Carl Clappison and Sea Grape Escape Ltd Plaintiffs v (1) The Proprietors, Strata Plan No.381 (2) Thompson Resorts Ltd (3) Castaways' Timeshare Ltd Defendants
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Justice Ingrid Mangatal |
| Judgment Date | 17 May 2016 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO G413 of 2013 |
| Date | 17 May 2016 |
The Hon. Justice Ingrid Mangatal
Statutory Interpretation — Strata Titles Registration Law 1973, s. 15(2)(a) — Strata Titles Registration Law (2013 Revision). s.3(2A) and s.21(2)(a) — Amendment of By-laws by Developer whilst 100% owner of units in Strata Plan according special rights to itself, affecting voting rights of other proprietors and composition of Executive Committee — Whether ultra vires — Need to Construe Statutory Provisions in their Context — Court to have regard to purpose both of Statute and particular provision
Section 9 of Strata Titles Registration Law (2013 Revision) — Appointment of Administrator — Whether cause shown — Remedy of last resort — Whether substantial misconduct or mismanagement established
Mr. James Kennedy of Samson & McGrath for the Plaintiffs.
Mr. Matthew Dors of Ritch & Connolly for the First Defendant.
Mr. Ian Huskisson and Ms. Charmaine Richter of Travers Thorp Alberga for the Second Defendant.
Mr. Hector Robinson and Ms. Alexandra Coe of Mourant Ozannes for the Third Defendant.
The Plaintiff Carl Clappison (‘Mr. Clappison’) and his wife each own a 1/6th share of Registration Section Colliers, Block 73A Parcels 39H45 and 39H46. These parcels of land are situated within a strata development known as Castaways' Cove, in East End, Grand Cayman. Mr. Beric Evans was, at the time of filing of the Originating Summons one of the Plaintiffs in this matter, he having indicated that he was the registered owner of a 1/2 share of Registration Section Colliers, Block 73A Parcels 39H29 and 39H30 along with his wife. However, Mr. Evans transferred his interest in those parcels to Sea Grape Escape Limited (‘Seagrape’) as of 5 May 2015. Seagrape owns one unit. At trial, the 2 nd Defendant applied to have the 2 nd Plaintiff struck out. This prompted an application by Seagrape to be substituted. I granted Seagrape's application, and ordered Seagrape substituted for Beric Evans, with costs of the application, and any costs thrown away to be the Defendants', to be paid by Beric Evans, to be taxed if not agreed.
The Originating Summons in this matter seeks the following relief and determination of questions:
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‘1. That the Court appoints an [sic] BCQS Property Management as administrator to act in place of the Executive Committee of the Proprietors, Strata Plan No. 381 for an initial period of one year from the date of making this Order.
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2 A declaration that Bye-law 2 is ultra vires the powers and duties of the Proprietors, Strata Plan No. 381 as being inconsistent with the Strata Titles Registration Law and that it be removed from the bye-laws.
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3 Such further and other relief that the Court deems fit.
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4 An order that the costs of and incidental to this application are paid by the Proprietor, Strata Plan No. 381.’
Affidavit evidence was filed on behalf of the Plaintiff, and the 2 nd and 3 rd Defendant. On the 21 April 2015 I heard a contested application made by the Plaintiffs seeking to have cross-examination at trial of the following persons on their respective affidavits:
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(a) Carl Clappison;
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(b) Kel Thompson;
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(c) Joanne Connolly.
On the 4 May 2015, I granted the Plaintiff's application and handed down a written ruling in which I indicated that whilst the relief sought and affidavit evidence demonstrate that most of the matters requiring determination by the Court involve issues of law, there are some questions which may require determinations of fact. These questions I referred to as being:
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a. Whether specific or manifold instances of inappropriate or excessive billing of expenses to owners have occurred;
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b. Whether substantial misconduct or mismanagement, or both, in the affairs of the Corporation, has been demonstrated.
At trial, both Mr. Clappison and Mr. Thompson were cross-examined. At the end of the day, Ms. Connolly was unable to give evidence on behalf of CTL, and thus her Affidavit was withdrawn.
The Plaintiffs are the registered proprietors of shares in units H45, H46, H29 and H30 of Strata Plan No. 381, also known as Castaways' Cove.
The first Defendant is a body corporate consisting of all the Strata Proprietors contained in Strata Plan No. 381.
