Alaska Airlines Inc. v Virgin Aviation TM Limited & Anor [2025] EWHC 2505 (Comm)

[2025] EWHC 2505 (Comm)Case No CL-2022-000507
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 03/10/2025
Before
MR JUSTICE FOXTON
Between
ALASKA AIRLINES INC.ClaimantVIRGIN AVIATION TM LIMITEDDefendantsVIRGIN ENTERPRISES LIMITEDDefendant
Shaheed Fatima KC and Daniel Burgess (instructed by Pallas Partners LLP) for ClaimantDaniel Toledano KC and Joshua Crow (instructed by Slaughter and May) for DefendantsHearing Hearing date: 16 September 2025Draft to parties: 19 September 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 03 October 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]This is the hearing of: i) the Defendants’ (“Virgin”’s) application for summary judgment on its counterclaim; and ii) the Claimant’s (“Alaska”’s) application for permission to amend its Particulars of Claim.[2]The background to the dispute and the procedural history can be relatively briefly summarised, because it has been set out in prior court decisions to which I refer below. This summary takes the position largely from those judgments: i) In 2005 and 2007, Virgin America Inc. (“Virgin America”) and Virgin entered into trade mark licensing agreements which set out the terms on which Virgin America was permitted to operate an airline in the US under the Virgin brand, and exclude others from doing so. ii) The 2005 license agreement had led to regulatory concerns on the part of the US Department of Transport as to Virgin America’s “nationality”, which concerns in turn led to the 2007 revision to the licence introducing clause 3.7. iii) In 2014, Virgin America decided to launch an IPO. Issues raised by the IPO led Virgin America and Virgin to enter into a re-stated licensing agreement (“the TMLA”) on 19 November 2014. Provision for the payment of a “Minimum Royalty” (“the MR”) was introduced at this time. iv) On 20 July 2018, Virgin American merged with Alaska and ceased to exist, Alaska succeeding to the TMLA. v) In 2019, Alaska ceased to use the Virgin brand, and issues arose as to whether it remained obliged to pay royalties to Virgin under the TMLA. vi) That issue was resolved in Virgin’s favour by a decision of this court ([2023] EWHC 322 (Comm), a decision of Mr Christopher Hancock KC) which was upheld by the Court of Appeal ([2024] EWCA Civ 622).[3]In 2022, Alaska identified a further reason why it said it was not obliged to pay royalties under the TMLA, namely that Virgin had breached clauses 3.2 and/or 3.3 of the TMLA by operating a customer loyalty scheme which allows customers to use loyalty points for domestic flights with Delta Air Lines. I will refer to the obligations allegedly breached as “the Exclusivity Obligation”. Alaska commenced these proceedings to establish a breach of the Exclusivity Obligation and that the breach had the effect of bringing the TMLA to an end through termination at law in September 2022. Virgin has counterclaimed for allegedly outstanding MR.[4]For present purposes, it is sufficient to note the following: i) While Virgin disputes that there was any breach of the Exclusivity Obligation (renunciatory, repudiatory or otherwise) or that it had the effect of bringing the TMLA to an end, it accepts that these questions give rise to triable issues for summary judgment and permission to amend purposes. ii) Virgin claims that Alaska has no defence to its claim for the MR under the TMLA in relation to the period up to the date of its alleged termination, relying on a “no set-off” clause in clause 8.9.1 of the TMLA. iii) For its part, Alaska contends that the MR was payable exclusively for the Exclusivity Obligation, such that the basis for Virgin’s entitlement to the MR has fallen away given the assumed breach of the Exclusivity Obligation. Alaska contends that Virgin cannot obtain summary judgment for the MR because it has an arguable claim to immediately recover any amount paid back in restitution. iv) Alaska argues that it was a condition precedent to its obligation to pay the MR that Virgin had not granted any “further licences in breach of clause 3.3 in that financial year” (which I understand to mean both the initial grant of any further licence in a financial year and the continuation of any such further licence during that financial year, regardless of when it was granted). v) In the alternative, Alaska argues that it was an implied term of the TMLA that “in the event that Virgin had granted a further licence in a given financial year in breach of clause 3.3 then the Minimum Royalty would not be payable in respect of that financial year” (as to which I hold the same understanding).[5]The amendments proposed by Alaska seek to add a plea of repudiatory breach of the TMLA to the existing plea of a renunciatory breach, to abandon a previously pleaded case of a contractual termination by Virgin in January 2022, and to advance the arguments by reference to failure of basis, condition precedent and implied term referred to above.[6]On that basis, the issues which potentially arise for determination are: i) Was the MR a severable payment due solely in respect of the Exclusivity Obligation (such that the assumed breach of the Exclusivity Obligation would give rise to a total failure of consideration)? ii) If so, and independently of the condition precedent and implied term arguments, does clause 8.9.1 of the TMLA have the effect that Alaska cannot rely upon its alleged right of recovery in restitution as a defence to the claim? iii) Is compliance with the Exclusivity Obligation in the relevant financial year a condition precedent to Alaska’s obligation to pay the MR in respect of that financial year? iv) Is it an implied term of the TMLA that no MR is payable in respect of any financial year in which there is a breach of the Exclusivity Obligation?[7]The principles applicable to the granting of summary judgment and obtaining permission to amend are well-known and are not substantially in dispute between the parties. Of particular relevance is the principle that “it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it” (Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), [15(vii)]).[8]I am satisfied that all of the material relevant to the determination of the issues of construction and law raised by these applications are before the court. Indeed I have the benefit of the exploration of the background to the TMLA in the decisions of Mr Hancock KC and the Court of Appeal in the prior proceedings. I was not persuaded that there was any realistic prospect of relevant factual or expert material being available at trial which might affect the issues which I have been asked to decide (no relevant factual matrix was pleaded nor introduced in witness evidence). It follows that I was similarly not persuaded that there was any realistic prospect that the evidence being adduced at trial on the issues of the meaning of the exclusivity obligations or the consequences of breach would be relevant to the different issues raised by this application.[9]Mr Toledano KC confirmed that if the court was not persuaded that Virgin was entitled to a monetary judgment, Virgin was not asking for the court to reach final conclusions on construction (which might necessitate a free-standing appeal at this stage). That addresses the concerns discussed by Constable J in Resource Recovery Solutions v DerbyshireCounty Council [2023] EWHC 708 (TCC), [30] on which Ms Fatima KC placed reliance.

