Trustee N v Attorney General

• Jurisdiction: Bermuda
• Judgment Date: 13 July 2015
• Neutral Citation: [2015] SC Bda 50 Com
• Date: 13 July 2015
• Docket Number: CIVIL JURISDICTION 2013: No XXX
• Court: Supreme Court (Bermuda)

[2015] SC (Bda) 50 Com

In The Supreme Court of Bermuda

COMMERCIAL COURT

CIVIL JURISDICTION 2013: No XXX

Between:

Trustee N and Others

Plaintiffs

and

The Attorney General and Others

Defendants

Mr Alan Boyle QC, Mr Jonathan Adkin QC and Mr Narinder Hargun, Conyers Dill & Pearman, for the Plaintiffs

Mr Mark Cran QC, Ms Elspeth Talbot Rice QC, Mr James Brightwell and Mr Rod Attride-Stirling, ASW Law Limited, for the Second Defendant

The other Defendants did not appear and were not represented

RULING

(In Chambers)

Introduction

1 Should a party to Beddoe proceedings be able to use material disclosed in them to attack the trust or trustees in the action to which those proceedings relate? Or to bring fresh proceedings in relation to another trust? Or to investigate potential wrongdoing? If so, in what circumstances? Those interesting questions are raised in the application before me, which has been brought in these Beddoe proceedings by the Second Defendant, D2, to vary the confidentiality order made by this Court at their outset (‘the Confidentiality Order’ or simply ‘the Order’).

Background

2 Applications for directions by a trustee, being of an essentially administrative character, are normally held in private, ie with the public excluded. As stated by Lord Neuberger MR (as he then was) in Howell v Lees-Millais [2011] EWCA Civ 786 at para 45, this practice is particularly appropriate for applications for directions in connection with projected litigation (ie Beddoe applications):

‘… it would be unfair and potentially embarrassing if opinions given to the trustee, and indeed the Judge's views, were known by any potential adversary of the trustee in the litigation concerned, …’

3 As it would if they were known by the judge hearing the main action. Further, there may be confidential information relevant to the Beddoe proceedings which the trustee wishes to communicate to the Beddoe Judge without placing it in the public domain. Moreover, I was satisfied on the evidence before me that there was a real risk that without the Confidentiality Order D2 would make use of material disclosed on the Beddoe application to appeal to the court of public opinion via the media. As D2 would have been perfectly entitled to do.

4 In Bermuda the fact that a hearing takes place in private does not in itself mean that the parties are prohibited from using material from the hearing in other proceedings or from disseminating it to the public. Thus, section 10(1) of the Administration of Justice (Contempt of Court) Act 1979 provides that the publication of information relating to proceedings held ‘ in camera’, which for present purposes is synonymous with ‘ in private’, shall not of itself be regarded as contempt of court, except in various specified circumstances, eg where the Court expressly prohibits such publication.

5 It was for these reasons that, at an ex parte hearing in the second half of 2013, I made the Confidentiality Order. The Court's power to do so has not been challenged. The Order provides that the file in these proceedings shall be sealed and that they shall be heard in camera. It further provides that all ‘ Confidential Information’ shall be kept confidential by each Defendant and shall not be used for any purpose other than these proceedings, but with liberty to any person to apply to vary or discharge the terms of the Order. However the Order provides that a Defendant may disclose confidential information if required to do so by law or to a ‘ Permitted Recipient’.

6 ‘ Confidential Information’ is defined in the Order as meaning all documents and information filed in or relating to these proceedings provided or made available to a party in connection with the proceedings save for (i) documents and information which are already in the possession of such party, and (ii) documents and information which are already in the public domain otherwise than by a breach of the Order.

7 ‘ Permitted Recipient’ is defined in the Order to mean a legal representative of a Defendant or a person holding a power of attorney which enables such person to represent a Defendant, provided that the representative is informed that the Confidential Information is confidential and is bound by professional obligations of confidentiality and non-disclosure to that Defendant, or has undertaken to the Plaintiffs (‘the Trustees’) to be bound by the terms of the Order as if the representative were a Defendant.

8 D2, who has scrupulously observed the terms of the Confidentiality Order, did not apply to vary or discharge it immediately. By an ex parte on notice summons dated in early 2014 D2 applied to extend its ambit to cover the Trustees. An affidavit filed in support of the application by D2's solicitor, stated that D2 had instructed D2's lawyers to seek the variation or discharge of the Confidentiality Order and that it was proposed to issue such an application shortly.

