Lombard North Central Plc v European Skyjets Ltd ((in Liquidation))

JurisdictionEngland & Wales
JudgeMr Justice Freedman
Judgment Date20 March 2020
Neutral Citation[2020] EWHC 679 (QB)
Date20 March 2020
Docket NumberCase No: HQ13X05885
CourtQueen's Bench Division
Lombard North Central Plc
(1) European Skyjets Limited (in liquidation)
First Defendant/Appellant
(2) Stephen Westlake (discontinued)
Second Defendant

[2020] EWHC 679 (QB)


Mr Justice Freedman

Case No: HQ13X05885



Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Philip Coppel QC and Ms Saima Hanif (instructed by Ballinger Law Limited) for the First Defendant/Appellant

Ms Charlotte Eborall (instructed by Addleshaw Goddard LLP) for the Claimant/Respondent

Hearing dates: 21 and 22 January 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Freedman



Paragraph number



(a) Terms of Loan Agreement


(b) Performance under the Loan Agreement


(c) The proceedings


(d) Restoration of two companies


Judgment of Deputy Master Leslie


Ground 1: The Defence did have a real prospect of success


(a) Lombard's submissions


(b) SkyJets' submissions


(c) Discussion




Ground 2: Reliance on alternative events of default not mentioned in the Notice of Termination


(a) Historic breaches


(b) Maintenance agreement default


(c) Asset cover percentage


Ground 3: Some other ground to set aside default judgment


Ground 4: Delay


Ground 5: Effect of dismissal of summary judgment against Mr Westlake






This is an appeal from a decision of Deputy Master Leslie who on 5 July 2019 refused an application on behalf of European SkyJets Limited (“SkyJets”) to set aside a default judgment. He concluded that a notice of termination in respect of a long-term lending contract was valid, and that, in any event, the delay of SkyJets in seeking to set aside the default judgment was so long that the Court should not set aside the default judgment.


Lombard North Central PLC (“Lombard”) is in the business of providing credit finance by way of instalment credit, loans and leasing. It is a subsidiary of the Royal Bank of Scotland plc (“RBS”). SkyJets was a private limited company incorporated on 30 April 2007. SkyJets was a special purpose vehicle formed to acquire and maintain two Learjet aircraft for executive charter. SkyJets was struck off the register on 9 December 2014. It was subsequently restored to the Register of Companies on 28 February 2017 pursuant to a court order dated 9 January 2017. European Skytime Limited (“Skytime”), the intended Second Part 20 Claimant was at all material times the parent company and 100% owner of SkyJets. Skytime operated the executive charter business by using the two Learjets owned by SkyJets. Skytime was dissolved on 17 March 2014 and was restored to the register on 23 August 2016.


The proceedings arise from a loan agreement (“the Loan Agreement”) made between Lombard and SkyJets, dated 23 October 2008, pursuant to which Lombard advanced the sum of US$8,771,250 to SkyJets by way of a loan (“the Loan”). The Loan Agreement was in a standard form drafted by Lombard. The purpose of the Loan was to enable SkyJets to acquire one of the two aircraft, a Learjet (“the Aircraft”). The loan was repayable by monthly instalments, each one comprising capital and interest repayments.


The Loan Agreement was secured by a Mortgage over the sole Learjet aircraft, the purchase of which it financed, and a personal guarantee and indemnity from Mr Westlake.

(a) Terms of the Loan Agreement


The base rate of interest was specified in the Loan Details as “1-month RBS US Dollar LIBOR” and was defined in Clause 1.1.1 such that SkyJets' case is that only Lombard could ascertain it. Accordingly, the interest payable fell to be calculated by Lombard or its parent company RBS.


