Gama Aviation (UK) Ltd v Taleveras Petroleum Trading DMCC
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Dame Elizabeth Gloster DBE,Lord Justice Hamblen |
| Judgment Date | 07 February 2019 |
| Neutral Citation | [2019] EWCA Civ 119 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A4/2018/2861 |
| Date | 07 February 2019 |
[2019] EWCA Civ 119
Lord Justice Hamblen
Lord Justice Males
and
Dame Elizabeth Gloster
Case No: A4/2018/2861
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BUSINESS & PROPERTY COURTS
OF ENGLAND & WALES
LONDON CIRCUIT COMMERCIAL COURT
MR RICHARD SALTER QC
[2018] EWHC 3090 (Comm)
Royal Courts of Justice
Strand, London, WC2A 2LL
Claudia Wilmot-Smith (instructed by MFB Solicitors) for the Appellant – written submissions only
Tim Marland and Emily McWilliams (instructed by Norton Rose Fulbright LLP) for the Respondent
Hearing date: 22 January 2019
Approved Judgment
Introduction
This is an appeal by the defendant against an order made by Mr Richard Salter QC sitting as a Deputy High Court Judge in the London Circuit Commercial Court whereby he adjourned an application by the claimant for summary judgment on terms that if the defendant provided security for the claim in the sum of £1 million, the defendant would have permission to rely in response to the application on a witness statement served only a few days before the hearing, but that if the defendant failed to provide security within the time specified, judgment would be entered against it for the full sum claimed together with interest and costs.
The defendant did not provide the security and asserts that it is unable to do so. It contends on appeal that the judge was wrong to make the provision of such security a condition of its being entitled to rely on the witness statement and, in any event, that the sanction of judgment being entered against it in the event of failure to comply was disproportionate. It points out that the effect of the order was that if the security was not provided, judgment would be entered against it without any consideration of the merits of the claim so that it would be worse off than if the judge had refused to admit the witness statement and gone on to deal with the summary judgment application, leaving the defendant to make such submissions as it could in response to the claim without the benefit of that evidence.
There are, therefore, two broad issues for decision:
(1) Was the judge wrong to make the provision of security a condition for admitting the witness statement?
(2) Was the judge wrong to order that judgment would be entered against the defendant if the security was not provided?
If the judge was wrong in one or both of these respects it will be necessary to consider what order should now be made.
The defendant's solicitors applied to come off the record very shortly before the hearing of the appeal and that application was granted. As a result, the defendant was unrepresented at the hearing, although Mr Alex School the defendant's Senior Legal Manager attended. He requested an adjournment of the hearing in order to enable the defendant to engage solicitors. However, we decided that the hearing should proceed. We had the benefit of a detailed written skeleton argument prepared by the defendant's counsel which developed the submissions outlined above. We heard oral submissions from the claimant's counsel.
Background
The claimant (Gama Aviation (UK) Ltd, a company incorporated in England and the respondent to the appeal) provides aircraft management services. The defendant (Taleveras Petroleum Trading DMCC, a Dubai company and the appellant) was the lessee of a Bombardier Global 5000 aircraft.
On 1 March 2016 the parties entered into an Aircraft Management Agreement by which the claimant agreed to provide management services to the defendant in connection with the entry into service and the subsequent management and operation of the aircraft. The defendant agreed to pay monthly management fees totalling US $23,500 together with various other fees for the provision of personnel and to reimburse the claimant for costs and expenses incurred by it. The services which the claimant agreed to provide included predelivery services such as assisting with the certification and registration of the aircraft and reviewing maintenance records to ensure compliance with all necessary regulations, preparation of the aircraft for entry into service including supervision of refurbishment work and the provision of equipment and crew, and management services for maintenance and operation including the provision of flight crew and administrative personnel.
It is the claimant's case, not accepted by the defendant, that the parties agreed a monthly figure of US $60,000 for the provision of personnel.
