Ryanair Ltd v SR Technics Ireland Ltd

The Claimant in the action, Ryanair Limited, is the well-known low fare airline. It is an Irish company which operates mainly in Europe.

The Defendant, SR Technics Ireland Limited (“SRT”), is the Irish subsidiary of a group whose holding company is incorporated under the laws of Switzerland and is based in Zurich. The business of SRT is the provision of aircraft maintenance services in Ireland and in particular in Dublin.

These proceedings relate to an agreement which was entered into between SRT (then called FLSA Ireland Limited) and Ryanair for the provision by the former of aircraft maintenance services at Dublin Airport. In this judgment I will where possible, for the sake of simplicity, refer to the company throughout as SRT. One of the provisions of the contract was that SRT would make available to Ryanair for a period of 15 years a section of hangar space at Dublin Airport. Since SRT leased its hangar space at Dublin Airport from the Dublin Airport Authority ("the DAA"), it was necessary for SRT to obtain the consent of the DAA to any lease or licence which SRT might grant to Ryanair.

The central question which I have to decide in this case is whether the failure of SRT to obtain the consent of the DAA to the grant of a licence for Ryanair to occupy hangar space at Dublin Airport, or in the alternative the failure to make available to Ryanair hangar space at that airport, constitutes a breach on the part of SRT of its contractual obligations towards Ryanair. The further or alternative question which may arise for decision is whether SRT was contractually entitled to revoke Ryanair's licence to occupy the hangar space. If these answers are resolved in favour of Ryanair, an issue arises whether Ryanair is entitled (as it claims) to relief in the form of an injunction restraining SR Technics Ireland Limited from revoking Ryanair's licence to occupy the hangar space and/or from refusing to make available to Ryanair the said hangar space or whether (as SRT contends) Ryanair’s remedy lies in damages only.

The particulars of claim were amended shortly before the commencement of the trial on 4 December 2007. In its original formulation Ryanair's claim was for breach, firstly, of an Novation Agreement dated 30 December 2004, whereby the rights and obligations of FLSA under an earlier contract dated 3 March 2000 and identified as "contract number 1747" were transferred to SR. The Novation Agreement provided that the terms and conditions of the earlier contract should apply mutatis mutandis.

There were two Side Letters to the Novation Agreement, each of them dated 30 December 2004. The first, Side Letter 6, provided that the aircraft maintenance services were to be performed by SRT at its Dublin facility. Reference was also made in Side Letter No 6 to the provision to Ryanair of a sub-lease of an area of Hangar 1 at Dublin Airport. The head lessor of that hanger and indeed of most, if not all, the buildings at Dublin Airport. No dispute arises as to the terms and effect of Side Letter No 6 which was in effect largely superseded by Side Letter 6A (“SL6A”).

Paragraph 3 of SL6A provided that SRT would licence Ryanair for a period of 15 years (with an option by mutual consent to extend by a further 15 years), subject to the consent of the DAA to be recorded in a written Hangar Licence Agreement (“HLA”), to occupy from 1 April to 30 September each year a section of Hangar 1 at Dublin Airport delineated in the drawing attached and from 1 October to 31 March a similar alternative area in another hangar occupied by SRT.

The terms of paragraph 3 of SL6A need to be set out in full:

Ryanair initially claimed that, since the date of execution of Side Letters 6 and 6A, the parties acted in accordance with the terms of the proposed licence agreement, in that Ryanair had the use and occupation of a bay similar to that identified in SL6A, and had been invoiced by SRT in respect of its use of that hangar space from 1 January 2005 to 31 January 2007. Ryanair further relied on the fact that, once it obtained access to the bay, it paid to SRT a sum in excess of £1million.

Ryanair alleged that SRT breached SL6A (a) by failing to seek the consent of the DAA to the grant of a licence to Ryanair of less than 15 years duration and (b) by failing to use all reasonable efforts to obtain the consent of the DAA to the grant of a 15 year licence to Ryanair and (c) by failing to use all reasonable endeavours to obtain the consent of the DAA to the grant of a licence to Ryanair of less than 15 years duration and (d) by purporting to terminate Ryanair's licence with effect from 30 September 2007.

Ryanair alleged in the alternative in the original Particulars of Claim that SRT was estopped from refusing to make available to Ryanair the hangar space stipulated for a period of 15 years.

By the late amendments to which I have referred Ryanair advanced the case that, on the true construction of paragraph 3 of the SL6A, SRT was under an obligation to seek the consent of the DAA to the grant of a 15 year licence and, if consent for a licence of that duration was not forthcoming, to seek consent to the grant of a licence to Ryanair of a shorter duration.

An alternative and fundamentally altered case was also advanced in the Amended pleading: the new case was largely based on an unsigned letter of 12 November 2004 emailed to Mr Hickey, the Director of Engineering at Ryanair, by Mr Declan O'Shea on behalf of SRT. This letter contained an assurance on the part of SRT that it was its intention to seek a duration of 15 years for the HLA but that, in the event that such an agreement were to be issued for a term of less than 15 years, SRT would upon expiry of termination of such licence seek for a renewal. Ryanair alleged that Mr Hickey indicated his satisfaction with the proposed arrangement and on the same date confirmed that Ryanair would pay the agreed sum of £1,071,595 within 1 calendar month of finally gaining access to the hangar in Dublin.

In those circumstances Ryanair alleged in the amended particulars that the assurance given in the letter of 12 November 2004 amounted to a collateral contract between the parties or gave rise to an estoppel. Ryanair further alleged that SRT was under the same obligation by virtue of an implied term of SL6A. In the further alternative it was pleaded that there was an implied term of SL6A that SRT would use all reasonable efforts to obtain the consent of the DAA to the grant of a 15 year licence to Ryanair.

Ryanair alleged that SRT breached the collateral contract and/or the implied term by reason of the failures identified at (a), (b) and (c) in paragraph 10 above.

Although naturally concerned at the lateness of the amendment, SRT did not oppose it; nor did SRT seek an adjournment of the trial. The case advanced on behalf of SRT in its original Defence was that the parties were unable to enter into the written HLA because the DAA did not consent to a licence period for a period of 15 years. SRT averred that it was able informally to allow limited use of hangar space by Ryanair on an ad hoc basis. That remained the position after Side Letters 6 and 6A had been agreed.

As to paragraph 3 of SL6A, SRT denied that it contained a licence agreement; rather it contained an agreement to make a written HLA subject to a condition which was not fulfilled and which in any event is unenforceable. The condition relating to the consent of the DAA was at no time waived. As to the payment of the sum of over £1 million by Ryanair, SRT pleaded that the sum was already due and its payment did not constitute additional consideration. In the circumstances there was no breach of any agreement between the parties and the allegation of estoppel was denied.

On 5 November 2007 the Defence was amended to add the assertion that the provision of the sub-lease was subject to obtaining the consent of the DAA, such consent not to be unreasonably withheld. Consent was refused in that the DAA was only prepared to grant a licence for a 2 year period. Accordingly SRT denied liability for the fact that Ryanair did not obtain a licence.

On receipt of the Amended Particulars of Claim, the Defence was re-amended to aver, firstly, that by virtue of the express terms of contract 1747 it was an entire agreement which could only be altered or amended in writing and that it represented the entire agreement of the parties to it. As to the reliance placed by Ryanair on pre-contractual discussions, SRT alleged that they are irrelevant to the construction of SL6A; that Ryanair made clear that it required a sub-lease of Hangar 1 for 15 years; that a proposal was made to Ryanair for a shorter licence because, as both parties were aware, the DAA was considering developing Dublin Airport to establish a new terminal and Hangar 1 might be demolished in the process; that Ryanair never sought agreement to the provision of a shorter licence than 15 years and there was no obligation on SRT to do so either. SRT further alleged in the Re-Amended Defence that SL6A is unambiguous; that pre-contractual negotiations cannot be relied on as an aid to its construction; that there was no written record of any agreement to vary SL6A and that no collateral contract was entered into by the parties. SRT denied that there was any implied term to the effect that SRT would use all reasonable efforts to obtain consent to the grant of a licence shorter than 15 years. In any event reasonable efforts to obtain a 15 year licence were made by SRT. Finally SRT denied that Ryanair had assumed at any material time that the condition relating to the consent of the DAA had been waived.

To complete my summary of the statements of case, Ryanair in a Reply to the Re-amended Defence served just before the commencement of the trial elaborated at some length the case based on Mr Declan O’Shea’s draft letter of 12 November 2004 (see paragraph 13 above). Ryanair denied that it had stipulated that the sub-lease had to be one of 15 years duration and that clause 3 of SL6A did not require the sub-licence to be for a period of 15 years. The possible future development of Dublin Airport was not itself a good reason for the DAA to refuse consent to a 15 year licence, since it is standard practice for an airport authority such as the DAA to reserve the right to terminate the relevant lease in the event of airport development. Ryanair alleged that according to the true construction of clause 3 of SL6A, SRT was obliged to apply for a 15 year licence but, if the DAA was only prepared to enter into a shorter licence, then the parties would enter into a licence agreement for that shorter period and upon its expiry application would be made to the DAA for a renewal. Ryanair alleged that it was deprived of the opportunity to enter into a licence of shorter duration than 15 years because SRT did not advise Ryanair at any time prior to the issue of the present proceedings that the DAA had refused consent to a 15 year licence but had indicated that it would consent to a licence of 2-3 years.

Ryanair's pleaded case is that SL6A does not refer to the provision of a licence for a term of 15 years; rather it provides that for a period of 15 years SR Technics Ireland would licence Ryanair to occupy the hangar space but did not specify that the term of the licence agreement would be 15 years (my italics). It is alleged that, if the licence was for a term of less than 15 years, then by necessary implication SRT was under an obligation to seek renewal thereof. Ryanair denied that the undertaking by SRT to seek, if necessary, a licence of less than 15 years was an agreement to vary SL6A and accordingly it did not need to be recorded in writing and signed by the parties.

Ryanair further contended in the Reply that both parties acted upon the common assumption that the undertaking given by SR Technics Ireland to apply for a licence shorter than 15 years would be binding on it; that Ryanair relied on the assurance to that effect and it would be unconscionable for the Court not to give effect to that common assumption. Accordingly it is pleaded that SRT is estopped from denying the construction of clause 3 of Side Letter No 6A for which Ryanair contends.

The Reply further alleges that SRT should have challenged any refusal by the DAA to grant a 15 year licence and that the result of such a challenge would have been that the parties would have been able to enter into a licence agreement for such a term. Alternatively it is contended that the parties would have been able to enter into a licence agreement of at least 3 years if SRT had complied with its duty to inform Ryanair of the DAA's consent to an agreement of such duration. It is further contended that, SRT having failed to require the DAA to give reasons for refusing a 15 year licence and given that SRT holds the hangar space under a 75 year lease agreement expiring in 2059, Ryanair is unaware whether there is any reason which might constitute reasonable grounds for the DAA refusing such consent. Finally it is pleaded that SRT has provided Ryanair with access to a designated hangar space for over 2 and a half years and the DAA has taken no steps to require that occupation to be terminated. In these circumstances Ryanair contends that there is no reason why such occupation should not continue; alternatively SRT can and should obtain a licence for a term of 2-3 years.

