I OVERVIEW

The Commonwealth of the Bahamas is an archipelagic nation situated south-east of the United States. Blessed with crystal blue waters, white sandy beaches and tropical temperatures, the Bahamas has long been acknowledged for its vibrant tourism industry. In addition to tourism, the Bahamas has earned a reputation as a compliant and transparent offshore financial services jurisdiction, frequently utilised by successful companies and high-net-worth individuals seeking investment and wealth management advice, and tax and estate planning opportunities. Maintaining the trust and confidence of financial institutions around the globe, specifically those in the banking, investment and trust businesses requires a flexible legal infrastructure capable of adjudicating complex disputes, and a statutory and common law framework capable of protecting the rights of those doing business within the jurisdiction, both of which the Bahamas boast.

The Bahamas is a former colony of Britain; as such, much of its law, except where codified, modified or replaced by statute, is based, to a large extent, on the common law of England.2 While Bahamian courts are not bound by decisions of the English courts, decisions emanating from England and other Commonwealth jurisdictions represent persuasive authority. The Privy Council, composed of judges from the United Kingdom, serves as the highest appellate court of the Bahamas. As a result, Bahamian courts are bound by decisions of the Privy Council.3

With the growth of its financial services industry, the Bahamian legislature and judiciary have developed a comprehensive legal regime to combat fraudulent activity.4 Below we will examine the various remedies available to those who are the victims of fraud, the procedures for accessing these remedies, and recent legal developments both in the Bahamian courts and in statutes enacted by the Bahamian Parliament.

II LEGAL RIGHTS AND REMEDIES

Both Bahamian statute and the common law recognise a number of rights and provide various remedies for obtaining redress against fraud. While the requisite elements of fraud are well settled, the causes of action that have developed over time to address fraudulent conduct reflect the dynamic nature of fraud: fraudulent disposition claims, fraudulent misrepresentation and deceit, conversion, breach of trust, constructive trusts and unjust enrichment. Third parties to a fraud may also be held liable for unlawful means conspiracy, lawful means conspiracy, dishonest assistance and knowing receipt. Criminal offences with fraudulent elements include theft, fraudulent breach of trust and dishonest appropriation.

i Civil liability and remedies

Fraudulent dispositions

To protect against the deliberate disposition of assets to avoid creditors' claims (such as judgment debts) the Fraudulent Dispositions Act 1991 (FDA)5 vests creditors with the statutory right of action to recover property that has been disposed of 'with the intent to defraud'.6 The FDA is a unique enactment with far-reaching effect as it relates to both actual and contingent liabilities7 and gives the court jurisdiction over dispositions made whether or not the property is situated in the Bahamas.8

Should the court find the transferee or any predecessor to be a bona fide purchaser, the FDA empowers the court to vest the transferee with a first charge on the property for the amount of costs incurred in defending the claim to set aside the disposition. Section 4(3) of the FDA, a highly controversial provision, extinguishes the creditor's right of action unless the claim is brought within two years of the disposal of the property.9

Fraudulent misrepresentation and deceit

Claims of fraudulent misrepresentation (also known as deceit) often arise in respect of contractual relationships where that party has been induced by deliberately false representations on which they rely. If it can be shown that (1) a representation was made knowingly without belief in its truth, or recklessly as to whether it be true or false, and (2) the reliance on that resulted in damage, a claim for fraudulent misrepresentation is sustainable.10 The more grave the allegations of fraudulent misrepresentation, the higher the probability required to be met by a plaintiff in satisfying the standard of proof on a balance of probability.11

Conversion

Conversion is established by proving that a wrongdoer has taken property with the intent of exercising rights that are inconsistent with the true owner's right of possession. In the event that liability is established, damages will reflect the value of the property at the time of conversion and may include, if pleaded, compensation for loss of profits. The House of Lords12 has now settled that conversion can only apply to tangible property and will not apply to claims for the loss of contractual rights or a chose in action.13

Constructive trusts

A constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights.14 Bahamian courts have adopted principles of English law in the finding and recognition of a constructive trust where property has been dealt with in an unconscionable manner, such as profiting from unlawful acts or unauthorised dealings by a fiduciary.15 An example of this is the Bahamian case of Elliott v. Associated Bahamian Distillers Autos, Brewers Ltd.16 There the court found that where a company purchased certain preference shares with monies from an employee pension plan, contrary to the provisions of the trust, that company will be considered a constructive trustee of the dividends of those shares. The court further found that it could impute to the company the knowledge of the trust where the company that held the plan and the company in which the preference shares were bought shared a common director.17

Unjust enrichment

A cause of action in unjust enrichment arises when the defendant acquires an interest or value in assets that benefits him or her at the expense of the plaintiff in circumstances where it is unjust that the defendant be permitted to retain the assets or value. This often applies to a transfer of interest or value by mistake, but may also apply to instances of fraudulent misrepresentation or deliberate misappropriation of assets.18

