CELESTIAL AVIATION TRADING 71 LTD V PARAMOUNT AIRWAYS PRIVATE LTD

[2010] EWHC 185 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Hamblen, 11 February 2010

Lease of aircraft - Termination of lease due to event of default - Claim for delivery up of aircraft - Equitable jurisdiction to grant relief from forfeiture in relation to an aircraft operating lease - Whether court ought to exercise its discretion to grant relief

The claimant, Celestial, had leased three aircraft to the defendant, an airline. Celestial and Paramount had concluded an Aircraft Specific Lease Agreement (ASLA) incorporating the terms of an Aircraft Lease Common Terms Agreement (CTA) concluded between GE Commercial Aviation Service Ltd and the defendant airline. The defendant was to pay rent and supplemental rent based on the preceding month's use of the aircraft. Failure to pay supplemental rent was a defined event of default allowing the claimant to accept repudiation, terminate the lease and take possession of the aircraft. The claimant's case was that supplemental rent had not been paid. It had sought summary judgment on sums due under the leases of three aircraft, for the delivery up of those aircraft and for damages to be assessed. Teare J had given summary judgment ([2009] EWHC 3142 (Comm)) in respect of the claim for supplemental rent. He had given direction for a speedy trial in respect of the claim for delivery up of the aircraft or damages, because the defendant's case was arguable. The main question was whether the court had jurisdiction to grant relief from forfeiture in relation to an aircraft operating lease of the type and on the terms of those before the court. The claimant submitted that this equitable jurisdiction had never previously been held to be exercisable in relation to such leases, or any like agreements. The defendant submitted that the jurisdiction should be held to be exercisable in relation to possessory leases such as these, and relied in particular on the decision in The Jotunheim [2005] 1 Lloyd's Rep 181 in which it was held to be exercisable in relation to a bareboat charter.