Court blasts three way trust battle


Tribune Business Editor


The Court of Appeal has blasted a legal battle involving ‘breach of trust’ claims against CIBC Trust Company (Bahamas) as a prime example “of how litigation ought not to be conducted”, bemoaning the failure to apply “rigorous case management” from the outset.

Justice Conteh, in his ruling on a fight that has also embroiled Experta Trust Company (Bahamas) and Belgravia International Bank & Trust, said the Supreme Court’s delay in implementing a Case Management Order had left the various attorneys - not the judge - “in the driving seat”.

As a result, the matter had been bogged down on interlocutory issues for more than eight years, with a trial on the merits of Belgravia’s claim yet to take place.

Describing the action as “illustrative of how litigation ought not to be conducted”, Justice Conteh wrote: “We are constrained to state that if a proper and rigorous case management had been embarked upon from the outset, the interminable meandering of the course of the litigation in this case would have been avoided.”

The failure to apply a Case Management Order from the get-go, Justice Conteh added, had allowed the three financial institutions and their attorneys to 
“take over the pace and progress of the litigation” to the “detriment” of the case itself.

It had left the Court of Appeal having to rule on four separate preliminary matters, and Justice Conteh added: “The raison d’etre and spirit of any proper case management regime is to put trial judges in the driving seat, as it were, so as to ensure that cases are tried and determined expeditiously.

“We hope that trial judges in civil litigation will heed the provisions on case management in the rules of court, such as they are, for the time being so as to avoid what has happened in this case, whose hearing and determination were overwhelmed by the plethora of interlocutory applications to the judge that culminated in these appeals.”

Justice Conteh noted that the Supreme Court judge who heard the case, understood to have been Justice Neville Adderley (now in the Court of Appeal), had described the trust company battle as a ‘nightmare’ due to the amount of documents he had to wade through.

“The parties, or rather their legal advisers, have embarked upon an extended, and no doubt, expensive forensic jostling at what is only the interlocutory stage of the trial,” Justice Conteh said.

“The Record of Appeal filed in this appeal (several volumes in total with over 100 pages each) is by no means how such record should be produced. It did not make for easy reading, and it was far from easy to follow.”

Belgravia and Experta are represented by Maurice Glinton, while CIBC is being looked after by Brian Simms QC of Lennox Paton. Most of the applications, which gave rise to the appeals, appear to have originated from Mr Glinton and his clients.

Justice Conteh said the legal battle stemmed from a June 1996 agreement between CIBC and Belgravia, where they agreed to act as co-trustees of the Bagdonovich Family Trusts. CIBC was to act as managing trustee and administrator for various trusts in the structure.

Differences that emerged between the two co-trustees ultimately led to CIBC’s replacement by Experta in July 2005, and Belgravia commenced legal action against the former for alleged breach of trust and the return of trust assets/monies still in its control.

Although the Supreme Court rejected most of Belgravia’s initial demands, it did grant an Order requiring CIBC to account for all monies and assets it held for the beneficiaries of the Bagdonovich Family Trusts.

Belgravia, though, alleged that CIBC had failed to comply with the Accounting Order - a constant theme of its actions.

“Beguilingly simple as the judge’s Accounting Order might seem, the parties are divided down the line as to its purport and meaning, and whether there has been compliance with it or not,” Justice Conteh said.

“As a result, this Order has come to brood over the whole proceedings between them, including these appeals..... It is the fate of this Accounting Order that has to a very large extent bedevilled the progress of the case between the parties.

“On the one hand, Belgravia contends that no proper account has been provided by CIBC for it to advance its claim of breach of trust by CIBC since the judge made his Order.”

Belgravia had attempted to unsuccessfully press contempt proceedings against CIBC, its officers and attorney in the Supreme Court, and was “aggrieved by what it feels is the failure or neglect of the judge to enforce his Accounting Order”.

CIBC, though, in denying Belgravia’s claims alleged that the latter had the responsibility for accounting for the trust assets by virtue of their previous agreements.

The Court of Appeal dismissed Belgravia and Mr Glinton’s appeal over the Supreme Court’s failure to award it costs, and instead order ‘cause for costs’.

But it overturned a permanent injunction granted against CIBC and its attorneys, and the removal of an affidavit sworn by its general manager, Carlis Chisholm, from the files, finding this was “unsustainable”.

The affidavit revealed that $365,607 was being held by CIBC for the benefit of the Belgravia or the trusts, but the latter deployed “the nuclear option” by alleging non-compliance with the Accounting Order.

And it also claimed that the affidavit breached confidentiality provisions in the Banks and Trust Companies Regulations Act, disclosing personal information concerning the trust beneficiaries.

CIBC argued that the injunction would have “a freezing and paralysing effect on its ability to mount an appropriate defence”, an argument that found favour with the Court of Appeal.

Justice Conteh’s ruling also found that the information contained in the affidavit was “not an impermissible disclosure of confidential matters” given the circumstances.

As a result, the injunction was set aside and the affidavit returned to the file.

And, making it four wins for Mr Simms and CIBC, the Court of Appeal set aside the refusal to allow it to amend its re-amended defence, and upheld the Order granting further discovery.

“We think that more unnecessary gloom than light has been shed on this Accounting Order, accompanied by unnecessary, unsubstantiated and unsustainable protestations on behalf of Belgravia of the alleged non-compliance with it by CIBC,” the Court of Appeal said.


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