Techfuel Pty Limited v Coulson Aviation

INTRODUCTION

1. Firefighting services have in recent years been indispensable for the management and control of bushfires that have beset many parts of the Australian continent in summer. This case reveals a glimpse of the commercial arrangements that lie behind the efforts of those involved in firefighting, particularly in rural areas; including the equipment and facilities used to control or douse bushfires and also involving different components of the nation's regulatory bodies, at state level, involved in the administration of firefighting services.
2. In August and September 2021, the defendant, Coulson Aviation (Australia) Pty Ltd ('CAA') entered into two agreements with the Australasian Fire and Emergency Service Authorities Council Ltd (the 'AFAC'). CAA is a subsidiary of Coulson Aircrane Limited, a family-owned company incorporated in British Columbia, Canada. The corporate group is very substantial: it conducts aerial firefighting operations not only in Canada, but also the United States of America, Chile and Australia. CAA has operated in Australia since 2005. Within Australia, it operates in New South Wales, Victoria and Western Australia. CAA's aircraft rotates to the northern and southern hemispheres at the end of each fire season.
3. The AFAC is a national body that has, as its members, the various States and Territories. Those members authorise the AFAC to procure and manage aerial firefighting resources, including the usage of helicopters to help quell or extinguish bushfires. The members are authorised to then deploy and manage firefighting operations. The National Aerial Firefighting Centre ('NAFC') is a business unit of AFAC and is responsible for procuring and co-ordinating aerial firefighting resources on behalf of State and Territory agencies.
4. The two agreements between the CAA and AFAC regulating aerial firefighting services in New South Wales and Victoria will be referred to as the 'NSW AFAC Agreement' and the 'Victorian AFAC Agreement', respectively. The relevant state agencies were the NSW Rural Fire Service (RFS) and the Victorian County Fire Association (CFA). There are numerous references in the evidence whereby the terms AFAC and NAFC are used interchangeably.
5. The CAA was a contractor with the AFAC. The CAA operates aerial firefighting aircraft, including helicopters. CAA has conducted aerial firefighting operations in Victoria since 2005 and in New South Wales since 2015. Broadly speaking, by September 2021, CAA agreed to supply the AFAC designated helicopters in Essendon and Mansfield, in Victoria; and Richmond, in New South Wales. CAA's Counsel, in his opening address, remarked that the CAA had designed and manufactured water tanks to fit on helicopters, which could drop volumes of water or fire retardants on bushfires.
6. The plaintiff, Techfuel Pty Limited ('Techfuel'), is a supplier of aviation fuel and support services in New South Wales and Victoria. It maintains a fleet of fuel delivery vehicles, being tankers. Its main clients are aerial firefighting fleets in those two states during the bushfire season each year.
7. Techfuel relevantly entered into three contracts, formally titled 'Fuel Purchase and Services Contract(s)' with CAA. They were described in these proceedings as 'Fuel Agreements'.
8. The term of the agreements commenced on 1 October 2021 and (subject to options for renewal) was scheduled to conclude on 31 March 2024. These were, broadly, contracts whereby Techfuel provided a dedicated refuelling vehicle and sold aviation fuel to the tankers in CAA's helicopters. Two of those helicopters were Boeing CH-47 Chinooks, one based out of Essendon in Victoria and one out of Richmond in New South Wales. The relevant fuel agreements in relation to those aircrafts were the 'Melbourne Fuel Agreement' the 'Richmond Fuel Agreement', respectively. (A third, a Sikorsky S-61 aircraft, which was based out of Mansfield in Victoria, was the subject of the Mansfield Fuel Agreement).
9. In practice, and again putting the matter broadly, CAA would contact Techfuel to indicate that one of its helicopters would commence a task and Techfuel was requested to provide a tanker (of a 30,000 litre capacity) with a qualified fueller (who doubled as a driver) to a particular site to refuel the helicopter.
10. The three fuel agreements between CAA and Techfuel operated successfully in the 2021-22 and 2022-23 seasons. The dispute underlying this litigation concerned the parties' arrangements for the 2023-24 season. It is not disputed that in respect to that particular season, each of the Melbourne Fuel Agreement and Richmond Fuel Agreement were terminated on 5 August 2023. It is the consequences of that event that are in issue.
11. The dispute crystallised in a proceeding that Techfuel commenced against CAA on 21 December 2023. The terms of the arrangements pertaining to Essendon and Richmond are materially the same albeit that they differ in the detail. So too are the legal issues that arise from the dispute. Techfuel says that following the termination of the contracts in August 2023, by cl 6.2, it was entitled, in circumstances where such termination occurred less than 100 days before the commencement of the 'fire season', to receive payment from CAA of a liquidated fee, calculated by reference to the 90 days of a specified daily rate. Alternatively, it contends that CAA repudiated the two fuel agreements, that it accepted that repudiation and is entitled to damages; which Techfuel describes as a claim for lost profits. CAA says it has no liability to pay any liquidated fee and disputes any liability in damages.
12. As will be elaborated, a fundamental issue is the extent to which, if at all, CAA's arrangements with AFAC influence the interpretation of important provisions of the fuel agreements.
13. The parties identified the following issues as requiring the Court's adjudication: 1. Whether CAA gave Techfuel written notice of termination of the fuel agreements (for Essendon and Richmond) less than 100 days before the "start of the fire season". This presents both: (a) a constructional issue of the meaning of when the fire season commenced; and (if answered in a certain way) (b) a factual question whether CAA terminated less than 100 days before the start of the fire season (the First Issue). 2. Whether the last sentence of cl 6.2 of each of the fuel agreements was void for uncertainty [1] (the Second Issue); or 3. Whether the 'services' under the fuel agreements were 'co-terminous' with CAA's agreements with AFAC (the Third Issue). 4. Whether the last sentence of cl 6.2 of each of the fuel agreements was unenforceable as a penalty (the Fourth Issue). 5. Whether CAA was entitled to terminate the fuel agreements on the basis of an implied term that Techfuel was not insolvent (the Fifth Issue). This issue subsumes multiple sub-issues, including whether the implied term exists; (if so) whether in breach of the term, Techfuel was insolvent; and whether by reason of s 451E of the Corporations Act 2001 (Cth), CAA can rely upon the breach. 6. Whether CAA repudiated the fuel agreements (the Sixth Issue). 7. The quantum of any damages payable to Techfuel (as an alternative to payment of the liquidated fee) and whether the claim of loss of profits is excluded by cl 9.1 of the fuel agreements (the Seventh Issue).

