Aer Rianta CPT v. Ryanair Ltd. [2000] IEHC 205 (5th December, 2000)

1. This is an application for summary judgment in the sum of £356,777. That sum is claimed for landing charges and passenger load fees in respect of the Defendant’s Dublin/Paris and Dublin/Brussels routes. A claim in respect of the Dublin/Bristol route which existed when the summary summons was issued is no longer extant, it having been discharged with a payment of £103,108.

2. Landing charges and passenger load fees are payable by airlines using the facilities of airports operated by the Plaintiff Dublin Airport is one such airport and is the only one involved in this case.

3. Pursuant to the provisions of Section 39 of the Air Navigation and Transport (Amendment) Act, 1998 the Plaintiff is entitled to recover these charges as a simple contract debt.

4. For some years now the Plaintiff has operated a discount scheme in respect of these charges. These are given under traffic growth incentives and the discounts allowable are

very large, sometimes as much as 90% or even 100%. These schemes were first introduced in 1994. The terms of the scheme involved in this action were set forth in a letter dated the 16th January, 1997 and sent to all relevant airlines. The scheme has a term of five years and was notified to all of the Plaintiff’s scheduled airline customers.

5. A dispute arose between the Plaintiff and the Defendant as to the operation of the scheme in question. In accordance with the terms of that scheme the dispute was referred to the Department of Public Enterprise. Whilst the scheme provides that the decision of that department is final and binding it does not exclude the right of either party to have recourse to the courts. Indeed, even though the Plaintiff contends that it was successful before the department it does not seek in any way to argue that the view of the department is binding on this Court and still less summarily enforceable by it. I will ignore the views of the Department for the purposes of this motion.

6. It is accepted by Counsel for the defence that in essence this is a single issue case. The defence which is proffered through the mouth of the Defendant’s Chief Executive Mr Michael O’Leary on affidavit is that there were discussions between him and a Mr Brian J Byrne of the Plaintiff which resulted in either (a) a variation to the scheme for the benefit of the Defendant, or (b) a collateral contract which gave the Defendant additional advantages under the scheme. It is said that in bringing this action account has not been taken of either of these matters. A third proposition is also made. It is said that the Plaintiff is estopped from pursuing this action successfully by reason of a promissory estoppel arising from the representations made by Mr Byrne.

7. The Plaintiff denies in categoric terms that there was or indeed ever could have been such a variation as is alleged without specific board approval on the part of the Plaintiff

which was never given. The Plaintiff contends that the line of defence is, on the evidence adduced, not credible and/or that there is no fair or reasonable probability of the Defendant having a real or bona fide defence.

8. The test which I have to apply on this application is that set forth by the Supreme Court in First National Commercial Bank plc v. Anglin [1996] 1 IR 75. In that case Murphy J speaking for the Court said:

“For the court to grant summary judgment to a plaintiff and to refuse leave to defend it is not sufficient that the court should have reason to doubt the bona fides of the defendant or to doubt whether the defendant has a genuine cause of action (see Irish Dunlop Co Ltd v. Ralph (1958) 95 ILTR 70).

In my view the test to be applied is that laid down in Banque de Paris v. de Naray [1984] 1 Lloyd’s Law Rep 21, which was referred to in the judgment of the President of the High Court and reaffirmed in National Westminster Bank Plc v. Daniel [1993] 1 WLR 1453. The principle laid down in the Banque de Paris case is summarised in the headnote thereto in the following terms:-

“The mere assertion in an affidavit of a given situation which was to be the basis of a defence did not of itself provide leave to defend; the Court had to look at the whole situation to see whether the defendant had satisfied the Court that there was a fair or reasonable probability of the defendants having a real or bona fide defence.”

In the National Westminster Bank case, Glidewell LJ identified two questions to be posed in determining whether leave to defend should be given. He expressed the matter as follows:-

“I think it right to ask, the words of Ackner LJ in the Banque de Paris case, atp. 23, ‘Is there a fair or reasonable probability of the defendants having a real or bona fide defence?’ The test posed by Lloyd LJ in the Standard Chartered Bank case Court of Appeal (Civil Division), Transcript No. 699 of 1990. ‘Is what the defendant says credible?’, amounts to much the same thing as I see it. If it is not credible, then there is no fair or reasonable probability of the defendant having a defence.”

