Court Awards 22 Million Dollars against Azman Air for Breach of Contract

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A High Court of England and Wales yesterday, 5th June, 2018, awarded the sum of US$22,007,888.98 against a Nigerian Airline operator, Azman Air Services Limited for a breach contract.

Azman was sued by Triple Seven Msn 27251 Limited and  Triple Seven (CIS) Limited, registered owners of two Boeing 777-200 ER aircraft (MSN 27251 and MSN 27252) leased by Azman sometime in 2016 for airlifting passengers from West Africa to the Kingdom of Saudi Arabia for the Hajj and Umrah pilgrimages. Delivering the judgement in the suit the Judge, Mr. Peter Macdonald Eggers QC, sitting as a Deputy Judge of the High Court held:

For the reasons explained above, the lease agreements are not void for common mistake and the Claimants are entitled to damages in the following sums: (1) US$16,246,020.00, (2) US$5,612,958.92, and (3) US$148,910.06. The total sum recoverable by the Claimants is US$22,007,888.98. In addition, the Claimants are entitled to interest on these sums calculated in accordance with clause 8.2 of the lease agreements.

Details of the facts of the case as contained in the judgment are as follows:

  1. The Claimants were the registered owners of two Boeing 777-200 ER aircraft (MSN 27251 and MSN 27252) and leased them to the Defendant (“Azman”) by two separate lease agreements dated 20th June 2016, one lease in respect of each aircraft. Each lease agreement was for a period of five years.
  2. It was understood that the aircraft would be used by Azman to transport passengers from West Africa to the Kingdom of Saudi Arabia for the Hajj and Umrah pilgrimages. On 11th May 2016, the National Hajj Commission of Nigeria (“NAHCON”) confirmed that Azman was approved to participate in the airlift of pilgrims to and from Saudi Arabia for the 2016 Hajj. However, this was not the only approval which was required in order to participate in the 2016 Hajj airlift; the approval of the Saudi authorities was also required.
  3. On 15th June 2016, NAHCON sent a letter to Azman informing it that the General Authority of Civil Aviation of Saudi Arabia (“GACA”) had excluded Azman from participation in the 2016 Hajj airlift because it had not met Saudi economic, security and safety requirements. However, Azman did not receive this letter until some hours after it had signed the lease agreements on 20th June 2016. Azman sought to persuade GACA to change its mind and to approve Azman to participate in the airlift for the 2016 pilgrimage, but these attempts were not successful.
  4. The Claimants tendered the aircraft for delivery to Azman on 28th June 2016 and 4th July 2016 respectively.
  5. Soon afterwards, on 6th-7th July 2016, Azman informed the Claimants that it was not in a position to take delivery of the aircraft, because it was no longer able to participate in the 2016 Hajj airlift, which was the major reason or one of the major reasons for Azman’s entry into the lease agreements. In response, on 8th July 2016, the Claimants called on Azman to take delivery of the aircraft. On 12th July 2016, Azman said was not in a position to accept either aircraft.
  6. On 12th August 2016, the Claimants purported to terminate the lease agreements in accordance with the provisions of the lease agreements by reason of Azman’s failure to accept delivery of the aircraft and to pay the first instalment of the rent due under the lease agreements.
  7. The Claimants claim damages for breach of the lease agreements in accordance with the lease agreements.
  8. Although Azman had pleaded a number of defences to this claim, by the time of the trial, the only substantive defence advanced by Azman to the Claimants’ claim was that the Claimants are not entitled to damages because the lease agreements were void at common law for common mistake, the mistake being that it was believed or understood by both parties that Azman was expected to or would be approved to participate in the 2016 Hajj airlift, which was the or a major purpose of the lease agreements, but in fact at the time of the execution of the lease agreements, such approval had been withheld by GACA.
  9. During the trial, Mr Philip Newman on behalf of Azman confirmed that if the defence of common mistake failed, Azman would be liable to compensate the Claimants for their losses arising from Azman’s non-performance of the lease agreements.
  • Azman has required the Claimants to prove their losses.
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Copy of the judgment

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Culled from:  British and Irish Legal Information Institute

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