RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance and Leicester plc

RIL Aviation HL 7740 and HL 7741 Pty Ltd (the appellants) appealed to the Court of Appeal of New South Wales against a decision concerning the payment of a management fee following the appointment of a replacement manager for aircraft. Alliance and Leicester plc (the respondent) was the chargee of the aircraft. The dispute arose from the construction of agreements relating to the purchase and lease of aircraft, specifically whether a stipulated management fee remained payable after the respondent appointed a replacement manager.

The primary legal issues before the Court of Appeal were: first, the proper construction of the relevant contractual documents to determine whether the management fee was payable to the original manager upon the appointment of a replacement manager; and second, whether the direction to pay the management fee to a third party, who would hold it on trust for the original manager, constituted an attempt to dispose of or deal with the secured property without the chargee's consent, thereby triggering an event of default under the securities.

The Court of Appeal considered the congruent operation of the various agreements. It reasoned that the management fee was payable under the terms of the agreements, irrespective of the appointment of a replacement manager, as the original manager had performed its obligations. Regarding the securities, the Court found that the payment of the fee was to be made by the chargee itself, and therefore, any payment would be with its consent. Consequently, there was no attempt to dispose of or deal with the secured property without the chargee's consent. The Court also found that the objective manifestations of intention were sufficient to establish that the third party would hold the money on trust.

The appeal and cross-appeal were dismissed, with costs awarded to the respondent.