Midland Bank Plc v Laker Airways Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LAWTON,LORD JUSTICE DILLON,LORD JUSTICE NEILL |
| Judgment Date | 30 July 1985 |
| Judgment citation (vLex) | [1985] EWCA Civ J0730-1 |
| Docket Number | 85/0417 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 July 1985 |
and
and
[1985] EWCA Civ J0730-1
Lord Justice Lawton
Lord Justice Dillon
Lord Justice Neill
85/0417
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
Royal Courts of Justice
MR. ROBERT ALEXANDER Q.C., MR. H. W. B. PAGE and MR. A. J., POPPLEWELL (instructed by Messrs. Coward Chance) appeared on behalf of Midland Bank PLC, Appellants (Plaintiffs) in the third action.
MR. DAVID JOHNSON Q.C., MR. MICHAEL CRYSTAL Q.C. and MR. R. D. HACKER (instructed by Messrs. Durrant Piesse) appeared on behalf of Laker Airways Ltd. and Mr. Christopher Morris, Appellants (First and Second Defendants) in the first and second actions.
On 5th February 1982 the airline, Laker Airways Limited, which Sir Freddie Laker had tried so hard over many years to establish, collapsed. An experienced liquidator, Mr. Christopher Morris, was appointed to wind-up the holding company, Laker Airways (International) Limited. Mr. Morris discovered evidence which seemed to prove that in the months before February 1982 a number of airlines, both United States and European, operating on North Atlantic routes, had agreed together to make operations financially difficult for Laker Airways by the use of what have become known as predatory fares, that is by charging fares as low as Laker Airway's fares and offering passengers additional amenities at a loss to themselves. What was done has been recounted in detail by Lord Diplock in British Airways Board and British Caledonian Airways Limited v. Laker Airways Limited and others (1985) A.C. 58. Most of these facts were common knowledge in aviation circles before the collapse of Laker Airways. They need not be repeated in this judgment. British Caledonian Airways, however, did not charge predatory fares themselves because at the material time they were not in direct competition with Laker Airways on the North Atlantic routes; but they had a common interest with the other airlines who were, because at any time Laker Airways might obtain additional scheduled routes which would compete directly with those of British Caledonian Airways. There was evidence before us that British Caledonian Airways regarded Laker Airways as disrupting airline business on the North Atlantic routes.
The liquidator was advised by United States attorneys that the combination of airlines on the North Atlantic routes to act as they did amounted to a breach of the United States anti-trust legislation. A suit under that legislation was started against a number of airlines, including British Airways and British Caledonian Airways in the Federal District Court of Washington D.C. The well-known aircraft manufacturers, McDonnell Douglas Corporation (MDC) and a financial subsidiary, the McDonnell Douglas Finance Corporation (MDFC), were also brought in, seemingly because, having offered financial help to Laker Airways sometime before 5th February 1982, shortly before that date they withdrew their original offer and substituted for it a less helpful conditional offer. The liquidator discovered later in the course of pre-trial discovery in the anti-trust suit that this had come about because MDC had been threatened by some European airlines, including British Caledonian Airways, that, if they went on helping Laker Airways as they had originally offered to do, these airlines would buy no more aircraft from them.
The liquidator was also advised by United States attorneys that he could sue the Midland Bank PLC and its subsidiary, the Clydesdale Bank PLC, because they too had withdrawn financial support from Laker Airways on 3rd February 1982 in circumstances from which a United States Federal District Court might infer a combination or conspiracy with the airlines and MDC and MDFC to put Laker Airways out of business. He told the Midland Bank what he had been advised and that he intended to act on the advice. He showed senior officials of the Midland Bank a document drafted by his United States attorneys which purported to set out a summary of what was being alleged against the Midland Bank. This document was referred to in the subsequent litigation as Attachment 7.
