RC Cayman has filed a second legal action against the Cayman Islands Government regarding the dispute over the sale price of the Ritz-Carlton, Grand Cayman. The new owners of the resort, which is fighting for government to honour the transaction, has filed an application for Judicial Review seeking a legal decision over instructions to the chief valuation officer (CVO) to get another valuation of the hotel after the sale. The hotel reportedly received a letter from the CVO on 22 March saying it was re-valuing the price, despite the previous agreement between the new owners and the valuation officer.
RC Cayman is seeking a decision from a judge that there was already a binding agreement on the resort value for stamp duty purposes in the sum of US$181.5 million and government is bound by that earlier agreement and that it does not have a right to come up with a new value. RC Cayman, which was also the creditor on the hotel formerly owned by Michael Ryan and a collection of his companies, purchased the Ritz at auction for US$177.5 million.
Since then, former premier McKeeva Bush made a public announcement that he believed the hotel was undervalued and the new interim government has continued to question the value, despite its own valuers having agreed a price.
The new owners are hoping the courts will find that the “interference by the Premier and the Government of the Cayman Islands with the valuation process was and is unreasonable, capricious and politically motivated, and therefore unlawful”, the firm states in the latest legal action as it seeks to have the sale, which took place more than six months ago, transferred.
RC Cayman maintains that neither the minister of finance nor the chief valuation officer are entitled to make further valuations of the property as a result of an existing prior agreement regarding the value made by the CVO, the fact that the hotel was sold at public auction, the delay to announce the second valuation and that it was only taken subsequent to, and in retaliation for, the action taken by RC Cayman earlier to get the hotel transferred.
“The decision was taken for political reasons and/or as part of the unlawful and corrupt scheme to make the Plaintiffs liable for the debt of Ryan and/or his companies, which they had allowed to go unpaid during the duration of their government as set out in Cause G 087 of 2013,” RC Cayman says in the action filed in the Grand court on 27 March.
Claiming a breach of human rights and damages for the delay in registering the title to the property, for the infringement and what it described as the unconstitutional acts of the CVO, the premier and minister of finance and the Government of the Cayman Islands, RC Cayman is pulling no punches in the dispute.
RC Cayman states clearly in the legal document that the valuation of the property for stamp duty purposes was expressly agreed between Simon Watson of Charterland Ltd and the CVO on 15 October 2012, just ahead of the sale at US$181,500,000, less the value of the chattels, which was confirmed in writing the next day.
“The Agreement was a legally binding agreement which the Minister of Finance was not entitled to depart from, having delegated the function of adjudication of stamp duty to the Chief Valuation Officer pursuant to section 5 of the Stamp Duty Law,” RC Cayman states.
Despite now facing two law suits over the issue, cabinet members said at last Thursday’s press briefing that they had an obligation to the tax payer to check the value as they did not believe it could have fallen so much from its value of some $400 million just a few years ago. The ministers said the new valuation was being conducted to address the questions which have arisen since the sale.
The value of the resort, however, was impacted significantly by the more than $200 million debt hanging over it and, according to the new owners, the lack of investment in the hotel since its completion more than seven years ago, among other issues.
With the legal action now rolling on, this looks like another costly courtroom drama that will be paid for by the public purse and fall into the laps of the next cash strapped administration to deal with.
