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Many local businesses ask “Why should I file a trade mark in the Cayman Islands?” especially where there has been longstanding use of a mark in the Islands. Whilst unregistered rights acquired through use may be protectable under the common law of passing off, there are several reasons why trade mark protection is always a good idea.
- Passing off requires evidence of use and evidence preparation can be expensive
Relying on unregistered rights is likely to be more expensive if litigation becomes necessary in order to protect your brand. This is because the owner of the unregistered rights (e.g. an unregistered trade name, logo or get-up) must demonstrate that they own the requisite goodwill through use and demonstrate this through evidence. Evidence preparation can be time consuming and therefore expensive.
On the other hand, the proprietor of a registered trade mark can simply rely on its trade mark registration certificate to prove ownership and the trade mark registration will be presumed valid unless and until the infringer can successfully demonstrate otherwise through arguments.
- Exclusive rights in the trade mark
Proprietors of registered Cayman Islands trade marks have the exclusive right to use the mark and registered rights are infringed by third party use of the trade mark in the Islands without the proprietor’s consent. There are some exceptions, but this is the general principle.
- Trade mark registrations are valid from the date of filing
For those with a new brand idea, but not yet ready to start using the brand, filing a trade mark application prior to first use not only puts a flag in the sand, but it can also be a good way to alert third parties to your rights as trade mark applications are published in the Cayman Islands Gazette, Intellectual Property Edition.
Also, if any third party believes they own earlier rights to an identical/similar mark they may oppose your application based on earlier registered and/or unregistered rights. If such events occur this can be a good point to consider whether you wish to continue to pursue your chosen trade mark or rebrand. On the other hand, if no oppositions are filed, the trade mark will proceed to registration and the exclusive rights to use the trade mark will belong to you.
- Disincentive to potential infringers
It is possible to search for registered trade marks before the Cayman Islands Intellectual Property Office (CIIPO) for a small fee via a registered agent. It is always best to conduct a trade mark search before committing to a brand to ensure that a similar/identical trade mark is not already owned by a third party in respect of identical/similar goods and/or services. In-use searches are also recommended to check for any conflicting common law rights. It is common practice for businesses to conduct full trade mark clearance searches before filing a trade mark application and should their searches reveal a conflicting earlier registration this will act as a disincentive to move forward with the chosen brand.
- Defence to an infringement action
Once your trade mark is registered, it cannot be infringed by the use of another registered trade mark in relation to goods or services which the latter trade mark is registered. In order to successfully bring infringement proceedings, the owner of the later trade mark registration would first have to invalidate your earlier trade mark registration through invalidity proceedings brought before the CIIPO or the Court.
- Monetization of your brand
Your registered trade mark has an economic value. It can be sold or licensed to a third party in exchange for payment or royalties. It may also act as security before a bank or other financial institution in exchange for a loan. Third party buyers, licensees and banks are much more likely to invest in a registered trade mark than an unregistered trade mark. The basic details of their investment should also be recorded on the public register through the filing of the relevant recordal applications at CIIPO.
- Protection against trade mark trolls and cybersquatters
As you build up a reputation in your brand you may encounter trade mark trolls and cybersquatters seeking to register your brand as a trade mark or domain name with no intention to use it. Securing your registered trade mark early on will help avoid such characters. In the context of domain name dispute resolution proceedings, ownership of a registered trade mark is a stronger right to rely on than an unregistered trade mark.
The bottom line is that trade mark registration in the Cayman Islands is a good investment and that the long term protection gained is worth the initial investment.
HSM IP has once again contributed to the International Comparative Legal Guide (ICLG) to Trade Marks. Click here to read our Cayman Islands 2021 Trade Mark chapter.
The International Legal Comparative Guide (ICLG) to Trade Marks is now in its 10th edition and provides a practical cross-border insight into trade mark work. Produced by Global Legal Group, this guide covers common issues in Trade Mark law and regulation across 36 jurisdictions.
HSM participated in the Layman E. Scott Sr. High School Career Fair which was held on Friday, 19 March.
This fair is organised by the Cayman Islands Further Education Centre (CIFEC) and helps to give students first-hand experience at applying for jobs and learning what career opportunities exists in the Cayman Islands.
