Cheryl Hamersmith-Stewart v Cromwell Trust Company Ltd, Adam Stewart (acting in his capacity as the Enforcer, a Member of the Advisory Board and personal capacity), Jaime Mcconnell (acting in her capacity as a Member of the Advisory Board and personal capacity), Brian Jardim, Gordon Stewart, Kelly Stewart, Sabrina Stewart
| Jurisdiction | Bahamas |
| Judge | Charles Sr. J |
| Judgment Date | 22 April 2022 |
| Court | Supreme Court (Bahamas) |
| Docket Number | 2021/CLE/gen/01043 |
IN THE MATTER of the trusts of the Declaration of Trust dated 23 rd February 2001 and designated as The Trust and of the trusts of the Declaration of Trust dated 23 rd February 2001 and designated as The Trust.
AND IN THE MATTER OF an application under Section 3 of the Judicial Trustees Act and/or under the inherent jurisdiction of the Court.
The Honourable Madam Senior Justice Indra H. Charles
2021/CLE/gen/01043
REDACTED RULING PENDING APPEAL
COMMONWEALTH OF THE BAHAMAS
Trust — Contentious trust dispute — Sealing application — Open justice — Whether matter should be heard in camera — Section 77(3) Banks and Trust Companies Regulation Act 2020
Extension of time to file Defence — RSC — O. 3 R. 4 — Order 31A Rule 18
HELD: Dismissing (i) the applications by the Trustee and the Second through Fourth Defendants to seal the file and (ii) the applications for extension of time by the Trustee and the Second through Fourth Defendants to file and serve their respective Defences, the Trustee is ordered to file and serve its Defence not later than 14 June 2022 and the Second through Fourth Defendants are to file and serve their respective Defences within 28 days from the date of this Ruling.
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1. Section 77(3) of the Banks and Trust Companies Regulation Act 2020 does not give the Trustee a statutory right to have the proceedings kept confidential. It merely gives the Court a discretion to decide whether to hear an action in private or seal a court file and the exercise of that discretion must be canvassed against the constitutional principle of open justice, which although not an absolute right, is difficult to displace: Hot Pancakes Limited et al v Amber Louise Murphy et al SCCiv App. 95 of 2020 and Standard Chartered Bank (Switzerland) S.A v UBS (Bahamas) Ltd. [2011] BHS J No 24 applied.
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2. The open justice principle is a constitutional one which ought not to be easily emasculated. It is the default position. As such, an applicant seeking a derogation from that position bears a heavy burden of proving to justify such departure: Hot Pancakes Limited et al v Amber Louise Murphy et al [supra] applied.
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3. There are exceptions to the open justice principle, for example (i) national security concerns; (2) privacy concerns (where the release of confidential information such as private financial records might harm the reputation of one of the parties); (iii) it may be necessary to protect the privacy of a minor and (iv) when legal matters involve uncontentious information unrelated to public issues such as the financial division of an estate after a death. However, the overriding objective in determining whether the open justice principle applies or not is to secure that justice is done. The question of whether open justice should be departed from is a question of principle, turning not on convenience, but on necessity: Scott v Scott [1913] AC 417 and Al Rawi v Security Service [2012] 1 All ER applied.
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4. The Court must undertake a fact-specific balancing exercise when considering the purpose of the open justice principle and the potential value of the information in question in advancing that purpose and any risk of harm that its disclosure might cause to the maintenance of an effective judicial process or to the legitimate interests of others: R v Chief Registrar of Friendly Societies, ex parte New Cross Building Society [1984] 2 All ER 27.
A wealthy and well-known entrepreneur created two trusts governed by Bahamian law. The Plaintiff, who is the common law widow of the Founder of the two trusts, commenced an action against the Trustee to which the Founder's children as beneficiaries of the trusts were joined.
The Trustee applied for the file to be sealed (‘the sealing application”). Some of the Defendants support the application.
The Plaintiff initially did not oppose the sealing application but now opposes it along with the Fifth through Seventh Defendants who are her adult children. They say that the circumstances are not sufficiently compelling to warrant the sealing of the file, effectively the disposal of the open justice principle.
The Trustee and the Second through Fourth Defendants (who were recently joined) also applied for an extension of time to file and serve their respective Defences.
