England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT

		12 May 2015

David Donaldson Q.C.:

1. The Claimant, London Executive Aviation Limited ("LEA") is a major European executive air charter operator, its principal activities being aircraft management and aircraft charter. Its managing director is Mr George Galanopoulos. In addition to aircraft owned by LEA itself, it manages aircraft on behalf of client owners. Typically, the latter pay LEA a flat rate monthly management fee and reimburse LEA for operating overheads, such as fuel, airport charges, and maintenance costs. Pilots, and any other flight crew such as steward(esse)s, can either be supplied by the owner, or provided by LEA from its employees at a suitable charge. In addition to private flights for their own purposes, owners usually also authorise LEA to arrange charters, generating income which reduces general operating and other costs, with LEA retaining a percentage of the charter fees net of broker expenses.
2. The Defendants, The Lily Partnership LLP ("Lily"), are a limited partnership of which Mr Howard Shore owns 20%, with the remainder being vested in Shore Capital Management Limited ("Shore Capital"), the holding company in a financial services group of which Mr Shore is the Executive Chairman and apparently its leading light and effectively alter ego. I received the impression that the affairs of Lily were administered by the personnel of Shore Capital and any major decisions in relation to the matters with which this case is concerned were taken or cleared either directly or ultimately by Mr Shore. In the course of this judgment I will often elide the difference between him and Lily as was frequently done in the hearing before me: this is purely for ease of exposition.
3. In 2007 Mr Shore formed the desire to buy through Lily a new Bombardier Challenge 300 jet aircraft direct from the Canadian manufacturer and approached LEA to take on its management. He indicated to Mr Galanopoulos that he envisaged substantial use for his own or Shore Capital's personal and business purposes, and also that in due course he intended to have one or more of his own pilots. An Aircraft Management and Charter Agreement between LEA and Lily was negotiated and signed on 22 November 2007 ("the Agreement") to become effective on the delivery of the aircraft, which in the event took place some months later in May 2008. The aircraft was thereafter operated and managed under the terms of the Agreement until 25 July 2012 when it was terminated by mutual agreement and the management transferred to TAG Aviation Limited ("TAG").
4. In part the Agreement corresponded to the typical pattern which I described in paragraph 1. Under Clause 8.1 a management fee of £42,000 per annum was payable monthly in advance. LEA was also entitled to retain 10% of charter income invoiced net of third party broker commissions. Expenses incurred in connection with the operation and management of the aircraft, enumerated in Clause 8.2 (a) to (o), were under Clause 9.1 to be first paid by LEA on behalf of Lily and then rebilled to Lily at net cost.
5. At the request of Mr Shore the Agreement also introduced a concept known as the Target Charter Rate which Clause 8.9 provided

"(a) shall be determined by Owner in consultation with LEA on or about the Agreement Effective Date [in the event May 2008] in accordance with the prevailing market conditions at that date. It is recorded that as at the date of this Agreement the market charter rate is £3,200 [per flying hour];

(b) thereafter, shall be reviewed on or about the Business Day following each Quarter Day being the 31 March, 30 June, 30 September and 31 December) and shall be determined by Owner in consultation with LEA."

The figure of £3,200 per hour was never in fact reviewed, either on the Agreement Effective Date in May 2008 or thereafter.

6. The Target Charter Rate under Clause 8.8 was to be used by LEA as the basis for calculating the fees to be charged to charterers. Such fees were (unless otherwise agreed by Lily) to be that rate (or higher) multiplied by the estimated flying hours plus landing fees, airport fees, and overnight crew expenses. Conspicuously, these additional elements over and above the charter fee did not extend to most of the other operating expenses which under Clause 8.2 and Clause 9.1 were to be reimbursed by Lily, even where they were tied directly to a particular flight, most importantly fuel costs. The calculation had, of necessity, to be based on estimates, which might in the event turn out to be significantly incorrect. Actual flying hours might be more (or less) than the estimate due to, for example, winds or traffic control routing. I was also told that landing and airport fees – subject to such variables as time on the ground or passenger numbers – could not always be accurately predicted. Clause 8.8 did not therefore guarantee a clear return to Lily even on a gross basis.
7. An important function of the Target Charter Rate was as the basis for so-called Charter Incentive Payments ("CIPs"). Clause 8.11 provided that "within 2 months of each Quarter Day LEA shall calculate" the average charter rate per flying hour (as recorded in the aircraft's technical log and to two decimal places) for the three months immediately preceding that Quarter Day, referred to as "the Average Charter Rate". This was to be the product of the aggregate charter fees accrued during that period net of brokerage and ancillary costs such as landing and airport fees divided by aggregate flying hours. If the Average Charter Rate exceeded the Target Charter Rate, LEA would be entitled to an additional payment (a CIP) equal to 25% of the excess multiplied by the flying hours. Conversely, LEA would be required to pay to Lily 25% of any shortfall. For shorthand convenience, I will refer to these as, respectively, a "positive CIP" and a "negative CIP".
8. Clause 9.2 provided that LEA should prepare and deliver to Lily for each calendar month by the end of the immediately following month a statement setting out:-