HSM is a full-service law firm based in Grand Cayman and offers several internship positions each year. Natasha Whitelocke (Head IP Paralegal) attended on behalf of the firm and spoke with students about a career in the legal profession. She also spoke about the different areas of expertise, including Intellectual Property, Litigation, Immigration, Finance, Corporate Services, Marketing and more.
“I left the fair feeling proud,” shares Whitelocke. “These students are well positioned to begin their careers and I look forward to seeing them make their mark in our community.”
HSM has worked with the CIFEC progamme since the firm’s inception in 2012.
Natasha Whitelocke (HSM IP Head Paralegal) behind HSM’s Career Fair Booth.
Our firm is thrilled to be recommended once again by Chambers and Partners in their new Global (Caribbean-Wide) Intellectual Property 2021 Guide.
HSM IP is listed in their top tier, band 1 ranking. This recognition highlights our ability to successfully handle Intellectual Property (IP) registrations, filings and infringement matters across the Caribbean.
Citing the Chambers website, they refer to HSM IP as a firm that is a “compact, IP-focused practice advising on regional portfolio management from its base in the Cayman Islands. Primarily assists with trade mark filings, prosecutions and renewals. Also regularly advises on region-wide brand protection strategies, and is highly experienced at overseeing revocation and opposition proceedings. Acts for a myriad of high-end clients, including household names from the technology and consumer goods sectors. Especially notable for its experience concerning contentious trade mark issues arising in Cuba.”
Sophie Peat (HSM IP Partner) has been listed for the first time as an Up and Coming individual. She is recognised for specialising in trade mark registration, renewal, protection and infringement issues. Satisfied clients comment: “Her style is efficient, responsive and clear.”
According to commentators, they appreciate HSM IP for its “clarity of advice,” adding: “HSM act efficiently, are responsive and meet our needs relating to trade mark activities. I consider them good value for money.” Another client commented: “HSM understand the needs and business of our company,” highlighting its “high professionality” and “great responsiveness.”
Chambers and Partners is a prestigious hub for lawyer and law firm recommendations. They diligently research and feature the world’s best lawyers and have done so since 1990, covering over 200 jurisdictions.
HSM IP Ltd. provides worldwide intellectual property services and specialises in the Caribbean. The firm’s experienced team of attorneys and paralegals deliver a full suite of intellectual property services and serve a broad client base which includes major Fortune Global 500 brand owners, international law firms and other specialist IP practices.
The HSM Group opened their doors to welcome 18 students from the Cayman Islands Chamber of Commerce Mentoring Cayman Programme on 25 February 2021.
The students were given a tour of the HSM offices by HSM’s Managing Partner, Huw Moses and Chief Executive Officer, Donna Farrow.
Afterwards they were given a presentation on the legal industry and career details, which included a panel of HSM staff across various sectors and the students got the opportunity to ask questions.
HSM is a full-service law firm in the Cayman Islands that offers a wealth of employment opportunities, including immigration, intellectual property, litigation, property, private client, corporate services and more. They also have areas outside of law such as finance, secretarial and marketing.
Chamber’s Mentoring Cayman Programme offers experiences for professionals to mentor students on the verge of graduating. It also serves as an introduction to the many career paths available on island.
“Our company is always looking for ways to support young adults,” shares Huw. “We are proud to offer them insight into the working world and help mold them professionally.”
In addition to this initiative, HSM is a proud supporter of the Cayman Islands Further Education Centre (CIFEC) Internship Programme since 2012 and offers sponsorship opportunities for further education. HSM also employs seven former CIFEC graduates fulltime.
In December 2020, the Premier announced that a mass vaccination campaign to prevent the spread of COVID-19 will be rolled out across the territory in January. In unveiling the plan, he stressed that inoculation will be voluntary but encouraged the public “to do due diligence, and to keep their minds open to the benefits that participation will offer”.
As the roll-out of the COVID-19 vaccination builds momentum in the Cayman Islands, employers will be considering the implications for their staff and workplace.
Many employers are likely to opt to encourage employees to take up the vaccine, without mandating it. However, there will be some who in taking account of the needs of the business, may be contemplating whether to impose compulsory vaccination. Requiring employees to be vaccinated raises a number of matters which will need to be thought through before implementation. HSM Partner Kerrie Cox explores the legal issues that could arise.
