The appellant is represented by Philip Rule KC, Henry Orren Merren IV (of George Town, Grand Cayman), and Samir Amin. The Judicial Committee of the Privy Council shall now proceed to hear the appeal from the Cayman Islands Court of Appeal (Civil Division) (Case No. JCPC 2024/0043).
The appeal concerns the question of the enforceability of a loan agreement and security provided to the lender in circumstances where the lender did not have the necessary licences to carry on the business of lending money that it had engaged in. It also questions the approach of the local court to the certification of a right to appeal to the Privy Council.
The appellant took out a loan from the respondent, secured on property, but with a high rate of compound interest. It transpired however that the respondent was not licensed under local legislation – notably, which provide for criminal sanctions in the event of breach. The advanced sums having been repaid, but not the high interest charge outstanding (which the appellant disputes), the respondent sought enforcement against the appellant’s property for the further sum of interest calculated as purportedly owing under the unlawful lending. The appellant challenged that the contract and the security. (i.e., registered charge) are unenforceable by reason of common law and/or statutory illegality.
The local courts found that the respondent was operating an unlicensed moneylending business but that, because the local legislation provided that “no business transaction shall be void or voidable by reason only that, at the relevant time, any party thereto is in breach of this Law”, the doctrine of common law illegality had no application or that, to the extent it did, an analysis of the trio of considerations set out in Patel v Mirza [2017] AC 467 led to the conclusion that the loan contract and the security were not void or unenforceable. The local courts also found that statutory illegality was not applicable and, therefore, that neither the loan contract nor the security was void or unenforceable.
The appeal is on several grounds. First, it is argued that the Cayman Islands courts erred in finding that the wording of the legislation precluded the concept of common law illegality applying and that, in fact, the trio of considerations ought to lead to a clear conclusion that the loan contract and the security are unenforceable. Second, that the Cayman courts had been wrong to place little or no weight on the effects of the local Proceeds of Crime Act (POCA). The criminal and civil branches of the law should be consistent. The POCA would enable the confiscation of any criminal benefits (such as interest sums) that the Respondent would obtain by enforcing the loan contract and the security, and thus it would be incoherent for the civil branch of the law to permit enforcement only for the criminal branch to then try and reclaim those benefits under POCA, particularly where that would give rise to a risk of dissipation of assets.
Philip Rule KC and Samir Amin are members of No5 Chambers. To contact their clerks please email PublicLaw@no5.com or BP@no5.com
