Wallis Trading Inc. v Air Tanzania Company Ltd (a company incorporated under the laws of Tanzania)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 21 February 2020 |
| Neutral Citation | [2020] EWHC 339 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000227 |
| Date | 21 February 2020 |
[2020] EWHC 339 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Butcher
Case No: CL-2017-000227
Philip Shepherd QC and Bajul Shah (instructed by Thomas Miller Law) for the Claimant
Prof Adelardus Kilangi, Gabriel Malata, and Mussa Mbura for the Defendants
Hearing dates: 2, 4, 5, 9–12, 16 December 2019
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.
This is a claim by Wallis Trading Inc. (to which I will refer as ‘Wallis’), a Liberian company which carried on the business of acquiring and leasing aircraft, against Air Tanzania Company Ltd (‘ATCL’) and the Government of the United Republic of Tanzania (‘the Government’) (and collectively ‘the Defendants’) in respect of sums which Wallis says are due to it from the Defendants arising out of a lease of an aircraft by Wallis to ATCL.
Wallis's primary case is that it is owed a sum of US$30,114,230.73, plus contractual or statutory interest, as a debt pursuant to a settlement agreement dated 4 October 2013 between it and the Defendants. That settlement agreement, it claims, compromised and settled the Defendants' liabilities arising out of an aircraft operating lease made between Wallis as lessor and ATCL as lessee dated 9 October 2007 and a guarantee dated 2 April 2008 by which the Government guaranteed the obligations of ATCL under the lease.
Procedural History and Representation
It is necessary, at the outset, to say something about the procedural history of this matter.
The Claim Form in these proceedings was issued in April 2017. Case Management Conferences were held in November 2018 and July 2019. An Amended Defence and Counterclaim was served on behalf of the Defendants on 26 July 2019, and in September 2019 witness statements were exchanged, and subsequently expert reports served.
In October 2019, Wallis made an application for specific disclosure of ATCL's Board minutes and Board papers for the period 2007 to 2014. On 13 November 2019 ATCL disclosed 16 Board minutes.
A Pre Trial Review was conducted on 15 November 2019 in preparation for the trial which was due to commence on 2 December 2019. At that stage the Defendants were represented by English solicitors and by both leading and junior counsel. On 25 November, however, Wallis's representatives learned that counsel previously instructed on behalf of the Defendants were no longer instructed, and also that the Court had permitted the Defendants' solicitors to come off the record.
An application was made in writing by the Attorney General of Tanzania, and also orally on 2 December 2019 by Mr Mussa Mbura, who is a state attorney seconded to the Tanzanian High Commission, for the trial to be adjourned for at least four months. This was opposed by Wallis and on 2 December 2019 I refused to adjourn the trial, for reasons I gave at the time. The Defendants sought, in the light of this, that they should be permitted to be represented at the trial by the Attorney General of Tanzania, and that the start of the trial should be put back to allow him to appear. In the unusual circumstances of this case I acceded to both of these applications. The result has been that the Defendants have been represented by the Attorney General of Tanzania, Prof. Adelardus Kilangi, together with Mr Gabriel Malata, the Deputy Solicitor General of Tanzania and Mr Mussa Mbura. Wallis has been represented by Mr Philip Shepherd QC and Mr Bajul Shah.
All the witnesses, factual and expert, for whom statements or reports had previously been served on behalf of either side were called and gave evidence. Prof. Kilangi cross-examined Wallis's witnesses, and made oral opening and written and oral closing submissions. I was very grateful to him and the Tanzanian team for the careful way in which the case was presented. I was left in no doubt that the issues in the case had been fairly and fully put before me.
Narrative
Most of the factual history and the chronology of the case is apparent from the documents and was not in dispute. What follows was either undisputed or, in relation to such minor points as were in dispute, represents my findings on the evidence.
Wallis is part of a group of companies, which is referred to as Abbotswood, which carries on business in a number of fields, including shipping, mining, aircraft financing and aircraft leasing. Mr Nemr Diab was the ultimate director of Wallis, and represented it in relation to the transactions at issue.