Can employers mandate vaccination?
A direction to take the vaccine could be regarded as a ‘reasonable instruction’ on the part of the employer, depending on the individual circumstances of the business. For example, employers in the social care sector may be able to issue a reasonable instruction to employees to take the vaccine because refusal could put vulnerable people at risk. Conversely, employers in other business sectors will not have the same strong rationale for mandating staff inoculation.
Clear communications and engagement with the workforce would assist an employer who does wish to pursue the mandatory route.
Can employers dismiss for failure to follow a reasonable instruction to vaccinate?
Failure to follow a reasonable instruction can lead to a fair dismissal, most likely ‘dismissal for some other substantial reason’ (SOSR). Again, using the social care example, a care home employer could well be able to rely on a refusal to seek vaccination to dismiss an employee – based on the instruction itself being reasonable. Nonetheless, the dismissal process also has to be fair, with each case considered on its own facts. Only an employee who unreasonably refuses to be vaccinated could be fairly dismissed. There must be an opportunity for the employee to set out the basis for their refusal, and the employer will need to consider those reasons in the context of its business.
One of the challenges for employers will be in justifying why accommodation can be made for those employees who are, for example, pregnant, or because of a health condition, cannot take the vaccine. This is likely to go to the proportionality of the approach and will be relevant should there be any legal challenge to a dismissal.
An employer seriously considering dismissing an employee as a result of a refusal to be vaccinated will need to give careful thought to whether there are any alternatives to dismissal – for example, reallocating the employee to another role where this does not amount to a detriment to the business in the particular circumstances.
Could an employee in the Cayman Islands bring a discrimination claim against his/her employer if dismissed?
Any inconsistency in the treatment of employees who have or haven’t been vaccinated may amount to indirect discrimination. The most likely protected characteristics which will be asserted are those of age, disability, sex and pregnancy, and potentially religion or belief.
Potential scenarios in which a claim for indirect discrimination may be advanced include where an employee cannot return to site without vaccination or a decision is taken not to pay sick pay to an employee who has refused the vaccine and then subsequently becomes ill with COVID-19.
In the Cayman Islands, there are constitutional prohibitions against discrimination as contained within the Bill of Rights, Freedoms and Responsibilities which apply essential human rights and freedoms to all individuals. These rights, however, are enforced against Government only and not against private individuals (which includes private businesses).
As concerns to the private sector, there are three pieces of discrete legislation which are applicable:
- Section 80(1) of the Labour Act (2011 Revision) states that:
“No person (whether an employer or an employee) shall discriminate with respect to any person’s hire, promotion, dismissal, tenure, wages, hours or other conditions of employment, by reason of race, colour, creed, sex, pregnancy or any reason connected with pregnancy, age, mental or physical disability (provided their ability to perform the job is not impaired), political belief or the exercise of any rights under this or any other Law.”
Whilst this resonates towards discrimination claims being brought by employees, in truth, section 80(1) is in reality, a basic homage to the principle that employers should not discriminate against a certain class of its employees. The provision is placed within Part IX of the Labour Act under ‘General Penalties and Miscellaneous’ and the prescribed penalty for statutory breach by an employer is liability on summary conviction to a fine of five thousand dollars and to imprisonment for twelve months.
Importantly, the legislation is silent as to whether a breach of the section creates a right of civil action against an employer by an employee. The general rule is that ‘where an Act creates an obligation, and enforces the performance in a specified manner…that performance cannot be enforced in any other manner’. [1]
Against the general rule, Lord Diplock in Lonrho Ltd v Shell Petroleum Co[2] considered that whether or not a private cause of action is granted is a question of statutory construction. He recognised two exceptions to the general rule, the first being where the obligation or prohibition was imposed for the benefit or protection of a particular class of individuals. Subsequent case law, however, suggests that even where a statute is undeniably passed for the protection of a specific class of individuals, the question of whether a private cause of action exists is not conclusive.[3]
There are no reported decisions in which an employee has sought to exercise a private cause of action under section 80(1). If such were to be the case, the court would attempt to ‘discover’ the intention of Parliament using the rules of statutory interpretation as balanced against the presumption that the Labour Act prescribes its own remedy. Nonetheless, it raises an interesting question of law due to the number of contradictory judicial statements in the UK which makes it impossible to forecast how the courts would deal with a stand-alone discrimination claim under the Labour Act.
