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Cite as: [2007] EWHC 999 (QB)

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Neutral Citation Number: [2007] EWHC 999 (QB)
Case No: HQ05X03299

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
11th May 2007

B e f o r e :

MR JUSTICE JACK
____________________

Between:
(1) Seventh Earl of Malmesbury
(2) William John Maltby
(3) Kathleen Hobbs
(4) Wilsco 283 Limited


Claimants

- and -

Strutt & Parker (A partnership)
1st Defendant/Additional Claimant
Wilsons (A partnership)
2nd Defendant/First Third Party
and

Peter Robin Fitzgerald
2nd Third Party

____________________

Anthony Speaight QC & Kevin Farrelly (instructed by Stockler Brunton) for the Claimant
Timothy Lamb QC, Edwin Johnson QC & John Gallagher (instructed by Williams Holden Cooklin Gibbons LLP) for the 1st Defendant
Michael Douglas QC (instructed by Simmons & Simmons) for the 1st & 2nd Third Party
Hearing dates: 5 - 23 Feb & 1, 2 March 2007

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    INDEX

    A. Introduction, paragraphs 1 – 6
    B. The history, paragraphs 7 – 62
    C. The Estate's view of the Airport Road, paragraphs 63 – 69
    D. The Airport witnesses, paragraphs 70 – 81
    E. The evidence of Mr Ashworth and Lord Malmesbury, paragraphs 82 – 98
    F. The evidence of the car park experts, paragraphs 99 – 103
    G. The evidence of the surveyor experts, paragraphs 104 – 107
    H. The duty of Strutt & Parker, paragraphs 108 – 111
    I. Breach of duty in relation to the 2000 lease, paragraphs 112 – 123
    J. Breach of duty in relation to the 2002 lease, paragraphs 124 – 147
    K. Breach of duty in relation to the 2003 leases, paragraph 148
    L. The lost chance, paragraphs 149 – 166
    M. The measure of loss, paragraphs 167 – 193
    N. Other quantum issues, paragraphs 194 – 201
    O. The status of the Airport Road, paragraphs 202 – 215
    P. Strutt & Parker's claim against Wilsons and Mr Fitzgerald, paragraphs 216 – 226
    Q. Contributory negligence, paragraphs 227 - 231
    R. Strutt & Parker's counterclaim for fees, paragraph 232
    S. Conclusions, paragraph 233

    Mr Justice Jack :

    A. Introduction.

  1. The claim in this action is for negligence in connection with the negotiation of leases of land to Bournemouth International Airport Limited for car parking. The land in question is part of the Hurn Estate, and the freehold is vested in the trustees under the Settled Land Act 1925 of a family trust made in 1963, modified in 1969, often called 'the 1969 settlement'. The tenant for life is the Earl of Malmesbury. The primary defendants are the well-known firm of Strutt & Parker - surveyors, property consultants, managers and estate agents. A partner in the firm who was later a consultant, Mr Ian Ashworth, had the carriage of the negotiations on behalf of the Estate. He negotiated the terms of four leases which were entered into in 1997, 2000, 2002 and 2003. It is alleged that he was negligent and in breach of his duty in relation to all save the first. The main allegation against him is that he should have negotiated leases with rents which reflected the earnings of the car park and provided for the Estate to receive the greater part, 80%, of those earnings. The most important lease is that of 2002. The 2003 lease was supplementary to it and brought in some more land. They will run until 13 August 2026. The initial rent under the 2002 lease was £9,000. Following a review under the terms of the lease it became £30,051 as from 8 July 2005. The earnings of Bournemouth International Airport from car parks in 2005 was £854,000 and in 2006 £1,804,000, the majority of which came from the car park on the leased land.
  2. The claim form was issued on 9 November 2005. Strutt & Parker served its defence on 17 January 2006. On 17 May 2006 Strutt & Parker issued an application to join the solicitors, Wilsons, and Mr Peter Fitzgerald, a partner in Wilsons, later a consultant, as defendants to a counterclaim under Part 20. Wilsons have their offices in Salisbury. Mr Fitzgerald had acted as solicitor to the Estate for very many years. He was a trustee of the 1969 settlement until these proceedings caused him to be replaced by Mrs Hobbs. The claims against Wilsons and Mr Fitzgerald are made conditionally upon Strutt & Parker themselves being held liable. The claims which are now pursued have been reduced from those in existence at the start of the trial. The sole claims now made are against Mr Fitzgerald as solicitor to the Estate, and through him against Wilsons, on the basis that, if Mr Ashworth failed in his duty, so did Mr Fitzgerald. Claims alleging breach of duty by individuals in the conveyancing department of Wilsons have gone. It was not until 2 November 2006 that the claimants obtained an order joining Wilsons as defendants. Save in one respect the claimants did not seek to make any positive case against Wilsons, but sought only to adopt any case which Strutt & Parker established. They now seek only to adopt such case as Strutt & Parker may establish against Mr Fitzgerald, and through him, Wilsons: the independent claim has been abandoned.
  3. Finally there is a counterclaim by Strutt & Parker for unpaid fees relating to Mr Ashworth's services in the sum of £35,541.
  4. It was agreed between counsel as the evidence drew to its close that I should not hear the accountancy evidence. I am to decide the main points of principle leaving the consequences to a further hearing if they cannot be agreed.
  5. The claimants are (1) Lord Malmesbury, (2) Mr William Maltby, (3) Kathleen Hobbs, and (4) Wilsco 283 Limited. As I have stated, Lord Malmesbury is the tenant for life of the Hurn Estate under the 1969 settlement. He had the power to grant the leases without reference to the trustees of the settlement as they did not exceed 25 years. It may be that he is the proper claimant and that the other claimants are not: but although at one time this seemed likely to be agreed, in the end it was not. I did not hear submissions on it. Mr Maltby and Mrs Hobbs are the present trustees under the settlement. Wilsco is a company in which the relevant land was once vested as bare trustee for Lord Malmesbury. The land has since been re-vested, and Wilsco can be ignored. Lord Malmesbury had the courtesy title of Viscount FitzHarris until he succeeded his father in 2000. I will refer to him throughout as Lord Malmesbury. Although Lord Malmesbury may be the sole claimant in respect of these claims, I will refer to 'the Estate' as representing the interests on his side. That is how they are referred to in the contemporary documentation, and it enables me to include the trustees and remaindermen where their interests may arise.
  6. I will refer to Bournemouth International Airport Limited as 'BIA'. I will use the term 'the Airport' to refer to the airport itself.
  7. B. The history

  8. It is first necessary to provide a description of the Airport. It lies to the north east of Bournemouth and was formerly part of Merriton Heath. It came into being as an airfield during the Second World War when it was compulsorily acquired from the Hurn Estate. It may be taken as very roughly rectangular in shape save that the south east corner is not owned by the Airport but by the Estate. The main runway runs from east to west and the airport is larger in that direction. Its southern boundary is formed by the B3073, called in the vicinity of the Airport, Parley Lane. The main buildings including the terminal are by the south eastern boundary. They are reached by a road called the Airport Road, which runs north from Parley Lane for a short distance. This road is bounded on its east side by the Estate's land. The terminal is immediately to its west. The main long stay car park is opposite the terminal immediately across the Airport Road on the Estate's land. There is another smaller long stay car park on the Airport's land to the north of that, but still south of the runway. It is unsurfaced. There is short stay car parking on the Airport's land adjacent to the terminal. There is a substantial industrial or business estate on Airport land at the north west corner and another smaller development on its land at the north east corner. There is a lane called Pussex Lane, which runs north west from the B road, Parley Lane, to the east of the relevant Estate land. It is closed off where it meets the Airport. It is surfaced with tarmac but somewhat overgrown and unkept. The main access to the Airport is via the Bournemouth spur road, the A338, a dual carriageway leading from the M27 to Bournemouth. This gives access to the B3073. Much of the land to the south of the Airport and Parley Lane is owned by the Estate. The land is all characterised as green belt save the land on the Airport which is designated for industrial or commercial development. There is no direct access to the airport by rail, but BIA runs a bus service from Bournemouth railway station.
  9. The business of BIA, the company, is in part the operation of the Airport and in part the management and development of the industrial and commercial property on its perimeter. The following table may indicate something of their relationship.
  10. Turnover Operating profit Operating profit Operating profit Operating profit
      Air traffic Property/commercial Air traffic Property/commercial
    1996 £2,566K £3,835K (£762K) £1,208K
    2000 3,101K 5,451K (1,044K) 1,884K
    2005 7,318K 4,275K £2,879K (net £1,650K) £2,879K (net £1,650K)

    In 1996 and 2000 commercial activities included car parking – the evidence of Mr Baron, Day 7, page 101. The income from car parking in those years is unknown. In 1997 it was £283K, and in 1999 £310K. I have included under air traffic turnover for 2005 car parking £854K, and concessions £1,842K, as these are related to the air traffic business. Aviation income in 2005 by itself was £4,622K. The operating profit was not divided into divisions in 2005. The years are financial years ending in the years stated.

  11. There will be some meetings and conversations in relation to which it will be appropriate to return and make further findings of fact when I consider whether or not Mr Ashworth was in breach of his duty.
  12. The story begins in 1988 when BIA made an application for planning consent for a car park on two fields on the Estate's land across the Airport Road opposite the terminal, which have been called Fields A and B, B being to the north of A. BIA was then jointly owned by the Dorset County Council and the Bournemouth Borough Council. This application was eventually granted on 12 August 1992. It had to be implemented within 5 years.
  13. On 4 June 1990 Mr Stephen Rippon-Swaine, then a partner in Joliffe & Flint, chartered surveyors, wrote on behalf of BIA concerning a suggestion that the Estate should grant a lease of the land. He proposed that the rent should include percentages of the income from car parking varying between 5 and 10% with amount. This was a part of a negotiation which carried on into 1992, but came to nothing.
  14. Strutt & Parker were appointed land agents by the Estate in December 1992. The person mainly involved on behalf of Strutt & Parker in the management of the Estate was Mr Anthony Fortescue. He was not concerned directly with negotiation matters concerning the Airport. Such matters were handled by Mr Ian Judd of Ian Judd & Partners, surveyors.
  15. In 1989 the Estate had granted an option to Argent Estates over 27 hectares of land with a view to releasing its development value. Argent planned a substantial development including a hotel, petrol filling station, and a business park. By 1995 Argent had withdrawn. I mention its involvement because it illustrates the strong desire of Lord Malmesbury to find a way of achieving the development of Estate land in the vicinity of the Airport.
  16. Early in 1995 BIA was sold to National Express Group PLC. In April of that year Strutt & Parker suggested that in the context of a new owner the Estate should appoint 'a development surveyor' to meet with National Express to discover their intentions and prepare a report as to how the Estate could best develop its land. The letter stated:
  17. "We firmly believe that the combination of the change of ownership of the Airport and the impending Consultation Draft of the Christchurch Borough Local Plan gives an ideal opportunity to maximise the potential development value of the land near Hurn Airport. Indeed, it is particularly fortunate that the Local Plan procedure is now underway but, in turn, this means that action needs to be taken immediately.

    ……

    The situation at the Airport is now so different that we believe that a fresh approach to the new owners could well be beneficial. The forthcoming Consultation Draft of the Local Plan gives the opportunity to work with National Express to mutual benefit. Such an approach needs to be well coordinated and attractive to National Express. We believe we are well suited to this task. We are well known in this field of development and we know the Senior Executive Directors of National Express. We have the necessary expertise to conduct and coordinate these negotiations and we can call upon assistance within the firm, as well as work with your existing advisors and any others that may be necessary. Until National Express' intentions are known, it is not possible to advise the precise team of advisors needed."

