B2/2001/2666, B2/2001/2667
Neutral Citation Number: [2002] EWCA Civ 300
IN THE SUPREME COURT OF JUDICATURE                                  
COURT OF APPEAL (CIVIL DIVISION)                                            
ON APPEAL FROM CHANCERY DIVISION
(MR JUSTICE ETHERTON)
                                  Royal Courts of Justice
                                  Strand
                                  London WC2
 
                             Wednesday, 20th February 2002
B e f o r e :

LORD JUSTICE SCHIEMANN
LORD JUSTICE MAY
-and-
LORD JUSTICE JONATHAN PARKER
- - - - - - - -

NEW CAP REINSURANCE CORPORATION LTD
Claimant/Respondent
- v -

HIH CASUALTY & GENERAL INSURANCE LTD
Defendant/Appellant
-and-

GORDIAN RUNOFF LTD
(previously known as GIO Insurance Ltd)                                         Claimant/Respondent
-v-

HIH CASUALTY & GENERAL INSURANCE LTD
Defendant/Appellant
- - - - - - - -
(Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2AG
Telephone No: 020 7421 4040
Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - -
MR W TROWER QC and MR J GOLDRING (instructed by Ince & Co, London EC3R 5EN) appeared on behalf of the Appellants
MR R M DE LACY QC (instructed by Holman Fenwick & Willow, London EC3N 3AL, and CMS Cameron McKenna, London EC1A 4DO) appeared on behalf of the Respondents
- - - - - - - -
J U D G M E N T
Wednesday 20th February 2002
1.	LORD JUSTICE SCHIEMANN: Lord Justice Jonathan Parker will deliver the first judgment.
2.	LORD JUSTICE JONATHAN PARKER: This is an appeal by HIH Casualty & General Insurance Ltd (“HIH”), acting by its provisional liquidators, against orders made by Etherton J on 28 November 2001 on applications made by New Cap Reinsurance Corporation Ltd (“NCR”) and Gordian Runoff Ltd (formerly named GIO Insurance Ltd) (“GIO”) for the lifting of the stay imposed by section 130(2) of the Insolvency Act 1986 on actions pending in the Commercial Court brought by them respectively against HIH. By his orders the judge acceded to their applications and lifted the stay in respect of each of the two actions. Permission to appeal was granted by Aldous LJ on 19 December 2001.
3.	Section 130(2) provides as follows:
“When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.” 
4.	The background to the matter is, in summary, as follows.
5.	HIH is an Australian insurance company, which is registered as a foreign company in this jurisdiction. It was licensed to write insurance business in this jurisdiction under the Insurance Companies Act 1982. Its principal business was general insurance underwriting.
6.	HIH is a member of a substantial group of insurance companies comprising some 274 companies located in Australia and elsewhere. The HIH Group was, we are told, the second largest general insurer in Australia. Its annual accounts for the year ending 30 June 2000 showed it as having assets worth some A$8bn. In early 2001, however, the HIH Group ran into serious financial difficulties. In consequence, the parent company and a number of other key companies in the group (including HIH) petitioned for their own winding-up and sought the appointment of provisional liquidators in Australia. Provisional liquidators were duly appointed.
7.	The HIH Group is massively insolvent. It is believed that the total deficit worldwide is between A$3.6bn and A$5.6bn. It is thought that unsecured creditors may receive no more than a 10 per cent dividend.
8.	The Australian court sought assistance of the English courts, pursuant to section 436 of the Insolvency Act, in appointing provisional liquidators of HIH in this jurisdiction. The application was granted by the Companies Court on 16 March 2001, and provisional liquidators were appointed.
9.	The English provisional liquidators are three insolvency practitioners who are partners in KPMG, namely Mr Anthony McMahon, Mr Thomas Riddell and Mr John Wardop.
10.	On 27 August 2001 the Australian court ordered that the HIH companies in respect of which provisional liquidators had been appointed should be wound up. The provisional liquidators were thereupon appointed liquidators.
