Re the B Trust; Medlands (PTC) Ltd v Attorney General and Ors

• Jurisdiction: Bermuda
• Judgment Date: 23 July 2020
• Date: 23 July 2020
• Docket Number: Commercial Jurisdiction 2018 No 376
• Court: Supreme Court (Bermuda)

[2020] Bda LR 42

In The Supreme Court of Bermuda

Commercial Jurisdiction 2018 No 376

In the matter of the B Trust

Between:

Medlands (PTC) Limited

Plaintiff

and

AttorneyGeneral

RTB (in his personal capacity as potential Protectors of the B Trust and as representative of the other Beneficiaries, Descendants and Ultimate Distributees of the B Trust

HSBC Private Bank (CI) Limited

Martin Lang

Grosvenor Trust Company Limited

Defendant

Mr J Elkinson for the Plaintiff

Mr M Diel and Ms K Tornari for the Joinder Applicant

The following cases were referred to in the judgment:

Re Beddoe; Downes v Cottam [1893] 1 Ch 547

Trustees 1–4 v Attorney General and Ors [2014] Bda LR 86

Re the G Trusts [2017] Bda LR 124

Schmidt v Rosewood Trust Ltd [2003] UKPC 26

B v Auckland District Law Society [2003] UKPC 38

R v Derby Magistrates' Court ex parte B [1996] 1 AC 487

Beddoe proceedings — Application for disclosure of trust documents on former trustee — Joinder application — Delay

RULING of Subair Williams J

Introduction

1. These proceedings were commenced in the Trust Administration and Beddoe's jurisdiction of the Court by way of Originating Summons in respect of a trust established in 1981 as an irrevocable discretionary settlement under Bermuda law (“the B Trust”/ “the Trust”). It has been broadly stated that the B Trust holds substantial assets worth billions of dollars.

2. The present application is brought by the Plaintiff trustee, Medlands (PTC) Limited (“Medlands”) whose current directors are Mr James Gilbert, Ms Kiernan Bell and Mr Darren Stainrod. The application is made by way of a summons filed under a cover letter dated 2 April 2020. This is supported by the Ninth Affidavit of Mr Gilbert which was sworn on 16 April 2020. One form of relief sought by Medlands is, inter alia, for an Order by this Court to issue directions in relation to disclosure of confidential and sealed Court documents on the former trustee, St. John's Trust Company (PVT) Limited (“SJTC”).

3. SJTC (now represented by the attorneys of Marshall Diel & Meyers Limited (“MDM”)) is wholly owned by Cabarita (PTC) Limited (“Cabarita”) which is a company domiciled in Nevis and whose sole director is Mr Evatt Tamine. The Board of Directors of SJTC (“the Board”) is currently comprised of Mr James Watlington and Mr Glenn Ferguson whose appointments were made effective as of 25 October 2019. Mr Gilbert, a Grand Cayman resident, was also a director of the Board up until 9 April 2020, having first been appointed on 23 June 2017. This means that between 25 October 2019 and 9 April 2020 Messrs. Gilbert, Watlington and Ferguson were all co-directors of the Board.

4. Prior to 25 October 2019, Mr Gilbert was the sole director of the Board. This was the case from 28 September 2018 when Mr Tamine, another previous director, resigned from the Board. Messrs. Gilbert and Tamine were, thus, co-directors of the Board between 23 June 2017 and 28 September 2018. Going behind 23 June 2017, Mr Tamine was the sole director of SJTC since 2013 and during that period, from March 2017, Mr Gilbert was employed as a Financial Controller providing his professional services to SJTC and to the B Trust.

5. While SJTC is no longer a party to these proceedings, the Originating Summons was filed on 2 November 2018 at the direction of Mr Gilbert in his capacity as a sole director of SJTC. At that time SJTC was the trustee company for the B Trust. This is how Mr Gilbert came to seek Beddoe relief of this Court as a Plaintiff under the SJTC name. However, on 19 December 2019 I ordered the discharge of SJTC as the trustee company for the B Trust and appointed Medlands in its place as the new trustee. Mr Gilbert, therefore, continues to have the Plaintiff's microphone in these proceedings, having transitioned from the voice of Plaintiff SJTC-JG to that of Medlands, the current Plaintiff.

6. For the avoidance of confusion, where I refer to SJTC as the former Plaintiff in these proceedings, I will adopt the term “Plaintiff SJTC-JG”. Otherwise, where I generically employ the word “Plaintiff” I do so by way of reference to Medlands.

