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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Amiri Flight Authority v BAE Systems Plc & Anor [2002] EWHC 2481 (Comm) (20 November 2002)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2002/2481.html
Cite as: [2003] 1 LLR 50, [2002] EWHC 2481 (Comm), [2003] 1 Lloyd's Rep 50, [2003] 1 All ER (Comm) 1

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Neutral Citation Number: [2002] EWHC 2481 (Comm)
Case No: 2001 Folio 690

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL
20 November 2002

B e f o r e :

THE HONOURABLE MR JUSTICE TOMLINSON
____________________

Between:
AMIRI FLIGHT AUTHORITY
Claimant
- and -

(1) BAE SYSTEMS PLC

(2) CROSSAIR LIMITED COMPANY FOR REGIONAL EUROPEAN AIR TRANSPORT

Defendants

____________________

Nicholas Underhill QC and Akhil Shah (instructed by Leboeuf Lamb Greene and MacRae) for the Claimant
Michael Crane QC and Bankim Thanki (instructed by Barlow Lyde and Gilbert) for the First Defendants
Philip Shepherd and Stephen Thompson (instructed by Beaumont and Son) for the Second Defendants
Hearing dates : 30 - 31 October 2002

____________________

HTML VERSION OF HANDED DOWN JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Tomlinson :

