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Cite as: [2001] EWCA Civ 1089

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Neutral Citation Number: [2001] EWCA Civ 1089
Case No: A3/2000/3691 CHANF

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
(Mr Nicholas Strauss QC sitting as a Deputy Judge
of the Chancery Division)

Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 11th July 2001

B e f o r e :

LORD JUSTICE PILL
LADY JUSTICE ARDEN
and
LORD JUSTICE DYSON

____________________

Biggin Hill Airport Ltd
Appellant
- and -

London Borough of Bromley
Respondent

____________________

(Transcript of the Handed Down Judgment of
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 Kim Lewison QC and Mr Guy Fetherstonhaugh (instructed by Messrs Blake & Lapthorn for the Respondent)
Mr Stephen Moriarty QC and Mr Marcus Smith (instructed by London Borough of Bromley Legal Dept for the Appellant)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LADY JUSTICE ARDEN:

  1. This is an appeal from the order dated 21 November 2000 of Mr Nicholas Strauss QC, sitting as a deputy judge of the Chancery Division. By his order the judge made two declarations as to the meaning of a clause in a 125 year lease ("the lease") of Biggin Hill Airport ("the airport") dated 6 May 1994 and made between Biggin Hill Airport Limited ("BHAL") and the London Borough of Bromley ("Bromley"), respectively the respondent and appellant on this appeal. His order declares (1) that for the purposes of clause 1.8 of the lease, any chartered or scheduled service, the predominant purpose of which is to carry passengers travelling for the purposes of their employment or business, is within the meaning of the term "business aviation" and (2) that any other flight by a chartered or scheduled service, air-taxi, or helicopter to or from the airport is within the phrase "other airport and aviation related uses".
  2. Clause 1.8 of the lease defines "permitted user" of the airport as:-
  3. "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.

  4. Both the permitted uses found by the judge go beyond those for which Bromley contended, and the judge's construction of limb D goes beyond that for which BHAL contended.
  5. Biggin Hill Airport - location and use

  6. The airport is situated some 17 miles from Central London in the London Borough of Bromley. It has a runway of some 1,800 metres in length. This is long enough to take aircraft of BAe 146 whispering jet size. It has however limited terminal facilities, restricted opening hours and limited road access. When the lease was granted, there was one scheduled service operating to Le Touquet (there had briefly also been scheduled services to Carlisle and Manchester which had been discontinued as mentioned below). The major use of the airport was for flights organised by businesses for their own purposes, air taxis, private flying (including the occasional air fair and air display) and ancillary businesses such as the maintenance of aircraft, hanger services, fuel services, aircraft components and so on.
  7. The background

  8. The judge heard evidence and made findings about the history of the airport. Nothing turns on its use until the 1970's. In 1978, a white paper entitled Airports Policy (Cmnd 7084) stated that the government believed that the airport could be "a major business aviation airport for the London area" and suggested that Bromley might transfer the ownership to British Airports Authority. However Bromley retained ownership of the airport. In 1981 it entered into an operating agreement with a company unconnected with BHAL but to which the judge refers as "Old BHAL".
  9. Bromley's Borough Plan dated 23 September 1985 refers to the airport. Policy BHA.5 states that "The Council will encourage and promote provision of development and facilities related to the business and executive use of" the airport. Policy BHA.6 states that passenger handling, hotel, restaurant and ancillary facilities are an integral part of the development of a business aviation function for the airport. Neither of these policies refers to scheduled air services.
  10. Bromley commissioned a report in 1987. This appears to have been an internal report. The report acknowledged that sale to a commercial organisation might involve the disadvantage that "business aviation would grow at a disproportionate rate and that there would be an increasing likelihood of scheduled flights and regular passenger services." The conclusions in the report referred to the need to maintain a balance between business and recreational aviation and a balance between the development of the airport and the preservation of amenities in the borough. In the light of this report Bromley decided not to sell the airport to a commercial organisation. Instead it terminated the operating agreement with Old BHAL and entered into a new agreement dated 8 July 1988 with a subsidiary of British Airports Authority called Airports UK Limited ("AUK"). This agreement, which required AUK to operate the airport in accordance with an airport policy agreed by the relevant committee of Bromley and specifically prohibited AUK from permitting the operation of scheduled passenger services from the airport without the consent of Bromley, is summarised below.
  11. In 1990 AUK applied to Bromley for permission to introduce scheduled services. Their request was supported by the airport consultative committee (subject to conditions) but was rejected by the policy and resources committee and the land and property sub-committee of Bromley. AUK was informed that its request had been rejected by letter dated 27 September 1990. However thereafter the land and property sub-committee set up a working party to consider the matter further. In June 1991, this working party recommended lifting the ban imposed in 1988 on scheduled services subject to the scheduled services complying with the opening hours, using aircraft on the approved list only and using aircraft having a seating capacity for no more than 18 passengers and being twin engine turbo-prop aircraft only. In July 1991, the policy and resources committee approved these recommendations. Bromley contended that this approval was revocable but the judge doubted whether this was correct but came to no conclusion (Judgment, para 40).
  12. The judge did not make any finding as to when or on what terms (or even if) AUK was informed of the decision given by the policy and resources committee but in December 1991 there were discussions between Bromley and AUK at which the judge found that AUK's plans to run scheduled services to Brussels, Rotterdam, Beauvais, Bembridge, Calais and Le Touquet with 30 and 10 seater aircraft must have been discussed (Judgment, para. 41).
  13. The Airports Act 1986 empowered the Secretary of State to designate local authority airports to be transferred to limited companies. In 1992, the Secretary of State designated Biggin Hill for this purpose, and Bromley formed a company. It considered whether to sell the airport to it or grant a long lease and it decided on the latter course in order to retain control over the airport without having to be directly involved in its management.
  14. In 1993, Love Air commenced a scheduled service from the airport to Le Touquet. There was one flight a week until shortly before the trial of this action. Each flight carried between five and ten passengers and it was not restricted to business passengers. Further services to Carlisle and Manchester were instituted but were short-lived. Love Air was regarded as an important contributor to the financial viability of the airport. The Le Touquet service has since been discontinued.
  15. On 13 September 1993 BAA served notice terminating the contract between Bromley and AUK on 30 September 1994 unless the main runway had been resurfaced, the fuel storage tanks replaced and other safety related work implemented. These events led to the negotiation of the lease with BHAL.
  16. An internal memorandum of Bromley dated October/November 1993 refers to four sectors of activity at the airport including scheduled services. This was a reference to the Le Touquet service and the memorandum added that there was not much scope for increasing scheduled services due to the proximity of Gatwick and the expenditure that would be needed on passenger handling facilities.
  17. The documents referred to above contain many references to Bromley's concern to protect the environment of the area and its concern to reduce or eliminate the rate fund subsidy.
  18. Negotiations for the lease

  19. Negotiations with Regional Airports plc ("Regional"), of which BHAL is a wholly-owned subsidiary, for the grant of a new lease began in March 1993 but began slowly. In November 1993 Bromley sent Regional details of the operating restrictions which would be imposed on a lessee. These did not refer to operating restrictions on scheduled services. In April 1994, Regional provided details of its confidential business plan to Bromley. This stated that one of its objectives was that the airport should become a source of a growing number of scheduled passenger services. This business plan was sent "for the eyes only" of the Borough Treasurer, Mr Pitt, and another council officer in the Finance Department. Neither of these two officers was involved in drafting the lease. The judge found that Regional could not reasonably expect either of these officers to check whether Regional was permitted to operate scheduled flights. We have not been shown this business plan and indeed it cannot be admissible on the question of interpretation of the lease because it was not reasonably available to Bromley. I have therefore not taken this document into account. In any event, it may well have related to Regional's business as a whole and concerned other plans which did not come to fruition (see Re Regional Airports plc [1999] 2 BCLC 30).
  20. When the lease was granted, Bromley issued a press release stating that the strict safeguards under which the airport had been operated since its acquisition in 1974 would be maintained by Regional.
  21. At the time of the lease a number of people were permitted to operate air charter, air-taxi and helicopter services from Biggin Hill Airport. Under their agreements with AUK, they were required to comply with the restrictions in the Operating Agreement between it and Bromley. This agreement did not contain any requirement that services should be for business purposes. The judge found that for the most part the services which were provided by these persons were for corporate customers and businessmen. However the judge found "that this was not exclusively so since (a) there was undisputed evidence that there was a market for surplus seats not needed by companies which had chartered an aircraft; these were often sold off to whoever wanted them and this must on occasions have included passengers travelling for leisure purposes and (b) air taxi and air helicopter services which were free to take all comers must on occasions also have had passengers travelling for leisure purposes". The judge then referred to a purely hypothetical example given in the course of the hearing of a group of individuals flying up to see the Grand National.
  22. The main agreements

