Australia Pacific Airports (Launceston) Pty Ltd v Airservices Australia [2025] FCA 288

(a) On the proper construction of clause 43.2(a) of each of the Subleases, may the contents of an environmental management plan for each Site the subject of the Subleases include actions to be taken at places situated:

(i) outside of the Sites but within Launceston Airport;

(ii) outside of the Sites and outside of Launceston Airport,

to address the presence of PFAS at, or the migration of PFAS to, places other than the Sites?

1. I heard oral argument in relation to the application on 27 February 2025. At the completion of oral argument, I made an order dismissing the application. I also made an order listing the proceeding for hearing on 1 September 2025, on an estimate of up to ten days.
2. Ms P Cahill SC appeared with Ms S Hooper for Airservices. Mr P W Collinson KC appeared with Ms E Dias for the respondent to the application (being the applicant in the proceeding), Australia Pacific Airports (Launceston) Pty Ltd (APAL).
3. Airservices relied on an affidavit of Mr Winram sworn 5 December 2024. APAL relied on an affidavit of Mr Buckley sworn 30 January 2025. Both parties also relied on written submissions prepared by counsel.
4. At the conclusion of the oral hearing, I said I would publish reasons for refusing the application. These are those reasons.

1. APAL is an airport lessee under the Airports Act 1996 (Cth) in respect of land leased from the Commonwealth upon which the Launceston Airport (the Airport) is located.
2. Since 1995, Airservices has engaged in functions under the Air Services Act 1995 (Cth) and related regulations.
3. Between 1988 and 1998, the Airport was owned and operated by the Federal Airports Corporation (FAC).
4. On 6 July 1995, the FAC (as lessor) and Airservices (as lessee) entered into two subleases of small parcels of land within the Airport, one for a site described as the "Fire Station", the other for a site called "Fire Training" (also called the "Former Fire Training Ground", or "FFTG").
5. On 28 May 1998, the FAC's right, title and interest in the Airport vested in the Commonwealth.
6. Around the same date, the Commonwealth (as head lessor) granted a lease to APAL (as head lessee) in respect of the Airport (the Head Lease), and the rights and obligations of the FAC under each sublease thereby became the rights and obligations of APAL.
7. Between 1988 and July 1995, the Civil Aviation Authority (CAA) occupied the Fire Station and the FFTG and conducted aviation rescues and fire-fighting services on both sites.
8. Airservices has conducted such firefighting services on the sites since 1995, when it took over the assets and liabilities of the CAA.
9. It is common ground that both the CAA and Airservices used products in the course of those services that contained "per- and poly-fluoroalkyl substances", abbreviated as PFAS, and that at least detectable amounts of PFAS have been found in and on the subleased sites in soil or sediment, and in surface and ground water.
10. It is also common ground that PFAS from the subleased sites have been detected in an on nearby locations.
11. Clause 43 of each of the subleases is in these terms:

43. CONTAMINATION

43.1 The Lessee acknowledges that:

(a) the Lessor has made no representation or warranty as to whether or not there is any Contamination in, on or under the Site or any adjacent premises; and

(b) the Lessee's (and its predecessors') use of the Site, especially with respect to areas used for rescue and fire fighting training, may cause (or have caused) Contamination.

43.2 Where the Lessor can demonstrate that there is a reasonable likelihood of Contamination, then the Lessee must:

(a) obtain and provide to the Lessor an environmental management plan for the Site by a suitably qualified and experienced person in such detail as the Lessor, acting reasonably, may require which will enable the Lessee to anticipate and deal with (and the Lessor to be made aware of) possible Contamination of the Site and any Contaminant on the Site; and

(b) carry out all its operations on the Site in accordance with that environmental management plan.

43.3 Where the Lessor can demonstrate that there is a reasonable likelihood of Contamination in the two months before the Expiry Date the Lessee must arrange and pay for:

(a) a survey (by a suitably qualified and experienced person in such detail as the Lessor, acting reasonably, may require) to be carried out of the Site to report on the Contamination (if any) of the Site at that date, the report of which must include an assessment as to the proportion of the Contamination (if any) which has been caused or contributed to by the Lessee's use of the Site (or use by persons associated with, authorised by or in any way connected with the Lessee) and the proportion which can be attributed to other persons (or cannot be attributed to any person); and

(b) any work on the Site to rectify any Contamination found on the Site which the survey referred to in clause 43.3(a) (or any other survey commissioned by the Lessee, Lessor or some other person) states has been caused or contributed to by the Lessee's use of the Site (or use by persons associated with, authorised by or in any way connected with the Lessee).

43.4 The Lessee indemnifies the Lessor against all actions, claims, liability, costs, loss and damage arising from any Contamination of the Site to the extent that any Contamination is caused or contributed to by the Lessee or persons associated with, authorised by or in any way connected with the Lessee.

43.5 Despite clause 43.4, the parties acknowledge that:

(a) the Lessee is only liable for Contamination it, or persons associated with, authorised by or in any way connected with it, caused or contributed to after it took possession of the Site on 1 July 1988 or for which it is liable by law; and

(b) the Lessor is not liable for any Contamination which it has not directly caused.

43.6 This clause 43 does not merge at the expiry of the lease and continues until all parts of it have been satisfied.

1. It is not necessary to recite the pleadings. It is sufficient for present purposes to say that APAL contended, among other things, and Airservices denied, that the obligation to provide an environmental management plan (EMP) extends to land or areas beyond the sites the subject of the subleases, and includes the Airport and locations beyond the Airport.
2. APAL sought the following declaratory relief:

On the grounds stated in the Statement of Claim, the Applicant claims:

1. A declaration that the Respondent must provide to the Applicant an Environmental Management Plan (EMP) that contains the Required Detail set out in Annexure A to the Statement of Claim.
2. A mandatory injunction requiring the Respondent to comply with, or alternatively an order for the Respondent to specifically perform, clause 43.2(a) of each Sublease, by providing to the Applicant an EMP that contains the Required Detail within 28 days.

