Tandrin Aviation Holdings Ltd v Aero Toy Store LLC and Another
| Jurisdiction | England & Wales |
| Judgment Date | 19 January 2010 |
| Neutral Citation | [2010] EWHC 40 (Comm) |
| Docket Number | Case No: CLAIM NO. 2009 / FOLIO 206 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 January 2010 |
[2010] EWHC 40 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before: Mr Justice Hamblen
Case No: CLAIM NO. 2009 / FOLIO 206
Mr Michael McLaren QC (instructed by DWF LLP) for the Claimant
(No Appearance for the Defendant)
Hearing dates: January 15 th 2010
Introduction
The Claimant (“Tandrin”) applies for:
a. summary judgment against the First Defendant (“ATS”) pursuant to CPR Pt.24;
b. (alternatively) an order striking out ATS's Defence pursuant to CPR 3.4(2)(a);
c. an order that ATS make an interim payment pursuant to CPR 25.6;
d. judgment against the Second Defendant (“D2”) in default of acknowledgement of service, pursuant to CPR pt.12 and/or 23; and
e. costs.
ATS have not appeared to dispute the application. On Monday 11 th January 2010 ATS's solicitors sent to Tandrin's solicitors a letter stating:
a. that ATS disagrees that the English court is the appropriate forum;
b. that ATS “vigorously disputes the Claim and [Tandrin's] applications”;
c. that ATS has attempted to resolve the claims without success; and
d. that ATS has instructed its solicitors [and counsel] not to attend the hearing and that it does not wish to be represented at it.
ATS had previously unsuccessfully sought to challenge the jurisdiction of the Court and adduced evidence in support of that application. The only evidence served specifically for the purpose of the present applications is Mr. Irvine's 2 nd statement and 3 rd statement on behalf of Tandrin. However, parts of the statements served for the jurisdictional challenge also have some relevance. Given the absence of ATS, I have read that evidence and in particular in addition to the Defence I have read:
a. 1 st statement of Mr. Irvine (on behalf of Claimant) dated 11 th February 2009.
b. 1 st statement of Mr. Lederman (on behalf of the First Defendant) dated 7 th April 2009.
c. 1 st statement of Mr. Kirk (on behalf of the First Defendant) dated 7 th April 2009.
d. 1 st statement of Mr. Laggan (on behalf of the First Defendant) dated 2 nd June 2009.
e. Skeleton argument served on behalf of the First Defendant for the hearing on 4 th June 2009.
f. 2 nd statement of Mr. Irvine (on behalf of Claimant) dated 6 th October 2009.
g. 3 rd statement of Mr. Irvine (on behalf of Claimant) dated 11 th January 2010.
Factual background
This action concerns the sale by Tandrin to ATS of a new Bombardier executive jet aircraft (“the Aircraft”) for US $31.75m. Pursuant to the Aircraft Sale Agreement (“the Agreement”) ATS paid a US $3m deposit (“the Deposit”) to D2 as escrow agent. Both the Deposit and the balance of the purchase price were due to be paid to Tandrin on delivery of the Aircraft. Once the Aircraft had been manufactured, Tandrin completed its purchase of the Aircraft from the original vendor (JetCoast 6051 LLC), paid a total of about US $26.5m for the Aircraft and took delivery of it. However, ATS failed to participate in the pre-delivery contractual procedures and in alleged breach of contract failed to accept Tandrin's tendered delivery of the Aircraft on about 16 th January 2009 or pay the balance of the purchase price. Ultimately, after expiry of the “cure period”, on about 9 th February 2009, Tandrin purported to exercise its contractual right to terminate the Agreement on the grounds of ATS's alleged breach, the consequence of which was (according to the Agreement) that the Deposit became payable to Tandrin as liquidated damages for the breach. However, in further alleged breach of contract (viz. cl.7.4.2 of the Agreement), ATS then failed to instruct D2 to pay the deposit to Tandrin.
Tandrin's evidence is that it is very heavily out of pocket; it has had to pay JetCoast for the new Aircraft, which it was ultimately forced to sell on for only US $24m, i.e. at a significant loss. One year later Tandrin has yet to receive a cent from ATS, yet has had to bear entirely out of its own resources the substantial costs of financing not only the purchase price from JetCoast but also the shortfall after the resale of the Aircraft.
The most relevant terms of the Agreement are as follows:
a. Deposit (to be held in escrow and non-refundable save in certain circumstances): clauses 2.2 – 2.3.
b. Pre-closing and closing obligations: clauses 4.2 – 4.3.
c. Purchaser's default (including liquidated damages clause etc.); cl.7.4.2.
d. Force Majeure clause; cl.7.17.