The TMLA in more detail

[10]Recital (A) to the TMLA notes the Second Defendant’s beneficial ownership of certain intellectual property which I shall refer to as “the Marks”. The TMLA includes two defined terms of particular relevance: i) “Airline Rights” defined as “the rights granted by [the First Defendant] to [Alaska] pursuant to clause 3 of this agreement”; and ii) “Airline Royalties” defined as “the royalty payments payable by [Alaska] in consideration for the grant of the Airline Rights, as more particularly described in clause 8.1.”[11]Clause 3.1 provides:
“In consideration of the payment of the Airline Royalties to [the First Defendant] by [Alaska], [the First Defendant] grants to [Alaska] the right: 3.1.1 to use the Marks only in connection with and in the ordinary course of carrying on the Licensed Activities; 3.1.2 … to carry on the Licensed Activities only under [certain trading or business names]; … 3.1.3 to do and authorise the doing of all acts the doing of which is restricted by the copyright [in certain work] only in connection with and in the ordinary course of carrying on the Licensed Activities and in accordance with the terms of this Licence; 3.1.4 to grant sub-licences of the rights granted by this Licence to each of its wholly-owned subsidiaries …” 3.1.1 to use the Marks only in connection with and in the ordinary course of carrying on the Licensed Activities; 3.1.2 … to carry on the Licensed Activities only under [certain trading or business names]; … 3.1.3 to do and authorise the doing of all acts the doing of which is restricted by the copyright [in certain work] only in connection with and in the ordinary course of carrying on the Licensed Activities and in accordance with the terms of this Licence; 3.1.4 to grant sub-licences of the rights granted by this Licence to each of its wholly-owned subsidiaries …”
[12]“Licensed Activities” are “the activities described in schedule 1 in connection with which [Alaska] and its subsidiaries are permitted to use the Marks pursuant to the grant of the Airline Rights under clause 3 below of this Licence”. Schedule 1 defines a series of activities including operating an airline, aviation and cargo business in certain defined territories (including the US) and incidental activities.[13]Clause 3.2 provides:
“[Alaska] shall be the exclusive licensee of the Marks in relation to the provision of the Licensed Activities by it and its wholly-owned subsidiaries to the exclusion of [the First Defendant] and all others ….”
[14]Clause 3.3 provides that Virgin “shall not grant any further licenses to use the Marks in respect of the Licensed Activities.”[15]Clause 3.6 provides: “Subject to clause 3.7, [Alaska] undertakes that, for as long as it provides the Licensed Activities it shall continue to do so using the Names and shall use all reasonable efforts to promote its conduct of the Licensed Activities under the Names”.[16]Clause 3.7 provided:
“Notwithstanding any other provision of this Licence nothing in this Licence shall prohibit [Alaska] at any time during the Term from electing to perform the Licensed Activities or any other activities, including, but not limited to, operating flights, code sharing arrangements with any other airlines or entities, or operating flights between any points regardless of where such flights originate or terminate, without the payment of royalties, so long as [Alaska] does not use the Names or Marks while undertaking such activities. Provided, however, that in the event [Alaska] ceases to use the Names or Marks in a material manner, which shall include but not be limited to where [Alaska] derives more than twenty percent of its operating revenues within the territories without using the Names or Marks, then [the First Defendant] will have the right to terminate the Licence after 45 days prior written notice”
[17]The payment of Airline Royalties is addressed in clause 8. Clause 8.1 provides: “In consideration of the Airline Rights granted pursuant to clause 3, [Alaska] agrees to pay [the First Defendant]:(a) with effect from the Effective Date and until December 31, 2015, a quarterly royalty which shall be 0.5% of Gross Sales in respect of each Quarter or part of a Quarter;(b) with effect from January 1, 2016 and until the Trigger Date, a quarterly royalty which shall be 0.7% of Gross Sales in respect of each Quarter or part of a Quarter; and(c) with effect from the Trigger Date and for the remainder of the Term, a quarterly royalty which shall be 0.5% of Gross Sales in respect of each Quarter or part of a Quarter. In each case, subject to the requirement that the “[Alaska]” will in each financial year during the Term pay at least the annual Minimum Royalty in accordance with clause 8.6”; (the “Trigger Date” being when Gross Sales for any period of four consecutive quarters exceed US$4.5 billion).[18]Clause 8.5 provides for the provision of quarterly statements of Gross Sales by Alaska within 10 days of the quarter’s end (clause8.5.1 ), and for provision by Alaska of a financial statement for its financial year within one month of its end to be reconciled to the quarterly payments (“the Reconciliation Statement”), (clause8.5.2 ). Under clause 8.4, amounts payable “under this clause 8” were to accompany “the quarterly statement to be provided … in accordance with clause 8.5.1”.[19]Clause 8.6 provides:
“For the avoidance of doubt, [Alaska’s] obligation in respect of payment of royalties due to [the First Defendant] in each financial year of [Alaska] is to pay the greater of (a) a royalty based on a percentage of [Alaska’s] Gross Sales in the relevant period, at the rates set out in clauses [8.1] and [8.3] above, and (b) the Minimum Royalty payment applicable for that period. Where the Reconciliation Statement reveals an underpayment of any amount due to [Virgin], the amount of such underpayment shall be paid in full by [Alaska] within 20 days following receipt of a relevant invoice from [the First Defendant]. Where the Reconciliation Statement reveals an overpayment of any amount due to [the First Defendant], the amount of such overpayment shall be set off against royalties due for the following Quarter.”
[20]The MR is US$7,978,200 or pro-rata for each financial year, to be adjusted annually by reference to USCPI.[21]Clause 8.9.1 provides:
“All sums payable to [the First Defendant] under or in connection with this Licence shall be paid in full without any set-off or counterclaim whatsoever and free and clear of all deductions or withholdings whatsoever, save only as may be required by law.”
[22]Finally, clause 9 provides: “9.1 The rights granted to [Alaska] by this Licence are personal to [Alaska] and [Alaska] shall not delegate or assign those rights except that, provided it has given prior notice to [the First Defendant], [Alaska] may delegate or assign:9.1.1 subject to clause 9.4, to wholly-owned subsidiaries of [Alaska];9.1.2 to third parties, but only as part of a transfer of all or substantially all of the business of [Alaska] forming part of the Activities; or9.1.3 by way of security. 9.2 [Alaska] may, with prior notice to [the First Defendant], mortgage or charge the rights granted to [Alaska] by this Licence”. 9.1.1 subject to clause 9.4, to wholly-owned subsidiaries of [Alaska]; 9.1.2 to third parties, but only as part of a transfer of all or substantially all of the business of [Alaska] forming part of the Activities; or 9.1.3 by way of security.

