Ann Maxine Patton v Alvarez, Jimenez, De Pass, S.A. A/K/A

• Jurisdiction: Bahamas
• Judge: Charles J
• Judgment Date: 04 September 2020
• Court: Supreme Court (Bahamas)
• Docket Number: 2017/CLE/gen/00777
• Date: 04 September 2020

IN THE SUPREME COURT

Common Law and Equity Division

Before:

The Honourable Madam Justice Indra H. Charles

2017/CLE/gen/00777

In the matter of the Deed of Settlement dated the 26 ^th May, 2005 and designated as the A.B. Insurance Trust Settlement

And in the matter of Section 48 of the Trustee Act 1998 (Chapter 176 Revised Statute Laws of The Bahamas 2000)

Between

Ann Maxine Patton

Plaintiff

and

Alvarez, Jimenez, De Pass, S.A. A/K/A Alvarez Aguilar Abogados Asociados, S.A. (in its capacity as the Trustee of the A.B. Insurance Trust Settlement)

First Defendant

James Alfred Walker JR. (in his capacity as the Protector of the A.B. Insurance Trust Settlement)

Second Defendant

Appearances:

Mr. Sean N. C. Moree with him Mrs. Vanessa L. Smith and Mr. Miguel A. Darling of McKinney, Bancroft & Hughes for the Plaintiff

Non-appearance by the Defendants although properly served

Trusts — Plaintiff seeking removal of trustee and protector — Removal of trustee — Appointment of successor trustee — Protector resigned a day before hearing — Appointment of successor protector — Failure to account and provide information — Dishonesty and potential fraud — Hostility between Defendants and Plaintiff — Defendants' refusal to submit to Bahamian jurisdiction — Protector resigned a day before hearing — Other beneficiaries do not oppose Plaintiff's application

The Plaintiff, a beneficiary of the A.B. Trust, commenced these proceedings seeking the removal of the First Defendant (“AJD”) as Trustee and the Second Defendant (“Mr. Walker”) as the Protector of the A.B. Trust. The Plaintiff also seeks that they be replaced by a successor Trustee and a successive Protector.

HELD: The Trustee is removed and replaced by a successor Trustee to the A.B. Trust. The Protector, having tendered his resignation a day before this hearing, leaves that office vacant. A successor Protector is appointed to the A.B. Trust.

• 1. The Court has an inherent jurisdiction to remove a trustee, the general principle guiding the court in the exercise of its inherent jurisdiction is the welfare of the beneficiaries and the competent administration of the trust: Lord Blackburn in Letterstedt v Broers (1884) 9 App Cas 371 at pages 385–387.

• 2. Trustees are under an obligation to account to the beneficiaries for their stewardship of the trust assets. The duty to account is one of the “ irreducible core obligations” owed by trustees to beneficiaries: Millett LJ in Armitage v Nurse [1998] Ch.241.

• 3. The Court finds that the First Defendant failed to account to the Plaintiff for its receipts and dispositions of value of the A.B. Trust.

• 4. A trustee is not at liberty to simply ignore a beneficiary's request for information about the trust: HHJ Paul Matthews in Lewis v Tamplin [2018] EWHC 777 (Ch) at paras 33–34.

• 5. In the present case, the Plaintiff has sought information from the Trustee to hold it accountable for its stewardship of the trust property and the Trustee has failed to provide the information requested.

• 6. Hostility between a beneficiary and trustee by itself is not enough to justify a trustee's removal. However, the court is encouraged to take these hostilities (and the reasons for them) into consideration when determining whether it is just and equitable to exercise its jurisdiction to remove a trustee: Lord Blackburn in Letterstedt v Broers (1884) 9 App Cas 371 at pages 389.

• 7. Hostility between the Plaintiff and the Trustee is borne out by (i) the misconduct of the Trustee; (ii) the mistrust by the Plaintiff of the Trustee; and (iii) the non-cooperation of the Trustee to deal with legitimate enquiries from the Plaintiff and to provide her with information about the trust to which she is entitled.

• 8. Despite being properly served with proceedings, the Trustee has refused to submit to the Bahamian jurisdiction and participate in the proceedings. A trustee, who has been served with proceedings concerning the administration of a trust and who does not participate in the proceedings a fortiori where its own removal is sought is, ipso facto, unfit to continue to act as trustee and an adverse inference with respect to its refusal to participate in these proceedings should be drawn.

• 9. The Court will exercise its inherent jurisdiction and remove AJD as trustee of the A.B. Trust and appoint a successor trustee pursuant to Section 48 of the Trustees Act.

• 10. While the Court possesses an inherent jurisdiction to remove a protector of a trust, the Protector tendered his resignation on 2 September 2020. The Deed of Resignation was provided to the Court on 3 September 2020. Accordingly, the office of Protector of the A.B. Trust is now vacant and the Court has the power to appoint a successor protector.

• 11. The Court has power to appoint a protector of a trust pursuant to its inherent supervisory powers over trusts: See Hargun CJ in In the Matter of H Trust [2019] SC (Bda) 27 at paragraphs 11–12.

