Bidzina Ivanishvili v Credit Suisse Life (Bermuda) Ltd

• Jurisdiction: Bermuda
• Judge: Hargun CJ
• Judgment Date: 22 December 2020
• Court: Supreme Court (Bermuda)
• Docket Number: CIVIL JURISDICTION 2017: No. 293
• Date: 22 December 2020

[2020] SC (Bda) 55 Civ

In The Supreme Court of Bermuda

Before:

Hon. Chief Justice Hargun

CIVIL JURISDICTION 2017: No. 293

Between:

(1) Bidzina Ivanishvili

(2) Ekaterine Khvedelidze

(3) Tsotne Ivanishvili

(An infant, by his mother and next friend, Ekaterine Khvedelidze)

(4) Gvantsa Ivanishvili

(5) Bera Ivanishvili

(6) Meadowsweet Assets Limited

(7) Sandcay Investments Limited

Plaintiffs

and

Credit Suisse Life (Bermuda) Limited

Defendants

Appearances:

Mr. Joe Smouha QC, Ms. Sarah-Jane Hurrion and Ms. Judith Roche, Hurrion & Associates Ltd, for the Plaintiffs

Mr. Stephen Moverley Smith QC, Mr. John Wasty, Ms. Hannah Tildesley and Mr. Sam Riihiluoma, Appleby (Bermuda) Limited, for the Defendant

Application for further directions; application to amend the Statement of Claim pleading a new cause of action potentially subject to foreign law and foreign limitation period; whether the issue of limitation should be determined in interlocutory proceedings or at trial; application for further and better particulars of the Statement of Claim; application for specific discovery

RULING

Hargun CJ

Introduction

1 The factual background to this action is set out in paragraphs 3 to 15 of my Ruling in relation to the strike out application dated 13 September 2018.

2 Briefly, the Plaintiffs' claim against Credit Suisse Life (Bermuda) Limited (“ CS Life”) is for losses suffered by two unit-linked life insurance policies (“ the Policies”), which were issued to Meadowsweet Assets Limited and Sandcay Investments Limited, the Sixth and Seventh Plaintiffs (as policyholders) in 2011 and 2012 respectively. The First to Fifth Plaintiffs are the ultimate beneficiaries of the proceeds of the Policies, as the beneficiaries of trusts within which the Policies are held.

3 The Plaintiffs allege that they entrusted US $755 million to CS Life by way of lump sum insurance premiums (“ the Policy Assets”). The Policy Assets were invested in accounts with Credit Suisse AG (“ the Bank”) in the name of CS Life (“ the CS Life Accounts”). In 2015 the Plaintiffs discovered unauthorised, imprudent and fraudulent trading on the CS Life Accounts resulting in huge losses to the Policy Assets.

4 In these proceedings the Plaintiffs assert that CS Life owed the Plaintiffs various contractual, fiduciary, statutory and common law duties, and that CS Life breached those duties resulting in losses estimated to be in the region of US $400 million.

5 Over the course of two days in October 2020, the parties to these proceedings pursued 9 separate applications. The applications are:

First, the Plaintiffs' application to amend their Statement of Claim in terms of the draft Amended Statement of Claim (the “ ASOC”) (the “ Amendment Application”) supported by the First and Sixth Affidavit of Ioannis Theodore Alexopoulos dated 10 July 2020 and 6 October 2020 respectively (“ Alexopoulos 1” and “ Alexopoulos 6”), and opposed by the Twelfth Affidavit of Janita Kate Burke dated 11 September 2020 (“ Burke 12”).

Second, the Plaintiffs' application for an unless order arising out of the Defendant's non-compliance with the Specific Discovery Order, supported by the Fourth Affidavit of Judith Maria Roche dated 14 March 2020 (“ Roche 4”), and the Seventh Affidavit of Mr Alexopoulos dated 6 October 2020 (“ Alexopoulos 7”), and opposed by the Eleventh Affidavit of Ms Burke (“ Burke 11”).

Third, the Plaintiffs' application for permission to adduce investment management expert evidence (the “ Investment Management Application”) supported by the Fourth Affidavit of Mr Alexopoulos dated 11 September 2020 (“ Alexopoulos 4”).

Fourth, the Plaintiffs seek the costs of their specific discovery application.

Fifth, the Defendant's application for a response to its request for further and better particulars (the “ RFBP Application”), supported by the Seventh and Fourteenth Affidavits of Ms Burke dated 4 June 2020 and 6 October 2020 respectively (“ Burke 7” and “ Burke 14”), and opposed by the Second Affidavit of Mr Alexopoulos (“ Alexopoulos 2”).

Sixth, the Defendant's application for an extension of time to exchange expert evidence (the “ Time Summons”), supported by the Eighth Affidavit of Ms Burke dated 4 June 2020 (“ Burke 8”) and Burke 14, and opposed by Alexopoulos 2.