THE FACTS

1. I formed the view that the evidence of the two witnesses in this case, Mr Syd Bower (sole director of Techfuel) and Mr Britton Coulson (director of CAA), was honest and reliable. Neither Counsel argued otherwise in their final closing submissions. The evidence of both men, to some extent, and unsurprisingly, reflected firm views that they had concerning the correctness of their positions. Nevertheless, both made concessions where appropriate.
2. In truth, there was little serious dispute about the primary facts, even if there was dispute about the inferences to be drawn from them. The events narrated by the witnesses were relatively recent, but, as ever, it is the content of the contemporaneous documents and the inherent probabilities of events at the pertinent times that really counts. As sometimes happens in cases of this kind, the witnesses were asked their opinions about the meaning of contractual documents, or their subjective motives and what commercial advantages that they perceived they would obtain. Those opinions, even if they were admissible, carry little real weight.
3. The parties prepared an extensive chronology (MFI 9), but the salient facts were of much smaller compass.
4. For pragmatic reasons, I was prepared to have admitted the full four volumes of pre-prepared court case book (Exhibit A, subject to rulings on parts of the affidavit evidence), whilst plainly indicating to the parties' Counsel that they could not assume that I would have regard to evidence that was not specifically drawn to my attention. Counsel did not demur from that indication.

The AFAC contracts between CAA and the AFAC

1. The services provided under the NSW AFAC Agreement were provided out at Richmond. The agreement identified a CH-47D Chinook helicopter, as the relevant asset, with the registration N40CU.
2. The services provided under the Victorian AFAC Agreement were provided out of Essendon and Mansfield. Materially, the Essendon services designated a CH-47D helicopter as the relevant asset, with registration N42CU.
3. Taking the NSW AFAC Agreement as being representative (unless reference to the Victorian AFAC Agreement becomes necessary), pertinent provisions in that agreement were as follows.
4. The 'Contract period' is the total period of time that there is a contract between the NFAC and CAA.
5. The 'notice period' is the minimum period of time, normally expressed as a number of days, to advise CAA in advance of the commencement date for any service period.
6. The 'service period' means the length of time where CAA was to provide its services to carry out aerial firefighting and other emergency operations and activities under the contract. There may be more than one service period in each year of the contract period. The commencement and duration of each service period was as specified in Schedule 2.
7. Clause 4.1 indicated that the AFAC agreement commenced on the date it was executed. Clause 4.2 indicated that the contract period would be for a term concluding on 30 June 2024 (unless extended).
8. Each of these agreements was for an expressly defined term of three years (clause 6). However, the services to be supplied were for discrete sub-periods, called 'Service Periods'. In effect, CAA was only obliged to provide aerial firefighting services for a defined Service Period. By clause 6.2(b), in particular, NFAC or the CAA could change the requirements for the service period.
9. In clause 6 of Schedule 2, there was greater detail concerning the Service Periods. Amongst other things, in respect to the NSW AFAC Agreement, 'Service Period' was defined as summer, with a minimum service period length of 120 days. The notice period was identified as being 55 days.
10. There were several conditions precedent to a service period (cl 6.3) and requirements prior to the commencement of a service period (cl 6.4).
11. For the Victorian NAFC Agreement, details of the service periods varied as between Essendon and Mansfield. In respect to Essendon, two categories of service periods were identified: being for 'summer' (where the notice period was 56 days and the minimum service period was 84 days), but also could be on an 'ad hoc' basis, with the notice period to be agreed. (In respect to Mansfield, there were the same two categories of service periods: for 'summer', the notice period was 35 days, with a minimum service period of 84 days and for 'ad hoc' service periods, the notice period was to be as agreed.)
12. There was a slight difference in the commencement date as between the NSW AFAC Agreement and the Victorian AFAC Agreement. The former commenced no earlier than 1 November each year (absent prior agreement). The latter did not have a commencement date scheduled to commence 'no earlier' than a particular date, but rather operated by reference to a notice given to CAA by the Victorian County Fire Association.
13. By the two AFAC Agreements, CAA received notice of the 'Service Periods' by either the NAFC, the (NSW) RFS, or the (Victorian) CFA. Some examples of this were in evidence. On 8 September 2021, the NSW RFS gave formal notice of the commencement of a service for a Boeing CH-47D, based at Bankstown Airport, to commence on 1 November 2021. The service was expected to take a 120-days contract through to 28 February 2022, although extensions were contemplated. Also, on 12 October 2021, the Victorian Department of Environment, Land, Water and Planning notified the CAA of a service period commencing for 2 aircraft (Helitack 341) for a period of 12 weeks commencing on 8 December 2021 with a scheduled end date of 2 March 2022.

Earlier draft agreements between CAA and Techfuel

1. Techfuel relied upon earlier drafts of the agreements to illuminate the provenance of cl 6.2. This was pertinent to the penalty issue to be later addressed.
2. On 27 September 2021, Techfuel provided CAA with a draft standard form contract. This omitted any provision for termination by convenience.
3. On 29 September 2021, Mr Bruner, described as a 'contract specialist', sent an internal email to Mr Coulson which alluded to that omission. The next day, Mr Coulson suggested to Mr Bruner that CAA needed a termination clause whereby it could "get out with 60 days' notice". Mr Coulson later said in his evidence that he thought the clause was fair for both parties.
4. On 14 October 2021, on behalf of CAA, Mr Bruner sent an email to Mr Bower of Techfuel proposing a termination for convenience clause, explaining that "we'd give 90 days' notice to terminate (that way Techfuel will get paid for that year's annual commitment". On 18 October 2021, Mr Bower emailed Mr Bruner a proposed revised draft clause, in which a termination for convenience clause was included. On 19 and 21 October 2021, Mr Bruner sent internal emails regarding the clause, to which Mr Coulson was privy.
5. On 26 October 2021, Mr Bruner and Mr Bower spoke on the phone. Following the conversation, Mr Bruner emailed Mr Bower the terms of the proposed termination for convenience clause. The next day, Mr Bower engrossed CAA's proposed version of the clause into the fuel agreements without amendment and sent final execution copies of the draft agreements to CAA's representatives. On 28 October 2021, Mr Bruner emailed Mr Coulson the final contract for execution, including the termination for convenience clause. Thereafter the parties executed the agreements.

