Kuwait Airways Corporation v Iraqi Airways Company [2002] EWHC 1626 (Comm) (31 July 2002)

Neutral Citation Number: [2002] EWHC 1626 (Comm) Case No: 1992 Folio 69 IN THE HIGH COURT OF JUSTICE QUEENS BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice Strand, London, WC2A 2LL 31 July 2002 B e f o r e : THE HONOURABLE MR JUSTICE LANGLEY ____________________ Between: KUWAIT AIRWAYS CORPORATION Claimant - and - IRAQI AIRWAYS COMPANY Defendant ____________________ Mr G. Vos QC, Mr J. Smouha, Mr S. Wordsworth and Mr A. Twigger (instructed by Messrs Howard Kennedy) for the Claimant Mr D. Donaldson QC, Mr S. Nathan QC and Miss J. Pollard (instructed by Messrs Landau & Scanlon) for the Defendant Hearing dates : 12th June to 27th June and 23rd July 2002 ____________________ HTML VERSION OF APPROVED JUDGMENT ____________________ Crown Copyright © Mr Justice Langley: INTRODUCTION This judgment concerns the assessment of part of the damages claimed by Kuwait Airways Corporation (KAC) from Iraqi Airways Company (IAC) arising from the conversion by IAC of six commercial aircraft belonging to KAC following the invasion of Kuwait by Iraq in 1990. The liability of IAC to KAC was determined by the Court of Appeal [2001] 3 WLR 1117 and affirmed by the House of Lords [2002] 2 WLR 1353 . BACKGROUND There is no substantive dispute about the general background facts and context in which the assessment falls to be made. On 2 August 1990 Iraq invaded Kuwait. Shortly thereafter Iraq seized 10 aircraft belonging to KAC which were at Kuwait International Airport at the time of the invasion. The aircraft were flown to Iraq. On 17 September 1990, Resolution 369 of the Revolutionary Command Council of Iraq came into force dissolving KAC and transferring all its property worldwide, including the 10 aircraft, to IAC. The House of Lords held in 1995, [1995] 1 WLR 1147, that IAC was immune from suit in relation to its conduct prior to 17 September 1990 under Section 14(2) of the State Immunity Act 1978. Subject to the outcome of yet further proceedings in this court before David Steel J (known as “the perjury action”) the losses to be assessed are and can only be claimed by KAC from 17 September 1990. The 10 aircraft must, however, be considered in two groups: i) “The Mosul Four” were destroyed by coalition bombing whilst on the ground at Mosul Airfield in Iraq in late January 1991. The House of Lords upheld the previous decision of the Court of Appeal and Aikens J to the effect that KAC was not entitled to recover any damages for the loss of the Mosul Four. That was because on the evidence, even without any usurpation by IAC, the aircraft would still have been destroyed by the bombing of Mosul Airfield and under Iraqi Law no damages were recoverable if that was the case. The double actionability rule was therefore not satisfied. The Mosul four were 2 Boeing 767s (designated 9K-AIB and 9K-AIC) and 2 Airbus A 300-600 Cs (designated 9K-AHF and 9K-AHG). The Airbus ‘C’ designation meant that the aircraft could be configured either to carry passengers or cargo or both passengers and cargo. ii) “The Iran Six” were moved by IAC from Iraq to Mashad in North Eastern Iran in late January and early February 1991. They remained there until KAC recovered them in July and August 1992 agreeing (in March 1994) to pay US $20m to the Government of Iran to do so. IAC has already been held liable to KAC for this sum. In respect of the Iran Six the House of Lords upheld the decision of the Court of Appeal that KAC was entitled to recover under five heads of damage. It is the amount of the damages under some of those heads which has been the subject of this trial. The Iran Six comprised 5 Airbus A 310-200s (designated 9K-AHA to E) and one Airbus A300-600C (designated 9K-AHI). The Boeing 767s were largely interchangeable with the Airbus A310-200s albeit the 767s had a somewhat longer range. At the time of the invasion KAC’s fleet comprised a total of 22 aircraft. 15 aircraft (including the Mosul Four and Iran Six) were seized by Iraq. The remaining 7 aircraft were outside Kuwait. They were Boeing 727s and 747s. No aircraft were on order at the time by KAC except for one replacement order for a 727. Kuwait was liberated by coalition forces on about 25 February 1991. Until then Kuwait International Airport was under Iraqi control. From about September 1990 KAC had, however, been running part of its service, using the remaining 7 aircraft, from its base in Cairo. From about April or May 1991 Kuwait International Airport became available again for commercial flights and by about July KAC had resumed full scheduled operations from its home base. The Airport had always been the hub of KAC’s routes, some 80% of the business involving flying into or out of Kuwait International Airport. As stated, the Iran Six were not recovered from Iran by KAC until July and August 1992. Whilst eventual recovery, once Kuwait had been liberated, was never seriously in doubt there were difficult and protracted negotiations to achieve it and no certainty when it would be achieved until about July 1992 itself. In the meantime, and as KAC sought to restore its business, a number of significant events for this assessment occurred. On 17 September 1991 KAC executed a contract to purchase a new fleet of 11 current model Airbuses (A310-300s and A300-600Rs). In the course of the negotiations for this contract, in April 1991, Airbus had offered to provide a put option entitling KAC to require Airbus to purchase the five A310-200s part of the Iran Six. The agreement for the put-option was not finally executed until 5 November 1993 but to quote an internal memorandum dated 2 September 1992 it had been “secured” by September 1992. The option price was $23.8m for each of three of the aircraft and $24m for each of the other two. The new aircraft were delivered between May 1993 and February 1994. The put-options were exercised by KAC in early 1994 for 3 of the A310-200s and for the other two in late 1994 and early 1995. In 1991 KAC also dry leased (a lease of the aircraft only) 5 Airbus A310-300s from Polaris Aircraft Leasing International Ltd (“Polaris”). The sums payable under the leases form a substantial part of KAC’s claim. The aircraft were delivered and the leases commenced between August and November 1991. In tabular form the position was as follows: Polaris Regn. No. Delivered to KAC/start date of leases Final date to which KAC is claiming. A6-KUA 20 August 91 2 May 93 A6-KUB 20 August 91 22 August 93 A6-KUC 29 August 91 22 August 93 A6-KUD 18 September 91 1 March 93 A6-KUE 4 November 91 2 May 93 In addition KAC wet leased (a lease of the aircraft and crew with insurance and other facilities) a number of aircraft on an ad hoc basis to meet specific demands and claims are also made for the costs of doing so. After the Iran Six were recovered in July and August 1992 they were sent on various dates between August and October 1992 to the maintenance facility of a company called Sogerma-Socea SA (“Sogerma”) in Bordeaux for repairs. The repairs were accepted by KAC as complete on various dates between December 1992 and June 1993. In tabular form the position was as shown below: Aircraft flown from Iraq to Iran Aircraft flown back out of Iran Delivery to Sogerma Work completion certificates issued by Sogerma Acceptance of aircraft by KAC AHA 15 Jan 91 8 Aug 92 15 Sept 92 1 Feb 93 23 Feb 93 AHB 15 Jan 91 5 Aug 92 15 Sept 92 15 Jun 93 15 Jun 93 AHC 18 Jan 91 2 Aug 92 6 Oct 92 15 Jun 93 15 Jun 93 HAD 18 Jan 91 27 Jul 92 4 Aug 92 2 Nov 92 23 Dec 92 AHE 15 Jan 91 27 Jul 92 5 Aug 92 28 Jan 93 23 Feb 93 AHI 4 Feb 91 11 Aug 92 25 Sept 92 18 Mar 93 4 May 93 The period for which KAC claims damages is from 17 September 1990 to the date each aircraft was accepted back by KAC from Sogerma plus a 45 day lead-in time claimed for crew training on the aircraft following their return and a 23 day period claimed in respect of checks required to be carried out on the 5 Polaris aircraft leased in before they could be (notionally) returned under the leases after they had been replaced in service by the Iran Six. The dates are shown in the final column of the table in paragraph 11. THE CLAIMS The various heads of loss (the figures have since undergone some adjustments) claimed by KAC are set out at pages 1265-6 of the report of the decision of the Court of Appeal. Head A: the claim for the value of the Mosul Four - failed in law on the grounds stated above in paragraph 5(i). Head B : the cost of the return of the Iran Six: KD 30,155 and $269,458.12. It was under this head that the claim was also made for the $20m paid to the Government of Iran for which KAC already has judgment. The KD30,155 is the amount of the expenses of KAC personnel incurred in the retrieval, inspection and maintenance of the aircraft. It is now agreed. The dollar sum is said to be for fees paid to Iran Air for ground handling and other services at Mashad shown on invoices rendered between 23 August 1992 and 14 June 1993. These claims are the subject of the present assessment. Head C : Repair claims for the Iran Six totalling just in excess of $11m. Whilst this is one of the heads of claim which the Court of Appeal ordered to be assessed by this court it is to be the subject of a further assessment hearing at a later date. Head D : A claim for $6.418m for diminution in value of the Iran Six by reason of the “taint” of their history. Aikens J rejected this claim on the facts and it has not since been pursued. Head E was broken down into 5 parts. Head E(i) was a loss of profits claim in a sum in excess of $66m based on the assertion that had KAC had its fleet available to it after the end of hostilities there would have been exceptional opportunities to make profits. Although the Court of Appeal ordered this claim to be assessed as regards the Iran Six KAC has not proceeded with it. Head E(ii) is a claim limited now to the one A300-600C (AHI) which was one of the Iran Six. The other 2 KAC A300-600Cs were destroyed at Mosul. The claim is for losses totalling $12,956,449 being the amount which KAC contends it could have recovered by leasing out AHI from 17 September 1990 until the aircraft was delivered to Sogerma for repairs. This claim is the subject of the present assessment. KAC also made an alternative claim for what was said to be the cost of leasing in substitute cargo capacity in 1991-3 of $6,100,841. This alternative claim was not, in the event, pursued. That was not surprising. There was little evidence to support it and it could only be sustained if AHI would otherwise have been converted to cargo configuration so as to be able to perform the same flights. On the evidence that would have made no commercial sense. Head E(iii) is a claim for the losses which KAC contends it suffered by reason of the conversion of the five A310-200s of the Iran Six. The claim is made up of three separate sub-heads: (a) $29,939,458 which KAC contends it could have recovered by leasing out the aircraft from 17 September 1990 until the various dates in 1991 when the Polaris leases began (referred to as “the pre-Polaris period”); (b) $35,731,848 being 80% of the adjusted costs