“The Lease is a net lease. [Paramount’s] obligations to pay Rent and to perform all of its other obligations is absolute and unconditional no matter what happens and no matter how fundamental or unforeseen the event. [Paramount] shall not regard its obligations as ended, suspended or altered in any way because of any defence, set-off, counterclaim, recoupment or other right of any kind or of any other circumstance.”
“The time stipulated in the Lease for all payments payable by [Paramount] and the prompt, punctual performance of [Paramount’s] obligations under the Lease are of the essence of the Lease.”
“So long as no Event of Default has occurred and is continuing, [Celestial] will not interfere with [Paramount’s] right to quiet use and possession of the Aircraft during the Term.” (2) by clause 7.2 Celestial agrees (in circumstances where Supplemental Rent is due) “provided no Event of Default has occurred and is continuing, [Celestial] will pay the following amounts to [Paramount] by way of contribution to the cost of maintenance of the Aircraft…”
“The occurrence of any of the Events of Default will constitute a repudiation (but not a termination) of the Lease by [Paramount] (whether the occurrence of any such Event of Default is voluntary or involuntary or occurs by operation of Law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Government Entity.”
“[Celestial] may at its option (and without prejudice to any of its other rights under the Lease and/or otherwise), at any time thereafter (without notice to [Paramount] except as required under applicable Law): (a) accept such repudiation and by notice to [Paramount] and with immediate effect terminate the leasing of the Aircraft (but without prejudice to the continuing obligations of [Paramount] under the Lease), whereupon all rights of [Paramount] under the Lease shall cease; and/or (b) proceed by appropriate court action or actions to enforce performance of the Lease or to recover damages for the breach of the Lease; and/or (c) either: (i) take possession of the Aircraft… (ii) by serving notice require [Paramount] to redeliver the Aircraft to Celestial at the Redelivery Location (or such other location as [Celestial] may require.” (i) take possession of the Aircraft… (ii) by serving notice require [Paramount] to redeliver the Aircraft to Celestial at the Redelivery Location (or such other location as [Celestial] may require.”
“The deputy judge quoted a passage from a statement published by the Institute of Chartered Accountants, SSAP 21, which provides a convenient explanation of how a finance lease differs from an operating lease: “Background Leases and hire-purchase contracts are means by which companies obtain the right to use or purchase assets. In the UK there is normally no provision in a lease contract for legal title to the leased asset to pass to the lessee. A hire-purchase contract has similar features to a lease except that under a hire-purchase contract the hirer may acquire legal title by exercising an option to purchase the asset upon fulfilment of certain conditions (normally the payment of an agreed number of instalments). Current tax legislation provides that in the normal situation capital allowances can be claimed by the lessor under a lease contract but by the hirer under a hire-purchase contract. “Forms of lease Leases can appropriately be classified into finance leases and operating leases. The distinction between a finance lease and an operating lease will usually be evident from the terms of the contract between the lessor and the lessee. An operating lease involves the lessee paying a rental for the hire of an asset for a period of time which is normally substantially less than its useful economic life. The lessor retains most of the risks and rewards of ownership of an asset in the case of an operating lease. A finance lease usually involves payment by a lessee to a lessor of the full cost of the asset together with a return on the finance provided by the lessor. The lessee has substantially all the risks and rewards associated with the ownership of the asset, other than the legal title. In practice all leases transfer some of the risks and rewards of ownership to the lessee, and the distinction between a finance lease and an operating lease is essentially one of degree” “Background Leases and hire-purchase contracts are means by which companies obtain the right to use or purchase assets. In the UK there is normally no provision in a lease contract for legal title to the leased asset to pass to the lessee. A hire-purchase contract has similar features to a lease except that under a hire-purchase contract the hirer may acquire legal title by exercising an option to purchase the asset upon fulfilment of certain conditions (normally the payment of an agreed number of instalments). Current tax legislation provides that in the normal situation capital allowances can be claimed by the lessor under a lease contract but by the hirer under a hire-purchase contract. “Forms of lease Leases can appropriately be classified into finance leases and operating leases. The distinction between a finance lease and an operating lease will usually be evident from the terms of the contract between the lessor and the lessee. An operating lease involves the lessee paying a rental for the hire of an asset for a period of time which is normally substantially less than its useful economic life. The lessor retains most of the risks and rewards of ownership of an asset in the case of an operating lease. A finance lease usually involves payment by a lessee to a lessor of the full cost of the asset together with a return on the finance provided by the lessor. The lessee has substantially all the risks and rewards associated with the ownership of the asset, other than the legal title. In practice all leases transfer some of the risks and rewards of ownership to the lessee, and the distinction between a finance lease and an operating lease is essentially one of degree”
