CSDS Aircraft Sales & Leasing Inc v Singapore Airlines Ltd

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JCA
• Judgment Date: 02 March 2022
• Neutral Citation: [2022] SGCA(I) 3
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 46 of 2021
• Year: 2022
• Published date: 05 March 2022
• Hearing Date: 18 January 2022
• Plaintiff Counsel: Shobna Chandran, Yong Manling Jasmine, Muhammad Taufiq bin Suraidi and Thaddaeus Aaron Tan Yong Zhong (Tan Rajah & Cheah)
• Defendant Counsel: Stephen Houseman QC (instructed), Tan Teck San Kelvin, Choy Wai Kit Victor and Yip Ting Yuan Darren (Drew & Napier LLC)
• Subject Matter: Contract,Remedies,Specific performance,Breach,Termination
• Citation: [2022] SGCA(I) 3

Andrew Phang Boon Leong JCA (delivering the judgment of the court): Introduction and overview of decision

It is often said that pleadings form the foundation upon which the evidence and arguments in a civil dispute are built. This court has emphasised – time and time again – the essential function of pleadings. In this appeal, however, a quite different question with regard to pleadings is thrown into sharp focus. Where a plaintiff pleads solely for specific performance of a contract in its first set of pleadings, is the plaintiff thereby taken to have affirmed the contract such that the defendant’s prior repudiatory breaches are waived? In what circumstances can such a plaintiff nevertheless claim thereafter for damages for breach of contract, if at all?

To state our conclusion right at the outset, we affirm the Judge’s decision below in Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc [2021] 5 SLR 26 (“the Judgment”) that the respondent, Singapore Airlines Limited (“SIA”), pleaded for specific performance and, in the alternative, damages for breach of contract in its first set of pleadings. In such circumstances, there was no clear and unequivocal affirmation of the contract. Indeed, this is (perhaps somewhat ironically) precisely what (amongst other things) was also held in the very case which the appellant, CSDS Aircraft Sales & Leasing Inc (“CSDS”), relied upon as a foundational precedent in the present appeal, viz, the English Court of Appeal decision of The Public Trustee v Pearlberg [1940] 2 KB 1 (“Pearlberg”) – a point to which we will return (see [27]−[29] below). In the present case, therefore, SIA could and did accept the defendant’s repudiatory breaches and validly terminated the contract.

Given the position we take with regard to SIA’s first set of pleadings, we do not think that it is necessary for us to express a definitive view on the questions at [1] above. That being said, we express our preliminary view that even if a plaintiff pleads solely for specific performance of a contract in its first set of pleadings, it is unlikely that this circumstance in itself is sufficient to constitute an affirmation of the contract such that the defendant’s prior repudiatory breaches are waived – not, at least, in any permanent way. Put simply, an election (if any) would be merely procedural and, at best, temporary in nature, and the plaintiff would be free to resile from it at any time. As a result, the plaintiff may still terminate the contract by accepting the defendant’s prior repudiatory breaches, although in so doing, the plaintiff necessarily abandons his claim for specific performance. Again, we will elaborate upon the reasons for this provisional view below. Let us turn now to the facts and background of the present appeal.

Facts The parties

The appellant, CSDS, is a company incorporated in the US and based in California. CSDS carries on the business of, inter alia, aircraft sales and leasing.

The respondent, SIA, is a company incorporated in Singapore and carries on the business of, inter alia, international carriage by air.

Background to the dispute

On 19 September 2018, SIA and CSDS entered into an Aircraft Purchase Agreement (“the Agreement”) for the sale of one Boeing B777-212 aircraft bearing Manufacturer’s Serial Number 30875 (“the Aircraft”). By cl 11 of the Agreement, the governing law was that of England. The purchase price of the Aircraft was US$6.5m. CSDS had paid a deposit of US$250,000 and a sum of US$6.25m remained outstanding (“the Outstanding Sum”). As the delivery date of 15 September 2018 had passed by the time the Agreement was entered into, it is not disputed by the parties that delivery was to take place on a mutually agreed date.

CSDS does not now dispute that, following the conclusion of the Agreement, there was a series of dates on which CSDS agreed to make payment of the Outstanding Sum. CSDS also does not challenge the Judge’s finding that on at least six of those agreed dates, CSDS did not make payment of the Outstanding Sum. Thereafter, on 23 October 2018, SIA sent a Letter of Demand (“SIA’s 23/10/2018 LOD”) requiring CSDS to make payment of the Outstanding Sum by 5.00pm on 26 October 2018. In an e-mail by SIA on 26 October 2018 (“SIA’s 26/10/2018 E-mail”), SIA recorded an agreement between the parties in which SIA would send out the Bill of Sale (“the BOS”) to the escrow agent that day, and CSDS would transfer the funds that night, at the opening of the US day, with confirmation of such payment by close of business on 26 October 2018 (California time). However, CSDS did not make payment of the Outstanding Sum by close of business on 26 October 2018 (California time).

On 31 October 2018, SIA instituted proceedings in the High Court. The Writ was endorsed with a Statement of Claim (“the First SOC”). As the exact terms of the First SOC assumed a central role in the arguments of the parties below and on appeal, we set out the relevant paragraphs of the First SOC in full as follows: 10. [CSDS] has, to date, failed and/or refused to (i) make payment of the Outstanding Sum or any part thereof to [SIA], and/or (ii) provide evidence that [CSDS] has appointed a process agent in England and that such process agent has agreed to act as agent. 11. On the other hand, [SIA] is and has at all material times been ready, willing and able to fulfil all its obligations under the Agreement. 12. By reason of the aforesaid, [SIA] is entitled to specific performance of the Agreement, and payment of the Outstanding Sum from [CSDS]. 13. In the alternative, by reason of [CSDS’s] aforesaid breaches of the Agreement, [SIA] has suffered loss and damage.

…

And [SIA] claims: (i) an order for specific performance by [CSDS] of the Agreement; (ii) the Outstanding Sum of US$6,250,000; (iii) in the alternative, damages to be assessed;

…

On 1 November 2018, 8.25pm (Singapore time), SIA sent a letter to CSDS (“SIA’s 1/11/2018 Letter”) stating that it was prepared to consider an extension of time for CSDS to complete the purchase of the Aircraft, on the condition that CSDS agree to a number of terms, including payment of the Outstanding Sum by 2 November 2018, 12.00pm (Singapore time). It is not disputed that CSDS did not accept SIA’s offer of an extension of time or make payment of the Outstanding Sum by the deadline given.

The first set of pleadings (including the First SOC) was served on CSDS on 2 November 2018 (California time). On the same day (California time), CSDS responded to say that “CSDS will perform as per the court filing”.

On 4 November 2018, SIA’s solicitors wrote to CSDS (“DN’s 4/11/2018 Letter”) stating that as CSDS continued to be in default on its obligation to pay the Outstanding Sum, SIA accepted CSDS’s repudiation of the Agreement and terminated the Agreement with immediate effect.

On 5 November 2018, SIA amended the Writ and Statement of Claim (“the Second SOC”). In the Second SOC, SIA made amendments to remove its claim for specific performance and added further particulars, viz: On or around 23 October 2018, SIA notified CSDS of its failure to pay the Outstanding Sum. CSDS’s continued failure and/or refusal to make payment of the Outstanding Sum constituted an event of default under cl 16.1(a) of the Agreement and/or a repudiatory breach of the Agreement. On or around 4 November 2018, SIA accepted CSDS’s repudiation of the Agreement and, by notice to CSDS, terminated the Agreement with immediate effect. This second set of pleadings (including the Second SOC) was served on CSDS on 5 November 2018 (California time).

The parties’ cases

On 13 August 2019, the proceedings were transferred to the Singapore International Commercial Court. Claims and counterclaims arose in relation to the way in which the Agreement came to an end, it being the case of each party that the other was in repudiatory breach, which breach had been accepted.

Before the Judge, the central argument advanced by CSDS was that no date for payment and delivery was ever agreed. In the alternative, CSDS relied on Pearlberg to argue that service of the first set of pleadings (including the First SOC) by SIA constituted an affirmation of the Agreement with the effect that all prior repudiatory breaches by CSDS (if any) were waived. If SIA wanted thereafter to terminate the Agreement for CSDS’s non-payment of the Outstanding Sum, it would have had to reimpose a new time limit for CSDS to make payment. SIA did not do so. In the circumstances, CSDS pleaded instead that by DN’s 4/11/2018 Letter, SIA was itself in repudiatory breach, which breach CSDS had accepted.

On the other hand, SIA disputed CSDS’s contention that there were no agreed dates for payment and delivery. SIA argued that CSDS was in repudiatory breach when it failed to make payment of the Outstanding Sum, which repudiatory breach SIA had accepted by way of DN’s 4/11/2018 Letter. In so far as CSDS’s alternative argument was concerned, SIA argued that as the First SOC had pleaded for specific performance and, in the alternative, damages for breach of contract, it was entitled to elect between the alternative remedies at any stage, which it did by way of DN’s 4/11/2018 Letter.

Decision below

The Judge rejected CSDS’s argument that there were no agreed dates for payment and delivery, finding that CSDS did, in fact, agree to a series of dates for payment or release of funds and confirmation with SIA. Despite assurances given by CSDS of payment on the dates in question, no funds were transferred.

The Judge was of the view that SIA’s 26/10/2018 E-mail provided a final deadline for CSDS to make payment. Consequently, CSDS was in repudiatory breach of the Agreement as at the close of business on 26 October 2018 (California time) which gave rise, at common law, to the right of SIA to accept that repudiation as bringing the contract to an end, regardless of...