Bristol Airport Plc and Another v Powdrill and Others

JurisdictionEngland & Wales
Judgment Date21 December 1990
Date21 December 1990
CourtCourt of Appeal (Civil Division)
[COURT OF APPEAL] BRISTOL AIRPORT PLC. and Another v. POWDRILL and Others 1989 Nov. 21, 22, 23; Dec. 21 Sir Nicolas Browne-Wilkinson V.-C., Woolf and Staughton L.JJ.

Bankruptcy - Administration order - Steps to enforce security - Insolvent airline operating under administration order - Detention of aircraft because of default in payment of airport charges - Whether leased aircraft “property” - Whether exercise of statutory right of detention “steps … taken to enforce … security” against property of airline - Whether leave of court required - Civil Aviation Act 1982 (c. 16), s. 88(1)F1 - Insolvency Act 1986 (c. 45), s. 11(3)F2

An insolvent charter airline had debts totalling £11m. The applicants, airport operators, were two of its unsecured creditors who together were owed over £1.5m. On 7 August 1989 the airline was placed under an administration order made pursuant to section 8 of the Insolvency Act 1986 and the airline continued trading. All airport charges incurred during the course of the administration were met. In October 1989 the administrators announced that there was a prospect of selling the airline on terms beneficial to its creditors and called a creditors' meeting for 3 November. At a meeting on 30 October between representatives of four airport operators including the two applicants it was agreed that none of them would exercise any power of detention over aircraft, which were operated by the airline under leasing agreements, until after the creditors meeting. However, on 2 November the first applicant applied for ex parte leave to detain two of the airline's aircraft under section 88 of the Civil Aviation Act 1982. Leave was granted pending an inter partes hearing, although one of the aircraft was then allowed to go. On hearing of the first applicant's action, the second applicant, without obtaining leave of the court, parked a lorry loaded with concrete in front of an aircraft operated by the airline and served the captain with a lien notice. Later the same day the second applicant obtained ex parte leave for the detention. The creditors' meeting took place the following day and both applicants attended. The sale of the airline was approved without dissent but was incapable of performance while the aircraft remained detained. On 6 November Harman J. heard both applications for leave to detain and held that the applicants required leave of the court under section 11(3) of the Insolvency Act 1986 before exercising their right under section 88 of the Civil Aviation Act 1982, to detain an aircraft being operated by an airline in administration and, in the exercise of his discretion, refused to grant such leave.

On appeal by the applicants: —

Held, dismissing the appeal, (1) that, although the airline held the aircraft under the terms of leases, the aircraft were “property” of the airline within the meaning of section 436 of the Insolvency Act 1986 and the statutory right to detain aircraft conferred on airport authorities by section 88 of the Civil Aviation Act 1982 came within the definition of “lien or other security” in section 248 of the Act of 1986; that the applicants by detaining the aircraft not only had created security for their debts but in asserting their right to retain the aircraft were taking steps to enforce that security and, therefore, section 11(3)(c) of the Act of 1986 applied and they required either the administrator's consent or leave of the court before they exercised their right of retention of property belonging to the airline, which was the subject of an administration order (post, pp. 1372A, C–D, H–1373A, F, 1375C, G, 1376B–C, D–E, 1377A, 1379F–G, 1383E).

(2) That the applicants, having taken substantial benefits from the administration of the airline, should not be permitted to enforce a right which was inconsistent with the administration order and thereby obtain greater rights from the making of the order than they would have done if the airline had gone into liquidation; that, in the circumstances, the judge had rightly exercised his discretion by refusing to grant the applicants leave to enforce their right to detain the aircraft (post, pp. 1379B–E, F–G, 1383E).

Per Sir Nicolas Browne-Wilkinson V.-C. and Woolf L.J. Until a lien holder makes an unqualified refusal to hand over the goods, he has not taken steps to enforce the security for the purposes of section 11(3)(c) of the Act of 1986. On detaining an aircraft an aerodrome authority is not to be treated as taking steps to enforce the statutory right to detain if an application for leave is promptly made to the court and the authority makes it clear that it is only preventing the removal of the aircraft pending determination of the question whether it is entitled to exercise its statutory right to detain (post, pp. 1376G–1377A, 1381C–G).

Decision of Harman J. affirmed.

The following cases are referred to in the judgments:

Air Ecosse Ltd. v. Civil Aviation Authority (1987) 3 B.C.C. 492, Ct. of Session

Channel Airways Ltd. v. Manchester Corporation [1974] 1 Lloyd's Rep. 456

Havelet Leasing Ltd. v. Cardiff-Wales Airport Ltd. (unreported), 29 June 1988, Phillips J.

Quazi v. Quazi [1980] A.C. 744; [1979] 3 W.L.R. 833; [1979] 3 All E.R. 897, H.L.(E.)

Queen of the South, The [1968] P. 449; [1968] 2 W.L.R. 973; [1968] 1 All E.R. 1163

Smith (A Bankrupt), In re, Ex parte Braintree District Council [1989] 3 W.L.R. 1317; [1989] 3 All E.R. 897, H.L.(E.)

