Re A Company

JurisdictionEngland & Wales
JudgeJones
Judgment Date08 May 2024
Neutral Citation[2024] EWHC 1070 (Ch)
CourtChancery Division
Docket NumberCase No: CR-2023-007112
In Re A Company

[2024] EWHC 1070 (Ch)

Before:

DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE Jones

Case No: CR-2023-007112

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

INSOLVENCY AND COMPANIES LIST

The Rolls Building

The Royal Courts of Justice

7 Rolls Building, Fetter Lane

London EC4A 1NL

Mr Josh Lewison (instructed by Mills & Reeve) for the Applicant

Mr William Willson (instructed by Birketts) for the Respondent

Hearing dates: 12 th March 2024

APPROVED JUDGMENT

I direct that pursuant to CPR PD 39A para. 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

1

This is an application to restrain presentation of a winding-up petition based on a money judgment obtained in a Lebanese Court (“the Lebanese judgment”).

2

The Applicant was represented by Mr Josh Lewison, Counsel, and the Respondent by Mr William Willson, Counsel. Both Counsel provided careful and helpful skeletons and each also provided an authorities bundle. Mr Willson provided a supplementary skeleton on the morning of the hearing, dealing with the case of Drelle v Servis-Terminal LLC [2024] EWHC 521 (Ch) in which judgment had been handed down the previous day. That judgment is helpful although not determinative of all the issues in this particular matter. I also asked Counsel for submissions on the issue of whether a stay in Lebanon would affect any running of time and for written submissions on the case of Tasarruf Mevduati Sigorta Fonu v Demirel and another [2007] EWCA Civ 799.

3

I am grateful to both Counsel for their clear submissions and assistance.

Basic Principles

4

The basic principles of an application for an injunction to restrain presentation of a winding up petition are not in doubt and I bear firmly in mind the principles in Re Tallington Lakes Ltd v South Kesteven District Council [2012] EWCA Civ 443, Argyle Crescent Limited v Definite Finance Co Limited [2004] EWHC 3422 (Ch) and Angel Group v. British Gas Trading [2013] B.C.C. 265. In short, a debt must be disputed on grounds which have substance.

5

My attention was also drawn to Applications to Wind Up Companies, 2.166, 7.344–7.345, 7.45, 7.39, 7.257, 7.263, relied upon by Mr Willson, which I have also found useful.

6

I bear in mind that I do not have to make a final determination of the issues but to assess whether or not there is a substantial dispute of a nature of which the result may be that the Lebanese judgment cannot be relied upon to found a winding up petition.

7

The issues were set out differently by each party and evolved somewhat during the hearing. A mild claim that the application was not properly brought effectively dissolved in the light of day, although it may raise its head again in respect of costs.

The Background

8

Judgment in the sum of USD $776,907.51 was obtained by the Respondent in Lebanon on 13.7.2010. The judgment was upheld by the appellate courts in Lebanon on 20.5.2014 and 23.3.2017 following appeals by the Applicant. There is evidence in the bundle that some enforcement was attempted in Lebanon by the Respondent without success in around 2015.

9

On 13.7.2022 the Respondent wrote to the Applicant through its London solicitors with a draft statutory demand, stating that it reserved the right to serve a formal demand. The demand was for the judgment sum plus 9% interest from 20.5.2014 to date of payment and for costs.

10

On 6.9.2022, the Applicant caused an unnamed third party that is affiliated to the Applicant and its current agent to make a payment into court in Lebanon by the way of a banker's cheque in the principal sum of USD $776,907.51. It does not cover any claimed interest or costs. The payment was made as the result of a confidential agreement between the agent, the third party and the Applicant to which the Respondent is not a party.

11

On 21.2.2023 the Respondent filed an objection to the payment with the Enforcement Bureau, seeking rejection of the bank cheque. On 16.10.2023 the Enforcement Bureau adjudged that the payment was invalid as a matter of Lebanese law. The cheque has been deposited in an interest-bearing account at Byblos Bank SAL in Lebanon which I am told is standard procedure. It is my view that I cannot go behind the determination of the Lebanese court as to the validity of the payment in Lebanon.

