The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Supreme Court judge has slammed the “lazy indulgence” of Bahamian attorneys in swearing affidavits containing “material” evidence without knowing the facts because it could “embarrass and prejudice” legal cases.

Justice Loren Klein, asserting that such evidence should come directly from parties to a legal dispute, rather than their attorneys, made his criticism as he found in favour of a Bahamian financial services provider’s bid to overturn the imposition of joint provisional liquidators for an International Business Company (IBC) client.

The affidavit supporting the winding-up Finethic Ltd had been sworn by David Hanna, an attorney with Higgs & Johnson, which was acting for the petitioners. This came under sustained attack from Maurice Glinton QC, the legal representative for Paul Moss and his Dominion Management Services company, who were bidding to remove the Kikivarakis & Company accounting firm as Finethic’s provisional liquidators.

Mr Glinton had sought to have the affidavit struck out on the basis that Mr Hanna had no first-hand knowledge of the facts he was attesting to, and Justice Klein agreed it was “a most troubling point” that it had come from an attorney in the firm that was pushing the winding-up petition.

While it was acceptable for attorneys to swear affidavits for matters in which they have direct involvement, such as settlement negotiations, the judge added: “In my considered view, affidavits which seek to establish facts material to the application, and which might have to be tested on cross-examination ought not to be sworn by counsel of the same firm presenting the application, and certainly not by the advocate appearing himself.”

Finding that a company’s affairs should always be detailed by someone with first-hand knowledge of the situation, Justice Klein said: “The facility of having in-house counsel swear material affidavits might be regarded as a simple matter of convenience.

“To my mind, however, it is a lazy indulgence that should not be encouraged or tolerated having regard to the relative ease with which affidavits can be procured from the proper principals wherever situated in the world by the use of information technology, even if it means filing such affidavits under cover of local affidavits until the requirements under the Hague Convention 1961 for apostilisation can be satisfied.”

While there was nothing in law to prevent this, Justice Klein said equally that there was “very little in the law or practice to condone it”. He added: “All of the cases and authorities speak with one voice in deprecating the practice and indicate that it is to be avoided at all costs.

“In my view, it amounts to something more than an undesirable or bad practice; it necessarily diminishes the probative value of the evidence before the court and always has the potential to embarrass and prejudice the proceedings.”

Justice Klein’s comments came as he ruled on a dispute involving Finethic’s equal 50/50 shareholders, the brothers Georgio and Andrea Nembri. The two had been at loggerheads over the management and direction of the company since 2015, with “the paralysis” resulting in the resignations of its then-directors, Gina A. Martinez and Fernando A. Gil, on December 12, 2016.

Aleman, Cordero, Galindo & Lee (Bahamas) also resigned as registered agent on that same date. However, a written resolution passed solely by Andrea Nembri on April 20, 2017, installed Dominion Management Services as the new registered agent, with Mr Moss and Melanie Lightbourne as president and secretary, respectively.

This sparked Georgio to initiate winding-up proceedings on August 21, 20201, on the basis that Finethic was in “gridlock”. At a hearing where only himself was represented, then-justice Ruth Bowe-Darville granted the winding-up and Anthony Kikivarakis and Cheryl Simms of Kikivarakis & Co were appointed as joint provisional liquidators.

Mr Moss, Dominion and Finethic moved within three weeks to have the winding-up overturned, and the Kikivarakis & Co accountants removed, via legal action initiated on September 17, 2020. Georgio Nembri alleged in his petition that the appointments of Mr Moss and Ms Lightbourne were invalid because he, as a 50 percent shareholder, had never agreed to them.

“It is further alleged that based on the lack of participation by the petitioner in the appointment process, the petitioner is of the view that Andrea Nembri and Mr Moss ‘have conspired to take improper steps to prejudice his interests in the company,” Justice Klein recorded.

“It is stated that the company holds a bank account with LGT Bank AG in Liechtenstein, which is said to contain a significant amount of money belonging to Andrea and Georgio as members of the company. It is averred that the petitioner was contacted by the bank and made aware that by resolution dated May 8, 2020, Mr Moss conveyed to the bank that he was entitled to access the account.”

Georgio Nembri alleged that Mr Moss’ actions were “alarming and entirely improper”, and that he needed to be “immediately restrained” otherwise Finethic could suffer “irreparable harm”. However, Justice Klein found that Mr Moss had standing to act as the company’s president and director.

And Mr Moss, in his witness statement, said the allegation that he conspired with Andrea Nembri against Georgio was “unfounded and false”. He added: “I am both offended and embarrassed by the allegations, and that the Act could be so manipulated to procure such appointment (of joint provisional liquidators) by maligning my professional reputation as counsel and attorney and personal character.”

Justice Klein found for Mr Moss, ruling: “There is the suggestion that the steps taken by Mr. Moss vis-à-vis the banking arrangements were to take control of the bank account, and that this was being done pursuant to some conspiracy between Mr Moss and Andrea. But these were bare, unsubstantiated second-hand allegations and innuendos, made in circumstances where there was plainly no evidence to support them.....

“Neither were there any specific allegations of any culpable behavior involving any breach of duty, or mismanagement or misconduct.” Justice Klein also noted Mr Moss’s assertion that Georgio had failed to fully disclose all the necessary facts, including a $1.4m arbitration ruling against him in Italy over allegations he had “stripped” funds from Finethic’s key asset.

“It seems the petitioner benefits if the company is ordered wound up,” Mr Moss alleged. Justice Klein ultimately set aside the appointment of the joint provisional liquidators, finding that the grounds to justify their appointment had not been met.