Flightlease (Ireland) Ltd (in voluntary liquidation)

• Jurisdiction: Ireland
• Judge: O'Donnell J.,Mr Justice Finnegan
• Judgment Date: 23 February 2012
• Neutral Citation: [2012] IESC 12
• Date: 23 February 2012
• Court: Supreme Court
• Docket Number: [S.C. No. 284 of 2006]

[2012] IESC 12

THE SUPREME COURT

Murray J.

Hardiman J.

Fennelly J.

Finnegan J.

O'Donnell J.

APPEAL NO. 284/2006

Flightlease (Irl) Ltd, In re

IN THE MATTER OF FLIGTLEASE (IRELAND) LIMITED (IN VOLUNTARY LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACT 1963 TO 2005

AND

IN THE MATTE OF AN APPLICATION PURSUANT TO SECTION 280 OF THE COMPANIES ACT 1963

PAUL McCANN AND STEPHEN AKERS, JOINT LIQUIDATORS

APPLICANTS

COMPANIES ACT 1963 S280

COLLINS & ORS DICEY MORRIS & COLLINS ON THE CONFLICT OF LAWS 14ED 2006 RULE 36

DICEY & KEITH A DIGEST OF THE LAW OF ENGLAND WITH REFERENCE TO THE CONFLICT OF LAWS 4ED 1927

D (K) (ORSE C) v C (M) 1985 IR 697 1987 ILRM 189 1985/7/1790

INDYKA v INDYKA 1969 1 AC 33 1967 3 WLR 510 1967 2 AER 689

MORGUARD INVESTMENTS LTD v DE SAVOYE & CREDIT FONCIER TRUST CO 1990 3 SCR 1077

EMANUEL & ORS v SYMON 1908 1 KB 302

YNTEMA THE OBJECTIVES OF PRIVATE INTERNATIONAL LAW 1957 35(6) CAN BAR REV 721

SALDANHA & ORS v BEALS 2003 3 SCR 416 2003 SCC 72

COMPANIES ACT 1963 S139

CAMBRIDGE GAS TRANSPORT CORP v OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF NAVIGATOR HOLDINGS PLC & ORS 2007 1 AC 508 2006 3 WLR 689 2006 3 AER 829

LINES BROS LTD (IN LIQUIDATION), IN RE 1983 CH 1 1982 2 WLR 1010 1982 2 AER 183

DYER v DOLAN UNREP KEANE 10.6.1993 1993/7/1971

RAINFORD & ORS v NEWELL-ROBERTS 1962 IR 95 30 ILR 105

DICEY A DIGEST OF THE LAW OF ENGLAND WITH REFERENCE TO THE CONFLICT OF LAWS 1ED 1896 RULE 80

CHESHIRE PRIVATE INTERNATIONAL LAW 3ED 1947

W (J) v W (J) 1993 2 IR 476 1993 ITR 473 1992/13/4362

MCG (G) v W (D) 2000 1 IR 96 2000 1 ILRM 107 1999/17/5217

DICEY & MORRIS CONFLICT OF LAWS 6ED 1949

MUSCUTT & JOHNSTON v COURCELLES & ORS 2001 5 CPC (5TH) 353 (SCJ)

BRIGGS THE CONFLICT OF LAWS 2ED 2008 138

BRIGGS CROSSING THE RIVER BY FEELING THE STONES: RETHINKING THE LAW ON FOREIGN JUDGMENTS 2004 8 SYBIL 1

BRIGGS FOREIGN JUDGMENTS: MORE SURPRISES 1992 108 LQR 549

KENNEDY T/A GILES J KENNEDY & CO v LAW SOCIETY OF IRELAND & ORS (NO 4) 2005 3 IR 228 2005/34/7011 2005 IESC 23

EEC REG 1346/2000

RUBIN & ANOR v EUROFINANCE SA & ORS 2011 CH 133 2011 2 WLR 121 2011 BUS LR 84 2011 1 AER (COMM) 287 2010 EWCA CIV 895

HIH CASUALTY & GENERAL INSURANCE, IN RE 2008 1 WLR 852 2008 BUS LR 905 2008 3 AER 869 2008 BCC 349

INSOLVENCY ACT 1986 S426(4)

BLOM & EDINGER THE CHIMERA OF THE REAL & SUBSTANTIAL CONNECTION TEST 2005 38 UBC LAW REV 373

BRIGGS & REES CIVIL JURISDICTION & JUDGMENTS 5ED 2009

CASTEL THE UNCERTAINTY FACTOR IN CANADIAN PRIVATE INTERNATIONAL LAW 2007 52(3) MCGILL LJ 555

CONFLICT OF LAWS

Recognition of foreign judgment

Requirements at common law - Right in personam - Presence of debtor in jurisdiction at time of institution of proceedings giving rise to judgment - Whether judgment secured in another jurisdiction by or against third party in course of bankruptcy proceedings created right in personam - Whether appropriate to modify criteria at common law for recognition of foreign judgments - In re Lines Bros Ltd [1983] Ch 1 followed; Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26; [2007] 1 AC 508 and Beals v Saldanha [2003] 3 SCR 416 not followed - Applicants' appeal dismissed (284/2006 - SC - 23/2/2012) [2012] IESC 12

Re Flightlease Ltd: McCann & Akers

Facts: In proceedings between joint liquidators and the liquidator of Swissair, the question arose whether a judgment obtained in Swiss proceedings would be recognised and enforced by the Courts in Ireland or whether Canadian contemporary jurisprudence was more appropriately adopted, employing a "real and substantial" connection test. The joint liquidators contended inter alia that the claim in the Swiss court was a claim in personam and that any change in the established common law could only be done by legislation.

