Court name
Supreme Court of Turks and Caicos Islands
Case number
CL 17 of 2022

Margaret Joan Smith (Trustee) v Bordier Bank (TCI) Ltd. (CL 17 of 2022) [2022] TCASC 24 (22 August 2022);

Media neutral citation
[2022] TCASC 24
Flynote
Case summary:

The Plaintiff (“the Trustee”) is the trustee of the estate of Joseph M Demauro (“the Debtor”). In 2013 the Debtor filed a petition for voluntary bankruptcy, and he died later the same year. The Trustee produced evidence of multiple transactions by the Debtor, which appear to have been calculated to conceal assets and evade his liabilities. As a result of her investigations the Trustee has discovered assets and transactions in multiple jurisdictions, including she contended, the Turks and Caicos Islands. Abia Management Co. S.A. (“ABIA”) is the holder of an account designated “abia #846” at the Defendant bank, Bordier Bank (TCI) Ltd. (“the Bank”). By an amended originating summons, the Trustee sought an order pursuant to sections 467(2) and 467(3)(c) or alternatively, 467(3)(h) of the Insolvency Ordinance CAP 16.18 that the Bank disclose and deliver up to her various documents and information in relation to the account, including bank statements, KYC documents and transaction instructions.

The Bank was represented by counsel. It maintained a neutral stance but made detailed submissions in which it expressed various concerns in relation to the orders sought by the Trustee. ABIA was not represented at the hearing and played no part in the proceedings. On July 15, 2022 the Trustee sent to ABIA the affidavits in support of the amended originating summons, but not the summons itself, or notice of the actual hearing. ABIA would have been able to ascertain the details of the orders sought from the Trustee’s first affidavit, but would have had to contact the court or one of the parties to ascertain the hearing date. It appears that it did not do so.

Headnote and holding:
  1. The Court ordered: Subject to the Plaintiff undertaking: a) to comply with any order that the Court might make if the Court were later to find that this order has caused loss to the Defendant and decide that the Plaintiff should compensate the Defendant for that loss; and b) not to use the information obtained except for the purposes of discharging the duties and obligations of the Plaintiff pursuant to the terms of her appointment by the US Bankruptcy Court, the Defendant shall on or before the effective date of this order, make disclosure and deliver up to the Plaintiff with respect to account “abia #846”. 1) the bank statements, signatories and any powers of attorney relevant thereto; 2) all internal KYC documents held with reference to the account; 3) all correspondence, internal memoranda and written instructions received by the Defendant in relation to the account; 4) all wire transfer, EFT or ACH payments, confirmations and requests, details and/or receipts, or any document sufficient to identify the date and amount of the transfer and the identity, account information and financial institution of the transferor and transferee. The Plaintiff shall serve a copy of this order via courier on Abia Management Co. S.A., at its registered address. The Plaintiff shall pay the Defendant’s reasonable legal and other costs in relation to these proceedings and complying with this order.  The parties shall have liberty to apply.
  2.  
  3. As the order may affect ABIA, it was intended to give it a further opportunity to be heard. Based on the evidence before the court, it was satisfied that this was an appropriate case to pierce the corporate veil and to treat ABIA as the alter ego of the Debtor. It follows from that finding that as the trustee of the Debtor’s estate, the Trustee is entitled to the documents and information she seeks. However, depending on the nature and contents of the documents disclosed, an order for the examination of a representative of the Bank may not be necessary. The Trustee can make a further application for such an order if it appears necessary after a review of the documents and information disclosed.
  4.  
  5. Finally, the Court found that the Bank was entitled to the costs incurred in complying with the order. The Trustee had not suggested that the Bank is guilty of any impropriety, and it will plainly incur costs in complying with the order. It is usual and appropriate in those circumstances to order the applicant to pay the reasonable costs of the third party who is being required to comply with a disclosure order [10]. It is also usual and appropriate, for the order to be conditional on the applicant undertaking to comply with any order the court may make as to any damages the third party may suffer as a result of the order [11].

IN THE SUPREME COURT                                                                      Action No. CL 17/22

TURKS AND CAICOS ISLANDS

 

IN THE MATTER OF PART XVI OF THE INSOLVENCY ORDINANCE 2017 AND IN THE MATTER OF THE ESTATE OF JOSEPH DEMAURO (DECEASED) AND IN THE MATTER OF AN APPLICATION BY MARGARET JOAN SMITH AS TRUSTEE OF THE ESTATE OF JOSEPH DEMAURO (DECEASED)

 

BETWEEN:

MARGARET JOAN SMITH (TRUSTEE)

Plaintiff

-v-

 

BORDIER BANK (TCI) LTD.