(a) all income accrued in favour of Lily during that month including (i) charter fees invoiced for charter services performed during the month and (ii) any (positive) CIPs "due to Owner in accordance with clause 8.11" (Clause 9.2(a)(iii));

(b) all expenses reasonably and properly incurred and paid by LEA during the month together with any amounts accrued in favour of LEA from Lily during that month, including any (negative) CIPs "due to the LEA calculated in accordance with Clause 8.11" (Clause 9.2(b)(v));

(c) the balance of (a) and (b), which "shall be owed" by LEA to Lily or vice-versa.

Clause 9.3 provided that the balance "owed" referred to in (c) "shall be due" within 10 days after the end of the month following the month covered by the statement "provided that if LEA fails to provide Owner with the statement within this time-line, any balance due from Owner to LEA shall not be payable until 10 days following receipt of such statement by Owner". (This would result in postponement of the entitlement to interest provided for by Clause 8.6.)

9. In this action LEA seeks payment of sums alleged to be due to it under the Agreement. This effectively falls into two parts:

(a) Whether LEA is entitled to payment of sums totalling £52,222.81 (plus interest) in respect of CIPs.

(b) Whether Lily is entitled to deduct sums totalling £20,103.69 from outstanding invoices in respect of management fees and operating costs in respect of four discrete matters.

(a) CIPs

10. In each of the first five quarters^[1] of the Agreement, ending 30 June 2008 to 30 June 2009, actual charter rates exceeded the Target Charter Rate. The five CIPs for these quarters, totalling £48,910.96, were invoiced together on 14 October 2009. The CIP for the next quarter, also positive, in the sum of £4,380.04 was invoiced on 15 January 2010. All six payments were refused by Lily and remain unpaid. The final quarter of 2009 produced a shortfall resulting in a negative CIP of £1,068.09 for which a credit note was issued on 17 May 2010. In each case the relevant invoice (or credit note) was accompanied by full details and vouchers. I was told that the delay was due at least in part to difficulties in obtaining and processing the information and documentation necessary for the calculation coupled with an indication (disputed by Lily) which Mr Heatherley of LEA's accounting staff believes he received in late 2008 that production of the CIPs should take second-place to that of the monthly statements and could be delayed accordingly.
11. When the positive CIPs were eventually invoiced to Lily, Mr Shore was not pleased. He thought that the charter rates underlying them must have been achieved by exploiting an increase in market rates caused by a rise in fuel prices. In fact, as Mr Galanopoulos told me, and I accept, LEA's quoted and achieved rates for the aircraft were never changed to reflect variations up or down in fuel prices over the period - nor, as I understood it, were market rates in general significantly affected by such variations. Moreover, an initial rise in fuel prices in the six months between signature of the Agreement and delivery of the aircraft was soon effectively cancelled by a fall from the autumn of 2008. The excess of the actual rates over the target rates was due rather, as Mr Galanopoulos explained to me and I accept, to the opportunistic gains which LEA was able to make for Lily by filling empty (but nonetheless paid) return sectors or on triangular flights and thus achieving an element of double-payment.
12. On the basis of his erroneous belief, however, Mr Shore concluded that Lily was being required to pay 25% of an increase in profit due to a rise in fuel costs which Lily was obliged to bear but was not included in the expenses deductible before ascertainment of the CIP. This annoyed him considerably, even though the CIP provisions had been included in the Agreement at his request, and he refused to pay. In February 2010 Mr Galanopoulos met with Mr Shore to discuss the position. It was agreed, and subsequently confirmed in a letter from Lily dated 16 February 2010, that the CIP provisions would cease to apply for the future. Mr Galanopoulos was not however prepared to forego LEA's entitlement for the past. Mr Shore told me in his oral evidence that he had given Mr Galanopoulos to understand that if LEA insisted on that position Lily might withdraw its business, but this was neither consistent with his written statement nor (unsurprisingly in these circumstances) put to Mr Galanopoulos in cross-examination. At all events, Lily continued to include the sums in summaries of account sent with the monthly statements, though latterly with the annotation "disputed", and the Agreement was not terminated until mid-2012 (and then by mutual agreement).

