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[2025] NSWCA 211
respondent. Appeal dismissed. The parties were directed to file and serve agreed costs orders or, absent agreement, their respective proposed orders, supporting evidence and submissions of no more than three...
8 cited instruments linked from this judgment.
The Court held that Coulson’s contracts with Techfuel did not automatically end just because the related AFAC arrangements ended. The contracts did not clearly say that they would, and they separately allowed termination for convenience on notice. The Court also held that “start of the fire season” referred to a fixed date, rather than the uncertain date when Coulson might have needed Techfuel’s services. It dismissed the appeal, leaving the primary judgment in Techfuel’s favour in place.
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2,596 words · generated 06/10/2026
Coulson Aviation (Australia) Pty Ltd supplied aerial firefighting capability to fire authorities. To support two Boeing CH-47 Chinook helicopters, it entered into two written Fuel Purchase and Services Contracts with Techfuel Pty Ltd in the second half of 2021. Techfuel was to provide a refuelling vehicle, drivers, aviation fuel and associated support. The contracts were connected commercially with Coulson’s arrangements with the Australasian Fire and Emergency Service Authorities Council Ltd (AFAC), through which the relevant fire authorities procured aircraft services. The Court accepted that the AFAC arrangements were an important part of the context and the reason the Techfuel contracts were made. [6]-[8], [64]
The 2021 contracts had a stated three-year term. They also included cl 6.2, which permitted either party to terminate for convenience by giving at least 90 days’ written notice. Where Coulson terminated for convenience less than 100 days before “the start of the fire season”, cl 6.2 required a lump-sum payment equal to 90 days of Techfuel’s daily rate. [13], [26]
The termination provision had a history. Coulson and Techfuel had contracted in 2020, but that earlier contract did not include a right to terminate for convenience. After AFAC retendered its arrangements, Coulson and Techfuel entered into replacement contracts. In the pre-contract emails, Coulson asked for a termination-for-convenience clause, explaining that 90 days’ notice would mean Techfuel “will get paid for that year’s annual commitment”. Techfuel agreed to insert one. [8], [32], [38]-[39]
On 5 August 2023, Coulson told Techfuel that the NSW Rural Fire Service did not then believe it needed a fuel truck for the Chinook and that Victoria had not continued the relevant line item for the backup aircraft. Techfuel later treated that communication as terminating the contracts and claimed the agreed sums. The notice was fewer than 100 days before 1 October. [41]-[44]
The primary judge entered judgment for Techfuel in the amount of $277,000. On appeal, Coulson narrowed its case to two construction issues: whether its arrangements with Techfuel automatically ended with the AFAC arrangements, and whether the “start of the fire season” meant the date Coulson would have started using Techfuel’s services. The Court of Appeal dismissed the appeal. [1]-[2], [51], [109]-[110]
The Court treated both questions as matters of contractual construction. It did not decide the wider issues litigated at trial, including the arguments about whether cl 6.2 was uncertain or penal. Those matters were not the two grounds pursued on appeal. [2], [28], [45]
On the co-terminous argument, the Court distinguished commercial connection from automatic legal consequence. It accepted that Coulson’s AFAC contracts were central to the commercial setting. But the fact that the Techfuel contracts were made to support the AFAC work did not, by itself, establish that they ended automatically when that work ended. Nor did it establish that Coulson’s obligations under the Techfuel contracts disappeared. [64]-[69]
The Court observed that parties can make a contract end automatically when a specified event occurs, including an event outside their control. But clear and unambiguous words and context are required for that effect. Similar considerations apply where a party says its obligations are automatically discharged when a contract between another party and a third party ends. The Court noted the particular difficulty of attributing an intention to permit a party to bring a commercial contract to an end through its own wrongful act, without clear language. [66]-[68]
The specific provisions did not do the work Coulson needed them to do. The reference in Schedule 1 to services for “the full term of the AFAC / NAFC NSW RFS contract period, including any extension periods” could naturally describe the period in which Techfuel had to be ready to provide services. It did not clearly create a negative rule that the Techfuel contract or Coulson’s obligations ended immediately if the AFAC contract ended. The words “including any extension periods” also sat awkwardly with Coulson’s proposed reading. [72], [77]
The Court also considered the location and form of other language on which Coulson relied. The services schedule was an unlikely place to find an automatic termination provision. The definition of “Refueller” and the “Additional Information” acknowledgement were likewise insufficient to establish automatic termination or discharge. The contracts did not provide a notification mechanism by which Techfuel would be told that its contract or Coulson’s obligations had ended. [74]-[78]
The 2021 termination-for-convenience clause reinforced that conclusion. The parties had changed their earlier bargain and introduced a right for either party to terminate on 90 days’ notice. That right provided a contractual way to end the arrangement if Coulson’s AFAC work ceased. An implied rule that the Techfuel contract or Coulson’s obligations ended automatically would sit uneasily with that express mechanism, and would undermine the protection negotiated for Techfuel if Coulson terminated at short notice. [79]-[82]
On the meaning of “start of the fire season”, the Court considered the wording in its context and the practical operation of cl 6.2. It accepted that the drafting was imprecise and that the parties had not expressly referred to the relevant legislation. But the statutory language, the parties’ New South Wales governing-law choice, and the need to give the phrase a workable meaning supported a fixed-date construction. The Court noted that “fire season” could colloquially refer to the period identified by the legislation, which used similar terminology for the bush fire danger period. [93]-[97]
The decisive difficulty with Coulson’s construction was uncertainty. If the start date depended on when a fire authority required aerial firefighting capability, neither Coulson nor Techfuel could necessarily know when the payment obligation was triggered at the time Coulson terminated. A still more fundamental problem was that the relevant date might depend on when Coulson would have called on Techfuel if it had not terminated. The very act of termination could mean Coulson never called on Techfuel in that season. The proposed interpretation thus required a counterfactual inquiry into an event that might never happen. [98]-[101]
That was inconsistent with the practical purpose of an agreed payment clause. The Court reasoned that the parties had adopted a fixed payment amount to avoid disputes about actual loss. It was improbable that they also intended the obligation to depend on a contestable inquiry about what would have happened if Coulson had not exercised its termination right. A fixed date offered certainty when termination occurred. [106]-[107]
The judgment does not purport to announce a new general rule of Australian contract law or to overrule earlier authority. Instead, it applies ordinary contractual construction principles to two particular clauses in commercially connected contracts. Its account of the relevant approach is cautious: automatic termination and automatic cessation of obligations are possible, but the asserted result must be supported by the contract’s text and context. [66]-[69]
For practitioners, the first useful distinction is between a commercial dependency and a contractual dependency. A contract may exist because the parties anticipate work under a separate third-party arrangement, and may refer to that arrangement, without necessarily stating that the first contract ends when the other one ends. In this case, the Court required the supposed automatic consequence to be found in the bargain the parties actually recorded. [64]-[72]
The judgment also illustrates why an express termination-for-convenience provision can matter to the construction of other provisions. Coulson relied on the AFAC connection to argue that the Techfuel contracts ended without notice when AFAC’s arrangements ended. The Court considered that construction alongside the express 90-day mechanism. Because the parties had specifically created a way to terminate for convenience, an implied automatic end was unnecessary and inconsistent with the protection that the new clause gave Techfuel. [79]-[82]
For the fire-season clause, the judgment demonstrates that a court may prefer a fixed, ascertainable trigger over a proposed trigger that depends on unknown future conduct or a counterfactual. The reasoning was tied to this clause’s payment purpose and drafting. It should not be overstated as a universal rule that fixed dates always prevail over operationally defined dates. The Court’s point was that, in this contract, the service-based interpretation would leave the parties uncertain when the termination right was exercised. [99]-[107]
The decision also shows how statutory terminology may assist where the contract uses a colloquial expression and the parties’ governing law and circumstances make a statutory analogue relevant. The Court did not treat the legislation’s language as identical to the contract’s language. It treated the statutory period as a candidate for the meaning of “fire season”, and concluded that this reading was less strained and more certain than Coulson’s alternative. [94]-[97], [107]
At [65], Leeming JA said that the AFAC contracts ending did not itself mean the Techfuel contracts or Coulson’s obligations ended. In plain English, a strong commercial link between two arrangements is not enough, without more, to make one legally end when the other ends.
At [66], the Court explained that parties can agree to automatic termination, but clear and unambiguous words and context are needed. This is particularly important where the asserted construction could allow a party to end the contract through its own wrongful conduct. The passage signals that courts distinguish an automatic end from a right to terminate that must be exercised.
At [71], the Court identified the textual gap: neither contract expressly said that the Techfuel arrangement ended when the AFAC arrangement ended, or that Coulson’s obligations were relieved in that event. This is a practical drafting lesson in reading, not legal advice: references to another contract should be checked for the precise consequence they are said to create.
