Gov’t review of Ritz value prompts another court filing

The purchasers of The Ritz-Carlton, Grand Cayman, have filed another legal action against Cayman Islands officials in effort to prevent another evaluation of the property for stamp duty purposes. 

The latest “Application for Leave to Apply for Judicial Review” was filed 27 March in the Cayman Islands Grand Court in response to the government’s Chief Valuation Officer notifying the purchasers 22 March that he was seeking two further valuations of the property from unidentified valuers. 

The plaintiffs, who bought the property on auction on 31 October, 2012, and have yet to have the transfer of land documents filed in December registered, contend it had a binding agreement as to the valuation for stamp duty purposes. It paid stamp duty on that valuation in December 2012 and it argues that by law, the government must now accept that valuation. 



RC Cayman Holdings – a local subsidiary of US-based private equity firm Five Mile Capital Partners – purchased the Ritz-Carlton and associated properties at auction for US$177.5 million. RC Cayman was the secured creditor of some US$250 million for companies that were controlled by Ritz developer Michael Ryan until they were placed in receivership March 2012. 

The 27 March filing follows an 11 March application where RC Cayman asked the court to force the transfer of property titles, and alleged that officials had committed potential unlawful acts, including that then-Premier McKeeva Bush had threatened RC Cayman to pay $6 million (which RC Cayman says was owed by the previous owners, not them) or else government would thwart them in the operation of the hotel. 

The 27 March filing names RC Cayman Hotel Holdings Ltd. and RC Cayman Property Holdings Ltd. as plaintiffs, and the chief valuation officer, premier and minister of finance and Government of the Cayman Islands as defendants. 

In the 27 March filing, RC Cayman’s attorneys Conyers, Dill and Pearman said their clients’ understanding is that the Chief Valuation Officer’s instructions came from Cabinet. 

“It is to be inferred that the decision was made in retaliation for [the 11 March application] and in order to delay further the registration of the Transfers of title and to oppress the Plaintiffs,” according to the 27 March filing. 

“The decision of the Premier and Minister of Finance and the Government of the Cayman Islands is politically motivated for the reasons set out in [the 11 March application] and/or for the purposes of electioneering,” according to the 27 March filing. 

When asked about the topic during a press briefing 4 April, Cabinet Minister Cline Glidden said Premier Juliana O’Connor-Connolly, whose ministerial responsibilities encompass the Lands and Survey Department, led the decision to seek independent valuations of the Ritz properties, due to inconsistencies in valuations of the property over the past five to seven years. A 2007 valuation performed by BCQS pegged the value of the Ritz properties at US$468.8 million. That report was done near the height of the local real estate market. 

The plaintiffs claim that Chief Valuation Officer agreed in writing with RC Cayman’s valuation firm Charterland 16 and 31 October that the valuation of the property for stamp duty purposes was US$181.5 million, less US$6.1 million for chattels. The plaintiffs say they paid roughly $9.6 million in stamp duty to the government on 20 December, from which time the government had 15 days if it wished to adjudicate the stamp duty. 

Following Mr. Bush’s arrest on suspicion of theft and corruption offences, and a subsequent no-confidence vote in the Legislative Assembly, Governor Duncan Taylor removed Mr. Bush from the position of premier and appointed Ms O’Connor-Connolly in his stead on 20 December. 

On 8 January, Ms O’Connor-Connolly said the Lands and Survey Department is performing its own valuation of the Ritz properties, and that it would be ready in late January. She said Cabinet would use the department’s report to inform its decision. 


Communication issues  

During interviews and in its March court filings, RC Cayman has taken issue with the government’s efforts to communicate about duty possibly owed. 

According to the 11 March filing, the government’s Financial Secretary wrote to RC Cayman’s attorneys at Conyers 28 November stating that government intended to obtain an independent valuation for the property. Conyers replied 29 November, stating that they would take the matter to the court if the government sought an independent valuation. On 30 November, the Solicitor General responded that “our office is taking full instructions” and “will get back to you with a full response”, according to the court document. 

According to the 11 March filing, the plaintiffs never received a subsequent response. Neither the plaintiffs nor their attorneys received responses to messages sent to Ms O’Connor-Connolly on 19 February and 25 February, according to the filing. 

According to the 27 March filing, the 22 March letter from the Chief Valuation Officer “was the first and only communication received by the Plaintiffs from the Lands and Survey Department or the Estates and Valuation Office since filing the Transfers to be registered on 20 December 2012”.  

In the days following the 31 October auction of the Ritz properties, Mr. Bush said that negotiations were still continuing between government and RC Cayman over $6 million in deferred duty obligations. RC Cayman responded that it has no obligation to pay the outstanding duty (for concessions on the importation of construction materials and other imported items when the Ritz property was being built). 

RC Cayman said its representatives met with government officials 23 April, 2012, to discuss Ritz-related proposals, including payment of the $6 million in duty, and then sent a formal letter to Mr. Bush 14 June “setting out in detail each of the proposals to facilitate payment of the outstanding duty”. The company said it received no reply from the premier, his office or Cabinet. 

On 14 November, Mr. Bush said in the Legislative Assembly that RC Cayman’s proposals “came with many strings attached; strings that could add up to over $70 million and set dangerous precedents for future governments in dealing with investors”. 

Mr. Bush said RC Cayman representatives wanted a lower stamp duty of 5 per cent charged on a lowered property value of US$150 million and that US$7.5 million stamp duty arising from those calculations be paid over five years with government getting US$1.5 million upon the property transfer.  

In addition, other concessions requested were the reduction of hotel work permit fees by 50 per cent, the reduction of utility costs by allowing the hotel complex to produce its own water, discussions to sell the freehold interest in the entire property of the hotel “along the same lines that we had previously rejected from the former owner”, Mr. Bush said; and that government provide new duty deferrals for five years, reducing import duties from 22 per cent to 10 per cent.  

Mr. Bush said he rejected RC Cayman’s proposals in writing in a letter dated 5 October. However, RC Cayman representatives maintained they received no such correspondence. 

Mr. Bush also said he met with Five Mile/RC Cayman officials in September 2011 and then three more times between February and April 2012 


  1. There is too much WHITE WALLING in this project, and if interested persons in Cayman would really check out what is going on here they would be surprised to see the political connections.

  2. This whole situation is just embarrassing to Cayman.
    This does not help Cayman when people are looking to invest in the island.
    Bush dropped the ball the first time around with the old owners and Government seems to be trying to save face during an election year.
    It is so wrong that the NEW owners have to be put through this.

  3. Let this be a lesson to anyone seeking to do business in Cayman Islands!

    News flash not friendly to investment!

    In case your wondering why the economy is performing poorly just look at the risk factors and anti-expat behaviour.

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