(i) Construction

13. It is common ground that, except for that relating to the quarter ending September 2009, none of the CIPs was calculated within the two month period referred to in Clause 8.11. Moreover, they were, at least initially, invoiced separately from any monthly statement. Each of these two matters is said by Lily to preclude any obligation on its part to pay these CIPs (though not its right to receive the negative CIP credited on 17 May 2010).
14. Ms Piercy, counsel for Lily, submits that the words "within 2 months of each Quarter Day LEA shall calculate" in Clause 8.11 mean that in the absence of any such timeous calculation nothing is due.
15. Such a construction is not in my judgment dictated by even a literal approach to Clause 8.11(a). The entitlement to a CIP (positive or negative) under that Clause arises from the difference between the Target Charter Rate and the Average Charter Rate, which exists objectively from the end of the relevant quarter. The Average Charter Rate, which is based on fees and expenses during the relevant quarter, and in consequence the difference from the Target Charter Rate and thus the positive or negative entitlement, is ascertained by the calculation in accordance with the formula in the Clause, not created by it. An objectively erroneous calculation could not affect the underlying entitlement of either party, nor by the same token can the absence of any such calculation do so.
16. On behalf of Lily, Ms Piercy readily accepts this result in the case of a negative CIP. Ignoring any element of self-interest, that would on her own argument, as she herself submits, follow necessarily from the absence of the word "calculated" in Clause 9.2)(a)(iii) ("payments due to Owner in accordance with clause 8.11"). Ms Piercy seeks however to contrast the inclusion, in her submission crucially significant, of the word "calculated" in Clause 9.2(b) (v)^[2] in the case of a positive CIP ("payments due to the LEA calculated in accordance with Clause 8.11"). Self-evidently, however, no sum could be credited to either party in a monthly Clause 9 statement unless its amount had been ascertained, i.e. calculated. The presence or absence of that word in the two sub-clauses I view therefore as no more than an inconsistency of drafting without substantive significance.
17. Even if that were wrong, the words "calculated in accordance with Clause 8.11" in Clause 9.2(b) (v) do not extend to requiring that the calculation should have been completed by the end of the two month period. Nor in my judgment is there any sensible reason to creatively interpret them as doing so.

(a) The clause does not state that the calculation made within the two month period must also be notified in that period. The first that Lily might therefore be expected to learn of the existence and amount of a positive CIP is when payment is sought at a later date. On Lily's construction, it could then refuse payment in the absence of acceptable proof by LEA that it had definitively completed the calculation (including perhaps its approval at a more senior level than the personnel procuring, collating and inputting the information) before the expiry of the two months. It is not hard to envisage numerous problems which this might pose and the scope for lengthy dispute. It would be incompatible, and uncommercially so, with a clause intended simply to create an invoicing mechanism.

(b) Clause 9 was aimed at the production of a statement and demand for payment by the end of the next succeeding month. But delay in doing so did not result in a loss of entitlement: it merely postponed correspondingly (see Clause 9.3) the date on which payment was to be made. There is no warrant for a more severe let alone draconic consequence to be attached to a delay in the calculation of one of the statement's envisaged components.