  23. I will now summarise the terms of the AUK agreement, the lease and the business transfer agreement.
  24. The AUK agreement is dated 8 July 1988. BHAL was not a party to this agreement. It is made between (1) Bromley; (2) AUK and (3) BAA plc. Bromley appointed AUK to manage and control all activities at the airport for a period of 25 years subject to termination on twelve months' notice by either side. It is to be noted that there was no a priori limitation in the primary clause appointing AUK to manage the airport. It was given power to manage the airport in the widest possible terms. However AUK agreed to operate the airport in accordance with the policy determined by the appropriate committee of Bromley. One of the agreed objectives of the parties was to attract corporate traffic to the airport. AUK agreed to certain express restrictions, including a ban on scheduled services. Bromley underwrote AUK's losses on running the airport.
  25. The lease is dated 6 May 1994 and is made between Bromley and BHAL. The contractual term is 125 years. There is a basic rent plus an additional yearly rent dependent on profits. The permitted user clause is set out above. BHAL agreed to observe the operating criteria set out in the third schedule. This schedule contained restrictions, including restrictions on flight movements and opening hours. The operating criteria were subject to variation by agreement, BHAL could take the matter to arbitration on grounds similar to judicial review. The arbitrator was to be appointed by the President of the Royal Institution of Chartered Surveyors. The third schedule does not contain a ban on scheduled services. On the contrary, the restriction on opening hours specifically gives permission for three landings between 8.15 am and 9 am on Saturdays and Sundays "to permit an operator based at the airport to operate a scheduled service to France." These words play a significant role in the judge's judgment.
  26. Among BHAL's covenants in the lease was a covenant not to make material alterations to the airport buildings without making an application to Bromley for its consent.
  27. The business transfer agreement is dated 6 May 1994 and the three main parties are AUK, Bromley and BHAL. In essence it provides for the transfer of the undertaking of AUK to BHAL. The agreement required BHAL (or any operator of the airport appointed by it) to obtain either a public use or ordinary Civil Aviation Authority licence. Bromley sold BHAL its airport business including the goodwill.
  28. For certain purposes the judge relied upon the differences between the AUK agreement and the lease and an issue arises as to whether he was correct to do so.
  29. BHAL's concession concerning the permitted user clause and withdrawal of this concession at trial

  30. In its particulars of claim BHAL accepted "to the extent that it is necessary so to do" that "the operation of scheduled and chartered services from [the airport] should be for the use of business men and or business activities and or to and from recognised business destinations." This was amplified in the further information which BHAL gave on 8 September 2000 when BHAL accepted that the operation of scheduled and chartered services from the premises was restricted in the following way:-
  31. "(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)."
  32. In his witness statement in these proceedings, Mr Andrew Walters, chairman of BHAL, said that "we recognised at the outset that the use of the airport was to provide facilities for business aviation and that insofar as this effectively ruled out leisure type passenger flights we had no problems." The judge found that Mr Walters was a truthful witness.
  33. Following enquiry from the judge, BHAL in its reply submissions decided to abandon their concession and leave it open to the judge to reach the wide meaning which he reached as to the meaning of the second part of a permitted user clause in the lease. Unfortunately, the exchange occurred after abortive without prejudice discussions between the parties. Bromley wrote a letter to the judge explaining that they stood to be prejudiced by this withdrawal of a concession in view of the without prejudice discussions. The judge gave them an opportunity to put in evidence and make further submissions but for self-evident reasons Bromley could not put in evidence about the content of its discussions which had been held on a without prejudice basis. It is to be noted that BHAL in its reply submissions withdrew the concession only to the extent necessary to allow business uses to continue. Moreover, the judge records that BHAL accepted that any use had to be of a kind that existed at the airport at the date of the lease (Judgment, para. 6). However the judge found that limb D of the permitted user clause had an even wider meaning. The judge considered himself free to grant the declaration that accorded with his own view even if wider than BHAL's case (Judgment, para 86).
  34. Expert evidence as to the meaning of "business aviation"

  35. At the trial BHAL called Mr L N Price as its expert on this question. He is a director of the Aviation & Travel Consultancy, a company providing specialist advice, planning, research, analysis and strategic development consultancy services to the aviation and travel industries. He submitted a detailed report referring to various uses of the word "business" in the context of aviation. In his opinion the term "business aviation" was imprecise and ill-defined but potentially a significant segment of commercial aviation. Commercial aviation covered a wider spectrum of activity other than business aviation and included the leisure segment (para 2.2.1). In Mr Price's opinion the term business aviation was commonly used in the aviation industry to describe the use of air transport services for business purposes. The business traveller could use a scheduled service, a chartered service, an air-taxi, a seat on a corporate aircraft or even fly an aircraft himself. He considered that business aviation was commonly and more usually used within the aviation industry in this wider sense than in the narrower sense contended for by Bromley. However he accepted that the term business aviation was sometimes used in the sense contended for by Bromley. In conclusion, in his opinion, in 1994 there was no generally accepted universal definition of business aviation within the aviation industry and there exists no such definition today. "The term is used in different contexts to mean different things. It is commonly used in the industry as a generic market term to denote the use of air transport services by people travelling for business purposes whether on scheduled, charter (sole use or otherwise), air-taxi or private flights irrespective of whether the ticket is paid for by an individual passenger or not." In one of the appendices to his report, Mr Price produced a report dated July 1998 prepared by Halcrow Fox. This report was written to provide an up-to-date and consistent view of the business aviation industry in south east England. It specifically adopted as its definition of business aviation "the operation of twin-engined, fixed wing aircraft for corporate purposes or as sole use charter or air-taxi services." Single-engined aircraft, helicopters, the use of aircraft for other general aviation purposes, such as training, recreation, commercial freight, law enforcement and other types of aerial work were all specifically excluded. The report stated that business aviation is a diverse industry in terms of the services it provides and the range of companies operating and using them.
  36. Bromley's expert was Mr Tim Johnson, a director of the Aviation Environment Federation, an organisation concerned specifically with all environmental and amenity effects of aviation. In his opinion the term "business aviation" is one that is used as in a technical sense within the aviation industry to describe a particular type of aviation traffic. He gave as his definition "a particular kind of traffic concerned in the operation and use of aircraft by companies in connection with the transport of passengers or cargo for that company (or other members of the same group of companies)." In his opinion the term accordingly did not include the transport of individual fare-paying passengers whether by scheduled services or otherwise. Mr Johnson produced a number of authoritative documents using the term "business aviation". For instance he produced Airports Policy (Cmnd. 7084) (1978), a paper presented to Parliament by the Secretary of State for Trade. This states that business aviation is a sector within the larger general aviation sector. It notes that Biggin Hill is used for business aviation. Facilities for Business Aviation in the South East of England, a consultative document produced by the Department of Trade in March 1983, refers in paragraph 2.2 to annex 6 of the Convention of the International Civil Aviation Organisation which defines general aviation as "all civil aviation operations other than scheduled air services and non-scheduled air transport operations for remuneration or hire". The consultative document notes this definition embraces a wide range of activities including "business aviation, private and recreational and leisure flying, civil, club flying, crop spraying, and gliding, but not air taxi movements, although in practice the latter constitute an important part of business aviation." This consultative document makes numerous references to business aviation. It assumes throughout that consultees will know what that term includes. Mr Johnson also produces a report by the Business Aviation Working Group published by the Department of Trade in 1984, which states that the group has taken "business aviation" to mean "all civil aviation operations carried out for business purposes other than scheduled air services. This covers a wide range of activities including air taxi operation and corporate/private aircraft operations undertaken for business purposes." This document therefore contrasts business aviation with scheduled air services although it includes air taxi operations within business aviation. The key here is that the operation is "undertaken for business purposes".
  37. In 1985 the Secretary of State for Transport presented to Parliament a further document entitled Airports Policy (Cmnd. 9542) (1985). This states that business aviation covers a wide range of civil aviation operations for business purposes, including air taxis and the use of corporate and private aircraft (para 7.2). Again air taxis are included and it is an essential part of the meaning of business aviation that aircraft are used "for business purposes".
  38. The two experts met to discuss the meaning of the terms "business aviation" and "commercial aviation" and their use in the aviation industry. They agreed that the terms "business aviation" and "commercial aviation" are used in the aviation industry. Their joint report however states that while Mr Johnson considered the former to be a technical term, Mr Price did not agree.
  39. The report continued: "However we are also in disagreement as to the meaning of such terms within the aviation industry in 1994. In summary: (a) Mr Johnson believes that the term business aviation generally refers to a kind of traffic concerning the operation and use of aircraft by companies in connection with the transport of passengers or cargo for that company (or other members of the same group of companies) and accordingly does not include the transport of individual fare paying passengers whether by scheduled or otherwise (b) Mr Price does not agree with Mr Johnson's definition and will rely on market interpretations of the terms used by such groups as the UK Civil Aviation Authority and UK Department of Transport to support his definition."
  40. Judgment of Nicholas Strauss QC