11.	On 14 September 2001 the English provisional liquidators of HIH were appointed as provisional liquidators under English law pursuant to a petition presented by another company in the HIH Group. This enabled HIH to remain in provisional liquidation in this jurisdiction, notwithstanding the winding-up in Australia. This accords with a now well-established practice in this jurisdiction in relation to insolvent insurance companies, whereby the company is enabled to remain in provisional liquidation so that the provisional liquidators can bring forward proposals for a scheme of arrangement to be placed before creditors for their approval, pursuant to section 425 of the Companies Act 1985. Consistently with this aim, by an order dated 14 September 2001 Patten J conferred on the provisional liquidators power:
“...to consider, and if thought to be in the interests of the creditors and shareholders of the Company, to draft with a view to implementing a scheme of arrangement to be entered into between the company and its creditors.” 
12.	The provisional liquidators presently hold cash amounting to some US$6.8m and £6m. They are (on the evidence Mr of Riddell) likely to be dependent on future insurance recoveries and/or support from the Australian liquidators to fund the cost of the provisional liquidation, including any litigation costs. Further, it appears that Australian law may limit the extent to which the Australian liquidators are in a position to fund the provisional liquidation, in that section 116 of the Australian Insurance Act 1973 may (according to Mr Riddell) have the effect of giving a measure of priority to creditors who are able to class their claims as “liabilities in Australia” within the meaning of the section. In addition, as Mr Riddell states in paragraph 18 of his witness statement (page 34 of the application bundle):
“...the effect of section 562A of the Corporations Act 2001, which may also have to be the subject-matter of an application in Australia, appears to be that those insured by the insolvent insurer obtain the benefit, by way of priority in liquidators' distributions, of any relevant reinsurance recoveries made by a liquidator triggered by their claims. It is unclear whether section 562A will apply to individual reinsurance recoveries and any underlying claims, or whether the section will apply to reinsurance recoveries as a whole, related to insurance liabilities as a whole.” 
13.	In the circumstances there is, says Mr Riddell, great uncertainty as to the dividend we may be payable under Australian law to any unsecured creditor.
14.	I can now turn to the two actions brought against HIH in the Commercial Court by, respectively, NCR and GIO. These two actions formed part of a group of four actions which have been directed to be tried together. A number of syndicates at Lloyds (“the Charman syndicates”) are suing NCR and GIO under alleged reinsurance contracts. They also sue the broker, AON Group Ltd (“AON”), alleging breach of duty. NCR and GIO are in turn suing HIH under an alleged retrocession agreement in respect of their risk under the reinsurance contracts. They have also joined AON as an additional defendant. The two actions in which the Charman syndicates are claimants have been referred to throughout as “the Mainframe Litigation”; the two actions in which NCR and GIO are claimants have been referred to throughout as “the Retrocession Litigation”. In the interests of consistency, I will so refer to them in this judgment. I will refer also to the four actions taken together as “the Charman litigation”.
15.	In the Mainframe Litigation, the Charman syndicates claim that NCR and GIO entered into reinsurance contracts for a full three-year period of account in respect of the years 1997 to 1999. NCR and GIO deny this, but on different grounds. It is unnecessary for present purposes to set out in any detail the various grounds on which they rely by way of defence to the claim, save to note that one of the defences raised by NCR is that it was a condition precedent of any reinsurance contract that an effective retrocession agreement should be in place. In the Retrocession Litigation, HIH denies liability and alleges (among other things) that it is entitled to avoid the retrocession agreement on grounds of misrepresentation and/or non-disclosure. There is, thus, a direct overlap (in the form of a common issue as to the existence of an effective retrocession agreement) between the claim by the Charman syndicates against NCR and NCR's claim over against HIH. I will refer to this common issue hereafter as “the condition precedent issue”. Equally, if NCR or GIO successfully defends the claim brought against it by the Charman syndicates, its claim over against HIH will fall away.
16.	The Charman litigation was due to come on for trial in the Commercial Court on 6 June 2001. However, at a Case Management Conference on 10 April 2001 Moore-Bick J directed that, in view of the appointment of provisional liquidators of HIH, the trial date should be vacated. A new trial date was accordingly fixed. The new trial date is 29 April 2002. The trial is estimated to last at least six weeks.