The prior proceedings

[23]The issue in the prior proceedings was whether clause 3.7 of the TMLA relieved Alaska of its obligation to make the MR payment if it ceased using the Marks (it being common ground that, in that eventuality, it would not be required to make payments under clause 8.1 by reference to the volume of Gross Sales).[24]Mr Hancock KC at [161(1) and (2)] held that the MR was “a set sum payable for every year of the contractual term, regardless of the level of usage of the Virgin brand” and that it was, in effect “a flat fee payable for the right to use the Virgin brand, whether or not that right is taken up”. (emphasis in original). At [162(2)], he found that Virgin America wished “to continue to have the right to use the Virgin brand, and was prepared to pay for this.”[25]He also addressed what was expressly put forward as an alternative case by Virgin – that if the MR was not payable if the Marks were not used, then Alaska was in breach of clause 3.6 in not making some use of them. At [174], he stated:
“I agree that this issue does not really matter in the light of my conclusions on Issue 1. However, I would conclude in any event that Alaska (or more accurately Virgin America) were obliged to use the Names or Marks under Clause 3.6, at least to some extent. It logically follows that in ceasing to do so, they acted in breach of contract. I accept, too, that the measure of loss for such breach is the amount of the Minimum Royalty, payable as damages rather than as a debt.”
[26]I am told that this represented an independent finding by Mr Hancock KC irrespective of his decision that the MR was payable even if there was no use of the Marks, that it was recorded in a declaration and that declaration was left undisturbed by the Court of Appeal (who did not find it necessary to address this point). That is not how I read [174] of Mr Hancock KC’s judgment, whose premise is that the absence of use would deprive Virgin of the MR (hence damages for non-use being the amount of the MR), whereas the effect of the main part of the judgment is that there would be no such deprivation. Rather, the finding reads as an alternative finding if the principal argument advanced by Virgin was rejected. The declaration granted is in similar terms, embracing the finding as to the damages recoverable. Nor is the characterisation of [174] as a free-standing determination consistent with the case advanced by Virgin (who clearly advanced this as an alternative case) and the decision of the Court of Appeal not to address this issue. In these circumstances, I do not propose to approach these applications on the basis that the clause 3.6 issue has been decided.[27]In the Court of Appeal, Phillips LJ at [26] found that “the language of the Licence, the factual matrix and commercial considerations all point firmly to Virgin being entitled to at least the [MR] in exchange for the rights Alaska holds for the remainder of the term of the Licence”. He noted at [27] that the language of the TMLA should be accorded “particular weight … given that it is a professionally drawn contract between commercial parties.”[28]At [30] Phillips LJ noted that:
“What clause 3.7 does not provide is that Alaska can cease all usage of the Virgin Brand … and at the same time avoid paying the Minimum Royalty or indeed any sum at all in respect of the rights it would continue to hold, if not use. Clause 3.7 can and should be understood consistently with the rest of the Licence, reading it as obliging Alaska to continue at least some usage of the Virgin Brand, or at any rate to pay the Minimum Royalty for its right to do so … [T]he Minimum Royalty is not in fact a sum calculated by reference to actual usage (or a ‘royalty’ at all) but a minimum payment Alaska must pay to Virgin for the Airline Rights granted under clause 3 of the Licence.”
[29]There are further passages in Phillips LJ’s judgment which are of relevance to the issues before the court: i) At [32], he referred to the Exclusivity Obligation, stating:
“Alaska's contention is that it should be entitled to hold (and effectively “sterilise”) valuable intellectual property rights for up to 25 years, and yet pay nothing. If nothing else, it is plainly of value to Alaska that the well-known Virgin Brand should not be used by one of its competitors in the US airline marketplace. It is not appropriate to consider the adequacy or otherwise of that consideration, but it is plain that some payment would be expected and indeed required”
(emphasis added). ii) While that passage points to the Exclusivity Obligation as something of value received in return for the MR even if Alaska does not use the Marks, it does not, in my view, involve a finding that this is the sole benefit for which the MR is paid, as the emphasised wording makes clear: the words “if nothing else” are intended to show that the Court of Appeal was not seeking to identify the sole benefit of the TMLA in the event Alaska chose not to use the Marks. As Phillips LJ made clear earlier in the judgment at [26] and [30], those benefits include the right to use the Marks, regardless of whether and to what extent Alaska chooses to avail itself of that right. iii) At [34], he noted that on Alaska’s case, “there would be a huge and unjustifiable difference between the use of a single Name or Mark in any part of Alaska's operation (perhaps by mistake), which would trigger the Minimum Royalty payment of nearly US$8m, and a complete de-brand, where nothing would be payable. There is no commercial or rationale justification for such an arbitrary distinction with huge financial consequences, which cannot have been intended by the parties.”[30]There was some debate as to whether the case which Alaska is now running was consistent with the reasoning of the Court of Appeal, and, if so, whether that precluded Alaska from advancing its case. For present purposes, it is sufficient to say that I respectfully agree with and gratefully adopt the conclusions reached by the Court of Appeal, whether formally binding in the case before me or not, because they are obviously correct and have been found to be so.

Was the MR a severable payment due solely in respect of the Exclusivity Obligation?

