Federal Airports Corporation v Makucha Developments Pty Ltd; Vanesha Pty Limited and Paul Makucha [1993] FCA 315;

Federal Airports Corporation v Makucha Developments Pty Ltd; Vanesha Pty Limited and Paul Makucha [1993] FCA 315; - FCA 1993 case summary — Zoe

[41]

"In respect of the site on Qantas Drive to be used for

employee car parking, on the condition that you seek and

obtain authorisation from the Corporation to cross

Corporation land to gain access to your proposed

Environmental Screen off Qantas Drive as described later in

this letter, the Corporation is prepared to offer you a

licence of that area as shown delineated and stippled on the

attached plan No. FSD-5828/1/A2 subject to receiving your

written acceptance of the following further terms and

conditions:-

1 the term of the licence will be for six (6) years;

2 the date of effect will be 1 March 1990;

3 the initial rental will be thirty three thousand two hundred

dollars ($33,200) per annum, payable on or before the thirty

first day of July each year adjusted in accordance with the

CPI each year;

4 the purpose will be for a car park for Airport employees or

for access to car parking facilities;

5 all other conditions are the same as those set out in the

attached draft licence document.

...

On the condition that you accept this Licence offer the

Corporation will authorise you to use Corporation land between

Qantas Drive and your proposed Environmental Screen for the

purpose of intermittent access to construct and maintain the

Screen and the plants and thirteen advertising panels as submitted

in your Development Application to Botany Municipal Council on the

further condition that you pay to the Corporation a fee of three

hundred thousand dollars ($300,000) per annum for these access

rights, payable on or before the thirty first day of July each

year adjusted in accordance with the CPI each year subject to

receiving your written acceptance of the following terms and

conditions:

1 access will be authorised for a period of six (6) years;

2 the date of effect will be 1 March 1990;

3 the initial access fee will be three hundred thousand

dollars ($300,000) per annum, payable on or before the

thirty-first day of July each year automatically increased

on the first day of July each year by the amount by which

the Consumer Price Index increased over the preceding period

of twelve (12) months;

4 the purpose of the authorisation will be to permit

intermittent access across Corporation land to construct and

maintain an Environmental Screen and the plants and thirteen

advertising panels thereon as submitted in your Development

Application to Botany Municipal Council Number 1888 dated 19

September 1988 and for no other purpose .."

[49]

20. I do not wish to be critical of the officers of FAC, for my impression is that Mr Makucha may be a difficult man to deal with. Nevertheless, the fact remains that the development of the area, including the development of FAC's land, was allowed to proceed and proceeded with FAC's support so far as the roadworks were concerned, without any person with authority in FAC making a decision as to whether or not it should happen. Attached to Mr Austin's affidavit of 4 May 1993 is a schedule of works in respect of which Mr Austin deposed that he did not consent. But those works include erection of a chain mesh fence in late 1989, removal of trees in December 1991, removal of light pole in April 1992 and a series of works during July to October 1992, including the boom gate control and associated works. There is a degree of unreality about FAC's attitude to this matter, for there could not have been any doubt as to how Mr Makucha wished to develop the Makucha T-P land, or that he wished to use a part of FAC's land for the car park or that any question of road design and safety could be dealt with by the Botany Council. The important issue appears to have been that of price. In 1990, Mr Austin had requested an annual fee totalling $330,000, which Mr Makucha considered to be exorbitant and discriminatory. Mr Makucha had agreed to pay a fee of $117,000 for access to other land from Joyce Drive, but considered that also to be discriminatory. The fee or fees payable for access from roads on FAC land was the general subject of his complaint to the Ombudsman in June 1992. It should be noted that, by the time FAC had widened the pavement of Qantas Drive up to the new kerbing and guttering, the remaining sliver of FAC land between the pavement and the car park was only one to two metres in width and was crossed, in the vital area, by two large bitumen surfaces fully guttered and kerbed. It was perhaps not surprising that Mr Makucha thought that $330,000 was a large fee to pay for the use of what, to him, appeared to be a driveway from a public road.

