Pricewaterhousecoopers v Saad Investments Company Ltd et Al
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance,Lord Clarke |
| Judgment Date | 17 November 2016 |
| Neutral Citation | [2016] UKPC 33 |
| Date | 17 November 2016 |
| Court | Privy Council |
| Docket Number | Appeals No 0114 of 2013; 0017/2014 and 0040 of 2014 |
[2016] UKPC 33
Privy Council
From the Court of Appeal of Bermuda
Lord Neuberger
Lord Mance
Lord Clarke
Lord Sumption
Lord Collins
Appeals No 0114 of 2013; 0017/2014 and 0040 of 2014
Appellant/Respondent
David Chivers QC (Instructed by Herbert Smith Freehills LLP)
Respondents/Appellants
Felicity Toube QC Stephen Robins (Instructed by Blake Morgan LLP)
This judgment is supplementary to those delivered by the Board on 10 November 2014 in proceedings between PricewaterhouseCoopers ("PwC") and Saad Investments Co Ltd ("SICL") [2014] UKPC 35: [2014] 1 WLR 4482 and between PwC and Singularis Holdings Ltd ("SHL") [2014] UKPC 36: [2015] AC 1675. The issue now for decision concerns the costs incurred by PwC, which is a registered exempted partnership in Bermuda, in preparing to comply with two orders for disclosure of documents made by Kawaley CJ on 15 April 2013. Both orders were set aside — in the proceedings involving SICL by the Court of Appeal whose judgment was upheld by the Board and in the proceedings involving SHL by the Board.
The full history is set out in the Board's previous judgments. For present purposes, what is relevant is that both SICL and SHL were incorporated in the Cayman Islands, both had been ordered to be wound up there in or about 2009 and in the course of their winding up there their Liquidators had obtained disclosure from PwC of documents belonging to SICL and SHL. The Liquidators wished however to obtain wider disclosure of PwC's working files relevant to give the Liquidators a fuller understanding of the affairs of SICL and SHL. In the present context, it will be convenient to continue to refer to them as the Liquidators, although, as will appear, they never were in the case of SHL, and should never have been in the case of SICL, in Bermuda.
With a view to obtaining the wider disclosure which they desired, the Liquidators applied for, and in September 2012 obtained, a winding up order in Bermuda in respect of SICL on the basis that SICL held assets there and/or that such an order was just and equitable. They followed this up by applying for, and on 4 March 2013 obtaining, an ex parte order under section 195(3) of the Bermudan Companies Act 1981 requiring PwC to produce the further books or papers in their custody or power. In the case of SHL no attempt was made to wind up SHL, and the Liquidators simply applied for, and on 4 March 2013 obtained, an ex parte order against SHL "by analogy with the statutory powers contained in section 195".
PwC applied inter partes to discharge the ex parte orders. On 15 April 2013, Kawaley CJ refused to set them aside, but, after hearing submissions about the time frame required for compliance, he extended this to require production within four months of 1 April 2013, and by no later than 1 August 2013. The extension was sought to give sufficient time for compliance, and not because of the possibility of an appeal. The Chief Justice did however have the possibility of an appeal in mind, as his judgment records at para 93, where he said that the extended period:
"achieves a more clear-cut result and also takes into account the reality that PwC Exempted may wish to pursue its appeal rights, a possibility that I somewhat delicately sought to elicit at the hearing but a topic upon which counsel refused to be drawn. The next session of the Court of Appeal is in just over two months' time."
PwC did in due course appeal. Its appeals were heard on 13, 14 and 18 June 2013. On 18 July 2013, PwC applied to the Supreme Court of Bermuda and obtained a further extension of the time for disclosure until 14 days after the handing down by the Court of Appeal of its judgment. In the event this occurred on 18 November 2013. The Court of Appeal, in a single set of judgments, quashed the order obtained by SHL and by a majority dismissed the appeal in respect of the SICL disclosure order, but (subject to a carve-out, which in the light of subsequent orders, became irrelevant) continued the stay of the SICL disclosure order until after the Board had given judgment allowing PwC's appeal in that case.