Before turning to the history of the negotiations between the parties, I have to record the fact that it is an unhappy feature of this case that SRT has failed lamentably to comply with its disclosure obligations.

In the first place a number of documents were disclosed very late, notably the potentially significant email dated 12 November 2004 sent by Mr O’Mahony to Mr Hickey (referred to at paragraph 13 above). When he came to give evidence, it rapidly became apparent that Mr O’Mahony had not had properly explained to him the scope of the duty to make disclosure by Mr John O’Shea. Mr O’Shea’s explanation that he “discounted” disclosure of the letter because it formed part of the pre-contractual negotiations strikes me as absurd, not least because SRT did disclose some documents within that category. The truth is that the letter of 12 November was not disclosed SRT until after they saw it in Ryanair’s disclosure. Another late disclosure was an SRT document entitled “Ryanair Decision Paper”, the relevance of which to the issues arising in this case should have been obvious.

More seriously, some important documents were not disclosed by SRT until after the trial had started. These documents include many of the Minutes of SRT’s Board meetings held over the relevant period. One of these, when it was finally disclosed, had paragraphs redacted which, when uncovered, turned out to be relevant and which obviously ought to have been disclosed in the first place. Mr John O’Shea, in-house legal counsel of SRT, gave as his explanation for making the redactions the fact that he had not wanted to embarrass the DAA in relation to what was a confidential matter. I am doubtful, even now, if all relevant Board Minutes have been disclosed. Another category of documents which were not disclosed until after the trial had started were Visit Reports recording contractual negotiations and discussions over the period from 2002 to 2005. Almost all of them are on their face clearly relevant to the issues arising for decision.

My concern is not confined to SRT having made late disclosure of documents; it is also that there are almost certainly documents which exist or existed, which are relevant and which have not been disclosed at all. In a case of this kind, which requires close examination of the dealings between the parties, it is important that full disclosure be made not only of documents passing between the parties (of which both parties will of course have records), but also of internal memoranda and notes of meetings etc. I have to say that I cannot accept that this obligation has been complied with by SRT.

One example concerns Mr John O’Shea. Despite his relatively slight experience of litigation, he told me that he undertook responsibility for collating potentially relevant documents for disclosure. Mr O’Shea’s evidence was that he does occasionally write attendance notes as well as what he described as “position papers”. For reasons which remain unclear, very few of these documents were disclosed. Mr O’Shea said that he had weekly meetings with the DAA over the relevant period and that he frequently took the opportunity to raise with SRT the issue of granting a 15 year licence to Ryanair. One meeting with the DAA which Mr O’Shea says he attended took place on 31 May 2005 (see paragraph 90 below). Although another of SRT’s witnesses recalled his having a notebook with him at the meeting, no note of that meeting was disclosed by SRT (or, for that matter, by the DAA). Mr O’Shea’s explanation was, surprisingly, that he left it to the DAA representative who attended the meeting to take a note.

No attendance notes have been disclosed by SRT (or by the DAA) of the numerous other meetings at which Mr O’Shea claims to have raised the question of a licence for Ryanair. Some of Mr O’Shea’s answers suggested that he thought (wrongly) that notes of meetings with “his” landlord (the DAA) did not have to be disclosed because the discussions with the Authority were confidential. But his ultimate position was that he made no records of his various meetings with the DAA. Mr O’Mahony told me that Mr O’Shea normally walks around with a notebook and Mr O’Shea himself at one point said he would take a notebook to meetings. I reject Mr O’Shea’s explanation. In addition no disclosure has been made by SRT of the internal management meetings at which, according to Mr O’Shea’s evidence, the question of a licence for Ryanair was also discussed.

As will be apparent, emails play an important part in this case. Yet there is a remarkable dearth of emails in SRT’s disclosure. Asked why no emails sent by Mr Declan O’Shea have been disclosed, Mr John O’Shea suggested that was because he (Declan) had not been involved in drafting the Side Letters; that task had been delegated to Mr O’Mahony. That evidence conflicts with the evidence given by Mr Declan O’Shea for not disclosing the unsigned letter of 12 November 2004 which was that he had forgotten about it. His evidence was that he sent his documents to Mr John O’Shea but none have been disclosed. Mr O’Mahony said the same. Mr O’Shea was unable to offer any acceptable explanation why emails sent by Mr O’Mahony had not been disclosed. Mr O’Shea gave evidence that the first he saw of the unsigned letter from Mr Declan O’Shea sent by Mr O’Mahony to Mr Hickey on 12 November 2004 was when he saw it in Ryanair’s disclosure.

The problems created by the numerous inadequacies, as I find them to be, in the disclosure made by SRT are compounded by the fact that I did not have the benefit of being provided with copies of the DAA’s documents relating to Ryanair’s occupancy of hangar space at Dublin Airport or the attempts said to have been made by SRT to obtain the consent of the DAA to a licence. Before the trial Ryanair’s English solicitors aksed SRT’s solicitors to obtain documents from the files of the DAA but the request was refused. Attempts made in the course of the trial to elicit documents from the DAA achieved nothing.

Assistance from the DAA would at least have mitigated the problems caused by the inadequacy of SRT’s disclosure. In my opinion the DAA must have made notes of the meetings at which SRT allegedly sought consent for the licence, not least because they might need them later for their own protection. I reject the evidence of Mr Murphy that a record of a decision to refuse a licence is only made when it represents a change in policy.

When asked by Mr O’Leary, Chief Executive of Ryanair, in 2006 for information about the attitude of the DAA to Ryanair’s occupancy of Hangar 1, Mr Collier, Chief Executive of the DAA, unhelpfully replied that it would not be appropriate for the DAA to discuss commercial discussions it might or might not be having with third parties. This reply typifies the attitude of the DAA to requests for documentary assistance in connection with this matter.

Attempts were made at my suggestion in the course of the trial to enlist the assistance of the DAA in providing the Court with relevant documents. Of course the DAA is not a party to these proceedings and is under no duty to make voluntary disclosure of its internal (or any other) documents. I do not overlook that there are ongoing proceedings in Ireland between Ryanair and the DAA. Unfortunately those approaches did not bear fruit. I believe I am right to say that the only two documents made available by the DAA are two draft letters prepared by Mr Murphy and Mr McGowan respectively neither of which was ever sent. Mr Michael Murphy, who was until September 2007 employed by the DAA as its general manager, was called by SRT to give evidence on its behalf. No longer being in the employ of the DAA, he was not in a position to help with DAA’s internal documents.

Some complaints were made in the course of the trial about Ryanair’s failures to make proper disclosure. These complaints were repeated and elaborated in the closing written submissions of SRT. They are to be found in paragraph 342C of those submissions. Some but not all of them had been ventilated earlier during the hearing.

I do not propose to go through the alleged failures one by one. It is noteworthy that request for no disclosure was made by SRT until after the commencement of the trial. In the absence of any affirmative case being advanced on behalf of SRT that there was available hanger space at Dublin airport, it is difficult to see why Ryanair should disclose documents relating to that question. Documents were produced by Ryanair when they were requested. Suffice it to say that such deficiencies as there may have been in Ryanair’s disclosure, none of them appears to me as serious or as culpable as the failures on the part of SRT which I have identified in the previous section of this judgment. To take just two examples: I see no reason for supposing that minutes of Ryanair’s management meetings would have a bearing on the issues which I have to decide. By the same token I cannot see that such notes, if any, as were made by Ryanair’s Chief Executive, Mr O’Leary, would be relevant to the issues which arise. He appears to have been on the outer periphery of the discussions and negotiations between the parties.

Before moving on from the parties’ statements of case, I should record a complaint made on behalf of SRT that there was introduced into the case an allegation of collusion between SRT and the DAA, which had not been pleaded, as it should have been. The fact is, however, that the suggestion of collusion arose out of allegations put to Mr Hickey in cross-examination. I entirely accept that it did thereafter become a feature of the case and was the subject of vigorous cross-examination of both SRT witnesses and the witness who effectively spoke for the DAA (Mr Murphy). No application was made to shut out that line of cross-examination; nor was an application made to adjourn the hearing. In those circumstances it seems to me that the right course for me to take is to address the issues of fact which have arisen in the next section of my judgment. I do not consider that this is in any way unfair to SRT.

I turn now to the history of the relationship between SRT and Ryanair so far as it bears on the present dispute. Where appropriate I will refer in this section of the judgment to witnesses’ evidence on contentious issues. I will also try to include reference, where convenient, to the parties’ respective contentions and submissions on the principal issues. In this way I hope that the issues in the case will be apparent from a reading of the narrative.

From the early 1990s FLS Aerospace (UK) Limited (“FLSA UK”) provided maintenance services for Ryanair at Stansted Airport. On 3 March 2000 Ryanair and FLSA UK entered into contract 1747, which provided for FLSA UK to provide maintenance services for Ryanair’s fleet of Boeing 737-200 and 737-800 series aircraft.

There came a time in or about 2002 when FLSA UK wanted to reduce or close down its heavy maintenance operations at Stansted. I infer that a major reason for this was to reduce costs and increase profitability. In order for this to be able to happen, the maintenance work carried out for Ryanair needed to be transferred to Dublin Airport. Accordingly in mid 2002 FLSA UK approached Mr Michael Hickey of Ryanair with a view to persuading Ryanair to transfer its maintenance programme to Dublin. The initial reaction of Ryanair to this approach was that it was content with the services being provided at Stansted and so was not interested in moving its maintenance programme to Dublin.

Subsequently, however, Ryanair agreed to make the move because it was prevailed upon to do so by a number of inducements or “sweeteners” offered to Ryanair by SRT in order to persuade Ryanair make the move. Of these the one which is for present purposes material was the offer to make available to Ryanair for a period of 15 years hangar space sufficient to accommodate the Boeing 737-800 series aircraft in one of its hangars at Dublin Airport. At the time Ryanair was introducing aircraft of this specification into its fleet. The 737-800 is wider and larger than the 737-200 and so needed a larger hangar.