17.	The Retrocession Litigation is not the only pending litigation against HIH. In paragraph 25 of his witness statement Mr Riddell says this:
“... HIH is involved in numerous actions in English Commercial Court arising out of film financing ('the Film Financing Litigation'). This has involved an extensive review of various proceedings. It should be noted that within the past week, one party to the Film Finance litigation, Chase Manhattan Bank ('Chase)', like GIO and New Cap [NCR], has indicated its intention to apply to have the stay under section 130 lifted in respect of a series of actions relating to three slates of films namely Phoenix, Paramount 1 and Paramount 2, each of which involves a number of films and is potentially a very heavy piece of litigation.” 
18.	He then refers to Chase's draft application, which he exhibits, and he goes on:
“There are several other significant sets of proceedings which are ongoing in the Commercial Court to which HIH was (prior to its provisional liquidation) a party relating to both inwards and outwards claims.” 
19.	The application by Chase, which we are told is due to be heard shortly in the Companies Court, relates to eight pending claims against HIH and five further pending claims in respect of which Chase seeks permission to join HIH as an additional defendant.
20.	In paragraph 40 of his witness statement Mr Riddell says this:
“... the claims made by GIO and New Cap [NCR] are but two of numerous claims that the estate of HIH and the HIH Group as a whole. [I think some words are missing here] More specifically:
(1) It is expected that the number of claims which will have to be considered by the insurance companies in the HIH Group will run into tens thousands.
(2) HIH is a party to numerous pieces of litigation in the English Commercial Court, including the Film Financing Litigation referred to above.
This is not an estate where there is only a single piece of potential litigation in which the company is involved. On the contrary, there are numerous potential claims and actual pieces of litigation. This makes the stay particularly important in allowing the English PLs (and the Australian Liquidators) to administer the affairs of the estate in an orderly fashion. If the stay were lifted, it would require the re-deployment of substantial resources to manage litigation, resources that we consider would be better used in dealing with the numerous other tasks arising.” 
21.	There is no dispute between the parties as to the guiding principles in the authorities in relation to the nature and the purpose of the court's discretion under section 130(2). The main authorities are all referred to in the judge's judgment, where the relevant passages are quoted in full. For present purposes it suffices to say that in Re Aro Ltd [1980] Ch 186, Brightman LJ, giving the judgment of the Court of Appeal, said that section 231 of the Companies Act 1948, which is the predecessor of section 130(2), gave the court “freedom to do what is right and fair in all the circumstances”. It would, I think, be hard to formulate a greater freedom for any court than that.
22.	I now turn to the judge's judgment.
23.	After setting out the factual and procedural background and referring to the relevant authorities, the judge summarised the arguments which had been addressed to him by Mr Richard de Lacy QC (appearing for NCR and GIO, as he does on this appeal) and by Mr Mark Phillips QC, appearing on that occasion for the provisional liquidators. The judge then expressed his conclusions thus, in paragraphs 39 to 51 of his judgment, under the heading “Striking the balance”: 
“39. I have not found it easy to decide how the court's discretion under s 130(2) should be exercised on these applications. Counsel on both sides have argued their respective cases with skill and force. I have come to the conclusion that, in all the circumstances, it would be right, on the particular facts concerning these applications and the Mainframe Litigation and the Retrocession Litigation, to give leave for the Retrocession Litigation to be continued against HIH, notwithstanding the appointment of the provisional liquidators.
40. I agree with Mr Phillips QC that the starting point must be that, in view of the immense complexities of the task of administering the estate of HIH against the background of the HIH Group's insolvency, the court must be very cautious before exposing the provisional liquidators to the burden of coping with difficult and time consuming litigation.
41. I also bear in mind the estimated substantial deficiency for both HIH and the HIH Group, and the small dividend to which unsecured creditors are likely to become entitled. On the other hand, I am told that there have been substantial dealings between GIO and NCR respectively, on the one part, and HIH, on the other part. Although it does not appear to be possible, at this stage, to predict with any degree of certainty whether greater amounts are due to or from HIH, it seems clear that, if GIO or NCR is successful in establishing retrocession agreements with HIH, they will not be in the financial position of ordinary unsecured creditors proving for a limited dividend, but will, to the extent of any set-off, in effect receive the full value of their claims.
42. I am conscious that the costs of fighting the Retrocession Litigation could be substantial and, further, that the cash resources of the provisional liquidators in England are strictly limited. I must set these points against the other considerations in favour of lifting the stay to which I [will] refer later. At this stage, it is necessary to observe, however, that the accounts which I have been shown do disclose substantial non-cash assets available to the provisional liquidators. I have not been told that none of them can be converted into cash.” 
