Analysis
The appellants (the Inghams) appealed against an interlocutory ruling which set aside a privacy order.
In the proceedings below, the Inghams were seeking permission (the permission application) to bring a derivative claim (the derivative claim) on behalf of the estate of their grandmother, the late Elfrida Louise Chappell deceased (the deceased), on the basis that the executors of the deceased’s estate, Butterfield Trust (Bermuda) Ltd and Stephen Kempe (the executors), were unable to bring that claim due to alleged conflicts of interest. The derivative claim would allege that the deceased’s son, the late George Wardman deceased, and his wife Claudia had taken control of the deceased’s affairs and had procured payments and transfers of assets from the deceased and from a trust settled by the deceased by undue influence, without the deceased’s authority or in breach of fiduciary duty. The Wardmans were, like the Inghams, beneficiaries of the deceased’s estate. The executors, after taking advice, alleged it was not in the interests of the beneficiaries of the deceased’s estate for such claims to be brought by the estate or by the Inghams by way of the derivative claim.
There had been related proceedings in Guernsey concerning a trust settled by the deceased governed by Guernsey law. The trustee of the Guernsey trust was Butterfield Trust (Guernsey) Ltd and at times Butterfield Trust (Bermuda) Ltd had acted as agent for the Guernsey trustee. In the Guernsey proceedings, which had proceeded in private, documents had been disclosed that the Inghams considered to be relevant to the derivative claim. The Guernsey Royal Court had made an order (the RCG order) giving permission for those documents to be used in support of the permission application. Where those documents had been disclosed by the trustee of the Guernsey trust, the RCG order was subject to the proviso that a privacy order was first made by the Bermuda court equivalent to that which had been made in the Guernsey proceedings. All the main beneficiaries of the trust had supported the making of the RCG order.
A privacy order was granted ex parte on the Inghams’ application on the basis of the proviso to the RCG order. On 16 September 2021, on the application of the executors, the court discharged that privacy order.
Held: allowing the appeal and restoring the privacy order
The derivative claim should be characterised as reflecting an underlying dispute between beneficiaries of the deceased’s estate. In the circumstances the executors should have taken a neutral position and followed the directions of the court, Alsop Wilkinson v Neary [1995] applied. The actions of the executors in taking advice and in taking the position that the underlying claims should not be brought had wrongly preferred the interests of the Wardman beneficiaries of the deceased’s estate over those of the Inghams. For the same reason, the executors should not have opposed the Inghams’ application for a privacy order. The judge below wrongly failed to take these matters into account.
The application for a privacy order did not involve or amount to the enforcement of a foreign judgment in the form of the RCG order, as the executors had argued. In so far as the decision below was based on that argument, the judge had erred in law.
The permission application was interlocutory. Section 6(10) of the Constitution of Bermuda contains exceptions from the general rule as to open justice, including with respect to interlocutory proceedings. The judge below had failed to give reasons for apparently finding that the interlocutory proceedings exception did not apply. It was clearly in the interests of justice for the Bermuda court to have the Guernsey documents before it when hearing the permission application and the privacy order should have been maintained for that reason.
The executors should have followed the course indicated in Alsop Wilkinson and adopted a neutral position in respect to the derivative claim generally and the application for a privacy order. Their conduct had been improper and unjustifiable, hostile and potentially governed by self-interest. As a result, they would normally have been ordered to pay the Inghams’ costs of the appeal and below. However, a Beddoe order had also been made by the judge below which purported to protect the executors in respect to their costs of the appeal. This order was the subject of a further application for permission to appeal by the Inghams which had not been heard pending the determination of the current appeal. In the circumstances, the parties should agree how the question of costs should be dealt with.
JUDGMENT BELL JA: Introduction [1] This appeal arises from a ruling made by Subair Williams J dated 16 September 2021, in which she set aside a privacy order (the Privacy Order) which she had previously made on an ex parte basis. The judge had made the ex parte order without having been informed that the …Continue reading "Ingham & anr v Wardman & ors [2022] WTLR 1337"