Mr. John Wilson QC with him Ms. Knijah Knowles of McKinney Bancroft & Hughes for the Plaintiff
Mr. Brian Simms QC with him Mr. Marco Turnquest and Mr. Wilfred P. Ferguson Jr. of Lennox Paton for the First Defendant
Mr. Sean McWeeney QC with Mr. Richard Wilson QC (London) and Mr. John Minns of Graham Thompson for the Second, Third and Fourth Defendants
Mr. Terry North with him Ms. Wynsome Carey and Mr. Darzhon Rolle of Alexiou Knowles for the Fifth, Sixth and Seventh Defendants
Mr. John Delaney QC with him Mrs. Lena Bonaby of Delaney Partners for the minor children of the Second and Third Defendants being instructed via Johann Gordon Epstein, their Guardian ad Litem
This Ruling has been redacted pending an appeal against my refusal to grant a sealing order.
There are four (4) extant Summonses before the Court namely:
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(i) An application by the Trustee filed on 12 November 2021 seeking an order to seal the file (“the sealing application”);
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(ii) An application by the Trustee filed on 12 November 2021 seeking an order for the determination of a preliminary issue, an extension of time for service of its Defence (“the Trustee's extension of time application”) and for joinder and representation orders (“joinder and representation application”);
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(iii) An application by the first family filed on 13 April 2022 seeking an extension of time for the filing of their respective Defences to 28 days after the final determination of the preliminary issue.
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(iv) REDACTED
This Ruling considers the sealing application and the extension of time applications of the Trustee and the first family.
By Summons filed on 12 November 2021, the Trustee seeks the sealing of the file. That application was supported by the First and Fourth Affidavits of a director or employee of the holding company.
The first family supports the Trustee's application by asking the Court to depart from the constitutional principle of open justice and grant a sealing order.
The Plaintiff and her adult children oppose the application, asserting that the circumstances of this case do not warrant the grant of a sealing or privacy order.
The Deceased was a well-known entrepreneur. He was the Founder of two (2) trusts governed by Bahamian law.
The Deceased died leaving two (2) surviving branches of his family. The first branch is the “first family”, comprising his adult children (and their respective families). The second branch is the “second family”.
Most of Deceased's wealth was settled into three trusts, two of which are Bahamian and the subject of these proceedings. The Trustee is a Bahamian private trust company that is the trustee of both trusts.
The Deceased left very detailed instructions expressing his wishes as to how the trusts are/ought to be administered after his death. In summary, he expressed that he wanted the trusts to be brought to an end promptly following his death and that the shares in the business holding companies to be decanted into five (5) new trusts.
The Trustee nor the first family have filed Defences.
The general rule with respect to the hearing of proceedings is a centuries’ old principle of “open justice” – proceedings are to be held in open Court. Open justice is a fundamental constitutional principle of The Bahamas. Article 20(9) of the Constitution of The Bahamas provides for open justice:
“All proceedings instituted in any court for the determination of the existence or extent of any civil right or obligations including the announcement of the decision of the Court, shall be held in public.”
In Scott v Scott [1913] AC 417, the House of Lords considered the circumstances under which it is permissible to derogate from open justice. The Court stated that there are exceptions to the open justice principle but that the overriding object in determining whether the open justice principle applies or not is to secure that justice is done. It was made clear that a party seeking to displace the application of open justice must show that it is necessary for the administration of justice. At page 438, the House of Lords expressed this high standard in the following terms:
“But unless it be strictly necessary for the attainment of justice, there can be no power in the Court to hear in camera either a matrimonial cause or any other where there is contest between parties.”
Lord Atkinson was of the view that this had to be tolerated and endured because public trials were the best security for the pure, impartial, and efficient administration of justice. At page 463, he stated:
“It is not necessary in the present case to determine whether the broad proposition laid down by Sir Francis Jeune (as he then was) in D. v. D. (1) is well founded. The hearing of a case in public may be, and often is, no doubt, painful, humiliating, or deterrent both to parties and witnesses, and in many cases, especially those of a criminal nature, the details may be so indecent as to tend to injure public morals, but all this is tolerated and endured, because it is felt that in public trial is to...
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