Monarch Airlines Ltd v London Luton Airport Ltd
| Jurisdiction | England & Wales |
| Judge | Clarke J. |
| Judgment Date | 11 December 1996 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 December 1996 |
Queen's Bench Division ((Admiralty Court)
Clarke J.
Robert Webb QC and Robert Lawson (instructed by Beaumont and Son) for the plaintiff.
Dominic Kendrick (instructed by Cameron Markby Hewitt) for the defendant.
The following cases were referred to in the judgment:
Airline Engineering Ltd v Inter con Cattle Meat Ltd (unreported, 24 January 1983, CA).
Associated Provincial Picture Houses Ltd v Wednesbury CorpELR [1948] 1 KB 223.
British Airports Authority v British Airways Board (1981) S & B Av R III/29.
Canada Steamship Lines Ltd v The KingELR [1952] AC 192.
Cinnamond v British Airports AuthorityWLR [1980] 1 WLR 582.
EE Caledonia Ltd v Orbit Valve plc [1994] CLC 647.
Flamar Pride, TheUNK [1990] 1 Ll Rep 434.
Golden Leader, TheUNK [1980] 2 Ll Rep 573.
Goldman v Thai Airways LtdWLR [1983] 1 WLR 1186.
Gurtner v BeatonUNK [1993] 2 Ll Rep 369.
Hesketh v Liverpool CorporationUNK [1940] 4 All ER 429.
Photo Production Ltd v Securicor Transport LtdELR [1980] AC 827.
R v Coventry Airport, ex parte Phoenix Aviation [1995] CLC 757.
Raphael, TheUNK [1982] 2 Ll Rep 42.
Shaw v Great Western Railway CoELR [1894] 1 QB 373.
Singer Co (UK) Ltd v Tees and Hartlepool Port AuthorityUNK [1988] 2 Ll Rep 164.
Smith v South Wales Switchgear Co LtdWLR [1978] 1 WLR 165.
Aviation — Negligence — Exclusion clause — Airline sued airport for damage to aircraft — Airport relied on exclusion clause — Clause protected against acts unless done with intent to cause damage or recklessly and with knowledge that damage would probably result — Whether exclusion clause covered negligence — Whether clause satisfied test of reasonableness — Proper construction of proviso to clause — Unfair Contract Terms Act 1977, s. 2 (2), 11(1).
This was the trial of preliminary issues in an action in which the plaintiff airline sued Luton Airport to recover damages for negligence and/or breach of duty under s. 2 of the Occupiers” Liability Act 1957 after one of the plaintiffs aircraft was damaged by loose paving blocks as it was preparing to take off at Luton in September 1992.
The defendant said that it was entitled to rely upon cl. 10 of its standard conditions of use, which excluded liability for damage to aircraft arising or resulting directly or indirectly from any act, omission, neglect or default on the part of the airport company or its servants or agents unless done with intent to cause damage or recklessly and with knowledge that damage would probably result.
The preliminary issues were whether cl. 10 on its true construction excluded liability for negligence and breach of statutory duty and how the proviso “recklessly and with knowledge that damage will probably result” was to be construed; and whether the terms and conditions, including cl. 10, applied by contract or by notice and, if by contract, when that contract or those contracts was or were made, which affected the question whether cl. 10 fell foul of the Unfair Contract Terms Act 1977.
The airline submitted that the words of cl. 10 did not satisfy the test for exclusion clauses set out in Canada Steamship Lines Ltd v The KingELR [1952] AC 192: they did not expressly refer to negligence; they were not wide enough, in their ordinary meaning, to cover negligence; alternatively, if they were wide enough to cover negligence, there were other possible bases of liability other than negligence which were excluded by the clause. The airport submitted that cl. 10 was not the kind of outright exclusion clause considered in the Canada Steamship case: it was a different type of clause which could be described as a “not liable unless” or “only liable if” clause.
Held, ruling accordingly:
1. Clause 10 excluded liability for negligence and breach of statutory duty unless the negligence or breach was caused by the defendant, its servants or agents either with intent to cause damage or recklessly and with knowledge that damage would probably result. The clause did not expressly refer to negligence, but it would make a nonsense of the clause if the airport company was to be liable for what might be called ordinary negligence, but only liable for other neglect or default if the test of intention or recklessness was satisfied. In any event the words “neglect or default” were synonymous with negligence and the words of the clause were wide enough to cover negligence. (Shaw v Great Western RailwayELR[1894] 1 QB 373 applied; British Airports Authority v British Airways Board(1981) S & B Av R III/29 and The Raphael[1982] 2 Ll Rep 42 considered.)