- The Gender Equality Act 2011 (“GEL”)
The legislation seeks to eliminate discrimination in employment, training and recruitment on the basis of sex, marital status, pregnancy or gender and to promote the payment of equal remuneration to male and female employees who perform work of equal value.
As the vaccine is not recommended for those who are pregnant, breastfeeding or even planning conception, an employee who is dismissed because she has not been vaccinated may be able to assert discrimination under the GEL if she has been subjected to unfavourable treatment. Maximum compensation is limited to CI$20,000 although unlike complaints to the Labour Tribunal, the Gender Equality Tribunal has a discretionary power to make an award for costs.
- The Disabilities (Soloman Webster) Act 2016 (“DSWA”)
The general purpose of the DSWA is set out in the pre-amble to the legislation:
“A Law to promote, protect and ensure the full enjoyment of human rights and fundamental freedoms, by persons with disabilities, on an equal basis with other persons; to promote respect for the dignity of persons with disabilities; to establish the National Council for Persons with Disabilities; and for incidental and connected purposes.”
‘Discrimination’ is defined as any distinction, exclusion or restriction, on the basis of disability, which:
- has the purpose or effect of impairing or nullifying the recognition, enjoyment or exercise, on an equal basis with others, of all rights and freedoms in the political, economic, social, cultural, civil, or any other field; and,
- cannot be shown to be a proportionate means of achieving a legitimate aim.
The broad scope of any other field combined with the general purpose of the DSWA, infers that the prevention and remedy for disability discrimination within employment would be a remit of the legislation. However, the National Council for Persons with Disabilities (the body established to promote and reinforce the principles under the DSWA) is not empowered to perform any quasi-tribunal/judicial tasks and as similar to section 81(1) of the Labour Act, there is no express right of civil action which could be brought under the legislation.
Furthermore, the key provisions to the DSWA contained in Part 4 (Access to Rights) which entitles a disabled person to the enjoyment of rights, privileges, interests, benefits and treatment (whether directly, or through contractual, licensing or other arrangements) is not in force.
Taking the three pieces of ‘discrimination’ legislation together, this potential area of claim is uncertain although specific proceedings brought under the GEL is likely to have a far more meritorious course in the right circumstances. As seen above, a more general claim under section 80(1) of the Labour Act will require a court to declare that a breach of the section gives rise to a civil cause of action.
Are there health and safety issues around mandating vaccination?
Under Part VIII of the Labour Act and under common law, employers also have obligations to ensure, so far is reasonably practicable, the health, safety and welfare at work of his employees;[4] in other words, to reduce health risks to employees and others to a level which is as low as reasonably practicable.
The vaccine should be considered as part of COVID-19 risk assessments, as a potential additional measure to control the risks associated with contracting the virus at work. However, health and safety considerations also need to take account of any health risks associated with the vaccine itself for certain groups or even for individual employees. Mandating the vaccine could give rise to claims from employees who suffer an adverse reaction to the vaccine if a link can be established, so medical advice for employees may be required.
What about data protection issues?
Requiring evidence of vaccination gives rise to significant data protection issues. Employers would have to carefully consider why they need evidence of vaccination and whether it is appropriate for their business. The employer must consider not only the reasons for requiring the data but also issues like how it will be held securely, who will have access and whether it is appropriate to hold more than a simple ‘yes’ or ‘no’.
Conclusion
There is no doubt that this topic will gain traction throughout the course of this year and not only in the employment context. Media reports indicate that international air travellers, for example, will in future need to prove they have been vaccinated against COVID-19 in order to board Qantas flights. How then, would that policy impact on customer facing employees of the airline who for all practical purposes, must be compelled to vaccinate?
