Global Knafaim Leasing Ltd v Civil Aviation Authority Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 11 June 2010 |
| Neutral Citation | [2010] EWHC 1348 (Admin) |
| Date | 11 June 2010 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/12012/2008 |
[2010] EWHC 1348 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Before: Mr Justice Collins
Case No: CO/12012/2008
Mr Rhodri Thompson, Q.C., Mr Tom Hickman & Mr Nicholas Gibson (instructed by Norton Rose LLP) for the Claimants
The Hon. Michael Beloff, Q.C. & Ms Victoria Windle (instructed by the CAA) for the 1 st Defendant & the 2 nd & 3 rd Interested Parties
Mr David Anderson, Q.C. & Mr Tim Ward (instructed by Herbert Smith LLP) for the 2 nd Defendant
Mr Rabinder Singh, Q.C. & Mr Sam Grodzinski (instructed by Reed Smith LLP) for the 1 st Interested Party
Mr Martin Chamberlain & Ms Margaret Gray (instructed by The Treasury Solicitor) for the 4 th Interested party
Hearing dates: 6–7, 10–13 May 2010
Mr Justice Collins:
The claimants are owners and lessors of aircraft. One of their aircraft was leased to a Canadian airline, Zoom Inc. The lease was originally to run from 31 March 2007 until 30 November 2009 but was extended to 31 May 201Unfortunately, Zoom got into financial difficulties and at the end of August 2008 was compelled to seek insolvency protection in Canada. It has since gone into liquidation and the assets available for its creditors are minimal. On 28 August 2008, the aircraft leased by the claimants to Zoom was detained at Glasgow Airport following Zoom's failure to pay airport charges due to BAA and what are known as route charges, that is to say charges which enable the first, second and third interested parties to carry out their functions to ensure safety in the air over Europe. In order to free their aircraft from detention, the claimants had to discharge not only the unpaid amounts attributable to their aircraft but also charges incurred by the other aircraft in Zoom's fleet in which they had no interest at all. Indeed, those other aircraft were leased to Zoom by other lessors who, as it happens, were in a more substantial way of business than the claimants. The extension of the charges beyond their aircraft, known as the fleet lien is, they contend, unfair and so unlawful. While permitted by domestic law, it is said to contravene Article 1 of the First Protocol (AIPI) to the European Convention on Human Rights (ECHR) and directly effective provisions of EU law. In addition, against BAA it is said to be unenforceable because it is anti-competitive.
As is apparent from the length of the hearing, the claim is complicated. I was presented with some nine files of authorities (about 140 in all) which, somewhat bizarrely, commenced with a case decided in 1688. As originally presented in the amended claim form, it challenged the lawfulness of the fleet lien power. In the claimants' skeleton arguments, this was narrowed to a challenge to the power insofar as it extended to the requirement that owners such as the claimants should discharge the debts incurred by aircraft in which they had no interest. It was contended that this power rendered the legislation incompatible with the ECHR. In the course of argument, this was further narrowed to the submission that the exercise of the power against owners such as the claimants was disproportionate when, because of the inability of the operator (in this case Zoom) to indemnify the owner, that owner had to pay sums which could be very substantial. In this case, they amount to nearly $US 2,000,000. It is said by all parties that this is a very important case since it concerns the funding of those bodies responsible for safety in the air over Europe and who provide facilities to enable aircraft to land, take off and be serviced at airports.
Not only is there an over-abundance of authorities but also of evidence, much of which for reasons which will become apparent I do not find it necessary to deal with in any detail. No expense has been spared in dealing with this claim and I have had the advantage of a 'live-note' record which has enabled me to review the submissions made. The skeleton arguments ran in total to over 300 pages. I shall, I trust, consider in this judgment the main points which seem to me to be material, but points which were shown to be peripheral in the course of argument or to have no real validity I shall not dwell on. A failure to refer to them in any detail does not mean they have not been taken into account.
