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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> JSD Corporation Pte Ltd v (1) Al Waha Capital PJSC & Anor [2009] EWHC 583 (Ch) (25 March 2009) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2009/583.html Cite as: [2009] EWHC 583 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
JSD Corporation PTE Ltd |
Claimant |
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- and - |
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(1) Al Waha Capital PJSC (2) Second Waha Lease Ltd |
Defendants |
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Mr B Shah (instructed by Trowers & Hamlins) for the Defendants
Hearing dates: 5th March 2009
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Crown Copyright ©
Peter Smith J :
INTRODUCTION
1) The Claimant's application for summary judgment by notice dated 18th February 2009.
2) The adjourned return date on the freezing injunction granted by Warren J on 16th December 2008 and continued (subject to minor variations) by a consent order made by Lewison J on 18th December 2008 ("the Freezing Injunction").
3) The Claimant's application by notice dated 2nd March 2009 to extend the Freezing Injunction to cover the Defendant's shareholding in Second Waha Lease Ltd ("Second Waha") and to join Second Waha as a Defendant.
BACKGROUND
THE ISSUES
1) Certain stated intentions, which JSD and Waha expressly agreed were not to be legally binding on them; and
2) Contractual obligations contained in clauses 5, 11, 13 and 15 which JSD and Waha expressly agreed were to be legally binding upon them.
TERMS OF THE DECEMBER LETTER
"5 DEPOSIT
This Clause 5 is legally binding.
Currently an amount of US$1,000,000 (United States Dollars one million) (the "First Deposit") that is held by Seller's legal counsel and escrow agent (Trowers & Hamlin) following earlier negotiations between Purchaser and Seller, shall become non-refundable upon signing of this Letter. Purchaser shall give immediate instructions to the escrow agent for the amount to be paid to Seller's account.
No later than 12 December 2007, Purchaser shall pay to the Seller a further deposit of US$1,000,000 (United States Dollars one million) (the "Second Deposit"). The Second Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 4 January 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
No later than 21 December 2007, Purchaser shall pay to the Seller a further deposit of US$1,000,000 (United States Dollars one million) (the "Third Deposit"). The Third Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 21 January 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
No later than 21 January 2008, Purchaser shall pay to the Seller a final deposit of US$1,500,000 (United States Dollars one million five hundred thousand) (the "Fourth Deposit"). The Fourth Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 15 February 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
On execution of this Letter and receipt of the First Deposit by the Seller, Seller shall remove the Aircraft from the market and shall not offer it to any other party for sale or lease until the transaction is terminated after Seller giving notice to Purchaser of a default under the terms of this Letter or, after its signature, of the Sale and Purchase Agreement."
OPERATION OF THE DECEMBER LETTER
GROUNDS FOR CLAIM
BREACH BY WAHA
1) There was alleged to be a breach of clause 5 because Aircraft 345 was advertised for sale on the www.speednews.com website. This was first advertised on or about 1st May 2007. Waha admits that it was advertised and that it "inadvertently forgot to remove the advert". It avers that it did not market Aircraft 345 or offer to sell or lease to anyone during the period. It also avers that no offers were received by it from speednews. It should also be noted that this advertisement was not discovered by JSD until after the dispute had arisen. Thus whilst Aircraft 345 was advertised during the entirety of the period that the December Letter was in operation neither party noticed it and it had no impact whatsoever.
2) The second breach relied upon was that JSD contended that it was an implied term of the December Letter that if Waha failed, refused or was unable to sell the aircraft the deposits would be repayable in full.
3) The third breach is the purported termination by the letter dated 10th March 2008 which JSD contended was not a valid termination but a repudiatory breach.
PRINCIPLES APPLICABLE TO PART 24 APPLICATIONS
BREACH 2
"However, the concept of seller default in the December Letter of Intent relates to the failure of the seller to deliver the aircraft to a purchaser in accordance with the delivery conditions. This is reflected in the September Letter of Intent which states:
The Deposit shall…. Become non-refundable except in the case of the total loss of the Aircraft or Seller default due to failure to present the Aircraft in the Delivery Condition which shall result in the refund of the Deposit.
I believe that Mr Balasingam understood this to be the case. In addition, in an e-mail dated 3 December 2007 (p.25), Mr Balasingam asked what would happen to the deposit in the event that the aircraft failed technical acceptance and he were to reject the aircraft. Mr dahmen confirmed that the failure to deliver the aircraft in accordance with clause 5 of the December Letter of Intent was a seller default which entitled Mr Balasingam to the return of its deposit (p.26). I therefore believe that Mr Balasingam understood that the default for which he would be entitiled to the return of his deposit would be if Al Waha failed to deliver Aircraft 345 in the correct condition."