18. That conclusion also avoids the difficulty which might be created by any extensive delay, such as that which Mr Galanopoulos told me might (and did often) arise, in receiving invoices for landing or airport fees, preventing their deduction from charter fees as required by Clause 8.11 ("net of … those ancillary costs set out in clause 8.8(b) to (f)) and therefore precluding the ascertainment within the two month period of an Average Charter Rate.
19. In my judgment, therefore, the word "calculated" does not have the substantive significance which Ms Piercy seeks to attribute to it. Though not then ascertained (or perhaps, sometimes, even ascertainable), the entitlement to CIPs existed from the last day of the relevant quarter. That leaves the further question of when such accrued sums became payable, and leads to Ms Piercy's second ground of objection.
20. Clause 9 was concerned with the provision of a mechanism under which LEA would account to Lily for receipts and expenditures and their balance. But it did not stipulate that the figure shown as the balance in that account would be definitive, and I see no reason to construe it nonetheless as doing so. That would have precluded any correction if an item of income or expenditure were erroneously misstated or omitted from the account, even where that occurred accidentally – for example due to a computer glitch or an employee in LEA's accounts department misreading an invoice and inputting an incorrect figure – and whether or not the error went against or in favour of Lily. Plainly, if LEA were to omit from the account an expense covered by Clause 9(b) (i) to (iv), it could not expect Lily to pay a sum which it had ex hypothesi never been asked to pay. But if the omission were later supplied by notification and invoice of the expense to Lily, there is in my view no sensible or commercial reason why it should not then become payable. There is no basis for any different approach to an accrued CIP covered by Clause 9(b) (v): a positive CIP and an expense are treated identically by Clause 9(b).
21. In the present cases, the amount of each of the absent CIPs was notified (with supporting vouchers and details) and invoiced later. If, as I have held, an item omitted from a monthly statement can be notified subsequently, this appears to me entirely adequate. Though Ms Piercy submits that it may only be done in a later monthly statement, that lacks both linguistic and commercial justification. In any event, the notifications were repeated in later "summaries of position" delivered simultaneously with monthly statements: it would be indefensibly pedantic and absurd to attach any significance to that minor difference, and I decline to ascribe any such intention to the parties.

(ii) Estoppel

22. In the alternative, Lily submits that LEA is estopped from claiming the CIPs. In paragraph 20 of the Defence the estoppel was alleged to be based on "an unequivocal representation as to the balance in respect of each month" created by the monthly statements and accompanying invoices. It was said that Lily relied on that representation by (a) paying the balance and (b) not raising the Target Charter Rate under Clause 8.9(b). The pleading contained no averment, necessary to support an effective estoppel, that LEA intended Lily to rely to its detriment upon the representation or knew that was likely to happen. It was also inherently implausible that (a) payment of a sum less than the underlying entitlement could constitute detriment or (b) the amount of the balance could have provoked the wish to increase the Target Charter Rate or be foreseen by LEA as likely to do so.
23. By the time of opening submissions before me, matters had – in the circumstances unsurprisingly - taken on a quite different aspect. Ms Piercy now sought instead to rely on a representation suggested to have been made by the absence of a CIP in the relevant statements. This was because it was said by Mr Shore – as I indicated earlier – that a positive CIP would have conveyed to him that market rates and those secured by LEA had risen beyond the £3,200 target as the result of a rise in fuel costs which he was obliged to bear, so that he rather than increased profitability was in effect financing the CIP. None of this was pleaded, even the alleged representation. Ms Piercy valiantly suggested that the amount of the balance, the pleaded representation, contained a representation that there was no CIP. I regard this as manifestly unarguable. This new case is not open to Lily.
24. It is therefore unnecessary to examine the revised case, let alone in any detail, and I restrict myself to some brief and non-comprehensive indications of why it too would be ill-founded.

(a) Where a representation is not made expressly but said to be implicit in or implied by other words or facts, there will generally be great difficulty in establishing that it was clear and unequivocal. In the present case I regard that hurdle as insurmountable. For cognate reasons I do not consider that Lily could have succeeded in establishing that LEA intended Lily to rely and act on such a representation (or knew that was likely to happen).

(b) It would have verged on the miraculous if the Average Charter Rate for any quarter turned out to be absolutely identical to the Target Charter Rate of £3,200 per flying hour. Lily could therefore rationally have expected only that there would be in the relevant monthly statement either a positive or a negative CIP, and the omission of any such item permitted no conclusion as to which. Though the effect of the omission might as readily have been (as in fact it in one case was) to deprive Lily of a credit as the reverse, it had not prompted Lily to make any enquiry. Having heard the evidence of, in particular, Mr Shore, I do not believe and would not have been prepared to find that he – or anyone at Lily – ever focussed on the absence of a CIP in any of the monthly statements or attached any significance to it. Had he done so, he could not sensibly have assumed that the omitted CIP was positive rather than negative, and to act on any such belief would have been correspondingly unreasonable. For similar reasons, there would have been no real prospect of proving that LEA intended or foresaw the likelihood of any such reliance by Lily.

(c) Even on the unwarranted assumption that a missing CIP was positive, Mr Shore could not reasonably have relied on that without enquiring as to the reason for the excess of actual receipts over the Target Charter Rate. He would then have learned that it was not the result of LEA fixing charters above the Target Charter Rate, but of adventitious benefits resulting from the exploitation of unused but paid return-legs (or triangular bookings), and that increased fuel costs had not altered the charter rates.

