Foith v Strata Plan 436

• Jurisdiction: Cayman Islands
• Judge: (Henderson, J.)
• Judgment Date: 09 April 2014
• Court: Grand Court (Cayman Islands)
• Date: 09 April 2014

Grand Court, Civil Division

(Henderson, J.)

FOITH and TWO OTHERS

and

PROPRIETORS, STRATA PLAN NO. 436 and THREE OTHERS

K.J. Farrow, Q.C. for the plaintiffs;

C. Young and Ms. C. Kish for the first to third defendants;

N.K. Meeson, Q.C. and Ms. H. Brooks for the fourth defendant.

Cases cited:

(1) British Eagle Intl. Airlines Ltd. v. Compagnie Natle. Air France, [1975] 1 W.L.R. 758; [1975] 2 All E.R. 390; [1975] 2 Lloyd”s Rep. 43, distinguished.

(2) Hoare v. Adam Smith (London) Ltd., [1938] 4 All E.R. 283, distinguished.

(3) Kok Hoong v. Leong Cheong Kweng Mines Ltd., [1964] A.C. 993; [1964] 2 W.L.R. 150; [1964] 1 All E.R. 300, considered.

(4) Lake View & Star Ltd. v. Cominelli, [1937] A.C. 653; [1937] 2 All E.R. 285, distinguished.

Legislation construed:

Registered Land Law (2004 Revision), s.2: The relevant terms of this section are set out at para. 11.

Strata Titles Registration Law (2005 Revision), s.21: The relevant terms of this section are set out at para. 5.

Land Law-strata titles-control by developer-prohibition of bye-law restricting ‘dealing’ with strata lots under Strata Titles Registration Law (2008 Revision), s.21(4) means bye-law unable to restrict ability to lease lot-prohibition of bye-law restricting ‘devolution’ of strata lot in s.21(4) means bye-law unable to restrict ability to transmit interest in property from one person to another by operation of law-no prevention in s.21 of such restrictions in contract of sale

Land Law-strata titles-interpretation of legislation-terms in Strata Titles Registration Law (2005 Revision) to have same meaning as in Registered Land Law (2004 Revision) unless specific definition given

The plaintiffs brought an action to set aside certain bye-laws and contractual terms which restricted their ability to let their strata lots to others.

The plaintiffs purchased strata lots governed by a bye-law which stated, inter alia, that an owner could only rent out his unit if he did so through the strata manager on terms set by the manager or executive committee, that the manager was entitled to a management fee on rentals, and that the owner was required to pay a deposit against damage by the tenant. This restriction was also included in the contract of purchase and sale for the units. The plaintiffs brought an action alleging that the bye-law, and the corresponding contractual terms, were invalid.

The plaintiff submitted that the Strata Titles Registration Law (2005 Revision), s.21(4)-which stated that no bye-law could ‘prohibit or restrict the devolution of strata lots or any dealing therewith’-guaranteed their ability to lease their strata units to others. The terms in this Law were to be given the same meanings as in the Registered Land Law (2004 Revision), s.2 of which defined ‘dealing’ as including the leasing of property. The Strata Titles Registration Law, s.21(4) therefore prohibited bye-laws from restricting an owner”s ability to lease his lot to others. The plaintiff further submitted that, as it was not possible for them to contract out of a statutory protection, this must also invalidate the contractual terms.

The defendants submitted that the Strata Titles Registration Law, s.21(1) stated that the control, management, use and enjoyment of a strata

lot would be regulated through bye-laws. As a restriction on leasing was part of such management, use and enjoyment, the bye-law must be valid. They further submitted that, even if s.21(4) did invalidate the bye-laws, there was nothing in the Strata Titles Registration Law which prevented the parties from contracting out of its terms. The court should therefore find that the restrictions were valid.

Held, granting the application in part:

(1) The Strata Titles Registration Law (2005 Revision), s.21(4) protected the plaintiffs” ability to lease their lots to others without restriction. It was clear that the Law was intended to operate in tandem with the Registered Land Law (2004 Revision), e.g. because it made multiple references to the that Law and s.3 of that Law stated that no other inconsistent Law could apply. In the absence of any specific definitions, terms which bore a particular meaning in the Registered Land Law would therefore bear the same meaning in the Strata...