7. Plaintiff SJTC-JG was represented by the attorneys of Conyers Dill & Pearman Limited (“CDP”) for the entire span of these proceedings leading up to 19 December 2019. CDP now represent Medlands and continue to be the attorney of record in these proceedings. On behalf of SJTC, MDM seek, inter alia, to be joined to these proceedings, now as a Defendant, on a summons application filed on 23 April 2020 (“the MDM summons”). The MDM summons is being driven by the current SJTC directors, Mr Watlington and Mr Ferguson.

8. The background to the summons applications before this Court is overlapped by injunction proceedings which were ultimately decided by the Honourable Chief Justice, Mr Narinder Hargun on 26 March 2020 in Case No. 447 of 2019 (“the injunction proceedings”). The injunction proceedings were commenced by Mr Gilbert in the name of SJTC as a writ action in pursuit of an order to restrain Mr Watlington and Mr Ferguson from acting and holding themselves out to be directors of SJTC. In this sense, I shall refer to Mr Gilbert, in his capacity as the SJTC Plaintiff in the injunction proceedings, as “Plaintiff-447”.

9. During the course of those proceedings, Hargun CJ stated that Messrs. Watlington and Ferguson should be served with the materials which were submitted to this Court leading up to 19 December 2019, subject to the discretion of this Court. In this context, he directed Plaintiff SJTC-JG to make the present disclosure application before me, although in the event it was made by Medlands.

10. In the first instance, I encouraged Medlands and SJTC to take steps to agree on the substance of an Order. This proved unsuccessful as the parties came to a dispute on the disclosure of Medlands' 2 April summons and the underlying evidence. As such, this Court has been called upon to determine the full issue and scope of the disclosure applications and SJTC's joinder application.

11. In so doing, it was clearly necessary for me to carefully review the history of this matter through previous Court filings. This was done in prelude to my examination of the documents filed by MDM, namely its 23 April summons and the supporting unsworn affidavit from Mr Watlington. Of course, I have also reviewed Mr Gilbert's Ninth Affidavit in support of Medlands' 2 April summons. The affidavit evidence of Ms Bell, as a director of Medlands, was also filed in support of Medlands' position and I have read her evidence thoroughly. Additionally, I reviewed Mr Elkinson's written submissions outlining the grounds of Medlands' arguments and proposals for the service of redacted documents where legal professional privilege is asserted.

12. The Plaintiff's written submissions and its April 2020 summons and supporting affidavit evidence has not been served on MDM. I directed that it would be appropriate for me to consider the legal professional privilege assertions therein on an ex parte basis. I have deliberated on those points and now state my decision on the subject of privilege in this Ruling.

13. In answer to the wider applications on disclosure as prayed in both parties' summonses, I deliver this Ruling on the papers inter partes. This Ruling is also an inter partes determination on the papers of the joinder application on the MDM Summons.

Procedural Background

The Commencement of these Proceedings

The Originating Summons

14. These proceedings commenced by an Originating Summons, dated 2 November 2018, for the Court's directions under RSC Order 85 on matters involving the execution of the B Trust. (Some six weeks prior, Mr Tamine had resigned as director of SJTC leaving Mr Gilbert as the sole director. Further, in Mr Gilbert's First Affidavit, filed days after the filing of the Originating Summons, he pointed to clause 4(6) of the Bye-Laws of SJTC in support of his proposition that he had authority to act as a sole director for the purpose of preserving company assets.)

15. The only named Defendant on the Originating Summons (and in all other Court documents made in 2018 and up until 25 July 2019) was the Attorney General. This was explained in Mr Gilbert's First Affidavit at paragraph 57:

“57. …the trust when created had certain named individuals as discretionary beneficiaries but to the best of my knowledge and belief, it has historically only made distributions to charitable organizations, and there is evidence that the beneficial class of the trust was narrowed and its name changed such that it appears to be a trust for charitable objects. For this reason, the Attorney General has been named as a Defendant to the application so that the interests of those charitable organizations may be represented in the context of this application. In circumstances where the other original “Beneficiaries” may be excluded persons and therefore not entitled to confidential information about the Trust, it is not proposed on this application that they be joined as parties (albeit that if, on analysis of any documents recovered, there are other beneficiaries, St John's can return to the court for further guidance on next steps).”

16. Plaintiff SJTC-JG prayed on the Originating Summons for the Court's sanction, in exercise of its Beddoe powers, to pursue the proceedings described below on behalf of the B Trust:

• (a) to issue and prosecute legal proceedings in Bermuda substantially in the form of the draft Generally Endorsed Writ of Summons which shall be provided to the Court;

• (b) to issue legal proceedings in England and Wales for an injunction in aid of the Bermuda proceedings, substantially in the form of the Claim From and Application Notice which shall be provided to the Court and to prosecute those proceedings and any appeals; and

• (c) to take all steps and to retain and employ such barristers, attorneys or solicitors and/or such other persons as...