BLUE SKY ONE LTD V BLUE SKY AIRWAYS LLC (NO 2)

[2010] EWHC 631 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Beatson, 25 March 2010

Tort - Conversion - Measure of damages - Torts (Interference with Goods) Act 1977 - Frustration - Validity of mortgage on aircraft - Applicable law

(1) In an action by a mortgagor for conversion l under the Torts (Interference with Goods) Act 1977, section 3, the mortgagor is entitled to recover the full value of the mortgaged subject matter. Damages are not confined to the value of the reversion. (2) A loan agreement was not frustrated by the intervention of the US authorities on the basis that the subject matter was being operated in breach of sanctions rules, because the parties were aware of that risk and had contracted in the light of it. (3) The validity of a mortgage on an aircraft was determined by the law of the place where the aircraft were situated at the date that the mortgage transferred title (the lex situs), and not by the place of the aircraft's registration.