Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lady Justice Arden,Lord Justice Waller |
| Judgment Date | 02 April 2009 |
| Neutral Citation | [2009] EWCA Civ 290 |
| Docket Number | Case No: A3/2008/2156 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 April 2009 |
[2009] EWCA Civ 290
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
Mr Justice Aikens
Before : Lord Justice Waller
(vice-president Of The Court Of Appeal, Civil Division)
Lady Justice Arden
and
Lord Justice Moore-bick
Case No: A3/2008/2156
Mr. Neil Vickery (instructed by TWM Solicitors LLP) for the appellant
Mr. George McPherson (instructed by Allen & Overy LLP) for the respondent
Hearing date : 2 nd February 2009
Lord Justice Moore-Bick :
This is an appeal against an order of Aikens J. giving summary judgment for the respondent, Trident Turboprop Dublin Ltd (“Trident”) against the appellant, First Flight Couriers Ltd (“First Flight”), under CPR Part 24. It raises some novel and interesting questions relating to the interpretation of section 26 of the Unfair Contract Terms Act 1977 and section 3 of the Misrepresentation Act 1967.
The background to the dispute is described in some detail in the judgment below, now reported at [2009] 1 All E.R. (Comm) 16, and can be summarised quite shortly. On 5 th September 2005 Trident entered into Aircraft Operating Lease Agreements in identical terms with First Flight in respect of two ATP model aircraft. The leases represented the culmination of negotiations between a representative of the manufacturer, BAE Systems Regional Aircraft Limited (“BAE”), and representatives of First Flight and were signed by a representative of BAE on behalf of Trident. Each provided for delivery to take place at Southend airport.
In the event one of the two aircraft was delivered to First Flight on 24 May 2006 at Lidköping airport in Sweden; the other was delivered on 16 October 2006 at Southend. A third aircraft was also leased by First Flight from Trident and was delivered in July 2006, but no claim is made in respect of it and it is unnecessary to say anything further about it.
Trident alleges that First Flight failed to pay rent under each of the two leases and that as a result it became entitled to terminate both contracts and recover possession of the aircraft. By two notices each dated 30 th January 2008 Trident purported to terminate the leases and on 6 th February 2008 it issued proceedings against First Flight seeking to recover possession of the aircraft, damages for wrongful interference with them and damages for breach of the leases. First Flight subsequently redelivered the aircraft to Trident pursuant to an order of the court made on 13 th March 2008. On 4 th April 2008 Trident issued an application for summary judgment.
First Flight says that the aircraft were unreliable and suffered from various defects, thereby preventing it from achieving its operational objectives. It stopped paying rent under the two leases in September 2007 and in response Trident served notices of default on 18 th October 2007. First Flight originally accepted that Trident was entitled to take that step, but in the present proceedings it asserts that on 30 th August 2007 it had already exercised a right to rescind the leases for misrepresentation by informing Trident that it had decided to stop using the aircraft. Alternatively, it says that if it did not effectively rescind the leases on that date it retained the right to do so and that consequently Trident has no right to recover arrears of rent or damages for breach of contract.
First Flight's defence to the claim therefore depends on establishing misrepresentations of a kind that would entitle it to rescind the leases. The allegations of fact on which that defence is based are in issue, but Trident accepts that for the purposes of an application for summary judgment the court must assume that they are well-founded, or at any rate that they cannot be determined without a trial. Its answer, however, is that the leases contain terms which prevent First Flight from relying on matters of that kind. Moreover, Trident contends that the provisions of the Unfair Contract Terms Act 1977, which would otherwise prevent it from relying on those terms unless it could show that they satisfied the requirement of reasonableness, do not apply in this case because the leases fall outside the scope of the Act by virtue of section 26.
The issues below
As the judge correctly recognised, Trident could only succeed on its application for summary judgment if it could satisfy the court that First Flight had no real prospect of resisting the claim because of the exclusion clauses in the lease agreements. He held that the clauses in question, to which it is unnecessary to refer in any detail, were effective to exclude First Flight's right to rely on the alleged misrepresentations, subject only to the operation of the Misrepresentation Act and any consequent requirement to satisfy the requirement of reasonableness in the Unfair Contract Terms Act. There is no appeal from that part of his decision.
The next question, therefore, was whether the clauses in question fell within the scope of section 3 of the Misrepresentation Act 1967 because they excluded or restricted a liability to which Trident would be subject by reason of any misrepresentation made before the contract was entered into or the remedy available to First Flight for any such misrepresentation. The judge held that they did and that therefore, unless the leases fell outside the scope of the Unfair Contract Terms Act, they would not be effective unless they satisfied the requirement of reasonableness in section 11. That was not something that could be decided on an application for summary judgment. There is no appeal from that part of his decision either.
The judge therefore turned finally to consider the primary question with which this appeal is concerned, namely, whether the leases in this case fall within section 26 of the Act. He held that they do and that the Act therefore does not apply to them. Accordingly, he gave judgment for Trident.
The statutory provisions
Section 26 of the Unfair Contract Terms Act 1977 provides as follows:
“ 26.—International supply contracts.
(1) The limits imposed by this Act on the extent to which a person may exclude or restrict liability by reference to a contract term do not apply to liability arising under such a contract as is described in subsection (3) below.
(2) The terms of such a contract are not subject to any requirement of reasonableness under section 3 or 4: and nothing in Part II of this Act shall require the incorporation of the terms of such a contract to be fair and reasonable for them to have effect.
(3) Subject to subsection (4), that description of contract is one whose characteristics are the following—
(a) either it is a contract of sale of goods or it is one under or in pursuance of which the possession or ownership of goods passes; and
(b) it is made by parties whose places of business (or, if they have none, habitual residences) are in the territories of different States (the Channel Islands and the Isle of Man being treated for this purpose as different States from the United Kingdom).
(4) A contract falls within subsection (3) above only if either—
(a) the goods in question are, at the time of the conclusion of the contract, in the course of carriage, or will be carried, from the territory of one State to the territory of another; or
(b) the acts constituting the offer and acceptance have been done in the territories of different States; or
(c) the contract provides for the goods to be delivered to the territory of a State other than that within whose territory those acts were done.”
The judge gave First Flight permission to appeal only on the question whether the leases fell within the scope of section 26(4)(a), but at the hearing of the appeal Mr. Vickery sought to advance two additional points, neither of which had been argued below and neither of which had been raised in his notice of appeal. He needed the permission of the court to do so, but since both raise questions of statutory interpretation alone and since the respondent did not object to his doing so, we granted permission and heard argument on them. They are (i) whether the limits imposed on Trident's right to rely on a clause excluding any remedy for misrepresentation are imposed by “this Act”, that is, the Unfair Contract Terms Act itself, or by the Misrepresentation Act 1967; and (ii) whether any liability for misrepresentation in this case is a liability arising “under a contract” within the meaning of section 26(1). Since these questions relate to the applicability of section 26 as a whole, it is convenient to consider them first.
Limits on the exclusion of liability for misrepresentation
Limits on a party's power to limit his liability for misrepresentation were first imposed by section 3 of the Misrepresentation Act 1967, which, as originally enacted, provided as follows:
“If any agreement (whether made before or after the commencement of this Act) contains a provision which would exclude or restrict—
(a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or
(b) any remedy available to another party to the contract by reason of such a misrepresentation
that provision shall be of no effect except to the extent (if any) that, in any proceedings arising out of the contract, the court or arbitrator may allow reliance on it as being...
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