Remedies available against third party

Conspiracy

A victim of fraud may also obtain remedies against one or several third-party wrongdoers on the ground of conspiracy. This may take the form of lawful means conspiracy or unlawful means conspiracy. Both torts require proof of an agreement between two persons calculated to injure the economic interests of another person. In The Central Bank of Ecuador and others v. Ansbacher (Bahamas) Limited and others19 the court held that the tort of unlawful means conspiracy could not be sustained on evidence that directors had acted under an honest mistake as to the worth of investments.20 The evidence of the loss and damage is integral to establishing both categories of tort.21

Dishonest assistance

A third party who assists in a breach of trust may be liable for the tort of dishonest assistance22 if it can be shown that by an objective standard he or she had knowledge that participation in the transaction was contrary to acceptable standards of honesty. Acting in reckless disregard for the rights or possible rights of the beneficiaries can amount to dishonesty.23 The elements of dishonest assistance are often complex and specific to the case before the court. The objective test set out in Barlow Clowes International Ltd (In Liquidation) v. Eurotrust International Ltd24 clarified the often confusing ratio of the House of Lords decision in Twinsectra Ltd v. Yardley,25 which introduced elements of subjectivity.26 This test holds liable all actors involved in the trustee's misappropriation of trust assets and will extend even to those who are professional advisers of the trustee in circumstances where their dishonest acts result in the dissipation of trust property.

Fraudulent preference

The court has the power to set aside as invalid a transfer made by a company that is insolvent and unable to pay its debts where the transfer was intended to give a creditor preference over others or was made with the intent to defraud its creditors.27 Where a fraudulent preference payment is discovered during winding up proceedings, there is no need to commence a separate action to seek a declaration or clawback of assets transferred as a result of a suspected fraudulent preference.28

Tracing

Tracing is a process that precedes the grant of a remedy for recovery of assets dissipated or transferred as a result of fraudulent dealings. The jurisdiction is often utilised in tandem with or for the purpose of facilitating an equitable right to the property or assets being traced. The object is to assert equitable or proprietary rights in traceable proceeds by showing that the value of the asset was used to acquire another or a series of other assets.29

Criminal liability and remedies

The intent to defraud is defined in the Penal Code as the intent to cause any gain or possibility of gain at the expense of another by means of forgery, falsification or other unlawful acts.30 The Bahamian Penal Code governs fraudulent conduct through several provisions that create criminal offences such as obtaining by false pretences,31 stealing or theft,32 fraudulent breach of trust,33 dishonestly receiving34 and dishonest appropriation.35

ii Defences to fraud claims

Waiver

The common law defence of waiver by affirmation arises when it can be proven that the plaintiff was aware of, or agreed to, a state of affairs that the plaintiff knew to be untrue yet expressly waived, either by word or conduct, any liability arising therefrom.36

Limitation

The general limitation period applicable to actions in contract, tort or upon breach of trust is six years from the date of accrual of the cause of action.37 Actions founded on a deed carry a 12-year limitation period.38 On an action for fraud or mistake, the limitation period does not begin to run until the fraud, mistake39 or the deliberate concealment of it40 has been discovered or could, with reasonable diligence, have been discovered. An action shall not be brought in relation to a judgment after six years from the date on which the judgment became enforceable.41 On actions against a trustee for fraud or fraudulent breach of trust, there is no limitation period.42

Change of position

Change of position is a defence exclusive to third-party unjust enrichment claims. It cannot be utilised to defend against claims of knowing receipt and will only succeed where a full and frank account of the dissipation of assets is given. The court must be satisfied that at the time of trial, the position of the defendant has in good faith changed to his or her detriment, so that it would be inequitable to require him or her to make restitution.43

Illegality and public policy

The doctrine of illegality does not permit a party to benefit from his or her own wrongdoing. Public policy also affords a defence to fraud claims where the claims cannot be founded on an illegal act. In the Bahamas, the defence will fail unless strictly pleaded and proven.44

III SEIZURE AND EVIDENCE

i Securing assets and proceeds

Mareva injunctions

Mareva injunctions45 or freezing orders, remain the primary mechanism available to secure assets or the proceeds of fraud pending the determination of court proceedings.

The jurisdiction of Bahamian courts to grant Mareva injunctions emanates from Section 21(1) of the Supreme Court Act.46 The criteria to successfully obtain a Mareva injunction is well settled, specifically:

  1. a substantive cause of action against the defendant;47
  2. a 'good arguable case' against the defendant;48
  3. a real risk exists of dissipation of assets as a result of unjustifiable conduct; and
  4. where the application is ex parte, the applicant must give full and frank disclosure.49

In addition to the aforementioned, the court will take into consideration the strength of the applicant's case and whether it is 'just and convenient' to grant the injunction.50

To protect defendants against losses suffered as a result of an injunction should the plaintiff's claim be unsuccessful, an applicant seeking a Mareva injunction must be willing to give an undertaking in damages to the court.51

It is now settled that in the Bahamas there is no entitlement to a free-standing injunction; an applicant must have an underlying cause of action and file proceedings in the Bahamas prior to or contemporaneous with the application for a Mareva injunction.52 Where the need for the injunction is urgent, an application can be made for injunctive relief ex parte53 (i.e., without notice to the defendant), but this should only be done in circumstances of last resort.

