Ashley Judith Dawson-Damer & others v Taylor Wessing & others [2015]

The team are acting for a professional Bahamian Trustee who faces a claim brought by a Beneficiary in the Bahamas. The Beneficiary in question has sought to circumvent section 83 of the Bahamian Trust Act which essentially enables Trustees to withhold documentation from Beneficiaries by issuing a subject access request under the Data Protection Act 1998 (“DPA”) in England against this firm who are long standing legal advisors to the Trustee.

This firm resisted the subject access request on various grounds including that the personal data held by the firm is held only in connection with its capacity as the legal advisers to the Trustee and accordingly falls within the exemption under the DPA1988 which relates to an organisation’s right to maintain legal professional privilege. The Claimants argued that the exception should be construed narrowly. They submitted that the exemption does not extend to the rules of equity in England and Wales under which trustees are not required to disclose trust documents to beneficiaries. Equally it does not extend to local Bahamian rules which apply to disclosure in respect of trust litigation in the Bahamian courts. The Claimants’ position was that as a Beneficiary of the relevant Settlement any privilege is a joint privilege and the Trustee could not rely on it against the Beneficiary.

Taylor Wessing were successful at first instance with Mr Justice Behrens concluding that the purpose of the right provided by the DPA is “to protect the Claimants’ right to privacy and accuracy of the information held” on them and that it “is no part of its purpose to provide the Claimants with information or disclosure of documents which may assist them in litigation against [the Trustee] whether in England or the Bahamas.” The Court therefore held that the relevant exemption should be interpreted purposively so as to include all the documents in respect of which the Trustee would be entitled to resist compulsory disclosure in the Bahamian proceedings.

The Beneficiary has appealed the decision with the appeal listed to be heard in mid July 2016. We will provide a further update on the outcome of that appeal in due course.

Section 1782 – a US route to documents:

Disclosure is always a key concern for trustees, particularly pre-action disclosure which is usually not available. One new possible powerful tool is Section 1782, a statute that authorises a US District Court to order “a person found or resident in the district” to provide information or documents “for use in a proceeding in a foreign or international tribunal.”

To invoke Section 1782, an applicant must satisfy three conditions:

  • The “person” from whom discovery is sought must “reside” or be “found” in the district of the court to which the application is made. The US courts have found that “person” includes legal entities and individuals and that being “found” in the district is a lesser requirement than being a residence of a district. This element of the test can therefore be satisfied even if the target of discovery is served with a subpoena while traveling through the district.
  • The request or application must be made “by a foreign or international tribunal or upon the application of any interested person.” An interested party is a party to foreign litigation or a person with some right to submit evidence to a foreign court or tribunal.
  • The evidence sought must be “for use in a proceeding in a foreign or international tribunal.” Evidence may be sought “for use in” a foreign proceeding whether or not the evidence would ultimately be admissible in the foreign tribunal. The US Court is not required to consider the evidence’s admissibility. Nor does the Court need to determine whether the requested evidence would be “discoverable” in the foreign proceeding. This is a particular issue to which Trustees need to consider as they will not be able to rely on local law which may prevent disclosure to beneficiaries and other third parties. The concept of “proceedings” has been broadly interpreted and includes international tribunals with the District Courts increasingly also granting 1782 applications in aid of non-traditional, non-adjudicative proceedings including investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts. As regards the stage of the proceedings, Section 1782 requires only that a proceeding be “within reasonable contemplation”, proceedings therefore need not be pending or imminent.

One question which remains unclear is whether section 1782 empowers a District Court to compel the discovery of documents located outside of the US. This issue has been the subject of conflicting decisions but the more recent case law from the Southern District of New York indicates that the Courts are interpreting section 1782 restrictively and limiting documents to those within the US.

In any event, Section 1782 is clearly an increasingly powerful tool for parties seeking to obtain documents in relation to either active or reasonably contemplated litigation and is a procedure which Trust companies in particular need to be alive to.