I should identify the various parties and their roles in more detail. The first claimant (GKL) is an aircraft leasing company incorporated in Israel in 2002. Mr Sidney Slasky, who has made statements on its behalf in these proceedings, is its president and chief executive officer. It generally does business through companies it sets up and wholly owns which own a single aircraft. In this case, the aircraft in question was owned and leased to Zoom by the second claimant, CGTSN. But it is common ground that GKL has borne the financial burden. Thus, although the lease was between CGTSN and Zoom, I shall refer to the claimants as in effect one entity for the purposes of this judgment. The claimants as at December 2008 owned some 19 aircraft of which 18 were leased to seven different airlines, usually in North America. Their turnover for 2007 was some $30.2 million.
The Civil Aviation Authority (CAA) is a public corporation established by Parliament in 1972 as the U.K.'s independent specialist aviation regulator and provider of air traffic services. Its costs are met by charges on those whom it regulates. The third interested party (NATS (Services) Limited (NSL)) provides traffic services in relation to taking off and landing at most of the U.K.'s major international airports, including Glasgow. NATS charges the individual airports which in turn recover their costs from the operators through landing fees. The second interested party NATS (En Route) Plc (NERL) levies a charge on aircraft operators for all aircraft arriving at Heathrow, Gatwick and Stansted and for aircraft operating within what is called the Shanwick Oceanic Control Area which lies approximately within 45 to 61° North and 8 to 30° West. The services provided by NSL and NERL are essential to ensure the safe and expeditious movement of aircraft.
Eurocontrol is the title of the European Organisation for the Safety of Air Navigation. It came into being as a result of an international convention relating to co-operation for the safety of Air Navigation known as the Brussels Convention 1960. The original contracting parties were the U.K., Germany, Belgium, France, Luxembourg and the Netherlands and its provisions came into force on 1 March 1963. It has since been revised in 1981 and 1997 and now has 38 Member States, including most who are part of what has been called the Single European Sky. The EU itself is party to the Convention following a protocol signed on 8 October 2002. It is to be noted that each of Eurocontrol's member states is a member of the Council of Europe and thus subscribes to the ECHR.
Route charges imposed by Eurocontrol cover air traffic management over Europe. As must be obvious, it is vitally important that in a crowded airspace measures are in force to ensure that aircraft can fly in safety and without delays. The volume of traffic and the transitions between the various national air traffic control centres mean that the provision of a safe, efficient and economic service and management of Europe's airspace is very complex and so the costs of such management are high. While the collection of route charges is the responsibility of Eurocontrol, enforcement in the case of non-payment has to be taken through the procedures applicable in the relevant Member State which are made available to Eurocontrol. In the case of the U.K., enforcement is achieved through the CAA and includes the power to detain aircraft whose operators have not paid the route charges to Eurocontrol. Such detention will not take place unless the Member States and subsequently the Director General of Eurocontrol gives his approval.
I have referred to the complexity of the management of the airspace. This means that it is very expensive to run the system and in 2008 Eurocontrol billed no less than ?6,575,505,775 through route charges. According to evidence from Mr Heerbaart, the Director of the Central Route Charges Office (CRCO) of Eurocontrol, which has the responsibility within Eurocontrol inter alia to collect and enforce against non-payment of route charges, prior to the ability to use the fleet detention powers available in the U.K., the recovery rate was 96%. By 2008, it had risen to 99.8%. As will be clear from the figures I have identified, even 1% amounts to a very substantial sum indeed of over €60 million. Thus high rates of recovery are essential to avoid substantial amounts falling on the users of the system and ultimately on the travelling public. And the finances of Eurocontrol must be maintained at the necessary level to ensure safety at all times.
BAA owns and operates a number of commercial airports in the U.K. These were at the material time Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh and Aberdeen. Since then Gatwick has been sold. It provides infrastructure and facilities to operators whom, in its conditions of use, it defines as the persons for the time being having management of...
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...party caught up in the failings of others are referred to in R(Global Knafaim Leasing Ltd and CGTSN Ltd) v Civil Aviation Authority [2010] EWHC (Admin) 1348, Collins J. This rather striking case concerned statutory fleet lien powers. An aircraft leasing company, and the owner of a specific......