  41. The first issue which the judge considered was the interpretation of the permitted user clause. In approaching this question he said that he found "the extensive evidence relating to the history of the airport and other relevant factual background" not simply useful, but "indispensable" (Judgment, para. 10). In a passage extending to just over 40 paragraphs, headed "Background facts relevant to construction", he set out his findings regarding the background. I have summarised his principal findings above. He said that the material he had seen was "for the most part" publicly available or seen by BHAL in its pre-contractual due diligence investigations, without however identifying the parts of the material which were not so available (see Judgment para.10).
  42. The judge made the following further findings about the business of the airport at the time of the lease. He found that:
  43. (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.
  44. The judge found that the financial viability of the airport had been a constant problem (Judgment, para. 56(7)). Bromley wanted to enter into the relationship with Regional to avoid the liabilities associated with the airport.
  45. With respect to the interpretation of the permitted user clause the judge relied principally upon the principles of interpretation of documents laid down by Lord Hoffmann in Investors' Compensation v West Bromwich Building Society [1998] 1 WLR 896:
  46. " 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 [1971] 3 All ER 237 at 240242,[1971] 1 WLR 1381 at 13841386 and Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570,[1976] 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 [1997] 3 All ER 352, [1997] 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 [1984] 3 All ER 229 at 233,[1985] 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.'"
  47. The judge however accepted that the court could correct obvious errors as a matter of construction. He cited a passage from the judgment of Mr Donald Rattee QC (sitting as a deputy Judge of the Chancery Division) in North Circular Properties Ltd v Internal Systems Information Ltd, 26 October 1984, unreported, which makes it clear that this process can be done, without extrinsic evidence and without meeting the stringent conditions which are required to be met to obtain a court order for rectification, where it is clear on the face of the document that there was "a draftsman's blunder".
  48. The judge then turned to the construction of the permitted user clause. He approached the question of construction with a disinclination to apply narrow construction (Judgment, para 102). This is because, for ten reasons, he held that "the factual background, in particular the balance of financial and environmental considerations as they stood in April 1994, make it very unlikely that Bromley would have wished to impose, or that BHAL would have accepted, a ban on scheduled services or on individual fare paying passengers."
  49. I will now summarise the judge's ten points:
  50. (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 [1995] 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").

  51. From these conclusions the judge concluded that it was very unlikely that Bromley would have wished to impose or that BHAL would have accepted a ban on scheduled services or on individual fare paying passengers. On that basis he was disinclined to interpret the lease as imposing such a ban unless the wording clearly required him so to do.
  52. The judge then approached the construction of limbs A and D, starting with limb D. He rejected the eiusdem generis rule and did not consider that limb D covered activities ancillary to limbs A, B and C. The one remaining possibility was that limb D covered scheduled flights of any kind. He rejected the argument that this construction made much of the permitted user clause redundant. The judge's conclusion was that, while in some circumstances the presumption against surplusage may carry some weight, "the word "other" necessarily implies that the previously mentioned activities, all of which did involve actual flying, are to be regarded as" within limb D (Judgment, para. 106). The judge was also impressed by the reference to air fairs and displays following limb D (Judgement, para. 106). Accordingly he held that any charter flight, air taxi flight, helicopter flight or scheduled service which was not "business aviation" was permitted by limb D (Judgment para.109).
  53. The judge then turned to the interpretation of limb A although he accepted that it was not necessary for him to determine this issue. The judge recited the expert evidence and accepted Mr Price's evidence. He held that as a matter of law there was no presumption that the technical meaning of the term "business aviation" was being used and held that the broader meaning contended for by BHAL should apply. Accordingly he held that any chartered or scheduled service, the predominant purpose of which was to carry passengers travelling for the purpose of their employment or business, was "business aviation" within the permitted user clause.
  54. Estoppel

  55. The facts found by the judge with respect to the estoppel issue were as follows.
  56. The judge found that Mr Stungo and Mr Hayward, respectively director of land and general services (and subsequently director of corporate affairs) and chief engineer (subsequently director of environmental services) in the technical services department of Bromley, had received documents from BHAL in 1994 and 1995 referring to scheduled services at Biggin Hill. Further he found that Mr Stungo did not consider that the lease prohibited these activities. The judge also found that Mr Hayward who took over from Mr Stungo received two documents in 1996 referring to scheduled services. The officer within Bromley responsible under the chief property officer for the conduct of Bromley's role as landlord of the airport was from 1995 Mrs Jane Pocknall, Head of Valuation and Estates.
  57. The judge then considered the extension of passenger terminal facilities, T2 and T3. Bromley as landlord gave its consent to the former by licence in December 1996. In this connection Mrs Pocknall told BHAL that she was liaising with Bromley's planning department.
  58. Planning permission was sought in October 1996 from the planning department of Bromley for the extension of T3 Phase 1 and this was accompanied by a letter which stated that the purpose of T3 was "to provide the proper facilities for scheduled air passenger services". BHAL also gave statutory notice of this application, but not the accompanying letter, to Bromley as landlord. Likewise, when in May 1997 BHAL made an application for planning permission for Phase 2 of T3, it gave notice to Bromley as landlord. Mrs Pocknall, on behalf of Bromley, informed him that a further licence would be requested and BHAL requested Mrs Pocknall by telephone to send this. Mrs Pocknall did not know that the purpose of T3 was to provide additional passenger facilities for scheduled services. Moreover the judge found that Mrs Pocknall did not say that the work could go ahead without consent (Judgment, para. 144). Mrs Pocknall omitted to send the necessary papers to BHAL. Planning permission was given for T3 Phase 2 in July 1997 and the work proceeded without Bromley's consent as landlord. The terminal was opened in November 1997.
  59. Mr Hayward took over from Mr Stungo in about 1996. He received further occasional documents referring to scheduled services at Biggin Hill. The judge found that Mr Hayward did not consider whether such activities were within the permitted user clause.
  60. The judge found that Mrs Pocknall had led BHAL to believe that there was no problem with the consent for the extension of T3 in her telephone conversation with BHAL and that this had to be seen in the context of her having earlier told BHAL that she was liaising with Bromley's planning department (Judgment, para. 152).
  61. The judge accepted BHAL's evidence that if Bromley had objected to scheduled services before work on T3 started that work would not have proceeded until the issue was resolved (Judgment, para. 154). The cost of T3 was 438,544. There was also further expenditure that would not have been warranted if scheduled services were not permitted (Judgment, para 160).
  62. BHAL accepted that facts communicated to the planning department for the purpose of a planning application could not be regarded as communicated to Bromley in its capacity as landlord (Judgment, para 16).
  63. The judge was satisfied that Bromley's silence was not deliberate. While Mr Stungo and Mr Hayward knew of the expenditure and remained silent, this on the judge's finding was because they believed that the lease permitted scheduled services.
  64. The judge held that BHAL could not rely on estoppel because it was proceeding in breach of the lease. The judge held that it was unnecessary for him to reach any further conclusions on the estoppel point.
  65. Issues on this appeal

  66. There are four main issues on this appeal:
  67. (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

  68. The first issue is whether or not BHAL should have been permitted to resile from the concession which it had made in its pleaded case about the meaning of this term that it could operate a scheduled or chartered flight from the premises only if the principal purpose of the service was the transportation of passengers to a recognised business destination for business purposes. Mr Moriarty QC, for the appellant, accepts that the concession was as to the proper construction of the permitted user clause and that questions as to construction are normally at large but submits that the judge erred in law in granting the declaration which he did in wider terms than the concession. A party may be estopped from withdrawing an admission: H Clark (Doncaster) v Wilkinson [1965] Ch 694, 703. Alternatively a party may be prevented from withdrawing an admission if the other party is prejudiced and that prejudice is greater than that suffered by the party seeking to withdraw the concession: Gale v Super Drug Stores plc [1996] 1 WLR 1089, 1091 D - E, 1097 H and 1099 E.
  69. Even on the basis that a balance of prejudice test applies, on Bromley's submission, BHAL suffered no real prejudice. By contrast Bromley could not be compensated in costs. The court does not know what influence the concession had. That very difficulty is itself the potential prejudice to Bromley and this prejudice must be weighed in the balance. It would be too late to bring separate proceedings to prevent BHAL from relying on the declaration on the grounds that it was estopped from doing so since estoppel cannot constitute a cause of action in itself. It was open to the judge to limit the declaration so as to take account of the concession which BHAL was prepared to make. The judge should have required an application for permission to amend the particulars of claim and further information. If BHAL had been required to make that application and that leave was given, Bromley would have pleaded that the claimant was estopped by convention from relying on the wider meaning of the second half of the phrase. On Mr Moriarty's submission, what distinguishes this case from that considered by Lord Diplock in Bermuda Trust v Threadgold [1974] 1WLR 1514, 1525-6, where he held that as a question of construction the court cannot be bound by a concession, is that the conditions for estoppel are made out. Mr Moriarty informed the judge by letter that the concession was "certainly a factor which featured in the consideration which was given to the proposed package" in the without prejudice negotiations. Mr Moriarty accepts that it is not possible to have an estoppel against jurisdiction, but he submits that the judge was not in a position to assess the question of prejudice or weigh it in the balance.
  70. "Other airport and aviation related issues"

