The Wife v The Husband and The Trust Company (as Trustee of ‘The A Fund’ and ‘The X Trust’)

JurisdictionBermuda
CourtSupreme Court
JudgeStoneham, P.J.
Judgment Date07 November 2019
Neutral Citation[2019] SC Bda 79 Div
Date07 November 2019
Docket Number2012: No. 65

[2019] SC (Bda) 79 Div

IN THE SUPREME COURT OF BERMUDA

DIVORCE JURISDICTION

Stoneham, P.J.

2012: No. 65

Between:
The Wife
Petitioner
and
The Husband
Respondent

and

The Trust Company (As Trustee of ‘The A Fund’ and ‘The X Trust’)
Second Respondent
Appearances:

In Chambers

Family Law - Husband and wife — Divorce — Maintenance pending suit — Multiple trusts — Application for ancillary relief — Beneficiaries — Distribution of assets — Whether X trust was nuptial settlement — Whether court had dispositive powers over trusts — Whether trusts were financial resources of the husband — Matrimonial Causes Act, 1974.

(In Chambers)

A. INTRODUCTION
1

This is my judgment in a case that might only be described as a scorched earth approached to ancillary relief proceedings following the breakdown of a marriage. Proceedings commenced in 2012. A wrath of ill feelings and allegations of egregious conduct infiltrated these protracted proceedings exhausting the mightiest of specialist attorneys including Karen V. P. Lomas, Honor Desmond-Tetlow and Katie Richards — all withdrawing as attorney of record at watershed moments in the battle.

2

This matter first came before me in 2016. Mr. David Kessaram assisted by Mr. Sam Riihiluoma of Cox Hallett Wilkinson Limited, appeared as Counsel for the Wife; Mrs. Georgia Marshall, of Marshall Diel Myers Limited, appeared as Counsel for the Husband and Mrs. Fozeia Rana-Fahy appeared as Counsel for the Trustee. Following an Order of Court, Mrs. Rana-Fahy was also appointed to represent the interests of the minor beneficiaries. These specialist attorneys, all of the highest quality, argued with the precision of ‘hired guns’ and over the course of two and one half years, besieged the Court with voluminous bankers boxes, filled with large ringed binders comprising pleadings, affidavits, disclosure documents and correspondence; all in support of their respective clients positions. At various stages of the proceedings, Mr. Kessaram and Mrs. Marshall catapulted bombastic remarks at one another and accused the other of ambush. Mrs. Rana-Fahy shielded herself with intellectual focus.

3

The hearing of this matter concluded before me in May of 2018. I have found this to be a particularly difficult case. I heard extensive oral submissions, oral evidence of the parties and read and re-read the evidence and authorities' bundles. The preparation of this decision following the conclusion of the trial in May 2018, coupled with no administrative support over the last three years has resulted in the delivery of this judgment far outside the six week time frame expected of a judge in Bermuda.

4

I have received several letters, emails and telephone calls concerning the completion of this judgment. As of this week, there is now an application for judicial review seeking a writ of mandamus ordering me to deliver this judgement on or before 7 November 2019. What an extraordinary circumstance that a judge's independence is threatened while searching for a fair outcome in all the circumstances of this Wife and Husband.

5

May all be reminded that my duty in these proceedings includes doing right to all people after the laws and usages of Bermuda without fear or favour, affection or ill-will, So help me God.

B. ESSENTIAL FACTUAL BACKGROUND
6

Insofar as these background facts differ from the evidence of the Husband and the Wife or The Trust Company, this is due to the fact that the evidence of the other is preferred or because I consider that the documents produced confirm these findings of fact.

7

The Wife and Husband are both in their fifties. They are ‘Bermudian’ and resided throughout the 22 years of marriage in Bermuda.

8

They first met at the Dinghy Club in Bermuda toward the latter part of September 1985. At that time, the Wife worked in an administrative capacity and the Husband held a position within his family's business. Following a five year courtship, including an equal period of premarital cohabitation, they married in 1990. After the birth of the two children of the family, the Wife gave up employment to become a home-maker.

9

B, the minor child of the family attended a well-established private school in Bermuda. The Husband was responsible for the tuition. B soon experienced challenges at this school and the Wife and Husband researched overseas educational options suitable to B's particular needs. The Wife and Husband decided to enroll B in School No. 1. Amongst the many positive instructive features of this school, it happened to be in close proximity to an apartment (‘the US Apartment’) owned by the Husband's brother and father. The US apartment is not an asset of The X Trust.

