Singularis Holdings Limited v PWC [2014] UKPC 36
Background and facts
In closely related proceedings, the liquidators of two Cayman-incorporated companies, Saad Investments Company Limited and Singularis, sought to obtain documents belonging to those companies’ auditors, PWC, in Bermuda. In both instances, the Privy Council’s decision frustrated those attempts. The decisions demonstrate the difficulties in the interplay between the powers of insolvency practitioners across different jurisdictions, even those with shared common-law heritages in closely-connected financial centres.
The Cayman court ordered the winding up of Singularis, appointing its liquidators. The liquidators sought recovery of documents held by PWC in Bermuda, which amounted to the auditors’ own working documents. The liquidators were recognised, upon their application, by court order in Bermuda, which made a further order for production of documents by PWC. The Court of Appeal reversed this decision, holding that the Bermudan court did not have power to make an order which the Cayman court could not itself make. The liquidators appealed.
Issues and decision
The Privy Council examined whether the Bermudan Court had the power to assist a foreign insolvency court in the way requested. The Privy Council affirmed the principle that local courts have the common law and statutory power to assist foreign insolvency practitioners under the principle of modified universalism of proceedings. However, these powers are subject to the proviso that they are not to be exercised by the assisting court to enact a power which would otherwise be unavailable in the requesting court’s jurisdiction.
Under Cayman law, as under established common law, the liquidators have no power, in the ordinary course, to require third parties to deliver materials other than that owned by the company. Under Bermudan law, such a statutory power may exist, but that is not, of itself sufficient (as addressed in detail by Lord Collins in his judgment). The Council therefore rejected the appeal, and refused to order production of the documents.
Closing thoughts
The case, along with Saad, demonstrates the difficulties insolvency practitioners face in exercising their powers across borders. In Saad, an alternative means was attempted, whereby discovery was sought by way of commencing an ancillary winding-up action in Bermuda. The Privy Council was heavily influenced by the fact that the ancillary proceedings were brought for the sole purpose of obtaining documents in Bermuda which would otherwise have been unavailable to the Cayman liquidators, and stayed the Bermudan winding-up.
The upshot of the decisions is to reinforce the Commonwealth common-law position that an insolvency practitioners, in seeking to exercise his powers abroad, must satisfy the court of two things: that he may exercise the power sought in his jurisdiction, and that he may exercise that power in the jurisdiction in which it is sought.