Mr Hickey, who was the principal witness for Ryanair, made clear in his evidence the paramount concern of Ryanair to obtain hangar access at Dublin airport for at least 15 years. This was the key to Ryanair’s intended expansion of its fleet. Mr Hickey explained in his evidence how fundamental it was that Ryanair should obtain hanger space in Dublin for a minimum period of 15 years. His preference was for Hangar 1 because it had strategic advantages and there was office space there. Although he was aware (because Mr Declan O’Shea and Mr O’Mahony of SRT told him so) of the possibility that the DAA would not consent to 15 years, Ryanair expected that it would be able to get a 15 year licence. Mr Hickey did, however, accept that he was aware that the DAA planned to develop the airport and that this plan might impact on Ryanair’s wish to obtain long-term hangar access. Similarly SRT’s witnesses were unaware of any reason why a 15 year licence would not be obtainable. As I have indicated SRT’s lease contained a provision entitling the DAA to terminate the lease in the event of the hangar being required in order to implement a development plan; there was no reason why any licence granted by SRT to Ryanair should not have contained a similar provision.

It is not disputed that it was SRT which induced Ryanair to move to Dublin. But it was very much in the financial interests of SRT that the move should be made. In November 2002 SRT prepared a “Ryanair Decision Paper”, which (when it was finally disclosed – with a redaction) revealed that the net benefit to SRT of Ryanair moving its maintenance to Dublin was US$3.6million per annum. According to the paper, SRT had excess hangar capacity at Dublin at this time.

The landlord of the hangar space at Dublin Airport was at all material times the DAA. The DAA had leased several hangars, including Hangar 1, to SRT for a term of 75 years, expiring in 2059. The consent of the DAA to any sub-lease or licence to occupy the demised hangar space was required, such consent not to be unreasonably withheld. Clause 15 of the lease provided the DAA with a right to recover possession, subject to the payment of compensation, in the event that the hangar was required for redevelopment.

According to Minutes of a Board Meeting of SRT held on 25 April 2003 (which were disclosed by SRT in the course of the trial), obtaining the consent of the DAA to the sub-letting of Hangar 1 was one of the matters which had to be settled before the Side Letter conferring a licence on Ryanair could be signed. SRT maintains that it made absolutely clear from the outset of its negotiations with Ryanair that the provision of access to hangar space at Dublin airport would have to be through a formal agreement, otherwise it would be in breach of its own lease. It was made clear in early drafts of SL6 that it was a specific condition of the sub-lease that the consent of the DAA to it be obtained. The same applied when the proposal changed with effect from May 2004 from a sub-lease to a sub-licence.

It is necessary for me to recount in some detail the course of the discussions and negotiations which took place over a lengthy period from about mid 2002 until about November 2004 as to the basis upon which the hangar space would be made available to Ryanair. Before doing so, however, I should make clear that the physical transfer of the maintenance work from Stansted to Dublin was substantially effected as early as 2002, that is, well in advance of the final execution of the contractual documents by which the parties ultimately agreed the terms on which such transfer should take place.

The position was that from late 2002 onwards Ryanair was in occupation of hangar space at Dublin airport with the knowledge and consent of SRT, which was the tenant of that hangar space pursuant to a lease granted to it by DAA. Mr Declan O’Shea gave evidence that he had been reluctant to let Ryanair into possession and that he had done so against the advice of SRT’s in-house lawyer. He said that he did so, because he needed to obtain payment from Ryanair of the substantial sum it owed to SRT.

The evidence is that, after Ryanair entered into occupation of the hangar space, problems arose because of the inability of Ryanair on numerous occasions to gain access the hangar space. Many complaints were made about this often at CEO level. These problems were eventually resolved and, as will be seen, Ryanair ultimately had its own designated area of hangar space.

The evidence of Mr Hickey was that, although no document evidencing the consent of DAA to Ryanair’s occupation of the hangar space was provided to him, he assumed that the consent of the DAA was in place because SRT continued to give Ryanair access which would have constituted a breach by SRT of the terms of its lease if done without the consent of the DAA. As he put it in his evidence: “I presumed it was sorted”. Mr Hickey said that he assumed that the licence was for the full period, ie 15 years.

Mr Declan O’Shea, who was still CEO of SRT at the end of 2005, accepted in his evidence that noone at SRT told Ryanair at that time that in fact the DAA had not consented to Ryanair’s occupation of the hangar space. He said that his namesake, Mr John O’Shea, was dealing with the matter on a daily basis. Mr Declan O’Shea accepted further that, if Ryanair had been informed of the absence of consent, it would have “taken steps”. He said that Ryanair had more leverage with the DAA than SRT.

The progress of the negotiations relating to the contractual arrangements to give effect to the transfer appears to have been impeded because FLSA was negotiating the sale of its business to SRT. This led Mr Michael O’Leary, Chief Executive of Ryanair, to protest to SRT about its failure to honour its contractual obligations under Contract 1747 and the Novation Agreement.

It was not until 8 April 2005 that the parties executed the Novation Agreement dated 30 December 2004 which replaced contract 1747. On the same day the two so-called Side Letters 6 and 6A were also executed. The initial proposal had been that SRT should grant Ryanair a sub-lease of hangar space for a term of 15 years. That is apparent from the early drafts of Side Letter 6. However, Side Letter 6 was largely superseded by SL6A, which in its final version provided that for a period of 15 years SRT would licence Ryanair to occupy a designated area of hangar space with an option by mutual consent to extend for a further 15 years.

The principal documents relating to the transfer of Ryanair’s aircraft maintenance to Dublin are Contract 1747, the Novation Agreement and SL6A. It is plain and is also common ground that the parties had been operating on the basis of the principal terms of those agreed terms for a considerable time before the contractual documents were executed: see for example the letter from Mr Hickey to Mr Hobbs, FLS Group President dated 1 June 2004. Liability in this action depends on the construction of those documents and the circumstances which led up to their ultimate execution. Accordingly, it is necessary for me to trace the progress of the negotiations which culminated in the agreement between the parties which is contained in those documents.

The contractual document which is at the heart of this case is SL6A. The vital provision is contained in clause 3. It is accepted that both parties wanted to make contractual provision for the agreed access to hangar space at Dublin for a period of 15 years. Mr Declan O’Shea agreed that the 15 years was “written in stone”; it was the obligation of SRT to satisfy that condition of Ryanair’s agreement to move to Dublin. The parties had also to accommodate within the provision for the fact that any licence was subject to obtaining consent from the DAA. The possibility existed that the DAA would refuse 15 years which gave rise to a need for some flexibility on the wording of clause 3. But SRT’s witnesses were confident that consent would not be refused outright ; the DDA had previously consented to a 2 year licence in the case of another airline, Cityjet.

Work on drafting SL6A started as long ago as May 2004. Nothing in my view turns on the earlier drafts, although it is pointed out on behalf of SRT that one finds in some of the early drafts reference to the sub-lease being for a “period” rather than a “term” of 15 years. I shall revert to the possible significance of this in due course.

I should, however, mention draft numbered 28, which Mr O’Mahony sent to Mr Hickey under cover of an email dated 13 September 2004. Paragraph 3 of that draft included the following proposed term in relation to the hangar at Dublin Airport:

As SRT accept, Mr Hickey had made it clear throughout the negotiations thus far that Ryanair wanted a sub-lease or licence of at least 15 years. In his evidence Mr Declan O’Shea accepted that he realised that Mr Hickey regarded this as a “deal-breaker”. He explained that the reference to a term of 15 years had been removed at that stage in the negotiations because SRT did not want to commit itself to something which it could not fulfil.

The exchange of drafts continued. There were regular telephone conversations between Mr Hickey and Mr O’Mahony (who had taken over the role of negotiating terms on behalf of SRT) about the wording in the drafts. The exchanges which are potentially crucial to the determination of the issue of liability in the case followed a meeting on 5 October 2004 between Mr O’Mahony of SRT and Mr Hickey. After that meeting Mr O’Mahony sent draft 30 of SL6A to Mr Hickey under cover of an email dated 12 November 2004. That draft contained no reference to Ryanair having a 15 year licence of the hangar space.

In his covering email Mr O’Mahony said that he trusted that the draft reflected all of their understandings and should form the basis for the conclusion of Contract 1747, the Novation Agreement 1747 and Side Letters 6 and 6A. Ryanair argues that this appears to indicate that Mr O’Mahony believed that Mr Hickey had agreed to countenance a term for the licence of less than 15 years. Yet it was the evidence of Mr O’Mahony that there was never any discussion between himself and Mr Hickey other than a 15 year licence. Mr O’Mahony added the following to he email:

There is an important conflict of evidence as to the precise sequence of events which followed. It is common ground that the draft of SL6A sent by Mr O’Mahony under cover of his email of 12 November 2004 at 10.56am included no reference to the term of the licence to be granted to Ryanair being 15 years. Mr Hickey was clear in his evidence that this was the draft which is to be found in trial bundle C2 at p905. Mr Hickey was sure about that because the draft is endorsed with his manuscript note “Received dated 12/11/04 via email”. On his copy of that draft Mr Hickey also noted in manuscript:

Mr O’Mahony accepted that it looked as if the reference to 15 years had been removed from the draft because SRT appreciated that, until it had applied to the DAA for consent, neither Ryanair nor SRT could be certain of getting 15 years.

In terms of documentary chronology the next document is an e-mail message from Mr O’Mahony to Mr Hickey sent at 17.40pm on 12 November 2004, that is, over 6 hours after Mr O’Mahony’s email quoted above. The 17.40pm email reads:

The case for Ryanair that the lapse of time between Mr O’Mahony’s earlier email of 10.56am and the evening message sent at 17.40pm, coupled with the terms of the later message, clearly indicate that there was communication between the two of them between 10.56am and 17.40pm. In his evidence Mr Hickey said that, whilst he had no specific recollection so long after the event, he thinks that he must have spoken on the telephone to Mr O’Mahony about the draft during that intervening period. Mr O’Mahony, who said that his recollection of events was poor and who had some difficulty in following some of the question asked of him, did not think he had spoken to Mr Hickey about the draft between 10.56 am and 17.40 pm. He suggested, however, that Mr Hickey may have spoken to Mr Declan O’Shea about the draft. This was the first time that this had been suggested on behalf of SRT. Mr Declan O’Shea had completed his evidence by this time.

Whether it was to Mr O’Mahony or to Mr Declan O’Shea that Mr Hickey had spoken, the terms of the email appear to be inconsistent with Mr Hickey having refused to countenance a licence for less than 15 years, as both Mr O’Mahony and Mr O’Shea claimed he did. Mr O’Mahony accepted that whoever it may have been who had spoken to Mr Hickey was expecting a positive response from him to the draft letter attached to that email.

The letter (trial bundle C2 at p1008) is also dated 12 November 2004. It is a letter or, more accurately, a draft letter, addressed to Mr Hickey. The name of Mr Declan O’Shea appears at the foot of the letter but it is not signed by him. It was Mr O’Mahony who sent the letter to Mr Hickey. The text of the letter is as follows:

The evidence of Mr Hickey is that, on receipt of that draft letter, he would have responded indicating that he was satisfied with the proposed arrangement. His evidence was that Ryanair did not envisage that there would be any difficulty in obtaining consent to the licence from the DAA. However, given the importance to Ryanair of obtaining hangar access, Ryanair wanted and, according to the evidence of Mr Hickey, obtained from SRT confirmation that, in the event that the DAA gave its consent for a licence of less than 15 years’ duration, SRT would seek a renewal of the licence.