Clause 7.4.2 provided as follows:
“ Purchaser's Default. In the event Purchaser fails to accept delivery of the Aircraft and pay the Purchase Price to Seller in violation of the terms and conditions of this Agreement, and provided Seller is not then in breach or default in timely performing its written obligations hereunder, Seller shall have the right, after ten (10) Business Days’ prior written notice from Seller of such breach or default and Purchaser's failure to cure (or commence curing) the same with such 10-day period, to terminate this Agreement by written notice to Purchaser and the Escrow Agent. If Seller elects to terminate this Agreement pursuant to this Section 7.4.2, the Escrow Agent shall pay the Deposit to Seller as liquidated damages (and Seller and Purchaser shall promptly give written instructions to the Escrow Agent to that effect), and this Agreement shall be of no further force or effect. Seller acknowledges and represents that the liquidated damages amount provided for in this Section 7.4.2 is a reasonable estimate of the damages that would be incurred by Seller in the event Purchaser defaults on Purchaser's obligations under this Agreement. Seller's right to receive the Deposit as liquidated damages, shall be cumulative and not alternative, and shall be the sole remedy available to Seller in the event Purchaser defaults on Purchaser's obligations under this Agreement (other than a default under this Article 7.4.2); and Seller waives any other remedies that may be available to Seller, at law or in equity, as a consequence thereof.”
Clause 7.17 provided as follows:
“Force Majeure. Neither party shall be liable to the other as a result of any failure of, or delay in the performance of, its obligations hereunder, for the period that such failure or delay is due to: Acts of God or the public enemy; war, insurrection or riots; fires; governmental actions; strikes or labor disputes; inability to obtain aircraft materials, accessories, equipment or parts from vendors; or any other cause beyond Seller's reasonable control. Upon the occurrence of any such event, the time required for performance by such party of its obligations arising under this Agreement, shall be extended by a period equal to the duration of such event.”
Procedural History
On 16 th February 2009 Tandrin issued an Application for permission to serve proceedings out of the jurisdiction on ATS and D2.
The Claim Form (with attached Particulars of Claim) was issued on 16 th February 2009.
On 18 th February 2009 an Order was made by Mrs. Justice Gloster (without hearing the parties) granting permission for service out of the jurisdiction. Service was duly effected in compliance with that Order.
D2 did not acknowledge service and has played no part in the English proceedings. However, ATS acknowledged service on 25 th March 2009, and on 8 th April 2009 issued a Notice of Application to set aside the Order of Gloster J. on the grounds that England was not the appropriate jurisdiction.
On 4 th June 2009 the application was argued before Mr. Justice Field, who made an Order dismissing the application with costs. Leave to appeal was refused by Field J.; and (so far as Tandrin is aware) no further application for leave to appeal was made to the Court of Appeal.
On 26 th June 2009 ATS served a fresh Acknowledgement of Service, and on or soon after 30 th July 2009 served its Defence.
On 19 th October 2009 Tandrin issued its Application Notice for the relief sought on this hearing, supported by Mr. Irvine's 2 nd statement and 3 rd statement. As noted above, no evidence in response has been served by ATS.
Part 24 application
The Particulars of Claim claims the following relief against ATS:
a. Prayer paragraph (1): declarations in relation to the termination of the Agreement and the payment of the Deposit.
b. Prayer paragraph (2): an order that ATS do forthwith give instructions to D2 for payment of the deposit to Tandrin.
c. Prayer paragraph (3): damages, being those flowing from the delay in ATS giving instructions for the release of the Deposit (see para 16 of the Particulars of Claim).
d. Prayer paragraphs (4)-(5): interest and further or other relief.
Tandrin has hitherto not sought from ATS damages in the sum of US $3m. It says that this is for consistency with the regime in cl.7.4.2 of the Agreement and lest to do so might cause further difficulty in recovering the deposit from D2.
On this Part 24 application for summary judgment, Tandrin seeks as against ATS:
a. the declarations as prayed;
b. an order that ATS give the necessary instructions for the release of the deposit, as prayed;
c. judgment on the claim for damages to be assessed, with an order for the payment of an interim amount of damages (the final amount of damages may vary according to whether or when ATS gives instructions to D2 for the release of the Deposit);
d. costs.
Tandrin's case against ATS
In support of its application Tandrin has referred me to a number of underlying documents, and in particular:
a. The Agreement.
b. Documents evidencing receipt of the deposit by D2 and D2's statement as to how it proposed to deal with the deposit.
c. The attendance note of a telephone conversation on 12 th November...
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