Jonathan Seitler KC and Alice Hawker appear in Supreme Court case Jalla v Shell

The Supreme Court case of Jalla and another v Shell International Trading and Shipping Company and another commences today, concerning one of the largest oil spills in Nigerian oil exploration history in 2011 and the issue of ‘continuing nuisance’.

The Appellants allege that oil from the spill has devastated their shoreline and continues to cause serious damage to their land and water supplies. Because the claims against the Shell entities were commenced outside the limitation period for claims in nuisance, the claim would be barred unless it involved a ‘continuing nuisance’.

The case featured in The Lawyer’s ‘In Court this Week’ feature; read the full article here.

Jonathan Seitler KC, Alice Hawker and Stuart Cribb (Essex Court) act for the Appellants, instructed by Rosenblatt.

Britannia Litigation: Court of Appeal clarifies important aspects of Cayman Islands’ property law regarding restrictive agreements, easements and Land Register rectification

Cayman Shores Development Ltd and another v. Registrar of Lands and Others CICA 017 of 2021

On 7 March 2023, the Cayman Islands Court of Appeal (CICA) overturned the decision of the Grand Court, which held that certain legal instruments dating from 1992 to 2001 granting various rights to residential proprietors in the Britannia development (Owners) were binding on a number of companies in the Dart Group (Dart Companies) which had acquired the land in 2016 (Land). . These instruments purportedly granted rights to enjoy certain facilities situated on the Land , including the enjoyment of a beach and a golf course.  At first instance, the Grand Court held that these rights bound the Dart Companies, a decision now reversed by CICA.

In summary, CICA adopted a strict approach finding that:

  1. The relevant instruments did not contain any restrictive agreements;
  2. The relevant rights were not perfected by registration as easements pursuant to the Registered Land Act (RLA);
  3. There was no rectifiable mistake under the RLA, emphasising the importance of respecting the parties’ apparent decision to enter into and register in the land register (Register) restrictive agreements only, and not easements.

CICA’s decision is important as it addresses a number of fundamental aspects of Cayman property law, And gives primacy to commercial certainty thereby avoiding the potentially impracticable consequences for the use of the Land introduced by the decision at first instance.

Facts

The dispute relates to a large development formerly known as the Britannia Resort, which was comprised of a hotel, a golf course situated on the land adjoining the hotel, two tennis courts, a beach club (together, the Facilities), and four phases of residential developments.

At the time the residential properties were developed, the use of the Facilities was held out by the developer as attractions to potential and actual purchasers.

The then registered proprietor of the Land (Cayman Hotel) entered into various written agreements relating to the Facilities (the Instruments).  The judge at first instance, Segal J, described the Instruments as “puzzling”. They are headed ‘Restrictive Agreement’ but contain no explicit promise from Cayman Hotel as to what it was not to do with the Land. Rather, and despite their heading, the Instruments purported to grant rights (referred to as the ‘Beach Club Rights’, the ‘Golf Playing Rights’ and the ‘Tennis Court Rights’ (collectively, the Rights)) to the proprietors of the relevant dominant parcels and their successors in title.  The Instruments were also entered into the Register as restrictive agreements or ‘Rest. Agmnts’.

Following Hurricane Ivan in 2004, the hotel and resort ceased to operate.  Subsequently, the tennis courts were overtaken by a highway and the golf course fell into disrepair.

After the Dart Companies purchased the Land in 2016,  they communicated to the Owners that they were considering plans for redevelopment of the properties and offered to make the beach facilities and golf course available for use by the Owners as licensees.

The Owners objected on the basis that, in their view, the Rights were binding on the Dart Companies as the successors in title of the servient tenement.

The Dart Companies, who had not been involved in creating the Instruments in 1992 to 2001, first tried to reach a negotiated settlement with the Owners but, when those efforts failed, were left with no choice but to bring the proceedings for the purpose of clarifying the legal position surrounding the Land

The decision of the Grand Court

At first instance, Segal J found in favour of the Owners on the basis of the following conclusions:

  1. the Instruments contained restrictive agreements within the meaning of and pursuant to section 93 of the RLA (‘an agreement …by one proprietor restricting the building on or the user or other enjoyment of his land for the benefit of the proprietor of other land’). The Judge found such a term arose out of clause 3 of the Instruments, which states:

‘The proprietors hereby covenant on their own behalf and that of their successors in title and assigns to exercise such rights in accordance with any rules and regulations in force from time to time in respect thereof subject at all times to the right of Cayman Hotel or its successors in title or assigns to modify the facilities or the location thereof as constitute such Rights or to suspend such Rights for the purpose of carrying out repairs or maintenance in respect thereto.’

The judge held that expressly or by implication, Cayman Hotel thereby promised not to modify the Facilities or their location, or to suspend the Rights, other than for the purpose of carrying out repairs or maintenance. As the Instruments contained restrictive agreements and were registered as such, the Rights were therefore binding on the Dart Companies as the registered proprietors of the Land.

  1. The Instruments contained easements within the meaning of and pursuant to section 92 of the RLA, notwithstanding the fact that the registration of those agreements marked a considerable departure from the prescribed formal requirements and did not reference the registration of an easement.
  2. The Register could, and should, be altered by the registrar of lands (Registrar) after the event to record that easements had been created over the Land.

The Grand Court’s decision has been previously discussed in an article by Appleby:  Britannia Litigation: Success Or Stalemate? | Appleby (applebyglobal.com).

Court of Appeal Decision

On appeal, CICA found in favour of the Dart Companies.

Restrictive Agreement

As to the issue of whether the Instruments contained any restrictive agreements, the Court of Appeal answered the question in the negative after conducting a principled analysis of the leading authorities on the interpretation and implication of a term.

In reaching that decision, CICA held that the Grand Court misconstrued clause 3 of the Instruments and erred in finding that there was an express or implied agreement by the registered proprietor of the servient parcel (Cayman Hotel) not to modify the Facilities constituting the Rights or their location or to suspend the exercise of the Rights other than for the purpose of carrying out repairs or maintenance.  Among other things, CICA found that the Judge’s construction of clause 3 ‘flies in the face of the fact that the agreements do not contain any promises by… [the then owner of the land] not to do anything on its land’, and was at variance with both:[1]

  1. the natural and ordinary meaning of the words use in the clause; and
  2. the parties’ contemplation at the time the Instruments were concluded that the Facilities would be available for at least as long as resort remained in operation and that over such time the Facilities might well be modified or moved for reasons other than repairs and maintenance.

Consequently, CICA concluded that the Instruments ‘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’.[2]

CICA also rejected the Owners’ counterclaim that the Instruments contained a so-called ‘Covenant Not to Build or Develop’, which flowed from the very purported grant of the Rights.  As CICA stated at paragraph 84:

‘…at the heart of the respondents’ case [on this issue] is the proposition that, where there is a grant of rights of the sort granted in the Agreements, the grantor is subject to a term that he or she will not interfere with the exercise of that right. In our view the judge was right to reject this proposition…’

Easements

Notwithstanding CICA agreeing with the Grand Court’s finding that the wording used in the Instruments was capable of creating rights in the form of easements, the Court of Appeal went on to find that the rights ‘were not easements in the full sense since they had not been perfected by registration as required by section 92(4) [RLA], the parties having deliberately decided not to create or register easements’.[3]

Significantly, CICA agreed with the Dart Companies’ submission that for the creation of easements, there had to be completion by registration so as to give notice to those who inspect the Register, and the registry entries in this case (which identified the Instruments as creating ‘Rest. Agmnts’) were insufficient to do so.  As the registry entries did not confirm to the mandatory requirements of the Land Registry Procedural Manual for the registration of easements, CICA held that the registration was ineffective pursuant to s 27 of the RLA.[4]

Rectification

As to rectification, CICA held that there was no rectifiable mistake under s 140 of the RLA and so the Judge below erred in ordering rectification of the Register so as to refer to easements. In doing the CICA emphasised the importance of respecting the apparent decision of the parties to enter into and Register restrictive agreements only, and not easements.

As noted above, the Instruments were entitled ‘Restrictive Agreement’, and a clause thereof expressly requested the Registrar to note that the Land was ‘subject to a restrictive agreement’ in relation to the Rights.  Given that the parties requested the noting of ‘restrictive agreements’ only in the Instruments, CICA found that the Registrar ‘most certainly would not have been entitled to proceed without more to register the easements in the appropriate sections of the register’, even if she had appreciated that the Rights could be characterised as easements.[5]

Significantly, CICA commented at paragraph 169:

‘…it is fundamental to the registration machinery created by the RLA and to the duties of the Registrar, to ensure that the Registrar and her or his staff accord a free choice to applicants as to which rights they wish to apply to have registered, in this case, restrictive agreements and/or easements…’

In light of that fundamental principle, CICA went on to affirm the importance of conducting registration in the prescribed form.  It found that:

  1. Even if the parties had confirmed to the Registrar that they wished to apply for the registration of easements, the Registrar would have been duty-bound to require the parties to amend the wording of the documents they had submitted.[6]
  2. The Registrar could not have simply approved the Instruments in their existing form using her powers contained in s 105(1) RLA, which required dispositions of land to be effected by instruments in the prescribed form ‘or in such other form as the Registrar may in any particular case approve’. The Registrar powers under s 105(1) of the RLA had to be exercised consistently with the Registrar’s duty to administer the Land Registry in accordance with the Law (s 5(1) RLA) ‘which would include the non-acceptance of documents containing confusing and/or misleading information’.[7]

Was rectification precluded by s140(2)?