Once an injunction is obtained, it is incumbent on the plaintiff to press on with the action as rapidly as possible, as delay in the prosecution of the action is a ground for discharge of the injunction.54 The Privy Council case of Walsh v. Deloitte55 confirmed that Bahamian courts have supranational jurisdiction to grant Mareva injunctions.56

ii Obtaining evidence

Anton Piller injunction

Anton Piller orders allow an applicant to search specific premises for documentation essential to the applicant's case in appropriate circumstances.57 The criteria necessary to obtain an Anton Piller order have not substantially changed since its inception in 1976.58 An applicant must establish:

  1. an extremely strong prima facie case on the merits of the underlying dispute;
  2. conduct or activity by the defendant that results in very serious potential or actual harm to the claimant's interests;
  3. clear evidence that the defendant has in his or her possession incriminating documents or materials; and
  4. a real possibility that those documents or materials may be destroyed before an application could be issued on notice.

The order will only be made when there is no alternative means or mechanism of ensuring that justice is done for the plaintiff.59 If it is possible to obtain the required documents by other means, alternate avenues should be explored prior to any application for an Anton Piller order.

Discovery

Order 24 of the Rules of the Supreme Court (RSC) governs the ability of parties to proceedings to inspect any non-privileged documents 'which are or have been in the possession, custody or power of the parties and relate to the matters in question in the action'. While discovery and inspection can be ordered at any time,60 it is generally conducted after the close of pleadings. This process is facilitated through the exchange of a list of documents by each party to the action followed by an inspection of the documents listed therein. Where a document that is not included in the list of documents is sought by a party, Order 24 Rule 7 RSC allows a party to apply to the court for an order requiring the opposing side to indicate whether the document is in its possession or control.

Third-party orders

Norwich Pharmacal order

These orders compel third parties with no direct nexus to the dispute, who inadvertently become involved in the wrongdoing of another party, to disclose pertinent information in their possession.61 The jurisdiction to grant such orders is only exercised by the courts when they are satisfied that it is absolutely necessary.62

To be successful, an applicant must establish that:

  1. a wrong has been carried out, or an argument can be made that a wrong has been carried out, by an ultimate wrongdoer;
  2. the third party has information required to enable action to be brought against the ultimate wrongdoer; and
  3. the person against whom the order is sought (1) assisted in facilitating the wrongdoing (albeit unknowingly); and (2) is able, or is likely to be able, to provide the information necessary to enable the ultimate wrongdoer to be sued.63
Bankers Trust order

These orders are very similar to Norwich Pharmacal orders but relate specifically to compelling a bank to disclose information normally protected by client confidentiality. To obtain a Bankers Trust order an applicant must, inter alia, establish clear evidence of fraud, be willing to give an undertaking in damages to the bank, and undertake not to use any information disclosed for collateral purposes.64

IV FRAUD IN SPECIFIC CONTEXTS

i Banking and money laundering

Banking

The relationship between bankers and customers in the Bahamas is primarily contractual and commences upon the opening of the bank account.65 It is an implied term of any banking contract that the bank will keep its customers' information confidential.66 A bank can only legally disclose customer information where (1) it is required by law to do so; (2) it has a public duty to do so; (3) it is in the bank's own interests to require disclosure; or (4) the customer consents to the information being disclosed.67

Having set out the duties of the bank, it is the customer's duty when issuing a cheque to avoid doing so in a manner that facilitates fraud.68 It is a customer's further duty to inform the bank as soon as he or she is aware of any fraudulent activity on his or her accounts.69

Money laundering

On 25 May 2018, a new Proceeds of Crime Act (POCA) came into force,70 which expanded the offence of money laundering to include situations where a person ought to reasonably have suspected that, 'he has entered, or is entering into an arrangement which facilitates, by whatever means, the acquisition, retention, use, concealment or the control of proceeds of crime by or on behalf of another person'.71

In conjunction with the enactment of the POCA, a new Financial Transactions Reporting Act was enacted, which expanded the categories of entities considered financial institutions, thereby expanding the amount of businesses required to report suspicious transactions.72

ii Insolvency

Insolvency proceedings are governed by a suite of legislation that include various provisions aimed at countering fraudulent conduct in the event that a company becomes insolvent.73 The Companies (Winding Up Amendment) Act 2011 provides specific protection for companies against fraud where it is anticipated the company will be wound up. Sections 228–233 deal with offences of fraud and general provisions, covering the following scenarios:

