Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc

CourtInternational Commercial Court (Singapore)
JudgeJeremy Lionel Cooke IJ
Judgment Date14 June 2021
Neutral Citation[2021] SGHC(I) 3
Citation[2021] SGHC(I) 3
Defendant CounselRoderick Martin SC, Rajaram Ramiah, Senthil Dayalan, Gideon Yap and Eugene Tan (RHTLaw Asia LLP)
Plaintiff CounselStephen Houseman QC (instructed), Kelvin Tan, Jason Chen and Chng Hu Ping (Drew & Napier LLC)
Hearing Date25 May 2021,24 May 2021
Published date18 June 2021
Docket NumberSuit No 4 of 2019
Subject MatterContract,Specific performance,Remedies,Termination,Breach
Jeremy Lionel Cooke IJ: Introduction

On 19 September 2018, the plaintiff and the defendant (“SIA” and “CSDS” respectively) 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 1, SIA was to sell the Aircraft to CSDS “on the Delivery Date (as defined herein)”. Delivery was to take place in Singapore. The purchase price was US$6.5m and the Agreement recorded that a deposit had been paid of US$250,000. SIA is, self-evidently, based in Singapore whilst CSDS is based in California. The sale was of the airframe only with the engines to be used to ferry the Aircraft to Sanford Airport in Florida but for those engines then to be shipped back to Singapore by CSDS at SIA’s expense.

By cl 11 of the Agreement, the governing law was that of England with a non-exclusive jurisdiction clause in favour of the English Courts but an express term providing that nothing in the Agreement would prevent either party from bringing suit in any other appropriate jurisdiction.

In circumstances described more fully later, completion of the Agreement never occurred, with each party blaming the other and the Agreement came to an end. Proceedings were begun by SIA in the High Court of Singapore with a transfer to the Singapore International Commercial Court on 13 August 2019. Claims and counterclaims arise 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 had been accepted.

By an order of 4 June 2020, the court ordered that all questions of English law be determined on the basis of submissions, either oral or written or both, instead of proof and gave permission for Edmund King QC and Roderick Martin SC to appear, represent and make submissions thereon. By a further order of 12 January 2021, the court gave such permission to Stephen Houseman QC in place of Edmund King QC as a result of the latter’s unfortunate illness.

On 16 July 2020, the court ordered that the trial be bifurcated, with issues of liability to be heard separately from, and prior to, the hearing of any assessment of damages on SIA’ s claim or CSDS’ counterclaims, as the case might be. This judgment is therefore limited to the question of liability in relation to the failure to complete the sale/purchase and the termination of the Agreement.

The history prior to the Agreement

Because at the relevant times there was a 15 or 16 hour time difference between Singapore where SIA was based and California where CSDS was based, emails sometimes appear with different dates on them. Save as expressly stated, this judgment has adopted the Singapore time and date, setting out particular times in California where the difference could be thought to matter.

On 19 July 2018, responding to a request from SIA for proposals, CSDS made a written offer to purchase the Aircraft subject to the execution of a definitive Aircraft Purchase Agreement in the seller’s standard form and subject to a Technical Inspection of the Aircraft and its records, with a right to reject the Aircraft within three days of such inspection. Closing and delivery were to occur on or around 15 August 2018, but no later than 30 September 2018. On 20 July 2018, SIA notified CSDS of its in-principle acceptance of the offer. The price was agreed at US$6.5m and an initial deposit of US$250,000 was paid on 27 July 2018.

Inspection took place on 3 August 2018 and on expression of satisfaction by CSDS, SIA recorded the discussion that the parties would work towards “Purchase Agreement and Technical Acceptance on 15 [August] 18” and “[f]erry to Sanford Airport, Florida, USA on week of 20 [August] 18”. On 8 August 2018, SIA sent CSDS a draft Aircraft Purchase Agreement for review, saying that the lead time for Flight Operations to prepare a ferry flight from Singapore was 10–14 days.

Thereafter there was a history of delay on the part of CSDS in failing to provide any comments on the draft Aircraft Purchase Agreement and Technical Acceptance. On 24 August 2018, the President of CSDS, Mr Benedict Sirimanne (“Mr Sirimanne”), informed SIA that it was impossible to complete the Technical Acceptance before the ferry flight which was then planned for 28 August 2018. He stated that if the schedule could not be delayed, he might have to withdraw CSDS’ offer. A telephone conversation took place that day in which it was agreed that the scheduled Technical Acceptance was planned for 15 September 2018, the delivery date would be 15 September 2018 and the ferry flight would take place thereafter for which five working days lead time was then required.

