On 7 March 2023, the Cayman Islands Court of Appeal handed down the judgment in Cayman Shores Development Ltd and Palm Sunshine Ltd v Registrar of Lands and others that effectively reversed the earlier judgment given by the Grand Court with regards to owners in the Britannia complex and certain rights registered on the respective Land Register(s). It is an important decision for certainty of title in respect of land in Cayman that is governed by the Registered Land Act.

From the early 1990s, the original developer and then owner of the former Hyatt Regency hotel, golf and beach resort, granted certain benefits to property owners in the Britannia development, including the right to play golf on the golf course, to use the facilities at the beach resort and to use the tennis courts (the “rights”) located on parts of the former Hyatt Regency properties. These rights were recorded in written legal agreements between the parties (the “agreements”) between 1992 – 2001 and registered by the Registrar of Lands on the Land Register.  The creation and registration of the legal agreements occurred more than 15 years prior to the acquisition of the Hyatt Regency properties by Dart. 

The Hyatt Regency hotel and resort ceased to operate in 2004 following Hurricane Ivan, although the golf course, beach and tennis courts remained in place. In 2016 Dart acquired the Hyatt Regency properties given the adjacency and connectivity to Camana Bay. Dart found there to be considerable uncertainty regarding the nature and validity of the rights. After years of without prejudice discussions with representatives of the Britannia owners seeking to reach agreement regarding the rights, and being unable to do so, the only remaining option available was for the landowner to seek the Grand Court’s guidance, clarifying the legal position surrounding the agreements, bringing certainty to all.

The Grand Court held that Dart should be bound by the agreements, but this decision has now been overturned by the Court of Appeal.  

Key questions before the Court of Appeal were the type of registrations of the rights, whether they were valid and, if not, whether the register can now be rectified and bind the landowner. The Court of Appeal has answered these questions by confirming that:

1. the nature of the rights did not amount to restrictive agreements capable of being registered as encumbrances. 
2. the rights do meet the definition of easements but were not validly registered as such because:
   1. incorrect and amended forms were used at the time of registration
   2. there was express wording in the agreements, as drafted by legal professionals; and
   3. the original parties specifically requested the Registrar record the encumbrances as a restrictive agreement, not an easement. 
3. the land register cannot now be rectified by the Registrar of Lands to change that. 

Consequently, the Court of Appeal has decided that the Land Registrar must now rectify the errors in the Land Register by cancelling and deleting the rights in their entirety.  

The Court specifically stated:

“As things currently stand, the register contains entries registering agreements that do not qualify for registration by reason of failing to satisfy the definition of restrictive agreements provided for in section 93(1) LRA. Those entries are accordingly grossly inaccurate and give a very misleading impression. In our view the case for their deletion is overwhelming.” 

During both the Grand Court and the Court of Appeal hearings, the landowner’s Leading Counsel, Mr. Jonathan Seitler KC, highlighted the importance of certainty of title in respect of Cayman land, with the Registered Land Act acting as a formalised comprehensive code, protecting the integrity of the Cayman Islands’ land registration system. On this point, the Court of Appeal stated:

“In our judgment, there is a powerful argument, founded on the long-accepted benefits that flow from commercial certainty ….. As a result of the parties’ freely taken decision to register restrictive agreements, the register recorded entries only for restrictive agreements and parties inspecting the same would have been well entitled to conclude that it was restrictive agreements and only restrictive agreements that had been registered. The whole point of the system created by the [Registered Land Act] was that entitlement to land and related interests therein are to be determined by entries in the register and that people should be able to rely on the entries to determine and vindicate their real property interests.”

Understanding the impact of the decision on the Britannia owners, the Court of Appeal further stated:

“The Court has well in mind that the outcome of this appeal will have a profoundly negative impact on some 193 proprietors who, when purchasing their properties, are likely to have paid a premium for the Rights that they would have assumed had been securely protected by restrictive agreements registered in the Land Register. However, as we were driven to conclude, the apparent restrictive agreements that the parties to the original Instruments and Agreements deliberately decided, on legal advice, should be the sole mechanism for protecting the Rights, lacked the essential ingredient plainly and obviously required by section 93 (1) RLA, namely that of restricting building on or the user or other enjoyment of the land owned by the Resort. The die was therefore cast at the very moment that the requested entries were recorded in the register, and it is most unfortunate that the proprietors must bear the consequences of the mistaken selection of this defective mechanism for the protection of the Rights.”

The Judgment is public and should be available from the Cayman Islands’ Judicial and Legal website shortly.