[53]

"RECITALS

A. The Sydney (Kingsford Smith) Airport ('Airport') in

the State of New South Wales is a Federal airport

within the meaning of Part IV of the Act.

B. The parties have been in dispute as to their respective

rights and obligations in relation to lands held by them

within and in the vicinity of the Airport and enter into

this agreement to resolve their dispute without admissions

and without prejudice save to the extent provided by and for

the period of this agreement.

C. The Corporation has agreed to certain limited rights to

conduct the business of a public car park concession and

courtesy bus service on and from premises within the Airport.

...

OPERATIVE PROVISIONS

...

2.1 General

The Corporation HEREBY GRANTS to the Concessionaire for the

Term the right in common with the Corporation and persons

authorised or permitted by the Corporation for the

Concessionaire to use portions of the Airport for the

purpose of entry and exit of the Cars to the Car Park.

2.2 Car Park

In consideration of the covenants of the Concessionaire

hereinafter contained the Corporation HEREBY GRANTS to the

Concessionaire the right to use the Car Park during the

period of this Agreement for the purposes set out in clause 3.

3. AUTHORITY FOR USE OF CAR PARK

Subject to the terms and conditions hereinafter set out the

Corporation HEREBY GRANTS to the Concessionaire AUTHORITY to

use the Car Park pursuant to section 9 of the Act for

himself his servants or agents to:

(a) conduct the public car park concession for use by the

Cars on and from the Car Park;

(b) access for maintenance purposes only over the strip of

land at the Airport lying between Qantas Drive and Lot

20 in Deposited Plan 747023 as restricted under clause

6.3 and clause 6.4;

(c) access for construction purposes only over the strip

of land at the Airport lying between Qantas Drive and

Lot 20 in Deposited Plan 747023 as restricted under

clause 6.3 and clause 6.4;

(d) erect and display one car park identification sign

relating to the Business (subject to clauses 6.50 and 8.16).

...

5. CONSIDERATION

...

(i) for each year of the Term and pro-rata for part

of a year a fee of $50,000 per annum

(hereinafter called the 'Car Park Fee') payable

by equal monthly instalments in advance on the

date of this Agreement in respect of the period

from the Commencement Date to 1 April 1993 and

thereafter payable in advance on the first day of each month;

...

(b) Fixed Maintenance Access Fee

(i) for each year of the Term and pro-rata for part

of a year a fee of $10,000 per annum

(hereinafter called the 'Maintenance Fee')

payable in advance on the date of this Agreement

in respect of the period from the Commencement

Date to the First Anniversary Date and

thereafter payable in advance on each Anniversary Date;

6. CONCESSIONAIRE COVENANTS

The Concessionaire covenants and agrees with the Corporation:

6.1 (Deleted)

6.2 Authorised Use of Premises

To use the Car Park solely for the parking of Cars and for

the Courtesy Bus Service and no other use or purpose

PROVIDED THAT the Concessionaire must forthwith on demand

make good any damage caused by such use and must forthwith

on demand cease access for any unauthorised use and PROVIDED

FURTHER THAT to the extent that (if any) part of the land

shown coloured yellow on the plan annexed and marked 'A' is

required for the widening of Qantas Drive and possession is

required for such road widening works the authority to use

that land granted by this clause 6.2 is terminated over the

land required for road widening purposes.

...

6.23 Requirements of Authorities

At the Concessionaire's own cost to comply with the By-Laws

and all statutes ordinances proclamations by-laws orders or

regulations present or future affecting or relating to the

Car Park or the Business or any matters contemplated by this

Agreement and with all lawful requirements which may be made

or notices or orders which may be given to the Corporation

or the Concessionaire in respect of such premises or the

user thereof by any competent authority including without

limitation the Corporation acting the Corporation's Official

Capacity) having jurisdiction or lawful authority over or in

respect of such premises or the user thereof and will keep

the Corporation indemnified in respect of all such matters

in this clause referred to PROVIDED ALWAYS that if the

Concessionaire fails neglects or refuses to comply with any

such statute ordinance proclamation by-law order regulation

requirement or notice it shall be lawful for but not

obligatory upon the Corporation to comply with the same and

all moneys paid by the Corporation in connection therewith

shall be payable by the Concessionaire to the Corporation on

demand as a liquidated debt.

6.24 By-Laws and the Act

To acknowledge and accept that in addition to acting in its

capacity as licensor under this Agreement the Corporation is

also charged with the responsibility of administering and

enforcing the By-Laws and administering and operating

Federal airports in accordance with the Act and any conduct

of the Corporation in such a regulatory capacity is deemed

not to be a breach of any of the Corporation's covenants for

quiet enjoyment or otherwise under this Agreement. The

Concessionaire will not do or suffer to be done any act or

neglect or omit to do any act or permit any other person to

neglect or omit to do any act where such conduct neglect or

omission may obstruct the Corporation from performing its

obligations under this clause and the Concessionaire must

indemnify the Corporation against any costs claims or

expenses suffered by the Corporation as a result of such

conduct neglect or omission by the Concessionaire. To the

extent that there is any inconsistency between any of the

terms conditions and covenants in this Agreement and the

By-Laws and the Act or between the Corporation's functions as

landowner compared with the Corporation's Official Capacity

then the statutory obligations and rights shall prevail to

the extent of any inconsistency. The Concessionaire will not

be entitled to claim any compensation or bring any

proceedings against the Corporation on account of any loss

or damage suffered by the Concessionaire on account of any

performance by the Corporation of its obligations under this clause.

...

6.29 Performance Bond

(a) To give to the Corporation at the time required by the

Corporation (which time, unless specified by the

Corporation to the contrary shall be within 14 days of

the dating of this Agreement) and in any event within

14 days of the Commencement Date a performance bond

('Performance Bond') in terms acceptable to the

Corporation (namely a guarantee given by an Australian

trading bank acceptable to the Corporation or another

financial institution acceptable to the Corporation

either in the form of the guarantee set out in

Annexure 'D' or a security otherwise acceptable to the

Corporation) in the sum of $50,000 for the due and

faithful performance and observance of Clause 5(a) of

this Agreement by the Concessionaire.

...

6.73.1 The Concessionaire may operate a courtesy bus service

('Courtesy Bus Service') from the Car Park to the

Domestic Terminal and to Sydney International Terminal ('SIT').

...

8.2 Essential terms

The following obligations of the Concessionaire are

essential terms of this Agreement:

(a) the obligations to pay money under clauses 5 and 6.34; and

(b) the obligations under clauses 6.2, 6.3, 6.4,

6.5, 6.29, 6.48, 6.51.2, 6.68 and 8.27(1).

This clause 8.2 does not prevent any other obligation

under Agreement from being an essential term.

8.3 Events of Default

8.3.1 An Event of Default occurs if:

(a) the Concessionaire repudiates this Agreement; or

(b) the Concessionaire fails to comply with an

essential term of this Agreement; or

...

8.3.2 The Concessionaire must ensure that no Event of

Default occurs.

8.4 Termination Events

A Termination Event occurs if any essential term of

this Agreement is or becomes wholly or partly void,

voidable or unenforceable but is not claimed to be so

by the Concessionaire or by anyone on its behalf.

8.5 Corporation's right to terminate

The Corporation may:

(a) terminate this Agreement by re-entering the Car

Park without notice, or if required by law, with

notice; or

(b) terminate this Agreement by notice to the

Concessionaire; or

(c) convert this Agreement by notice to the

Concessionaire into a licence which may be

terminated at the will of the Corporation but

not of the Concessionaire

if an Event of Default or a Termination Event occurs.

If the Corporation takes action under clause 8.5(c)

the Concessionaire remains bound under this Agreement

as if that action had not been taken.

8.27 Acknowledgments

The parties agree that and the Concessionaire

acknowledges that:

...

