Agenda item

That BHAL’s application to amend the Permitted User Clause in the Lease be refused and appropriate funds to fight any tribunal case be set aside.

BHAL had formally requested their intention to seek to modify the definition of “Permitted User” in clause 1.8 of the Lease. They had requested that the Council approved the modification, but should the Council not decide to approve it then pursuant to their rights under section 84 of the Law of Property Act 1925 (“LPA 1925”) they would apply to the Upper Tribunal (Lands Chamber) to determine such a change.

In introducing the item, the Portfolio Holder for Resources, Commissioning and Contracts Management made the following comments and highlighted the following points from the discussion at the Executive, Resources and Contracts PDS Committee on 23 November 2022:

1. The letter from BHAL dated 24^th October demanded a response within 28 days, so this was not an item that could be deferred;
2. The legal advice the Council received indicated that the Council had strong grounds to resist challenge to the current Permitted User Clause (PUC);
3. The Council had a duty to behave reasonably in respect of any requests made by BHAL in its capacity as tenant;
4. Any amendment of the existing PUC could undermine the principle of no fare-paying passengers upheld by the Court of Appeal in 2002;
5. The lease had been set up partially to protect residents on environmental grounds; and
6. The 28-day deadline set by BHAL had, similar to the request last year, given the Council and Bromley residents relatively little time for discussion.

The Portfolio Holder noted that the letter dated 24^th October received from BHAL contained the following sentence: “Please confirm that the Council agrees to BHAL’s above proposed modification of the definition of the Permitted User in the Lease”. This was followed by “However, having taken all of the above steps, if this still does not result in an agreement over the proposed modification then BHAL will have to make such an application and will refer the Tribunal to this correspondence”. It was noted that under property law Bromley Council as landlord of the airport was required to consider any requests to amend the lease received from BHAL as tenant. Bromley Council was acting within its legal obligations as landlord by considering this request; it would also be entirely within its legal rights as landlord to refuse, providing this was done on reasonable grounds.

Executive heard that the existing permitted user clause, upheld by the Court of Appeal in 2002, did not permit fare-paying passengers. The original intention of this clause and the lease in general, as amended by the deed of variation and related documents in 2016, was to permit the operation and development of Biggin Hill airport for business aviation, flight training and private flying, as well as one air fair or display each year. It was drafted explicitly to preclude the possibility of fare-paying passengers from using the airport, as the resulting increase in aircraft movements would likely result in an unacceptable loss of amenity for residents living in the southern part of the borough.

The Portfolio Holder recognised that the latest request from BHAL did not explicitly request fare-paying passengers. However, it would allow “passenger services operated by aircraft carrying no more than 19 passengers, provided that seats are only made available to individuals who by reason of club membership, shared ownership or some other private arrangement with the owner or operator of the aircraft are able to secure a seat on such a flight”. The Portfolio Holder emphasised that the crucial words lie towards the end of the sentence: “some other private arrangement with the owner or operator of the aircraft”. As noted by officers in paragraph 3.27 of the report “the statement contains enough ambiguity so as to allow for the possibility of multiple ways of purchasing tickets for flights with minimal restriction”. It would effectively permit fare-paying passengers without explicitly doing so, and thus effectively end the restriction on the airport’s activities upheld in the judgement of 2002.

However, in order for the Council to refuse the request on reasonable grounds, it must have substantive grounds on which to do so. The operations of Biggin Hill benefitted the borough in terms of generating local employment and diversifying the borough’s economy. The Council also benefited directly via the turnover rent it received from the airport and its share of business rates generated by activities on the airport’s site. Set against this, the airport’s activities generated significant negative externalities for residents living in the southern part of the borough. The most significant of these was noise from aircraft travelling to or from the airport. This noise disrupted the sleep of residents who worked night shifts (including those at the Princess Royal University Hospital) and the enjoyment of residents living or visiting the southern part of the borough of their gardens or green spaces, as the noise of passing aircraft was sufficiently loud to halt conversation. The Portfolio Holder highlighted that in the summer months, when there could be aircraft movements every few minutes along a single route, the effect for residents was particularly oppressive. In addition, the growing number of residents working from home following the COVID-19 pandemic were also affected, with their virtual meetings and conference calls disrupted by aircraft noise. Although not visible or audible, the carbon emissions resulting from the airport’s operations also concerned a growing number of residents. The Portfolio Holder suggested that private aviation was far more damaging in terms of carbon emissions per capita than regular aviation; with a BBC article from 2021 (https://www.bbc.co.uk/news/59135899)estimating the CO2 emissions per passenger were almost five times higher from private jets than regular commercial flights. The Portfolio Holder further noted that due to the cost of private aviation, the number of the borough’s residents that have ever been able to use private aviation services from the airport was a mere fraction of the number of residents directly affected by its environmental impacts.