BREACH 3
BREACH 1
PENALTY
ARE THE PAYMENTS DEPOSITS?
JSD Corporation Pte Ltd
Attn. Mr. Kumar Balasingam
491 River Valley Road
#14-02 Valley Point Tower
Singapore 248373
Dear Sir
This letter, upon its acceptance, will record the understanding we have reached between us in respect of the sale by Oasis International Leasing Company pjsc or its nominee (the "Seller") to JSD Corporation Pte Ltd or its nominee (the "Purchaser") of one used 1992 Airbus A320-200 aircraft as described below, subject to the principal terms and conditions as set forth below.
1. AIRCRAFT
One Airbus A320-200 bearing MSN 345 as further described in Exhibit I hereto attached and equipped with two CFM56-5A3 engines with serial numbers 731675 and 731648 respectively (the "Aircraft"), together with maintenance and operating records, data and related documents pertaining the Aircraft (the "Records"). The Aircraft is currently on lease (the "Lease") to Onur air Tasimacilik A.S. (the "Current Lessee").
2. PURCHASE PRICE
The Purchaser shall pay to the Seller on the Delivery Date a purchase price of US$17,650,000 (United States Dollars Seventeen million six hundred fifty thousand). The Purchaser's obligations must be guaranteed by a guarantor acceptable to the Seller.
3. PAYMENTS
All payments and sums to be paid between Seller and Purchaser shall be made without, and free and clear from, all taxes and duties whatsoever including without limitation withholding taxes, sales taxes and VAT. Payments to Seller shall be made to a bank account to be advised by Seller.
Each party shall bear its own taxes, sale taxes, VAT, stamp or documentary taxes or taxes on income, profits or gains whatsoever and howsoever arising. Each party will be responsible for researching its own tax position in relation to the transaction and, in the event that either party identifies a potential tax liability, the other party shall co-operate in good faith and to such extent as may reasonably be expected with a view to mitigating or avoiding the incidence of such tax liability.
On the Delivery Date, PurchaserPurchaser shall pay to Seller the balance of the Purchase Price, less any Deposits paid already in accordance with paragraph 5 below.
As requested, Seller shall on "best effort" basis assist in sourcing financing for the Purchaser to fund the acquisition of the Aircraft. Should such financing not be successfully obtained, and provided that a total amount of at least US$6,090,000 (United States Dollars six million ninety thousand) in addition to the Deposits paid as per paragraph 5 below shall have been paid on the Delivery Date, then the Seller shall allow the Purchaser to pay the balance over 18 equal monthly instalments from the Delivery Date. The Seller shall charge the Purchaser an interest rate of LIBOR + 5.0% per annum in consideration of the financing, to be paid monthly. Purchaser may prepay any such financed amount without penalty (compensating for break-funding cost only).
4. ESCROW
Left blank intentionally.
5. DEPOSIT
This Clause 5 is legally binding.
Currently an amount of US$1,000,000 (United States Dollars one million) (the "First Deposit") that is held by Seller's legal counsel and escrow agent (Trowers & Hamlin) following earlier negotiations between Purchaser and Seller, shall become non-refundable upon signing of this Letter. Purchaser shall give immediate instructions to the escrow agent for the amount to be paid to Seller's account.
No later than 12 December 2007, Purchaser shall pay to the Seller a further deposit of US$1,000,000 (United States Dollars one million) (the "Second Deposit"). The Second Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 4 January 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
No later than 21 December 2007, Purchaser shall pay to the Seller a further deposit of US$1,000,000 (United States Dollars one million) (the "Third Deposit"). The Third Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 21 January 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
No later than 21 January 2008, Purchaser shall pay to the Seller a final deposit of US$1,500,000 (United States Dollars one million five hundred thousand) (the "Fourth Deposit"). The Fourth Deposit shall be held by the Seller on a refundable basis pending execution of the Sale and Purchase Agreement. Thereafter, or in any case after 15 February 2008, it shall become non-refundable, except in the case of the total loss of the Aircraft or Seller default, which shall result in the refund of the Deposit.
On execution of this Letter and receipt of the First Deposit by the Seller, Seller shall remove the Aircraft from the market and shall not offer it to any other party for sale or lease until the transaction is terminated after Seller giving notice to Purchaser of a default under the terms of this Letter or, after its signature, of the Sale and Purchase Agreement.
6. RESERVES
The Seller will keep any remaining maintenance reserves which have not been applied in paying for maintenance costs at the time of delivery to the Purchaser.