  1. The Claimant Amiri Flight Authority ("Amiri") is an entity established under the law of the United Arab Emirates. It is akin, although far from identical, to a small private airline, providing aircraft for flights undertaken by local VIPs, sometimes to remote parts. It is said to be (I do not need to decide whether it is) the successor to the rights and obligations of the Private Department ("PD") of the Ruler of Abu Dabi. This case is concerned with a contract dated 7 September 1987 pursuant to which the PD purchased from the First Defendant BAE Systems PLC ("BAE") a BAE 146-100 aircraft together with an associated technical back-up package for the price of US$25,450,000. The aircraft was delivered to the PD in December 1998. The PD's fleet already contained one each of Boeing 707, 737 and 747, two Airbus 300s and three Gulfstream jets and I understand that the fleet has subsequently increased. However for present purposes I must assume that, as is asserted by Amiri, and as I have no reason to doubt, as was known to BAE through its negotiations with it, the PD had only limited technical experience and resources and was unable to undertake all of its own maintenance or any of its maintenance planning. In addition, PD had no experience of operating the BAE 146 aircraft prior to this purchase. One of the contractual obligations undertaken by BAE was the development, in conjunction with the PD, of a Maintenance Programme which was to be finalised three months before the date on which the aircraft was offered by the seller for acceptance by the buyer.
  2. It is common ground that all relevant acts of contract formation in the shape of offer and acceptance took place in Abu Dhabi, where the contract was also signed. In accordance with the terms of the contract delivery of the aircraft took place at Hatfield, although it was not then registered. The aircraft was then flown out of the UK to the UAE where it was registered, a process for which a relevant Certificate of Airworthiness for Export was required and for the issue of which provision was made in the contract.
  3. From 1991 to 1995 Amiri contracted with various aircraft maintenance providers for the supply of certain maintenance services required by the maintenance programme, provided by BAE. From 1995 the Second Defendant, Crossair, was the company which undertook these services together with the provision of a customised maintenance schedule, which they then updated periodically. The provision of maintenance services by Crossair was formalised by a written agreement with Amiri dated 1 January 1996.
  4. Crossair is of course, and was at all material times, a Swiss airline, and it is now the national flag carrier, having changed its name to Swiss International Airlines Limited and using the marketing name "Swiss". Between 1990 and 1996, Crossair operated a fleet of up to six BAE 146 aircraft and subsequent to 1996 operated its successor, the RJ85/100. Of more relevance however for present purposes since 1994 Crossair has had the necessary JAR-145 approval issued under the authority of the JAA (Joint Aviation Authorities) which enables it to offer its services as a maintenance provider in respect of the BAE 146.
  5. As is obvious the maintenance requirements of an aircraft such as the BAE 146 are complex and require substantial documentary support in order that the airworthiness of the aircraft can be maintained. One particular feature of the PD's operation of the aircraft which called for special treatment was the fact that it was a low utilisation regime, when compared to the flying hours typically to be expected of an aircraft operating scheduled services for a regular airline and that it was predominantly, if not exclusively, in areas of high ambient temperature and humidity. Following the purchase of the aircraft, Amiri made numerous requests to BAE for advice on changes to the maintenance programme. It is Amiri's case, as I shall explain in more detail hereafter, that BAE provided this advice as part of the performance of its obligations under the contract.
  6. For the purposes of the present applications I must assume that an inspection of the aircraft by Amiri in October 1998 revealed corrosion in the horizontal and vertical stabilisers and corrosion on the fuselage skin. I must assume that prior to that date Amiri had not been aware of any material corrosion on the aircraft. I must further assume that the C-Check inspection of the aircraft by Crossair in May 1999 revealed extensive corrosion, amongst other places in the left and right fuel tanks outboard of the outer engines of the aircraft. Further, I must assume that the corrosion in the fuel tanks was so severe that the aircraft was no longer airworthy and that it was grounded after the discovery of the corrosion. The aircraft was then stored at Crossair's facilities in Basel, Switzerland. Again, I assume for present purposes that the corrosion in the fuel tanks was caused by microbiological fungal contamination. The relevant bacteria or spores, cladosporium resinae, may be introduced into fuel tanks by contaminated fuel. The fungal growth produced flourishes at the interface between fuel and water - fuel can contain dissolved water which settles out and water can be formed when moisture in the atmosphere condenses on the exposed internal surfaces of the tanks. Low utilisation in areas of high ambient temperatures and humidity can provide ideal conditions for proliferation of the fungus. As it grows, cladosporium produces a corrosive acid. Corrosion caused by such contamination is a known risk against which measures can be, and are, routinely taken. In 2000 Amiri sold the aircraft on the best terms available. The sale, on 29 October 2000, realised US$2,600,000 as against a benchmark market value for an aircraft of similar age in the condition reasonably to be expected of an aircraft of such age of US$10,700,000.
  7. Amiri allege that the corrosion problem, and thus their loss, was caused by breaches of contract by both BAE and Crossair. As against BAE, it is said that it failed to exercise reasonable skill and care in developing the maintenance programme required pursuant to the contract. In addition to the obligation in respect of development of that programme, the contract also imposed upon BAE an obligation to provide technical advisory assistance with respect to the aircraft. Possibly for tactical reasons Amiri do not put in the forefront of their case that such technical advisory assistance as was provided by BAE was given without the requisite reasonable care and skill, although that point is made in their Reply. It seems to me likely to be the better way of putting their case, and I assume that it is fairly arguable. Amiri also contend that BAE owed it parallel duties of care in tort. This adds nothing of substance but it may be relevant to issues of limitation with which I am not presently concerned. Amiri places specific reliance on a series of communications between 1989 and 1998 in which maintenance procedures were discussed. It is alleged, and I shall assume, that the advice provided by BAE in faxes of 19 May 1996, 3 December 1996 and 7 January 1998 was all furnished in performance of a contractual obligation imposed by the 1987 contract. If that advice was causatively negligent, Amiri's cause of action in respect thereof is not time-barred.
  8. Crossair's contractual obligations to Amiri included the provision of a customised Maintenance Schedule reflecting the aircraft's specific operational and environmental conditions and the performance of maintenance checks and rectification work, including annual C-Checks. Amiri allege that Crossair failed to exercise reasonable skill and care in these functions, and in particular that they failed to identify the corrosion present at an early stage, for example, during or after the C-Checks of the left wing fuel tanks in May 1996 and May 1998 and of the right wing fuel tanks in May 1997.
  9. Both BAE and Crossair deny the allegations made against them and in turn allege that Amiri cannot have been carrying out, properly or at all, the water drainage and fuel testing regime which they claim to have followed. Had they done so, it is asserted, the extent of the contamination must surely have been discovered earlier.
  10. Crossair have in turn issued Part 20 proceedings against BAE. In those proceedings they claim to be entitled to be indemnified by BAE against any liability they may have to Amiri. They put their case in two ways. Firstly, they rely upon the provisions of Section 1 of the Civil Liability (Contribution) Act 1978. Secondly however they allege that BAE owed to them as a maintenance provider a direct tortious duty of care. In this regard Crossair adopts wholesale the allegations of negligence made by Amiri against BAE and adds to them a series of allegations which can be summarised as amounting to reliance upon BAE's failure to take adequate measures and failure to warn Crossair of the inadequacy of the maintenance regime to deal with the detection and treatment of microbiological contamination of fuel. It is not alleged that there was issued by BAE direct to Crossair any Service Bulletin or similar document dealing with this problem, nor that Crossair may rely on any relevant communication between BAE and themselves as maintenance providers for with one irrelevant exception there was none. That exception is a single fax of 10 November 1998 from BAE to Amiri which happened to be copied to a Mr Karl Wilkinson, who was at the time stationed at Crossair's Basel headquarters as the Designated Technical Representative of BAE. It is rightly not suggested that this constitutes a statement from BAE to Crossair so that Crossair's case against BAE can properly be characterised as amounting to a failure to warn, if necessary by the issue of a Service Bulletin or some similar communication.
  11. By this application under Part 24 BAE seeks the dismissal of Amiri's claim against it on the ground that its success whether in contract or in tort is precluded by an exclusion clause in the contract. It is accepted by both BAE and Amiri that I should on this application reach a final conclusion as to the proper construction of the relevant clause which is to be found at clause 10 of Appendix C, Part A. There is a secondary issue whether the clause falls within the scope of the Unfair Contract Terms Act 1977. The facts relevant to that inquiry are agreed, so I can decide that point too. If the contract is not an "international supply contract" and thus excluded from the scope of the Act by section 26 thereof, the remaining question of reasonableness does not admit of summary determination. If BAE is successful in achieving the dismissal of Amiri's claim, it will necessarily follow that Crossair's claim against BAE for contribution under the 1978 Act will fall away, on the footing that BAE has no liability to Amiri. However BAE independently and in any event seeks the dismissal or striking out of Crossair's allegation that BAE owes to it a direct tortious duty of care on the grounds that that claim has no real prospect of success. There it is not agreed that I should, whatever the outcome, reach a final conclusion on the issue. It is accepted on both sides that I should, indeed must, decide whether the claim has a prospect of success but that I should not, indeed could not, reach a final conclusion to the effect that a duty of care was in fact owed, still less of course that there had been a breach of the duty, causative of loss and damage to Crossair.
  12. The Contract between BAE and Amiri
  13. The structure of the contract is important, not least because it is the submission of Mr Underhill QC for Amiri that proper construction of the clause is significantly informed by the location or context wherein it is found. Thus the contract itself consists of 26 clauses, into which there are incorporated by reference 7 appendices. Although the principal contract contains a number of what might be called "boilerplate" provisions, such as an entire agreement clause and an applicable law clause, there is within the primary 26 clauses no exclusion clause. It should not be thought that by identifying the following specific clauses of the contract so as to give a representative indication of its shape I have overlooked the impact which some other clauses may have upon the proper approach to the construction of the relevant exclusion clause. The relevant provisions include clause 4.1, which fixes the price at US25,450,000. It should be noted that it is common ground that the price must be regarded as payable not simply for the aircraft but also for certain ancillary technical support services which it is axiomatic must accompany a piece of high technology equipment such as a modern passenger aircraft. Thus the development by the seller in conjunction with the buyer of the maintenance programme to which reference is made in Appendix B, Part D clause 6 is clearly comprised within the price, not least because it must be achieved prior to delivery. Less obviously but in my judgment equally included in the price or if not gratuitous is the Additional Technical Support to which clause D3 of Appendix B Part D makes reference. From time to time one finds in the contract reference to the provision by the seller to the buyer of additional special services on mutually agreeable terms and conditions, including price, scope of work etc - see for example Appendix B Part D7. D3 is not such a clause. Reverting to the contract, I set out clause 6.3 because it is relevant to the construction of the exclusion clause:-

    "6.3 At all times when training of the Buyer's pilots is conducted in the Aircraft that Aircraft shall in all respects remain at the buyer's risk and the Buyer hereby:

    6.3.1 Indemnifies the seller against any claims, demands or expenses whatsoever without any limitation which may be made against the Seller or its servants or its agents and which may arise either directly or indirectly out of flights made by the Aircraft in the course of such training and waives any claim of its own against the Seller arising out of such flying unless such claim is made within the terms of Clause 17…"

    Other relevant clauses include:-

    "Aircraft Supply Programme

    7.1 The Seller shall offer the Aircraft for acceptance at its works within the following period from the date the buyer complies with the provisions of Clause 5.1.1. Subject to the provisions of this Contract the final working day of such period shall be due Date of Offer for the Aircraft…

    Aircraft Acceptance Procedure

    12.1 Seller shall offer the Aircraft for acceptance at its works in the United Kingdom and notify the Buyer at least 21 days before the estimated Date of Offer of the Aircraft and shall give to the Buyer not less than 7 days notice of the confirmed Date of Offer of the Aircraft.
    Transfer of Title and Collection
    13.1 On the delivery date, the Buyer shall execute and deliver to the Seller the Certificate of Acceptance for the Aircraft and shall pay to the Seller the balance of the Invoice Price for the Aircraft. Thereupon the Seller shall deliver the Aircraft to the Buyer and title to and risk in the Aircraft shall pass by delivery from the Seller to the Buyer.