9. In his first affidavit which is animadverted upon very strongly by Counsel for the Plaintiff Mr O’Leary the Defendant’s Chief Executive at paragraph 4 of the affidavit accepts that the discount scheme applied generally. But he says

“I say that the application of the Scheme to Ryanair’s proposed commencement on the Dublin/Brussels and Dublin/Paris routes was specifically and deliberately amended following discussions between the plaintiff and the defendant, prior to and in order to procure the Defendant’s commencement on these routes”.

10. From the exhibits contained in his affidavit it is quite clear that the Defendant announced its commencement of services to Brussels and Paris on the 7th February, 1997.

11. Details of fares payable for these flights and ancillary arrangements for passengers to be taken from distant airports to Paris and Brussels by coach or taxi were also announced on that date. It is clear therefore, on Mr O’Leary’s own evidence that the Defendant had made its arrangements to commence these routes not later than the 7th February, 1997.

12. It follows therefore, that the “specific and deliberate” amendment to the discount scheme which was allegedly made “to procure” Ryanair’s commencement on these routes must have occurred prior to the 7th February, 1997.

13. Details of the negotiations which led to the alleged amendment to the discount scheme are set forth at paragraphs 19-30 of Mr O’Leary’s first affidavit. Paragraph 19 reads:

“As set out above, the Plaintiff’s concerns in relation to the Dublin/Brussels Route for 1997 were such that in early 1997 they entered into negotiations with the Defendant. The Defendant was interested in starting a service on the Dublin/Brussels route, but only if it was not penalised by being denied growth discounts for the 17,500 CityJet passengers who had already qualified for growth discounts in 1996 anyway”.

“I became involved in the discussions with the Plaintiff at that stage. I dealt with the Plaintiff’s Assistant Chief Executive of Operations, Brian J. Byrne. I made the Defendant’s position quite clear to the Plaintiff and informed the Plaintiff that unless an agreement could be reached whereby the Defendant would obtain the

15. This final sentence makes it clear that any amendment must have been finalised prior to the 7th February, 1997.

“21. I had a number of discussions, by telephone and in person, during January and early February, 1997 with Mr Byrne about the application of the growth discount scheme to the Dublin/Brussels route. It was expressly agreed between us that Aer Rianta would vary the scheme with the Defendant to encourage Ryanair to commence a Dublin/Brussels service in 1997. The Plaintiff agreed that the Defendant would be entitled to the frill benefit of the growth discount scheme and that CityJet’s traffic would be ignored in setting the base rate for the purpose of calculating growth on the Brussels route because at that time, late January 1997, CityJet was no longer an incumbent on the route. The base rate for 199 7 would be the traffic for the incumbent carrier on the route, Aer Lingus.

22. Our discussions at this time also concern the Dublin/Paris route. In relation to Dublin/Paris the Defendant agreed to operate on that route on the express agreement that the base, from which growth would be calculated, would be determined by treating the Aer France/Air

Inter/CityJet group as one and Aer Lingus as the other incumbent carrier. Any increases generated by the Defendant over the 1996 figures for these incumbents would be deemed to be growth under the growth discount scheme.

23. Mr Byrne stated to me that Aer Rianta was prepared to accommodate Ryanair. Consistent with the prior practice of Aer Rianta, we did not set out formally in writing the terms agreed. However, in view of the assurances he gave me and the fact that on all previous occasions Aer Rianta had performed the oral variations, I was not concerned to have a specific written variation. I was completely satisfied that we had agreement on the point and on foot of this Ryanair held a press conference which Minister Dukes and Aer Rianta attended to announce the launch of the Dublin/Brussels and Dublin/Paris routes on 7th February, 1997.”

“24. The fact of our agreement is clearly set out in subsequent correspondence between the Plaintiff and the Defendant (he then exhibits the correspondence to which I will return in a moment). I was concerned to receive the Plaintiff’s letter of the 14th February, 1997 which, although it acknowledges the application of the discount scheme to the new services

18. I turn now to a consideration of the correspondence which Mr O’Leary says clearly sets out the fact of the agreement allegedly reached between him and Mr Byrne.

19. The first item of correspondence is a letter of the 14th February, 1997 from Mr Byrne to Mr O’Leary. It reads:

May I take this opportunity to congratulate you and your team on the launch of your new services to Europe. Paris and Brussels are two key routes for Ireland and Aer Rianta and I have every confidence that these routes will be successful for Ryanair and will complement your existing extensive UK network. You are, no doubt already familiar with the terms of our generous and much improved traffic incentive scheme and its application to city pair routes. Based on your share of net route growth, discounts of 90% for the first three years and 70% for a further two years will be allowed for that space of growth.

20. This letter provides no support for an assertion that the discount scheme had been altered in favour of the Defendant. On the contrary it sets out the terms of the scheme

applicable to all airlines without amendment. Not merely does it do that but it makes no reference at all to any negotiations of the type alleged by Mr O’Leary and is inconsistent with them.

21. The next exhibit is an internal memorandum from Mr O’Leary to an official of the Defendant called Howard. In it he says

I spoke to Brian Byrne this morning, who confirmed that there is “nothing of any significance” in the second paragraph of his letter of the 14th. He also confirmed to me that to the extent that Aer Lingus’ passenger carryings do not decline on either the Paris or Brussels route, then most or all of Ryanair ‘s traffic will qualify for the growth rebates.

I have also asked him to give Don Treacy every assistance with the allocation of three additional stands to us for the summer operation, and he has undertaken to do so.

It may well be worthwhile to have someone (perhaps yourself- given the importance of this issue) follow up with Marion O’Brien over the next couple of days, just so we have all of these issues out in the open before we start, rather than in arrears.”

22. This document does not appear to me to provide any support for the variation which had already allegedly been agreed as between the parties. Indeed, the final paragraph is inconsistent with such a variation ever having been effected.

23. It is also of some significance that there is no evidence either in this memorandum or in any other document which suggests that Mr Byrne’s letter of the 14th February, 1997 (which I have already reproduced) is wrong.

24. On the same day that he wrote the memorandum which I have just quoted Mr O’Leary wrote a letter to the Plaintiff. It reads

I refer to your letter of the 14th and our subsequent telephone conversation of this morning. May I also thank you and your team at Dublin Airport for your help over last weekend, during which further passenger records were set by Ryanair doubtless to our mutual benefit.

In relation to the improved traffic incentive scheme for our new services to Europe - a scheme which we support - I think your suggestion of a meeting with Marion O’Brien at this stage to iron out these minor issues and ensure that there are no misunderstandings is helpful. Howard will contact Marion to arrange such a meeting as soon as possible.

I thank you for your confirmation that to the extent that Aer Lingus’ traffic on Paris and Brussels does not decline in 1997 over 1996, then Ryanair’s traffic on these routes will be treated as entirely incremental growth and will attract the appropriate discounts.

25. Again, this letter provides no support for the Defendant’s contention. The penultimate paragraph is indeed inconsistent with the agreement which is contended for.

Just to keep the record straight, may I point out that our traffic incentive scheme is based on the overall net growth of a route or “city pair” route, regardless of what airlines or indeed how many airlines are serving such routes. For example, the Paris route would take account of traffic generated by Aer Lingus and Air Inter/CityJet and not just Aer Lingus, as stated in your letter. I’m sure you already understand this point and the local discussions at Dublin Airport with Marion O’Brien will, in any event, clarify any such issues.”

27. This letter makes it clear that it is the general scheme which applies and not some special arrangement allegedly entered into more than a month beforehand between Mr Byrne and Mr O’Leary. A criticism is made of the fact that this letter is dated the 11th March and is in reply to one of the 17th February. Nothing turns on that since there was no need to respond to the earlier letter which was completely consistent with the scheme as applied generally.