  1. fraud in anticipation of winding up;74
  2. attempts to defraud creditors on wind up;75
  3. misconduct of officers, directors and professional service providers;76 and
  4. material omissions from company statements of affairs.77

A key element required in all the aforementioned offences is that there must be an intention to defraud.

iii Arbitration

Section 90 of the Arbitration Act, provides that an arbitral award may be set aside on the basis of a serious irregularity, which includes arbitral awards secured by fraud. The procedure for doing so is by application to the Supreme Court.78 The threshold that must be met to establish that the arbitral award was secured as a result of fraud is high; it is not sufficient to show that one party inadvertently misled the other, however carelessly.79

iv Fraud's effect on evidentiary rules

In civil proceedings, allegations of fraud must be specifically pleaded in the statement of claim or counterclaim.80 It is not permissible to leave fraud to be inferred from the facts of a case,81 nor is it permissible to set out vague or general allegations of fraud within a statement of claim.82 When alleging fraud, a plaintiff must clearly prove the facts on which it is asserted that the fraud arises.83 Failure to specifically plead, particularise or set out the grounds on which fraud is alleged is a basis for the striking out of a claim.

V INTERNATIONAL ASPECTS

i Conflict of law and choice of law in fraud claims

The Bahamian court will assume jurisdiction of a matter where a foreign defendant is personally served with process within the jurisdiction or voluntarily submits to the jurisdiction of the court.84 Where it is necessary to serve a foreign defendant out of jurisdiction, leave of the court is normally required unless leave is not required by virtue of statutory provision.85 In a recent judgment of the Bahamian Supreme Court, this exception was held to apply to claims relating to trusts governed by Bahamian law.86

ii Collection of evidence in support of proceedings abroad

The Evidence (Proceedings in Other Jurisdictions) Act87 facilitates the production of evidence within the Bahamas for use in foreign proceedings. The application for this relief is made to the Supreme Court in pursuance of a request by or on behalf of the foreign court in which the civil proceeding has been instituted.88 On receipt of the application the Supreme Court is empowered to make any order necessary to give effect to the request, inclusive of an order for the examination of witnesses, the production of documents, preservation and detention of property and the medical examination of any person.89 The procedure for application is governed by Order 65 RSC.90 The Mutual Legal Assistance (Criminal Matters) Act91 governs the taking of evidence in aid of criminal proceedings in a foreign court.

iii Seizure of assets or proceeds of fraud in support of the victim of fraud

The POCA provides for the seizure or forfeiture of assets or proceeds of fraud92 and empowers the court, among other things, to obtain disclosures of information,93 and to restrain and confiscate property.94 Any assets or funds that are the subject of any of the aforementioned provisions of the POCA are paid into the Confiscated Assets Fund.95 The POCA does provide for victims of fraud to receive payments from the Confiscated Assets Fund as compensation for any losses suffered as a result of the fraud.96 The POCA also authorises payments to third parties with an interest in confiscated assets.97

iv Enforcement of judgments granted abroad in relation to fraud claims

Foreign judgments may be enforced in the Bahamas by way of registration or by suit. The statutory procedure available under the Reciprocal Enforcement of Judgments Act 1999 provides the basis for registration of certain foreign judgments as a preliminary step to their enforcement in the Bahamas. This only applies to judgments obtained in jurisdictions with which the Bahamas has reciprocal enforcement treaties. There are currently 10 such jurisdictions.98

Alternatively, a judgment creditor who is entitled to be paid a money judgment under a foreign court order may commence an action or make a counterclaim based on the foreign judgment, or may rely on the foreign judgment by way of defence. A successful action brought in respect of the foreign judgment will entitle the judgment creditor to enforce the foreign judgment debt, as if it were a judgment made by the courts of the Bahamas.99

v Fraud as a defence to enforcement of judgments granted abroad

No judgment shall be registered or enforced in the Bahamas if it has been obtained by fraud.100 If it should be discovered that a foreign judgment that was registered was obtained by fraud, the recognition will be set aside.

VI CURRENT DEVELOPMENTS

i Legislation

The POCA was a substantial overhaul of the statute it repealed.101 The noteworthy additions include:

a Part V, which is entitled Non-Conviction-Based Civil Forfeiture, allows the Crown to apply for standard civil orders (e.g., freezing orders and property seizure orders) in proceedings where it is asserted that an entity or person is in possession of or has benefited from the proceeds of crime.

b Part VI, entitled Cash and Personal Property, enables 'cash or personal property which is, or represents, property obtained through unlawful conduct, or which is intended to be used in unlawful conduct, to be forfeited in civil proceedings before the Court'.

