Airport to seek millions in compensation after winning legal battle with Bmibaby

4:06pm Wednesday 5th May 2010

By Joe Willis

AN airport will now seek up to £12m in compensation after winning a landmark legal battle with a budget airline.

The Appeal Court today ruled that Bmibaby had breached its contract with Durham Tees Valley Airport (DTVA) when its axed its services from the airport in 2006.

The court's decision is a huge blow to British Midland Airways subsidiary, Bmibaby, which will now have to put the airport financially back in the same position it would have been in had there been no breach of contract.

The airport says it lost huge sums in passenger fees, duty free and retailing profits and car parking receipts.

The Appeal Court's decision was a complete reversal of fortune for Bmibaby which last year won its case at the High Court when a judge ruled that the terms of its contract with the airport were so vague and uncertain they were unenforceable.

Today, Lord Justice Patten, sitting at London's Civil Appeal Court with Lord Justice Mummery and Lord Justice Toulson, overturned that ruling and found Bmibaby in "repudiatory breach" of the contract. The airline now also faces legal costs bills likely to exceed £1m.

The case will now go back to the High Court for an assessment of the damages due from Bmibaby to the airport company.

Lord Justice Toulson said: "The cardinal principle of any assessment of damages for breach of contract is that the innocent party (the airport company) is entitled to be put in the same position as he would have been in if the defendant (Bmibaby) had not broken the contract".

However, Bmibaby's lawyers have in the past attacked as "exaggerated" the airport's claim that it faced "a future expectation loss of some £11,585,306" as a result of the airline's withdrawal.

Hugh Lang, group airports director for the Peel Airports Group, which owns DTVA, said: "Today's judgement totally vindicates the action we have been pursuing for the last three and a half years.

"The action of Bmibaby in withdrawing their services was totally avoidable and while we found it regrettable to sue our former airline partner they had left us with no alternative. We are very pleased the Court of Appeal has agreed with our interpretation of the contract and that significant damages are now due to the Airport Company to compensate us for our loss."

Bmibaby said it would be appealing the ruling and therefore could not comment further.