Departing from the Open Justice Principle: A Test of Necessity | The Bahamas
Vanessa L. Smith of McKinney, Bancroft & Hughes analyses a Bahamian court case where the open justice principle clashed with privacy concerns in a trust dispute involving the Sandals Group founder's family.
Senior Justice Charles (as she then was) (“Justice Charles”) considered the open justice principle (the “Principle”) in Cheryl Hamersmith-Stewart v Cromwell Trust Company Limited et al 2021/CLE/gen/01043.
Gordon “Butch” Stewart (“Mr Stewart”) was the founder of the Sandals Group. He created two inter vivos trusts governed by Bahamian law (collectively, “the Trusts”). The sole trustee is a Bahamian company, Cromwell Trust Company Limited (“Cromwell”). Mr Stewart died in January 2021, leaving two surviving families: (i) his Jamaican family comprised of his adult children, Adam Stewart (“Adam”), Jaime Stewart-McConnell, Robert Stewart (“Robert”) and Brian Jardim and their respective families; and (ii) his US family comprised of Cheryl Hamersmith-Stewart (“Cheryl”) and her adult children. Mr Stewart left behind wishes as to how he wished for the Trusts to be administered upon his death.
In September 2021, Cheryl brought an action against Cromwell for failing to carry out Mr Stewart’s wishes, seeking its removal as trustee. Cromwell filed an application for the proceedings to be heard in camera and for the file to be sealed or some lesser form of confidentiality order. Cromwell’s argument, supported by the Jamaican family (save for Robert), was that open proceedings would put the minor beneficiaries’ personal safety at risk and disclose commercially sensitive information concerning the affairs of the Trusts and the Sandals Group.
The Law
Pursuant to the Principle as enshrined in Article 20 of the Constitution of The Bahamas, proceedings are to be held in open court. Exceptions to the Principle include:
- national security concerns;
- privacy concerns (where the release of confidential information might harm the reputation of a party);
- the protection of the privacy of a minor; and
- circumstances when legal matters involve uncontentious information unrelated to public issues such as the financial division of an estate after death.
However, as stated by Justice Charles, “the question of whether open justice should be departed from is a question of principle, turning not on convenience, but on necessity”.
Cromwell invoked the jurisdiction of the Supreme Court (the “Court”) under Section 77(3) of the Banks and Trust Companies Regulation Act, 2020 (“the BTCRA”) or its inherent jurisdiction. The Court found that Section 77(3) of the BTCRA does not give an applicant the right to have proceedings kept confidential but confers a discretion on the Court to determine whether privacy is warranted.
Safety of Minor Children
Cromwell submitted that the safety of the beneficiaries, specifically the minor grandchildren of Mr Stewart, would be at risk if the proceedings were not sealed as they all have low-profile lives, save for Adam as the current Sandals Group Executive Chairman. Considering the value of the Trusts’ assets, the popularity of Sandals and the perceived wealth, the litigation and the publicity resulting therefrom would pose a threat to the safety of all beneficiaries, especially the Jamaican family.
The Court found that it was widely known in Jamaica that the minor children were the grandchildren of Mr Stewart. Accordingly, they were already perceived to be wealthy, and the publicity of the details of their wealth would not add to their safety risk.
Effect on the Sandals Group’s Business and the Trusts
Cromwell emphasised Mr Stewart’s commitment to ensuring that sensitive commercial information relating to the Sandals Group remained private as it is not a publicly traded company. Accordingly, the Court ought to keep confidential the financial affairs of the Sandals Group, which is a part of the Trusts’ structure.
“The Court ruled it would not be in the interest of justice to depart from the Principle in order to keep financial information confidential merely because such information tends to attract publicity”.
The Court held that the effects on the Trusts and the Sandals Group’s business were no more than inconveniences. Departing from open justice on the grounds that there was a risk of customers and competitors becoming aware of company profit margins would undermine the Principle itself. The fact that the proceedings were not commenced by the Jamaican family was not considered by the Court to be a probative fact toward their position that the proceedings should be confidential as parties to litigation should be prepared to have their information disclosed.
While Cromwell and the Jamaican family proved that it was more convenient that a sealing order be in place, they did not demonstrate that a sealing order was necessary. Accordingly, it would not be in the interest of justice to depart from the Principle in order to keep financial information confidential merely because such information tends to attract publicity.
Subsequent Applications for Leave to Appeal
Save for Robert, the Jamaican family sought leave to appeal the decision of Justice Charles, which was denied. They then joined the guardian ad litem for the minor grandchildren of Mr Stewart to seek leave to appeal from the Court of Appeal.
The Court of Appeal denied the application for leave to appeal, citing the following reasons:
- The application made pursuant to Section 77(3) of the BTCRA is misconceived because it relates to civil proceedings where information about a customer’s bank account is likely to be disclosed.
- The Judge correctly applied the test of necessity to determine whether it was correct to make a privacy order departing from the Principle.
- Article 20 of the Bahamas Constitution does not alter the common law position which provides that the Principle may be modified by law. However, in this case, there was no law that authorised such modification.
- The Judge was correct to refuse the order sought. Open justice is so fundamental that it cannot be ignored because a litigant wants to keep their commercially sensitive financial information confidential. Should this be the test, it would allow every successful businessperson to have litigation concerning their business or wealth held in secret. This was not a case involving a patent or secret process, disclosure of which would render the litigation nugatory.
- The minor children were joined to the proceedings by their parents and are known to be the grandchildren of Mr Stewart. As their wealth is known to the public, it is difficult to see how conducting the proceedings in private would provide protection from the disclosure of information that is already in the public domain.
The guardian ad litem subsequently sought permission to appeal from the Judicial Committee of the Privy Council, which was also refused.
McKinney, Bancroft & Hughes