24.	In the course of oral argument this morning we were shown an account which contained a list of the HIH Group's worldwide assets and not those of HIH available to the provisional liquidators. It appears that this may be the document to which the judge was referring. Continuing with the quotation from the judgment:
“43. In the same context, I am conscious of the potential difficulties posed by s 116 of the 1973 Act in the funding of the provisional liquidators in England out of assets under the control of the liquidators in Australia. I can have no confidence, however, if there is such a problem, that it has any realistic prospect of disappearing in the future if and when the claims of GIO and NCR were to be disposed of, as Mr Phillips QC suggested, by way of proof under a scheme of arrangement or in a winding up.
44. In order to lessen the potential severity of an adverse order for costs against HIH in the Retrocession Litigation and the Mainframe Litigation, I shall direct, in accordance with the procedure to which Buckley J referred in Re Wenborn & Co...that it is a condition of lifting the stay on the claims against HIH in the Retrocession Litigation that GIO and NCR shall add any costs ordered to be paid by HIH in their favour to the amount for which they recover judgment and for which they claim to be entitled to prove in the provisional liquidation of HIH.
45. I have also taken into account other pending and likely future litigation against HIH, and the precedent which it is said that my decision may set in relation to future applications under s 130(2). It does not seem to me that this is a matter on which I can set any real weight. The exercise of the court's discretion under s 130(2) must turn on the facts of each case. If it would otherwise be right to lift the stay in relation to the Retrocession Litigation, I cannot think that the fact that there is other pending or potential litigation, the precise facts of which are not before me, in relation to which an application might or might not be made under s 130(2), should lead to a different exercise of the court's discretion on the applications before me.
46. I now come to what seem to me to be the decisive factors on these applications. As I have said, and as Mr Phillips QC accepts, there is, on the face of the pleadings in the Mainframe Litigation and the Retrocession Litigation to which NCR is a party, a risk of inconsistent findings if all the litigation is not conducted at the same time. NCR defends, as against the Charman Syndicates, on the basis, among other things, that it was as condition precedent to any reinsurance contract that NCR was protected by retrocession, and if HIH is entitled to avoid the retrocession by virtue of non-disclosure and misrepresentation, as pleaded by HIH in the Retrocession Litigation, then that condition precedent to the reinsurance contract was not satisfied.
47. Mr Phillips QC described this as a 'narrow point'. But I agree with Mr De Lacy QC that it is a central part of NCR's defence and has direct and important repercussions on NCR's case against AON. This was clearly recognised by Moore-Bick J in his judgment on 10 April 2001, when he adjourned the trial fixed for 6 June 2001. There is a possibility that, if the Retrocession Litigation is not determined at the same time as the Mainframe Litigation, then NCR may succeed in establishing the condition precedent for the reinsurance contract which it alleges, but fail to establish the alleged grounds for the avoidance by HIH of the retrocession, namely non-disclosure or misrepresentation, and so be held liable on the contract of reinsurance. It would then be open to HIH, through the provisional liquidators, at some subsequent stage, to rerun as against NCR the arguments as to the avoidance of the retrocession due to misrepresentation or non-disclosure. Whilst it is true that this scenario is, as Mr Phillips QC has said, a contingent one which may not arise, I cannot agree that it is so remote or unlikely as not to carry considerable weight in assessing what is fair and just in all the circumstances in the context of s 130(2).
48. I am plainly not in a position, on these applications, to evaluate the merits of the various defences raised by NCR in the Mainframe Litigation. I must assume that the contingency of NCR failing, on the grounds I have mentioned, as against the Charman syndicates, is one which may well occur.
49. Mr Phillips QC forcefully and eloquently urged upon me that, provided the points as to misrepresentation and non-disclosure pleaded by HIH are properly debated in the Mainframe Litigation, it is extremely difficult to conceive that the provisional liquidators would wish to reargue the points as against NCR. I do not consider, however, that it is possible to evaluate, with Mr Phillips QC's degree of confidence and optimism, the position that the provisional liquidators would take. I bear in mind that HIH has, so I am informed, its own outward reinsurance. The provisional liquidators will wish to take care to ensure that such reinsurance is not avoided on the ground that there has been a failure to take appropriate steps to challenge the retrocession.