12

On 20.11.2023 the Respondent again demanded payment and the Applicant provided a full response on 6.12.2023. I am told by the Applicant that it appealed the 16.10.2023 judgment on 22.12.2023 and has applied for a stay of enforcement proceedings as part of the appeal. There is some dispute as to the status of the enforcement processes. I have no first-hand evidence by an expert in Lebanese law to support this assertion.

Reasons for restraining Presentation

13

There are five reasons presented by the Applicant for restraining presentation of a petition:

a. That the judgment debt is time-barred;

b. That it is unclear if there was acknowledgment within the limitation period;

c. There is a substantial dispute as to whether the judgment debt has been satisfied;

d. The solvency of the Applicant;

e. The appropriateness of an injunction.

Limitation Point

14

The first judgment was obtained on 13.7.2010. The first appeal was dismissed on 23.5.2014 and the second on 23.3.2017.

15

The first question is what limitation regime applies to a foreign judgment, the second is when time started running for any limitation period and the third is whether any action of the Applicants might have caused the limitation period to reset.

What Limitation Regime applies to a foreign judgment?

16

There are traditionally two ways in which foreign judgments can be recognised in England & Wales:

a. Statutory registration; and

b. Common law.

17

It is common ground that the Lebanese judgment does not fall into either of the statutory regimes available. It is also common ground that the Lebanese judgment has not undergone the common law conversion to an English judgment by way of a Part 7 claim.

The statutory regime

18

The Respondent has sought to draw analogies from, in particular, the Foreign Judgments (Reciprocal Enforcement) Act 1933, (“the 1933 Act”) as a guide for the position under common law. I have also had my attention drawn to case law relating to the Administration of Justice Act 1920 (“the 1920 Act”)

The Administration of Justice Act 1920 (“the 1920 Act”)

19

The 1920 Act relates to certain former dominions and colonies of the United Kingdom. It is limited to specified types of sums of money. It provides for registration of the judgment at the High Court (or Scottish equivalent) within twelve months after judgment (or a longer period if the court agrees). On registration the judgment has the same force and effect of a judgment obtained in the registering court and is controlled by that court. In other words, it becomes for all intents and purposes an English judgment.

20

It appears that foreign judgments registerable under the 1920 Act, but which are not registered, may also be enforced by way of the common law – it does not appear to be specifically precluded.

Foreign Judgments (Reciprocal Enforcement) Act 1933 (“the 1933 Act”)

21

This extends the recognition of foreign judgments to countries not necessarily forming part of the former dominions and colonies (although it does include some of these), but where there is substantial reciprocity of treatment. It is again limited to sums of money and can be registered in the High Court. Registration again gives the same status as an English judgment for all purposes.

22

Although the 1933 Act prescribes that a judgment is deemed final and conclusive and can be registered even if there is a pending appeal, the statutory time limit at s2(1) 1933 Act is six years from the date of judgment or the date of the last judgment if there have been appeals in the original jurisdiction. It is clear that Parliament intentionally built in something of a moving feast to allow all processes in the original jurisdiction to be completed before any final trigger is pulled as to the statutory time limit. S6 of the 1933 Act limits actions outside registration:

“No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this Part of this Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom.”

23

As a result, 1993 Act foreign judgments do not appear to be enforceable at common law, this view being supported by Dicey, Morris and Collins on the Conflict of Laws @ 14R-2024.

The Common Law Regime

24

The position under the common law is somewhat different. There is no direct route to recognition of the judgment. The general recognition procedure is that a person with the benefit of the foreign judgment brings a Part 7 claim based on the sums awarded in the foreign judgment. It is, again, only available for money judgments but, as a matter of public policy, not for taxes, fines or penalties.

25

These claims are often known as Recognition Claims, but in fact that is something of a misnomer. The claims do not recognise the foreign judgment qua judgment, but as a debt owed. They are often (in fact usually) granted by way of summary judgment as the English courts will not go behind the foreign judgment other than on the same public policy grounds which would give rise to a refusal to register a judgment.

26

The judgment which can then be enforced is the English judgment on the basis of the debt owed by reason of the foreign judgment.

27

Judgments must be final and unalterable in the court which pronounced the judgment to enable a successful conversion to an English judgment. If, however, there are appeals in the original court which are being pursued,...

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