    Customer Support Services

    14. The Seller shall provide the training courses, operations support, technical representation, and technical manuals listed in the Appendix B, which is by this reference incorporated herein.

    Warranty

    17. The Seller's Aircraft Warranty is set out in Part A of the Product Support Assurances attached hereto as Appendix C which is by this reference incorporated in this Contract. The Seller and the Buyer agree to be bound by all parts of such Product Support Assurances as though they were set forth in full in this Contract.

    Spares

    18.8 The Buyer shall accept all Spares supplied by the Seller subject to the conditions of the Seller's Spares Warranty set out as Part C of the Product Support Assurances attached hereto as Appendix C.

    Applicable Law

    25.1 This Contract shall be governed and construed in all respects in accordance with the laws of England and the Buyer hereby submits to the jurisdiction of the English Courts."

    The nature of the appendices emerges in part from the provisions which I have already set out. The appendices may be summarised as follows. Appendix A is headed Aircraft Specification and this is incorporated by reference in clause 2, which is the provision containing the primary agreement to sell. Appendix B is headed Customer Support Services. I have already set out clause 14 of the contract which provides for BAE to provide various post-sales services by way of "customer support", as listed in Appendix B. Appendix B requires BAE to provide the specified services "to assist the Buyer in the introduction of the Aircraft into service and in its continued operation in service with the Buyer". The services in question are listed in five parts, A – E. Part D covers "Technical Representation" and requires BAE to supply a variety of ongoing support services including the development of a maintenance programme. It is in relation to the supply of services under this Part that Amiri claim that BAE was negligent. Clauses D.3 and D.6 provide:-

    "Additional Technical Support

    D.3 The Seller shall provide technical advisory assistance with respect to the Aircraft and all accessories, equipment and parts installed in the Aircraft at the time of delivery. Such technical assistance shall include:-
    (a) Analysis of and comment on any service or operational difficulty experienced by the Buyer in order to determine the nature and cause of such difficulty and to suggest the solution thereof.
    (b) Analysis and comment on the Buyer engineering releases relating to structural repairs not covered by the Seller's Structural Repair Manual.
    …

    Maintenance Planning

    D.6 The Seller in conjunction with the Buyer will develop a Maintenance Programme to be finalised three months before Date of Offer of the Aircraft."

    Appendix B contains no exclusion clause. It does however contain an indemnity clause, clause D.9, which provides:-

    "Indemnity

    D.9 The Buyer hereby indemnifies and holds harmless the Seller and technical representatives, engineers, instructors and other personnel against any claims, demands or expenses whatsoever without limitation which may be made against the Seller or it's technical representatives, engineers, instructors or other personnel and which may arise either directly or indirectly out of the maintenance and technical operation of the Aircraft during the period or periods referred to in paragraphs D.2 and D.7 or out of any other services provided under this Part D."

    For the purposes of the present application BAE do not suggest that clause D.9 absolves them of liability, noting without admission that it does not expressly exclude negligence and that it might be thought to focus on third party claims against the Seller. However, Amiri contend that the presence of this limited indemnity expressly referable to the services provided pursuant to Part D is indicative that the exclusion clause on which BAE rely, which is to be found in Appendix C Part A, should not be regarded as applicable to the services to be provided by BAE pursuant to Appendix B Part D.

    It is to Appendix C that I next turn. This is headed "Product Support Assurances" in contradistinction to the expression "Customer Support Services" which appears in clause 14 and in Appendix B. Clause 14 and Appendix B are concerned with post-sales support of the kind which is common with high technology products of this kind. The expression "Product Support Assurances" as used in clause 17 and Appendix C is more idiosyncratic. Thus the Appendix begins with the following words: "The Seller makes to the Buyer the assurances herein contained in respect of the Aircraft in service with the Buyer". There then follow Warranties under three parts. Part A is headed Aircraft Warranty. This Part is incorporated by Clause 17 of the contract. It contains the essential quality warranties for the aircraft. It is this Part which contains the exclusion clause on which BAE relies. Relevant clauses within Appendix C Part A include:-

    "2. The Seller warrants that subject to all the conditions of this warranty all parts of the Aircraft shall conform to any applicable specifications referred to in this contract at the Date of Offer and shall be free from fault due to:
    2.1 Defective material or
    2.2 Defective workmanship or
    2.3 Defective design on the part of the Seller having regard to the state of the art at the date of such design.
    3. The Buyer's remedy and the Seller's obligations under this warranty shall be limited to faults which:
    3.1 are discovered by the Buyer within 24 months of the Date of Offer of the Aircraft in which the fault occurs, and
    3.2 are notified by the Buyer to the Seller on a Warranty Report Form (of which a specimen is annexed as schedule C/A.1) within 30 days of each such discovery, and
    3.3 are proved by the Buyer to the Seller's satisfaction to be within the terms of this Warranty.
    4. This Warranty shall not extend to:
    4.1 Normal wear and tear. The Buyer acknowledges that this results in a life expectancy of less than 24 months for some parts.
    4.2 Any parts not manufactured by the Seller or to it's detailed design, but it shall extend to any workmanship on the part of the Seller in installing any such part in the Aircraft.
    4.3 A part regarded as faulty for the sole reason only that some modification, alteration or replacement thereof is required by a change in regulation on the part of an airworthiness authority after acceptance of the Aircraft.
    4.4 Parts or equipment damaged as a result of a fault in another part.
    5. If any part is proved to be faulty and within the terms of this Warranty, the Seller at its option shall:
    5.1 Repair or rectify the part without charge, or
    5.2 Replace such part with a similar part free from fault, and any part so replaced shall become the property of the Seller, or
    5.3 Reimburse the Buyer's costs in rectifying the fault in accordance with paragraph 8 below, or
    5.4 In respect of faults in design, replace such part without charge with a modified part or parts and similarly supply such modified part or parts in respect of all Aircraft purchased by the Buyer which are within Warranty and subject to the same fault.
    …
    9. The Seller shall diligently remedy a fault within the terms of this Warranty and the provisions of this Warranty shall apply to any repair, rectification, replacement or modification pursuant to paragraph 5 provided however that the Seller shall not be liable under this Warranty for any faults not discovered within 36 months after the Date of Offer of the Aircraft."