Clause 4 of the Loan Agreement set out the express terms for repayment of the Loan, as follows:

i) SkyJets was required to repay the Loan and interest on the Loan by “Instalments” (see paragraph ii) below) in the amounts and on the “Payment Dates”, which were monthly, specified in the Loan Repayment Details until the Loan was repaid in full (clause 4.1.1).

ii) The Loan Repayment Details provided that, assuming the rate of interest was 5.75% and that there were 120 instalments, the amount of each monthly “Instalment” would be US$96,300.55.

iii) As clause 4.1.2 noted, the assumed number of Instalments may increase or decrease depending upon the “Applicable Interest Rate”. Further, pursuant to clause 6.5.3, the Instalments would be reviewed annually and possibly adjusted to reflect past and anticipated movements in RBS US Dollar LIBOR to ensure that the Loan was repaid within the estimated period (of ten years).

iv) The “Applicable Interest Rate” was, pursuant to clause 1.1.1 the higher of the “Base Rate” and the “Minimum Base Rate”, the Base Rate being at the (variable) 1-month RBS US Dollar LIBOR rate.

v) Under clause 4.2.1, interest accrued from day to day on the outstanding balance of the Loan during each “Interest Period” defined at definitions at clause 1.1.1 which referred to clause 5.3.1 at a rate equal to the sum of the fixed 2.00% “Add-on Percentage” and the “Applicable Interest Rate”.

vi) Pursuant both to clauses 4.3 and 22, time was of the essence for all payments due from SkyJets and as regards the times and dates referred to in the Loan Agreement.


The following were also express terms of the Loan Agreement:

i) Under clause 5, in the event that SkyJets failed to pay any sum due under the Loan Agreement, Lombard was entitled to charge “Default Interest” at a rate of the “Applicable Interest Rate” plus 5.00%.

ii) Pursuant to clause 5.2.2 of the Loan Agreement, the statement of Lombard as to the rate or amount of interest payable was ‘conclusive’.

iii) Clause 6.5 granted Lombard the right to call upon SkyJets to pay increased Instalments; to prepay part of the balance of the Loan; or place an amount on deposit should the “Asset Cover Percentage” fall below 133% (this was arrived at by dividing the value of the Aircraft by the balance of the Loan and expressed as a percentage).


Clause 9 (and clause 13) of the Loan Agreement provided, inter alia, as follows:

9. Events of default

9.1 Defaults

There shall be default if:

(a) [SkyJets]…defaults in the payment of principal or interest or any other sum payable under any Transaction Document [which included the Loan Agreement and the Mortgage (and guarantee)] or fails to insure or maintain the Aircraft in accordance with the requirements of the Aircraft Mortgage or is in breach of any of its obligations under any Transaction Document;

(o) any representation, warranty or statement made to [Lombard] by [SkyJets, Skytime or Mr Westlake] in or connection with any Transaction Document proves to have been incorrect in any material respect when made (or deemed made) or if repeated at any time by reference to the facts or circumstances subsisting at that time, would no longer be true and correct in all material respects;

(p) in the opinion of [Lombard], a material adverse change occurs in the business, assets, conditions, operations or prospects of [SkyJets, Skytime or Mr Westlake]

9.2 Acceleration

At any time after the occurrence of an Event of Default [Lombard] may by notice to [SkyJets]:

(a) cancel the Facility and require [SkyJets] immediately to repay the Loan together with accrued interest and all other sums payable under this Agreement or any other Transaction Document, whereupon the same shall become immediately due and payable…

Upon the service of any such notice [Lombard's] obligations under this Agreement shall be terminated.”

13. Demand or notice

Any demand or notice on [SkyJets] under this Agreement or any other Transaction Document shall be made in writing signed by an officer of [Lombard] and served either by personal delivery on any officer of [SkyJets] at any place or by post or by hand delivery addressed to its registered office…”


It will be noted that there was no provision for a notice to remedy provision. A default notice had the effect set out in it without forewarning to or consent of SkyJets as the borrower. In the event of breach, Lombard was given an entitlement to have immediate recourse to the underlying security and all the powers (including sale of the borrower's assets). The Appellant's skeleton argument summarised the position at paragraph 20 as follows:

“SkyJets, as borrower, was afforded no period of grace to rectify or otherwise remedy the breach, regardless of the scale of the breach, regardless of the period of breach, regardless when the breach had occurred and later been remedied, regardless of the cause of default (e.g. misrepresentation by the bank) and regardless of the consequences.”


Under Clause 20, it was provided under the heading “non-waiver”:

“No failure by the Lender to exercise and no delay by the Lender in exercising any right, power or privilege under this Agreement or any other Transaction Document shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.”

(b) Performance under the Loan Agreement


From 30 November 2009, SkyJets began to fall into arrears. SkyJets' own Annexure 4 to the proposed Defence and Counterclaim shows that repayments were neither monthly nor in the amount of the Instalment (as...

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