Ryanair Ltd v SR Technics Ireland Ltd
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE GRAY,Mr Justice Gray |
| Judgment Date | 20 December 2007 |
| Neutral Citation | [2007] EWHC 3089 (QB) |
| Docket Number | Case No: TLQ/07/0669 |
| Court | Queen's Bench Division |
| Date | 20 December 2007 |
[2007] EWHC 3089 (QB)
The Honourable Mr Justice Gray
Case No: TLQ/07/0669
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Hannah Brown (instructed by Nabarro Solicitors) for the Claimant
Alec Haydon (instructed by Speechly Bircham LLP) for the Defendant
Hearing dates: 5, 6, 7, 10, 11, 12, 14, 17 & 18 th December 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Gray:
The parties and the issue which arises for decision
The Claimant in the action, Ryanair Limited, is the well-known low fare airline. It is an Irish company which operates mainly in Europe.
The Defendant, SR Technics Ireland Limited (“SRT”), is the Irish subsidiary of a group whose holding company is incorporated under the laws of Switzerland and is based in Zurich. The business of SRT is the provision of aircraft maintenance services in Ireland and in particular in Dublin.
These proceedings relate to an agreement which was entered into between SRT (then called FLSA Ireland Limited) and Ryanair for the provision by the former of aircraft maintenance services at Dublin Airport. In this judgment I will where possible, for the sake of simplicity, refer to the company throughout as SRT. One of the provisions of the contract was that SRT would make available to Ryanair for a period of 15 years a section of hangar space at Dublin Airport. Since SRT leased its hangar space at Dublin Airport from the Dublin Airport Authority (“the DAA”), it was necessary for SRT to obtain the consent of the DAA to any lease or licence which SRT might grant to Ryanair.
The central question which I have to decide in this case is whether the failure of SRT to obtain the consent of the DAA to the grant of a licence for Ryanair to occupy hangar space at Dublin Airport, or in the alternative the failure to make available to Ryanair hangar space at that airport, constitutes a breach on the part of SRT of its contractual obligations towards Ryanair. The further or alternative question which may arise for decision is whether SRT was contractually entitled to revoke Ryanair's licence to occupy the hangar space. If these answers are resolved in favour of Ryanair, an issue arises whether Ryanair is entitled (as it claims) to relief in the form of an injunction restraining SR Technics Ireland Limited from revoking Ryanair's licence to occupy the hangar space and/or from refusing to make available to Ryanair the said hangar space or whether (as SRT contends) Ryanair's remedy lies in damages only.
Statements of case
The particulars of claim were amended shortly before the commencement of the trial on 4 December 2007. In its original formulation Ryanair's claim was for breach, firstly, of an Novation Agreement dated 30 December 2004, whereby the rights and obligations of FLSA under an earlier contract dated 3 March 2000 and identified as “contract number 1747” were transferred to SR. The Novation Agreement provided that the terms and conditions of the earlier contract should apply mutatis mutandis.
There were two Side Letters to the Novation Agreement, each of them dated 30 December 2004. The first, Side Letter 6, provided that the aircraft maintenance services were to be performed by SRT at its Dublin facility. Reference was also made in Side Letter No 6 to the provision to Ryanair of a sub-lease of an area of Hangar 1 at Dublin Airport. The head lessor of that hanger and indeed of most, if not all, the buildings at Dublin Airport.
No dispute arises as to the terms and effect of Side Letter No 6 which was in effect largely superseded by Side Letter 6A (“SL6A”).
Paragraph 3 of SL6A provided that SRT would licence Ryanair for a period of 15 years (with an option by mutual consent to extend by a further 15 years), subject to the consent of the DAA to be recorded in a written Hangar Licence Agreement (“HLA”), to occupy from 1 April to 30 September each year a section of Hangar 1 at Dublin Airport delineated in the drawing attached and from 1 October to 31 March a similar alternative area in another hangar occupied by SRT.
The terms of paragraph 3 of SL6A need to be set out in full:
“Paragraph 6 is hereby deleted in its entirety and the following is substituted therefor:
6.1 “for a period of 15 years with an option by mutual consent to extend by a further 15 years and subject in both circumstances to the consent of [SR Technics Ireland's] Landlord(s) to be recorded in a written licence agreement (“Hangar Licence Agreement”) between the parties, [SRT] shall licence [Ryanair] to occupy from 1 April to 30 September each year during the term of the Hangar Licence Agreement, the section of Hangar 1 Dublin Area delineated in the drawing attached at Appendix 1 and from 1 October to 31 March each year during the term of the Hangar Licence Agreement [SRT] will provide a similar alternative area in one of its other Hangars at Dublin Airport which area is to be agreed between the parties (in each such case the “Designated Area”).