1. At the oral hearing, Ms Cahill made submissions, among others, concerning the proper construction of cl 43, and in particular cl 43.2(a), of the subleases.
2. She submitted that cl 43.2(a) is quite clear: the obligation on Airservices to obtain and provide to APAL an EMP is "for the Site", such that Airservices can "deal with", and APAL can be "made aware of", possible Contamination (as defined) "of the Site" and any Contaminant (as defined) "on the Site" - not possible Contamination or any Contaminant of or on some other site, as APAL contends. Ms Cahill also agreed with me that it is arguable that the omission from cl 43.2(a) of the phrase "or any adjacent premises" that is found in cl 43.1(a) also suggests that the phrases "of the site" and "on the site" in cl 43.2(a) were intended to exclude "any adjacent premises" (which would or might include the Airport).
3. Ms Cahill submitted that that is the clearly preferable construction of cl 43.2(a) and that the question of whether that submission is correct should be heard separately because, if the construction of cl 43.2(a) contended for by Airservices is correct:

(a) the available evidence suggests that the proceeding is likely to settle; or

(b) even if it does not settle, the scope of the matter left for trial would be significantly curtailed.

1. Mr Collinson submitted to the contrary. He said that the question of construction should not be heard in an evidentiary vacuum; that evidence would be led at trial about issues relating to that question, including expert evidence about the meaning of the phrase "deal with ... possible contamination of the Site and any Contaminant on the Site"; that APAL does not share Airservices' view about the likelihood of settlement if the separate question were determined in Airservices' favour; and that even if it were so determined, the following issues would remain to be determined on the basis of the exchanged pleadings:

(a) Is the PFAS plead by APAL a Contaminant?

(b) Is the PFAS at the leased Sites Contamination?

(c) Was APAL entitled to request an EMP?

(d) Did APAL properly request an EMP?

(e) If so, is the EMP required to address:

(i) the leased Site only; areas outside the leased Site, but within the boundary of the Airport;

(ii) areas outside the boundary of the Airport?

(f) In relation to the 'Required Detail':

(i) Is the 'Required Detail' of the kind that APAL is able to request under the sublease?

(ii) Did APAL properly request the 'Required Detail'?

(g) Is the 'Required Detail' reasonably required?

(h) Does the PFAS Management Plan prepared by Airservices comply with the obligations [it] would have under clause 43.2 (if any)?

1. The principles governing applications of this type are well recognised, and there was no dispute about them at the hearing.
2. Single-issue trials should only be embarked upon when their utility, economy and fairness to the parties are beyond question. See Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 55 [170] (Kirby and Callinan JJ).
3. As a general rule, it is inappropriate to order that a preliminary issue be isolated for determination before trial unless the determination of the issue in favour of the plaintiff or the defendant will put an end to the action, or there is a clear line of demarcation between issues and the determination of one issue in isolation from the other issues in the case is likely to save inconvenience and expense. See, for example, Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; [1978] VR 669 at 671 (Young CJ and Jenkinson J).
4. Factors that tell against making an order under r 30.01 of the FCR include that the separate determination of the question may: (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial; (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial, possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding; and (iii) prolong rather than shorten the litigation. See, for example, Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718; (1999) 240 FCR 276 at 279-280 [8] (Branson J).
5. Generally speaking, an issue will not be appropriate for separate determination if its determination would leave other significant issues unresolved. See City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 at 95 [27] (Rares J), citing AWB Ltd v Cole (No 2) [2006] FCA 913; (2006) 253 FCR 288 at 296-299 [26]-[40] (Young J).
6. Further, when the relief sought is declaratory in a case like this, then as Beach J said in Australian Energy Regulator v Snowy Hydro Ltd [2014] FCA 1013 at [45]-[46]:

A declaration should not be made or an answer given which amounts to no more than a declaration that the law dictates a particular result when certain facts in the material or pleadings are established. The facts must be stated and identified with precision. And the facts should not be left open. They should be established or agreed. ... Further, it is "no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case" ...

Further, great caution needs to be exercised in formulating a separate question for determination on the parties' agreement to proceed on the basis of assumed facts. Assumed facts may be incomplete or insufficiently precise and "parties may also have different views concerning the effect or duration of the assumptions" such that "they may consider that they can depart from the assumptions and reagitate the facts in another part of the case".

(Citations omitted.)

1. As I said at the conclusion of oral argument, this is not an appropriate case for a question to be hived off, essentially for the reasons advanced by Mr Collinson.
2. It is simply not possible, in light of the submissions advanced on behalf of APAL, to predict with the confidence required that the hearing and determination of the separate question posed would be just or convenient, or consistent with the overarching purpose stated in s 37M of the Federal Court of Australia Act 1976 (Cth) - in particular, because an appeal from any answer to it would be inevitable, and there would in any event remain for hearing and determination a host of other issues. It is also relevant that this proceeding was commenced in 2021, so to bifurcate it now would be undesirable for that reason alone.
3. I therefore dismissed the interlocutory application.
4. I have set the proceeding down for hearing on 1 September 2025 on an estimate of up to ten days. It may not, and hopefully will not, take that long, but I have allocated the maximum estimate given by Airservices so that there is no risk of it not finishing in time. I have also directed senior counsel for both sides to confer about pre-trial directions.
5. I reserved the costs of the interlocutory application because, as I said at the hearing, it may be that the construction of cl 43.2 of the subleases advanced by Airservices is ultimately accepted. Mr Collinson, quite properly, did not resist the proposition that reserving the costs of the application was the appropriate course.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.