Defendant

__________________________________

JUDGMENT

__________________________________

 

Before:                                   The Hon. Mr. Justice B. St. Michael Hylton QC (Ag)

 

Appearances:                        Mr. Yuri Saunders for the Plaintiff

Mr. Conrad Griffiths QC for the Defendant

Hearing Date:                        16 August 2022

Venue:                                    Court No. 5, Graceway Plaza, Providenciales

Date Delivered:                     22 August 2022

 

  1. The Plaintiff (“the Trustee”) is the trustee of the estate of Joseph M Demauro (“the Debtor”). In 2013 the Debtor filed a petition for voluntary bankruptcy, and he died later the same year. The Trustee has produced evidence of multiple transactions by the Debtor, which appear to have been calculated to conceal assets and evade his liabilities.

 

  1. As a result of her investigations the Trustee has discovered assets and transactions in multiple jurisdictions, including she contends, the Turks and Caicos Islands.

 

  1. Abia Management Co. S.A. (“ABIA”) is the holder of an account designated “abia #846” at the Defendant bank, Bordier Bank (TCI) Ltd. (“the Bank”). By an amended originating summons, the Trustee seeks an order pursuant to sections 467(2) and 467(3)(c) or alternatively, 467(3)(h) of the Insolvency Ordinance CAP 16.18 that the Bank disclose and deliver up to her various documents and information in relation to the account, including bank statements, KYC documents and transaction instructions.

 

  1. The Trustee also seeks an order pursuant to sections 467(2) and 467(3)(f) of the Insolvency Ordinance for the private examination of a representative of the Bank with knowledge of the account.

 

  1. The Bank was represented by counsel. It maintained a neutral stance but made detailed submissions in which it expressed various concerns in relation to the orders sought by the Trustee.

 

  1. ABIA was not represented at the hearing and played no part in the proceedings. On July 15, 2022 the Trustee sent to ABIA the affidavits in support of the amended originating summons, but not the summons itself, or notice of the actual hearing. ABIA would have been able to ascertain the details of the orders sought from the Trustee’s first affidavit, but would have had to contact the court or one of the parties to ascertain the hearing date. It appears that it did not do so. 

 

  1. The orders I intend to make may affect ABIA, and I therefore propose to give it a further opportunity to be heard.

 

  1. Based on the evidence before the court, I am satisfied that this is an appropriate case to pierce the corporate veil and to treat ABIA as the alter ego of the Debtor. It follows from that finding that as the trustee of the Debtor’s estate, the Trustee is entitled to the documents and information she seeks.

 

  1. However, depending on the nature and contents of the documents disclosed, an order for the examination of a representative of the Bank may not be necessary. The Trustee can make a further application for such an order if it appears necessary after a review of the documents and information disclosed.

 

  1. Finally, the Trustee has not suggested that the Bank is guilty of any impropriety, and it will plainly incur costs in complying with the order. It is usual and appropriate in those circumstances to order the applicant to pay the reasonable costs of the third party who is being required to comply with a disclosure order.

 

  1. It is also usual and appropriate in my view, for the order to be conditional on the applicant undertaking to comply with any order the court may make as to any damages the third party may suffer as a result of the order.

 

Disposition

 

  1. For these reasons, I make the following orders:
    1. Subject to the Plaintiff undertaking:
      1. to comply with any order that the Court might make if the Court were later to find that this order has caused loss to the Defendant and decide that the Plaintiff should compensate the Defendant for that loss; and

 

      1. not to use the information obtained except for the purposes of discharging the duties and obligations of the Plaintiff pursuant to the terms of her appointment by the US Bankruptcy Court,

 

The Defendant shall on or before the effective date of this order, make disclosure and deliver up to the Plaintiff with respect to account “abia #846”:

 

  1. the bank statements, signatories and any powers of attorney relevant thereto;
  2. all internal KYC documents held with reference to the account;
  3. all correspondence, internal memoranda and written instructions received by the Defendant in relation to the account;
  4. all wire transfer, EFT or ACH payments, confirmations and requests, details and/or receipts, or any document sufficient to identify the date and amount of the transfer and the identity, account information and financial institution of the transferor and transferee.

 

    1. The Plaintiff shall serve a copy of this order via courier on Abia Management Co. S.A., at its registered address of Rosas y Rosas Agente Residente de Abia Management Co. S.A., Via Espana y calle Elvira Mendez, Edificio BankBoston, piso 14, Ciudad de Panama, Republic de Panama and at the address of its directors, Fairfax Invest Corp. at OMC Chambers, P.O Box 3152, Road Town, Tortola, BVI and the effective date of this order shall be 21 days after the date of service.

 

    1. The Plaintiff shall pay the Defendant’s reasonable legal and other costs in relation to these proceedings and complying with this order. 

 

    1. The parties shall have liberty to apply.

 

 

B. St. Michael Hylton QC  

Acting Judge of the Supreme Court

22 August 2022