    The all-important exclusion clause is clause 10 and it is set out in capital letters thus:-

    "NOTHING IN THIS CLAUSE SHALL BE CONSTRUED AS A WARRANTY OR REPRESENTATION AS TO THE TIME FOR WHICH AN AIRCRAFT OR ANY PART THEREOF WILL OPERATE WITHOUT FAULT, OR AS UNDERTAKING BY THE SELLER TO MODIFY THE AIRCRAFT OR ANY PART THEREOF TO CONFORM TO NEW DEVELOPMENTS IN THE STATE OF DESIGN OR MANUFACTURING ART. THE PROVISIONS OF THIS WARRANTY ARE IN SUBSTITUTION FOR AND EXCLUDE ALL EXPRESS OR IMPLIED STATUTORY OR OTHER WARRANTIES, GUARANTEES, CONDITIONS OR LIABILITIES (WHETHER AS TO FITNESS, QUALITY, STANDARD OF WORKMANSHIP OR OTHERWISE) AND THE PROVISIONS HEREOF SHALL OVERRIDE ANY ALLEGED REPRESENTATION OR COLLATERAL AGREEMENT TO THE CONTRARY. EXCEPT AS EXPRESSLY PROVIDED FOR IN PARAGRAPH 5 ABOVE THE SELLER SHALL BE UNDER NO LIABILTY WHATSOEVER TO THE BUYER AT ANY TIME WHETHER IN CONTRACT OR IN TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE) OR FOR BREACH OF STATUTORY OBLIGATIONS IN RESPECT OF THE AIRCRAFT OR ANY EQUIPMENT PART OR REPLACEMENT THEREOF OR TRAINING ADVICE OR SUPERVISION GIVEN IN RESPECT THERETO WHETHER OR NOT COVERED BY THE FOREGOING UNDERTAKINGS AND HOWSOEVER ANY DEFECT MAY BE CAUSED AND WHETHER ANY LOSS DAMAGE OR LIABILITY THAT MAY BE INCURRED BY THE BUYER IS DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO OR ARISES CONSEQUENTLY FROM ANY DEFECT OF THE SAID AIRCRAFT OR ANY EQUIPMENT PART OR REPLACEMENT THEREOF."

    Appendix C Part B contains Supplier Warranties. Appendix C Part C contains the spares warranty. This Part is incorporated by clause 18.8 of the contract. It contains a distinct exclusion clause at (g), again set out in capital letters as follows:-

    "THE PROVISIONS OF THIS WARRANTY ARE IN SUBSTITUTION FOR AND EXCLUDE ALL EXPRESS OR IMPLIED STATUTORY OR OTHER WARRANTIES, GUARANTEES, CONDITIONS OR LIABILITIES (WHETHER AS TO FITNESS, QUALITY, STANDARD OF WORKMANSHIP OR OTHERWISE) AND THE PROVISIONS HEREOF SHALL OVERRIDE ANY ALLEGED REPRESENTATION OR COLLATERAL AGREEMENT TO THE CONTRARY.
    EXCEPT AS EXPRESSLY PROVIDED IN PARAGRAPH (f) ABOVE THE SELLER SHALL BE UNDER NO LIABILITY WHATSOEVER TO THE BUYER AT ANY TIME WHETHER IN CONTRACT OR IN TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE) OR FOR BREACH OF STATUTORY OBLIGATIONS IN RESPECT OF THE SPARE PART OR ANY EQUIPMENT, PART OR REPLACEMENT THEREOF WHETHER OR NOT COVERED BY THE FOREGOING UNDERTAKING AND HOWSOEVER ANY DEFECT MAY BE CAUSED AND WHETHER ANY LOSS, DAMAGE OR LIABILTY THAT MAY BE INCURRED BY THE BUYER IS DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO OR ARISES CONSEQUENTIALLY FROM ANY DEFECT OF THE SAID SPARE PART OR ANY EQUIPMENT, PART OR REPLACEMENT THEREOF."

    Appendices D-G are each separately incorporated by different clauses of the contract and they are of no relevance to the matters which I have to decide.

