Aviation v Sayegh Group Aviation & Anor

The claimant, Galaxy Aviation (“GA”), is a general partnership licensed for business in Ontario, Canada, which was founded on 22 March 2007. Its registered address is 30 Blue Spring Drive, No 509, Waterloo, Ontario (the “Waterloo address”), a residential flat belonging to Capt Jahandar Kabolinejad. The partners are Capt Kabolinejad, who has the major (91%) interest, and Capt Ibrahim Dilli, with a smaller (9%) share. Capt Kabolinejad and Capt Dilli are both pilots, and GA is involved in leasing, chartering and maintaining aircraft. Capt Kabolinejad had connections with Iran Air, who, he said, would sometimes refer business opportunities to him. Initially GA supplied crew to Kano Air, which is based in Nigeria, and then it became involved in arranging aircraft leases.

The first defendant, Sayegh Group Aviation FZE (“SGAF”), is a company incorporated in Sharjah in the United Arab Emirates (“UAE”) and licensed in the Sharjah Airport International Free Zone. It was registered on 4 July 2004. It belongs to what has been referred to in this litigation as the Sayegh Group of companies, a family business which, at the material time and until he died on 19 June 2012, was controlled by Mr Saleem F Sayegh ("SFS”), and owned by SFS and his two brothers. The group has more than 3,500 employees. It includes National Paints Factories Company Limited (“NPF”), the largest paint manufacturing company in the Middle East, and its core business is the production, distribution and export of paints. Its other interests include chemical engineering, mining, manufacturing, banking, real estate and media, and also aviation.

The second defendant, Mr Sameer Saleem Sayegh (“SSS”), is the eldest son of the late SFS, and as executor of his estate represents it in these proceedings. SSS has been involved in the Group’s business for some 16 years, since the age of 18 years, and from 2005 he shared his father’s office. He was given a general power of attorney over his father’s affairs dated 17 October 2005. Since his father’s death, SSS has become the Managing Director of NPF.

Licences issued by the Government of Sharjah describe SGAF’s activity as “Aircraft Chartering & Leasing”, and state that the manager was a Mr Adib Burhan Kombarji. It operates out of a building owned by NPF. SSS explained that his father’s original purpose in forming SGAF had been to develop a cargo plane business in Africa, and in February 2008 he had SGAF buy five Russian Antonovs, but soon afterwards the Antonovs were banned from African airspace. SGAF leased planes to, amongst others, Sayegh Aviation Europe sro, a charter flight company incorporated in Slovakia, which traded as Samair and was owned by a Mr Anton Dafesh, who is related to the Sayegh family.

GA contends that it entered into a written agreement dated 9 November 2010 with SGAF and SFS for the lease of four aircraft, a Boeing 747-200 and three Boeing 747-300 aircraft, and also for the delivery of a Boeing 747-200 aircraft as a “stand-by” or replacement aircraft. It was signed by Capt Kabolinejad for the lessees, and by a Mr Abdullah Ramadan for, or purportedly for, the lessors. The agreement identified the aircraft by their manufacturer’s serial numbers (or “MSNs”). None of the planes were delivered to GA under the agreement, and by a further agreement dated 16 July 2011 the five aircraft were sold to Mr Ramadan for $1 consideration. GA contends by an email of 8 January 2012 the lessors renounced the contract, or repudiated it by selling the aircraft, and for this and other reasons it was entitled to end the lease agreement and by a solicitor’s letter dated 8 March 2012 it did so. It claims damages, and a declaration that the lease agreement was discharged with effect from 8 March 2012, if not before, because the defendants (or one of them) wrongly renounced it or made it impossible to perform or because of repudiatory breach of contract.

It is convenient before going further to say something about the ownership of the aircraft at the time of the lease agreement. The position with regard to the Boeing 747 300s is relatively clear, and not in dispute: they were bought for a total consideration of $6 million from Qantas on 17 May 2010 by SGAF, who had issued Mr Ramadan with a power of attorney dated 7 February 2010 and signed by SSS for this purpose. It authorised Mr Ramadan to represent and act for them in relation to negotiations and in closing the acquisition of the planes. They were owned by SGAF until they were sold to Mr Ramadan in July 2012.

GA’s case is that the Boeing 747 200s were owned by SFS personally, and therefore, as I understand it, that, when Mr Ramadan entered into the lease agreement, he was acting for SGAF in so far as the lease concerned the Boeing 747 300s and for SFS in so far as it concerned the Boeing 747 200s. The documentary evidence suggests that the Boeing 747 200s were owned by SGAF. A document listing equipment on board, issued by the Civil Aviation Authority of Burkina Faso and dated 24 June 2010, identifies “Compagnie Sayegh Aviation Group” as the owner (“proprietaire”) of the two planes. A maintenance manual document of the authority dated 1 July 2010 gives “Sayegh Group Aviation” as the owner of them. A certificate of registration dated 7 July 2010 also names “Sayegh Group Aviation” as the owner of the leased Boeing 747 200. As I shall explain, on 25 November 2010 the authorities in Burkino Fasa cancelled the registration of planes said to belong to Sayegh Group Aviation because of non-compliance with air-worthiness procedures, including registration of the two Boeing 747 200s.

GA’s case was supported by the evidence of Mr Peter Sharpe, who became the managing director of SGAF on 10 March 2014. His understanding was that the two Boeing 747 200 aircraft were acquired by SFS in 2009 and sold to SGAF only on 16 July 2011, when they were immediately sold on to Mr Ramadan. However, he had no direct knowledge about this. On the other hand SSS said that, while he did not know who did own Boeing 747 200s, SFS did not own them personally. I do not consider that the ownership of the planes is ultimately important to what I have to decide. If it matter, I find the evidence in the documents more persuasive than what Mr Sharpe said, and conclude that at the relevant time the Boeing 747 200s were owned by SGAF.

The issues between the parties are these:

GA called two witnesses to give evidence at the trial, Capt Kabolinejad and Capt Dilli. It also served a statement of a Mr Seyed Ali Moomchi dated 19 October 2014: I was told by Mr Simon Hunter, who represented GA, that Mr Moomchi was unable to obtain a visa to come to the country to give evidence, and he first invited me to allow his evidence to be heard by video-link. I questioned whether the evidence in the statement was important enough to require this, and Mr Hunter and Mr Philip Jones, who represented the defendants, agreed that his statement should be admitted under the Civil Evidence Act, 1995.

The defendants served five witness statements by:

Mr Sharpe and SSS gave oral evidence. By an order made by consent on 4 September 2015 at a pre-trial review Popplewell J permitted the defendants to adduce the evidence of Mr Al Refai, Dr Al Jarman and Mr Bagduyan by video-link. Arrangements were made for a video-link to Dubai for this purpose. However, at the start of the trial, I questioned whether their evidence was controversial in any important way. Mr Hunter and Mr Jones agreed that cross-examination of Mr Al Refai was unnecessary. There was only one minor point about which Mr Hunter wanted to ask Mr Bagduyan, and I suggested that, if Mr Bagduyan was asked about it by email overnight, it might mean that he did not need to give oral evidence. An email was send and Mr Bagudyan clarified the point of concern in his reply; and in these circumstances counsel agreed that cross-examination was not required. The statements of Mr Al Refai and Mr Bagudyan, together with Mr Bagudyan’s email, were admitted under the Civil Evidence Act, 1995.

On the first day of the trial I directed that, if Dr Al Jarman was to be cross-examined by video-link, this should be done at 2.00pm on the second day, and that his evidence would, if necessary, be interposed accordingly. Mr Jones then told me that Dr Al Jarman had indicated that he might be unwilling to give oral evidence: the defendants’ representatives were to seek to clarify this. In the event, Dr Al Jarman did not make himself available on the second day of trial: indeed, he was reported not to be in Dubai. The evidence was otherwise concluded during the afternoon of the second day. Mr Jones asked me to delay closing the defendants’ case in the hope of learning more about Dr Al Jarman’s position, and GA adopted a neutral stance about this request. I refused to delay the trial: considering remote both the prospect of Dr Al Jarman changing his declared position about giving oral evidence and the chance that my decision would depend on his oral evidence, I declined to allow the defendants more time. The defendants did not rely on his statement.

By an order made at a case management conference on 10 May 2013, the parties were given permission to call expert evidence of the law of the UAE, and each served a report of an expert witness. I understand that they were directed to the issue about whether Mr Ramadan had actual authority to enter the lease agreement on behalf of SGAF and SFS (or either of them). There was no issue between the parties that under English private international law questions about Mr Ramadan’s actual authority would be governed by the law of the UAE, whereas questions about his apparent authority would be governed by English law, the law governing the putative lease agreement: see Dicey, Morris & Collins, The Conflict of Laws (15^th Ed, 2012), rule 422 at para 33R-432. However, neither GA nor the defendants pleaded or alleged that the law of the UAE and English law differ in any material respect, and in those circumstances and by consent (or at least without demur) I discharged the permission to call expert evidence.

Neither party adduced evidence, either oral or by way of a statement put in evidence, from Mr Ramadan. His employment with NPF was terminated in October 2012. Capt Kabolinejad said that he had seen Mr Ramadan some two weeks before the trial and discussed whether he might give evidence. I was told that Mr Ramadan was willing to give evidence, but he was apparently unable to obtain a visa to travel from Dubai. That explains why he did not come to London to give evidence, but not why no application was made to adduce video evidence or at least to put in evidence a statement from Mr Ramadan. In some circumstances, the court will draw an adverse inference when a party does not call evidence from a witness who might be expected to have material evidence to give on an issue: Wisniewski v Central Manchester Health Authority, [1998] Lloyd’s LR Medical 223. I was not invited by Mr Hunter or Mr Jones to draw an adverse inference in this case from the fact that Mr Ramadan did not give evidence, and I do not draw one either against GA or against the defendants.

I regard Capt Kabolinejad as an unsatisfactory witness, and I do not consider that his evidence was reliable. My reasons will become apparent in the course of this judgment, but they include, for example:

Capt Dilli’s evidence was really relevant only to part of GA’s damages claim. He was an honest witness, his evidence in cross-examination was not significantly controversial, and I accept it generally, although not in its entirety.

Mr Sharpe was, as I have said, not directly involved in the matters that are in dispute, and his evidence essentially recounted what he understood from documents that are before the court. I consider him a reliable witness, but his evidence was not very important.