At [77], the Court read the Schedule 1 language as a positive statement of when Techfuel had to be ready to provide services, not as an unstated automatic termination clause. In simpler terms, a clause saying how long a service is to be available does not necessarily say what happens if the related third-party contract ends early.
At [79]-[82], the Court connected the parties’ new termination-for-convenience right to the co-terminous argument. The parties had already provided a route for ending their arrangement on notice. The automatic-termination construction would undercut the contractual significance of that route and the payment protection attached to it.
At [100]-[101], the Court explained the counterfactual problem. Coulson’s construction required asking when it would have called on Techfuel if Coulson had not terminated, even though termination might mean that call would never occur. Put plainly, the proposed trigger could depend on an event made impossible by the very decision that triggered the payment clause.
At [107], the Court summarised why a fixed date was preferable: it let both parties know, when termination occurred, whether the payment obligation was engaged. The Court accepted some strain in linking “fire season” to a statutory period, but regarded that as less problematic than an uncertain, hypothetical service date.
The decision is most directly relevant where a party argues that a supply or services contract automatically ended because a related contract with a third party ended. The relevant comparison is not simply whether the commercial arrangements were connected. The judgment focuses on whether the contract text and context provide a sufficiently clear basis for automatic termination or discharge of obligations. [64]-[78]
It is also relevant where a contract contains a separate termination-for-convenience mechanism. The decision indicates that a court may examine whether an asserted automatic-ending construction would make that express mechanism, or an associated payment protection, less coherent. In Coulson, the express right to terminate on 90 days’ notice was inconsistent with implying that the Techfuel arrangement ended automatically on the loss of AFAC work. [79]-[82]
The second part of the judgment may be relevant to contracts where a fee depends on termination occurring within a specified period before an operational season or event. It is particularly pertinent if one interpretation uses a calendar or statutory date, while another depends on when a party would have performed, been called upon, or received a third-party instruction. The Court examined whether the trigger could be known when termination happened and whether the proposed alternative depended on a counterfactual. [98]-[107]
The judgment’s application remains tied to the contract before the Court. It does not establish that all references to “fire season” mean 1 October, nor that every statutory period supplies the meaning of similar contractual words. The Court relied on the New South Wales governing-law setting, the relevant statutory terminology and the particular need for an ascertainable trigger under cl 6.2. [94]-[97], [107]
The judgment text provided here records the decision date as 16 September 2025 and identifies the cited authorities considered in reaching the result. It contains no subsequent decisions applying, distinguishing, or otherwise treating Coulson Aviation (Australia) Pty Ltd v Techfuel Pty Ltd. A later-treatment account therefore cannot be established from this judgment alone.
The authorities that the Court itself discussed illuminate the reasoning it applied. At [66], it referred to Rudi’s Enterprises Pty Ltd v Jay and Perovich v Whitton (No 2) in connection with automatic termination and the principles relevant where a party may be at fault. At [93], it cited Cherry v Steele-Park on objective surrounding circumstances in contractual construction. At [96], it quoted Sydney Trains v Argo Syndicate AMA 1200 to explain why pointing to words the parties could have used, but did not use, may not resolve the meaning of the words they did use. The Court also cited Norton Property Group Pty Ltd v Ozzy States Pty Ltd and S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd when addressing the limited significance of fine drafting distinctions in carelessly drafted agreements. [12], [66], [93], [96]
Those are relationships within this judgment, not evidence of how later courts have treated it. The material supplied does not establish whether the decision has since been followed, distinguished or considered.
The Court expressly confined its task to the two construction questions raised on appeal. It did not reconsider all issues determined at first instance, including the arguments that cl 6.2 was uncertain or penal, or whether an implied term requiring Techfuel to remain solvent should be found. The appeal therefore does not provide a fresh appellate ruling on those issues. [2], [28], [45]
The judgment also does not resolve the meaning or effect of various awkward provisions in the contracts, including the definition of “Term”, the nature of the options, or the meaning of the “maximum” amounts in the rate table. Leeming JA said those matters were not necessary to decide the appeal. [14], [22], [28], [37]
The precise operation of Schedule 4 was also left on an assumed basis. The Court considered its significance for the co-terminous argument on the assumption that it had contractual force, despite not being picked up in the body of the agreement. The judgment does not finally determine the schedule’s contractual status or resolve the full operation of its provisions. [25], [80]
Finally, the decision does not establish a universal date for the start of a fire season in every contract or jurisdiction. The result followed from the wording and context of these contracts, their New South Wales governing-law clause, the statutory terminology considered by the Court, and the need for the payment trigger to be known when termination occurred. Different drafting or context may present a different construction question. [29], [94]-[107]
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on, relying on, or using this analysis, have it checked by a qualified Australian lawyer.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Coulson Aviation (Australia) Pty Ltd v Techfuel Pty Ltd (subject to deed of company arrangement) [2025] NSWCA 211
Hearing dates: 28 August 2025
Decision date: 16 September 2025
Before: Leeming JA at [1];
McHugh JA at [111];
Griffiths AJA at [112]
Decision: 1. Appeal dismissed.
2. The parties to file and serve within 7 days of today (a) agreed orders as to costs, or (b) in the absence of agreement, the orders each seeks, any evidence in support, and submissions not exceeding 3 pages in support of those orders, with a view to all questions of costs being resolved on the papers.
Catchwords: CONTRACTS — construction — written contract for supply of aviation fuel and services for aerial fire fighting — aircraft supplied to third parties pursuant to separate contracts — whether contract automatically terminated when contract with third parties came to end — whether obligations under contract automatically ceased when contract with third parties came to end — contract permitted termination for convenience — respondent entitled to liquidated fee if contract terminated for convenience within 100 days of “start of the fire season” — construction of “start of the fire season”
Legislation Cited: Corporations Act 2001 (Cth) ss 444E, 450E(2)
Country Fire Authority Act 1958 (Vic)
District Court Act 1973 (NSW) s 127
Rural Fires Act 1997 (NSW)
Cases Cited: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295
Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23
Perovich v Whitton (No 2) (2016) 250 FCR 272; [2016] FCAFC 152
Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568
S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd (2022) 108 NSWLR 165; [2022] NSWCA 72
Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101; 422 ALR 189
Category: Principal judgment
Parties: Coulson Aviation (Australia) Pty Ltd (Appellant)
Techfuel Pty Ltd (subject to deed of company arrangement) (Respondent)
Representation: Counsel:
T Brennan SC, D Stanton (Appellant)
R Scruby SC, M Jaireth (Respondent)
Solicitors:
Norton White (Appellant)
Watson Webb (Respondent)
File Number(s): 2025/00117997
Publication restriction: Nil
[This headnote is not to be read as part of the judgment]
Techfuel Pty Ltd, a supplier of aviation fuel and support services, entered into two contracts in the second half of 2021 with Coulson Aviation (Australia) Pty Ltd, a provider of aerial fire fighting services, to supply refuelling services for helicopters operating under agreements between Coulson and the Australasian Fire and Emergency Service Authorities Council Ltd (AFAC) during southern hemisphere summers. Both contracts stipulated that Techfuel would provide a refuelling vehicle and would sell aviation fuel to the tankers in Coulson’s two Boeing CH-47 Chinook helicopters. Both contracts had a Term of three years. The contracts operated successfully in the first and second years. In August 2023, Coulson indicated it would not use Techfuel later that year.
Techfuel commenced proceedings in the District Court of NSW seeking payment of a liquidated fee under cl 6.2 of the Fuel Purchase and Services Contracts, which provided for a lump sum payment if termination occurred less than 100 days before the start of the fire season.
At first instance, the primary judge found that the fire season commenced on 1 October each year, consistent with the statutory bush fire danger period in NSW. His Honour held that the termination by Coulson was within 100 days, and that cl 6.2 was enforceable. His Honour further rejected arguments that the clause was uncertain or penal, and declined to find an implied term requiring Techfuel to remain solvent, thereby awarding Techfuel the liquidated sum.
On appeal, Coulson contended two issues of contractual construction. First, that Coulson’s obligation to pay did not arise because its contracts with Techfuel, or its obligations under the contracts, ended automatically when its contracts with AFAC ended. Secondly, that if Coulson did terminate for convenience, it gave sufficient notice because “start of the fire season” referred to when Coulson would have commenced supplying its aircraft, rather than when the fire fighting authorities made their declarations.
The Court held, dismissing the appeal:
Per Leeming JA, McHugh JA and Griffiths AJA concurring:
(1) The services under the Fuel Purchase and Services Contracts were not “co-terminous” with Coulson’s AFAC contracts. Clear and unambiguous words and context are required for commercial parties to include in their bargain a provision which would entitle one to bring the contract to an end, or one parties’ obligations under the contract to an end, either (i) by that party’s own wrongful act or (ii) upon the cessation of a contract between one of the parties and a third party. There was no express provision to that effect. Nor was there any provision for notification by Coulson to Techfuel. Such a conclusion would further undermine the rationale for inserting a right to terminate for convenience on 90 days’ notice: [64]-[83].
Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568, Perovich v Whitton (No 2) (2016) 250 FCR 272; [2016] FCAFC 152, considered.
(2) The expression “start of the fire season” in cl 6.2 was construed to be the fixed date (1 October) that aligned with the default bush fire danger period contained in the Rural Fires Act 1997 (NSW). The term “start of the fire season” should not be understood as referring to when Coulson would have commenced supplying its aircraft, because (i) neither party might know whether termination for convenience would trigger a large payment, and (ii) it would require a counter-factual inquiry about when Coulson might have called on Techfuel after termination, even though Coulson’s termination may mean it never would. Thus, Coulson’s notice of termination on 5 August 2023 was less than 100 days before the fire season commenced: [93]-[108].
Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295, Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101, considered.
LEEMING JA: Coulson Aviation (Australia) Pty Ltd appeals from a judgment of the District Court entered against it in the amount of $277,000 following a three day trial. The judgment amount is (approximately) the sum of two amounts agreed to be paid to the respondent, Techfuel Pty Ltd, in the event insufficient notice was given for the termination for convenience of two agreements concerning the supply of aviation fuel to two Boeing CH-47 Chinook helicopters, modified for use in fire fighting operations, which Coulson made available to fire fighting authorities in New South Wales and Victoria.
The two issues on appeal are considerably narrower than the issues at trial. They are pure questions of contractual construction. The first maintains that the obligation to pay did not arise, because Coulson’s obligations under its contracts with Techfuel ceased automatically upon the ending of Coulson’s contracts with the fire fighting authorities; this was described as the “co-terminous argument”. The second maintains that if Coulson did in fact exercise its power to terminate for convenience, then it gave sufficient notice, because of the meaning to be given to the words “start of the fire season” in the contracts, which turned not on the declarations given by fire fighting authorities, but, so it was said, by reference to when Coulson would have been called upon to supply its aircraft.
Coulson is an Australian subsidiary of a Canadian company, and its aircraft have been used seasonally in Australia and in North America. The particular helicopters giving rise to this litigation had previously been used in the Australian and Canadian summers to fight bushfires.
Techfuel’s sole director is Mr Syd Bower. At relevant times, Techfuel maintained a small fleet of fuel delivery vehicles which could accompany and supply fuel to a helicopter when it was based away from its home airfield during fire fighting operations. They were required to have a capacity of 30,000 litres. The vehicles were modified to facilitate that role, including being fitted with GPS and radio communication facilities.
A voluntary administrator was appointed to Techfuel a few months before the trial. Techfuel is presently subject to a deed of company arrangement, and orders were made at the commencement of this hearing altering the title of this appeal, in accordance with s 450E(2) of the Corporations Act 2001 (Cth). However, it was common ground that Coulson is not bound by the deed, and thus the prohibition against commencing proceedings (such as this appeal) in s 444E was inapplicable.
Following bushfires in the Australian summer of 2019/2020, Coulson had entered into two agreements with Australasian Fire and Emergency Service Authorities Council Ltd (“AFAC”). The NSW Rural Fire Service (“RFS”) and the Victorian Country Fire Authority (“CFA”) are members of AFAC. The “National Aerial Firefighting Centre” (“NAFC”) is a business unit of AFAC, concerned with procurement, which is mentioned in the contracts.
Each agreement concerned making available a particular CH-47 helicopter (N40CU and N42CU) to the RFS or CFA. (There was a third agreement, involving a Sikorsky S-61 aircraft, but that is relevant only to explain references to it in the contracts.)
The original agreements between Coulson and AFAC, entered into in 2020, were for terms of three years, with two one year options for extension. However, after the first year’s operation, AFAC went to tender again. Coulson was successful, and new three year contracts were entered into between AFAC and Coulson. The significance of this is that Coulson had entered into a “Fuel Purchase and Services Contract” with Techfuel in 2020, also with a three year term with two one year options for extension. This contract did not include a right of termination for convenience. When AFAC went to tender again in 2021, Coulson and Techfuel treated their existing contract as being at an end, and when Coulson succeeded in obtaining further agreements with AFAC, Coulson and Techfuel entered into new Fuel Purchase and Services Contracts, this time containing cl 6.2 which addressed termination for convenience and the circumstances in which an amount was payable to Techfuel. I shall in due course return to the differences between the superseded Fuel Purchase and Services Contract and those upon which Techfuel sued.
FUEL PURCHASE AND SERVICES CONTRACT #RW21791 NAFC Coulson-CH47 Melbourne
AIRCRAFT REGISTRATION TBC
FUEL PURCHASE AND SERVICES CONTRACT – COULSON AVIATION AUSTRALIA PTY
REF: RW21903 – CH47 – N40CU RAAF BASE RICHMOND
We say 1.1 is to be construed in this document and in the 2021 fuel contracts as being the term as outlined in sch 1, and that cannot be the uppercase term on p 42, firstly because as you’ll see, the term outlined in schedule 1 is profoundly different in concept from the uppercase Term on p 42. Secondly, because cl 1 is carefully drafted to use term, lowercase, in 1.1, but it would seem to use the defined Term, uppercase, referring back to p 42 in cll 1.2 and 1.3.
In a written contract where the parties have evidently disregarded attention to consistent capitalisation, such submissions will have little force; cf Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23 at [48]-[49] and S&C Nicola Pty Ltd v Peter Holmes Investment Pty Ltd (2022) 108 NSWLR 165; [2022] NSWCA 72 at [26] and [29], both of which concerned the construction of similarly carelessly drafted contracts. In the latter, it was said that “where errors are numerous, and the drafter’s approach to grammar and syntax is casual, it would be wrong to place great weight on considerations turning on the precise form of the clauses”: at [30].
Both documents also disclose conceptual imprecision. This is perhaps most manifest in the definition of the “Term” in, and the “options” granted by, each agreement. Term was defined as follows:
This agreement is for an initial three (3) year term, the minimum number of days in each yearly term being 84 days, with the option to extend as operationally required, commencing on the 1st of October 2021 and concluding on the 31st March 2024 with the option to renew for a further two consecutive 1 year extensions, concluding on 31st March 2027, OR, if a further contract is awarded to the customer, first option for a five year term.
The difference between “term” when first used (“three (3) year term”) and secondly used (“yearly term”), both being parts of the definition of “Term” is, to say the least, awkward. Moreover, the natures of the “option to extend” and “option to renew” were left unstated; there is nothing even to indicate which party had the benefit of the option. The reference to a “first option” might perhaps be a reference to a so-called “right of first refusal”, obliging Coulson if it obtained a further contract from AFAC to make an offer to Techfuel before contracting with an alternative fuel supplier. Happily it is unnecessary to resolve any of those questions.
The concluding words of the definition reinforce what is apparent from other clauses, namely, that Coulson’s contract with Techfuel was linked to its contract with AFAC. This bears on the “co-terminous” submission. As will be seen below, Coulson also sought to rely upon the definition of “Term” in support of other submissions of construction.
In each contract, Coulson was the “Customer” and Techfuel was the “Contractor”. Clause 1 provided:
Services Contract
Provision of Services
1.1 The Contractor agrees to provide aviation fuel and to provide supply and support services to the Customer throughout the term as outlined in Schedule 1 of this contract and in conjunction with the AFAC/NAFC Standard PR 005 Pricing for refuelling vehicles (approved November 2012).
1.2 If the Contractor continues to provide services after the expiration of the Term, the terms of this contract will govern the relationship between the Parties.
1.3 The Contractor is engaged by the Customer on an exclusive basis to provide the Services and any services substitutable for the Services during the Term.
1.4 In the context of this Contract, “Refueller” means collectively the vehicle, trailer, personnel and associated equipment required to deliver fuel into an aircraft providing services under AFAC/ NAFC contract.
Coulson’s submissions gave prominence to the promise in cl 1.1 and the definition of “Refueller” in cl 1.4 because both were explicitly linked with the AFAC Contract. As it happens, the contracts with Techfuel did not in fact use the defined term “Refueller”, although that of itself does not necessarily detract from Coulson’s submission.
As well as what was said in cl 1, “Services” was defined on the front page to mean “Services as specified in schedule 1”. Schedule 1 was extensive. It occupied some 3½ pages. It commenced:
SCHEDULE 1: Supply of Vehicle and Drivers
TECHFuel will provide the Customer with one (1) 30,000 litre dedicated Jet A1 Aviation refuelling vehicles with both overwing and Underwing (pressure) refuelling capability, equipment and drivers at the NOB location specified – RAAF Base Richmond for the full term of the AFAC / NAFC NSW RFS contract period, including any extension periods.
The reference to RAAF Base Richmond appeared both in the New South Wales agreement where the helicopter was based at Richmond, and in the Victorian agreement, where a different helicopter (N42CU, whose registration had been left as “TBC” in the executed version of the contract) was based at Essendon.
