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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Biggin Hill Airport Ltd v London Borough Of Bromley  EWCA Civ 1089 (11 July 2001)
Cite as:  EWCA Civ 1089
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
(Mr Nicholas Strauss QC sitting as a Deputy Judge
of the Chancery Division)
Strand, London, WC2A 2LL
Wednesday 11th July 2001
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE DYSON
| Biggin Hill Airport Ltd
|- and -
|London Borough of Bromley
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Stephen Moriarty QC and Mr Marcus Smith (instructed by London Borough of Bromley Legal Dept for the Appellant)
Crown Copyright ©
LADY JUSTICE ARDEN:
"airport providing facilities for business aviation flight training and private flying and other airport and aviation related uses (including one air fair or one air display in each year of the Term or such greater number as may have been previously agreed in writing by the Landlord (such approval not to be unreasonably withheld))."
I will call this clause "the permitted user clause". By clause 5.9.1, BHAL covenanted not to use the airport other than for the permitted user. The permitted user clause falls into four parts: airport providing facilities for "business aviation" ("limb A"); airport providing facilities for flight training ("limb B"); airport providing facilities for private flying ("limb C"), and airport providing facilities for other airport and aviation uses ("limb D"). The dispute revolves round limbs A and D of the permitted user clause. Essentially the judge's construction (reflected in the declaration contained in his order) means that the airport can be used for any form of flying whatsoever. That construction raises one of the principal issues on this appeal. I summarise the principal issues in paragraph 52 below.
Biggin Hill Airport - location and use
Negotiations for the lease
The main agreements
BHAL's concession concerning the permitted user clause and withdrawal of this concession at trial
"(b) The claimant's contention is that it is open to it to operate a scheduled or chartered flight from the premises if the primary purpose of the service is the transportation of passengers to a recognised business destination for business purposes.
(c) "Recognised business destinations" are capital and regional cities of a size sufficient to support a significant business community, or other centres with recognised conference facilities. The claimant instances Paris, Brussels, Dusseldorf, Rotterdam, Cologne, Bonn and Eindhoven (without intending in anyway to confine itself to those cities)."
Expert evidence as to the meaning of "business aviation"
Judgment of Nicholas Strauss QC
(1) scheduled services were permitted subject to the conditions set out in the June 1991 recommendations of the working party though the Le Touquet service was the only scheduled service in operation at the time.
(2) AUK had granted licences to operate air charter, air taxi and helicopter services on the terms of the AUK agreement. These were not limited to travel for business purposes, but the judge found that "for the most part they were for corporate customers and businessmen". However, as already explained, he held that this was not exclusively so because surplus seats were sold off to whoever wanted them and that air taxi and helicopter services must from time to time have taken passengers travelling for leisure purposes. The judge does not identify any factual basis for this inference and accordingly, with respect to the judge, use of aircraft operating from Biggin Hill for leisure purposes in this way was either speculation on his part or based on such slight evidence that it may be properly inferred also that such use was an insignificant part of the use of the airport as a whole. In any event, there is no finding that Bromley would have known of this business.
(3) Biggin Hill took flights re-directed from Gatwick in bad weather after May 1994. Bromley contended that it was not aware of this, but the judge held that one official had known about such business at some stage, though not apparently before the lease was granted. In addition the judge held such diversions were occurring at the date of the lease. Mr Walters thought that it was likely that such diversions were occurring at the date of the lease. The judge gave two reasons for his finding: (1) that the AUK agreement prohibited scheduled services "from" the airport only and (2) "I think that if this was a type of business which Mr Walters had had to develop from scratch, he would have remembered doing so." (Judgment, para.56(3)). There was therefore no contemporaneous or documentary evidence for this inference, and it is not clear to me that point (2) was ever put to Mr Walters. Again, this inference seems to me to have been founded on a tenuous basis, but in any event there is no finding that Bromley knew about this type of business when the lease was entered into.
(4) Most of the flying activities were private and recreational flying.
" My Lords, I will say at once that I prefer the approach of the learned judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v Simmonds  3 All ER 237 at 240–242, 1 WLR 1381 at 1384–1386 and Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co  3 All ER 570, 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of 'legal' interpretation has been discarded. The principles may be summarised as follows:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd  3 All ER 352,  2 WLR 945).
(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common-sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios  3 All ER 229 at 233, AC 191 at 201:
'… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.'"
(i)The restriction in schedule 3 to the lease on the operating hours of the airport referred to "a scheduled service to France". The judge held that this reference indicated that scheduled services must be within the permitted user clause, and since limb D could cover scheduled services there was no evidence of an obvious mistake which the court could remedy by appropriate construction (Judgment, para. 89)
(ii) Schedule 3 referred to "a" scheduled service to anywhere in France. This was not just an exception for an existing service (Judgment, para. 90). (I will call this and the first point "the schedule 3 points").
