Kemper Reinsurance Company v Minister of Finance et Al
| Jurisdiction | UK Non-devolved |
| Judge | Lord Browne-Wilkinson,Lord Lloyd of Berwick,Lord Hoffman,Lord Clyde,Lord Hutton |
| Judgment Date | 05 May 1998 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No. 67 of 1997 |
| Date | 05 May 1998 |
Privy Council
Lord Browne-Wilkinson
Lord Lloyd of Berwick
Lord Hoffman
Lord Clyde
Lord Hutton
Privy Council Appeal No. 67 of 1997
Practice and procedure - Whether the Court of Appeal of Bermuda has jurisdiction to hear an appeal from an order discharging leave to apply for an order of certiorari — Court found that the Court of Appeal had jurisdiction to hear the appeal and allowed the appeal.
The question in this appeal is whether the Court of Appeal of Bermuda has jurisdiction to hear an appeal from an order discharging leave to apply for an order of certiorari. The point is a perfectly general one, unaffected by the facts of the case. But the appellant also made a preliminary application to the Board which makes it necessary to explain the background against which the main point arises.
The appellant (“Kemper”) is an Illinois reinsurance company. It has treaties of reinsurance with Electric Mutual Liability Insurance Company (“Emlico”) which is incorporated in Massachusetts. Emlico is a subsidiary of the General Electric Company(“GE”)and its business appears to be confined to insuring the companies in the GE group and reinsuring those risks in the market. The policies it has written for GE have given rise to very large long-tail claims for indemnity against liabilities for asbestos-related diseases and cleaning up toxic waste. In 1994 Emlico reorganised its business by transferring its more profitable lines of insurance to a subsidiary, leaving itself only with long-tail liabilities under policies issued to GE. It then transferred its domicile to Bermuda. The procedure by which a foreign company may acquire a domicile (in the statutory language, “be continued”) in Bermuda is governed by section 132C of the Companies Act 1981 and requires the consent of the Minister of Finance. An applicant must provide the Minister with, among other things, proof that it has obtained “all necessary authorisations required under the laws of the country in which it was incorporated to enable it to make this application”. For this purpose, Emlico produced an order of the Massachusetts commissioner of insurance approving of the transfer of domicile. The order was made under section 49A of Chapter 175 of the Massachusetts General Laws (Insurance), which provides that the commissioner shall approve the transfer of an insurance company's domicile to “any other state in which it is admitted to transact the business of insurance” unless she determines that this is “not in the interests of the policyholders of the commonwealth”. The Minister was duly satisfied by the commissioner's order and gave his approval. Emlico was registered as having been continued in Bermuda and became subject to the laws of Bermuda as if it had been incorporated there. Four months later, it petitioned for its own winding-up on the grounds of insolvency.
Kemper considers itself prejudiced by Emlico's removal to Bermuda. It attempted unsuccessfully to intervene in the winding-up but on 26th July 1996 the usual order was made and joint liquidators appointed. Kemper also applied exparte to Ground J. for leave to apply for an order of certiorari to quash the consent of the Minister and the subsequent registration by the Registrar of Companies on the ground that the approval of the Massachusetts commissioner of insurance had been obtained by fraud. The judge gave leave but Emlico, acting by its joint liquidators, applied to discharge it. On 18th December 1996, after a lengthy inter partes hearing, Wade J. discharged the leave which Ground J. had given. She gave leave to appeal against her order.
When Kemper attempted to appeal, Emlico raised a preliminary objection that the court had no jurisdiction to hear appeals from the grant or refusal of leave to apply for certiorari. On 17th June 1997 the Court of Appeal upheld the objection and dismissed the appeal. On 25th June 1997 the Court of Appeal granted leave to appeal against its jurisdictional ruling to Her Majesty in Council. It is this appeal which is now before the Board.
Meanwhile, however, there have been developments in Massachusetts. On 5th January 1998, in an appeal in Re Electrical Mutual Liability Insurance Company Ltd No.1) 426 Mass. 3 62 (1998), the Supreme Judicial Court of Massachusetts decided that “any other state” in section 49A of the insurance statute meant any other state of the Union and did not include Bermuda. The grant of approval to the removal of its domicile had therefore been ultra wires and Emlico remained, by the law of Massachusetts, a domestic company–
As a result of this ruling, Lord Neill of Bladen Q.C., who represented Kemper, invited their lordships to give a preliminary ruling on whether Emlico was a proper party to the appeal. He said that if Emlico had not ceased to be a Massachusetts corporation, it could not have become a Bermuda corporation. It could not therefore have been wound up under Bermuda law and the joint liquidators had no right to give instructions for its representation at the hearing of the appeal.
