Bidzina Ivanishvili v Credit Suisse Life (Bermuda) Ltd

• Jurisdiction: Bermuda
• Judgment Date: 13 September 2018
• Date: 13 September 2018
• Docket Number: Commercial Jurisdiction 2017 No 293
• Court: Supreme Court (Bermuda)

[2018] Bda LR 87

In The Supreme Court of Bermuda

Commercial Jurisdiction 2017 No 293

Between:

Bidzina Ivanishvili

Ekaterine Khvedelidze

Tsotne Ivanishvili (An Infant By His Mother And Next Friend, Ekaterine Khvedelidze)

Gvantsa Ivanishvili

Meadowsweet Assets Limited

Sandcay Investment Limited

Plaintiffs

and

Credit Suisse Life (Bermuda) Limited

Defendant

Ms S Hurrion and Ms J Roche for the Plaintiffs

Mr J Wasty and Ms H Tildesley for the Defendant

The following cases were referred to in the judgment:

Williams & Humbert v W&H Trade Marks (Jersey) Ltd [1986] 1 AC 368

Kingate Global Fund Ltd (in liquidation) v Kingate Management Ltd & ors [2016] Bda LR 4

Altimo Holdings v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804

Freeman v Ansbacher Trustees (Jersey) Ltd [2009] JRC 003

Gorham v British Telecommunications plc [2000] 1 WLR 2129

Vinton v Fladgate Fielder [2010] EWHC 904

Strike out application — Serious and prolonged argument — Soundness of pleadings — Decisive — When appropriate

RULING of Hargun CJ

Introductory

1. By a summons dated 6 July 2018 the Plaintiffs seek an order that the applications contained within paragraphs 1 to 5 inclusive of the Summons of the Defendant dated 1st June (the Defendant's Summons) be not entertained and/or summarily dismissed, in accordance with the power of the court exercised in Williams & Humbert v W&H Trade Marks (Jersey) Ltd[1986] 1 AC 368 and/or the Court's inherent jurisdiction and/or RSC Order 18, rule 19, and RSC Order 1A, rules 1 and 4. Alternatively, the Plaintiffs seek an order that the applications contained in the Defendant's Summons be stayed generally pending trial of this action.

2. By the Defendant's Summons the Defendant seeks an order pursuant to RSC order 18, rule 19 or under the inherent jurisdiction of the Court to strike out the entirety of the claims made by the 1st to 5th Plaintiffs in the Statement of Claim. These claims consist of damages based on breach of statutory duties contained in the Segregated Accounts Companies Act 2000 (the “SAC Act”) (Statement of Claim 31, 58 – 59) and damages for breach of “common law duties” (Statement of Claim 60).

Background

3. The background to this action is taken from the Statement of Claim dated 22 August 2017 and filed on behalf of all the Plaintiffs. The 1st Plaintiff is a Georgian national, a prominent businessman, and who was the Prime Minister of Georgia from 25 October 2012 to 20 November 2013. The 2nd Plaintiff is the 1st Plaintiff's wife. The 3rd, 4th and 5th Plaintiffs are the children of the 1st and 2nd Plaintiffs. The 1st to 5th Plaintiffs (the “Family Plaintiffs”) are the beneficiaries of the Mandalay Trust and the Green Vals Trust.

4. The Mandalay Trust is a trust established under the laws of the Republic of Singapore by declaration of trust dated 7 March 2005. At all material times Credit Suisse Trust Limited (the “Mandalay Trustee”) has been the trustee of the Mandalay Trust. The 6th Plaintiff, Meadowsweet Asset Limited (“Meadowsweet”), is a company incorporated in the British Virgin Islands. The Mandalay Trustee at all times owned, and continues to own, the entire share capital of Meadowsweet.

5. The Green Vals Trust is a trust established under the laws of Prince Edward Island by declaration of trust dated 10 August 2012. On 1 July 2014 Credit Suisse Trust Limited became the trustee of the Green Vais Trust (the “Green Vals Trustee”) and the proper law of the Green Vals Trust was changed to New Zealand law. The 7th Plaintiff, Sandcay Investments Limited (“Sandcay”), is a company incorporated in the Bahamas and has, at all material times, been owned by the Green Vals Trustee.

6. The Defendant, Credit Suisse Life (Bermuda) Ltd (“CS Life”), is an insurance company incorporated and registered in Bermuda as a segregated accounts company under the SAC Act. CS Life is a wholly owned subsidiary Of Credit Suisse AG (the “Bank”), which provides private banking services from various locations around the world. The Trustees, the Bank and CS Life are all subsidiaries of Credit Suisse Group AG (“Credit Suisse”), a global financial services company headquartered in Zurich, Switzerland.

7. In or around 2004, the Bank approached the 1st Plaintiff to offer private wealth management services to him and his family. The 1st Plaintiff agreed to invest monies through the Mandalay Trust established by the Mandalay Trustee. In 2010 or 2011, the investment in an insurance policy under the Mandalay Trust was suggested and/or recommended by the Bank. At all material times it was envisaged that the premium payable under the life insurance policy would be held and invested by the Bank acting as agent for CS Life. On 7 November 2011, CS Life issued unit-linked life insurance policy to Meadowsweet in consideration of a single premium payable by Meadowsweet in the amount of USD 480,267,313. Meadowsweet paid that premium in due course.

8. On or around August 2012 at the bank advised the 1st Plaintiff that he should establish a new trust to hold and invest with the Bank proceeds relating to the sale of a pharmaceutical business, which could then be used to provide more generally for inheritance purposes for the 1st Plaintiff's family members. The Bank suggested and/or recommended the investment in an insurance policy which would be held by a company, the shares in which be held by the Green Vals Trustee. At all material times it was envisaged that the premium payable under the life insurance policy would be held and invested by the Bank acting as an agent for CS Life. On 7 December 2012, CS Life issued a unit – linked life insurance policy to Sandcay in consideration of a single premium payable by Sandcay in the amount of USD 275,075,927. Sandcay paid that premium in due course. The total premiums paid by Meadowsweet and Sandcay amounted to USD 755,343,240.

9. On various dates between 2011 and 2013, the Bank recommended certain investments for the Mandalay Trust and the Green Vals Trust. In particular, the Bank recommended that a large part of the Mandalay Trust and the majority of the Green Vals Trust fund should be invested in life insurance policies issued by CS Life, sister company of the Trustees and a subsidiary of the Bank.

10. In September and October 2015, the Bank made a number of margin calls in relation to the CS Life accounts. On 29 September 2015, the Bank issued a margin call of USD 5, 550...