Air Transworld Ltd v Bombardier Inc.

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeThe Hon. Mr Justice Cooke,THE HON MR JUSTICE COOKE
Judgment Date20 Feb 2012
Neutral Citation[2012] EWHC 243 (Comm)
Docket NumberCase No: 2010-1046

[2012] EWHC 243 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Hon Mr Justice Cooke

Case No: 2010-1046

Between:
Air Transworld Limited
Claimant
and
Bombardier Inc
Defendant

Stephen Kenny QC and George Woods (instructed by Messrs Stocker Brunton Solicitors) for the Claimant

Michael Crane QC and Tom Weisselberg (instructed by Messrs Jones Day Solicitors) for the Defendant

Hearing dates: 30, 31, January, 1-3 and 6-7 February 2012

THE HON MR JUSTICE COOKE The Hon. Mr Justice Cooke

Introduction

1

In this action the claimant, a Gibraltar registered company, seeks a declaration that it has validly rejected a Challenger 605 private jet aircraft, purchased new from the defendant, a Canadian manufacturer, based at Dorval near Montreal, Canada. The claimant submits that the contract of sale has been rescinded by rejection of the aircraft and claims a refund of the purchase price following that rejection, or alternatively damages if it was not entitled to reject.

2

The claimant is a company controlled by Mr Antonio Mosquito, a resident of Angola. He also controlled another Angolan company, Angoil SA which entered into an Aircraft Purchase Agreement (the APA) with the defendant to buy a new Challenger 605 aircraft, built according to a limited edition specification. On the 26 th April 2007, the APA was assigned to the claimant by way of an Assignment Agreement, to which the defendant was also party. It is the claimant's case that the jet was to be Mr Mosquito's personal private jet and that the companies were merely vehicles through which, as their alter ego, he acted.

3

Whilst there are a range of issues relating to the condition of the aircraft on delivery, which cannot be determined at this trial because of late development in the parties' respective cases, it is common ground that the jet was formally delivered to the claimant on the 27 th March 2009 and that the claimant wrote a letter of rejection of the aircraft on the 5 th July 2010, whilst the jet was at the defendant's premises in Hartford, Connecticut, for investigation following an incident on 19 th/20 th May 2010 when the aircraft had to make an unscheduled landing at a military airfield in Algeria on only one of the twin engines, because of a problem with the main engine driven pump in the No.1 left hand hydraulic system which had been powering the aircraft's flight controls. (Either of the left or right hand systems can be used for this purpose).

4

At the risk of oversimplifying the issues, I can summarise the essential dispute between the parties on the pleadings as being a battle in which the claimant alleged that the aircraft did not correspond with description, was not of satisfactory quality and was unfit for purpose within the meaning of Sections 13 and 14 of the Sale of Goods Act 1979 (as amended). The defendant relied upon the terms of the APA as excluding such liability under statute and replacing it with the warranties set out in the APA, of which, it says, it is not in breach. Moreover, the defendant contended that, in any event, the problems which were encountered by the aircraft during service did not represent a breach of any of the terms implied by statute as to the condition of the jet on delivery and merely represented the sort of issues which can arise with a highly complex piece of machinery during service, even if, on two particular occasions (the first and last flight) they gave rise to particularly unfortunate and distressing consequences.

5

In consequence of disclosure given by the defendant of incidents involving engine driven pumps in the hydraulic systems of other aircraft which are part of the Challenger 604/605 fleet, the claimant's expert put forward, in his report, served on 25 th November 2011, an unpleaded case of a general design defect in the hydraulic systems of the fleet, which the defendant then sought to refute by evidence from one of its own senior employees responsible for the design. He is expert in hydraulic systems. That evidence took the form of a statement served shortly before trial with appendices and references to documents previously unseen by the claimants. In order to do justice between the parties an adjournment was required so that they could be in a position properly to prepare for trial on the complex issues which had arisen at this late stage.

6

The contractual issues and questions of law which arise in relation to the terms of the APA, the Assignment Agreement, the Sale of Goods Act 1979 (as amended) and the Unfair Contract Terms Act 1977 were all, it was agreed, susceptible of determination on the assumption that the claimant's case on the technical aspects was good, though of course, those issues remain to be resolved, if required.

7

The Unfair Contracts Terms Act does not apply to an "International Supply Contract" but if it is of application, its effect is different where the purchaser is a "Consumer" within the meaning of the Act, from the situation where it is not. In short, liability for breach of the conditions set out in Sections 13 and 14 of the Sale of Goods Act cannot be excluded in a consumer contract but can be excluded to the extent that the term is reasonable in other contracts. I turn to these issues.

The Contract Terms

8

Insofar as relevant, the contract provided as follows:—

"This Aircraft Purchase Agreement (the "Agreement") is made by and between BOMBARDIER INC. ("Seller") and ANGOIL SA ("Buyer") and shall be effective as of the date of its acceptance and execution by Seller.

