Category Archives: HSM LAW

The HSM Group has added two more employees to the firm from the Cayman Islands Further Education Centre (CIFEC) Internship Program.

Gabriel Morla has joined HSM IP Ltd. to work on Intellectual property matters as an IP Administrative Assistant; he will be under the supervision of Associate Sophie Davies. Tianna Ramgeet has joined the Immigration team in HSM Chambers as an Immigration Administrative Assistant and will work under the supervision of Associate Alistair David.

HSM has worked with the CIFEC progamme since 2012 and now have eight CIFEC graduates amongst our staff of approximately 60. The firm’s continued involvement in the CIFEC programme forms part of our commitment to the local community, as we continue to provide opportunities for young Caymanians to access the legal industry.

Managing Partner Huw Moses notes: “We are pleased to have these former CIFEC students join our team. The CIFEC internship allowed each of these students to gain valuable experience and now full time employment.”

L-R: Gabriel Morla and Tianna Remgeet

A non-resident plaintiff in the Cayman Islands may be required by the Court to post security for a potential adverse costs award in favour of the defendant. But does the exercise of this judicial power impugn constitutional principles prohibiting discrimination on grounds of nationality? And if so, how should the Court interpret and apply the security for costs rules? In a 19 October 2017 judgment given in the long-running AHAB v Saad litigation, Chief Justice Smellie considered these questions in light of recent Cayman and English case law, and clarified the test defendants must meet to be awarded “full security” rather than just the additional costs of enforcement in a foreign jurisdiction.

The plaintiff, AHAB, is a Saudi Arabian partnership. The trial of its fraud, conspiracy and knowing receipt claims against a group of Cayman companies in liquidation commenced on 18 July 2016 and was originally expected to conclude in February 2017. Ultimately, the trial did not conclude until 27 July 2017. The defendants applied for additional security for costs to account for the unanticipated extension of trial. Although the previous security for costs orders made against the plaintiff proceeded on the basis that the defendants were entitled to security for the full amount of their potentially recoverable costs, on this application the plaintiff took the position that only an amount to secure the additional costs of enforcing a costs award in Saudi Arabia was warranted. The main argument focused on what evidential burden the defendants had to overcome in order for the Court to award full security.

The Court found that:

• Section 16 of the Bill of Rights prohibits the government from treating any person in a discriminatory manner on grounds of domicile or nationality with respect to the right to a fair trial guaranteed in section 7 of the Bill of Rights. Because the security for costs regime set out in the Grand Court Rules is promulgated by a government organ and the Court is a creature of the Constitution, the Court must exercise its jurisdiction to award security for costs in a manner consistent with the non-discrimination requirements.
• The non-discrimination and fair trial principles set out in the Bill of Rights require that security for costs orders cannot be made merely because a plaintiff is a non-resident.
• To justify an award of full security, a defendant must adduce evidence that there is a real risk that enforcement in the plaintiff’s home jurisdiction might fail because of difficulties or obstacles to enforcement. Those difficulties or obstacles must be shown to exist on objectively justified grounds. This does not require a defendant to show that enforcement will be impossible or that insurmountable hurdles to enforcement exist, but simply that the difficulties or burdens likely to be encountered objectively render enforcement problematic in the foreign jurisdiction.
• Where a defendant cannot show that a real risk of unenforceability exists, it may still be entitled to security for costs based on the anticipated additional costs that would be incurred to enforce a costs award in the applicable foreign jurisdiction.
• On the evidence adduced by the defendants, there existed a real risk that efforts to enforce a costs award in Saudi Arabia will fail. The Court cited, among other factors, uncertainties over Saudi Arabian recognition of a Cayman Islands judgment and AHAB’s stated intent to oppose enforcement in Saudi Arabia. Accordingly, the defendants were entitled to a security for costs order covering for the full amount of potentially recoverable costs, as determined by the Court.

The decision is a confirmation of a recent line of Cayman cases on the applicability of the non-discrimination obligations to security for costs orders, including Elliott v CI Health Service Authority, 2007 CILR 163, Gong v CDH China Management, 2011 (1) CILR 57, Dyxnet Holdings Limited v Current Ventures II Limited, 2015 (1) CILR 174 and Locke v CWM Limited (Grand Ct, 7 April 2017, Unreported). There can now be no doubt about how a Cayman Islands court should approach a security for costs application based on the non-residency of the plaintiff.