Mr Hickey gave evidence that after receiving the draft letter of 12 November 2004, he drafted an amendment to the last paragraph of the letter (C2 at p1010), the effect of which was to add the following opening words:

The case for SRT in relation to the unsigned draft is that it had no significance, contractual or otherwise. There is no documented evidence that it was ever accepted by Mr Hickey. SRT points out that the draft letter was never signed by Mr Declan O’Shea; nor did Mr Hickey ask that this should happen. It is emphasised on behalf of SRT that the letter is no more than a draft and is not signed. It was never finalised or signed. According to Mr Declan O’Shea, he did not discuss it with Mr Hickey, who conceded in his evidence that this is correct. The draft letter is not mentioned in later correspondence. The evidence of Mr Declan O’Shea was that in no sense did the draft letter form part of the ultimate agreement. It lay dead when the then current draft of SL6A was superseded by a later draft. Mr O’Mahony denied having discussed with Mr Hickey the worry that the DAA might not consent to a 15 year licence. He submitted that, if Mr Hickey had confirmed his OK, he (Mr O’Mahony) would have reported that fact to one or other or both of the O’Sheas. Mr O’Mahony was sure he did not receive any amended version of the draft letter from Mr Hickey. If it had been discussed, the draft of SL6A would have been amended accordingly.

According to SRT, the unsigned draft was overtaken by the revised version of SL6A which was sent by Mr O’Mahony to Mr Hickey on 16 November 2004. One can see from the history of that draft, as shown in “Main document changes and comments”, that, shortly before Mr O’Mahony e-mailed the draft to Mr Hickey, he had inserted at the beginning of paragraph 6.1 of the draft SL6A the words:

The riposte of Mr Hickey is that he was content that he had the assurance which he wanted from SRT, notwithstanding the fact that Mr Declan O’Shea did not sign the draft letter. Given that assurance, he saw no need to amend SL6A, notwithstanding that it no longer stipulated a term for the licence agreement. In his evidence Mr Hickey stressed that the 15 years he was looking for in relation to access for Ryanair to the hanger. He had the assurance of the provision in the revised version of Sl6A which specified a period of 15 years for the licence plus the assurance in Mr O’Shea’s unsigned letter that, in the event of the licence being for a period of less than 15 years, SRT would apply for a renewal. Mr Hickey rejected the claim made by Mr O’Shea in his evidence that he insisted throughout that nothing short of a 15 year licence would do.

The papers include a draft of SL6A which Mr Hickey headed “Version 14.11.04”. Other drafts bear his annotation specifying the date when the draft was received. Mr Hickey made clear in his evidence that he has now no independent recollection of this draft or what action he took in relation to it. His evidence is that he was in his office on that day. It was a Sunday but his work log confirms that he was at work that Sunday. He said he thought it was unlikely that he got the date wrong. His supposition was that on the Sunday he amended the draft he had received by adding to clause 3 the following underlined words:

SRT contends that the amendment made to Mr Declan O’Shea’s unsigned letter is unhelpful to Ryanair because it shows Mr Hickey’s continuing concern to obtain a 15 year licence, albeit in the context of a letter of assurance rather than in SL6A.

Ryanair’s case is that the purpose and effect of adding the words set out above to clause 3 was to underline the fact that, as between Ryanair and SRT, there was to be a licence for a period of 15 years as distinct from a licence the term of which was to be 15 years. The counter-argument of SRT is that “period” and “term” mean exactly the same thing and that Mr Hickey was evasive in his evidence on this point.

The case for SRT in relation to “Version 14.11.04” is that Mr Hickey cannot be right in saying that he amended that draft on 14 November 2004. A print out of that draft (it was No 32) shows that it was changed on 16 November, which is the date when the document was last saved. In answer Ryanair accepts that it may well be that Mr Hickey is wrong about the date when he amended the draft but there is nothing sinister about his error which in any event had no material effect on the issues which arise for decision. It is common ground that Mr Hickey was the author of the added words. However, SRT insist that Mr Hickey’s belief that he had Version 15/11/04 before him on 14 November is crucial because it shows that he had “parked” the idea of relying on an assurance from Mr Declan O’Shea as to the duration of the licence.

According to Mr Hickey, it was for those combined reasons that he wrote to Mr Humphreys a letter which bears the date 12 November 2004, copied to Mr O’Mahony, in the following terms:

That letter is dated 12 November 2004 but Mr Hickey thinks that he would not have sent it to SRT until about 17 November. He bases that, firstly, on the fact that the fax under cover of which his letter to Mr Humphreys was sent to Mr O’Mahony is dated 17 November. The comment is made: why, if the letter to Mr Humphreys was sent to him by Mr Hickey on 12 November, was there any need or reason for Mr Hickey to fax a copy of his letter of 12 November to Mr O’Mahony on 17 November. Secondly Mr Hickey relies on the fact that the first internal SRT email which refers to his letter is dated 18 November 2004 (see D157) and there is none before that date. After that there is a series of internal SRT emails discussing what conclusions can be drawn from Mr Hickey’s letter which culminates in an email from Mr Declan O’Shea saying firmly that Ryanair is to be denied access to its hangar space until a licence has been executed. It is suggested that what triggered this email traffic was the receipt on 17 November of the faxed copy of Mr Hickey’s letter to Mr Humphreys. Ryanair contends that, when ever it was sent, Mr Hickey’s letter to Mr Humphreys provides further confirmation that he did not reject the suggestion that the parties should not specify the term of the HLA, so that SRT would be able to apply for a renewal on expiry in the event that the DAA would not consent to a 15 year licence.

After the prolonged negotiations which I have summarised, the Novation Agreement was finally executed on 8 April 2005, that is, nearly three years after the transfer of Ryanair’s maintenance operations to Dublin. As I have already indicated the Contract 1747 was executed on the same day. Clauses 16.3 and 5 provided respectively:

SL6A was also executed on 8 April 2005. The material terms of Side Letter 6A are set out at paragraph 8 of this judgment.

Ryanair submits that it is clear on the evidence, both oral and documentary, that following the signature of SL6A, both parties proceeded on the footing that SRT considered itself to be obliged to provide Ryanair access to a designated hanger space in accordance with clause 3 and that Ryanair understood that it was being given such access pursuant to the terms of SL6A.

It is further submitted by Ryanair that SRT led Ryanair to believe that the DAA had given consent to Ryanair’s access to the hanger space. Mr Hickey gave evidence that he presumed this to be the position; otherwise SRT would have been in breach of its tenancy agreement with the DAA. This was done, according to Ryanair, in order to obtain payment of the monies owed by Ryanair to SRT.

The case for SRT is that Ryanair was not misled in any way as to the absence of DAA consent. The position, according the SRT witnesses, was that they reluctantly allowed Ryanair to continue to occupy the hanger space “on an ad hoc basis”, as before. Mr Declan O’Shea was, however, obliged to concede that this term is not to be found in the contemporaneous correspondence. Mr O’Mahony agreed that he would not have told Ryanair that the occupation was on a provisional or ad hoc basis.

In the event the payment of just over £1million which Ryanair had agreed to pay to SRT within a month of gaining access to the hangar was not paid until August 2005. Although Ryanair had access to hangar space with effect from 1 January 2005, it can be seen from communications, both internal and passing between the parties, over the succeeding months, that there were recurrent problems for Ryanair in gaining access to the hangar. It was not until later in the year that Ryanair had dedicated access to hanger space. Pending the obtaining of consent from the DAA that access was to Hanger 6/Bay 1A rather than to Hangar 1. Mr Declan O’Shea in his evidence said that this was to ensure that SRT was paid the monies owed to it by Ryanair.

It is SRT’s case that Ryanair was not only guilty of wrongfully withholding monies due to SRT but also that Ryanair subjected SRT to duress by delaying payment of those monies in order to force SRT to give Ryanair unfettered access to the hangar space. Ryanair’s case is that the payment of the monies due was tied to the signature of the side letters and the provision of hangar access. Ryanair say that Mr Hickey’s letter to Mr Humphreys dated 12 November 2004 (but which Mr Hickey says was not sent until 17 November) made clear that the monies would not be paid until Ryanair had access, meaning physical and legal access, to the hangar space.

I turn now to a problematic topic, namely the obtaining of the consent of the DAA to the Ryanair licence. I describe this topic as “problematic” for two reasons. The first is that the documentary evidence of such attempts as were made by SRT to obtain consent are fragmentary. Documents bearing on this issue were disclosed very late in the day by SRT and some have still not been disclosed. The second reason is that, for whatever reason, the DAA has not felt able to assist by disclosing its documents relating to this question. I have to do the best I can on such information as is available.

Ryanair had been aware from the outset of the need to obtain the consent of DAA to a licence: Mr Patrick O’Mahony, who later became Senior Customer Services Manager of SRT, so informed Mr Hickey by letter dated 2 December 2002. No such consent was ever obtained.

So far as I can make out, the relevant history is as follows: it is unclear at what stage the DAA became aware of Ryanair’s access to a designated area of hangar space. Mr Michael Murphy, who was employed by the DAA as general manager until 26 September 2007, gave evidence that he had been aware at the time that Ryanair moved its maintenance operations to Dublin in 2002. But he did not realise that Ryanair had been occupying a designated area until after SL6A had been executed. I will set out in due course the reasons why Ryanair submit I should reject that evidence of Mr Murphy.

One might have expected SRT to have approached the DAA at an early stage to find out what the reaction of the Authority would be to a 15 year licence. No approach had been made by the time the unsigned letter of Mr Declan O’Shea was sent to Ryanair. SRT asserts that it is clear from the wording of that letter that the DAA had not by then been approached by SRT.

It was not until 18 May 2005 that Mr John O’Shea, general counsel to SRT, wrote to Mr Hilliard of DAA referring to their “recent” meeting at which SRT informed DAA of its agreement with Ryanair relating to Hangar 1. There are no notes of that meeting. Mr O’Shea’s evidence was that he told Mr Hilliard at that meeting that SRT’s agreement with Ryanair was for a 15 year licence. He said that it was at this meeting that the DAA informed him for the first time that consent would not be given to a 15 year licence. Mr Murphy’s position as to the length of the licence was that the DAA would have agreed a 2 year term, which he thought would be acceptable to Ryanair.

In his letter of 18 May Mr O’Shea informed Mr Hilliard that Ryanair’s occupancy was planned to last for a minimum of 15 years, which was of course “clearly subject to your consent and any conditions set by you”. Mr O’Shea added that he realised that prospective airport developments might very well influence DAA’s response to this request.

