Where a tenant was required to pay for electricity and gas ‘at no more than … the … prevailing commercial rates’ the court held that this meant the prevailing commercial rates of the private utility networks of major UK airports including airports receiving international and internal passengers rather than the rates payable to public networks for the supply of electricity.
In order to ascertain the ‘prevailing commercial rate’, it was necessary to identify a market or comparator accommodating or approximating as closely as possible the contractual arrangements between the parties.
The court must avoid an excursion into the world of make believe rather than the lease being construed to reflect the factual position of the parties at the time they entered into the agreement. This is consistent with business common sense. Other major airports operated private utility networks for which they invoiced tenants and occupiers and that was therefore the fair market comparison.
This judgment illustrates the modern approach to contract interpretation that the context must be taken into account.
The case is Manchester Airport and Another v Radisson Hotel Manchester and Another.