50. Furthermore, resolution of the question of avoidance of the retrocession by reason of misrepresentation or non-disclosure to HIH, does not turn merely on the oral evidence of Mr Payne or similar witnesses of fact. Mr De Lacy QC rightly submits that the issue will or may well turn upon inferences to be drawn from documents, and, critically, evidence, including expert evidence, as to market practice. I cannot be at all certain that the provisional liquidators will in due course take the view that all the relevant evidence and submissions were made in relation to a case which is primarily theirs, but which is adopted by NCR, as an alternative case, in the Mainframe Litigation. Nor, for that matter, can I be certain that the present defence of HIH to NCR's claim will not be altered, whether by way of refinement or expansion, in due course.
51. Bearing in mind these and all other matters, including the advanced stage which the preparations for the Mainframe Litigation and the retrocession litigation have reached, and the view expressed by Moore-Bick J in his judgment on 10 April 2001 that the Mainframe Litigation and the Retrocession Litigation should all be tried at the same time, I conclude that it is right and fair, in this particular case, to permit the statutory stay on the claims by both GIO and NCR against HIH in the Retrocession Litigation to be lifted. The interrelationship between all the actions does not make it appropriate to grant leave solely in relation to NCR's claims against HIH. Indeed, I did not understand Mr Phillips QC to contend that would be an appropriate course to take.” 
25.	It appears that when delivering judgment orally the judge may not have included the word “real” in the sentence in paragraph 45 of the judgment where he said, according to the transcript, “it does not seem to me that this is a matter on which I can set any real weight”. However, nothing can turn on that.
26.	By their grounds of appeal the provisional liquidators contend primarily that the judge erred in law in failing to give any weight to the existence of other litigation to which HIH might be subjected. In the alternative, they contend that the judge was plainly wrong in exercising his discretion to lift the stay and that he should have concluded that the lifting of the stay was contrary to the interest of unsecured creditors and the orderly management of HIH's insolvent estate.
27.	In support of the provisional liquidators' primary ground of appeal, Mr William Trower QC submits that the judge misdirected himself in rejecting the submission that, given that one of the purposes of the stay is to protect the estate and the provisional liquidators from a multiplicity of time-consuming and expensive litigation, an important factor weighing against the lifting of the stay was the fact that HIH faced numerous other potential or actual pieces of litigation with the consequence that there was a risk that (as a result of a series of applications under section 130(2)) the estate would be simply overwhelmed by litigation costs and that the provisional liquidators would be diverted from performing other necessary tasks.
28.	He submits that the existence of other litigation (actual or potential) must be relevant to a determination of the extent to which it is right and fair that the company should be exposed to a particular piece of litigation, since (unlike courts in which a particular piece of litigation is proceeding) the Companies Court is concerned with the orderly administration of the insolvent estate as a whole. He further points to the potential effect of other litigation as a drain on the assets available to the provisional liquidators.
29.	Focusing on the judge's observations, in paragraph 45 of his judgment (which I quoted earlier) that “if it would otherwise be right to lift the stay in relation to the Retrocession Litigation, I cannot think that the fact that there is other pending or potential litigation, the precise facts of which are not before me, in relation to which an application might or might not be made under section 130(2), should lead to a different exercise of the court's discretion on the applications before me”, Mr Trower submits that the judge thereby misdirected himself. He submits that the potential impact on the insolvent estate of other litigation (actual or potential) is an integral part of the discretion exercise.
30.	Mr Trower further submits that if claims are determined outside the liquidation process there is a risk that creditors whose claims are determined within that process will be prejudiced, and that the judge erred in principle in failing to take proper account of that factor.
31.	Mr Trower stresses that the judge was shown paragraph 25 of Mr Riddell's witness statement (which I quoted earlier) - indeed the judge refers to it in paragraph 34 of his judgment - and he was also shown a judgment of this court on certain preliminary issues which had arisen in the Film Financing litigation referred to by Mr Riddell in order to demonstrate both the scope and complexity of that litigation. The judge was also referred to paragraph 40 of Mr Riddell's witness statement (which I quoted earlier) and was told that the number of claims to be considered by the HIH Group as a major insurer and reinsurer would run into tens of thousands. Given that the judge considered the matter to be finely balanced this error by the judge may, submits Mr Trower, have been crucial to his decision to lift the stay.
32.	In support of the provisional liquidators' alternative ground of appeal, namely that the decision which the judge reached was plainly wrong, Mr Trower submits, first, that the judge was right to be “very cautious before exposing the provisional liquidators to the burden of coping with difficult and time-consuming litigation”, and that that caution ought to have led him to decline to lift the stay. He stresses a number of factors which, as he submits, point clearly to such a conclusion.
33.	First, he points to the limited amounts of cash available to the provisional liquidators, the question marks over the extent to which they can be funded from Australia (I referred earlier to the alleged difficulties under Australian law), and the fact that unsecured creditors are likely to receive only a small dividend.
34.	Second, he submits that it is obviously undesirable that such assets as are available to the provisional liquidators should be drained away in unnecessary legal costs, which are likely, in the case of the Retrocession Litigation, to be very substantial indeed: possibly amounting to £3m.
35.	Third, he relies once again on the existence of other litigation (actual or potential) as a weighty factor in favour of leaving the stay in place.
36.	Fourth, he points out that whether HIH's assets are finally distributed under a scheme of arrangements promoted by the provisional liquidators or in their winding-up, there will in any event be a mechanism for resolving claims in an orderly way by the submission of proofs of debt.
37.	Turning to NCR's claim against HIH in the Retrocession Litigation, Mr Trower submits that the judge was wrong to place any substantial weight on the risk of inconsistent findings if all four actions were not heard at the same time. Mr Trower submits that the risk is remote and (as it is put in his written skeleton argument) “borders on the fanciful”. He submits that the risk can only arise if (a) NCR fails in its defence in the Mainframe Litigation on grounds other than the condition precedent issue, (b) NCR fails to recover fully against AON, (c) the provisional liquidators refuse to accept the findings of the Commercial Court and reject NCR's proof, and (d) the provisional liquidators fail to satisfy the Companies Court, on an appeal against the rejection, that the findings of the Commercial Court ought not to be followed. Mr Trower stresses that in practical terms the overwhelming likelihood must be that the provisional liquidators, as officers of the court, will accept the findings of the Commercial Court, even though those findings are not strictly binding on HIH.
38.	Mr Trower submits that there is nothing exceptional about a creditor of an insolvent company being placed in a worse position by reason of the insolvency. In any event, he submits that HIH's role in the Charman litigation is primarily evidential, and that the individual underwriter concerned, Mr Michael Payne (who, as it happens, is no longer employed by HIH), is available to be called as a witness by NCR. He tells us that the provisional liquidators have offered to use all reasonable endeavours to make Mr Payne available to NCR and/or GIO at the trial if required.
39.	Mr Trower further submits that unsecured creditors of HIH will suffer substantial prejudice if the stay is lifted. He submits that, given the shortage of available funds in the provisional liquidation, the provisional liquidators may well be faced with the choice of either defending the Retrocession Litigation (and thereby running the risk of very substantial costs orders being made against the company, all or part of which might fall to be treated as expenses of the provisional liquidation) or submitting to judgment (and thereby reducing still further the amount of any future dividend whilst at the same time giving NCR and/or GIO an advantage not open to proving creditors).
40.	Mr Trower submits that there is a real possibility that the potential cost exposure in the Retrocession Litigation may take up a major part of the available funds in England and possibly the entirety of the available funds.
41.	For all these reasons, Mr Trower submits that the judge's decision to lift the stay was plainly wrong.
42.	In his helpful written skeleton argument, Mr de Lacy, for NCR and GIO, submits (unsurprisingly, perhaps) that the judge fell into no error of principle, nor was his decision plainly wrong; and that accordingly there are no grounds upon which an appellate court can exercise the discretion afresh.
43.	As to paragraph 45 of the judge's judgment Mr de Lacy submits that the judge's observations in that paragraph are wholly unexceptionable. Given the absence of any detailed evidence as to the other claims faced by HIH, the judge was fully entitled to conclude that the existence of other claims was not a factor on which he should place any real weight. In the alternative, should that submission not be accepted, Mr de Lacy contends (by reference to respondent's notices served by both NCR and GIO) that had the judge attached real weight to that factor, the overall balance would still have lain in favour of lifting the stay.
44.	Referring to the Film Finance litigation, Mr de Lacy submits that there was no evidence before the judge that any other actual or potential claim was in any way comparable with the Charman litigation, or that any other claim had reached the same or a comparable stage of readiness for trial.
45.	Accordingly, submits Mr de Lacy the judge fell into no error of principle.
46.	Turning to the provisional liquidators' alternative ground of appeal, namely that the judge's decision was plainly wrong, Mr de Lacy submits, in summary, that there is no basis for any challenge to the judge's decision on that ground. In particular he submits that there is no basis for the submission that the risk of inconsistent findings in relation to the condition precedent issue is fanciful. He submits that the whole purpose of trying the four actions in the Charman litigation together is to ensure that the interlocking claims and defences are all determined together. He further submits that it is not to be assumed that there is no real risk of NCR failing in its claim against AON.
47.	As the authorities (and in particular re Aro Ltd) demonstrate, section 130(2) confers on the Companies Court a broad and unfettered discretion to do what is right and fair in the circumstances of the particular case. The judge in the instant case gave careful consideration to all the circumstances, as they appeared from the evidence before him, and concluded, “striking the balance” (to use his own words) that it was right and fair to lift the stay in relation to the Retrocession Litigation.
48.	It is, of course, common ground that this court can only interfere with the judge's exercise of his discretion if he erred in principle or if his decision was plainly wrong.
49.	I can detect no error of principle by the judge. So far as paragraph 45 of his judgment is concerned, the judge was, in my judgment, fully entitled to conclude, in the light of the evidence before him, that no real weight should attach to the existence of other claims. On other evidence, he might have taken a different view; but be was considering the evidence before him, and his conclusion on that evidence seems to me to be unassailable in this court.
50.	In reaching that conclusion the judge was clearly influenced by the fact that the Charman litigation involved interlocking facts, that the litigation was ready for trial, and by the imminence of the trial date. These were factors which the judge was fully entitled to take into account, attaching to them such weight as he saw fit.
51.	Nor can I see any substance in Mr Trower's alternative submission that the judge was plainly wrong. The fact that the decision might have gone either way is neither here nor there. It was for the judge to decide which way it should go, and that is what he did.
52.	As to Mr Trower's submission that the judge attached undue weight to what he would regard as the negligible risk of inconsistent findings, in my judgment it was a matter for the judge what weight he should attach to that factor. In my judgment he cannot be criticised for having regarded it as being of substantial weight, in the particular circumstances of the case as presented to him.
53.	Accordingly, I can, for my part, see no basis for interfering with the judge's decision.
54.	At this point, however, I must turn to an additional matter which arose in the course of Mr Trower's submissions this morning. After taking instructions Mr Trower informed us that if the appeal were otherwise to be dismissed the provisional liquidators would submit to a direction by this court to be bound by all findings of fact in the Charman litigation. He submitted that if such a direction were given, the risk of inconsistent findings (assuming the Retrocession Litigation were to be stayed) would be even more remote, and that on that basis the appeal should be allowed. In my judgment, however, it would not be appropriate for this court to make such a direction. The provisional liquidators had a choice as to the extent of the part (if any) which HIH should play in the Charman litigation, and, as is common ground, they have full powers of compromise. Essentially the choice is a commercial one which the provisional liquidators are well placed to make. It is open to them to decide that HIH should take no part in the litigation and simply be bound by the findings which the Commercial Court makes (assuming a trial takes place), just as it is open to them at the other extreme to decide that HIH should play a full part in defending the claims and in supporting NCR on the condition precedent issue.
55.	In the circumstances I can, for my part, see no satisfactory grounds for directing the provisional liquidators as in effect a condition of allowing the appeal as to the choice which they should make in this respect.
56.	I would accordingly dismiss this appeal.
57.	LORD JUSTICE MAY: I agree.
58.	LORD JUSTICE SCHIEMANN: I also agree.
(Appeals dismissed with costs; such costs to be assessed or agreed; appellants' costs to be expenses in the provisional liquidation).