  14. Amiri contends, as already foreshadowed above, that it is clear from a proper appreciation and analysis of the shape of the contract as a whole that the exclusion clause at Appendix C Part A.10 simply does not relate to the relevant claim. Amiri's claim relates to BAE's performance of the Customer Support Services required under clause 14 and Appendix B. The exclusion clause relates, and relates only they submit, to BAE's obligations as regards the quality of the aircraft as delivered, deriving from clause 17 and Appendix C. These are, they suggest, quite distinct areas of obligation and have been explicitly so treated by the draftsman. The Appendices should be regarded as autonomous and self-contained.
  15. In that regard Mr Underhill suggested that the case is in the line of territory explored by Bingham LJ in Interfoto Picture Library Limited v Stiletto Visual Programmes Limited [1989] 1 QB 433. Any observations of Bingham LJ are deserving of respect but it has to be pointed out that this interesting decision of a two judge Court of Appeal may not contain a ratio since it is not clear that Dillon and Bingham LJJ reached their common conclusion by wholly consistent routes. The case was a contest between two small businesses. The plaintiff photographic transparency lending library delivered to the defendants forty seven transparencies in a jiffy bag which contained also a delivery note containing, at the bottom, nine printed conditions set out in four columns under the heading "conditions" fairly prominently printed in capitals. Bingham LJ described the printing of the conditions themselves as "small but visible". One of the conditions prescribed a holding fee in the event that the transparencies were not returned within 14 days, which Dillon LJ described as being set at a "very high and exorbitant rate". Dillon LJ held that as nothing was done by the plaintiffs to draw the defendants' attention particularly to the relevant condition, it never became part of the contract between the parties. I am not sure that Bingham LJ accepted that reasoning. It may be that he should be regarded as holding, at page 455, that because the relevant condition was not in a common or usual form regularly encountered in this business, so it was not incorporated in the contract. However that would be a question of contractual analysis, whether one party has done enough to give to the other notice of the incorporation of a term in the contract. I have the impression from what he said at pages 439 and 445 that Bingham LJ eschewed that analysis and addressed a different question, with which he believed the cases on sufficiency of notice to be equally concerned, whether it would in all the circumstances be fair or reasonable to hold a party bound by a particular condition of an unusual or stringent nature. On the facts of that case he held that the defendants were to be relieved of the liability apparently imposed by the condition because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention. At all events, in reliance on the approach of Bingham LJ Mr Underhill suggested that the present is a case where the context in which the exclusion clause is set positively misleads with the consequence that the words used cannot fairly be construed as having an exclusionary ambit outside the subject matter of Appendix C itself and in particular cannot be taken as qualifying the obligations apparently undertaken by the sellers pursuant to Appendix B.
  16. With all due diffidence I have some reservations about the applicability of Bingham LJ's approach, if Mr Underhill has correctly identified it as such, to a contract of this magnitude and sophistication concluded between large and powerful commercial interests who have available to them skilled legal advice even if they do not seek to avail themselves of it. In fact I believe it to be uncontroverted that the draft contract was handed to the PD's legal adviser for review before signature but I do not rest my conclusion on that. However the test propounded by Bingham LJ involved consideration whether the clause could be said to have been fairly and reasonably brought to the notice of the party sought to be impressed with it by the party seeking to rely on it. It must be obvious that fairness and reasonableness will take their colour from the nature of the transaction and the nature of the parties thereto. I would accept that the structure of a complex contract is part of the context in the light of which the contract, or any part of it, must be construed. However if the wording of clause 10 is sufficiently unambiguous and explicit it must, I think, be given its fair meaning notwithstanding it might more conventionally have been placed elsewhere. In this regard it is of some slight significance that the clause appears in capital letters, as does the exclusion clause in Part C of Appendix C, the Spares Warranty.
  17. Mr Underhill's argument as to context is however in my judgement undermined by the reference in the clause to "training advice or supervision given in respect" to the aircraft. Whatever the meaning of that phrase, and whether "training" is adjectivally descriptive of "advice" and "supervision" or, as I think, the three words are independent nouns, the activities connoted thereby are not the subject matter of Appendix C but of Appendix B. The suggestion that the words should simply be ignored as meaningless in the context in which they appear I reject. This document is very different from that considered in Nelson Line v Nelson [1908] AC 16, where the document contradicted itself. Although there may be controversy as to the proper meaning to be ascribed to the words "training advice or supervision" it is not difficult to give them some content. Words in a contract should always be given content if fairly they can. Hence in my judgement it is inescapable that the exclusionary ambit of clause 10 in Appendix C Part A extends beyond the subject matter of Appendix C itself. Furthermore, it extends to Appendix B, the only question being whether it extends simply to matters contained within Part B of Appendix B, as Mr Underhill submits by way of fall-back, or whether as Mr Crane QC for BAE contends, it extends also to the advisory obligations contained in Part D of Appendix B.
  18. Mr Underhill pointed out that the reference in the first line of clause 10 to "this clause" can only sensibly be read as a reference to clause 17, which is itself side-titled "Warranty" and to Part A of Appendix C which it incorporates by reference. Part A of Appendix C is itself headed "Aircraft Warranty". The first sentence of the clause is concerned with obligations relating to the quality of the aircraft and the time at which they attach. The next few lines of the clause go on to provide, in customary form, that the provisions of the Warranty are in substitution for any other express or implied warranties. The express or implied warranties to which reference is made are warranties as to the quality of the aircraft. Mr Underhill submits that the exclusionary words which then follow should naturally be read as relating only to the areas of obligation hitherto dealt with in the clause. He points out that there would be a mismatch if in exchange for warranties as to the quality of the aircraft, but not as to the quality of the advice given in relation thereto, the latter part of clause 10 is construed as excluding all liability save as provided in those warranties, not just in relation to the quality of the aircraft but also in relation to the quality of the advice.
  19. Whilst I see the force of Mr Underhill's argument as to the potential mismatch of the warranty given and the exclusion of the liability which is apparently the counterpart thereof, the argument is once again compromised by the reference to "training advice or supervision". The warranties in Appendix C Part A do not relate to training, or to training advice or to training supervision, so that on any view there is a mismatch, the only question being how great it is. A mismatch is not of itself surprising. It would be surprising if there were an exact correspondence of warranty and exclusion. Moreover I do not find anything inherently surprising in the notion that there should be a wholesale exclusion of liability in respect of the provision of advisory services. The obligation in respect of the development of the maintenance programme at least crystallises 3 months before delivery, or thereabouts. The other obligations undertaken under Appendix B Part D are unbounded in time – except by the backstop provision that they terminate if only five aircraft of the type remain in commercial air transport service. There is nothing inherently unreasonable or surprising about a desire to exclude liability in respect of so unbounded an obligation. Nor am I impressed by the argument that, if the exclusion clause has the ambit for which BAE contends, the performance of the contract so far as concerns advisory services must be regarded as optional on the part of BAE. The aircraft could not validly be offered for acceptance without prior finalisation of the maintenance programme. As to the ongoing provision of technical back-up, it is unreal to think that any commercial aircraft manufacturer could remain in business without offering such services and moreover in a professional and internationally competitive manner.