[31]The legal principles in relation to this question were not substantially in dispute, and for present purposes I am content to adopt Alaska’s own summary in paragraph 32 of its skeleton argument: i) “The doctrine of “severability” in the context of total failure of basis ‘allows courts to split up the total payment made and allocate it to particular parts of the benefit expected in return. Where only part of the expected benefit has been conferred, it can be said that there has been a total failure of basis in respect of that part of the payment relating to the benefit still outstanding’ (Goff & Jones, §12-26).” ii) “It is not a requirement that ‘the contract must expressly distribute the consideration between different elements of counter-performance: all that is needed is that the court be able to identify distinct elements of payment in respect of which there has been a failure of basis’ (Goff & Jones, §12-27 citing Giedo Van der Garde BV v Force India Formula One Team Ltd [2010] EWHC 2373 (QB) at §§302– 304 and 323).” iii) “The test in each case as to whether a contract is severable is ‘whether as a matter of practical common sense the court considers that it is able to apportion on objective analysis of the nature of the contract and the consideration’ Dargamo Holdings v Avonwick Holdings [2021] EWCA Civ 1149 [2021] 2 CLC 583 (per Carr LJ at §104, quoting §297 of Giedo).”[32]Applying those principles, in my assessment it is clear that the answer to this question is no.[33]First, the position as a matter of construction is clear: i) Clause 3 grants the compendious “Airline Rights” in consideration for “Airline Royalties.” Clause 8.1 provides for a payment obligation (with a floor) “in consideration of the Airline Rights”. The “Airline Rights” comprise rights to use and sub-license (clause3.1 ) (and through clause 9 the right to transfer those rights in specified circumstances) and rights of exclusivity (clauses3.2 to 3.4). ii) On the natural reading of the introductory words to both clauses 3.1 and 8.1, and given the definition of “Airline Royalties”, the “Airline Royalties” are granted in consideration of the full package of Airline Rights. The definition of “Airline Royalties” does not distinguish between the MR payment provision in clause 8.6, and the amounts calculated by reference to clause 8.1(a) to (c), to the extent these lead to a figure exceeding the MR. While clause 3.1 provides that the Airline Royalties are paid in consideration of the use rights alone, Mr Toledano KC accepted that, read as a whole, the TMLA provided that the Airline Royalties were paid in return for the full bundle of Airline Rights. iii) I do not accept the submission that this construction requires the words “each and every” to be read into the words “in consideration of the Airline Rights”. “Airline Rights” is a defined term, and the natural meaning of a provision that a sum is paid “in consideration of the Airline Rights” is that it is paid in respect of all the rights falling within that definition, not some unspecified sub-set of them. iv) That conclusion is also strongly supported by the history of the TMLA, which, prior to November 2014, contained the same use and exclusivity rights, and a version of clause 8.1, but no MR. At that stage there could be no suggestion that the Exclusivity Obligation was the subject of a separate payment obligation from the use rights. The November 2014 TMLA introduced the MR in the form of the floor to ensure payment was received even if there was no use. However, there is nothing to suggest the amendments were intended to create separate payment obligations where previously there had been one. v) It is also consistent with the conclusions of the Court of Appeal, who observed that the TMLA gives Alaska the right to use the Marks to the extent it wishes to do so, whether it chooses to avail itself of that right or not. That right to use forms part of the consideration for which the MR was payable, as the Court of Appeal noted.[34]Further, Alaska’s case fundamentally mischaracterises the nature of the MR, which is not a separate payment obligation, but a “floor” for the single payment obligation created by clause 8.1. That is clear from the proviso to clause 8.1 (“in each case, subject to the requirement that [Alaska] will in each financial year during the Term pay at least the annual [MR] in accordance with clause 8.6”), with the nature of a “minimum” royalty, and the curious commercial consequences which follow from Alaska’s construction: i) On Alaska’s construction, as confirmed in oral submissions, if Alaska used the Marks during a financial year in which there was a breach of the Exclusivity Obligation, Virgin would remain entitled to “Gross Sales”-assessed royalty payments under clause 8.1. If these equalled or exceeded the amount of the MR, the MR would be of no relevance and Alaska could point to no amount referable to the Exclusivity Obligation which ceased to be payable or became recoverable on total failure of consideration grounds. ii) Where royalties calculated under clauses 8.1(a) to (c) fell below the MR, the severable payment solely referable to the Exclusivity Obligation would be the amount of the shortfall, and thus inherently variable. iii) The suggestion that the TMLA provides for a severable payment solely referable to the Exclusivity Obligation which would vary in amount, and in some cases involve no payment at all, is a commercially very surprising outcome. iv) These difficulties arise because what Alaska is trying to treat as a separable and severable payment is not a payment at all, but a floor forming part of the definition of the single payment obligation created by clause 8.1.[35]As to the other arguments raised by Alaska: i) Reliance was placed on reference to “Gross Sales” in clause 8.1 and the associated definitions which it was suggested showed that payments under clause 8.1(a) to (c) were solely in consideration of actual use. “Gross Sales” is defined as amounts received “in connection with the carrying on of the Licensed Activities”, which are in turn defined as “the activities … in connection with which [Alaska] and its subsidiaries are permitted to use the Marks”. Clause 8.1 does not, therefore support the conclusion that clause 8.1 is intended to calculate a payment made solely in return for actual use (such that the consideration referable to exclusivity must be found elsewhere). (emphasis added) ii) The fact that the MR is a fixed amount does not support the conclusion that it is paid solely for the Exclusivity Obligation. The MR is (necessarily) a fixed amount because it represents the floor of the amount payable for the Airline Rights. iii) The structure of clause 8.6, with Alaska being obliged to pay the higher of the two alternatives in (a) and (b), does not assist Alaska. Indeed the fact that where the clause 8.1 calculation (i.e. the amount Alaska says is payable for actual use) is higher than the MR, nothing additional is paid (and therefore on Alaska’s case nothing solely referable to the Exclusivity) tells against Alaska’s construction. iv) The mechanism for payment (quarterly accounting and an annual adjustment at the end of Alaska’s financial year by reference to the MR where appropriate) does not assist Alaska. That inevitably follows from the MR being an annual floor for royalty payments. v) Finally, Alaska made the point on a number of occasions that Virgin had accepted for the purposes of this hearing that there was an arguable repudiatory breach, i.e. one which deprived Alaska of “substantially the whole benefit of” the TMLA (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, 66). However, it is very far from the case that a breach sufficient to satisfy the Hong Kong Fir test and permit prospective discharge of a contract for breach of an innominate term means that there has been a total failure of consideration in respect of any contractual performance by the party in repudiatory breach prior to termination.[36]Alaska also sought to support its argument by reference to commercial considerations.