(iii) There was an express ban in the AUK agreement on scheduled services. The judge held that it was clear that much of schedule 3 was directly copied or adapted from the provisions of the AUK agreement, "and anyhow it would make no sense to replace a clear specific provision with the clause 1.8 wording". The obvious inference was that the ban "was not mistakenly omitted, but deliberately omitted because it was no longer to apply." (Judgment, para 91). (I will call this "the AUK agreement point").
(iv) Bromley had relaxed its policy as regards scheduled flights after 1991. Therefore it was "extremely unlikely" that Bromley would wish to ban scheduled services subject only to one exception and far more likely if a ban was to be imposed at all that it would have been subject to exceptions established in 1991 (Judgment, para 92). (I will call this "Bromley's scheduled services policy point").
(v) The judge regarded it as unlikely to have been intended that a prohibition on the scheduled services should have been "set in stone". Schedule 3 to the lease permitted Bromley to adapt the operating criteria subject only to a challenge on restricted grounds which were subject to arbitration. (Judgment, para.93). (I will call this "the flexibility point").
(vi) Clause 3.1 of the business transfer agreement gave BHAL an option to maintain either a public use licence or an ordinary licence for the airport. A public use licence would have required it to make facilities available to all persons on equal terms and conditions subject to the facilities being available (see R v Coventry CC ex parte Phoenix Aviation  1AER 37, 50-1). This would suggest that all scheduled services were permitted (Judgment, para.94). (I will call this "the public licence point").
(vii) By the business transfer agreement, Bromley sold the business and goodwill of the airport to BHAL. The effect of Bromley's construction of the permitted user clause was that the scope for scheduled services was significantly reduced and diversions from other airports had to cease. Tenants would have to be told not to accept bookings for leisure purposes and to ensure that no seats were sold to individual passengers paying their own fares. In the judge's view, "an interpretation of the lease which would require the lessee to start off its relationship with its sub-tenants in this way [was] unlikely to be right" (Judgment, para 85). (I will call this "the point about Old BHAL's goodwill").
(viii) Bromley was concerned about its financial exposure because of the airport which had never been profitable. BHAL was assuming an obligation to pay a substantial rent and undertaking substantial capital expenditure in connection with the business which had never in the past operated profitably. This made it unlikely in the judge's view that the parties would have intended to impose a restriction which would make it more difficult to operate profitably (Judgment, para. 97). (I will call this "the financial viability point").
(ix) The construction for which Bromley contended was potentially impractical. Bromley submitted that the restrictions could be noted in Air Pilot, which publishes the operating conditions of airports. However in the judge's view it was very unlikely that the airport's tenants, let alone the operators of occasional flights wishing to use the airport, would be prepared to vet passengers in this way. (I will call this "the practicability point").
(x) On the evidence there was no perceived need in 1994 for a ban on scheduled services or on passengers flying for non-business purposes. The restrictions on hours, permissible airport aircraft, noise levels and numbers of movements together with the length of the runway would preclude any form of mass holiday traffic. Moreover the council's internal memorandum of October/November 1993 suggested that "the environmental objective" had been "largely achieved". The judge was not concerned about increased demand on the surrounding roads if scheduled flights (which would carry many more passengers) were started. The judge found that if there was an increase in volume of scheduled services there would have to be further development of the airport buildings for which planning permission would be needed. Further, in his judgment, it was inconceivable that if the councillors' concerns on this point [sc. road congestion] had been known to those who were negotiating the terms of the lease, the specific ban on scheduled services would have been dropped from the operating criteria. As I understand it, what the judge was saying here was that he did not accept that Bromley was concerned about road congestion in 1994 (Judgment, para.101). (I will call this the "no perceived need for a ban point").
Issues on this appeal
(i) Should the judge have permitted BHAL to resile from the concession it made as to the exclusion of scheduled services for leisure purposes from limb D?
(ii) Do the words "other airport and aviation related uses" in limb D of the permitted user clause mean that any scheduled or chartered services to or from the airport for any purposes are within the permitted user clause?
(iii) On the true construction of the permitted user clause, does the phrase "business aviation" embrace any chartered or scheduled service whose predominant purpose is to carry passengers travelling for the purpose of the employment or business or is it confined to flights by aircraft owned or chartered by a company or other business and undertaken for business purposes and so did not include flights carrying individual fare-paying passengers?
(iv) Should the judge have held that Bromley was estopped from relying on the correct meaning of business aviation?
The appellant's submissions
The concession issue
"Other airport and aviation related issues"
"I see the force of that argument, but I have never found the presumption against superfluous language particularly useful in the construction of leases. The draftsmen traditionally employ linguistic overkill and try to obliterate the conceptual target by using a number of words or phrases expressing more or less the same idea. I cannot, therefore, rely on the language alone but must, as it seems to me, construe the words by reference to the commercial effect which would be produced by one construction or the other."
