ACTION NO.: 85

IN THE MATTER of the Foreign Tribunals Evidence Act 1856.

AND IN THE MATTER of Order XXXVIII rules 44-50 of the

rules of the Supreme Court of Belize.

AND IN THE MATTER of a Civil Matter now proceeding and

pending before the United States District Court for the

District of Columbia.

BETWEEN ( SECURITIES AND EXCHANGE COMMISSION ) Plaintiff

(

( AND

( BANNER FUND INTERNATIONAL

( SWISS TRADE & COMMERCE TRUST, LTD

( EDDIE R. BLACKWELL

( BERT C. THOMPSON

Mr. Dennis Goffe Q.C. with Mr. Eamon Courtenay for the plaintiff

Mr. Emile George Q.C. with Mr. John Vassel and Mr. Oscar Sabido for the Applicants/Defendants.

REASONS FOR DECISION

On February 24th, 1994, the United States Securities and Exchange Commission, an agency of the Government of the United States of America, commenced litigation against the defendants, Banner Fund International and the other four Defendants, in this action by filing a complaint in the United States District Court for the District of Columbia. The complaint alleged, generally, that the defendants engaged in securities fraud and offered and sold unregistered securities in violation of United States Law. Banner Fund International and the other four defendants are doing business from within Belize and all their business records and its business managers and employees are in Belize.

On the 25th February, 1994, the United States District Court for the District of Columbia issued a Letter of Request to the Supreme Court of Belize seeking this court's assistance in obtaining the production of certain documents, the viva voce examination of certain witnesses and the inspection, copying and conservation of certain other documents for the purposes of the proceedings before that court.

On the 2nd March, 1994, the Plaintiff made an application by ex-parte Summons to this Court under the Foreign Tribunals Evidence Act 1856 (Imperial) for the implementation of the Letter of Request of the United States District Court. This court granted an ex-parte Order in terms of summons on the same day.

Before doing so, however, I wish to express my thanks to learned Counsels on both sides for the able manner in which they assisted this court in its deliberations. Their presentations were indeed well researched and ably elucidated.

In opposing the Defendants application to set aside the ex-parte Order, Learned Counsel for the Plaintiff, Mr. Dennis Gaffe Q.C., relied heavily on the decision of Lord Denning MR, in Bankers Trust Co. v. Shapira and others (1980) 3 A.E.R. 353. In that case two men presented two forged cheques for $500,000.00 each to the Plaintiff, a New York bank. The Plaintiff's bank, on the two men's instruction, deposited a portion of the proceeds into an account with London Bank. When the forgery was discovered, the plaintiff bank applied for and obtained a Mareva Injunction to stop the London bank from disposing of any of the moneys in the accounts. The Plaintiff's bank also applied for an Order to compel the London bank to disclose information about the accounts. This latter application was refused. The judge refused this application because the defendants owners of the accounts had not been served with notice of the application to disclose information about their accounts, and so long as the owners had not been served no order for disclosure could be made. On appeal, however, the judge's

decision was reversed and the order for disclosure granted. The Court of Appeal held that an order for disclosure could be made to compel a bank to disclose the state of, and the documents and correspondence relating to, the account of a customer who was prima facie guilty of fraud even though the customer had not been served, for unless there was the fullest possible disclosure the fund could not be traced. To justify such an order, however, the evidence of fraud against the customer had to be very strong, but, where it was, the customer was disentitled from relying on the confidential relationship between himself and his bank to prevent the discovery.

I regard the Bankers Trust decision as good law. I cannot see, however, that it is relevant to the case before me. It is not a decision on the Foreign Tribunal Evidence Act 1856. It is a decision on the common law doctrine of confidentiality between a banker and his client.

In the instant case this Court is not called upon to make a decision on whether or not the defendants committed fraud. All that this court is being asked to do is to assist the United States District Court in its proceedings by compelling the production of certain items of evidence in Belize. The question of fraud is a matter that will be competently determined by the United States District Court in accordance with its own substantive and procedural laws. Certainly, there is nothing on the evidence that establishes even a prima facie case that the defendants have breached any of the laws of Belize. Whether or not they have, in fact, breached any of the Laws of the United States of America is a question beyond my competence.

The sole question before me, therefore, is whether the plaintiff has followed the proper procedure in making the ex-parte application and, if so, whether the substantive law allowed the court to make the ex-parte Order it made on that application.

