Aquila Wsa Aviation Opportunities II Ltd v Onur Air Tasimacilik AS

On a summary judgment application, the court may decide a short point of construction where the relevant contractual wording and evidence are before it. A party may contractually agree that a specified state of affairs is to govern the parties’ relationship, including through a conclusive acceptance certificate. Such an agreement can prevent the party from asserting that the agreed state of affairs was untrue.

Contractual wording must be read as a whole and given its commercial effect. A clause excluding representations cannot ordinarily protect a party from its own fraud, but a properly pleaded fraud case must still establish representation and inducement. A contractual allocation of risk may also defeat a total failure of consideration argument where the alleged failure depends on a condition the claimant is contractually precluded from disputing.

The claimant, an aircraft-engine lessor, sought summary judgment on claims for the stipulated amount, rent and related sums under a short-term engine lease. The defendant alleged that the engine failed to satisfy contractual delivery conditions and advanced defences and counterclaims based on breach, misrepresentation, collateral warranty and total failure of consideration.

The lease provided for delivery on an “as is, where is” basis, subject to specified delivery conditions. The defendant signed an acceptance certificate stating that it had unconditionally accepted the engine, that the certificate was conclusive proof of compliance, and that it had no claims concerning delivery condition. The central issues were the effect of that contractual scheme, the alleged representations and fraud plea, and whether the defences had a realistic prospect of success.

1. Summary judgment. The court applied the distinction between a realistic and a fanciful prospect of success. The claimant bore the burden of showing that the defendant had no real prospect of success. Short points of law and construction could be determined summarily where the necessary material was before the court, but the court had to avoid a mini-trial and should not decide matters where further evidence might realistically alter the construction.
2. Contractual estoppel and construction. The lease’s emphatic “as is, where is” wording, its allocation of risk, the delivery conditions, and the prescribed acceptance certificate had to be read together. Their combined effect was that the defendant agreed, by signing the certificate, that the engine satisfied the contractual delivery conditions and could not complain about its delivery condition. The defendant’s construction would substantially undermine the principal risk-allocation clause and was rejected. The court was entitled to enforce a tough bargain where its meaning was clear, applying the approach in Arnold v Britton [2015] AC 1619.
3. Acceptance certificate. The court regarded the certificate as likely to have separate contractual effect. The execution of the certificate was a condition precedent to delivery and supplied the necessary consideration. The reasoning in Olympic Airlines SA v ACG Acquisition XX LLC [2013] EWCA Civ 369; [2013] 1 Lloyd's Rep. 658 was persuasive, although the relevant discussion there was obiter.
4. Misrepresentation. The defendant’s alleged delivery representations could not extend beyond the contractual delivery conditions. In the contractual context, an innocent or negligent misrepresentation case had no real prospect of success, including on inducement. The defendant’s factual differences and emails did not alter that conclusion. A properly pleaded fraudulent representation would not be excluded by contractual wording relating to representations, because a party cannot benefit from its own fraud. That did not remove the separate obstacle on inducement, and the fraud case was in any event inadequately pleaded.
5. Total failure of consideration. The pleaded total failure depended on the engine not satisfying the delivery conditions. Since the defendant was contractually precluded from asserting that proposition, the defence and counterclaim had no real prospect of success. The contractual provisions dealing with total and partial loss reinforced that conclusion.
6. The collateral-warranty contention was not pursued separately and added nothing to the other arguments. The claimant was therefore entitled to summary judgment.

First-instance decision. No prior appellate decision is stated in the judgment.