Charles J

Introduction

1 By Amended Originating Summons filed on 27 June 2017, the Plaintiff (“Mrs. Patton”) seeks the following order namely:

• (i) The First Defendant, Alvarez, Jimenez, De Pass, S.A. a/k/a Alvarez Aguilar Abogados Asociados, A.A. (“AJD”) be removed as Trustee of the A.B. Insurance Trust Settlement (“the A.B. Trust”) and that Peter James DeLisi (“Mr. DeLisi”) be appointed as the successor Trustee of the A.B. Trust; and

• (ii) The Second Defendant, James Alfred Walker Jr. (“Mr. Walker”) be removed as Protector of the A.B. Trust and that John Michael Koonmen (“Mr. Koonmen”) be appointed as the successor Protector of the A.B. Trust.

2 The Amended Originating Summons is supported by the following Affidavits:

• a. Affidavit of Ann Maxine Patton filed on 23 June 2017 (“the First Patton Affidavit”);

• b. Affidavit of Ann Maxine Patton filed on 19 July 2017 (“the Second Patton Affidavit”);

• c. Affidavit of Peter James DeLisi filed on 23 June 2017 (“the DeLisi Affidavit”); and

• d. Affidavit of John Michael Koonmen filed on 23 June 2017 (“the Koonmen Affidavit”).

Procedural history

3 The Amended Originating Summons and supporting Affidavits have been duly served on AJD and Mr. Walker. The named discretionary beneficiaries of the A.B. Trust are (i) Mrs. Patton who is the Primary Beneficiary; (ii) Professor Paul Bender, the Settlor's father; (iii) Mrs. Margaret Bender, the Settlor's mother; (iv) Mr. Matthew Bender, the Settlor's brother; (v) Mr. Kenneth E. Patton III, Mrs. Patton's father; (vi) Mrs. Grace E. Patton, Mrs. Patton's mother; and (vii) Mr. Kenneth S. Patton IV, Mrs. Patton's brother. They also have been served with the Amended Originating Summons and the supporting Affidavits.

4 AJD has not entered an appearance in these proceedings. Mr. Walker had, in prior interlocutory proceedings, challenged the service of the Amended Originating Summons and supporting Affidavits and the jurisdiction of this Court to hear the Amended Originating Summons (“Mr. Walker's Challenge”) which was unsuccessful. Thereafter, Mr. Walker advised the Court that he would not be submitting to the jurisdiction and would not further participate in the action.

5 Pursuant to the Order dated 3 June 2020 (“the Order”), Mrs. Patton served the other named beneficiaries of the A.B. Trust electronically. The method of service was declared effective by way of the Order dated 17 August 2020.

6 None of the aforementioned beneficiaries have filed any appearances in this action.

The hearing of the Amended Originating Summons

7 The Amended Originating Summons was heard on 4 September 2020 at 10: 30 a. m. via remote hearing using the CISCO WEBEX platform. Despite the Court providing Webex invitations to the following persons, none of them chose to appear:

• 1) Mr. Marco Turnquest and Ms. Chizelle Cargill of Lennox Paton who had previously made representations on behalf of Mr. Walker;

• 2) Professor Paul Bender;

• 3) Mrs. Margaret Bender;

• 4) Mr. Matthew Bender;

• 5) Mr. Kenneth Patton III;

• 6) Mrs. Grace Patton; and

• 7) Mr. Kenneth Patton IV.

8 Nonetheless, by emails dated 3 September 2020, Mr. Kenneth Patton III, Mrs. Grace Patton and Mr. Kenneth Patton IV expressed their support of the application made by Mrs. Patton.

9 Additionally, by letter dated 3 September 2020, Mr. Marco Turnquest of Lennox Paton wrote to Mr. Sean N.C. Moree of McKinney, Bancroft & Hughes, Mr. Turnquest stating that Mr. Walker has elected to resign as Protector of the A.B. Trust. The letter reads:

“Re: ANN Maxine Patton v James Walker Jr. (“Mr. Walker”) et al - Action No. 2017/CLE/gen/00777

As you are aware, we represent Mr. Walker. After Justice Charles' Rulings in early June 2020, our client entered in discussions with the late Mr. John Bender's father and other family members (“the Bender family”) concerning the captioned Action. Initially, the Bender family advised our client that they intended to participate in the Action as beneficiaries to protect their interest. However, earlier this week, the Bender family abruptly advised our client that they no longer had any interest in participating in the Action. Consequently, the Bender family advised our client that they would not oppose the relief that your client was seeking in the Action. Given the Bender family's position, our client has decided to respect their wishes and has instructed us to advise you that in the circumstances he has elected to resign as protector of the A.B. Insurance Trust Settlement (“the Settlement”). Accordingly, we attach a copy of our client's executed Deed of Resignation.

However, notwithstanding our client's resignation as the protector of the Settlement, he maintains his position that Mr. Peter J. DeLisi and Mr. John M. Koonman (sic) are not suitable persons to be appointed as trustee and protector of the Settlement respectively for the reasons set out in his previously filed affidavits ….”

10 Furthermore, neither the Bender family nor...