After 15 April 2013 and before the date the appeals to the Court of Appeal were decided (in probability before the end of July 2013), PwC did the preparatory work necessary to enable compliance, if required, with Kawaley CJ's orders by 1 August 2013. The work was undertaken internally, and PwC wishes to recover in respect of it some USD250,000, said to derive from some 1,500 hours of staff work at ordinary charging out rates.
That this was PwC's estimate of the cost of the work was put before Kawaley CJ by Trent Lyndon, PwC's General Legal Counsel, in an affidavit sworn on 22 March 2013. He gave this figure by reference to the cost of the exercise conducted in the Cayman Islands (which PwC had been required to undertake without indemnification). Mr Lyndon put the figure forward in arguing that the order for disclosure was, in the absence of any offer to pay anything towards either this or the Cayman Islands exercise, "totally unreasonable" and should not be permitted. Kawaley CJ did not accept this argument, but upheld the two orders with an extended time limit, as already mentioned, without making any reference in his judgment to the costs of, or preparatory to, compliance.
In their appeal to the Court of Appeal, PwC submitted that the orders should be discharged because (as its skeleton argument put it):
"… the court did not rule upon the appellant's argument that the respondents should give an undertaking for the appellant's costs of complying with the Orders.
89. The court was asked to determine this point and did not do so. This court is invited to order the "[Liquidators]" to give such an undertaking rather than remit the question back [to] the Supreme Court. The respondents are invited to give such an undertaking to avoid the need for it to be addressed, but this point will be dealt with in submissions to the extent necessary."
The majority of the Court of Appeal, having allowed PwC's appeal in respect of the SHL order, but dismissed it in relation to the SICL order, dealt with this submission for reasons given by Bell AJA as follows:
"The Cost of Compliance
62. As I indicated, the grounds of appeal referred to a figure 'in excess of $500,000' as the cost of complying with the orders made in both Cayman and Bermuda. In its skeleton argument, PwC Exempted indicated that the Chief Justice had been asked to determine this point and had not done so, and asked the Joint Liquidators to give an undertaking in regard to costs rather than have the matter remitted to the Supreme Court. The evidence of Mr Lyndon was that the Joint Liquidators had required PwC Exempted to spend 1,500 hours and incur over $250,000 in costs, but it appears that those figures related to the cost of compliance with the Cayman orders, and presumably the figure of $500,000 appearing in the grounds of appeal was reached simply by doubling that figure. Certainly, we were shown no evidence as to how this figure was reached. Mr Attride-Stirling [counsel for the Liquidators] submitted there was no authority for the court to make an order which recovered management time spent in compliance, which presumably would constitute the lion's share of the cost in this case. Mr Chivers for his part accepted that the figure for costs had not been broken down, and did not provide authority for the undertaking or order which he sought.
63. In the absence of authority, I would not make an order that the Joint Liquidators either be responsible for or give an undertaking in relation to the cost of compliance with the orders made by the Chief Justice, particularly in circumstances where the cost of compliance is far from clear."
The way in which the Court of Appeal put the matter indicates that it saw the issue ultimately as one involving the exercise of a discretion in circumstances for which there was no authority, rather than as one of strict jurisdiction.
Before the Board, the matter was put by PwC in its written case by reference to two points: first, the need for an undertaking, both at the ex parte and later at the inter partes stage, in respect of compliance costs coupled with a submission that there was an implied undertaking, in the absence of any such express undertaking; and, second, the principle in In re Condon, Ex p James (1874) 9 Ch App Cas 609 that officers of the court should not be permitted to benefit by their own error. Reliance was placed on dicta in the Board's previous judgment in the proceedings involving SHL by Lord Sumption and Lord Mance at paras 25 and 121 respectively about the need for an appropriate order or undertaking in situations such as the present. Lord Sumption said "as with other powers of compulsion exercisable against an innocent third party" the exercise of a common law power to compel production of information was "conditional on the applicant being prepared to pay the third party's reasonable costs of compliance". Lord Mance said that "PwC should have been protected" in respect of the costs of compliance, since "Common justice and established practice relating to freezing injunctions, Anton Pillar orders and Norwich Pharmacal relief should have confirmed the need for an appropriate order or undertaking in that respect".
In the course of oral submissions, Mr Chivers QC for PwC addressed submissions which relied on two further principles additional...
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