The following additional cases were cited in argument:

Abbott v. Philbin [1960] Ch. 27; [1959] 3 W.L.R. 739; [1959] 3 All E.R. 590, C.A.; [1961] A.C. 352; [1960] 3 W.L.R. 255; [1960] 2 All E.R. 763, H.L.(E.)

Air Canada v. Secretary of State for Trade [1981] 3 All E.R. 336

Ally, The [1952] 2 Lloyd's Rep. 427

Ayerst v. C. & K. (Construction) Ltd. [1976] A.C. 167; [1975] 3 W.L.R. 16; [1975] 2 All E.R. 537, H.L.(E.)

Cohen v. Lester (J.) Ltd. [1939] 1 K.B. 504; [1938] 4 All E.R. 188

Debtor (No. 1 of 1987), In re A [1989] 1 W.L.R. 271; [1989] 2 All E.R. 46, C.A.

Felixstowe Dock & Railway Co. v. United States Lines Inc. [1989] Q.B. 360; [1989] 2 W.L.R. 109; [1988] 2 All E.R. 77

Harris Simons Construction Ltd., In re [1989] 1 W.L.R. 368

Herbert Berry Associates Ltd., In re [1977] 1 W.L.R. 1437; [1978] 1 All E.R. 161, H.L.(E.)

Kasumu v. Baba-Egbe [1956] A.C. 539; [1956] 3 W.L.R. 575; [1956] 3 All E.R. 266, P.C.

Mayfair Trading Co. Pty. Ltd. v. Dreyer [1959] A.L.R. 104

Mitchener v. Equitable Investment Co. Ltd. [1938] 2 K.B. 559

Roberts Petroleum Ltd. v. Bernard Kenny Ltd. [1983] 2 A.C. 192; [1983] 2 W.L.R. 305; [1983] 1 All E.R. 564, H.L.(E.)

Royal Trust Bank v. Buchler [1989] B.C.L.C. 130

Standard Austria S.H. 1964, The [1965] 2 Lloyd's Rep. 189

Western Bank Ltd. v. Schindler [1977] Ch. 1; [1976] 3 W.L.R. 341; [1976] 2 All E.R. 393, C.A.

APPEAL from Harman J.

On 2 November 1989 the first applicant, Bristol Airport Plc., obtained ex parte leave from Harman J. to detain, under section 88 of the Civil Aviation Act 1982, two aircraft operated by Paramount Airways Ltd., a company operating under an administration order made pursuant to section 8 of the Insolvency Act 1986. One of the aircraft was allowed to fly to Australia but the other remained at the airport. Later the same day the second applicant, Birmingham International Airport Plc., also obtained ex parte leave, from Hodgson J., to detain an aircraft operated by Paramount. An inter partes hearing of both applications was heard on 6 November 1989 by Harman J. The respondents were: (1) Roger Arthur Powdrill and Joseph Beaumont Atkinson, the administrators of Paramount, (2) Irish Aerospace Leasing Ltd., the lessor of the detained aircraft and (3) Air 2000 Ltd., the creditor who petitioned for the administration order. Harman J. held that the applicants required leave of the court under section 11 of the Act of 1986 before they could exercise their right of detention and in the exercise of his discretion refused to grant such leave.

By notices of appeal dated 14 November 1989 the applicants appealed on the grounds that the judge was wrong (1) in holding that the exercise by the applicants of their right of detention under section 88 of the Act of 1982 necessarily involved the taking of possession of the aircraft; (2) in holding that the detention of aircraft operated by Paramount constituted “other proceedings … commenced … against the above named company or its property” within section 11(3)(d) of the Act of 1986; (3) in holding that the detention of aircraft operated by Paramount constituted a “distress levied against the company or its property” within section 11(3)(d); (4) in holding that an aircraft was the property of Paramount when Paramount's only interest in the aircraft was under a lease; (5) in holding that the applicants were not entitled to be treated as secured creditors, with a statutory right of detention and/or a contractual lien; (6) in failing to give sufficient weight to the applicants' rights pursuant to section 88 of the Act of 1988; (7) in failing to give sufficient weight to the terms of the contracts entered into between the applicants and the administrators on behalf of Paramount; (8) in failing to give sufficient weight to the fact that if the applicants were denied leave the aircraft would leave their aerodrome and the applicants would loose their remedy against the second respondents and the owners of the aircraft; and (9) in holding that during an administration a creditor was not entitled to rest on his lien or security.

On 20 November the third respondents issued a respondent's notice contending that the judgment should be affirmed on the grounds that when the applicants' detention of the aircraft began, Paramount had ceased to manage them and had thus ceased to be their operators within the meaning of the Act of 1982 and accordingly the applicants' rights to detain aircraft under section 88 of the Act of 1982 in respect of airport charges owed to them by Paramount were confined to...

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