Practically, the application of these principles will mean that defendants facing claims from plaintiffs resident in jurisdictions with familiar and predictable private international law rules like the United Kingdom, the United States, Canada and Australia will generally only be entitled to security for costs awards for the additional costs of enforcement. States or jurisdictions with a different legal tradition or lacking an established practice of recognizing foreign judgments will continue to raise issues that may justify awards of full security. Defendants with concerns about enforcement in a plaintiff’s home jurisdiction should adduce evidence clearly describing the potential obstacles and difficulties in enforcement. Where the obstacles arise from foreign law or practice, expert evidence on the foreign law should ideally be produced.

It is worthwhile to note that different considerations will apply in proceedings brought by an impecunious foreign plaintiff company. The Cayman Islands Court of Appeal has found that the court has an inherent power to make security for costs orders against a foreign company in the same way it does against a local company under section 74 of the Companies Law. The jurisdiction under that provision is exercisable when it appears that the assets of the plaintiff company will be insufficient to pay the costs of a successful defendant. As these rules apply to both resident and non-resident companies – unlike the security for costs rules considered in AHAB v Saad – the same discrimination concerns do not arise and awards of full security would seem to be justified even where the ability to enforce a costs award in the foreign jurisdiction is not in doubt. It will be interesting to see whether and how the law and practice on the section 74 power will intertwine with the principles discussed in AHAB v Saad.

HSM Chambers represents the joint official liquidators of six of the defendant companies in AHAB v Saad.

Contacts:

Ian Lambert

Mark Russell

Majdi Beji, an articled clerk with HSM Chambers, was called to the Cayman Islands Bar on Wednesday, September 27th, 2017.

Mr. Beji’s admission was moved by HSM Partner Ian Lambert, who summarized his qualifications for Justice Robin McMillan. Madji moved to the Cayman Islands in 2006 and has a wide-range of experience in project management, hotel and property management, and real estate. He is fluent in Arabic, English, French and Wolof. Majdi earned a commendation in his Professional Practice Course and also has a Bachelor of Technical Science in Mechanical Engineering.

Mr. Beji is joining HSM as a Litigation Associate and will focus on a wide range of civil litigation, acting for banks, strata corporations and leading businesses based both in the Cayman Islands and overseas.

Managing Partner Huw Moses notes: “We are very pleased to add another lawyer to our team. Providing opportunities for personal and professional growth is at the very core of HSM’s human resources strategy. We are delighted to welcome Madji and expand on the services available to our clients.”

The HSM Vipers reclaimed their title of Champions of the Cayman Islands Flag Football Association women’s league on Saturday, September 23, 2017 at the Ed Bush Stadium in West Bay. HSM sponsored the HSM Vipers in the league which took place from June to September 2017. The HSM Vipers were awarded the overall trophy for their participation and performance during the tournament.

Managing Partner Huw Moses notes: “I am pleased with the outcome of the league. Having the HSM Vipers come out victorious for the second year in a row is quite an accomplishment. The team had a great season and we are very proud to share this moment with the entire league and our own HSM Vipers!”

Photo Caption: HSM Vipers Women’s Flag Football Team

HSM participated in the Cayman Islands Further Education Centre (CIFEC) Career Fair which was held on 21 and 22 of September 2017. HSM set up a booth at the CIFEC Library to introduce themselves and seek to recruit 14 new students to join their 2017/18 internship programme. Managing Partner, Huw Moses and IP Head Paralegal, Natasha Whitelocke were on hand to speak with students about a career in the legal profession especially in the fields of Intellectual Property, Debt Collection, Immigration and Corporate Services.

Ms. Shantel Ritch and Ms. Victoria Whittaker, two full time HSM IP staff members and ex CIFEC students were also on hand to speak with the potential student recruits. They shared their current experience of working within the firm and also spoke to students who may be interested in pursuing a career in law.

