SPC Aviation Ltd v Air Link One Ltd

On summary judgment, the court must decide whether the opposing party has a realistic prospect of success, without conducting a mini-trial. A charter by demise is determined by the underlying agreement creating the relevant interest, rather than solely by whether the charterer presently possesses or operates the aircraft. If such an agreement may exist, its termination must be established according to contractual principles. Declaratory relief may be granted on a summary judgment application, but the court should act cautiously and consider justice to both parties, the usefulness of the declaration and any special reasons. Where material contractual issues remain for trial and no immediate injustice is shown, summary judgment should be refused.

The claimant owned a Bombardier Challenger aircraft. The defendant was registered with the Civil Aviation Authority as charterer by demise following discussions and heads of terms concerning a proposed lease and sale. The claimant later transferred the aircraft to a third party and sought a declaration that any charter by demise had ended, so that the Register could be amended. The defendant contended that it remained entitled to registration because any agreement had not been validly terminated.

The claimant applied for summary judgment on the declaratory claim. The central questions were whether the 2016 heads of terms created a binding agreement giving rise to a charter by demise, whether that agreement had been terminated, and whether declaratory relief should be granted before trial.

1. Application refused. The claimant had not shown that the defendant had no real prospect of establishing that it had a charter by demise which had not been terminated.
2. Under CPR 24.2, the applicant bears the burden of showing that the opposing case has no real prospect of success and that there is no other compelling reason for trial. The court must assess whether the prospect is realistic rather than fanciful, must avoid a mini-trial, and must consider evidence reasonably expected to be available at trial. A short point of law or construction may nevertheless be decided where the evidence is sufficient.
3. The question was whether the defendant currently had an interest in the aircraft arising under a lease, hire, hire-purchase agreement or similar agreement, such that it was entitled to registration as charterer by demise. The existence of a charter by demise depended on the underlying agreement, not merely on present possession or operation of the aircraft. The claimant therefore had to show valid termination if a binding agreement existed.
4. There were triable issues as to whether the 2016 heads of terms were binding, what their terms were, and whether any relevant agreement had been terminated. The contemporaneous registration documents, correspondence and evidence concerning the parties’ earlier proceedings gave the defendant a realistic prospect of success. The absence of possession or operation did not itself establish termination.
5. Even if the summary judgment test had otherwise been satisfied, the court would have declined to grant a declaration. Declaratory relief on summary judgment requires caution. The court should consider justice to each party, whether the declaration would serve a useful purpose and any special reasons. Although amendment of the Register would serve a useful purpose, the claimant had not established immediate or specific prejudice or injustice if the matter awaited trial.
6. The court would leave the question of declaratory relief until after trial.