BCT Ltd v Spanish Steps Holdings Ltd, Evatt Anthony Tamine, Tangarra Consultants Ltd
| Jurisdiction | Bermuda |
| Judge | Hargun CJ |
| Judgment Date | 06 May 2022 |
| Court | Supreme Court (Bermuda) |
| Docket Number | 2018: No. 390 |
[2022] SC (Bda) 29 Com
Hon. Chief Justice Hargun
2018: No. 390
In The Supreme Court of Bermuda
Mr Keith Robinson of Carey Olsen Bermuda Limited, for the Plaintiffs
Mr David Brownbill QC and Mr Paul Harshaw of Canterbury Law Limited, for the Defendants
Application to withdraw admissions made in the Defence; principles to be applied
There are three summonses before the Court whereby the parties make a number of applications. First, there is the Defendants’ summons issued on 12 January 2021, whereby the Defendants seek leave to (i) amend their Defence and add to it claims against Spanish Steps Holdings Ltd, the Second Defendant (“ SSHL”), and against Robert Theron Brockman (“ Mr Brockman”); and (ii) serve the amended Defence and Counterclaim out of the jurisdiction on Mr Brockman.
Second, the summons issued on behalf of the First Plaintiff, BCT Limited (“ BCT”) on 29 October 2021, seeking leave to amend the Statement of Claim.
Third, the summons issued on behalf of the Plaintiffs dated the 23 February 2022 seeking judgment to be entered in favour of SSHL pursuant to RSC Order 27 rule 3 on admissions of fact made by the Defendants in their Defence in relation to the three payments which are the subject of these proceedings: US $5.395 million received by Evatt Tamine, the First Defendant ( “Mr Tamine”), in relation to the acquisition of the Bewdley property (“ the US $5.395 million Payment”); US $16.8 million paid to Mr Tamine as an advance on his remuneration package (“ the US $16.8 million Payment”); and GBP 5 million paid to Herbert Smith Freehills (“ HSF”)(“ the GBP 5 million Payment”).
The applications made by the parties have the following elements to them and it is convenient to deal with these applications in the following order.
First, the Defendants wish to amend their Defence to the claims brought against them by the Plaintiffs so as (i) to advance their positive case in respect of the payments and in so doing (ii) to change their proposal to repay the monies. In order for this application to succeed, the Defendants need the leave of this Court to withdraw the admissions which are pleaded in the existing Defence whereby the Defendants agreed to repay the three amounts to the Plaintiffs. The application to withdraw the admissions made in the Defence is disputed by the Plaintiffs. The Plaintiffs contend that the Court should refuse to give leave to the Defendants to withdraw the admissions made and in addition, should enter judgment in favour of SSHL for the amounts claimed and interest thereon.
Second, Mr Tamine wishes to bring a counterclaim against SSHL for declaratory relief in respect of his entitlement to indemnification in respect of his legal fees under the articles of association of SSHL.
Third, Mr Tamine wishes to bring a counterclaim against Mr Brockman in respect of (i) US $5.395 million Payment, to the extent that it is found to fall to be repaid to SSHL, and (ii) his own costs and any costs and interest which he is ordered to pay in these proceedings, pursuant to the indemnity arising under his employment agreement with Mr Brockman.
Fourth, if Mr Tamine is given leave to bring a counterclaim against Mr Brockman, he seeks leave to serve a counterclaim out of the jurisdiction on Mr Brockman in the United States of America.
Fifth, BCT's application for leave to amend the Statement of Claim by substituting its name in place of St John's Trust Company (PVT) Limited (“ SJTC”).
The Defendants’ application for leave to amend the Defence in this matter is supported by Mr Tamine's third affidavit dated 4 January 2021 (“ Tamine 3”). Mr Tamine says that he first became aware of Mr Brockman when he was working as an attorney at Cox Hallett Wilkinson between 1999 and 2001. Mr Tamine was invited to attend a meeting with Mr Brockman at his office in Houston. In the course of that meeting, Mr Tamine states that he entered into an employment agreement with Mr Brockman, pursuant to which Mr Tamine agreed to take up a role working in Bermuda in respect of the A. Eugene Brockman Charitable Trust (“ the Brockman Trust”) and various other structures connected with Mr Brockman (“ the Employment Agreement”).
Mr Tamine says that he was advised to set up a company in order to obtain a work permit in Bermuda for the purposes of this new role. Accordingly, Mr Tamine incorporated a Bermuda company named Tangarra Consultants Limited, the Second Defendant (“ Tangarra”), on 23 July 12, 2003. Pursuant to the Employment Agreement, Mr Tamine states that he moved to Bermuda in January 2004 to formally begin his new role. He says that he was paid through the Second Defendant throughout the course of his employment with Mr Brockman.
Mr Tamine states that at the time of the US $5.395 million Payment, his remuneration under the Employment Agreement (recorded in a memorandum dated 13 July 2015) had been fixed by Mr Brockman as comprising a salary of US $750,000 dollars, bonus potential of US $850,000 and an annual contribution of US $1 million towards a retirement fund.
According to Mr Tamine, during the course of 2015, Mr Brockman and Mr Tamine began to discuss potential locations for the headquarters of the Brockman Trust. The property that was eventually chosen was Bewdley, a Bermudian property then owned by Mr Tamine's wife's family through a trust. According to this evidence, Mr Brockman and Mr Tamine resolved that Mr Tamine would purchase Bewdley, renovate the property to make it suitable for use as the headquarters of the Brockman Trust, and then lease the property to SJTC.
In March 2016, Mr Tamine was paid the sum of US $5.395 million from SSHL. It is Mr Tamine's sworn evidence that this sum comprised monies which had not been paid by Mr Brockman under his Employment Agreement and a loan from SSHL in the amount of US $2.495 million which was thereafter set off against Mr Tamine's remuneration under the Employment Agreement. It is Mr Tamine's evidence that “ Mr Brockman agreed in Mr Tamine's performance review meeting at the end of 2017 that the amount had been repaid.”
It is Mr Tamine's evidence that during the course of 2017, he and his wife decided to move to the United Kingdom. Mr Tamine's family moved out to the UK in April 2018 and he intended to join them in September 2018.
Mr Tamine says that he was advised that, in order to structure his remuneration in the most tax efficient way, Mr Brockman should pay him an advance of six years’ salary (being the amount of time he intended to live in the UK), which he could then lawfully remit to the UK as needed. He would then pay tax on the remitted sum as a non-domiciled resident of the UK.
Mr Tamine says that his annual remuneration package at that time amounted to US $2.6 million. A six-year advance of that sum amounted to US $15.6 million. It is Mr Tamine's sworn evidence that Mr Tamine raised the proposal of an advance payment of a salary in a telephone conversation with Mr Brockman in spring of 2018. In August 2018, Mr Tamine says that Mr Brockman agreed to the proposal.
Apparently, on 15 August 2018, a search warrant was executed on the home of Mr Kepke, a US tax attorney, who had previously provided advice to Mr Brockman in respect of the Brockman Trust. In light of this development, Mr Tamine became concerned that the Brockman Trust structure would come under challenge by the US authorities and that, if such a challenge materialised, he would require access to funds to cover his legal expenses. Mr Tamine therefore took the decision to make provision for an indemnity fund of US $1.2 million. Accordingly, Mr Tamine took steps to cause SSHL to transfer the sum of US $16.8 million to his accounts.
Mr Tamine accepts that US $15.6 million constituted an advance payment made in respect of work as Mr Brockman's employee and as he has not carried out work, he is not entitled to retain that sum. However, Mr Tamine contends that as Mr Brockman may have a claim in respect of this sum, he should not be required to pay that sum to SSHL. Mr Tamine intends to bring an application for interpleader relief to determine that question.
According to Mr Tamine, following the execution of the search warrant on Mr Tamine's home on 5 September 2018, these payments were made to cover Mr Tamine's legal costs in respect of the United States Department of Justice (“ DoJ”) investigation upon his retention of HSF in New York and London. Mr Tamine says that both payments were authorised by James Gilbert, a director of SJTC, on 6 September 2018 and 8 September 2018.
The Plaintiffs point out that following the amendment of the Writ, a Defence was filed on behalf of the Defendants on 31 October 2019. This Defence contained a number of core admissions. By paragraph 4 of the Defence, the Defendants agreed to repay the following three amounts without prejudice to their case that the payments were made and received in good faith:
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(a) A payment of US$5.395 million transferred from SSHL to the Second Defendant in March 2016;
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(b) A payment of US$16.8 million transferred from SSHL to the Second Defendant in August 2018; and
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(c) Payments totalling GBP 5 million paid to HSF in New York and the United Kingdom.
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