As previously explained, an employer seeking to impose compulsory vaccination is likely to raise a number of legal issues. The most practical approach would be for employers to engage with staff and encourage, perhaps writing a non-contractual policy outlining the benefits of taking the vaccine and assisting in any arrangements for staff to be immunised. Any employees who refuse the vaccine could be met privately to explain the benefits again, but employers should be cautioned about forcing or disciplining staff who refuse.
[1] Lord Tenterden CJ in Doe d Bishop of Rochester v Bridges (1831) 1 B&Ad 847, 859
[2] [1982] AC 173
[3] X (minors) v Bedfordshire CC [1995] 3 WLR 152 (per Lord Browne-Wilkinson at pp. 180-1)
[4] Section 58
World Trademark Review (WTR) 1000 has once again recommended HSM IP as a top tier law firm and Sophie Peat as a leading trademark practitioner in the 2021 edition of WTR 1000 – The World’s Leading Trademark Professionals.
This is the fourth year in a row that we have been recommended by WTR 1000 and this highlights our practice as a world-class, go-to resource for trademark services across the Caribbean.
The WTR 1000 is the only definitive guide exclusively dedicated to identifying the world’s leading trademark legal services providers. Through an extensive research process conducted by a team of highly qualified, full-time analysts, the publication identifies the leading trademark law firms and individuals in over 80 global jurisdictions and US states.
Cited from WTR’s website, commentators said:
Sources line up to sing the praises of HSM IP, a Grand Cayman firm that provides a dream service across the Caribbean and Central and Latin America: “Every single member of the team does amazing quality work: they are professional and courteous, and respond quickly with answers to questions and helpful, thorough reports. The firm itself is extremely well organised and covers a huge number of countries, and uses paralegals sensibly for routine tasks to keep costs low.”
Adding to its appeal, it maintains an interactive database that facilitates efficient matter management and allows for easy adaptation to clients’ individual reporting and invoicing requirements. Harnessing everything that the firm offers to blue-chip brand owners, Sophie Peat surpasses high expectations as a managing senior attorney.
Our WTR 1000 listings can be found at:
- Sophie Peat: https://www.worldtrademarkreview.com/wtr1000/individuals/sophie-peat
- HSM IP: https://www.worldtrademarkreview.com/directories/wtr1000/rankings/caribbean
As a result of financial losses caused to some businesses since the start of the COVID-19 pandemic, commercial insurance policy holders turned to their insurers to make claims under Business Interruption (“BI”) insurance policies. As one might expect, this led to wide-ranging disputes in the interpretation of policy wording, as insurers sought to limit their indemnity exposure under the policies. HSM Partner Kerrie Cox brings some important issues and case examples to light that may apply to Cayman.
In the UK, under pressure from small business owners particularly, the Financial Conduct Authority (“FCA”) stepped in and in conjunction with eight insurers, selected a representative sample of 21 policy wordings as a test case for the High Court to consider and rule upon.[1]
The policies selected were those that offered protection where businesses were affected by:
- disease outbreaks (known as “Disease Clauses”);
- the denial of access to premises by virtue of a public authority decree; or,
- a mixture of the two (known as “Hybrid Clauses”).
In September 2020, the High Court delivered its judgment. Hailed as a victory for policyholders, the court favoured the arguments put forward by the FCA in the majority of the considered clauses, based primarily on well-established rules of construction.
Unsurprisingly, the insurers issued expedited appeal proceedings to the Supreme Court[2] and in January 2021, the Court dismissed the insurers’ appeal which will bring comfort to the estimated 370,000 policyholders affected in the UK.[3]
The following is a summary of the Supreme Court’s judgment in FCA v Arch Insurance (UK) Ltd:
Disease clauses
Such clauses provide cover in respect of business interruption in consequence of or following the occurrence of a “Notifiable Disease”. These clauses generally provide for the occurrence of the disease within a specified distance of the policyholder’s business premises. COVID-19 became a Notifiable Disease in the UK from 5 March 2020.
The Supreme Court agreed with the High Court that a general exclusion to the BI policy which stated that “the insurance by this Policy does not cover any loss or Damage due to … epidemic and disease”, did not exclude claims arising out of the COVID-19 pandemic. It found that a policyholder had cover where the business interruption was caused by any COVID-19 cases that occurred within a specified radius (as defined in the policy) of the insured premises.
