Barbara Blades Lines (Beneficiary of Barbara Blades Lines Nonexempt Trust) v Pricewaterhousecoopers d/b/a PWC & Abacus Trust Ltd
| Jurisdiction | Bermuda |
| Judge | Subair Williams J |
| Judgment Date | 26 May 2021 |
| Docket Number | CIVIL JURISDICTION |
| Court | Supreme Court (Bermuda) |
[2021] SC (Bda) 42 Civ
In The Supreme Court of Bermuda
Subair Williams J
CIVIL JURISDICTION
2019 No: 222
1 st Plaintiff: In Person
2 nd Plaintiff: In Person
1 st Defendant: Mr. Rhys Williams ( Conyers Dill & Pearman Limited)
2 nd Defendant: Mr. Jairaj Pachai ( Wakefield Quin Limited)
Application to strike out Writ (RSC Order 18/9) and Court's Inherent Jurisdiction / Requirement for Allegations of Fraud to be clearly pleaded and particularised / Difference between Primary Facts and Conclusory Facts on Pleadings/ Whether Pleadings are an embarrassment for an omission of material facts/ Whether action is time-barred under the Limitation Act 1984 / Application for the Disqualification of Counsel on grounds of conflict of interest / Application for a Stay of Proceedings pending DPP's consideration of criminal charges
There are three applications presently before the Court:
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(i) The Plaintiffs' application for the Court to direct the disqualification of Conyers Dill & Pearman (“CDP”) so to prevent any attorney of that law firm from representing the 1 st Defendant on the grounds of a conflict of interest;
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(ii) The Defendants' application to strike out these proceedings; and
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(iii) An application by the Plaintiffs for the stay of these proceedings
Having received oral and written arguments in respect of all three applications, I reserved judgment and informed the parties that a written decision of the Court would likely be forthcoming within the usual 6 week time-frame. Regrettably the production of this Ruling has been unavoidably delayed by my assignment to other priority Court matters in addition to a recent COVID-19 country-wide 4-week “Shelter in Place”. I thank the parties for their kind patience in awaiting this Ruling which I now provide with the below reasons.
The relevant factual background is outlined in the affidavit evidence of the 2 nd Plaintiff, Mr. Robert Blades and Mr. Keir Savage, a director of Abacus Trust Ltd (“Abacus”). I would note from the outset that issue was taken by the 1 st Defendant that Abacus and PricewaterhouseCoopers (“PwC”) are separate corporate entities and that PwC, notwithstanding the Plaintiffs' pleadings or the resulting Court heading, has never done business in the name of Abacus. I accepted this point made out on the evidence before me [see paragraphs 39–41 below]. Accordingly, where the Plaintiffs refer to PwC in their pleadings or submissions, I have treated those pleadings as if the reference was made to Abacus alone.
Ms. Blades Lines is said to be the beneficiary of the Barbara Blades Lines GST Non-Exempt Trust (“the BBL Trust”). Mr. Blades is one of the two appointed trustees of the BBL Trust. The second trustee is Mr. Blades' brother, Mr. Richard Mills Blades.
On 16 May 1996, Mr. Grenville Lines and Ms. Blades Lines were married. Mr. Lines settled the Lone Star Trust (“the LS Trust”) as a family discretionary trust. However, neither Ms. Blades Lines nor the BBL Trust are beneficiaries of the LS Trust. Colica Trust Company Limited (“Colica”) was named as the trustee of LS Trust and was appointed an unfettered discretionary power in respect of the sale, distribution and handling of the assets of the LS Trust.
Ten days after Mr. Lines and Ms. Blades Lines were married, the LS Trust acquired property known as “Little Rock” located at 22 Rockville Lane Pembroke for the purchase price of $750,000.00. I shall refer to this sole trust asset as “the property” or as “Little Rock”.
The purchase of the property was partly facilitated by a $400,000.00 loan from Butterfield Mortgage & Finance Limited (“Butterfield”) in the form of a mortgage on the property which has been termed “the First Mortgage”. Under the First Mortgage, dated 27 May 1996, Colica, as the trustee of the LS Trust, was the mortgagor and Butterfield was the mortgagee. Mr. Lines and Ms. Blades Lines in addition to the BBL Trust were the guarantors.
The LS Trust borrowed a further sum of $300,000.00 to make good the purchase of the property. That second loan was advanced by Ms. Blades Lines' mother, Ms. Eloise Blades, and was secured by “the Second Mortgage”. The Second Mortgage, dated 1 July 1996, was made between Colica as the mortgagor, Ms. Eloise Blades as the mortgagee and Mr. Lines and Ms. Blades Lines as guarantors. Butterfield was also party to the Second Mortgage as a show of its concurrence with the terms agreed.
On 13 August 1996 Colica, as the trustee of the LS Trust, entered into a lease agreement (“the Lease”) with Mr. Lines who became the tenant of Little Rock where he cohabited with Ms. Blade Lines throughout their marriage.
The following year, by a ‘Deed of Retirement and Appointment of New Trustee’ dated 10 March 1997, Abacus replaced Colica as the trustee of the LS Trust.
On 8 September 2008, following the death of Ms. Eloise Blades, the Second Mortgage was assigned to the trustees of the BBL Trust, namely Mr. Bob Blades and his brother Mr. Richard Mills Blades. The parties to the Assignment of Second Mortgage were Mr. Bob Blades and Mr. Richard Mills Blades as both the assignors on behalf of the estate of Ms. Eloise Blades and the assignees as trustees on behalf of the BBL Trust. Butterfield was also party to the Assignment of Second Mortgage to signify its consent.
Mr. Savage stated in his evidence that on 11 August 2009, a year after the making of the Assignment of Second Mortgage, Mr. Lines applied to First Bermuda Group (“FBG”) (now known as Clarien, the 2 nd Defendant) for a loan in the sum of $960,000.00 to refinance the First Mortgage as the original $400,000.00 loan sum from BNTB had fallen into arrears. Additionally, Mr. Lines was looking to renovate the property.
On 13 January 2010 Abacus (the mortgagor), Mr. Lines and Ms. Blades Lines (the guarantors) and FBG (the mortgagee) executed “the New First Mortgage”. This moved the First Mortgage from Butterfield to FBG who became the holder of the New First Mortgage.
Relevant to the facts pleaded by the Plaintiffs, the New First Mortgage contained a provision empowering FBG to sell the property without the need for consent or notice to any person in the event of default on any of the provisions of the New First Mortgage [4(a)]:
“ Power of Sale
That it shall be lawful for the Mortgagee at any time or times after the date of this deed and without any further consent on the part of or notice to the Mortgagor or any person or persons whomsoever to sell the Property if and when the Mortgagor shall fail to comply with any provision hereof.”
On the face of a Deed of Postponement made on the same date as the New First Mortgage (“the Deed of Postponement”), Mr. Bob Blades and Mr. Richard Mills Blades as trustees of the BBL Trust (having been assigned the Second Mortgage) agreed that the Second Mortgage with the BBL Trust would be subordinate to the New First Mortgage with FBG:
“1. That in pursuance of the said agreement and in consideration of these presents the parties hereto HEREBY AGREE AND DECLARE that notwithstanding anything contained in the Second Mortgage and the Assignment thereof and notwithstanding any provisions of law or equity to the contrary and notwithstanding the provisions of The Mortgage Registration Act 1786 the New First Mortgage and the New First Mortgage Principal Sum thereby secured and interest thereby secured and all the powers covenants and provisions therein contained shall stand in preference and in priority before the Second Mortgage and the Assignment thereof and the remaining principal balance of the Second Mortgage Principal Sum thereby secured for all purposes whatsoever and that the New First Mortgage shall have (as against the Second Mortgage) all and singular rights and priority of a First Mortgage.
2. THE PARTIES hereto agree that nothing herein contained shall as between the Mortgagor and the Second Mortgagee affect or prejudice any of the rights or remedies of the Second Mortgage under the Second Mortgage which shall remain in full force subject only to the New First Mortgage and the postponement of the security of the Second Mortgage shall be deemed to relate only to the monies advanced by the New First Mortgagee be deemed to confer on it any like right of priority over the Second Mortgagee.”
At paragraph 3(p) of the Lease, Mr. Lines covenanted to “ pay all rates taxes and assessments, including Land Tax now or at any time due or levied upon the Property.” However, by 2010 Mr. Lines had defaulted on his lease obligations and on the land tax payments for which he was contractually responsible under the Lease. On 28 June 2010 the Minister of Finance issued writ proceedings against the former trustee, Colica, for $52,696.15 worth of unpaid land taxes on Little Rock. Subsequently, these proceedings were brought to an end and the outstanding sum owed was paid in full.
In 2011 Ms. Blades Lines commenced divorce...
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