    The surveyor in question was Mr Ian Ashworth, a partner in Strutt & Parker who specialised in commercial property. He was the author of the letter. By letter of 14 April 1995 Lord Malmesbury made the appointment.

  18. Until the appearance of National Express BIA could well have been described as stagnant. The airport operation itself ran at a loss, which was in part supported by the income obtained from lettings on the northern sectors. National Express wished to improve the airport and was prepared to provide funds to do so. In 1996 the runway was extended to accommodate larger aircraft able to cross the Atlantic. This gave it an advantage in that respect over its neighbour, Southampton Airport.
  19. The 1997 lease

  20. In 1995 it was clear to all involved that steps must be taken to implement the planning permission granted in 1992 before it lapsed. BIA had no need for car parking on the land at this point but wished to provide for future growth. BIA first sought to buy the land, but the Estate refused to sell. Eventually it was agreed between Mr Ashworth and Mr Graham Holland that there should be a lease of Field A to BIA for three years at a rent of £1,000 per annum. Mr Holland was a partner in Holland Mitchell, chartered surveyors. He was consultant to National Express on matters relating to BIA. It was agreed that the lease should be outside the security of tenure provisions of the Landlord & Tenant Act 1954. BIA was to do the work necessary to provide a car park. The lease was dated 9 July 1997. On 18 June 1997 Mr Howard Baron, BIA's commercial director, had written to Mr Ashworth saying that in the event of the lease not being renewed BIA would not seek compensation from the Estate for the cost of works carried out by BIA. I should also mention that on 6 March 1997 Mr Ian Judd, the surveyor who had been involved in the 1990/2 negotiations with Mr Rippon-Swaine wrote to Lord Malmesbury reminding him of that fact and referring to 'a combination of rent and turn-over'. He did not want that to be omitted from the negotiations. Mr Ashworth received a copy of the letter.
  21. No criticism is made in respect of Mr Ashworth with regard to 1997 lease. It was a temporary measure to preserve the positions of the parties and the benefit of the planning permission. BIA had no real immediate need for the land as car parking: it had sufficient parking space on its own land near the terminal.
  22. There was a further reason why the lease was regarded as temporary. In the summer of 1997 BIA was considering a new Master Plan. This included the building of a new terminal and car parks in part on the Estate's land. The Estate's advisers were kept informed and had meetings with BIA's advisers. Planning permission was applied for on 28 November 1997 and was recommended for approval by the Planning Department on 25 February 1998. It seems that the Council voted to grant approval but that it was never formally granted. Initially this was because a section 106 agreement was required to be entered into by BIA and the Estate. Later it was because the application might be, and in due course was, called in by the Secretary of State. The section 106 agreement was the subject of prolonged discussion between BIA and the Estate in 1998 and 1999. Considerable effort went into it.
  23. The 2000 lease

  24. The car park next raised its head when on 30 October 1998 Mr Holland wrote to Mr Ashworth. He said that although limited use had been made of it further surfacing work was required to bind the surface. I add that it was not at this time being used by more than a few passengers, but was used in a small way by Airport employees and perhaps contractors. Mr Holland stated that National Express had approved £165,000 for the work to be done in that year but required a lease for longer than the remaining two years. He asked if the Estate would grant an extension of the existing lease. The existing lease was of Field A only, and the negotiations for the 2000 lease did not involve Field B, which lay to the north of Field A and abutted what was BIA's southern boundary at that point. Mr Holland also referred to BIA's concern that the 'bigger deal' was only moving forward slowly, and that it might not come to fruition before the lease expired. By the 'bigger deal' he must here have meant the intended new terminal. In a note of 2 November 1998 Mr Ashworth described the request as 'extraordinary'. He wrote to Lord Malmesbury on 3 November 1998 saying that the letter raised important issues and that it gave a further opportunity to ask BIA to explain its intentions. By a letter of 4 November Mr Ashworth suggested to Mr Holland that the matter be discussed at an Estate BIA liaison meeting. That meeting was held on 16 November. A number of matters were discussed apart from the car park, which takes up only a small part of the minutes. Mr Howard Baron, the Commercial Director of BIA stated that £100,000 had previously been spent but the surface was not adequate for use. He had £65,000 to spend that year and £100,000 in the next year. When Mr Ashworth expressed surprise that all would be 'torn up' for the new terminal, Mr Baron said that the terminal project was delayed and the car park would be needed for longer: the laid out part was clear of the site for the new terminal. Mr Baron also informed the meeting that it was his view, which might or might not be accepted by National Express that, if the planning application for the new terminal was called in by the Ministry, it should be abandoned because of the delay and costs that would be incurred. He later stated that BIA had had a 're-think' about the new terminal. The predicted increase in passengers had not occurred for a number of reasons. The project was postponed to 2003/4, though that could change. The forecast of passengers was:
  25. 1997 270,000
    1998 300,000
    1999 400,000

    The opening of the new terminal would coincide with a throughput of about 500,000 passengers p.a. It was agreed that Mr Holland should pursue the extension of the car park lease as a matter of urgency.

  26. On 20 November 1998 Mr Ashworth received a message to telephone Mr Holland to discuss the car park and that Mr Holland would be sending a fax. The fax was sent in the form of a letter dated 23 November. In it Mr Holland suggested that the existing lease be surrendered and a new lease for 10 years from 9 July 1997 should be granted. The rent was to be £1,000 p.a. for the first 3 years, £5,000 for the fourth and fifth years and thereafter £10,000 p.a.
  27. On 25 November 1998 two telephone conversations took place between Mr Ashworth and Mr Holland. Mr Ashworth referred to their content in his letter to Mr Holland the next day. Mr Ashworth wrote that Mr Holland had said that the Airport would not pay a 'full economic rent' because it would be incurring a capital expenditure of some £500,000 on upgrading works, and because of the limited car parking revenues. Mr Ashworth had asked for a rent which included an element based on the turnover of the car park. He recorded that Mr Holland had refused this because of the difficulties in monitoring usage. (At that time usage was on a pay-and-display basis with no means of distinguishing between users of the parks on the Airport's land and users of the park on the Estate's land.) They had left it that Mr Holland would come back to him with a revised rental structure for, say, a five year lease from 9 July 1997. Mr Ashworth suggested that by July 2002 the Airport would then want to renew the lease at a full economic rent or deal with the car park in conjunction with the arrangements concerning the new terminal.
  28. In his letter to Mr Ashworth of 1 December 1998 Mr Holland enlarged on the problems with a turnover rent. They were (1) the car park was used only by staff and the usage was unlikely to grow significantly in the short term; (2) any substantial use the next year would come from a major further tranche of air charter business; (3) much of car parking was paid for through an overall arrangement whereby it was included in the price of a charter ticket; and (4) the cost of installing a form of auditing system. Mr Holland proposed a new lease to expire in July 2004 with a rent of £1,000 to July 2000, £5,000 for the next year, £10,000 for the next 2 years and £15,000 for the last year. So the lease was for 5 years instead of the 10 years he had first proposed and the rent in the fifth year was to be £15,000 instead of £5,000. There was to be no security of tenure or compensation under the Landlord & Tenant Act. The much better rent was the fruit of Mr Ashworth's negotiation. The original offer would have brought the Estate £13,000 over the term of the lease. Now it was to get £31,500.
  29. The proposal was considered at a meeting of the Estate Trustees on 3 December 1998, which was attended by Mr Ashworth for the relevant item. The minutes record that 'The Trustees agreed that [Mr Ashworth] should do what he can to increase these rents and it may be better to have the total rent averaged out annually over the term'. In his evidence Mr Ashworth accepted that subject to that he would have advised the Estate to accept the offer. The minute also records 'Originally a turnover rent was suggested but a scale rent is now proposed …'. In his evidence Mr Ashworth suggested that he may have said more than the minutes record. I think it unlikely that he said anything of substance which was not recorded. This was an example of something which Mr Ashworth did on a number of occasions, namely saying he might have done something which was not recorded, and that he had no recollection either way.
  30. In further discussions between Mr Holland and Mr Ashworth a rent of £7,000 was agreed for 5 years to 9 July 2004. Mr Ashworth wrote to Mr Holland confirming the Estate's agreement on 8 December. He set out the context in relation to the development of the new terminal. The National Express legal department were to send a draft lease to Wilsons. That was done on 10 December.
  31. In a memorandum dated 24 December Mr Fitzgerald recorded his view, already conveyed to Mr Ashworth, that it was important to have a break clause in the lease enabling it to be terminated if planning permission was granted for any form of development over the land, because BIA would otherwise use the lease as a means of reducing the purchase price. This requirement was not accepted by BIA and was a reason for the substantial delay in the completion of the new lease, which did not occur until 20 January 2000. The other and main reason was that BIA and the Estate were occupied with the proposals for the new terminal and the section 106 agreement.
  32. With effect from 1 May 1999 Mr Ashworth ceased to be a partner in Strutt & Parker and became a consultant acting in respect of specific clients and projects. By letter of 5 March 1999 Lord Malmesbury confirmed that he should continue to act as 'haggler' to the Trustees.
  33. On 24 March 1999 Mr Fitzgerald wrote to Mr Ashworth to say that he had read that Drivers Jonas had particular experience of rental performances in relation to airports and asked if the appropriate expertise was available at Strutt & Parker or should they take one-off advice. Mr Ashworth did not reply. He said in evidence that he did not do so because he considered that he had adequate expertise. He was irritated by the letter but not offended. I asked him if he did not have a good relationship with Mr Fitzgerald. He replied that they had known each other a long time: they had never been close.
  34. On 21 July 1999 the section 106 agreement was signed and on the same day the Christchurch Borough Council sent it and other documents to the Government Office for the South West so it could be considered whether to call in the application for planning permission for a new terminal partly on the Estate's land.
  35. In September 1999 the question of the new car park lease came alive again. On 3 September Mr Holland wrote to Mr Ashworth referring to their telephone conversations. The agreement which they had reached was that the new lease would expire in July 2005 with a rent of £9,000 (the previously agreed figure was £7,000). On 13 September Mr Ashworth replied agreeing those terms on behalf of the Estate. On 15 September Mr Fitzgerald again raised the question of a break clause. By letter of 19 November National Express agreed to a clause, and its terms were agreed in early December.
  36. By letter to BIA's advisers dated 20 December the Government Office for the South West stated that the planning application for the new terminal was being called in.
  37. On 19 January 2000 Mr Holland telephoned Mr Ashworth to pursue the new lease. It was signed on 20 January. It ran until 8 July 2005, and the rent was £9,000 per annum payable quarterly. It related to Field A only.
  38. On 7 February 2000 BIA announced that it was withdrawing its planning application for a new terminal partly on the Estate's land. In the announcement the managing director, Mr Glynn Jones, stated that passenger numbers had doubled in 4 years and BIA was determined to find a way of improving the Airport's facilities. He said that BIA would shortly be submitting a planning application for interim improvements to the existing terminal. The announcement came as a blow to the Estate and its advisers. Mr Fitzgerald discussed the position with Mr Ashworth on 2 March 2000. Mr Ashworth's view was that the Estate would make its real money by selling land to enable the widening of Parley Lane to provide a better access to the Airport's estate to the north. Mr Ashworth is recorded as stating that the Estate was getting a fairly modest rent for the car park but when the lease ran out it could get a full rent without crediting the Airport for the work done by it.
  39. The 2002 lease

  40. In 2000 the scheme whereby car parking vouchers might be supplied to some charter passengers came to an end.
  41. On 12 May 2000 Lord Malmesbury wrote to the Chief Executive of National Express, Mr John Spooner, referring to his disappointment at the withdrawal of the planning application for the new terminal on Estate land. He asked if he might have an early indication of BIA's intentions as to a new terminal. The outcome was a dinner on 2 August. Prior to this at a meeting on 17 July the Estate was advised that BIA was looking to build a new terminal on its own land to the south and west of the existing terminal. Among its reasons were that this enabled it to keep its existing car parking and avoided a need for Estate land. It was looking for an expansion in passengers of 7% each year for 30 years, from 300,000 p.a. to 6 million p.a. Because of the need to up-grade the existing car park on Field A and the cost of that, BIA was likely to approach the Estate to re-negotiate the existing short lease or to buy the land. There was discussion at the meeting of the improvement of Parley Lane. This was something that the Estate hoped for because it would enable it to sell the necessary land. It was stated on behalf of BIA that the acquisition would be carried out by the Dorset County Council using compulsory purchase order powers, which would be unfavourable to the Estate. This information was provided to Mr Ashworth. Prior to the dinner Lord Malmesbury was advised to say nothing about road widening or ransom strips in connection with it. By a letter from the Estate's highways consultant, Mr Richard Parker, dated 26 July Lord Malmesbury was advised that the building of a new terminal with capacity for 1 million passengers a year was unlikely to lead to road widening. This was copied to Mr Ashworth. The dinner was pleasant. Lord Malmesbury learnt that BIA had no intention of building the new terminal in the near future. Cooperation between BIA and the Estate was discussed.
  42. At the beginning of September 2000 it was announced that National Express was selling its airports. The plans for the new terminal with car parking to its west were published early that October. The accompanying environmental statement said that parking spaces were typically provided at the rate of about 1,650 per annual million passengers. So the terminal intended to handle 1.25 million p. a. was to have 1,750 short and long term spaces including staff parking. The intention was to retain the existing 1,000 spaces on the Estate's land, to lose the 450 spaces on Airport land to the north of the Estate's land required for a taxiway, and to provide a new car park to the south west of the new terminal, which would provide 650 spaces. Passengers using that car park would have been bussed to the terminal – evidence of Mr Baron, day 7, pages 113 to 115. Planning consent was granted on 18 October 2001.
  43. In February 2001 it was announced that the Manchester Airport Group was buying East Midlands and Bournemouth Airports.
  44. A meeting was held on 21 March 2001 between Lord Malmesbury and the Estate's advisers. It was reported among many other matters that Mr Glyn Jones had offered to Dorset County Council to pay parking income to a sustainable transport fund, but Mr Baron had advised against it 'as 40 – 50% of the total income at the airport is derived from car parking'. There was discussion of the position regarding the widening of Parley Lane at the point where the proposed new car parking to the west of the intended new terminal required new access to be provided with a 4 lane stretch. Mr Ashworth thought this would put the Estate into a ransom position and recommended legal advice be sought when the position was clearer.
  45. Mr Baron, the Airport's Commercial Director left in May 2001. One of his last acts was to order an electronic pay-on-foot system for the car park on Field A. This was not installed immediately. The cost may have been in the order of £50/60,000. This was a system whereby a driver would take a ticket to raise a barrier to permit him to enter. On leaving he would have to pay the charge for the period he had parked, thus validating the ticket to raise a barrier and permitting him to leave. The system enabled the earnings of the car park to be known.
  46. On 20 July 2001 Mr Rippon-Swaine telephoned Mr Anthony Fortescue of Strutt & Parker. As I have said, Mr Fortescue normally dealt with estate management matters, but at this time Mr Ashworth was on holiday. Mr Rippon-Swaine told him that passengers were complaining that they could not push trolleys over the car park gravel, and that the Airport wanted to tarmac it but needed a longer lease to write off the expenditure. Mr Fortescue informed Mr Ashworth of the approach. This was followed up by a letter from Mr Rippon-Swaine dated 24 July putting the need to improve the car park surface in strong terms. The letter stated that depreciation of car park expenditure was usually over 25 years. Mr Rippon-Swaine also wanted to discuss Field B as an extension to the existing park. Mr Rippon-Swaine was now employed by BIA as head of property services.
  47. A meeting took place on 7 September 2001 attended by Mr Glyn Jones, the Managing Director of BIA, Mr Rippon-Swaine, Mr Ashworth and Mr Fortescue. Mr Fortescue later set out his detailed recollection of the meeting in a report dated 11 September. Mr Jones gave an overview of the new situation at BIA. Mr Baron (Commercial Director) and Mr Holland had departed. Future negotiations would be with Mr Jones and Mr Rippon-Swaine. Mr Jones said he had not realised how obstructive Mr Baron had been. It was stated that the Airport anticipated 1.25 million passengers p.a. in 10 years. Parking, short and long term, was a critical factor for any new terminal. Mr Jones expected the Airport to become a more significant regional airport because he did not think that Gatwick would obtain a second runway and Southampton had no room for expansion. It was proposed that the Estate should grant a 20 year lease taking in Field B at a nominal £100 per acre. Mr Jones stated that the cost of widening Parley Lane was prohibitive.
  48. On 20 September Mr Rippon-Swaine wrote to Mr Ashworth with his proposals asking him to present them to the Trustees meeting on 26 September. They were for a 24 year lease to include Field B. The rent for Field A was to be £9,000 p.a. until the expiry of the existing lease on 8 July 2005 when there should be a rent review, with rent reviews 5 yearly thereafter. The letter was silent as to the basis of review. Field B was to be rented at £300 until it was used for parking when it would go onto a level pro rata with Field A. Mr Ashworth replied on 21 September. He wanted to know what was BIA's planning consultant's advice as to the current planning status of Field B. Mr Rippon-Swaine wrote on 24 September saying that the advice was that Field B had consent for use as a car park because the 1992 consent had been implemented. He looked forward to hearing from Mr Ashworth as soon as possible after the Trustees meeting.
  49. There was a meeting of Lord Malmesbury, Lord Fitzharris and Mr Fortescue on 26 September 2001. The meeting was mainly concerned with Estate matters and the Airport occupies only half a page in five pages of minutes. Mr Ashworth did not attend. The meeting had before it Mr Fortescue's report dated 11 September. The minutes state that Mr Fortescue enlarged on his report. There was agreement that it should be confirmed that the planning permission was still effective in respect of Field B. That was later resolved positively. It was also agreed that the Estate should pay for Mr Ashworth to attend a conference in London concerning development in and around airports on 16 November. There was a Trustees meeting the same day. The Airport was not referred to, presumably because it had been covered at the earlier meeting.
  50. On 3 October 2001 Mr Jones wrote to Lord Malmesbury to tell him that the Secretary of State had decided not to call in the application concerning the new terminal, thanking the Estate for its assistance. The outline application was granted on 18 October 2001. It had a life of 5 years but any renewal had to be applied for within 3 years. An application for renewal was made in 2004 but remains undetermined. The present position is unclear (contrast paragraph 5.3.2 of the draft Airport Master Plan of July 2006 with paragraph 184 of Mr Warner's report).
  51. It is difficult to understand what was happening on the Estate's side at this point. Mr Ashworth did not attend the meetings on 26 September 2001. The proposals made by Mr Rippon-Swaine by letter of 20 September are not referred to in the minutes of the meeting on 20 September between Lord Malmesbury, Lord Fitzharris and Mr Fortescue. Mr Fortescue had been copied in with Mr Rippon-Swaine's letters of 20 and 24 September and Mr Ashworth's of 21 September. Mr Ashworth and Mr Fortescue knew that Mr Rippon-Swaine wanted to hear quickly.
  52. On 4 October 2001 Mr Ashworth wrote to Mr Rippon-Swaine saying that he understood that the proposal for the new lease had been looked on favourably at the Trustees meeting. He said he was waiting to hear from Mr Corcoran on planning issues and would be in touch to commence detailed negotiations following his return from holiday on 18 October.
  53. On 14 November 2001 Mr Corcoran wrote to Mr Ashworth about the planning permission, saying in effect that all was well. On 16 November Rachel Pearson, estates surveyor at BIA wrote to Mr Ashworth asking about progress. On 28 November 2001 Mr Ashworth reported to Lord Malmesbury on his attendance at the airports conference on 16 November. He had had a discussion with one of Manchester Airport's advisers about road improvements.
  54. On 14 December 2001 Mr Rippon-Swaine wrote to Mr Ashworth. This followed a telephone conversation. Mr Rippon-Swaine set out his proposals for the car park lease in very much the same terms as before. He anticipated that Field B might be needed in 3 years but it was more likely to be 5. Mr Fortescue noted on his copy of the letter "Discussed with RIA [Mr Ashworth]. Agree its time to renegotiate base rent." Mr Ashworth noted on his copy the matters he wished to raise with Mr Rippon-Swaine, namely 'implementation [in relation to Field B], improvements, rent review, costs, security [of tenure].' He wrote on 10 January 2002 raising those matters. As to rent reviews he stated "Rent Reviews – the detailed basis and mechanics of this will need to be fully recorded in the lease and I would welcome your early thoughts on this please." The letter did not otherwise refer to Mr Rippon-Swaine's proposals for rent.
  55. On 16 January 2002 Mr Ashworth wrote to Lord Malmesbury reporting generally on the current situation with the Airport. He said that passenger numbers had reduced and it was not apparent for the moment how or when this would be reversed, and the new terminal would not be needed for at least 5 years. He then wrote:
  56. "The Estate is cooperating with [the Airport] to enable the new car park to be properly surfaced and this will involve the surrender of the current lease with a simultaneous renewal for a longer term to facilitate the funding of the re-surfacing work. The new lease will incorporate an additional area of approximately 3 acres with an obligation on [the Airport] to implement the outstanding element of the extant planning permission for car park development."

    The greater part of the letter was taken up with road or access improvement matters, where the situation did not look favourable to the Estate.