of leasing in the 5 Polaris aircraft until the delivery of the five A310-200s to Sogerma. KAC claims 80% of this cost on the basis that the equivalent of one of the 5 aircraft should be considered a replacement for the Mosul Four and so cannot in the light of the decision of the House of Lords properly be the subject of a claim; and (c) $20,271,147 being the claimed cost of wet leases entered into by KAC save the first (ZAS) lease which are also said to be attributable to the replacement of the five A310-200s. This claim, and each of the sub-heads, is also the subject of the present assessment. There are issues whether or not (and if so to what, if any, extent in law or in fact it is material) the time taken to repair the Iran Six (“the Sogerma period”) was reasonable and the 45 and 23 day periods (paragraph 14) are properly claimable. It is agreed these issues can more readily be addressed on the assessment of Head C. Thus the end date and period of the claims under Heads E(ii) and E(iii)(b) cannot be determined at this hearing save that it is accepted that it must extend at least to the dates upon which each aircraft arrived at Sogerma. It is agreed, however, that the court should determine what is the appropriate rate of loss for the Sogerma period. Further KAC seeks an interim payment in respect of this part of its claim under CPR Part 25.7(1)(b) which IAC opposes. Heads E(iv) and E(v) were claims in very substantial amounts (in excess of $100m and $290m respectively for all 10 lost aircraft) for financial losses said to arise out of the purchase of the new aircraft. The basis of the claims was that the KAC fleet had been renewed five to six years earlier than would otherwise have been the case because KAC operated a 15-year cycle of purchases and the Iran Six were broadly in the middle of that cycle when they were seized. Head E(iv) claimed higher depreciation costs on the new aircraft than would have been incurred on the lost aircraft and Head E(v) claimed the financing costs of the new fleet. Both claims failed before Aikens J. The depreciation claim failed for a number of reasons including the finding that it did not represent a “loss” to KAC at all. It was not pursued on appeal. The claim for financing costs was pursued to the House of Lords. It also failed. The reasons are, I think, to be found in the speech of Lord Nicholls at paragraphs 97 and 98 as follows: “97 …. The new aircraft bought by KAC were not mere replacements for the ten aircraft misappropriated by IAC. Having lost most of its fleet, KAC used the occasion to carry out a fundamental reappraisal of its aircraft requirements in the light of changing market conditions. These requirements dictated that the composition of KAC’s fleet should be significantly different from its existing fleet. Different aircraft, with different specifications, were called for. Accordingly, in the early 1990s KAC did not seek to restore the airline to the position which would have existed if the Mosul four had survived intact and the Iran six had not become temporarily unavailable. KAC did not set out to replace the aircraft it had lost with the same models, or the closest available. It did not just buy new for old. The ten aircraft seized included five Airbus A310-200s. New aircraft of this model were still available for purchase from Airbus, but KAC chose to buy different aircraft. 98. This was not an unreasonable course for KAC to take. Indeed, it would have made no commercial sense for KAC to replace the ten aircraft without regard to its current and anticipated aircraft requirements. KAC was forced to review its aircraft requirements, and it seized the opportunity to make significant changes in the composition of its fleet. This may well have been a commercially wise decision. But I do not think it would be right to saddle IAC with the finance costs associated with this substantial restructuring of KAC’s fleet. In agreement with the Court of Appeal and the view expressed by Aikens J on this point, although not for precisely the same reasons, I would not allow this head of claim.” Thus the claims to be assessed in these proceedings are: i) Head B : the two claims for direct loss in securing the return of the Iran Six: KD 30,155 and $269,458; ii) Head E(ii): A claim in respect of one A300-600C (AHI) calculated on the basis of the return said to have been realisable from leasing the aircraft out for the period between 17 September 1990 and delivery of the aircraft to Sogerma for repair and service; iii) Head E(iii): A claim in respect of the five A310-200s calculated on the basis of (a) leasing them out for the period between 17 September 1990 and the start of the Polaris leases, and (b) the costs of the Polaris leases and of the wet leases for the period of the Polaris leases until delivery of the aircraft to Sogerma. Heads E(ii) and E(iii) are claims for consequential loss. THE LEGAL BASIS FOR THE CLAIMS Head B This is a claim for direct loss. Lord Nicholls said (paragraph 92) that “provided the amount is not out of proportion to the value of the goods, the wrongdoer ought to reimburse the owner for any money spent on recovering the goods or carrying out necessary repairs”. The issues which arise on the assessment (apart from the agreed sum) are whether KAC has proved the nature and fact of the payments for which it claims and their relationship to the recovery of the Iran Six. IAC also pointed to the fact that the $20m payment to the Government of Iran was expressed to cover “all expenses and costs of maintenance and sheltering” of the Iran Six. On the evidence, however, not only were the claimed payments made to Iran Air and not to the Government of Iran but they were made before the $20m agreement was concluded and IAC rightly conceded that if KAC succeeded in proving them then it was entitled to recover them. The consequential loss claims under Heads E(ii) and E(iii) are not so straightforward in principle. They are claims for compensation for the detention of the aircraft as a result of IAC’s conversion of them on and after 17 September 1990. KAC is entitled to be placed in the position it would have been in had the tort not occurred. Had that been the case KAC would have been in possession of the aircraft. But the matter is complicated by the fact of the invasion and Iraqi control of Kuwait International Airport. Those are not matters to be laid at the door of IAC. Indeed IAC contends that had the aircraft not been converted they would have been at Kuwait International Airport and so effectively of no use to KAC at all which would not have had access to them (or use of them) at least until hostilities ceased in early March 1991. IAC also sought to contend that the subsequent detention of the aircraft in Iran until July and August 1992 was not a matter the consequences of which should be compensated for by IAC. Lord Nicholls addressed this contention at paragraph 92 of his speech and rejected it. In doing so, he said: “A person who misappropriates another’s goods does so at his own risk. That is the nature of the wrong. He takes upon himself the risk of being unable to return the goods to their rightful owner. It matters not that he may be prevented from returning the goods due to unforeseen circumstances beyond his control. The reason for his non-return of the goods, or his delay in returning the goods, is neither here nor there so far as his liability to the owner is concerned.” In Paragraph 95 Lord Nicholls said in respect of the consequential loss claims for the conversion of the Iran Six: “95. KAC was an operational airline. The ten aircraft seized in the invasion were the major part of its fleet. When the hostilities ended KAC found itself without most of its aircraft. It was eminently to be expected that until the missing aircraft were replaced, KAC would need to hire substitute aircraft capacity, both for passengers and cargo. Furthermore, it was eminently to be expected that until substitute capacity was obtained KAC would suffer losses of business and might suffer loss of profits. I see no reason to question that IAC’s liability to KAC ought to extend to meeting the reasonable costs of chartering substitute aircraft and making good any loss of profits.” Lord Nicholls also considered the materiality of the fact that Iraq had already seized the aircraft before IAC wrongfully converted them in the context of causation of loss: “81 … every person through whose hands goods pass in a series of conversions is himself guilty of conversion and liable to the owner for the loss caused by his misappropriation of the owner’s goods. His liability is not diminished by reason, for instance, of his having acquired the goods from a thief as distinct from the owner himself. In such a case, it may be said, looking at the successive conversions overall, the owner is no worse off as a result of the acts of the person who acquired the goods from the thief. Such a person has not ‘caused’ the owner any additional loss. 82. In one sense this is undoubtedly correct. The owner has already lost his goods. But that is really nothing to the point for the purposes of assessing damages for conversion. By definition, each person in a series of conversions wrongfully excludes the owner from possession of his goods. This is the basis on which each is liable to the owner. That is the nature of the tort of conversion. The wrongful acts of a previous possessor do not therefore diminish the plaintiff’s claim in respect of the wrongful acts of a later possessor. Nor, for a different reason, is it anything to the point that, absent the defendant’s conversion, someone else would wrongfully have converted the goods. The likelihood that, had the defendant not wronged the plaintiff, somebody would have done so is no reason for diminishing the defendant’s liability and responsibility for the loss he brought upon the plaintiff. 