ARTICLE I. AIRCRAFT DESCRIPTION

Subject to the provisions of this Agreement, Seller agrees to manufacture, sell and deliver, and Buyer agrees to take delivery of, and pay for, one Bombardier Challenger CL-600–2B16 variant 605 (the "Aircraft") as described in the Description and Customer Support Services Manual dated January 30, 2007 Rev.5 attached hereto as Schedule "A", and Completion Description dated February 1 st 2007 Rev.4 and Buyer selected options ("Options") attached hereto as Schedule "A-1" and Schedule "A-2" respectively (Schedules "A-1" and "A-2" together the "Completion Work") which are made part of this Agreement by reference (collectively, the "Specification").

ARTICLE 2. PRICE, PAYMENT SCHEDULE AND DELIVERY

2.1

In consideration of Seller's obligations to manufacture, sell and deliver the Aircraft to Buyer, Buyer shall pay to Seller the amount of $ 27,650,000 USD (the "Purchase Price") as follows;

(i) 1 st payment due upon Buyer's execution of this Agreement (which includes USD 250,000 already received by Seller):

$3,250,000 USD

(ii) 2 nd payment due on or before 10 November 2007:

$3,000,000 USD

(iii) 3 rd payment due on or before 20 April 2008:

$2,000,000 USD

(iv) 4 th payment due upon issuance of the Certificate of Airworthiness

$15,500,000 USD

(v) balance of Purchase Price due at the Delivery Time: (as hereinafter defined):

$3,900,000 USD

2.2

The Aircraft shall be ready for Buyer's inspection and acceptance at Seller's facility in the city of Dorval, Quebec within 45 days of 15 March 2009.

ARTICLE 4. GENERAL PROVISIONS

4.1

THE WARRANTY, OBLIGATIONS AND LIABILITIES OF SELLER AND THE RIGHTS AND REMEDIES OF BUYER SET FORTH IN THE AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF AND BUYER HEREBY WAIVES AND RELEASES ALL OTHER WARRANTIES, OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW, IN CONTRACT, CIVIL LIABILITY OR IN TORT, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE, AND B) ANY OTHER OBLIGATION OR LIABILITY ON THE PART OF SELLER TO ANYONE OF ANY NATURE WHATSOEVER BY REASON OF THE DESIGN, MANUFACTURE, SALE, REPAIR, LEASE OR USE OF THE AIRCRAFT OR RELATED PRODUCTS AND SERVICES DELIVERED OR RENDERED HEREUNDER OR OTHERWISE.

4.2

SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND/OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANYAIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OF ANY SPARE PART FOR ANY REASON.

4.3

THE PARTIES HERETO HEREBY ACKNOWLEDGE AND AGREE THAT THE LIMITED WARRANTIES AND THE LIMITATION OF LIABILITY PROVISIONS CONTAINED HEREIN AND IN THE SPECIFICATION HAVE BEEN EXPRESSLY AGREED TO IN CONSIDERATION OF THE PURCHASE PRICE AND OTHER PROVISIONS OF THIS AGREEMENT. TO THE EXTENT APPLICABLE LAWS DO NOT ALLOW THE LIMITATIONS SET OUT IN THIS ARTICLE 4, SUCH LIMITATIONS SHALL NOT BE APPLIED OR INVOKED.

4.4

This Agreement shall be governed by and interpreted in accordance with the internal laws of England and Wales, excluding any conflicts of law provisions thereof.

ARTICLE 5. DELIVERY AND INSPECTION

5.1

Seller shall give Buyer reasonable notice of the date on which the Aircraft will be ready for Buyer's inspection and acceptance flight test of not more than 10 hours duration. Within 10 days of such date. Buyer agrees to perform such inspection and, if no defect or discrepancy is revealed, Buyer shall accept delivery of the aircraft before the end of such 10 day period (the time of the acceptance of delivery of the Aircraft being the "Delivery Time").

5.2

Any defect or discrepancy revealed by Buyer's inspection and/or acceptance flight test shall be corrected at no cost to Buyer before or after Delivery Time depending on the nature of the defect or discrepancy and time required for correction. If such correction requires an additional flight test, it shall be...

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2 firm's commentaries
  • Detailed Analysis Of International Supply Contracts Under UCTA
    • United Kingdom
    • Mondaq United Kingdom
    • 26 March 2012
    ...Transworld Limited v Bombardier Inc [2012] EWHC 243(Comm) Bombardier, a Canadian company, sold one of its aircraft to Angoil, an Angolan company controlled by a Mr Mosquito. Immediately after the sale, the parties entered into an assignment under which the purchase agreement was assigned to......
  • Excluding Liability For Implied Conditions Under The Sale Of Goods Act: Distinguishing The Mercini Lady
    • United Kingdom
    • Mondaq United Kingdom
    • 7 March 2012
    ...Transworld Limited v. Bombardier Inc [2012] EWHC 243 (Comm) Under English law, limitation of liability and exclusion clauses are interpreted strictly against the party relying on them. This means that if the clause is ambiguous and/or does not expressly limit or exclude liability for a part......
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