Airport Industrial Gp Ltd v Heathrow Airport Ltd & Anor

A contractual parking licence intended as an interim arrangement will ordinarily terminate when the agreed permanent parking arrangement should have taken effect, subject to any express statutory continuation. A term extending the licence will not be implied where the contract operates coherently without it and the term is not necessary for business efficacy or obvious.

Where a covenant requires a specified number of parking spaces but leaves the method of performance open, the covenantor generally chooses the method, subject to producing a fit result with proper workmanship and materials. Specific performance may be ordered before the contractual performance date, with directions for preparatory steps and court supervision, but the remedy must remain proportionate.

The claim concerned rights and obligations arising from agreements and leases governing car parking for the Catering Base at Heathrow Airport. The principal dispute was whether AP16 Ltd, as assignee of a long lease of the Heathrow Express Site excluding the Stub, was required to provide 280 parking spaces under obligations derived from the 2000 Lease.

The court also considered whether the alternative parking licence remained in force, whether HAL had breached obligations to provide or construct parking, whether Gate Gourmet had waived compliance with the construction obligation, and what relief should be granted. The central issues concerned construction, implication of terms, waiver, assignment of landlord covenants and specific performance.

1. Car Park Licence. The licence was an interim arrangement linked by the 1990 Agreement to construction and letting of a permanent car park. It would terminate no later than 22 October 2016, although the express wording covered continuation of the Catering Base tenancy under section 24 of the Landlord and Tenant Act 1954.
2. No term extending the licence for the duration of any later tenancy of the Catering Base was implied. The agreement operated effectively without it, and the proposed term was neither necessary for business efficacy nor so obvious that it went without saying: Marks & Spencer plc v BNP Paribas Securities Services Trust Co [2015] 3 WLR 1843.
3. Following termination of the licence, HAL became obliged to provide 280 spaces under Schedule 4 to the 2000 Lease. That obligation subsisted for the purposes of paragraph 15.1 of Schedule 2 to the 2005 Lease, so AP16 was obliged to provide 280 spaces on the Site excluding the Stub. The obligation affected that whole part of the Retained Land and was not reduced to 265 spaces merely because the Stub was excluded.
4. AP16 retained the contractual choice as to how to provide the spaces, provided that the result was fit for its intended purpose and the works were carried out properly with suitable materials. If AP16 had already performed the inconsistent obligation to construct a surface car park with approximately 265 spaces, an implied qualification might have relieved it from providing a second, non-surface car park.
5. HAL’s obligation under clause 29 of the 1990 Agreement remained subsisting. HAL had ceased to require the Site for purposes authorised by the Heathrow Express Railway Act 1991. Gate Gourmet had initially waived compliance with the surface-car-park obligation, but that waiver ended in late 2010. HAL was therefore in breach of paragraph 4 of Schedule 3 to the 2000 Lease.
6. Specific performance was ordered in favour of HAL against AP16. The order could be made before 22 October 2016 and could direct preparatory steps. AP16 was allowed a period up to October 2018 to pursue a more valuable development, subject to court supervision, milestones and a default requirement to construct the surface car park with ramp and deck. AP16 was also required to fund HAL’s loss during the delay, including through an escrow arrangement.
7. HAL’s continuing provision of 280 spaces on P5 satisfied its immediate obligation under Schedule 4. The Claimants obtained declarations but no further specific-performance order against HAL.