(d) Clause 8.11 envisaged that the CIP for the first quarter (in fact two months) to 30 June 2008 would be calculated by 31 August 2008, and therefore included in the statement for August, which would be delivered (pursuant to Clause 9.2) by 30 September 2008. An amendment to the Target Charter Rate could not therefore have been effected before the quarter commencing on 1 October 2008. Any estoppel would therefore have left untouched the entitlement in respect of the first two quarters, amounting to £26,850, more than half of the CIPs claim. I note also that, since the invoice for August 2008 was not in fact delivered until 3 November 2008, amendment of the Target Charter Rate could not have been effective before 1 January 2009, which removes a further £16,369.12 from the effective ambit of the suggested estoppel, reducing it to under £5,000.

(e) As Lily could have discovered by asking LEA or from publicly available information, after an initial significant rise between the signature of the Agreement and delivery of the aircraft in May 2008 fuel costs fell from the autumn of 2008, removing thereafter Mr Shore's suggested rationale for increasing the Target Charter Rate: to do so would therefore not have been a reasonable reliance on the suggested representation.

(f) In any event, in giving effect to any estoppel, equity would have regard to the nature and extent of the detriment. It would therefore have been necessary to explore whether – as Mr Galanopoulos believes - raising the Target Charter Rate would have lost charters to Lily and thus reduced its charter income, and the extent of this phenomenon which might potentially have even exceeded the reduction in Lily's CIP liability. This would almost certainly have called for expert market evidence.

In these circumstances, it does not appear me to that Lily's revised case on estoppel, would have succeeded – or even that I would have acceded to any application to amend, which – no doubt advisedly – was never made or even mooted.

(iii) Conclusion^[3]

25. I accordingly conclude that LEA is entitled to judgment for the amount of these CIPs^[4].

(b) Other matters

26. Given the low value of each of the items, I have sought to address only what appeared to me the essential aspects of the evidence and arguments.

(1) Missing equipment - £8,998.75

27. Under Clause 11.8 of the Agreement LEA was obliged to redeliver the aircraft on termination "with engines and parts complete … as on Delivery". A list of all such parts was provided by Bombardier and its contents are not in issue. The aircraft was on termination handed over on 25 July 2012 to TAG, the new managers appointed by Lily. In October 2012 TAG produced a list of items, passed to LEA by Lily on 7 November 2012, which they had not received with the aircraft. Some of the items were subsequently found, for example concealed in the nose-hold, but the remainder – totalling in value an agreed £8,998.75 - remain missing to this day.
28. Counsel for LEA submits that in the absence of oral evidence from TAG the court should assume as an equal possibility that the equipment was received and then lost by TAG. I disagree: the contemporary schedule in October 2012 establishes sufficiently what to TAG's knowledge at that time it had not received. They have notified items subsequently found and would have had no reason to suppress any other item. Absent any serious likelihood that oral evidence from TAG personnel might have cast any further light on the matter, I do not draw any adverse inference from Lily's failure to call them, which would simply have added to the length and cost of trying this small claim.
29. I accordingly rule that that Lily can set off this item against LEA's claim.

(2) Silver vases - £2,000

30. It was the practice of Lily to add adornment to the cabin for private flights. As part of this enhancement it provided two silver flower vases, worth £2,000. When the aircraft was used for charter work, they were routinely removed from the aircraft (with other owner-specific items) and placed in LEA's store at Luton airport. On one occasion they went missing and were discovered on another plane. In 2011 they disappeared again and have never been found: neither side knows why. Plainly, they were not covered by Clause 18.1, as was suggested in Lily's pleading. Any liability would therefore arise from ordinary bailment, it not being in issue that the vases were consensually in the possession of LEA and not ultimately returned.
31. The only point taken by counsel for LEA is that the vases may have been owned not by Lily but by Mr Shore personally, and that Lily has not produced any evidence to support its ownership. It does not however need to do so: it is trite or "hornbook" law that a bailee is estopped from denying the title of its bailor: China Pacific S.A. Appellants v Food Corporation of India, [1982] A.C. 939 at 959^[5]. This applies in my view as much to damages as to liability.
32. I accordingly rule that Lily is entitled to set off £2,000 in respect of this item.

