BAHAMAS Law and Practice Contributed by: Adrian Hunt and Gabrielle Rahming, Graham Thompson
to that party in breach of trust or fiduciary duty. It therefore operates as an equitable claim whereby a claimant can hold a party personally liable to account for or provide compensation for any property that they dispose of despite knowledge of the breach of trust or fiduciary duty. A claimant does not have to establish dishonesty on the part of the recipient of the property but must satisfy the court that the knowledge of the recipient would make it unconscionable for the recipi - ent to retain the benefit of the property. Conversely, a claim of dishonest assistance requires an element of dishonesty. However, as the claim can be pursued even where there is no receipt by the defendant of property in breach of trust or a fiduciary obligation, the dishonesty element must arise from the acts of the defendant that facilitated, induced or pro - cured the breach. The test for whether the defendant acted dishonestly is an objective one based on what the defendant actually knew at the time, and not what a reasonable person ought to have known. 1.4 Limitation Periods Section 41 (1) of the Limitation Act of the Bahamas postpones the running of the period of limitation for a claim based on fraud until the claimant has: • discovered the fraud; or • with reasonable diligence, could have discovered the fraud. This provision operates to limit the instances in which a party, by themself, their agent or any other person, can rely on its intentional concealment of material fact to assert that the limitation period for a claim has expired. 1.5 Proprietary Claims Against Property A claimant who seeks the recovery of property misap - propriated or transferred by fraud can assert a pro - prietary claim against the converted proceeds of the original fraud. This is subject to there being: • a continuing enforceable proprietary interest; • an ability to trace that interest to identifiable assets; and
• no dissipation of the proceeds or presence of a bona fide purchaser for value without notice of the fraud. At common law, tracing is not available where the proceeds have become co-mingled with other funds. Equity, however, will also allow for tracing of proceeds that have become co-mingled with other funds, pro - vided that there is a fiduciary relationship. 1.6 Rules of Pre-Action Conduct The Supreme Court (Civil Procedure) Rules 2022 (CPR), which govern the commencement and prose - cution of civil claims in The Bahamas, do not prescribe any pre-action protocols for fraud claims. 1.7 Prevention of Defendants Dissipating or Secreting Assets Freezing orders can be sought under Part 17 of the CPR to restrain a party from dissipating assets. If granted, a freezing order will operate to restrain a party from dealing with any assets, including seeking to remove the assets from the jurisdiction. A cross- undertaking in damages is required upon seeking a freezing order. Non-Compliance A defendant’s failure to comply with a freezing injunc - tion may lead to contempt proceedings. In determin - ing whether a defendant is in contempt, the court will consider whether the defendant knew of the freezing injunction, was aware of its terms and still knowingly refused to comply with the order. If the answer is yes, the defendant will face sanctions, which may be a fine but could also be a committal to prison. The nature and extent of any sanctions is at the dis - cretion of the court. In weighing what sanctions, if any, to impose, the court can consider all of the cir - cumstances of the non-compliance. It is likely that the court would place significant weight on anything that suggests that the defiance of the freezing order was not a one-off but likely to be repeated. Third Parties Freezing orders are usually endorsed with a penal notice warning any third parties against knowingly facilitating a breach of the order. If that admonition is
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