In CargoLogicAir Ltd (in administration) v WWTAI Airopco 1 Bermuda Ltd [2024] EWHC 508 (Comm), Paul Stanley KC sitting as a Deputy High Court Judge was confronted with a claim that had been brought (by way of counterclaim) by WWTAI against a company in administration (“CLA”) without the consent of CLA’s administrators or the permission of the Court.

The claim arose from the termination of a lease of a Boeing 747 air cargo carrier, which WWTAI had leased to CLA, with CLA alleging that termination was unlawful, had caused substantial damage and that its security deposit should be returned. WWTAI contended that termination had been lawful and sought to counterclaim (i) for the delivery up of documents relating to the aircraft; and (ii) for loss of rental payments under the lease. WWTAI originally pleaded its damages claim without giving any credit for the benefit of having the aircraft back early. It subsequently sought to give credit for market rent without advancing any case as to what the market rent was at the time, before then advancing a case as to market rent but not one which matched the state in which it alleged it had retrieved the aircraft.

CLA contended that the counterclaim had been issued in breach of the statutory moratorium that applies in respect of proceedings against companies in administration, that absent retrospective consent or permission being forthcoming the counterclaim should be struck out, and that permission should only be given once WWTAI’s damages claim was properly pleaded, advancing its case as to market rent for the aircraft in the state it had been in.

WWTAI contended that no permission was required because its counterclaim for delivery up was an assertion of proprietary rights and its counterclaim for damages was defensive (relying on Mortgage Debenture Ltd v Chapman [2016] EWCA Civ 103), that even if permission were not granted, it would be inappropriate to strike out the counterclaim, and there was no defect in its pleading requiring remedy before permission was to be granted.

The judgment (found here: CargoLogicAir Ltd v WWTAI AirOpCo 1 Bermuda Ltd [2024] EWHC 508 (Comm) (07 March 2024) (bailii.org)) may be of interest to insolvency professionals, as it makes clear that:

• Whilst it will be normal for permission to be granted to pursue a claim against a company in administration for a proprietary remedy, permission was still required.
• A cross-claim for money will require permission unless it is pleaded solely by way of set-off.
• Permission will usually be granted if the cross-claim concerns the same facts as the primary claim.
• If permission is not granted, it would be abusive for the cross-claim to be pursued and it would be liable to be struck out.
• The pleading of damages was indeed defective, as CLA had contended, and needed to be remedied as a condition of permission being granted to pursue the loss of rent claim.

Trevor Mascarenhas, David Johnson and Beth Arrowsmith of PCB Byrne instructed Max Kasriel of Fountain Court Chambers on behalf of CLA (Administrators David Buchler and Jo Milner of Buchler Phillips).