HSM has worked with the CIFEC progamme since 2012.The firm’s continued involvement in the CIFEC programme forms part of HSM’s commitment to the local community, as we continue to provide opportunities for young Caymanians to work within the legal industry.

Managing Partner Huw Moses notes: “We enjoy participating in this programme as CIFEC students play an integral role in our team. We aim to train them with the skills to achieve their full potential. We appreciate the opportunity to share our expertise with the students who may be interested in pursuing a career in law.”

Photo Caption – L- R: Ms. Victoria Whittaker and Shantel Ritch from HSM speaking with students at the CIFEC Fair.

The HSM Group is opening its doors over the summer to four talented students from the Cayman Islands Further Education Centre (CIFEC). Keanuanna Melwood, Gabriel Morla, Tianna Ramgeet and Tagh-Jay Wilson, who have joined HSM’s summer internship programme for a unique learning experience.

Each of the interns will be gaining experience in areas such as Intellectual Property, Debt Collection and Immigration. Attorneys Sophie Davies, Sarah Alison and Alastair David will oversee the students while at the firm.

HSM has worked with the CIFEC progamme since 2012 and six CIFEC graduates currently form part of our staff of fifty plus. The firm’s continued involvement in the CIFEC programme forms part of our commitment to the local community, as we continue to provide opportunities for young Caymanians to access the legal industry.

Managing Partner Huw Moses notes: “We are very pleased to have the opportunity to train the CIFEC Students, especially the students who may be interested in pursuing a career in law. We appreciate sharing our expertise with the students who work with us over the summer.”

Students gain legal experience over summer with HSM

Photo Caption – L- R: Gabriel Morla, Keanuanna Melwood, Huw St. J Moses OBE, Tianna Ramgeet and Tagh-Jay Wilson.

The Cayman Islands has long had opportunities for persons to gain residency in these Islands based primarily on investment in real estate. The options have included a Residential Certificate for Persons of Independent Means (a permission ideal for retirees and constituting a 25 year renewable certificate) and a Certificate of Permanent Residence for Persons of Independent Means.

On 26 May the Immigration (Amendment) (No. 4) Regulations, 2017 were published. These have changed the requirements for qualification and further, have added “back office” type businesses in Cayman Brac to the list of enterprises which meet the criteria for a Residency (Substantial Business Presence) Certificate.

For those interested, the No. 3 Regulations (published the same day) provided for a wide range of exemptions for persons involved in the music industry from any requirement to have a work permit, subject to them working in the Islands for no more than 6 months in any year. It is assumed that major recording activity is to be taking place here, a development sure to be welcomed, and typical of the type of industry that Cayman is so poised to entice to our shores. It bodes well for further economic diversification and those responsible should be congratulated.

A copy of the Immigration (Amendment) (No. 4) Regulations, 2017 is attached for your information. Some of the changes are (in our view) very positive. For example, rather than having to demonstrate an income of no less than CI$120,000 without having to engage in gainful occupation in the Islands, a deposit in a local account of at least CI$400,000 will be deemed to constitute confirmation that an applicant has available to them sufficient funds to maintain themselves in these Islands to an appropriate level. This development is particularly welcome as we have seen situations where persons with several million dollars in cash have been unable to become a resident in the Cayman Islands because (as they had not and did not wish to invest those funds, and interest rates being so low) they could not demonstrate an ability to generate CI$120,000 without having to work. Nevertheless, demonstrating that income as an alternative to holding significant funds on deposit in the Cayman Islands, remains an option.

That is however not the extent of the changes. The minimum required investment in the Cayman Islands for a retiree seeking residence in Grand Cayman through a Residential Certificate for Persons of Independent Means has increased from CI$500,000 to CI$1 million. For residence in Cayman Brac or Little Cayman the required investment has doubled from CI$250,000, to CI$500,000. In either event, up to half the required investment can be in something other than developed real estate. Raw land and shares in local businesses would appear to be appropriate options or, of course, CI$1,000,000 could simply be invested in a home. Unlike with the Permanent Residence points system, monies paid by way of stamp duty do not appear to count towards the threshold. The grant fee remains CI$20,000, with an additional CI$1,000 payable in relation to each dependant.

