Robert Colin Foster and Another v Action Aviation Ltd (A Company Incorporated under the Laws of England and Wales)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 08 August 2013 |
| Neutral Citation | [2013] EWHC 2439 (Comm) |
| Docket Number | Case No: 2011 Folio 1288 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 August 2013 |
[2013] EWHC 2439 (Comm)
Mr Justice Hamblen
Case No: 2011 Folio 1288
Case No: 2011 Folio 1418
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr M Reeve and Ms E McCrea-Theaker (instructed by Kennedys Aviation LLC) for the Claimants
Mr T Marland (instructed by Clark Ricketts LLP) for the Defendants
Hearing dates: 30 April, 1, 2, 7, 8, 9, 13 May, 26 July 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
"Faster, Farther, Higher" is a selling catchphrase of the SJ30 business jet aircraft.
The SJ30 is a light twin-engine jet aircraft equipped for up to seven occupants and certified for single pilot operations. It has a combination of range (2,500 miles), operating ceiling (49,000 ft) and speed (486 KTAS) which compares well with aircraft from more established manufacturers such as Cessna, Bombardier, Embraer and Hawker. However, despite its impressive design and potential it has never been produced in significant numbers. To date only four aircraft have made it off the production line.
The dispute between the parties arises out of a purchase agreement for SJ30 Serial Number 007 (US Registration N7SJ — "the aircraft" or "007").
By an Aircraft Purchase Agreement signed on 31 August 2010 ("the APA") the Second Claimant purchased the aircraft from one or more of the Second to Fourth Defendants. The purchase price was US$5m, of which US$2.3m was the trade-in price agreed for the Claimants' existing 2008 Cessna 510 Mustang jet. The Defendants delivered the aircraft on 15 December 2010.
Two and a half months later, on 2 March 2011, the Claimants sought a refund and demanded that the Defendants take the aircraft back pursuant to a buy-back clause in the APA. The Defendants refused to do so. Eventually the aircraft was sold in April 2012 for US$2,669,556.
In essence, the Claimants claim as damages the difference between the monies paid by them for the aircraft and those realised on its eventual resale. These damages are claimed in contract for alleged breach of the buy back clause and in tort for alleged misrepresentation.
The alleged misrepresentations relate to the accident history of the aircraft and the finances of the manufacturer, Emivest, and its ability to provide continuing support for the aircraft.
In relation to the aircraft's accident history, the Claimants contended that in the course of negotiations the Third Defendant, Mr Harding, told the Claimants that the aircraft had not previously been in an accident, assuring them that he had bought it from new. The Claimants contended that the aircraft had in fact suffered an accident in the course of attempting to land at Cascais Airport in Portugal on 15 May 2009 when Mr Harding had been the pilot in command and the representation made was fraudulent or at least negligent. The Defendants denied that any such representation was made and further denied that any such representation would have been untrue.
In relation to the finances of the manufacturer, the Defendants sold the aircraft with promises to the Claimants of a full 5 year "new aircraft factory warranty", promises of factory pilot training for the SJ30, promises of factory engineer training and promises of assistance with the certification of the aircraft with the South African Civil Aviation Authority (where the aircraft was to be based and registered). In fact, within 1 1/2 months of the making of the APA, the manufacturer filed for Chapter 11 bankruptcy. The Claimants contended that implied representations were made that Emivest was a going concern which was capable of providing the future support which the Defendants' promises entailed, which representations were untrue and were made without reasonable grounds for believing them to be true. The alleged representations, their falsity and absence of reasonable grounds were denied.
The Claimants further contended that the representations and the APA were made on behalf of Mr Harding and the Fourth Defendant (Mr James) as joint principals and real joint beneficial owners of the Action Aviation business and the aircraft. The Defendants contended that the APA was made with the Second Defendant and/or the legal owner of the aircraft, Action Aviation Holdings Inc, on whose behalf any representations were made.
The Claimants' tortious claim is for £2,017,063. Its contractual claim is for £1,904,040.
The Issues
The essential issues which arise for determination may be summarised as follows:
(1) Misrepresentation in respect of the accident history of the aircraft.