c The granting of an order for civil forfeiture, which is defined as, 'an order in rem, granted by the Supreme Court in the exercise if its civil jurisdiction to forfeit to the Crown property that is or represents proceeds or instrumentalities or terrorist property'.102 The burden of proof on the application is on the balance of probabilities and the property subject to the forfeiture order must be within the Bahamas.103 It is not necessary to show that the property was derived directly or indirectly, in whole or in part, from a particular criminal offence or that any person has been charged in relation thereto.104 It is only necessary to establish that the property in question is comprised of proceeds from a criminal offence.105

d The court may make an order freezing property where it believes the same to be the proceeds of crime.106 Applications can be made ex parte and heard in camera. The court need only be satisfied that there are reasonable grounds to believe the property or part thereof are the proceeds of crime.107 Where a property freezing order would not be appropriate, the POCA allows for the grant of a property search and seizure order.108

Any person who asserts an interest in any of the properties covered by the above orders and seeks to oppose the grant of the civil forfeiture order or exclude their interest must file an appearance in the action in accordance with the RSC.109 If the court is satisfied on a balance of probabilities that the property is indeed the proceeds of a crime but the owner of the property is a legitimate owner, the court may take any steps it considers necessary to protect the legitimate owner's interests.110

As POCA is only two months old, there are no reported cases dealing with the operation of the newly enacted provisions. The powers contained in the POCA raise interesting questions about the priority of claims, specifically where a creditor is seeking damages. For instance, if a creditor is seeking damages relating to a fraudulent preference claim in tandem with the Crown seeking the forfeiture of assets, will the Crown's claim prevail over that of the creditor?

ii Case law

AWH Fund Limited (in Compulsory Liquidation) v. ZCM Asset Holding Company (Bermuda) Limited SCCiv App No. 256 of 2014

The pertinent facts of the case are straightforward. The liquidator of AWH believed a payment to the respondent to be a fraudulent preference. A summons was filed seeking a declaration that (1) the payment was an undue or fraudulent preference payment and therefore invalid within the meaning of Section 160 of the International Business Companies Act 2000 (the IBC Act), (2) the former directors of the company were guilty of misfeasance or breach of trust by allowing the payment. A subsequent ex parte summons was filed seeking leave of the court to serve the summons out of the jurisdiction. The registrar granted leave, which was subsequently set aside by a judge of the Supreme Court.

Two issues were before the Court of Appeal:

  1. whether the liquidator's application pursuant to Sections 160 and 161 of the IBC Act for declarations in respect of the suspected fraudulent preference, suspected misfeasance or breach of trust of the company's former directors are a part of the winding up process such that they can (as the appellant submitted) be properly prosecuted within the course of ongoing winding up proceedings simply by issuance of an interlocutory summons, or whether such claims ought properly (as the respondent contended) to be commenced by an originating process, such as a writ or originating summons or motion; and
  2. whether it was permissible for the registrar to grant leave to the liquidator to serve the summons out of the jurisdiction.

In relation to the first issue, the Court of Appeal determined that an application under Section 160 of the IBC Act can be commenced by way of summons pursuant to Rules 4(3) and 6(2) of the Companies Winding Up Rules.

In the Court's view, Sections 160 and 161 of the IBC Act did not lay out a specific procedure for determining how fraudulent preference claims must be brought. To accept the respondent's view would require the Court to add words to the Sections that were not there.

In relation to the second issue, the Court of Appeal determined that the judge's decision that an interlocutory summons could not be served out of the jurisdiction was wrong and based on too narrow an interpretation of Order 11 Rule 8(4).111 As such, the learned judge ought to have permitted the summons to be served out of the jurisdiction.

The Court of Appeal decision was appealed and is currently before the Privy Council.

Ivanishvili v. The Registrar of the Bahamas (2017) 2 BHS J No. 119

In Ivanishvili112 the Supreme Court held that although an amendment to Section 166 of the IBC Act113 repealed and replaced the provisions for restoration, leaving no provision for a company to be restored once voluntarily dissolved, the Court had the inherent power to restore such a company in circumstances where the dissolution of the company was occasioned by fraud and the dissolution resulted in injury or loss. The Court ordered the restoration of the company to enable the company to join litigation in Singapore, so as to further investigate the alleged fraud and secure assets that may be available to the company.


Footnotes

1 Sean N C Moree is a partner, Michelle I Deveaux is a senior associate and Knijah Knowles is an associate at McKinney Bancroft & Hughes.

2 Section 2 Declaratory Act 1799, Chapter 2, Statute Laws of The Bahamas.

3 This relates specifically to actions that originate from the Bahamas and those that relate to common law principles.

4 On 25 May 2018 the Bahamas' Anti-Money Laundering legislation was repealed and replaced with a new Financial Transactions Reporting Act and a new Proceeds of Crime Act aimed at establishing and strengthening procedures that conform with international standards of risk assessment, fraud reporting and asset recovery.