9 The summons came before the Court shortly after its filing. I adjourned it so that it could be heard together with the broader application to vary or discharge the Confidentiality Order which, according to the affidavit of D2's solicitor, was to be filed shortly, and invited the parties to agree a sensible timetable for the filing of affidavits.

10 D2 did not in fact file a further application to vary the Confidentiality Order until early 2015. By that time, and indeed even before D2's summons in early 2014 was issued, the Trustees had filed a number of affidavits in these proceedings and provided very considerable disclosure.

11 In a further affidavit, D2's solicitor explained that D2 had waited for the filing of the Trustees' evidence in the Beddoe application to be completed, which did not take place until the end of 2014, so that D2 could assess the position ‘ in the round’ with D2's legal advisors. D2 then made an application to vary the Confidentiality Order which took into account the totality of the Confidential Information. It is upon that application that I am now required to rule.

12 D2 seeks to vary the Confidentiality Order so as to permit D2 to use for the purpose of other proceedings a number of specified documents (‘the Permitted Material’) falling within the Confidential Information. The Permitted Material includes documents which:

• (1) are relevant to causes of action already pleaded by D2 in the main action to which these proceedings relate (‘the Main Action’) in which D2 contends, inter alia, that the Trustees hold the entirety of the trust funds of the Trusts on trust for the heirs (‘the Heirs’) of D2's late father absolutely. Of the Heirs, D2 stands to inherit by far the largest share of the late father's estate;

• (2) disclose new causes of action related to matters pleaded within the Main Action. These were pleaded in a draft re-amended statement of claim which was before the Court at the substantive hearing of the Beddoe application;

• (3) disclose causes of action relating to another trust (‘Trust J’). These were pleaded in a draft statement of claim which was also before the Court at the substantive hearing of the Beddoe application (‘the Trust J Action’); and

• (4) will enable D2 to pursue enquiries relating to a further trust (‘Trust K’). These may result in a new action analogous to the Main Action but brought against the trustee of Trust K.

13 D2 asserts that the existence of Trust J and Trust K was revealed to D2 for the first time in affidavits sworn on behalf of the Trustees in these proceedings.

D2 also seeks to vary the Confidentiality Order in various other ways. I shall deal with them later in this ruling.

The law re disclosure of confidential material

14 When considering whether to vary the Confidentiality Order the obvious starting point is cases relating to applications by trustees for directions in general and Beddoe applications in particular.

15 It will be helpful to bear in mind that over the years the role of a party to the Beddoe proceedings who is also a claimant to the trust fund has changed. As Waite JA explained in STG Valmet v Brennan [1999 – 2000] Gib LR 211, a decision of the Gibraltar Court of Appeal:

‘ 39 The original view taken by the courts was that where the claimant to the fund was himself a beneficiary under the trust, he should be allowed a limited right to be heard on the Beddoe application but should be excluded from the hearing when the merits of his claim and the defence to it were discussed between the trustees and the judge: see ( In re Moritz [1960] Ch. 251) and ( In re Eaton, Midland Bank Exor. & Trustee Co. Ltd. [1964] 1 W.L.R. 1269). A claimant who was not himself a beneficiary had no such right to be heard, and might not even be aware that the application was being made at all: see ( In re Dallaway [1982] 1 W.L.R. at 760, per Megarry, V.-C.). In In re Evans, Nourse, L.J. had this to say about the nature of a Beddoe application ( [1986] 1.W.L.R. at 106):

“First and foremost, every application of this kind depends on its own facts and is essentially a matter for the discretion of the master or judge who hears it. The application is heard in Chambers and the claimant is excluded from any consideration of the merits of the action which are discussed before the court in much the same way as they would earlier have been discussed with counsel in his chambers. Being entirely domestic to the estate or trust concerned, the application is often conducted in a comparatively informal manner.”

40 There are indications in more recent authority that the courts look with disfavour on the exclusion of the claimant from a Beddoe application; accepting that he should not be present when the strength of the case against him is discussed but insisting that in all other respects the rules of natural justice require him to be heard as fully as if he were a party to the proceeding. Thus in Weth v. Att.-Gen. , ( ...