  20. Mr Underhill also suggested that the shape of the clause is indicative that the draftsman envisaged that loss of the type for which liability is excluded would take the form of or be consequent upon a defect in the aircraft. It may be that the focus of the clause is upon loss so caused, that no doubt being the paradigm case. However the exclusion is expressed to be equally applicable in relation to loss which is not directly attributable to, or arises consequentially from, any defect.
  21. I was naturally reminded of the reaffirmation by the House of Lords in Ailsa Craig Fishing Co. Ltd. v Malvern Fishing [1983] 1 WLR 964 that exclusion clauses must be construed both contra proferentem and by reference to specially exacting standards. Mr Underhill submitted that the parties are not to be presumed to have intended to achieve a swingeing exclusion of liability.
  22. The question is whether clause 20 clearly and unambiguously excludes liability in respect of this claim, which, in my judgment, is properly to be characterised as a claim in respect of negligent advice. It is true that the draftsman could have referred to "Technical Representation" although that is itself a somewhat inapt description of the subject matter of Appendix B Part D. Properly analysed the substantive services which by Appendix B Part D clauses 2 – 6 the Seller is required to provide are advisory services – to advise on maintenance and technical operation, clause D.2; technical advisory assistance, clause D.3: to evaluate facilities, tools and equipment, clause D.4; to assist in evaluating the Initial Spares Recommendation, clause D.5; to develop in conjunction with the Buyer a maintenance programme, clause D.6, which involves the production of a programme which is itself advisory as to the maintenance required. Thus far it seems to me that advice is a suitable and compendious description of what it is that BAE is, pursuant to Appendix B Part D, obliged to provide. Clause D.7 goes further since it envisages the provision of additional special services including maintenance and repair, but these services, if requested are to be the subject of separate "mutually agreeable terms and conditions".
  23. Despite Mr Underhill's efforts to persuade me to the contrary, I do not regard the words "training advice or supervision given in respect thereto" as apt to cover flight training and nothing else. It is true that BAE were to provide training – Appendix B clause B.2; advice in relation to training, inferentially from the requirement to supply training flights and a training captain, Appendix B clause B.2 and B.8: and, equally inferentially from those last two clauses, supervision in relation to training. However I can think of no reason why the draftsman would wish to single out training for special treatment. Why should BAE stipulate for protection in relation to its Training Captain, but not in relation to, for example, its Operations Support Engineer – see Appendix B Part C.2. It is true that clause 6.3.1 of the contract envisages that claims may be made arising directly or indirectly out of flights during which the Buyer's pilots are being trained on the aircraft. However the clause does no more than preserve the Buyer's right to claim under Appendix C Part A.5 in respect of faults manifesting themselves on such a training flight. Indeed in many ways the waiver of claims arising out of training flying which is provided by clause 6.3.1 militates against clause 10 being intended, in the relevant part, as simply an exclusion in relation to flight training. It is probably not necessary to Mr Underhill's argument that "training advice or supervision" should relate only to flight training, as opposed to ground training – Appendix B Part A – although that is how he put it. However once it is realised that "training advice or supervision" would have logically to extend to ground training, even if training is adjectivally descriptive of advice and supervision, it becomes yet more difficult to understand why training in respect of maintenance should attract an exclusion of liability but advice simpliciter in respect of maintenance should not.
  24. I do not regard as natural the suggested reading of "training" as adjectivally descriptive of "advice" and "supervision". A much more natural reading is in my judgment that the words training, advice and supervision are each autonomous nouns and that by collecting them in this way the draftsman was attempting a compendious description of the ancillary support services which by the contract the Sellers undertook to provide. I can also think of no rational reason why the parties should think it appropriate that the Sellers should exclude their liability in relation to the quality of the aircraft but not in relation to their unbounded obligation to provide advice in relation thereto which advice might in one sense be regarded as gratuitous. I say gratuitous because it might be thought that one way to approach the structure of the contract is that the Buyers pay for the aircraft together with all those obligations which are expressly defined by or bounded in time – such as the development of the maintenance programme, ground and flying training, the services of an Operation Support Engineer etc. In one sense the provision of the other advisory services could be regarded as included within the contract price, or they could since unlimited be regarded as effectively gratuitous. On either approach, I would find it distinctly odd that the parties should envisage that the Sellers accepted only a limited and circumscribed liability in respect of the quality of the aircraft itself and yet assumed unlimited and uncircumscribed liability in respect of the ancillary services, some of which they were obliged to provide over an indefinite period of time.
  25. Although it was not a point made by Mr Crane, on reflection I can understand why this all-embracing exclusion clause appears at clause 10 of Appendix C Part A. By that point in the contract the reader has come to the end of the description of the direct first-hand obligations undertaken by the Seller in relation to the aircraft and support services. All that follows is Supplier Warranties, which although the Seller must procure that they are given, are warranties given not by the seller but by third party suppliers, and the spares Warranty. Clause 18 makes clear that Spares shall be supplied pursuant to separate contractual arrangements which will include the Spares Warranty set out as Appendix C Part C. It is therefore logical that Appendix C Part C should contain its own exclusion clause, since it forms or will form part of a different contract or contracts, distinct from the contract under which the aircraft is sold. It is to be noted that the exclusion in respect of spares does not contain the same language in respect of training, advice and supervision which would of course in that context be redundant. Indeed, it is the presence of the exclusion clause at the end of the Spares Warranty which has caused me to realise how logical it is to find a similar but broader exclusion clause at the end of that part of the contract, of course the bulk of it, which defines the Seller's obligations thereunder. Appendix D which follows the Spares Warranty is concerned with the formalities of the Buyer opening a letter of credit, Appendix E is a Specimen Change Order, Appendix F is a Specimen Letter of Credit and Appendix G is the list of Buyer furnished Equipment. It is thus entirely logical and natural to find at the end of that part of the contract which sets out and defines the Seller's obligations a comprehensive exclusion clause which qualifies all that which goes before it. Moreover the exclusion is given some prominence by being set out in capital letters. The more I have looked at it and considered it in the context of the contract as a whole, the more I have become convinced that it is intended to and does embrace matters of the type in respect of which the claim is brought. Its meaning is in my judgment so clear and obvious and its positioning, properly understood, so logical that I can see no basis on which it can be said that the clause has not fairly and reasonably been brought to the attention of the Buyer. For all these reasons therefore I conclude that Amiri's claim is without more precluded by the clause unless there is cast upon BAE an obligation to demonstrate its reasonableness. For the avoidance of doubt, whilst I have already observed in the context of the arguments on construction that I see nothing unreasonable about an exclusion of liability in respect of the provision of advice, I should not be taken to have expressed a concluded view on the outcome of the statutory enquiry as to reasonableness prescribed by section 11 of the Unfair Contract Terms Act. However, I must next decide whether that enquiry is necessary.
