Air Transworld Ltd v Bombardier Inc. [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Cooke J. |
| Judgment Date | 20 February 2012 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 February 2012 |
Queen's Bench Division (Commercial Court).
Cooke J.
Stephen Kenny QC and George Woods (instructed by Stocker Brunton) for the claimant.
Michael Crane QC and Tom Weisselberg (instructed by Jones Day) for the defendant.
The following cases were referred to in the judgment:
Amin Rasheed Shipping Corp v Kuwait Insurance CoELR [1984] 1 AC 50.
Amiri Flight Authority v BAE Systems plc [2003] 2 CLC 662.
Baldry v MarshallELR [1925] 1 KB 260.
Cammell Laird & Co Ltd v Manganese Bronze & Brass Co LtdELR [1934] AC 402.
Henry Kendall & Sons v William Lillico & Sons LtdELR [1969] 2 AC 31.
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha LtdELR [1962] 2 QB 26.
KG Bominflot Bunkergesellschaft fur Mineraloele mbH & Co KG v Petroplus
Marketing AG (Mercini Lady) [2010] 2 CLC 637.
Photo Production Ltd v Securicor Transport LtdELR [1980] AC 827 (HL).
R&B Customs Brokers Co Ltd v United Dominions Trust LtdWLR [1988] 1 WLR 321.
Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009] 1 CLC 134.
Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd [2009] 1 CLC 490; [2010] QB 86.
Wallis Son & Wells v Pratt & HaynesELR [1911] AC 394. Whitecap Leisure Ltd v John H Rundle LtdUNK[2008] 2 Ll Rep 216.
Contract — Aircraft purchase agreement — Assignment agreement — Agreement assigned to claimant purchasing company — Entitlement to reject — Claimant alleged that aircraft did not correspond with description, not of satisfactory quality and unfit for purpose — Statutory implied conditions excluded by contractual scheme — Purchase agreement and assignment agreements international supply contracts — Acts constituting offer and acceptance done in different states — Goods to be carried from one state to another — English law only applying by choice of parties — Purchasing company not acting as consumer —— Exclusion of statutory conditions reasonable — Claimant not entitled to reject or to damages — Sale of Goods Act 1979, s. 13, 14 — Unfair Contract Terms Act 1977, s. 3(2), 6(2), (3), 12, 26(4)(a), (b), 27.
This was a claim by the purchaser for a declaration that it had validly rejected an aircraft.
The claimant was a Gibraltar registered company controlled by an individual resident in Angola. He also controlled an Angolan company which had entered into an aircraft purchase agreement (the APA) with the defendant Canadian manufacturer to buy a new Challenger 605 aircraft. The APA was assigned to the claimant under an assignment agreement to which the defendant was also party. The jet was formally delivered to the claimant in March 2009. In May 2010 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 hydraulic system powering the aircraft's flight controls. Thereafter the claimant wrote a letter of rejection of the aircraft.
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 s. 13 and s. 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 said, it was 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.
Article 4.1 of the APA provided that: “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.” Article 4.4 provided that the APA “shall be governed by and interpreted in accordance with the internal laws of England and Wales, excluding any conflicts of law provisions thereof”.
The claimant relied upon a run of authorities, culminating in The Mercini Lady[2010] 2 CLC 637, as showing that, for art. 4.1 of the APA to exclude the conditions implied by the Sale of Goods Act, it would have to refer to the word “condition” which it did not.
It was common ground between the parties that the APA and the assignment agreement were contracts which fell within s. 26(3)(a) and (b) of the Unfair Contract Terms Act 1977, as contracts for the sale of goods made by parties whose places of business were in the territories of different states. Issues arose, however, as to whether or not the requirements of s. 26(4) were satisfied so that the contracts were “international supply contracts” to which UCTA did not apply, whether s. 27 of UCTA applied, and whether the claimant was a “consumer” within s. 12, so that liability for breach of the conditions set out in s. 13 and s. 14 of the Sale of Goods Act could not be excluded.
Held, ruling accordingly:
1. The opening lines of art. 4.1 could only be read as saying that the defendant seller's obligations were to be found exclusively in the APA. There was plainly intended to be no room for the operation of any primary or secondary rights or obligations outside the terms of the contract itself. Article 4.1 went on to give examples, without limiting the generality of the earlier provisions. It was the later part of art. 4.1 which referred to any implied warranty of merchantability or fitness for purpose, as well as to any other obligation or liability of the seller “of any nature whatsoever” by reason of the design, manufacture and sale of the aircraft. Whilst, on the authorities, the use of the word “warranty” would not be sufficient to give rise to any exclusion of liability for breach of the implied conditions of satisfactory quality, merchantability or fitness for purpose, that part of art. 4.1 was only illustrative of the all embracing provision found in the first part of the article. The words “all other … obligations … or liabilities express or implied arising by law”, which the purchaser expressly waived, necessarily included the conditions implied by the Sale of Goods Act. Those were apt and precise words which were sufficiently clear to exclude those implied conditions, and the article by necessary inference negatived the application of those implied conditions. The parties' language was fairly susceptible of only one meaning. Unlike the preceding authorities, in this case the words used encompassed contractual conditions implied by law. (The Mercini Lady[2010] 2 CLC 637 distinguished.)
2. Section 26(4)(b) of UCTA, when referring to “the acts constituting the offer and acceptance', referred to the totality of the acts which constituted the offer and acceptance, including both the making and receiving of each. Whilst there was no provision such as art. 1(4) of the Uniform Law on International Sale of Goods, explaining how the section was to be interpreted in the case of offer and acceptance by correspondence, the effect of s. 26(4)(b), was the same. It intended to exclude, as an international supply contract, cases where there was an international element in the formation of the contract, so that all elements of the offer and acceptance had to occur in the same state if the provisions of UCTA were to apply. If the subsection had intended to refer to the single individual act which constituted the completed offer or completed acceptance or the communication of the offer or acceptance, the subsection would have referred to “the act constituting the offer” and the “act constituting the acceptance”. That construction, which tallied with the rationale of art. 1(4) of the Uniform Law, made best sense of the language used and had a logic behind it, since it avoided the application of technical rules of English law about the location of communicated offers and communicated acceptances and the differences which arose in relation to different means of communication. On that basis, the acts of sending and receipt which constituted the offer were done in two different states, England and Canada. The acts constituting the acceptance were done in England and Portugal and possibly Canada. The acts in question, constituting the offer and acceptance, were therefore not all done in the territory of one state. (Amiri Flight Authority v BAE Systems plc[2003] 2 CLC 662considered.)
3. Similarly the acts constituting the offer and acceptance in respect of the assignment agreement were done in the territories of different states for the purposes of s. 26(4)(b). Since the assignment agreement was the tripartite contract upon which the claimant sued, it was the assignment agreement, which incorporated the APA, rather than the APA itself, which had to be analysed for the purpose of determining whether UCTA applied.
4. Section 26(4)(a) also applied because at the time of the conclusion of the APA and the assignment agreement, the aircraft was, in the contemplation of the parties, to be “carried” from the territory of one state to the territory of another, since delivery was to take place in Canada and the aircraft was to be exported straight away, with a view to it being based in Africa and registered abroad, with the ability to fly into Europe if desired. (Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd[2009] 1 CLC 490; [2010] QB 86applied.)
5. Article 4.4 did not have the effect of excluding the application of s. 27 of UCTA. Section 27, in...
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