De Havilland Aircraft of Canada Ltd v Spicejet Ltd [2021] EWHC 362 (Comm) (23 February 2021)

De Havilland Aircraft of Canada Ltd v Spicejet Ltd [2021] EWHC 362 (Comm) (23 February 2021)

CO6 did not suspend payment obligations for Aircraft 9–20, only the scheduled delivery months; LA 13 did not impose an enforceable or breached obligation to procure finance; Article 15.4(c) is not a penalty but a reasonable pre-estimate of loss; and the Claimant is entitled to summary judgment for liquidated damages.

Citation
[2021] EWHC 362 (Comm)
Parties
Claimant: De Havilland Aircraft of Canada Limited; Defendant: SpiceJet Limited
Jurisdiction
England and Wales
Judgment Date
23 February 2021
Procedural Posture
Commercial Contract Dispute (summary Judgment And/or Strike Out) / High Court (commercial Court) Judgment on Summary Judgment Applications and Strike Out
Outcome
Summary judgment for the Claimant; Defendant's counterclaim struck out.
Legal Topics
Construction of Contract, Liquidated Damages and Penalty Clauses, Summary Judgment, Set Off and Counterclaim, Assistance in Arranging Finance, Prevention Principle
Contract Law Commercial Law Construction of Contract Liquidated Damages and Penalty Clauses Summary Judgment Set Off and Counterclaim Assistance in Arranging Finance Prevention Principle

Case Brief

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Parties

De Havilland Aircraft of Canada Limited

Claimant

SpiceJet Limited

Defendant

Procedural Posture

Commercial Contract Dispute (summary Judgment And/or Strike Out) / High Court (commercial Court) Judgment on Summary Judgment Applications and Strike Out

Legal Issues

  1. 1 Whether Change Order 6 (CO6) suspended payment obligations for Aircraft 9–20 or only the scheduled delivery months
  2. 2 Whether the Claimant breached obligations under Letter Agreement 13 (LA 13) to assist in arranging finance, and if so, whether this provided a defence or set-off
  3. 3 Whether Article 15.4(c) of the Purchase Agreement is an unenforceable penalty clause

Ratio Decidendi

CO6 did not suspend payment obligations for Aircraft 9–20, only the scheduled delivery months; LA 13 did not impose an enforceable or breached obligation to procure finance; Article 15.4(c) is not a penalty but a reasonable pre-estimate of loss; and the Claimant is entitled to summary judgment for liquidated damages.

Court Disposition

Summary judgment for the Claimant; Defendant's counterclaim struck out.

Orders

  • Claimant entitled to terminate the Purchase Agreement and undelivered aircraft for default.
  • Claimant entitled to recover liquidated damages of US$42,950,000 for undelivered aircraft.