The Midland Bank were outraged by the suggestion that they had combined or conspired either with the airlines or anyone else to put Laker Airways out of business. They contended that their dealings with Laker Airways had been in the ordinary course of their banking business in England; that for some months, at the request of the Bank of England, they had tried to organise financial help for Laker Airways and had extended their own and Clydesdale Bank's commitments to help Laker Airways; and that it was only after they had received information about Laker Airways' trading figures from the Central Aviation Authority (CAA) and had consulted with them and with the Bank of England that they decided to tell Sir Freddie Laker that, unless he could get financial help elsewhere and quickly, they would have to appoint a receiver. As he failed to get such help they did appoint a receiver as any prudent bank would have done. The Midland Bank are concerned about the consequences of the threat to sue them in the United States under that country's anti-trust legislation. They say first that the liquidator has not got the beginnings of a case against them. They have never combined or conspired with anyone to put Laker Airways out of business and that the liquidator has no evidence which will implicate them in any combination or conspiracy and will find none. Secondly, they say that, if they are sued in the United States, they will be subjected there to the onerous and costly pre-trial discovery which Federal District Courts have and they will have no hope of getting costs out of the liquidator if they are dismissed from the suit as they expect to be. Thirdly, they say that lawful acts done in this country should not be the subject of suit in another country when the same acts if done there would have been unlawful. Finally, they say (and the Bank of England support them in this) that, if what they did in their banking dealings with Laker Airways makes them liable under United States anti-trust legislation, for the future they and other banks will have to hesitate a long time before offering banking facilities to any customer, English or foreign, who carries on or who intends to carry on business in the United States.
The Midland Bank's sense of outrage led them on 29th November 1982 to issue a writ claiming first a declaration that they were not liable under either English or United States law for the collapse of Laker Airways and, secondly, an injunction restraining the liquidator from instituting or continuing an antitrust suit against them in the United States. On 4th February 1983 Parker J. granted an interlocutory injunction as asked. On 20th May 1983 he refused to grant a similar injunction in favour of British Airways and British Caledonian Airways. Both these airlines appealed against that refusal and on 19th July 1984 the House of Lords dismissed their appeals. Thereupon, the liquidator applied to Leggatt J. to discharge the interlocutory injunction which Parker J. had granted. He refused, as he was entitled to do, to await discovery and any cross-examination on affidavits which might have been ordered had the plaintiff banks gone to trial. His argument before Leggatt J. was that the plaintiff banks were in the same position as British Airways and British Caledonian Airways. Leggatt J. accepted this submission, discharged the injunction and struck out the plaintiff banks' applications for a declaration that the liquidator's claim against them in the United States courts was invalid. He left in the plaintiff banks' claim for a declaration that the liquidator had no claim against the plaintiff banks under English law. The liquidator has appealed against this part of the judge's order. This claim is of no value to either side. The liquidator has so far made no claim against the plaintiff banks which is triable under English law; but on advice he has not been prepared to abandon his appeal. The case is now primarily before the court on appeal by the plaintiffs. Their counsel, Mr. Alexander Q.C., has put his case on two main grounds: first, that the plaintiff banks were in a different position altogether from British Airways and British Caledonian Airways. They were banks carrying on ordinary banking business in England with an English customer whose centre of operations was in England. The law governing that business was the law of England. It had not been suggested and could not have been that this business was tainted with illegality. They had not had at any material time banking business with any of the other airlines, either directly or indirectly. Mr. Alexander contrasted their position with that of British Airways and British Caledonian Airways. Since they operated over United States territory and picked up and put down passengers there, they had to comply with the domestic legislation of the United States, including the anti-trust legislation. Since they operated international airlines to and from the United States, if what they did was done with intent to injure a rival who was operating inside that country, their activities clearly came within the United States anti-trust legislation. Further, submitted Mr. Alexander, the threatened anti-trust suit would be frivolous and vexatious because there was no evidence to support it. In all the circumstances of this case, it would be unconscionable for the liquidator to institute his threatened suit in the United States.
The reply of Mr. D. Johnson Q.C. to these...
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