[37]First, it suggested its construction was commercially sensible because “the only commercial benefits to Alaska … were(i) the profit generated from the actual use of the Marks and(ii) the ability to exclude competitors from using the Marks”: i) That analysis affords no commercial value to Alaska’s right to use the Marks (and the passages in Virgin’s pleadings in the previous action relied upon as adopting Alaska’s submission define the benefits in terms of Alaska being “permitted” to use the Marks rather than simply actual use). One benefit of the continuing right to use is that it remained open to Alaska to change its mind and use the Marks if it wished. ii) Further, it was also open to Alaska to sell the licence along with a substantial part of its business (clause 9.1.2) to a purchaser who might well attach value to the right to use the Marks and to exclude others from doing so, and to use the licence as security (clauses 9.1.3 and 9.2). iii) Alaska suggested that Virgin had already conceded that the only commercial benefits which arose from the licence were actual use and exclusivity, relying on submissions made in the prior proceedings. I was not assisted by the references to the submissions made in the prior proceedings, which did not always clearly distinguish between issues of the right to use and exclusivity, and had no reason to do so. However, Virgin’s submissions clearly identified one of the benefits to Alaska as “the right to use the Virgin brand again in future should it wish to do so” (paragraph 47(1) of its appeal skeleton and transcript 6 March 2024 page 118 lines 18-23). iv) I have addressed Alaska’s reliance on [32] of the Court of Appeal judgment above. Alaska relied on an analogy drawn by Virgin in prior proceedings with a lease of real property, submitting “it is not …typical that a lease will require payment where the property is not used and the landlord is simultaneously entitled to lease it for occupation by a third party”. However the analogy is not apt. A lease of real property is rivalrous, in the sense that leasing the property to one party necessarily precludes leasing the same property to use by another in the same period. However, trademarks can be the subject of more than one (non-exclusive) licence, but the licensee still benefits from a right to use not available to non-licensees.[38]Second, Alaska submits that its construction achieves a sensible outcome for Virgin, which will be able to terminate the TMLA under clause 3.7 in the event of insufficient use, and license the Marks elsewhere, or continue to receive the MR and comply with the Exclusivity Obligation. However, it is also a commercially sensible position for Virgin to agree a non-separable payment covering both Alaska’s right to use and the Exclusivity Obligation.[39]Neither of these arguments persuade me away from the clear language of the TMLA, which provides that the Airline Royalties (i.e. all of the clause 8 amounts) are payable for the Airline Rights, subject to the clause 3.7 right to conduct operations “without the payment of royalties, so long as [Alaksa] does not use the Names or Marks while undertaking such [operations].” On the contrary, the commercial consequences of the rival constructions support the meaning which the clear wording of the TMLA suggests.[40]Alaska contends that if the MR payment would be recoverable on failure of basis grounds once paid, it follows that it is under no obligation to pay it. It relies on this regard on the following statement of principle in Chitty on Contracts (35th), [28-082]:
“Where, at the time of termination, money is due under the contract by the innocent party but that sum remains unpaid, the innocent party is not required to pay that sum if it would then be recoverable by him in an unjust enrichment claim (for example, on the ground that there had been a (total) failure of consideration).”
[41]Professor Peel’s Treitel: The Law of Contract (16th) at [18.20] contains a passage to similar effect when explaining the effects of termination:
“Normally the party in breach is released from primary obligations which had not yet fallen due at the time of termination, but he remains liable to perform those which had already fallen due at that time, except where the payment is one which he could, if had so made it, have recovered, even on termination, for his own breach, e.g. where there has been a total failure of basis. These rules can be excluded by contrary provision in the contract or by other evidence of contrary intention.”
[42]That general principle was not in dispute. What was in dispute was the correct legal characterisation of it, and whether clause 8.9.1 had the effect of preventing Alaska from relying upon an arguable right of recovery in restitution of the amount paid. This raised an interesting issue, on which Mr Crow (ably) advanced Virgin’s submissions. Where arguments arise as to the effect of a no set-off clause, they generally have forensic utility at the summary judgment stage only (FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2012] EWHC 2477 (Comm), [5] per Popplewell J). For that reason, and in case this matter should go further, I have decided to resolve the issue in this judgment.[43]By way of a helpful entry point, Alaska referred to a comment about the no set-off clause before him made by Hamblen J in Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm), [329(2)(a)], namely that the clause “does not prevent the debtor from contesting whether the sums are actually due. It comes into play only if the sums are either admitted or if contested have been proved due”. That does not, of course, prevent parties from agreeing what the conditions for payment are to be (for example production of certain documents in a sale contract even if no goods are delivered) or “conclusive evidence” clauses as to whether the conditions for the accrual of the debt are satisfied. However, provisions of this type are not no set-off clauses. I am going to refer to an argument of the first kind as the “Pure No Debt” argument.[44]There are contexts in which the distinction drawn by Hamblen J will be easy to apply. If, for example, the price is payable on delivery of goods under a contract with a no set-off clause, the clause will not prevent the buyer saying that the goods were never delivered and thus the price never became payable. By contrast, it would (at least if, as here, the words “set-off” are included) ordinarily preclude the defence of equitable set-off on the basis that the goods were delivered late and loss suffered as a result. Another example is that considered in ROHLIG (UK) Ltd v Rock Unique Ltd [2011] EWCA Civ 18, where it was said that certain of the charges in the invoices sued on were in excess of the amounts permitted to be charged or for charges which the invoicing party was not permitted to pass on ([11]). A third is the argument that the claim for the price under a sale of goods contract has not become payable because the requirements for a claim for the price under s.49 of the Sale of Goods Act 1979 are not met, which argument was treated as not precluded by a widely worded no set-off clause in FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2014] 1 WLR 2365, [87].[45]However, the distinction is not always easy to draw. A division on purely chronological grounds (was a debt ever payable?) or by reference to the burden of pleading does not seem appropriate. If there was a triable issue that a debt claim had subsequently been settled, I can see a strong argument that a “no set-off” clause would not avail the claimant, even though the burden of first raising this point would be on the respondent and the matters relied upon will have arisen after the debt first came into existence. Similarly, if the defendant can establish a triable issue that it has actually paid the debt by a contractually permitted method, there seems no scope for a no set-off clause to operate.[46]Alaska’s submissions suggested that the effect of the putative right to recover asserted in this case was not caught by clause 8.9.1 because it was a “defence”. However, equitable set-off also constitutes a defence, and yet is the central target of a no set-off clause. The effect of excluding an equitable set-off is that a state of affairs which would otherwise be sufficient to satisfy a debt does not do so, satisfaction requiring payment in cash.