83. Where, then, does this leave the simple ‘but for’ test in cases of successive conversion? I suggest that, if the test is to be applied at all, the answer lies in keeping in mind, as I have said, that each person in a series of conversions wrongfully excludes the owner from possession of his goods. The exclusionary threshold test is to be applied on this footing. Thus the test calls for consideration of whether the plaintiff would have suffered the loss in question had he retained his goods and not been unlawfully deprived of them by the defendant. The test calls for a comparison between the owner’s position had he retained his goods and his position having been deprived of his goods by the defendant. Loss which the owner would have suffered even if he had retained his goods is not loss ‘caused’ by the conversion. The defendant is not liable for such loss.” In my judgment these principles have the practical consequence for the assessment of the consequential loss claims that they fall to be considered on the hypothesis that as from and after 17 September 1990 KAC had possession and control of the Iran Six but did not have access to Kuwait International Airport (until it in fact obtained it in about April 1991) and on the basis that hostilities continued as they in fact did until early March 1991. I reject IAC’s submission that the aircraft should be considered as if they were stranded at Kuwait International Airport by the Iraqi invasion. I think that is the antithesis of what Lord Nicholls was saying. KAC would not then be compensated for the wrong done by IAC which was to exclude KAC from possession of KAC’s aircraft. KAC is to be compensated on the basis that if IAC had not committed the tort KAC would have retained the aircraft and not been deprived of them. Indeed, I think Mr Vos is correct that had IAC’s submission been right the outcome of the decision in the House of Lords would have been that KAC’s claim under these heads failed. There are also other, albeit well-known, legal principles involved. Heads E(ii) and E(iii)(a) are claimed by KAC on the basis of a hypothetical leasing out of the Iran Six. In the case of AHI the total claim runs from the date of conversion (17 September 1990) to the date when the aircraft was repaired. In the case of the five A310-200s the claim runs from the date of conversion to the dates of delivery of the Polaris aircraft leased in as, so KAC contends, replacements. The hypothesis is, on the basis of the conclusion I have expressed in Paragraph 31, that, KAC would have been in possession of the aircraft on 17 September 1990 but unable to use them for flights into or out of Kuwait International Airport. On that hypothesis it is agreed that it is for KAC to prove to the usual standard that it would and could have leased out the aircraft and the return it would have received had it done so. There is a further consideration in relation to the five A310-200s. IAC submits that there is an inconsistency between the leasing out claim and the leasing in (or Polaris) claim, especially so as KAC has in fact calculated the leasing out claim on the basis of the rental payable for a lease of a term of 2 to 3 years and the Polaris leases in fact began within that term. But I think the inconsistency is more apparent than real. KAC does not, of course, claim the loss of rent for the hypothetical leasing out beyond the start date of the Polaris leases. Nor was any rent in fact received for any period and the evidence of Ms Beyer (KAC’s expert) which I accept is that in general terms the shorter the lease the higher the rental (because of the costs to the lessor arising at the commencement and end of a lease). It is possible that on the factual hypothesis to which I have referred KAC could reasonably have decided to lease out the aircraft but also that at a later date when able to resume services from Kuwait decided to lease in the Polaris aircraft for that purpose. The inevitable hypothetical questions of fact remain but I do not see any fatal or insuperable inconsistency in the E(iii) claims being advanced cumulatively in amount but not in time. In the event, on my findings, the problem is one which does not really arise. The other material principles of law relate specifically to the claims for the cost of the Polaris leases and the wet leases under Head E(iii)(b) and (c). There are issues of fact whether or not and to what extent the aircraft were replacements for the Mosul Four not the Iran Six but it is also IAC’s case that the leasing in of the Polaris aircraft (which were A310-300s) was not in any event caused by the detention of the Iran Six and that it gave KAC aircraft which were far superior to the detained A310-200s. It is submitted that KAC could and should have leased in only A310-200s which would have been cheaper. The causation argument runs as follows. The purchase or decision to purchase the new A310-300s was not caused by the conversion of the Iran Six as the House of Lords decided in concluding that KAC could not maintain its claims under Heads E(iv) and (v). The decision to lease in the Polaris A310-300s was caused by the decision to purchase the A310-300s. Therefore the decision to lease in was not caused by the conversion. In my judgment this argument is hopeless and again in effect the antithesis of what has already been decided in these proceedings. Aikens J held (paragraph 218), relying in part on the evidence of IAC’s expert, Mr Villa, that KAC’s decision to purchase new aircraft was itself a reasonable commercial decision and that it made reasonable sense to dry lease aircraft of the same type as those to be purchased until the new aircraft were delivered. Aikens J said: “Given these answers from the expert called by IAC on matters of airline operations, I must conclude that the arrangements made by KAC to lease substitute capacity were generally reasonable in the circumstances.” Although Mr Donaldson sought to say this finding was limited to the Mosul Four and the relevant passage appears under that heading, I think it was plainly intended to apply also to the Iran Six and in any event the reasoning was approved by both the Court of Appeal (paragraph 586) and Lord Nicholls (paragraph 98) in terms applicable to both. There can be no doubt that the decision by KAC to lease in some aircraft pending delivery of the new A310-300s was necessitated by the detention of the Iran Six and Mosul Four. It enabled KAC to run its services and so avoid the loss of profits which otherwise would have been claimable from IAC. That of itself in my judgment satisfies the test of causation, and has I think already been decided. It has also been determined that the decision to choose A310-300s for that role was itself reasonable. But reasonable in the context of the purchase decision. The consequence in my judgment is that whilst it is open to IAC to contend that KAC failed to mitigate its loss by choosing to lease in A310-300s and not A310-200s it is not open to IAC to contend (nor in the event did it contend) that it is not liable for at least the calculated cost of notionally leasing in A310-200s. The consequence is, as Mr Vos submitted, that the issue is properly to be considered in terms of mitigation not causation. As Mr Vos also submitted, there are two well-known features of the law of mitigation to be kept in mind when considering the issue. First, that the onus of proof is on IAC. IAC must show that KAC ought reasonably to have taken certain mitigating steps: see McGregor on Damages Sixteenth Edition paragraph 299. Second, that the standard of reasonableness is not a high one in view of the fact that the defendant is an admitted wrongdoer. Mr Vos referred me to the speech of Lord Macmillan in Banco de Portugal v Waterlow & Sons [1932] AC 552 at 506: “Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of a breach of duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.” The same principle applies to a claim in tort as in contract: see McGregor paragraph 323. A particular illustration of the principle, to which Mr Vos referred, is to be found in Harbutt’s Plasticine Ltd v Wayne Tank and Pump Co [1970] 1QB 447 at pages 468 (per Lord Denning) and 472 (per Widgery LJ). If there is no reasonable alternative to the acquisition of a ‘better’ replacement to restore a business and mitigate the loss of profit then no credit is to be given for “betterment”. There is a further general issue which it is convenient to address here. The contract terms on which KAC purchased the new aircraft included substantial credits which were described as lease subsidies. IAC has submitted that KAC must give credit for the subsidies in the claim it makes. The submission is that whatever lease rates KAC may have paid to Polaris were effectively subsidised by Airbus and to that extent KAC’s loss was diminished. It was also submitted (on the basis of Mr Villa’s opinion) that the subsidies were material to the question whether or not the actual Polaris lease rates were unreasonable or inflated. The latter submission and opinion in my judgment are misconceived. There is ample evidence that the Polaris lease rates were sensibly and commercially negotiated by KAC and indeed considerably reduced from their opening suggested level. Nor is there any conceivable reason why KAC should have allowed Polaris to benefit from the Airbus subsidies. But I also think that the first submission is wrong. The subsidies plainly were intended as inducements to KAC to purchase the new aircraft. In commercial and contractual terms they were dependent on the purchase. At the trial before Aikens J the subsidies were treated by agreement as credits against the acquisition cost of replacement aircraft. It has been held that KAC cannot claim for the costs of the purchase whether expressed in terms of financing or depreciation. It would in my judgment be quite unfair in that context to apply the subsidies as a reduction in the cost of leasing-in the Polaris or any other aircraft. THE EVIDENCE Much of the evidence has already been rehearsed in the previous proceedings. In the event the only witnesses who gave oral evidence of matters of fact were Mr William Saad who, at the time of the invasion, was responsible, based in London, for all KAC’s passenger and cargo operations in Europe; Mr Al-Buloushi who was then KAC’s Aviation Safety Engineer based in Kuwait, and Captain Al-Shamlan employed by KAC as a pilot and a training captain at the time of the invasion. There was really no challenge to their evidence which was given in a straightforward manner and I accept it as accurate and truthful. KAC also relied upon a statement (dated 14 April 1999) served under the Civil Evidence Act 1995 made by Mr Al-Zabin who was the Engineering Director of KAC during the period 1990-1996. Mr Al-Zabin gave oral evidence before Aikens J who found him to be “a careful and serious witness on whose evidence I could rely entirely”. Expert evidence on the value, marketing and operation of and leasing rates for aircraft was given by Barbara L. Beyer on behalf of KAC and Mr Villa on behalf of IAC. Ms Beyer is principal stockholder and chief executive officer of Avmark Inc. Avmark publishes regular and recognised newsletters containing aircraft values and lease rates. It has done so since the late 1960s. Ms Beyer was an obviously knowledgeable, experienced and intelligent witness who gave her evidence carefully and professionally. Mr Villa (who, unlike Ms Beyer, gave evidence before Aikens J also) is the Managing Director of Apollo Aviation Advisory Limited (a general consultancy to the aviation industry) and has some 30 years experience of senior management in the aviation industry. He, too, was a knowledgeable and experienced witness but one who had acknowledged in the earlier proceedings that his valuation experience was limited. Mr Villa was, I think, on occasions more dogmatic in his views and more of an advocate for them than either his experience or the nature of the issues readily allowed. KAC also produced a number of reports from Mr A. H. F. Campbell, a partner in Littlejohn Frazer, Chartered Accountants. In the event IAC did not require Mr Campbell to attend to be cross-examined on his reports. IAC had relied at previous hearings on reports from Mr Philip Kabraji, Forensic Senior Partner in Grant Thornton, Chartered Accountants. HEAD B THE RETURN COSTS CLAIM It was Mr Al-Zabin’s evidence in his statement served under the Civil