Oxford Aviation Services Ltd. v Godolphin Management Company Ltd.

The claimant (Oxford) buys and sells aircraft, maintains them and acts as a provider of pilot training from premises at Oxford Airport. The defendant (Godolphin) operates horse-racing stables at Newmarket and ancillary to that business at the time in question operated light aircraft for the purpose of enabling its retained jockeys to fly to race meetings. It is a company registered in this country which manages the bloodstock interests of the Ruler of Dubai and his family. A Mr Leslie Steward was engaged by Godolphin to manage the operation of its aircraft and to organise freelance pilots to fly them when required. He has been involved in the management of aircraft for over 25 years. He was responsible for arranging maintenance and fuelling the planes and sending invoices for this and his own expenses to Godolphin for settlement. He arranged for three freelance pilots, including Mr Mackey to fly these planes for Godolphin when required.

This action arises out of the crash of a Piper PA-34 Seneca III Aircraft with the registration mark G-BMNT ("NT") which occurred on take-off from the July Course landing strip at Newmarket Racecourse on lst June 2000. The accident resulted in the death of its pilot Mr Mackey, the total loss of that plane and injury to the two passengers Mr Frankie Dettori and Mr Ray Cochrane.

Oxford was the owner of the aircraft. There is no dispute that Godolphin had possession of the aircraft at the time of the accident and that Mr Mackey was piloting it as part of Godolphin’s aircraft operation in order to fly the passengers to another racecourse. The terms upon which Godolphin had use of the plane are the subject of dispute, being made by oral agreement. Godolphin had possession of the plane since 26^th May 2000, having previously had the use of a Cessna 303 Crusader aircraft belonging to Oxford, registration G-EDRY which had been made available to Godolphin, through Mr Steward for some two months before this.

Oxford seeks recovery from Godolphin of the value of the plane, loss of profit from its inability to hire out the aircraft and survey fees and expenses, together with declaratory relief in respect of any further claims which might be made against it arising out of the accident. In addition it claims outstanding hire charges.

By a letter dated 4^th June 2003, Godolphin made a number of formal admissions. Godolphin accepted that it was bailee of the aircraft at the time of the accident and that it could not disprove negligence on the part of Mr Mackey, the pilot at the time of the crash, with the result that it would be liable to the claimant as bailee unless it could show that an agreement had been made in respect of the bailment as pleaded in paragraphs 3 – 21 of its Defence and Counterclaim.

In that Defence and Counterclaim, Godolphin alleged that:

It is not disputed that Oxford never took out any insurance which would cover Godolphin in respect of either plane. It had its own insurance which paid out so that its insurers are now pursuing the claim in its name against Godolphin in bailment. Godolphin contend that Oxford cannot recover because it agreed to obtain cover for Godolphin, so that there are no subrogated rights for the insurers to pursue or because, in breach of contract, it failed to take out the necessary insurance which would have protected Godolphin in full and the damages for this breach equate to the loss claimed. Points are also taken in relation to the loss caused and the quantum of it.

Alternatively, Godolphin claims that it was induced to enter into a contract for the use of the aircraft by a representation that its use of the aircraft would be fully covered by comprehensive insurance and it is additionally alleged that "in making that representation [Oxford] assumed a duty of care to ensure that it was true and/or to arrange the insurance that it represented had been arranged."

Oxford did not accept that there could be a claim in negligence or negligent misstatement, even on the facts alleged. The loss suffered by Godolphin was said to be pure economic loss and there was no sufficient special relationship nor any assumption of responsibility to give rise to such a duty. So far as the contract claim is concerned Oxford accepted that, if an agreement had been made as alleged by Godolphin, it would be unable to recover any loss from Godolphin by reason of circuity of action. It denied however that any such contract was made.

I heard from a number of witnesses on behalf of the parties. Those involved in negotiations for the use of the aircraft gave evidence, being Mr Tarratt, Mr Steward and Mr Dryden. Mr Tarratt is still employed by Oxford in its aircraft sales division but Mr Dryden left his employment there as sales executive in November 2001 and gave evidence for Godolphin. Mr Steward also gave evidence as to the conversations in which the representations and/or agreements were alleged to have been made. Additionally, I heard from Mr Marland, a loss adjuster who had interviewed Mr Dryden, made notes of that interview and drafted a statement for him to sign. Mr Roberts was also present at the meeting where this occurred and gave evidence as to Mr Dryden’s statements then, as did Mr Tarratt. Mrs Carter, Godolphin’s accountant who was responsible for insurance arrangements for Godolphin prior to going on maternity leave in May 2000 also gave evidence.

Oxford had two separate independent operating divisions which operated as separate profit centres, being Oxford Air Training School and the Engineering Services & Spares Department which incorporated Sales of Aircraft. Both Mr Tarratt and Mr Dryden worked in the latter department, Mr Dryden as a sales executive being responsible to Mr Tarratt. Mr Tarratt in turn was responsible to Mr Trivett who was the Managing Director of Oxford at the time.

