The Hong Kong and Shanghai Banking Corporation Ltd v Newocean Energy Holdings Ltd
| Jurisdiction | Bermuda |
| Judge | Clarke P,Kay JA,Bell JA |
| Judgment Date | 18 November 2022 |
| Neutral Citation | [2021] CA Bda 21 Civ |
| Docket Number | Case No: Civ/2022/11 |
| Court | Court of Appeal (Bermuda) |
| Year | 2021 |
In the Matter of Newocean Energy Holdings Limited
And in the Matter of the Companies Act 1981
BM 2022 CA 20
Neutral Citation Number: [2021] CA (Bda) 21 Civ
THE PRESIDENT, Sir Christoper Clarke
JUSTICE OF APPEAL Geoffrey Bell
JUSTICE OF APPEAL Anthony Smellie
Case No: Civ/2022/11
IN THE COURT OF APPEAL (CIVIL DIVISION)
ORIGINAL CIVIL/COMMERCIAL JURISDICTION
THE HON. MR. JUSTICE MUSSENDEN
CASE NUMBER 2021: No. 338
Dame Lois Browne-Evans Building
Hamilton, Bermuda HM 12
Keith Robinson, Carey Olsen Bermuda Limited, for the Respondent
Kevin Taylor, Walkers (Bermuda) Limited for the Appellant
Hearing date(s): 14 November 2022
On Tuesday 26 July 2022 we allowed the appeal of the Hong Kong and Shanghai Banking Corporation (“HSBC” or “the Petitioner”) from the decision of Mussenden J, dated 31 May 2022 (leave to appeal having been granted by the judge on 1 June 2022), and ordered that the Respondent, NewOcean Energy Holdings Ltd (“NewOcean” or “the Company”), a Bermuda company, should be wound up and that the joint provisional liquidators should continue as provisional liquidators with the powers granted pursuant to section 175 of the Companies Act 1981, which powers were not to be limited by section 170 (3) of the Companies Act, such that the Amended Light Touch Order was no longer to be in effect. The winding up order was made in relation to a petition filed by HSBC on 22 October 2021.
On 30 September 2022 we gave detailed reasons for the decision (“the Reasons”) that we had made at the end of July.
The Company, acting through Mr Shum, its executive director, now seeks leave to appeal to the Judicial Committee of the Privy Council from our decision and a stay of the order which we made, pending the final determination by the Privy Council of the appeal.
The Company contends that it is entitled to appeal as of right. As to that, section 2 of the Appeals Act 1911 provides that an appeal shall lie:
“( a) as of right, from any final judgment of the Court, where the matter in dispute on the appeal amounts to or is of the value of $12,000 or upwards or where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $12,000 or upward;”
If an appeal lies as of right it would only be proper to refuse leave if the putative appeal was devoid of merit and bound to fail, or if the appeal was an abuse of process. That is not the case here.
I do not accept that the Company's putative appeal is from a decision of this Court where either “ the matter in dispute on the appeal amounts to or is of the value of $12,000 or upwards” or where the appeal “ involves directly or indirectly some claim or question to or respecting property or some civil right amounting to or of the value of $12,000 or upward”.
The application of this section was considered by this Court in Sturgeon Asia Central Balanced Fund Ltd v Capital Partner Securities Co Ltd Civil Appeal No 14 of 2017, in which this Court determined that the participating shareholders in a fund were entitled to vote to terminate the fund and have a Company wound up on the just and equitable grounds. The Court, which had been provided with a bundle of some 50 authorities on the question, held that there was in that case no appeal as of right under section 2 (a). In the lead judgement Baker P observed, echoing the words of Lord Hodge in the Privy Council case of A v R (5 March 2018) that the provision for a right of appeal if the amount in dispute amounted to or was of the value of $12,000 was “ anachronistic” and should be “ restrictively rather than liberally applied”. He also observed, inter alia, that:
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(a) the money realised in the liquidation of the Company was not “ the amount of the matter in dispute” nor was it “ the amount of a claim or question relating to property”
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(b) the economic consequences of the Court's winding up order were indirect and/or too remote
The value of the debts owed by the Company to its bank creditors, of whom the Petitioner is one, amounts to some $ 770.6 million. And the Petition debt is over US $ 70 million and HK $ 5.4 million. But those debts were not the matter in dispute on the appeal. The Petition debt was not disputed and nothing decided by this Court or the Privy Council will determine whether or not it exists or in what amount. The appeal did not determine a claim to property or a question respecting property. Nor did it determine the existence or otherwise of some civil right. What was in dispute on the appeal was to whether the Supreme Court had erred in the exercise of its discretion in further adjourning the winding up proceedings, and continuing the Amended Light Touch Order, and not ordering the immediate winding up of the Company.
Mr Keith Robinson for the Company submits that the appeal involves directly or, at the lowest, indirectly some claim or question to or respecting property amounting to or of the value of more than $12,000, the question being whether or not the Court was right to grant a winding up order in relation to the Petition debt. I do not accept that this submission is well founded. The section is to be narrowly construed and it must, in my view, be held to apply if, but not unless, there is a claim in respect of some property to which the would-be appellant is, or claims to be entitled, or some question in respect of that property. No such question arises. The Petitioner's entitlement to the only relevant property – its chose in action against the Company – is not in question. A contrary conclusion would not constitute the application of a strict construction; would not, as it seems to me, be consistent with Sturgeon; and, if correct, would appear to mean that, in relation to all windings-up where the Petition debt exceeded $12,000, there was an appeal as of right.
The 1911 Act also provides that an appeal to the Privy Council may lie:
“(c) at the discretion of the Court, from any other judgment of the Court, whether final or interlocutory, if in the opinion of the Court, the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to Her Majesty in Council for decision.”
It is apparent from the authorities – such as Imran Siddiqui v Athene [2019] BN 2020 CA 2 — that it is necessary for a would-be appellant who relies on the “ great general or public importance” provision to show that there is a dispute as to the applicable principle[s] of law rather than a dispute as the applicability of settled principles of law to the facts of the case.
In Imran Siddiqui Smellie JA cited, inter alia, the judgment of the British Virgin Islands Court of Appeal in Renaissance Ventures Ltd v Comodo Holdings [2018] ECSC J 1008-3:
“ Where there is no dispute on the applicable principles of law underlying the question which the appellant wishes to pursue on his or her appeal, a question of great general public importance does not ordinarily arise, especially where the principle of law is settled either by the highest appellate court or by longevity of application. Where the principle is one established by this Court but is either unsettled, in the sense that there are differing views or conflicting dicta, or there are some genuine uncertainties surrounding the principle itself, or if it is considered to be far-reaching in its effect, or given to harsh consequences or for some other good reason would benefit from consideration at the final appellate level, this court would be minded to seek the guidance of their Lordships' Board. Where, however, the real question on the proposed appeal is the way this court has applied settled and clear law to the particular facts of the case, or whether a judicial discretion was properly exercised, leave will ordinarily not be granted on this ground. In such a case, the question on the proposed appeal may be of great importance to the aggrieved applicant, but it would not for that reason alone be a question of great general or public importance.”
Mr Robinson further submits that, according to his research, there have been 25 reported Bermuda Supreme Court cases in the last 10 years that have concerned Hong Kong provisional liquidations (which I take to mean, provisional liquidations in relation to companies carrying on business in Hong Kong). None of them have been successfully appealed to the Court of Appeal for Bermuda or to the Privy Council. There is a lack of judicial guidance on provisional liquidations in Bermuda from the highest court which has left uncertainty as to, inter alia, the appellate Court's ability to use its discretion in the context of a provisional liquidation to order a winding up. This, he submits, has given rise to conflicting views, genuine uncertainty and likely harsh consequences that will affect the interests of the Company's creditors. Further the increasing regularity with which Hong Kong provisional liquidations are appearing in front of the Bermuda courts reinforces the point that it is of general public importance that Bermuda's highest appellate court should opine on this subject and bring clarity to this important area of law.
This is said to be of particular importance to the Company which is a public listed Company with around 48% of its stock held by the general public. The Group has over US$ 1 billion worth of assets and was operating one of the major LPG and oil terminals in the Southern China region. There were continuing negotiations in respect of asset sales in terms of hundreds of millions of US$s. The Company's 30 bank lenders were major local and international banks. The Group has over 950 employees in Hong...
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