Cayman Shores v The Proprietors of Strata Plan No.79 & Ors
Mark Sefton KC and Joe Ollech, instructed by Nick Dunne, Daisy Boulter and Alexandra Stasiuk of Walkers LLP, appeared on behalf of the successful appellants in this appeal to the Privy Council from the Cayman Islands.
The litigation concerned the validity of leisure rights granted by developers in the 1990s to neighbouring villa and condominium owners over the golf course, beach club and tennis courts at what used to be the Hyatt Regency hotel and resort at Seven Mile Beach.
In its heyday the resort was a glamorous and luxurious destination retreat. Film aficionados who recall a young Tom Cruise in The Firm will have seen the beach club feature in his scene with Gene Hackman and Jerry Weintraub. Especially if they are tax practitioners and film aficionados.
Hollywood icons aside, the development of the hotel resort included the creation of the adjacent residential Brittania estate, and as part of the marketing and sale of properties on that estate the purchasers were given various rights to use the recreational facilities at the resort. The resort was badly damaged by Hurricane Ivan in 2004. The hotel has been derelict since then, and although the beach club was to some extent restored, and the golf course was also maintained and operated to some extent, albeit on a limited basis.
In 2016 Cayman Shores Development Ltd acquired the land for development and asserted that the neighbouring owners had mere licences and not binding property rights.
The case concerned the interpretation of the agreements by which the rights had been granted, and the system for the registration of restrictive agreements and easements under the Cayman Registered Land Act 1971. In particular, the Cayman Shores argued that strict compliance was required with the registration requirements imposed not just by the Act itself, but with the Manual of Registry Procedure as well. The original parties had requested that the Registrar record the rights granted as “restrictive agreements” in the incumbrances section of the servient land’s title register. The Manual required that the word “easements” be used to record easements. Cayman Shores contended that the mislabelling was fatal – even if the rights were otherwise classified as easements at common law (which it also contested), they nevertheless failed to take effect under the Cayman Islands system of registration which it argued was a system of “title by registration”. It also contended that rectification of the register should not be ordered.
The neighbouring owners succeeded at first instance but lost in the Cayman Islands Court of Appeal.
The Board was unanimous in allowing this further appeal. It held that the rights granted were certainly easements - if that was not clear in the 1990s in the light of Re Ellenbourough Park [1956] Ch 131 it was certainly clear now in light of Regency Villas v Diamond Resorts (Europe) Ltd [2018] UKSC 57; [2019] AC 553. Furthermore, the registration of the rights by the Registrar as “restrictive agreements” whilst inelegant, was sufficient registration under s.92 of the 1971 Act.
This was on the basis of two core reasons. First, the entry was not simply the short record in the “nature of incumbrance column” on the face of the register. In order to register an easement the instrument creating the easement has to be filed as well, and is kept by the Registry. It forms part of the register. The face of the register tells a purchaser nothing beyond the briefest description of the rights protected – to ascertain what those rights are the purchaser must look at the filed instruments itself. On doing so it would be plain that the actual grant was of a set of easements, despite the fact that the parties chose to call it something else. Street v Mountford [1985] AC 809 applied.
Secondly, it could not possibly be right that the Manual of Registry Procedure in this case could superimpose additional requirements, notwithstanding that under s.11(2) of the 1971 Act the Registrar has a power to make directions in respect of registration requirements. At the material time during the 1990s the Manual was an unpublished document, produced for internal use only by Registry staff as a guide for them in carrying out their duties. It was contrary to natural justice to allow an unpublished set of guidance criteria to operate as rules that would bind the public who could not know whether or not any particular requirements imposed by that guidance had been complied with.
The Board did not consider itself bound by comments made in the Cayman decisions of The Proprietors of Strata Plan No. 66 v RP Developments Ltd (unreported) 29 August 1988 and Jones v Registrar of Lands [1998] CILR 7, both of which treated a particular aspect of the Manual as amounting to a mandatory direction. Neither of those cases considered the question whether an unpublished manual could satisfy the requirements of s.11(2) in the first place.
In the circumstances, the appellants have the benefit of binding easements. Rectification under s.140 of the 1971 Act is not strictly required, but the Board has suggested that the Registrar consider his or her powers under s.139 as to making corrections to the register simply to clear up the “inelegant” presentation of the wrong label.
This decision has implications not just for the immediate parties but may also affect other properties in the Cayman Islands as well. There appears to have been something of a conveyancing convention that whereby rights that constitute easements were recorded as restrictive agreements. Different issues might arise with regard to the 2010 edition of the Manual, which has been made available online.
Blake Morgan LLP acted as the appellants’ Privy Council London agents.
You can read the judgment here.
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