CSDS Aircraft Sales & Leasing Inc. v Singapore Airlines Ltd

• Jurisdiction: Singapore
• Judge: Steven Chong JCA,Beverley Marian McLachlin IJ
• Judgment Date: 19 June 2023
• Docket Number: Civil Appeal No 8 of 2022
• Court: Court of Appeal (Singapore)

CSDS Aircraft Sales & Leasing Inc

and

Singapore Airlines Ltd

[2023] SGCA(I) 5

Steven Chong JCA and Beverley Marian McLachlin IJ

Civil Appeal No 8 of 2022

Court of Appeal

Damages — Assessment — Valuation of aircraft — Breach of aircraft purchase agreement — Aircraft being sold without engines resulting in difficulties in attracting prospective buyers — Various third-party offers being received by seller in attempting substitute sale of aircraft — Whether third-party offers should be given due weight in determining market value of asset — Whether there was hierarchy between factual and expert evidence in determining market value of asset — Section 50(3) Sale of Goods Act 1979 (c 54) (UK)

Evidence — Weight of evidence — Expert opinion evidence — Expert providing valuation of aircraft by extrapolating from market value of other aircraft models and making adjustments — Expert making concession at trial that his valuation method was incorrect — Whether court could disregard expert's mistaken concession at trial where it did not make sense

Held, dismissing the appeal:

(1) It was axiomatic that the process of valuing assets was largely fact-sensitive in nature and was typically reliant on expert evidence to assist the court. The court had to consider all categories of evidence (both factual and expert) when arriving at its conclusion on valuation, and these pieces of evidence had to be tested against one another, having regard to logic and common sense. The weight to be ascribed to each category of evidence depended on the issue in question, the nature of the evidence and its inherent reliability. There was no hierarchy of evidence on the determination of the market value of an asset. The Judge did not completely disregard Mr Seymour's expert evidence when ascertaining the market value of the Aircraft. This was self-evident from the Judge's reasoning where he noted that his conclusion of US$1.5m (by adding an uplift from the March 2019 RFP bid of US$1.315m) was not too different from Mr Seymour's conclusion for that date: at [33] to [36].

(2) Where it was difficult to ascertain the market value of an asset, reference to third-party offers was relevant as they could provide some informational value on market value, though not having determinative weight. In the present appeal, reference to third-party offers was required as it was difficult to determine the Aircraft's market value as it was to be sold without engines which created enormous difficulties in attracting prospective offers. Further, although there was an available market for the Aircraft, the market was comparatively soft and first-generation Boeing aircrafts were proving difficult to sell. The March 2019 RFP bid for $1.315m was a tangible and real offer that should be given due regard and treated as cogent evidence of the Aircraft's market value as it was genuine, made at arm's length, and was not speculative or conditional: at [38] to [41].

(3) The factual evidence on record played a useful role in furnishing a reality check on the expert evidence. The median point market valuation of the Aircraft provided by Mr Seymour for May 2019 was US$1.66m, which was remarkably close to the March 2019 RFP bid of US$1.315m. This suggested that Mr Seymour's valuation was not unfounded or divorced from reality. Considering both the factual and expert evidence, the Judge's eventual figure of US$1.5m would approximate the arithmetic mean of US$1.315m and US$1.66m. There was thus no reason to disturb the Judge's conclusion: at [42] and [43].

(4) While Mr Seymour made certain concessions at the trial concerning his valuation methodology, the Judge was entitled to reject these as they were mistaken concessions. There was no rule of law that the court had to unquestioningly accept the unchallenged evidence of any witness, even for expert witnesses. If the evidence of the expert did not make sense, it was entirely open to the court to disregard it just like any other inherently tenuous or questionable evidence. If Mr Seymour's concession was given effect to by the Judge, then the market value of the Aircraft would have been in excess of US$6m. This would bear no resemblance whatsoever to the reality that after multiple rounds of issuing RFPs to more than 200 potential buyers over a period of two years, these efforts only attracted the highest viable offer of US$1.315m: at [48] to [53].

(5) There was no reason to disturb the Judge's finding that the reasonable time to conclude the substitute sale would be six months from 4 November 2018. Once the March 2019 RFP bid was used as the reference point to assess the reasonable time for sale, it was untenable for CSDS to suggest otherwise that a substitute sale could have been concluded within three months (ie, even before March 2019). Thus, CSDS's challenge to the award of six months of parking and maintenance fees (instead of three months) had to fail: at [54] to [56].

Case(s) referred to

Abhilash s/o Kunchian Krishnan v Yeo Hock Huat [2019] 1 SLR 873 (folld)

AerCap Partners I Ltd v Avia Asset Management AB [2010] EWHC 2431 (Comm) (folld)

Armstrong, Carol Ann v Quest Laboratories Pte Ltd [2020] 1 SLR 133 (refd)

CSDS Aircraft Sales & Leasing Inc v Singapore Airlines Ltd [2022] 1 SLR 284 (refd)

Kiri Industries Ltd v Senda International Capital Ltd [2023] 3 SLR 140 (refd)

Lim Chong Poon v Chiang Sing Jeong [2020] SGCA 27 (refd)

Lo Sook Ling Adela v Au Mei Yin Christina [2002] 1 SLR(R) 326; [2002] 1 SLR 408 (refd)

Poh Fu Tek v Lee Shung Guan [2018] 4 SLR 425 (refd)

Poh Soon Kiat v Desert Palace Inc [2010] 1 SLR 1129 (refd)

Sakthivel Punithavathi v PP [2007] 2 SLR(R) 983; [2007] 2 SLR 983 (refd)

Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc [2021] 5 SLR 26, SICC (refd)

Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc [2022] SGHC(I) 15 (refd)

Facts

The appellant, CSDS Aircraft Sales & Leasing Inc (“CSDS”) entered into a contract dated 19 September 2018 (the “Agreement”) to purchase from the respondent, Singapore Airlines Ltd (“SIA”), a Boeing 777-212777-212 aircraft (the “Aircraft”) without engines at the price of US$6.5m. Following the trial on liability, an international judge of the Singapore International Commercial Court (the “Judge”) found that CSDS was in repudiatory breach of contract and this breach was accepted by SIA as bringing the contract to an end on 4 November 2018. The outstanding issue pertained to the assessment of damages for losses consequent upon the breach. SIA sought damages for: (a) the difference in the contract price and market value of the Aircraft under s 50(3) of the English Sale of Goods Act 1979 (c 54) (UK) and (b) parking and maintenance fees, etc.

Despite efforts by SIA to resell the Aircraft after 4 November 2018, no successful substitute sale was concluded. The highest viable bid that SIA received for the sale of the Aircraft's components (excluding the airframe) was US$1.315m in the request for proposal (“RFP”) issued on 12 March 2019 (the “March 2019 RFP”). However, SIA did not proceed with this bid as it considered redeploying the Aircraft to meet the operational needs of its sister airlines. Further attempts were made to advertise and sell the Aircraft between May 2019 and October 2020, but to no avail.

The key issue before the Judge, and in the present appeal, pertained to the proper determination of the market value of the Aircraft. SIA adduced expert evidence from Mr Philip Seymour (“Mr Seymour”) who provided a notional valuation of the Aircraft by extrapolating from the market value of another aircraft model and making certain adjustments, but also taking into account that the Aircraft was to be sold without engines. Based on Mr Seymour's expert evidence, the median point market value of the Aircraft in February 2019 and August 2019 was US$2.14m and US$1.17m respectively. Thus, the midpoint of these figures for May 2019 would have been US$1.66m.

The Judge relied on both the factual and expert evidence on record to determine the Aircraft's market value at US$1.5m. Therefore, the consequential damages suffered by SIA amounted to US$4.75m (ie, the contract price of US$6.5m, less a US$250,000 deposit paid and the US$1.5m market valuation). The Judge also found that a period of six months from 4 November 2018 (ie, 4 May 2019) was a reasonable timeframe to conclude a substitute sale based on the most viable bid of US$1.315m in the March 2019 RFP following some negotiation. Consequently, the Judge awarded the attendant parking and maintenance charges required to store and maintain the Aircraft for potential buyers for six months, amounting to S$233,829.87. CSDS appealed against the Judge's decision.

Legislation referred to

Sale of Goods Act 1979 (c 54) (UK) s 50(3)

Shobna Chandran, Yong Manling Jasmine, Thaddaeus Aaron TanandMarissa Daisy Decruz (Tan Rajah & Cheah) for the appellant;

Tan Teck San Kelvin, Yip Ting Yuan DarrenandKenneth Kwek Junjie (Drew & Napier LLC) for the respondent.

19 June 2023

Steven Chong JCA (delivering the grounds of decision of the court):

Introduction

1 This appeal, CA/CAS 8/2022 (“CAS 8”), concerns an award of damages by an international judge (the “Judge”) of the Singapore International Commercial Court (the “SICC”) in Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc[2022] SGHC(I) 15 (the “Judgment”), following an assessment of damages hearing. The facts of the underlying suit are unremarkable.

2 The appellant, CSDS Aircraft Sales & Leasing Inc (“CSDS”) entered into a contract dated 19 September 2018 (the “Agreement”) to purchase from the respondent, Singapore Airlines Ltd (“SIA”), a Boeing 777-212 aircraft (the “Aircraft”) without engines at the price of US$6.5m. CSDS paid the deposit of US$250,000, but failed to make payment of the balance sum of US$6.25m. Following the...