Seventh, the Defendant's application for specific discovery and a discovery methodology affidavit (the “ Defendant's Discovery Application”), supported by the Tenth and Thirteenth Affidavits of Ms Burke dated 16 July 2020 and 6 October 2020 respectively (“ Burke 10” and “ Burke 13”), and opposed by the Third Affidavit of Mr Alexopoulos (“ Alexopoulos 3”).

Eighth, the Defendant's summons for an extension of time (the “ Methodology Summons”) to file its affidavit setting out the methodology of its discovery exercise in accordance with the Court's 11 February 2020 Ruling (the “ Methodology Affidavit”) supported by the Fifteenth Affidavit of Ms Burke dated 15 October 2020 (“ Burke 15”).

Ninth, the Plaintiffs' summons for directions (the “ Directions Application”) supported by the Fifth Affidavit of Mr Alexopoulos dated 5 October 2020 (“ Alexopoulos 5”).

Procedural background

6 These proceedings were commenced in August 2017. CS Life filed its Defence on 12 January 2018 and also served at the same time a request for further and better particulars. The Plaintiffs filed their Reply and response to the request for further and better particulars on 16 March 2018.

7 Directions were agreed by the parties and they filed a consent Order on 9 September 2019. Discovery was initially ordered to be exchanged on 4 September 2018 but this deadline was extended and provision made for the parties to exchange discovery on 10 December 2018, with CS Life providing a further list of documents received from the Bank by 31 January 2019.

8 Lengthy correspondence followed regarding the deficiencies in CS Life's discovery, and in July 2019 the Plaintiffs filed an application for specific discovery which was granted by this Court in its Ruling of 11 February 2020 (“ the February Ruling”) and resulted in the Specific Discovery Order dated the 2 June 2020.

9 CS Life sought leave to appeal and a stay of the February Ruling. CS Life was granted leave to appeal on two out of six grounds and the respective orders were stayed. Otherwise CS Life was ordered to comply with the February Ruling.

10 CS Life sought to comply with the Specific Discovery Order, to the extent that it had not been stayed, by serving Burke 5. The Plaintiffs did not accept that there was full compliance with the Specific Discovery Order and filed their application for an unless order.

11 CS Life's appeal against the Specific Discovery Order and CS Life's renewed application for leave to appeal were heard by the Court of Appeal on 4 June 2020.

12 On 17 July 2020 CS Life filed the Defendant's Discovery Application.

13 By Judgment dated 7 October 2020, the Court of Appeal dismissed CS Life's appeal on all grounds, save that the Court allowed the appeal against the finding that CS Life had waived privilege in relation to the correspondence with the Bank.

14 The parties agreed directions to trial by way of the September 2019 Directions and trial was subsequently listed for 18 January 2021.

15 Witness statements were due to be exchanged on 27 March 2020, but this was extended at the request of CS Life until 15 May 2020.

16 On 28 April 2020 CS Life sent its second request for further and better particulars, which is now the subject of the RFBP Application.

17 The Plaintiffs sent a draft Amended Statement of Claim to the Defendant on 5 May 2020. The draft Amended Statement of Claim provided further particulars of breach and loss following review of the discovery provided by CS Life, along with claims for declaratory relief and misrepresentation. This draft Amended Statement of Claim forms the basis of the Amendment Application.

18 Expert evidence in the field of forensic accounting and Swiss law was due to be exchanged on 31 July 2020. CS Life has sought an extension of time for filing expert evidence to a date 8 weeks after the date on which the Plaintiffs provide a response to the second request for further and better particulars. This forms the basis of the Time Summons.

19 Given the outstanding applications the parties have agreed that the January 2021 trial date is no longer a realistic possibility and have agreed to seek a date later in the year with additional directions arising out of these applications.

(1) The Amendment Application

20 The Plaintiffs seek leave to amend their Statement of Claim pursuant to RSC Order 20, rule 5. The amendments fall into four categories, two of which have been agreed by CS Life, and two of which are contested.

21 The agreed categories relate to minor amendments to update the pleadings and the inclusion of a claim for declaratory relief as to the effect of the total surrender of the policies at paragraphs 53A to 53C of ASOC. CS Life requests that certain case management directions be granted as a precondition to consenting to the agreed amendments. In particular, CS Life seeks provision in the trial timetable for amended pleadings, further discovery, further factual evidence if so advised, and additional time to file expert evidence.

22 These directions are not in dispute:

• (a) The Plaintiffs have suggested that CS Life should be allowed three weeks, following the filing of the ASOC, to file the Amended Defence (paragraphs 4 to 6 of the Draft Directions).

• (b) Separately, the Plaintiffs have proposed that the time for exchanging expert reports be extended to March 2021 (paragraph 11 of the Draft Directions).

• (c) To the extent that the parties have further documents relevant to the issues in dispute, the Plaintiffs have made provision for exchange of further lists of documents at paragraph 7 of the Draft Directions.

• (d) The Plaintiffs do not accept that any...