  71. Mr Moriarty submits that the judge placed excessive reliance on the AUK agreement. There are significant differences between the AUK agreement and the lease. Under the former, Bromley had the whip hand because it could lift the ban on scheduled services knowing it could be reimposed. So Bromley could experiment. But under the lease, which was for 125 years, the effect of a broad construction of their permitted user clause is that Bromley loses control. Given the length of the lease, it is to be expected that Bromley would have been more cautious.
  72. Mr Moriarty criticises each of the judge's ten points for adopting a wide construction of limb D. Mr Moriarty fairly accepts that the judge's first and second points constitute a major point against Bromley's construction. On the other hand he submits that limb D of the permitted user clause could not really have been intended to swamp what went before. The omission of the scheduled service to Le Touquet was an oversight. On the evidence, the Le Touquet service operated propeller Piper planes which took a maximum of ten passengers. In practice, the flight did not operate unless there were at least four passengers. On Mr Moriarty's submission it makes sense to regard schedule 3 as an exception. Mr Moriarty submits that to deal with the omission, words must be read into the permitted user of clause: compare Schneider v Mills [1993] 3 AER 377, 383d.
  73. As regards the judge's third point, Mr Moriarty submits that it would be unsatisfactory to have restrictions in schedule 3 because they would always be subject to arbitration, by reference to certain criteria.
  74. As regards the judge's fourth and fifth points Mr Moriarty accepts that Bromley had changed its policy on scheduled flights but submits that it was a very limited change. The effect of BHAL's submissions is that the relaxation in the policy was set in stone for 125 years. Moreover, Mr Million gave evidence on behalf of Bromley to the effect that Bromley expected to give specific consent to each specific scheduled service. This was not really challenged in cross-examination by BHAL.
  75. As regards the judge's sixth point, Mr Moriarty submitted that it was possible to hold a public use licence without scheduled services and without infringing the requirements of the regulations of the Civil Aviation Authority under which the licence was given.
  76. As respects the judge's seventh point, there was only one scheduled service operating from Biggin Hill before the business transfer agreement, and therefore the amount of goodwill was (contrary to the judge's assumption) of a very limited nature. Mr Moriarty accepts that the charter of an aircraft to take a party to the Grand National would be corporate hospitality and within the expression "business aviation". The findings as to flights diverted from Gatwick was based on very slight evidence and Mr Moriarty submits that there was no evidence that diversions took place in such quantities that they would justify such a change in the scope of the lease.
  77. As regards the eighth point, this really related to matters of business risk. Moreover insofar as the operating criteria protected environmental considerations, they were always capable of being overturned by arbitration and it was a concern on the part of Bromley that qualified protection might not be enough.
  78. As regards the judge's ninth point, the judge was wrong to conclude there would be any difficulty in enforcing the restrictions. Mr Moriarty submits that restrictions could be placed in a publication called Air Pilot. In cross-examination, Mr Walters in effect accepted that a limitation to the effect that only flights for business purposes could use the airport could be inserted in Air Pilot. Moreover BHAL never thought that scheduled flights for purely leisure purposes could use Biggin Hill.
  79. As regards the judge's tenth point, the councillors were very concerned at the time at the expansion of scheduled services and accordingly a restriction on scheduled services would be expected in the permitted user clause. Inclusion in the operating criteria would lead to a situation which was inherently subject to change. The ultimate outcome could be decided by arbitration and there was a risk that the arbitrator would agree with BHAL rather than Bromley. The only way in which Bromley could maintain control was through a restriction in the permitted user clause. Therefore if anything, the background to the circumstances of the lease is a pointer in favour of a narrower construction. At best however it is neutral. The judge's tenth point shows the dangers of trying to construe the clause by reference to factual circumstances applying before negotiation of the agreement.
  80. As respects the reference to the air fair and the air display, Mr Moriarty submits that these were really forms of private flying.
  81. As regards the business plan, Mr Moriarty submits that this was part of the negotiations between the parties (see Judgment para 53). Accordingly the contents of the business plan could not be used in interpreting the agreement.
  82. Mr Moriarty submits that the expression "other airport and aviation related uses" cannot have the wide meaning attributed to it by the judge. Mr Moriarty did not accept the judge's point that flying activities were included within limb D. Those words appeared at the end of the clause and made the earlier references to (for example) flight training redundant. He criticises the judge's reliance on the word "other" on the basis that the fact that some identified forms of flying can properly be regarded as airport or aviation related uses does not mean that the term embraces any and all forms of flying. He further submits that the judge was wrong to approach the question of construction with a disinclination to construe clause 1.8 as imposing a ban on scheduled services. Moreover, on his submission, the judge wrongly considered that the absence of an express ban on scheduled services in the lease as opposed to the AUK agreement was significant whereas if as Bromley contends the terms "business aviation" itself excludes scheduled services there was no reason or need to include the ban in the subsequent operating criteria.
  83. Mr Moriarty submits that limb D clearly refers to ancillary services. He submits that the court should apply the "main objects" rule of construction used in the interpretation of memoranda of association of incorporated companies: see for example Re German Date Coffee Co (1882) 20 Ch.D169,188; see also Stephens v Mysore Reefs (Kangundy) Mining Co Ltd [1902] 1 Ch. 745. Mr Moriarty submits that the words do not bear the meaning given to them by the judge, in particular because the expression does not apply to "any" other airport and aviation related uses and does not use the word "whatsoever".
  84. As to the meaning of the phrase "other airport and aviation related uses", Mr Moriarty submits that since the permitted user clause starts with specific activities (business aviation etc), the effect of the judge's construction is to render its earlier words wholly otiose. The judge held that this reason was not conclusive. The permitted user clause set out main or anticipated uses and stressed other uses which were permitted subject in the case of the air fair to a limit. Mr Moriarty relies on the presumption against surplusage (as to which see generally Lewison, The Interpretation of Contracts, second edition, 1997, para. 6.03 pages 161-2). In Tea Trade Properties Limited v CIN Properties Limited [1990] 1EGLR 155, 158 Hoffmann J said with respect to argument in that case based on the presumption against surplusage:-
  85. "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".

  86. Mr Moriarty submits that uses within limb D would include aircraft maintenance and repair services and fire services.
  87. "business aviation"

  88. Mr Moriarty submits the judge should have given this phrase a technical meaning. The central issue was whether the expression excluded scheduled air services carrying individual fare paying passengers. BHAL's expert contended for a wider meaning that described the use of air transport services for business purposes. The problems which the judge perceived to flow from Bromley's interpretation also flowed from BHAL's expert's interpretation.
  89. Mr Moriarty makes the point that BHAL has given different meanings for the term "business aviation" as the case has progressed. BHAL now says that it has no technical meaning and that it means in effect "business air travel". Bromley's case below was that the words "business aviation" were a term of art but the judge did not accept its expert's evidence. On this basis no expert evidence should have been admitted.
  90. Although BHAL's expert, Mr Price, said that the term the words "business aviation" had no technical meaning, he accepted that they were sometimes used in the way contended for by Bromley, albeit that he also said that the words were more usually used in a wider sense of air transport for business purposes. However it is notable that he could not find any use of this kind in any literature. He candidly accepted that he was giving his own view as to the meaning. Bromley's expert, Mr Johnson, accepted that the term "business aviation" as a term of art had some penumbral areas. However his evidence was that all uses had in common the exclusion of scheduled air services with individual fare paying passengers.
  91. In reliance on Holt v Collyer (1881) 16 Ch D718 at 720, Mr Moriarty submits that where a word has a technical meaning that meaning must be applied. He submits that the words "business aviation" are not ordinary words. Like the phrase "quota share", it consists of two separate words which when put together result in a phrase which has a technical meaning. He submits that it is not clear whether the judge accepted that the words "business aviation" had a technical meaning. However it must in fact be a technical term or aviation term. Mr Johnson's evidence was the only expert evidence as to its meaning as a term of art and accordingly the judge should have applied the meaning put forward by Mr Johnson. The judge suggested that if it had been intended to confine BHAL to flying activities which were "business aviation", it would have been necessary to define the term in the lease (Judgment, para 116). Mr Moriarty submits that this fails to take account of the fact that a definition of a technical expression is unnecessary. The judge gave too much weight to outside circumstances.
  92. "Business aviation" on Mr Moriarty's submission, is confined to flights by aircraft owned or chartered by a company or other business and undertaken for its business purposes provided that it does not include flights carrying individual fare paying passengers. This excludes companies operating aircraft for the purpose of making money out of chartering flights. However the incidental sale of seats by a company whose main business was something else would not be caught by this proviso. Accordingly if a business, as incidental to some other non-travel business, hires an aircraft, this is "business aviation" even though some of the seats are sold. The sale of those seats does not make the passengers "individual fare paying passengers" for the purposes of this proviso. It turns on the purpose of the charter. Scheduled services aimed at the business market would use far larger aircraft carrying more people.
  93. Mr Moriarty relies on the Halcrow Fox report which noted that business aviation was a significantly different market from business air travel as a whole. The fact that it is not possible to define aviation comprehensively is not a reason for construing limb D as including every flying activity.
  94. In the circumstances, Mr Moriarty seeks an order of the Court declaring that scheduled flights and chartered flights carrying individual fare-paying passengers are not within the meaning of the term "business aviation" in clause 1.8 of the lease or within the meaning of the term "other airport and aviation related uses"
  95. Estoppel

