KPMG Tax Ltd v Frank Majors Maxine Majors Modified MDMW 2000 Family Trust Majors Family LLC

• Jurisdiction: Bermuda
• Judge: Hargun CJ
• Judgment Date: 22 November 2023
• Court: Supreme Court (Bermuda)
• Year: 2023
• Docket Number: COMMERCIAL JURISDICTION 2021: No. 257

Between:

KPMG Tax Limited

Plaintiff

and

Frank Majors Maxine Majors Modified MDMW 2000 Family Trust Majors Family LLC

Defendants

[2021] SC (Bda) 90 Civ.

Before:

The Honourable Chief Justice

COMMERCIAL JURISDICTION 2021: No. 257

In The Supreme Court of Bermuda

Appearances:

Mr. David Scorey KC, Mr. Mark Chudleigh and Mr. Erik Penz of Kennedys Chudleigh for the Plaintiff

Mr. John Jarvis KC and Mr. Nicholas Howard of Walkers (Bermuda) for the Defendants

(Consequential Matters)

Hargun CJ

Introduction

1 By Judgment dated 20 October 2023 (the “ Judgment”) the Court (i) dismissed the application of Majors Family LLC (“ LLC”), the Fourth Defendant seeking the discharge of the Interim Order dated 3 September 2021; and (ii) granted a permanent injunction against the LLC and the other Defendants (Frank Majors, the First Defendant; Maxine Majors, the Second Defendant; and the Modified MDMW 2000 Family Trust (“Family Trust”), the Third Defendant) in terms of the Interim Order.

2 The Court further stated that it is “ minded to discharge the injunction against Mr Majors, Mrs Majors and the Family Trust on the basis of their undertaking to the Court and to the Plaintiff but will give an opportunity to the Plaintiff to explain the basis of their objection before doing so.”

3 At the hearing on 8 November 2023, the Court heard arguments in relation to the issues of (i) the terms of any stay pending the determination of any appeal LLC may pursue in the Court of Appeal; (ii) the appropriate wording of the undertakings offered by the First to Third Defendants and whether they should be incorporated in the order; and (iii) the issue of costs.

Stay pending appeal

4 Paragraph 3 of the draft order provides that “ The Fourth Defendant shall, whether by itself or through its members, trustees, officers, directors, employees, servants, agents, representatives, attorneys or otherwise, take all steps necessary to dismiss, withdraw and/or otherwise discontinue the Tennessee Proceedings against the Plaintiff.”

5 Mr Jarvis KC, for the Fourth Defendant, seeks an order that “ Paragraph 3 above is stayed until 2 December 2023, or (if before that date the Fourth Defendant files an appeal against this Order) until further order of the Court of Appeal.”

6 The Court agrees that it is appropriate to stay Paragraph 3 of the draft order as suggested by Mr Jarvis KC given that (i) the Tennessee proceedings are effectively on hold pending the determination of any possible appeal in Bermuda; (ii) if the Tennessee proceedings had to be recommenced following a successful appeal to the Court of Appeal the Fourth Defendant may be faced with limitation issues under Tennessee law; and (iii) fresh proceedings in Tennessee following a successful appeal to the Court of Appeal will necessarily result in additional expense for the parties.

Terms of the order

7 KPMG contends that the Order should record that the First, Second and Third Defendants have provided the permanent undertakings set out in Schedule to the Order. The undertakings sought by KPMG are in terms of the permanent injunction granted by the Court against LLC and indeed the other Defendants. The terms of the undertaking sought by KPMG are:

“Each of the First, Second and Third Defendants hereby permanently undertakes:

• 1. that they shall not, whether by themselves or through their trustees, officers, directors, employees, servants, agents, representatives, attorneys or otherwise:

  • 1.1 prosecute, pursue and/or otherwise continue and/or take any further substantive or procedural step against the Plaintiff in the in the proceedings commenced by the Defendants in the Chancery Court for the State of Tennessee, in the United States of America, Case No. 21-0641-III (the “Tennessee Proceedings”) because the Tennessee Proceedings breach the terms of the valid and binding arbitration agreement (“Arbitration Agreement”) governing the Defendants' claims contained in Paragraph 14 of the Plaintiff's Standard Terms and Conditions for Advisory and Tax Services (the “Terms and Conditions”), save for the purpose of dismissing, withdrawing and/or otherwise discontinuing the Tennessee Proceedings;

  • 1.2 seek and/or obtain an anti-suit and/or anti-anti-suit injunction and/or a temporary order restraining and/or preventing the Plaintiff from pursuing and/or otherwise enforcing the said valid and binding Arbitration Agreement; and/or

  • 1.3 prosecute, pursue and/or otherwise continue any proceeding against the Plaintiff in respect of any dispute subject to the Terms and Conditions other than pursuant to the valid and binding Arbitration Agreement;

  and

• 2. that they shall provide such assistance and take all steps as may be necessary to dismiss, withdraw and/or otherwise discontinue the Tennessee Proceedings against the Plaintiff.”

8 The First to Third Defendants contend that their existing undertakings to the Court and to KPMG should be sufficient to protect the interests of KPMG in relation to the continuation of Tennessee proceedings and the Court should accept the wording of the undertakings as proffered by the...