Mr Moriarty submits that that case was very different from the present case. Private flying, business aviation and flight training are not synonyms and therefore this is not a case of "obliterating the conceptual target".
The respondent's submissions
The concession issue
"Other airport or aviation related uses"
The concession issue
The interpretation issue
"Other airport and aviation related uses"
"other uses related to an airport or related to aviation"
"As a matter of plain English, any flying activity, including a scheduled flight, involves a use of the land which is related to aviation and related to the airport" (Judgment, para.104).
For my part I do not consider that aviation, which is a "flying activity", can logically constitute a use which is related to aviation. A use related to aviation is one ancillary or connected with it, not aviation itself. Likewise I reject as improbable an interpretation of the permitted user clause which leads to any form of flying being "a use related to the airport". This is unlikely to have been the meaning in view of the specific mention of business aviation, flight training and private flying. However helpful the factual background in interpretation is, it cannot dispense with the need to pay close attention to the words used in the relevant document.
(3) The AUK agreement point: As the court cannot enquire into the parties' subjective intentions, it cannot enquire into the reason why the draftsman of the lease copied some parts of the AUK agreement and not others, or draw inferences therefrom. In any event the AUK agreement was for a different purpose (see generally para. 96 of the Judgment) and between different parties and accordingly the weight to be given to it is in my judgment small. There was no permitted user clause in the AUK agreement.
(4) Bromley's scheduled services policy point: As the court is not concerned with the subjective intentions of the parties, the correct approach is not to ascertain the improbability of an intention on the part of Bromley to ban scheduled services. The relaxation of the policy of prohibiting scheduled services in 1991 is however a matter which can be taken into account as part of the factual matrix. It is a relevant consideration but without some basis in the lease it is not a determining one.
(5) The flexibility point: The fact that scheduled services could be regulated under schedule 3 does not mean that the parties permitted them. Moreover the permitted user clause was not "set in stone" as the judge held: the parties could vary the permitted user clause if they agreed to do so and (although this point has not been argued) provisionally it seems to me that Bromley's refusal to do so would be judicially reviewable.
(6) The public licence point: This is a highly technical point and in contradistinction to the judge I consider the weight to be given to it in the context of a commercial arrangement is slight given that BHAL have never had a public use licence. If the permitted user clause does not otherwise permit scheduled services the clause permitting BHAL to have a public use licence could not do so.
(7) The point about Old BHAL's goodwill: This point turns solely on the question of whether Old BHAL's goodwill included goodwill arising out of the diversion of Gatwick-bound scheduled services, for which there was only slight evidence (namely Mr Walter's oral evidence that it was likely that diversions had occurred before the lease was granted (Judgment, para. 56(3)). There is little substance in this point if the lease permitted, as in my view it did, the Le Touquet service, the only scheduled service operated from the airport at the time of the agreement. The weight to attach to this point is therefore in my judgment not very great.
(8) The financial viability point: The financial viability of the airport is obviously a relevant consideration but if scheduled services were essential the permitted user clause would not have been drafted in the way that it was. It is to be noted that even Mr Walters did not consider that it had the meaning which the judge held that it had. Moreover, if it turned out that BHAL could not operate the airport profitably without operating scheduled services, the parties could agree to vary the permitted user clause.
(9) The practicability point: The problem of enforcing restrictions would exist with restrictions imposed under schedule 3: it was not unique to the way the permitted user clause was drafted. If there was such a problem, it would have been a problem under the AUK agreement but there was no evidence of that to which we have been directed.
(10) The perceived need for a ban point: The court is not writing the lease for the parties; it is only ascertaining its meaning. Moreover the court does not know if the parties discussed this issue in negotiations. Certainly scheduled services are not expressly permitted in the lease, save for the Le Touquet service.
1) the fact that, with some minor exceptions, the principal business of the airport at the time of the lease (apart from private or recreational flying) was business aviation;
2) the fact that neither Bromley nor Mr Walters thought that the lease permitted BHAL to carry out unrestricted scheduled services; and
3) the fact that Bromley was not a normal commercial landlord seeking to maximise profits for its shareholders. A decision to permit activities at the airport would not therefore be guided solely by its wish to make profits or avoid losses. Throughout the history of the airport Bromley had had to balance its obligations to the local community and the environment with purely financial considerations. For example, there was evidence that at the time the lease was entered into councillors of Bromley were concerned about road congestion (Judgment, paras. 100, 101). This factor diminishes the weight to be given to the commercial logic of permitting scheduled services to enhance viability.
(1) whether Bromley made a representation to BHAL that it permitted BHAL to operate scheduled services from the airport;
(2) whether it would be unconscionable for Bromley to withdraw any such representation; and
(3) the extent of BHAL's reliance.
LORD JUSTICE DYSON:
LORD JUSTICE PILL: