Court of Appeal favours in claim against Blackpool Airport Ltd

3 April 2012

The Court of Appeal has ruled in favour of in a case concerning the construction of a 15 year agreement relating to the use of Blackpool Airport by a low cost carrier.

Blackpool Airport Limited (“BAL”), 95% owned by Balfour Beatty plc, had argued unsuccessfully before HHJ Mackie QC at trial that it was not obliged to keep Blackpool Airport open to accommodate’s schedules beyond its promulgated opening hours.

BAL had contended that the provisions of the agreement that obliged it to cooperate and use best endeavours to promote’s low cost services from Blackpool Airport and use all reasonable endeavours to provide a costs base that would facilitate’s low cost pricing did not require it to sacrifice its own commercial interests. BAL renewed that argument on appeal, namely that best and reasonable endeavours entitled it to consider its own commercial interests before those of

BAL further argued that the terms of the agreement to use such best endeavours and all reasonable endeavours to promote low cost services and low cost pricing were too uncertain to create legally enforceable obligations. It argued that the contract was silent on hours of operations so that this meant that it was not obliged to keep Blackpool Airport open to accommodate any flights outside its standard promulgated opening hours even though it had done so for 4 ½ years from the outset of the agreement argued that the nature of best / all reasonable endeavours obligations depended on the context in which they arose and that this was a matter of construing those terms against the factual matrix in which they arose. also argued that there was nothing uncertain about the obligations and that any attempt to restrict Blackpool Airport opening hours was, as the Judge had held at trial, a breach of contract.

After an exhaustive review of the best and reasonable endeavours case law, including Sheffield District Railway Co. v Great Central Railway Co. (1911) 27 T.L.R. 451, Terrell v Mabie Todd and Co. Ltd [1952] 2 T.L.R. 574, A.P. Stephens v Scottish Boatowners Mutual Insurance Association (The ‘Talisman’) [1989] 1 Lloyd’s Rep. 535, Phillips Petroleum Co. UK Ltd v Enron Europe Ltd [1997] C.L.C. 329, Yewbelle Ltd v London Green Developments Ltd [2006] EWHC 3166 (Ch), EDI Central Ltd v National Car Parks Ltd [2010] CSOH 141 and R. & D. Construction Ltd v Hallam Land Management Ltd [2010] CSIH 96, the Court of Appeal (Longmore LJ and Moore-Bick LJ, Lewison LJ (dissenting)) held by a majority that’s arguments on the nature of best and reasonable endeavours obligations depending very much on the context in which they appeared were correct. In particular, it did not follow that on each occasion these words were used in a commercial contract that this permitted the party obliged to place its own commercial interests first or that the duty was limited in the way BAL had suggested.

The Court of Appeal again by a majority also rejected BAL’s argument that the contract was too uncertain to create binding obligations to promote low cost services.

Philip Shepherd QC and Adam Cloherty instructed by Bird & Bird partner Robin Springthorpe acted for Click here for the judgment.