Trustee N v Attorney General

• Jurisdiction: Bermuda
• Judgment Date: 13 July 2015
• Date: 13 July 2015
• Docket Number: Commercial Jurisdiction 2013 No XXX
• Court: Supreme Court (Bermuda)

[2015] Bda LR 68

In The Supreme Court of Bermuda

Commercial Jurisdiction 2013 No XXX

In the matter of the Bermuda Constitution

Between:

TRUSTEE N AND OTHERS

Plaintiffs

and

THE ATTORNEY GENERAL AND OTHERS

ATTORNEY GENERAL

Defendants

Mr A Boyle QC, Mr J Adkin QC and Mr N Hargun for the Plaintiffs

Mr M Cran QC, Ms E Talbot Rice QC, Mr J Brightwell and Mr R Attride-Stirling for the Defendants

The following cases were referred to in the judgment:

Howell v Lees-MillaisUNK [2011] EWCA Civ 786

STG Valmet v Brennan [1999-2000] Gib LR 211

Midland Bank Trust Co v GreenELR [1980] Ch 590

Re 3 Trustees [2007] EWHC 1922

Deery v Continental Trust Co Ltd [2010] JRC 001

A, B and C v Rozel Trustees (Channel Islands) Ltd [2012] JRC 127

20 Crest Homes Plc v MarksELR [1987] 1 AC 829

Marcel v Commissioner of PoliceELR [1992] Ch 225

Tchenguiz v SFOUNK [2014] EWCA Civ 1409

Springfield v BridgelandsUNK [1992] 110 ALR 685

Cobra Golf Inc v RataUNK [1996] FSR 819

AG v Guardian Newspapers (No 2)ELR [1990] 1 AC 109

Trilogy Management Ltd v YT Charitable Foundation International Ltd [2014] JRC 182

Beddoe proceedings — Use of disclosed confidential material — Investigation of wrongdoing — Variation of confidentiality order

RULING of HELLMAN J

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-MillaisUNK[2011] EWCA Civ 786 at para 45, this practice is particularly appropriate for applications for directions in connection with projected litigation (ieBeddoe 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:

• i. 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;

• ii. 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;

• iii. 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

• iv. 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 MoritzELR([1960] Ch 251) and In re Eaton, Midland Bank Exor. & Trustee Co LtdWLR([1964] 1 WLR 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 WLR at 760, per Megarry V-C. In In re Evans, Nourse, LJ had this to say about the nature of a Beddoe application ([1986] 1WLR 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...