Prevention of Access and Hybrid Clauses
Prevention of access clauses provide cover for business interruption losses resulting from public authority intervention preventing or hindering access to, or the use of, the business premises. Hybrid clauses combine the main elements of disease and prevention of access clauses.
In both the lower and appellate courts of the UK, the following clause was examined where cover was provided for business interruption caused by:
“your inability to use the insured premises due to restrictions imposed by a public authority”.
In giving its consideration to the interpretation of the clause, the Supreme Court confirmed a ‘broader’ approach to that of the High Court. Whereas, the High Court had been correct that “restrictions imposed” by a public authority would be understood to mean mandatory measures “imposed” by the authority pursuant to its statutory or other legal powers, the Supreme Court determined that such a restriction did not always require the force of law before it could fall within that description.
A mandatory instruction might be given by a public authority in the anticipation that legally binding measures would follow shortly afterwards, or would do so if compliance was not obtained. That was capable of being a “restriction imposed”, as was an instruction from the Prime Minister to businesses to close “tonight”. The test was how they would be understood by a reasonable person, and a reasonable policyholder would not understand the word “imposed”, without more, as making cover conditional on the existence or immediate prospect of a valid legal basis for the restriction.
Thus, for example, the measures announced by the Prime Minister to close certain businesses or schools were a clear and mandatory instruction given by the government that people would understand needed to be complied with.
Further, the High Court had also held that where there is an “inability to use” premises, coverage would not be afforded if the insured can use some part of the premises. Again, the Supreme Court went further and determined that if the policyholder is unable to use the premises for a discrete part of its business activities or if it is unable to use a discrete part of its premises for its business activities, then the policy responded since in both those situations there is a complete inability of use. It recognised that there would only be cover for that part of the business for which the premises could not be used. By way of example, the Supreme Court said that if a restaurant stayed open during lockdown periods for take-away (take-out), it could still claim for the loss of that part of the premises usually used for customers dining at the restaurant.
Causation
Causation was extensively considered by the Supreme Court, particularly as it applied to Disease and Hybrid Clauses.
The insurers took the view that a policyholder would have to demonstrate losses that would not have been sustained but for the occurrence of COVID-19. They argued that because COVID-19 was so widespread, policyholders would have suffered the same or similar losses in any event and, therefore, the policy did not respond.
The Supreme Court disagreed. It held that the “but for” test is sometimes inadequate and that there can be situations where a series of events cause a result even though none of them was individually either necessary or sufficient to cause the result by itself. So, if an insured event occurs, in combination of many other similar but uninsured events, which causes a loss with a sufficient degree of inevitability, there will be cover.
As such, in relation to the Disease and Hybrid Clauses, there will be cover for losses resulting from any local occurrence of COVID-19 together with the government’s response to the wider pandemic. So, there would still be cover, even if the local occurrence of COVID-19 would not have been sufficient on its own to cause any losses.
Trends Clauses
Trends Clauses provide a mechanism for calculating loss to ensure that the amounts recovered under a policy are not artificially reduced or inflated. More commonly, damages assessment is approached by adjusting the results of the business from the previous year to take account of “trends” or other circumstances affecting the business in order to estimate better what the results would have been.
The insurers had argued that as a result of how widespread the COVID-19 pandemic is, they would not be liable to indemnify policyholders for losses as they would have suffered these losses in any event: relying on the authority of Orient-Express Hotels Ltd v Assicurazioni General Spa.[4] However, the Supreme Court agreed with the court at first instance and held that unless the policy wording states otherwise, Trends Clauses should not be construed so as to remove cover on the basis of concurrent causes of losses. In the court’s view, these clauses should be construed so that profits derived from previous trading are adjusted only to reflect circumstances affecting the business unconnected with COVID-19.
The Application of the Supreme Court’s decision in FCA v Arch Insurance (UK) Ltd and others to the Cayman Islands
There is little doubt that the principles derived from the judgment of the UK’s Supreme Court would be highly persuasive in the Cayman Islands; it is but a decision on the construction and interpretation of insurance contracts.