(g) that the rights created in this Agreement are

contractual only and do not create in or confer

upon the Concessionaire any tenancy or any

estate or interest whatsoever in or over the Car

Park to the intent that the rights of the

Concessionaire are those of a licensee only;

(h) that this Agreement confers no rights of

exclusive occupation of the Car Park to the

Concessionaire and the Corporation may at any

time and at all times and from time to time

exercise all of its rights as owner of the Car

Park including, without limitation, its rights

to use possess and enjoy the whole of the Car

Park save only insofar as such rights prevent

the operation of the Business;

...

(j) the Concessionaire has no right of access from

Qantas Drive across the land vested in the

Corporation to the land comprising Lot 20 in

Deposited Plan 747023 for any purpose other than

those rights of access granted pursuant to this Agreement;

(k) access from Qantas Drive to the Car Park is for

the Cars and the vehicles operating the Courtesy

Bus Service only and is for no other purpose

without the prior written consent of the Corporation;

(l) it is noted that the Guarantor executed this

Agreement under a power of attorney and the

parties agree that if Paul Makucha does not

personally execute the part of this Agreement

held by the Corporation by 5.00 pm on Friday, 20

March 1993 such failure to execute is both a

Termination Event and an Event of Default. At

least 48 hours' notice of his intention to sign

must be given to the Corporation to enable the

relevant part of this Agreement to be available

for signing at the office of the Corporation's

solicitors or any other place reasonably

nominated by the Corporation."

[57]

"1. I was overseas at the time the agreement between the

Federal Airports Corporation and Makucha Developments Pty

Limited and myself ('the Agreement') was entered and did not

return to Australia until 15 March 1993. I had been absent

from my office for several weeks and as a consequence I had

a large number of matters to attend to upon my return,

including matters which required my attendance interstate.

2. I was aware that pursuant to the Agreement I was

required to personally execute a copy of it when I returned

from overseas. I was also aware that I was legally bound by

the Agreement as it had been executed on my behalf by an

Attorney whom I had appointed for that purpose. I fully

intended to execute the Agreement within the time prescribed

and in fact arranged to attend at the office of my

solicitors to execute the Agreement but was unable to attend

as arranged until 24 March 1993.

3. I believe that a photocopy of the Agreement excluding

its annexures was made available by the solicitors for the

FAC on 17 March 1993. On 16, 17 and 18 March 1993 I was

involved as the defendant and a witness in proceedings in

the District Court of New South Wales. I gave evidence on

16 and 17 March and was required to attend at other times

for the purpose of providing instructions to my solicitor

and barrister. On 17 March 1993 I believed that the

District Court case would finish that day and made a loose

arrangement to attend at the office of Pike, Pike and Fenwick

to sign the Agreement sometime on 18 March 1993. As events

transpired the District Court proceedings did not conclude

until about 3pm and it was then necessary for me to return

to the office to attend to urgent matters concerning the

construction of stage two of the environmental screen on the

Vanesha land.

4. On 19 March 1993 I was involved in various meetings from

the early morning including a meeting with a barrister in

the City at 8 am, an interview with a new assistant at 11 am

at my office as well as my regular work which by then had

mounted up as a result of my absence from the office for

nearly three days in connection with the District Court

proceedings. At 12 noon I flew to Queensland to commence a

series of business meetings which extended over the weekend

relating to advertising signs on the Vanesha land.

5. I returned to Sydney from Queensland at 2 pm on Monday

22 March 1993 and spent the balance of that afternoon

attending to urgent matters at my office and meeting with

engineers in connection with stage two of the environmental

screen. At 6 pm I again flew to Queensland to attend to an

urgent matter relating to other litigation.

6. I returned to Sydney from Queensland at about 9.30 am on

23 March 1993. Apart from the usual matters needing my

attention at the office I held a meeting with an employment

agency regarding new staff, conducted a site inspection at

the Vanesha land, met with engineering and construction

advisers in relation to the environmental screen and

discussed in detail with the company accountant the terms of

the Agreement. That discussion which lasted for several

hours, was the first real opportunity I had to go through

the details of the Agreement.

