Foster & Anor v Action Aviation Ltd

An implied representation arises only where a reasonable representee, viewed objectively in context, would understand that a representation was being made substantially in the alleged terms. Necessity or obviousness will usually be important. Contractual treatment of the same subject matter, particularly alongside an entire agreement clause, weighs strongly against implying an additional representation. A statement concerning the future is actionable as fact only so far as it conveys a present expectation, belief or opinion. Contractual wording must be construed so far as possible to harmonise apparently inconsistent provisions and avoid rendering one provision redundant.

The claim arose from the purchase of an SJ30 business jet under an aircraft purchase agreement. The claimants alleged negligent and fraudulent misrepresentations concerning the aircraft’s accident history and the manufacturer’s ability to provide continuing support. They also claimed that the agreement contained an unconditional buy-back guarantee and that individual defendants were liable as undisclosed principals or representors.

The court determined the five issues of accident-history misrepresentation, alleged Emivest representations, construction of the buy-back clauses, agency and liability, and quantum.

1. Accident history. The court found that the defendant’s chairman had represented that the aircraft had never been in an accident. The ordinary meaning of “accident” applied, rather than a specialist meaning based on reportability under aviation regulations. The Cascais hard landing was plainly an accident. The representation was made negligently, and reliance and inducement were proved. The claims in negligent misrepresentation and under section 2(1) of the Misrepresentation Act 1967 succeeded. Fraud was not established.
2. Emivest representations. The alleged implied representations were not established. The ongoing support issue had been considered and addressed in the agreement, including the bespoke buy-back provision, and the entire agreement clause weighed against implication. The alleged statements largely concerned future performance but were not pleaded as statements of present expectation, belief or opinion. In any event, the representations were not shown to be untrue at the date of the agreement. Emivest remained a going concern, continued to provide support and training, and had serious prospective investment interest.
3. Buy-back guarantee. The manuscript wording was a continuation of, and amendment to, the typed clause rather than a separate unconditional guarantee. The clauses were to be read harmoniously. The manuscript amendment altered the starting price and period of exercise but remained subject to the typed clause’s conditions. Those conditions were not satisfied, and alternative support providers could maintain the aircraft.
4. Agency. The agreement identified Action Aviation Holdings Inc as the legal owner and principal. The undisclosed-principal doctrine therefore did not make Mr Harding or Mr James parties. The evidence also showed that any beneficial interest was held through Action Aviation LLC, not by them personally. The corporate veil was not pierced.
5. The Second Claimant’s claim for misrepresentation concerning accident history succeeded against the second defendant. All other claims failed and were dismissed.