For persons seeking a Certificate of Permanent Residence for Persons of Independent Means, the required minimum investment in developed Cayman Islands Real Estate has increased from CI$1.6 million, to CI$2.0 million. There is no requirement that the investment be in residential real estate. The grant fee remains CI$100,000 with (again) a further CI$1,000 payable in relation to each dependant.

In other material respects the position required to qualify remains the same with applicants needing to demonstrate that (for example) they are of good character and conduct, and possess local health insurance.

The Regulations have further changed so that persons seeking and holding a Residential Certificate for Persons of Independent Means (but not a Certificate of Permanent Residence for Persons of Independent Means) are now required to not only pay CI$1,000 upon grant in relation to any dependants, but are also now required to pay CI$1,000 per dependant each and every year. There is most regrettably no clear transitional period and no confirmation (although it has been requested) as to whether or not the authorities will expect payment from existing holders of these certificates in respect to their dependants; even though when they applied for and obtained the certificates, no such payments were necessary. Should there be any attempt to charge annual fees to the dependants of persons who already have permissions to reside for a particular period, the lawfulness will be questionable and (we would propose) suitable challenge raised. We wait to see what the formal position is, and are hopeful that any concerns we hold as to the treatment of existing holders of such permissions, are ill-founded.

This annual CI$1,000 Dependant’s Fee has also been introduced in relation to the dependants of the holders of Certificates of Direct Investment and those who hold a Residency Certificate (Substantial Business Presence). Again, there is no confirmation as to the treatment of existing holders of such permissions.

Most lamentable is the fact that there has been no formal notification of intended changes, or transitional provision in relation to the introduction of this new regime. As can be imagined, it takes several months to prepare for applications of this nature. We have at least three clients who embarked on these applications prior to the change in the regulations, and made investments accordingly. In one instance, the main reason they did not apply for the actual certificate before the change in the regulations was due to delays issuing the required Land Registers.

The good news however is that the Cayman Islands are and remain a wonderful place for persons to invest and bring their families, and that mechanisms continue to exist whereby qualified individuals and their families can join the community we are so privileged to call home.

In order to assist you and any existing clients we have prepared the attached brochures which reflect the current changes and which we hope might be of assistance to you and those with whom you work in relation to that seeking and obtaining of appropriate permissions to live (and work) in the Cayman Islands.

If you would like more information please contact us.

HSM IP was given the opportunity to discuss the firm’s internship possibilities with John Gray High School Students on Friday, February 24, 2017. The IP team consisting of Ms. Lisa Chin-Forde, Ms. Kenyah Pinnock and Ms. Sophie Davies were on hand to present and join in the conversation with students in regards to their next education options, including attending the CIFEC programme.

Ms. Lisa Chin-Forde and Kenyah Pinnock who are both currently IP Assistants with HSM IP, revealed their experiences in the CIFEC programme. They also discussed their on the job experience and future ambitions to become paralegals at the firm. Ms. Pinnock and Ms. Chin-Ford were recruited a part of the CIFEC progamme and took part in the HSMIP Internship programme. IP Associate Ms. Sophie Davies additionally spoke with students about what employers look for when considering hiring CIFEC Students as well as a career in the legal profession especially in Intellectual Property.

HSM has worked with the CIFEC progamme since 2012 and recruits up to 12 new students per year from CIFEC to join our internship programme. The firm’s continued involvement in the CIFEC programme forms part of our commitment to the local community, as we continue to provide opportunities for young Caymanians to access the legal industry.

Managing Partner Huw Moses notes: “We are incredibly pleased to have CIFEC students play an integral role in our team. We aim to train them with the skills to achieve their full potential. We appreciate the opportunity to share our expertise with them and future students who may be interested in pursuing a career in law.”

Photo Caption – L- R: IP Associate Sophie Davies, Ms. Lisa Ford-Chin and Ms. Kenyah Pinnock Presenting at the John Gray High School Assembly.

NEW YEAR CHANGES TO PENSIONS                              

December 31, 2016 will mark not only the eve of a new year but also the commencement of The National Pensions (Amendment) Law 2016 (the “Law”). The Law will amend various sections of the principal law, The National Pensions Law (2012 Revision).