Material terms of the Fuel Agreements between CAA and Techfuel

1. The parties were content for me to focus upon the terms of the Melbourne Fuel Agreement (which concerns the helicopter based out of Essendon) which, as I have indicated, was materially the same as for the Richmond Fuel Agreement. Where there are significant differences, they will be pointed out.
2. The provisions that the parties relied upon were respectively as follows. The Fuel Agreements were created on TechFuel's letterhead or evinced its logo and business contact details. CAA was identified as the "Customer" and Techfuel was identified as the "Contractor".
3. The key provisions cited by the parties were as follows.
4. First, in the title of the agreement itself, CAA noted a particular reference number was given. For the Melbourne Fuel Agreement, this was "RW21791". For the Richmond Fuel Agreement, it was "RW21903".
5. "Services" was commonly defined in Schedule 1. This was: "TECHFuel will provide the Customer (CAA) 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."
6. Schedule 1 contained a table of 'Rates Wet A Fuel tanker support 2021/2022'. The Court was informed that those rates did not alter during the period that the fuel arrangements were on foot.
7. Within Schedule 1, further detailed provision was made for fuel pricing structure.
8. "Term" of the fuel agreements 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 operation required, commencing on the 1st of October 2021 and concluding on the 31st March 2024 with the option for 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."
9. As Contractor, Techfuel's obligations are set out in clauses 1 and 2. Clause 1 provided: "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."
10. Under a sub-heading 'Additional Information' which appears in Schedule 1 appears the following: "Both parties acknowledge that the Customer (CAA) 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 (Techfuel) is contracted by the Customer (CAA) to provide adequate resources to ensure that the operational requirements of the Customer (CAA) for the Service are met."
11. In basic terms, by the two fuel agreements scheduled to commence on 1 October 2021 and conclude on 31 March 2021, Techfuel agreed to provide aviation fuel and refuelling services for a minimum period of 84 days each year. Its daily rate was $1,400 plus GST.
12. Clause 2 of the Fuel Agreements also concerns Techfuel's obligations. Relevantly, cl 2.2(c) obliges Techfuel to comply, and cause its employees, officers and permitted agents to comply with all applicable laws, regulations, industrial awards and agreements including specifically, but without limitation, those laws relating to driver fatigue and Chain of Responsibility Legislation.
13. Clause 3 of the Fuel Agreements concern Techfuel's warranties. By clause 3.3(b) Techfuel warranted that its 'Services' would be performed in accordance with the requirements of all relevant laws.
14. The parties expressly provided for termination in clause 6. Relevantly, this was as follows: "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 a 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. …" (emphasis added)
15. With reference to cl 6.1(a)a, the expression 'externally-administered body corporate' is a reference to the expression appearing in the Corporations Act 2001 (Cth), however, at the time of the Fuel Agreements, it was already redundant, following the repeal of that provision in March 2017. The expression 'insolvent under administration', also defined by reference to a commensurate statutory expression in s 9 of that legislation, meant: "(a) a person who, under the Bankruptcy Act 1966, is a bankrupt in respect of a bankruptcy from which the person has not been discharged; or (b) a person who, under the law of a foreign country, has the status of an undischarged bankrupt; or (c) a person any of whose property is subject to control under: (i) section 50 or Division 2 of Part X of the Bankruptcy Act 1966; or (ii) a corresponding provision of the law of a foreign country; or (d) a person who has executed a personal insolvency agreement under: (i) Part X of the Bankruptcy Act 1966; or (ii) the corresponding provisions of the law of a foreign country; where the terms of the agreement have not been fully complied with; or (e) a person who is a party (as a debtor) to a debt agreement under: (i) Part IX of the Bankruptcy Act 1966; or (ii) the corresponding provisions of the law of a foreign country."
16. Clause 9.1 provided: "Neither party shall be liable to the other for any consequential, special, or indirect losses including but not limited to loss of revenue, loss of production, loss of contract, loss of profit or loss of opportunity howsoever arising and whether in any action in contract, tort (including without limitation for negligence) in equity, product liability, under statute or any other basis."
17. Clause 17.4 provided: "If a provision of this Contract would, but for a particular clause, be unenforceable, to (sic) provision must be read down to the extent necessary to avoid that result or, if the provision cannot be read down to that extent, it must be severed without affecting the validity and enforceability of the remainder of this Contract."
18. Clause 17.7 indicated that the fuel agreement was governed by the laws of the jurisdiction of the State or Territory of the Contractor's nominated address. There is no dispute that this is New South Wales.

Earlier services supplied by Techfuel

1. In its written submissions, CAA created a table which it argued illuminated a pattern of CAA receiving notice under the AFAC agreements, followed by Techfuel's performance of services under the fuel agreements with the CAA. Mr Bower was cross-examined upon certain schedules that were created on Techfuel's behalf. The schedules were based upon primary documents, including truck run sheets and delivery dockets. Mr Bower accepted that they reflected the requirements that the state agencies made of CAA.
2. An edited version of that table (excluding reference to the Mansfield Fuel Agreement) is as follows. Fire Season Service Period (AFAC) Services provided by Techfuel Melbourne Contract 2021/2022 8 December 2021 to 2 March 2022 18 January 2022 to 15 March 2022 2022/2023 14 December 2022 to 7 March 2023 16 December 2022 to 8 March 2023 Richmond Contract 2021/2022 1 November 2021 to 28 March 2022 17 November 2021 to 28 March 2022 2022/2023 1 December 2022 to 30 March 2023 15 December 2022 to 31 March 2023