7. On 24 March 1993 I was again extremely busy attending to

matters which had accumulated in my absence. In addition to

those matters I spoke at length with the other director of

Makucha Developments Pty Limited, Mr John Goddard,

concerning arrangements for the bank guarantee required

under the Agreement and other terms of the Agreement. I

also held meetings with representatives of Qantas and other

companies. I attended at the office of Pike, Pike and Fenwick

at 6.30 pm and executed a copy of the Agreement.

8. At the time I returned from overseas I was also aware

that the Agreement required the putting into place of a bank

guarantee for a reducing sum of $50,000.00. I had not paid

particular attention to the date by which that bank

guarantee had to be put in place. I had intended and was

financially able to put the guarantee in place during the

week commencing 15 March 1993. I had a number of

discussions with Mr John Goddard regarding the nature of the

'reducing' bank guarantee and what form it should take.

When those matters had been agreed between us I instructed

the company accountant, Mr Geoffrey Schofield, to make

appropriate arrangements with the bank, National Australia

Bank at Mascot. Once it had been requested to arrange for

the bank guarantee it took the bank a day or two to issue

the document evidencing the guarantee. That document was

issued on 26 March 1993 and a copy was forwarded to the FAC

that day.

9. I was very surprised by the actions of the FAC in

purporting to terminate the Agreement merely because I had

been a few days late in personally signing the Agreement and

arranging for the bank guarantee, both matters which I

considered to be relatively minor given that I had paid the

sum of $14,166.66 upon entering the Agreement on 5 March

1993 and was not in arrears in any payment as at 19 March 1993."

[67]

"In my capacity as General Manager, Sydney (Kingsford Smith)

Airport, on behalf of the Applicant, I took the decision

that the Agreement should be terminated for breach of

clauses 6.29 and 8.27(1). My reasons for determining to

terminate the Agreement were as follows:

(a) Both clauses referred to above were expressed to

be essential and were essential in substance. I

had been advised and understood that this had

been emphasised to the representatives of the

Respondents during the negotiations leading up

to the execution of the Agreement and it had

also been emphasized that compliance with those

clauses was of fundamental importance to the

Applicant as a test of the good faith of the

Third Respondent. The Third Respondent failed this test.

(b) Further to (a), the clauses were incorporated in

the draft Agreement when, at the conclusion of

the negotiations which occurred immediately

prior to the hearing of proceedings no.6244 of

1992 in the Supreme Court of New South Wales,

which had been conducted in the belief by the

Applicant that the Third Respondent was present

and available (the Third Respondent having been

required for cross-examination in the Supreme

Court proceedings), it was disclosed that the

Third Respondent had departed for overseas prior

to the commencement of the negotiations. This

was of fundamental concern to the Applicant and

the representatives of the Applicant as:

(i) the Applicant has had previous experience of the

conduct of the First and Third Respondents,

including contractual relations with the First

and Third Respondents. For example, the

recovery of moneys under the Licence Agreement

referred to in paragraph 19 of the Affidavit of

John William Gordon Austin sworn in these

proceedings on 28 April 1993; and

(ii) the representatives of Applicant believed they

had been misled by the disclosure of the

representatives of the Respondents, at the

conclusion of the negotiations, that the Third

Respondent was overseas, despite being required

for cross-examination.

It was in these circumstances that the importance of

the clauses had been emphasized to the representatives

of the Respondents as referred to above. The

requirement of good faith, in these circumstances, was

further necessitated given that the Agreement

contemplated a contractual relationship for a term of

approximately 5 years."

[69]

"Thank you. The second thing I want to ask about is this.

Did you take any steps directed towards ensuring that Mr

Makucha or Makucha Developments was acquainted with their

obligations under the agreement in relation to provision of

the performance bond and personal signature of the document

by Mr Makucha?---I took some steps, yes.

Could you tell his Honour what those steps were?---Well, it

sort of comes in two stages. In relation to the performance

bond, that was part of the agreement from the outset or at

least from the second draft of the agreement and I had sent

the second draft of the agreement over to Mr Makucha in the

United States by facsimile. But at that stage the agreement

didn't contain the clause 8.27(2) so he would not have been

aware of that until probably when he returned to Australia.