[47]The issue as to the type of “answer” (to use a neutral word) to a monetary claim caught by a no set-off clause has arisen in number of contexts: i) There have been attempts to argue that where a claimant’s claim has been caused by the “wrong” which forms the basis of the answer, the no set-off clause should not apply: e.g. where the defendant claims it was induced to enter into the contract under which the debt arose by an actionable misrepresentation. The suggestion that a widely-worded no set-off clause did not apply in similar circumstances was rejected by the Court of Appeal in Society of Lloyd’s v Leighs [1997] CLC 1398, 1408, albeit in a case which raised the complication that the party against whom the misrepresentation claim arose was suing as assignee of the debt. The Court of Appeal distinguished the case before them from cases where “breaches of warranty by the seller or provider of services reduce or extinguish the price that would otherwise be due for the goods sold or services provided” (which they referred to as “pure defence” cases), albeit stating “we consider that the words ‘or other deduction on any account whatsoever’ would probably be wide enough to encompass the reduction or extinction of the premium by way of ‘pure’ defence.” Similarly, in Skipskredittforeningen v Emperor Navigation [1997] CLC 1151, the case proceeded on the basis that a no set-off clause in a loan contract was capable of applying to a claim for damages on the basis that the defendant had been induced to enter into the contract by misrepresentation. ii) The issue of whether a claim to “abate” the price of goods or services by reference to defects in them is caught by a no set-off clause has been considered in a number of cases, the overall effect of which is that it is possible to exclude the operation of abatement through an appropriately worded clause, but there will be forms of clause which exclude legal and equitable set-off but not abatement. In Acsim (Southern) Ltd v Danish Contracting & Development (1990) 47 BLR 55, a construction contract provided that with certain exceptions, “no other rights whatsoever shall be implied as terms of this sub-contract relating to exceptions.” Those words were held not to “affect the right of a contractor to defend a claim … by showing that the sum claimed includes sums to which the sub-contractor is not entitled under the terms of the contract or to defend by showing that, by reason of the sub-contractor’s breaches of contract, the value of the work is less than the sum clamed under the ordinary right of defence established in Mondel v Steel” (p.70). However, the Court acknowledged that a party seeking to achieve that result “can, without difficulty, find words apt for that purpose.” The same outcome was conceded on similar wording (and with the Court’s approval) in Mellowes Archital v Bell Products (1997) 58 Con LR 22. Similarly, in NH International (Caribbean) Ltd v National Insurance Property Development Co. Ltd [2015] UKPC 37, wording regulating a contractor's entitlement “to set-off against or make any deduction from an amount certified” was held not to preclude the employer from raising an abatement argument, namely that the work for which the contractor was seeking payment was so poorly carried out that it did not justify any payment or was so defective that it was worth significantly less than the contractor was claiming, relying on Mellowes. iii) In Totsa Total Oil Trading SA v Bharat Petroleum [2005] EWHC 1641 (Comm), the relevant clause provided “payment shall be made without discount, deduction, withholding, set-off or counterclaim in United States Dollars … on or before the due date … against presentation to Buyer of hard copy or telex invoice together with original bills of lading or letter of indemnity …”. The buyer claimed that the quantity shipped was short. At [20]-[21], Christopher Clarke J held that while the buyer’s claims could be “put forward as counterclaims, claims to equitable set-off or claims to abate a price”, they were all caught by the provision (the judge observing that “set-off and counterclaim are dealt with expressly, and a claim by way of abatement involves claiming a deduction from the price”.) At [24], he stated:
“It seems to me that when a buyer declines to pay the full amount of the invoice upon the ground that not all of the oil that he contracted for has been shipped, what he is doing is seeking to deduct from his payment to the seller such proportion of the invoice as he declines to pay and to withhold payment of that amount. That is exactly what the buyers have undertaken not to do.” iv) In the case of Skipskredittforeningen v Emperor Navigation [1997] CLC 1151, a further issue arose as to whether an assumed wrongful failure to realise the value of security for a loan was caught by a no set-off clause in a loan agreement. Mance J noted that cases had treated a mortgagee’s claim for loss arising from such a failure as an “allowance” and he accepted at p.1167 that “it was arguable in law that failure to use reasonable care in realizing assets could entitle a borrower to claim a reduction in his indebtedness corresponding in amount to the amount of any loss caused by the failure.”
Nonetheless, the alleged reduction was held to fall within the words “without set-off … whatsoever”. v) What of circuity of action (where the defendant contends that the amount for which summary judgment is sought against it will, if recovered, constitute an amount which the defendant is immediately entitled to recover back from the claimant by reference to some separate legal entitlement, very often a claim arising out of an anterior wrong, but perhaps because of a contractual right of recovery, e.g. under an indemnity)? In Workington Harbour and Dock Board v Towerfield (Owners) [1951] AC 112, 148, Lord Normand referred at p.148 to the principle “frustra petis quod mox es restiturus” (helpfully, and necessarily in my case, translated by Geoffrey Lane LJ in Post Office v Hampshire CC [1980] QB 124, 134 as “it is no good trying to get something which immediately afterwards you are going to have to hand back”). Conceptually, this raises a similar issue to that considered in Leighs, and appropriately worded “no set-off clauses” have been held to apply to circuity arguments. In Petroplus Marketing AG v Shell Trading International Ltd [2009] EWHC 1024 (Comm), payment was to be rendered “in full without deduction, offset or counterclaim”. This was held to be sufficient to preclude an argument that the price should be reduced to the extent that it arose from the seller’s assumed wrongful late shipment (the price being tied to the bill of lading debt). vi) Two cases dealing with an argument which might be regarded as a sub-set of the circuity doctrine – the so-called “prevention principle” – reached different conclusions on the application of the “no set-off” clauses in issue to the argument that the defendant’s liability had arisen because the claimant’s breach of a co-operation agreement had prevented the defendant from performing. In Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd [2018] EWHC 2977 (Comm), clause 6.4 of a contract for the supply of steel provided that “no default by the Buyer of its obligations under this Agreement …. or any other action or inaction by the Buyer, any Alternative Buyer or a third person shall suspend, terminate or otherwise extinguish the Seller's payment obligation.” Teare J held that this clause, which he described as “rather wider in effect than simple no set-off clauses” ([18]) precluded reliance on a defence based on the prevention principle ([19]-[20]). vii) In TMF Trustee Limited v Fire Navigation Ince [2019] EWHC 2918 (Comm), a clause requiring payment “without any form of set-off, cross-claim or condition” was held to be insufficient to exclude a defence based on the prevention principle, Phillips J stating at [41] that the effect of the no set-off clause was “that the Borrowers cannot resist liability for amounts due by reason of any alleged set-off or cross-claim, but that does not in any way stop the Borrowers from arguing that the amounts claimed are not due in the first place”. At [42], he held that the authorities establish “that the prevention principle ‘excuses’ a breach where performance was prevented by the other party's breach, giving rise to a defence to liability for the breach itself, not merely defence by way of a set-off.” However, I do not understand the case to hold that an appropriately worded no set-off clause could not apply to a defence based on the prevention principle, and I am satisfied that it could.[48]Finally, it is helpful to recall some more general observations about no set-off clauses made by Popplewell J in FG Wilson (Engineering) Limited v John Holt & Company (Liverpool) Limited [2012] EWHC 2477 (Comm). At [83], Popplewell J summarised a number of authorities on no set-off clauses by noting that while “clear and unambiguous language” is required to exclude a right of set-off, such a term “is not to be treated in the same way as an exclusion clause”. At [85], he stated that the construction of such clauses was not to be approached “in a mechanistic way”, with the key question being “whether there has been clearly expressed an intention that payment is to be made without reference to the claim which would otherwise be set-off”.