The events triggering termination of the fuel agreements

1. In his sole affidavit, Mr Coulson deposed that by the end of the 2022-23 fire season in Australia, the N40CU and N42CU aircrafts (based in Richmond and Melbourne, respectively) were returned to North America, he understood, to be utilised for aerial firefighting services during the summer in the northern hemisphere. In particular, both aircraft were deployed by firefighting authorities in Southern California where they were required year-round. This meant that they were not able to be returned to Australia for its 2023-24 fire season to service the NSW and Victorian AFAC Agreements.
2. On 28 March 2023, Mr Coulson sent an email to Sharon Dimmock, of the Victorian Department of Energy, Environment and Climate Action, advising the Department that all of the CH-47 Chinooks with tanks would not be operating but that CAA was planning to lease a tanked Chinook from another operator to service the Victorian AFAC Agreement. Mr Coulson and Sharon Dimmock exchanged correspondence on the subject in which further information was supplied.
3. In April 2023, Mr Bower had a telephone conversation with Mr Biggs. The subject was CAA's difficulties with the Victorian AFAC Agreement. It was put to him, but Mr Bower denied, that he apprehended that this agreement may come to an end. He said that, to that point, he had not received advice that CAA could not provide a helicopter. He said he recalled that it was sourcing substitute aircraft.
4. Around this time, CAA tendered for and eventually purchased a separate CH-47 helicopter from a third party. Separately to the NSW AFAC Agreement, NSW RFS engaged CAA to provide helicopter crew. The RFS itself assumed responsibility for procuring refuelling services. Mr Bower was asked whether this development concerned Techfuel, by its signifying the possible end of the NSW Fuel Agreement. Mr Bower indicated that he was not concerned. He explained that the helicopter did not meet specifications and was scarcely airworthy. It was a 'secondary' support. More generally, he did not consider that there was a risk that CAA's arrangements with the NSW agency may end.
5. Mr Coulson indicated that the NSW RFS had acquired a Chinook helicopter from Unical and had engaged CAA to operate it. Specifically, CAA provided pilots and maintenance services: the services were 'labour-oriented'. The RFS took care of its own aviation fuel supplies. That removed an issue about limitations upon places where Techfuel could carry out refuelling. Mr Coulson's personal view was that he was content for CAA to continue engaging Techfuel where it needed a mobile service, in relation to refuelling. He acknowledged that CAA continued to engage with Techfuel at Mansfield to the end of the (2023-24) fire season.
6. On 7 May 2023, Mr Coulson received an email from the Deputy Director of the AFAC, advising CAA that the AFAC disapproved of the proposed substitute aircraft, advising that Victoria had indicated that it wished to terminate the service in relation to Essendon and giving notice that the Victorian AFAC Agreement was terminated (although the Mansfield service would continue). Mr Coulson deposed to instructing Mr Biggs to inform Techfuel of the outcome.
7. On 11 May 2023, Mr Coulson responded to the AFAC's email of 7 May, in which he expressed his surprise. He queried whether he could speak to Ms Stirling (and another person) in the next week. Mr Coulson was asked under cross-examination whether, at about this time, he remained hopeful that he could negotiate with the NFAC about the termination of the Victorian AFAC agreement. Mr Coulson did not believe so: the Victorian agency had indicated a firm position.
8. In May 2023, Mr Biggs had a telephone conversation with Mr Bower. The latter accepted that Mr Biggs had indicated that CAA's dispute with the agency remained unresolved.
9. On 10 July 2023, Mr Bower sent an email to Mr Coulson. Amongst other things he expressed disappointment that CAA's Essendon service had been cancelled and asked if Techfuel's tanker utilised for the Melbourne Fuel Agreement could be utilised elsewhere in Australia if need be. Mr Bower accepted that by 10 July 2023, he was aware that CAA's contract with the relevant Victorian agency concerning Essendon had been terminated wholly (and not just in relation to night vision services).
10. On 5 August 2023, Mr Coulson sent an email to Mr Bower. It stated the following: "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"
11. Techfuel says that by this email, CAA was notifying it that CAA was down to one aircraft (the S61) the subject of the Mansfield Fuel Agreement, having previously operated three aircraft: what was formerly three was now one.
12. On 27 September 2023, under the instruction of Mr Bower (who was at that time receiving medical treatment), his wife, Ms Ingrid Bower of Techfuel sent a letter to CCA. The letter contained the assertion that until that time, Techfuel understood that the aircraft (N40CU) would commence in at Richmond early November for the standard 120-day contract. It also asserted that notwithstanding Techfuel was aware of an unresolved dispute with NVIS (night vision) with the Victorian agency meant that the contract for Essendon would end earlier than expected, Techfuel believed that a minimum 3-year term would still be fulfilled. However, the crux of the letter was to the effect that given CAA terminated the Melbourne and Richmond Fuel Agreements, Techfuel, in reliance upon cl 6.2, sought payment (under that provision).
13. Techfuel issued two invoices demanding a 'lump sum payment claim' under cl 6.2, in equal amounts, totalling $277,200.
14. On 1 October 2023 the NSW Minister for Emergency Services issued a media release in which reference was made to the "official start" of the 2023-24 bushfire season in areas including Greater Sydney, the Central Coast, Illawarra and the Central West.
15. According to Mr Bower's affidavit, from September 2023 through October 2023 Techfuel was seeking out other work in Victoria. He identified Techfuel making informal approaches to several customers, but aside from NSW Helicopters, there was no written record of the approaches, or the respective responses.
16. On 10 October 2023, Mr Bower sent an email to Mr Coulson. This was a reply to CAA's response to Ingrid Bowers' letter of or about 23 September 2023. Mr Bower was justifying the content of that earlier letter. He emphasised that no written notice had been given to Techfuel of termination of the two fuel agreements.
17. In his evidence, Mr Coulson said he understood that at about this time, in order for CAA to terminate the fuel agreements it was necessary for it to provide notice to Techfuel. He said he thought the circumstance that the NFAC Agreement(s) was terminated was not an event giving rise to a right to terminate the fuel agreements per se.
18. On 12 October 2023, Mr Coulson responded to Mr Bower's email of 10 October; indicating that Techfuel's invoices were disputed and would not be paid. He asserted that he had personally discussed the Melbourne and Richmond fuel agreements, "as required by contract, with ample notice".
19. On 26 October 2023, Techfuel purportedly elected to accept CAA's 'repudiation' of the fuel agreements.

Techfuel financial difficulties as at 2023

1. CAA referred to financial statements for Techfuel in the 2021 and 2022 financial years.
2. In respect to the financial year ended 30 June 2021, Techfuel traded at a net loss of $756,747.
3. In respect to the financial year ended 30 June 2022, Techfuel traded at a net loss of $625,635.
4. Mr Bower accepted that the 2023 financial year was "tough" for the company. He accepted that the company had run up two years' worth of losses. By the end of the 2023 financial year, Techfuel accumulated losses were in the sum of about $1,019,000. Nevertheless, he said that Techfuel had faith in its three-year contract with CAA and also referred to an agreement in Sydney.
5. Mr Bower accepted that there were several events in the leadup to the 2023 financial year that placed Techfuel under severe economic pressure. Mr Bower accepted that this was the state of the company when it received CAA's email of 5 August 2023. These were: 1. Techfuel defending a winding-up application by a creditor (Fuelcraft NSW), resulting in payment in 2022 of the sum of $279,940. That payment necessitated a refinance with a financier; 2. Techfuel's settlement of a debt claim by a former Techfuel director (Mr Hearps) relating to a director's loan. Mr Bower said an amount was paid to Mr Hearps in the sum of $82,915 (plus interest) in October 2024; 3. Techfuel's debt owed to the ATO which, as at the end of the financial year 2023 was in the sum of $483,598; 4. as at the end of the 2023 financial year, Ms Ingrid Bower was (and remains) owed the sum of close to $500,000.
6. In re-examination, Mr Bower emphasised the equity that Techfuel had in its assets. Further, and somewhat paradoxically, the circumstance of a downturn in its contracts had freed up three vehicles for re-sale purposes. The company had, since the end of 2021, a payment plan in place to repay debt obligations to the ATO. It was these matters which, Mr Bower explained, led him to sign the Director's declaration as to solvency.
7. In the financial year ended 30 June 2024, Mr Bower said Techfuel had not entered into any new formal written agreement; although he said that there was short term (as in 3 weeks) job with NSW Helicopters.
8. There are other matters which CAA relied upon that emerged from the report of an administrator, however, Techfuel objected to the tender of that report.