I consider SSS an honest witness. Understandably his memory of what happened was, as he acknowledged, imperfect, but I regard his evidence about what he could recall as generally reliable.

Capt Kabolinejad’s evidence was that he first had dealings with what he referred to as Sayegh Group Aviation (“SGA”) in early 2010 through Mr Seyed Ali Moomchi, the Iran Air Director of Maintenance in Tehran, who approached him about flying two Boeing 747 200 aircraft from Tehran to Sharjah. Capt Kabolinejad said that he understood that the aircraft were owned by a company called Sam Air, but he also said that they were leased to Iran Air by “Sayegh Group Aviation”, and in cross-examination he said that Mr Moomchi told him that they belonged to SFS. Apparently because of a dispute about maintenance fees, they had been detained in Iran. Capt Kabolinejad himself flew one of the aircraft to Sharjah, and arranged for another pilot to fly the other plane. He said that he did so under an agreement between GA and Sayegh Group Aviation, but that he did not turn his mind to what legal entity he was dealing with or whether there was a company or other entity called Sayegh Group Aviation: indeed, he said that before these proceedings he was unaware “that there is a distinction between a corporate entity and the individual owner of that corporate entity”. In view of his involvement in other companies, such as Infinity Asia Co Ltd (“Infinity”) to which I refer below, I cannot accept that.

Capt Kabolinejad said that he first met Mr Ramadan when he was involved in arranging these flights. Before he flew to Sharjah, they had been in contact by emails or telephone, and in Sharjah he went to what he understood to be the SGA’s offices. He said that Mr Ramadan paid him in cash for flying the aircraft to the UAE, but he was paid only some $12,500, about half the amount that he had expected. Although he had himself paid the second pilot and the crews, Capt Kabolinejad accepted what he was given without questioning it, in the hope that it would be the start of a business relationship. He said that payment was not important to him and that he was willing simply to help because Mr Moomchi had asked him to do so.

In about October 2010 Mr Moomchi again contacted Capt Kabolinejad about another business opportunity, which led to the lease agreement. He understood from Mr Moomchi that SGA had had aircraft lying idle for some time because they lacked the skill or contacts to exploit them. They included the two planes flown from Iran to Sharjah in 2010. Mr Moomchi described them as old ex-Qantas 747’s, which would not have been fuel efficient because of their age and would have been too noisy to meet requirements for flying into Europe. According to Capt Kabolinejad, he thought that they were worth some $12 million each, and supposed that he was dealing with a substantial organisation with a wealthy owner who, having bought them, had not put the planes to immediate use. Whether or not Capt Kabolinejad really believed that this was their value, the aircraft must have been worth much less, as is clear from the price at which three of them had been bought from Qantas.

Capt Kabolinejad expressed interest in Mr Moomchi’s proposition, and Mr Moomchi arranged a meeting with Mr Ramadan, whom he described as the Managing Director of SGA and who had, he said, bought the aircraft for the group. Capt Kabolinejad agreed in cross-examination that this would potentially have been a “major piece of business”, but he did not conduct any searches into who SGA are: he simply understood that it was a business owned by SFS and that in substance he was dealing with SFS. He explained that he trusted Mr Moomchi, whom he described as “very important” in Iran.

Capt Kabolinejad had a meeting with Mr Ramadan in Tehran. It appears from documents that his flight was arranged by and paid for by NPF. Mr Ramadan was introduced by Mr Moomchi as the managing director of SGA. Mr Ramadan apparently already knew that Capt Kabolinejad was interested in leasing the aircraft. The meeting lasted about 30 minutes. They agreed in principle that (as he put it) Capt Kabolinejad “through GA” should lease the aircraft on terms to be agreed, but nothing was agreed about the price of hire. They were to have further discussions in Sharjah at Mr Ramadan’s offices within a few weeks.

According to Capt Kabolinejad’s witness statement, when they met Mr Ramadan gave him a business card on which he was described as the “Managing Director” of SGA. Capt Kabolinejad kept it, he said, and it was put “in the file”. The business card of Mr Ramadan that is in evidencedoes not so describe him: it describes him as an “Investments Manager” with “National Paints”. When cross-examined, Capt Kabolinejad initially confirmed that he thought that this was the business card that he was given. However, when the discrepancy between his statement and the card was pointed out, Capt Kabolinejad sought to back-track, and said that he thought that he was given a different card, which was not in evidence, and that he could “look it up”. No other card has been disclosed or produced, and I do not accept Capt Kabolinejad’s evidence about this. He might have been honestly mistaken in his statement about what was on the business card that he was given. However, in my judgment he never thought that he had another card or that he had been given a card that was not in evidence: those answers were dishonest.

Capt Kabolinejad met Mr Moomchi the next day, and Mr Moomchi said that he would prepare a lease agreement. It appears from email exchanges between Capt Kabolinejad and Capt Dilli of 26 and 27 October 2010 that Capt Kabolidinejad was confident that he would conclude an agreement to lease the aircraft: he wrote that he only had to obtain a power of attorney to represent GA and go to Sharjah. He and Mr Moomchi planned to meet with Mr Ramadan in his office there. Mr Moomchi called him on 8 November 2010 to come to a meeting that was arranged, and Capt Kabolinejad travelled to the UAE for it.

When Capt Kabolinejad arrived in Dubai, he telephoned Mr Moomchi, who arranged for a driver to bring him to what he described as “SGA’s offices in Sharjah, which was located in a National Paint Factory”. He was taken to Mr Ramadan’s office on the second floor, which, he said, had a sign “Sayegh Aviation”. He met with Mr Moomchi, Mr Ramadan, a Mr Harid, whom he described as a mechanic with SGA, and a Mr Jalil Khrosravinejad, whom he described as taking care of maintenance. He understood that the purpose was to finalise and sign a lease agreement, as was contemplated in Tehran.

However, Capt Kabolinejad said that, when he arrived at Mr Ramadan’s offices, various other schemes were proposed by Mr Ramadan and Mr Moomchi, which he did not accept, and he was provided with two other documents, which are in evidence. They have some curious features.

First, there is a document headed “Mandate 09-11-2010”. (Capt Kabolinejad said that he did not recall whether this document was produced at the meeting in Sharjah or had already been produced in Tehran, but the date shows that it was produced at this meeting.) It reads “We, Sayegh Group Aviation Authorize Mr Ali Moomchi to negotiate and enter into lease contract and finalise it for the lease of” the three Boeing 747 300s. The document then states, “This Mandate is valid for one moths (sic) starting of today, November 09-11-2010”. It was signed by Mr Ramadan above the title “Managing Director Sayegh Group Aviation, Sharjah UAE”. The stamp of SGAF was placed against his signature. Oddly, the document refers only to the Boeing 747 300 aircraft and does not mention the Boeing 747 200 aircraft. There is no apparent reason that Mr Ramadan should provide the mandate for Mr Moomchi if SFS or Mr Ramadan himself was going to sign the lease agreement.

I shall refer to the second document as the “agency agreement”. It is a two page document headed “Agreement”, and purports to be an agreement between “Galaxy Aviation Canada” and “Sayegh Group Aviation”. There is a heading “Scope of Project”, under which it is stated that “Sayegh Group Aviation appoints Galaxy Aviation Canada as its exclusive agent for leasing” the five planes (including the “stand-by” plane) mentioned in the Lease Agreement “to 3^rd party”. It is said that “Galaxy Aviation” would act on behalf of “Sayegh Group Aviation” “in the assistance of negotiations” and other specified matters.

Capt Kabolinejad signed the agency agreement under the name of Galaxy Aviation Canada and the title “Managing Director and CEO”. His signature is not dated, but under his signature there are two company stamps. One is of “Galaxy Aviation Canada Co” and the other of “Global Investment Canada”. Both include the Waterloo address. Global Investment Canada is, as Capt Kabolinejad explained, a company that he had incorporated for his investments. Mr Ramadan signed the agency agreement twice, and the stamp of SGAF was placed against each of his signatures. One of his signatures is under the name of SGA and the title “General Director”.

Initially Capt Kabolinejad said that, when he arrived at Mr Ramadan’s offices on 9 November 2011, this document was produced and they (presumably referring to Mr Moomchi and Mr Ramadan) wanted him to enter into an arrangement of this kind instead of a lease arrangement such as had been discussed in Tehran; and he said that he refused to sign it and so they then entered into the lease agreement instead. However, this is not right: he did sign the agency agreement, as he acknowledged when the signed document was put to him, albeit he said that he did not know when he signed it. The agency agreement stated “This agreement is signed today 24^th Oct. 2010 …”. Nevertheless I conclude that it was signed on 9 November 2010, the date typed at the top of the agreement: Mr Ramadan dated one of his signatures “9-11-2010”. There is in evidence a version of the agency agreement that bears only this signature and SGAF’s stamp: Capt Kabolinejad must have signed it, as I therefore infer, after Mr Ramadan had signed and stamped it on 9 November 2010.

The provision in the document that the agreement was signed on 24 October 2010 is one of the curious features to which I have referred. Further:

It is no less odd that the agreement, like the mandate, was printed on paper headed “Galaxy Aviation Co Ltd”, which was described as “Air Charter Company”. The second page of the agency agreement had at its foot the Waterloo address, which was also in the body of the document and the lease agreement and, curiously, gave as a telephone number that which was elsewhere given as the fax number for Galaxy Aviation Canada. I find this impossible to reconcile with Capt Kabolinejad’s evidence that the documents represented various proposals put to him when he arrived at Mr Ramadan’s offices, and that the documents had already been prepared before he arrived. He had no credible explanation about why Mr Ramadan or Mr Moomchi might have drafted them on the paper of Galaxy Aviation Co Ltd. He suggested that “they must have had no paper” of their own: that beggars belief, and in any case does not explain how they came to have this headed paper. I return below at para 79 to Capt Kabolinejad’s explanation for why this headed paper was ever printed all.

I therefore cannot accept much of Capt Kabolinejad’s evidence about these documents. However, it does seem to me probable that the agency agreement was signed by Capt Kabolinejad and Mr Ramadan on 9 November 2010 before they signed the lease agreement, and the lease agreement was understood to supersede the agency agreement. After all the arrangement in the agency agreement was inconsistent with that in the lease agreement, and the parties cannot have intended to be bound by both at the same time.