10

The Husband is required to pay rent and approximately $1,800 per month for maintenance fees and other utilities for so long as the Wife and B stayed in the apartment. For reasons that are not quite clear, the Husband has not had access to B.

11

Whilst the Wife and son were in the US, the Husband continued employment within his family business in Bermuda. The Husband's family operates a well-established business in Bermuda (‘the Business’), which prior to the economic recession employed a number of persons and met economic success in the marketplace. However, since the economic recession, a number of its operations have ceased and employees let go.

12

At the time of the hearing, the Husband continued to hold a position in the Business and continued to provide high tier health insurance coverage for the Wife and B. By Order dated 1 March 2017, this court ordered, inter alia, that all information regarding the Business must be sealed and shall not be available for public inspection. With that said, my description of the Business and its financial affairs are deliberately obscured and generalized to protect its identification.

The Business
13

The Business has significant borrowings in excess of $10 million dollars. The 2018 financials of the Business revealed operating losses in excess of $ 1.5 million dollars. The Business is not doing well and thus struggling to service its significant borrowings.

The X Trust
14

The shares of the Business were held in a discretionary trust; The X Trust. In 1985, The X Trust was settled by the patriarch of the Husband's family (‘the Settlor’) five years prior to the Husband and Wife's marriage. At the time of settlement, the Wife and Husband had not met one another.

15

The beneficiaries of The X Trust were the Settlor and the Matriarch of the family (the Husband's mother), their two children (one of whom is the Husband) and “ the remoter issue of the settlor and his said wife”. The remoter issue includes grandchildren and those yet to be born. There are currently five grandchildren (three of whom, including B, are minors). The trust was intended to be dynastic in nature.

16

The Wife is not a beneficiary of The X Trust and to the Trustee's knowledge “the Wife has never been a beneficiary”. Likewise, neither is the spouse of the Husband's brother a beneficiary of this trust.

17

The purpose of The X Trust was to hold assets of the Settlor and the Matriarch of the family, their issue, and remoter issue. In addition to holding the shares of The Business, the assets of The X Trust included various commercial holdings and residential properties situate in Bermuda.

18

It was always the intention of the deceased Settlor and his wife that each of their grandchildren be secured a home.

19

The X Trust obtained 100% financing to purchase a $3.8 million dollar home for the Husband (‘the FMH’). The X Trust expended some $3.9 million dollars in relation to this property including mortgage payments made and other expenses.

20

The X Trust also expended some $2.3 million dollars on the marital home of the Husband's brother.

21

In or about 2004, the Husband's brother experienced serious medical issues. This roused his concern that in the event of his death, his wife and children should have a home. The outstanding debt of $800,000 on this property was discharged and The X Trust irrevocably appointed his matrimonial home to a discretionary trust established for the benefit of himself, his wife and their three children.

The A Fund & other trusts
22

Likewise, in or about February 2004, $800,000 was paid toward the outstanding debt of $3.8 million dollars then secured against the FMH. The X Trust irrevocably appointed out to The A Fund, a discretionary trust established for the benefit of the Husband, the Wife and their two children, subject to all debt secured thereon with the bank continuing to hold the deeds to the FMH by way of security. The debt secured on the FMH was thus reduced to $2,999,009 and The X Trust continued to pay the debt which remained a debt of The X Trust.

23

No agreement existed between The X Trust and The A Fund for repayment to The X Trust of funds that it paid out to service the loan against the FMH. The bank loan remains a debt of The X Trust, which it was obligated to repay at a monthly rate of $25,000. At the commencement of this hearing, the debt level was more than two and half million dollars

24

After residing in this home, the Wife, Husband and children vacated the FMH and thereafter, it was leased producing an income of approximately $14,000 – $18,000 per month. All such rental income was appointed to the Husband for his own use.

25

During a real estate boom in 2004, the Husband settled other discretionary trusts, one of which was The CS Trust, the beneficiaries of which were the husband, the Wife and the two children of the family. The only asset of The CS Trust was a residential property (HC). The property was purchased for $1,950,000 with the Husband paying $195,000 by way of deposit which came from the sale of Bank of Bermuda shares, most of which the husband had prior to the marriage. The Husband also raised a sum of approx. $70,000 for the closing costs. The balance of the sale...

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