(2) Misrepresentations in respect of Emivest.
(3) The buy-back guarantee.
(4) Agency — Who is liable?
(5) Quantum.
The parties
The First Claimant, Mr Foster, is a British Citizen. He and his wife live in Swaziland. They own and run a white goods manufacturing business under the brand "The Fridge Factory" which is well known in Southern Africa.
Mr Harding and Mr James are the founders and shareholders of a number of companies which trade under the name "Action Aviation" ("AA"), which companies include the First and Second Defendants. The business of AA is the buying, selling and operating of aircraft. Mr Harding is generally described as the Group Chairman and Mr James as the Group CFO.
The evidence at trial
The witness evidence of the Claimants at the trial was given by Mr Foster, Mrs Foster, Mr Nevile Houareau (the owner of a maintenance facility at Mustapha International Airport); Mr Michael Giles (an experienced commercial pilot who acted as a pilot and sales and marketing promoter for AA from February to May 2009) and Mr Michael Creed (managing director of the First Defendant from November 2005 to February 2009). There was also a CEA witness statement from Mr Richard Davis, the CEO and Chairman of America Aerospace Inc and an unchallenged witness statement of Mr Peter Royce (commercial pilot and former pilot for AA).
The witness evidence of the Respondents at the trial was given by Mr Harding; Mr James; Mr Mark Butler (Regional sales director for AA); Mr William Barclay (pilot contracted to AA); Mr Don Philpot (licensed aircraft engineer contracted to AA) and Mr Michael Mascarenas (former CEO of Emivest). There were also witness statements which were substantially unchallenged from Mr Jose Pereira (former flight operations manager, Helibravo, Cascais, Portugal) and Mr Joao Bravo (owner Helibravo Helicopters, Cascais, Portugal).
In the light of the major factual disputes concerning the alleged representation as to the accident history of the aircraft and the circumstances in which the representation was allegedly made, I directed that the evidence on that issue should be given orally by way of examination in chief rather than by witness statement.
The factual background
Mr and Mrs Foster lead busy lives. Business success has brought with it the pressure to take frequent international flights, often at short notice. In 2008, they purchased a nearly new Cessna Mustang jet. The Cessna was certified for single-pilot operation. With manufacturer support they were able to maintain the aircraft, operate it and employ a suitably-qualified pilot. But, by the end of 2009, Mr Foster had come to the conclusion that the Cessna's performance was inadequate for their particular needs. For example, it could not fly the Swaziland/Cape Town sector without stopping to refuel.
Mr Foster had seen the SJ30 at the EBACE air show in 2008, displayed by a business calling itself "Action Aviation" and remembered its impressive performance figures. In December 2009 he established contact with Mr Butler. Mr Butler's business card and his email signatures described him as the "Regional Sales Director" of "Action Aviation". In the business card AA's business was referred to as being that of distributor for the SJ30.
Mr Foster expressed interest in the SJ30. Negotiations proceeded over 8 months until the APA was made on 31 August 2010. The negotiations were conducted largely by Mr Butler, with occasional interventions by Mr Harding, whom Mr Butler described as "my Chairman" and as an experienced owner of an SJ30.
At first, Mr Foster was offered 006 which was owned by the factory and was, apart from 007, the only other production SJ30 which the factory had delivered. It had flown about 900 hours. He was then offered 013, a new aircraft which Mr Butler said to be due for completion by the factory in less than a year. Finally, in May 2010, he was offered 007 which was described by Mr Butler as having flown 170 hours since new (220 in total). He told Mr Foster "we own the aircraft free and clear" and on that basis was able to take Mr Foster's Cessna in part-exchange. During the latter stages of the negotiations, 007 was marketed to Mr Foster by way of comparison with 013 as an "as new" aircraft.
007 was used by AA as a demonstrator aircraft. On 15 May 2009 the aircraft had suffered a "hard landing" at Cascais in Portugal as a result of late wind shear on final approach. Both wing tips and the ventral fin and rudder were damaged by contact with the ground....
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