There followed within Schedule 1 a table of “Rates Wet A Fuel tanker support 2021 / 2022” with ten rows, including the daily and nightly rates for making a tanker and its driver available. The tables were identical, save that the Essendon contract specified the price of fuel at Essendon monthly PAP less 27 cents per litre, while the Richmond contract specified Bankstown monthly PAP less 27 cents per litre. There were “Explanations” underneath the table, including that “‘PAP’ stands for Posted Airport Price”, and PAP Calculations were, in the case of NSW based operations, based upon Viva “PAP” Bankstown, while Victorian based operations were based on Viva “PAP” Essendon.
In each case, the “Hot standby response time” in the table was 15 minutes, and the “Relaxed standby – Subject to Agency / Customer determination” was “1-2 hours or as determined by the relevant agency”.
In each case, the top row of the table was the Single Daily rate of AUD$1400.00 plus GST. The second and third rows were for “Single Nightly Rate” and “Single Day-VFR/Night VFR Rate”, which were AUD$725.00 plus GST and AUD$1400.00 plus GST respectively. However, these rows were followed by words in brackets which were absent from the top row, upon which Coulson placed reliance: “($60,900 maximum for minimum 84-day term yearly)” and “($117,600 maximum for minimum 84-day term yearly)” respectively. Obviously 84 x $725 = $60,900, and 84 x $1400 = $117,600. Less obvious is the notion of those amounts being a “maximum” for the minimum 84 day term. Putting that peculiarity to one side, Coulson’s point was that the references to 84 day terms in the second and third rows of the table indicated a shared expectation that the expected period during which services were supplied was 12 weeks.
The table in Schedule 1 was followed by other “Explanations”, and then “Schedule 1(a): Fuel Price Structure”. The next heading was “Schedule 1: Supply of Vehicles and Drivers – NOTES” (it would seem that “Schedule 1(a)” is either wrongly placed or wrongly named). This section contained eight notes and other information. Notes 1 and 2 referred to the table at the beginning of the Schedule. Note 1 stated that the daily rates covered “the cost of the truck and driver for a full day time shift and remains in place for the contract term and any additional extension periods that may occur. There are no additional or overtime charges”. Note 2 was in similar terms for the night rate.
At the conclusion of the Schedule were six subheadings, the last of which was “Additional Information”, under which appears:
Both Parties acknowledge that the Customer is contracted by AFAC/NAFC to provide a Wet-A fuel solution for the aircraft contracted to the Service, RAAF Base Richmond and that the Contractor is contracted by the Customer to provide adequate resources to ensure that the operational requirements of the Customer for the Service are met.
SCHEDULE 4: Special Conditions
Early Termination of Contract
a) The parties agree that if the Customer is in breach of its Contract with AFAC / NAFC to provide Wet A refuelling provisions for each of the three (3) contracted aircraft (1 x S61 and 2 x CH-47) which is caused directly by the negligence of the Contractor, then the Customer may terminate this contract on the provision that the notice to the contractor is to coincide with the completion of the fire season however not less than 30 days, without incurring any penalties.
b) The parties agree the Contractor may terminate the Contract if the customer breaches its obligations under this contract on the provision that the notice to the Customer to coincide with the completion of the fire season however not less than 30 days, without incurring any penalties.
c) in either case of (a) or (b) above, the obligations in relation to the provision of emergency services under in relation to the Contract (Contract # to be confirmed) shall not be jeopardised by either party until such time as suitable arrangements are in place. This may include the contractor agreeing to sell at a reasonable market value, to the customer, the plant, equipment and approvals to independently provide their own supply.
Termination and Cancellation
6.1 Either party may terminate this contract by written notice given to the other party if:
a) In relation to the other party or any holding company of the other party
a. The other party or a holding company of the other party becomes an ‘externally administered body corporate’ or an ‘insolvent under administration’ (as defined by the Corporations Act 2001), or
b) The other party breaches any provision of this contract, and such breach is incapable of remedy, or such breach is capable of remedy and the other party fails to remedy the breach within 20 Business Days of receiving a notice requiring it to do so.
6.2 Termination For Convenience
Notwithstanding any other provision of this Agreement to the contrary, either party may terminate this Agreement by giving the other party at least ninety (90) days’ prior written notice of its election to terminate. In case of termination for convenience by either party, the customer agrees to pay the contractor for all undisputed Fees and Expenses incurred by the contractor in connection with the Services up to the effective date of termination. Further, in the event of a termination for convenience by the customer, which is less than 100 days prior to the start of the fire season, the customer agrees (as its sole and only payment obligation) to pay the contractor a lump sum amount equal to 90 days of the contractor’s daily rate as set out in schedule 1, item 3.
6.3 Upon termination of this contract, no party has further rights or obligations under this contract, except rights and obligations accruing prior to termination and rights and obligations expressed in this contract to survive termination. (Emphasis added.)
The critical words which give rise to this litigation are the last sentence in cl 6.2, to which emphasis has been added. The 90 day period is the amount claimed by Techfuel in relation to each contract: 2 x 90 x ($1400 + GST) = $277,200 which was the amount claimed. That amount was recorded by the primary judge as not being in dispute at [176], although the judgment entered was $277,000.
To be clear, it is not necessary to construe the effect of the definition of “Term” or “Services” or the options or many of the other infelicitously drafted clauses in these contracts. The only questions of construction before this Court are those summarised at the outset of these reasons. The other clauses are mentioned because the parties’ submissions invoked those clauses in the course of their arguments on the “co-terminous argument” and the “start of the fire season” argument.
Clause 17.7 provided that the agreement was governed by the laws of the jurisdiction of the State or Territory of the Contractor’s nominated address. It was accepted that this was New South Wales.
This contract was in evidence. It was in very similar terms. The relevant differences were as follows.
The definition of “Term” on the coversheet not only contained earlier dates, but it was also more straightforwardly drafted:
This agreement is for an initial three (3) year term , commencing on the 1st of October 2020 and concluding on the 1st October 2023 with the option to renew for a further two consecutive 1 year extensions, concluding on 1st October 2025, OR, if a further contract is awarded to the customer, first option for a five year term.
After the 2020 agreement was brought to an end, and AFAC proceeded to retender, Mr Bower, the principal of Techfuel, supplied to Coulson certain “files for your tender submission” (email of 9 June 2021).
One of the attachments identified the “management systems” Techfuel had in place. This included provision for training and induction of drivers. This section relevantly stated:
Check and Training
TECHFuel has developed, in conjunction with the Training & Development Policy, a Driver/Refueler Induction. Typically, inductions and training are conducted each year in September / October, prior to the annual bush fire season. Modules that staff are trained include …
Mr Bower distributed a revised and edited contract on 12 October 2021. His email concluded “[i]t will be a pleasure to work along side such well-presented and capable aircraft during the coming fire seasons”.
Mr Bruner, on behalf of Coulson, responded on 14 October. One suggestion was that the contract should make it “clear what we are committed to for the 84 days. Also, what happens if we don’t meet the minimum (i.e. Australia has a low fire season and we’re not flying)?”. Mr Bower’s response was “[t]he table now shows the maximum amount payable for the 84-day contract period”. This is most likely the source of the statements in two of the three rows concerning a “maximum”; the proper construction of those words does not arise in this appeal.
The third point of Mr Bruner’s email was as follows:
- Coulson’s ability to terminate the agreement for convenience.
Currently the only option is to terminate for cause. I would like to propose, under article 7 a termination for convenience clause where we’d give 90 days’ notice to terminate (that way TechFuel will get paid for that year’s annual commitment,).
3. The “Termination for convenience” clause has also been entered as requested.
Good Morning Syd
I got a chance to spend some time with RFS in Dubbo and they told me they appreciated the offer but at this time do not believe they need any fuel truck for the CH47. If it was us we would want to assure we had access to something like you proposed, but its not ours anymore!
Your also correct about Essendon, unfortunately VIC chose not to continue that line item with the backup aircraft we offered so were down to just the S61 now.
You guys have done an awesome job for us always and gone far over and above and we will keep working with RFS on this opportunity but wanted to pass along the news as soon as I could.
Britt
Techfuel responded by letter dated 27 September 2023, asserting that Techfuel understood that the Richmond-based helicopter would commence at Richmond in early November, and that while it was aware of an unresolved dispute concerning night vision with the Victorian CFA, Techfuel believed that a minimum three year term would still be fulfilled. However, the letter also asserted that the 5 August email amounted to Coulson terminating the Melbourne and Richmond Fuel Agreements, and Techfuel sought payment. It attached invoices totalling the $277,200. That is the amount which was sought in this litigation.
It is not necessary to summarise the ensuing correspondence, not all of which was consistent with the stance adopted in the litigation. By its defence and consistently thereafter, Coulson maintained that its contract with Techfuel automatically came to an end with the non-renewal of any contracts between it and RFS or CFA in relation to the CH-47 helicopters, but if that was wrong, the email of 5 August amounted to written notice within the meaning of cl 6.2.
