Counterclaims and the administration moratorium

Disputes then arose between the parties as to whether the claimant, CLA, was entitled to damage for wrongful termination and the return of a security deposit, and/or whether WWTAI had claims of its own for the failure by CLA to return logbooks, certificates and maintenance records, and for loss of rental income arising from CLA’s own breaches. 

A claim was issued by CLA before it went into administration, but a defence and counterclaim served after administrators were appointed. No leave or consent was obtained for the counterclaim in breach of the moratorium. Where a counterclaim was purely defensive, no permission was required, but in this case, the counterclaim sought delivery up of property and claimed damages that might exceed the value of the claim. However, the court was prepared to grant retrospective leave here and in doing so, referred to several themes to draw from the authorities on the balancing exercise including:

• It may sometimes be in the collective interests of creditors for a claim for unliquidated damages against the company (such as this one) to be determined by a court.
• The balance is more likely to lie in favour of determination and preservation of individual property rights.
• Even where a counterclaim is not solely defensive, it may be so closely connected with the original claim that there would be something fundamentally questionable about permitting the company to pursue its claim, but refusing to permit the target of those actions from asserting cross claims arising from the same facts.

This case is a good example of a practical approach taken to the grant of permission to pursue a counterclaim in circumstances where the facts and issues involved were, in substance, the same as the claim being pursued by the company in administration.

Cargologicair Ltd v WWTAI Airopco 1 Bermuda Limited [2024] EWHC 508