However that may be, at some point during their meeting Mr Moomchi handed Capt Kabolinejad a draft lease agreement. It was some four pages. There was discussion of its terms, and those about payment were agreed. The original draft, according to Capt Kabolinejad, named Mr Moomchi as the lessee, and that was changed. He had a vague recollection that one of the aircraft serial numbers might have needed to be corrected, but did not recall other changes. A revised draft was sent for typing. Capt Kabolinejad described this as a “very time-consuming” process, because the secretaries, he said, were otherwise engaged. But agreement was reached, and Capt Kabolinejad said that he then signed the lease agreement in Mr Ramadan’s office. When he had done so, Mr Ramadan said they should go to SFS’s office: Capt Kabolinejad understood that SFS was going to sign the agreement.

I break off the narrative to set out the relevant parts of the lease agreement. I should set out the front sheet in full:

“Aircraft & Insurance Lease Agreement

Concluded

Between

Sayegh Group Aviation

Mr Saleem F Sayegh

Owner

Hereinafter referred “LESSOR”

Having its principal office at:

National Paint Building

SHARJAH UAE

TEL: +9716 534 0111

FAX: +9716 5340222

And Galaxy Aviation Canada

Mr J Kabolinejad

Managing Director

Hereinafter referred to as the “LESSEE”

Having its principal office at:

Suite No 509

30 Springs Drive Waterloo N2J 4T2

Ontario, CANADA

Tel: +1519 729 1346

Fax: +1519 880 0008

E-Mail: galaxyavt@aol.com”

The lease agreement was signed at the end on behalf of the lessee by Mr Kabolinejad and his signature is dated 9 November 2010. The agreement itself stated “This agreement is signed today Oct 13, 2010 in two original copies … one copy for each party, both having the same validity and authenticity as originals”. (Only one copy of the agreement is in evidence.) However, neither party disputes the date of Capt Kabolinejad’s signature. The agreement also bears what is agreed to be Mr Ramadan’s signature under the wording:

I set out these articles of the agreement:

“Subject to terms and conditions stated herein, the LESSOR agrees to Lease four aircraft with insurance (Crew & line maintenance and consumable parts up to “A” check are to be paid by the lessee) the LESSEE agrees to lease from the LESSOR, (1) One aircraft BOENG (sic) 747-200, in configuration 480 seats, MSN 21054 Registration XT-DMT and (3) Three Aircraft Boeing 747-300 in configuration 456 seats, NSN 23224, 23408, 23823 Registration XT-SAE, XT-SAF, and XT-SAG,

Both party agree one B-747-200 Registration XT-SAT MSN 21352 will be delivered in a (sic) airworthy condition and positioned at Lessee’s base as standby and replacement aircraft free of charge”. (Article 1)

“The lease term shall be considered for minimum of 150 (one hundred & Fifty) block hours per Month per aircraft, as from the commencement date for each aircraft will be the delivery date stated on the Exhibit “A” Aircraft Delivery form for 12 Months with the possibility of extension for another period according to a further agreement between the LESSOR and the LESSEE”. (Article 2)

“The aircraft will be operated by second party with coordination with the first party.

LESSEE shall indicate the schedule to be flown prior to the execution of this agreement. The aircraft shall be operated only on the agreed routings set forth by this schedule”. (Article 3)

“The financial terms and conditions between the LESSOR and the LESSEE are as follows: … Minimum guaranteed utilization of (150) block hours per Month per aircraft for 12 Months and Lessee shall conduct every 6 (six) months reconciliation of the actual Block Hours flown in the preceding 6 (six) months in excess of the Minimum Guaranteed Block Hours for six months (the “Excess Block Hours”) based on the collected data from the Lessee’s flight voyage reports. This Excess Block Hours shall be invoiced by the Lessor at the Wet Lease Price and paid by the Lessee within 14 (fourteen) business days following receipt of the related invoiced …”. (Article 4)

“The LESSOR shall provide at his own expense the following: …The aircrafts in an airworthy condition according to the requirements of the Civil Aviation Authorities concerned … “. (Article 6)

“The LESSOR and the LESSEE warrant having sufficient title or authority to the aircraft, to enter this agreement”. (Article 10)

“This agreement is subject to the laws of England and it is also subject to the approval of civil aviation authorities of the countries where it operates. Any dispute is to be settled in English Courts. All five aircraft will be delivered to Kano airport Nigeria”. (Article 18)

Although the agreement provided that the lessee should indicate the schedule to be flown by the aircraft before it was executed, Capt Kabolinejad accepted that none was provided. He explained that it was understood that it had to be provided before the aircraft were delivered, but not before then.

Capt Kabolinejad said that he and Mr Ramadan went with Mr Moomchi to SFS’s office: Mr Ramadan had not signed the lease agreement, but Capt Kabolinejad had done so. According to Capt Kabolinejad, they “just walked into SFS’s office without knocking”: there was no security lock. This evidence is disputed by SSS: he said that the office had a lock, that only SFS and he had a key to it, and that others had to go through the secretary if they wanted to see SFS. I prefer SSS’s evidence: it seems to me inherently more probable, SSS was generally a more honest and reliable witness than Capt Kabolinejad, I find it difficult to think that SSS could have been mistaken about this, and I do not think that he was lying.

Capt Kabolinejad said that SFS and SSS were in the office when he arrived with Mr Ramadan and Mr Moomchi; that SFS greeted him; and that Mr Ramadan introduced him to SSS, who gave him a business card and told him that he ran a paint factory in Ahwac, Iran. The meeting lasted for 15 to 20 minutes: Capt Kabolinejad spoke in Farsi with SSS and in English with SFS: SFS’s English was said to be poor, but it was good enough for him to express himself. Capt Kabolinejad said that he told SFS that he flew aircraft.

According to Capt Kabolinejad, Mr Ramadan had brought the agreement with him and put it on a table. SFS did not sign it, and Capt Kabolinejad said that neither SFS nor SSS looked at it, although he recounted that SFS said to him, “good luck with these aircraft” (or with “those aircraft”). He also said in cross-examinationthat, when Mr Ramadan referred to the lease agreement, SFS and SSS “seemed to know what he was talking about”, and appeared happy because “they did not know what to do with the aircraft”. He was pressed about this evidence: it was suggested that SFS and SSS could not have been aware of the terms of the agreement because they had only just been agreed. Capt Kabolinejad then mentioned, for the first time, that he thought that Mr Ramadan and SSS had discussed the details of the lease in Arabic, a language which Capt Kabolinejad does not understand. I reject this evidence: if he did recall such discussions, Capt Kabolinejad would have been mentioned earlier. It seemed clear to me that Capt Kabolinejad was simply making this up when asked questions about the meeting that he found difficult to answer.

SSS had no recollection of the meeting. However, he did not think that there would have been a meeting such as Capt Kabolinejad described. He said that SFS would not have leased aircraft that had been grounded because the agreement could not have been honoured. More importantly, he said, and I accept, that SGAF had a standard aircraft lease running to some 30 pages, and if they were going to enter into a lease agreement, they would not have used a form of agreement such as the lease agreement. He also said that it was his father’s practice to sign business contracts himself, and, if he had been aware of the lease agreement, he would not have left it to Mr Ramadan to sign.

Capt Kabolinejad, Mr Ramadan and Mr Moomchi returned to Mr Ramadan’s office. Mr Ramadan made a manuscript correction to the lease agreement (which in itself is inconsequential for present purposes), and he signed the document against the correction and at the end under the name of SFS and the title “Owner”, writing “For” above his signature. He stamped the agreement under both signatures with the stamp of SGAF: at the time Capt Kabolinejad did not appreciate that the stamp referred to SGAF rather than simply to SGA.

According to Capt Kabolinejad, he considered that he was dealing with SFS: he never considered that Mr Ramadan did not have his authority to sign the agreement and he did not “really pay much attention” to the fact that the agreement named SGA as the lessor and “certainly did not focus upon SGAF”. However, when he saw Mr Ramadan write “For” above his signature, Capt Kabolinejad asked why SFS had not signed the agreement himself. Mr Ramadan, apparently annoyed, replied that he had “the power of attorney to sell the factory”, or with some such expression. Capt Kabolinejad asked for a copy of the power of attorney establishing and evidencing his authority. This would not have been a surprising request: powers of attorney are commonly used in business dealings of this kind in the Middle East. Indeed Capt Kabolinejad thought that Mr Ramadan was acting under a power of attorney when he arranged to have the two planes brought from Iran in early 2010.

Mr Ramadan agreed to provide a copy, and asked a member of the office staff to deal with it. The assistant returned to say that the photocopier had broken and the office girls had gone home. Mr Ramadan promised to send Capt Kabolinejad a copy of the power of attorney later. But GA and Capt Kabolinejad never received it. Capt Kabolinejad’s evidence was that they never reminded Mr Ramadan about the promise and took no further steps after the meeting to obtain a copy.

Even making allowance for Capt Kabolinejad’s professed concern not to upset GA’s relationship with SGA, this seems to me an improbable account, and his evidence was challenged: first, he was asked why Mr Ramadan should be annoyed when asked about his power of attorney, given that, it was suggested, such a request would have been entirely normal in business dealings between Arabs. Capt Kabolinejad denied that it was a usual request, but was then shown that in his witness statement he had said that powers of attorney are “common in Arab business dealings, where you need to show to any commercial counterparty that you have authority to enter into whatever business deal you are conducting”. He sought to disown this, saying that his statement had been drafted by his former solicitors, Messrs Zaiwalla & Co., but I found the explanation unconvincing.

Secondly, the evidence was that the offices of NPF where they met were well-equipped with several photocopiers. The excuse that the power of attorney could not be copied would have been absurd, and Capt Kabolinejad would not have accepted it. Moreover, even if there were no copying facilities, Capt Kabolinejad could, and surely would, have asked to see the power of attorney. He said that he did not do so, but he had no explanation for this.