“47. It is accepted by the owners that the Court is, in principle, entitled to grant relief from forfeiture of a contract such as this, provided that the object of the transaction and of the insertion of the right to forfeit for non-payment of money is essentially to secure the payment of that money or is security for the attainment of a specific result which can be achieved through the Courts. If the contract provides for a right to retain possession of a chattel so long as the conditions of the agreement are performed, together with the right to purchase the chattel by payment of the instalments provided for by the contract, relief from forfeiture is available provided that the right of forfeiture is for either of these purposes. …. 50. Mr. Collett for the owners argued that there was no difference in principle between the position under a time charter and a demise charter for material purposes, since, as Lord Diplock said in The Scraptrade at p. 257, it was not possible to say that the insertion of the withdrawal clause, let alone the transaction itself, was to secure the payment of money. Hire was payable in advance to provide a fund to which owners could have access to provide the services they had contracted to provide to the charterers. Here, under this demise charter, Mr. Collett argued, hire was payable in advance to provide a fund for the owners to pay their mortgage. The key here, however, in my judgment, is the provision of services in a time charter, whereas in a bareboat charter which is also a hire/purchase agreement, the owners provide the ship in anticipation that they will do nothing further after delivery. They receive the charterers' payments and, if all goes well, transfer the vessel to the charterers on receipt of the final instalment. 51. So, although the parties differed as to whether or not the insertion of cl. 32 in the charter was essentially to secure the payment of money or the production of a stated result which could effectively be obtained when the matter came before the Court, in my judgment the demise charterers are right on this point. The demise charterers are given contractual and possessory rights in relation to the vessel during the four years of the charter, as is plain from cll. 9(a) and (b). Whilst the agreement functions both as a demise charter and as a sale agreement (see the heading to Part IV which refers to this as a hire/purchase agreement) the demise charterers do have the right to have ownership transferred to them at the end of the charter period, if there has been compliance with the conditions of the charter. 52. The essential purpose, therefore, of the right to withdraw the vessel under cl. 32 is to secure the payment of the hire for which the agreement provides and also payment of the deposits; default in the latter respect is non-performance of other agreed terms, which is covered by cl. 32. There is both a requirement for an initial deposit payable at the outset, which is part of the purchase price and security for the fulfilment of the contract (which has nothing whatever to do with hire payments as such) and, as the contract goes on further, deposits are payable at 6 months, 12 months and 16 months, which will equally be lost to the demise charterers if the right of withdrawal is exercised. Clause 32, therefore, acts in terrorem to ensure that payments are properly made. 53. The need for availability of relief of the kind suggested here appears to be stronger in the present case then in a hire purchase or financing purchase agreement of the kind found in Gerson , relating to chattels, or even in leases of land where there is, of course, a statutory regime. It is of little consequence that the owners need a fund from the hire payments to discharge their mortgage. They can always sue for hire due and recover it, whilst the right to withdraw is there as a form of security to ensure performance.”
“…in a bareboat charter which is also a hire/purchase agreement, the owners provide the ship in anticipation that they will do nothing further after delivery. They receive the charterers' payments and, if all goes well, transfer the vessel to the charterers on receipt of the final instalment.”
“…Lord Wilberforce was contemplating that the jurisdiction exists in some cases where the primary object of the forfeiture is to secure a stated result, but he cannot, we think, have had it in mind that the jurisdiction was exercisable wherever the stated condition existed. It is inherent in his statement of principle that it applies only in “appropriate and limited cases” and, while it is true that he went on to consider the conduct of the applicant for relief in order to determine whether the case was an “appropriate” one, we cannot find in his speech any suggestion that he was treating “appropriate” and “limited” as synonyms… Thus Shiloh Spinners Ltd. v. Harding [1973] A.C. 691, in our judgment, establishes as a matter of decision no more than this: that one essential hall-mark of the limited cases in which the equitable jurisdiction to relieve will be exercisable is that the forfeiture clause has been inserted with the object mentioned.”