The Portfolio Holder noted that the proper role of the Council was to weigh the economic benefits from the airport’s operations against the negative environmental externalities. It was entirely right and proper that Members considered the impact on residents as well as the purely financial impact on the Council as a corporate body. Bromley was not just a private landlord, but a local authority with democratic legitimacy to represent its residents and their interests in negotiations with third parties. It would be unreasonable to judge the Council’s actions as if it were a private landlord with no broader public role; indeed, this was recognised in clause 2.11 of the Lease which required any arbitrator assessing whether the Council was acting reasonably by refusing a request to amend the lease to the ‘no reasonable local authority’ test.

Turning to the likely impact of the proposed change, the Portfolio Holder noted that in the report Council officers highlighted that no forecast of the impact of any change to the permitted user clause on the number of annual aircraft movements had been provided. The number of movements was directly correlated to the impact the airport’s operations had on those residents living under flightpaths in the southern part of the borough. Moreover, activity at the airport, and thus the Council’s income from turnover rent and business rates, was also correlated with the number of movements. Considering the Council’s obligation as a reasonable local authority to weigh the economic benefit from any changes to the airport’s governing regime against the likely environmental impact, the Portfolio Holder felt that it was not reasonable for the airport to request a change to its governing regime without providing any data regarding the impact of the change in terms of the number of movements. The Portfolio Holder acknowledged that a claim may be made by the airport or others that the intent of the change was to ensure that aircraft that were already flying were used more efficiently, with supposed environmental benefits. The Portfolio Holder considered that this was highly disingenuous, as it ignored the fact that tickets may effectively be purchased for flights, then operators would be able to spread the fixed costs of flights over a greater number of passengers. That in turn would increase the viability of individual flights, and thus the total number of movements to and from the airport. As the environmental impact of the airport’s operations could not be reduced to a financial value, the Council could not weigh the economic and environmental impacts of this potential change in monetary terms alone. However, the Portfolio Holder noted that while BHAL’s financial contribution to the Council was under £1m per annum, the amount of Council tax paid by residents in the southern wards of Darwin, Hayes and Coney Hall, Petts Wood and Knoll, Bromley Common and Holwood, Farnborough and Crofton, Orpington, and Chelsfield was equivalent to circa £86m per year.

Finally, the Portfolio Holder noted that in their letter, BHAL implied that without ‘modernisation’, which they equated to amendment of the permitted user clause, the airport would not benefit from investment. The Portfolio Holder felt that it was difficult to see how this claim could be made when Members had been invited to the grand opening of Bombardier’s newly expanded London Biggin Hill Service Centre earlier in the day. Bombardier were clearly prepared to make this investment under the existing terms of the lease. As noted in paragraph 3.29 of the officer report, Castle Air had similarly recently announced an increase in their operations from Biggin Hill and lastly, the Portfolio Holder noted the development of the hotel on the airport site. 

In conclusion, the Portfolio Holder noted that while the Council wished to see the airport operate successfully and profitably within the bounds of its governing documents, as it had done with considerable success in recent years, the Council would not be acting as a reasonable local authority if it agreed to further liberalisation of the lease without considering the likely environmental impact of such a change. Members knew from the airport’s noise action plan that complaints had quadrupled since the variation of the lease in 2016, which had driven a shift in the type of aircraft using the airport from small general aviation aircraft to business jets. Councillors representing all southern wards excluding Biggin Hill, with a combined population of approximately 99,000, had personally conveyed to the Portfolio Holder the sheer volume of correspondence received on this issue, none of which was supportive of the airport’s request. The Executive had before it not a request, but an ultimatum to change the lease put in place to protect the residents of the borough, without any forecast of how such a change was likely to affect them. On that basis the Portfolio Holder urged the Executive to follow the officer recommendation to refuse BHAL’s application to amend the Permitted User Clause in the lease.

The Chairman of the Executive, Resources and Contracts PDS Committee supported the comments made by the Portfolio Holder for Resources, Commissioning and Contracts Management, confirming that they represented an accurate summary of the discussion at the recent PDS Committee.  The Member also highlighted that local residents felt that they had not been consulted and had not had a voice.

The Officer recommendation that BHAL’s application to amend the Permitted User Clause in the Lease be refused was put to the vote:

6 in favour

1 abstention

The motion was therefore carried.

The report had been scrutinised by the Executive, Resources and Contracts PDS Committee at its meeting on 23 November and the Committee had supported the recommendations.

RESOLVED: That BHAL’s application to amend the Permitted User Clause in the Lease be refused.