San Antonio International Ltd v San Antonio Oil & Gas Svcs Ltd

• Jurisdiction: Bermuda
• Judgment Date: 15 October 2020
• Docket Number: Commercial Jurisdiction 2018 No 437
• Court: Supreme Court (Bermuda)

[2020] Bda LR 64

In The Supreme Court of Bermuda

Commercial Jurisdiction 2018 No 437

Between:

San Antonio International Limited

Applicant

and

San Antonio Oil & Gas Services Limited

Respondent

Mr J Hindess for the Applicant

Mr D Kessaram for the Respondent

The following cases were referred to in the judgment:

Re Mentor Insurance Ltd [1987] Bda LR 52

Attorney General of the Gambia v N'jie [1961] AC 617

Ex parte Sidebotham (1880) 14 ChD 458

Re Reed Bowen Co (1887) 19 QBD 174

Deloitte & Touche AG v Johnson [1999] UKPC 25

Mahomed v anor v Morris & ors [2000] EWCA Civ 46

Bank of Tokyo Ltd v Karoon [1986] WLR 414n

Re Edennote Ltd [1996] 2 BCLC 389

Application for provision of audited accounts and permission to inspect books and papers of a company in liquidation — Applicant is neither a creditor nor contributory — Whether proper person to invoke the jurisdiction

RULING of Hargun CJ

Introduction

1. This is an application by San Antonio International Limited, the Applicant, for an order under section 176(5) of the Companies Act 1981 (the “Act”) for an order that the Joint Liquidators of San Antonio Oil & Gas Services Limited (the “Company”) provide to the Applicant audited accounts and permit the Applicant to inspect the books and papers of the Joint Liquidators in this matter.

2. The application is supported by the First affidavit of Saul Dismont sworn on 1 November 2019. The Joint Liquidators have also filed evidence in the form of the First Affidavit of Matthew Clingerman sworn on 18 December 2019.

Background

3. The Applicant owns 100% of the shares of Oil Services Holdco Ltd “Oil Services”) which owns 100% of the shares of Armadillo Holdings Inc. (“Armadillo”) which in turn owns hundred percent of the shares of the Company. The Applicant claims that it is entitled to a copy of the audited accounts and inspection of the books and papers of the Joint Liquidators on the basis that it has sufficient interest on two grounds.

4. First, as the Applicant is the indirect holder of 100% of the shares of the Company, the Applicant has an economic interest in any surplus dividend declared by the Joint Liquidators to the shareholders of the Company.

5. Secondly, it is said that the Applicant has an economic interest in the shares of the company owned by Armadillo. The shares of the company owned by Armadillo were pledged as collateral for the indebtedness of the Company, pursuant to a Credit Facility Agreement dated 23 July 2008 between the Company, as the borrower, Armadillo, as the owner of the shares of the Company to be pledged, and the lenders who are parties to that agreement. In 2014, the lenders foreclosed on the debt and the collateral agent, Mayflower Management Services (Bermuda) Limited (“Mayflower”), took possession of the shares pursuant to the terms of the Credit Facility Agreement. In the written submissions, filed on behalf of the Applicant, it is said that the Applicant is entitled to any surplus after the sale of the shares of the Company “held by the [Applicant]”. In the written submissions it is contended that this entitlement arises pursuant to the terms of the Credit Facility Agreement. At the hearing of this application Mr Hindess, who appeared on behalf of the Applicant, was unable to point to any particular provision in the Credit Facility Agreement which provided that entitlement to the Applicant. Mr Hindess contended that the Applicant had an economic interest in any surplus from the sale of the shares of the Company given that the Applicant was the indirect holder of 100% of the shares of the Company.

Statutory framework

6. As noted, this application is made under section 176(5) of the Act which provides that:

“If any person is dissatisfied by any act, omission or decision of the liquidator, that person may apply to the Court, and the Court may confirm, reverse or modify the act or decision complained of, and may give such directions and make such order in the premises as it thinks just.”

7. It should be noted that the Act expressly provides for inspection of books and papers of a company in liquidation. Section 193(1) of the Act provides:

“The Court may, at any time after making a winding-up order, make such order for inspection of the books and papers of the company by creditors and contributories as the Court thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories accordingly, but not further or otherwise.”

8. Furthermore, Rule 129 of the Companies (Winding Up) Rules 1982 provides that:

“When the liquidator's accounts have been audited, the Registrar of Companies shall certify the fact upon the account and thereupon the duplicate copy bearing a like certificate, shall be filed with the Registrar and that copy together with a copy of the said account delivered to the Court for filing in accordance with section 180 of the Act, shall be open to the inspection of any person on payment of the same fee as is payable with respect to the inspection of the file of proceedings under rule 12.”

9. Rule 12, referred to in Rule 129...