  96. The facts found by the judge would not justify a finding of estoppel against Bromley. The facts communicated to the Planning Department could not be regarded as communicated to Bromley in its capacity as landlord of the airport. It is clear from Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] I QB 133 that it is necessary for the party sought to be estopped to know of the mistake by the other party at the time the detriment was incurred.
  97. The position of Bromley was one of mere silence alternatively in the case of Mrs Pocknall it was made clear that a formal landlord's consent was required under the lease. The conduct on which BHAL relied was mainly expenditure without the landlord's approval. It could not found its plea of estoppel on its own wrongful act. The fact that consent if withheld would have been unreasonably withheld does not mean that BHAL could go ahead and build the third terminal in breach of the lease. That left the expenditure in connection with the planning permission, and there was no evidence as to the amount of this. In any event there is no evidence that Bromley knew that this expenditure was specifically incurred for the expansion of scheduled services. In this case there could be no estoppel founded on mere silence.
  98. Miss Pocknall was asked for consent to T3 but she did not know what the terminal was for. Nor did she say there was no problem if there was no consent. Accordingly BHAL was not justified in going ahead. Mr Moriarty submits that as a matter of law for an estoppel to arise in the case of pure omission the possessor must have known of his right and of the other party's mistaken belief. Estoppel only arises if there is unconscionable conduct and accordingly the party sought to be estopped has to know that he is acting under a mistake. Mr Hayward, one of the officers of Bromley did not appreciate that BHAL was acting under a mistake. He never directed himself to the lease.
  99. At the material time, Mr Stungo was the principal officer of Bromley dealing with the negotiation of the lease. He received internal memoranda referring to scheduled services. The judge held that it was likely that having regard to his earlier encouragement of scheduled services he did not consider that the lease prohibited them (Judgment, para 132). On Mr Moriarty's submission, it was not open to the judge to draw these inferences and in any event there was never any pleaded reliance on Mr Stungo's conduct and it was never investigated. The earlier encouragement of scheduled services was as far back as 1990 and very slim evidence for saying that Mr Stungo appreciated that the terms of a lease entered into years later permitted scheduled flights. In support of the proposition that the party sought to be estopped had to know of his own right, Mr Moriarty referred to Taylors Fashions v Liverpool Victoria Trustee Co Ltd, above, and The Stolt Loyalty [1993] 2 Lloyd's Rep 281.
  100. Moreover BHAL failed to establish any material respect in which it had acted reasonably to its detriment or that it would be unconscionable for Bromley to rely on the correct interpretation of clause 1.8 of the lease in circumstances where (1) most of the expenditure was incurred in breach of the lease, (2) there was no evidence as to the amount of the expenditure not incurred in breaching the lease and (3) there was no evidence that Bromley knew of the specific purpose of any other expenditure nor any evidence of how much of it would have been avoided if Bromley had made clear its objection to scheduled services.
  101. Mr Moriarty submits that it is not open to BHAL to rely on the very expenditure which was incurred in breaching the lease to support the estoppel on which it relies. It had been made aware of the need for formal permission. It is clear that if a formal application had been made Bromley would have sought legal advice. It is clear that any consent by Bromley under the lease had to be in writing (lease, clause 3.7). In the case of the permission for the second terminal, Bromley had indeed entered into a formal licence.
  102. The respondent's submissions

    The concession issue

  103. Mr Kim Lewison QC, for BHAL, submits that the judge was entitled to construe the lease as he thought fit. He cited Bahamas International v Threadgold, above, where Lord Diplock stated that it was contrary to the judicial oath for a judge to regard himself as bound by a concession on a point of law. If a balancing exercise was required, the judge carried out a balancing of the respective prejudice to the parties. Bromley produced no evidence. There was clear prejudice to BHAL in the form of an erroneous declaration. The court could have left the question open but that would have been inconsistent with the overriding objective in the Civil Procedure Rules since it meant that the question could only be resolved by further litigation. Moreover, for the judge to decide whether scheduled air services were within the permitted user clause he had to decide first what the clause meant. His reasoning process would inevitably have involved interpreting the clause. Accordingly, on Mr Lewison's submission, the court took the right course.
  104. Mr Lewison further submits that without going into the content of the without prejudice negotiations it was impossible for the court to determine whether the rejection of the without prejudice offer was prejudicial to Bromley. The court could obviously not go into the content of without prejudice negotiations because that would be to render them with prejudice. It must be possible to amend pleadings even if there have been abortive without prejudice negotiations. The judge was correct in saying that any prejudice could be dealt with in costs. He should also have said that the existence of any negotiations was irrelevant.
  105. Mr Lewison submits that there is no evidence to support an estoppel by convention in Bromley's favour on the concession issue.
  106. "Other airport or aviation related uses"

  107. Mr Lewison submits that the judge was correct to look at the factual matrix of the transaction mainly to put himself in the position in which the parties were at the time of making the contract. He compared the court's approach in this respect to that of the court when construing a will. In that situation it is clearly established that the court approaches the matter from the point of view of the testator "sitting in his armchair" (Mr Lewison did not cite authority for this proposition but see for example Re Tepper's Will Trusts [1987] Ch 358). It is right therefore for the court to apprise itself of the background before delving into the text. It is not objectionable, on Mr Lewison's submission that it may give rise to an expectation as to what the parties wanted to agree. At this stage in his submissions Mr Lewison accepts that the material must be known to both parties.
  108. Mr Lewison made submissions with respect to each of the ten points in the judge's judgment, which he held lent "strong support to the view that the parties did not intend to prohibit scheduled services or passengers not travelling for business purposes" (Judgment, para 87).
  109. As regards the judge's first and second points (the schedule 3 points), the judge on Mr Lewison's submission was right to conclude that there was no error. He submits that Regional's business plan (see Judgment para 53) referred to the expansion of scheduled services. The judge's interpretation avoids the need to interpolate words. It would not be sufficient to interpolate words "subject to schedule 3" because schedule 3 only refers to flights at the weekend. Schedule 3 moreover refers to a scheduled service to France and not simply a scheduled service to Le Touquet. Operating criteria were not set in stone and Bromley could be asked to agree to variations. Accordingly the judge's schedule 3 point was an important textual point. There was no mistake as BHAL has an aspiration to run scheduled services. If the reference to Le Touquet was not a mistake, Bromley's view as to permitted use was unsupportable. The judge was right.
  110. Mr Lewison relies on the finding of the judge 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 and specific provision with the clause 1.8 wording" (Judgment, para 91). The judge concluded that the obvious inference was that it was not mistakenly omitted but deliberately omitted because it was no longer to apply. Mr Lewison rejects Bromley's submission that a ban on scheduled services was necessary in the AUK agreement because there was no a priori definition of uses that were permitted. Mr Lewison submits that this is the wrong approach. Bromley maintained a considerable degree of control over AUK because the AUK agreement provided that AUK would operate the airport in accordance with the airport policy as agreed with the appropriate committee of Bromley (clause 12.1). This clause also stated that there were agreed objectives of the contractual relationship and these included marketing the airport "in order to attract corporate traffic". This is a different phrase from that used in the permitted user clause in the lease. Mr Lewison accepts that the term "business aviation" may include certain scheduled services, for example where a scheduled service is provided by a company for the benefit of its employees. Mr Lewison's basic point is that if there is to be a ban on scheduled services one would expect an express ban, and Bromley could control scheduled services through the operating criteria.
  111. As respects the third and fourth points made by the judge, Mr Lewison relies on the change of policy by Bromley. In September 1990 Bromley decided not to permit scheduled passenger services at Biggin Hill. In July 1991 however the policy and resources committee of Bromley approved the recommendations of a working party which recommended that the ban on scheduled services could be lifted subject to a number of conditions. These were that scheduled services complied with opening hours, and used aircraft on the approved list only, being aircraft having a seating capacity for no more than eighteen passengers and twin engine turbo-prop aircraft only. These conditions were all included in the lease other than the conditions that the aircraft should have a seating capacity for no more than eighteen passengers and be twin engine-turbo prop aircraft only.
  112. In 1993 Love Air began its scheduled service from Biggin Hill to Le Touquet. This was not business aviation on any interpretation of the meaning of the term. Scheduled services were also started to Carlisle and Manchester but neither route was successful and these scheduled services were abandoned. Mr Lewison submits that even under the lease, while there was an advance on policy there were still controls on the type of aircraft, their number and hours of operation and other environmental matters (see third schedule paragraphs E, F and J). The judge's point was that it was unlikely that the permitted user clause would be severer than the policy which the council had adopted in 1993.
  113. Mr Lewison accepts that scheduled services means services departing according to published timetables which may carry individual fare-paying passengers and excludes a scheduled service by a company for its employees which are within business aviation. Mr Lewison accepts that the words scheduled services are used in this way in the council minutes. It was not entirely clear whether Mr Lewison considered that a flight by a company for its employees with a printed timetable was a scheduled service.
  114. As regards the judge's sixth point, Mr Lewison submits that Bromley's construction of the permitted user clause makes it impossible for BHAL to take up a public use licence, even though this is one of the options permitted by the business transfer agreement.
  115. As regards the judge's eighth point, Bromley wanted to reduce its rate fund subsidy to Biggin Hill which was a loss-making venture. Mr Lewison submits that the ban on scheduled flights was relaxed to help it to be viable and that it would not make sense to restrict the way in which the airport could be run through the user clause. Environmental considerations could be taken into account through the third schedule. Mr Lewison accepts that the judge's eighth point is really about the evaluation of risk of unviability but he nonetheless submits that it was a "telling" point.
  116. As respects the judge's ninth point, Mr Lewison submits that Bromley's construction is impracticable. It would be difficult to police flights to see whether fare paying passengers were included.
  117. As regards the judge's tenth point, Mr Lewison submits that this shows that the judge took into account the physical characteristics of the demise which the judge was entitled to do. On Mr Lewison's submission, it is important that the permitted user clause is clear. It is important to know what can or cannot be done at the airport.
  118. Mr Lewison submits that the judge was right to find that limb D of the permitted user clause entitled the company to engage in all forms of services from the airport. However, as in the phrase "shoe shop or other retail use", the specification of one activity did not affect the fact that the residual category permitted a wide and general use (though I venture to think, not so wide as to include shoe shops). He rejects the submission that limb D of the permitted user clause is ancillary or subsidiary to "business aviation, flight training and private flying". He submits that the references to air fair and air display were included because it was doubtful if they were included within limb D. The permitted user clause includes the word "facilities" and this term meant that air traffic control, the supply of fuel, repair activities and so on necessitated by any flying activity such as business aviation were included without express words.
  119. As to the meaning of this expression, Mr Lewison relies on the absence of the word "ancillary" despite its use elsewhere in the lease. This suggests that it was not intended to be included in clause 1.8. The word "other" suggests that this expression was intended to include flying activities. It is common in leases for words to duplicate earlier words. The lease does not contain any indication that "leisure flying" is prohibited. Indeed the reference in schedule 3 to the service to Le Touquet suggests the contrary. There is nothing to suggest that the parties were isolating an exception to the general rule that leisure flying was prohibited by use of this provision.
  120. Bromley's approach involves saying that there is some mistake in the lease whereas BHAL's construction does no damage to the words used. There was evidence that there had been leisure flying for a number of years, for example (but not only this example) the scheduled service to Le Touquet. This point is reinforced by the fact that the airport was occupied by a large number of sub-tenants many of whom ran charter businesses under leases which did not restrict the use of their demised premises to business aviation. If the judge's construction of limb D led to an increase in the traffic using the roads in the surrounding area, that was a matter to be taken into account at the planning stage.
  121. Mr Lewison submits that, because of the obligation to maximise turnover, BHAL must in fact retain a proportion of business aviation but he accepts that if business aviation were not more profitable than scheduled services BHAL could on its case terminate business aviation altogether.
  122. "Business aviation"