Upon [SRT's] receiving notice to quit occupation of Hangar 1, [Ryanair] shall vacate Hangar 1 forthwith. In such circumstances, subject to the terms of Hangar Licence Agreement, [Ryanair] shall be only entitled to occupy part of Hangar 2, 3, 4 or 5 for the period from 1 April to 30 September each year during the term of the Hangar Licence Agreement.
…
12 “Vacating Hangar 1 (New Paragraph)
It will be a term of the licence that upon [SRT] receiving notice to terminate occupation of Hangar 1, [Ryanair] shall vacate Hangar 1 forthwith In such circumstances, subject to the terms of the Hangar Licence Agreement, [Ryanair] shall be entitled only to occupy a similar alternative area (designated at [SRT's] sole discretion) in any one of Hangars 2, 3, 4 or 5 for the period from 1 April to 30 September each year during the term of the Hangar Licence Agreement and [SRT] shall have no obligation to provide Ryanair with any other accommodation or facilities…”.
Ryanair initially claimed that, since the date of execution of Side Letters 6 and 6A, the parties acted in accordance with the terms of the proposed licence agreement, in that Ryanair had the use and occupation of a bay similar to that identified in SL6A, and had been invoiced by SRT in respect of its use of that hangar space from 1 January 2005 to 31 January 2007. Ryanair further relied on the fact that, once it obtained access to the bay, it paid to SRT a sum in excess of £1million.
Ryanair alleged that SRT breached SL6A (a) by failing to seek the consent of the DAA to the grant of a licence to Ryanair of less than 15 years duration and (b) by failing to use all reasonable efforts to obtain the consent of the DAA to the grant of a 15 year licence to Ryanair and (c) by failing to use all reasonable endeavours to obtain the consent of the DAA to the grant of a licence to Ryanair of less than 15 years duration and (d) by purporting to terminate Ryanair's licence with effect from 30 September 2007.
Ryanair alleged in the alternative in the original Particulars of Claim that SRT was estopped from refusing to make available to Ryanair the hangar space stipulated for a period of 15 years.
By the late amendments to which I have referred Ryanair advanced the case that, on the true construction of paragraph 3 of the SL6A, SRT was under an obligation to seek the consent of the DAA to the grant of a 15 year licence and, if consent for a licence of that duration was not forthcoming, to seek consent to the grant of a licence to Ryanair of a shorter duration.
An alternative and fundamentally altered case was also advanced in the Amended pleading: the new case was largely based on an unsigned letter of 12 November 2004 emailed to Mr Hickey, the Director of Engineering at Ryanair, by Mr Declan O'Shea on behalf of SRT. This letter contained an assurance on the part of SRT that it was its intention to seek a duration of 15 years for the HLA but that, in the event that such an agreement were to be issued for a term of less than 15 years, SRT would upon expiry of termination of such licence seek for a renewal. Ryanair alleged that Mr Hickey indicated his satisfaction with the proposed arrangement and on the same date confirmed that Ryanair would pay the agreed sum of £1,071,595 within 1 calendar month of finally gaining access to the hangar in Dublin.
In those circumstances Ryanair alleged in the amended particulars that the assurance given in the letter of 12 November 2004 amounted to a collateral contract between the parties or gave rise to an estoppel. Ryanair further alleged that SRT was under the same obligation by virtue of an implied term of SL6A. In the further alternative it was pleaded that there was an implied term of SL6A that SRT would use all reasonable efforts to obtain the consent of the DAA to the grant of a 15 year licence to Ryanair.
Ryanair alleged that SRT breached the collateral contract and/or the implied term by reason of the failures identified at (a), (b) and (c) in paragraph 10 above.
Although naturally concerned at the lateness of the amendment, SRT did not oppose it; nor did SRT seek an adjournment of the trial. The case advanced on behalf of SRT in its original Defence was that the parties were unable to enter into the written HLA because the DAA did not consent to a licence period for a period of 15 years. SRT averred that it was able informally to allow limited use of hangar space by Ryanair on an ad hoc basis. That remained the position after Side Letters 6 and 6A had been agreed.
As to paragraph 3 of SL6A, SRT...
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