The administrator's report

1. On the last day of the hearing, just prior to the parties' closing verbal arguments, I admitted the report, enabling CAA to rely upon factual representations for the truth of their contents, whilst rejecting any use of the report for opinions, whilst indicating I would publish my reasons for that outcome in these reasons.
2. I now give those reasons.

Admissibility

1. On 9 September 2024, after this proceeding commenced, the firm Hogan Sprowles was appointed as Voluntary Administrator to Techfuel.
2. On 4 October 2024, Christian Sprowles, a partner of that firm prepared a report to creditors pursuant to s 439A of the Corporations Act 2001 (Cth).
3. CCA explained that the purpose of the tender was to prove Techfuel's actual financial position. This is in a context where Mr Bower, Techfuel's former director, gave testimonial evidence in the course of which he agreed that in 2023 Techfuel was under severe financial pressure in several ways (noted earlier in these reasons). In argument, CCA did not, however, identify specific representations of fact made in the report that it sought to rely upon for a hearsay purpose. Nor did it identify particular opinions contained within the report that it sought to rely upon.
4. CCA explained that the firm's methodology including a summary of the company's financial position, after a review of financial statements and information. Its junior Counsel, Mr Flick, accepted that not all of the underlying financial documents are in evidence in the proceeding.
5. Techfuel objected to the tender of the Hogan Sprowles report on multiple bases. It contends that to the extent that factual statements were made, they were inadmissible hearsay, with no exception to the hearsay rule (such as a business records exception or admissions) being engaged.
6. To the extent that out of court opinions were expressed to prove the truth of the opinions, Techfuel said that they infringed the opinion rule even if an exception to the hearsay rule applied. Techfuel emphasised that no expert witness was called for CCA. If it was suggested that the report could be treated as an expert's written opinion, the report itself would not be admissible under s 79 of the Evidence Act 1995 (NSW) and procedural rules, such as rule 31.28 of the Uniform Civil Procedure Rules 2005 (NSW), were not complied with.
7. Finally, Techfuel argued that if these other bases for objection were not sustained, then the report would also be inadmissible under s 135 of the Evidence Act.
8. All of these objections were essentially generic. Certainly Techfuel did not argue that if I ruled against its objections on principle, the Court should make specific rulings about parts of the report.
9. In response, as indicated, CCA said it relied upon representations of fact for a hearsay purpose, and it is permitted to do so, as admissions, or as business records. It did not say what, if any opinions in the report that it relies upon.

Consideration

1. The debate about the admissibility of the report was truncated and conducted at a high level. It was also conducted at the heel of the evidence in the hearing. Subject to my decision, the defendant's case was closed. In fairness, the issue regarding the admissibility of the report was raised with the Court at the beginning of the hearing. However, especially in circumstances where the defendant's main witness was giving evidence by Audio Visual Link in a place outside Australia, the Court's preference was not to risk delaying that evidence being given. Further, the practice of this Court is that cases, once started, run until the end. It is unusual that they are adjourned to a later point to allow substantial periods for the preparation of submissions. I thought it was desirable for the parties' Counsel to know of the Court's decision as to the proposed tender so that they could get on with their closing submissions on the scheduled last day of the hearing. Although I was not involved in the pre-hearing interlocutory disputes, it does not appear that an application for an advance ruling under s 192A of the Evidence Act was sought; which might have facilitated closer consideration on specific matters in the report.
2. The forensic consequence however was that these reasons are only pitched at the level of principle, and are not directed at specific parts of the report. (In anticipation that this might be so, I indicated to Counsel on the penultimate day of the hearing at the close of argument on the application to tender that their closing submissions should be made on the basis of all permutations).
3. In considering the objections, I relied significantly upon the decision of Austin J in ASIC v Rich (2005) 191 FLR 385; [2005] NSWSC 417 ("Rich"), recognising, as I do, that what his Honour said, especially about the opinion rule, appears now not to reflect the position in the light of the High Court's later decision in Lithgow City Council v Jackson (2011) 244 CLR 352 ("Lithgow"). The case is illustrative because one of the many categories of documents that the defendants in that civil penalty proceeding objected to were reports prepared by liquidators, not only in their capacity as liquidators, but also in their earlier capacity as administrators of the company.
4. To begin with, Techfuel did not, in terms, make any objection on the basis of a lack of relevance, under s 55 of the Evidence Act. Its first objection was hearsay. CAA did not dispute that it would need to find an exception to the hearsay rule. Thus, it cited the "business records" exception in s 69(1) and it argued that such representations of fact it relied upon for a hearsay purpose were additionally admissible as 'admissions'.
5. In Rich, Austin J held (at [185]-[187]) that the records of the business of a company in administration or liquidation included records kept by the administrator or liquidator about the company's affairs, including copies of his or her reports to creditors. At [193] (and at [189]) his Honour also held that since the liquidators were at all times the agent of the company, their reports could also be regarded as reports kept by the company in the course of its business. Further, his Honour inferred at [202] that representations in those reports were made on the basis of information directly or indirectly supplied by persons who might reasonably be supposed to have personal knowledge of the asserted facts.
6. There is no reason, in my view, for distinguishing Rich on the facts of this case. None was ventured other than the suggestion that in Rich, the issue was reports from a liquidator. As indicated, I do not see that as a material point of distinction: his Honour had identified an administrator as also acting as an agent of a company. In my view, the business records exception in s 69(1) is engaged.
7. I did not consider that the exception to the admissibility of business records in s 69(3) was engaged any differently to that exception not being put in issue in Rich. In this regard, in relation to s 69(3)(a), the representations in the report were prepared for the purpose of fulfilling a statutory requirement and the administrator's responsibility of informing Techfuel's creditors. Further, although the proceeding had begun in December 2023 and the report was finalised in October 2024, it was only in December 2024 that any substantive issue emerged about Techfuel's solvency in 2023, by reason of the amendment to CAA's defence. In that sense, there is missing the quality that representations were made of self-serving nature directed to filling a vacuum of proof about the state of solvency of the company in 2023 in anticipation that the issue would arise in the civil proceeding. Section 69(3)(b) was not applicable.
8. The result is that, to the extent that the CAA relied upon the content of the report for proof of the facts intended to be asserted in the administrator's representations, the evidence is admissible.
9. In Rich, the same result (admissibility) flowed by a different route: being s 1305 of the Corporations Act 2001 (Cth). An important feature of the reasoning that led to that conclusion was that the liquidators (in that capacity, but also in their earlier capacity) were agents of the company such that the reports they prepared were 'kept' by the company ([307], [314]). Further the presumption in s 1305(2) applied and was not rebutted.
10. It seemed to me that, on the basis of what Austin J said about the agency of administrators in Rich, such representations of fact as may be contained in the report by the administrator, in that capacity, were separately also admissible as admissions, for the purposes of ss 81 and 87 of the Evidence Act. I did not accept Techfuel's submission that the person whose out of court representations a tendering party relies upon must necessarily itself by a party (or principal of the party), such as the sole director.
11. In what appeared to be something of an afterthought, CAA's Counsel also flagged reliance upon s 50 of the Evidence Act. The most cursory look at the report indicates however, that the administrator was doing much more than merely summarising a voluminous document or documents. I did not consider that s 50 could be relied upon.
12. This left two matters, which again, I can only deal with at a general level.
13. I did not understand Mr Flick to indicate that CAA was seeking to rely upon opinions of the administrators in his oral submissions in the argument. But if I am wrong, I accept Techfuel's submission that the admissibility of a business record under s 69 does not militate in favour of the admission of out of court opinions expressed by the administrator. That view is precluded by the High Court's decision in Lithgow. The CAA did not suggest that opinions contained in the report were admissible under s 79 of the Evidence Act. Nor did the CAA contend that the report could be relied upon as written expert opinion in a way that might circumvent procedural rules as to the reliance upon an expert report. It is unnecessary to consider whether the report could be excluded under Court's rules for being treated as an 'expert report'.
14. The second matter is that in Rich, Austin J also determined that documents that are admissible as exceptions to the hearsay rule (and/or s 1305 of the Corporations Act) may, nevertheless, be excluded or limited under the Court's discretionary powers in ss 135 and 136 of the Evidence Act.
15. Counsel for Techfuel relied upon the limbs in s 135(a) and (b) (but not (c)). But the arguments he cited in his written submissions were very similar to those that had been advanced (and rejected) in Rich, including emphasis upon his inability to cross-examine the administrator, who has not been called for CAA.
16. In a decision by the Western Australian Court of Appeal, Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [2022] WASCA 132 per Murphy JA at [695] (Fraser AJA agreeing), the Court emphasised that the content of statutory reports have a degree of 'presumptive' value.
17. To the extent that Techfuel suggested that the administrator's representations are provisional, or qualified, or feature inconsistent statements, in my view, those complaints go to weight; not admissibility. In the final decision in the Rich litigation (ASIC v Rich (2009) 236 FLR 1 at [398]), Austin J noted that there may be a variety of reasons why evidence admissible under s 1305 is rejected by the tribunal of fact. The same observation applies to any evidence of out of court representations located in business records. It must be recalled, as Austin J also emphasised in Rich, that this is a hearing by judge alone; where submissions about an 'unfairly prejudicial' evidence commonly run aground because judges, as trained lawyers, do not habitually misuse evidence as juries might. As Austin J also indicated, and as a matter I touched upon in the brief oral argument on the application, the circumstance that hearsay evidence is relied upon in a document would rarely provide a firm basis for exclusion of the evidence under s 135 of the Evidence Act; as relatively early authorities on the application of s 135 recognised. [2]
18. These were my reasons for determining that the administrator's report was admissible for the hearsay purpose of proof of the facts (but not the opinions) intended to be asserted.

