PwC v Saad Investments Company Ltd
| Jurisdiction | Bermuda |
| Judge | Zacca P,Auld JA,Bell AJA |
| Judgment Date | 18 November 2013 |
| Court | Court of Appeal (Bermuda) |
| Docket Number | Civil Appeal 2013 No 7 |
| Date | 18 November 2013 |
[2013] Bda LR 82
In The Court of Appeal for Bermuda
Zacca P; Auld JA; Bell AJA
Civil Appeal 2013 No 7
In the matter of the Companies Act 1981 and in Re Saad Investments Company Limited (in official liquidation) and in Re Singularis Holdings Ltd (in official liquidation)
Mr D Chivers QC and Mr P Smith for the Appellant
Mr R Attride-Stirling and Ms K George for the Respondents
The following cases were referred to in the judgment:
Rubin v Eurofinance; New Cap Reinsurance [2012] UKSC 46
Cambridge Gas v Committee of Navigator HoldingsELR [2007] 1 AC 508
Al Sabah v Grupo TorrasELR [2005] 2 AC 333
Re African Farms [1906] TS 373
Picard/Madoff v Primeo Fund (No FSD275 of 2010 Ruling on Preliminary Issues, 14 Jan 2013)
PwC Bermuda v Kingate Global Fund LtdBDLR [2011] Bda LR 32
Re Mid East Trading LtdUNK [1998] BCC 726
In re Bowling and Welby's ContractELR [1895] 1 Ch 663
In re HIH Casualty and General Insurance LtdWLR [2008] 1 WLR 852
Re Impex Services Worldwide [2004] BPIR 564
Baker v RELR [1975] AC 774
De Lasala v De LasalaELR [1980] AC 546
British & Commonwealth v Spicer and OppenheimELR [1993] AC 426
Shierson v RastogiWLR [2003] 1 WLR 586
Schmitt v Deichmann [2012] EWHC 62
Winding up — Section 195 order — Jurisdiction — Grant to foreign liquidators powers in Bermuda — Judicial precedent — Production order as means of enforcement of foreign winding-up orders
JUDGMENT of Bell AJA
1. The appellant in this case is PricewaterhouseCoopers, an exempted partnership registered in Bermuda under registration number 7420 (“PwC Exempted”). Through its branch office in Dubai, PwC Exempted was at the material times the auditor of the two Respondent companies, which are now in liquidation. The first of these (“SICL”) was organised and incorporated pursuant to the Companies Law of the Cayman Islands, and a winding-up order in respect of SICL was made by the Grand Court of the Cayman Islands on 18 September 2009; Official Liquidators were appointed on the same date. On 17 August 2012, SICL presented a petition for its winding-up to the Supreme Court of Bermuda. Joint Provisional Liquidators were appointed, and on 14 September 2012, SICL was the subject of a winding-up order by the Supreme Court of Bermuda, and the Joint Provisional Liquidators were appointed as Joint Liquidators. On 13 February 2013, the Joint Liquidators applied by ex parte summons for an order under section 195 of the Companies Act 1981 (“the 1981 Act”) requiring, inter alia, the production of documents in relation to SICL and certain of its subsidiary companies.
2. The second of the Respondent companies (“SHL”), also a company incorporated in the Cayman Islands, was placed in voluntary liquidation on 20 August 2009, and on 18 September 2009, the Grand Court of the Cayman Islands made an order that the winding-up of SHL should continue under its supervision, and Joint Official Liquidators were appointed.
3. By summons dated 12 February 2013, the Joint Official Liquidators of SHL applied to the Supreme Court of Bermuda for recognition and assistance at common law, and for corresponding relief to that sought by SICL under section 195 of the 1981 Act. That application was made pursuant to the Court's inherent jurisdiction, under common law and/or pursuant to section 195 of the 1981 Act. Its application was heard as the same time as the application made on behalf of SICL, and on 4 March 2013, Kawaley CJ made orders under section 195 of the 1981 Act in relation to SICL, and under the inherent jurisdiction of the Court and/or at common law and/or under section 195 of the 1981 Act in relation to SHL (respectively “the SICL Order” and the “SHL Order”). PwC Exempted applied to set aside those orders, and that application was refused by the Chief Justice in a ruling dated 15 April 2013.
