Durham Tees Valley Airport Ltd v Bmibaby Ltd [2010] EWCA Civ 485

Incorporation of terms in aviation contract; measure of damages

Facts

Bmibaby entered an agreement to operate two aircraft from Durham Tees Valley Airport (DTVA) in 2004. The contract was to continue for a 10-year term from the date the base was established. In return for operating a base there, DTVA provided substantial funding to assist Bmibaby’s launch of the operation. After incurring substantial losses, the airline withdrew its operation in 2006. DVTA brought an action for the loss of income.

Issues

DVTA contended the contract imposed an obligation on Bmibaby to base and operate two aircraft from the airport for a 10-year period. Their withdrawal amounted to a breach of contract and DVTA were entitled to recover their losses. DVTA argued the contract was sufficiently certain to be enforceable. For the quantification of damages, they claimed it would be necessary to imply a term into the contract requiring Bmibaby to conduct its operation in a manner which was reasonable in all the circumstances. Bmibaby contended the contract was insufficiently certain in its terms to be enforceable. The airline argued the contract provided them with merely a right to conduct an operation from the base, and not an obligation to do so.

Held

DVTA were successful in their claim. The contract was not too uncertain to be enforceable. It was not necessary for DVTA to imply a term into the contract regarding the conduct of the operations, as the agreement contained sufficiently clear terms to determine Bmibaby’s level of performance. Bmibaby had breached the contract because they could not be said in a real and genuine sense to have been operating their aircraft from the base. DVTA were entitled to recover the monies they would have received had the airline continued to operate from the base for the 10-year term.