Content of the administrator's report relied upon by CAA (Exhibit 2)

1. Notwithstanding the tender over Techfuel's objection, ultimately, CAA made no specific reference to its content, other than its generalised assertion that the report disclosed numerous claims and demands from creditors onwards, including statutory demands, claims by the estate of a former director and refinancing arrangements. As noted earlier in these reasons, these matters were explored in Mr Bower's cross-examination. CAA also noted (without specificity) that the administrator's report indicated financing arrangements with numerous lenders in respect to most of the company's assets.

(a) the proper construction of the expression 'the start of the fire season'?

1. Upon the answer this question, Techfuel's claimed entitlement to a lump sum liquidated fee under cl 6.2 of the contracts hinges.
2. CAA contends that neither the Melbourne or Richmond Fuel Agreements started on 1 October 2023. They started on different dates - no earlier than 1 December 2023 for the Melbourne fuel agreement and no earlier than 15 November 2023 for the Richmond fuel agreement. On either case, it being common ground that notice was given on 5 August 2023, CAA did give notice prior to the period of 100 days prior to the start of the fire season.
3. CAA is not definitive as to when it says the fire season started. There was no express definition of the length, or commencement of the 'fire season'. That is deliberately so since it depended on a range of variables, such as the state of the weather and the AFAC's ad hoc requirements of the CAA; which would then be conveyed to Techfuel. The CAA says that the legislative provision in the Rural Fires Act is neither here nor there. It only applied, in terms, in New South Wales (in Victoria, CAA noted, there was a significant potential for the involvement of local councils as to when the fire season would begin) and, in New South Wales, the objects and purposes of that legislation were directed at different subject matter.
4. That, CAA argues, reflects a business-like or commercial approach to the interpretation of CAA's and Techfuel's rights and obligations towards one another.

