In ACG Acquisitions XX LLC v. Olympic Airlines (in Liquidation)¹, the airline defendant was estopped from alleging that the aircraft, a Boeing 737-300 aircraft was not in the condition required by the Lease because of representation contained in a signed certificate of acceptance. Mr Justice Teare, in his judgment, considered the meaning of airworthiness because it was a major debate between the parties. Neither party were able to refer to any authorities which considered the meaning of airworthiness². He stated, an appropriate test of airworthiness is:
"Would a prudent operator of an aircraft have required that the defect should be made good before permitting the aircraft to fly, had he known of it. If he would, the aircraft was not airworthy."
He further commented that "in the context of a lease of an aircraft intended for the safe carriage of passengers it seems to [me] that the reasonable lessor and lessee would each expect the requirement in the lease that the aircraft be airworthy on delivery to relate to the actual condition of the aircraft and not the assumed condition."
On findings of fact, the aircraft was not in an airworthy condition on delivery or in a condition for safe operation.
Teare J noted that there were no words of limitation to be found in the representation given by Olympic and on the contrary, the scope of the statement was that the aircraft complied "in all respects" with clause 4.2 and Schedule 2 was only limited by the defects set out in Annex 2 to the certificate.
Teare J, in his judgement, stated that "it is necessary to bear in mind that commercial men prefer certainty to doubt". In referring to the requirement to have a certificate of acceptance signed prior to ACG signing a certificate of redelivery, he commented that:
"the reasonable man with knowledge of the background would be surprised if the statement in the certificate did not have consequences, and that Olympic having formally stated that the aircraft complied in all respects with the condition required at delivery was nevertheless free to allege to the contrary."
Teare J was persuaded that it would be inequitable for Olympic to be permitted to allege, contrary to the representation, that the condition of the aircraft on delivery did not comply with the lease, notwithstanding that the effect of such an estoppel is to prevent Olympic from pursuing its claim for substantial damages for breach of ACG's obligations to deliver the aircraft in the required...