On 1 October 2023, the NSW Minister for Emergency Services issued a media release which referred to the “official start” of the 2023–24 bushfire season in areas including Greater Sydney, the Central Coast, Illawarra and the Central West. That is fewer than 100 days after 5 August 2023.
The primary judge produced substantial reasons of 198 paragraphs, only some eight days after the conclusion of the three day hearing, addressing the numerous issues which had been advanced, which extended to whether cl 6.2 was void for uncertainty, was invalid as a penalty, and whether there was an implied term that Techfuel was not insolvent.
The reasoning of the primary judge on the only two arguments advanced by Coulson on appeal is at [123]-[151]. Part of that reasoning turned on the Rural Fires Act 1997 (NSW) and the Country Fire Authority Act 1958 (Vic), which both utilise the expression “fire danger period”. The primary judge noted that in both States, the relevant executive officer of the RFS and the CFA designated and declared a fire danger period. The consequence of such a declaration was to cause certain conduct (for example, lighting a fire without a permit) to be an offence. The process by which such a declaration was made involved mandatory consultation with various bodies (in New South Wales, local councils and various fire fighting authorities). His Honour observed that in New South Wales, there is a default (bush) fire danger period, commencing on 1 December and ending on 31 March, subject to a power conferred upon the Commissioner to modify those dates. His Honour said that the legislative framework was known to the parties, and added:
- It is true that the Victorian legislation does not set such a default period for fire danger period. Nevertheless, at least in New South Wales, such a default period applies. It signifies statutory recognition by the New South Wales Parliament, which I infer is based not only on historical experience, shaped also by the views of qualified persons, that ordinarily, within a broad six month period, spanning all of summer, part of spring and the first month of autumn, there is potential, or likelihood, of fire danger to land and property in rural areas; with a commensurate potential or likely need for the State of New South Wales to require firefighting services of the kind which Coulson, aided by Techfuel, supply.
(In that and subsequent quotations for the reasons of the primary judge, references to “CAA” have been replaced by “Coulson”.)
The primary judge then returned to the consultation required before determining the fire danger period, noting that there was much more involved in fighting bushfires than aerial fire fighting, but noted that all the services involved would be doing so in “the fire season”, supporting the proposition that a “fire season” was “likely to be broader than the period in which it is expected that Coulson’s services, and therefore Techfuel’s services, would be required”.
Drawing those considerations together, his Honour said at [135]-[137]:
- I regard the plain or ordinary meaning and colloquial expression of ‘fire season’ carries a similar connotation: the season (on the calendar) in which there is a potential or likelihood of fire danger imperilling property and land in rural areas.
- It is, in my view, no coincidence that although the parties executed the fuel agreements after the date, they chose a date for the Term of the fuel agreements. The fixed term component of the Term commenced on 1 October 2021 and ended on 31 March 2024. This is consistent with the parties’ intention that, leaving the potential for the exercise of options aside momentarily, there would be three fire seasons within the Term: 2021–22, 2022–23 and 2023–24. (This intention was manifested, amongst other places, in the table created by Coulson’s counsel referred to at paragraph 55 above.)
- I recognise, of course, that Coulson was also carrying out fire services in Victoria which was subject to a slightly different legislative framework, with no default fire danger period. Nevertheless, the matters I have referred to aid Techfuel’s construction. The proper law of the fuel agreements was New South Wales. Techfuel was a supplier based in New South Wales and Coulson agreed to a term of the contract representing (as a minimum) three seasons over a (fixed) period reflecting the statutory (in NSW) default setting of “(bush) fire danger period”, within which broad period, it was expected that Coulson and Techfuel would be expected to supply their respective services.
- An advantage of Techfuel’s adopted construction is that it provides certainty.
- Coulson’s construction has many difficulties. As a matter of language, I consider it is a strain to equate the expression ‘fire season’ with the more discrete concept of the actual period (the ‘service period’) in which the operators of firefighter aircraft, with the aid and support of their suppliers, supply their firefighting services. Although of course issues of construction are not determined by a party’s subjective beliefs, it is not without some evidential significance that both Mr Bower and Mr Coulson, in their respective affidavits, were comfortable in their use of the notion of a fire season in contradistinction to the concept of ‘service periods’.
Uncertainty associated with Coulson’s construction of the expression
- The central difficulty for Coulson’s construction assimilating “fire seasons” with “supply periods” is that it is just not known when within the ‘fire season’ Coulson (and correspondingly Techfuel) will be supplying their respective services. That is inherent. It is also productive of uncertainty. When Coulson is required to perform the AFAC agreements is not only something about which Techfuel has no knowledge or control. With reference to the framework in the AFAC Agreements, it is something about which Coulson has little or no control either. The latter acts at the behest of state agencies, and there is a raft of conditions precedent and requirements before the services the Coulson is to perform its services.
- It is to be recalled that the expression has to be interpreted in the light of the provision (and of course contract) as a whole. The expression ‘start of the fire season’ cannot be viewed in isolation, detached from the purpose and object apparent in the provision in which that expression appears. The expression only appears in the last sentence of cl 6.2 of the fuel agreements.
- When considering whether to exercise its right to terminate for convenience in the last sentence in cl 6.2, Coulson has to make a decision within a particular timeframe and faces the jeopardy of a liability to pay a fee depending on when the decision is made and notified to Techfuel. It cannot know, when it is considering whether or not to exercise that right, when its services will actually be required under the AFAC Agreement. Conceivably, in any fire season in a ‘good’ year (for the State, or the community, at large), for weather or other reasons during the season, there may be no requirement placed on Coulson for any services at all. At the time Coulson decides whether or not to exercise that right, it can only predict (at best), and presumably in most cases guess, when its services will likely be required and performed. The only thing that can be said with any real degree confidence, barring something exceptional, is that the occasions on which Coulson provides its services will fall within the fire season: a concept which naturally connotes a broader temporal period then the period in which it actually provides services, when it is expected or assumed that there is a potential danger of fires occurring in rural areas that is likely to cause the State significant damage to land and property.
- I also accept Techfuel’s other criticisms of the construction. One of them is that if the parties intended that the right in the last sentence in cl 6.2 was tied to a ‘service period’ determined by third parties in circumstances not known to Techfuel (beyond that which it has been advised by Coulson), it might have been expected that this would be reflected in the language. One possibility, it seems to me, that if this was the result commonly intended, the language might make Coulson’s liability to pay the fee subject in clause 6.2 (in either of the two situations referred to therein) to a condition subsequent, to the effect that the liability to pay will only arise after it is known the period in which Coulson’s services were performed and its aviation fuel and associated services have been supplied by an alternative supplier. At any rate, it is difficult to accept that a right to compensation which Techfuel acquires upon conduct engaged in by Coulson is affected by a third party’s conduct under an agreement to which Techfuel is neither a party nor privy. (Footnotes omitted.)
Are the services ‘co-terminous’?
- A further point against Coulson’s construction arises logically from its contention that the performance of the fuel agreement is ‘co-terminous’ with the AFAC agreements. The commencement dates for the NSW AFAC Agreement (30 August 2021) and Victorian AFAC Agreement (10 September 2021) did not coincide with the commencement dates for the Melbourne or Richmond Fuel Agreements. There is no transposition of the concept of ‘service period’ in the AFAC agreement in the Fuel Agreements. As I have said, the ‘service period’ in the AFAC Agreement is itself uncertain, affected by multiple preconditions and requirements (which were unknown to Techfuel). In contrast, the period of services, or ‘Term’ in the Fuel Agreements was fixed.
- Undoubtedly, there are references within the Fuel Agreement to the AFAC Agreement. I have already accepted that Techfuel was aware of the AFAC Agreement. The references to the AFAC Agreement in the fuel agreements plainly were also known by Techfuel. But neither individually or in combination, do the provisions in the AFAC Agreement support the construction urged by Coulson. In particular, Coulson’s citation of what appears under the sub-heading ‘Additional Information’ (Schedule 1 to the Fuel Agreement) does not objectively indicate the parties’ agreement that the length, or more pertinently, start of the fire season is determined by the service period in the AFAC. There is nothing in that acknowledgment that bears upon the construction issue, being when a fire season starts, that the Court has to resolve in cl 6.2.
- The premise for Coulson’s contention is that the period in which services that Techfuel agreed to supply Coulson must coincide with the period of services Coulson agreed to supply to the AFAC: if the AFAC had dispensed with the need for Coulson to provide work; so too, it was argued, Coulson was entitled to dispense with Techfuel’s services.
- Although Techfuel was not a party to Coulson’s arrangements with the AFAC, the fuel agreements, in numerous places, referred to those arrangements. There was no doubt that Techfuel knew of their existence and Mr Bower also admitted that he knew that Techfuel’s arrangements with Coulson practically depended upon the subsistence of continuing AFAC Agreements.
- Despite a contention raised in its written submissions (paragraph 35) apparently to the contrary, in closing argument, Counsel for Coulson expressly disavowed any suggestion that the provisions within the AFAC Agreements were incorporated in the Melbourne or Richmond Fuel Agreements (T 157.21). Techfuel was not, of course, a party or privy to those particular agreements (which were designated as being ‘commercial in confidence’). Nevertheless, CAA argued that the bare circumstance that the AFAC Agreements were terminated automatically resulted in the termination of the Melbourne or Richmond Fuel Agreements.
- I do not accept that submission. Clause 6.1 may be characterised as providing express rights to terminate for cause (of certain kinds of event: simplistically the insolvent status [of a limited kind] of the other party or for breach). It would have been easy for the parties to include, as another event justifying termination for cause in the Fuel Agreement, termination of the AFAC Agreements, but that did not occur.
- It is the experience of the Courts that if parties to commercial contracts commonly expect or intend for their rights and obligations to be affected by the exercise of rights of third parties in other contracts to which they may not be parties; they may insert an interdependency or co-dependency of contracts clause. I myself considered this situation in a recent decision. (Footnotes omitted.)
the services which the Respondent was to provide under each Fuel Contract were services which were referable to, and dependent upon, the services provided by the Appellant to AFAC. Consequently, the cessation of the AFAC Contracts had the consequence that there were no services to be provided by the Respondent for the final “fire season” commencing in late 2023.
In reply Coulson added that “[i]f no services were required, the fire season under either the NSW or the Victorian agreement did not commence”.
In oral submissions, when explaining how the point had been pleaded, it was said:
Our position was we first of all ran the co-terminous argument and said the AFAC contracts had come to an end and therefore this contract, or the obligations under it had come to an end, and we told Techfuel that by the notice of 5 August. Then we said if that’s not right then the notice of 5 August was a notice of termination for convenience.
We say it’s not a question of power; it’s a question of construction. Did it come to end in the sense of was there a prospect of any future service being required under the fuel contract? We say the answer, on a proper construction, no. That’s the end at least of those obligations and we say likely of that contract. But whether it’s of the contract or simply the obligations to pay and deliver we say doesn’t matter.
It will be seen that the submission went so far as to contend that the cessation of the AFAC contracts brought about the ending of contractual relations between Coulson and Techfuel. However, Coulson also pitched this submission at the level of bringing Coulson’s obligations under its contract with Techfuel at an end.
It is far from clear to me that there is any real difference in the different ways in which Coulson advanced its submission. I agree with counsel’s final submission that the different ways ultimately make no difference. Nonetheless, I shall address the various ways in terms, although doing so will make these reasons more cumbersome.
Coulson invoked the proposition that contracts should be construed so as to produce a commercial result, and that it was obvious that its contracts with Techfuel were back-to-back with Coulson’s contracts with AFAC to provide fire fighting capability involving the same nominated aircraft based at Richmond and Essendon. There were numerous references to the AFAC contracts in Coulson’s contracts with Techfuel, including the contract number designated by AFAC, the particular AFAC standard, and the particular aircraft. The most important contractual language was found in cll 1.1 and 1.4 and the opening words of Schedule 1.
Coulson emphasised that Techfuel’s obligation to it, and its obligation to AFAC, was to supply a capability. It put this orally as follows:
But the central service that was provided was not firefighting, it was firefighting resources. That is, what AFAC was acquiring was a capability, should it be needed. You’ll see that that was a quite specific capability. It was a capability to have aircraft fuelled and ready to be in the air on 15 minutes’ notice.
Clauses 1.1 and 1.4 have been reproduced above. Although “Refueller” was not elsewhere used, both clauses referred to the AFAC contract which both parties knew Coulson had entered into and which was, after all, the premise of Coulson’s fuel supply contracts with Techfuel.
Coulson relied on the opening words of Schedule 1 identifying the Services:
TECHFuel will provide the Customer with one (1) 30,000 litre dedicated Jet A1 Aviation refuelling vehicles with both overwing and Underwing (pressure) refuelling capability, equipment and drivers at the NOB location specified – RAAF Base Richmond for the full term of the AFAC / NAFC NSW RFS contract period, including any extension periods.
We say that’s the statement of the term for which services could be required, and it’s expressly by reference to Coulson’s contract with AFAC, and by reference to the particular aircraft and the particular nominated operating base. We say the obligation to supply services and the obligation to pay for services is limited to that term, so specified, and that on the facts as found both the New South Wales AFAC contract for Richmond and the Victorian AFAC contract for Essendon had expired by 5 August at the latest. So that the period specified in the chapeau to the schedule had ended.
56. Consequently, the sensible and commercial construction of each Fuel Contract was that:
a) The Appellant would provide aerial firefighting services to AFAC as required, with those requirements depending on a variety of matters, including the severity of the fire season, and the particular firefighting demands at any point in time; and
b) The Respondent would provide refuelling services to the Appellant as required to enable it to perform the AFAC services. Consequently, the services to be provided by the Respondent would depend in turn upon the services provided by the Appellant under the AFAC Contract.
57. The very definition of “Term” and “yearly term”, and the manner in which services were contemplated to be performed, reveals that the Contract expressly countenanced variation of services from year to year, while the overarching Contract remained on foot for the duration of the “Term”.
58. Understood in that manner, the cessation of the AFAC Contract had the consequence that there were no services to be provided by the Respondent for the final “yearly term” of the Contract “Term”. That conclusion follows from the express provisions of the Contract, and the admitted contractual context in which the Contract fell to be construed, that the Respondent’s services were referable to and dependent upon the continuation of services by the Appellant under the AFAC Contract.
59. The Appellant was not required to perform services under the AFAC Contracts and, as a consequence, there was no obligation on the Appellant to engage the Respondent to provide services under the Richmond and Melbourne Contracts.
The first thing to note is that it is plain that the existence, or probable existence, of Coulson’s contracts with AFAC was an important part of the commercial context in which the Fuel Purchase and Services Contracts were entered into. Indeed, it was the raison d*’*être for doing so. It is scarcely unexpected that there are references in the executed contracts to Coulson’s obligations under its contracts with AFAC.
It does not follow that the Fuel Purchase and Services Contracts automatically came to an end when Coulson’s contracts with AFAC came to an end. Nor does it follow that Coulson’s obligations under the Fuel Purchase and Services Contracts automatically came to an end. The proposition on which this first ground of appeal turns requires the conclusion that by reason of the contractual relations between AFAC and Coulson altering, there is as a matter of construction an automatic termination of, or effect upon, contractual relations between Coulson and Techfuel.
It is of course possible for the parties to contract on the basis that their contract comes to an end automatically, on the occurrence of an event which may be beyond their control: see Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568 at 576-580 and Perovich v Whitton (No 2) (2016) 250 FCR 272; [2016] FCAFC 152 at [58]-[64], where there is also discussion of the principles applicable where one party is at fault. It has been said that clear and unambiguous words and context are required to bring about the result that the contract comes to an end, as opposed to entitling the non-defaulting party to terminate. That reflects the unlikelihood that parties to a commercial contract would include in their bargain a provision which would entitle one to bring the contract to an end by that party’s own wrongful act. Those authorities were not considered by the parties, either in the District Court or in this Court.
It is also possible that the parties may agree that the obligations of one party are dispensed with upon the happening of some event such as the cessation of the contract between one of the parties and a third party. But similar considerations apply. It is unlikely that such an intention will be imputed to the parties, in circumstances where the other party may have no knowledge of the event. It is also unlikely that the dispensation of contractual obligations will take place irrespective of whether that party is at fault or is blameless in its dealing with the third party.
For present purposes, all that matters is that howsoever Coulson couches its submissions, the conclusion for which Coulson contends is one that must come from the text and the context of the contract, and is to be reached by the application of ordinary principles of construction.
Hence, the references to the AFAC contracts by themselves in cl 1.1, 1.4, Schedule 1 and elsewhere do not dictate the answer to the question of construction. They are merely aspects of the contract which are available to support such a construction.
Against the possibility that its “co-terminous” argument might fail, Coulson also contended that the construction of the words “the start of the fire season” in cl 6.2 was wrong.
Coulson contended “that ‘fire season’ was a reference to the period each year during which the Respondent provided refuelling services to the Appellant, which in turn was dependent on the requirement for services by the Appellant under the AFAC Contracts” (written submissions, para 64). Coulson relied on two principal considerations in support of that construction.
The first was that it was said to be commercially sensible. It was said:
66. Each Contract provided for the provision of refuelling services by the Respondent throughout the defined “Term”. That “Term” was defined by reference to a three year period, with the qualification that the “minimum number of days in each yearly term” was 84 days. “Services” were then defined in Schedule 1 by reference to refuelling services, with greater detail, at the “Nominated Operating Base” location to be specified by the Appellant.
67. Those provisions of the Contract are the only provisions which concern the timing of the provision of services, other than clause 6.2.
68. Clause 6.2 is accordingly to be construed in that context.
69. The first two sentences of clause 6.2 provide for an unqualified right to terminate by “at least ninety (90) days prior written notice”. It is not specified what the 90 days must be prior to. It cannot be prior to the commencement of the “Term” of the Contract, being 1 October, as that would work a commercial nonsense.
70. Aid is to be found in the second sentence of clause 6.2, which provides that in the event of termination, the Appellant is to pay for all undisputed “Fees and Expenses” incurred by the Respondent “in connection with the Services”. That can only mean the Services provided in accordance with the periodic “yearly term”. That period interim term each year is in turn dependent upon the periodic aerial firefighting requirements of the Appellant, as communicated to the Respondent.
71. That is, clause 6.2 can only have work to do if it operates by reference to the periodic services provided by the Respondent to the Appellant.
72. The second sentence provides for a different outcome in the event of termination for convenience by the customer which is less than “100 days prior to the start of the fire season”, in which case a lump sum is payable. That lump sum is a multiple of the Respondent’s daily rate for the provision of Services.
73. The term “fire season” must, in that context, also operate by reference to the provision of services under the Contract. That is the only material aspect of the Contract which operates by reference to a “season”.
74. It is trite that a term of a contract should be construed by reference to its object. The object of the relevant Contracts was the provision of refuelling services, during the overarching three year “Term”, for the periodic summer periods in which the Appellant was required to provide aerial firefighting services. It is those periodic “yearly terms” which must bear on the construction of the term “fire season”.
Coulson added, in its written submissions in reply, that it was notorious that in any year the start and end of the fire season in any particular part of Australia would be affected by weather conditions, and could not have a stable date range each year, and that reference in a special condition in Schedule 4 to the “fire season” was a reference to the period when actual aerial fire fighting was occurring.
The second matter was what were said to be admissions by Mr Bower as to the circumstances known to the parties at the time at which the Contracts were concluded. One admission was said to be Mr Bower’s evidence that the 2020 Contract worked as follows:
at the start of the fire season, you would be contacted by Coulson and told that a particular asset located at a particular place would start working the fire season at that point in time.
Coulson also submitted that Mr Bower had admitted that, at the time that the Fuel Contracts were entered into, Techfuel’s understanding was that the term “fire season” was the period during which the Respondent would be called upon to provide refuelling services, and that that “fire season” would start and end at different times, turning on the timing of notice being given of the commencement of the service period by CFA and RFS under the AFAC Contracts.
This knowledge on the part of Mr Bower, which was said to be shared by Coulson, was said to be admissible as an aid to construction in order to establish the relevant surrounding circumstances known to both parties at the time of entry into the Contract, reinforced by the admissions by Mr Bower as to his knowledge of how the Contracts were to be performed, his industry experience, and the performance of the 2020 Contract (which involved identical operative terms).
Coulson added that there was no evidence supporting the contrary position upheld by the primary judge, that the term “fire season” incorporated a different statutory term, to which neither contract referred.
On Coulson’s construction, the 100 day period, running from 5 August 2023 when notice was given in respect of the Richmond Contract, ended on 13 November 2023. This was said to be “comfortably prior to the first date on which [Techfuel] provided services under either Contract, and prior to the first date on which [Techfuel] provided services under the 2020 Contract”. Alternatively, it relied on onus, and Techfuel’s failure to adduce evidence of when the fire season commenced in 2023.
The imprecision of the parties’ contractual language gives rise to this question of construction. It is clear from the exchange of emails prior to contract how cl 6.2 came into existence. Those emails are objective facts known to both sides of the transaction. They are objective surrounding circumstances which are available to inform the process of contractual construction: see Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [1], [64]-[67], [92] and [146]-[148]. But they do not greatly assist the particular issue which arises in this case, namely, the point from which the 100 day period is to be measured.
The primary judge placed reliance on the statutory regimes, which his Honour found was known to both parties. Coulson did not contend that there was error in taking that course, although it complained about what his Honour took from the statutory regimes.
The statutes employ the terms “bush fire danger period” and “fire danger period”. The New South Wales statute has been summarised above. Both contracts were governed by New South Wales law (because that was where Techfuel’s nominated address was located). It would not be unnatural for these colloquially and casually drafted contracts to use the language of “fire season” to identify the period of time identified by the statute.
Coulson’s submissions made the point that the statutory language is different from, and was not referenced in, the Fuel Purchase and Services Contracts. That is so, but it does not greatly advance the argument. If the contracts had referred to the legislation in terms, the issue would probably not arise. Clause 6.2, no differently from much else in the contracts, is not especially well drafted. The fact that it could have been drafted differently, in a way that does not give rise to a dispute, does not greatly assist the resolution of the task at hand, which is to fix a legal meaning to the contractual language the parties have chosen to record their bargain. As was said in Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101; 422 ALR 189 at [153]:
The meaning of the words that appear in a contract (or a statute or a will or any other legal instrument) is often not greatly illuminated by a submission that posits words which were not used, which if they had been used would clearly resolve the question of application which arises in the facts of the particular case. I am saying nothing more nor less than that a submission that the question of construction would disappear if different words had been used is often merely rhetoric, and does not greatly assist resolution of the legal meaning of the words which have in fact been used.
Coulson also made the point that there is a clear distinction between bushfire prevention and bushfire fighting, and that the statutes are concerned with the former while the contract is concerned with the latter. As much may be acknowledged. But that does not relieve the Court from affixing some meaning to the words “start of the fire season”. The similar statutory language, of which both parties must have been aware, is at least a candidate. What are the alternatives?
The construction for which Coulson contends is replete with very substantial difficulties. These were exposed during argument.
McHUGH JA: Your candidate for the start of the fire season is the giving of notice by your client to [Techfuel], isn’t it?
BRENNAN: Yes.
McHUGH JA: In circumstances where your client has terminated, how can that ever happen?
BRENNAN: We put it slightly more nuanced. It’s the date upon which the fire service in question requires the standing up of aerial firefighting capability.
McHUGH JA: It’s the date of the notice?
BRENNAN: If our contract were on foot, that would be the date on which we are required to stand up, so after we receive the notice it’s the date upon which we actually have to be ready to fight fires. If the RFS is fighting the fires itself by its own helicopter, it’s the date upon which the RFS has got itself ready to fight fires with its helicopter.
McHUGH JA: Because in the circumstances that occurred here, they wouldn’t have notified you because they terminated you as--
BRENNAN: Correct. But they had their own helicopter, and ultimately we say fire season is a colloquial term. What it connotes is the season for fighting fires, and in the context of this contract, the season for fighting fires by having available aerial capability, and that that season varies from State to State, and varies between parts of States. But where the parties understood, by reference to the service periods in this contract, they understood there was an arrangements where each State would give a notice to say we require aerial firefighting capability to be available on this day in this year, and that that day varied year to year.
There are two levels of uncertainty inherent in Coulson’s construction. The first is that because the date turns on a decision being made by RFS or CFA, it will not be possible for either party to know at the time the contract is terminated for convenience whether doing so is accompanied by an obligation to pay an amount which may exceed the total amount of daily fees which would have been paid had the contract not been terminated. That is unlikely enough, bearing in mind that the point of an agreed damages clause is to remove the uncertainty inherent in parties having to establish consequential loss.
The second is worse. On Coulson’s construction, the relevant inquiry is when Coulson, had it not terminated the contract, would have required Techfuel to make its tanker and driver/refueler available. Not only can that not be known at the time, but it is apt to be counter-factual, because the fact that Coulson has terminated for convenience may very well mean that Coulson has chosen not to engage in fire fighting at all in that season.
There is no reason to prefer a construction which inevitably requires a counter-factual analysis. The premise of the obligation to pay in cl 6.2 is that Coulson has terminated for convenience. It is with respect deeply problematic for the 100 days to be measured by reference to something which, by dint of Coulson’s own act, can never happen, namely, Coulson calling upon Techfuel to make its tanker and driver/refueler available after Coulson has terminated for convenience.
Contrary to Coulson’s submissions, a consideration of what is commercially sensible points against, rather than in favour of, its construction.
The commercial reality of the position was that the parties’ bargain involved an obligation to pay if the new power to terminate for convenience was exercised insufficiently ahead of time. The nature of the parties’ bargain was that Techfuel was liable to be called on to make its tankers available shortly after Coulson was called upon to make its helicopters available to the relevant fire fighting agency. That was only likely to happen at a time when there were unusual (for example, especially intense) bushfires. The parties are to be taken to have contemplated that that might happen at any time in the fire season. It may very well be that it was more likely to happen towards the end of the fire season, rather than at the very beginning, and it may very well be that everyone assumed that would be so as a matter of practical likelihood. But that did not alter the fact that the parties had promised, if called upon, to make aerial fire fighting services available at any time in the fire fighting season.
Those commercial considerations point to the construction upheld by the primary judge.
Turning to Coulson’s second submission, it is far from clear to me that Mr Bower made admissions as contended. One difficulty is that the cross-examination in 2025 did not clearly distinguish what was in Mr Bower’s mind in 2020 as opposed to what was in his mind in 2021 or 2022 or 2023. Only if the admission reflected his understanding before Techfuel entered into the Fuel Purchase and Services Contracts in 2021 which included cl 6.2 could the admission be used in the process of contractual construction. A second difficulty is that the words “fire season” are quite ambiguous, being equally amenable to describing the period during which Techfuel and Coulson were on call, and when they were actually fighting fires. This is evident from the passage on which Coulson relied:
Q. As you may have heard when I opened to his Honour, is it the case that the way the agreement worked is that at the start of the fire season, you would be contacted by Coulson and told that a particular asset located at a particular place would start working the fire season at that point in time?
A. Yes.
Q. That was the trigger for you to then do what you needed to do in terms of your business – that is, organise a driver and a tanker to be available to service that asset?
A. Yes.
But it is not necessary to express concluded views on either of those points. Even taking Coulson’s submissions on the admissions made by Mr Bower at their highest (including what was said in the attachments to his email of 9 June 2021), they fell well short of sustaining a construction whereby, in order to determine whether as the price of Coulson exercising a right to terminate for convenience, the parties must engage in the hypothetical exercise of determining when, had the contract remained on foot, Coulson would have called on Techfuel to make a tanker and a refueller available, and then determine whether the exercise of the power is within 100 days of that event. It is to be borne steadily in mind that the point of an agreed damages clause is to avoid the need and expense of disputation concerning the actual loss sustained by a party in certain circumstances. There is no reason to impute to the parties (when they chose to put in place cl 6.2) an intention that while the amount of agreed damages was readily calculable, the obligation to pay it turned on such a counterfactual and contestable issue such as what would have happened had Coulson not exercised the right.
To recapitulate the above, it is natural to impute to both parties an intention that it be clear, if and when the exercise of the new right to terminate for convenience occurred, whether Coulson was subject to the obligation to make the payment. Another way of putting this is that it is inherently improbable that both parties would choose to be bound, in respect of an obligation to make a substantial payment, by something which was not known at the time and which was beyond their control, and which, in the event the power to terminate was exercised, would never in fact occur. The only way of construing the clause so that it provided certainty to both parties at the time the power to terminate for convenience was exercised is for the “start of the fire season” to be a fixed date. It is consistent with the casual language employed by the parties in the rest of their bargain for this to refer to the start of the period regulated by the applicable legislation, which used a similar name (“bush fire danger period”). True it is that that requires some straining of the language. But it is much less strained than the alternative proffered by Coulson, requiring a hypothetical determination of what would have occurred but for the exercise of the power, and which left both parties in the position where they did not know at the time the power was exercised whether the obligation to pay was engaged. Coulson’s construction introduces uncertainty into a clause whose self-evident purpose is to remove uncertainty, and means that neither party may know where it stands at the time the power is exercised. There is no good textual or contextual reason to uphold that construction.
This ground is not made out.
For those reasons, the appeal must be dismissed. Techfuel sought, in that event, to be heard as to costs. The orders I propose accommodate that request.
I propose these orders:
1. Appeal dismissed.
2. The parties to file and serve within 7 days of today (a) agreed orders as to costs, or (b) in the absence of agreement, the orders each seeks, any evidence in support, and submissions not exceeding 3 pages in support of those orders, with a view to all questions of costs being resolved on the papers.
McHUGH JA: I agree with the orders proposed by Leeming JA for the reasons given by his Honour.
GRIFFITHS AJA: I agree with Leeming JA.
**********
Coulson Aviation (Australia) Pty Ltd
Techfuel Pty Ltd
(2017) 96 NSWLR 548
(2016) 250 FCR 272
(1987) 10 NSWLR 568
(2022) 108 NSWLR 165
Appeal dismissed. The parties were directed to file and serve agreed costs orders or, absent agreement, their respective proposed orders, supporting evidence and submissions of no more than three pages within seven days, for costs to be resolved on the papers. [109]-[110]
Coulson also referred to the ready acceptance by Mr Bower in cross-examination, to the effect that if AFAC no longer required the services of Coulson’s helicopter, Coulson would no longer require the services of the tanker and refueller. But that does not affect the construction of the contract either. Those considerations of the practical reality informed the commercial context in which a power to terminate for convenience came to be inserted, rather than being bound to the contract for the whole of the “Term”.
Absent from either contract is any express provision bringing Coulson’s and Techfuel’s contract to an end when Coulson’s contract with AFAC comes to an end, or relieving Coulson of its obligation under the contract when its contract with AFAC comes to an end.
The clauses upon which Coulson relies fall well short of such express provision. The first difficulty with cl 1.1 in Schedule 1 is that “the contract period” is apt to mean the period during which the helicopter is to be made available, as opposed to the period during which the contractual relationship between AFAC and Coulson is in force. That meaning is supported by the words “including any extension periods”, which would be wholly otiose on Coulson’s construction.
Against this, Coulson said that Techfuel did not possess a copy of the AFAC contract and is not to be taken to understand its terminology. Taking that at its highest, it does not detract from the submission that the natural meaning of the words is not that for which Coulson contends.
The second difficulty is that the schedule identifying the Services is an unlikely location to find a clause which, on its proper construction, brings about the automatic termination of the contract between Coulson and Techfuel, or the cessation of Coulson’s obligations under that contract.
Much the same may be said in relation to cl 1.4. The existence of an unnecessary definition is an unlikely foundation for an inference that each Fuel Purchase and Services Contract automatically comes to an end upon the termination of each AFAC contract, or that Coulson’s obligations under the contract automatically cease.
The same may be said of Coulson’s reliance on the “Additional Information”. The clause is, in form, an acknowledgement. It is a considerable strain of the parties’ contractual language to derive an automatic termination, or an automatic cessation of one party’s obligations, from an acknowledgement.
Probably in recognition of those textual limitations, Coulson appeared to give greatest prominence to the language which commences Schedule 1. But the references there to Techfuel being required to provide refuelling capacity for “the full term of the AFAC / NAFC NSW RFS contract period, including any extension periods” have an ordinary natural meaning, namely, a positive statement of the time when Techfuel is to be ready to provide services. It is a considerable stretch to imply from those words a negative, namely, that if the contract between Coulson and AFAC comes to an end, that between Coulson and Techfuel does too, immediately and automatically, or that there are no longer any obligations upon Coulson for the purposes of its contract with Techfuel.
One difficulty is that there is no provision for notification by Coulson to Techfuel. One would expect, even in this not especially well-drafted contract, a provision whereby Techfuel would know that its contract has come to an end, or that Coulson’s obligations under it have ceased.
A related but more fundamental difficulty is that in 2021 both parties made a significant departure from their earlier 2020 bargain. The earlier bargain was for a term of at least three years. Confronted by the reality of the retendering that occurred after the first year of operation of that earlier contract, Coulson and Techfuel renegotiated, such that notwithstanding the “Term” defined on the first page of the contract, each enjoyed a right to terminate for convenience on 90 days’ notice. One of the circumstances when that right might be exercised would be if Coulson’s contract with AFAC came to an end; indeed there is every reason to think that the course taken by AFAC prompted the insertion, in 2021, of the new right. There is no necessity for an automatic termination, or for an automatic cessation of obligations, when both sides can escape from the contract freely, on giving 90 days’ notice.
This conclusion is strengthened by Schedule 4. Coulson relied upon this in support of ground 2, but it also bears upon the first ground. Let it be assumed that Schedule 4 has contractual force despite not being picked up in the body of the contract. The ordinary meaning of its language is to confer a right of termination on the part of Coulson in certain circumstances (namely, where Coulson is in breach of its contract with AFAC as a direct result of a breach by Techfuel). These are precisely the circumstances where AFAC might exercise a right to terminate its contract with Coulson. The proposition that Coulson might have a right to bring its contract with Techfuel to an end, but only if that is “to coincide with the end of the fire season”, sits uneasily with the automatic termination or automatic cessation of obligations for which Coulson contends.
Moreover, the construction for which Coulson contends undermines the central aspect of the bargain the parties made in 2021 concerning the protection which would be given to Techfuel in the event of termination for convenience. The short point is that the parties’ bargain in 2021 conferred a new right to terminate if either side wished to do so, irrespective of fault, and that is inconsistent with the construction for which Coulson contends.
True it is that in some circumstances, the exercise of that new right to terminate for convenience carried with it an obligation to make a specified payment, which is the dispute giving rise to this litigation. But irrespective of whether the new right was subject to an obligation to make a payment in certain circumstances, and irrespective of whether those circumstances were made out, the existence of the new right conferred by cl 6.2 is inconsistent with the need to imply that the Fuel Purchase and Services Contracts would automatically come to an end upon the termination of Coulson’s agreements with AFAC. Much the same may be said of Coulson’s submission insofar as it is framed in terms of Coulson’s obligations under the contract coming to an end.
This ground is not made out.