  57. Mr Rippon-Swaine replied to Mr Ashworth's letter of 10 January on 17 January 2002. He accepted the points made by Mr Ashworth. He proposed that the rent review should be dealt with 'on the same basis as we deal with other car parks on the estate, i.e. that the rent be reviewed every 5 years (first review 8 July 2005), and linked into the percentage increase in our seasonal ticket car parking charges.' The Airport had in fact no car parking areas which were let on the basis of a rent review in line with season tickets. Mr Ashworth was still concerned that the part implementation as car park of the area covered by the 1992 planning permission might be ineffective, and this caused a delay in his reply. On 13 March Mr Jones wrote to Mr Ashworth referring to the delays since 20 September, saying that the Airport 'wished to provide an improved and passenger friendly car park in time for the coming season'. Unfortunately Mr Ashworth was then in hospital. When he was out he went to see Mr Rippon-Swaine in early April. Mr Rippon-Swaine wrote to him on 12 April referring to their meeting and setting out the terms they had agreed. The terms were more detailed than had been previously agreed and included Mr Ashworth's agreement to the season ticket rent review term. Mr Ashworth spoke to Lord Malmesbury on 29 April. He followed up the conversation with a letter the same day. In it he set out the terms which 'I have tentatively negotiated with Steve Rippon-Swaine and which I recommend for approval.' He asked for instructions. Lord Malmesbury replied on 30 April saying, 'As the terms seem attractive please expedite as quickly as possible.'
  58. On 2 May 2002 Mr Ashworth sent heads of agreement to Mr Rippon-Swaine. On 3 May Mr Rippon-Swaine sent a telephone message to Mr Ashworth. It was that the chief executive of the Manchester Airport Group was delighted and had asked if they could have a 99 year lease instead of a 24 year lease. Mr Rippon-Swaine signed the heads of agreement on 7 May. On 8 May he sent them back. He also said he was awaiting the trustees' response to the proposal of a 'further extended term or purchase', but in the meantime he did not wish to delay the work on the car park. On 9 May Mr Ashworth instructed Wilsons to prepare the new lease. On 28 May the Airport's Board considered the proposal for the new lease. Mr Rippon-Swaine's paper for the board concluded that the Airport needed to protect its position for the long term as regards car parking; that the gravel surface made the existing car park unsuitable for use and an extended lease justified the cost of improvements; and that the opportunity to obtain extra land should be taken. On 30 May Mr Ashworth wrote to Mr Rippon-Swaine putting any negotiations for a further agreement in relation to the car park land on hold. On 2 July Mr Rippon Swaine asked for information as to the revenue from 'extra car parking spaces for tenants and also third parties.' He was informed that it was £3,400 p.a. from tenants and £8,100 p.a. from car hire companies. He then asked for confirmation that the annual tenant's cost per space was £100, which was given. After various delays the lease of 2000 was surrendered and the new lease entered into on 14 August 2002. It was for 24 years from that date.
  59. The 2003 lease

  60. On 30 October 2002 it was announced that Buzz, then the United Kingdom's third largest low cost airline would be commencing flights from the Airport in March 2003. Buzz estimated that it would put 750,000 seats into the market from Bournemouth in its first year. On 10 December Mr Ashworth had a meeting with Mr Jones and Mr Rippon-Swaine. Mr Ashworth noted 'Terminal was not about to be built. Buzz starts March. Passengers go from 380,000 to 1m p.a. straight away. Car park to be sorted.'
  61. The construction of the car park as it now is on the Estate's Field A began in February 2003 following design work beginning once the lease was signed. It included tarmacing of the access ways, gravel in the actual parking spaces, electronic barriers and pay-on-foot boxes. It is fully automatic. The cost was of the order of £400,000. The work was completed in March. This then became the primary long stay car park. The car park on the Airport land to the north became in effect largely an overflow park.
  62. On 10 January 2003 Mr Rippon-Swaine wrote to Mr Ashworth referring to a conversation which they had had before Christmas. He stated that he wished to discuss a lease for Field C, the area to the east of the land covered by the existing lease. He proposed that it should be supplemental to the latter and on the same terms as provided for the northern part of that, Field B. He anticipated bringing the northern part into car park use later in the year. Mr Ashworth wrote to Lord Malmesbury recommending the proposal on 14 January. He stated that it provided a useful opportunity for the Estate to obtain and implement development on further land within the Green Belt. Lord Malmesbury gave his agreement the next day. Mr Ashworth wrote to Mr Rippon-Swaine with agreement on 21 January.
  63. In early February 2003 it was announced that Ryanair had taken over Buzz. A consequence of this was that Buzz's plans to fly from Bournemouth were abandoned. (Ryanair had been operating flights to Dublin from Bournemouth since 1996). Mr Rippon–Swaine informed Mr Ashworth on 5 February that the Airport still wished to go ahead with the further lease although the application for planning permission for use as a car park would be delayed until the land was needed. On 11 February Mr Rippon-Swaine wrote saying that it was nonetheless expected that passengers would go up from 275,000 in 2001 and 408,000 estimated for 2002 to 525,000 in 2004. He said he believed that it was only a matter of time before a replacement arrived for Buzz. He stated that the new lease would provide an economic case for the installation of an electronic 'pay on foot' system for the leased land. On 25 February Mr Ashworth wrote to Lord Malmesbury asking for his instructions. Mr Ashworth wrote saying that he had Lord Malmesbury's consent on 26 March. On 1 April he wrote to Wilsons instructing them as to the new lease. It was executed on 28 November 2003. The proposed lease had been considered by the Airport's board on 29 April. Mr Rippon-Swaine's paper for the board presented the following conclusions: that car parking was a major commercial revenue generator for the airport, that possession of the further land secured valuable future parking, that the 23 year lease had a minimal rent until additional parking space was required, and that the Airport could decide when to apply for planning consent and to use the land.
  64. Later events

  65. On 27 January 2005 Mr Fitzgerald wrote to Mr Ashworth stating that the Estate had decided to appoint a new development adviser. On 5 May arrangements were concluded whereby Mr Ashworth handed to Mr Fitzgerald Strutt & Parker's files. He also then presented his account from 1 May 1998 to date, totalling £35,541 before VAT.
  66. On 8 June 2005 Mr Fitzgerald wrote to BIA asking the price of a season ticket as the first step towards a rent review under the 2002 lease. By letter of 17 June he was informed that the highest charge was £220 p.a. and the average £192. Negotiations followed which were complicated by the Airport's use of Field C as an overflow car park in the summer of 2005 without planning permission having been obtained. The outcome was the agreement in December 2006 of a revised rent of £30,051.78 for the land covered by the 2002 lease.
  67. On 17 June 2005 the claimants' solicitors wrote a letter before action alleging negligence by Mr Ashworth in relation to the leases of 2000, 2002 and 2003, and that he should have negotiated leases whereby 80% of the net car park receipts went to the Estate. That gave a current rent of £770,457.
  68. Work to incorporate Field B in to the Field A car park commenced in July 2005 and was completed that August at a cost of £378,052.
  69. In July 2006 BIA published its draft Master Plan 2006 – 2030. This includes statements as to car parking development by 2015 and by 2030. It envisages the use of the leased land in addition to other land.
  70. On 14 December 2006 BIA announced a £32 million redevelopment programme.
  71. On 1 November 2005 the Estate entered a complex option agreement with Sutton Overseas Holdings Limited, a company controlled by Mr Paul Sutton, a property developer. This gave an option over Estate land including Fields A, B and C. The agreement either has become or will shortly become ineffective. I was told that a further such agreement is being negotiated.
  72. There are aspects of the dispute between the parties which I have not covered in the above history. It is more convenient to refer to them separately in due course.
  73. C. The evidence relating to the Estate's view of the Airport Road between 1980 and 2005

  74. On 8 January 1980 BIA wrote to Lord Malmesbury about access to a field by Pussex Lane Farm House which had been closed off by a gate. The letter refers to a farmer, Mr Lucas, having had a special arrangement with BIA allowing him to use the Airport Road. Lord Malmesbury then wrote to Mr Fitzgerald asking him to check whether a right of access to the field was kept when the Airport was conveyed by the Estate. Mr Fitzgerald advised that it was not (letters of 15 and 26 February 1980).
  75. On 1 March 1994 Mr Corcoran, the estate's planning adviser, wrote a letter to Mr Judd about the 1992 planning consent for car park. It records that Mr Judd had said he would check the Estate's right of access to the land from the Airport Road. Mr Corcoran produced a report for the Estate dated 29 March 1994. It stated 'It is not clear if Malmesbury have a right of access to their land from the Airport Road or whether a new access to Parley Lane is essential to avoid any ransom.' A copy of this report was provided to Mr Ashworth at some point after his appointment.
  76. In 1996 Mr Corcoran provided a further report dated 26 March. Mr Ashworth had then been appointed for nearly a year. The report stated in paragraph 7.2 'Access to the Car Park is shown from the airport access road which is a private road and owned by [the Airport] to which the Estate does not have a right of access.' So, in Mr Corcoran's mind, the position had been clarified. Mr Corcoran and Mr Ashworth produced a joint report dated 28 March 1996. Paragraph 7.2 of that report was in similar terms and suggested access could be obtained to implement the planning consent from Pussex Lane.
  77. The question next arose in 2001 at the meeting held between Lord Malmesbury and the Estate's advisers on 21 March. The context appears to be concern whether the 1992 planning consent had been implemented sufficiently to preserve it in respect of Field B. Mr Corcoran raised the possibility of the Estate securing access from Pussex Lane 'thereby avoiding a ransom situation from [Manchester Airport Group].' Mr Fortescue was to inspect the site and consider the position with Mr Corcoran. In a letter to Lord Malmesbury of 29 March Mr Corcoran considered the possibility of the Estate seeking to implement the 1992 planning consent by work to Field B. He referred to the Estate creating an access through the hedge from Pussex Lane. He said "it is not clear to me at the moment what benefit the Estate can turn this to." This was prior to the Airport raising the question of a further lease to include Field B in July 2001, and the Estate's advisers appear to have been concerned that the planning consent had not been secured with regard to Field B by implementation. In an e-mail of 30 March Lord Malmesbury showed that his concern was that something should happen to Field B and he hoped that BIA would show an interest in it. At an Estate meeting attended by Lord Malmesbury, Lord Fitzharris and Mr Fortescue on 2 April 2001 it was agreed that Mr Fortescue should 'inspect possible alternative access to car park site.' I note here that neither Mr Corcoran nor Mr Fortescue were called to give evidence, so there is no explanation from them. The minutes for the similar meetings on 15 May, 26 June and 14 August 2001 record the same as the 2 April minutes. But the minutes for the next meeting, that on 26 September 2001 do not, and Mr Fortescue's proposed inspection seems to have been dropped. It is likely that it was overtaken by the progress with BIA on a new lease and by the fact that Mr Corcoran was seeking to confirm with Christchurch Borough Council that the planning consent was still effective in relation to Field B. That was favourably resolved a letter from the Borough dated 5 November 2001 – albeit that the letter was in guarded terms. The very clear implication is that the Estate did not then consider that it had any right of access via the Airport Road.
  78. On 25 November 2006 Mr Ashworth wrote to the Christchurch Borough Council asking the status of the Airport Road. The Borough replied on 30 November that it 'is private and as such is not maintained by the Council at public expense.'
  79. It has at all times been the Airport's position that the Airport Road is a private road and that the Estate has no right to use it.
  80. The position thus is that after Mr Corcoran's report of 26 March 1996 the thinking on the Estate's side was that the Airport Road was a private road, and that the Estate had no right of access along it.
  81. D. The Airport witnesses

