New Cap Reinsurance Corporation Ltd & Anor v Grant & Ors

The Court of Appeal dismissed the appellants' challenge to orders made in aid of New South Wales insolvency proceedings. It held that the Foreign Judgments (Reciprocal Enforcement) Act 1933 (as applied to Australia by the 1994 Order) can apply to money judgments made in insolvency proceedings and such judgments are, in principle, registrable in England. The court also held that section 426 of the Insolvency Act 1986 may be used to provide English court assistance for enforcement of a money judgment made in foreign insolvency proceedings and that use of that discretionary power was appropriate in the present case. The Court concluded that registration of the New South Wales order could not be set aside under the 1933 Act because Rubin v Eurofinance SA establishes recognition of the foreign insolvency jurisdiction for orders of this kind, and that Lewison J had not erred in exercising his discretion under section 426.

This was an appeal against a decision of Lewison J ([2011] EWHC 677 (Ch)) who granted relief to the liquidator of New Cap Reinsurance Corporation Ltd (New Cap) seeking assistance in England for enforcing a New South Wales court order which declared two payments to members of Lloyd's Syndicate 991 to be voidable preferences and ordered repayment with interest.

Background and parties:

• Claimants/respondents: New Cap (in liquidation) and its liquidator, Mr Gibbons.
• Defendants/appellants: members of Lloyd's Syndicate 991 for the 1997 and 1998 years of account.
• Procedural history: the liquidator obtained an order in New South Wales (dated 11 September 2009) including declarations that the payments were voidable and orders for repayment. A letter of request (dated 20 October 2009) sought English court assistance under Insolvency Act 1986, section 426. Proceedings were issued in the Companies Court and Lewison J made orders under section 426; permission to appeal was granted.

Nature of the relief sought: assistance in England to give effect to the New South Wales order by ordering the syndicate members to pay the sums ordered in New South Wales or, alternatively, permission to bring proceedings in England to set aside the payments as preferences to be decided according to Australian law.

Issues framed by the court:

• Which of three possible routes for enforcement applied: (i) common law action on a foreign judgment; (ii) registration under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act) as applied to Australia by the 1994 Order; or (iii) assistance under section 426 of the Insolvency Act 1986?
• Whether the 1933 Act (and the 1994 Order) extends to money judgments made in insolvency proceedings.
• Whether section 426 could be used to obtain an English order to enforce money judgments made in foreign insolvency proceedings and whether section 6 of the 1933 Act precluded that use.
• Whether, if registrable under the 1933 Act, registration could be set aside on jurisdictional grounds given Rubin v Eurofinance SA.

Reasoning and conclusions:

• The court analysed the 1933 Act, the 1994 Order, the historical materials which led to the Act, and the wording of the relevant provisions. It concluded that Part I of the 1933 Act can apply to judgments for the payment of money made in insolvency proceedings and that the phrase "civil or commercial matter" in the 1994 Order did not exclude insolvency matters between common law jurisdictions.
• The court held that section 426(4)–(5) of the Insolvency Act 1986 can be used to seek assistance by way of enforcement of a money judgment made in foreign insolvency proceedings; the discretionary nature of that power distinguishes it from the statutory registration regime under the 1933 Act.
• The court rejected the argument that section 6 of the 1933 Act (which precludes other proceedings for recovery of sums payable under a registrable foreign judgment) prevents use of section 426; the two regimes can co-exist because section 426 is discretionary and serves a different constitutional function.
• On the facts the judge had not misdirected himself when exercising the discretion under section 426 and the liquidator was entitled to the assistance sought. The Court further held that, if the New South Wales order were registered under the 1933 Act, registration could not be set aside under section 4(1)(a)(ii) because Rubin determines that the foreign insolvency jurisdiction would be recognised.

Wider observations: the judgment discusses the interaction between the 1933 Act registration regime and cross-border insolvency assistance under section 426, and applies the Court of Appeal decision in Rubin regarding recognition of foreign insolvency orders.

Appeal dismissed. The Court of Appeal upheld Lewison J’s orders made under section 426 of the Insolvency Act 1986, ruling that (i) the Foreign Judgments (Reciprocal Enforcement) Act 1933 (as applied by the 1994 Order) can apply to money judgments made in insolvency proceedings and such judgments are registrable, (ii) section 426 can be used to obtain assistance by way of enforcement of a foreign insolvency money judgment and the judge did not err in exercising his discretion, and (iii) registration of the New South Wales order could not be set aside under section 4(1)(a)(ii) of the 1933 Act given the effect of Rubin v Eurofinance SA.

On appeal from the High Court of Justice, Chancery Division, Companies Court (Lewison J) [2011] EWHC 677 (Ch). Permission to appeal was granted by the trial judge; Court of Appeal hearing 18 July 2011; judgment handed down 9 August 2011.