For unexplained reasons no reply was made by DAA to the letter of 18 May 2005 until much later. Unbeknownst to Ryanair, however, Mr O’Shea and Mr O’Mahony attended a meeting with Mr Murphy on 31 May 2005 at which they claim to have raised the issue the 15 year licence to Ryanair. Mr John O’Shea was challenged as to how he deduced that the date of the meeting was 31 May without the assistance of any document as to when it took place. His evidence about the meeting was also challenged, on the grounds, inter alia, that it is at odds with the terms of the letter written later by him. According to the evidence of Mr O’Shea and Mr Mahony, Mr Murphy indicated at the meeting that a 15 year licence would not be acceptable. The reason given was that it was “not airport policy” to grant a long term licence. Although neither Mr John O’Shea nor Mr O’Mahony make any mention of it in their respective witness statements, Mr Murphy told them that it might be possible to grant a 2 year licence along the lines a of a licence previously granted to Cityjet. Mr O’Shea accepted that Mr Murphy told him so. Mr Murphy agreed, however, to take the matter “up the line”.

No note of that meeting by Mr Murphy or by Mr John O’Shea was disclosed. However, on 14 December 2007 (after the evidence in this case had been concluded) SRT belatedly disclosed an email from Mr John O’Shea to Mr Declan O’Shea dated 27 May 2005 which reads:

Somewhat surprisingly Mr Murphy made no note of the meeting; nor apparently did his assistant. Mr Murphy said that he thought that Mr O’Shea may have made a note (which one would have expected) but no such note has been provided by SRT. For whatever reason, SRT did not inform Ryanair what had emerged at the meeting.

Mr Declan O’Shea agreed in evidence that did not believe that Mr John O’Shea told Ryanair at the time of the outcome of his meeting with Murphy on 31 May 2005. It is common ground that Mr Hickey enquired of Mr Declan O’Shea on 21 June 2005 as to the position relating to the consent of the DAA. Mr O’Shea suggested in his evidence that the reason why he did not tell Mr Hickey about the willingness of the DAA to consent to a 2 year licence was that he did not himself know of that offer by the DAA. It is submitted on behalf of Ryanair that this suggestion is not worthy of belief and that Mr Declan O’Shea lied to Mr Hickey when he was asked about the DAA position.

Mr John O’Shea wrote to the DAA on 18 May 2005. Asked why his letter does not in terms request consent to a 15 year licence, Mr O’Shea said it was “an opening request” to the landlord. However, no further letter of request was ever sent. Asked why he had not pursued the matter earlier, Mr O’Shea said at one point in his evidence that he had been “instructed to wait” probably by Mr Sorenson and Mr Declan O’Shea. The case for Ryanair is that the language of the letter on 18 May 2005 is consistent only with SRT not wanting the DAA to consent to a 15 year licence.

It was claimed by Mr John O’Shea that there were frequent meetings and telephone calls between himself and Mr Murphy in the months following 11 August 2005. There are no records of any such meetings or telephone calls.

It was not until 16 December 2005 that Mr Murphy wrote to confirm that DAA was in principle prepared to consent to SRT providing Ryanair with a licence agreement on the basis that the terms and conditions are the same as those provided to Cityjet. Asked to explain the delay, Mr Murphy said that it took time to get an executive decision. No documentary records of any discussions which took place have come to light. Ryanair points out that the letter does not refuse consent to a 15 year licence. Mr Murphy’s evidence was that he was not aware of the 15 years being a critical issue for Ryanair.

On 19 September 2006 a meeting took place between SRT and DAA. Mr Murphy said he made no note of this meeting. However, a note was, unusually, made by Mr O’Shea of what took place. The note was not initially disclosed. When it was disclosed both the agenda and the first two paragraphs were redacted. One of the paragraphs which was not redacted reads:

An unredacted note of the meeting was disclosed in the course of the trial. It then emerged that the agenda of the meeting had been “Future use of Hangars 1 and 2 and other airport property issues”. One of the previously redacted paragraphs made reference to “the need for SRT to keep Hangar 2”; another paragraph referred to a review by SRT of “required works to exit Hangar 1”. Those passages are in my view plainly relevant to the issues in this case and the redactions were improperly made.

Paragraph 3 of Mr O’Shea’s note of the meeting reads:

Mr John O’Shea gave evidence that the meeting on 19 September 2006 was one of a series of meetings he had with Mr Murphy at this time. The topic of Ryanair’s licence came up at some of them but no note of any of those meetings has come to light. However, towards the end of 2006 Mr O’Shea said that he asked for a written letter from the DAA refusing consent to the 15 year licence since SRT had never really had one. Mr Murphy consulted his lawyers who told him not to do so because SRT had already refused the licence. The consequence was that Ryanair remained ignorant of the fact of the DAA’s refusal. Mr Hickey’s evidence was that he could not see on what basis the DAA could refuse to grant consent, as to do so would amount to unreasonable interference with the maintenance requirements of one of the biggest operators at the airport.

Mr Declan O’Shea’s evidence was that he told Ryanair, when asked, that the consent of the DAA to the licence had not been obtained. It is common ground that neither the fact of the DAA’s refusal to grant consent nor its preparedness to consider a 2 or 3 year licence was revealed to Ryanair at this time, as it plainly should have been. It is also accepted that at no stage did SRT challenge the decision of the DAA not to grant a 15 year licence. Mr John O’Shea said that at one point he had considered doing so but decided not to do so because he would be challenging the Irish government.

Ryanair complain that no coherent explanation has been provided by SRT how this came about. Mr Declan O’Shea sought to excuse the failure to keep Ryanair informed by saying that he was “out of the picture”. Later, he candidly admitted that the reason why Ryanair was not told of the refusal was that he was anxious to obtain payment from Ryanair of the monies owed to SRT. He also accepted that he had been exaggerating when he said in his email of 2 June 2005 that the issue of consent was being brought up at every SRT Board meeting. Mr John O’Shea explains the failure to keep Ryanair informed by saying that he had been trying to avoid involving Ryanair with SRT’s landlord, the DAA. He added that he had been “under instruction” for several months in 2006 not to inform Ryanair of the position because of a fear that the monies due from Ryanair to SRT would not be paid. He also said that to issue a licence for 2 years would probably result in Ryanair being in occupation for 25 years.

On 26 January 2007 SRT served notice on Ryanair that its licence to use the hangars at Dublin Airport was terminated, such termination to take effect on 30 September 2007. The notice read:

When asked about that letter of termination, Mr John O’Shea accepted that Ryanair was not a “bare licensee”; nor was it “on a quantum meruit basis”: Ryanair was paying SRT an annual “fee” of euros 185,000 pa for its occupation of the hangar space. Mr O’Shea denied that the opening reference to Ryanair using hangars “from time to time” was misleading and wrong.

Ryanair responded by letter dated 7 February 2007 disputing that it was a bare licensee of the hangar space and saying that its occupation was in accordance with the terms of SL6A, by virtue of which it was entitled to occupy the space for a period of 15 years from 1 January 2005 with an option to extend the period by a further period 15 years. Ryanair’s letter further pointed out that it had recently been invoiced in the sum of 185,000 euros for occupation of the space, which corresponds with the fee payable under SL6A. Ryanair further contended that SRT was estopped from claiming that it had not been granted a licence by reason of Ryanair’s letter bearing the date 12 November 2004 to Mr Humphreys (referred to at paragraph 75 above) and SRT’s email dated 14 April 2005 to Ryanair. In a later letter dated 22 February 2007 Ryanair disputed SRT’s claim that it had ample opportunity to make other arrangements in respect of hangar space in the period to 30 September 2007 since there were no other facilities at Dublin Airport which Ryanair would be able to occupy.

Another document which was belatedly disclosed by SRT in the action is a note made Mr John O’Shea of a meeting which took place with Mr Jack McGowan and Mr Michael Murphy of DAA on 10 July 2007. The meeting was concerned with the surrender of Hangar 1. The first sentence reads:

A curious footnote to the narrative history of these proceedings is that the DAA through its solicitors on 10 December 2007 (i.e. in mid-trial) disclosed two draft letters to Mr John O’Shea and to Mr O’Leary of Ryanair respectively, neither of which was in the event sent. The former letter reads:

Ryanair’s case is that what in fact occurred was as follows: as is evidenced by SRT’s “Ryanair Discussion Paper” (see paragraph 43 above), it suited SRT to give Ryanair access to hangar space for 15 years if Ryanair moved its maintenance operations to Dublin. However, when SRT ceased to providing maintenance services to Ryanair (as happened in 2004), it was no longer enjoying the substantial revenue which had been accruing from the performance of the maintenance work for Ryanair and there was no profit for SRT in continuing to provide hangar and office space to Ryanair pursuant to SL6A. In those circumstances it was preferable from SRT’s point of view to oust Ryanair from the hangar space and to hand back Hangar 1 to the DAA in return for some 5 million euros. This thesis was articulated by Mr Hickey in the witness box.

I am now in a position to set out my findings upon the issues which arise for decision in this case. In doing so I will refer back to previous paragraphs of the judgment where I have set out documents, passages from the evidence and some of the submissions made by counsel.

Ms Hannah Brown for Ryanair and Mr Alec Haydon for SRT are agreed that the first issue which arises is the proper constructions of clause 3 of SL6A. The terms of SL6A in its final form are set out in paragraph 78 above.

Before turning to the wording of SL6A, I should make it clear that I accept that the many drafts of SL6A which were exchanged, some of which I have referred to earlier in this judgment, are of no relevance when it comes to construing the final version. The extent to which it is permissible for the court, when construing a document, to look outside the document in seeking to arrive at the intention of parties is strictly limited.

I was referred by Mr Haydon to the well-known case of Prenn v Simmonds [1971] 1 WLR 1381 and to the summary by Lord Hoffmann of the principles laid down in that case which is to be found in ICS Ltd v West Bromwich BS [1998] 1 WLR 896 at 912F. The summary includes the following:

In the light of those authorities I accept that I am confined, when construing the meaning of clause 3 of SL6A, to the evidence of the objective factual background known to the parties at the date of that agreement, including evidence of the “genesis” and “aim” of the contract.

I have set out in paragraphs 38 to 43 matters which in my view constitute part of the objective factual background known to the parties at the date of the making and execution of the various contracts, including SL6A. I accept the submission of Ms Brown that in the present case the genesis of clause 3 of SL6A was the assurance by SRT, given to Ryanair in order to induce Ryanair to move its maintenance programme to Dublin, that SRT would give Ryanair access to hangar space for a period of 15 years. To put it another way, the aim of the parties was to enter into an agreement the effect of which would be to implement the undertaking given by SRT to Ryanair to provide access to hangar space for a period of 15 years. Since it was at the material time known that the consent of the DAA needed to be obtained for such a licence, it was also part of the objective factual background known to the parties at the date of the contract that provision would have to be made for the requirement for consent to be obtained from the DAA. I would only add this: since the overall intent and effect of the various agreements between the parties was that Ryanair should move a large part of its maintenance operations from Stansted to Dublin, it is plain as a matter of common sense that Ryanair would require hangar space in order to carry out the maintenance of its fleet of aircraft based in Dublin.

