OLYMPIC COUNCIL OF ASIA v NOVANS JETS LLP

A failure to pay an invoice does not necessarily amount to repudiatory breach. The question is whether, objectively, the conduct clearly shows an intention to abandon and refuse performance of the contract.

Contractual wording must be construed objectively, considering the agreement as a whole, its commercial consequences and the quality of its drafting. A reference to payment obligations set out in a particular clause may not extend to obligations appearing elsewhere in the agreement. A minimum contractual term can prevent termination for ordinary breaches during that period.

Where consideration is calculated by reference to units supplied, it may be apportioned and restitution may be available for units not provided after termination.

The claimant had paid substantial sums under an aircraft lease-to-purchase agreement under which the defendant was to provide block hours and separately invoice excluded expenses. The claimant disputed an invoice for excluded expenses, sought accounting information and did not pay it. The defendant suspended use of the aircraft and later purported to terminate the agreement.

The claimant alleged breach of contract and sought damages, restitution for unused block hours and an account of profits from third-party charters. The defendant relied on repudiatory breach and contractual termination provisions. The issues included whether payment could be withheld pending queries, whether termination and suspension were authorised, and whether restitution was barred by the agreement’s non-refundable wording.

1. Payment and implied term. The invoice for excluded expenses was due under clause 3, and the claimant was in breach by failing to pay it. The agreement contained no express or implied term requiring the defendant to resolve accounting queries before payment. The proposed term was unnecessary because the contract remained commercially workable: [2016] AC 742.
2. Repudiatory breach. The claimant’s conduct did not objectively demonstrate an intention to abandon the agreement. It continued seeking meetings, clarification and performance, and had paid the principal instalments. Non-payment of the disputed invoice did not deprive the defendant of substantially the whole benefit of the contract. The defendant therefore could not accept a repudiation.
3. Construction of termination clauses. Clause 10(b) referred to payment obligations set out in clause 3 and did not extend to excluded expenses separately identified elsewhere. Clause 10(c), read with the minimum-term provision in clause 10(a), did not permit termination for an uncured ordinary breach before expiry of the minimum term. The defendant was not entitled to terminate.
4. Suspension. No contractual or other legal basis for suspending performance had been established. Suspension of the aircraft’s use was therefore a breach of contract.
5. Restitution and relief. The alternative unjust-enrichment analysis supported apportionment of the block-hour price because the agreement stated a price per block hour. The non-refundable wording did not permit retention of payment for services never provided, and the change-of-position defence failed. Judgment was entered for the claimant for US$6,995,540.50 for unused block hours and US$83,544 for post-suspension costs, subject to set-off for the properly due balance of the disputed invoice. The profit-share claim required further pleading and directions for an account.