Fraud, Asset Tracing & Recovery 2023 - Bermuda (Commercial Dispute Resolution, CDR)

• Law Firm: Carey Olsen
• Subject Matter: Criminal Law, White Collar Crime, Anti-Corruption & Fraud, Crime
• Author: Mr Keith Robinson, Kyle Masters, Sam Stevens and Oliver MacKay
• Published date: 31 May 2023

This guide explores the latest legislative, regulatory and enforcement developments in Bermuda and provides expert analysis on industry-wide topics including the local legal framework, the main stages of a fraud case, parallel proceedings, cross-jurisdictional mechanisms, recent developments, technology and other impacting factors.

CONTENTS

Please click on the links below to jump to the relevant section:

1. Important Legal Framework and Statutory Underpinnings to Fraud Asset Tracing and Recovery Schemes
2. Case Triage: Main Stages of Fraud, Asset Tracing and Recovery Cases
3. Parallel Proceedings: A Combined Civil and Criminal Approach
4. Cross-jurisdictional Mechanisms: Issues and Solutions in Recent Times
5. Recent Developments, Technology and Other Impacting Factors

1. IMPORTANT LEGAL FRAMEWORK AND STATUTORY UNDERPINNINGS TO FRAUD, ASSET TRACING AND RECOVERY SCHEMES

Bermuda's constitution establishes the Supreme Court as the primary court of first instance and the Court of Appeal as the court with jurisdiction to hear appeals from judgments of the Supreme Court. The Judicial Committee of the Privy Council is Bermuda's final court of appeal. The common law, the doctrines of equity, and the Acts of the Parliament of England of general application that were in force in England at the date when Bermuda was settled on 11 July 1612, have force within Bermuda pursuant to the Supreme Court Act 1905 (subject to the provisions of any acts of the Bermuda Legislature).

A range of remedies, familiar to practitioners in other common law jurisdictions, are available to litigants in fraud, asset tracing and recovery cases in Bermuda. These include actions for information, such as Norwich Pharmacal and Bankers Trust orders, actions to protect and guard against the dissipation of assets, such as freezing orders and other injunctive relief, and actions to enforce judgments awarded against wrongdoers, including the ability to appoint equitable receivers over assets, garnishee orders, and orders for the seizure and sale of assets in satisfaction of judgments.

Victims of fraud can make claims for unjust enrichment, breach of trust, breach of fiduciary duty, conversion, dishonest assistance, breach of contract, misrepresentation, as well as a host of other actions ordinarily available in the equitable jurisdictions in the High Court of England and Wales and other parts of the Commonwealth.

2. CASE TRIAGE: MAIN STAGES OF FRAUD, ASSET TRACING AND RECOVERY CASES

Victims of fraud seeking to protect their interests and enforce their rights in Bermuda should consider the following key stages in their claim: investigation; preservation of assets; the action/claim; and enforcement. Because of the complex and often fluid nature of fraud, these issues will need to be considered in the round by any potential litigant. The particular circumstances arising in connection with a claim may require certain stages to be considered, and actions to be taken in connection with such stages; in tandem with, or in advance of, other actions. For the purposes of this article, however, we will consider these stages in turn.

Investigation

In cases of suspected fraud, the speed and accuracy with which parties are able to discover information can be crucial to the successful outcome of a claim. Such matters are paramount at the early stages of a claim in order to discover, protect and recover assets. There are several avenues available to a litigant to gather such information. The following are worth closer review.

Public sources of information

When a company is the target of an investigation or a potential action, litigants can search and obtain from the public records of the Registrar of Companies, amongst other things, the location of the company's registered office (crucial for the effective service of documents in litigation), registered charges (note that registration is voluntary), winding-up notices, share capital information, the memorandum of association, the company's name (and any previous names), and its registration number. The Companies Act 1981 obliges companies to maintain registers of both the shareholders and the appointed directors and officers of that company, which must be kept at the company's registered office, and which are generally available for inspection by any member of the public.

The Supreme Court (Records) Act 1955 also gives any person the right to request to inspect and take copies of originating process and any orders on the court file in respect of pending cases, and there is a broader right of access in respect of historic cases and material which has been referred to in open court subject to the payment of the requisite fee and other stated exceptions.

The Public Access to Information Act 2010 also provides a right of access to information held by a government body. This can be used to great effect in a myriad of circumstances; however, certain kinds of information are subject to exemptions under this legislation.

Disclosure

Pre-action disclosure is not generally...