In a judgment given on 17 November 2016, the majority of the Privy Council (Lord Clarke dissenting) has rejected PwC’s claim to recover its preparatory costs of compliance with a documentary production order that was ultimately set aside on appeal.
The judgment will be of general interest to liquidators and auditors of insolvent companies, both in Bermuda and in other common law jurisdictions.
From a Bermuda law perspective, there is an interesting discussion in Lord Mance’s judgment as regards the law and practice of cross-undertakings, in England and Wales and in Bermuda.
“In an English context, the law and practice regarding the giving of a cross-undertaking as the “price” of an injunction pending trial was examined fully, and in the Board’s view accurately, by Lewison J in SmithKline Beecham Plc v Apotex Europe Ltd  EWHC 1655 (Ch);  1 WLR 872, paras 25-52. He considered a passage in Gee’s Mareva Injunctions and Anton Pillar Relief, 4th ed (1998) adopted by Laddie J in A Bank v A Ltd (The Times, 18 July 2000) and explained this in the light of prior authority not all of which had been cited to Laddie J. This included Tucker v New Brunswick Trading Co of London (1890) 44 Ch D 249. On appeal, Lewison J’s reasoning was effectively uncontroversial: see  EWCA Civ 658;  Ch 71, paras 23-32….
The Board was not referred to any Bermudan practice direction, note, rule or customary understanding relevant in the present situation. It is, however, prepared to assume that it may well be understood in Bermuda that a cross-undertaking is expected or, in the absence of anything said to the contrary, implied, when an interim injunction is obtained pending trial.”
The judgment is also of interest because it is somewhat at odds with some obiter dicta of Lord Sumption and Lord Mance when delivering their substantive judgments in the case. The Privy Council (speaking through Lord Mance) addresses this inconsistency in the following way:
“In the light of the above reasoning, it will be apparent that the Board, in the light of fuller scrutiny of the course of events and detailed submissions on the legal position by counsel, sees the matter differently from the way in which it was put in the obiter observations of Lord Sumption and Lord Mance at paras 25 and 121 respectively in the Board’s previous judgment in the proceedings involving SHL, quoted in para 10 above, which must now be regarded as having gone too far.”