Price Water House Coopers v Saad Investments Company Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Neuberger |
| Judgment Date | 10 November 2014 |
| Neutral Citation | [2014] UKPC 35 |
| Date | 10 November 2014 |
| Docket Number | Appeal No 0114 of 2013 |
| Court | Privy Council |
[2014] UKPC 35
Lord Neuberger
Lord Mance
Lord Clarke
Lord Sumption
Lord Collins
Appeal No 0114 of 2013
Privy Council
From the Court of Appeal of Bermuda
Appellant
David Chivers QC Paul Smith Scott Pearman
(Instructed by Herbert Smith Freehills LLP)
Respondent
Gabriel Moss QC Felicity Toube QC Stephen Robins Rod Attride-Stirling
(Instructed by Blake Morgan LLP)
Heard on 29 and 30 April 2014
This appeal raises two issues. The first issue, which turns on the interpretation of two Bermudian statutes relating to companies, the Companies Act 1981 and the External Companies (Jurisdiction in Actions) Act 1885, is whether the Supreme Court of Bermuda had jurisdiction to make an order on 14 September 2012, winding up Saad Investments Company Limited ("SICL"), a company incorporated in the Cayman Islands. The second issue, which arises if there was no jurisdiction to make that order, turns on the interpretation of the 1981 Act, but it raises a point of more general application in the field of company law; it is whether SICL's auditors are entitled to challenge the winding up order in answer to an application by the liquidators under section 195 of the 1981 Act seeking the disclosure of documents in their possession.
SICL was incorporated in 1990 in the Cayman Islands as an exempted limited liability company limited by shares, with its registered office in Grand Cayman. By the time of its winding up, its authorised capital was US$4bn, of which $3.15bn had been issued, almost all of it held by another company based in the Cayman Islands, Saad Group Limited, whose shares were held by a trust based in the Cayman Islands. The facts in the following four paragraphs are not in dispute at least for the purpose of the present appeal, and are taken from the winding up petition referred to in para 7 below.
In May 2009, the Saudi Arabian monetary authorities froze the Saudi assets of certain companies within the Saad group. Consequently, the credit ratings of companies within the group, including SICL, were downgraded. This constituted an event of default under a facility agreement which had been granted to SICL by various banks, including Barclays Capital. As a result, repayment of all sums outstanding under the facility agreement was accelerated, and SICL became liable for a sum in excess of $2.8bn. On 30 July 2009, a winding up petition was presented to the Cayman Islands Grand Court by Barclays Capital, based on SICL's default in failing to pay this sum. On 5 August 2009, the Cayman Grand Court appointed Hugh Dickson, Stephen Akers and Mark Byers, of Grant Thornton Specialist Services (Cayman) Limited ("the Respondents") as joint provisional liquidators of SICL. Six weeks later, they were appointed joint official liquidators when SICL was ordered by the Grand Court to be wound up.
On investigating SICL's records, the Respondents encountered what they described as "a significant amount of uncertainty due in part to the complexity of its affairs, the position of the wider Saad group, and [certain] litigation". However, they said that they were satisfied that "there is a very significant deficiency, running into billions of US dollars, as regards creditors in the winding up of SICL". They also described the liquidation as "not only large but … complex", and requiring investigations "in multiple jurisdictions including the Cayman Islands, the United Kingdom, Saudi Arabia, Bahrain, Switzerland, Bermuda" and many other countries, including the United States, France and the Channel Islands.
Prior to its liquidation, PricewaterhouseCoopers, ("PwC"), which is registered as exempted partnership No 7420 in Bermuda, were the auditors of SICL and of seven other companies in the Saad group, and they also provided other accountancy services to those eight companies. Following their appointment as official liquidators of SICL, the Respondents believed that PwC had in their possession, either in Bermuda or in PricewaterhouseCoopers' Dubai branch office, "information and documentation pertaining to [SICL] that ought to be turned over to [the Respondents]". Accordingly, the Respondents "made numerous attempts to obtain information and documents relating to the affairs" of SICL from PwC in Bermuda and in the Dubai Office. Eventually, in early September 2010, the Respondents obtained an order from the Cayman Grand Court for delivery up of what amounted to PwC's working files relating to every aspect of SICL's business, including its annual audited accounts, its statutory records, its tax affairs, its bank statements, and records and notes relating to all other aspects of its business.