Mr Ramadan then asked Capt Kabolinejad for a cheque to guarantee the hire payments under the lease. Capt Kabolinejad agreed to provide one for $1.35 million, representing hire of the three Boeing 747-300s for one month. It was drawn on Merrill Lynch and made for the order of “Sayegh Group Aviation only”. It was stated on the face of the cheque to be “for Guarantee of Contract only”. Because Capt Kabolinejad was, he said, concerned that the cheque might be cashed and not only held as security, the parties entered into an agreement (the “security agreement”) in these terms:

“Agreement between

The galaxy aviation Canada and Sayegh Group Aviation

This is to certify that the check No. 112 of Merrill Lynch Ready Assets Trust only for the guarantee of the contract for the (Aircraft and Insurance Lease Agreement) dated Nov. 09 2010 between the galaxy aviation Canada and Sayegh Group Aviation

Both party understand under no condition the above check should be deposit and cashed unless approved by the both witnesses signed below”.

It was signed by Capt Kabolinejad for GA and by Mr Ramadan for SGA (but this time he did not stamp his signature). Unlike other agreements made between GA and SGA, the security agreement was witnessed, the witnesses being Mr Moomchi and Mr Jalil.

Capt Kabolinejad’s evidence about the circumstances in which the lease agreement and the security agreement were signed is inconsistent with GA’s pleaded case. It is pleaded that SFS and SSS were present when both were signed, and when Capt Kabolinejad asked SSS why Mr Ramadan was signing the lease, he was told that Mr Ramadan was an authorised signatory and a power of attorney had been executed in his favour. The pleading was signed by Zaiwalla & Co, who were then but are no longer GA’s solicitors, and Capt Kabolinejad said that they had misunderstood their instructions. On the face of it this is improbable, and the more so because Mr Sarosh Zaiwalla of Zaiwalla & Co gave similar evidence in a witness statement of 23 January 2013 made in opposition to the defendants’ application for security for costs.

As I see it, therefore, Capt Kabolinejad’s evidence about his visit to Sharjah to sign the lease agreement was self-contradictory, inconsistent with GA’s pleaded case and in some ways inherently improbable. I accept SSS’s evidence to which I have referred at para 44, and this corroborates my conclusion that I cannot rely on what Capt Kabolinejad said in so far as it is controversial, and specifically, while I accept that Capt Kabolinejad met SFS and SSS on his visit, I cannot rely on anything that he told me about the meeting.

Before explaining the dealings and exchanges between Capt Kabolinejad and Mr Ramadan after 9 November 2010, it is convenient to say something of how Sayegh Group’s aircraft business came to be managed in 2011. This account is based on the evidence of SSS, which I consider reliable in this regard.

SFS had wanted to start a European airline business through Samair, and SGAF was involved in trying to acquire planes for it. SSS said that in early 2011, after SGAF had bought the Boeing 747 300 and other aircraft, he became more involved with the business because his father was ill. Mr Ramadan was given a power of attorney dated 20 March 2011, expiring on 31 May 2011, to act in relation to negotiations and closing the acquisition of three Boeing 747 400 aircraft from Qantas. But SGAF engaged a consultant called Mr Zoltan Katona, to make sure, as SSS put it, that the planes were appropriate.

SSS came to learn that Mr Ramadan had involved himself with arranging the maintenance of SGAF’s aircraft. He was unhappy about this, and on 2 July 2011 he wrote to Boeing to state that only Mr Katona and a Mr Viktor Hajso were authorised to deal with maintenance and engineering works for SGAF. He also wrote to Qantas that all previous authorisations issued by SGAF to act on its behalf were revoked, that all future communications should be sent to him and that only Mr Katona had authority to conclude any pending business. He was asked in cross-examination why the letters did not alert the addressees that Mr Ramadan had been misrepresenting his position or authority, but SSS responded, to my mind reasonably, that this was unnecessary: the letters were clear enough to protect the Sayegh Group in the future.

SSS said that he also became concerned about the expense being incurred in respect of the Boeing 747 200 and 747 300 aircraft: he did not know “what exactly was going on with these aircraft”, and he did not want SGAF to be responsible for them. He therefore decided to transfer them to Mr Ramadan for nominal consideration. SGAF entered into an agreement with Mr Ramadan dated 16 July 2011 selling them for $1.

SGAF and the Sayegh Group did not thereby completely sever their connection with the planes, or with Mr Ramadan. Under the purchase agreement with Qantas SGAF were to maintain aviation liability insurance in respect of the Boeing 747 300s for two years, and so they did so until May 2012: I consider that unremarkable and insignificant. Mr Ramadan remained employed by NPF: SSS explained in evidence that that he would have preferred to end his employment at that time, but Mr Ramadan’s father was a friend of SFS and SSS did not want to upset his father. As I have said, Mr Ramadan’s employment was terminated in October 2012, after SFS had died.

In order for the aircraft to be operated for commercial purposes they required an air operator’s certificate (“AOC”), an approval for the operation granted by a national aviation authority. To obtain an AOC, they needed to undergo and pass a “C-check” (or a more demanding “D-check”), an overhauling procedure which, Capt Kabolinejad said, he had expected the lessors to arrange after the lease agreement had been made in order to comply with their obligation to provide at their own expense the aircraft “in an airworthy condition according to the requirements of the Civil Aviation Authorities concerned”. Once the aircraft had had their checks, he explained, they might then be delivered to Africa, or collected by him and flown there. According to Capt Kabolinejad, Mr Ramadan had indicated that the planes would be checked and delivered “in a very short time frame”, a matter of days or weeks rather than months.

After the lease agreement was made, one of the aircraft – it is not clear from the evidence which of them, except that according to Capt Kabolinejad it was not the stand-by plane - was flown to Afghanistan without the proper certification. SFS learned of this, and put an end to this unlawful activity. About three weeks after the lease agreement was made, Capt Kabolinejad was told by an engineer whom he knew that one of the leased aircraft was being flown to Kabul. He asked Mr Ramadan about this, and was told that it was being flown illegally, without undergoing a C-check.

On 25 November 2010 the Civil Aviation Authority of Burkina Faso cancelled the registration of four of the five aircraft, the two Boeing 747 200s and two of the Boeing 747 300s. Their reason was stated to be “persistent non-respect of operational air-worthiness procedures”. (It is odd that this decision does not cover the fifth aircraft, the serial number of which was 23408: it was registered with the Burkina Faso authority according to a certificate of 27 August 2010. There is no explanation for this, but no party suggested that this is significant.) In a letter of 26 November 2010 to, among others, SFS, the Authority referred to “late safety concerns regarding [SGA]”, and confirmed that all aircraft belonging to SGA had been “deregistered”. It proposed a meeting on 13 December 2010, but there is no evidence about whether the meeting took place and if so what was its outcome.

Emails sent by Capt Kabolinejad at the end of December 2010 do not indicate any impatience or concern that the aircraft had not been delivered under the lease agreement. This is perhaps not surprising: once the aircraft were delivered, GA would have to start to pay hire, and there is no credible evidence that it had any arrangements for immediate use of the aircraft: as I shall explain, the claim is based on a plan to carry pilgrims during the 2011 Hadj season, but for that purpose GA would not have required delivery of the aircraft for some months. GA also developed plans to use the aircraft in a venture through Infinity (see below), but they would not require the aircraft until about September 2011. GA had thought of using them to fly workers from Bangladesh, but there is no evidence that GA was ready so to deploy the aircraft immediately.

However, Capt Kabolinejad’s evidence was that he would “chase” Mr Ramadan “every day”, and he arranged to meet Mr Ramadan at his offices. (This evidence, I observe, had a markedly more urgent tone from GA’s pleaded case, which was that “On dates unknown between around November 2010 and around August 2011 [GA] (through Capt Kabolinejad) made a series of requests to the Defendants (through Mr Ramadan) for delivery of the Aircraft in accordance with the Agreement”.) He said that Mr Ramadan assured him that the planes would be re-registered in Gambia within a few weeks, but efforts to do so were unsuccessful. Thereafter Capt Kabolinejad visited Sharjah on “several subsequent occasions”, but Mr Ramadan simply repeated his assurance that their registration was imminent.

Capt Kabolinejad said that on one occasion, a few months after the lease agreement was made (he did not remember more exactly when), he met SFS, and SSS too was present. Capt Kabolinejad said that they were waiting for the aircraft and had made preparations for their delivery. According to Capt Kabolinejad, SFS said only that they were “working on it”. SSS did not recall the meeting.

No emails or other documents in evidence record or reflect any enquiries about the aircraft made by Capt Kabolinejad or GA during this period, nor the assurances that Capt Kabolinejad claimed to have been given by Mr Ramadan, nor the assurance said to have been given by SFS. Capt Kabolinejad explained that he understood that by 2011 SFS had been diagnosed with cancer, and he did not want to trouble him. However, that does not explain why Capt Kabolinejad should have put nothing in writing, either to Mr Ramadan or to SFS, by way, for example, of thanking him for “working on it”. Nor was there any suggestion that Mr Kabolinejad passed on to Capt Dilli what he had been told on the visits to Sharjah.

Indeed, no emails sent between January and July 2011 or other material documents reflecting communications during this period have been disclosed. Capt Kabolinejad was unable to explain this: it is inconsistent with his account that from soon after the lease agreement was signed he was “on the phone and emailing almost every day”. I do not accept his evidence that he was expecting and pressing for delivery of the aircraft throughout this period, and I do not accept that there was a meeting with SFS or SSS at which anything significant about the planes was said. Otherwise, there would have been emails and other documents. I reject this part of GA’s case, and conclude that it has not established that it was looking for delivery in the first half of 2011. After all, there was no good reason that GA should press for delivery until it had arranged some profitable employment for the aircraft.

However, whether because of (actual or anticipated) difficulties in having the aircraft registered in Africa or for some other reason, Capt Kabolinejad eventually sought to arrange a Thai AOC for them. It appears that he planned to do so using the offices of Infinity, a Thai company that Capt Kabolinejad and others established in April 2011. Capt Kabolinejad had (directly or indirectly: see para 80below) a 27% interest in the enterprise, which it was intended should operate scheduled flights between Bangkok and Tehran. Capt Kabolinejad thought that Mr Ramadan and Mr Sayegh might register through Infinity the aircraft that were the subject of the lease agreement. Apparently Capt Kabolinejad thought that Infinity might use one of the Boeings on the scheduled route when it started operations. There was also thought of using an aircraft to provide flights for Hadj pilgrims from Bangkok.

