Swissport (UK) Ltd v Aer Lingus Ltd

Summary judgment remains discretionary even where the claimant’s debt is established and the defendant’s counterclaim or set-off is uncertain. The court must balance expedition and economy against the risk of injustice, particularly where the claimant is insolvent and payment may be distributed before a contingent cross-claim can be determined.

Insolvency set-off is substantive and mandatory, but a contingent or unascertained cross-claim must be valued rather than accepted at face value. A merely arguable claim does not automatically prevent judgment. The court may grant judgment subject to protective conditions where a near-term event may materially alter the position.

Swissport supplied ground handling services to Aer Lingus under a fixed-price agreement. After Swissport ceased trading and entered administration, it claimed unpaid charges. The Deputy Master entered summary judgment for Swissport.

Aer Lingus appealed, relying on a possible indemnity under the business transfer agreement, damages for breach of the ground handling contract, and legal or insolvency set-off. The proposed cross-claim depended on pending employment proceedings concerning whether a transfer of undertaking had occurred under the Transfer of Undertakings (Protection of Employment) Regulations 1981. Swissport had subsequently entered liquidation. The central issues were whether the cross-claim had a real prospect of success, how it should be valued for insolvency set-off, and whether summary judgment should nevertheless be granted.

1. Disposition. The appeal was allowed only to the extent necessary to vary the protection attached to the order. The Deputy Master’s summary judgment was upheld, subject to payment by Aer Lingus of the claim and interest and an undertaking by the liquidators not to distribute the money to creditors until 14 days after the Employment Appeal Tribunal’s judgment.
2. Summary judgment. CPR rule 24.2 confers a discretion. Even where the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for trial, the court must exercise that discretion on proper judicial grounds and in accordance with the overriding objective. There is no bright-line rule that an insolvent claimant cannot obtain summary judgment where the defendant asserts a contingent cross-claim.
3. The proposed counterclaim depended on several contingencies: success in the employment proceedings, a finding of a TUPE transfer, liability for the employees’ losses, a substantial value of those claims, loss exceeding the savings made by Aer Lingus, and entitlement to recovery under the indemnity or general damages law. The claim was therefore weak, particularly because Aer Lingus had not shown the amount of any saving achieved by replacing Swissport’s services.
4. Insolvency set-off. Insolvency set-off differs from ordinary legal set-off and may include contingent obligations arising from pre-insolvency dealings. The required account must nevertheless involve valuation. The court is not required to treat a shadowy contingent claim as if it had its full asserted value. That approach applied whether Aer Lingus relied on the claim as a counterclaim or as insolvency set-off.
5. The pending Employment Appeal Tribunal decision could potentially affect the position and was expected shortly. Justice was therefore achieved by allowing payment while preserving a short opportunity to apply on genuinely fresh circumstances.

• High Court (Chancery Division): on appeal, upheld the Deputy Master’s summary judgment for Swissport, subject to an undertaking restricting distribution of the money pending the Employment Appeal Tribunal’s judgment.
• Deputy Master Hoffmann: on 15 September 2006, entered summary judgment for Swissport in respect of the ground handling charges and rejected Aer Lingus’s proposed counterclaim or set-off.