Jet2.com Ltd v S C Compania Nationala De Transporturi Aeriene Romane Tarom SA

In assessing damages for repudiatory breach, causation must be distinctly proved, but the court may assess loss on the evidence and commercial probabilities without resolving every minor uncertainty. The claimant may recover reasonable additional costs incurred in mitigation, including directly replaced permanent staff costs, but must prove that the costs are attributable to the breach rather than pre-existing overheads. A claimant need not generally account for a mitigation benefit or windfall unless it has reduced the overall loss. Any such benefit must be supported by evidence and must not be assessed speculatively.

Jet2.com Ltd claimed damages from S C Compania Nationala De Transporturi Aeriene Romane Tarom SA following an earlier finding that Tarom had repudiated an aircraft-maintenance agreement. The remaining hearing concerned the amount of loss.

The principal issues were how many aircraft Jet2 would probably have sent to Tarom during three maintenance seasons, and whether thirteen disputed items formed part of the recoverable loss, including hangarage, staff costs, labour hours, materials, additional work, interior refurbishment and alleged benefits from reduced downtime.

1. Causation and assessment. Causation had been distinctly proved on the facts already found. The approach adopted in the earlier liability judgment was consistent with the guidance in Galoo v Bright Grahame Murray [1994] 1 WLR 1360. The judge was not persuaded to depart from that approach, and any challenge to the validity of the test was for the Court of Appeal.
2. Probable aircraft allocation. Damages were assessed by estimating what Jet2 would probably have done in the commercial circumstances, taking account of Tarom’s attractive price, its performance concerns, Jet2’s developing relationship with JAT, the LBA facility and Tarom’s practical capacity. Jet2 would have sent five aircraft to Tarom in 2007/2008, eight in 2008/2009 and six in 2009/2010. The balance would have gone to JAT.
3. Recoverable costs. Hangarage was recoverable only to the extent attributable to additional C-check work caused by the termination, not by allocating an existing overhead to the aircraft. Permanent staff costs were recoverable in the exceptional circumstances because staff seconded to LBA were directly replaced by contractors elsewhere. The Leeds labour-hour claim was reduced by 6% because the evidence suggested some optimism in the hours claimed.
4. Materials and additional work. Jet2 could deduct the cost of materials from its claimed cost comparison, but the deduction had to be the best estimate of actual material cost rather than an unproved contractual formula. The assumptions that Tarom would have required similar hours and material costs to JAT for additional work were fair. The interior-refurbishment claim was assessed at US$100,000 as a necessarily approximate exercise.
5. Downtime and mitigation. Although JAT and LBA probably reduced maintenance downtime, any resulting financial benefit was nebulous and unsupported by sufficiently developed evidence. There was no general obligation to account for a mitigation windfall, although an actual reduction in overall loss would be brought into account. No speculative adjustment was made.

The parties were directed to prepare an agreed draft order and corrections.

This was a first-instance quantum judgment. The court recorded that liability had previously been determined in favour of Jet2.com Ltd, with Tarom liable in principle for damages. Permission to appeal had earlier been refused by Rix LJ, but no appellate decision was determined in this judgment.