“It is of the utmost importance in commercial transactions that, if any particular event occurs which may affect the parties' respective rights under a commercial contract, they should know where they stand. The court should so far as possible desist from placing obstacles in the way of either party ascertaining his legal position, if necessary with the aid of advice from a qualified lawyer, because it may be commercially desirable for action to be taken without delay, action which may be irrevocable and which may have far-reaching consequences. It is for this reason, of course, that the English courts have time and again asserted the need for certainty in commercial transactions - for the simple reason that the parties to such transactions are entitled to know where they stand, and to act accordingly.”
“The principle that equity will restrain the enforcement of legal rights when it would be unconscionable to insist upon them has an attractive breadth. But the reasons why the courts have rejected such generalisations are founded not merely upon authority (see per Lord Radcliffe in Campbell Discount Co. Ltd. v. Bridge [1962] A.C. 600, 626) but also upon practical considerations of business. These are, in summary, that in many forms of transaction it is of great importance that if something happens for which the contract has made express provision, the parties should know with certainty that the terms of the contract will be enforced. The existence of an undefined discretion to refuse to enforce the contract on the ground that this would be "unconscionable" is sufficient to create uncertainty. Even if it is most unlikely that a discretion to grant relief will be exercised, its mere existence enables litigation to be employed as a negotiating tactic. The realities of commercial life are that this may cause injustice which cannot be fully compensated by the ultimate decision in the case. The considerations of this nature, which led the House of Lords in The Scaptrade [1983] 2 A.C. 694 to reject the existence of an equitable jurisdiction to relieve against the withdrawal of a ship for late payment of hire under a charterparty, are described in a passage from the judgment of Robert Goff L.J. in the Court of Appeal [1983] Q.B. 529, 540-541, which was cited with approval by the House [1983] 2 A.C. 694, 703-704. Of course the same need for certainty is not present in all transactions and the difficult cases have involved attempts to define the jurisdiction in a way which will enable justice to be done in appropriate cases without destabilising normal commercial relationships.”
“…this maxim [that the time fixed for completion in a contract for the sale and purchase of real property] is not of the essence never had any application to cases in which the stipulation as to time could not be disregarded without injustice to the parties, when, for example, the parties, for reasons best known to themselves, had stipulated that the time fixed should be essential, or where there was something in the nature of the property or the surrounding circumstances which would render it inequitable to treat it as a non-essential term of the contract.” (2) Steedman v Drinkle[1916] AC 275 at 279 per Viscount Haldane: “As to the relief from forfeiture, their Lordships think that the Supreme Court was right in holding, for the reasons assigned in the former decision of this Board, that the stipulation in question was one for a penalty, against which relief should be given on proper terms. But as regards specific performance they are of opinion that the Supreme Court was wrong in reversing the judgment of Newlands J. Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance in cases where justice requires it, even though literal terms of stipulations as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of their bargain. If, indeed, the parties, having originally so provided, have expressly or by implication waived the provision made, the jurisdiction will again attach.”
“a consideration of the conduct of the applicant for relief, in particular whether his default was wilful, of the gravity of the breaches and of the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach.”
“HOWEVER, your continued and persistent defaults regarding payments and the matters set out below are very alarming and we cannot continue to tolerate this sort of delinquency and we hereby warn you that if they are not rectified in full and as a matter of utmost urgency as soon as possible, we will be forced to take further action which may include, without limitation, termination of your right to lease the aircraft and/or court action.”
“Established and, in my opinion sound principle requires that wilful breaches should not, or at least should only in exceptional cases, be relieved against, if only for the reason that the assignor should not be compelled to remain in a relation of neighbourhood with a person in deliberate breach of his obligations.”
“Indeed, even if as at today the Plaintiff's past failures to make the payments due under his agreement could be compensated sufficiently as a condition of obtaining relief by the payment now of principal, interest and costs, that fails to take into account the full extent of any future risk -- a risk which has been demonstrated already by the Plaintiff's unreliability and poor financial circumstances, and which depends for security upon such a chattel as a car which, as contrasted with land, is easily moved, easily concealed and easily sold, is liable to rapid depreciation and may require considerable expenditure to maintain. Thus, as it was put by Sir Godfray, when a hirer has shown himself to be a defaulter, to oblige the owner of goods to forego his contractual rights and to return the goods to the hirer, would be to oblige the owner to accept a risk far greater than that contemplated when the contract was made.”