THE REGISTERED LAND ACT (2018 REVISION) Between Cayman Kai Property Owners Association Plaintiff v Sea Watch Villas Ltd Defendant

• Jurisdiction: Cayman Islands
• Judge: Justice Alistair Walters (Actg.)
• Judgment Date: 27 January 2023
• Docket Number: CAUSE NO. GC 80 of 2022
• Court: Grand Court (Cayman Islands)

IN THE MATTER OF THE REGISTERED LAND ACT (2018 REVISION)

Between

Cayman Kai Property Owners Association

Plaintiff

and

Sea Watch Villas Ltd

Defendant

Before:

Hon Justice Alistair Walters (Actg.)

CAUSE NO. GC 80 of 2022

IN THE GRAND COURT OF THE CAYMAN ISLANDS

CIVIL DIVISION

HEADNOTE

Costs of unsuccessful application for leave to appeal - Circumstances in which indemnity or wasted costs might be awarded.

Written Submissions from:

Walkers on behalf of the Plaintiff

Jackson Law on behalf of the Defendant

ON THE PAPERS

COSTS JUDGMENT

1 These proceedings were started by the Plaintiff which is an unincorporated association (the “Association”) by way of Originating Summons dated 6 April 2022. The members of the Association are some of the owners of houses and land that are within an area known as Cayman Kai which comprises approximately 350 parcels of land. As between the various parcels of land within Cayman Kai there are restrictive covenants (the “Restrictive Covenants”).

2 The proceedings alleged that the Defendant which is the registered proprietor of Block 33B, Parcel 139 (the “Property”) which is included within Cayman Kai breached the Restrictive Covenants.

3 The Plaintiff's claim was put as follows:

• “1. A declaration that the Defendant's construction of the proposed dwelling (the “Dwelling”) on Block 3 3B, Parcel 139 of Registration Section Cayman Kai is in breach of the restrictive covenants registered thereon.

• 2. Until further order of the Court, orders to restrain the Defendant from continued construction of the Dwelling as proposed.

• 3. Such further or other relief as this Honourable Court thinks fit.

• 4. Costs.”

4 After a number of affidavits were exchanged, the Defendant issued a summons dated 9 August 2022 seeking an order striking out the proceedings pursuant to GCR O. 18, r. 19 (a) and (d) on the basis that the Plaintiff did not possess the requisite locus standi whether in its own capacity or in a representative capacity to bring and continue the proceedings.

5 In response, although not accepting that it was necessary, the Plaintiff issued its own summons dated 19 July 2022 seeking leave to amend its Originating Summons:

• 5.1 To add after the name of the Association as Plaintiff the words “On behalf of the Proprietors” and to then list the names of owners of homes and land in Cayman Kai.

• 5.2 To add after the name of the Association in the body of the Originating Summons the words “… as the representative for and on behalf of the proprietors set out herein…”.

• 5.3 A minor amendment to the reference to the registration details of the Property.

6 The basis for the Plaintiff's application to amend the Originating Summons was GCR O.15, r. 12 which provides that:

“12.(l)Where numerous persons have the same interest in any proceedings, not being such proceedings as are mentioned in rule 13, the proceedings may be begun, and, unless the Court otherwise order, continued, by or against any one or more of them as representing all of as representing all except one or more of them.”

7 Although relying on GCR O.15, r. 12, the Plaintiff s counsel argued at the hearing and at the hearing of the subsequent application for leave to appeal, that the decision of Sanderson J. in the case Cayman Kai Property Owners Association v. Cayman Island Basic Industries Limited, North Coast Resort Management Limited and Cayman Kai Development Limited 1 constitutes binding authority that the Plaintiff did have locus standi to bring this action in its own name.

8 Having heard the parties, I indicated to them that I was of the opinion that the 2006 decision of Sanderson J. had not specifically addressed the question of whether the Association could properly act in a representative capacity on behalf of some or all of its members and did not appear to have been appointed in that capacity. I did not agree with Mr Basdeo that for the purposes of GCR O. 15, r.12 it could properly be said that the Association shared the same interest as its members for the purposes of these proceedings. That being the case, in my view, the proposed amendment did not cure the Plaintiff's lack of standing to act as the Plaintiff on behalf of the relevant members. It seemed to me that the correct format for an amendment would have been for one of those members individually to be substituted as the Plaintiff on behalf of the remainder.

