In a very important case for the aircraft leasing industry and anxiously watched by aircraft lessors, the Court of Appeal (Rix, Tomlinson & Kitchin LJJ) has handed down judgment in Olympic v. ACG, upholding the decision of the Commercial Court (Teare J) as to the effect of a Certificate of Acceptance in an aircraft lease, albeit on quite different grounds.
ACG was the lessor of a Boeing 737, which was delivered off-lease by AirAsia and back-to-back on lease to Olympic. The aircraft was found to have had numerous defects, some of them serious; indeed, the trial judge concluded (following a 3-week trial) that the aircraft was not airworthy at delivery. In ACG’s claim against Olympic for unpaid rent and in defence of Olympic’s counterclaim, ACG had relied on the Certificate of Acceptance (signed by Olympic) and the conclusive proof terms of the aircraft lease (to the effect that the Certificate of Acceptance was conclusive proof as between the parties of various matters, including, so ACG argued, that the aircraft was in the condition specified in the contract). There were disputes about the construction of the Certificate of Acceptance and the Lease.
In the Commercial Court, Hamblen J. refused ACG’s claim for summary judgment on the construction of the Certificate and the Lease ( EWHC 923 (Comm)). At trial, Teare J likewise held against ACG on the issue of construction; but he accepted ACG’s alternative argument that Olympic were estopped by the Certificate from contending that the aircraft was otherwise than in the condition specified in the lease, resulting in judgment for ACG ( EWHC 1070 (Comm)).
On Olympic’s appeal, the CA unanimously found in favour of ACG on the issue of construction, disagreeing with Teare J and (probably) Hamblen J on that issue. The CA also accepted ACG’s alternative argument, that the Certificate of itself constituted a separate agreement between the parties, irrespective of the terms of the Lease.
Michael McLaren QC and Harriet Jones-Fenleigh acted for ACG, the successful aircraft lessors.
For a copy of the CA judgment ( EWCA Civ. 369), click here.