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Mar 24

In the recent decision of Beck v MV Cayman Ltd, Justice Ramsay-Hale clarifies the relevant principles on which the court may grant a stay of execution pending appeal.

On 19 November 2021, Justice Ramsay-Hale delivered her judgment requiring MV Cayman Ltd., the developer/ owner of the former Margaritaville Resort on West Bay Road, to pay US$2,005,000 to Jeremy Beck and buyback the 9 units MV Cayman sold to Mr. Beck in February 2016 (the “Judgment”).

MV Cayman Ltd. has since appealed the Judgment, and Mr. Beck has sought to enforce it, giving rise to a flurry of satellite litigation.

Background to the Judgment

The proceedings giving rise to the Judgment were issued in the Grand Court by Mr. Beck (represented by McGrath Tonner) in March 2021, in which Mr. Beck sought an order for “specific performance” requiring MV Cayman to buy his 9 strata units in the former Margaritaville Resort, in accordance with the terms of an option agreement the parties had entered into 5 years earlier.

When purchasing his units in 2016, Mr. Beck had asked MV Cayman to enter into the option agreement to protect his investment in the Resort should MV Cayman lose its franchise with the well-known Jimmy Buffet brand “Margaritaville” (which it did in the summer of 2020) and fail to replace that franchise with a brand of “equivalent caliber”. In those circumstances, MV Cayman would be required to buy back Mr. Beck’s units at the price he paid for them (US$ 2,005,000).

In defending the proceedings, MV Cayman argued that:

– an equivalent brand had already been obtained, or alternatively that Mr. Beck had not afforded MV Cayman reasonable time to find a brand of equivalent caliber especially given the ongoing impact of the pandemic on the hotel industry in the Cayman Islands; or

– the Grand Court does not have jurisdiction to order MV Cayman to buy Mr. Beck’s units where MV Cayman’s financial position is such that it would be ‘impossible’ for it to comply with that order, if it were made; and/ or

– Damages for breach of the option agreement were an adequate remedy, and therefore the court could not instead make an order for specific performance, requiring MV Cayman to comply with the option agreement.

At the final hearing, Justice Ramsay-Hale found on the evidence put before her that MV Cayman was not impecunious to the extent it would be impossible for it to buy back Mr. Beck’s units, and her Ladyship made an order requiring the parties to complete the buyback of the units, including, as a first step, MV Cayman paying Mr. Beck US$ 2,005,000 within 21 days (the “Order”).

MV Cayman has appealed the Order, citing the following two grounds:

      1. Having made factual findings that it would not be possible for MV Cayman to buy back Mr. Beck’s units, Justice Ramsay-Hale should have found that it was impossible for MV Cayman to comply with the order for specific performance.
      2. Damages were/ are an adequate remedy for Mr. Beck (i.e., Mr. Beck should sell his units on the open market and claim any shortfall from MV Cayman), and therefore it was not open to the court to make an order requiring MV Cayman to buy his units.

Stay of Execution

In December 2021, MV Cayman also applied to the Grand Court for an order staying execution of the Order, pending its appeal.

In determining that application, Justice Ramsay-Hale was required to apply the relevant principles on which a stay of execution may be granted, and in doing so, she relied on the Court of Appeal’s decision in The Deputy Registrar of the Cayman Islands Government v Day and Another 2019 (1) CILR 510 where it was held that:

a. by virtue of Section.19 (3) of the Court of Appeal Act (2011 Revision), a stay may be granted for a ‘good cause’, meaning there must be a ‘good reason’ for the court to prevent a successful litigant the ‘fruits of his success’; and

b. when deciding whether or not to impose a stay, the court will consider:

a. the grounds of appeal;
b. their likelihood of success on appeal;
c. the balance of convenience, having regard to the interests of both parties; and

c. The applicant does not need to show the grounds are strong or likely to succeed, but that the grounds are arguable or there is a real prospect of success on appeal.

Justice Ramsay-Hale also noted the Cayman Islands’ decision in Heriot African Trade Finance Fund Limited v Deutsche Bank (Cayman) Limited 2011 (1) CILR 34 where Justice Jones held that the onus is on the applicant to show good cause and the court must consider all circumstances of the case, including whether the appeal would be rendered nugatory if a stay is not granted.

What amounts to ‘Good Cause’?

In asserting “good cause’, MV Cayman relied on the following:

  1. its grounds of appeal; and
  2. that to not make an order staying execution, and MV Cayman being required to purchase the units, would render the appeal nugatory and/ or cause MV Cayman irreparable harm, both to its financial position and reputation.

Following a contested hearing, Justice Ramsay-Hale’s dismissed MV Cayman’s application for a stay of execution and her Ruling delivered on 10 January 2022 explains the reasons for doing so:

1. on considering both grounds of appeal ‘neither have a real prospect of success’;

2. if she is wrong, and MV Cayman does have an arguable appeal, she would refuse the stay of execution in any event as the balance of convenience lay in Mr. Beck’s favour as:

a. MV Cayman could not be said to suffer irreparable harm if the stay was not ordered where it’s remedy lay in obtaining an injunction preventing the Plaintiff from presenting, advertising or pursuing a winding up petition (which Mr. Beck had said he would do if the US$2,005,000 was not promptly paid); and

b. Mr. Beck, as a man of means, could repay MV Cayman any sums paid pursuant to the Order if their appeal succeeded.

3. In the circumstances, Mr. Beck is entitled to “the fruits of his judgment”.

Since the Ruling, MV Cayman has applied to the Court of Appeal for an order staying execution of the Order.

[1] The Deputy Registrar of the Cayman Islands Government v Day and Another 2019 (1) CILR 510 can be found [Deputy Registrar v Day]

[2] This decision can be found [HERIOT AFRICAN TRADE FINANCE FUND LIMITED v. DEUTSCHE BANK (CAYMAN) LIMITED].

[3] The Ruling of Ramsay-Hale, J in Beck v MV Cayman 45/2021 can be found [220112 Jeremy Beck v MV Cayman Ltd – Ruling re Stay of Execution Pending Appeal].