  82. I will next consider aspects of the evidence of those witnesses who were involved with the management of the Airport. Their evidence is particularly relevant to the issue of what the outcome might have been in respect of the leases in respect of which complaint is made if Mr Ashworth had taken a tougher line in negotiation or if the Estate had decided not to lease its land to the Airport but had decided to lease it to an independent car park operator. Some of them only emerged as witnesses at a late stage. I will take them in what seems to me to be the most logical order rather than in the order in which they were called.
  83. Mr Graham Holland was called on behalf of Strutt & Parker. He is a surveyor and since 1981 has always been in private practice. He specialises in commercial property, and has some limited experience of car park leases. In April 1995 he was retained as a consultant to National Express in relation to commercial property aspects of the Airport. In 1998 he negotiated the terms of the 2000 lease with Mr Ashworth. His involvement with the Airport tailed off in 2000. The evidence provided in his witness statement was to this effect. He and Mr Baron realised the importance to the Airport of implementing the planning consent for a car park on the Estate's land before it lapsed. The importance was not simply the possibility of a car park but to promote the prospect of further commercial development. This led to the 1997 lease. It formed a relatively small part of the discussions then going on. In October 1998 he was asked by Mr Baron to see if the 1997 lease could be extended. The temporary park on the leased land was then being used only by staff and as an overspill for passengers, but further work was required to bind the surface to avoid complaints, the minimum having been done previously. He recalled a number of heated discussions with Mr Ashworth by telephone as to rent. Mr Ashworth raised the question of a turnover rent. The Airport was not prepared to pay one because the park was used primarily by staff and there was no electronic monitoring system to record usage. There was also the problem of parking vouchers. The car park had no track record on which to base a turn over rent. The Estate could not insist on one because the balance of power lay with BIA. The Airport had land which it could use for parking and it controlled the access to the Estate's land.
  84. In cross-examination on behalf of the claimants Mr Holland said that he had felt that his negotiating position was strong enough to avoid being forced to pay a turnover rent. He said that the discussion with Mr Ashworth had been very blunt: he just said the Airport was not having a turn-over rent. He was looking for certainty as to what the rent would be: he was not concerned with the additional cost to the Airport which a turnover rent might pose in later years. (day 5, page 36). He said that the arguments he had put to Mr Ashworth – which are set out in the correspondence, were to justify the decision which had been made not to have a turnover rent, but he did not accept that their validity should be questioned. He thought that it had been Mr Ashworth who had raised a turn-over rent. He said that Mr Ray McEnhill, then chief executive of National Express, would follow his advice and was an uncompromising negotiator. Mr Baron's evidence was also that Mr McEnhill was very decisive.
  85. Mr James Baron was called on behalf of Strutt & Parker. He was commercial director of BIA from 1996 until May 2001. His evidence is therefore relevant to the 2000 lease but not directly relevant to the 2002 or 2003 leases. He was appointed early in National Express's ownership of BIA and left soon after Manchester Airport Group purchased the company. He has a background in commercial management and property. He is not a surveyor. The evidence provided in his witness statement was to this effect. In 1996 he saw the Airport as an industrial estate with a runway. The company was loss-making. National Express provided money to improve the Airport, and by 2001 it was making a profit of £850,000. The company nonetheless continued to be run on a frugal basis. At the time of the 1997 lease the Airport had no need for additional car parking, but it was in the long term interests of BIA and the Estate to implement the existing planning consent. He thought that generally the Estate and Mr Ashworth had an inflated idea of the value of the Estate's land. National Express would never have permitted BIA to pay a substantial sum as rental for an unnecessary car park. He took the view that the car park was a short term requirement. BIA had areas in the north west sector which could be used as alternative car park areas. One was the former BAC employee car park. BIA could have provided the bussing of passengers which that would have involved. There would also have been a loss of income from lettings of the BACC for open storage. The Airport would have elected to sustain those costs and losses rather than give the Estate the level of income it now asserts should have been negotiated. BIA also had other sites which it could consider to avoid the loss of revenue. BIA and the Estate worked together to a degree in what he called a partnership, in particular in planning matters, but the relationship was not an easy one. Mr Holland's brief was simply to get leases of the Estate's land as cheaply as possible. He said in paragraph 96 of the witness statement:
  86. 'If Ian Ashworth had insisted upon a turn-over rent during the pre-renewal lease negotiations, this could possibly have been accommodated although it would have been very much against our wishes and I may well have refused.'
  87. In his oral evidence in chief Mr Baron said that there was no way that BIA would have contemplated a lease where the Estate obtained 80% of the car park revenue after deduction of amortised capital costs and operating costs. In his evidence in cross-examination on behalf of the claimants Mr Baron agreed that in negotiations for the 2000 lease Mr Ashworth had asked for a turnover rent. He said that, first, a turnover rent was inappropriate in 1998 when no passengers were using the car park and, second, one was not necessarily appropriate in a situation where BIA was providing all the passengers. He said that at that time BIA was not thinking about the cost of a turnover rent: it was against one in principle. He said that a 'strategic' decision had been taken against it, the reasons being those given by Mr Holland. He said that the Estate's position was very weak because BIA controlled the access to the Terminal through its control of the Airport Road, and BIA also provided the passengers. He stated that the passage from his witness statement which I have quoted remained his evidence. In re-examination he said that BIA had a very good relationship with Christchurch Borough Council because BIA was seen as the main economic generator for the area: he could not conceive BIA being refused planning consent for a car park on its own land in a situation where disagreement with the Estate was fettering BIA's ability to operate.
  88. Mr Stephen Rippon-Swaine was called on behalf of the claimants. He is a chartered surveyor and was in private practice in 1987 when he was appointed as a consultant to the Airport. In 1993 he became employed by the Airport as estates manager and in 1997 he became head of property services. He left in 2004 and is now in private practice. He was involved in internal discussions relating to the 2000 lease. He negotiated the 2002 and 2003 leases.
  89. In his witness statement he stated that he reported to the managing director and liaised with Mr Baron. He said that major land decisions were taken between the three of them. In 1998 he discussed the intended new lease with Mr Holland. Mr Holland told him that Mr Ashworth had requested a turnover rent. This was discussed between Mr Holland, Mr Baron and himself, and they agreed to avoid a turnover rent if at all possible. He stated that the reasons given by Mr Holland to Mr Ashworth were ultimately of little importance on the issue whether a turnover rent was appropriate. He said, in contrast to Mr Holland;
  90. 'If we had been pushed to the limit in negotiations we would have yielded on the principle of a turnover rent. The Estate could have dug their heels in and insisted on a turnover rent and we would have had no alternative. We needed car parking facilities and there was no other land available in the south [east] sector.' [First witness statement, paragraph 26]

    He referred to BIA's ownership of the Airport Road. He referred to the lack of security for parking in the north west sector and the costs of bussing passengers to there. He referred to the improvement in BIA's fortunes after the millennium. He said that as of 2002 the leased car park was only covered with gravel and only used by staff. (I note that it seems plain there was by then some passenger use.) He said: 'Passenger growth was improving and discussions were being held with other airlines. It was obviously necessary to negotiate for an extension to the car park lease.' He said that he suggested to Mr Ashworth the season ticket rent review provision. It was important to the Airport that car park usage could increase without an increase in rent. The Airport wanted the longest term it could get, and 25 years was as long as he thought the Estate would grant. He was worried that with the planned increase in passengers the Airport might be left with inadequate parking. He said:

    'We were lucky that the Estate was amenable in 2002 to negotiations to extend the lease term at all. We would have been placed in a far worse position if the Estate had refused to negotiate with us and allowed that lease to expire. My concern for future car parking from 22nd December 2001 to August 2002 is evident from the written pressure which I was exerting on Mr Ashworth to agree the terms that I had been proposing. I was clearly worried that, with the planned expansion of flights from the airport, BIA would be left with a wholly inadequate provision for car parking growth.
    If the Estate had refused to grant us a renewal lease on those terms then we would have paid more. A rent of £9,000 per annum is not a large sum of money for BIA with its turnover of £11 million. I cannot say how much higher BIA would have gone. We probably would have conceded a turnover rent at the time. We were negotiating with Buzz and we could not afford to land ourselves in a situation where we would not have car parking to service our passengers.' [First witness statement, paragraphs 41 and 42]

    As to rent review he stated:

    'I would have expected that in the normal negotiations, there would have been a proper rent review every 5 years. BIA would have been prepared to pay market price and I would have asked people whom I knew in the aviation industry what the market price was.' [Third witness statement, from paragraph 11]

    In the summer of 2003 he decided that he should obtain a lease over Field C, and negotiated one with Mr Ashworth. It was very cheap. BIA considered that the problem would be to obtain planning permission. In his third witness statement he gave his view that it was the Estate which was in a strong negotiating position rather than BIA. He also stated that the chief executive of Manchester Airport Group had told him that he thought the 2002 lease was 'the deal of the decade'.