The provisions of the Law come into effect at various times and a few provisions will only come into force on a date yet to be announced by Cabinet.

This advisory highlights the major changes that relate primarily to Employers and Employees.

CHANGES AS OF 1 JANUARY 2017

• The year’s maximum pensionable earnings will increase to CI$87,000 requiring some Employees to contribute more towards their pension each year.
• All Employees between the age of 18 and 65 must be members of a pension plan.
• Persons who will attain age 60 in the next 12 years (i.e. between 1 January 2017 and 31 December 2029) can choose age 60 as their age of pension entitlement rather than having to wait until age 65 in order to apply for pension benefits.
• A new definition, the “Normal age of pension entitlement” has been introduced with effect from 31 December 2016. It refers to persons who have attained the age of 65 and to persons who will attain age 60 in the next 12 years and have elected age 60 as their age of pension entitlement.
• This is not a mandatory retirement age. It is the age at which a member can start to receive pension benefits.
• This definition will replace the commonly used term “normal retirement age”.
• The normal pension entitlement date will be reduced to 3 months after the attainment of age 65.
• Early retirement eligibility will increase from age 50 to age 55.

CHANGES AS OF 9 JANUARY 2017

• There will be changes to the pension withdrawal schedule and allowances for Retirement Savings Arrangements.
• There will be a minimum and maximum annual withdrawal amount that a pensioner can make based on the pensioner’s age and account balance. The current withdrawal maximum of CI$12,000, which has been in effect for the past 18 years will cease. The minimum annual withdrawal for all pensioners will be CI$12,480. This figure will be adjusted for inflation going forward.
• Pensioners who have larger amounts in their account will be able to withdraw an increasing amount on a yearly basis above the CI$12,480 threshold as well as have the option to withdraw a lump sum amount after age 90.

CHANGES AS OF 1 FEBRUARY 2017

• Employers, for any purpose, will be able to apply to the Director for verification of their compliance with the Law. If the Director is satisfied of their compliance, a verification will be issued upon payment of a prescribed fee.
• An Employer will be deemed compliant with the Law if all pension contributions, interest and fees have been paid and the Director has no knowledge that the Employer has contravened any provisions of the Law.
• Fines will be increased up to CI$10,000 for Administrators of pension plans and Employers who fail to comply with requests for information from the Director of Labour & Pensions. The late or non-payment of pension contributions will be handled by a new and extensive procedure that has been created under the Law.
• The fine for the administration of an unregistered pension plan will increase up to CI$10,000 and/or one year imprisonment.

CHANGES AS OF 1 MARCH 2017

• Comprehensive provisions protecting Employees from victimisation by Employers will be introduced. Victimisation will include dismissal, suspension, denial of promotion, demotion, redundancy, intimidation, reduction of earnings and/or benefits and discrimination by the Employer or other Employees.
• An Employee that reasonably believes that an Employer has failed to comply with the Law can make a written disclosure to the Director or an authorised officer.
• Where an Employee believes that he has been victimised as a result of a disclosure, he may file a complaint with the Labour Tribunal. It is unknown what types of awards the tribunal will make in cases where there is a finding of victimisation.
• The definition of “employee” will be amended to expressly exclude Caymanians (as defined in the Immigration Law 2015 Revision) who are under age 23 and pursuing full-time education. These persons and their Employers will be exempt from having to contribute to a pension plan.
• The definition of “household domestic” found in the Labour Law (2011 Revision) will be added to the definitions in the Law. This will have the effect of excluding from the Law not only maids but also care givers (of adults or children) and gardeners who work in a private home and not for themselves or a company.
• Employers must keep proper payroll accounts, books and records for all sums paid to a pension plan. These records must give a true and fair view of the state of affairs of the Employer’s pension plan transactions.
• The records must include the names of Employees; current employment contract information; employment date and duration; full-time and part-time status; rate of pay; gross and net pay; bonuses; resignations and terminations; name of pension plan; all deductions from earnings for pension contributions; all contributions made on behalf of Employees; evidence of pension plan payments; contribution period and dates of payment and any pension plan interest payments.
• Records must be kept for a minimum of 5 years. Failure to maintain these records is an offence and the Employer will be liable on summary conviction to a fine of up to CI$10,000.
• Employers must provide their Employees with information about their pension plan and obtain a written acknowledgement of receipt signed by the Employees. Failure to comply is an offence and the Employer will be liable on summary conviction to a fine of up to CI$10,000.
• Pension contributions must not be co-mingled with other payments that Employers are required to make such as health insurance.

CHANGES AS OF 31 MARCH 2017

• Personal liability for corporate directors and officers will be introduced. Where a company commits an offence under the Law, every director and officer concerned in the management of the company commits the offence.
• The directors and officers will not be held liable if they are able to prove that the offence was committed without their consent or connivance or that they exercised reasonable diligence to prevent the commission of the offence.
• The Director will be able to bring criminal proceedings for any offence committed under the Law provided the consent of the Director of Public Prosecutions is first obtained. The Director will also be able to appear in court to prosecute the offence. This gives the Director the ability to choose whether to bring a criminal or civil claim.
• Subject to the pension plan, a member may access their additional voluntary contributions (“AVCs”) prior to age 65 but only for certain purposes.
• AVCs can be accessed for (1) medical purposes not covered by the member’s health insurance; (2) temporary unemployment for the first 6 months following the first 3 months after termination; (3) housing purposes including the construction of the member’s dwelling house, purchase of residential land or the payment of the total balance owed on the member’s mortgage; and (4) educational purposes of the member or a dependent child under the age of 23 pursuing full-time education.

CHANGES AS OF 31 DECEMBER 2017

• An Employee who has terminated employment with a specific Employer and is entitled to a deferred benefit may ask the Administrator of the fund to transfer the commuted value of the benefit outside the Cayman Islands if the Employee ceases to reside in the islands and no contributions have been made to the plan for 2 or more years.

CHANGES AS OF 31 DECEMBER 2019

• Refunds of contributions to pension plans will only be permissible where (1) the Director approves; (2) the pension plan permits refunds; (3) the member has attained age 65; and (4) the member provides evidence that the benefit cannot be transferred to another pension plan, saving arrangement or life annuity.

CHANGES TO TAKE EFFECT AT A LATER DATE

• Upon application for membership to a pension plan Administrators must provide details of the returns and expense ratios of the fund in addition to the information normally provided.
• Administrators of pension funds must issue written statements of the fund semi-annually. The statements can be issued electronically with the consent of the plan members.
• Employers will not be required to contribute to a pension plan for Employees on work permits who are working in the islands for the first time for a continuous period of 6 months or less.
• Pension contributions must be remitted on or before the 15^th of the next month following the Employee’s receipt of remuneration or expectation of remuneration. This will be known as the “Contribution Date Deadline”.
• If the contribution is not received by the Administrator on close of business on the Contribution Date Deadline the contributions will be classified as a “Delinquent Contribution”.
• The Administrator will then be required to take immediate action to collect the Delinquent Contribution (including accrued interest).
• The Administrator must notify the Director and the affected Employees in writing and may also publish the name of the Employer in more than one publication if the Director instructs.
• The additional expenses of the Administrator for the additional reporting will be borne by the Employer and not the pension plan or the Employees.
• The Director can write a letter of demand giving the Employer 14 days to effect payment or demand the appearance of the Employer to explain the delinquency.
• The Director can then order payment, commence legal proceedings or publish the Employer’s breaches including their name, offence and the applicable penalty. Personal information of the Employees cannot be published.
• Where the Director orders payment and the Employer fails to pay within the time specified by the Director, the Employer will be liable on summary conviction to a fine of up to CI$20,000 or 2 years imprisonment or both (in addition to the delinquent contributions, fees and expenses).
• The Employer will be liable to pay interest to the pension fund from the Contribution Date Deadline up to the date of actual payment of contributions to the fund.
• Interest is payable on all monies due in respect of the pension fund at the current prime rate plus 5% calculated on a daily basis. This is in addition to any other fees, fines and penalties specified by the Law or a court order.
• The Director will be able to investigate the activities of Employers in respect of their contributions to pension plans and share any information obtained with other Government departments and agencies.

At A Glance

For more information contact the HSM Employment Team: