VB Leaseco Pty Ltd (administrators appointed) v Wells Fargo Trust Company, National Association (trustee) [2020] FCAFC 168

VB Leaseco Pty Ltd (administrators appointed) v Wells Fargo Trust Company, National Association (trustee) [2020] FCAFC 168

Art XI(2) of the Protocol does not require an insolvency administrator to effect physical redelivery of aircraft objects in accordance with lease redelivery provisions. Properly construed, it requires the insolvency administrator, notwithstanding domestic insolvency law, to do what is necessary to pass to the creditor the form of possession the creditor could have taken through the Convention's self-help right to take possession; affirmative steps may be required only to overcome barriers caused by the insolvency administration. The primary judge erred by using Art IX(3)'s commercial reasonableness requirement to define the content of the Art XI(2) obligation and by treating the lease...

Jurisdiction
Australia
Judgment Date
07 October 2020
Procedural Posture
Expedited Appeal / Appeal From Wells Fargo Trust Company, National Association (trustee) V VB Leaseco Pty Ltd (administrators Appointed) [2020] FCA 1269
Outcome
Appeal allowed; orders 5, 6, 7, 8 and 12 made by the primary judge on 3 September 2020 set aside; proceeding remitted to the primary judge; respondents ordered to pay appellants' costs of the appeal.
Legal Topics
['international Interests in Mobile Equipment (cape Town Convention) Act 2013 (cth)' 'convention on International Interests in Mobile Equipment' 'protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment' 'remedies on Insolvency' 'meaning of Give Possession Under Art Xi(2) of the Protocol' 'aircraft Object Redelivery Obligations' 'vienna Convention on the Law of Treaties Arts 31 and 32']
['aviation' 'corporations and Corporate Insolvency' 'commercial Law' 'treaty Interpretation'] ['international Interests in Mobile Equipment (cape Town Convention) Act 2013 (cth)' 'convention on International Interests in Mobile Equipment' 'protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment' 'remedies on Insolvency' 'meaning of Give Possession Under Art Xi(2) of the Protocol' 'aircraft Object Redelivery Obligations' 'vienna Convention on the Law of Treaties Arts 31 and 32']

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Procedural Posture

Expedited Appeal / Appeal From Wells Fargo Trust Company, National Association (trustee) V VB Leaseco Pty Ltd (administrators Appointed) [2020] FCA 1269

Legal Issues

  1. 1 ["Whether Art XI(2) of the Protocol requires an insolvency administrator or debtor to redeliver aircraft objects in accordance with physical return provisions in the parties' lease agreements, or otherwise in a manner deemed reasonable and appropriate by the Court, at the expense of the insolvency administrator or debtor." 'Whether giving possession under Art XI(2) can be satisfied by making aircraft objects available to a creditor by giving the creditor the opportunity to take possession.' "Whether Art IX(3) of the Protocol and the requirement that remedies be exercised in a commercially reasonable manner inform the content of an insolvency administrator's obligation under Art XI(2)." "Whether the primary judge's orders requiring delivery of aircraft objects to Florida in accordance with the lease agreements should be set aside."]

Ratio Decidendi

Art XI(2) of the Protocol does not require an insolvency administrator to effect physical redelivery of aircraft objects in accordance with lease redelivery provisions. Properly construed, it requires the insolvency administrator, notwithstanding domestic insolvency law, to do what is necessary to pass to the creditor the form of possession the creditor could have taken through the Convention's self-help right to take possession; affirmative steps may be required only to overcome barriers caused by the insolvency administration. The primary judge erred by using Art IX(3)'s commercial reasonableness requirement to define the content of the Art XI(2) obligation and by treating the lease...

Court Disposition

Appeal allowed; orders 5, 6, 7, 8 and 12 made by the primary judge on 3 September 2020 set aside; proceeding remitted to the primary judge; respondents ordered to pay appellants' costs of the appeal.

Orders

  • ['The appeal is allowed.' 'Orders 5, 6, 7, 8 and 12 of the orders made by the primary judge on 3 September 2020 be set aside.' 'The proceeding, including any application by the appellants for declaratory relief, be remitted to the primary judge for further hearing in accordance with these reasons.' "The respondents...