Following a trial in the London Circuit Commercial Court, HHJ Pearce this week handed down judgment in FTAI AirOpCo UK Limited v Olympus Airways [2022] EWHC 1362 (Comm). Aaron Taylor acted as sole counsel for the successful claimant, instructed by Norton Rose Fulbright.
FTAI AirOpCo UK Limited took a novation of an Aircraft Lease Agreement in October 2018, on the purchase of the Aircraft by a sister company. Olympus Airways was the lessee. At the time of the novation, the Aircraft was subject to a Grounding Notice issued by the previous lessor, following Olympus’ failure to pay rent.
That failure to pay continued, and FTAI terminated the leasing of the Aircraft on 1 November 2018, requiring Olympus to return the Aircraft in the ‘Return Condition’ provided for in the Agreement. Olympus failed to do so, and FTAI claimed for the unpaid rent, its costs of recovering the Aircraft, and the diminution in the Aircraft’s value.
Olympus alleged that FTAI’s termination notices of 1 November 2018 had not validly terminated the leasing of the Aircraft, because it had not specified the amount of rent which was overdue. The Judge rejected that argument. There was no requirement to set out the precise sum, given that the notice accurately stated that Olympus was in default of rent, and Olympus had the opportunity to seek to clarify the outstanding sum.
The Judge accepted that Aircraft was in non-compliant condition on the date the leasing was terminated, and that Olympus was obliged to put the Aircraft into Return Condition. He also accepted that, under the contractual definition of the “Termination Date”, the Lease Agreement remained on foot until Olympus did so, or until FTAI exercised its contractual discretion to repossess the Aircraft in non-compliant condition. He held that FTAI exercised that discretion in March 2020, when it applied to the Greek authorities for permission to disassemble the Aircraft in situ (in order to export the airframe for sale and the engines for re-leasing).
FTAI was therefore entitled to the Base Rent and Maintenance Rent which had been unpaid up to the Termination Date. This was a claim in debt, not damages. It was also entitled to damages representing the difference between the value that the Aircraft would have had in Return Condition on the expiry date of the Lease Agreement, and the actual value of the Aircraft in its non-compliant condition as at the Termination Date. FTAI had not failed to mitigate that loss. Finally, FTAI was entitled to recover various of the costs it had incurred in recovering possession of the Aircraft.
A copy of the judgment is available here.