In the event the period during which the claimant provided services was short lived. The claimant's case is that the aircraft entered into service on 14 March 2016, that being the date of a flight from the United States to the United Kingdom which appears to have been the only flight which the aircraft made during the period when the Agreement was in force. The defendant, however, maintains that this was merely a repositioning flight as the aircraft had been delivered at an airport in the United States and needed to be flown to this country where it was to be based, and that this did not amount to entry into service under the Agreement. The defendant accepts that the aircraft did eventually enter into service and that management fees became payable, but does not accept that this occurred before 12 April 2016, which was six weeks from the date of the Agreement.
On 13 June 2016 the claimant received a copy of a Grounding Notice served by Credit Suisse on the owner of the aircraft. Subsequently, on 23 December 2016, Credit Suisse served a Repossession and Grounding Notice on the owner of the aircraft which had the effect of formally terminating the Agreement. Thus the Agreement was in force for a period of just under 10 months, the aircraft was in service for two or three months depending on the status of the initial and (as it appears) only flight, and the aircraft was grounded for some six months before termination of the Agreement.
The claimant's case is that during the period of the Agreement it earned management fees and is entitled to be reimbursed for costs and expenses incurred in the total sum of US $1,967,977.05 but has received only US $567,638.70. Thus its claim is for the sum of US $1,400,338.35 alleged to be due under the Agreement. It says that it invoiced the defendant from time to time and provided detailed supporting documents and that there was never any challenge to its entitlement to payment. The invoices were simply ignored.
The defendant admits that the claimant is entitled to management fees during the period when the aircraft was in service which it says was from a date not before 12 April 2016 until receipt of the Grounding notice on 13 June 2016, together with such costs and expenses as were actually incurred and paid by the claimant during this period. However, it does not accept that the total amount to which the claimant is entitled exceeds the payments which it has received.
Procedural history
A letter before action dated 22 December 2018 was sent by the claimant's solicitors to the defendant demanding payment of the sum claimed. The claimant's evidence is that it was copied to Mr Igho Sanomi, a director of the defendant and the moving spirit behind the Taleveras group of companies. There was no response.
The claim form in this action was issued on 16 March 2018. It was served on a service agent in London nominated in the Agreement, with service deemed to have taken place on 27 March 2018. The claimant's evidence is that the claim form and Particulars of Claim were also emailed to Mr Sanomi.
The defendant did not acknowledge service by the due date, 10 April 2018, but the claimant's evidence is that the proceedings came to the attention of the defendant and were discussed between the Chief Executive Officer of the claimant's group and Mr Sanomi at the end of April 2018.
On 6 July 2018 the claimant issued an application for summary judgment which was served on the defendant on 24 July, with a hearing listed for 30 July. The claimant did not enter a default judgment, which it would have been entitled to do, presumably because such a judgment may have been difficult to enforce. Instead it sought summary judgment, an application for which the claimant needed permission pursuant to CPR 24.4(1) because the defendant had not filed an acknowledgement of service.
At that stage the defendant instructed solicitors who sought an adjournment of the hearing. The hearing was adjourned by consent. On 2 August 2018 the defendant acknowledged service but it did not serve any Defence. As the claimant had applied for summary judgment, it was not required to do so: CPR 24.4(2).
In due course the application for summary judgment was re-fixed for Friday 2 November 2018. The defendant's evidence should have been served by 7 August 2018, but its solicitors requested an extension until 17 September. That was not agreed, but the defendant took no steps to seek an extension from the court.
On 9 October 2018 the claimant's solicitors pointed out that the defendant had failed to serve a Defence or evidence in response to the summary judgment application and invited the defendant to consent to the application. There was no response.
Eventually, on 29 October 2018, i.e. on the Monday before the hearing on the Friday, the defendant issued and served an application to be permitted to rely on a witness statement of Mr Alex School, the Senior Legal Manager of the defendant. Much of the witness statement consisted of submission, contending that the claimant had not sufficiently established that it was entitled to reimbursement of expenses which it claimed to have incurred and which represented the greater part of the claim. However, it also made two factual...
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