  91. In cross-examination on behalf of Strutt & Parker Mr Rippon-Swaine agreed to an extent with Mr Baron that the Estate had an inflated view of the value of its land. He was asked a number of questions relevant to his view that BIA would have conceded a turnover rent in 1998 if it had been pressed – day 4, pages 73 to 88. He considered, in contrast with Mr Baron, that there were serious problems with parking in the northwest sector. He remembered discussing with Mr Baron and Mr Holland the reasons given by Mr Holland to Mr Ashworth for not having a turnover rent. He said the reasons were important in veering the Estate away from a turnover rent, which was their prime objective. He said that the existence of planning consent for parking on the Estate's land was a difficulty if planning consent was sought for parking elsewhere, which was a pressure on them. He had no view as to what an acceptable split of turnover would have been between BIA and the Estate. He referred to the season ticket review mechanism in four passages – day 4, pages 89 to 92, pages 100 to 106, pages 114 to 117 and pages 123 to 125. Having considered them and some contradictions which may seem to appear I have concluded that when he negotiated the 2002 lease he was of course aware that the review mechanism had the effect that the rent was independent of the usage of the car park, and I have concluded that he put forward the season ticket mechanism with it in mind that it gave BIA the possibility of controlling the car park rent in the future by means of its control of the season ticket price, but that it was not his intention that BIA should exercise that power to disadvantage the Estate unfairly. Part of his intention in asking for the ticket revenue on 2 July 2002 was to see how BIA stood in its ability to keep the ticket price down.
  92. Mr Glynn Jones was called on behalf of Strutt & Parker. He was managing director of BIA from August 1999 to mid 2003. The negotiation of the 2000 lease was largely complete before he came onto the scene. He was managing director when the 2002 lease was negotiated, likewise with the 2003 lease although he left before the latter was signed. In his witness statement dated 17 January 2007 Mr Jones stated that at the time the leases were being negotiated, BIA, was financially 'a very marginal business. In reality it comprised two distinct businesses, one based on aviation and one based on property letting. The aviation business made a substantial annual loss and was in effect subsidised by the profits from the property letting business. The reason why the aviation business was loss-making was a combination of high fixed costs and low passenger numbers.' He also stated that passenger numbers were volatile. He said income from charter and full-service airline usage of the Airport was reducing in his time because of the impact of low cost carriers. That, together with the long runway, which Southampton did not have, encouraged BIA to target low cost airlines. Because low cost airlines will not pay substantial landing fees, income had to come from ancillary activities, of which car parking was a very important part: the income from parking was almost as important as the passenger numbers. He considered the claim that, if properly advised, the Estate would have retained up to 90% of the parking revenue to be bizarre. The Airport was in a strong postition for three main reasons: although the Estate land was ideally placed for parking, the Airport had land which could easily be converted to parking, and the Airport would have faced the costs involved including bussing passengers; access to the Estate's land was effectively controlled by the Airport; and the Estate had a vested interest in maintaining a cordial relationship with the Airport in order to achieve the maximum long term value from its land so it could not overplay its hand on the car park leases. He was not in a position to agree a turnover rent: he would have had to refer the matter to Manchester Airport Group. He himself would only have agreed a turnover rent which, following an evaluation, showed no greater cost to the Airport then the actual 2002 terms. He said the Airport would not have been interested in setting up a turnover rent system because of the capital expenditure. (However, it must be pointed out, that is effectively what the Airport did with the pay-on-foot system decided on in 2001 and installed in early 2003.) He said it was not obvious at the time of 'the negotiations' that that there would a large income in the future from the Estate car park. The Airport would certainly have evaluated the costs of a car park in the north west sector if it had been faced with the loss of the Estate car park or a very considerable increase in its cost. The Airport would have sought to prevent the Estate running a car park on its own. Given the importance of the Airport to the region it would have been able to make a very strong case for planning permission for further car parks of its own, had it faced a substantial reduction in parking revenue.
  93. In cross-examination on behalf of the claimants Mr Jones confirmed that in September 2001 when the 2002 lease was under negotiation BIA still had poor passenger numbers which were proving difficult to improve: they were talking to a number of low cost airlines: they needed to get car parking at the lowest possible cost because they did not know what the future was. He agreed that it was not a realistic option for the Airport in the autumn of 2001 to do nothing about its car park situation. He did not think that it was desirable for BIA to construct a car park on its own land, because BIA wanted to have a long term constructive relationship with the Estate. He thought it would have been extraordinarily difficult for the Estate to have run a car park on its land using a car park operator: BIA would have been very opposed to it and would have done a lot to prevent it happening. He thought the airlines would have understood BIA's position if it had fallen out with the Estate over the car park. Commercial pressures would have forced BIA to take steps against the Estate, because if BIA could not derive income for parking, it became very difficult to work with low cost airlines. He said that BIA would have found a way to operate a low cost shuttle service to a distant car park: they had learnt to cut their cloth in every circumstance. If the negotiations with the Estate had become difficult, the evaluation by BIA would have been relatively simple: what was it being asked to pay; what were the costs of alternatives? BIA would have taken into account the desirability of maintaining its long term relationship with the Estate and accorded it a value. As to planning consent, BIA had obtained permission for a scheme with a further 650 spaces in the south east sector, and had considerable support from local and regional bodies, including the planning authority where it had a very good relationship. He agreed that if BIA had applied for planning consent for a further car park and had failed, its position would have been much weakened: it would have been risky for either side to have proceeded independently. He judged the Estate's position in the negotiations to be very weak principally because of its access problem but also because of the desirability on its side of maintaining good relations. Mr Jones accepted that, if the Estate had stuck out for a turnover rent, the Airport would have asked what the Estate wanted, and would then have explored the implications. They would then have balanced it against the cost implications of the alternatives. He said that it would have been possible for BIA to prevent a car park operator on the Estate's land from using the Airport road, perhaps simply by writing to the operator and denying them permission. There was no possibility whatever that BIA would have accepted an 80% split in favour of the Estate. He said that it was valuable to the Airport to be able to control the rent reviews through the season ticket provision although it would also have had to have a view to its relations with the Estate. He said that the season ticket rent review provision was unique to the Estate.
  94. Mr Aidan France was called on behalf of the claimants and came in answer to a subpoena. He was the first among these witnesses to give evidence. He is director of revenue management for Manchester Airports Group, though not a director of the company. He was involved in the acquisition of BIA together with East Midlands Airport. He later used the phrase 'buy one, get one free' to describe the purchase, Bournemouth being the free one. That should probably not be taken literally, but it gives the flavour. He was then head of business strategy. He oversees the passenger forecast process. Their forecasts are intended to be as accurate as possible and are developed in line with those of the Civil Aviation Authority. His company had experience of the cost of bussing passengers to and from car parks, and could make an appropriate assessment. He was not close enough to BIA's business to say what BIA would have done if the lease on the Estate car park had not been renewed, but there were options. He could not say whether BIA would have discussed a demand for a turnover rent because he was not involved in the negotiations. He was asked if BIA could have afforded to pay more than the rent of £9,000. He said that the airport business as opposed to the property business was then making a small loss, and in that context the answer was no. He said that the commercial activities of an airport were very important, and if one was under threat, what would be done would depend upon the threat. He agreed that if the Estate had refused the rent of £9,000 negotiations would have followed to discover what the Estate's sticking point was and BIA would have had to assess the cost of alternatives in the light of it. He said that the commercial activities at the Airport were very important to the business and they would not welcome a third party taking over the Estate car park and would take steps to prevent it, but what would have been done he could not say.
  95. I did not think that any of these witnesses were doing other than their best to convey to the court the truth as they saw it after a passage of time. Nor was it contended otherwise. It is as well to bear in mind that time and the litigation process may harden perceptions. The most important differences between the witnesses are between Mr Holland and Mr Rippon-Swaine as to the acceptability of a turn-over rent as a matter of principle and the comparative strengths of the Estate and the Airport in negotiation. Mr Holland had the carriage of the negotiations in 1998 to 2000, and he provided advice to National Express. His evidence is supported by that of Mr Baron and Mr Jones. Mr Rippon-Swaine had the carriage of the negotiations for the 2002 and 2003 leases. He was the only one among the four who considered that the Estate had a stronger hand than the Airport. It is important to have in mind that the position in 1998 was different to that in 2001 and 2002. I will return to these issues.
  96. E. The evidence of Mr Ashworth as to the negotiations and his advice, the evidence of Lord Malmesbury.

  97. Mr Ashworth is a Fellow of the Royal Institution of Chartered Surveyors. He joined the Salisbury office of Strutt & Parker in 1992, and later established the commercial department there. He became a partner in the firm in May 1980. Since May 1999 he has acted as a part time consultant to the firm advising specified clients on specific projects. His work in this latter period had largely involved greenfield development projects. As I have already set out, Mr Ashworth first became involved with the Estate in 1995. In this section I will refer only to such of Mr Ashworth's evidence as to the negotiation of the leases as is not covered in my relation of the history
  98. It was an important part of Mr Ashworth's evidence that he had in mind at all times what he called 'the bigger picture'. He was not alone in that, and BIA itself had very much in mind the advantages of cooperation between it and the Estate. From the Estate's viewpoint the bigger picture comprised (1) the possibility of development work on the Estate's land adjacent to the existing terminal, which might also lead to road improvement works requiring Estate land, (2) the possibility of development work in the south east sector of the Airport, likewise benefiting the Estate by a requirement for road improvement land, (3) the possibility of employment development work in the north west sector, requiring Estate land for the improvement of the B3073 (4) less important, the possibility of mineral works, that is gravel extraction, at the adjacent Hurn Court Farm. It was a feature of Mr Ashworth's approach that he did not wish to take a hard line on the car park leases for fear of jeopardising 'the bigger picture'. In order to assist cooperation between the Airport and the Estate there were regular meetings between the two teams – Mr Ashworth, Mr Corcoran (planning) and Mr Parker (highways) for the Estate, and Mr Holland, Mr Baron and another for the Airport.
  99. The relevant evidence from Mr Ashworth's witness statements is as follows. I mention the negotiations for the 2000 lease only to say that Mr Ashworth stated that Mr Holland took a hard line and resisted his attempts to get a higher rent. It was made clear to him that BIA was operating on a tight budget. He stated that he was also made aware that BIA controlled the access and that the planning consent was for airport parking. Moving on, his statement emphasises his involvement in 1997 and 1998 with the plans for the new terminal partly on the Estate's land and with the section 106 agreement.
  100. Mr Ashworth was surprised in October 1998 to receive Mr Holland's letter requesting an extension to the car park lease. The reasons, which I have already set out, were explained to him by Mr Holland. He had two or three telephone conversations with Mr Holland, saying that the Estate was disappointed that BIA seemed in the light of the request not to be pursuing the new Terminal. In such a conversation he raised with Mr Holland the possibility of a rent on a turnover basis: Mr Holland made it clear that there was no way that BIA would agree. The statement says that he believed that Mr Holland told him that, if he held out for a turnover rent or a market value rent, BIA would site the car park on its own land. He was sure that he had reported the reasons for the refusal of a turnover rent at the trustees meeting on 3 December 1998. The Estate was aware of the situation that there was not an open market situation because there was only BIA as a potential lessee and BIA owned the road access. At the meeting Mr Ashworth was instructed to do what he could to try and increase the rent it being suggested that it might be better to average it out over the 5 years. This resulted in his agreement of £7,000 p.a. This was increased to £9,000 in September 1999.
  101. The request made by BIA in July 2001 for a further lease also came as a surprise to Mr Ashworth. He did not report to the Estate on BIA's proposals in September 2001. That was done, or done in part, by Mr Fortescue at the meeting on 26 September to which I have referred and which Mr Ashworth did not attend. So Mr Ashworth gave no direct advice to the Estate at this point. He believed that he spoke to Lord Malmesbury about the new lease by telephone on the occasion referred to at the start of his letter to Lord Malmesbury dated 16 January 2002, which reported on his meeting with Mr Corcoran and Mr Parker. He thought he had advised Lord Malmesbury that the lease was in the Estate's interest because to have the parking area extended and the facilities up-graded would urbanise the green belt land. He discussed Mr Rippon-Swaine's proposals including the season ticket proposal with Mr Fortescue: he received no adverse comment. All on the Estate's side were aware that BIA was in a much stronger bargaining position than the Estate. He met Mr Rippon-Swaine to discuss the terms on 5 April 2002. He did not recall discussing a turnover rent with him: if he had, it would have been dismissed for the reasons given by Mr Holland. He had no reason to think that position had changed. He wrote to Lord Malmesbury on 29 April recommending the terms that had been agreed. He had spoken to Lord Malmesbury earlier that day by telephone. He was certain he would have discussed why it was in the Estate's interest to cooperate to achieve the urbanisation of the Estate's land. Lord Malmesbury had not raised any objections to anything.
  102. On 21 January 2003 Mr Ashworth wrote to Mr Rippon-Swaine that having consulted his clients he was instructed that the Airport's proposals for Field C were approved in principle. The witness statement says only that Mr Ashworth believes that he discussed the proposal with Lord Malmesbury and obtained his instructions. On 25 February he wrote to Lord Malmesbury asking for his instructions on the drawing Mr Rippon-Swaine had sent. Lord Malmesbury must have given his approval to proceed.
  103. In his third witness statement he said that, if he had suggested to the Estate that it should construct its own car park or lease the land to a commercial car park operator, the suggestion would have been laughed at. Such a thing was never suggested: the Estate was not a developer. The discussion in 1997 of the Estate itself doing work to the land was in the context of saving the planning consent, and it turned out not to be necessary. In 1998/9 when the 2000 lease was being negotiated the main hope was that the proposal for the new terminal partly on the leased land would proceed: so the involvement of the Estate or a third party in the development of the car park would have been pointless. He did not think that the Estate could get planning permission to widen Pussex Lane or to build a new access road to the B3073, and he would have so advised. In any event the Estate would not have been prepared to fund such works. All save the first of those difficulties applied also in relation to the 2002 lease. No commercial operator would have been interested because BIA controlled the access to the terminal.
  104. In cross-examination on behalf of the claimants Mr Ashworth said that he could not remember seeking the assistance of any one in Strutt & Parker in relation to the Estate and the Airport. I do not think that he did do so in any significant way. He said that he was not unfamiliar with car parks but had not been involved in a project where the car park was the major feature. He agreed that the money which BIA spent on the Estate's land was a tie between the Airport and the land. He said that he thought his request to Mr Holland for a turnover rent was a tongue-in-cheek suggestion and he would not describe it as an appropriate suggestion. I think, on the contrary, that he put it forward as a serious suggestion: it had never before been suggested otherwise. Mr Holland's reasoned response shows that he took it seriously. I regret that in his answer Mr Ashworth was attempting to play down the importance of the fact that he had asked for a turnover rent. Mr Ashworth said that having got it out of the way he and Mr Holland then got down to the 'nitty-gritty'. He suggested that he would have told Mr Holland that without a turnover rent the Airport would get no lease: I do not think that he did. It had never crossed his mind that the Estate might get planning consent for a new road giving access to the leased land. He was told by Mr Holland and Mr Baron that the Airport had other land where it could site a car park. He had not thought that the Airport would have much difficulty getting any planning consent required. He did not know what he had meant by 'a full economic rent' in his letter to Mr Holland of 26 November 1998, but was floating a fly for the future. He did not accept that at the meeting with the Estate Trustees on 3 December 1998 he should have advised that a turnover rent was the most appropriate. He said that the reasons given by Mr Holland were not the whole reason, because the Airport was opposed to a turnover rent in principle. He advised in favour of the Airport's proposal, but he did not remember what further advice he gave: all were aware of the relative bargaining strengths of the parties. He thought that spinning out the negotiations which began in 1998 for 18 months would have been difficult. He thought reference in his negotiation to leasing the land to a car park specialist would have been a red rag to a bull. It would have brought to a head the access situation and he did not think that in the situation any reputable car park company would have been interested. He said that it would have been a possibility later in those negotiations when the planning application for the terminal partly on Estate land was not progressing as fast as hoped to have reopened negotiations on the lease, but did not think it would have achieved anything. Nor did he think that there was scope for fundamental change at the end of 1999.
  105. In relation to the negotiations for the 2002 lease he denied that he did not pay much attention to the season ticket rent review provision. He said that his letter to Lord Malmesbury of 29 April 2002 recommending approval was, as the letter states, preceded by a telephone conversation, and in that conversation he would have run through the points set out in the letter. He did not recall mentioning any other possibility to Lord Malmesbury, and I do not think that he did: he simply informed Lord Malmesbury that the terms could be accepted. He agreed that by this point the personnel had changed, save Mr Jones, and the Airport had a new owner, but, he said, it was the same airport and car park, and the circumstances were quite similar. He agreed that the idea of the terminal partly on the Estate's land had gone, but said that the green belt status of the land had been confirmed, which was bad for the Estate. He said the need to avoid upsetting BIA with regard to the new terminal was replaced by the need to concentrate on what was left of the bigger picture. He agreed that the point about an electronic system for the car park had gone because one was being installed but the said the principle of opposition to a turnover rent remained. It was put to him that he had never even asked in 2002 what the attitude of the new owners was. He said that he thought it was raised in his discussions with Mr Rippon-Swaine and rejected as before. When it was correctly put to him that this had never been suggested by him before he said that he would be very surprised if he had not raised the question of a turnover rent in his initial discussions with Mr Rippon-Swaine. In paragraph 9.15 of his main witness statement he had said that he did not recall discussing a turnover rent. It is likely that this was inserted because he was asked by the person taking the statement if he had discussed it. I am satisfied that he never raised the question of a turnover rent with Mr Rippon-Swaine. I do not think that it occurred to him to do so. I think that if he had decided to raise it and to make a case that it was now appropriate he would both have remembered and also it would have found a mention in the documents. Further, having been ordered by the Master to provide proper particulars of their pleading on this point, it was stated in further information provided on 19 August 2006 that the position had been made clear by BIA in respect of the 2000 lease "and so thereafter Mr Ashworth did not revisit it".
  106. Continuing with Mr Ashworth's evidence, it was his view, he said, based on discussions with Mr Holland and Mr Rippon-Swaine, that BIA felt it was inappropriate for the Estate to participate in the car park business. He said as regards the need to preserve the big picture and the lease negotiations that it was not a question of being nice or nasty but of having a good commercial relationship and understanding. He had been asked whether he was saying that being nice over the lease negotiations increased the likelihood that BIA would later buy land for road widening. He said he considered that the season ticket price was a rent review index which he considered was put forward in good faith and he thought it not inappropriate. He said that Lord Malmesbury was aware that the season ticket price was controlled by BIA and that was discussed. I do not think that it was: I do not think that Mr Ashworth appreciated the danger of the rent review provision, nor did Lord Malmesbury. He was asked if he had known that the Airport was then receiving £400,000 in car parking fees, he would have regarded the rent of £9,000 as proper. He said he thought that he had negotiated the best deal available. He agreed that 24 years was very long for the lease of a car park, but, he said, it was an unusual situation. He said that there was no market to provide a market rent: if the Estate and BIA had parted company, the Estate would have been left high and dry with its fields, which was not something to contemplate. He thought that the control of access by BIA was an insurmountable problem and that neither Pussex Lane nor anything else provided a way round. He said that the suggestion the Estate could have obtained a split of 80/20 in its favour was very, very much mistaken.
  107. As to the 2003 lease, he thought the parties saw it as a tidying-up exercise. He said he would give the same answers to questions about it as he had given in respect of the 2002 lease.
  108. Questioned on behalf of Wilsons and Mr Fitzgerald, he said that he did not see the car park by itself as a part of the bigger picture. He never had in mind any figure that the Estate might make from road widening. He never considered that the car park had a substantial value in its own right. [Day 70, page 50]
  109. At the end of Mr Ashworth's evidence I asked him some questions. In answer to my question whether he had at the relevant times knowledge of the importance of car park earnings for provincial airports in particular, he said that he had no direct knowledge. I asked him if he had an understanding as to whether such earnings were an important feature in their finances. He said he had no information as such but was aware that it was unusual for an airport to have car parking on third party land. He did not have knowledge as to the terms on which airport car parks might be leased, but would have imagined that where the airport leased land to the operator it would usually be on turnover terms. He would have expected that, he said, applying his approach as a surveyor because the airport would be in a strong position and in control. He did not remember if he had thought how he would have responded if Mr Holland had asked him what he had in mind as a turnover rent. He said that he did not know whether he had given thought to the car park earnings at any stage in the negotiations for the 2002 and 2003 leases: he thought that he would have done. I consider that the strong probability is that he did not. Yet it had been said at the meeting on 22 March 2001 that 40 to 50% of the airport income was derived from car parking. This does not seem to have registered with him. It was Mr Fitzgerald's evidence that Mr Ashworth's advice was always that the rents available for the car park were extremely modest (Day 9, page 103)
  110. Lord Malmesbury described himself as primarily a farmer. I think estate owner should be added to that. He said, and I accept, that he has no experience in the matters which are raised by the issues in this action. He was familiar with the concept of a turnover rent from the 1990/2 negotiation.
  111. Two witness statements by Lord Malmesbury were put in evidence. Most of what they contain is derived from the documents and it has already been covered in my recitation of the history of the negotiations. There are only a few matters to which I need refer. Lord Malmesbury thought in relation to the proposals for the 2003 lease that £9,000 was a good rent until 2005, and provided that the Estate was protected by an adequate rent review provision the length did not matter. He knew nothing about the use of season tickets at the Airport. The second witness statement put in evidence (numbered as his third) included the following. If he had been advised to consider and perhaps go ahead with the construction of a car park on Fields A and B, he would have procured the Estate to do so. The Estate could have afforded the costs, and would have made a profit. The Estate could have done the same work as BIA did in 2003 costing £400,000. If BIA had obstructed the access of passengers from the Estate's land, he would have contested the company's right to do so, and would have sought to have the Airport Road adopted by the local authority, or to obtain permission to widen Pussex Lane. I note here that this evidences an error in the claimants' thinking which continued into the trial, namely that if Pussex Lane could be used to obtain access to Parley Lane, the B road, passengers using a car park run by the Estate or by a third party operator could then be bussed up the Airport Road without objection from BIA. He said that he would have been ready to put such a car park out to tender to car park operating companies. Likewise, in 2000 he would have taken the car park back and put it out to tender. He said that he was never advised that the position as to the Airport Road as access was never raised with him as a factor weakening the Estate's position. If he had been told that it was, he would have sought legal advice, and would have sought a declaration that there was a public right of way over the road. I will revert to this part of Lord Malmesbury's evidence.
  112. In cross-examination Lord Malmesbury said he recollected discussion at a Trustees meeting before the 2002 lease about the idea of the Estate running the car park. He said it was dropped because the Estate was happy with the way negotiations were going. There is no direct reference in the documents to the idea of the Estate running a car park. There is a hint of it in the minutes of the meeting on 21 March 2001. I have set out the relevant matters under the heading of the Estate's view of the Airport Road. The context appears to have been that the Estate was concerned about Field B, namely that nothing was happening to it and it might be that the planning consent had lapsed. Lord Malmesbury's e-mail of 30 March 2001 makes it clear that the Estate was not intending to act in competition with BIA in relation to Field B but wanted BIA to make an offer in respect of it. That is a very different context to that envisaged of the Estate and BIA failing to agree a rent and the Estate running its own car park in competition with BIA. In July of that year the offer was made.
  113. Lord Malmesbury also said in cross-examination that in 2000 the Estate would probably not have invested its own money in a car park but would have brought in a third party operator. He agreed that he did not think at the material times that he had a clear right of access up the Airport Road, and that that was his thinking until November 2006. He said later that on the basis of what he was told by Mr Judd he accepted that it was a private road. He agreed that there had never been any thought of decking on the car park land until the preparation of the claim.
  114. F. The evidence of the car park experts

  115. Mr Graham Stuart was instructed on behalf of the claimants. He is managing director of Britannia Parking, which he described as one of the larger companies providing parking spaces in the United Kingdom. He was asked to say whether the rents negotiated by Strutt & Parker were appropriate, and, if not, what full open market rents would have been. His revised report is dated 26 October 2006. In it he stated that the standard method of calculating rents for car park leases was, in short, to have a base rent which increases by an agreed percentage every year, perhaps by the RPI, coupled with a percentage of turnover above a certain level. He did not think that the reasons given by Mr Holland in 1998 for refusing a turnover rent were valid. He had made calculations of the rent the Estate should have received on the basis of a 80/20 turnover split between the Estate and BIA , with 80% going to the Estate. He had assessed passenger numbers and car park usage. He had assumed that planning consent was obtained for Field C, and that in due course the capacity of the Estate land would be increased by the building of decking, first one storey, and then two – that is, multi-storey car parking. On this basis he calculated that, if the car park leases had been properly negotiated, the Estate would receive a total rent up to 2026 of £182,450,187. Although it has been over-taken in much of its details by the evidence of other expert's and other material, this calculation is the origin of the Estate's claim. The report assumes that the situation between the Estate and BIA was similar to the typical position where a the owner of a car park leases it. It does not refer to any of the factors which might make the situation different. Mr Stuart had also made a witness statement saying that his company would have been most interested in running the Estate's car park.
  116. In cross-examination Mr Stuart stated that he was not aware of any problem of access to the Estate's car park. He had assumed that BIA would be cooperating in the operation of the car park.
  117. Mr John Theophilus was instructed on behalf of Strutt & Parker. He is a chartered accountant. Between 1998 and 2002 he was group property director of National Car Parks Limited – NCP. He is now a consultant. He stated that the relationship between BIA and the Estate was unusual because the party controlling the usage, tariffs and access to the car park land was not the Estate but BIA. BIA both controlled the access and had alternative land for car parking. He said that a base rent with a turnover element was common in car park leases, but not invariable, particularly where there was no established use or demonstrated demand for future use. He considered that it was unusual to have a rent review provision which was within the control of the operator. He wrote:
  118. "In looking at the negotiations for the leases, BIA demonstrably had the upper hand. It would have been unlikely in any negotiations that they would have given up the major income stream which derived from car parking (and which, in any event, was apparently crucial to the overall revenue and profitability of BIA) or otherwise increased their costs by paying additional rent. " [paragraph 3.08]

    He stated that before investing in the Estate's car parking land an operator such as NCP would have required a number of safeguards such as unhindered access and guarantees as to revenue, and also information as to BIA's own intentions as to car parking.