Held by the Supreme Court per Finnegan J. (Murray, Hardiman, Fennelly, O' Donnell JJ. Concurring), that the judgment would not be recognised and enforced. It was preferable that the matter be dealt with by comprehensive legislation rather than the introduction of a new test in the common law. The change which Swissair asked the Court to make in Irish law exceeded the judicial function. The decision of the High Court would be affirmed and the appeal dismissed. Per O' Donnell J.: that there was no good reason why liquidators of Irish companies should receive favourable treatment. The development of the common law should not necessarily be ruled out.

Reporter: E.F.

1 Judgment of Mr Justice Finnegan delivered on the 23rd day of February 2012

2 JUDGMENTS DELIVERED BY FINNEGAN J. [MURRAY J., HARDIMAN J. & FENNELLY J. CONCUR] & O'DONNELL J.

3 Flightlease (Ireland) Limited (in voluntary liquidation) ("Flightlease") was incorporated in Ireland on the 21 ^st November 1997. At an extraordinary general meeting of the shareholders of Flightlease held on the 13 ^th July 2004 a resolution for the winding-up of the company was passed and Paul McCann and Stephen Akers were appointed as joint liquidators. Flightlease is a wholly owned subsidiary of Flightlease AG which in turn is a subsidiary of SAir Group which is the highest holding company in a complex corporate structure. Swissair Schweizerisch Luftverkehr-Aktiengesellschaft in Nachlassliquidation (which translates as Swissair Transport Company Limited in debt restructuring liquidation) ("Swissair") was the operational aviation company of the SAir Group. Flightlease AG and Swissair are subsidiaries of S Air Lines the subholding company of S Air Group. S Air Group and Flightlease AG are also in debt restructuring liquidation in Switzerland. Karl Wüthrich is the liquidator of S Air Group, Swissair and Flightlease AG.

4 Flightlease AG, Flightlease and associated companies incorporated in Guernsey and Bermuda of which Flightlease AG was also the intermediate parent company were incorporated for the purpose of aircraft leasing. Flightlease leased seven Airbus 320 aircraft to Volare Airlines Spa ("Volare"). These aircraft were used on various flight routes but were also used by Volare to handle Swissair flights on the route Zurich-Venice. In respect of the Zurich-Venice route Volare was at all material times a creditor of Swissair. However in connection with the operation of the leased aircraft Volare also purchased services from other companies in the S Air Group and in respect of these services was at all material times indebted to Flightlease and to other companies within the S Air group. By June 2001 Volare was in arrears with payments to Flightlease and to the other companies in the S Air group. From that date S Air retained payments due to Volare in respect of the Zurich-Venice route with the intention of transferring amounts retained to companies within the S Air Group in discharge of the indebtedness of Volare. On the 20 ^th September 2001 CHF8,000,000 from the amounts retained were transferred to Flightlease. All the creditors to whom Flightlease acknowledged indebtedness and the joint liquidators entered into a wind down agreement dated 22 ^nd December 2003 for the purposes of providing for the orderly winding down of Flightlease and the distribution of the realised assets in accordance with the terms of the agreement. Swissair is not a party to the write down agreement. Kurt Wülrich as liquidator executed the write down agreement on behalf of Flightlease AG. The only outstanding claim in respect of Flightlease, not covered by the agreement, is a claim by Swissair for repayment of the said sum of CHF8,000,000. This claim is all that remains preventing the distribution of the assets of Flightlease in accordance with the wind down agreement.

5 Swissair submitted a claim in the liquidation on the 23 ^rd May 2005 which claim was rejected by notice of rejection of proof dated 18 ^th October 2005. It was open to Swissair to apply to the court pursuant to the Companies Act 1963 section 280 which provides as follows:-

6 2 "280(1) The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding-up of a company, or to exercise in relation to the enforcing of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court.

7 (2) The court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just."

8 Swissair did not avail of section 280. Instead Swissair, without notice to the joint liquidators, instituted proceedings in the Swiss courts seeking the return of certain monies paid by Swissair to Flightlease and the existence of which proceedings was not revealed until after rejection of the proof of debt. The Swiss proceedings were served on the 31 ^st January 2006. By originating notice of motion dated the 15 ^th February 2006 the joint liquidators applied to the High Court in the liquidation pursuant to section 280 of the Companies Act 1963 seeking the following reliefs:-

9 2 "1. An order granting liberty to the applicants to distribute the assets of the company without reference to the claim submitted by Swissair Schweizerisch Luftverkehr-Aktiengesellschaft in Nachlassliquidation (the "claimant") acting by its liquidator Karl Wüthrich dated the 23 ^rd May 2005;

10 2. In the alternative, an order fixing the time for the taking of any challenge or appeal to the applicant's notice of rejection of proof dated the 18 ^th October 2005 in respect of the claimant's claim;

11 3. Such further or other order as to this Honourable Court shall seem fit;

12 4....