[49]Unless properly characterised as a Pure No Debt argument, I am satisfied that the wording of clause 8.9.1 is sufficiently wide to extend to the putative right to recover the MR on the basis of a total failure of consideration: i) I remain of the view I expressed in Delivery Hero v Mastercard [2023] EWHC 1827 (Comm), [22]-[23], in reliance on Fibrosa Spolka Akcyna v Fairbairn Lawson Come Barbour Limited [1943] AC 32, 55, that the principle summarised in Chitty and Treitel is best explained by reference to the defence of circuity of action. I note that the deputy judge analysed the principle in these terms in Ministry of Sound (Ireland) Limited v World Online Limited [2003] EWHC 2178 (Ch), [63] as did a different deputy judge in Lomax Leisure Limited v Miller [2007] EWHC 2508, [54]. The latter’s statement that “a liability to honour the cheques never properly arose” is readily understood as meaning never arose in a way which meant that the claim could not be resisted on the circuity basis. ii) On the basis of the authorities and as a matter of principle, I am satisfied that circuity defences can be made the subject of no set-off clauses when these are appropriately worded. Clause 8.9.1 is a widely worded clause, providing for payment “without any set-off or counterclaim whatsoever and free and clear of all deductions or withholdings whatsoever ….”[50]Ms Fatima KC submits that Alaska’s response to the MR claim is properly characterised as a Pure No Debt argument, relying in this regard on passages in Hyundai Heavy Industries Co Ltd v Papadopolous [1980] 1 WLR 1129, 1136 and Mirimskaya v Evans [2007] EWHC 2073 (TCC), [60]-[61]. Neither case concerned the application of a no set-off clause: i) The passage relied upon in Hyundai is at 1136, where Viscount Dilhorne states:
“I conclude that save in the case of sales of land and goods and where there has been a total failure of consideration, it was the law prior to the decision in Lep Air Services Ltd. v. Rolloswin Investments Ltd [1973] A.C. 331 that cancellation or rescission of a contract in consequence of repudiation did not affect accrued rights to the payment of instalments of the contract price unless the contract provided that it was to do so.” ii) That passage is concerned with the (different) question of whether a right to payment which has accrued prior to termination of a contract can be affected by termination, the answer being that it can when the termination has the result that there is a total failure of consideration but not otherwise. It does not follow, however, that the “effect” in question is that no debt ever accrued, as opposing to a defence coming into existence, still less that it is not possible through an appropriately worded no set-off clause to require that defence to be pursued by independent action. iii) I do not believe Mirimskaya v Evans [2007] EWHC 2073 (TCC), assists. The case involved judgment following a trial, and the principle applied was that in Hyundai, namely “after a repudiation, unpaid instalments which were due prior to the repudiation remain payable by the party repudiating unless there has been a total failure of consideration in respect of those instalments.”
At [63], the deputy judge explained the reason why total failure of consideration is language redolent of the circuity analysis, rather than a Pure No Debt analysis:
“The result in law is that, although DZL might technically be entitled to payment of those paid instalments, the Claimant would have a clear restitutionary right to recover them immediately due to a total failure of consideration. In these circumstances the law does not require the instalments to be paid and then recovered.”
[51]I have not found it easy to formulate a clear test which distinguishes between a Pure No Debt argument, and an answer which is capable of being caught by a no set-off clause. In addition, I have found the present context (a debt which is due but which it is said could, if paid, be recovered on the basis of a total failure of consideration) a particularly challenging one in which to apply that distinction: i) There is an obviously closer connection between the basis of the claim and the basis of the answer than found in many other “circuity” contexts. ii) In this case, the total failure argument is one assumed to be available when the MR first became due (contrast a case in which it might arise after the debt became due, e.g. because goods under a contract of sale were subsequently rejected, and property revested in the buyer).[52]However, I remind myself that the principle formulated in Chitty and Treitel, and which falls to be applied here, is one engaged when the debt is “due”. The following factors have led me to conclude that the total failure of consideration argument advanced in this case, in which the premise is also that the MR is due, is not a Pure No Debt argument but one caught by clause 8.9.1: i) Virgin is able to plead and prove what it needs to plead and prove for the purposes of establishing its debt claim absent any response, and there is no arguable basis for denying those elements. While that is not sufficient to prevent the answer from being a Pure No Debt argument, it is necessary. ii) It is not alleged that there has been any change in the status of the debt through a subsequent agreement between the parties, or that it has been satisfied in a manner which, if it had occurred, would constitute an undisputed means of discharging the payment. iii) Alaska’s answer is one which is capable of being asserted and given effective relief by way of independent action (which is one of the basic premises of a no set-off clause, often reflected in their characterisation as “pay now, sue later” clauses). iv) Entering judgment for the debt does not create a cause of action estoppel which precludes later reliance on the answer (such that it can be said that the answer must either be taken into account when judgment is sought for the debt, or not at all). v) From a commercial perspective, the issue raised (whether there has been a breach of a contractual obligation on disputed facts) is the type of dispute which a no set-off clause is ordinarily intended to prevent being set up as an answer to a payment obligation arising as one of the primary obligations under a contract (see by analogy Popplewell J in FG Wilson at [88]-[89]).[53]It follows that had I been persuaded that Alaska had an arguable claim that it would be entitled to claim the repayment of the MR (if paid) on the ground that there had been a total failure of consideration, I would have held that this did not prevent Virgin from getting summary judgment for the MR in the period up to 23 September 2022, leaving Alaska to claim recovery in its counterclaim.[54]It is accepted that this aspect of Alaska’s argument does raise a Pure No Debt argument – it is said that entire performance of the Exclusivity Obligation is a condition precedent to the obligation to make any payment under the TMLA, whether calculated under clause 8.1(a) to (c) or in the amount of the MR.[55]It is worth briefly exploring the commercial consequences of this argument, before considering the issue of construction it raises. It would mean that any non-trivial breach of the Exclusivity Obligation – e.g. the use of the Virgin signature on the tail of a single aircraft operating in the North American market – would allow Alaska to use the Marks itself, include them in a sale to a third party of its business or as security for loan, and have the legal right to exclude (or require Virgin to exclude) other aircraft operations from using the Marks, yet be under no obligation to make any payment. That would be a commercially very surprising outcome to which rational business people would be unlikely to commit themselves, and it would require clear wording before a court would conclude that this was indeed what they had done.[56]While I accept that it is not necessary for a contract to include the language of “condition precedent” before a contractual provision will be held to have had that effect, the absence of this or similar language in the TMLA is noteworthy. Alaska relied on the statement of Flaux J in AstraZeneca Ltd v Albermarle International Corporation [2011] EWHC 1574 (Comm), [249]-[250]:
“In the absence of an express term, performance of one obligation will only be a condition precedent to another obligation where either the first obligation must for practical reasons clearly be performed before the second obligation can arise or the second obligation is the direct quid pro quo of the first, in the sense that only performance of the first earns entitlement to the second.”
[57]The first of those conditions is clearly not engaged. As to the second, I have already found that the amounts payable under clause 8 are paid in respect of the bundle of Airline Rights, and are not “the direct quid pro quo” of the Exclusivity Obligation, save only in the general and wholly uninformative sense that one contracting party’s promises are in some sense the “quid pro quo” of the other’s. The fact that Virgin was obliged to and has provided other benefits to Alaska in addition to exclusivity, as well as the fact that the Exclusivity Obligation is a negative obligation capable of being breached in a wide variety of ways with a wide variety of consequences, with the breach capable of continuing for widely varying periods of time within the relevant financial year, all tell against compliance being a condition precedent.[58]At [251] in AstraZeneca, Flaux J observed that:
“In the present case, there is absolutely nothing in clause H to suggest that performance of AZ's obligations under it was contingent on performance by Albemarle or to suggest that Albemarle would not be entitled to exercise the rights clause H gave it, unless it had complied fully with its delivery obligations in respect of DIP. It would have been very easy for AZ to insist upon some express provision to that effect, but in the absence of such a provision, in my judgment, there is nothing to link performance of the one obligation with performance of the other.”
Those observations are equally applicable in this case.[59]Turning to the TMLA: i) Alaska relied upon the statement in Chitty on Contracts (35t), [25-028] that “[i]n the reported cases the courts have tended to the view that in every lump-sum contract there is an implied term that no part of the price is to be recovered without complete performance.” However, the MR is not a “lump sum” in this sense, but a floor of a payment obligation which can vary in amount. ii) Alaska relied upon the fact that the MR was payable after the end of the financial year, and therefore after “the period in which Virgin’s obligation is to be performed”. However, the conferral of the right to use the Marks and the Exclusivity Obligations are continuing obligations which are not divided into separate time periods. The MR is invoiced after the end of a financial year because the floor it creates is a floor for a particular financial year. If no MR is ever payable as such (because the clause 8.1(a) to (c) payments exceed the floor), then the payments made by Virgin do not involve any link with a financial year. iii) The payment provisions are not consistent with Alaska’s construction. On Alaska’s case, where there had been quarterly payments under clauses 8.1(a) to (c) for the first three quarters of a financial year, they would be recoverable in the event that there had been breach of the exclusivity obligation in the fourth quarter. However, clause 8.6 does not provide for recovery of amounts paid on this basis, but only a right of set-off and then only where a Reconciliation Statement reveals an overpayment rather than for any other reason. iv) I accept Virgin’s submission that clause 8.9.1 also provides a measure of support for its construction. If Alaska’s “condition precedent” argument is correct, it is difficult to see how there could ever be an occasion on which a payment was due to Virgin but there was a counterclaim for breach of Virgin’s obligations. v) Alaska (sensibly) does not suggest that the Exclusivity Obligation is a condition, but accepted that it is an innominate term. That also tells against the suggestion that, nonetheless, entire performance is a condition precedent to Virgin’s right to recover any payment under the TMLA. Alaska suggested that “the question of whether or not an obligation is entire turns substantially upon the same analysis as to whether the breach is repudiatory”, citing Muduroglu v Stephenson Harwood [2017] EWHC 29 (Ch), [43]-[53]. However that case is authority for the proposition that the issue of whether a term is a condition “turns upon much the same considerations” as whether one is concerned with a dependent obligation in an entire contract. Far from assisting Alaska, this decision is inconsistent with its case. The question of whether performance of an obligation is a condition precedent to the obligation of a counterparty to perform an obligation must be fixed when a contract is concluded. Where a term is innominate, the question of whether it is a dependent obligation cannot change depending on the consequences of a particular breach in a particular case and whether they are sufficient to amount to a repudiatory breach.[60]This contention was advanced in writing but not developed orally. The reasons I have given for rejecting Alaska’s condition precedent argument as a matter of construction are also fatal to the implied term argument, as is the highly lawyered nature of the TMLA (as Phillips LJ noted in the Court of Appeal at [27]) which is most unlikely to have allowed such a significant provision, if it did form part of the contract, to pass unexpressed.

The case management arguments

[61]The effect of my conclusions is that Virgin is entitled to a monetary judgment in the amount of the MR in the period to 23 September 2022. It was accepted (and follows inexorably) that if I am so satisfied, the fact there will be further proceedings in which the TMLA, the Exclusivity Obligation and the underlying facts and context will receive extended consideration does not provide a sufficient basis to deprive Virgin of the monetary judgment to which it has established a legal entitlement.[62]It follows that Virgin is entitled to judgment with interest, and that Alaska is refused permission to effect the disputed amendments. I will ask the parties to draw up an order giving effect to this ruling.