  119. He considered that the situation at the Airport was unique because the Estate was the landowner and BIA the lessee. The usual expectations as to rent did not apply. He was broadly in agreement with Mr Stuart as to the typical terms where the airport was the landowner and the lessee a car park operator. He referred to key factors affecting his expectation as to the leasing terms here as being (1) that apart from the planning consent for parking the Estate's land was subject to the restrictions of the Green Belt; (2) that BIA had its own land to use for car parking; (3) that BIA controlled the access to the Estate's land; (4) that BIA was not simply the intended operator of the car park but was generating the demand for parking; and (5) BIA was bearing the capital cost of creating the car park. He considered that, bearing in mind in particular that BIA generated the demand and the control which it had, BIA would look for 80 to 86% of the net revenue from the car park after costs.
  120. He had looked at the Airport's car parks on behalf of NCP in 2000. The car park he was most interested in was the northernmost which is not on the Estate's land. That was then the one which seemed the most used. He was not impressed, and for a number of reasons including the sale of NCP nothing came of it.
  121. G. The evidence of the surveyor experts

  122. Mr Guy Joseph was instructed on behalf of the claimants. He is a chartered surveyor carrying on business in London and has particular experience of car parks, but limited experience of airport car parks. He approached the issue of proper rent on the basis of an open market situation with adjustments. He started from the position that it was well-established that a car park owner received the vast majority of the income derived from the land. It was his view that the rents under the three leases complained of were all below a market rent and should have comprised base rents with provisions for a share in turnover. The base rents should be subject to 5 yearly review. He considered that any rent review provision must be capable of reflecting any increase in the car park earnings. He considered that, if the Airport could deny the Estate access via the Airport Road, that should reduce the Estate's share of split from 90% to 75%. He considered that overall the Estate was in a stronger negotiating position than BIA. He thought that too much was made of the access position and not enough of the difficulties and costs which would arise for BIA if it could not use the Estate's land. He considered that Mr Ashworth had been negligent because there had been no discussions or negotiations between the parties exploring their positions. He estimated the annual costs of running a bussing service for passengers to a car park in the north west sector of the Airport would be £499,000 consisting of £200,000 capital costs and £299,000 operational costs. He had no experience on which to base his calculations, but had made his own enquiries. No other figures were put in evidence, but Mr Baron said that BIA had acquired buses for its service to and from the railway station for £300 each.
  123. Mr Simon West was instructed on behalf of Strutt & Parker. He is a surveyor in practice in Bournemouth. The greater part of his experience has been gained advising on industrial and commercial property matters in Dorset and south west Hampshire. He considered that the key was the relative negotiating positions of BIA and the Estate, and that the negotiations did not take place in an open market environment. The factors favouring BIA were (1) the Estate was dependent on BIA for the commercial use of its land; (2) the Estate's land only has planning consent for car park use; (3) the control of the Airport Road by BIA; (4) BIA was not reliant on the Estate for car parking land; and (5) the importance of car parking revenue to BIA. He stated '… [Strutt & Parker] had to balance an assessment of how badly BIA required the Site for car parking against the risk that if they pushed for too high a rent, BIA might choose to walk away from negotiations and use their own land …. .' He said that the car park leasing 'formed only a small part' of the Estate's strategy for commercial development in conjunction with BIA. He concluded:
  124. "In my opinion, the importance of protecting the Estate's longer term commercial position out-weighed the risk inherent in trying to achieve shorter term gains from the Airport. I believe the outcome achieved by the Defendants in securing the Estate's longer term commercial position in relation to the land, whilst at the same time generating an income stream in excess of that which might have been achieved from its agricultural use, represents a successful outcome under difficult circumstances. In the circumstances I am drawn to the conclusion that on balance, the Defendants were not negligent in their negotiations carried out on behalf of the Claimants in respect of the various leases negotiated with BIA."

    That may be thought to be delicately expressed. He returned to the point later in his report, saying:

    "I believe Strutt & Parker had to balance achieving the best level of rent against the risk BIA might walk away from the negotiations. Under difficult circumstances I believe Strutt and Parker achieved a level of rent in excess of agricultural rental values whilst at the same time protecting the Estate's longer term commercial position in relation to the Site. I believe Strutt & Parker were in a weak negotiating position and in the circumstances, I find it difficult to criticise the level of return that they achieved."
  125. He did not think that the situation between the Estate and BIA in relation to the car park land was comparable to that of an airport seeking an operator to run car parks on its land. The Estate was not in the position of such an airport, and it could not be deduced by analogy with that situation that the Estate should be entitled to most of the income. He suggested that there were two possible rent review mechanisms. One was to link the level of payments to turnover. The other was to use some form of index. He did not think that a review based on comparables was practicable because of the lack of comparables. He rejected an 'open market' basis because it was not an open market situation. He thought an index was a logical solution, but that Strutt & Parker had 'left themselves open to criticism by agreeing' the season ticket provision where BIA could control the price of the tickets. He considered that the particular circumstances called for a surveyor with broad experience in commercial land negotiations capable of understanding the issues. He did not think that the car park could have been offered to an independent operator without the agreement of BIA. In cross-examination he said that he did not think that a ransom strip approach to valuation (Stokes v Cambridge) was appropriate. He said, speaking as a local surveyor with 20 years experience in the area, that if BIA had gone to the local authorities saying it needed planning consent for car parks because the Estate was asking for more than it could pay, given the perceived importance of the Airport to the area BIA would have got their support. He thought on what he had read that Mr Ashworth was entitled to assume that the Airport Road was owned by BIA.
  126. Mr Duncan Locke was instructed on behalf of Wilsons and Mr Fitzgerald. He is a partner in GVA Grimley LLP based in the West End of London, and specialises in the landlord and tenant side of commercial property. He is experienced in car park work and has acted for NCP for over 10 years. He has advised on car parks related to airports but not on a car park on an airport owned by it. He is mainly concerned with open market rents. He suggested that the reason why he had never advised on an on-airport car park was that many are leased on a management agreement basis (which would be turnover related) or leased with a turnover based rent. He was not asked to consider whether Strutt & Parker had been negligent, but to consider the role of a surveyor in negotiating 'heads of terms' for a lease. It was his opinion that a surveyor should advise his client about commercial considerations of which the surveyor is or should be aware which may affect the negotiation of the terms or the client's decision whether or not to enter into the lease. He considered that a surveyor would not expect a solicitor to comment or offer a view on the commercial terms which the surveyor had negotiated. His experience was that 24 year leases had 5 years rent reviews rather than 3 year reviews. In his live evidence he was referred to the joint statement which he had signed with Mr West. The statement agreed the 5 matters which I have set out in my review of Mr West's evidence as factors favouring BIA in the negotiations.
  127. H. The duty of Strutt & Parker

  128. The duty of Strutt & Parker is here the duty of Mr Ashworth. He is the only individual who was involved on behalf of Strutt & Parker and no wider duty on the firm is alleged. But, as I will point out, that duty included a duty to seek assistance within the firm when he needed it.
  129. It was asserted in the written opening submissions on behalf of the claimants that 'the level of expertise to be expected was that of a major national firm of surveyors, which had expressly put itself forward as well suited to the task of advising on land value near an airport. In other words the expertise to be expected was the very highest within the profession of chartered surveyors.' The answer on behalf of Strutt & Parker was that the claimants were not entitled to expect the highest standards in airport development - which was not asserted, but were entitled to 'expect the standard of a competent surveyor negotiator advising on such development of land near an airport.'
  130. I consider that the difference between the parties, such as it is, is to be resolved in this way. The standard of professional skill and care to be expected from Strutt and Parker was that to be expected of a major national firm. It was the competence to be expected from such a firm holding itself out as having the competence to act in connection with the development of land adjacent to an airport. It was to be the competence which might be drawn from the whole firm: that is to say that, if Mr Ashworth was not himself fully competent to deal with a situation, he should draw on the resources of the firm. If the firm could not provide the necessary expertise in a particular situation, it might be necessary to go outside it. It will be remembered that on 24 March 1999 Mr Fitzgerald had written to Mr Ashworth referring to the particular experience of Drivers Jonas of rental performances in relation to airports. However it does not seem to me that that should have been necessary.
  131. It is important to have also in mind the principle that has often been expressed and I take it conveniently from the opinion of Lord Hobhouse in Hall (Arthur JS) & Co v Simons [2002] A.C. 615 at 737, a case concerning the duty of advocates:
  132. "The standard of care to be applied in negligence actions against an advocate is the same as that applicable to any other skilled professional who has to work in an environment where decisions and exercises of judgment have to be made in often difficult and time constrained circumstances. It requires a plaintiff to show that the error was one which no reasonably competent member of the relevant profession would have made."

    That is not intended to imply that the standard to be expected of a specialist Queen's Counsel is the same as that to be expected of a white-wigged junior. Mr Ashworth was more in the position of the specialist Queen's Counsel.

    I. Breach of duty and negligence in relation to the 2000 lease, 1988 – 2000

  133. It is as well to say by way of introduction that the important lease is the 2002 lease because it runs until 14 August 2026 and the 2003 lease in effect follows on from it. This was the way the claimants' case was put: see opening submissions, day 1, page 30.
  134. As I have set out, the negotiation of the 2000 lease took place in what were effectively two phases. The first phase ran from October to December 1998 when a rent of £7,000 was agreed in respect of Field A for a lease of 5 years to 9 July 2004. At that time BIA's plan to build a new terminal partly on the Estate's land was still in being. It was in this phase that Mr Ashworth asked for a turnover rent and was refused by Mr Holland with four reasons being provided as to why it was inappropriate. The second phase covers September to December 1999. The rent for Field A was then agreed at £9,000 and a further year was added to the lease. The lease was signed on 20 January 2000. It ran to 8 July 2005.
  135. It was alleged in the amended particulars of claim served on 6 November 2006 under the heading of 'The 2000 lease' that Mr Ashworth should have been aware that it was normal commercial practice for leases of car parks to have a fixed rent based on estimated usage with an additional element based on turnover. It is alleged that he failed to examine Mr Holland's reasons for refusing a turnover rent and failed to realise that they were of little weight. It is alleged that Mr Ashworth failed to make any estimate of what a turnover rent might yield. It is alleged that he failed to advise the Estate on 3 December 1998 as to a turnover rent and the likely returns, and that Mr Holland's reasons were of little weight, and, by amendment, of the possibility of the Estate constructing a car park itself or letting the land to a commercial operator. It is pleaded that, if such advice had been given, Mr Ashworth would have been instructed to seek a turnover rent, which BIA would have agreed, or, failing agreement, the Estate would have pursued the options of constructing its own car park or dealing with a commercial car park operator. In anticipation of the case made by Strutt & Parker that BIA owned the Airport Road and so controlled access to the car park land, it was pleaded in paragraph 4 of the claimants' reply, leave for which was obtained at the start of the trial, that Mr Ashworth should have advised that the Estate should investigate the rights over the Airport Road. In his closing submissions Mr Lamb submitted that it was not open to the claimants to run this last case. However, following my ruling that certain evidence as to the road should be admitted, he raised no objection to my giving permission to serve the reply.
  136. I do not consider that Mr Ashworth was negligent in relation to the 2000 lease. It may well be that the process by which he decided to accept Mr Holland's statement that BIA would not pay a turnover rent and to advise the Estate to agree to the terms offered can be made the subject of some criticism. But that is not the test. The position he took is one, which in my judgment, could easily have been taken by a competent surveyor of appropriate standing.
  137. It is important to remember what the situation at the Airport then was. Enough had been done to Field A to save the planning consent. The surface which had been provided was inadequate. Few passenge