The legal action – which was titled “Application for Leave to Apply for Judicial Review” – was filed on Monday by Conyers, Dill & Pearman, the attorneys of RC Cayman Holdings Ltd. The application seeks orders of Mandamus to compel the transfer of the title to The Ritz-Carlton, Grand Cayman and adjoining properties purchased at a public auction on 31 October, 2012.
Elements of the application suggest that the government has not only failed to do what it was required to do by law, but that it could be guilty of blackmail, corruption and a breach of Cayman’s Bill of Rights.
The application claims that prior to the auction of the 56 parcels of property, the valuation of the properties for stamp duty purposes was “expressly agreed between Mr. Simon Watson of Charterland Ltd. and the Chief Valuation Officer at a meeting on 15 October as being a total of US$181,500,000, less the values of the chattels. This agreement was confirmed in writing on 16 October, 2012 and a deduction of US$6,129,350 for chattels was proposed as per a list then provided. The chattels list was checked and finally agreed upon by the Chief Valuation Officer on 31 October, 2012.”
On 20 December, 2012, when the purchasers filed the transfer documents with the registrar of lands, it paid a sum of more than $9.56 million in stamp duty based on the previously agreed valuation, the application states.
Since that time, however, even though the plaintiffs claim the government cashed its cheque, it hasn’t registered the property transfers.
“The plaintiffs are entitled to the registration of the transfers and the registrar of lands has wrongfully and unlawfully failed to register the transfers whereby and order of Mandamus is required to compel her to do so,” the application states, adding that the registrar of lands has verbally suggested that the fault lies with the Valuation Office.
The application also states that, further to the agreement with the chief valuation officer on 31 October, 2012, the chief valuation officer ought to have adjudicated stamp duty on the transfer and, pursuant to the Stamp Duty Law, was required to do so within 15 days of the presentation of the transfer documents.
Claim of potential unlawful acts
The application sets out a course of events which have occurred that it claims are potential unlawful acts. It states that during the time that companies associated with Ritz-Carlton developer Michael Ryan owned the Ritz properties, former Premier McKeeva Bush had “since entering office, permitted those companies not to pay monies owed to the government by way of deferred duty in the sum of CI$6M. The liability to pay such stamp duty is personal to the companies who incurred such liability and to whom such concessions was made”.
Mr. Bush publicly stated on 22 November 2012 that “Government will continue to demand its due payment of the deferred stamp duty and will expect it to be paid before any consideration is given to any request for new licences, work permits or any other of the things that government does on a day-to-day basis in relation to the operation of the hotel,” the application states.
“Such public statement was in simple terms a threat that unless the plaintiffs, as the new owners of the hotel, discharged a liability incurred by the previous owners of which the government had allowed Bush’s associate Ryan not to pay, they could expect that government would thwart them in the operation of the hotel.”
The application accuses Mr. Ryan of either writing Mr. Bush’s speeches or that Mr. Bush conspired with Mr. Ryan in making speeches, which it claims were written on a computer at Stingray Construction, a company owned or controlled by Mr. Ryan.
“The involvement of Ryan in the making of public statements by the premier on behalf of government was improper, showed that the government was biased in favour of Ryan who was engaged in legal proceedings with companies under common interest with the plaintiffs and is prima facie evidence of an apparently corrupt relationship between Ryan and the government,” the application states.
The application claims “the government has threatened to act unlawfully towards the plaintiffs” in breach of two sections of the Cayman Islands Constitution Order 2009 (The Bill of Rights).
“Such threats, if made directly to the plaintiffs would constitute blackmail contrary to section 259 of the Penal Code (2010 revision),” the application states. “The acts threatened would, if carried out, be an offence under section 17 of the Anti-Corruption Law (2008) revision.
Less than a week after Mr. Bush’s public statement, on 28 November, Cayman’s financial secretary wrote a letter to the plaintiff’s attorneys stating the government intended to obtain an independent valuation for the Ritz properties that had been bought at the auction, the application states.
“On 29 November 2012, the plaintiff’s attorneys replied pointing out that the value had been agreed and that government had no right to interfere and that if it did persist then an application would be made for judicial review.”
The next day, Cayman’s solicitor general responded to the plaintiff’s attorneys by e-mail stating “our office is taking full instructions” and would get back to them with a full response.
“No response has ever been received,” the application states.
The plaintiff’s attorneys followed up with a letter to the current premier and minister of finance on 19 February 2013 asking when the property transfers would be registered, but no response was received, the application states, adding that on 25 February, it sent another letter to the current premier and minister of finance “putting her on notice that unless registration took place forthwith, proceedings would be issued without further notice”.
No response was received to that letter, the application states.
“It is to be inferred that the failure to register the transfers is in fulfilment of the government’s threats made of 22 November, 2012.”
In addition to seeking an order of Mandamus to compel the chief valuation officer to adjudicate stamp duty in accordance with what had been previously agreed and seeking an order of Mandamus to compel the registrar of lands to register the transfers of the property, the action seeks an injunction to prevent the premier and minister of finance “from interfering with the Plaintiff’s peaceful enjoyment of their property and/or demanding US$6M which they are not entitled to as a prerequisite to administrative acts being carried out which are necessary for the operation of the hotel.”
The US-based Five Mile Capital Partners LLC, which is associated with the buyers of the Ritz-Carlton properties, issued a news release about the legal action on Tuesday.
“We have repeatedly written to the government and most recently on February 19 and February 25 to the current premier and minister of finance asking for the transfer to take place,” the press release quotes RC Cayman Property Holdings Ltd. Director Jim Glasgow as saying. “To date, we have not received the courtesy of a reply from the government.”
The press release stated that the Ritz-Carlton buyers were forced to exercise the option of legal action when they were “unable to secure even an acknowledgement from the Office of the Premier and Minister of Finance.”
“We are institutional investors in the Cayman Islands who purchased a prop
erty following the established rule of law,” Mr. Glasgow said. “We have followed the established and agreed process and simply want the government to do what it is legally bound to do.”
Without getting the transfer finalised, Mr. Glasgow said it was extremely difficult to justify investing needed capital into the hotel “when there is so much uncertainty about what laws the government will or will not decide to follow”.
“The government cashed our US$11.6 million check for transfer taxes on December 28, 2012 and is violating the law by not recording the deed,” Mr. Glasgow concluded.