ATCL was established in 1977 as Air Tanzania Corporation. In 2002, the Government began the process of privatising Air Tanzania Corporation, which became registered as a limited company, and the Government entered into a joint venture with South African Airways (‘SAA’) under which SAA acquired 49% of the shares in ATCL. The joint venture with SAA did not succeed, however, and in 2006 the Government reacquired SAA's 49% shareholding and terminated the joint venture. At that point, ATCL had only a few functioning aircraft, including two old Boeing 737–200A aircraft which were leased from a California-based aircraft lessor called Celtic Capital Corporation (‘Celtic’).
In 2007, the Government wished to revivify ATCL, and to expand and modernise its fleet. In early 2007 the Board of ATCL approved a five-year business plan for the growth of ATCL, to include buying and leasing aircraft. To support its business plan ATCL required outside investment. To this end, ATCL sought to partner with a Chinese company, called China Sonangol International Holdings Ltd (‘China Sonangol’) and ATCL and China Sonangol entered into a Heads of Agreement dated 13 March 2007.
In March 2007, ATCL invited Boeing, Airbus and Embraer to present options for modern short-haul and regional aircraft for ATCL to consider. Each made a presentation, but at least by May 2007 ATCL had only received a commercial proposal from Airbus. That proposal was reported to ATCL's Board on 29 March 2007. Airbus's proposal was that ATCL should acquire a fleet of five Airbus aircraft (two A330 and three A319 aircraft) and Airbus would grant various ‘credit memoranda’ for the purchase of these aircraft. These proposed aircraft would be available in 2011/2012 if the manufacturing slots were secured. Airbus would seek to facilitate the leasing of Airbus aircraft in the interim.
The minutes of ATCL's Board meeting of 29 March 2007 recorded that:
‘Lease rates of A 319 aircraft depends on age, configuration and other aspects desired by the lessee. Generally the lease rates are relatively high, and on average lease rate of A319 aircraft is USD 350 000 per month. This calls for outright purchase, if the Organization has proper financing for the required aircraft.’
ATCL's Board resolved on that occasion that:
‘ATCL should pursue the A319 and A330 route in terms of leasing and acquiring the aircraft. In the interim the Management may procure any type of new generation aircraft for leasing pending availability of the A319 aircraft.’
On 5 April 2007, Airbus's Vice President of Sales, Mr Hadi Akoum, contacted Mr Diab to see if he was interested in the possibility of leasing aircraft to ATCL. In an email of that date, Mr Akoum informed Mr Diab that Airbus had located two Airbus A319 aircraft formerly operated by Air Canada which could be purchased and leased to ATCL. Mr Diab was interested in the transaction and various emails and discussions took place between him and Airbus. At this stage, Mr Diab did not have contact with ATCL.
In early May 2007 Mr Akoum provided Mr Diab with a draft proposal for leasing three A319 aircraft to ATCL. Mr Diab and Mr Wettern, an adviser to Wallis, reworked the proposal, which was for leasing each aircraft to ATCL on an operating lease for a period of 72 months, with a rent of US$315,000 per aircraft per month plus maintenance reserves. The proposal also stated that a guarantee from the Government was required. Mr Wettern provided the proposal to Mr Akoum, who provided it to ATCL on or about 11 May 2007.
In the meantime, ATCL's Board had not made a decision on Airbus's commercial proposal, but at its meeting on 7 May 2007 1 decided that its Managing Director and CEO, Mr David Mattaka, should write to the Principal Secretary in the Ministry of Infrastructure Development (‘MOID’), which was the ministry with relevant responsibility for ATCL, in relation to the offer from Airbus for five aircraft, and an offer from China Sonangol to pay the deposits for the aircraft to secure delivery slots in 2012.
Mr Mattaka sent such a letter on 10 May 2007. That letter stated in part:
‘[ATCL's Board had resolved:]
i) That in terms of procurement guidelines and the dictates of good governance, the Board has solicited presentations and commercial proposals from the major manufacturers of aircraft namely Airbus, Boeing and Embraer and received presentations from all of them.
ii) That the Board was generally impressed by all presentations but have so far received only one commercial proposal from Airbus; and that it was awaiting commercial proposals from the other manufacturers for evaluation and final selection.
iii) That the offer by [China Sonangol] … to effect payment for the offer already received from Airbus is a welcome idea because of retaining early delivery slots.
iv) That despite its intention to follow the procurement guidelines to the later (sic), the Board is willing and ready to...
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