29. “Your letter of the 11th refers. I don’t have any difficulty with computing the overall net growth on any route or “city pair” but must emphasise that the net growth will not be shared with any incumbent unless that incumbent actually generates growth on its own services. To the extent that Aer Lingus and Air Inter/City Jet don’t increase their carryings in calendar 1997 over calendar 1996 on the Dublin/Paris route for instance, then they will not attract any growth rebates. We will not accept a situation whereby growth actually delivered by us is then shared on some arbitrary rebate formula basis with those incumbents.”

30. This letter of the 11th March from the Defendant does not provide any support for the variation contended for.

31. This correspondence is dealt with at paragraphs 25 and 26 of Mr O’Leary’s affidavit. In dealing with the letter of the 17th February, 1997 which was not responded to until March, 1997 Mr O’Leary swears

“In order to ensure that there was no doubt about the matters between the Plaintiff and the Defendant I caused the letter of the 17th February, 1997, to be written. As appears from paragraph 3 of that letter I stated ‘I thank you for your confirmation that to the extent that Aer Lingus traffic on Paris and Brussels does not decline in 1997 over 1996 then Ryanair’s traffic on these routes will be treated as entirely incremental growth and will attract the appropriate discounts.’

32. No reply was received to that letter until March, 1997. In the meantime the Defendant took all of the necessary decisions, committed the necessary resources and began selling its very low fares and marketing its new routes from Dublin to Paris and Dublin to Brussels.”

33. This last averment is wholly inconsistent with the launch having taken place on the 7th February, 1997 by which time all arrangements were made. It furthermore destroys any claim of promissory estoppel.

34. In my view far from establishing an “express agreement clearly set out in correspondence” the documents in this exhibit demonstrate the opposite.

35. There are other inconsistencies in the Defendant’s approach. For example, in the memorandum to the Department of Public Enterprise it stated “It is quite clear that the exchange of correspondence between Ryanair and Aer Rianta in February and March, 1997, which formed the basis for Ryanair’s entry into those routes, formed a written agreement between the two companies for the specific application of the scheme”. This assertion of a written agreement was wrong. There was no such agreement. Furthermore, this exchange of correspondence post-dated Ryanair’s announcement of its entry into those routes when, having regard to the launch which took place on the 7th February, 1997 all necessary arrangements had been made.

36. Even on Mr O’Leary’s own affidavit and exhibits it is difficult to see how there is any support to be obtained for his assertion on oath concerning an alleged variation to the scheme. The variation is denied by the Plaintiff who asserts not merely that no variation occurred but says that it could not have occurred since it would have required the express approval of the Plaintiff’s board of directors. Moreover, they allege that prior to the launch on

the 7th February, 1997 they were not even aware of what cities the Defendant would be flying to, having been refused such information by the Defendant. Indeed, that much is clear having regard to the letter of the 20th September, 1996 from Ryanair where they say:

“The cities and airports we propose to serve are commercial (sic) confidential but are not relevant to Aer Rianta’s consideration of its element of our cost base”.

37. There is of course conflict on the affidavits. But a mere assertion in an affidavit of a given situation which is said to be the basis of a defence does not of itself constitute a ground for granting leave to defend. I have to look at the whole situation to see whether the Defendant has satisfied me that there is a fair or reasonable probability of it having a real or bona fide defence. I have to ask ‘is what the Defendant says credible’? In my view it is not. Mr O’Leary’s credibility is undermined by the very documents which he exhibits, his assertion of an agreement when the exact opposite is indicated by those exhibits and the inconsistencies both as to the form of the agreement and when it was allegedly entered into.

38. In my view there is no fair or reasonable probability of the Defendant having a defence to these proceedings and the Plaintiff is entitled to summary judgment in the amount claimed.

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Aer Rianta CPT v. Ryanair Ltd. [2000] IEHC 205 (5th December, 2000)