Informission Group Inc. v Convertix Corporation 1999 Civil Jur. No. 267

• Jurisdiction: Bermuda
• Judgment Date: 06 December 2000
• Date: 06 December 2000
• Docket Number: Civil Jurisdiction 1999 No. 267
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Wade-Miller, J

Civil Jurisdiction 1999 No. 267

BETWEEN:

Informission Group Inc

Petitioner

and

Convertix Corporation

Respondent

Mr I Kawaley of Messrs Milligan-Whyte & Smith for the Petitioner

The Respondent is unrepresented

Re International Tin CouncilELR [1987] Ch 419

Re A Company (No. 00359 of 1987)ELR [1988] Ch 210

Companies Act 1981, s. 4

External Companies (Jurisdiction in Actions) Act 1888

Winding up — Overseas company — Whether Court has jurisdiction — Appropriate forum

JUDGMENT

On the 31^st March 2000 Informission Group Incorporated applied to have Convertix Corporation wound up under the provisions of the Companies Act 1981. Mr Kawaley recognised on behalf of the Petitioner, that the application to wind up an overseas Company is being considered by the Bermuda Courts for the first time. Essentially, it raises the point whether the Courts' of Bermuda have the jurisdiction to grant a winding up Order in these circumstances. I granted the application and promised to give written reason for that decision later.

The Respondent Company, Convertix Corporation (‘the Company’), was incorporated by registration in the British Virgin Islands on 21st November 1977. It has carried on business in Bermuda from a Bermuda branch office with a sole director in Bermuda.

In its petition dated 11th of August 1999, the Petitioner, Informission Group Incorporated, (‘the Petitioner’), seeks an order for the winding up of the Company. The petition states that the Petitioner and the Company entered into an agreement under which the Petitioner provided certain information technology services to China First Commercial Bank (‘China Trust’) pursuant ‘to a code conversion services agreement’ entered into between the Company and China First in July 1998.

By Deed of Assignment dated 14th April 1999, the Company assigned an account receivable from China Trust to the Petitioner and admitted, inter alia, a minimum current debt on the part of the Company to the Petitioner of US$467,494. Clause 7 of the Deed of Assignment expressly provided that the assignment ‘is not in full and final settlement of any and all claims which the Petitioner assignee has against the Company assignor.’ The Company's debt to the Petitioner remains unsatisfied.

The Petitioner alleges that the Company should be wound up on the basis that it is unable to pay its debt and/or it is just and equitable that the Company be wound up.

The Petitioner argues that the Company is an overseas Company, it has conducted business in or from Bermuda and has assets within this jurisdiction.

Mr Kawaley submitted that the Courts' jurisdiction to wind up the Company is clear in light of:

• a) the location of the Company's sole director and of the Company's bearer share certificates in Bermuda;

• b) the location of assets collected by the provisional liquidators here;

• c) the fact that the Company's management has, from inception, been principally conducted from Bermuda;

• d) the fact that the sole director has the ability to exercise the rights of all of the Company's bearer shares and has agreed, for good order, to place the Company into members voluntary liquidation and to appoint a voluntary liquidator under British Virgin Islands' law;

• e) the consequent fact that Bermuda is the most appropriate forum for the compulsory winding up of the Company.

Mr Kawaley further submitted that the Court has jurisdiction to grant the relief sought by the Petitioner by virtue of the provisions of section 4 of the Companies Act 1981 as read with the External Companies (Jurisdiction in Actions) Act 1888 and/or under its inherent jurisdiction. He maintained that although there is no explicit provision in the Companies Act of 1981 (‘the Act’) to wind up an overseas Company, it is implicitly clear that Part XIII of the Act applies to permit companies.

He argued the same jurisdiction must be exercisable over an overseas company which is deemed to be conducting business in Bermuda because it has an office here (section 133) but is doing so ‘unlawfully’ without a permit, providing the Petitioner can make out a ground for winding up under section 161.

Mr Kawaley maintained that the main requirement is that the Petitioner makes out a case that some practical benefit will flow from a Bermuda winding up order: McPherson, the Law of Company Liquidation 3rd Ed, pp 462-464.

Another factor Mr Kawaley...