2. On the assumption that the only contract between the parties was made before April 1992, cl. 10 satisfied the test of reasonableness in s. 2(2) and 11(1) of the Unfair Contract Terms Act 1977, when viewed as at that time. It was generally accepted in the market, including the insurance market. There had been no suggestion in the market (whether from the airlines, the airports or the insurers) that the clause be amended in any way. It was accepted by the plaintiff without demur. It had a clear meaning and the insurance arrangements of both parties could be made on the basis that the contract was governed by standard terms which had already been held to be reasonable in principle. Whether it satisfied the relevant test of reasonableness at any later stage could not be determined at present. (British Airports Authority v British Airways Board(1981) S & B Av R III/29 considered.)
3. The questions whether the terms were incorporated by contract or notice and if by contract, by which contract or contracts remained to be determined.
4. The proviso to cl. 10 was not to be construed as meaning that if the nature of the act (or omission) was such as to make the damage probable, the requirement would be satisfied. The clause required proof of actual knowledge that an act or omission was taking place and that it did involve probable damage of the sort contemplated; both tests being subjective. (Goldman v Thai International Airways LtdWLR[1983] 1 WLR 1186 applied.)
Clarke J:
The defendant owns and operates Luton Airport. The plaintiff owns and operates aircraft, one of which was damaged in the course of taking off at Luton on 22 September 1992. As a result the plaintiff sustained loss which it seeks to recover in this action from the defendant as damages for negligence and/or breach of its common duty of care under s. 2 of the Occupiers” Liability Act 1957. The defendant says that it is entitled to rely upon cl. 10 of its standard conditions of use, which is in these terms:
“Neither the Airport Company nor its respective servants or agents shall be liable for loss or damage to the aircraft, its parts or accessories or any property contained in the aircraft, occurring while the aircraft is on the Airport or is in the course of landing or taking off at the Airport, or being removed or dealt with elsewhere for the purpose of paragraph 5, arising or resulting directly or indirectly from any act, omission, neglect or default on the part of the Airport Company or its servants or agents unless done with intent to cause damage or recklessly and with knowledge that damage would probably result.”
The defendant says that that clause affords it a defence to the plaintiffs claim, whereas the plaintiff says that it does not.
The defendant applied to Deputy Master Ashton for an order that a number of issues relating to the applicability, construction and reasonableness of the clause be tried as preliminary issues. On 20 January 1995 Deputy Master Ashton refused that application because he was not satisfied that a trial of such issues would save time and expense. He took the view that such issues would themselves involve discovery and evidence. The defendants appealed and on 3 March 1995 Judge Marr-Johnson allowed the appeal and ordered certain preliminary issues to be tried. The action was subsequently transferred to the Commercial Court and by an order dated 23 February 1996 Langley J directed an amendment to one of the issues.
This is the trial of those preliminary issues, which as so amended, are as follows:
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“1. Was the use of the defendant's airport by the plaintiff subject to the defendant's standard terms which included cl. 10?
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2. If the plaintiff agreed to use the airport subject to the said standard terms, does cl. 10 on its true construction exclude liability for negligence or breach of statutory duty?
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3. Does cl. 10 fall foul of the Unfair Contract Terms Act 1977?
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4. Whether the proviso ‘recklessly and with knowledge that damage will probably result’ is to be construed using the same test of construction as that used in construing art. 25 of the amended Warsaw Convention in the case of Goldman v Thai Airways International LtdWLR[1983] 1 WLR 1186.”
The parties have agreed a number of facts for the purposes of the preliminary issues. They include the following. On the day of the accident the plaintiff was a visitor to the airport and the defendant its occupier for the purposes of the Occupiers” Liability Act 1957. The aircraft was a Boeing 737–300 which had an insured value of US$30m. When the accident happened it was performing the plaintiffs scheduled service to Alicante. During the course of its departure it made a 180 degree right turn at the turning circle at the threshold of runway 26, before lining up and carrying out a rolling take-off at 0735 hours. As it did so, approximately 130 square metres of paving blocks at and/or near the turning circle became displaced and some of them struck the aircraft and caused it damage.
As a result the plaintiff has suffered loss amounting to £501,386, as set out in the amended writ and statement of claim. The total charges (to which I shall refer further below) amounted to £1,013.59. The damage was caused by the negligence and breach of the common duty of care on the part of the defendant, its servants or agents in that they:
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