  123. As to "business aviation" Mr Lewison submits that this expression is apt to include all means by which businessmen travel by air including scheduled flights to business destinations. Once it is established that businessmen travel to say Paris, all scheduled flights to that destination would be within the expression. The technical meaning if any of this phrase does not apply unless it is shown that both parties intended the expression to be used in the latter sense: see Holt & Co v Collyer (1881) 16 Ch D 719 at 720 per Fry J. On the evidence, the expression "business aviation" did not have a well recognised meaning within the aviation industry. BHAL's evidence, which the judge accepted, was to the effect that "business aviation" was a term commonly used in the industry to describe the use of air transport services for business purposes. There had been a prohibition in the AUK agreement on the operation of scheduled passenger services. It was significant that this obligation was excluded from the lease. The reference in the third schedule to the scheduled service to Le Touquet showed that the parties had scheduled services in mind (albeit in that instance not within the expression "business aviation"). Moreover, Bromley's definition makes no commercial sense given the precarious financial position of the airport. In addition Bromley had granted permission in June 1991 for the ban on scheduled flights in the 1988 agreement to be lifted. Bromley accepted that it could not have withdrawn its permission for scheduled services if AUK had opened up a number of scheduled services to other European destinations. Accordingly "the construction contended for by Bromley would therefore have the effect that the operation of the airport would be plunged back into the restrictive practices which ordained prior to June 1991". Those practices had led to a substantial loss and the lease marked a new era ostensibly in order to make a profit in which Bromley was intended to share.
  124. Mr Lewison submits that although Bromley contended that this term was a technical term, it had to modify its meaning during the course of the hearing. He refers to the fact that the report dated July 1998 of Halcrow Fox on business aviation in the south east, which was produced to the judge by Bromley's expert, adopts a definition of "business aviation" for the purposes of that study. It defines it as the "operation of twin engine, fixed-wing aircraft for corporate purposes or as sole use charter or air taxi services." Single engine aircraft, helicopters, the use of aircraft for other general aviation purposes such as training recreation and commercial freight, law enforcement and other types of aerial work were specifically excluded. The report recognises that "business aviation" is a diverse industry in terms of the services it provides and the range of companies operating and using them. He also refers us to the report of the business aviation working group which was published by the Department of Trade in 1984. It stated that the group had taken "business aviation" to mean all civil aviation operations carried out for business purposes other than scheduled air services (para 3). This definition differed from that in the Halcrow Fox report. Moreover the group had obviously found it necessary to set out expressly their definition. Accordingly, submits Mr Lewison, the judge was right to conclude that definitions varied and that the term "business aviation" was not a technical term.
  125. As respects Holt v Collyer, above, Mr Lewison submits that this case does not establish a rule of law that if there is a technical meaning for a word and no ordinary meaning, the technical meaning must necessarily apply. This rule was part of the "intellectual baggage" of construction to which Lord Hoffmann had referred. The ultimate question is what the parties meant against the relevant background. Mr Lewison submits that the words "business aviation" are ordinary English words and that an acceptable interpretation would be "predominantly for business purposes". This means that the purpose of the flight has to be considered. However as regards source of revenue it would not be relevant whether the passengers were fare paying or not. It is not difficult to tell which routes are predominantly for business purposes. BHAL's expert, Mr Price had submitted that certain routes were regarded as business routes. Mr Lewison accepts however that while it may be easy to tell that a flight to Malaga is not "business aviation" on his test, it would be more difficult to tell as regards Paris.
  126. "Business aviation" was included because whatever it meant it was a good thing to be encouraged. He submits that under the lease BHAL had an obligation to maximise the turnover of the airport. It was always a long term objective to introduce scheduled services, though Mr Lewison also accepts that Bromley had in mind that consideration would have to be given to the environmental impact on the neighbourhood together with the views of the Airport Consultative Committee (Judgment, para 47). Mr Lewison accepts that the number of flights could be reduced if scheduled services were introduced and that if there was such a reduction, BHAL's ability to challenge the reduction was severely restricted. The judge found that there were no environmental problems with scheduled services and on Mr Lewison's submission there are a number of controls designed to deal with scheduled services. Mr Lewison accepts that the business plan was not seen by those drafting the lease but he submits that, as it concerned the financial stability of the tenant, the business plan should have been referred by the officer of Bromley who saw it to those responsible for preparing and negotiating the lease and that accordingly the information was provided to Bromley as landlord and is within its knowledge even if it was not passed to the individual who drafted the lease. Therefore on Mr Lewison's submission the business plan can be taken into account in construing the lease. Even so, the business plan was not produced in this court. Mr Lewison submits that the judge was right to construe limb D of the permitted user clause as including other forms of flying and to say that airport and aviation related uses could include flying activities. The term "business aviation" was included because Bromley wished to encourage business aviation and because that was the short-term use of the airport.
  127. Estoppel

  128. BHAL spent nearly 0.5m on its new terminal. The judge should have asked whether it was just in the circumstances to allow Bromley to change its stance. Its breach of the lease had been technical. The judge had held that the circumstances were such that one would have expected Bromley to object. In certain circumstances silence can give rise to an estoppel. Accordingly BHAL submits by its respondent's notice that the Court should hold that Bromley is estopped.
  129. Mr Lewison submits that the judge was wrong in his conclusions about estoppel. First the judge held that by carrying out work in breach of the lease, BHAL could not rely on the consent it obtained from Bromley. But Bromley's acquiescence was as much in the works as in use. Second, the judge came to the wrong conclusion that there was breach. Third, BHAL was led reasonably to believe that there was nothing wrong with the works. Accordingly the judge should have held that Bromley was estopped. Moreover it was unconscionable for Bromley to enforce its legal rights now. This is the issue, not whether it was unconscionable for Bromley to speak up at the time.
  130. The lease does not require any application for consent to be in writing. The judge found that BHAL had made a request orally and this is enough. Moreover under the lease any consent to works must not be unreasonably withheld or delayed. The judge found that Mrs Pocknall never wrote to Bromley as she said that she would (Judgment, para 144). Accordingly the judge should have held that the consent was unreasonably delayed. In any event, Bromley led BHAL reasonably to believe that there was liaison between its planning department and the officers dealing with the airport. Mr Hayward knew that the work was proceeding and raised no objection.
  131. Mr Lewison relies on Taylors Fashions v Liverpool Victoria, above, at pages 151-152, where Oliver J stated that it is sufficient if the party sought to be estopped "knowingly or unknowingly allowed or encouraged" the other party to believe that he was entitled to act as he did. This is not a case of silence.
  132. Mr Lewison submits that this is also supported by The Stolt Loyalty, above. He submits that it is further supported by Republic of India v India Steamship Co Ltd. [1998] AC 878: see per Staughton LJ at 891H in the Court of Appeal and per Lord Steyn in the House of Lords at 913. These passages show that it is not necessary that the party sought to be estopped had actual knowledge that he was entitled to prevent the other party from acting.
  133. Alternatively Mr Lewison submits that there was a duty to speak in the circumstances.
  134. Conclusions