7. SALE AND DELIVERY DATE
a) Both parties will work to execute the transaction documents as soon as possible following receipt of the Second Deposit (the "Anticipated Sale Date"). The date on which delivery is expected to occur ("Delivery Date") on or around 15 February 2008, immediately upon completion of an Engine Shop Visit of engine with serial number 731648.
b) The Seller shall tender the Aircraft and Records for inspection prior to delivery. Such inspection shall be completed within ten business days and may include an acceptance flight of reasonable length, not exceeding a total duration of two block hours and a borescope inspection for Engine serial number 731675.
c) On completion of the inspection if the Aircraft fails generally to accord with the Delivery conditions applicable to it and such failure affects the Aircraft's airworthiness or safety, then the Purchaser may reject the Aircraft by delivering a rejection notice to Seller within 72 hours after completion of the inspection. If the Purchaser does not deliver a rejection notice to Seller within this period of time, Purchaser will be deemed to accept the Aircraft, subject to fulfilment by the Seller of all applicable terms and conditions of the Sale and Purchase Agreement.
d) If Seller corrects any deficiencies as listed in the Purchaser's rejection letter within 15 banking days after the delivery of a rejection notice the Purchaser must accept the Aircraft failing which it will be deemed to have accepted the Aircraft.
e) Should the Seller fail to deliver aircraft on Delivery Date or the amended Delivery Dates as per paragraphs 7c and 7d above then Seller shall refund all money paid whether as deposits (referred to in paragraph 5 above) or otherwise, in full to the Purchaser within 5 banking days.
f) The details and timing of the pre delivery inspection process will be set out in the Sale and Purchase Agreement.
g) Signature of the Acceptance Certificate shall confirm the Purchaser's unconditional and final acceptance of the Aircraft and confirmation that the Aircraft to which it relates meets the Delivery Condition.
8. DELIVERY LOCATION
The Delivery Location shall be Abu Dhabi (United Arab Emirates)
9. CONDITIONS PRECEDENT
The obligation of the Purchaser and the Seller to complete the transaction contemplated by this Letter shall be subject to the satisfaction or waiver by the party for whose benefit inserted on or prior to the Delivery Date of the following conditions:
i. signature by the Seller and the Purchaser of a legally binding Sale and Purchase Agreement for both Aircraft (which, upon signature, will replace this Letter);
ii. Seller representation and warranty that it has good and marketable title, free and clear of all liens and encumbrances;
iii. customary closing legal opinion from Purchaser's counsel;
iv. Seller agrees to allow Purchaser to carry out cabin reconfiguration and refurbish work at its own cost after signing this letter while the aircraft is, provided this is logistically possible and permitted by the relevant authorities and maintenance organization(s).
v. no total loss occurring with respect to the Aircraft between the date hereof and the Sale Date;
vi. timely payment by Purchaser of all the Deposits as per paragraph 5; and
vii. approval of the terms and conditions of the transaction by the Boards of Directors of Seller, to be satisfied before the Sale and Purchaser Agreement is signed.
10. DELIVERY CONDITION
a) The Aircraft will be delivered a condition that is consistent with the return conditions contained in the Lease to the Current Lessee as detailed at Exhibit II of this Letter.
b) left blank intentionally.
c) For the sake of clarity, any amounts paid to Seller by Current Lessee in connection with the expiration of the Lease and return of the Aircraft shall be retained by the Seller.
d) Subject to the Purchaser entering into such documentation as the manufacturer may require, the Purchaser may procure that the benefit of any remaining manufacturer warranties relating to the airframes or engines are assigned to the Purchaser.
11. COSTS
The Seller and the Purchaser shall each bear its own legal and professional costs associated with documenting this transaction. Registration costs shall be for the account of the Purchaser.
12. DOCUMENTATION
It is the intent of the Seller and the Purchaser that documentation incorporating the terms of this Letter and other terms normal to such transactions as are contemplated by this Letter, will be executed on or before 4 January 2008. The Seller and Purchaser each agree to negotiate in good faith towards the prompt execution of such documentation. The documentation shall be governed by the laws of England.
13. CONFIDENTIALITY
The terms and conditions set out in this Letter shall remain confidential between the parties and each party acknowledges that this Letter contains commercially sensitive information and agrees not to disclose same except to their respective Boards of Directors, advisers and employees or potential financiers of the Aircraft or as otherwise agreed between the parties or required by applicable law. No press release may be made by either party without the other party's consent to the release and its content.
14. VALIDITY OF TERMS
This Letter of Intent is valid for acceptance on or before 9 December 2007.
15. CONTRACT
The terms of this Letter do not and are not intended to create binding legal obligations upon the parties hereto with the exception of this Clause and Clauses 5, 11 and 13 which clauses shall be governed by English law and are subject to the jurisdiction of the English courts.
SIGNED FOR AND ON BEHALF OF | SIGNED FOR AND ON BEHALF OF |
JSD CORPORATION PTE LTD | OASIS INTERNATIONAL LEASING COMPANY PJSC |