9 Moreover, in my opinion, the action should not have proceeded by way of Originating Summons at all. By virtue of the issues raised it should have proceeded by way of a writ action with detailed pleadings. During the hearing on 18 August 2022 I gave consideration to whether an order should be made pursuant to GCR O. 28, r.8 that the proceedings should be continued as if they had been commenced by way of a writ and whether the affidavits filed could stand as pleadings.

10 Taking into account the issues in relation to the capacity of the Plaintiff and the fact that the affidavits filed on behalf of the parties (and in particular the Plaintiff) did not address the precise relief sought by the Plaintiff beyond very simplistic reference to an injunction and declaration, I took the view that the overriding objective would not be served by making any orders under GCR O.28, r.8. To do so

would either require substantial amendments to the Originating Summons with consequential pleadings served by the Defendant (the costs of which would be the responsibility of the Plaintiff in the usual way) or further detailed exchanges of affidavit evidence setting out the complete case of the aggrieved members of the Association and responsive affidavits from the Defendant

11 As a result, at the hearing on 18 August 2022, I made an order striking out/dismissing the proceedings on the basis that it would be most expedient for the aggrieved members of the Association to re-start a properly pleaded writ action. As a consequence, the parties filed an agreed order on 30 August 2022 giving effect to my decision and providing that the Plaintiff shall pay the Defendant's costs of an incidental to the proceedings to be taxed if not agreed 2.

12 On 16 November 2022, I heard an application by the Plaintiff for leave to appeal against my decision. For the reasons that I gave on 30 November 2022 3, I refused to give leave to appeal.

13 The question now is what costs order should be made in relation to the application for leave to appeal and the costs of preparing the written arguments in relation to that issue.

14 Pursuant to GCR O.62, r.4, the Court has a wide jurisdiction as to costs. Sub-rule (2) sets out the general rue as follows:

“(2) The overriding objective of this Order is that a successful party to any proceeding should recover from the opposing party the reasonable costs incurred by him in conducting that proceeding in an economical, expeditious and proper manner unless otherwise ordered by the Court.”

GCR O.62, r.4, (5) makes it clear that:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of any proceedings, the Court shall order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

15 The position of the Defendant in relation to costs is as follows:

• 15.1 The case should have been commenced by way of writ from the outset, not by way of originating summons.

• 15.2 At the hearing on 18 August 2022, the court raised questions about the nature of the relief sought by the Plaintiff and how it had been pleaded and was of the view that considerable and disproportionate costs would be incurred in treating the action as one started by way of writ pursuant to GCR O. 28, r.8, hence the court's decision to dismiss the action. On that basis, it is argued that the Plaintiff should not have incurred any further costs by seeking leave to appeal against that decision but should have started fresh proceedings. Even if an appeal was successful it was argued that the Plaintiff would just end up where it started, having to amend substantially its original pleadings.

• 15.3 On 3 November 2022, prior to the hearing of the unsuccessful application for leave to appeal, the Defendant put the Plaintiff on notice that it was of the view that the application for leave to appeal was meritless and frivolous and, if unsuccessful, it would be seeking costs on an indemnity basis and/or a wasted costs order.

• 15.4 In relation to the question of wasted costs, it says that the Plaintiff and/or its Counsel acted negligently in continuing to pursue what the Defendant describes as ill-fated proceedings, despite the fact that it says that it was obvious that the Plaintiff was unlikely to succeed in respect of its application for leave to appeal. It also raises the question of a wasted costs order against the Plaintiff's counsel on the basis that it says that the Plaintiff is an unincorporated association against which a costs order might not be enforceable, which lacked capacity and as a result of failing to file the correct originating process all of which left the proceedings doomed to failure 4.

16 An award of costs on an indemnity basis means that:

“On a taxation on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing officer may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; and in these rules the term “the indemnity basis” in relation to the taxation of costs shall be construed accordingly..” 5

17 An order for wasted costs is governed by GCR O.62, r.11 which states:

“11. (1) In Part III of this Order the expression “attorney” shall include a “foreign lawyer”.

(2) Where it appears to the Court...