S 140(2) RLA precludes rectification affecting the title of a proprietor in possession who purchased the property for valuable consideration, ‘unless such proprietor had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or caused such omission, fraud or mistake or substantially contributed to it by his act, neglect or default.’

Although CICA agreed with the Grand Court’s ruling that knowledge for s 140(2) purposes ‘includes knowledge possessed by the proprietor at the time he, she or it acquired the land in question’, not just knowledge acquired at the time the omission, fraud or mistake occurred,[8] it held that the Grand Court erred in finding that the Dart Companies had such knowledge on the facts.  Therefore, rectification to refer to the Rights as easements was not available against the Dart Companies in any event.[9]

Discretion

Further, CICA held that the Judge was ‘clearly wrong’ in the exercise of his discretion in ordering rectification of the Register to refer to easements, when the parties had requested only the registration of restrictive agreements.  At [176], CICA went to express the following view:

‘In our judgment, there is a powerful argument, founded on the long-accepted benefits that flow from commercial certainty, for holding the respondents to their election, which should have been weighed in the balance by the judge giving it the very considerable weight it merited. 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 RLA 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.’

Following from its conclusion that there were no restrictive agreements which satisfied that definition under s 93(1) of the RLA and no rectifiable mistake, CICA ordered the entries referring to ‘Rest. Agmnts’ to be removed from the Register.[10]

Conclusion

By giving primacy to commercial certainty, CICA judgment marks the reversal of a decision that created potentially impracticable consequences for the future use of the Land.  On the Grand Court’s reasoning, the golf course land at Britannia could only be used to play golf by the Owners, but there was no requirement for the Dart Companies to maintain it as such and it could not be modified to any alternative use.

The strict approach taken by CICA to the formal requirements of registration, although resulting in what CICA recognised as ‘a profoundly negative impact on the Owners who had paid a premium for the Rights’,[11] is arguably necessary for the purpose of maintaining the integrity of the land registration system.  The creation of a land registration system which enables users to treat the Register as an accurate record of all entitlements to land is the whole point of that system under the RLA.

Unfortunately, commercial certainty comes at a cost to parties that seek to rely on ambiguously worded agreements or instruments.  As put by CICA at [184]:

‘… the 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.’

CICA’s decision serves as a reminder to parties intending to enter into restrictive agreements and/or easements, and crucially their lawyers, to ensure that the instruments purporting to record those agreements or grant those rights are clearly drafted and registered in the correct form.  It confirms that simply identifying a right over land as protected by a ‘restrictive agreement’, and registering it as such, is insufficient if the agreement does not actually contain any promise by a landowner restricting the use of its land within s 93 RLA. It also confirms the limits of what the courts can do to rectify after the fact if an incorrect mechanism is used.  The decision may also prompt others to review the adequacy of historic arrangements already in place.

Jonathan Seitler KC and Emer Murphy acted for the successful appellants, The Dart Companies, and were instructed by Appleby.

[1] Cayman Shores Development L td v The Registrar of Lands and Ors CICA 017 of 2021 at [81]
[2] [184]
[3] [134]
[4] [112]
[5] [169]
[6] [171]
[7] [171]
[8] [173]
[9] [174]
[10] [181]
[11] [184]

Daniel Petrides successfully represents Claimant in the recent case of Rokstone Ltd v Tiggy Butler

The case concerned the sale by the Defendant of an ‘ultra-prime’ property in Central London for £10.3m in March 2021. Following completion, the Defendant failed to pay commission to the Claimant estate agent. The Defendant disputed liability, arguing that her contract with the Claimant was unenforceable pursuant to section 18 of the Estate Agent’s Act 1979, and seeking to set-off a multi-million pound professional negligence claim.

In a reserved oral judgment following a 5-day trial, HHJ Johns KC found in favour of the Claimant, permitting the contract to be enforced in full and dismissing the counterclaim.