Evidence Act 1995 that a KAC team of 22 engineering personnel and 4 flight crew travelled to Iran on 25 July 1992 and that various Iran Air fee notes were paid by KAC in January 1993. Aikens J recorded in his judgment at paragraph 37(2) that there was “no dispute” about the figures claimed by KAC. IAC’s defence, however, puts KAC to proof of the claims. The dollar claim is made up of 5 Iran Air invoices as follows: i) 28.8.92 $1,735.00. For handling and other services in July 1992. ii) 5.10.92 $2,157.52. Catering services between 27.7.92 and 10.8.92. iii) 28.10.92 $252,871.60. Handling and other services from 17.1.91 to 10.8.92. iv) 28.10.92 $11,428.00. Unidentified services on 10.8.92. v) 14.6.93. $1,266.00. Handling and other services on 27.5.93. Mr Al-Zabin’s statement refers only to payment by KAC of the $252k invoice and one other unidentified invoice. Although each invoice refers to “attached documents” the only one for which there is supporting (or attached) documentation is the $252k invoice. It is also the only one which is signed “Services Verified” by KAC representatives. There is, however, proof of payment of all the invoices through the IATA clearing house system. All the invoices refer to “your aircraft … at (or in) MHD” which is the reference for Mashad. Yet the last invoice is dated long after the Iran Six had left Mashad. Mr Vos suggested 1993 might be a mistake for 1992 but the invoice went through the clearing house system only in May 1993. There is no explanation for the other small separate invoices which all overlap in time with the $252k invoice. As regards that invoice, Mr Nathan understandably made some quizzical remarks about certain of the items which appeared in the supporting documentation. They include charges for baggage trailers, passenger steps, a catering high lift and a “lift-o-mobil for invalid pax”. But I do not find those items so surprising in circumstances where it is known that the aircraft were simply parked at Mashad and were visited from time to time to check their condition. It is of course for KAC to prove the figures and their attribution to the six aircraft. In my judgment, and despite the fact that they were paid, there is sufficient doubt about the small invoices to conclude that KAC has failed to make out its case. They might be duplicates; there is no detail; the date of the last one remains unexplained and as recorded precludes it from any claim. On the other hand I do think there is sufficient evidence to justify the conclusion that the $252k invoice was probably for services rendered to the Iran Six which were charged to and reasonably paid by KAC as a necessary expense in retrieving the aircraft. It follows that under this Head I assess KAC’s loss as: KD30,155 and US $252,871.60. The parties did not address questions of interest and, if they cannot be agreed, I will consider the matter later. HEAD E(iii) CONSEQUENTIAL LOSS: THE FIVE AIRBUS A310-200s I have deliberately chosen to take Head E(iii) before Head E(ii) because of its importance and the common issues which arise in respect of the leasing-out claim. The claim (paragraph 23) made by KAC is for: i) $29,939,468 (leasing-out) from 17 September to the dates on which “replacement aircraft” were leased from Polaris; plus ii) $35,731,848 being 80% of the adjusted costs of the Polaris leases (leasing-in) until the delivery of the A310s to Sogerma; plus iii) $20,271,147 the cost of the wet leases. The leasing–out claim for the pre-Polaris period is calculated on the basis of Ms Beyer’s evidence as to rates for leases commencing in September 1990 which vary slightly for each aircraft according to its age and characteristics. The period of the claims ends at the dates between 19 August and 4 November 1991 when the Polaris aircraft came into service. KAC acknowledges that if this claim succeeds it could not also claim for the first wet lease which ran from June to August 1991. To do so would be “double counting” as the notionally leased-out aircraft could have been used to fulfil the same purpose as the aircraft wet leased in. The Polaris leasing-in claim runs from the commencement dates between 20 August and 4 November until the delivery of the recovered five A310 aircraft to Sogerma on dates between 4 August and 6 October 1992. The periods of the wet leases for which claims are made run from June 1991 to 6 October 1992 and so (apart from the first) during this period of the Polaris leases. The details of the wet leases are set out in paragraph 93 below. The claim for the Sogerma period at 80% of the cost of the Polaris leases amounts to $ 20,221,954. The court is to assess the appropriate rate but not the period (if any) for this loss. It is also the subject of the Interim Payment application. The essential facts specific to these claims are: i) The five A310s were an important part of KAC’s fleet of “short-haul” aircraft at the time of the invasion. They were wide-bodied, twin-engined, short to medium range aircraft in the 200 seat class. KAC took delivery of them between September 1983 and May 1984. ii) The A310-200 and A310-300 aircraft differed in respects which KAC (Mr Saad) say were of little significance to KAC but which IAC (Mr Villa) say were of real commercial importance. The 300 was the later model introduced in 1985. It had a longer range by about 11%. It was also certified (ETOPS) to fly 180 minutes over water. Mr Saad said neither feature was of any relevance to the routes for which KAC required the aircraft. In general KAC flew 747s across the Atlantic. The 300 was also more reliable. iii) Mr Al-Zabin, in his statement, said that “up to January 1991 we were totally in the dark as to the location and status of the ten aircraft. During this period we had no alternative but to prepare our contingency plans on the basis that the aircraft were lost. Following our discovery in January that some of the aircraft were in Iran we reconsidered the whole situation but reached the conclusion that the only safe premise upon which planning could proceed was that the four aircraft in Iraq were lost to us and the aircraft in Iran were not going to be in our possession in the foreseeable future, if at all.” iv) If aircraft were to be leased in to replace the Mosul Four and Iran Six they had to be sister aircraft so as to ensure consistent running of services and pilot and engineering qualification. Mr Al-Zabin said that “the market at the time offered very few alternatives which provided a fleet of aircraft of identical specification to the size we required” and that the problem KAC faced was that it had a temporary need that was too long to fill with expensive wet leases and yet arguably too short for a fleet lease. v) At the year-end 1989 there were some 300 jet aircraft available for sale or lease and 1,588 new aircraft on order. Only one of the 300 was what Ms Beyer called a newer wide-bodied aircraft (such as the A310-200 and 300). vi) In 1990 the US economy had started to slow but the down turn was accelerated by the Gulf War and a sharp increase in fuel prices. 1990 and 1991 were years of losses for the airline industry with a huge increase in aircraft available for sale or lease as well as a substantial reduction in the numbers actually sold or leased. vii) In the years 1990-1993 most of the A310-200s in service were still operated by the original purchasers/operators and continued to be so for some years thereafter in accordance with the general practice of retaining a new aircraft for 10 or 12 years before replacement. There were a number of agreements made in November 1999 between the experts then instructed by the parties in these proceedings of which the following are potentially material to the assessment under this Head. The valuation experts used two measures of value: “current market price” (CMP) and “fair market value” (FMV). CMP was defined as “the most likely transaction price that may be generated for an aircraft under prevailing market conditions that are perceived to exist at the relevant time.” The experts agreed that “the CMP could reflect the cost that would need to be incurred/paid to replace the aircraft for a ‘like for like’ aircraft if available”, and that “CMP also reflects the most likely realisable cash amount in the event that the aircraft was to be sold at a specific date.” FMV assumes a “willing, able, prudent and knowledgeable” buyer and seller under no unusual pressures and arm’s length negotiations in an open and unrestricted market. Essentially in a market in a reasonable state of equilibrium CMP and FMV are likely to be the same. If the market favours a buyer CMP will be less than FMV. It was on the basis of this definition or description of CMP that the experts agreed the resulting half-life CMP of the Iran Six at August 1990, January 1991 and August 1992. They also agreed that: At the time prevailing market conditions were poor. There were few transactions completed of the type that would confirm the CMP. This is due to the small population size of the A310-200 and A300-600 aircraft concentrated into a handful of operators. Due to little or no availability of the subject model variants the market could be described as static. The agreed CMP values were as shown in the following table: 1st August 1990 Aircraft Model Half-Life CMP AHI A300 39,481,600 AHA A310 29,346,400 AHB A310 29,406,400 AHC A310 29,406,400 HAD A310 31,800,000 AHE A310 31,820,000 1st January 1991 Aircraft Model Half-Life CMP AHI A300 37,600,000 AHA A310 28,472,800 AHB A310 28,472,800 AHC A310 28,472,800 HAD A310 30,566,400 AHE A310 30,566,400 1st August 1992 Aircraft Model Half-Life CMP AHI A300 32.099,600 AHA A310 24,303,200 AHB A310 24,303,200 AHC A310 24,303,200 HAD A310 26,350,800 AHE A310 26,350,800 It will be seen that the CMP declined between August 1990 and January 1991 and declined again and markedly so between January 1991 and August 1992. The FMVs (also agreed) at the same dates were substantially higher but showed the same pattern of decline. It will also be seen that AHI was agreed to have a significantly greater value than the A310s. There is no dispute that there were a very small number of actual transactions in equivalent aircraft in the period 1990 to 1993. Ms Beyer identified 12 transactions involving A300-600s, 20 involving A310-200s and 58 involving A310-300s (including the five KAC Polaris leases). But some of those transactions were deliveries of new aircraft pursuant to commitments made prior to 1990. Others were sales and leasebacks or re-financing transactions which would provide at best limited evidence of a market in the aircraft. Mr Villa’s analysis of the transactions concluded that only some 15% of them (or 19 aircraft) were “real” transactions, by which he meant arm’s length transactions by which aircraft passed from one operator to another. Mr Villa’s thesis was that the paucity of “real” transactions in 1991 and 1992 meant that a false impression was given of constant values in those years and the dramatic fall in value in 1993/4 when a larger number of transactions occurred really masked what would have been the case in 1991 and 1992 had such transactions occurred then. But