On appeal from the Court of Appeal of Bermuda
Liquidation – Foreign company – Section 103 of the Cayman Islands Companies Law – Section 195 of the Companies Act 1981 of Bermuda – Whether the Bermuda court has a common law power to assist a foreign liquidation by ordering the production of information where the Bermuda court has no statutory power to wind up an overseas company – Whether if such a power exists it is exercisable in circumstances where such an order could not be made by the court in which the liquidation is proceeding
This appeal and the appeal in PWC v Saad Investments Co Ltd are closely connected and concern attempts on the part of the liquidators of Singularis Holdings Ltd and Saad Investments Co Ltd to obtain information from those companies’ former auditors, PWC.
The Grand Court of the Cayman Islands had wound up the company and made an order under s.103 of the Cayman Islands Companies Law requiring PWC to deliver up property or documents belonging to the company. However, s.103 extends only to material belonging to the company. The liquidators sought to use s.195 of the Companies Act 1981 of Bermuda to obtain from the Supreme Court of Bermuda an order requiring PWC to provide its working papers and other information which did not belong to the company. The liquidators required this material to enable them to locate assets belonging to the company. The problem was that the power under s.195 was only exercisable in respect of a company, which the Bermuda court had wound up.
At first instance Kawaley CJ made an order recognising the status of the liquidators appointed by the Cayman Court and exercising what he termed a common law power, by analogy with the statutory powers contained in s.195, to order PWC to produce the same documents they could have been ordered to produce under s.195. The Court of Appeal of Bermuda set the order aside and the liquidators appealed to the Privy Council. The issues on the appeal were:
(1) Whether the Bermuda court has a common law power to assist a foreign liquidation by ordering the production of information where the Bermuda court has no statutory power to wind up an overseas company and its statutory power to order production of information is limited to cases where the company has been wound up in Bermuda;
(2) Whether, if such a power exists, it is exercisable in circumstances where an equivalent order could not have been made by the court in which the foreign liquidation is proceeding.
The Privy Council unanimously dismissed the appeal on the basis that if there were a common law power to assist a foreign liquidation by ordering the production of information, it could not be exercised in circumstances where the equivalent order could not have been made by the foreign court. In coming to this conclusion the Privy Council concluded that Cambridge Gas Transportation Corp v Official Committee of Unsecured Creditors of Navigator Holdings [2007] 1 AC 508 cannot be regarded as good authority for the propositions that in assisting a foreign winding up (a) the court can do whatever it could properly have done in a domestic insolvency and (b) that the power to assist a foreign liquidation is itself the source of its jurisdiction over those affected, and that the absence of jurisdiction in rem or in personam is irrelevant.
Lords Clarke, Sumption and Collins found that there is a power at common law to assist a foreign court of insolvency jurisdiction by ordering the production of information in oral or documentary form which is necessary for the administration of a foreign winding up. They stated that this power is available only to assist the officers of a foreign court of insolvency jurisdiction to surmount the problems posed for a worldwide winding up of the company’s affairs by the territorial limits of each court’s powers and not to enable them to do something which they could not do under the law by which they were appointed, it is available only when it is necessary for the performance of the office-holder’s functions and is subject to the limitation that such an order must be consistent with the substantive law and public policy of the assisting court.
Lords Mance and Neuberger disagreed with decision of the majority regarding the existence of the common law power. Both considered that such a decision was not necessary to dispose of the appeal and was, therefore, obiter, but stated that had such a decision been necessary to dispose of the appeal they would have rejected the existence of such a common law power.
The case decides, by a majority, that there is a common law power to order production of information so as to assist a foreign insolvency but that the power was not wide enough to enable the liquidators to do something which they could not do under the law by which they were appointed.