The case has been widely reported in the national press (The Times, The Daily Mail, The Evening Standard) and the trade press (The Negotiator, Property Industry Eye).

Daniel Petrides was instructed by Mark Buckley, Will Thompson and Isha Wurie of Fladgate LLP.

Wilberforce team successful as Court of Appeal dismisses jurisdiction applications in leading “Bitcoin” case

Judgment has been handed down by the Court of Appeal (Birss LJ, Popplewell LJ and Lewison LJ) in Tulip Trading v Van Der Laan. The Court of Appeal reversed the decision of Falk J and dismissed the jurisdiction applications brought by various of the Defendants against the Claimant, Tulip Trading.

Tulip Trading says that it is the owner of many billions of dollars of digital assets, commonly (but Tulip Trading says, mistakenly) referred to as Bitcoin, and that it had its access to those digital assets taken from it in a theft, when an unknown third party stole its private keys and related information.

Tulip Trading claims that the Defendants are the developers of the digital currency networks in question and that they owe Tulip Trading, as the true owner of the digital assets, fiduciary and/or tortious duties to restore Tulip Trading’s ability to access and use the digital assets.

At first instance, Tulip Trading succeeded in showing that the Claim could be served out under the gateways in PD6B and that England was the appropriate forum (which findings were not challenged on appeal). However, Falk J was persuaded that there was no serious issue to be tried that the duties were in fact owed by the Defendants.

The Court of Appeal has now unanimously reversed Falk J’s decision, finding that there was a “significant flaw” in the Judge’s reasoning because she impermissibly made factual findings contrary to Tulip Trading’s case.

The Court of Appeal held that there was a serious issue to be tried as to the existence of the duties, and, in fact, that – if Tulip Trading is right that the digital currency networks are not decentralised – “there is much to be said for the submission that bitcoin developers, while acting as developers, owe fiduciary duties to the true owners of that property”.

The Court also held that, while the facts were, “quite a long way from factual circumstances which the courts have had to examine before in the context of fiduciary duties… if the facts change in a way which is more than incremental I do not believe the right response of the common law is simply to stop and say that incremental development cannot reach that far.” The Court also stated that “The internet is not a place where the law does not apply.”

This decision – which would allow Tulip Trading’s case to proceed to trial – will therefore be of significant interest. The trial of this Claim will address the question of whether or not digital currency networks are in fact decentralised, as well as determining the existence of the fiduciary and tortious duties in question.

The leading judgment of Birss LJ (with which Popplewell LJ and Lewison LJ agreed) also contains an interesting exposition of concepts relating to digital assets and confirms that they were located in the jurisdiction on the basis of Tulip Trading’s residency in England.

John Wardell KC, Bobby Friedman and Sri Carmichael acted for the successful appellant, instructed by a team at Ontier LLP.

Read the full judgment

Jonathan Seitler KC acted for the successful Respondent in the Court of Appeal in Yee Shi Yin & Others v 174 Solicitors Limited

Jonathan Seitler KC acted for the successful Respondent in the Court of Appeal in Yee Shi Yin & Others v 174 Solicitors Limited which concerned a claim by multiple purchasers of off-plan units in city centre blocks against the vendor’s solicitors for having paid away moneys held as stakeholder. Jonathan succeeded on various bases despite the Court departing somewhat from the reasoning of the Judge at first instance. Jonathan led Michael Bowmer of 4 New Square and was instructed by Phil Murrin and Chris Lewis of DAC Beachcroft.

Read the full judgment

First-tier Tribunal Decision concerning the meaning of “the amount payable on the transfer” in relation to disposal of gilt strips

Watts v Commissioners for HM Revenue and Customs [2022] UKFTT 408 (TC)

Jonathan Davey KC has received judgment in a First-tier Tribunal (“FTT”) appeal regarding a pre-planned tax scheme involving the disposal of gilt strips. The issues raised in the appeal include the meaning of the phrase “the amount payable on the transfer” (paragraph 14A(3) of Schedule 13 to the Finance Act 1996). The FTT (Judge Heidi Poon) held that on a purposive construction of the relevant legislation, the phrase “the amount payable on the transfer” was to be interpreted more broadly than the Appellant contended for, and, accordingly, on the facts of the case, the “transfer” in question comprised the aggregate of two amounts including a payment made for the assignment of an option. The FTT therefore found for the Respondents on the point. Jonathan Davey KC acts for the Respondents (HMRC) with Joshua Carey (Deveraux Chambers); Aparna Nathan KC and Colm Kelly (Deveraux Chambers) act for the Appellant.

Read the full judgment

In the matter of Avivo Group – FSD 145 of 2022 (RPJ)

Clare Stanley KC acts for the successful respondent in one of the first reported decisions in the Grand Court of the Cayman Islands in this important case on when the Court will appoint inspectors to examine into and report on the affairs of a company at the behest of a minority shareholder.  Although a case on s.64 of the Cayman Companies Act, similar statutory provisions are to be found in legislation throughout the Commonwealth, and hopefully this case will be a useful precedent in those jurisdictions too.  Clare worked with the team from Walkers Cayman and Walkers Dubai: Barnaby Gowrie, Luke Petith, Siobhan Sheridan and Carly Kilshaw.

Read the full judgment here.

No obstacles to enforcement of an English costs order in the UAE

In a recently published judgment in Invest Bank v El-Husseini and Others [2022] EWHC 3008 (Comm), Mr Justice Bryan dismissed applications for security for costs by four defendants against the Claimant, a bank based in the UAE. The defendants contended that security should be ordered in circumstances where there was a real risk that an English costs order would not be enforceable in the UAE, either onshore or offshore (in the DIFC). In dismissing the application, the Judge rejected the extensive expert evidence on UAE law submitted by the defendants to the effect that there was a real risk enforcement could be refused because of absence of reciprocity of enforcement between the UAE and England, and/or because enforcement of a costs order would be contrary to the public policy of the UAE.

In rejecting that evidence, the Judge held that it is clear that there is reciprocity of enforcement of judgments between the English court and the UAE courts, and that enforcement of a costs order is not contrary to the public policy of the UAE. The Judge also found that “a straightforward route” to enforcement of an English costs would be to enforce the judgment in the DIFC and then to enforce the resulting DIFC judgment in the UAE.

Alan Gourgey KC (leading Marc Delehanty of Littleton Chambers) acted for the Claimant bank, together with PCB Byrne’s team led by Trevor Mascarenhas.

A copy of the judgment is available to read here.

Bond & anor v Webster & ors features in the Telegraph and the Daily Mail

Clare Stanley KC is instructed in a case concerning the Estate of Reginald Charles Bond which featured in yesterday’s editions of the Telegraph and the Daily Mail. Reginald Bond was a multi-millionaire racehorse trainer who died last year. His four children are now engaged in litigation over the validity of his last will.

The Telegraph article can be read in full here and The Daily Mail article can be read in full here.

Clare Stanley KC is instructed by Naomi O’Higgins (Howard Kennedy). A date for the trial has not been set.

Key Privy Council decision: Equity Trust (Jersey) Ltd v Halabi

The Privy Council has handed down judgment in two appeals (ETJL v Halabi; ITGL v Fort Trustees [2022] UKPC 36) concerning the nature and scope of the right of a trustee to recover from or be indemnified out of trust assets in respect of liabilities and other expenditure properly incurred by the trustee. A seven-member Board was convened because the Privy Council was asked to reconsider part of its decision in Investec Trust (Guernsey) Ltd v Glenalla Properties Ltd [2019] AC 271.

Although both appeals concerned Jersey law, the decision is likely to have significance throughout the common law world. It has particular importance in circumstances where the trust fund is ‘insolvent’, in the sense that the trust assets are insufficient to meet the amounts due under the trustee’s right of indemnity.

There were four principal issues:

  1. Does the right of indemnity confer on the trustee a proprietary interest in the trust assets? Answer: yes. On this issue the Board was unanimous.
  2. If so, does the proprietary interest of a trustee survive the transfer of the trust assets to a successor trustee? Answer: yes. On this issue also the Board was unanimous.
  3. If so, does a former trustee’s proprietary interest in the trust assets take priority over the equivalent interests of successor trustees? On this issue, the Board split 4:3. The majority view, expressed in the judgments of Lord Briggs (with whom Lord Reed and Lady Rose agreed) and Lady Arden was that trustees’ claims rank pari passu. However, the minority view of Lord Richards and Sir Nicholas Patten, with whom Lord Stephens agreed, was that trustees’ claims rank according to the chronological order in which they were appointed, consistently with the usual ‘first in time’ rule applicable to equitable proprietary interests.
  4. Does a trustee’s indemnity extend to the costs of proving its claim against the trust if the trust is ‘insolvent’, in the sense that trustees’ claims to indemnity exceed the value of the trust fund? Answer: yes, unanimously.

Clare Stanley KC acted for the Appellant and James Goodwin acted for the Respondent in ETJL v Halabi.

A copy of the Judgment can be found here.