National Private Air Transport Services Company (National Air Services) Ltd v Creditrade Llp & Anor

A contractual waiver is construed by considering the language used in its commercial and factual context. A stated target date for performance is not necessarily a condition making the waiver ineffective if the date is missed. Where an agreement expressly waives identified rent for a defined period, the waiver is not extended to later rent merely because redelivery occurs later. An aircraft sublease is a conventional contract whose express redelivery requirements are not redefined by an implied duty of good faith or general industry practice.

The claimant leased two aircraft to the defendants under subleases governed by English law. The dispute concerned MSN 169, which was due for redelivery in November 2012 but was not redelivered until 30 April 2013.

In January 2013, the parties agreed that the claimant would make specified payments towards repair and redelivery costs, that the aircraft had a target redelivery date of 31 January 2013, and that rent invoiced for November 2012 to January 2013 would be waived at redelivery. The parties disagreed about whether the waiver was conditional on redelivery by 31 January, or continued until actual redelivery.

The court also considered alleged breaches concerning manufacturer support, maintenance-reserve payments, payments to repair facilities, and refusal to accept redelivery. The central issues were the proper construction of the January agreement and whether rent for February to April 2013 should be reduced.

1. Construction of the January agreement. Applying the principles stated in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 at [21], the agreement was construed from its language, background and commercial context. The reference to 31 January 2013 as the target redelivery date did not make redelivery by that date a condition of the waiver. The claimant’s conditional-waiver construction was inconsistent with the agreement, particularly because the claimant’s subsequent requirement for tripartite agreements made redelivery by 31 January impossible.
2. The waiver extended to rent from November 2012 to January 2013 only. The references to rent for that period and to invoices being waived at redelivery did not waive rent accruing after January 2013. The defendants’ alternative fault-based construction was also uncertain, although it was unnecessary to decide that issue.
3. The defendants established no breach concerning manufacturer warranties or product support. The engines were outside the relevant warranties, and the product-support provisions did not require financial support for repair costs. The January agreement also resolved liability for rent during the earlier period.
4. The claimant was not in breach by delaying maintenance-reserve release or payments to Lufthansa and Flybe. Any short delay in the Flybe payment did not cause the relevant delay because hangar space was unavailable.
5. The claimant was entitled to insist on compliance with the contractual redelivery requirements. Although Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB) was accepted as authoritative, an aircraft sublease was not a relational contract in the relevant sense. Industry practice involving negotiation or compensation for outstanding items did not imply a term redefining the express redelivery obligation.
6. The defendants were not liable for rent for November 2012 to January 2013, but were liable for rent for February to April 2013 without deduction. The parties were directed to calculate the resulting balance and return on consequential matters.

Not stated in the judgment.