5 Sections 4 and 5 of the FDA.

6 Such a disposition is voidable and liable to be set aside if the creditor can prove that the transferor's intention was to wilfully defeat an obligation due to that creditor that existed prior to the disposition and of which the transferor had actual notice. The creditor must also prove that the transferee either provided no consideration for the disposition or the consideration was significantly less than the value of the subject property.

7 Section 2 of the FDA in relation to the definition of 'obligation'.

8 Section 3 of the FDA.

9 See the Judgment of Sawyer CJ in Girten v. Andreu (1998) BHS J No. 168.

10 See Derry v. Peek (1889) 14 AppCas 337, repeatedly followed by the Bahamian courts; see Adderley and Ors. v. Bahamas Oil Refining Company International Limited (Trading as Vopak Terminal Bahamas) [2014] 1 BHS J No. 97, and Cleomae Holdings Limited v. Bahamas Woodworking Studio Limited and another [2017] 1 BHS J No. 48.

11 See Fidelity Merchant Bank & Trust Limited v. Brown (2010) 3 BHS J No. 64 applying Hornal v. Neuberger Products Limited (1957) 1 QB 247 as approved by the Privy Council in Brazier v. Bramwell Scaffolding (Dunedin) Ltd. (2001) UKPC 59.

12 The House of Lords is now referred to as the Supreme Court.

13 See OBG v. Allan [2008] 1 AC 1.

14 The deprivation must be due to a person obtaining a legal proprietary right that they should not possess.

15 See Elliott v. Associated Bahamian Distillers Autos, Brewers Ltd. [1997] BHS J No. 107.

16 Ibid.

17 Ibid.

18 In the case of Villeneuve and another v. Gaillard and another [2011] 3 BHS J No. 127 the Privy Council on appeal from the Bahamian court considered the compensation applicable on a claim for unjust enrichment in relation to the sale of shares at an inflated price, procured by an investment manager pursuant to a fraudulent misrepresentations. It must also be noted that unless there is a defence to the claim, the equitable remedy of restitution will often require the return of the value or asset (if it can be retransferred) or create an obligation to repay.

19 [2010] 2 BHS J No. 158.

20 Cf. with Total Network SL v. Revenue Customs Commissioners 2008 All ER (D) 160 (HL) the unintentional consequence of injury is sufficient to prove the tort.

21 Following the decision in Central Bank of Ecuador et al v. Conticorp [2015] UKPC 11, the Bahamian court recently found in III Dune Capital Partners 7 Inc. v. Bay Spring International Ltd. and others [2017] 1 BHS J No. 99 that it is a legal impossibility for companies having common directors to conspire with each other.

22 Previously formulated as knowing assistance. See Selangor United Rubber Estates v. Craddock (1968) 1 WLR 1555.

23 See Royal Brunei Airlines v. Tan [1995] 2 AC 37.

24 [2005] UKPC 37.

25 [2002] 2 AC 164.

26 See Lord Hoffmann Decision: 'Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant's mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.'

27 The transfer must have occurred within six months of a liquidation. In respect of companies, see Section 241 Companies Winding UP Amendment Act 2011, Section 239 in respect of offences of officers with intent to defraud creditors, and in respect of international business companies, Section 160 of the International Business Companies Act.

28 AWH Fund Limited (In Compulsory Liquidation) v. ZCM Asset Holding Company (Bermuda) Limited [2017] 1 BHS J No. 47.

29 See Federal Republic of Brazil and another v. Durant International Corp and another [2016] AC 297, in which the Privy Council cautioned against the expansion of the remedy as an equitable proprietary claim.

30 Section 17 of the Penal Code, Chapter 84, Statute Laws of The Bahamas.

31 Where a defendant makes representations as to a state of facts known by him or her to be untrue. See Section 144 of the Penal Code.

32 The offence is established where one dishonestly appropriates a thing of which he or she is not the owner. See Section 45 of the Penal Code. Proving embezzlement of money by a trustee is difficult, as it must be proven that either the trustee admitted the appropriation was dishonest or he or she concealed or absconded with the asset or the proceeds refusing to disclose the same according to his or her duty. See Section 57 of the Penal Code.

33 The offence is proven if a person dishonestly appropriates an asset, the ownership of which is vested in him or her as trustee. See Section 48 of the Penal Code.

34 The offence is established if a person receives anything of value that he or she knows to have been obtained by commission of an offence. See Section 148 of the Penal Code.

35 This is an appropriation made without a claim of right and with the knowledge or belief that the appropriation is without the consent of the owner or of the person for whom the person appropriating acts as trustee. There is no need to prove actual knowledge of the identity of the owner but rather it would suffice that the accused had reason to believe that some person other than himself or herself had a certain or uncertain interest in the property whether as owner or in some other manner. This certainly accounts for the interest of a beneficiary, a bailee or person holding title less than ownership. See Section 49 of the Penal Code.

36 The UK Court of Appeal has ruled that the defence cannot vitiate the effect of the provisions of the UK Misrepresentation Act. However, because of the absence of a similar statute in the Bahamas, the defence still exists in the Bahamas.