I spoke to him on the telephone about it, I can't remember the

date, probably the day that I first made an appointment with

to sign the document but he was unable to keep that appointment.

...

Did you tell him that it was important that he should

punctiliously comply with his obligations under the agreement?

---I don't think I said, I used any of those expressions.

I'm sure you said something much more direct and to the

point and could you tell us what it was?---Well, I

personally didn't expect the corporation to terminate the

agreement and I didn't think that they would for a few days

here or there. I did stress to him that I would like him to

sign it before Friday. I understood that he was busy and in

fact he was unable to keep at least one of the appointments

that he had with me to sign it.

Did you stress with him that it was important that he should

have the performance bond provided and the agreement signed

on or before the Friday?---When you say 'stress' I don't

think I - I was really asking him to come into the office so

that I could go through the contract with him face to face

and explain all its terms and have him sign it. I don't

think I separately stressed either of the causes."

[85]

"It was soon after that the critical divide or supposed

divide occurred, between the liberal view of Lord Erskine

LC in Sanders v. Pope [1806] EngR 125; (1806) 12 Ves Jun 282 and the

strict view of Lord Eldon LC in Hill v. Barclay. The

latter case came to be followed as the true canon; the

former was poorly regarded in Lincoln's Inn, but it is

important to observe where the difference lay. This was

not, as I understand it, in any disagreement as to the field

in which relief might be granted, for both cases seem to

have accepted that, in principle, relief from forfeiture

might be granted when the covenant was to lay out a sum of

money on property: but rather on whether equity would

relieve against a wilful breach. The breach in Sanders v.

Pope was of this kind but Lord Erskine LC said, at p 293:

'If the covenant is broken with the

consciousness, that it is broken, that is, if it

is wilful, not by surprise, accident, or

ignorance, still if it is a case, where full

compensation can be made, these authorities say,

not that it is imperative upon the court to give

the relief, but that there is a discretion.'

To this Lord Eldon LC answers[1811] EngR 288; , 18 Ves Jun 56, 63:

'... with regard to other cases,' (sc. waste or

omitting repairs) 'the doctrine I have

repeatedly stated is all wrong, if it is to be

taken, that relief is to be given in case of a

wilful breach of covenant.'

The emphasis here, and the root of disagreement, clearly

relates to wilful breaches, and on this it is still Lord

Eldon LC's view which holds the field.

The suggestion that relief could not be granted against

forfeiture for breach of other covenants was not one that

followed from either case: relief was so granted in Bargent

v. Thomson [1864] EngR 719; (1864) 4 Giff 473. Equally in Barrow v. Isaacs

and Son (1891) 1 QB 417, a case of a covenant against

underletting without consent, a high water mark of the

strict doctrine, the emphasis is not so much on the nature

of the breach which may or may not be relieved against, but

on the argument that it is enough to show that compensation

can be given:

'it was soon recognised that there would be

great difficulty in estimating the proper amount

of compensation; and, since the decision of Lord

Eldon LC in Hill v. Barclay it has always been

held that equity would not relieve, merely on

the ground that it could give compensation, upon

breach of any covenant in a lease except the

covenant for payment or rent' (per Kay LJ at p 425).

We are not bound by these decisions, certainly not by every

shade of opinion they may reflect, but I am entirely willing

to follow them in their main lines."

[107]

(1) There was conduct on the part of FAC which contributed to

that breach. The first was the imposition of such a

condition at a time when Mr Makucha was overseas. Mr

Makucha was bound by the agreement, for his attorney under

power had executed the agreement on its behalf, but what was

required was his personal signature. The requirement that

he execute the agreement personally by 20 March 1993 gave

rise to the problem. Mr Makucha could not execute the

agreement until he returned from the United States and, when

he returned, he was caught up with other concerns. It was

the imposition of a restrictive time limit which caused the

difficulty. Moreover, it is an ordinary part of the law of

the land that a notice should be given under s.129(1) of the

Conveyancing Act 1919 (NSW) prior to the forfeiture of a

lease. It was not argued by Sir Maurice Byers that that

provision operated, though if the licence agreement really

were a lease, it would have applied. The point is that for

present purposes, the giving of such a notice is an accepted

part of the relationship between lessors and lessees and

therefore notice which a responsible owner of land such as

FAC would give to its licensee. No such notice was given,

even though FAC's solicitors were aware that Ms McCulloch

was holding a part of the agreement for Mr Makucha to sign

and that she was awaiting an opportunity to obtain his

signature. There were letters and facsimile transmissions

between the solicitors on 24 March, but no reasonable notice

of intention to terminate was given. Mr Makucha and Ms

McCulloch were both taken by surprise when the termination

occurred.