Consideration

1. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35], the plurality stated the test for determining the meaning of a provision in a contract as follows: "[T]he objective approach [is] to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. ... [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'." [3]
2. However, the starting point for the construction of the provision is the language used by the parties. [4]
3. In Mount Bruce Mining, the plurality considered the scope of surrounding circumstances to which recourse may legitimately be had. These were objective: "What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations." [5]
4. As to the last sentence in that passage, in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, Heydon JA (at [25]) noted that post-contractual conduct was not admissible on the question of what a contract means.
5. The plurality also emphasised that in the construction of commercial contracts, absent a contrary indication in the contract, "a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption 'that the parties ... intended to produce a commercial result'. Put another way, a commercial contract should be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience' [6] ."
6. Earlier, in QBE Insurance Australia Ltd v Vasic (2010) 109 NSWLR 184, Allsop P (with the agreement of Giles and Macfarlan JJA) made observations about the knowledge that the parties are taken to have. His honour said: "…the scope of the surrounding circumstances, knowledge of which is to be attributed to a reasonable person in the situation of the contracting parties (not one or some only of them), is to be understood by reference to what the parties knew in the context of their mutual dealings. As Lord Wilberforce said, this does not involve a species of constructive notice. Constructive notice implies a degree of enquiry by reference to some external standard. Just because something is available to be found does not make it relevant, if the parties did not know of it. The reasonable person may be taken to know of things that go beyond those that the parties thought to be important or those to which there was actual subjective advertence by the parties. Further, the circumstances may include such things as the legal context to the transaction, especially if a market is involved. Nevertheless, the scope of the relevant material is necessarily bounded by the objective task of the reasonable person giving meaning to the words used by the parties in the circumstances in which the contract came to be written, by reference to what the parties knew in the sense stated by Lord Wilberforce in Reardon Smith, by Mason J in Codelfa and by the High Court in the various cases since Codelfa."
7. What is in issue is the meaning of the expression "start of the fire season" within the last sentence of cl 6.2.
8. The parties presented a constructional choice. For CAA, the start of the fire season, for the purpose of the last sentence of cl 6.2, occurs when Techfuel's supply of its services commenced. For Techfuel, it is 1 October, which is the starting day of the 'bush fire danger period' in respect to rural areas in New South Wales. It was, Techfuel noted, in New South Wales that it had its base of operations and it was New South Wales law that governed the parties' rights.
9. Starting with the language in the last sentence of cl 6.2, it is undisputed that the parties themselves did not define the expression 'fire season'. The expression itself was not referred to earlier in cl 6.2 or, indeed, elsewhere in the fuel agreements.
10. Clause 6.2 is plainly very distinct from cl 6.1. Clause 6.1 fundamentally provided a right to terminate for (stipulated) cause; the former provided to a right to terminate at will. But cl 6.2 provided for two situations in which the right could be exercised, with two different monetary consequences. By the first and second sentences, either party could terminate for convenience, and, in that event, Techfuel would be paid for fees and expenses incurred. The third sentence conferred a right solely upon CAA. This was less than 100 days prior to the "start of the fire season" and, if CAA exercised its right, it was obliged to pay Techfuel a lump sum fee.
11. The concept of a 'fire season' is not technical or scientific. It strikes me as amounting to a colloquial expression and one that should carry its ordinary and plain meaning. It is, however, an ambiguous expression, such that recourse can and should be had to the surrounding circumstances known to the parties that help identify the purpose and object of the provision.
12. It is an overstatement to suggest, as Techfuel does, that no regard can be had to the existence or terms of the New South Wales and Victorian AFAC Agreements. It was well known to Techfuel, at the date of contract, that its services were to aid in CAA's firefighting services to the AFAC.
13. In my view, it can also be said that the services that both Techfuel and CAA were respectively supplied were directed to what might in economic terms be referred to as a particular geographical 'market'. These were areas of rural land in the States and Territories; but especially in New South Wales and Victoria. The operating legislation in both of those states for the administration and co-ordination of rural fire services was the Rural Fires Act 1997 (NSW) and the Country Fire Authority Act 1958 (Vic). Both pieces of legislation, amongst other things, established rural fire agencies, being the Rural Fire Services in New South Wales and the Country Fire Authority in Victoria. Although this was not the subject of direct evidence, I consider that I can infer that the parties were commonly aware that it is the rural areas of each state where the damage wrought by bushfires is likely to be most severe in both cases.
14. Both pieces of legislation utilise the expression 'fire danger period' (although in the New South Wales legislation the expression is more accurately the 'bush fire danger period'). In both States, the relevant executive officer of the RFS (the Commissioner) and CFA (Chief Executive Officer) designates and declares a fire danger period. As was pointed out by Counsel for CAA, that period has particular functional significance since conduct by persons within that period may give rise to criminal liability. But the main point for present purposes is that the executive officer does so following a mandatory consultation process. In the case of New South Wales, this is with local councils [7] or a variety of firefighting authorities (including the RFS, but also Fire and Rescue NSW, the Office of Environment and Heritage and the Forestry Corporation). [8] In Victoria, the position appears more streamlined: the executive officer is obliged to consult the leading bureaucrat of the Department of Sustainability and Environment. [9]
15. In both States, there is flexibility given to the date range for the fire danger period and there is also flexibility as to the part of the (rural) land within the state to which the fire danger period applies. [10] But a key difference is that in New South Wales, there is a default (bush) fire danger period: it commences on 1 December and ends on 31 March. I say it is a 'default' period since it is that period which applies subject to the Commissioner's exercise of a power to modify that date.
16. Given the 'market' in which both parties to the fuel agreements operated, I regard the legislative framework in each State as being known to both parties. Neither party suggested that it did not know of that framework prior to entry into the fuel agreements.
17. 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 CAA, aided by Techfuel, supply.
18. Further, as indicated in paragraph 130, the consultation process for the fire danger period involves different stakeholders. This may reflect the circumstance that aerial firefighting services is only one part of firefighting services over the season; embracing other kinds of firefighting services. It might be expected that many services occur within the period in which aerial firefighting services are needed. But all of those involved are doing so in "the fire season". This is one indication of why a 'fire season' is likely to be broader than the period in which it is expected that CAA's services, and therefore Techfuel's services, are required.
19. 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.
20. 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 CAA's counsel referred to at paragraph 55 above.)
21. I recognise, of course, that CAA 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 CAA 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 CAA and Techfuel would be expected to supply their respective services.
22. An advantage of Techfuel's adopted construction is that it provides certainty.
23. CAA'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' [11] .

Uncertainty associated with CAA's construction of the expression

1. The central difficulty for CAA's construction assimilating "fire seasons" with "supply periods" is that it is just not known when within the 'fire season' CAA (and correspondingly Techfuel) will be supplying their respective services. That is inherent. It is also productive of uncertainty. When CAA 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 CAA 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 CAA is to perform its services.
2. 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.
3. When considering whether to exercise its right to terminate for convenience in the last sentence in cl 6.2, CAA 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 CAA for any services at all. At the time CAA 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 CAA 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.
4. 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 CAA), 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 CAA'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 CAA'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 CAA is affected by a third party's conduct under an agreement to which Techfuel is neither a party nor privy.

Are the services 'co-terminous'?

1. A further point against CAA'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.
2. 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 CAA. In particular, CAA'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.
3. The premise for CAA's contention is that the period in which services that Techfuel agreed to supply CAA must coincide with the period of services CAA agreed to supply to the AFAC: if the AFAC had dispensed with the need for the CAA to provide work; so too, it was argued, the CAA was entitled to dispense with Techfuel's services.
4. Although Techfuel was not a party to CAA'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 CAA practically depended upon the subsistence of continuing AFAC Agreements.
5. Despite a contention raised in its written submissions (paragraph 35) apparently to the contrary, in closing argument, Counsel for the CAA 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 [12] .
6. 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.
7. 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. [13]
8. Techfuel's construction of the expression 'start of the fire season' in the last sentence of cl 6.2 is preferred and accepted.

(b) was notice of CAA's exercise of the right to terminate for convenience given less than 100 days before the start of the fire season?