Their Lordships refused the application. The fact that Emlico is a Massachusetts corporation by the law of Massachusetts is not of course inconsistent with it being a Bermuda corporation by the law of Bermuda. Lord Neill drew their Lordships' attention to an order of the Chief Justice of Bermuda made on 9th January 1998 on an application ex parte by the joint liquidators for directions on the conduct of the winding-up. The order declared that notwithstanding the ruling in Massachusetts, Emlico continued to be a Bermuda-company and it authorised the joint liquidators to continue with the winding-up. Lord Neill said that this order was a matter of some embarrassment to his clients because it was being used by Emlico in the American proceedings as evidence that the argument which he wished to raise by way of a preliminary point before their lordships had already been decided against him in Bermuda.
Their Lordships consider it is plain, as Miss Gloster Q.C. for the joint liquidators readily accepted, that it does nothing of the kind. The order was properly sought by the joint liquidators for their personal protection in the courts of Bermuda in case it should later be held that Kemper was right and that the winding-up proceedings were not properly constituted. No doubt the Chief Justice would not have made such an order unless he was at any rate provisionally of opinion that Emlico remained a Bermuda company, but the order is not binding upon any other person and the matter remains open for argument in the courts of Bermuda. It has not so far been considered in proceedings inter partes by either of the lower courts and is not a matter which it is necessary to decide or even material for the purpose of disposing of this appeal. Their Lordships jurisdiction is wholly appellate and it is not their practice to decide new points of law without the benefit of the judgments in the courts below: see Pillai v. Comptroller of Income Tax [1970] A.C. 1124, 1130. Lord Neill's application was therefore refused.
Their Lordships therefore turn to the single issue in the appeal, which is whether the Court of Appeal had jurisdiction to hear an appeal from the order of Wade J. The jurisdiction of the Court of Appeal of Bermuda is entirely statutory and derives from the Court of Appeal Act 1964. Section 12 provides as follows:–
“(1) Subject to the provisions of subsections (2) and (3) and any rules, any person aggrieved by a judgment of the Supreme Court in any civil cause or matter, (including matrimonial causes), whether final or interlocutory, or whether in its original or appellate jurisdiction, may appeal to the Court of Appeal; and any such appeal is hereinafter referred to as a ‘civil appeal’.
(2) No appeal shall lie to the Court of Appeal–
(a) against the decision in respect of any interlocutory matter; or
(b) against an order for costs, except with leave of the Supreme Court or the Court of Appeal.
Subsection (3) concerns matrimonial causes and is not material. The term “judgment” in section 12(1) is defined in section 1 to include “any decree, order or decision”.
This language appears prima facie wide enough to include the order of Wade J. Insofar as her decision was interlocutory, she gave leave under section 12(2). Nevertheless the Court of Appeal considered itself obliged to decline jurisdiction on the principle stated by the House of Lords in Lane v. Esdaile [1891] A.C.210 and subsequently applied by the House to an application for judicial review in In re Poh [1983] 1 W.L.R. 2. It is therefore necessary for their Lordships to examine these cases with some care.
Lane v. Esdaile [1891] A.C. 210 concerned the appellate jurisdiction of the House of Lords. Originally founded upon the common law, the jurisdiction had been momentarily abolished by the Judicature Act, 1873 but reinstated on a statutory basis by the Appellate Jurisdiction Act, 1876, of which section 3 provided that an appeal should lie to the House of Lords from “any order or judgment of … Her Majesty's Court of Appeal in England”. The language conferring jurisdiction was thus comparable in its breadth to section 12 of the Court of Appeal Act of Bermuda. In Lane v. Esdaile, the order of the Court of Appeal against which it was sought to appeal was a refusal of leave to appeal under Order LVIII, r. 15 of the rules of the Supreme Court, which had statutory force. (The rules had originally been scheduled to the Judicature Act, 1873.) Rule 15 read as follows:–
“No appeal to the Court of Appeal from any interlocutory order, …shall, except by special leave of the Court of Appeal, be brought after the expiration of twenty-one days, and no other appeal shall, except by, such leave, be...
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