In or about March 2000, the training school identified a requirement for a Piper Seneca III aircraft to be used for flying training. On the evidence the Training School’s preference was to lease such an aircraft but the Sales department investigated the possibility of purchasing an aircraft, "leasing" it to the Training School and then selling it on the basis that this might prove more economic to the company as a whole. So it was that a potentially suitable aircraft was identified by Mr Dryden, being NT which was duly purchased for the sum of £128,500 on 16^th May 2000. NT had a private category Certificate of Airworthiness and since any aircraft used for flying training purposes had to have a Public Transport category Certificate of Airworthiness, the aircraft had to undergo a 50-hour/six monthly maintenance inspection and an upgrade to public transport standard. This work was complete by 26^th May but the certificate itself was awaited and not expected to arrive for a few days.

Oxford was then approached on 26^th May 2000 by the CAA who wished to hire the aircraft for their training purposes. This was agreed and there was a short period of use by the CAA amounting to 2 hours 30 minutes that day. It was in the evening of that day that the plane was then made available to Godolphin.

It is common ground between the parties that Godolphin owned a twin-engined Cessna 303 Crusader aircraft registration G-INDC which was damaged at about the end of February 2000 following a heavy landing. It was taken to Oxford for repairs there by the Engineering Services and Spares Department. Because of difficulty in obtaining spares, it was anticipated that the aircraft would be unserviceable for most, if not all, of the racing season which created a problem for Godolphin for the transportation of its jockeys.

Although not known by Mr Tarratt, Godolphin had also owned a single-engined Piper Saratoga aircraft registration G-HIHI. Mr Tarratt knew that Mr Steward had operated this aircraft but did not know whether it was owned by Godolphin since Mr Steward handled aircraft for a number of different clients. Mr Steward had an office at Oxford airport and was well known to Oxford and told it that in about February 1999 the Piper Saratoga G-HIHI had been sold. Both the Cessna G-INDC and the Saratoga G-HIHI were insured by Godolphin on the Dubai Airwing policy, which covered the Ruler of Dubai’s other aircraft, including 747s, helicopters and large aircraft. This was done at minimal additional premium – of the order of £100 pa for each small plane. The brokers concerned were Willis Corroon Aerospace, who were also Oxford’s brokers.

In addition from May 1997 through to 2000, Godolphin dry leased a twin-engined Cessna 303 registration G-PUSI from the jockey Walter Swinburn, for use, when available. By prior arrangement, Godolphin’s interest was noted on Mr Swinburn’s aviation insurance policy, the liability limits were increased and Godolphin paid the extra premium attributable thereto.

Mr Steward’s evidence was that in early 2000, G-INDC was under repair and unavailable and because G-PUSI’s future availability was uncertain, Godolphin was looking to purchase a twin-engined plane to provide transport for Frankie Dettori. A twin-engined plane was thought to be more suitable than a single-engined plane because of the greater safety involved in flying over water to Europe where some races took place.

I am satisfied on the evidence of Mrs Carter and Mr Steward that prior to the winter of 1999-2000, Mr Steward was given a general instruction to research the availability of a twin engined light aircraft and that he travelled in Europe at Godolphin’s expense in investigating this possibility. There was however no pressing urgency for any such purchase.

It is common ground that Mr Steward was offered the use of the Cessna 303 Crusader aircraft G-EDRY in late March 2000. This was a similar plane to the G-INDC which was under repair by Oxford and it was a plane which Oxford had acquired in part exchange from the jockey Mr Eddery when selling him another aircraft. Oxford was trying to sell this plane (G-EDRY) at the time but was prepared to make it available to Mr Steward and Godolphin provided that the plane was returnable on short notice for the purpose of carrying out any demonstration needed to seek to achieve a sale. Leasing out was not part of Oxford’s core business at all.

It was part of Oxford’s case and it appeared from Mr Tarratt’s witness statement that the draft hire agreement sent to Mr Steward was in Oxford’s "standard form" and that clause 5 was a "standard clause" in all Oxford’s leases. He stated that it was the official company policy always to make it a condition of hire that the hirer or lessee arranged his own insurance. One of the reasons for this was the imposition of a special excess or deductible, should any approved lessee be added to Oxford’s own policy, recovery of which would be expensive and difficult in the event of a crash involving the death of a negligent pilot.

It appeared from Mr Trivett’s statement, which was adduced under the Civil Evidence Acts, that whether aircraft were being hired in or out, the company policy was that the other party should always bear the insurance cover. What emerged in evidence however was that hiring in of aircraft for the training school was rare and hiring out of aircraft was even more rare.

Since the accident, there was a further hiring out to Ulster Flying Club in the same context of the proposed purchase of aircraft and with an hourly charge, which again included insurance. This led to annoyance on the part of Mr Trivett who expressed his displeasure in no uncertain terms to Mr Tarratt and Mr Dryden. According to Mr Tarratt, Mr Trivett had been happy with the original arrangement with the Ulster Flying Club, but by this stage wanted adherence to the "company policy" of requiring other parties to insure in any hiring arrangements, Since that time there have been three further hiring out arrangements where the hirer has been responsible for insurance.

From this history, it cannot be said that there was a standard practice by March 2000 in respect of the leasing out of aircraft by Oxford, nor a truly standard form of Hire Agreement, since a basic format was tailored to meet the individual circumstances of each hiring. I accept, because it is clear on the evidence of all of the employees and ex employees of Oxford, including Mr Dryden that there was a company policy that, on any hiring, whether in or out, insurance should be arranged by the other party. Yet the Ulster Flying Club hire arrangements, in the context of a sale, left the insurance obligation with Oxford which reveals that the general policy was one which could give way to other commercial considerations

The negotiations for the use of this aircraft were effected between Mr Dryden and Mr Steward but Mr Tarratt, to whom Mr Dryden was responsible, said that he was kept fully informed of them and I accept that Mr Dryden did inform him of which he said had happened.

It was common ground between the parties that Mr Stewart and Mr Dryden discussed the price and terms for hiring G-EDRY but there was dispute about what, if anything, was said about insurance. On 29^th March Mr Dryden produced the draft hire agreement, taking the format from the computerised version of previous hiring in agreements, all of which had been made by the training department, not the sales department, and then adapted it for use in the present circumstances. The draft included the following:

It is accepted by both parties that Clause 3 did not reflect the agreement made orally that Oxford could demand the immediate return of the aircraft for demonstration for sale purposes. Mr Tarratt’s evidence was that it was exceptional to hire out aircraft and whatever was done in this regard would not be done at the expense of jeopardising any sale.

Mr Steward’s evidence was that he thought he had received this draft some days after taking possession of the plane and that he sent it on to Godolphin for their approval on 31^st March 2000 and discussed the matter with Mrs Carter of Godolphin shortly thereafter. She raised a number of queries and asked for a copy of the agreement to be forwarded to Godolphin’s insurance brokers, Willis Corroon. Mr Steward’s evidence was that he thought he would have faxed or posted a copy of the draft agreement to Willis Corroon. He however regarded the matter as being of little significance since he said that Mr Dryden had informed him that, pending the signing of a formal hire agreement, Godolphin would be covered by full hull and combined liabilities insurance on Oxford’s policy, which he knew from previous dealings to be of the order of £30M.

The evidence of Mr Steward and Mrs Carter who was the accountant for Godolphin who dealt with insurance arrangements, was that Godolphin itself would take decisions with regard to insurance. In the case of the planes owned by Godolphin, G-INDC and G-HIHI, although Mr Steward had investigated other possibilities, both had been added to the Dubai Airwing Policy after negotiations by Godolphin’s company secretary, Mr Tyndal. Mrs Carter had limited experience of aircraft insurance since Godolphin had only owned private aircraft from 1998 onwards. The insurance on the Cessna G-PUSI had been concluded before possession was taken of the plane by the addition of Godolphin to Mr Swinburn’s policy. That plane continued to be used throughout 2000.

The immediate issue for Godolphin was a replacement for G-INDC, the repair of which was likely to mean it was out of action for much or all of the racing season of 2000, ending in November, whilst the possibility of purchase was still in mind.

According to Mr Steward he considered G-EDRY for purchase but concluded it was not financially right as the engines were old and needed replacement. He could not recall whether he had mentioned the purchase of that plane to Godolphin as a possibility and agreed that there was no need for two months use in order to decide whether or not to purchase it. What was needed however was a temporary replacement until G-INDC was back from repair and he said that Oxford had offered G-EDRY as a "loan machine" on a temporary basis because they were looking for a sale.

He said that he consulted with Godolphin about hiring G-EDRY, as indeed he must have done because he sent the draft agreement to Mrs Carter. Neither he nor Mrs Carter gave any evidence to the effect that there was any agreement between them that G-EDRY was to be the subject of a trial for the purpose of purchase or long-term lease. Mrs Carter accepted that at no time was it suggested to her that any terms other than those in the hiring agreement were to cover the use of the plane.

When she received the draft she said that she had questions over the insurance provisions in it. She never investigated the possibility of adding Oxford as a loss payee on a Godolphin policy despite the terms of Clause 5, because she said it never crossed her mind. Her evidence was however that she discussed with Godolphin’s brokers, Willis Corroon, the question of adding named pilots as additional insured and that this presented a problem for Willis. She thought that she then discussed this with Mr Steward and told him that if the brokers were not happy, she was not happy and that the hiring agreement could not go ahead. She said that she had told Mr Steward that if he wanted to take the matter up further with Willis he could, since if they were happy she would be happy. In those circumstances she said that she did not send the policy to Willis because they had said that they would not give cover on this basis and she left it to Mr Steward to contact them. On her copy of the hire agreement she wrote "?? Les to forward copy to Willis" alongside clause 5.

It is plain, in my judgment, that the matter was never taken further with Willis, if there was a conversation with Willis of the kind Mrs Carter described. No further steps were taken in relation to the obtaining of insurance cover and it appears from Mrs Carter’s note that the oversight was that of Mr Steward, even though insurance matters were primarily the concern of Godolphin itself in the person of Mrs Carter.

Mrs Carter on her own admission failed to follow this up in any way and Godolphin began to use the aircraft. In her witness statement Mrs Carter said that "since Godolphin had begun to use G-EDRY and the draft hire proposal was not signed on behalf of Godolphin, I assumed the insurance issue had been resolved without the need for Godolphin to insure the plane".

She had no recall of any conversation with Mr Steward in which Mr Steward had said that there was any other insurance or that Godolphin would be covered by Oxford’s insurance pending agreement on a sale or hiring agreement. She recalled discussing the hire agreement and the insurance issues and accepted that, if Mr Steward had told her that there was cover under Oxford’s policy, it would be a very important piece of information and that she would like to think she would have remembered it. When Mr Steward was asked about this, he also could not recall telling Godolphin about any assurance given of cover under the Oxford policy. When pressed, although there was nothing in his statement to this effect, he then said he was sure he would have imparted the information that it was insured. I have no hesitation in finding that there never was any such conversation between Mr Steward and Mrs Carter in which he told her that Godolphin was insured for G-EDRY on Oxford’s policy.

The point is illustrated by his evidence that the reason he faxed the hire agreement to Mrs Carter was so that she could approach brokers to make insurance arrangements and his evidence that she did indeed ask him to forward a copy to the brokers which he said he did, to the best of his knowledge.

Further reinforcement for this appears from the events immediately following the accident. Kirsten Brown, the temporary replacement for Mrs Carter (who was on maternity leave) wrote a draft report which was approved by the company secretary Mr Tyndal on 8^th June 2000, after Mr Steward had provided a précis of events to Godolphin. Mrs Brown had been present during the handover period from Mrs Carter when the draft hire agreement arrived and, according to Mrs Carter, they had discussed the problems raised by it and the insurance issue. In Ms Brown’s draft report, although details for insurance were given for other planes, no details for insurance were given for G-EDRY which was said to be hired from [Oxford] although no signed agreement was in place. No suggestion was made in this document that Godolphin had ever been given any assurance that it was covered under Oxford’s policy.

Equally in a report dated July 2000 made by Lynton Aviation Limited, who had been to Oxford airport and had discussed matters with Mr Steward, although there is reference to insurances of other aircraft, there is no suggestion of any cover available to Godolphin from Oxford. This report was a review of the existing aeroplane operation with options for the future. Recommendations were made in it with regard to existing insurance arrangements.

It is in these circumstances and against the background of no documentary support of any kind for Godolphin’s allegations that I approach the issue of what was actually said during the negotiations relating to G-EDRY. Mr Steward’s evidence was that he dealt with Mr Tarratt and Mr Dryden. He thought that discussions with them took place around 29^th March but possibly a few days earlier. The discussion he had about insurance was with Mr Dryden but he could not remember the exact words. In his statement, he said that Mr Dryden offered him the plane to try out with a view to it being purchased or hired by Godolphin and that this was of assistance to Godolphin whilst G-INDC was being repaired. In his statement he also said there was discussion between him and Mr Dryden about the price and terms of hiring and insurance. He said that "Mr Dryden informed me that, pending the signing of a formal hire agreement, Godolphin would be covered by full hull and combined liabilities insurance on Oxford’ policy". He knew from previous dealings that the liability cover was of the order of £30M. Thus he maintained in evidence that there was an oral agreement that Oxford’s cover operated in favour of Godolphin until the hire agreement was signed and insurance was arranged by Godolphin.

According to him this did not necessarily mean that Godolphin would have free insurance cover until the hire agreement was signed. A charge might be rendered later by Oxford and retrospectively agreed. There was however no agreement at the time as to payment for such insurance. He said that following this initial discussion with Mr Dryden about insurance there were no further discussions on the subject and he proceeded on the basis that insurance was already in place to cover Godolphin’s use of the aircraft. He never followed the matter up with Oxford and Oxford never followed it up with him. He did not recall ever mentioning the subject of insurance to Mr Tarratt at all but was happy to rely upon what Mr Dryden told him and, according to him, he would not have taken the plane without establishing the insurance position.

He accepted that there was no discussion of any details of Oxford’s policy in terms of the financial limits, the geographical limits of use, the deductibles, or any other terms or conditions, save that he said he did discuss the question of landing and taking off from grass strips, although this might have been in the context of taking NT rather than G-EDRY. He therefore never ascertained any details of the policy to ask Mrs Carter whether this was acceptable to Godolphin and never referred such matters to Godolphin or to their insurance brokers.

Godolphin adduced the evidence of Mr Dryden in the form of two statements, to which he testified orally. In his first statement he said that he could not remember explicitly discussing insurance with Les Steward nor telling him the size of insurance cover in place but that it was highly likely that Mr Steward would know of the limits because of his considerable prior dealings with Oxford. His evidence was that, because G-INDC was being repaired, Oxford agreed to loan G-EDRY to Godolphin. He said he could remember very little about the negotiations with Mr Steward over the hire of G-EDRY and could not recall the conversation. It was not his recollection that it was hired with a view to eventual sale to Godolphin. He recalled that Godolphin needed a plane for use at that particular moment. On the critical point his statement reads as follows:

I find as a fact that at no stage did Mr Steward ever tell Mr Dryden or Mr Tarratt that Godolphin was interested in purchasing G-EDRY. Nor did he indicate that he was contemplating a long-term hire agreement. G-EDRY was taken for use in order to fill the gap left by the need for repair to G-INDC, the duration of which was uncertain. A draft hire agreement was supplied as the basis upon which that use would take place. It would make no sense for Oxford to suggest an alternative insurance arrangement in these circumstances. If arrangements of this kind were to be made, the matter was of such importance that it would be put in writing and there would be clear reference to it in both Oxford’s and Godolphin's documents. There are no such references or documents. Moreover it would require Oxford to take steps with regard to its insurance arrangements in circumstances which were contrary to its general policy. No such arrangements were made. The fact that Mr Steward never told Mrs Carter of any such arrangements at any time, nor told Godolphin, nor Lynton Aviation Services shortly after the accident is a very clear pointer in this respect. There was no "loan on a trial basis" of G-EDRY and the only basis put forward for the use of G-EDRY was the Hire Agreement.

Mr Dryden was, at the time, a 23 year old junior sales executive working under Mr Tarratt and in close liaison with him. There were only the two of them working in Oxford’s Sales Department so that Mr Tarratt could be expected to know what Mr Dryden did, unless he kept matters from him. It was plain from Mr Dryden’s oral evidence that he was unaware of the specific terms of Oxford’s insurance policy and knew little of the principles and operation of aviation insurance. He agreed that he would have to take advice to find out if a third party would be covered for its risks under Oxford’s policy and did not recall making any representation about that. When asked later about the alleged statement on May 26^th that Godolphin were covered by Oxford’s policy, he said he was most unlikely to have discussed Godolphin’s third party liability with Mr Steward. He would have been out of his depth in discussing such issues. He considered that there was insurance in existence at all times, but that was Oxford’s own insurance. He accepted that Oxford had a strong preference (if not a settled company policy) that, on hiring aircraft in or out, the other party should pay the insurance, albeit with the reservation that he could not recall any occasion when this had actually happened.

As appears below, when interviewed by Mr Marland on 16 August 2002, he was clear that he could not have made a statement of the kind alleged by Godolphin because it was contrary to the company rule or "strong preference". Whatever Mr Dryden’s reasons for now being less clear on this, his evidence, which was unsatisfactory because of its inconsistency with the statements he made in that interview, did nothing to assist Godolphin’s case and I could not accept the evidence of Mr Steward on it. The most that Mr Dryden would ever have been able to say was that Oxford maintained insurance on its planes, when used by third parties, but he could not have commented on the terms of cover, nor on its application to cover Godolphin. Nor could Mr Steward have reasonably relied on any such statement, without knowledge of the detailed terms of cover.

The hire agreement in addition provided as follows:

The draft hire agreement was never signed and returned to Oxford, nor was any copy insurance policy provided by Godolphin in accordance with clause 5. Although, as Godolphin pointed out, the Hire Agreement provided that the hire period would commence from the date of signature and that a copy of the insurance policy procured by Godolphin should be provided to Oxford at the start of the hire period, neither of which occurred, Oxford invoiced Godolphin for its use of G-EDRY at the rate of £140 per Hobbs hour plus VAT (a scale of payment based upon the gauge in the aircraft showing the engine running time). Three invoices were rendered by Oxford on 8^th May 2000, 15^th June 2000 and 5^th July 2000 at the hire agreement rate, all of which were duly paid by Godolphin. The documentary evidence supports the inevitable conclusion, that in the absence of any other basis for use of the aircraft, it was the draft Hire Agreement which was presented to Godolphin which was the basis upon which it was bailed to it. There is no reliable evidence to gainsay that.

For these reasons, I an unable to accept the evidence of Mr Steward that any statement of the kind alleged to have been made by Mr Dryden was made in relation to G-EDRY . Nor could I accept that a man with Mr Steward’s experience could reasonably rely on any comment on the scope of Oxford’s insurance by a 23 year old salesman, without ascertaining the detailed terms of that insurance and referring them to Godolphin for checking and confirmation.

It is agreed that Oxford was entitled to demand return of the plane at short notice and it did so on 26th May 2000. Oxford did so because it wished to provide a demonstration of the plane to potential purchasers and to carry out a maintenance inspection.

According to Mr Tarratt, he and he alone had a conversation with Mr Steward some time after 5.30p.m. on Friday, 26^th May at Oxford airport. Mr Dryden was not present. The meeting and conversation took place in the context of Oxford’s request for the return of G-EDRY which perturbed Mr Steward who had need for an aircraft in the following week. In those circumstances, Mr Steward asked for a substitute and the only possibility open to Oxford was NT. Mr Tarratt was reluctant to make NT available because of the Training School’s requirement. Nonetheless he was able to let Mr Steward have it for a few days until the Certificate of Increased Status for Airworthiness arrived. The arrangement was therefore to be a short term one and if G-EDRY was not sold following the demonstration NT would be returned and G-EDRY would revert to the hiring arrangement.

In Mr Tarratt’s evidence he said that there was discussion of the rate of hire which was agreed to be the same as for G-EDRY (although the plane was a more expensive plane) because of the limited nature of the substitution which was taking place. Mr Steward said that there was no discussion of hire rates but this is so improbable that I reject his evidence on this. Mr Taratt said that there was no discussion of insurance since, so far as he was concerned, all the arrangements would be the same as those already made for G-EDRY which NT was replacing, and which he took to be the terms of the draft hire agreement, including the requirement for Godolphin to insure.

Mr Tarratt was clear that he had no idea that Godolphin had any intention to purchase a plane, whether G-EDRY or NT or a similar Seneca plane. He knew that Mr Steward was a fan of the Cessna planes and would have considered such a plane much more suitable for Godolphin’s use than Seneca planes. He was never told that Godolphin was interested in purchasing NT or a similar aircraft. As with G-EDRY, Oxford would have been delighted to secure a purchaser for another Seneca but was never informed of this as a possibility. Had Mr Tarratt been so informed, Oxford’s approach would have been entirely different and there would have been no question of a hiring arrangement of the kind made for G-EDRY or the temporary substitution of NT for G-EDRY. Mr Tarratt thought that the hire agreement had been signed when G-EDRY was handed over and that this use of NT was merely a substitution for G-EDRY within those arrangements.

If there had been any question of a purchase trial for G-EDRY, there would be no reason for a hire agreement at all and had Mr Steward wanted to purchase, he would have heard about it long before. In his mind there was no question of Mr Steward taking either plane to try it pending a formal lease or sale. In the context of his discussions with Mr Steward over NT, he never understood that there was any suggestion that Mr Steward wanted to buy the plane. The immediate problem was Godolphin’s need for a plane in the next few days to replace G-EDRY which Oxford wanted back for the sales demonstration to a potential buyer. There was no specific lease negotiation on NT because both regarded this as a continuation of the existing arrangement albeit on a very short-term basis until G-EDRY was again available (if unsold) or the certificate for NT had come through to enable NT to be used for the training school.

There was no doubt in his mind that if Mr Steward had said that he wanted to buy either G-EDRY or NT, or a similar plane, Oxford would have sold G-EDRY or tried to find a Seneca plane if that was what was required, which they never did. In his witness statement and in evidence, Mr Dryden did not suggest that he was told that Godolphin was interested in purchasing NT, although he said he would have sold it to them if they had made an acceptable offer.

Mr Steward said that, on the evening of 26^th May, he needed an aircraft additional to G-PUSI for the next few days particularly since it was intended to fly to Ireland the next day with Frankie Dettori, Mr Crisford the Managing Director of Godolphin and the trainer of the horses. There were other options open to him such as an aircraft taxi. He maintained that he was still looking on behalf of Godolphin for a suitable plane to purchase or hire and that Mr Dryden and Mr Tarratt offered him the use of NT, that Friday evening. He looked inside the aeroplane, discussed maintenance and paperwork with Mr Tarratt and agreed to take it. As he described it "the loan of the aircraft" effectively had a dual purpose, either to try the plane to see if it would be suitable for Godolphin’s needs with a view to purchasing it or a similar plane or to try it out with a view to organising a long-term hire. He was not sure if Godolphin would like the plane but understood that the Training School had no use for the plane for a few days. He did not consider it a straight swap for G-EDRY since G-EDRY was finished for Godolphin’s use because maintenance on it was due. He had no idea when the school required the plane back but agreed to use it for a few days and take it from there. His understanding was that it was offered for sale and was offered on a trial basis.

He accepted that the issue of insurance was never discussed by him with Mr Tarratt at the time of agreeing to take the plane nor in his presence. He maintained that subsequently, perhaps an hour later, after much to-ing and fro-ing of all concerned to the plane, he discussed insurance with Mr Dryden at the back of the aircraft. He asked him if there was cover which included use of grass airstrips, to which he was given an affirmative answer and was told that cover of up to £50m was in place or that the combined liability limit was £50M. This was the only conversation which he had with Oxford relating to the insurance of NT.

He agreed that he did not discuss the insurance of NT with Godolphin at all, simply telling them he had a suitable plane for the following days.

Mr Dryden’s evidence was that he might or might not have been present on 26^th May when Mr Tarratt was talking to Mr Steward. He could not recall if he was part of any discussion about NT. He agreed that Mr Tarratt did most of the negotiation. In his statement he said he could not recall whether a conversation had taken place with Mr Steward in which he confirmed that the plane was covered by insurance. That was however his understanding.

When pressed on this point in cross-examination he said that he had no way of knowing about Godolphin’s liabilities and that he was only interested in Oxford’s cover and third party liability insurance. He had no concern with any risk that Godolphin might wish to have covered as opposed to Oxford. Indeed he thought it highly unlikely he would discuss Godolphin’s third party liability at all. If he had been asked if the aircraft was insured then he would have said yes. He had however no idea whether Godolphin was covered, his understanding being that Oxford was insured, whoever used the plane. He then said that he was not specifically asked if Godolphin was insured under the Oxford policy. These answers throw light upon any earlier conversation which he might have had with Mr Steward prior to the hiring of the G-EDRY also, as did the evidence which I heard from Mr Marland.

Mr Marland was the loss adjuster who carried out an interview with Mr Dryden on 16^th August 2002 in Oxford. Mr Marland was there for other purposes primarily but took the opportunity to see Mr Dryden with a view to taking a statement. He interviewed Mr Dryden first because he was an ex employee and it was felt that he should be released from the meeting at as early a point as possible.

According to Mr Marland he sat down at a table with Mr Dryden opposite and informed him that he was interviewing him with a view to taking a statement. He then wrote down in a note which was put before the Court that which Mr Dryden said. There were other people present throughout, including Mr Tarratt, Mr Roberts (a Hull surveyor instructed by Oxford’s insurers) and Mr Brown who was one of Oxford’s engineers. There were points in the conversation where others joined in and made their own comments.

Mr Marland’s evidence was that the passages which were underlined in his manuscript note represented (with the absence of prepositions and the like) what Mr Dryden said verbatim, whilst notes which were not underlined represented the substance of what Mr Dryden said, but not verbatim. Passages in square brackets were Mr Marland’s own comments and passages in round brackets, or where the note expressly said so, represented comments made by others by way of interjection. The vast majority of his note therefore represented what Mr Dryden had said.

I have no reason to doubt anything that Mr Marland said and his note can therefore be taken as an accurate representation of what Mr Dryden said at that meeting, save where the note indicates otherwise. It was put to Mr Marland that much of what was said to him was the company party line rather than Mr Dryden’s own evidence of what he recalled. Mr Marland in answer said that he had started the interview by asking to what extent Mr Dryden had any actual recollection and stressed that it was his recall that mattered for these purposes, as he did when he came to send the draft statement to Mr Dryden for signature. Mr Marland, Mr Roberts and Mr Tarratt all agreed that Mr Dryden had said that which was recorded of him in Mr Marland’s note even though Mr Dryden, when sent a copy of the statement drawn up on this basis, did not sign it and never replied to any correspondence asking him to review it, amend it and return it.

Mr Marland was taxed about the question of the company policy in relation to insurance. He agreed there had been no mention of the Ulster Flying Club or of any other hiring arrangement but there had been express mention of the company rule, by Mr Dryden as well as by others. The notes which he made include the following:

The allegations made by Godolphin in their letters which ultimately found their way into the pleadings were rejected by Mr Dryden at that meeting with some force. The note records:

Mr Marland was adamant and his note records that although there was general discussion about the policy of requiring others to insure when hire agreements were under consideration, Mr Dryden’s own position was entirely at one with the others as to the rule and his adherence to it.

In his oral evidence Mr Dryden disagreed that he had said that which Mr Marland recorded him as saying in his note or alternatively did not recall so saying:

I have no hesitation in accepting the evidence of Mr Marland and others present as to what Mr Dryden said at the meeting of 16^th August 2002. He would not however sign a statement to that effect but his evidence before me was unsatisfactory and unconvincing when maintaining that he did not tell Mr Marland what was recorded.

Once again, the documents emerging from Godolphin immediately following the accident are revealing. Kirsten Brown’s draft report approved by Mr Tyndal on 8^th June refers to NT in the following terms:

Moreover, in the Lynton Aviation Limited report reviewing existing operations and future options, the reference to NT talks of it in terms of a temporary lease that was in effect but without formal documentation.

In neither of these two reports is there any suggestion that either G-EDRY or NT were ever taken on trial with a view to purchase or long term lease. It is, as Counsel for Oxford submitted, inconceivable that in circumstances where an accident had just taken place and Mr Steward had been consulted about events, the version of events now maintained by Godolphin would not have appeared in these documents, if Mr Steward had related it at the time. The inevitable conclusion to be drawn is that the whole of Godolphin’s case about taking the planes on trial pending purchase or long term hiring, loans without the application of the terms of the draft hiring agreement and assurances relating to the extension of Oxford’s cover to protect Godolphin is a later invention.

The first occasion upon which Godolphin’s defences surface in any shape or form is a letter of 16^th October 2001 from Godolphin’s Solicitors in response to the claim made by Mr Marland as loss adjuster for the insurers. A letter of 8^th November 2001 is the first occasion upon which it is specifically said that Mr Dryden expressly told Mr Steward that Oxford had insurance in place which covered Godolphin’s hire of the aircraft until such time as a formal hire agreement was signed. It is significant that Mr Stewart and Mr Dryden both refer, in their statements, to a conversation between them in October 2001 in which Mr Dryden told Mr Steward that he believed that G-EDRY was on Oxford’s insurance and that NT was also insured by Oxford. According to them both, he also said that there was no question of Godolphin being responsible for insurance on NT because the plane was being trialed with a view to being sold.

I have already rejected the evidence advanced on behalf of Godolphin that Oxford was told that Godolphin was interested in purchasing either G-EDRY or NT and that the aircraft were provided on a trial basis. Mr Dryden did not suggest that he was told at the time of any potential trial of NT for sales purposes, although he was always looking for sales. He did not therefore support the truth of his statement in October 2001 about such a trial basis, whilst not resiling from the fact that he had made that statement in October. In answer to questions, he accepted that two weeks would be sufficient for a trial for a flying school and also for an operator whereas G-EDRY had been in Godolphin’s possession for nearly two months prior to being recalled and replaced by NT.

What appears to have happened is that both Mr Steward and Mr Dryden understood that Oxford was insured in respect of the hull of its planes and its liabilities regardless of the persons who used the planes. This was perfectly accurate but it did not of course mean that Godolphin was covered in respect of its liabilities when using such planes. When discussing the matter in October 2001, they confused the issues, which then gave rise to Godolphin’s defence.

Mr Steward may have had limited understanding of the difference. His understanding may have been revealed in a passage in cross-examination where he expressed the view that Oxford always had a block cover which was in operation for all their aeroplanes which operated for Oxford and "anybody they care to let fly their aeroplanes". He went on to say that otherwise he had been flying their aeroplanes under a great misapprehension for a few years. When it was pointed out to him that he had been flying their aircraft on their behalf rather than on behalf of a hirer he immediately recognised that this was a different scenario.

Similarly, during cross-examination of Mr Dryden, his initial position was that it was not uncommon for third parties to use Oxford’s planes on Oxford’s cover and for Oxford to insure when it loaned aircraft out. His understanding was that whenever Oxford lent aircraft, which he equated with short-term hire, Oxford would insure. When asked to point out in Oxford’s policy where the provisions were which dealt with third party use of the aircraft for their own purposes, he was unable to do so and accepted the distinction between an owner’s insurance and another’s insurance of liabilities on a given aircraft. This led to his admission that he would have needed to take advice on whether or not a third party would be capable of being covered by Oxford’s policies and that he might possibly be out of his depth if he sought to pass comment on this without taking such advice. Hence as he said later he would be unlikely to comment on cover for Godolphin’s liabilities.

I therefore find that Oxford did not, through Mr Dryden ever represent to Mr Steward that Godolphin’s liabilities were covered by Oxford’s insurance, whether before or after agreement was reached with Mr Tarratt as to the use of NT or as part of the arrangements relating to G-EDRY. I also find that there never was an agreement between them that this should be the case.

What plainly happened at Godolphin’s end was that, prior to taking possession of G-EDRY, the draft hire agreement was provided and sent on to Godolphin for approval and arrangement of insurance cover. Whatever discussions then took place between Mrs Carter and Mr Steward, there was an oversight in failing to secure the insurance which was required and to formalise the arrangement. Mr Steward may have thought that Oxford’s cover was good enough regardless, having heard that Oxford maintained block insurance for itself for third party use, without applying his mind to the question whether it covered Godolphin’s liabilities or he may equally have forgotten to take the matter up with Willis Corroon. Mrs Carter at Godolphin did nothing further and left on maternity leave in due course, whilst her temporary replacement may well not have been in a position to follow the matter through. Although Oxford was remiss in not pressing for a copy of the policy and for signature of the Hire Agreement, this is not altogether surprising since Mr Steward was well known to Oxford and a man whom they trusted. Oxford could not however have made any agreement on the basis of anything other than the draft Hire Agreement and specifically not on the basis of a statement of the kind attributed to Mr Dryden without careful consideration of it and agreement with their brokers. Nor could it have made any such representation for the same reason. This never happened.

In consequence, Godolphin is liable to Oxford in damages in respect of the loss of NT.

There is no dispute as to the value of the aircraft at £135,000. There can equally be no dispute as to the amount of hire due at £822.50 since Godolphin had the use of NT on the same terms as G-EDRY, namely the terms of the draft hiring agreement.

With regard to the claim for loss of profits, there was dispute. Godolphin maintained that notwithstanding Mr Tarratt’s evidence that the sales department investigated the possibility of buying a substitute Seneca III for the Training School’s use, a replacement could have been found in a matter of hours and therefore no effort was made to do so. As explained by Mr Tarratt however Oxford had made extensive investigations of the market in order to purchase NT in order to obtain a Seneca that was suitable for the Training School with the correct equipment and at the right price to make it financially viable for use and re-sale instead of leasing in such a plane. The further investigation required was therefore limited but I accept Mr Tarratt’s evidence that this was done. The Training School did lease in a plane instead of using NT. It was not suggested that the leasing in was an unreasonable course of action to adopt by way of mitigation, or if it was, I reject that suggestion. In consequence the loss suffered by Oxford as a result of having to hire in a plane, given that the operating costs were otherwise identical, is represented by the lease charges of £172,937.50, which Oxford is entitled to recover as loss naturally flowing from the destruction of its profit earning chattel.

The last item claimed is the sum of £11,402.79 which represents survey fees paid by the insurers to surveyors who investigated the accident. The point taken by Godolphin is that this does not represent a loss to Oxford but a loss to its insurers as can be seen from the identity of the addressee of the invoices and the fact that payment was made direct by insurers. In the absence of evidence of any liability on the part of Oxford for these sums, Godolphin must succeed on this limited point albeit that the sum may well prove to be recoverable as costs rather than as damages.

For all these reasons Godolphin are liable to Oxford in the sum of £308,760.00. Oxford are entitled to Judgment in respect of that sum and interest thereon, whilst Godolphin’s Counterclaim in respect of sums paid out to Mr Cochrane in respect of his personal injuries claim must be dismissed. Oxford are also entitled to a declaration in relation to indemnity in respect of further claims arising from the accident.

So far as interest is concerned, Oxford pleaded an implied term that by reason of clause 10 of its Conditions of Sale which were set out on the reverse of its invoices, Godolphin was liable to pay interest at 12% on any sum unpaid within 28 days of the submission of the invoice under the hire agreement. There was evidence of the course of dealings on the basis of these conditions of Sale, by virtue of the three prior invoices for G-EDRY, and I am satisfied therefore of the basis of this element of the claim so far as concerns the hire due. So far as the other elements of claim are concerned, interest will be paid at base rate plus 1%.

I therefore award interest on the sum of £135,000.00 from September 20^th, 2001 to the date of entering Judgment at base rate plus 1%. I have selected the date of September 20^th, 2001 as the date when insurers paid Oxford the value of the aircraft.

I award interest on the sum of £172,937.50 at the same rate from 1^st February 2002 until judgment, because it represents an approximate median date for the continuing losses between 1^st December 2000 and 1^st April 2003 in respect of the lease charges.

I award interest at 12% on the sum of £822.50 from 23^rd November 2002, being 28 days from submission of the invoice for hire charges on NT.

It seems to me that costs must inevitably follow the event unless there are issues of which I am unaware. Submissions can be made in relation to this after handing down this Judgment. Equally, I will listen to any submissions on the form of relief to be given in respect of the declaration sought.