Cayman Islands court opens new path through strata deadlock in landmark ruling

In a novel ruling, the Grand Court of the Cayman Islands has held that unbuilt strata buildings can be treated as ‘destroyed’ for the purpose of removing them from a strata plan. The decision provides what appears to be the first practical solution to a longstanding statutory deadlock where unanimous consent to alter a strata plan cannot be obtained.

Brett Basdeo, Insolvency and Dispute Resolution Partner, commented:

‘Can you legally ‘destroy’ a strata building that was never built? The Grand Court of the Cayman Islands has answered that question with a resounding yes, in perhaps the first decision of its kind in any common law jurisdiction.

Phased strata developments can stall for many reasons including financial difficulties, changes in planning policy or the death of the original developer. When that happens, traditionally undeveloped land becomes trapped within the strata scheme. The legislation requires unanimous consent to amend the development plan and, if even one interested party fails to respond, the land can effectively be frozen indefinitely. This judgment provides the first practical mechanism out of that deadlock while protecting the rights of existing owners.

The significance of the decision lies in the court’s willingness to interpret ‘destruction’ as a legal concept rather than a purely physical one. That approach allowed the court to solve a problem that the legislation did not expressly contemplate and unlock land that had been trapped within an incomplete development for more than a decade.

Given the prevalence of strata and condominium developments across common law jurisdictions, including the UK, Australia and Canada, the court’s reasoning is likely to attract close attention wherever similar disputes arise.’

A few key takeaways also include:

• In a novel ruling, the Grand Court of the Cayman Islands has deemed unbuilt strata buildings could be deemed ‘destroyed’ in order to remove them from strata plans.

• The ruling offers the first practical route through statutory deadlock where unanimous consent for the alteration of the strata plan cannot be secured.

• The decision may be the first of its kind in common law jurisdictions and may influence strata and condominium disputes across other jurisdictions.