Dorothy Kay Brockman v Bct Ltd, Medlands (PTC) Ltd, The Attorney General, Martin Lang, Dorothy Kay Brockman, BCT Ltd

JurisdictionBermuda
JudgeShade Subair Williams J
Judgment Date04 May 2022
CourtSupreme Court (Bermuda)
Docket Number2018 No: 476

IN THE MATTER OF THE TRUST SETTLED BY A EUGENE BROCKMAN ON 26 MAY 1981 FOR THE BENEFIT OF HIS CHILDREN AND CHARITIES

IN THE MATTER OF RSC O. 85 AND PART IV OF THE TRUSTEE ACT 1975

BETWEEN
Dorothy Kay Brockman (In her personal capacity and in her capacity as intended representative of the other human discretionary and contingent Beneficiaries pursuant to RSC Order 15/13)
BCT Limited (In its capacity as Trustee)
Plaintiff
and
(1) Medlands (PTC) Limited (In its capacity as the Former Trustee)
(2) The Attorney General (In her capacity as Representative of the Charitable Beneficiaries)
(3) Martin Lang (In his capacity as the Trust Protector)
(4) Dorothy Kay Brockman (In her personal capacity and in her capacity as the Representative of the other Human Discretionary and Contingent Beneficiaries pursuant to RSC Order 15/13)
(4) BCT LIMITED (In its capacity as the intended new Trustee)
Defendants

[2022] SC (Bda) 30 Com

2018 No: 476

In The Supreme Court of Bermuda

Application for the form of Order to be settled from Previous Ruling of the Court re the Court's Supervisory and Equitable Jurisdiction to sanction indemnities in respect of an outgoing trustee

Plaintiff:

Mr. Keith Robinson (Carey Olsen Bermuda Limited)

1 st Defendant:

Mr. Robert Ham QC of Counsel and Mr. Matthew Mason (Wakefield Quin Limited)

2 nd Defendant:

Ms. Lauren Sadler-Best (Crown Counsel on behalf of the Attorney General)

3 rd Defendant:

Mr. John Machell QC of Counsel and Mr. Lewis Preston (Kennedys Chudleigh Ltd)

4 th Defendant:

Mr. Francis Tregear QC of Counsel and Ms. Sarah-Jane Hurrion (Hurrion & Associates Ltd)

RULING

RULING of Shade Subair Williams J

Shade Subair Williams J
Introduction
1

The factual and procedural background to these proceedings may be understood by reference to the below list of previous reported judgments:

  • (i) St John's Trust Company (PVT) Ltd v Watlington and Ors [2020] Bda LR 25 (Application for strike-out), per Hargun CJ;

  • (ii) Re the B Trust, Medlands (PTC) Ltd v Attorney General et al [2020] Bda LR 42 (Beddoe and Administrative Proceedings: Disclosure and Joinder Applications), per Subair Williams J;

  • (iii) St John's Trust Company (PVT) Ltd v Watlington and Ors [2020] Bda LR 76 (Consequential Relief), per Hargun CJ;

  • (iv) St John's Trust Company (PVT) Ltd v Watlington and Ors [2021] Bda LR 14 (Leave to Appeal Costs), per Hargun CJ;

  • (v) Medlands (PTC) Ltd and Ors v Commissioner of the Bermuda Police Service [2020] Bda LR 26 (Judicial Review), per Hargun CJ;

  • (vi) Re the B Trust, Medlands (PTC) Ltd v Attorney General et al [2021] COA (Unreported)

  • (vii) Re the B Trust, Medlands (PTC) Ltd v Attorney General et al [2021] SC (Bda) 41 Com (12 May 2021) (Appointment of new trustee and indemnities), per Subair Williams J;

The Present Application
2

The present application arises out of the most recent ruling from this Court made on 12 May 2021 (“the May Ruling”), by which I declined a category two Public Trustee v Cooper application for this Court to assume BCT Limited's power of discretion to grant indemnities or to decide the issue of a retention of trust funds. In the May Ruling I outlined the extent of this Court's approval and blessings in the form of non-binding opinions, given the sufficiently momentous impact of the sums of money involved in the indemnities which were in question.