(3) APU hire 50% share - £7,061.69

33. In September 2011 the auxiliary power unit ("APU") on the aircraft developed a problem requiring its removal and repair. It was under warranty from the manufacturers, Honeywell International Inc, which covered the cost of its removal – to the US – and repair. Regulations required the aircraft to carry an APU on all charter flights. Agreement was therefore made with Honeywell through its UK agent, Harrods Aviation, for the temporary loan of an APU during the existing unit's absence. It is not in issue that the cost of this, £14,123.38, was an operating expense covered by Clause 8.4 of the Agreement.
34. In advising Lily of the need for repair, LEA had used ambiguous language which might have been understood to suggest, incorrectly, that the hire cost would also be covered by the warranty. In a conversation with Mr Galanopoulos in April/May 2012 Mr Shore expressed a degree of grievance about this, though it was not clear that anyone at Lily had focussed on the point at the time or that it would have made any difference: Honeywell would still have been entitled to payment for the APU hire. It is common ground that in that conversation Mr Galanopoulos, perhaps out of embarrassment, offered to bear half the costs, and Lily seeks to hold LEA to that offer. Mr Galanopoulos says, and I accept, that it was made subject to Lily paying all other outstanding matters in full^[6]. Lily did not in the event do so, and the offer was therefore never transformed into a contract. Even if I had accepted Mr Shore's counter-evidence that no such condition was attached to the offer, it would have availed him nothing: there would have been no consideration to render the offer contractually enforceable.
35. I disallow the deduction of the 50% sought by Lily.

(4) Simulator training - £4,195.80

36. On 9 May 2012 Mr Christiano Colantoni, one of the pilots employed by Lily, underwent training on a simulator in Amsterdam in order to maintain his Operating Pilot's Certificate, necessary under EASA regulations to fly the aircraft on charters. It was supervised, as regulations required, by Captain Karl Ratcliffe, the Chief Pilot of LEA. The previous day Mr Colantoni had assisted by playing the role of a co-pilot in similar training on the simulator of Mr Tim Seels, one of LEA's pilots, though Captain Ratcliffe could have done so in addition to supervising Mr Seels' training. The sessions were arranged by Captain Ratcliffe following a telephone conversation with Mr Richard Davies, Lily's captain of the aircraft and responsible for training of Lily's pilots. The costs of such training, as is not in dispute, were covered by Clause 8.2(l) of the Agreement.
37. The case pleaded and advanced by Lily was that in return for it making Mr Colantoni available to assist in the training of Mr Seels Mr Ratcliffe had agreed that all costs of his training would be paid by LEA. Mr Ratcliffe told me that he had agreed only that LEA would not charge for his supervision of Mr Colantoni's training. In his written evidence Mr Davies stated that Mr Ratcliffe had "offered to conduct Mr Colantoni's OPC free of charge", and in his oral testimony he described Mr Ratcliffe as having said that if he freed up Mr Colantoni for the two days "I will do Christiano Colantoni's OPC for you". These expressions are entirely consistent with Mr Ratcliffe's account, and more so than with Lily's pleaded case. Having heard the two men, I am moreover quite unpersuaded that Mr Ratcliffe had agreed to bear the cost of hiring the simulator.
38. I accordingly disallow this proposed deduction.

Conclusion

39. Counsel are asked to agree and draw up an order giving effect to this judgment.

Note 1   The first “quarter” was in fact two months.    [Back]

Note 2   Sub-paragraphs (b) and (c) are erroneously misstated as (c) and (d) in the Agreement. In this judgment I correct for that error.     [Back]

Note 3   Since it did not survive into LEA’s closing submissions, and is in the event otiose, I have not addressed a further argument raised in paragraphs 3 to 5 of the Reply that the parties agreed in a telephone conversation between their accountancy staff in November 2008 that the outstanding monthly statements could be submitted without CIPs, leaving these to be calculated and invoiced separately at a later date. In the circumstances I indicate only that, even if it were right (i) to accept Mr Heatherley’s evidence in full and (ii) to treat it as disclosing a legal agreement, there would remain significant and substantially unexplored questions as to its content and effect. I record also that no attempt was made to transmute the argument into one of equitable estoppel.     [Back]

Note 4   Subject to any submissions which Counsel may wish to make I am of the provisional view that the interest under Clause 8.6 should run from 10 days after the dates on which they were first notified and invoiced.    [Back]

Note 5   Even if (which is debatable) section 8(1) of the Torts (Interference with Goods) Act, 1997 were applicable, it would place the onus on LEA to establish the title of the third party, in this case Mr Shore or Shore Capital, and possibly require their joinder to the action.    [Back]

Note 6   Though the discussion did not detail what he had in mind, Lily had for some considerable time been refusing to pay the CIPs which had accrued in 2008 and 2009 and had eventually been “parked” in monthly summary accounts marked as “disputed”.    [Back]