To cut a long story short, the Respondents' case is that PwC complied with that order very late and only partially, and, in particular, that many of the documents which PwC provided were heavily and unjustifiably redacted. In those circumstances, the Respondents decided to apply to wind up SICL in the Supreme Court, ie in the court in the jurisdiction in which PwC was registered, with a view to invoking the power of that court to require PwC to produce the documentation sought by the Respondents, and also to provide information about SICL, under section 195 of the 1981 Act.
Accordingly, on 17 August 2012, attorneys acting for the Respondents presented a petition ("the Petition") to wind up SICL in the Supreme Court of Bermuda ("the Supreme Court") on the grounds that it was just and equitable to make such an order. Paragraphs 24–28 of the Petition dealt with SICL's "connection to Bermuda". This connection was said to be that SICL "holds assets in Bermuda", consisting of shares in a company incorporated in Bermuda called Green Way, which shares were worth over $2m, and had been held by Credit Agricole, as SICL's "nominee and agent", until they were transferred to SICL in June 2011. The Petition also contended that the Respondents' desire to obtain relief against PwC under section 195 of the 1981 Act rendered it "just and equitable" to wind up SICL in Bermuda.
The Petition was advertised in the normal way, and, in anticipation of it being granted, the Respondents were appointed joint provisional liquidators of SICL in Bermuda on 20 August 2012. On 14 September 2012, the Petition came before the Supreme Court, which, after reading the evidence in support of the Petition and hearing from counsel for the Respondents, made the winding up order pursuant to the 1981 Act, and appointed the Respondents as joint provisional liquidators of SICL in Bermuda.
The Respondents then applied on 12 February 2013 to the Supreme Court for an order pursuant to section 195(1) of the 1981 Act, which provides that, "at any time after the appointment of a provisional liquidator or the making of a winding up order", the Supreme Court "may … summon before it … any person whom the Court deems capable of giving information concerning the … dealings, affairs or property of the company". Section 195(2) empowers the court to "examine such person on oath … either by word of mouth or on written interrogatories". Section 195(3) empowers the court to "require such person to produce any books or papers in his custody or power relating to the company".
On 4 March 2013, Kawaley CJ, sitting in the Supreme Court, granted the Respondents' section 195 application, ordering PwC to attend for examination and to produce all documents in their possession relating to the affairs of SICL. On 15 April 2013, he refused to accede to PwC's contention that his decision should be set aside on the ground that the court had had no jurisdiction to appoint the Respondents as liquidators of SICL or to make the winding up order of 14 September 2012. PwC's appeal to the Court of Appeal (Zacca P, Auld JA and Bell AJA) failed for reasons given on 18 November 2013, and they now appeal to Her Majesty.
PwC contend that the Supreme Court had no jurisdiction to wind up SICL under the 1981 Act, given that it did not carry on business in Bermuda, and that, in those circumstances, the court ought not to have exercised its powers to require PwC to answer questions or to provide documents in accordance with section 195(2) and (3) of the 1981 Act.
The Respondents offer two answers to this contention. The first is that the Supreme Court did in fact have jurisdiction to wind up SICL, either under the 1981 Act, or, failing that, under the 1885 Act. The second answer is that, even if the Supreme Court did not have jurisdiction to wind up SICL, it is not open to PwC to challenge the winding up order, and, in particular, they cannot do so as a defence to the Respondents' application under section 195 of the 1981 Act.
The Board will consider those two arguments in turn.
The Supreme Court's jurisdiction to wind up companies is wholly statutory in nature, and is at least primarily governed by the provisions of Part XIII of the 1981 Act, which include section 161, which provides that the court has power to wind up a "company" if one or more specified conditions is or are satisfied. Those conditions include that "the Court is of the opinion that it is just and equitable that the company should be wound up". Section 163 provides that an application to wind up "a company shall be by petition, presented either by the company or by any creditor [and/or] contributory".
Section 4(1) of the 1981 Act provides that the 1981 Act applies to (a) all companies registered under it or registered before 1 July 1983 under the Bermudian Companies (Incorporation by Registration) Act 1970, (b) all companies limited by shares incorporated by private Act in Bermuda at any...
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