Applications under the Foreign Tribunals Evidence Act, 1856 (Imperial) are governed by Order XXXVIII Rules 44-50 of our Supreme Court of Judicature Rules. These rules provide that an application under the Act may be made by "any person shown to be duly authorized to make the application on behalf of such foreign court or tribunal". There is no evidence before this court to indicate that the plaintiff is, in fact, so authorized. Furthermore, the plaintiff does not purport to make this application on behalf of the District Court of the District of Columbia; it purports to make this application in its own right. There is nothing in the law to permit individuals or agencies to make such an application except in a representative capacity on behalf of the requesting foreign court. The application was₅ therefore, procedurally deficient. It ought not to have been entertained by the Court and the ex-parte Order given thereon must be struck out.

The application was also procedurally deficient in that the Letter of Request of the United States District Court was not properly before this Court. Section 33 of the Evidence Act, Chapter 75 of the Laws of Belize (1990) sets out the means of proving judicial documents of a foreign court. Section 33(l)(b) provides that for a copy of such a document to be admissible, the copy must purport either to be sealed with the seal of the foreign court to which the original document belongs or, if in the event of that court having no seal, to be signed by the judge or, if there are more judges than one, by one of the judges, of that court, and the judge must attach to his signature a statement in writing on the copy that the court whereof he is judge has no seal.

What was tendered before this court on the hearing of the ex-parte Summons was an unauthenticated photocopy of a purported

Letter of Request. This unauthenticated copy was inadmissible. It was not properly before the court, and the court had erred in acting upon it.

Learned Counsel for the Plaintiff submitted that the Defendants had delayed for too long in objecting to the admissibility of the Letter of request and therefore waived their right to do so. I am not persuaded by this submission It should be recalled that the Letter of Request was not tendered on the hearing of this motion. It was tendered during the hearing of the ex-parte Summons. Counsel for the Defendants were not present when it was tendered₁ and, therefore, had no opportunity to object to its admissibility at that time. They could, therefore, not be said to have waived their objection, and were free to raise it at any time.

Learned Counsel for the Defendants submitted further that the terms of the ex-parte Order issued herein are far wider than the terms of the Letter of Request. As far as the obtaining of evidence is concerned, the Letter of Request asks for two things:

(a) Production of documents by the Belize bank; and

Mark Winburn, Jennifer DeLima and George Delima.

The Letter off Request also asks for an Order for the conservation, inspection and copying of certain other documents. This aspect of the Letter Of Request I shall make reference to later.

The ex-parte Order issued by the court, however, directed the production as evidence not only of the items set out in the Letter of Request but of several of other documents not included therein. These documents are set out at (a) to (r) of the Order. Since the production of these documents was not requested by the District Court of the District of Columbia, their production should never

have been ordered and paragraphs (a) to (r) of the ex-parte Order should be struck out.

As I noted before, the District Court of the District of Columbia also requested the conservation, inspection and copying of certain other documents. Such a request, however, cannot be made under the Act.

Inspection and copying of documents, as opposed to producing them before the Court as evidence, amounts to pre-trial discovery, and it is settled law that, on a true construction, Section 1 of the Foreign Tribunals Act, 1856, does not extend to discovery of documents for pre-trial purposes. It extends only to the production as evidence of documents relevant to the issues to be tried in the foreign action, and an application thereunder is akin to an application for a subpoena duces tecum. This principle is well established by Radio Corporation of America v. Rauland Corporation and another (1956) 1 All E.R. 549 and American Express Warehousing Ltd. v. Doe and Other (1967) 1 L.L.R. 222. It is evident that in the present case the purpose of the request for the inspection and copying of certain documents is merely to obtain discovery of material which might lead to the obtaining of evidence relevant to the issues ultimately to be tried by the foreign court.

As regards the request for the conservation of certain documents, there is nothing in the Foreign Tribunals Evidence Act, 1856, which gives the Court power to make such an order. In the United Kingdom it was thought necessary to pass a new Act to give their courts that power. Section 2(2)(c) of the Evidence (Proceedings in Other Jurisdictions) Act 1975 allows the United Kingdom Courts to make an Order upon the request of a foreign tribunal for the "inspection, photographing, preservation, custody or detention of any property" in appropriate circumstances. This Act, however, is not a part of the Laws of Belize.

Learned Counsel for the Plaintiff contended that the Court has power to issue such an Order under its general power to grant injunctions. This is a misconception on the part of Learned Counsel. The Court has power to issue injunctions only in relation to proceedings before the Court itself. There are in fact no proceedings before this court. This application is merely ancillary to proceedings before the District Court of the District of Columbia. The ultimate and penultimate paragraphs of the Order for the custody and conservation of certain documents should, therefore, never have been made and should be struck out.

The Plaintiff made objections to certain procedural matters. in particular, the Plaintiff made an issue of the fact that the Defendants Notice of Motion was unsigned. In this regard, I am entitled to take judicial notice of the fact that there is a practice in these Courts which allow Notices of Motion to be either signed or unsigned. In any case, even if a requirement for signature exists, it is a requirement that can be waived. And the Plaintiffs' long delay in making the objection amount to waiver.

I turn now to the provisions of the Statute itself.

Learned Counsel for the Defendants submitted that the 1856 Act limits the 'jurisdiction of the Court to entertaining a Letter of Request from a foreign court in respect only of a civil or commercial matter pending before that foreign court.

In learned Counsel's submission, the importance of having proper evidence to establish that it is a civil or commercial matter is illustrated by the cases of

Re: State of Norway Application (No. 1) 1989 1 A.E.R. 661,

Re: State of Norway Application (No. 2) 1 A.E.R. 683 and

Re: State of Norway Application (Nos. 1 & 2) (1989 1 A.E.R. 745.

Learned Counsel further submitted that such evidence as there is would lead to the conclusion that by the Law of Belize the proceedings before the foreign court would properly be characterized as criminal or penal rather than civil. In the Letter of Request itself at page 4 paragraph (F), the Plaintiff is stated to be seeking "civil penalties" resulting from the alleged fraudulent activities of the defendants.

Section 60(1) of the Evidence Act of Belize provides as follows:

Learned Counsel for the defendants submitted, therefore, that the Law of Belize places on the same footing exposure to a criminal charge and a penalty of forfeiture of a civil nature. In such circumstances, it is not enough merely to label the proceedings "civil." It is necessary to establish the true nature of the proceedings by proper evidence.

In reply, Learned Counsel for the Plaintiff submitted that the "Norway" cases were based on the 1975 U.K. Act and were of no assistance in the interpretation of the 1856 Act. In Counsel’s submission, the mere production of the Letter of Request suffices to establish that a civil or commercial matter is pending before the foreign court.

I cannot accept learned counsel for the Plaintiff’s submission. In my view, the line of reasoning applicable to the 1975 U.K. Act in this respect is equally applicable to the 1856 Act. He who alleges must prove. The burden of proving that the

application falls within the purview of the Act is upon the Plaintiff, and he has not satisfied me that the matter before the District Court of the District of Columbia is a civil or commercial matter within the meaning of the Foreign Tribunals Evidence Act, 1856. His application must therefore fail on this ground as well.

Learned Counsel for the Defendants also made reference to the Trust Act, 1992. He pointed out that the Plaintiff’s application sought to have the Defendants disclose information which they era privy to in their capacity as trustees. By Section 25(2) of the Trust Act, a Belizean trustee is enjoined to keep confidential all information regarding the state and amount of the trust property or the conduct of the trust administration. This, however, is precisely the information being sought here.

I accept and support Learned Counsel's submission in this respect. In a jurisdiction such as Belize, which offers international investors confidentiality and protection for their assets against foreign litigants and which has passed laws towards those ends, it is important that judges, mindful of the legislature’s intentions as set out in the law, support these principles of confidentiality, inviolability, and exclusivity of jurisdiction. As the Court of the Commonwealth of the Bahamas

noted in The Royal Bank of Canada v. Apollo Development Limited (1985) L.R.C. (Comm) 73 in relation to the matter of banking secrecy in that country, "The policy of preserving banking secrecy in the Commonwealth as enshrined in its laws must be scrupulously observed."

This is not to say that the confidentiality laws of Belize or of any other country should be used as a device to encourage or protect fraud. As the court of the Commonwealth of the Bahamas was quick to add in The Royal Bank of Canada V. Apollo Development Limited (supra), "Of equal importance is the need to ensure that it (the confidentiality law) does not become a screen for facilitating fraud." Of necessity, there will always be a dynamic tension between these equally important and often conflicting principles.