(2) The breach was, in my opinion, not a significant one. The

officers of FAC apparently placed great weight upon Mr

Makucha's execution as a sign of good faith, but Mr Makucha

had already executed the agreement through his attorney

under power. Moreover, the breach did not affect the

operation of the agreement in any way. Mr Makucha's

solicitor did not regard the matter as being of crucial

importance and she was not aware of the importance which Mr

Snelling and other officers of FAC placed upon it. In my

opinion, the delay of a few days in obtaining Mr Makucha's

signature for the agreement, which had a term of five years and

which had already been executed on his behalf, was a slight one.

In the light of the evidence of Mr Makucha and of his

solicitor, I would not hold that the breaches showed bad

faith or any lack of good faith on the part of Mr Makucha.

The breaches show no more than that the time limits were not

complied with by Mr Makucha, who was under considerable

pressure and had many matters to attend to at that time. Of

course, whilst I must give weight to the parties agreement

that the term was an essential term, Ms McCulloch had not

had an opportunity to explain that matter to Mr Makucha.

Moreover, Mr Makucha's breach was not wilful in the sense of

being deliberate. I accept Mr Makucha's evidence that he

intended to execute the agreement personally, that he had

arranged a tentative appointment with his solicitor for 18

March 1993 to do so and that his failure was brought about

by the pressure of other concerns of which the details are

set out in his affidavit. Inadvertence may not be the

appropriate word to use in relation to the breach but,

nevertheless, it appears that Ms McCulloch had not had an

opportunity to go through the agreement with Mr Makucha

after his return from the United States and had not

explained to him the provision of the agreement which

specified the requirement as an essential term, breach of

which would give rise to a right to terminate. Perhaps if

Mr Makucha had seen the agreement in that form, he would

have obtained a better understanding of the nature of the

term. But, as Ms McCulloch explained, the draft of the

agreement which Mr Makucha saw before he left for the United

States did not contain that term and she was awaiting an

opportunity to see him so as to go through the terms of the

final agreement with him. In these circumstances, I would

not describe Mr Makucha's breach as wilful.

(3) and (4) There were no adverse consequences to FAC resulting

from the breach. FAC may gain from the retention of the first

month's rent and perhaps the $10,000 maintenance fee

paid in advance and also the ability once more to

demand a substantial fee for access to the car park

and to the environmental screens, though an

appropriate fee has already been negotiated and

agreed, and FAC has no use for its land other than the

use proposed by Makucha T-P.

Makucha T-P, on the other hand, is at risk at losing the

benefit of its five years lease, of the business which it

has developed and of the moneys which it has spent in

developing the car park in recent years. The sums spent

have been substantial, exceeding $500,000 and assets such as

mini buses to run from the car park to the terminals have

been acquired. A business has been established and this

business is at risk.

(5) Specific performance would be an adequate safeguard for FAC.

Indeed, in my opinion, it would be highly desirable to tie

Mr Makucha and Makucha T-P into the licence agreement, which

seems well drawn so as to protect the interests of FAC. It

does not appear that anything would be gained by re-opening

the conflict over the subject land, although the officers of

FAC obviously hold a contrary view.

At a glance

Court

Decision date

Before

Source

Judgment (117 paragraphs)

Federal Airports Corporation v Makucha Developments Pty Ltd; Vanesha Pty Limited and Paul Makucha [1993] FCA 315; (1993) 115 ALR 679 (6 July 1993)

Parties

Legislation Cited (2)

Cases Cited (9)