The second Defendant, Thompson Resorts Limited (‘TRL’) has involvement in this matter in a number of capacities as follows:
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(a) As the original owner of the land and developer of the Strata;
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(b) As the legal or beneficial owner of at least 12 units at the Strata;
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(c) It manages the Strata through the Strata Management Agreement, which was entered into in December 2003;
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(d) It operates the Rental Pool Agreement with individual owners;
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(e) It owns and operates the Reef Resort.
The Third Defendant, Castaways' Timeshare Limited (‘CTL’) is a Cayman Islands incorporated limited liability company. It owns four units in the Strata Development No. 381.
In his first affidavit at paragraph 17 Mr. Clappison states that TRL or its nominee or assigns is still the owner of approximately 12 units in the Strata. Some units, he states, have been sold by TRL as timeshares by CTL, a company formed by TRL for this purpose.
Castaways' Cove is the name by which the Strata Plan No. 381 is commonly called or known.
The Reef Resort is a timeshare Resort adjacent to the Strata, owned and operated by TRL.
kel Thompson is the Managing Director and/or directing mind of TRL and a member of the Executive Committee of the Strata from its formation, right up to the time of the hearing.
I intend to deal with this issue first, as it is the main legal issue involved in this case. This question is a very important one, not only for the parties involved in this case. Indeed, it may hold significance for other developments in the Cayman Islands where the strata development is part of a resort. The evidence in this case reveals that it is common practice in respect of such resorts to appoint a manager to manage the operations, as well s conferring enhanced rights on the developer of the resort.
I wish to thank Counsel for the extraordinary level of research and assistance, and the high quality legal analysis presented in the Skeleton Arguments. This is not a straight-forward case. The issue surrounding By-Law 2 involves principles of statutory construction, and no decided case cited, local or otherwise, is directly on point. It is my view that the ultra vires issue involves the analysis of the Law as it existed at the time when the by-laws were amended, as well as the present state of the Law at the time of this application. On the other hand, the relief seeking to have an administrator appointed in place of the Executive Committee depends upon the Law in its present form at the time of application. Thus, the Strata Titles Registration Law (‘the STRL’) has been examined in its various revised and amended forms.
Castaways' Cove was developed in phases adjacent to and forms part of a commonly managed beach side holiday resort with The Reef, situated in East End, Grand Cayman. The Reef was developed by TRL on Block 73A Parcel 80 and comprises 30 two-bedroom apartments which can be divided into 60 rooms.
TRL is the registered proprietor of the Reef, which is not a strata development. The Reef is owned and managed by TRL. TRL, by way of a membership plan, confers vacation residence rights to participants in a manner similar to a timeshare arrangement.
Castaways' Cove was developed, as a strata development after TRL developed the Reef. Castaways' Cove was developed on Block 73A Parcel 39. It is made up of 53 two bedroom condominiums, 39 of which may be divided and rented as two separate units. Pursuant to a Strata Management Agreement dated 12 December 2003, between Castaways' Cove and TRL, Castaways' Cove appointed TRL as the manager of the development, for a term ending 2050, with a right of successive renewal for successive periods of five years each.
TRL manages a rental pool whereby owners of individual units in Castaways' Cove appoint TRL the exclusive agents for the rental of their units. A majority of the units within Castaways' Cove are members of the rental pool. The units within the rental pool are let for short term holiday rental and are managed together with the rooms at the Reef as one single resort to which guests are assigned interchangeably upon reservation.
Both Castaways' Cove and The Reef share a number of common facilities and amenities, including the beach and tennis court.
The combined Resort comprising The Reef and Castaways' Cove is now affiliated with the Wyndham International Resort chain through a franchise agreement. The agreement leaves continued management of the Resort to TRL but requires that the management be maintained to the Wyndham standard.
On 20 October 2003, when TRL owned 100% of the units' entitlements, a unanimous resolution was passed amending the by-laws contained in Schedule 1 and in Schedule 2 of the STRL to adopt the by-laws which at present govern the management and administration of Castaways' Cove. The amendments were as follows:
‘ Clause 2
Notwithstanding anything to the contrary in these by-laws, until the Developer is no longer the registered proprietor of one of the Strata Lots comprising the apartments or for the lifetime of the Resort, whichever...
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