Capt Kabolinejad said that, if the aircraft were to obtain an AOC through Infinity, it would have cost $450,000 for manuals, crew training, fuel and other expenses. Mr Ramadan sent noise certificates, airworthiness certificates and aircraft licences to assist with the applications. However, for some reason that is not clear the plan to use Infinity to register the leased aircraft did not work out. According to Capt Kabolinejad, this was Mr Ramadan’s fault: one of the aircraft was taken to Jakarta, Capt Kabolinejad arranged for Thai inspectors to carry out a C-check there, and Capt Kabolinejad travelled to Jakarta. But at the last minute on 26 September 2011 Mr Ramadan told him to cancel the inspector’s visit because it had been decided to “put the aircraft under a different type of AOC in Gambia”.

The authorities of the Republic of Gambia issued an AOC dated 18 October 2011 to Sam Air Corporation Limited, a company that had been incorporated in the Gambia on 17 October 2011 and was owned by Mr Ramadan. (The company is apparently not related in any way with Sayegh Aviation Europe sro, which traded as Samair.) However, the AOC was only for the period of the Hadj, and it expired on 18 January 2012.

On 3 December 2011 Capt Kabolinejad wrote to Mr Ramadan complaining that the AOC issued by Gambia was “restricted to Hajj and no help for us”. He also wrote this about the attempts to use Infinity to register the aircraft:

“ … when I was in UAE in March 2011 I offered you shares in [Infinity] that could have open[ed] the door for you to register all you 5 B-747 in Thailand but you did not show any interest. I offered you to register one aircraft in Thailand, you agreed to do so but at the last minute you changed your mind and asked me to postpone the Thai Civil Aviations personal trip to Jakarta that cost me a lot of reputation and financial expenses …”

In December 2011 Capt Kabolinejad learned that one of the aircraft had had passed a D-check, and on 8 December 2011 he wrote to Mr Ramadan that “we” would take delivery of it as soon as Mr Ramadan had obtained a valid AOC. However, on 8 January 2012 Mr Ramadan wrote that, because payment had not been received, the lease agreement was terminated and “the owner had sold [the aircraft that had passed the check] to another party and it is not under our control anymore”. Capt Kabolinejad responded that he was sorry to hear that the aircraft was sold and wrote, “We always thought you were the owner because you signed the contract with Galaxy and all the aircraft’s documents are in your name”. He observed no advance payment was required under the lease agreement, and suggested that Mr Ramadan send “an official letter to Galaxy Aviation in Canada” to inform it of the position, adding that, having been told that none of the aircraft was ready for delivery, “they have gone through tremendous amount of preparation commitment and expenses (they have hired 75 crew to operate that aircraft) …”. He said in his evidence that he wrote that he had thought that Mr Ramadan owned the aircraft because he was “upset”, and that he had never believed this to be the position: I do not understand why he should make this up simply because he was upset. He also agreed that in fact GA had not entered into any contracts to hire crew.

On 9 January 2012 Capt Kabolinejad sent a letter to SGA marked for the attention of SFS and Mr Ramadan giving formal notice that “SGA” was in breach of the lease agreement. The letter was on the paper of Galaxy Aviation Co Ltd. It was said to be from “Galaxy Aviation Canada”, and Capt Kabolinejad signed it above the words “Galaxy Aviation (Canada)”. He wrote that “SGA” had failed to deliver the aircraft to “GAC”, and that “this failure has caused GAC to incur costs and damages”, threatening legal action by “GAC”. I take it that “GAC” is intended to refer to Galaxy Aviation (Canada).

GA claims that Capt Kabolinejad was acting on its behalf when he concluded the lease agreement. In my judgment, he was not doing so, and in any case GA was not the lessee under the lease agreement as a matter of its true interpretation ascertained against its background in so far as it was known to Capt Kabolinejad and Mr Ramadan I take the second point first.

The lease agreement was made in the name of “Galaxy Aviation Canada”, and the question is whether that name referred to the claimant, whose registered business name is “Galaxy Aviation” (or, in business names reports that are in evidence, “Galaxy Avaition”). GA contends that it does, and points to the address given for the lessee in the lease agreement, which is the Waterloo address, the claimant’s registered business address. But against that Capt Kabolinejad purported to sign the lease agreement in the capacity of the lessee’s managing director: that might be seen as an indication that he was acting for a company.

However, more importantly to my mind, the lease agreement must be interpreted in light of the agency agreement which had been signed by Capt Kabolinejad and Mr Ramadan earlier that day and which, as I conclude, the lease agreement was intended to replace. The agent under the agency agreement was called Galaxy Aviation Canada, and it is natural to suppose that that the lessee under the lease agreement was intended to be the same entity as the agent under the predecessor agency agreement, especially since it gives the Waterloo address as Galaxy Aviation Canada’s “principal office” and gives telephone and fax numbers and email address which correspond with those of the lessee in the lease agreement.

This leads to the question which entity was the agent under agency agreement, and for whom was Capt Kabolinejad acting when he made it Given the headed paper on which it was printed, the natural interpretation is that Capt Kabolinejad was acting for, and the agent under the agreement was, a limited company called Galaxy Aviation Co Ltd; and that the name “Galaxy Aviation Canada” referred to, Galaxy Aviation Co Ltd, an air chartering company. (This is consistent with the use of a company stamp against Capt Kabolinejad’s signature to the agency agreement, but this is the less significant because of the inexplicable use of the stamp of “Globe Investment Canada” as well, and so I do not base my conclusions on the use of the company stamp.)

This being so, as I understand the law, since Capt Kabolinejad purported to act on behalf of an identified principal, Galaxy Aviation Co Ltd, it would not be open to him to claim that he was acting on his own behalf and seek to take the benefit of the agreement (see Bowstead & Reynolds on Agency (19^th Ed, 2010) pare 9-094), and equally it is not open to him or GA to claim that he was acting on behalf of a different principal, GA, and for GA to seek to take the benefit of the contract.

However that may be, I have in any case concluded that Capt Kabolinejad was indeed acting for a company called Galaxy Aviation Co Ltd. I did not find it easy to unravel Capt Kabolinejad’s evidence about the various companies and businesses in which or with which he was involved: his answers about this in cross-examination seemed to me inconsistent. Certainly he explained that GA itself was and is a partnership that he had with Capt Dilli. It appears from the results of a search of business names that he was also involved with a business called Galaxy Aviation Canada Co, which was registered as a general partnership on 29 December 2010, but then as a sole proprietorship of the same name on 23 June 2011. (Capt Kabolinejad explained that originally he had intended to carry on this business in partnership with his daughter, but since she was a minor he was advised that he should conduct it alone.) The businesses of both this general partnership and the sole proprietorship were described as “aircraft charter, lease, maintenance”, and their connection with Capt Kaledinejad is confirmed by their address being the Waterloo address.

I also find that, Capt Kabolinejad was involved with not only GA and Galaxy Aviation Canada Co, but also a limited liability company called Galaxy Aviation Co Ltd. As I understood him, Capt Kabolinejad denied this, or at least was unwilling to accept it, but the documentary evidence and Capt Kabolinejad’s inadequate explanations for it justify this conclusion.

First, there is the letter paper that was used for, among other documents, the agency agreement and the mandate. Capt Kabolinejad said that it was printed for GA in 2007 and 2008, and it was headed “Galaxy Aviation Co Ltd” as a result of a printer’s error. He noticed the mistake, he said, but nevertheless used the paper: Capt Kabolinejad said that he did so because he did not understand the difference between a partnership and a company with limited liability. I reject that explanation. There is in evidence an agreement dated 15 April 2010 expressed to be entered into by “Galaxy Aviation Co Ltd” with Al Mandhoom General Trading LLC (“Al Mandhoom”) for the provision by Galaxy Aviation Co Ltd of maintenance crew. It was signed by Capt Kabolinejad under the words “for Galaxy Aviation Co Ltd”. Initially Capt Kabolinejad told me that the agreement had been drawn up by him or someone who worked for him. However, when he was asked why it was in the name of Galaxy Aviation Co Ltd, Capt Kabolinejad changed his account: he claimed that the agreement had been drafted by Al Mandhoom; that they had typed it on paper that he had emailed to them; and that he supposed that Al Mandhoom had simply copied the name Galaxy Aviation Co Ltd from the heading of the letter paper. He had no credible explanation for sending Al Mandhoom paper on which to type the agreement. I reject his account.

There is another reason for concluding that the letter paper was indeed printed for a limited liability company, and rejecting for Capt Kabolinejad’s evidence that the letter paper was printed for GA with an erroneous heading and used in ignorance of the difference between a company and a partnership. Capt Kabolinejad had a 27% share in Infinity, being one of four “partners” interested in the business. He agreed that the 27% holding was registered in the name Galaxy Aviation Co Ltd, but explained that the shares were so registered without his permission and that the registration was a mistake. I conclude that this evidence was untruthful: documents from the Thai Department of Business Development show that initially shares were issued in Capt Kabolinejad’s own name and they were later transferred to Galaxy Aviation Co Ltd. Whatever the reason for the transfer, Capt Kabolinejad must have been party to it. Moreover, he signed a membership interest agreement in which the shareholding in the name of Galaxy Aviation Co Ltd is recorded: he explained that he signed it because the registration “had been done”, and there was “nothing we could do about it”. I do not accept that: if his shares had been registered in the name of a company that did not exist or was nothing to do with him, he would have had the registration corrected.

Further, in July 2011 Capt Kabolinejad signed another agreement in the name of Galaxy Aviation Co Ltd: it is an agreement with Global Plane Services to lease two aircraft. Capt Kabolinejad’s only explanation was to repeat that he did not know the difference between a limited company and a partnership, but I do not believe that.

I conclude that GA was not party to the lease agreement and is not entitled to sue on it.

I come to the issues about whether SGAF and SFS were party to the lease agreement. There are two questions:

To my mind, the lease agreement contemplates that there is one lessor which is to provide all five aircraft to the lessee, and the lessor is the entity identified as “Sayegh Group Aviation”. It is clear from the stamp of the lessor that that entity is SGAF. This is confirmed because SGAF’s stamp had also been placed on the agency agreement, which the lease agreement, as I have concluded, superseded.

Three considerations might be identified as suggesting that SFS himself was also a party to the lease agreement:

None of this persuades me that SFS was party to the lease agreement.