In the case of the confidentiality provisions of the Belize Trust Act, this conflict was resolved by providing certain specific exceptions to the general confidentiality rule. Thus Section 28(1) provides, inter alia, that the trustees of a Belize trust must provide information to the Court. There is no definition of "Court" in the Trust Act itself, but the Interpretation Act defines "Court" to mean the Court of Belize. The Trust Act makes no provision, therefore, for the disclosure of information regarding a Belize trust to a foreign court. It does not go to say, for example, "to the Court of Belize for disclosure to a foreign court". The statutory exception says clearly "to the Court", i.e. to the Belize Court for the purposes of that Court in the course of proceedings before it. Here there is no proceedings before the Belize Court. All there is, is a request from a foreign court for the assistance of the Belize Court in order to obtain evidence that is relevant to proceedings that are now in progress before the foreign court. The information sought by the plaintiff, then is not to be given to the Belize Court, but to the foreign court. The Belize Court has no use for this information. It is for the foreign court and for the foreign court alone. Such disclosure is

prohibited by Subsection (2) of Section 28, and those sections of the ex-parte Order requiring the disclosure of information regarding the Belize trust must be struck out.

The Act of 1856 does not permit a fishing expedition, that is to say, an application for the purpose of obtaining evidence to discover if any unlawful act has in fact been committed. The Court will not permit disclosure of material simply because it may lead to a line of inquiry which itself may reveal relevant testimony. This principle is admirably set out in Radio Corporation of America V. Rauland Corporation (1956) 1 All E.R. 549, and re-enforced by cases such as Rio Tinto Zinc V. Westinghouse (1978) All E.R. 434 per Lord Wilberforce at p. 442, 443 and 444; per Lord Dilhome at p. 453 and 454 g-h; and per Lord Fraser at page 470, and Re: Asbestos Insurance Coverage cases (1985) 1 All E.R. 716 at 720.

An examination of the affidavit of Catherine M. Shea sworn to on the 5th July, 1994, is revealing on this point. This affidavit states that the Plaintiff has some evidence already in its possession, and goes on to describe in great particularity what this evidence is by referring to particular documents. Then Ms. Shea comes to asking for documents which the Plaintiff wishes to have the witnesses produce, she is contrastingly vague and non- specific, referring to these documents only in generalities and by categories. In fact, the Plaintiff has not named a single specific document which it requires the Belize Bank or the named witnesses to produce.

In order to satisfy the requirement of Section 1 of the 1856 Act, the Plaintiff must name, or otherwise sufficiently

 particularize, the precise documents it is requesting. How specific the reference to the documents requested must be is set out by Lord Denning in Re: Westinghouse Electric Corporation (1977) 3 All E. R. 703 at 710. There Lord Denning said:

This statement of the law was approved by Lord Diplock in Rio Tinto Zinc V. Westinghouse Electric Corporation (1978) 1 All E. R. 434 at 463 where he said:

The operative words are those I have underlined. A request for a class of documents is not of itself bad, but a request a class of documents may be so wide it loses all particularity and ceases to be clear.

A good example of a case where a request for a class of documents was upheld is American Express Warehousing Ltd. v. Doe (1967) Lloyd List Law Reports 222. In that case a Letter of Request was directed to the High Court in England asking that two representatives of an insurance brokerage company be examined orally as witnesses about three specific contracts of insurance which were stated to be placed in 1964 at Lloyd’s for the New York Terminal Warehouse Company. It also requested that they produce the slips and quote slips related to each of the insurances and also all memoranda, letters and other files related to the

insurances. All three policies of insurance were specified and the name of the insured was given. In other words, the documents required were mentioned in the Letter of Request and they could be easily found and produced. As Lord Denning pointed out in supporting the request, this was a case in which a subpoena duces tecum would have been appropriate.

It would have been very different, of course, if the request had been for "all insurances policies issued by Lloyd's and all memoranda, letters and other files relating thereto". This class would have been clearly too wide and the application would have been refused.

But this is, in fact, precisely what the plaintiff is seeking here. The Plaintiff sought and the ex-parte Order directed the production of what is probably all the documents in the office of the first and second-named defendants, i.e. all unit trusts, all banking and financial records, all accounting records, all investment documents and so on.

Clearly this application is a "fishing expedition" in the nature of pre-trial discovery that lacks any specificity whatsoever. It must also fail on these grounds.

Since I have already decided that the ex-parte Order is bad

and must be struck out on other grounds, it is necessary for me to consider these additional grounds.

As regards costs, I order costs to the defendants as agreed or taxed.

Troadio J. Gonzalez

[Note: "Puisne" Judge means "Junior" Judge as distinguished from Chief Justice and Chief Baron.]

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