Ryanair Ltd v SR Technics Ireland Ltd

A contractual obligation to provide access to premises for a specified period may require terms dealing with a landlord’s consent, even where those terms are not express. Where the parties knew that consent might be refused for the full period but granted for a shorter period, business efficacy required the tenant to seek the longest period reasonably obtainable and to seek renewal where necessary. A party induced to enter the transaction by that undertaking may also rely on a collateral contract. Entire agreement and no-oral-variation clauses do not necessarily exclude a supplemental collateral arrangement addressing an eventuality not covered by the principal contract. Where the promised premises are operationally essential and no suitable alternative is shown, damages may be inadequate and injunctive or specific relief may be granted.

Ryanair moved aircraft maintenance operations from Stansted to Dublin after SRT represented that it would provide hangar access for 15 years. Side Letter 6A provided for a licence of designated hangar space, subject to the consent of the Dublin Airport Authority. The Authority would not consent to a 15-year licence but was prepared to consider a shorter period.

SRT did not properly pursue consent, failed to inform Ryanair of the position, and later terminated Ryanair’s occupation. Ryanair claimed breach of contract, a collateral contract, estoppel, and injunctive and specific relief. The central issues were the construction of Side Letter 6A, the terms to be implied, the effect of the collateral arrangement and the appropriate remedy.

1. Construction and implied terms. Clause 3 of Side Letter 6A required SRT to licence Ryanair to occupy designated hangar space for a period of 15 years, subject to the Dublin Airport Authority’s consent. The clause was to be construed against the objective background that hangar access was essential to the transaction and that consent was required. It would defeat business common sense to allow SRT to escape its obligation entirely if consent was refused for 15 years but available for a shorter period. Terms were therefore implied requiring SRT to seek consent for a shorter licence and to seek renewal on expiry so as to provide access for at least 15 years.
2. Collateral contract. The unsigned draft letter of 12 November 2004, read with the parties’ dealings, evidenced a collateral contract. SRT undertook to seek a 15-year licence and, if the Authority granted a shorter licence, to seek renewal. The consideration included execution of the contractual documents and payment of the agreed sum. The entire agreement and written-variation provisions in Contract 1747 did not exclude this independent, supplemental arrangement, which addressed an eventuality not covered by the principal contract.
3. Estoppel. Ryanair was not entitled to a proprietary estoppel preventing SRT from denying that the Authority would consent to a 15-year licence. The evidence established an assurance about the possibility of a shorter licence, not a continuing assurance that 15-year consent would be obtained.
4. Breach. SRT was under an implied best-endeavours obligation to obtain consent for a 15-year licence or, failing that, the longest shorter period obtainable. SRT persistently breached that obligation by delaying its approach, failing to pursue consent diligently, withholding material information from Ryanair and facilitating refusal.
5. Relief. Damages were inadequate because hangar access was operationally critical and no suitable alternative accommodation had been established. SRT was restrained from revoking Ryanair’s licence and ordered specifically to use its best endeavours to obtain consent for a 15-year licence, or such shorter period as the Authority might reasonably consent to, and thereafter to obtain renewal sufficient to provide at least 15 years’ access.

First-instance decision. No prior or subsequent appellate decision is stated in the judgment.