I come therefore to consider Mr Ramadan’s actual or apparent authority to enter into the lease agreement on SGAF’s behalf. GA pleads that Mr Ramadan had actual authority to act for SGAF (and SFS) because a power of attorney had been executed in his favour: that Mr Ramadan in SFS’s presence claimed to have a power of attorney. Capt Kabolinejad disavowed that, no evidence supports the pleaded case, and I infer that Mr Ramadan had no relevant power of attorney. If he had one, as, according to Capt Kabolinejad, he claimed on 9 November 2010, he would have produced it or a copy of it to Capt Kabolinejad. Moreover, he would not have needed the specific and limited powers of attorney which he was given in order to deal with Qantas.

In his closing submissions, Mr Hunter did not pursue the pleaded contention. He submitted instead that I should infer Mr Ramadan had actual authority from:

I am not impressed by the argument, and I do not think that (individually or collectively) the considerations that Mr Hunter identified support the inference that he invites. Mr Ramadan was first employed by NPF on 1 July 1997, and was so employed until 10 October 2012. His first employment was described in his contract of employment as “paint sales”, and in 2003 he became a “sales supervisor”. SSS described him as “basically a paint salesman”, but acknowledged he had a closer relationship than others with SFS. When SGAF started business, Mr Ramadan sought to be involved with it, but he was never its officer or employee. Mr Sharpe described Mr Ramadan as “appointing himself” to work for SGAF, but confirmed that he had found nothing in SGAF’s documents to suggest that Mr Ramadan was SGAF’s officer or employed by them, and that he understood that he never held any position with SGAF.

Before I come to the six points identified by Mr Hunter, I shall refer to three other matters that might be taken to indicate that Mr Ramadan’s involvement with the aircraft business of SFS and the Group was more than this suggests. First, I refer an undated document (the “Samair document”), headed “Sam Air Corp” and purportedly signed by SFS as Sam Air’s Chairman, that stated that “in capacity as the Owner of Sam Air and the two Air Craft (Boeing 747) leased to Iran Air” he certified Mr Ramadan “is the only authorised person to sign and negotiate and collect any due money on behalf of Samair from others”. SSS denied that it was signed by his father. Its authenticity has not been proved, and I am not persuaded that it is a genuine document. But in any case it has nothing to do with SGAF, and there is no reason to suppose that SFS did, or would have, signed a comparable document in respect of SGAF.

Next, the sale of the aircraft to Mr Ramadan in July 2011 for nominal consideration: GA submitted that SSS and SGAF would not have treated Mr Ramadan so generously if they had disapproved of what he had been doing with the Boeing planes: and that therefore it shows that they were satisfied that he had managed the planes generally and leased them to GA in particular. Undoubtedly, on its face it is strange that the planes were given to Mr Ramadan: the Boeing 747 300s had apparently proved much less valuable than the price paid to Qantas would indicate, but they must have had significant value. But I accept SSS’s evidence that they were an embarrassment to SGAF, and also that he wanted with Mr Katona’s assistance to assert control and to draw a line under Mr Ramadan’s ambitions to manage this part of the Group’s business. I accept the Mr Ramadan was given the five planes so that he could pursue his interest separately from the Group and would not interfere in its aircraft business. At all events, I decline to infer that by transferring the planes SSS was approving or condoning the lease agreement: there is no evidence that persuades me that SFS or SSS was aware of it: I accept SSS’s evidence to the contrary.

Thirdly, I refer to a document, apparently emanating from Mr Ramadan, which, for no good reason, GA disclosed only on the second day of the trial. It is in manuscript and is in Arabic, it is headed Samair Corp, it purports to be signed by SFS and it is apparently stamped with the SGAF stamp. According to a translation provided by GA, it reads as follows:

“To Whom It May Concern:

I [SFS] the owner of Al Sayegh Aviation whose address is in the Sharjah Free Zone admit that it has been agreed with Mr. Abdullah Khalid Ramadan Palestinian citizen … that he would be manager for the company for a percentage of 15% and a salary of AED 25,000 plus housing and that is what we have agreed.”

The translation provides no date for the document.

This document was not properly proved, and no evidence explains it. It is perhaps not surprising that the defendants were unable to provide an explanation for it (from, say, Mr Kombarji) in view of the late disclosure. But even taking it at face value, it is inconsistent with any claim by Mr Ramadan to be managing director of SGAF, and does not provide significant support, in my judgment, for the contention that he had authority to enter into the lease agreement: that would not be implicit either in appointing him as a manager of SGAF or in him having a (minority) shareholding.

I accept that these matters reflect that SFS indulged Mr Ramadan more than other employees, and that he was treated more favourably than was indicated by his position with NPF. No doubt this resulted from SGS’s friendship with Mr Ramadan’s father. But there is no evidence that Mr Ramadan’s working relationship with SFS was such that SFS was likely to have authorised him to enter into contracts for SGAF of this kind, or to have acquiesced in him doing so, or that he was likely to have known that Mr Ramadan was claiming or assuming such authority. SSS told me, and I accept, that generally SFS signed all contracts for his businesses himself, and exerted personal control over them, except to the extent that he allowed authority to SSS or limited powers of attorney were granted to employees for specific purposes.

I come to Mr Hunter’s six points. His argument emphasised the evidence of Capt Kabolinejad about Mr Ramadan walking into SFS’s office without any appointment or formality, and about the conversation in Arabic between SFS and Mr Ramadan, apparently about the terms of the lease agreement that had been agreed. I have rejected those parts of Capt Kabolinejad’s evidence.

I accept that on 9 November 2010 Mr Ramadan used what appeared to be SGAF’s stamp. There is no evidence about whether it was a genuine stamp. The Samair document is not itself stamped, but its questionable status makes me the more cautious about accepting that the stamp used by Mr Ramadan was genuinely one of SGAF’s. But even if it was, I do not infer that Mr Ramadan had actual authority to use SGAF’s stamp. It seems to me inherently improbable that anyone who had no office or official position of any importance in the company would have been so authorised. The evidence did not explore who had access to a stamp of SGAF or how Mr Ramadan might have been able to use one: for example, it was not explored whether Mr Kombarji had use of one and could have given Mr Ramadan access to it. Mr Hunter simply did not establish through the cross-examination of SSS or of Mr Sharpe or otherwise the basis for the inference from the use of the seal which he invited me to draw.

Mr Sharpe said that he knew of no evidence that Mr Ramadan had an email address with SGAF, but that evidence was clarified by Mr Bagduyan. He stated, and I accept, that the email address aramadan@sayegh.aviation.com (the “Ramadan email address”) was created for Mr Ramadan, but that it was never released or activated because management approval for it was never given. It is not clear why it was created: it could have been Mr Ramadan who arranged it. But since it was not activated, I do not see how its creation assists GA’s argument. Even if it had been activated, I would see no real significance in it: most employees given emails addresses by their employers are not authorised to enter into significant contracts. It might be said that it shows that Mr Ramadan was known to be acting for SGAF in some way, but that is not controversial: SFS, as I infer, knew that he dealt with the purchase of the Qantas planes and approved of that.

The dealings with Qantas do not assist GA’s contention. On the contrary, the fact that Mr Ramadan needed specific and limited powers of attorney evidences that he did not have general authority to act for SGAF.

Mr Hunter accepted, and it is clear from the evidence, that Mr Ramadan was not the managing director of SGAF. However, he signed on behalf of SGAF a side agreement dated 26 May 2010 to the contract with Qantas to buy the Boeing 747 300s (the “Qantas side-agreement”). Under his signature Mr Ramadan described himself as managing director of Sayegh Group Aviation, giving this as his title under his signature. SSS said that generally he would have expected his father soon to learn and intervene if an employee claimed authority that he did not have or claimed a position such as that of managing director that he did not have. SSS did not know of his father taking Mr Ramadan to task about the title that he assumed in the Qantas side agreement, but pointed out that SFS might well have seen no point in doing so since Mr Ramadan was entitled under the power of attorney to act as he had. However this may be, this is much too slender a basis to infer that SFS generally allowed Mr Ramadan to describe himself as managing director of SGAF, still less that he allowed him to assume authority to enter on SGAF’s behalf into agreements such as the lease agreement.

Nor do I consider that the decision and ruling of BIS assists GA. By an order of 23 April 2012 BIS deprived SGAF, Mr Ramadan and others of export privileges for 180 days because of concerns about the export of the three Boeing 4747 300s to Iran. In their decision, the BIS stated:

“On April 16, 2012 [Mr Ramadan], Managing Director of both [SGAF] and [Sam Air Corporation Limited], informed BIS and provided transaction documents indicating that three 747s at issue were obtained by [SGAF] from Qantas Airlines in the United States in August 2010, sold to Sam Air in July 2011, and then sold yet again …”.

This observation, as I infer, was based on what Mr Ramadan had told BIS, and it was not true: he was not the managing director of SGAF. In subsequent correspondence, SGA, through BIS’s lawyers, denied that Mr Ramadan had authority to act on its behalf, the order expired in October 2012, and it was not renewed.

I therefore reject the submission that Mr Ramadan had actual authority to make the lease agreement for SGAF, and I come to the contention that he had apparent authority to do so. This requires GA to show that:

In their pleaded case GA relied on the alleged representation:

I reject point i) because I do not accept that SGAF held Mr Ramadan out as its managing director. The contention was, I think, based principally on the claim in Capt Kabolinejad’s witness statement that Mr Ramadan was described as managing director on his business card, but that claim was destroyed in cross-examination. In so far as it was based on the Qantas side-agreement, I have already explained why I cannot draw from that the inferences that GA invites. Specifically I do not infer that SFS held Mr Ramadan out as having authority to enter into agreements such as the lease agreement for SGAF, but in any case there is no evidence that Capt Kabolinejad knew of the Qantas side-agreement, still less that he relied on its description of Mr Ramadan as SGAF’s managing director.

I see no basis for the point ii). In principle a principal can allow his agent to tell third parties that the principal had given him authority to hold himself out as their agent for purposes outside actual authority, and so be bound by apparent authority that the agent confers on himself: see Bowstead & Reynolds, loc cit, at para 8-022. In practice this is, I think, relatively unusual, and there is no evidence that SGAF put Mr Ramadan in this position.