Mr Villa himself produced a News Page published by the Aircraft Value Analysis Company (a competitor of Avmark) in October 2001 which sought to address the effect of the events of September 11 on aircraft values and to compare it with the effect of the Gulf crisis. It stated: “The Gulf Crisis resulted in a spike in oil prices and a fall in international traffic. Passenger confidence was affected by the perceived threat of terrorist action. The fall in aircraft values did not occur overnight but rather emerged over a period of some three years. Firstly the Stage 2 types saw a rapid increase in availability. This quickly led to a fall in values. Newer types and widebodies managed to initially resist major falls. Only when the economy entered recession did airlines suffer considerable yield loss. Airlines at this time also failed to appreciate the seriousness of the situation and took time to restructure. Many airlines at that time were facing high structural costs. The some 20-30% fall in values for newer aircraft at the time of the Gulf Crisis occurred not in a matter of weeks but over some two years. Lease rates also took time to fall, reflecting on-going problems” Further, in the course of the hearing, Ms Beyer produced the Avmark newsletter published in October 1990. As a contemporary document, it gave considerable force to her evidence. It included the following statements under the heading “Interim Estimate of Used Jet Transport Values”: “The Iraqi invasion of Kuwait has had a tumultuous effect on aircraft values. Texas crude, which was selling at $21.55 a barrel before the invasion, reached a high of $40.95 on October 9. This has driven the spot price of jet fuel from 79 cents per gallon to $1.39, a 78 percent increase in slightly more than two months. This has caused two opposing effects: If all other things are equal, the value of widebodies would increase, because of their superior seat-mile costs. This applies to a lesser extent to the newer narrowbodies, with good fuel efficiency and already high prices. If all other things were equal, the value of all aircraft, particularly the Stage II narrowbodies, would decline, as increased fuel prices reduce operating profits. For some aircraft, such as the older but popular widebodies, the first factor is having a greater effect than the second, and there is a net increase in value. For others, the first and second factors cancel each other, and there is no net change. A third category is that in which the second factor is dominant, and there is a considerable decline in value.” The newsletter set out an interim set of values and the values published by Avmark in January and July 1990 for comparison. These values were stated to be “for the oldest aircraft of the type, in half-time status and average condition for its age. Values are for airline-to-airline arm’s length transactions, with neither party under duress to buy nor sell”. The values given for both A300s and A310s were virtually the same at all three dates. Ms Beyer said it was only in mid-1992 and 1993 that values fell as more widebodied aircraft came on to the market. Mr Villa said he did not agree but he offered little coherent justification for his disagreement. Nor do I think it surprising that there were limited numbers of transactions as the A310-200 was still almost exclusively in operation with their original operators. LEASING OUT The Start date for any Lease It was the evidence of Ms Beyer that it would take between 3 and 6 months from the time when a potential lessor began to seek a lessee to the conclusion of a lease. There would be much to be agreed and checked even once an interested party had been found including the condition of the aircraft on delivery and return. Mr Vos submitted that in the hypothetical situation with which the court was concerned it was legitimate to approach the matter on the basis that KAC would and could have started the process before 17 September 1990. But I do not think it is. It is only on and from that date that KAC is entitled as against IAC to be treated as if it retained possession of the Iran Six. It follows that some allowance must be made in any start date for the 3 to 6 month period. The fair course is, I think, to allow for about four and a half months and so to assume that any lease (let alone five leases) would not have been concluded before 1 February, 1991 at the earliest. That assumption may also, of course, be, and I think is, material to the issue whether any lease would in fact have been agreed at all and to any rate which might have been achieved. Would KAC have sought to lease out? Unsurprisingly, there is limited evidence that KAC would have sought to lease out the aircraft if it had found itself in possession of them in mid-September 1990 but deprived of access to the hub of its activities. Of course it is possible (as Mr Villa said) that the older aircraft in the remaining fleet (Boeing 727s) might have been leased out in preference but I see no reason to doubt that leasing out would have been seen as a better option than having aircraft standing idle. But as time would have gone by I think there is force in Mr Donaldson’s point that the logic of leasing out the aircraft would have markedly diminished. The greater the hope of a return to Kuwait the less point in leasing out the aircraft. Better to have them ready to resume operations as soon as that was possible and even if there would be temporary over capacity. Thus by January 1991 at least the evidence is that KAC would have been optimistic about the chances of an early return to Kuwait International Airport. There is no evidence before the court which would justify any claim on the basis of leasing out on short wet-leases. Agreement to dry lease out for a term of even two years is I think improbable in the hypothetical context which the court must address. In my judgment KAC’s leasing-out claim fails at this first hurdle. Could KAC in fact have leased out? Ms Beyer acknowledged that there would have been no single candidate for leasing all 5 aircraft, but she identified a number of possible companies which, between them, she said might well have been interested in leasing in the aircraft. Mr Villa believed it was unlikely that KAC would have been able to lease out any of the aircraft. In view of my earlier finding the debate is academic. But I prefer the views of Ms Beyer. They also accord with the evidence before Aikens J and in particular the agreement of a CMP defined as stated in paragraph 58 above; albeit sale not leasing was then under consideration. Indeed Mr Vos submitted that it was not open to IAC to contend that there was no available market for leasing out the aircraft. I do not think it matters. I am satisfied there was a market and that the documents support as much. What rates would have been achieved? This question is also academic but I should nonetheless address it. Avmark published (and publishes) lease rates for commercial aircraft in March and September each year. The calculation is derived by applying a percentage rate to a value for the aircraft which Avmark also publishes semi-annually. Ms Beyer said (and I accept) that the published value was the “book” value for an average aircraft of a particular type and year of build and was Avmark’s “Current Fair Market Value” which itself was “the price we would expect the aircraft to sell for in the current market”. Ms Beyer produced a table of the values reported in the Avmark publications in 1990-3 for an average, mid-life in half-time maintenance condition A310-200 built in 1983 and 1984 and valuations for KAC’s specific aircraft derived from “a desktop appraisal” modifying those average values for the specific characteristics (such as maintenance status and usage) of the actual KAC aircraft. She said, and I accept, that the desktop values also took account of “market forces during the relevant period” hence the abrupt decline in value in 1991. She agreed that lessees were in the driving seat in the period 1990-1992. She also compared her values with other published figures and whilst acknowledging that “aircraft valuation (due to the shortage of definitive transaction information) tends to be a very subjective opinion of the appraiser” noted that her other sources including such transactional data as there was “broadly” supported her values. Her figures in $000s were as follows: Estimate Period Book Value A310-200 1983 Build Desktop Value S/N 267 9K-AHA Desktop Value S/N 276 9K-AHB Desktop Value S/N 278 9K-AHC Sep-90 37,950 35,744 35,770 35,982 March-91 39,270 36,876 36,902 37,114 Sep-91 30,580 28,239 28,264 28,477 March-92 29,040 26,463 26,393 26,605 Sep-92 28,450 25,926 25,856 26,068 March-93 27,860 25,388 25,318 25,530 Sep-93 27,160 24,740 24,670 24,883 Estimate Period Book Value A310-200 1984 Build Desktop Value S/N 318 9K-HAD Desktop Value S/N 331 9K-AHE Sep-90 38,860 36,680 36,673 March-91 39,800 37,720 37,761 Sep-91 31,740 29,713 29,753 March-92 30,110 27,464 27,457 Sep-92 29,340 26,747 26,739 March-93 28,570 26,029 26,021 Sep-93 27,890 25,401 25,394 These values for September 1990 were slightly lower than the FMVs agreed by the experts at the time of the trial before Aikens J but substantially higher than the agreed CMPs (see paragraphs 62-63). Ms Beyer used these values to calculate a lease rate by applying a percentage rate to them. Again she relied upon contemporaneously published Avmark information. That information states the rates for five year operating leases. On instructions from KAC she adjusted those figures for a shorter lease of a two to three year term which in her opinion would increase the applicable percentage from 1.1 or 1.2% to 1.4% which she described as virtually an industry standard for a shorter lease. On this basis she gave it as her opinion that the revenue KAC could have expected from leasing out the aircraft was as follows in $000s per month and assuming a start date on the dates shown: Date Typical 1983 Year of Build Lease Rate Lease Out 9K-AHA Lease Out 9K-AHB Lease Out 9K-AHC Lease Out Sep-90 531.3 500.4 500.8 503.7 March-91 549.8 516.3 516.6 519.6 Sep-91 428.1 395.3 395.6 398.7 March-92 406.6 370.5 369.5 372.4 Sep-92 398.3 363.0 362.0 365.0 March-93 390.0 355.4 354.5 357.4 Sep-93 380.2 346.4 345.4 348.4 Date Typical 1984 Year of Build Lease Rate Lease Out 9K-AHD Lease Out 9K-AHE Lease Out Sep-90 544.0 513.5 513.4 March-91 557.2 528.1 528.7 Sep-91 444.4 416.0 416.5 March-92 421.5 384.5 384.4 Sep-92 410.8 374.5 374.3 March-93 400.0 364.4 364.4 Sep-93 390.5 355.6 355.5 The claim made by KAC is calculated on the basis of the September 1990 lease-out rate for each aircraft for the period between 17 September 1990 and the start dates for the Polaris leases (see the table in paragraph 80). The value of the claim on that basis is set out in paragraph 2.3 of Mr Campbell’s Second Supplementary Report dated 17 June 2002. For the 5 aircraft the total claim amounts to $29,939,458. Had I decided that KAC’s claim under this sub-head was sustainable, any lease would have commenced on 1 February 1991 (not 17 September 1990). Ironically, on Ms Beyer’s figures, the lease out rate increased between September 1990 and March 1991. But had KAC sought to lease out the 5 aircraft it would, I think, have been seen to be doing so in a situation of some difficulty. I also think that some discount would have been appropriate to reflect the acknowledged problems of any valuation, and the various figures before the court. In those circumstances and because the claim is so expressed I would have decided that the claim should have been assessed at Ms Beyer’s September lease out rates discounted by 10% calculated from 1 February 1991 until the start date of the Polaris leases with (for simplicity’s sake) the aircraft treated as KUA replacing AHA and so on as Mr Campbell has done. Mr Villa’s views on lease rates were apparently coloured by his belief that the rates for the Polaris leases (for the more modern A310-300s) were themselves inflated. They (see paragraph 80) were operative from August 1991 onwards. Mr Villa said the rates could “without any great difficulty” have been negotiated to a monthly figure as low as between $300,000 and $325,000. But, as I have said, (paragraph 40), I am quite satisfied that the Polaris rates were commercially negotiated and the Airbus subsidies were of no relevance to that negotiation. On that basis the Polaris rates provide some support for Ms Beyer and none for Mr Villa. Mr Villa’s rate of $200,000 for an A310-200 in 1991 was, as Mr Vos submitted, both arbitrary and inconsistent with the agreed valuations before Aikens J. LEASING-IN The actual costs of leasing-in the “Polaris” aircraft at the rates generally agreed between Mr Campbell and Mr Kabraji were as set out in the following table: KUA KUB KUC KUD KUE Lease Start Date 19 Aug 91 19 Aug 91 29 Aug 91 18 Sep 91 4 Nov. 91 Month Total Total 8 223741 509257 616750 617750 2093938 616750 617750 2411300 616750 617750 493245 12 616750 560050 2959350 1 616750 560050 2959350 616750 617750 548050 3 616750 560050 2599350 616750 617750 548050 5 616750 560050 2959350 616750 617750 548050 7 616750 560050 2959350 616750 617750 548050 9 616750 560050 2959350 616750 617750 548050 11 616750 560050 2959350 616750 617750 548050 1993 616750 617750 548050 2 616750 560050 2959350 616750 617750 548050 4 475000 475000 5 475000 31666 6 475000 7 475000 8 348333 Return Condition Adjustment 248,209 2,133,626 2,497,576 2,497,576 2,328,010 9,704,997 9,704,997 Total costs US$ 16323950 12279782 69942253 Lease End date 2-May-93 22-Aug-93 22-Aug-93 1-Mar-93 2-May-93 2-May-93 2-May-93 Date to Sogerma 15-Sep-92 15-Sep-92 6-Oct-92 4-Aug-92 5-Aug-92 5-Aug-92 5-Aug-92 Total Costs to Sogerma Date 8,181,325 10,066,742 10,709,665 8,413,028 7,294,050 44,664,810 44,664,810 The “total costs” figure includes the “return condition” adjustment to reflect an allowance which was proposed by Mr Kabraji. The amount of the claim up to the dates when the aircraft were sent to Sogerma gives credit for the same adjustment. The claim for that period is for 80% of the total figure of $44,664,810, namely $35, 731,848. The major issue on this claim is the extent to which the 5 Polaris aircraft can be said to have been in substitution for the Iran 6 as distinct from the Mosul 4. KAC limited the claim to 80% of the Polaris lease costs following the opinion of Mr Kabraji that at the time of the trial before Aikens J it was not possible to say which leasing costs were incurred as a consequence of the non-availability of particular aircraft because KAC’s flight programme was not available. Before me attempts have been made to address this with mixed results on which I comment later. Mr Kabraji continued: “Notwithstanding this uncertainty, it would be reasonable to assume that none of the leased passenger aircraft were leased as cover for the three Airbus A300-600 aircraft which were seized. This assumption is based on the fact that these particular aircraft were already surplus to KAC’s operational requirements before the invasion and were not being used by KAC. If these three aircraft are eliminated, it means that KAC must have leased in five Airbus A310-300 aircraft from Polaris as cover for the seven passenger aircraft that were not available (five Airbus A310-200s and two Boeing B767s). Based on his knowledge of the operational capabilities of the Boeing B767-200ER, Mr Villa is of the view that at least one of the five Airbus A310-300 aircraft that were leased from Polaris would have been as cover for the two Boeing B767-200ERs. On this basis, if the Court determines that IAC are not deemed responsible for the non availability of the two Boeing B767-200ERs, … then it would not be appropriate for IAC to be held responsible for at least one fifth of the Polaris leasing charges ...” The courts have, of course, determined that IAC is not liable for the loss of the two Boeing B767s as they were two of the Mosul four. The evidence before this court is also that an A300-600 was used in 1990 on scheduled flights between Kuwait and Cairo. Mr Villa’s opinion was that KAC was entitled to claim only 58.1% of the Polaris lease costs. His reasoning was that between 1990 and 1992 there was a fall in air traffic in the Middle East of at least 5.16% (it was greater in other parts of the world) and that following the Gulf War certain routes were no longer flown by KAC for political or security reasons. One measure of aircraft utilisation is “Available Seat Miles” (“ASMs”). It is a calculation of the available scheduled seats multiplied by flight distance in miles. Mr Villa calculated KAC’s ASMs in summer 1990 and adjusted the figure down by the 5.16% and for the loss of the routes not flown in 1992 and compared the result with KAC’s ASMs in summer 1992 flown by the Polaris aircraft. The Polaris ASMs exceeded the (adjusted) ASMs flown by the Iran Six in 1990 which themselves had flown only 18.95% of the total ASMs flown in summer 1990. The figure of 58.1% is 18.95% of the total ASMs flown in 1992. The major weakness of an ASM analysis (as Mr Villa accepted) is that it is a measure of economic efficiency or productivity in the operation of an airline but does not take account of or address the routes flown and so how many aircraft may be required to maintain any particular route pattern. Nor does it reveal anything about which aircraft are being used on which routes. The actual calculations also ignore the opportunity for KAC to fly changed routes or more frequencies on some routes as in fact happened in 1992. Mr Vos further submitted that since fractions of an aircraft cannot be leased 58% was in effect 3 aircraft. Ms Beyer did seek to carry out an analysis of the actual frequencies flown in 1990 and 1992 (“a tail for tail” analysis) to see to what extent it could be demonstrated that in 1992 the Polaris aircraft had in fact replaced the Iran Six on the routes they had flown in 1990. So did Mr Villa, but his percentage was only derived from his ASM analysis. Ms Beyer’s evidence was that her tail by tail analysis showed that the Polaris aircraft had replaced the Iran Six suggesting that KAC ought not to have conceded 20% (in effect one aircraft) in the amount of the claim. But, as she also acknowledged and became apparent, this analysis was itself very difficult to carry out not least because of frequency and route changes in 1992, the varying schedules operated by KAC throughout the year, and variations in the type of aircraft used on the same route. It was this analysis which showed, for example, that an A310-300 was used in 1992 on the Kuwait-Cairo route (14 frequencies) which in 1990 had been flown by an A300-600. What the analysis cannot or cannot readily show is a case where an aircraft of type A is used to replace one of type B on one route but type B is then itself used on the route or routes previously flown by type A. Ms Beyer also prepared an analysis of the “block hour utilization” of each type of aircraft in 1990 and 1992. Ms Beyer believed block hours were a more accurate measure than ASMs because they are independent of the size of the aircraft and route structure. Block hours measure the time from when the doors of the aircraft close before take-off until they open again when the aircraft lands. Her conclusion was that between 1990 and 1992 the number of block hours flown by the A310 aircraft only increased by some 1.9% indicating that save to that extent the 310-300s had in 1992 simply replaced the capacity provided by the A310-200s in 1990, albeit the actual routings had changed. But block hours also reveal nothing about the circumstances of given routes nor do they show which aircraft are doing what or which may be replacements for others. There is no satisfactory way in which to resolve this issue in a scientific or precise manner. I think the court can do no more than take account of all the evidence to which I have referred and certain overall considerations which I think provide a basic framework in which to address the issue and assist in reaching a fair assessment in all the circumstances. KAC is entitled to be compensated under this head for the loss of 5 aircraft. It claims for only 4 replacements. Equally KAC in fact lost 10 aircraft (albeit the use of the two A300-600Cs destroyed at Mosul remains somewhat obscure and AHI was not available in 1990 as it was leased out to Egypt Air), and replaced them with only 5 aircraft. KAC was entitled to re-establish its business as best it could. It had run fairly relaxed schedules in 1990 and could reasonably do so again where routes were available to it. Whilst I see the logic of Mr Vos’ submission that any requirement for more than 2 or 3 aircraft must be considered as 3 or 4 (as part of an aircraft cannot be leased) the fact is that part of the spare capacity would be required (in effect) to replace the Mosul 4 and would be available for other routes or frequencies for which credit would normally be due to IAC. The basis of the claim remains a claim for the avoidance of lost profits. But I think the court is also entitled to look at the matter in terms which, if anything, err on the side of generosity to KAC and to keep in mind that “unavoidable betterment” is recoverable. In my judgment taking all these considerations into account and despite the logic the fair figure is to award KAC 70% of the appropriate total costs of the 5 Polaris leases taken as a whole for all 5 aircraft for the period from the date each lease began until each of the A310-200s was delivered to Sogerma. It is not possible or I think sensible to seek to apply the cost aircraft by aircraft. By the appropriate costs I mean the costs which can be justified in the light of the other submissions on this issue to which I now turn. Mr Villa’s opinion was that lower rates could have been negotiated than the Polaris rates. The basis for his opinion was largely the belief that KAC could have leased-in A310-200s and negotiated rates for them of $200,000 a month. Mr Vos objected to such an approach from Mr Villa in principle, pointing to the fact that he had accepted before Aikens J that the Polaris leases were “the quickest and probably only way (for KAC) to restart operations”, and Aikens J’s findings in paragraph 218 (quoted in paragraph 36 of this judgment). I do not, however, think that Mr Villa is to be precluded on this basis from giving his further opinion as the particular issue to which it relates was not one with which Aikens J was concerned. That is not to say that Mr Villa’s first thoughts are not to be preferred. Mr Villa’s report dated 10 June 1999 contained an Appendix summarising the comparable aircraft offered for sale or lease during 1991. The Appendix included only 5 A310-200s from 3 different sources. Mr Villa said, no doubt rightly, that the Appendix only contained aircraft which were publicly known to be available and so did not indicate any companies which might have been prepared to sell or lease their aircraft if they had been approached by KAC to that end. But, as Mr Vos submitted, I do not think it behoved KAC to go out and seek A310-200s from other companies when it had the good fortune to have available a near-ideal solution to the difficulties it faced and the needs it had to meet in the Polaris aircraft. That, I think, would be to set a standard of mitigation in excess of the standard required by law (see paragraphs 37 to 39). Moreover the evidence is that only a limited number of well-known operators had a fleet of 5 or more A310-200s in 1991 all of which would have been acquired new. Whilst Mr Villa suggested some of these operators might have jumped at the opportunity to lease the aircraft to KAC that was little more than conjecture on his part. In my judgment, KAC is entitled to recover on the basis of the actual costs of the Polaris leases, and not the notional costs of leases of A310-200s. The submissions of IAC based on the subsidies agreed by Airbus for KAC on the purchase of the new aircraft has been considered earlier in this judgment (paragraph 40). No reduction is to be made on that basis either. WET LEASES The leases and their cost were as follows: Lessor Contract Duration Aircraft Type Agreed not less than: US$ ZAS Airline June to August 1991 A310 2,446,800 Omega 21 August to 10 October 1991 L10-11 2,340,298 Air Atlanta 04/01/92 to 09/01/92 L10-11 319,940 Nation Air 14/01/92 to 25/05/92 B747 3,630,100 Nation Air 26/08/92 to 25/09/92 B747 1,719,312 Lufthansa 03/06/92 to 19/06/92 DC10 620,000 British Airways 28/05/92 to 04/07/92 DC10 2,971,644 British Airways 04/06/92 to 06/10/92 2xL10-11 8,669,880 Total 22,717,947 The major issue in relation to this claim arises from IAC’s submission that KAC has simply failed to prove that the wet leased aircraft performed flights which would otherwise have been operated by the Iran Six. A simple examination of the details of the wet leases demonstrates that whilst the first (ZAS) lease began when none of the Polaris aircraft were on lease to KAC, by the time of the second (Omega) lease, 3 of the Polaris aircraft were already in service with KAC. All the subsequent wet leases (7 aircraft) overlapped with the 5 Polaris aircraft and in the month of June 1992 4 aircraft were wet leased at the same time as all 5 Polaris aircraft were operational. There is no evidence at all as to the routes on which these aircraft were used or as to the frequency of their use. The aircraft were all long-haul larger aircraft than A310s and the simple examination itself strongly suggests that at least to a considerable extent the aircraft could not have been performing services which the Iran Six would otherwise have performed. The more probable explanation is that at least some of them were leased to meet periods of exceptional demand (for example the Haj) and that similar arrangements would have been made in previous years and would have been required even if KAC had been able to operate the Iran Six. Mr Vos submitted that even if the court determined that this claim had not been generally established it could safely infer that at least the first and possibly the first two leases were in substitution for the Iran Six and were required pending delivery of the first of the Polaris aircraft. I see some force in that as a submission, but the position remains that there is no evidence to support it when, if it existed, I see no reason why evidence should not have been available to give real support to the inference or even to establish the fact if such were the case. In my judgment this claim fails in its entirety for lack of proof. The strong inference is that the majority of the aircraft were not substitutes for the Iran Six and I decline to draw any contrary inference as regards the first two leases both for that reason and because KAC has wholly failed to support such a conclusion with evidence. There were two other grounds on which IAC submitted this claim should fail or be reduced on which I shall comment only briefly in view of my conclusion that the claim has in any event not been proved. The first ground was that Mr Villa opined that KAC did not have enough crew to operate all its scheduled flights in 1992 and so the wet leases were required for want of crew not want of aircraft. But Ms Beyer analysed KAC’s crew requirements and concluded that KAC had more than enough crew. She demonstrated that KAC’s crews were, if anything, under utilised compared to other airlines and substantially so in relation to the operational hours permitted by Kuwaiti regulation. Although Mr Villa did not resile from his opinion I accept Ms Beyer’s evidence based as it was on analysis rather than assertion. Mr Villa also said (basing himself on an earlier report of Mr Kabraji) that 30.1% of the cost of the wet leases was a saving to KAC in not having to pay for crew, maintenance and hull insurance itself. However, that begs the question. If, as they did, KAC had their own crews, maintenance facilities and insurance and continued to pay for them there was no saving. The aircraft leased were not ones for which Kuwaiti crews and engineers were qualified. As Ms Beyer put it, KAC would be paying a huge premium over its normal costs to wet lease in the aircraft. There was no saving and hence no credit would have been due on this ground. HEAD E(ii) CONSEQUENTIAL LOSS: A300-600C (AHI) The claim made by KAC is for $16,852,452 the “loss of profit” which it is said it could have been made by leasing out AHI from 17 September 1990 until the return of the aircraft from Sogerma on 4 May 1993. However, now that the Sogerma period is excluded from this trial, the claim for the pre-Sogerma period runs from 17 September 1990 to 25 September 1992 when AHI arrived at Sogerma. The claim for that period (24 months and 7 days) is made at the rate of $534,000 a month, based on Ms Beyer’s figures, and as calculated by Mr Campbell totals $12,956,449. It is also for the court to determine the applicable rate (if any) for the Sogerma period from 25 September 1990 onwards. The full claim for that period (7 months and 10 days) at $534,000 a month is $3, 879,912. It is also the subject of the Interim Payment application. The essential facts specific to this claim are: i) At the time of the invasion KAC had three A300-600Cs. Only 4 of the specific convertible type were ever built. Two of the three owned by KAC were destroyed at Mosul. The A300 was the first Airbus commercial model. It is a wide-bodied, twin engined, short to medium range aircraft. ii) To convert the aircraft from passenger to cargo (or mixed) mode a conversion kit was required. The total cost of conversion to full cargo configuration was in excess of $3m. Two kits had been supplied with the aircraft but were lost in the war. iii) At the time of the invasion each of the three aircraft was in passenger configuration. AHI had recently (in July 1990) been returned from a lease to Egyptair and was undergoing a maintenance check at Kuwait International Airport. AHI was manufactured in 1984. The Egyptair lease was dated 26 November 1987. It lasted (after an extension) for 2 years and 4 months at a minimum leasing rate of $750,000 a month. The lease was, at least partially, on a “wet” basis. It included maintenance of the aircraft by KAC and KAC maintaining Hull and War Risks Insurance upon it. iv) The scheduled or regular operation of a single aircraft of a particular type is not economically viable (because of the need for maintenance, risk of breakdown etc). v) There would have been no use which KAC could have made of the aircraft, had it retained control of it, for so long at least as the war continued. vi) After AHI had been recovered from Iran in August 1992 KAC had some negotiations to lease it out but did not do so. After its return from Sogerma in May 1993 AHI was used as a “spare” and for VIP flights. The start date for any lease For the reasons expressed in paragraph 68 I do not think any lease would have commenced before 1 February 1991. Would KAC have sought to lease out? In contrast to the 5 A310-200s I do think the probability is that KAC would have sought to lease out AHI notwithstanding that by January 1991 it would have anticipated return to Kuwait. The aircraft had previously and recently been leased out and was surplus to requirements. Moreover once it was known that the two sister aircraft had been destroyed it was of perhaps even less utility. Commercially it would have been preferable to lease it out than simply keep it as a spare aircraft. Could KAC in fact have leased out It was Mr Villa’s opinion that there would have been no takers for a single aircraft which was or soon became only one of two in existence of its type. But, again, I prefer the evidence of Ms Beyer. Her market evidence did not distinguish between A310s and A300s and she was able to suggest from published information potential customers for AHI. What rate would have been achieved? Ms Beyer used the same methodology to derive lease rates for AHI as for the five A310-200s. I have set it out and commented on it in that context and will not repeat what is said there. Her values for an average aircraft of the type built in 1984 and for AHI were as follows: Aircraft Values (US $Million) Aircraft Values (US $Million) Aircraft Values (US $Million) Date A300-600 Average Aircraft Built in 1984 A300-600 Built in 1984 AHI Sep-90 49.36 48.58 March-91 45.48 44.79 Sep-91 43.05 42.36 March-92 40.61 39.97 Sep-92 39.15 38.55 March-93 37.68 37.21 Sep-93 36.28 35.83 It was Ms Beyer’s evidence (and see paragraph 63 also) that although only 4 of the ‘C’ model were manufactured and sold, the particular configuration with its cargo convertibility “has always commanded a premium” over the standard A300-600 aircraft and a premium ranging from $1m at the date of purchase to $1.35m in 1993. She also considered other publications and concluded that they gave figures comparable to her own. Her calculation of lease-out rates for such an aircraft reflected the fact that AHI would be due for a major ‘C8’ check in 1991. For a five-year lease (and she again said the rate would rise for a shorter lease) her calculation showed: Aircraft Lease Rates (US$ Thousands per month) Aircraft Lease Rates (US$ Thousands per month) Aircraft Lease Rates (US$ Thousands per month) Aircraft Lease Rates (US$ Thousands per month) Lease Start Date Typical A300-600 (Lease In) KAC A300-600 (AHI) (Lease In) KAC A300-600 (AHI) (Lease Out) Sep-90 597 March-91 601 Sep-91 591 March-92 559 Sep-92 538 March-93 518 Sep-93 499 These leasing out rates represent 1.1% of the capital value in September 1990, 1.2% in March 1991 and 1.25% thereafter. In my judgment there are no good reasons for questioning Ms Beyer’s figures. Again I prefer to take the (very slightly lower) September 1990 figure (not March 1991) discounted by 10% for the same reasons as expressed in paragraph 78 which apply equally to AHI. Mr Villa put forward no alternative figure of his own for AHI. I would therefore assess this claim at $534,000 less 10% per month from 1 February 1991 to 25 September 1992. I will again leave it to the parties to make the calculation and address questions of interest. INTERIM PAYMENT This application arose out of the agreement that the claim under Head C had to be adjourned. KAC’s approach to the application has undergone a complete about-turn. The evidence in support of the application sought an interim payment in effect of the amount claimed for the Sogerma period ($24,101,866) less only the period of time (agreed to be up to 10 weeks) which would have been required for a C8 check on the basis that the need for the aircraft to undergo such a check in any event was the only point of substance advanced by IAC in opposition to the claim. However Mr Vos submitted that the interim payment should be made on the basis of the 10 week period itself and not otherwise on the basis that whilst there were issues about delays at and the decision to use only the facility at Sogerma there could be no real issue that although the C8 check was indeed required, had KAC retained the aircraft the checks would have been planned and carried out at KAC’s own facilities in the slack period of demand in the winter. There is indeed some brief evidence to that effect in Mr Al-Zabin’s statement. The claim for the entire Sogerma period is made up of $20,221,954 in respect of 80% of the Polaris leasing costs of the five A310-300s and $3,879,912 for the leasing out of AHI from 25 September 1992 to 4 May 1993. On the basis of a 10 week claim the Polaris claim would be at the rate of $591,870 per month (paragraph 2.10 of Mr Campbell’s Second Supplemental report) for (in effect) 3.5 aircraft and the AHI claim would be for 10 weeks at $534,000 less 10% per month. In my judgment, however, the change in the approach to the claim raises sufficient doubt about any “likely amount of the final judgment” which KAC might obtain for the Sogerma period to make it inappropriate to order that any interim payment should be made: CPR Part 25.7(4). I decline to do so. However I agree with the parties that it is sensible to decide the appropriate rates at which KAC should be compensated for the Sogerma period to the extent that it should later establish its claims. Head E(iii) has to be calculated at 70% (not 80%) of the reduced Polaris leasing in costs for such period as KAC is held entitled to recover. In accordance with Mr Campbell’s Second Supplementary Report those costs should be reduced in respect of any part of the Sogerma period for which KAC is held not to be entitled to recover by $591,870 per month per aircraft for periods prior to April 1993 and by $475,000 per month per aircraft for periods in and after April 1993. E(ii) (AHI) . The claim should be at the rate of $534,000 less 10% per month in respect of such part of the Sogerma period for which it is held that KAC is to be compensated. CONCLUSION I therefore assess KAC damages as follows: Head B KD30,155 and US$252,871.60 Head E(iii) Leasing-out: Nil. Leasing-in (Polaris): See paragraphs 90 to 92. Essentially 70% of the claimed costs of the Polaris leases from inception to the dates when the 5 A310-200 aircraft went to Sogerma. Leasing-in (Wet Leases): Nil Head E(ii) $534,000 less 10% per month from 1 February 1991 to 25 September 1992. I make no order for any Interim Payment. The precise calculations, questions of interest, the form of any judgment, costs and directions for progressing the remaining claims will be considered (to the extent not agreed) on a date to be fixed following the handing down of this judgment. Insofar as KAC may hereafter be held entitled to recover for the “Sogerma period” the rates to which it will be entitled are stated in paragraphs 115 and 116. Postscript I had prepared this judgment in draft and arrangements had just begun to be made for it to be provided to counsel when I was informed that a difficulty had arisen because of some further disclosure made by KAC. The disclosure was made on July 1 and consisted of documents relating to the possible leasing out by KAC of the 5 310-200s and AHI in the period from August 1992 to early 1994. That was the period from the time when the Iran Six were retrieved from Iran until several months after the end of the Sogerma period. On the evidence, AHI could in fact only have been leased out from mid-March 1993 and all the 5 A310-200s from only mid-June 1993 when the aircraft were returned from Sogerma (see the Table in paragraph 13 of the judgment). Two of the newly disclosed documents in particular understandably caused concern to IAC. There was, as KAC acknowledges, no excuse for the failure to make the disclosure in due time and IAC was entitled to be concerned. The first document is dated 17 November 1992. It is addressed by the Chairman and Managing Director of KAC to his opposite number at Iran Air. The letter responds to an expression of Iran Air’s interest in leasing all the Iran Six for a period of five years. It quotes dry lease rates of US$350,000 per aircraft per month for A310-200s and US$380,000 per month for AHI. Although described as a “dry” lease the letter states that the cost of insurance is included in the rate quoted. The second document is a further letter between the same parties dated 1 December 1993 by which KAC offered Iran Air dry leases of the Iran Six “for a period of one year renewable” at rates of $270,000 per month for A310-200s and a rate of $335,000 per month for AHI. These dates were on the basis that the cost of insurance would be Iran Air’s responsibility. On learning of the disclosure, I invited counsel for IAC to put in writing their concerns and gave KAC an opportunity to respond in writing. IAC’s “supplemental submissions” were provided on 18 July and KAC’s submissions on 19 July. Thereafter IAC provided reply submissions on 22 July and the matter was considered at a short further hearing held on 23 July. IAC’s concerns as expressed are really two-fold. First it submits that the rates quoted are inconsistent with and undermine Ms Beyer’s evidence and second that they support much lower leasing out rates than KAC, on her advice, claim. As I had already concluded that the leasing-out claim for the A310-200s failed in any event the only material effect on the outcome relates to the leasing-out claim for AHI. When the matter arose KAC properly offered to recall Ms Beyer to be cross-examined on the documents. She was also present in court for that reason on 23 July. But IAC declined the offer both before and on 23 July. IAC’s supplemental submissions contained a letter from Mr Villa commenting on the disclosure which I have read and considered. I do not think it is right in those circumstances to permit the further disclosure to affect the views of Ms Beyer’s evidence which I had formed unless the contents of the documents themselves compel such a conclusion. The relevant considerations as regards the A310-200s are I think these: i) Ms Beyer’s monthly rental figures at September 1992 were in the range of $362 to $375,000 (paragraph 76); ii) Her figures were somewhat less at March 1993 and at September 1993 were in the range of $345 to $355,000; iii) The figures quoted by KAC in the new disclosure were $350,000 a month at mid-November 1992 (including insurance) and $270,000 a month at December 1993 (excluding insurance). iv) But the figures are not comparable. Ms Beyer’s figures were for a lease of a two to three year term not five years, and her figures excluded insurance. The former would increase the rental figure (as Ms Beyer said and I have found) and the latter would lower it in the sense that the cost of insurance should be excluded from it. Further there were no negotiations on the figure and it is possible that KAC could have been persuaded to lower its opening offer; on the other hand a package deal for all six aircraft might well be expected to carry a discount. In my judgment there is nothing in these figures bearing in mind the lack of comparability which justifies the suggestion that Ms Beyer’s evidence is undermined by them let alone the suggestions that her evidence is “highly suspect” or “falsified”. Moreover Mr Villa’s figure of $200,000 in 1991 remains wholly out of line with all the other evidence including the new disclosure. The relevant considerations as regards AHI are: i) Ms Beyer’s monthly rental figure for AHI in September 1992 was $482,000. (Paragraph 107); ii) Her figure in March 1993 was $465,000 and in September 1993 $434,000; iii) The figure quoted by KAC in the new disclosure was $380,000 at mid-November 1992 and $335,000 at December 1993. iv) The same considerations of comparability or the lack of it apply as they do with the A310-200s but with the significant exception that Ms Beyer's figure for AHI was also for a five year term. Plainly the discrepancy in these figures is so substantial that as Mr Vos acknowledged it cannot be explained more than partially by comparability considerations. There are, however, other considerations. The disclosed figures relate to late 1992 and late 1993 which are long after the date on which the relevant figure has to be determined for KAC’s claim. That the market was bad by then is not in doubt. Ms Beyer herself said it was in mid-1992 and 1993 that values fell (paragraph 66). Further I have already decided that it is appropriate to discount Ms Beyer’s figure for AHI by 10% (paragraph 108). Although Mr Nathan rightly submitted that there is no evidence to connect them, it is also a fact that at the time of the exchange of letters with Iran Air KAC and the Government of Iran were in negotiation about the figure which resulted in the payment of $20m by KAC: paragraph 5(ii). The figure first sought by the Government of Iran was many times higher than $20m. Nonetheless I have given anxious consideration to whether or not the AHI disclosure should affect my conclusions. I have decided that it should not. First I am entirely satisfied that my assessment of Ms Beyer’s evidence is still justified and indeed that it would be quite unfair to conclude otherwise. I think her figures for the A310-200s have, if anything, been given further support and the factors to which I have referred generally and as regards AHI are more than sufficient to make an adverse conclusion insupportable. More difficult, to my mind, has been the question whether a discount greater than 10% from Ms Beyer's figure would be appropriate. But having in mind in particular the different dates and what I think to be the commonsense commercial advantages of package deals, on balance I have concluded that no greater discount should be applied. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII