Long lease of airport largely used by non-fare-paying business passengers – Claimant lessee seeking to promote scheduled services – Whether permissible under terms of user clause – Whether obvious from lease that certain words mistakenly omitted – Whether restrictive interpretation consistent with other provisions of lease – Whether statements made during negotiation admissible as aid to interpretation
The claimant held a long lease of Biggin Hill Airport, which was owned by the defendant council. The council had acquired the airport in 1974 with the declared purpose of preserving the environment and ensuring that the airport was not a burden on the rates. At the time of acquisition, the airport (which had been a military airfield until 1954) was operated by a private company as a home for light executive aircraft. The airport continued to be so operated until 1981, when the council entered into a long-term operating agreement with a jointly-owned company. The agreement, which could be determined upon 12 months’ notice after 10 years, contained various restrictions upon the size of aircraft and the number and timing of aircraft movements. There was no prohibition against scheduled services, although no such services operated at that time.
In 1985 the council adopted a borough plan that, while restating the need for strict noise controls, announced the council’s intention to encourage the provision of facilities related to “the business and executive use of the Airport”, including proposals for fixed-base business and executive operations, air taxi services, aircraft charter, aircraft sales, and club and training uses. Specifically to be encouraged was the provision of a “modest development” related to passenger handling, hotel and restaurant facilities, these being seen as “an integral part of the development of a business aviation function”.
In the years that followed, the council became increasingly concerned about the economic viability of the airport. In July 1988 they made a new agreement, with a different operating company, that specifically prohibited the operation of scheduled passenger services without the council’s consent. In 1993 the council consented to the introduction of a small-scale scheduled passenger service between the airport and Le Touquet. Plans for similar services to other destinations (not implemented) were then under active consideration.
In the same year, the council entered into negotiations with a private company for the disposal of the airport by way of long lease to the claimant. In May 1994 the claimant took a 125-lease at a rent partly geared to the profitability of its future operations. On the same date, the council joined with the claimant and the former operating company in executing a business transfer agreement whereby the claimant acquired the business of running the airport together with various assets.
The lease prohibited any use other than the “Permitted User”, which, by clause 1.8, was defined as “Airport providing for business aviation flight training and private flying and other airport and aviation uses (including one air fair or one air display in each year of the term)”. The only reference to scheduled services was contained in the third schedule to the lease, which modified the permitted weekend operating hours to allow for “an operator based at the Airport to operate a scheduled service to France” (the schedule 3 service). Both the lease and the business transfer agreement required the claimant to obtain and maintain all necessary licences from the Civil Aviation Authority. However, the latter document declared that the licence to operate the airport could be “a public use or ordinary Civil Aviation Authority Licence”.
In July 1997 the claimant obtained planning permission for a runway extension, having made clear in its application that it anticipated increased use for scheduled passenger services. The council maintained (in their capacity as landlords) that such operations, with the exception of the schedule 3 service, fell outside the permitted user. In particular, it was argued that the term “business aviation” did not include flights, other than an air taxi or helicopter service carrying businessmen, that carried any fare-paying passengers. The claimant sought a declaration that it was free to permit scheduled and chartered services from the airport.
Held: The declaration was granted.
1. In construing the lease, the court was bound to disregard what was said in the course of negotiations (see per Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at p1384. Accordingly, the claimant could not, save possibly in one instance noted below, point to the fact that the council had not responded adversely to the claimant’s strongly-expressed intention to encourage scheduled services.
2. The provision for the schedule 3 service could not be read as an exception to a general prohibition in clause 1.8, unless the omission of appropriate words of exception in the latter clause could be shown to be a mistake. As the council were not seeking to rectify clause 1.8, the presence of such a mistake had to be obvious from the terms of the document itself: see, generally, Lewison on Interpretation of Contracts (2nd ed) pp227-8, citing North Circular Properties Ltd v Internal Systems Information Ltd unreported 26 October 1984, and compare the obvious mistake corrected in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84. There was nothing to indicate an obvious blunder on the part of the draftsman, who had, apparently, deliberately chosen not to repeat the express prohibition that had been inserted into the 1988 agreement. To find such a prohibition would also be inconsistent with the obligation to maintain a public licence for the airport, as an airport so licensed could not accept one scheduled service without accepting all, subject to availability and compliance with its operating conditions: see para 3(1) of the Civil Aviation Authority Regulations 1991, as considered in R v Coventry City Council, ex parte Phoenix Aviation [1995] 3 All ER 37.
3. Given the factual background, in particular the balance of financial and environmental considerations as they stood in April 1994, it was very unlikely that the council would have wished to impose a ban upon scheduled services or individual fare-paying passengers. Nor was the court constrained by the wording of clause 1.8 to find otherwise. The inclusion of air fairs among the listed uses precluded any argument that the meaning of “other airport and aviation related uses” should be narrowed down by applying the eiusdem generis rule: see Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240.
4. If, contrary to the view taken above, the lease had indicated a mistake on the part of the draftsman, then it would have been at least questionable whether the rule in Prenn v Simmonds went so far as to exclude negotiation evidence showing that no such mistake had been made.
5. In the light of the above, it was not necessary to determine the precise meaning of “business aviation”. However, the documents produced to the court showed the expression to be an elastic and imprecise term, the meaning of which depended upon its context.
Guy Fetherstonhaugh (instructed by Blake Lapthorn, of Fareham) appeared for the claimant; Stephen Moriarty QC and Marcus Smith (instructed by the solicitor to Bromley London Borough Council) appeared for the defendants; Matthew Hutchings (instructed by Richard Buxton, of Cambridge) appeared for a group of Bromley residents.
Alan Cooklin, barrister