With regard to point iv), for reasons that I have explained, I am not persuaded that SGAF permitted Mr Ramadan to use its stamp. I add only this: Mr Jones submitted that GA could not rely on the use of the stamp to support its argument because Capt Kabolinejad had already signed the lease agreement before Mr Ramadan used it, and so he did not rely on Mr Ramadan being in a position to use the stamp. I reject that argument: first, Mr Ramadan had, as I have concluded, already used the stamp on the agency agreement, and so Capt Kabolinejad knew that he had access to a stamp. Secondly, GA’s case is not that he relied on a representation that Mr Ramadan had authority to make the lease agreement when he, Capt Kabolinejad, signed it. Capt Kabolinejad then thought, I infer, that SFS would sign it notwithstanding Mr Ramadan had signed the agency agreement because, whereas the agency agreement provided for Mr Ramadan to sign it on behalf of SGAF as its “General Director”, the lease agreement provided for SFS to sign it as “”Owner”. GA’s case is that he relied on Mr Ramadan having authority later, when they returned from SFS’s office with the agreement still unsigned.

As with the allegation that Mr Ramadan had actual authority to sign for SGAF, so too with apparent authority Mr Hunter again expanded the pleaded case and relied on all the matters invoked by him in relation to actual authority. Again Mr Jones did not argue that he should not be permitted to do so, but for the reasons explained when I assessed the case that Mr Ramadan had actual authority, I am not persuaded by these considerations. I conclude that SGAF did not represent that Mr Ramadan had any relevant authority.

In any case, GA has not established that Capt Kabolinejad relied on any representation or “holding out” by SGAF or SFS when he signed the lease agreement. On the contrary, he asked for a copy of Mr Ramadan’s power of attorney because he was concerned about whether Mr Ramadan was authorised to make the agreement. I reject as incredible his explanation about how Mr Ramadan excused himself from giving him a copy of the power of attorney. I conclude that, by the time that the lease agreement was signed by Mr Ramadan, Capt Kabolinejad had come to believe that Mr Ramadan was acting for himself. That is why he wrote in the terms that he did on 8 January 2012: I can conceive of no other realistic explanation for the email.

There remains the contention that SGAF ratified the lease agreement. In his closing submissions Mr Hunter said that this contention really rested on the same matters as the allegation of apparent authority, and I have rejected those. In so far as it also rested on Capt Kabolinejad’s evidence that at a meeting in 2011 SFS told him that SGAF were “working on” having the aircraft delivered, I simply do not accept that evidence. Ratification would require (i) an unequivocal act by SGAF adopting Mr Ramadan’s conducting in making the lease agreement, with (ii) knowledge of all the material circumstances. GA has proved neither requirement.

I add that, if I had concluded that SFS was a party to the lease agreement on its proper interpretation, I would have concluded that Mr Ramadan had no authority to enter into the agreement for him either. This contention really rested on the pleaded case that the lease agreement had been signed in SFS’s presence, which was never supported by the evidence. I add only that at one point in his cross-examination Capt Kabolinejad appeared to say that GA had in its possession a power of attorney, or copy of a power of attorney authorising Mr Ramadan to act for SFS. It was never produced. If I understood this evidence correctly, I reject it.

Either my conclusion about the identity of the lessee or my conclusion that the lease agreement was not binding on the defendants would be sufficient to defeat GA’s claim, but I shall state my conclusions about the other issues. Although logically I would therefore next come to the impact of article 18 and whether the lessors were in breach of the agreement, it is convenient next to consider GA’s claim for damages if it does establish liability. This raises questions about (i) what loss GA suffered and (ii) whether it mitigated its loss, the defendants contending that it did not do so.

GA’s pleading states that expert accountancy evidence would be required in order to plead “full particulars” of the loss and damage. There is no such evidence, and GA has provided no particulars of the loss and damages claimed other than those in the original particulars of claim. They are under two heads (or, as it is pleaded, “at least” two heads).

The first claim rested on Capt Kabolinejad’s evidence (or perhaps his bald assertion) that, if the planes had been delivered under the lease agreement, their deployment on the Hadj routes would have earned a profit of at least 15%, this being, he explained, a conservative estimate because he would have expected a profit of 25%. This was not supported by any explanation of the basis of assessment, and Capt Kabolinejad did not even explain what elements “15% net profit over lease costs” comprised: whether only hire payments had been deducted from the gross profit, or whether there had also been deducted some, and if so which, other costs of operating the planes.

No documents were disclosed in support of this claim. Capt Kabolinejad maintained that GA had no relevant documents. I find that impossible to accept: no business would have entered into an agreement of this kind without making some calculations, however rough and ready, by way of a forecast or budget. Moreover, Capt Dilli said this in his witness statement:

“I should point out that a great deal of business activity in Africa is a “cash one” – so whilst I will be able to obtain and will disclose documentation supporting as much of the expenditure as possible, I ask that the Court bear in mind that Africa is a slightly unusual business area, where “cash is King” and the use of bank accounts is not as widespread as in Europe or for that matter the Arab world, which is also very much a cash culture”.

This makes clear that there was some relevant documentation, albeit limited. There is no credible explanation for it not being made available.

The inadequacy of the evidence and disclosure are enough reason, in my judgment, to reject the claim for lost profits: it simply has not been proved. But in any case the evidence does not establish either (i) that GA would have been able to deploy the aircraft if the lessors had complied with the lease agreement as GA contends they should have done, or (ii) that GA planned to deploy the aircraft as it pleads.

The first point raises the question whether, had the lessors complied with the lease agreement, GA would have had the planes in time to carry Hadj pilgrims in 2011. Capt Kabolinejad explained that pilgrims from West African countries book their transport with the Hadj Commissions there. Operators require permission for Hadj flights both from the Saudi Arabian authorities and from the Hadj Commission for the West African countries. If a Hajj Commission gives a carrier permission, he will enter into a commitment to the Commission to provide transport for a specified number of passengers, and the Commission undertakes to pay for them. The advantage to carriers of this system is that they are guaranteed that they will be paid for full planes.

When GA entered into the lease agreement, Captain Dilli was engaged in dealing with the relevant authorities about applying for permission to fly pilgrims to Mecca, using his contacts in Nigeria, Niger, Mauritania and elsewhere.He explained how a carrier might go about obtaining permission from Hadj Commissions, and specifically the Nigerian Commission of which he had particular experience. He said that the annual process starts in about March, April or May when advertisements are placed inviting applications to carry Hadj pilgrims. Applicants need to support their applications with proof that they could afford to provide and could make arrangements to provide handling facilities, catering facilities and other such services. A shortlist is interviewed The Hadj Commissions require that the aircraft be inspected, and so an applicant has to make the planes available for inspection in Nigeria or other country from which it is to operate.

Capt Dilli said that he had “countless” meetings with officials and they had reached agreement “in principle”. However, there was no documentation either reflecting the meetings or recording the agreement, and, as I conclude from the disclosure, GA had prepared or collected none of the documentation that it would have needed to supply to support an application. I infer that it had decided not to take any steps to apply before it had had delivery of the aircraft, or at least until it had made more definite arrangements with the lessors about when the planes would be delivered. Admittedly Capt Dilli said in his witness statement that he had “all the relevant pilots/engineers/crew in place”, but again nothing was in writing: while I accept Capt Dilli’s insistent evidence that much African business is conducted orally and is not recorded, I conclude that any arrangements were of the loosest kind.

I found unsatisfactory the evidence about when GA would have required delivery of the aircraft under the lease agreement if it might feasibly have applied to Western African Hadj Commissions to carry pilgrims in 2011. Capt Dilli said at one point that sometimes applicants to a Hadj Commission are not interviewed until a month before the Hadj season begins, but I did not understand him to mean that they need not apply with supporting documents until then. He also said that there was a “lead time” of 4 or 5 months, and this would mean that GA would have had to apply by about April or May 2011. I conclude that, if there was then still uncertainty about delivery of the aircraft, it would not have been feasible for GA to have applied to Hadj Commissions to carry pilgrims in 2011, and it would not have done so.

Further, the evidence about how GA planned to use the aircraft went beyond the pleaded case and was not wholly consistent with it. According to Capt Kabolinejad, when he heard about the aircraft he conceived a plan to use them to fly pilgrims from Africa to Mecca: he thought that they could be so operated not only at full capacity for Hadj flights during the last four months of the year, but at other times for Umrah pilgrims although many fewer pilgrims go to Mecca for Umrah than for Hadj. The pleaded case does not refer to Umrah flights.

This might mean only that the pleading does not include a claim for loss of income from this source, but the evidence departed from the pleading in another, more significant, respect. First, it appears from email exchanges between Capt Kabolinejad and Capt Dilli in October 2010 that they were planning to use aircraft, or at least an aircraft, on routes to and from Bangladesh. Capt Kabolinejad explained in cross-examination that he had in mind that they might fly workers from Bangladesh to work in Dubai, but that GA would probably have discontinued the flights had it been possible to use them for the 2011 Hadj. I was not convinced of that explanation for the emails: Capt Kabolinejad had explained none of this until documents emerged showing the plans to use the aircraft on the Bangladesh routes.

Moreover, GA’s pleaded case is that the costs of registering Infinity and establishing an office in Bangkok are recoverable as wasted expenditure: the implication is that at least one of the leased aircraft was to be deployed in the Infinity enterprise. Capt Kabolinejad told me that Infinity’s plans included scheduled flights between Bangkok and Tehran. Initially he said that the leased aircraft would not be use for this purpose, but then accepted that one of the aircraft might be so used. The documentary evidence show that it was contemplated, if not planned, that at least one of the aircraft might be so deployed: in an email of 16 August 2011, Capt Kabolinejad wrote to Mr Ramadan, whom he addressed as “Infinity Partner” that Infinity planned to start selling tickets from 1 September 2011 for flights starting on 1 October 2011. He referred to a need to “position all aircrafts to the maintenances base” in order to have them ready on time, and then to the registration of “all 3 B473”, which must be the three Boeing 747 300s that were to be leased.

Finally, Capt Kabolinejad said in cross-examination that there was a plan to carry 2,500 Hadj pilgrims from Bangkok.

An email disclosed by GA showed that by April 2011 a budget for Infinity’s business had been prepared: it was sent with the disclosed email. The budget was not disclosed: it might well have given a clearer picture of the plans for Infinity than Capt Kabolinejad’s evidence. As it was, I found it impossible to extract from the documents and oral evidence any clear picture about how GA thought it might to use the leased aircraft, in Infinity’s operations or otherwise. However, by the end of Capt Kabolinejad’s cross-examination, it was apparent that GA did not have a settled plan to deploy the leased aircraft, or at least to deploy all of them, on flights between West Africa and Mecca for the 2011 Hadj: their plans were much more fluid.