Notwithstanding, there are a couple of points to note:
Firstly, the BI policies considered for examination in the UK included coverage for instances of disease and where access to business premises were restricted; whereas, certainly in the Cayman Islands, we are aware of commercial policies which expressly exclude ‘infectious diseases’ which lead to the imposition of quarantine or restrictions in the movement of people by a national or international body or agency. However, in light of the Supreme Court’s conclusions on the operation of the general exclusion to the BI policy pertaining to ‘epidemic and disease’, this may restrict the reliance of local insurers accordingly.
Secondly, even if such coverage was found to be within the scope of a BI policy which might give rise to a claim, a condition precedent to cover will invariably include timely notification to the insurers within a prescribed period of time. Therefore, it is likely that for an insured business to avail itself of the recent decision in the Supreme Court, that business would almost certainly have had to make a claim to an insurer during the notification period to which that claim had been declined by the insurer.
Although the Supreme Court’s decision will make it far more difficult for insurers to deny claims based on some of the standard wording in policies, it must be remembered that individual claims will be decided on both specific wording in the relevant policy and the circumstances of the insured party. It is therefore highly likely that the Supreme Court’s decision in FCA v Arch Insurance (UK) Ltd and others is only the first in a wave of insurance-related claims destined for judicial determination. Moreover, it is only a matter of time before prospective Plaintiffs begin to give serious consideration to negligence claims against their insurance brokers, either in addition to or as an alternative to any claims they may have against their insurers.
[1] FCA v Arch Insurance (UK) Ltd and others [2020] EWHC 2448 (Comm)
[2] As provided by the Administration of Justice Act 1969
[3] [2021] UKSC 1
[4] [2010] EWHC 1186 (Comm)
HSM was recognised as a Chamber Champion Advocate at the Cayman Islands Chamber of Commerce Annual General Meeting on 28 January 2021 at The Ritz-Carlton, Grand Cayman.
This recognition highlights HSM’s philanthropic contributions to the Chamber and businesses in the Cayman Islands in 2020. Members in the top category of Chamber Advocate invested staff hours and contributed more than $10,000 in kind or in sponsorship over the past year.
Most significantly, HSM’s lawyers were at the forefront of the COVID-19 lockdown and quickly facilitated free webinars in partnership with the Cayman Chamber where they discussed employment and immigration, wealth management, financial strategies and business liabilities. Click here for more details and to view the webinar recordings.
HSM has been an active member of the Cayman Chamber since opening its doors in 2012 and offers regular training seminars on an array of legal topics each year.
Robert Mack (HSM’s Head of Private Client and Trusts) shares: As a longstanding wills and estate practitioner I have encountered many homemade wills. I have yet to be impressed with any that have come across my desk, and that includes those cheap ‘fill in the blank’ template wills found online. While it may be tempting to save on the lawyers’ fees, let me explain why that is a really bad idea.
You can only give what you got
As a fundamental point of law, you can only give away assets you actually own outright. For example, if you have a joint asset, such as a joint bank account with your spouse, it will usually pass automatically on your death to the surviving spouse. If you try to give away ‘your’ joint bank account in your will — as a gift, for example — it will likely fail. Therefore, if you are attempting to achieve a sense of balance amongst the beneficiaries of your estate, your misunderstanding of how the law works may in fact create an imbalance. Such imbalances have the potential to cause disputes and may breed resentment amongst your beneficiaries. This could result in expensive estate litigation, which will not only impede the administration of your estate but also drain its value.
Failed gifts
What happens if a beneficiary dies before you or they refuse to accept their gift from the estate? Professional wills have provisions to deal with such situations. Most homemade wills do not take such scenarios into account. If there is no provision in the homemade will to deal with such failed gifts, it will pass in accordance with intestacy provisions, which may result an unintended distribution of estate assets.
Assets overseas?
What if you have assets in other jurisdictions outside of the Cayman Islands? There is no guarantee that those other jurisdictions will accept your homemade will, no matter how clear the terms, even if your will is expressed to apply to your worldwide assets (which most homemade wills do not). This is because succession laws differ depending on each jurisdiction in question, and in the case of real property (houses, buildings, etc.) the law which governs succession is the law where such real property is located. In the Cayman Islands you are free to dispose of your assets as you see fit, but that is not the case in other jurisdictions which may have laws in place that dictate to whom your assets should go. Also, while there are no inheritance taxes or death duties in the Cayman Islands you cannot predict how your foreign assets (and sometimes your Cayman assets) will be taxed by foreign tax authorities. There may, therefore, be lost opportunities to make your estate more tax efficient unless these factors are taken into account in your will.
Executors
Executors are the persons named in your will who have the responsibility to administer your estate after you die. They are required to submit your will to the probate court to obtain the ‘Grant of Probate,’ which gives them the legal authority to deal with your assets; pay off any debts and expenses of the administration; and distribute the property to the beneficiaries in accordance with the terms of your will. While many people may name friends or family to act as their executors, one must consider the factors that may frustrate your intentions, including situations where your named executors are unable or unwilling to act for whatever reason. Few people understand just how onerous the duties of the executor are, and there is scope for such executors to be sued by any one or more of the beneficences if the beneficiaries think they are not doing a good job. In other words, it is often a thankless task, and many people as a result refuse to take up the office. If there is no default executors named, then some other person or persons permitted by law will have to be appointed instead. There is a challenge, however, to locate such a person(s) and even if they agree to take up this task they may not have been considered suitable by the testator or their family.
Execution
Signing (otherwise known as ‘executing”) your will requires strict observance of certain procedures set out in the law. In order to be valid the will must be in writing and must signed in the presence of two witnesses. If you do not observe those formalities your will is likely to be void. In addition, if any one of those two witnesses are also beneficiaries of your estate, their entitlement under the will is void.
Marriage
Were you recently married? If so, any will that you had in place before your marriage is now invalid as a matter of law — and this fact is not widely known by the general public.
Domicile
The law of domicile is a complex area, but in a nutshell a person’s domicile is determined by a number of factors which seek to link an individual to a particular country. If it turns out your domicile is not that of the Cayman Islands such laws may restrict your ability to dispose of your assets as you wish and may expose you to taxation.
Non-lawyers are generally not aware of this issue nor are they equipped to work out what their domicile might be. While that may not be an issue for born and bred Caymanians, given the large number of people who have expatriated from their country of origin to Cayman, it is a factor that needs to be considered in such cases. It also has to be born in mind that some countries seek to tax citizens no matter what their domicile status is. The United States, for example, taxes its citizens regardless of their domicile status. Given all it takes to become an American citizen is to be born on US soil, it does not take much to fall into this trap, and there are many Caymanians that may be unaware of their obligations to the IRS. If that is the case, steps can often be taken with careful planning to minimise exposure to US taxation.
Paperclips and staples
When a will is submitted for probate it is often examined for signs of tampering by the probate office. If there are multiple staples or paperclip marks it is possible for a will to be rejected and subject to scrutiny, and it may complicate the probate process and hinder the administration of the estate. This is often overlooked with homemade wills, and in some case, hand-written amendments.
Amendments
It is not possible to amend a will without following the same procedures surrounding the execution of a will as described above. To amend a will it is necessary to complete a legal document known as a ‘codicil,’ which is an addendum to the will. Therefore, it is not possible to simply ‘strike out’ any part of your will you dislike by hand. Such amendments will be invalid as a matter of law and will therefore be ineffective.
Mental capacity
Too often people try to sort out their wills when they are sick or elderly. Leaving it so late can raise a question of whether such an individual has the necessary mental capacity to create a valid will. If such a person does not have sufficient mental capacity even an otherwise perfectly valid will can be rendered invalid. If there is any doubt, both medical professionals and attorneys should work hand-in-hand to ensure there are no doubts raised.
A legal ‘insurance policy’
Lastly, one of the very best reasons to instruct an attorney to prepare your will is that if the attorney gets it wrong, your beneficiaries may have somebody to sue. If you are the author of your own will, your beneficiaries will have no one to blame but yourself! If you instruct an attorney, it acts as a sort of ‘insurance policy’ as the buck will stop with the attorney. In other words, you are buying peace of mind along with a valuable service.
Conclusion
More often than not, the homemade will causes more problems than it solves. The legal fees involved in sorting out the aftermath will always exceed the legal fees involved to prepare a professional drafted will. Do not let your short term gain become long term pain for those loved ones left behind.
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