I turn to the express wording of clause 3 of SL6A. Ms Brown submits that the only commercially sensible and rational construction of that clause is that it provides the following:

that SRT was bound to licence Ryanair to use designated hangar space for a period of 15 years (with an option to extend by a further 15 years);

that the licensing by SRT of the use of such designated areas was subject to the consent of the DAA which was to be recorded in an HLA;

the term of the HLA is not specified in clause 3 and would depend upon what the DAA, acting reasonably, would consent to;

in the event that the HLA was issued for a term of less than 15 years, SRT would seek renewal on expiry and;

SRT was under an obligation to use its best endeavours to obtain the consent of the DAA to an HLA for a term of 15 years, or such other lesser period as the DAA, acting reasonably, would consent to.

By contrast Mr Haydon submits that, as a matter of the ordinary and natural meaning of the words found in clause 3, the obligation of SRT was limited to providing an initial licence “for a period of 15 (fifteen) years” but was subject to the condition precedent that the DAA provided its consent. He points out that nothing is said in clause 3 about a licence or an extension for any shorter term, so there was no obligation to apply for a shorter licence if the DAA refused to consent. Clause 3 could easily have been worded to make a provision to this effect but no such wording is to be found in it. Moreover, submits Mr Haydon, there was only one HLA contemplated for the initial period or term of 15 years. Since “period” is synonymous with “term”, the mere presence of those two words in the same clause is not sufficient to suggest a relevant distinction. Mr Haydon points out that the word “period” had appeared in earlier drafts of SL6A. Furthermore there was only one extension contemplated by clause 3 and it too was for an extension of a further 15 years. The words “subject in both such circumstances to the consent of [SRT’s] landlords to be recorded in a written [HLA]” confirm that there were only to be two HLAs, the initial licence for 15 years and the optional extension for 15 years. The word “both” is only used in the context of two things.

In support of his contention as to the construction of clause 3, Mr Haydon relies on a dictum of Lord Lloyd in ICS Limited v West Bromwich BS at 904G-H that, where one construction was the more natural meaning of a disputed clause and the rival construction was not even a possible meaning of the language used, then “it would take a very strong case indeed before I would reject the former meaning in favour of the latter”. See also Charter Reinsurance Co Limited v Fagan [1997] AC 313 at 387.

I accept that on its proper construction clause 3 does bear the meanings at (i) and (ii) paragraph 115 above, as Ms Brown contends. The real question, as I see it, is whether the parties are to be presumed to have intended that their agreement included the terms set out at (iii) to (v) in paragraph 115 above. As to that, Mr Haydon is plainly right when he says that there is no reference in clause of SL6A to the HLA being issued for a term of less than 15 years; nor is there any reference to SRT being obliged to seek renewal on expiry. Nor for that matter does clause 3 require the DAA to act reasonably in connection with the grant or withholding of its consent to a 15 year licence or to SRT being under an obligation to use its best endeavours to obtain the consent of the DAA for a 15 year licence, still less to SRT being under an obligation to use its best endeavours to obtain the consent of the DAA to a licence for a lesser period.

It is, however, a commonplace of commercial agreements that they do not always cater for every eventuality. I accept of course that the Court cannot rewrite the bargain which the parties have seen fit to enter into. What it can do is imply terms, where it is necessary to do so, in order to give business efficacy to the bargain to which the parties have entered into. The question I have to decide is whether it is necessary in that sense to imply into SL6A the additional terms for which Ms Brown contends and which I have set out at (iii) to (v) in paragraph 115 above.

As I have already pointed out, it was to the knowledge of SRT essential for Ryanair to have access to hangar space at Dublin Airport in order to be able to carry out the maintenance of its aircraft there. The problem, as the parties were aware, was that Ryanair would only be able to occupy such hangar space if the DAA granted the consent which by virtue of the lease made between it and SRT was necessary. It is common ground and was known by the parties that – and indeed is implicit in the wording of clause of SL6A – that the grant or withholding of consent was a matter entirely within the discretion of the DAA; they could not be compelled to grant consent, still less to grant consent for a period of 15 years. It must have been within the contemplation of the parties that the DAA might not consent to the granting of a licence for the full 15 years but would give its consent to a licence for a term of less than 15 years.

In these circumstances it seems to me that it flouts business common sense to construe clause 3 of SL6A as entitling SRT to escape altogether any obligation to provide hangar access to Ryanair and in effect to walk away from its agreement in the event that the DAA said no to 15 years but yes to, say, 2 or 3 years. Accordingly in my judgment clause 3 is to be construed as imposing by necessary implication the obligations on SRT which are spelled out at (iv) and (v) in paragraph 115 above. (I do not include (iii) because it does not appear to me to add anything).

I should make it clear that I have arrived at this as being the proper construction of clause 3 without relying on any earlier draft of the clause or on the draft unsigned letter of Mr Declan O’Shea dated 12 November 2004.

My conclusion as the proper construction of clause 3 of SL6A (or in the alternative my finding as to the terms which were to be implied into that clause) renders it unnecessary to consider the two alterative bases on which it is submitted that SRT was bound to seek consent from the DAA for the grant of a licence of a shorter duration and to seek a renewal when necessary of that shorter licence, namely a collateral contract between the parties and estoppel. However, in case I am wrong on the construction and implied term issues, and in deference to the detailed submissions I have heard from counsel, I should deal with those further questions.

I start with the question whether, as Ryanair alleges, there was a collateral contract entered into between the parties in the terms pleaded at paragraph 15(b) of the Amended Particulars of Claim. Once I have arrived at a decision whether or not a collateral contract in the terms there alleged was entered into between the parties, I will next consider whether the entire agreement clause contained in appendix 1 of contract 1747 (set out at paragraph 77 above), has the effect contended for on behalf of SRT, namely that Ryanair is disentitled from relying upon that collateral contract.

Ryanair’s case that a collateral contract was entered into between the parties is founded upon, but not confined to, the unsigned draft letter from Mr Declan O’Shea to Mr Hickey dated 12 November 2004. Its terms are set out in paragraph 65 above.

The letter was sent to Mr Hickey by Mr O’Mahony, who was the person principally responsible for conducting the negotiations on behalf of SRT.

I have set out in some detail from paragraph 47 to 64 above some of the circumstances under which the unsigned draft letter came to be sent. Those circumstances include the fact that previous drafts of SL6A had included an express provision that the licence by SRT to Ryanair would be of a duration of at least 15 years. However, as I have said at paragraph 58 above, draft 30 of SL6A sent to Mr Hickey under cover of an email dated 12 November 2004, contained no reference to Ryanair having a 15 year licence of the hangar space. It is apparent from Mr O’Mahony’s covering email that there had been some prior discussion between himself (and possibly Mr Declan O’Shea) and Mr Hickey about draft 30. That must be what Mr O’Mahony meant when he said that he trusted that the draft reflected “all of their understandings”. I do not overlook the fact that Mr O’Mahony denied that he had been party to any such prior discussion with Mr Hickey and that he also denied that he had ever discussed anything other than a 15 year licence with him. I am unable to accept that evidence of Mr O’Mahony. It was apparent that his recollection of material events is poor and I think he has forgotten the conversation which I consider must have taken place shortly before he sent the email on 12 November 2004. I say that in part because of the reference to “their understandings” in that email but also because it seems to me to be an irresistible inference that there would have been some discussion before the stipulation that the licence was to be of a duration of 15 years was removed from the version of SL6A which is to be found in draft 30.

It is noteworthy that, when he received draft 30 from Mr O’Mahony, Mr Hickey did not, as he had done with previous drafts which omitted to make reference to the 15 year duration of the licence, note in manuscript the fact that such a provision was not contained in the draft he had received.

As noted at paragraph 60 above Mr O’Mahony’s email enclosing draft 30 of SL6A was sent at 10.56 am on 12 November. Some hours later at 17.40 pm one finds another email from Mr O’Mahony to Mr Hickey which I have quoted at paragraph 62 above. In the latter email Mr O’Mahony asks Mr Hickey to give him a call “to confirm your OK”. In my opinion the use of that expression must mean that between 10.56 am and 17.40 pm Mr O’Mahony (or possibly Mr Declan O’Shea) had a further conversation with Mr Hickey about the draft unsigned letter. The wording used by Mr O’Mahony points clearly towards that conclusion; why else would Mr O’Mahony be expecting Mr Hickey to confirm his OK. Mr O’Mahony did not recollect any such conversation with Mr Hickey (see paragraph 63 above) but that is not surprising given the lapse of time. I have not overlooked the fact that Mr Hickey had no specific recollection of any such conversation either. That is also not unsurprising. Moreover, if indeed Mr Hickey were to be the dishonest person that Mr Haydon suggests he is, he would surely have pretended to have a clear recollection of that conversation. I reject the contention of SRT that Mr Hickey had no conversation with anyone at SRT about the reason for omitting for the first time in draft 30 the reference to the licence being one for 15 years.

Mr Haydon places strong reliance on the fact that the draft letter of 12 November 2004 was never signed by Mr Declan O’Shea or by anyone else at SRT; that Mr Hickey never asked that the letter should be signed; that there is no documentary evidence that the draft letter was accepted by Mr Hickey or anyone else at Ryanair; that there was no discussion between Mr Declan O’Shea and Mr Hickey about it and that there is no mention of the draft letter in later correspondence. It was for that reason that Mr Declan O’Shea suggested in his evidence that the draft letter “lay dead” when the next draft of SL6A appeared.

At first sight this is a formidable submission. On such an important matter one would expect a commercially astute businessman, such as Mr Hickey obviously is, to have ensured that there was clear evidence that SRT had indeed given the assurance which is contained in the draft unsigned letter. On reflection, however, I have concluded for a number of reasons that Mr Haydon’s submission is not as formidable as it first appeared.

In the first place I was impressed with the evidence of Mr Hickey on this (as on other) issues in the case. He is an intelligent man and he gave his evidence clearly and, I believe, honestly. It would have been possible for him to have pretended to have a clearer recollection of the events surrounding his receipt of the letter of 12 November than he in fact accepted in the witness box he had. He frankly admitted that he was reconstructing events. That no doubt explains why the amendment to the Particulars of Claim to rely on a collateral contract came so late in the day (see paragraph 13 above). Where there is a conflict between the evidence of Mr Hickey and Mr O’Mahony on this issue, I prefer the evidence of Mr Hickey. I repeat the comment which I made at paragraph 63 above about Mr O’Mahony’s evidence on this point.

