UK: Acceptance Certificate Precluded Later Claims

ACG Acquisition XX LLC v Olympic Airlines (in liquidation) [2012]

Olympic Airlines leased a Bowing 737-300 aircraft from ACG for five years. The parties signed a certificate of acceptance, following which the aircraft was put into commercial service. A few weeks later defects were discovered and the aircraft's airworthiness certificate was suspended. The certificate of acceptance stated that the airline had examined and investigated the aircraft and that the aircraft and aircraft documents were satisfactory. Olympic served termination and redelivery notices. ACG argued that the aircraft was airworthy when delivered, but even if it was not, Olympic was estopped by the certificate of acceptance from asserting that it did not comply with the terms of the lease when delivered.

The High Court (Teare J) found in favour of ACG. On the evidence, the aircraft was not in an airworthy condition on delivery but the acceptance certificate was conclusive proof of the matters mentioned and its effect was to waive any right Olympic might otherwise have to refuse to accept the aircraft under the lease. The provision did not prevent ACG from relying on ordinary principles of estoppel. The certificate of acceptance contained a clear and unequivocal representation that the aircraft and aircraft documents complied in all respects with the conditions required at delivery. Before signing the lease, the parties agreed that Olympic would carry out a detailed inspection of the aircraft and that all findings would be rectified and ACG's cost prior to delivery. It would be inequitable for Olympic to be permitted to allege that the condition of the aircraft on delivery did not comply.

Comment

There is no new law in this decision, but it does demonstrate that certificates signed by the parties are a good and valid way of establishing the position at certain points during a transaction or project.

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