3

In the May Ruling I expressed various opinions to show this Court's approval of the following proposed indemnities:

  • (i) Medlands’ legal fees relating to the handover process between Medlands and BCT Limited;

  • (ii) The uncontroversial indemnity claimed by Medlands in respect of its Court-ordered liability to indemnify the former trustees. (However, it was also my general view that with the change of trusteeship, Medlands’ liability for those indemnities should pass on to the new trustee);

  • (iii) Medlands’ costs associated with bringing Mr. Gilbert's directorship in Medlands to an end;

  • (iv) Medlands’ costs for Mr. Gilbert's communications and his examination of information and documents regarding Point Investments Ltd (“PIL”);

  • (v) Medlands’ costs associated with its liability for Zobec's administrative services during its tenure as trustee and in bringing that trusteeship to an end;

  • (vi) Medlands’ legal fees arising out of any cooperation it provided to the DOJ in relation to the Trust when Medlands was the Trustee and

  • (vii) The costs of keeping Medlands ‘alive’ (The extent of approval here was for coverage of the expense of Medlands’ registration and regulatory requirements needed for it to see the 376 proceedings through to completion.

4

For the indemnities which I considered worthy of apprehension or disapproval, I provided my reasoning which applied to the following indemnities requested by Medlands:

  • (i) Mr. Gilbert's costs of defending the Cayman Islands Court proceedings commenced by Messrs. Watlington and Ferguson;

  • (ii) The costs of an appeal from the 447 proceedings and

  • (iii) The Conyers Indemnity

5

I also refused the invitation made to this Court for its sanction of a retention of funds for Medlands.

6

This Court is now asked to construe the May Ruling (i.e. its refusal to accept or exercise BCT Limited's discretionary power to decide on the issuance of various indemnities) with its earlier Order of 26 March 2021 (“the March Order”). In the March Order BTC Limited was formally appointed as the new trustee and I directed that the terms of the outgoing trustee were to be settled in accordance with a Schedule annexed to the Order, which in material part provided that the liabilities of the Trust would include:

1.17.6 any claims by the Directors under the Director Indemnities, including any Indemnity Costs provided that the Director Indemnities are valid, effective and enforceable obligations;

1.17

7 any payments or sums due under the Gilbert Indemnity, including any Indemnity Costs provided that the Gilbert indemnity is a valid, effective and enforceable obligation;

1.17

8 any payments or sums due under the Conyers Indemnity, including any Indemnity Costs provided that the Conyers Indemnity is a valid, effective and enforceable obligation;

provided that Liabilities shall not include any liabilities arising as a result of actual fraud, intentional wrongdoing or negligence on the part of Medlands.

…”

Analysis and Decision
7

On behalf of the Protector, Mr. Machell QC submitted that the March Order and the May Ruling contained irreconcilable differences in that the Schedule to the March Order effectively granted indemnities which this Court not only refused to grant but even disapproved of in its May Ruling. It was said that the Protector's Counsel astutely foreshadowed a possible quandary prior to the formalizing of the March Order in his warning that the inclusion of the Schedule to the March Order would prove premature. On the Protector's proposals, the entire Schedule ought to have been excluded and settled only after the May Ruling.

8

Supposing that there is no scope for aligning the directions under the March Order with the May Ruling, it seems to me that the resulting incongruity could only be resolved by a variation of the March Order. This approach engages the pivotal question as to whether the March Order expressly or by necessary implication reserved a power of variation or discharge onto this Court. The answer to that question would then call for a proper construction of the wording of the March Order, particularly where it provides [3]:

“The terms on which Medlands shall be discharged as trustee of the Trust and replaced by BCT are as set out below and in the Schedule to this Order subject to such further directions as may be given by Subair-Williams J [Subair Williams J] on her determination of the issues which were the subject of submissions made to her at the hearing on 26 March 2021.”

9

Mr. Tregear QC submitted that the March Order only allowed for additional directions to be made as opposed to enabling a full-scale variation of the Order. He said that the word “only” could easily be inserted into the term to give it the true meaning which it already bears: “ subject [only] to such further directions …”. Mr. Tregear QC further pointed out that I already ruled in favour of the inclusion of the Schedule on 1 April 2022, notwithstanding the Protector's expressed reservations. Consequently, he contended, the Court is now bound by its apparent support for the indemnities provided for under the Schedule. Sprinting towards this finish-line, Mr. Tregear QC, Mr. Ham QC and Mr. Robinson all argued that the March Order is now...

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