  26. Section 26 of the Unfair Contract terms act has a side-heading "international supply contracts" and provides:-
  27. "26 - (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 of ownership of goods passes; and
    (c) 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."
  28. It is not in dispute that the parties' places of business or habitual residence are in the territories of different states. Equally, the acts constituting the offer and acceptance were done in the territory of the same state, Abu Dabi or the UAE as the case may be. BAE contends that the contract is a contract for the sale of goods and that it provides for the goods to be delivered to the territory of a state, the United Kingdom, other than that within whose territory the acts of offer and acceptance were done. As a fall-back they say that at the time of conclusion of the contract it could be said that the goods "will be carried" from the territory of one state, the UK, to the territory of another, the UAE. Amiri join issue with these contentions. They accept that, if the contract has to be characterised as either a contract for the sale of goods or a contract for the supply of services, it is the former. However they contend that section 26 is to be construed as excluding a contract from the ambit of the Act only in so far as it provides for the sale of goods. Secondly, whilst accepting that the contract provided for the delivery of the aircraft in the UK, as in fact occurred, they contend that the language of section 26(4)(c) which speaks of delivery "to" a territory, rather than "in" a territory, connotes the goods being taken from one territory to another. That did not occur here since the aircraft was manufactured in the UK and delivered in the UK. Therefore, they contend, the contract is not one as is described in section 26(4)(c).
  29. I can see no warrant for the suggestion that the section is applicable only in so far as the contract provides for the sale of goods. It is true that there may be arbitrary results, as in the different cases of a seller who enters into a separate support or maintenance contract in relation to goods sold as compared to a seller who incorporates similar obligations into what is nominally a single contract. To my mind the anomaly is not that a different result ensues from the decision to make two contracts rather than one but that the legislature has chosen to exclude from the ambit of the regime international contracts for the sale of goods but not international contracts for the supply of services. However that may be, and whether the test to be applied is one of identification of the substance or of the predominating feature, this is unarguably a contract for the sale of goods. See generally Benjamin's Sale of Goods 5th Edition paragraphs 1- 041 to 1- 047 and McKendrick Sale of Goods paragraph 1- 054.
  30. Mr Underhill's second argument as to the non-satisfaction of the requirements of section 26 turns upon the use by the parliamentary draftsman of the word "to" rather than the word "in" after the word "delivered" in sub-subsection (4)(c). In sub-subsection (3)(b) and in subsection (4) the draftsman has generally adopted the language of section 7 (1) of the Supply of Goods (Implied Terms) Act 1973 wherein is to be found a definition of "contract for the international sale of goods". The definition in the 1973 Act in turn follows Article 1.1 of the Uniform Law on the International Sale of Goods which is set out in Schedule 1 to the Uniform Law on the International Sales Act 1967. In each of the earlier statutes the reference is to contracts providing for delivery of the goods to be made "in" the territory of a state other than that within whose territory the acts constituting the offer and the acceptance have been effected. I cannot believe that the draftsman intended to bring about a substantive change to the applicable test. Mr Underhill submitted that the policy of the section appears to be to protect exporters, and that that is better achieved by giving protection only where the goods are taken from one territory to another. However the policy of the section does not in my judgment involve simply the protection of exporters. The policy of the section is to exclude contracts of an international character from a regime largely devised for the protection of domestic consumers. It is true that many such contracts will involve exports from the UK, and that one consideration which informed the inclusion of section 26 was a desire not to place UK exporters under restrictions which would not apply to some of their foreign competitors. It is also true that there was a recognition that where goods are exported from the UK to another country, it is for the legal system of that country rather than for our own to specify how far contractual freedom should be limited or controlled in the interests of consumers or purchasers. A further consideration was however that contracts of an international character ordinarily involve transactions of some size between parties who are engaged in commerce and who wish to be free to negotiate their own terms. In such contracts, contractual freedom is of particular importance. See generally paragraph 120 of the Law Commission Report number 24 "Exemption Clauses in Contracts First Report: Amendments to the Sale of Goods Act 1893". Paragraph 121 of the same report shows that the Law Commission recognised the problem of satisfactorily defining contracts for the sale of goods which had an international character, but recommended that it be overcome by adoption of the definitions in Article 1 of the Uniform Law on the International Sale of Goods. In their report number 69 "Exemption clauses Second Report" the Law Commission recognised that the definition of a contract for the international sale of goods had received some trenchant academic criticism. However the Commission thought that no alteration should be made precisely because the Uniform Law on Sales had by then become part of our law, so that parties to a contract which is an international contract for the purposes of that Uniform Law are entitled to the full benefit of the provisions of the Uniform Law, which includes an absolute freedom to contract out of the terms in the Uniform Law which correspond to sections 12 - 15 of the Sale of Goods Act 1893 – see paragraph 235 of report number 69.
  31. In the light of this discussion it seems to me unlikely that the use of the preposition "to" rather than "in" in sub-subsection 26 (4) (c) was used advisedly in order to bring about a definition of an international sale different from that enshrined in the Uniform Law. The facts of the present case surely demonstrate that there can have been no rational reason for wishing to bring about such a result. To exempt from the domestic regime a contract providing for delivery abroad but not an identical and similarly concluded contract providing for delivery at Hatfield would be arbitrary and capricious and certainly not protective of exporters since BAE would surely be regarded as an exporter whether its overseas customers stipulated to take delivery abroad or at Hatfield. To construe the act as requiring that, in order to attract exemption from the regime, there must be an element of delivery from one territory to another would in my judgment involve the imposition of a limitation which would frustrate the overriding legislative intention to accord freedom of contract to parties involved in substantial transactions of an international character. Whilst therefore it is perhaps inelegant to speak of this contract providing for delivery of the aircraft to be made to the United Kingdom, I have no difficulty in swallowing that inelegance in order to achieve a result consistent with that which would be achieved by application of the test contained in the Uniform Law.

  32. Having reached that conclusion, I do not need to consider sub-subsection 26 (4) (a). I would find it difficult to conclude that the aircraft was to be carried. I do not think that the draftsman had in mind goods such as aircraft, vessels and cars which move under their own means of propulsion.
  33. The Claim by Crossair against BAE
  34. I have already summarised at paragraph 10 above the nature of Crossair's claim against BAE. The essence of Crossair's case is contained in paragraph 11 of its Notice of Part 20 claim which reads:-

    "In such circumstances it would be fair, just and reasonable for operators and maintainers such as Crossair to rely on BAE:
    (i) to publish full and accurate technical manuals reflecting best maintenance and inspection practices for each aircraft type, including the BAE 146 and Avro series and in particular the Aircraft and
    (ii) keep operators and maintainers fully advised of all known sources of operational problems which were encountered and
    (iii) to identify and publish as soon as they were known solutions to such problems."

    This is the assertion of a duty to warn. It is not alleged that BAE made any negligent misstatement to Crossair. It is however alleged that BAE made negligent misstatements to Amiri. It is said that BAE, by virtue of its role as manufacturer and design authority, knew that reliance would be placed on such statements by maintenance providers such as Crossair.

  35. I put on one side the possibility that Crossair may be liable to Amiri in consequence of the failure to observe or discover the corrosion earlier than they did. That almost certainly raises considerations unrelated to the allegations against BAE. However the allegation against Crossair by Amiri, however it ultimately manifests itself, is essentially that they failed to exercise reasonable skill and care in the functions that they undertook. The contract between Amiri and Crossair is governed by English law. Mr Philip Shepherd for Crossair accepted that it was likely that Crossair could only be liable to Amiri in the event that they were shown to have been negligent. That was a realistic concession, since I cannot as at present advised see any circumstances in which Crossair will have a liability to Amiri in the absence of proof of negligence. Furthermore it seems to me inevitable that in so far as Crossair demonstrate that they placed reasonable reliance upon a maintenance regime or procedures prescribed by BAE, they will escape liability for negligence.
  36. Thus the duty of care which Crossair assert as against BAE is a duty to protect them against the consequences of their own independent negligence, and in particular to use reasonable care to protect Crossair from the economic loss caused by or flowing from their own independent negligence. This would in my judgment be a most unusual duty and it is in my view clear that English law has set its face against the imposition of any such duty.
  37. Mr Shepherd reminded me of the approach adopted by the House of Lords in Barrett v Enfield London Borough Council [2001] 2 AC 550 and W and others v Essex County Council [2001] 2 AC 592, and in particular the emphasis placed upon the importance that the development of uncertain areas of law should be upon the basis of actual facts found at trial rather than hypothetical facts assumed, possibly wrongly, to be correct for the purposes of a striking out application. Mr Shepherd also submitted that the present case involves the exploration of hitherto uncharted territory, in which the court should pay careful regard to the complex regulatory environment before coming to a conclusion as to the tortious allocation of responsibility for loss incurred in connection with the operation of passenger aircraft. I bear these injunctions well in mind, although it seems to be that the regulatory framework if anything tells against the imposition of the suggested duty of care on an aircraft manufacturer since the regulations are, as it seems to me, directed to the maintenance of airworthiness and are intended to protect persons and their property from physical damage. Furthermore, I note that in fact some of the seminal decisions in this area of the law have been made on the trial of preliminary issues or in striking out applications- see by way of example Simaan General Contracting Co. v Pilkington Glass (No.2) [1988] QB 758, Minories Finance v Arthur Young [1989] 2 All ER 105 and Caparo v Dickman [1990] 2 AC 605. The correct approach on an application such as the present is to assume that all the facts and matters alleged in the pleading are true and to allow the case to proceed to trial unless satisfied that the claim is unsustainable even on that assumption. It is for the party concerned, here Crossair, to assert in their pleading all facts and matters upon which they propose to rely at trial- see per Saville J in Minories Finance at page 109.
  38. One area of the factual enquiry is not entirely clear to me. It seems likely that Crossair received technical documentation from BAE in two capacities, one as an operator of the aircraft type and the other as a maintenance provider in respect of that aircraft type. I am quite clear that insofar as the present duty of care is sought to be constructed there must be ignored transactions between BAE and Crossair which were generated by reason of the relationship between manufacturer and operator. I am concerned with an alleged duty of care owed by a manufacturer to a maintenance provider. Clause 1.2.8.1 of the contract between Amiri and Crossair imposed upon Amiri a duty to procure that BAE sent to Crossair all relevant technical publications and the related revision service. The cost was to be borne by Amiri. I am unclear whether Crossair, in its capacity as maintenance provider, received such technical material other than pursuant to this arrangement, for the purposes of which Crossair registered themselves with BAE as the maintenance provider in respect of this specific aircraft. In fact in so far as Crossair acted as maintenance provider for other operators of this aircraft type, it seems to me that they must have received the material as a result of other similar contractual arrangements, unless steps were taken to avoid duplication. BAE may even have supplied technical material to Crossair qua maintenance provider without the intervention of Crossair's customers. All this notwithstanding, the gravamem of Crossair's allegation is that BAE negligently failed to provide Amiri with a maintenance programme appropriate to the environmental and operational conditions under which they used the aircraft – paragraph 37 of the Notice of Part 20 claim. Paragraph 38 alleges that the recommendations made by BAE to Amiri were inadequate, or at any rate ineffective. The particulars of negligence as I have already summarised them, so far as relevant, allege a failure to warn and rely only upon positive misstatements in so far as those were made to Amiri, not to Crossair. It is inevitable that the case should take this shape since, as I understand it, it is not alleged that the maintenance was in principle defective or inappropriate, rather that it was inadequate for the particular circumstances in which this aircraft was operated, low utilisation, high ambient temperature and humidity.
  39. In my judgment Crossair's allegation that BAE owed to them an independent duty of care obliging BAE to warn of dangers which might cause Crossair economic loss has no realistic prospect of success. The law in that regard seems to me well settled as a result of decisions of high authority, to three of which I have referred in paragraph 33 above and to which list I should add The Aliakmon [1986] AC 785, The Mineral Transporter [1986] AC 1 and Murphy v Brentwood Borough Council [1991] 1 AC 398. No useful purpose would be served by my attempting my own distillation from these authorities. In fact I believe that in this area of the law the inquiry still begins and could usefully end with the search for a relationship "equivalent to contract" where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract – see per Lord Devlin in Hedley Byrne v Heller [1964] AC 465 at page 529. My conclusion in this regard is fortified by the recent decision of the Court of Appeal in Hamble Fisheries Limited v L Gardner and Sons Limited, The Rebecca Elaine [1999] 2 Lloyds Reports 1. I would particularly draw attention to the short judgment of Mummery LJ in that case, which contains, if I may respectfully say so, a penetrating and economical summary of the current state of English law, noting that different legal systems draw the boundary line in different positions. In that context I would also note that whilst the law of Canada might be thought to be more fertile ground for the implication of the alleged duty, in Can-Arc Helicopters v Textron [1991] 86 DLR 404, a case in British Columbia on which Mr Shepherd placed some reliance, it was not even suggested that the defendant helicopter manufacturers owed a duty of care to warn their co-defendant maintenance providers of the possible dangers arising out of the weakening of the gear by chromium plating. The Court of Appeal in The Rebecca Elaine looked for an assumption of responsibility. Tuckey LJ concluded at page 7:-
  40. "My review of the authorities shows that the general rule is that a manufacturer in the position of the respondents owes no duty of care to avoid economic loss. Exceptionally he may under such a duty if he assume responsibility to his customers in a situation which is akin to contract. That duty may include a duty to warn but it would be much more difficult to infer in the case of mere silence than in the case of misrepresentation. Reliance by the customer is relevant to whether there has been an assumption of responsibility and essential as to causation.
    The central question in the present case is whether the respondents assumed a responsibility to warn the appellants. In answering this question the Judge considered that he should look at the matter subjectively and objectively. This approach was too favourable to the appellants. The test is an objective one so the focus of the inquiry must be on statements and conduct which cross the line between the parties. Here the appellants had no dealings with the respondents or the manufacturers at any time".

    If a duty of care was not owed on the facts of that case by, effectively, a manufacturer to a customer, I find it impossible to conceive that in this case Crossair can succeed in demonstrating that BAE as manufacturer owed to them as maintenance provider a duty of care to warn of features which might give rise to economic loss suffered by Crossair in their capacity as maintenance providers. There is nothing very surprising in this conclusion. Crossair will not be liable in respect of conduct which amounts to reasonable reliance upon a regime prescribed by BAE. For Crossair to be liable some wholly independent negligence of their own must be shown. It would indeed be surprising if Crossair had to be protected against the consequences of their own negligence.

  41. For these reasons, and because the claim for contribution under the 1978 Act falls away in the light of my conclusion that BAE is under no liability to Amiri, Crossair's Part 20 claim against BAE must be dismissed in its entirety.


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