    The concession issue

  135. Bromley's case here is that BHAL was estopped from resiling from its pleaded concession and changing its case so as to assert that the permitted user clause allowed activities wider than flights predominantly for business purposes to business destinations. I am prepared to accept Mr Moriarty's submission that a party may estop himself from contending that a document has a particular meaning. That is not a situation which Lord Diplock was considering in Bermuda International v Threadgold, above. In that situation the judge could not make a declaration on the issue covered by the estoppel, and any order on a related issue would probably have to recite the issue which the party had precluded himself from disputing. However, that point aside, in the instant case, the judge in my view was right in deciding to make a declaration about the true construction of the lease as he saw it and without any inhibition based on the concession which BHAL had made but in part withdrawn. Bromley could not rely on detriment because that would involve disclosure of without prejudice negotiations and detriment could not be assumed in its favour. Therefore, even if Bromley had sought permission to amend its defence to plead that BHAL was estopped from seeking to change its case on the interpretation of the lease, permission could not properly have been granted as the plea would have no real prospect of success.
  136. The interpretation issue

  137. The meaning of limb D of the permitted user clause is clearly subject to the meaning of limb A. The first issue is therefore the meaning of the term "business aviation" (limb A).
  138. "Business aviation"

  139. There are two important matters on which in my judgment the judge's approach was in principle correct. First, in my judgment he was correct to approach the question of the meaning of "business aviation" against the factual background to the lease in accordance with the principles described by Lord Hoffmann in the Investors Compensation case (above). Second, in my judgment the judge was right to reject the contention that the term "business aviation" had some special meaning in the aviation industry. However, I part company with him in the identification of the relevant factual background and the conclusions to be drawn from it. I will take that point first even though it applies more directly to limb D than limb A on the judge's approach.
  140. The process of interpretation does not involve ascertaining what the subjective intentions of the parties were in making the agreement, however desirable in an ideal world such an approach might be. The process of interpretation is essentially an objective exercise of ascertaining meaning but it is to be carried out from the perspective of a reasonable observer equipped with all the relevant background information that would have been reasonably ascertainable at the time by both parties.
  141. For the reasons already given above, that information would not in my judgment include Regional's business plan produced on a strictly confidential basis to two only of Bromley's officers concerned with financial matters. BHAL cannot contend that they should have passed it to other officers of Bromley responsible for the wording of the lease when Regional expressly prohibited them from passing the business plan to anyone else. If it had been admissible for the purposes of interpretation it would have been relevant only to show Regional's current business strategy and not to show what were BHAL's intentions in entering into the lease. It follows that it could not be used as material from which such intentions might be inferred.
  142. The reasonable observer would know however that the term "business aviation" had no generally accepted meaning. He would also know from the publicly available documentation that Biggin Hill was associated with business aviation. He would also have known that, at the time the lease was executed, apart from private or recreational flying, the predominant use of Biggin Hill was for the operation of aircraft owned by businesses for their own purposes, and the provision of aircraft on charter to businesses, again for their own purposes. Aviation of this kind was a distinct category of business since it did not involve the offering of transport to members of the public for reward save if, at all, in a very minor or incidental way. The only other uses of the airport at the time of the lease and not mentioned by name in the permitted user clause were: (1) air taxis and helicopters; (2) diversions of scheduled flights from Gatwick and elsewhere; (3) air fairs and air displays; (4) the sale of surplus seats, and (5) the Le Touquet service. As to (1), the informed reasonable observer would know that the term "business aviation" often included this category of business (see the annexures to Mr Johnson's evidence). If air taxis and helicopters were carrying passengers for leisure purposes, there is no finding that this was known or could have been known to Bromley. As to (2) (diversions), as I have said, in my judgment, the findings of the judge that such activities were taking place at the time the lease was granted was based on very slight evidence which suggests that they were so minimal as to be capable of being disregarded. Again there is no finding that Bromley knew or could have known of this business at the time of the lease. So far as (3) is concerned (air fairs and air displays), I consider that in the light of my conclusion (below) on limb D Mr Moriarty's submission that these are a form of private flying within limb C must be correct to this extent, namely to the extent that they involve airborne activity. The words in parenthesis in the permitted user clause are therefore arguably misplaced. But even if air fairs and air displays involve airborne activities, they also involve considerable activity on the ground, with spectators, exhibitions, car parks and so on that would not be required simply for the airport. On that basis, the words in parenthesis are not misplaced. I have already dealt with (4) (paragraph 33 (2) above). If the sale of surplus seats took place, it was very minor and there is no evidence that this information was known to or was reasonably ascertainable by Bromley.
  143. Armed with the knowledge of the Le Touquet service ((5) above), the reasonable observer interpreting the lease would need to ask himself whether schedule 3, by extending operating hours "so as to permit an operator based at the airport to operate a scheduled service to France" referred to the specific service to Le Touquet or any scheduled service by the same operator to France. In my judgment, given that the permission was linked to a particular operator and a particular country and related to the obviously sensitive issue of opening hours, the reasonable observer would in my judgment form the view that the permission related only to the Le Touquet service.
  144. Approaching the matter in that way, the reasonable informed observer would have to ask whether the Le Touquet service comprised "business aviation" as that phrase was used by the parties to the lease. The Le Touquet service was clearly not business aviation. It was a scheduled service for leisure purposes. I consider the Le Touquet service further below in connection with the interpretation of limb D.
  145. The judge was heavily influenced by the fact that Regional wanted to expand the use of Biggin Hill (if it was granted a lease) into scheduled services, and by the fact that Bromley had some years previously decided that subject to certain conditions the use of Biggin Hill for scheduled services could be permitted, and (by inference) that such services might ease the financial problems of running the airport both for the operator and in turn itself (as the likely underwriter of any losses). The financial burden of running the airport was no doubt a hard fact which the informed observer would readily recognise. But the objectives of Regional and the policy decisions within Bromley, even if publicly available, rest at the level of the subjective intention. In my judgment, the judge was in error in taking these factors into account in the way he did.
  146. I now turn to my second point, that the judge was right to reject the evidence that the term "business aviation" had some special meaning in the industry. It was in effect alleged that these two plain English words had acquired some special customary meaning which applied to the lease. It is well established that custom is not admissible on interpretation unless it is clearly established: see for example Chitty on Contracts, 28 ed. (1999), para 12 127. The judge's conclusion was that "business aviation" had no technical meaning. That conclusion was clearly open to him on the evidence. There is therefore no room for any presumption that the technical meaning of a word applies (see Holt v Collyer, above). For my own part, I doubt whether such a presumption is needed today since the court decides the meaning of contractual provisions by recourse to the factual matrix.
  147. Significance must of course be attached to the phrase the parties used. The term is not "business travel" or "business aircraft" or "business aviation market" but "business aviation". The ordinary meaning of "aviation" is the practice of operating aircraft. It follows therefore in my judgment that the term "business aviation" is focusing on the purposes of the operator of the aircraft (by whom I mean the person who has the use of the aircraft whether or not he or it is the owner). This is reinforced by the fact that the permitted user clause refers to other ways in which aircraft can be used, that is flight training and private flying. In order to give the word "business" meaning in the context of "business aviation", the phrase must in my judgment mean that the operator of the aircraft is operating an aircraft for the purposes of the business of the operator. The expression "for the purposes of its business" in this context excludes a situation where the business is the carriage of passengers for reward. On the other hand the carriage by a company which operates an aircraft for its own employees free of charge would be "business" aviation. Individual fare paying passengers carried pursuant to a published timetable would however be excluded.
  148. It is necessary to bear in mind the implications of BHAL's "Paris" point. BHAL's case is that once it is shown that businessmen travel to, say, Paris, all scheduled flights to that destination are within "business aviation". In his expert report, Mr Price listed some thirty destinations; he said in his evidence that these were generally regarded as business routes and that any passenger flying on these routes could be taken to be flying for business purposes. If that were the correct meaning of business aviation, it would permit a far wider class of aviation than was conducted at Biggin Hill at the time of the lease. In my judgment, the parties are more likely to have taken business aviation to mean the type of business aviation conducted then than some newer and wider meaning. This is all the more so when one appreciates the true extent of the "Paris" point, that it would enable BHAL for example to operate weekend or Christmas flights to Paris which clearly have no likely business connection whatever. BHAL's definition of "business aviation" turns the concept on its head.
  149. There are certain grey areas. Suppose that the company carries its customers or suppliers, would this be "business aviation"? In my judgment, provided that the company was doing this for the purposes of its business, this would fall within the meaning of "business aviation". On the other hand where a company charters a plane for the benefit of its employees and then charges its employees a proportionate share of the direct costs for each passenger, the situation is much more marginal. We have not heard argument on the meaning of "private flying". That phrase may be rather more suited to cover the penumbral situation just postulated than the term "business aviation". Air taxis and helicopters might be thought to present a difficulty but as I have said it seems to be accepted in practice that such flights should be treated as business aviation even though they do not strictly fall within that term as I found it to be. This is no doubt because air taxis and helicopters are often provided for the benefit of corporate customers and their executives.
  150. In the course of negotiations BHAL indicated its intention to develop Biggin Hill for scheduled services. In my judgment, as I have said, this evidence was not admissible on the question of construction and should not have been utilised for the purposes of interpreting the permitted user clause. The court has no way of knowing from this single piece of evidence what influence it had on the course of the negotiations, if any. In all the circumstances it ought to be left out of account. This of course leaves it open to BHAL to bring proceedings for rectification if there was some prior concluded agreement that scheduled services should be included in the permitted user clause of the lease.
  151. I have not expressly referred at any point to the carriage of cargo. It appears to be common ground that any use permitted for passengers would also be permitted for cargo. Moreover no distinction was drawn in argument between use by an operator for its purposes and use by an operator for the purposes of any member of its corporate group. These days businesses often carry on business through a group of companies rather than a single company. I have assumed that there is no issue between the parties as to any such distinction.
  152. For all these reasons, in my judgment, the interpretation of "business aviation" advanced by Bromley is to be preferred, namely that it means the operation of aircraft owned or chartered by a company or other business, and undertaken for business purposes, provided individual fare-paying passengers are not accepted. I also include air taxis and helicopters within "business aviation".
  153. "Other airport and aviation related uses"