Besides on Mr Hickey’s account his reaction to the receipt of the draft unsigned letter was by no means a passive one. As I have already found, he had a conversation with Mr O’Mahony (or Mr Declan O’Shea) before receiving the draft letter. Once he had possession of the draft letter he firstly, according to his account, amended the unsigned draft letter: see paragraph 67 above. I think that Mr Hickey is probably right in saying that this happened on 15 November 2004. In my opinion the amendment is entirely consistent with Ryanair’s case that it was concerned to achieve a 15 year licence from SRT and to cater for the possibility that the DAA did not consent to a 15 year licence by obtaining an assurance from SRT that it would apply for renewal of the licence on the expiry of the shorter original term. It is in my view important to keep firmly in mind the distinction between an obligation on the part of SRT to provide hangar access for 15 years on the one hand and on the other hand the obtaining of a licence from the DAA.

In addition to amending the unsigned draft, it is common ground that Mr Hickey amended draft 30 of SL6A to insert at the beginning of paragraph 6.1 the words which I have quoted at paragraph 69 above. It is true that in many contexts the word “period” bears the same meaning as the word “term”. I accept also that the word “period” had been used in early drafts to refer to the duration of the licence. In the context of the events of 12 November and the following days, however, I consider that the introduction into paragraph 6.1 of the word “period” is of significance. It signifies that there is a distinction between the term of the licence which is subject to the consent of the DAA and the period of the licence which, irrespective of the consent of the DAA, SRT is bound to give to Ryanair each year.

The final action taken by Mr Hickey after receiving the draft unsigned letter was to write to Mr Humphries, CEO of SRT on 12 November 2004 in the terms set out at paragraph 75 above. The first paragraph of that letter appears to me to be wholly consistent with agreement having been reached between the parties both as to the wording of SL6A and the giving of an assurance by SRT in case the DAA was unwilling to consent to a licence of 15 years. At the same time Mr Hickey agreed to the release of the not inconsiderable sum of over £1 million once the agreement to provide access to the hangar in Dublin had been performed by SRT.

For the above reasons I have concluded that the parties did enter into the collateral contract alleged by Ryanair. The consideration for that collateral contract consisted in the execution by Ryanair of the Novation Agreement and SL6A and/or the agreement to pay the £1,071,595 referred to in Mr Hickey’s letter to SRT dated 12 November 2004 and/or the actual payment by Ryanair of that sum in due course.

I have found on the facts that a collateral contract in the terms set out in paragraphs 15(b) and 16 of the Amended Particulars of Claim was agreed between the parties. However, Mr Haydon submits that I am precluded from giving effect to that contract by reason of the entire agreement provision and/or the written document provision of contract 1747 both in its original and in its novated form. The terms of those sub-clauses are set out above at paragraph 77.

In support of that submission Mr Haydon has referred to a number of authorities including Deepak Fertilizers & Petro Chemicals Ltd v Davy McKee [1999] 1 Lloyd’s REP 387 and Inntrepreneur Pub Co Ltd v East Crown Ltd (op cit). In the latter case Lightman J said:

In my judgment Ms Brown has a valid answer to the reliance which SRT seeks to place on clauses 16.3 and 16.5 of contract 1747. The collateral contract which, as I have held, was entered into between the parties was specifically intended to cater for the problem that both SRT and Ryanair were, contractually speaking, at the mercy of the DAA. What the parties wanted and achieved by virtue of their collateral contract was to bring about a situation whereby, in the event that the DAA were to consent to a licence of less than 15 years, SRT provided Ryanair with the comfort of an undertaking that, in the event that the DAA issues an HLA for a term of less than 15 years, it would seek an extension of its licence on the expiry of the initial shorter licence to which the DAA had initially consented. This was an independent collateral arrangement between the parties to cater for an eventuality (i.e. the DAA consenting for a shorter period than 15 years) for which neither contract 1747 nor SL6A provided.

Both parties proceeded, as I have found, on a common assumption that this collateral contract would be honoured notwithstanding the provisions of clause 16.3 and 16.5 of contract 1747.

In these circumstances I am satisfied that I should give effect the collateral contract notwithstanding those provisions in contract 1747. I do not accept that the collateral contract is a “previous agreement” within the meaning of clause 16.5; nor do I accept that the effect of the collateral contract was to alter or amend contract 1747, rather it was supplemental to it.

This is a case, like McGrath v Shah [1987] P&CR 452, where the entire agreement clause should not prevent Ryanair from contending that the bargain between the parties was contained partly in contract 1747 and SL6A and partly in the contract collateral thereto which I have found was agreed. The entire agreement clauses in Deepak and Inntrepreneur were in materially different and distinguishable terms. The present case comes in my opinion into the category described by Lord Denning in Brikom Investments Limited v Carr [1979] 1 QB 467 in these words:

Accordingly I reject the contention of SRT that either clause 16.3 or 16.5 has the effect of debarring Ryanair from relying on the terms of the collateral contract into which, as I have found, the parties entered. I should add that I would, if it had been necessary for me to do so, have held that, since both parties proceeded on the common assumption that SRT’s undertaking in the draft letter of 12 November 2004 was of legal effect it would be unconscionable for SRT to rely on either clause 16.3 or clause 16.5 of contract 1747 to deprive that undertaking of legal effect. Accordingly I would have found that SRT was estopped from doing so.

I have accepted Ryanair’s contention that there was a collateral contract, evidenced by the draft letter of 12 November 2004, whereby SRT agreed to apply for a renewal of the licence in the event that the HLA was for a duration of less than 15 years. I have also rejected the argument of SRT that Ryanair is disentitled from relying on that collateral contract by reason of the provisions at clause 16.3 and 16.5 of contract 1767.

In these circumstances it is, strictly speaking, unnecessary for me to adjudicate on a broader alternative argument advanced by Ryanair to the effect that SRT is estopped from denying Ryanair the right to the use of the hangar space for 15 years. For the sake of completeness I will briefly express my conclusions upon it.

I have summarised the nature of the case advanced by Ryanair at paragraphs 13 and 14 above. Some elaboration is required. At paragraph 25 of the Amended Particulars of Claim it is pleaded:

Ms Brown contends that repeated and continuing assurances were given by SRT that appropriate hangar space would be made available to Ryanair for a period of 15 years; that those assurances were relied on by Ryanair and that accordingly it would be unconscionable for SRT to go back on them. Accordingly, she submits that SRT’s conduct gives rise to a proprietary estoppel from denying Ryanair the right to use hangar space for a period of 15 years. (I emphasise in parentheses this is a wider and different estoppel than that which I have referred to at paragraph above).

Mr Haydon denies that at any stage SRT assured Ryanair that DAA would consent to a 15 year licence; this was simply an assumption on the part of Mr Hickey. He submits that it was clear at the time of the move from Stansted to Dublin that any licence of hangar space would be granted if and only if the DAA gave its consent. Besides Ryanair had moved its maintenance to Dublin long before the assurance given in Mr Declan O’Shea’s draft letter of 12 November 2004. The fact that Mr Hickey agreed by his letter to Mr Humphreys dated 12 November 2004 to pay the monies owing to SRT within one month of Ryanair gaining access to the hangar space cannot assist Ryanair’s case on estoppel since Ryanair was already liable to pay those monies to SRT. Mr Haydon argues further that there is no evidence that Ryanair suffered any detriment as a result of relying on any assurance by SRT. Moreover SL6A refers to Hangar 1 and, in the absence of any amendment to SL6A, Ryanair cannot found a claim to be entitled to access to a different hangar (i.e. Hangar 6, Bay 1A) in support of its estoppel claim.

I am by no means persuaded by all of the arguments advanced by Mr Haydon for saying that no estoppel arises in the circumstances of the present case. For example I do not accept that the mere fact that, as a matter of convenience, Ryanair has been in occupation of a bay in Hangar 6 rather than Hangar 1 prevents an estoppel arising. Nor do I accept that Ryanair cannot rely on the fact of the payment of £1 million in support of its estoppel argument. However, I do accept that there is a reason why it would be wrong for me to accede to Ms Brown’s submission that SRT is estopped from refusing to make available to Ryanair the section of hangar space identified in paragraph 25 of the Amended Particulars of Claim. It is this: the hangars at Dublin are owned by the DAA. To the knowledge at all material times of both SRT and Ryanair, it was necessary for SRT to obtain the consent of the DAA to a 15 year licence if SRT was to be able to perform its obligations under SL6A. Whilst I am prepared to accept on the totality of the evidence (including the fact of the Cityjet licence) that SRT believed and communicated its belief to Ryanair by way of assurance that the DAA would consent to the grant to Ryanair of a licence of hangar space for a limited term of 2 to 3 years, I do not accept the evidence supports a conclusion that SRT provided Ryanair with a continuing assurance that the DAA would consent to a 15 year licence.

It appears to me that this conclusion is fortified by the collateral contract (as I have found it to be) whereby SRT and Ryanair agreed to deal with the possible difficulty about obtaining the consent of the DAA to a licence for the full 15 years by omitting from SL6A any reference to the term of the licence and by making provision in Mr Declan O’Shea’s draft letter of 12 November 2004 for SRT to apply for a renewal of Ryanair’s licence in the event that the DAA consented to a licence for a period of less than 15 years.

Accordingly I reject Ryanair’s contention that SRT is estopped from denying Ryanair the right to use the hangar space for 15 years.

As I have recorded at paragraph 10 above, it is Ryanair’s case that SRT was in breach of its obligations under SL6A in the 3 respects there set out at (a), (b) and (c). There is no express obligation imposed on SRT to use its best endeavours but SRT accepts that it was under the obligation at (a), namely to use its best endeavours to seek the consent of the DAA to a licence for a term of 15 years. However, SRT denies that it was under an obligation to use its best endeavours to seek consent to a licence of less than 15 years ((c) above), in the event that the DAA was not prepared to consent to a licence for the full 15 years. SRT further denies that its obligation extended to suing the DAA if consent were to be unreasonably withheld to a licence of 15 years or to a shorter licence.

Accordingly the first question which I have to decide is whether SRT was under the obligation which I have summarised at paragraph 10(c) above. The answer to that question depends of course on the particular circumstances of the case. The extent to which assistance can be derived from the authorities is consequently limited. I can therefore deal with the relevant cases briefly. Ms Brown referred me firstly to Jolley v Carmel Ltd [2000] 2 EGLR 153, in which case Mr Kim Lewison QC (as he then was), sitting as a Deputy Judge, said:

Ms Brown relies also on IBM UK Ltd v Rockware Glass Ltd [1980] FSR 335, where the issue was whether a party under an express obligation to use best endeavours to obtain planning permission was in breach of that obligation by failing to appeal an adverse planning decision. Buckley LJ held:

On the basis of those authorities Ms Brown submits that SRT was under an obligation to use its best endeavours to obtain the consent of the DAA to a Hangar Licence Agreement for a term of 15 years or such lesser a term as the DAA would, acting reasonably, consent to. That submission is founded upon the particular circumstances which obtain in this case. In particular reliance is placed on the fact that it was at the request of SRT that Ryanair moved its maintenance operations to Dublin and that, in so doing, Ryanair relied further on the assurance contained in the draft letter of 12 November 2004. Ms Brown submits that, as in the case of IBM UK, the obligation on SRT was to take all those steps in its power which are capable of producing the desired results namely the obtaining of consent to a 15 year HLA or such a lesser term as the DAA, acting reasonably, would consent to. Those are the steps which are prudent, determined and reasonable lessor acting in its own interest and desiring to achieve that result would take.

