New Cap Reinsurance Corporation Ltd ((in Liquidation)) v Grant; Rubin v Eurofinance SA
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice McFarlane,Lord Justice Mummery |
| Judgment Date | 09 August 2011 |
| Neutral Citation | [2011] EWCA Civ 971 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 August 2011 |
| Docket Number | Case No: A2/2011/0901 |
[2011] EWCA Civ 971
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
MR JUSTICE LEWISON
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Mummery
Lord Justice Lloyd
and
Lord Justice Mcfarlane
Case No: A2/2011/0901
In the Matter of New Cap Reinsurance Corporation Limited (in Liquidation)
Robin Knowles CBE Q.C. and Ms Blair Leahy (instructed by Edwards Angell Palmer & Dodge LLP) for the Appellants
Gabriel Moss Q.C. and Barry Isaacs Q.C. (instructed by Mayer Brown International LLP) for the Respondents
Hearing date: 18 th July 2011
Introduction
This appeal is about whether Mr Gibbons, liquidator of New Cap Reinsurance Corporation Ltd (New Cap), can enforce in England an order which provides, among other things, for the payment of sums of money by the Defendants to New Cap, which he obtained in the courts of New South Wales. There are three possible bases for doing so. Lewison J rejected one but held that he could and should allow the liquidator's request under one of the others, and that alternatively, he could and would have done so under the third. His judgment is at [2011] EWHC 677 (Ch). He gave permission to appeal to the Defendants.
New Cap is an Australian reinsurance company. The Defendants are the members of a Lloyd's syndicate, in respect of each of two successive years of account. The syndicate placed reinsurance with New Cap. New Cap paid sums to the syndicate by way of commutation of its liabilities. Soon afterwards New Cap went into liquidation. The liquidator brought proceedings in New South Wales to set aside and recover the payments made to the syndicate as being a preference, on the basis that New Cap had been insolvent when they were made. The syndicate did not accept service of the proceedings, they had not submitted to the jurisdiction of the New South Wales court by agreement, and they did not take part in the proceedings, although they made points which seemed to them relevant in correspondence with the liquidator's solicitors, and they had taken part in the liquidation by, for example, submitting proofs of debt. The court allowed the proceedings to continue against the syndicate on the basis of an order for substituted service. It first decided the issue of insolvency, which was relevant to claims against other parties as well as to those against the syndicate. Then, having held that New Cap was insolvent at the relevant time, it decided the issue of preference, not by default but on evidence adduced by the liquidator. Having decided that point against the syndicate, Mr Justice Barrett made the order which is at the centre of this appeal.
By his order dated 11 September 2009 (which I will call the New South Wales order), the court declared that the two payments were voidable transactions under the relevant legislation. It then ordered the relevant syndicate members to pay two sums to New Cap, with interest. It provided for interest after judgment on each such sum. It ordered the defendants to pay the plaintiffs' costs. It also ordered the sending to the English court of a letter of request seeking the assistance of the English court.
The letter of request was sent accordingly, dated 20 October 2009. It sets out relevant aspects of the facts and the history of the litigation. It recorded that the court had been shown that, in order to discharge the liquidator's obligations under the relevant Australian legislation, and in particular to get in the assets for the benefit of creditors, it was just and convenient that the letter of request should issue. By the letter the court requested the English court to exercise its jurisdiction under the Insolvency Act 1986, section 426, to act in aid of and assist the New South Wales court. It asked for that assistance primarily by ordering that the syndicate should pay to New Cap the sums of money ordered respectively by the relevant part of the New South Wales order. Alternatively it asked that the liquidator be allowed to bring proceedings in the English court to set aside the payments as preferences, those proceedings to be determined according to Australian law. Alternatively the English court was asked to give such other relief as it might consider just.
The Claimants, that is to say Mr Gibbons as liquidator and New Cap itself, then issued proceedings in the Companies Court seeking the relief indicated in the letter of request, originally pursuant to section 426 alone, and then by amendment alternatively under common law. The case came before Lewison J on 14 and 15 March 2011, and he gave judgment on the afternoon of 15 March.
A recent decision of this court featured in the argument before him and before us, namely Rubin v Eurofinance SA [2010] EWCA Civ 895, [2011] 2 WLR 121 ( Rubin). Like Lewison J, we are bound by that decision. It is inconsistent with some of the arguments on which the syndicate wish to rely. It is, however, subject to an appeal to the Supreme Court of the United Kingdom, and is due for hearing there, we were told, next spring. There are material differences between this case and that, but Mr Knowles Q.C. for the syndicate recognised that the decision of the judge and of this court might be affected by that binding authority. With that in mind, he wishes to have the chance of bringing this case to their Lordships, if permission be granted, and to have it heard at the same time as the appeal in Rubin. That influenced Lewison J in granting permission to appeal. It has also led to an earlier listing of the appeal than might otherwise have been arranged.
The three possible routes to enforcement
Foreign judgments could (and in some cases still can) be enforced at common law, by the bringing of an action on the judgment.
However, the position under the common law jurisdiction and procedure has been superseded, in relation to some foreign countries, by the Foreign Judgments (Reciprocal Enforcement) Act 1933. The Act has been applied to Australia by an order which I will discuss later. The Act establishes a procedure for the registration of a foreign judgment, for judgments so registered to be enforceable in the same way as judgments of English courts, and for the judgment debtor to be able to apply to set aside the registration.
As mentioned already, however, the provision to which the Claimants had recourse was section 426 of the Insolvency Act 1986. That does not deal in terms with enforcement in the UK of orders of courts outside the UK. It provides for assistance to be afforded by UK courts exercising insolvency jurisdiction to courts elsewhere in the UK or in other relevant countries, of which Australia is one.
Lewison J decided that he could and should make the orders sought under section 426. He held that the 1933 Act did not apply to orders made in insolvency proceedings, so that it would not have been open to the liquidator to register the New South Wales order under that Act. He also held that the common law jurisdiction would enable him to make the same order as he would make under section 426. He therefore made orders for payment as requested by the New South Wales court.
For the syndicate, Mr Knowles argued that the judge was wrong about the 1933 Act, that he was also wrong about section 426, and that the common law jurisdiction should also not allow the making of the order for payment which the judge made. His clients' position is not that they are immune from proceedings by the liquidator or by New Cap, but that such proceedings should be brought in England where, under section 426, they could be tried according to Australian law.
It is not immediately easy to see what advantage the syndicate would gain if the 1933 Act applied to the New South Wales order, since the liquidator could immediately apply for the registration of the order, and then enforce it in England. However Mr Knowles went on to submit that if the order were registered, the registration should be set aside, though he accepted that whether an application to set it aside succeeded would be affected by the status of the Rubin decision.
By a Respondent's Notice the Claimants contend that, if the 1933 Act does apply, the order, if registered, would not be liable to be set aside. On their behalf Mr Moss Q.C. argued that, if we were to decide that the 1933 Act does apply to orders made in insolvency proceedings, we ought not to postpone a decision as to registrability and, if registrable, whether registration could be set aside.
Having considered the written and oral submissions addressed to us by Counsel, I am persuaded that this is not a case in which it is appropriate simply to wave the case on towards their Lordships in Parliament Square, on the basis that it all depends on the fate of Rubin. I will attempt to grapple with all the various arguments on each of the three possible ways of enforcing a foreign judgment providing for the payment of a sum of money given in insolvency proceedings. Each of the three aspects is interrelated with one or more of the others, so I will discuss them all before coming to a conclusion on any.
Section 1 of the 1933 Act allows for Orders in Council to be made by which Part I of the Act is declared to extend to...
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