4. PwC Exempted founds its appeal on four grounds. First, it contends that the Supreme Court had no jurisdiction to make the SICL Order in circumstances where there was, it contends, no jurisdiction to make a winding-up order against SICL. Secondly, it contends that the Supreme Court had no jurisdiction to make the SHL Order, either at common law or on grounds analogous to section 195 of the 1981 Act. Further, PwC Exempted contends that if the common law power to grant orders analogous to section 195 does exist, that power does not extend beyond the power available to a liquidator in his home jurisdiction. It is common ground that the Cayman Islands equivalent of section 195 of the 1981 Act does not extend to documents relating to the subject company, as provided for in section 195(3) of the 1981 Act, as opposed to documents which are the property of the company. The distinction is significant in this case because the former provision extends to audit working papers, which are the property of the auditor, not the company.
5. Before the Chief Justice, PwC Exempted accepted that it was not open to it to challenge the making of the SICL Order on the basis that the Court had no jurisdiction to make a winding-up order in relation to SICL. PwC Exempted had not made a timely objection to the making of the SICL winding-up order because it was said to have been unaware of the making of such order. Consequently, it had needed an extension of time within which to appeal the winding-up order, and its application to the Court of Appeal for such extension had been refused. Hence there was a valid winding-up order against SICL. PwC Exempted's position changed before this Court, and I will come in due course to the manner in which the matter is now put on behalf of PwC Exempted.
6. The second ground of appeal is directed at the SHL Order. PwC Exempted contends that the Court had no jurisdiction at common law to make an order analogous to an order under section 195 of the 1981 Act, in circumstances where the Court lacked statutory jurisdiction to make a section 195 order as such. The grounds of appeal under this head included the contention that the Chief Justice was wrong to find that the UK Supreme Court case of Rubin v Eurofinance; New Cap Reinsurance[2012] UKSC 46 did not apply to the totality of the decision of Cambridge Gas v Committee of Navigator HoldingsELR[2007] 1 AC 508. Cambridge Gas, being a decision of the Privy Council would normally be binding on this Court, but the argument put forward on behalf of PwC Exempted was that where there are inconsistent decisions in the Privy Council (here, between the decision in Cambridge Gas and the earlier decision of the Privy Council in Al Sabah v Grupo TorrasELR[2005] 2 AC 333), then where the later Privy Council decision has been disapproved by a subsequent decision of the UK Supreme Court, the Bermuda Court should follow the earlier decision, in this case Al Sabah. Express complaint was also made of the Chief Justice's reliance on three cases (Re African Farms[1906] TS 373, Frank Schmitt v Henning DeichmannUNK[2012] EWHC 62 (Ch), and Picard/Madoff v Primeo Fund (No. FSD 275 of 2010 Ruling on Preliminary Issues — Dated 14 January 2013). The Chief Justice had held that there was common law power to make an order analogous to one under section 195 of the 1981 Act, in relation to companies to which the section would not otherwise apply, following those decisions. PwC Exempted submitted that the Chief Justice should have followed the decision of the Privy Council in Al Sabah and the decision of the UK Supreme Court in Rubin.
7. The third ground of appeal related to the scope of the SICL and SHL Orders. PwC Exempted contends that the Chief Justice erred in holding that the Court was able at common law to grant foreign liquidators powers in Bermuda which were wider than the powers actually possessed by those liquidators in their home jurisdiction. This ground is of course aimed at the order that PwC Exempted should disclose its audit working papers, and there was an alternative plea that if the Court had jurisdiction to order such disclosure, it erred in the exercise of its discretion in doing so. Finally in regard to this ground, complaint is made that the Chief Justice should not have imposed a requirement that the relevant partners and officers of PwC Exempted should confirm on oath that all relevant documents had been produced, and should not have included a penal notice in the relevant orders.
8. Finally in regard to the grounds of appeal, PwC Exempted complained that the Joint Liquidators of SICL, and the Joint Official Liquidators of SHL, had failed to give an undertaking that they would meet the costs of PwC Exempted in complying with the orders made. The grounds of appeal referred to the costs of compliance with the orders made in the Cayman Islands, as well as the costs which would need to be incurred in complying with the Bermuda orders, and contend that PwC Exempted would have to spend “in excess of $500,000” in complying with the orders. I will come in due course to the lack of evidence to support this or any figure for the cost of compliance.
9. It is important to consider this appeal in the context of the breadth of the liquidations. Various affidavits have been filed, primarily by Hugh Dickson, one of the Joint Liquidators of SICL and one of the Joint Official Liquidators of SHL (for ease of reference I will refer to them as the Joint Liquidators hereafter), and Trent Lyndon, general counsel for PwC Exempted. Mr Dickson's first affidavit sworn in the Bermuda proceedings is dated 17 August 2012 and set out in considerable detail the background to SICL. His third affidavit sworn on 7 February 2013, set out similar detail in regard to SHL. To put the application and the orders made by the Chief Justice in context, it is necessary to set out some of the detail to which Mr Dickson deposed.
10. The authorised capital of SICL...
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