37 Section 5(1), Limitation Act, Chapter 83, Statute Laws of The Bahamas (Limitation Act); Section 33 Limitation Act in respect of breach of trust claims.

38 Section 5(2) Limitation Act.

39 Section 41(1) Limitation Act.

40 Section 41(2) Limitation Act.

41 Section 5(3) Limitation Act. See the recent decision in Perfect Luck Investments Limited et al v. CTF BM Holding Ltd. et al. [2017] 2 BHS J No. 122, which calls into question the decision in Bahamas Commonwealth Bank v. Lewis (1996) BHS J No. 96, which was decided prior to the House of Lords decision of Lowsley v. Forbes (1999) AC 239.

42 Section 33(1) Limitation Act.

43 See Lipkin Gorman (a Firm) v. Karpnale (1991) 2 AC 548.

44 See Soldier Crab Limited t/a Sandy Toes v. Aqua Tours Limited [2016] 2 BHS J No. 190.

45 Named after the case Mareva Compania Naviera SA v. International Bulk carriers SA [1975] 2 Lloyd's Rep 509, in which the first injunction of this kind was made.

46 Chapter 52, Statute Laws of The Bahamas, Section 21(1). The court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.

47 See Walsh v. Deloitte [2001] UKPC 58 at para. 10.

48 Ibid.

49 The procedure governing the application is set out in Order 29 of the Rules of the Supreme Court (RSC).

50 See footnote 47.

51 See American Cyanamid Co v. Ethicon Ltd. [1975] AC 396.

52 See Meespierson (Bahamas) Ltd. v. Grupo Torras S.A. No. 41 of 1998.

53 Order 29 RSC.

54 See footnote 47, at para. 26.

55 [2001] UKPC 58.

56 See para. 9: 'The Bahamas legislature has not enacted the equivalent of subsection (3) of section 37, which gives the court express power to grant Mareva relief in respect of assets within the jurisdiction, whether or not the defendant is “domiciled, resident or present” within that jurisdiction. Nevertheless, their Lordships consider that the jurisdiction to grant such relief in respect of assets within or without the jurisdiction and against residents or foreigners was well established in England before the 1981 Act was passed: see Third Chandris Shipping Corporation v. Unimarine SA [1979] QB 645 and Barclay-Johnson v. Yuill [1980] 1 WLR 1259 (jurisdiction against residents) and Derby & Co Ltd. v. Weldon [1990] Ch. 48 (worldwide restraints). The courts of the Bahamas have a similar jurisdiction.'

57 Typically the application is made ex parte.

58 See Anton Piller KG v. Manufacturing Processes [1976] Ch. 55.

59 Ibid. at page 783 per Lord Denning, at paras. (e) and (f), 'such an order can be made by a judge ex parte, but it should only be made where it is essential that the plaintiff should have inspection so that justice can be done between the parties; and when, if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed, that papers will be burnt or lost or hidden, or taken beyond the jurisdiction, and so the ends of justice be defeated; and when the inspection would do no real harm to the defendant or his case'.

60 See Order 24 rule 7 RSC.

61 Norwich Pharmacal Co. v. Customs and Excise Commissioners [1974] AC, 133, 175 per Lord Reid, 'that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should cooperate in righting the wrong if he unwittingly facilitated its perpetration.'

62 Ashworth Hospital Authority v. MGN Ltd. [2002] 1 WLR 2033 HL.

63 Mitsui & Co Ltd. v. Nexen Petroleum UK Ltd. [2005] EWHC 625.

64 Bankers Trust Co v. Shapira and others [۱۹۸۰] ۳ All ER ۳۵۳.

65 Breach of any of the terms contained in the contract follow the normal course of civil proceedings.

66 See Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461.

67 Ibid. at page 473. See also the Financial Transactions Reporting Act, which sets out particular instances where banks are required to report customer information to the Central Bank of the Bahamas. Section 19 Banks and Trust Companies Regulation Act, Chapter 316, Statute Laws of The Bahamas.

68 See Privy Council decision of Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. [1986] AC 80.

69 Ibid.

70 See discussion below in Section VI.

71 Section 10 Proceeds of Crime Act, No. 4 of 2018.

72 Under the revised Act, the requirement to conduct customer due diligence, when establishing new business relationships remains along with the requirement to report suspicious transactions if they arise.

73 Companies Act, Chapter 308 , Companies (Winding Up Amendment) Act 2011, the Companies Liquidation Rules 2012, the Companies (Winding Up) (Amendment) Rules 2010, the Companies (Winding Up) Rules, the Insolvency Practitioners Rules 2012, the Foreign Proceedings (International Cooperation) Liquidation Rules 2012, and the Foreign Proceedings (International Cooperation) (Relevant Foreign Countries) Liquidation Rules 2016.

74 Section 228 of Companies (Winding Up Amendment) Act 2011.

75 Section ۲۲۹ of Companies (Winding Up Amendment) Act ۲۰۱۱. The opposite position is canvassed by Section ۲۶۲ of the Companies Act, which makes void any property dispositions made with the primary purpose of preferring one creditor over the other.

76 Section 230 of Companies (Winding Up Amendment) Act 2011.

77 Section 231 of Companies (Winding Up Amendment) Act 2011.

78 Section 90(1) Arbitration Act, No. 52 of 2009.

79 'There must be some form of dishonest, reprehensible or unconscionable conduct that has contributed in a substantial way to obtaining the award. The authorities are unclear as to whether these adjectives are all disjunctive or whether reprehensible or unconscionable conduct is more accurately seen as another way of describing dishonest conduct.' See Celtic Bioenergy Ltd. v. Knowles Ltd. [2017] EWHC 472 (TCC) at para. 67.

80 Order 18 rules 8 and 12 of the Rules of the Supreme Court.

81 See Davy v. Garrett (1877–78) L.R. 7 Ch. D. 473 at page 489 referred to by the Bahamian Court of Appeal in West Island Properties Limited v. Sabre Investment Limited SCCivApp No. 119 of 2010 at para. 17.

82 See Re Rica Gold Washing Company (1879) 11 Ch. D. 36 referred to in West Island Properties Limited v. Sabre Investment Limited SCCivApp No. 119 of 2010.

83 West Island Properties Limited v. Sabre Investment Limited SCCivApp No. 119 of 2010.

84 This is normally achieved by entry of an appearance to the action.

85 Order 11 rule 1(2) RSC.

86 RTL v. ALD and others [2014] 3 BHS J No. 83.

87 Chapter 66, Statute Laws of The Bahamas.

88 See Sections 3 and 4 Evidence (Proceedings in Other Jurisdictions) Act.

89 Section 5(2) Evidence (Proceedings in Other Jurisdictions) Act.

90 Section 8 Evidence (Proceedings in Other Jurisdictions) Act. Order 65 of the Rules of the Supreme Court provides that the application is made ex parte (see Order 65 rule 2) and supported by way of affidavit. The examination of any witnesses is done in accordance with Order 39 rules 5–10 and 11(1)–11(3) (see Order 65 rule 4(2)).

91 Chapter 98, Statute Laws of The Bahamas. The request is made to the Attorney General as the competent authority under the Act.

92 See Section VI for further details.

93 Sections 18, 19 POCA 2018.

94 See Sections 24, 25 and 26, in respect of international requests, and Sections 33–44, on confiscation and recovery orders, POCA 2018.

95 Established by Section 52 of the 2000 Proceeds of Crime Act.

96 Section 91(2)(a) POCA 2018.

97 Section 91(2)(d) POCA 2018.

98 Barbados, Bermuda, Jamaica, Leeward Islands, St Lucia, Trinidad and Tobago, British Guiana (now Guyana), British Honduras (now Belize), Australia and the United Kingdom; see Application of Act Order under Section 6 of the Reciprocal Enforcement of Judgments Act, Chapter 77, Statue Laws of the Bahamas.

99 See Re Roddy Di Prima Ltd. [1998] BHS J No. 153 at paras. 29–36.

100 Section 3(2)(d) Reciprocal Enforcement of Judgments Act.

101 Various aspects of fraud are criminalised in the Penal Code. Section ۳۵۰ criminalises the falsification of company accounts and records with the intent to defraud. The fraudulent concealment of documents in mortgage actions is criminalised by Section ۳۵۵ of the Penal Code. Obtaining credit facilities by way of fraud is canvassed by Section ۳۵۲ of the Penal Code. Similarly, see Section ۳۵۳ of the Penal Code for money lending by false pretences.

102 Section 50(1) POCA 2018.

103 Section 50(2) POCA 2018.

104 Section 50(3) POCA 2018.

105 Section 50(3) POCA 2018.

106 Section 51 POCA.

107 Section 51(5) POCA 2018.

108 Section 53(1)(a) POCA 2018.

109 Section 54(5) POCA 2018.

110 Section 55 POCA 2018. Similar powers are promulgated in Part VI of the Act with particular reference to the search, seizure or freezing of cash and personal property obtained as a result of unlawful conduct; unlawful conduct being described as any act that is unlawful under any law in the Bahamas that occurs outside the Bahamas and is unlawful under the law of that jurisdiction (see Section 63(1) POCA 2018). Interestingly, it is the magistrate's court that decides on a balance of probabilities whether the conduct alleged constitutes unlawful conduct (see Section 63(2) POCA 2018).

111 See paras. 31–40 of the decision.

112 The fraudulent conduct of a client relationship officer of the bank justified the restoration of the company to engage foreign proceedings for asset recovery.

113 International Business Company (Amendment) Act No. 309 of 2010.