JURISPRUDENCIA Volver >
Liens in English law following the La Senza case (March 2012)
The La Senza case highlights the rights of a freight forwarder (trading under BIFA standard conditions) to exercise a general lien over branded goods where a customer has become insolvent. The court ruled in favour of the freight forwarder, recognising that, if they granted the administrators' request, it would be inadequate to protect the freight forwarder's rights and would destroy the freight forwarder's security. Furthermore, the court would not order that any goods sold by the freight forwarder in exercise of the lien should be stripped of their branding, because to do so would be to fetter the terms of the lien. The administrators were ordered to pay the freight forwarder's costs. Overall, a very good result for this British freight forwarder.
Citar: elDial.com - CC2FEE
Copyright 2024 - elDial.com - editorial albrematica - Tucumán 1440 (1050) - Ciudad Autónoma de Buenos Aires - Argentina
Texto Completo
Liens in English law following the La Senza case (March 2012)(*) |
Insolvency and General Liens
April 2012 Re
A
landmark decision by Sir Andrew Morritt, the Chancellor of
the English High Court means that freight forwarders, liner
shipping companies and road hauliers finally have a court
judgment that they are entitled to enforce their BIFA, bill
of lading or RHA general lien clauses against administrators
acting on behalf of insolvent customers. This is very welcome
news to the freight forwarding, liner shipping and haulage
industries. Most
disputes between forwarders/carriers and administrators of
collapsed companies end with negotiated settlements. This
will doubtless continue to be the case. Up until this
judgment, however, there has been some doubt about whether a
court would enforce a general lien in light of the moratorium
imposed on liens under Section 43(b) of Schedule B1 of the
Insolvency Act 1986 (the “Act”) and also whether a court
would order delivery up of goods to the administrators
without an indemnity being provided to protect the
forwarder/carrier from potential costs and/or claims from
third parties arising out of delivery up. The Chancellor’s
judgment resolves these doubts in relation to cases which
fall on all fours with the facts in this case. Because every case inevitably presents at least some novel facts, forwarders/carriers should still, however, always obtain early legal advice if a customer collapses owing significant sums and administrators and/or suppliers to the collapsed company demand delivery up of goods held by the forwarder/carrier. The facts The
Uniserve group of companies, represented by HFW, provided
supply chain management services to LSL
suffered financial difficulties during the latter half of
2011 and failed to pay a number of Uniserve’s invoices
within agreed credit terms. As a result, on 14 December 2011,
Uniserve wrote to LSL advising that it was exercising a lien
over goods in transit pending payment of all invoices in full
in accordance with the general lien in the BIFA Conditions.
Not long after this, LSL gave notice of its intention to
enter into administration, and three administrators from KPMG
were subsequently appointed on 9 January 2012. After
their appointment, the administrators quickly found a buyer
for the business and assets of LSL and also agreed with the
buyer that if they were able to deliver the goods in
Uniserve’s possession, the buyer would pay LSL 50% of their
commercial invoice value (the “Sale Contract”). The Sale
Contract included a longstop date of 16 March 2012, which was
only communicated to Uniserve on 2 March 2012. Uniserve
offered to deliver up the goods to the administrators in
return for (a) payment in full of its invoices and the
storage charges that had accrued on the goods since they had
arrived in the UK and (b) an indemnity in relation to any
costs and/or claims that may arise out of Uniserve complying
with LSL’s order to deliver up the goods. Uniserve also
submitted that there was no breach of the moratorium or
conversion of the goods in circumstances where Uniserve was
evaluating the validity of LSL’s title to the goods. The Court applications The
administrators rejected Uniserve’s offer and on 1 March
2012 made an application to the court under Section 234 of
the Act seeking an order that Uniserve deliver up goods with
a commercial invoice value of about GBP2.2 million without
the immediate payment of Uniserve’s charges and without the
provision of an indemnity. They submitted that LSL was
entitled to delivery up because, pursuant to the terms of
sale between the suppliers and LSL, LSL “appeared to be
entitled” to them within the meaning of Section 234 (2) of
the Act. In
a cross-application, Uniserve applied for the court’s
permission under Section 43(3)(b) of Schedule B1 of the Act
to enforce its general lien. Uniserve also requested that LSL
pay its legal fees. On
5 March The administrators change their position In
the eight day period in the run up to the expedited hearing,
during which witness statements, voluminous evidence and
skeleton arguments were exchanged, the administrators
modified their position on several occasions. Instead of
demanding unconditional delivery up of the goods, they
offered to pay the sums received under the Sale Contract into
an escrow account and submitted that third parties with valid
claims and Uniserve could make claims on this escrow account.
Uniserve submitted that this proposal was poorly thought
through as it would both destroy Uniserve’s lien and
provide insufficient protection against any costs and/or
claims arising out of Uniserve complying with LSL’s
demands. The administrators also submitted that even if Uniserve had an enforceable general lien, its value should be limited to the amount that Uniserve itself could recover were Uniserve to sell the goods. Their evidence, which Uniserve rejected, was that Uniserve would only recover 5.5% of the commercial invoice value of the goods. Uniserve’s submission was that the amount that Uniserve could sell the goods for was the incorrect test for the value of the lien and that the 5.5% figure was incorrect in any event. The Court’s judgment The
Chancellor initially indicated to the parties that he would
be prepared to order delivery up of the goods to LSL
providing, as Uniserve submitted, an indemnity were provided
to Uniserve and all of Uniserve’s charges were paid. The
administrators declined to pay the sums owed and provide an
indemnity so the Chancellor therefore ordered, as Uniserve
had requested in the alternative, that permission be granted
to Uniserve to enforce its lien and sell LSL’s goods. In
making his judgment, the Chancellor rejected the
administrators’ submission that permission to enforce the
lien should be declined because Uniserve had been in breach
of the moratorium by retaining the goods between December and
March 2012 without a court order. He also rejected the escrow
account proposal and the proposition that the value of
Uniserve’s general lien be limited to the sum that Uniserve
itself could sell the goods for, which the administrators had
previously suggested would be 5.5% of their commercial value.
He said that to do so would be to “fetter the terms of the
lien”. The
judge also awarded legal costs against LSL and ordered a
payment of costs on account. Commercial impact This
judgment means that freight forwarders, liner shipping
companies and road hauliers can now all feel much more
certain about their legal rights when faced by administrators
who refuse to settle debts in full, challenge liens and
demand delivery up of goods. Individual cases do still,
however, always turn on their individual facts, so whilst the
judgment is most welcome as general guidance, legal advice
should still be sought as soon as possible if a customer goes
into administration owing significant sums. Commenting
on the judgment, the Managing Director of Uniserve said,
“It is always sad when an important customer experiences
financial difficulties and creditors like Uniserve are
exposed to potentially large losses. This judgment at least
gives companies like Uniserve comfort that if they contract
on suitable terms they will be recognised as secured
creditors in an administration. HFW did an excellent job to
defend Uniserve against the unnecessary challenge by the
administrators on Uniserve’s legitimate legal position.”
|
|
Citar: elDial.com - CC2FEE
Copyright 2024 - elDial.com - editorial albrematica - Tucumán 1440 (1050) - Ciudad Autónoma de Buenos Aires - Argentina
¿PROBASTE NUESTROS SERVICIOS?
Formá parte de elDial.com y obtené acceso a novedades jurídicas, nuevos fallos y sentencias, miles de modelos de escritos, doctrinas y legislación actualizada. Además, con tu suscripción accedes a muchos beneficios y descuentos en las mejores editoriales, libros y cursos.