Aviation – Conditions of engagement – Contract terms – Interpretation

Rooney & Anor v CSE Bournemouth Ltd (t/a CSE Citation Centre): CA (Civ Div) (Lady Justice Arden, Lord Justice Toulson, Mr Justice Hedley): 9 June 2010

The appellant aircraft maintenance company (C) appealed against a decision that its standard conditions of trading were not incorporated into a work order form.

The first respondent was the owner of the second respondent company that was the registered owner of an aircraft that had been leased to a third party company (E). The aircraft was maintained by C under a maintenance support contract and a continuing airworthiness management support contract with E. Under the contractual arrangements, C’s practice was for the scope of maintenance works to be carried out on the aircraft to be defined on a work order form. C’s work order forms contained the statement ‘terms and conditions available on request’. On a particular occasion, C negligently carried out works, pursuant to a work order form, on the aircraft with the result that it sustained damage on a subsequent flight. E assigned its right of claim against C to the first respondent.

The respondents subsequently brought a claim for losses incurred by them and E as result of the damage suffered by the aircraft. The respondents applied for summary judgment in their claim on the basis that, among other things, C had no real prospect of showing that the work order form was a contractual document or that it incorporated C’s terms and conditions. A judge held that it was reasonably arguable that the work order was a document intended to have contractual effect. However, the judge held that the statement ‘terms and conditions available on request’ did not incorporate C’s standard conditions of trading because they conveyed no more than that there were terms and conditions available, and they did not purport to incorporate any particular terms and conditions into a contract.

C contended that the judge erred by adopting too linguistic an approach and failed to look at the commercial context in which the work order form and the statement on it was made, and that if he had he ought to have found that it was at least arguable that it was intended that work carried out by C pursuant to a work order form was subject to its conditions of trading.

Held: The judge had correctly directed himself towards the applicable principle as to the construction of commercial contracts, namely whether reasonable people would have understood the words used as referring to contractual terms upon which C had agreed to do the work, Investors Compensation Scheme Ltd v West Bromwich Building Society (No1) [1998] 1 WLR 896 HL followed. However, the judge had erred in finding that the words used could not be said to have incorporated C’s standard conditions of trading. The work order form was a contractual document that took its place in a contractual maintenance scheme, whereby the work order form activated the work, and nature of work, to be done on the aircraft. While the judge’s interpretation of the words used might have been correct grammatically, in a business context it would be odd if a contractual binding order such as the work order form contained no commercial terms but left them only for inclusion at a customer's request. It was at least arguable that a reasonable person would have understood the words used as referring to contractual terms upon which C had agreed to work on the aircraft.

Appeal allowed.

Akhil Shah QC, Alexander Milner (instructed by DLA Piper UK) for the appellants; James Leabeater (instructed by Berwin Leighton Paisner) for the respondent.