Friedland v Hickox (Anguilla)

The contractual effect of a mediator’s award must be determined by reading the award as a whole and giving effect to all operative provisions. A sanction preventing reliance on a charge’s premature registration does not necessarily impose a permanent prohibition on enforcement or require formal re-registration. Where a competent court changes the charge’s priority date so that it takes effect only after the relevant contractual restriction has ended, the substance of the sanction is met. The material question is whether the charge-holder relies on the earlier priority, not whether the charge was physically re-presented for registration. An unchallenged court order altering a public register remains effective and may bind persons beyond the original proceedings.

The parties’ dispute arose from a 1996 Settlement Agreement concerning the ownership and financing of a resort in Anguilla. A mediator’s Final Award found that Mr Hickox had breached the agreement by registering charges over the resort property, and confined him to the rights of an unregistered charge holder. An Amplification Award prohibited reliance on the prior registration but stated that, after Mr Friedland acquired the relevant shares, Mr Hickox was free to register the charges.

The High Court later deemed the charges effective from the post-sale date. The ECCA dismissed Mr Friedland’s appeal, holding that the Settlement Agreement no longer restricted enforcement and that actual re-registration was unnecessary. The central issue before the Board was whether the awards imposed a permanent bar on enforcement unless the charges were physically re-registered.

The appeal was dismissed by a majority of four to one. Lady Arden delivered the majority judgment, with Lord Lloyd-Jones, Lord Burrows and Lord Stephens agreeing.

1. The Amplification Award had to be interpreted as a whole. The provision imposing the sanction had to be read with the later provision permitting Mr Hickox to register the charges after the sale of the LIR shares. A construction imposing a permanent ban would fail to give effect to both provisions.
2. The restraint concerned reliance on the priority obtained by the January 1997 registration, not reliance on the charges themselves. Once the High Court order deemed the charges effective from the post-sale date, Mr Hickox was not relying on the prohibited prior priority.
3. The mediator’s concern was substance rather than form. Physical re-registration was unnecessary where the High Court order achieved the same substantive result and removed the benefit of premature registration. The relevant consideration was the post-sale priority date.
4. The Board interpreted the anti-dilution clause in light of its function of protecting the Friedland group’s contractual rights. Once the security over the LIR shares had been enforced, those rights were transferred to the proceeds of realisation and the clause ceased to have effect. In any event, the clause did not require physical re-registration where the court order produced the same effect.
5. The Board declined to consider whether the High Court order had been outside its powers. The order had not been set aside or varied and therefore remained effective, consistently with Smith v East Elloe Rural District Council [1956] AC 736 at 769. Because it altered a public register on which priority depended, it operated in rem and affected Mr Friedland despite his not having been a party to the earlier proceedings.
6. Lord Sales dissented. He considered that the sanction continued to prevent reliance on the January 1997 registration for any purpose. In his view, an order amending or deeming the existing registration effective from a later date still required reliance on the original registration. He would have allowed the appeal and remitted the case for assessment of damages.

1. Privy Council: The Board dismissed the appeal and agreed essentially with the ECCA’s conclusion.
2. Eastern Caribbean Court of Appeal (Anguilla): By order dated 18 January 2018, the ECCA dismissed the appeal from the preliminary issue decision. It held that the Settlement Agreement ceased to restrict enforcement after the sale of the LIR shares and that actual re-registration was unnecessary.
3. Master Ventose: On the preliminary issue, the Master held that the Settlement Agreement ceased to exist from the date of the sale to the Friedland group. The ECCA disagreed on that reasoning but reached the same practical conclusion on enforcement.