PricewaterhouseCoopers v Saad Investments Company Limited

An overseas company cannot ordinarily be wound up under Part XIII of the Companies Act 1981 merely because it holds shares or other assets in Bermuda. Under the External Companies (Jurisdiction in Actions) Act 1885, ownership of Bermuda shares without more is not doing business in Bermuda by agents or branches, and a winding-up petition is not ordinarily a suit for a cause of action arising there. An order made without jurisdiction by a court of unlimited jurisdiction remains effective until set aside or stayed. In exceptional circumstances, a directly and solely affected person may challenge it. Where no irreversible steps or third-party rights intervene, the winding-up should be stayed. The appeal was allowed.

PricewaterhouseCoopers v Saad Investments Company Limited concerned the attempted winding up in Bermuda of SICL, a Cayman Islands company. SICL had already been wound up in the Cayman Islands. Its Cayman liquidators petitioned the Bermuda Supreme Court because PwC, SICL’s Bermuda auditors, allegedly held documents and information sought under section 195 of the Companies Act 1981.

The Bermuda Supreme Court made the winding-up order on 14 September 2012 and later ordered PwC to attend examination and produce documents. Kawaley CJ refused to set aside the disclosure order on jurisdictional grounds. The Court of Appeal of Bermuda dismissed PwC’s appeal on 18 November 2013. The central questions before the Board were whether the Bermuda court had jurisdiction to wind up SICL and whether PwC could challenge the order and resist the section 195 relief.

Appeal allowed. The Board advised that the Bermuda winding-up should be stayed and that the consequential section 195 order should be discharged.

1. The Supreme Court’s winding-up jurisdiction was statutory. Under the definition provisions and section 4(1) of the Companies Act 1981, Part XIII applied to companies within the statutory scope of the Act. SICL was an overseas company, had no permit under section 134, and did not carry on business in Bermuda. The express extension of Part XIII to permit companies confirmed that overseas companies were not otherwise included.

2. The alternative jurisdiction under section 1(1) of the External Companies (Jurisdiction in Actions) Act 1885 also failed. Holding shares in a Bermuda company, without more, did not constitute doing business in Bermuda by agents or branches. Isolated share-related acts by an agent were insufficient. A winding-up petition, particularly one based on the just and equitable ground, was not ordinarily a suit for a cause of action arising in Bermuda.

3. Although the order had been made without jurisdiction, it remained effective in law until set aside or stayed. The principle in Isaacs v Robertson [1985] 1 AC 97, supported by In re Dover & Deal Railway Co (1854) 4 De GM & G 411 and In re London Marine Insurance Association (1869) LR 8 Eq 176, meant that PwC could not ordinarily resist a consequential section 195 order by collateral attack while the winding-up order remained in force.

4. The ordinary rule concerning strangers to a winding-up was not immutable. PwC were the sole direct targets of the Bermuda winding-up, the petition’s purpose was to obtain relief against them, they had received no notice of the hearing, and they challenged the jurisdiction as soon as reasonably possible. Denying them formal standing and an appeal opportunity would have been a denial of natural justice. On these exceptional facts they could be added as parties and challenge the order. The reasoning in In re Mid East Trading Ltd [1998] BCC 726 and In re Bradford Navigation Company (1870) LR 5 Ch App 600 did not prevent that result.

5. Section 184 of the Companies Act 1981 empowered the court to stay the winding-up altogether. No irrevocable steps or material third-party rights made restoration unjust. The Board therefore should exercise that power. If section 184 had been unavailable, the Court of Appeal could instead have added PwC as parties, permitted an out-of-time appeal and set aside the order.

6. Alternatively, if the winding-up order had remained in force, the Board would have discharged the section 195 order because the winding-up had been created solely to obtain relief against PwC and denying them any effective jurisdictional challenge would have breached natural justice. That alternative reasoning was unnecessary to the disposition.

• Privy Council: On appeal in [2014] UKPC 35, the Board advised that PwC’s appeal be allowed, the Bermuda winding-up be stayed and the section 195 order be discharged.
• Court of Appeal of Bermuda: On 18 November 2013, dismissed PwC’s appeal from the refusal to set aside the winding-up and disclosure orders. No citation was stated in the judgment.
• Supreme Court of Bermuda: Made the winding-up order on 14 September 2012. On 4 March 2013 it made the disclosure order under section 195 of the Companies Act 1981; on 15 April 2013 Kawaley CJ refused to set it aside.