There is a further difficulty facing the claim for lost profits: at most, GA had no more than a chance of being appointed to carry pilgrims for the 2011 Hadj, and, if it had a claim of this kind, it would be for loss of that chance. I am not persuaded by Capt Dilli’s vague evidence about reaching agreement in principle that, even if GA had definite plans of the kind pleaded and the aircraft had been delivered by about April 2011, an application to the Nigerian or any other Hadj Commission would definitely have succeeded. Any assessment of the chance would be almost a guess, but my impression is that it was less than 50%.

For all these reasons, I am not satisfied that GA has proved this claim.

I therefore come to the claim for wasted expenditure: of course, in an action for damages for breach of contract in principle a claimant is entitled for expenditure that he incurred in reliance on his expectation that the other party would observe the contract. GA pleads a claim in respect of the following:

The claim for wasted expenditure was said to be supported by the evidence of Capt Dilli. His evidence was that costs were incurred for no return because GA’s plans could not be progressed without the aircraft being delivered, and the costs to which he referred were set out in a spreadsheet, which was attached to his witness statement. The schedule is headed “Air Jupiter Ltd”, which Capt Dilli explained was a Nigerian company of which he was the managing director and which incurred expenditure “on behalf of” GA. The items in the schedule are stated in Nigerian naira, and then converted into a sterling claim of £799,675 by using what was said to be a “black market” exchange rate of 123 naira to £1.

Three difficulties facing the pleaded claim are immediately apparent:

But there are other problems with the claim in Capt Dilli’s schedule. The items in it are divided into three categories: (i) “Staff retainership”, (ii) “Registration Costs, Fees and Logistics”, and (iii) “Administrative Expenses”. It became clear from Capt Dilli’s evidence that many of the items were incurred not in order to be able to provide flights for Hadj pilgrims in 2011, but in respect of expenditure incurred in the hope of servicing the 2010 Hadj. The 2010 Hadj was well under way by the time of the lease agreement: although at one point in his cross-examination Capt Kabolinejad suggested that, if the aircraft had been delivered immediately after the lease agreement, GA might have made profits from bringing 2010 pilgrims back from Mecca, there is no claim pleaded on this basis, it seems unarguable (and it was not argued) that the lessors were in breach of the lease agreement in not providing aircraft in time for them to be so used and any such claim would be hopeless. On the basis of Capt Dilli’s own evidence and accepting it uncritically, this alone defeats the whole of the claim for so-called administrative expenses and two of the four items for “registration costs, fees and logistics”. This alone would reduce the claim from £799,675 to £477,427

The remaining items in Capt Dilli’s schedule are these:

It can immediately be seen that there are curious element in the claims, which Capt Dilli did not explain. For example:

None of the claim for wasted expenditure (like that for loss of profits) was supported by any documentation at all. Capt Dilli’s only explanation was that he had asked “the office to find supporting documentation” but “it is not there”. As I have said, Capt Dilli told me that cash payments are common in African business, but that is an inadequate explanation: some of the claim related to expenditure in Saudi Arabia, and, even if employees were paid in cash, it seems improbable that, for example, there would be no documentation reflecting payments to Civil Aviation Authorities. Capt Dilli accepted that a Nigerian company such as Air Jupiter Limited would have to prepare accounts, and would need records accordingly. Given its curious features, I find that without documentation no part of the claim it is proved.

There remains in respect of the damages claim the argument that GA did not take reasonable steps to mitigate its loss. The burden to prove this is upon the defendants. Their contention is that, if GA was suffering the losses that it claims because the aircraft were not delivered under the lease agreement, it could and should have leased aircraft from other sources. In view of my other conclusions, I do not propose to consider this argument at any length, and I say only this: the claim is in respect of losses in respect of GA’s professed plans for use of the aircraft in 2011, and it complains that they were incurred because Mr Ramadan was constantly reassuring it until January 2012 that the aircraft would be delivered. In these circumstances, I am not persuaded that GA acted unreasonably in not hiring other aircraft. The position might have been different if GA’s complaint was that, shortly after the lease agreement or in early 2011, the lessors had told it that they could not or would not deliver the aircraft: then GA might have reasonably have been expected to alternative planes. I therefore reject the defendants’ mitigation argument.

GA pleads that by a letter from its solicitors dated 8 March 2012 it accepted the defendants’ repudiation of the lease agreement and determined it. This is denied in the defence, and the letter of 8 March 2012 has not been put in evidence. However, that is not ultimately of any importance.

GA pleads that it was entitled to terminate the contract because:

If, as GA contends, the lease agreement had been concluded between it and the defendants and Mr Ramadan was authorised to act for the defendants, then the email of 8 January 2012 renounced the agreement and GA would have been entitled to determine it. However, this would not assist GA: its claim is for damages because it could not use the aircraft to carry pilgrims on the 2011 Hadj: that was not a result of the lease agreement being renounced (or repudiated) in January 2012. Nor was it a result of the aircraft being sold to a third party, Mr Ramadan, in July 2011 if I am right about when GA would have needed to put in train an application to the Hadj commissions. These allegations do not support the damages claim. In so far as GA seeks declaration that the lease agreement was discharged from 8 March 2012, I would see no purpose in granting this relief since neither defendant contends that the lease agreement is in force.

Accordingly, as I see it, GA’s claim is really based on its allegations that the defendants were in breach of the lease agreement in that:

I consider that the first point depends on the effect of article 18 of the lease agreement, together with the requirement of article 3 that the lessee should indicate the schedule to be flown by the aircraft. Disregarding these provisions, the lessors would have been obliged to deliver the aircraft within a reasonable time after the agreement. Even then, I am not persuaded that the lessors were in breach because I am not persuaded that GA was asking for delivery at this time. What is the impact of article 18? It provides that “the agreement” is “subject to the approval of the civil aviation authorities of the countries where it operates”, but it cannot be interpreted literally: Civil Aviation Authorities would not be expected to express approval for the terms of the lease. It must be intended to refer to them giving approval for the operation of the aircraft under the lease. I therefore would understand article 18 to provide that the performance of the lease, the provision of the aircraft and the corresponding obligation of the lessee to pay hire, did not come into force unless and until the authorisations had been obtained. This makes commercial sense in that it protects the lessee from taking delivery of aircraft, and so having to pay for aircraft, which it could not operate. But the approval of the authorities “of the countries where it operates” could not be obtained until the lessees had provided a schedule identifying those countries. GA contends that the lease agreement should not be so interpreted because (as it is pleaded) “the approval of the relevant civil aviation authorities would have been obtained prior to the operation of the aircraft”, but that does not, to my mind, respect the wording of article 18. If this be so, then article 18 qualifies the lessors’ obligation to deliver the aircraft: they were not obliged to deliver them until a reasonable time after the authorisations were obtained, and no air operator certificates were obtained by GA. I therefore reject the contention that the lessees were in breach of the lease agreement because they did not deliver the aircraft.

That leaves the allegation of breach in that the defendants did not “cooperate with [GA] to secure performance of the [lease agreement] in particular in taking any or any adequate steps in co-operation with [GA] to ensure that the Aircraft could be registered timeously as airworthy by a relevant civil aviation authority and/or take adequate steps to secure such registration”. There was no express requirement in the lease agreement that the lessors would so co-operate. However, GA pleads that, in order “to give business efficacy to the agreement and/or to give effect to the presumed intent of the parties”, the lease agreement is to be understood to provide that the lessors would take all reasonable steps to ensure that the aircraft were “certified timeously as being in an airworthy condition according to the requirements of the applicable civil aviation authority”; and that in breach of that obligation the defendants failed in particular to take “any or any adequate steps in co-operation with the Claimant to ensure that the Aircraft could be registered timeously as airworthy by a relevant civil aviation authority and/or to take any adequate steps to secure such registration”.

I accept that the courts readily imply that a party to a contract that is subject to a condition precedent is obliged to do nothing to prevent the condition being fulfilled (Chitty on Contracts (31^st Ed, 2012 para 13-013). Given the obligation to deliver aircraft in airworthy condition, here I would will also imply an obligation to take reasonable steps to co-operate with GA about having the aircraft in a condition in which they might be registered as airworthy. Similarly, given that the aircraft could not be operated without an AOC, I accept that there was an implied obligation to provide any necessary co-operation to this end.

Here GA pleads that it sought unsuccessfully to co-operate with the defendants in various ways:

I have rejected GA’s evidence about the first of these points..

The second point is less straightforward. I conclude that after the lease agreement was made at least one of the aircraft was indeed flown unlawfully to Afghanistan, and also that on about 25 November 2010 the Director General of the Burkina Faso authority cancelled registration of aircraft registered in the name of SGAF, including four of the aircraft that were the subject of the lease agreement. There is, however, no direct evidence that this was because an aircraft had been flown to Afghanistan, or because of anything done after the lease agreement had been concluded: the wording of the decision of the Director General, referring to “persistent” failure to respect procedures, shows that the decision was not the result of a single incident, and implies that the matters of complaint were more long-standing. Nor is there direct evidence that this was a significant reason that the aircraft were not delivered under the lease agreement.

The evidence about this point is unsatisfactory and incomplete: this might partly be because SGAF’s disclosure is deficient. For example, apparently no documents have been disclosed about the meeting with the Burkino Faso Authorities proposed for 13 December 2010. However, GA put forward no reasoned argument to explain how the decision of the Burkina Faso authorities presented or hindered it obtaining authorisation in respect of the aircraft. I do not consider that it has made out a case that unlawful use of the aircraft or other conduct on the part of SGAF constituted a failure to co-operate with GA so as to amount to a breach of the lease agreement.

With regard to the third point, this complaint does not support GA’s claim for damages in respect of carrying pilgrims from West Africa for the 2011 Hadj: it was, I conclude, too late for it to apply to Hadj Commissions by the time that GA went about seeking a CAO from the Thai authorities. Further, GA advanced no reasoned argument that authorisation from the Thai authorities would have enabled or assisted it to obtain authorisations in West Africa.

I conclude, therefore, that GA has not proved a breach of the lease agreement that supports the damages claim.

I shall therefore dismiss the claim because: