Jet2.com Ltd v Blackpool Airport Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeJUDGE MACKIE QC
Judgment Date15 June 2011
Neutral Citation[2011] EWHC 1529 (Comm)
Docket NumberCase No: 2010 Folio 1294
Date15 June 2011

[2011] EWHC 1529 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

His Honour Judge Mackie Qc

Case No: 2010 Folio 1294

Between:
Jet2.com Limited
Claimant
and
Blackpool Airport Limited
Defendant

Mr Philip Shepherd QC and MrAdam Cloherty (instructed by Bird and Bird LLP) for the Claimant

Mr Michael Crane QC and Mr Paul Sinclair (instructed by Eversheds LLP) for the Defendant

Hearing dates: 29, 31 March 2011

JUDGE MACKIE QC

JUDGE MACKIE QC:

1

This has been the expedited trial of a dispute about the hours when the Claimant airline may operate at the Defendant's Airport. The main issue is the interpretation of the agreement between the parties. There is an alternative claim of estoppel by convention.

The Parties and the Background

2

The Claimant ("Jet2") is a low cost airline with a fleet of over thirty Boeing 737 and 757 aircraft operating scheduled flights from eight airports in the United Kingdom, mainly to European leisure destinations. One of those airports is Blackpool which is owned and operated by the Defendant ("BAL").

3

Blackpool Airport has been making operating losses for some years but investors have seen it as having potential. Thus in 1994 City Hopper Airports Limited bought ninety five percent of the shares in BAL's parent company, Blackpool City Council owned the rest. BAL then sought to attract new carriers. One of these was Jet2 with whom BAL entered into a 15 year agreement on 23 September 2005 ("The Agreement"). For four and a half years Jet2 operated some flights, particularly at peak times in summer, outside the airport's promulgated operating hours and did so with the support and co-operation of BAL. 'Promulgated' hours are those published in the UK Aeronautical Information Publication ("UK AIP"). The hours, which I shall refer to from now on as 'normal hours', are 0700 to 2100 which become 0600 to 2000 in summer.

4

In May 2008 ninety five percent of the shares in BAL's holding company were acquired by a subsidiary of Balfour Beatty Plc. The airport was still making a substantial operating loss and the new team was understandably keen to eliminate or at least reduce that loss. Jet2 had based one aircraft at Blackpool at the outset of the Agreement and in time added a second. BAL wanted Jet 2 to add a third aircraft. Jet 2 would have liked to have done this but eventually concluded, despite the fact that its business was flourishing at other airports, that a third aircraft at Blackpool would not be viable particularly in the midst of a serious recession in the leisure travel market. BAL was disappointed. There were other problems for BAL. Monarch had left Blackpool and Ryanair, BAL's biggest customer, also departed in 2009 at the same time as BAL introduced a £10 per passenger Airport Development Fee.

5

Commercial tension between the parties increased during the Spring and Summer of 2010 following the appointment of a new airport director who started a review of all BAL's contracts as part of a wider drive to improve the finances. Things came to a head when on 22 October 2010 BAL told Jet2 that from midnight on 29 October 2010 it would not accept departures or arrivals scheduled outside normal hours. At short notice two of Jet2's flights had to be diverted from Blackpool to Manchester causing considerable inconvenience to passengers and expense to Jet2.

6

Jet2 applied for and was granted injunctions broadly requiring BAL to allow Jet2 to operate the same flight schedules in the winter of 2010, as for winter 2009. The matter came before Hamblen J on 4 November 2010 at short notice and there was a one day hearing before Beatson J on 18 November. The details are set out in the judgments particularly that of Beatson J who heard full argument. The court ordered an expedited trial because of the urgency. The urgency fell away following BAL's decision, recorded in their solicitors' letter of 21 March 2011, on the eve of trial, not to implement the proposed restrictions currently prevented by the injunction, until the end of the summer season which started on 27 March 2011 and concludes on 29 October. BAL stated that its decision was a voluntary concession.

7

The judges dealt, amongst other things with whether there was a serious issue that BAL had acted in breach of contract in taking this action. I am concerned first with whether there was a breach, secondly with whether Jet2 is entitled to a declaration and thirdly with whether there has been a relevant estoppel by convention. The trial has involved consideration of nineteen thick bundles of documents and live evidence from four witnesses for Jet2 and six for BAL. Each party also points to what it sees as the deafening silence from one potential witness for the other. All the evidence was extremely interesting but much material in the witness statements, in particular the perception by individuals of the meaning of the contract in dispute was irrelevant. Much time has been spent on articulation by the parties of their accumulated grievances against each other arising from the operation of the Agreement despite its limited relevance to the legal issues.

8

Early in the trial I invited the parties to discuss settlement urgently. I rarely do this in a dispute between sophisticated parties with top rate legal representation. However the Agreement is a long term contract set out in a relatively short letter prepared, with little legal assistance. It is expressed in broad, but not uncertain, terms and includes phrases such as "reasonable endeavours". The court can and will answer questions based on a particular state of affairs but it seemed to me unlikely that much general guidance of future use could be provided given my provisional view (which remains unchanged) that interpretation of the Agreement is very fact sensitive. In time new factors arise and the relative importance of current circumstances may change. As a result this case may prove to be little more than a practice run for the next one. The parties apparently had some discussions without success.

The Agreement

9

The Agreement of 23 September 2005 is on Jet2 notepaper signed by Mr Philip Meeson, Chief Executive of the company which is now Jet2, addressed to Mr Paul Whelan of BAL and of City Hopper Airports. The letter "sets out the terms of the agreement…in relation to low cost services from and to Blackpool Airport" and then provides as follows:

1. Jet2. com and BAL will co-operate together and use their best endeavours to promote Jet2. com's low cost services from BA (ie Blackpool Airport) and BAL will use all reasonable endeavours to provide a cost base that will facilitate Jet2. com's low cost pricing.

Jet2. com proposes to commence a service between Belfast International Airport and BA as soon as practicable and to base one B737–300 aircraft, or its equivalent, at BA from the commencement of the Summer operating season, 26 March, 2006, and to operate and build its fleet at BA in accordance with demand for an initial period of 15 years from the date of the first service by Jet2. com from BA and the terms set out in this Letter Agreement will, except as otherwise stated, apply for the 15 year period.

Not later than three months prior to the expiry of such initial period of 15 years, senior representatives of the parties of this letter agreement will meet in good faith to review and agree a new Charging Scheme which will enable Jet2. com to continue to develop its base at BA and increase its low cost services from BA.

2. In consideration of the investment that Jet2. com is making in offering such services from BA, BAL will make available the following pricing and other benefits to Jet2. com in relation to BA.

(a) (i) BAL will levy airport charges on Jet2. com on the basis of the Charging Scheme as set out in Appendix A for the initial period of 15 years commencing on the date of Jet2. com's first flight from BA. These charges include all BAL's aircraft movement, handling and passenger charges to Jet2. com including landing, navigation, marshalling etc., parking, passenger facilities charges, passenger security charges, security, baggage x-ray and security screening, baggage handling, bussing, CUTE and check-in desk charges.

For the avoidance of doubt, these charges do not include charges for the provision of labour for passenger check-in and boarding supervision as is typically provided by handling agents.

(ii) In the event of increased terrorist activity resulting in further Government imposed security restrictions, BAL will reserve the right to pass on to Jet2. com any additional costs reasonably incurred by BAL.

(b) BAL will provide a contribution towards Jet2. com's marketing expenditure to be calculated in accordance with Schedule B, such payment to be paid quarterly in arrears following Jet2. com's first flight of its BA based aircraft…"

10

There are then further sub clauses (c) to (m) relating to advertising and public relations and to the details of car parking passes, ticket sales and office accommodation, security, aircraft stands, long-term car parking and jet fuel pricing. These also entitle Jet2"without charge to self-handle its aircraft operations, including check-in."

Clause 3 deals with confidentiality. The other relevant clauses are 4 and 5 which provide as follows:-

"4. The terms set out in this Letter Agreement represent the whole agreement between BAL, CHAL and Jet2. com in relation to their subject matter and cannot be changed except by a written document signed by all such parties.

5. In the event of any inconsistency between the terms of this letter agreement and the BA conditions of use, the terms of this letter agreement shall prevail to the extent of that inconsistency. Nothing in this letter agreement is to affect the right of Jet2. com to receive from time to time whatever...

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