  154. In the Investors' Compensation case, above, at 913, Lord Hoffmann referred to the "common sense proposition that we do not easily accept that people make 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." Looking at the permitted user clause with that in mind, one must start from the opposite of the proposition accepted by the judge, namely (in his judgment) that the meaning of limb D is so wide that limbs A, B and C are unnecessary. The judge's approach involves the conclusion that the parties made a mistake in including limbs A, B and C in addition to limb D.
  155. The usual reason for including a general phrase after some specific items is to catch minor or ancillary matters which it would be tedious or unnecessary to list by name. (I would not regard that approach as intellectual baggage which has to be discarded but rather the wisdom of experience). Such a phrase is often called "a sweep up clause". That first impression is enhanced by the use of the word "related", which connotes an ancillary use. Contrary to the judge (Judgment para. 106), the word "other" seems to me naturally to qualify "uses" rather than "aviation" or "airport". In other words, grammatically, the full phrase would appear to be:
  156. "other uses related to an airport or related to aviation"
  157. To reach this result, I do not myself think it is necessary to have recourse to the authorities on the construction of main objects clause in the memorandum of association of a company. The context is entirely different, and in that context there are considerations which arise which play no part here.
  158. On the footing that the parties naturally used the language in the permitted user clause (including limbs A, B, C and D) rather than, say, "airport providing facilities for use for any form of aviation and any use related to an airport", aviation uses within limb D must be narrower than those held to be within that limb by the judge. That also follows from the use of the word "related". Limb D is not permitting any other form of aviation whatsoever; it is permitting additional uses which are not themselves aviation but related to aviation. This would include, for example, aircraft maintenance facilities servicing, not just aircraft using the airport, but other aircraft as well.
  159. Accordingly in my judgment the judge erred in his conclusion that:
  160. "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.

  161. The judge's construction of limb D is hinged on this point because he took the view that the authorities precluded him from adding words to the permitted user clause to bring in the Le Touquet service if limb D "could possibly cover the scheduled service to France" (Judgment, para. 89). To my mind, by including the word "possibly" the judge stated the proposition which he drew from the authorities at too high a level for a case such as this where the wording of two separate provisions in the document are potentially conflicting. Moreover the question is not simply whether limb D covers the Le Touquet service. In my judgment it could not. The true position is that the lease must be read as a whole and (in view of its ambiguity) with the benefit of its factual matrix. Read as a whole, it must in my judgment be taken to have permitted the operation of the Le Touquet service as it was operated at the date of the lease.
  162. Schedule 3 shows that the Le Touquet service was clearly a permitted user. I do not agree with the judge's reasoning that there was no evidence of an obvious mistake which the court could remedy by appropriate construction. The parties could always add to the permitted user clause by agreement. Their agreement might have been recorded in a formal licence or deed of variation. In this case the agreement to add an additional user is recorded in schedule 3. Had there been no reference to a single scheduled service in schedule 3, the conclusion might not have been the same. But as I see it the reasonable observer, informed as he was as to the limited nature of the scheduled service to Le Touquet, would conclude that it was casus omissus, not the thirteenth chime of the clock. It does not in my judgment mean that limb D should have an extended meaning beyond that which I have found above.
  163. I have already dealt with the judge's first two points. In response to the judge's third to tenth points:
  164. (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.

  165. With respect to the judge, he gave too great weight to his ten points. In addition there were other important aspects of the factual background to which he did not give sufficient weight:
  166. 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.

    Estoppel

  167. The main issues here are:
  168. (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.

  169. This aspect of the case presents difficulties because the Court is being asked to decide this question of estoppel on the basis of the judge's findings of fact but without the benefit of any final conclusion by him or sight of the underlying documents to which he refers in this part of his judgment. However neither party has asked us to order a retrial of this issue or to remit it to the judge.
  170. As to (1), Mr Stungo and Mr Hayward knew about BHAL's wish to expand its scheduled services and did not object. But the judge found that, their silence was not deliberate. Their knowledge was derived from documents dealing with the future strategy of BHAL, the proposed withdrawal of customs facilities and a report by BHAL's business consultants sent "for information". I do not consider that Mr Stungo and Mr Hayward could be expected to follow up these passing references to scheduled services. In my view they could reasonably proceed on the basis that if any consent from Bromley as landlord was needed it would be sought. Moreover there is no evidence that BHAL took any action on the basis of their failure to react by objecting to scheduled flights. Furthermore, BHAL was in as good a position as Mr Stungo and Mr Hayward to know what the lease said.
  171. Mrs Pocknall represented that Bromley's consent as landlord would be a formality to the second phase of the extension of the third terminal. However she did not know that BHAL wished to build the third terminal to enhance its scheduled services business.
  172. As to (2), BHAL covenanted in the lease not to make any material structural alteration to any building without "making an application to the landlord for its consent" (clause 5.5:2). That consent had to be in writing (clause 3.7). In my view while the express requirement of the lease was only that BHAL should apply for the landlord's consent if it wished to extend the terminal building, one meaning of that requirement is that BHAL must obtain that consent before proceeding with that work. In my judgment that is the logical and sensible construction, and the meaning that properly applies here. BHAL did not obtain Bromley's written consent. Therefore BHAL carried out the relevant work in breach of the lease.
  173. So far as estoppel is concerned, the factors in BHAL's favour here were Mrs Pocknall's indication that consent would be a formality, her failure despite her agreement to do so to send the necessary documentation to BHAL and the fact that BHAL incurred nearly 0.5m on the terminal. As against those points, however, by failing to revert to Mrs Pocknall and enquire why the documentation had not been sent, Bromley were (if now estopped) deprived of the opportunity of investigating the matter properly with its own planning department. Bromley might still not have reached the conclusion that the permitted user clause was not wide enough to permit the proposed use of the terminal as extended, but it lost the opportunity of ascertaining the position. There is no reason why BHAL could not have followed the matter up: it had never done so in writing. Obtaining the landlord's consent pursuant to the terms of the lease is not a mere formality: it is a contractual obligation of the tenant.
  174. The fact that Mrs Pocknall did not know that the terminal was to be used for scheduled services, still less that scheduled services were not a permitted user, is not a conclusive ground for saying that Bromley could not be estopped (see the Taylor Fashions case, above, at 151-2), but it is a relevant consideration in Bromley's favour in determining whether it would be unconscionable to allow Bromley to resile from Mrs Pocknall's representation that Bromley's consent under the lease would be a formality.
  175. In all the circumstances, I agree with the judge that BHAL cannot succeed on its respondent's notice.
  176. As to (3), it is clear that BHAL recognised from the outset that scheduled services for leisure purposes were not permitted by the lease (see the statement of Mr Walters in paragraph 25 above). Accordingly, if there had been any estoppel, it would not have extended beyond the user which BHAL contends was permitted by limb A of the permitted user clause.
  177. Disposition

  178. In my judgment the appeal should be allowed, a new declaration as to the meaning of the permitted user clause made and the cross-appeal dismissed.
  179. LORD JUSTICE DYSON:

  180. I agree.
  181. LORD JUSTICE PILL:

  182. I also agree.
  183. ORDER: Appeal allowed; cross appeal dismissed; appellant to have costs under clause 3 of draft minute; time to pay, 3 months; permission to appeal refused; form of declaration adjourned generally, not to be re-listed before 2nd October; parties to confer with each other and with court administration as to date and duration of further leaving.
    (Order does not form part of approved Judgment)


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