Property owners at the former Britannia resort on Seven Mile Beach have won their fight to retain recreational rights to golf and beach facilities, after the UK Privy Council overturned lower court decisions in a landmark property law ruling.
The Judicial Committee of the Privy Council ruled on 23 June that recreational rights originally granted in the 1990s remain binding, despite them being incorrectly registered as “restrictive agreements” rather than “easements”.
The case involved Cayman Shores Development Ltd, a subsidiary of Dart Realty, which purchased the resort facilities in 2016, against owners of 193 residential units across four developments including Lion’s Court, Regent’s Court, King’s Court and Britannia Estates.
Lord Briggs, delivering the judgment, explained that the attempted registration of recreational rights as encumbrances on the title to the former Britannia resort at Seven Mile Beach in Grand Cayman was flawed.
With the benefit of hindsight, he said, this was due to the mistaken mislabelling of the rights as restrictive agreements rather than easements.
The Britannia Resort was originally laid out and developed in the late 1980s and early 1990s as a holiday complex including a hotel, golf course, tennis courts and beach club, together with a range of residential villas and condominiums.
The dispute arose after Cayman Shores closed the golf course in September 2016 and redeveloped the beach facilities, the judgment stated.
The company proposed to the then owners of the residential units that the golf course and beach club would, after closure and redevelopment, be made available to lot owners, but only as licensees.
In reply, the lot owners asserted that the rights conferred by the instruments were property rights, the judgment said.
They were established through instruments created between 1992 and 2001, granting residents access to recreational facilities.
These included “golf playing rights”, defined as “the right on a non-exclusive pre-reservation basis to play golf on the Britannia golf course without payment of green fees”.
They also included “beach club rights”, meaning “the non-exclusive right together with Cayman Hotel its agents, servants, licensees, invitees, the guests of the Hyatt Hotel and other Britannia condominium owners to enter upon the beach club property and enjoy the restaurant, beach and watersport facilities”.
However, the rights were registered using the wrong legal classification.
The Privy Council found that “all that the parties and their conveyancers were seeking to do by using restrictive agreement rather than easement to describe the rights was to use what they mistakenly thought was the right descriptor or label for the rights”.
Both the trial judge and Court of Appeal had ruled against the property owners, finding the rights were not properly registered.
But the Privy Council concluded that “the registration of the rights did comply with the statutory requirements for the registration of easements”.
Lord Briggs emphasised that the mislabelling of the rights as restrictive agreements – both in the instruments and in the registered entry of the incumbrances section of the register – did nothing to detract from the complete fulfilment of that purpose.
The judgment noted that it was “only in the English litigation which culminated in the judgment of the UK Supreme Court in Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018]” that recreational rights at resorts were definitively established as valid easements.
This, it explained, helps to clarify why “conveyancers in the Cayman Islands in the 1990s seeking to achieve the same result may have been uncertain which of the categories of incumbrance recognised by the RLA best described the rights”.
The resort suffered significant damage in 2004 when it was badly damaged by Hurricane Ivan.
The hotel was put out of action and has remained derelict ever since. The tennis courts have not been in use since 2004.
The Privy Council’s decision means the order from the Court of Appeal that the registers of the servient parcels be rectified by the removal of all reference to the rights, must be set aside.
The judgment represents a significant victory for residential property owners in Cayman and establishes important precedent for recreational rights in resort developments.