Mr Haydon cites two authorities, namely Lipmans Wallpaper v Mason and Hodghton Ltd [1969] Ch. 20 and Lehmann v McArthur[1868] 3 Ch. App 496. In light of those authorities Mr Haydon submits that it is immaterial whether the refusal of the DAA was reasonable or unreasonable, since it is no part of his duty to seek consent from the landlord for a tenant to go into the question whether its refusal was reasonable or unreasonable. He further submits that there is no obvious duty to seek to change the landlord’s mind; once the refusal had become categorical, no further endeavours were required to be used. In the present case Mr Haydon asserts that SRT repeatedly made requests to the DAA for consent asking it to revisit its refusal.

I think that Ms Brown is right when she says that both Lipmann Wallpaper and Lehmann are distinguishable from the present case. In both those authorities the question was what efforts had to be made to obtain a landlord’s approval to the assignment of the lease. If such approval could not be obtained, there would be no hardship to the tenant beyond the inability to complete the assignment. By contrast in the present case SRT had prevailed upon Ryanair to agree to move its maintenance operation to Dublin in the circumstances which I have described at paragraphs 44 and 45 above. That move took place on the assumption that Ryanair would be given access to the hangar space which it needed to carry out maintenance of its fleet of aircraft. This appears to me to be a case where the nature and extent of SRT’s obligation is highly fact-sensitive. In the particular circumstances which obtained here and which I have endeavoured to set out at some length in the earlier section of this judgment, I am no doubt that, in the event that the DAA declined to grant consent to a 15 year licence, SRT was under an implied obligation to use its best endeavours to obtain the consent of the DAA to a shorter licence but one which would be as long as SRT’s best endeavours would be able to produce.

The second question which arises is whether SRT was in breach of its admitted obligation in the terms summarised at paragraph 10(b) above and/or of the further obligation in the terms of paragraph 10(c) above which I have held to apply in this case. The particulars of the alleged breaches of agreement on the part of SRT are pleaded in paragraph 23 of the Amended Particulars of Claim.

Mr Haydon deals briefly with the issue of breach in his closing submissions. He says rightly that the burden is on Ryanair to establish that the DAA’s consent was refused unreasonably. He says that Mr O’Shea of SRT and Mr Murphy of the DAA have explained why consent was refused to a 15 year licence. He says that both of them refer in the main to the risk that Ryanair would rely on its long term occupation under a licence as giving rise to an entitlement to a tenancy under the Irish Landlord and Tenant Act. It would have been undesirable for the DAA to have permitted additional rights to be acquired over hangars whilst the airport’s future in terms of development is uncertain. Mr Haydon referred me to the relevant provisions of Part II of the Landlord and Tenant (Amendment) Act 1980 and to the 1994 Act of the same name.

The answer of Ms Brown to this submission is that it is clear from the evidence that SRT failed to comply with its obligation to use its best endeavours to obtain a 15 year licence or, failing that, a licence for a shorter period. She argues that Mr John O’Shea not only failed to make any attempt to obtain a licence for the term of 15 years but discouraged the DAA from so doing. She submits that neither SRT nor the DAA has identified any reasonable grounds upon which the DAA could reasonably refuse to consent to a licence for a term of 15 years. She maintains that Mr John O’Shea, together with Mr Murphy of the DAA, have together attempted to construct, ex post facto, justification for refusal to a request which was never pursued. What is more, submits Ms Brown, SRT, having obtained a clear indication that the DAA would consent to a hangar licence agreement for a shorter term, withheld that information from Ryanair.

One of the main reasons for setting out in the section of this judgment entitled “Dealings between SRT and the DAA”, which runs from paragraph 86 to 100 above, is that, in order to establish whether SRT was in breach of its obligation, it is necessary to look at those dealings in some detail. The picture is not as clear as one would have wished because of the inadequacies in SRT’s disclosure, also outlined earlier in this judgment, and in the absence of material documents from the DAA. I emphasise that the DAA is not a party to these proceedings and accordingly was not obliged to provide copies of its documents and was further not amenable to the jurisdiction of the English courts to enforce disclosure.

Doing the best I can on the available material, I am in no doubt at all that SRT was in persistent and clear breach of its obligations in relation to the obtaining of consent from the DAA to a licence in favour of Ryanair.

I have set out earlier the history of the dealings between SRT and the DAA and no purpose would be served by my repeating that history at this point in the judgment. It is sufficient if I say that I am wholly satisfied that SRT delayed unduly in making the initial approach to the DAA for consent to a 15 year licence; that it thereafter failed to pursue the question with the diligence which was to be expected of it in all the circumstances; that, far from using its best endeavours to obtain such a consent, SRT in the person of Mr John O’Shea did nothing to press the DAA to agree a 15 year licence and that he went out of his way to facilitate a refusal. I have to say that I found Mr John O’Shea to be an unsatisfactory witness and one who appeared to be unwilling to give the court the assistance which one would expect from a man in his position. I do not accept that the issue of the 15 year licence was raised by him with the DAA on anything like the number of occasions which he claims. If he had been intent on doing his best to obtain the longest possible licence from the DAA for the benefit of Ryanair, I feel sure he would have set about his task in a different and for more positive way.

I do not read Mr John O’Shea’s letter to the DAA dated 18 May 2005 as being a request to consent to a 15 year licence. It seems to me that there was an inexcusable delay in informing Ryanair of the agreement in principle on the part of the DAA to consent to SRT providing Ryanair with a licence equivalent to that provided to Cityjet. I am satisfied that there came a point, by the time of the meeting on 19 September 2006 referred to at paragraph 97 above, when Mr John O’Shea ceased to concern himself with obtaining consent for Ryanair to have access to hangar space at the airport for 15 years or indeed for any other shorter period. The reason was that, as I have described at paragraphs 97 to 98 above, his preoccupation was with securing terms upon which SRT might hand back Hangar 1 to the DAA in consideration of the payment to SRT by the DAA of a substantial sum of money. That in my judgment was the reason why Ryanair was kept in ignorance of the stance of the DAA towards the grant of a licence: see paragraphs 101 to 102 above.

When he came to terminate the licence of Ryanair without prior notice on 26 January 2007, Mr John O’Shea wrote a letter which seriously misrepresents the circumstances under which Ryanair had for a considerable time been in occupation of hangar space at the airport. The note of the meeting which took place between Mr John O’Shea and representatives of the DAA on 10 July 2007, which I have summarised at paragraph 106 above, reveals that the proposal at that stage was that the DAA would pay SRT 5 million euros for relinquishing possession of Hangars 1 and 2. The likely tenant of Hangar 1 was to be Aer Lingus. The concluding reference in that note to the present action, which I have summarised in paragraph 106 above, is indicative of the collaboration which by then existed between the DAA and SRT.

On that history I am entirely satisfied that SRT was in breach of its obligation to obtain the consent of the DAA to a 15 year licence. I do not accept that the plans for the redevelopment of Dublin Airport in reality presented an obstacle to the grant of a licence of that duration, since the licence could have included a covenant on the part of Ryanair to relinquish possession in the event of the DAA giving notice to SRT that the hangar space was required for redevelopment. Nor do I accept that the Irish Landlord and Tenant legislation in reality prevented the DAA from granting a licence of over five years duration. The papers include no reference to that legislation being made either by SRT or by the DAA at any material time. I think that Ms Brown is justified in her assertion that Mr John O’Shea and Mr Murphy used that legislation as part of their attempt to construct, ex post facto, justification for refusing SRT’s request.

The relief sought in the prayer to the Amended Particulars of Claim is as follows: firstly, an injunction to restrain SRT from revoking Ryanair’s licence to occupy the hangar space; and/or, secondly, an order for specific performance of the agreement for the licence of hangar space contained in paragraph 3 of SL6A; and/or, thirdly, an order that SRT use all reasonable efforts to obtain the consent of the DAA to the grant of a 15 year licence, such efforts to include the prosecution of legal proceedings against the DAA to prevent it from withholding its consent to such a licence, if necessary; and/or, fourthly, an order that SRT use all reasonable efforts to obtain the consent of the DAA to a grant of a licence to Ryanair of less than 15 years duration, and that it use all reasonable efforts to seek a renewal if and when necessary for an initial period of 15 years; and/or, fifthly, damages to be assessed.

Mr Haydon submits rightly that, in order to be entitled to any of the injunctive relief sought, Ryanair must show that damages are not an adequate remedy and that there is no evidence to that effect which could justify any such conclusion. Mr Haydon is critical of the timing and extent of the disclosure made by Ryanair as to the existence of any alternative hangar accommodation at the airport. He takes the point that the DAA has already refused its consent to the grant of a licence and that it is unlikely that the DAA would now accede to a request for even a two year licence.

Mr Haydon argues that the most appropriate relief in the circumstances of the present case would be for the court to grant declaratory relief. The nature of the relief which it is suggested might be appropriate is set out in paragraph 335 of Mr Haydon’s closing submissions.

Notwithstanding Mr Haydon’s argument, damages would not in my view constitute an adequate remedy in the circumstances which obtain here. I say that because it was the evidence of Mr Hickey, as well as that of Mr Adcock, Deputy Director of Heavy Maintenance at Ryanair, that it is of critical operational importance to Ryanair to have hangar space at Dublin Airport. Mr Hickey said:

A question belatedly arose whether there is available at Dublin Airport alternative hangar space which would be suitable for Ryanair’s requirements and which could be made available for its use and occupation. The state of the evidence on this topic is unsatisfactory. That said, it seems to me that, if it is to be relied on as a ground for resisting injunctive relief, it was incumbent on SRT to set up an affirmative case that alternative hangar space was and will remain available. No such case has been advanced. In these circumstances I must proceed on the basis that there is no alternative hangar space currently available in Dublin.

The question which then finally arises is as to the nature of the injunctive relief which is appropriate. As to this I am satisfied that Ryanair is entitled to:

an injunction in the terms of paragraph 27(a) of the amended particulars of claim and

an order for the specific performance by SRT of its obligations under SL6A to use its best endeavours to obtain consent for a Hangar Licence Agreement for term of 15 years or such a term as the DAA may be reasonably consent to and thereafter to obtain a renewal of the Hangar Licence Agreement upon expiry, to give a total of at least 15 years.