By 31 August 2018, the parties had agreed on the draft form of the Agreement, but on 4 September 2018, CSDS informed SIA that it wished to add a “closing mechanism” into the agreement and provided some details the next day. CSDS wanted the agreement to be executed by both parties on or before 10 September 2018, for the ferry date to be fixed for a date on or before 15 September 2018 but before the aircraft set off on the ferry flight, SIA was to send the Original Bill of Sale, undated to AEROtitle, as escrow agents. CSDS was to place the balance of the purchase price in escrow and when the aircraft landed at Sanford Airport, it was to be de-registered by SIA and the balance of the purchase price released by the escrow agent. Discussions continued without any agreement being reached, with CSDS then asking for the Original Bill of Sale to be sent to AEROtitle as soon the Agreement was executed with instructions that it was to be released to CSDS on confirmation of payment to SIA.

On 11 September 2018, SIA emailed Ms Meagan Vincent (“Ms Vincent”) of AEROtitle to say that SIA and CSDS were on the point of concluding an aircraft purchase agreement and understood that AEROtitle had been appointed the escrow agent by CSDS. The email went on to say that SIA had been informed by CSDS that, upon execution of the agreement and the Technical Acceptance Certificate the signed but undated Original Bill of Sale should be sent to AEROtitle for it to hold in escrow until confirmation was given by SIA that it could be dated and released to the Federal Aviation Authority for purposes of registering the interests of the buyer. The receipt of the email was acknowledged (and copied to CSDS) with a request for a copy of the executed sale agreement when available, following which AEROtitle would provide a checklist of items required for completion of the closing which would assure the parties of the escrow agent’s understanding of the escrow arrangements. SIA informed CSDS that it had begun to engage with the escrow agents and sent CSDS, on 13 September 2018, a scanned copy of SIA’s executed Agreement, a draft of the Technical Acceptance Exception Letter, an updated Ferry Flight Agreement and a Certificate of Insurance for the aircraft which, if acceptable to CSDS, would then be processed by SIA’s insurance department. The email attached a planned timeline chart which provided for execution of the Agreement on 13 September 2018, the Technical Acceptance Exception Letter on 14 September 2018, the undated Bill of Sale to be sent to the escrow agent on the same day and the invoice for the balance of the purchase price to be issued on 17 September 2018. Confirmation of transfer of funds for the purchase, together with confirmation of arrangements for the ferry date, were to be given between 17 and 19 September 2018, the undated Bill of Sale was to reach the escrow agent by 21 September 2018, the ferry flight to take place on 25/26 September 2018 and the Bill of Sale to be released by the escrow agent to CSDS on 27/28 September 2018.

Delay occurred whilst discussions continued with SIA insisting on the same sequence of steps, with confirmation of the payment of the purchase price prior to the undated Bill of Sale reaching the escrow agent and release to the purchaser. In essence, SIA was requiring the confirmation of funds transfer before arranging the ferry flight to California.

On 19 September 2018, Mr Sirimanne sent the executed Agreement to SIA, expressing gratitude for SIA’s understanding of the delay that CSDS had requested for the closing and delivery and proposing a new schedule, saying that it was “[b]ased on your assurance that you will try to make the new schedule work”. That new schedule involved a further delay of two weeks which presented logistical problems and the need for a further approval from the Civil Aviation Authority of Singapore (“CAAS”). The email exchanges recorded CSDS’ confirmation that the end date for the ferry flight was fixed for 10 October 2018 and would not slide further.

The terms of the Agreement

The Agreement provided, so far as material: Sale

Upon and subject to the terms and conditions of this Agreement, Seller will sell and Buyer will buy the Aircraft on the Delivery Date (as defined herein).

Purchase Price The purchase price for the Aircraft shall be … US$6,500,000 (the “Purchase Price”). Seller acknowledges that Buyer has paid a deposit of US $250,000 on 27 July 2018 (“Deposit”). Having completed the inspection of the Aircraft, and upon the execution of this Agreement, this Deposit shall be non-refundable. This deposit shall be applied to the Purchase Price. The Purchase Price for the Aircraft less the deposit shall be payable on the Delivery Date (as defined herein). The Deposit shall be refunded in full, and without interest, to Buyer within five (5) business days of the earliest to occur of: (i) the Termination Date (as defined herein) … and (ii) termination of this Agreement in accordance with Clause 16.2.

Delivery Seller will deliver, sell, transfer and convey with full title guarantee all of their respective rights, title and...

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2 cases
  • Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc
    • Singapore
    • International Commercial Court (Singapore)
    • 3 November 2022
    ...damages following the trial on liability in this matter, which is reported as Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc [2021] 5 SLR 26. In that judgement, I held that the defendant was in repudiatory breach of contract on 26 October 2018 and that this breach was accepted b......
  • CSDS Aircraft Sales & Leasing Inc v Singapore Airlines Ltd
    • Singapore
    • Court of Appeal (Singapore)
    • 2 March 2022
    ...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 ......

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