Singapore International Commercial Court Considers The Public Trustee v Pearlberg in a Contract Termination Dispute Governed by English law

17 June, 2021

On Monday 14 June 2021, Sir Jeremy Lionel Cooke IJ issued a reserved judgment in the case of Singapore Airlines Ltd. v CSDS Aircraft Sales & Leasing Inc. [2021] SGHC(I) 3.  This judgment followed a short trial conducted remotely in the Singapore International Commercial Court (SICC) during May which dealt with issues of liability in a dispute concerning an agreement for the sale of a Boeing 777 aircraft.  The action had originally been commenced in the High Court of Singapore, but was transferred to the SICC in August 2019.

The Aircraft Purchase Agreement (APA) was expressly governed by English law and made provision for time to be of the essence. The parties’ respective obligations as regards delivery by the claimant seller (SIA), on the one hand, and acceptance and payment by the defendant buyer (CSDS), on the other hand, were set out in detail in the APA.  This provided for the Delivery Date to be “on a mutually agreed date” in the alternative to the date stated in the relevant clause which happened to precede the date of execution of the APA on 19 September 2018. Having paid the deposit sum as required, CSDS failed to make or tender payment of the purchase balance despite a number of agreed extensions or accommodations. This was described by the trial judge as a “history of delay, prevarication and procrastination on the part of CSDS” (Judgment [45]).

A dispute arose between the parties as regards who terminated the APA, how and when.  The trial judge found in favour of SIA that it had terminated the APA both at common law and pursuant to the contractual termination mechanism by letter dated 4 November 2018 (“4 November Termination Letter”).  The trial judge found that CSDS was in continuing repudiatory breach of the APA by its failure to make or tender payment of the balance purchase price by (at latest) 26 October 2018, by which time SIA had also given notice requiring payment for the purposes of the contractual termination mechanism in light of Event of Default on the part of CSDS.

The trial judge rejected various contentions advanced on behalf of CSDS to the effect that the 4 November Termination Letter was ineffective at common law or as a matter of contract to bring the APA to an end on that date.  In particular:

(i) The issuance and service of legal proceedings by SIA in the days immediately prior to the 4 November Termination Letter – seeking both specific performance and damages for breach of contract – was held not to have been an election or waiver or affirmation on the part of SIA.  The Court of Appeal decision in The Public Trustee v. Pearlberg [1940] 2 KB 1 was considered at length in this context. That case was distinguished on the basis that the general alternative plea for damages for breach of contract in the present case (cf. a claim for damages in lieu of specific performance under Lord Cairns’ Act) meant that the original writ/claim was not unequivocal in demanding performance of the APA. Whether or not Pearlberg reflects a mere rule of practice or procedure peculiar to the Chancery Division of the High Court of Justice, it does not represent any substantive rule of law as regards affirmation or election at common law, in particular in light of Johnson v Agnew [1980] AC 367: Judgment [65]-[79], [88]-[92].

(ii) There was no requirement for SIA to give any fresh notice to make time of the essence for CSDS’ performance of its obligations under the APA, and no defence or position was advanced by CSDS based upon estoppel: Judgment [93].

(iii) Nothing said or done by or on behalf of CSDS in response to service of the legal proceedings operated to render its own repudiation ‘spent’ as a matter of legal analysis, and CSDS remained in continuing repudiatory breach of the APA throughout these events by its failure to make or tender the balance purchase price on a daily basis: Judgment [94]-[97].

The trial judge also held that, even if the 4 November Termination Letter had not been effective, SIA had terminated the APA by letter dated 7 November 2018 following service of its amended writ/claim a day earlier by which it had removed the claim for specific performance and pleaded CSDS’ repudiation at common law and Event of Default under the APA; alternatively on 14 December 2018 when SIA sent CSDS a copy of a Default Judgment for damages to be assessed as entered or granted by the High Court of Singapore: Judgment [97]-[101].

Finally and for good measure, the trial judge rejected the allegation by CSDS that the 4 November Termination Letter, even if ineffective, could have been a repudiation on the part of SIA, still less one that remained open for acceptance as late as 22 January 2019 when CSDS purported to accept it: Judgment [65] & [104].

SIA’s damages will be assessed in a further stage of the proceedings in the SICC.

The judgment is publicly available on the websites of the Singapore Supreme Court and SICC Registry. A link to the judgment can be found here.

Stephen Houseman QC represented the claimant at trial in the SICC, instructed by Kelvin Tan of Drew & Napier LLC in Singapore.