1. For reasons explained, the "start" is 1 October throughout each fire season during the term of the contract.
2. The cut-off date, for the purposes of the 100-day period of notice referred to in the last sentence of cl 6.2, was 23 June 2023. As indicated, Techfuel's position was that 'notice' of the right to terminate was given on 5 August 2023. That date was less than 100 days prior to the start of the 2023-24 fire season, starting on 1 October 2023.

The Fourth Issue: is cl 6.2 unenforceable as a penalty?

1. CAA argues that the last sentence of cl 6.2 is a penalty and is therefore unenforceable. It says that strictly read, it imposes a requirement upon CAA to pay Techfuel $138,000, irrespective of any performance by Techfuel and irrespective of any fault on the part of CAA. This is based upon CAA's acceptance of the calculation of a multiple of a contracted rate at $1,400 a day.
2. CAA says that this could not be said to be a genuine pre-estimate of loss, but is rather a windfall. Techfuel could not recover $1,400 without incurring expenses it would ordinarily incur (such as labour costs). It says that the amount of the fee is not calculated by reference to future loss. It says that the circumstance that Techfuel is not required to mitigate is another indication that it is a penalty.
3. Counsel for Techfuel argued that that the requirement to pay an amount on termination for convenience under the last sentence of cl 6.2 was not a collateral stipulation to a primary stipulation. It was a primary stipulation itself. But if not, it could not be construed as an additional detriment on the failure of any primary stipulation. Techfuel's legitimate purpose, protected by cl 6.2 was that if, at its election, CAA terminated the fuel agreements in close temporal proximity to the commencement of the fire season, it was required to pay an agreed amount as compensation to reflect the commercial realities (given that CAA's right was exercised in such close temporal proximity to the commencement of the season) that Techfuel was likely to find it difficult to find an alternative customer or customers for the season imminently to commence.
4. He argued that underlying the penalty doctrine is that it is a sum payable by contracting party A to contracting party B upon the occurrence, or non-occurrence, of an event where it is party A who bears the responsibility of ensuring that the occurrence (or non-occurrence) does not occur. That was not the last sentence of cl 6.2. The fee was not intended to incentivise CAA to perform in a particular manner.
5. Further, the pre-contractual communications indicated that CAA was responsible for the insertion of the last sentence to cl 6.2. It was difficult to see how given that circumstance, the operation of the fee could be characterised as unconscionable or extravagant.
6. Relying upon Mr Bower's uncontradicted evidence in his second affidavit (27/8/24) that the Richmond and Melbourne aircraft used 1,650 Litres of fuel per hour, and assuming a price of $1,80 per litre, Techfuel's Counsel supplied hypotheticals to demonstrate the falsity of CCA's arguments about the extravagant or disproportionate nature of the fee. On the conservative assumption that CCA aircraft operated for 6 hours (excluding, say night vision flights), at the rate of fuel identified by Mr Bower, 10,800 Litres would be used. For 6 hours spread over 60 days, 650,000 Litres would be used.

Consideration

1. In Dunlop Pneumatic Tyre Co v New Garage & Motor Co Ltd [1915] AC 79 Lord Dunedin said (at [86-87]): "2. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage … 3. The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach … 4. To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are: (a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach … (b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid … (c) There is a presumption (but no more) that it is penalty when "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage".
2. In Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 ("Andrews") (at [12], [45]-[46] and [78]), the High Court departed from English law to the extent that it determined that penalties doctrine was not confined to contractual provisions involving a breach of contract by one of the parties. The 'primary stipulation' may be the occurrence, or non-occurrence of an event simpliciter.
3. In Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231 ("Arab Bank"), after considering the last of the trilogy of recent High Court cases dealing with penalties in Paciocco v Australia and New Zealand Banking Group (2016) 258 CLR 525 ("Paciocco"), MacDougall J (delivering the leading judgment) distilled (at [74]) the following principles (citations omitted): "(1) Lord Dunedin's propositions were not "rules of law", but "distillations of principle" … (2) The essence of a penalty is that it is a collateral stipulation, the (or a predominant) purpose of which is to punish the borrower for breach, and thus to compel performance ... (3) One way of testing whether the impugned stipulation is penal - intended to punish - is to inquire whether the sum that it stipulates to be payable on breach (as I have indicated, the equitable origins and continuing equitable operation of the principle have no present relevance) is to ask whether the stipulated sum is extravagant or out of all proportion to, or unconscionable in comparison with, the maximum amount of damage that might be anticipated to follow from the breach ... (4) "Damage" in this sense is not limited to damages recoverable upon breach of contract, but may extend to damage, or losses, caused by the impairment of other legitimate commercial interests that were intended to be protected by the stipulation ... (5) The analysis is to be made at the time, and taking into account the circumstances applicable, when the contract was made; not at the time of breach; the analysis is prospective, not retrospective (or as is said in some judgments, is ex ante, not ex post) [14] ... (6) Mere disproportion between the stipulated sum and the possible damage is not enough to indicate "penalty"; the disproportion must be such that it is unconscionable for the lender to rely on the stipulation..."
4. As was also commented in Cheshire & Fifoot Law of Contract (12th Australian ed) (LexisNexis, 2023) at [23.45], there is no inflexible requirement for a contracting party seeking to justify an impugned clause, to justify it by reference to a genuine pre-estimate standard of damage (at the time of contract). In Paciocco, Kiefel J (French CJ agreeing) emphasised that that the question is whether the sum is 'out of all proportion' to the interests said to be damaged. In Paciocco the lender admitted it could not justify the clause by reference to a genuine pre-estimate, but still its fees were upheld by the High Court since they were not punitive.
5. The onus of proof as to whether a requirement to pay money is a penalty falls upon Techfuel. [15]
6. Techfuel's submission, with its emphasis upon a party's 'responsibility' for an event, or an event 'within its control', tends to conflate the concept of what is a primary stipulation with whether a party has breached a provision. However, the High Court in Andrews released penalties doctrine from the fetter of a need to prove an event of default or a breach of contract by one of the parties. As Gageler J (as his Honour then was) said in Andrews: "..there is no reason in principle why the primary stipulation to which a penalty is collateral cannot consist of an occurrence or non-occurrence of an event which is neither a breach of contract nor another event which it is the responsibility or obligation of the party subjected to the penalty to avoid" [16] (emphasis supplied)
7. It is sufficient to engage penalties doctrine that the last sentence to cl 6.2 that a liability results from there being an occurrence, or non-occurrence, of an event. The occurrence here is CAA's election of its right to terminate within a temporal period.
8. Nevertheless, this is not the paradigm case for penalties where the party seeking to enforce the clause has an interest in compelling the other party's performance of a provision. The right was conferred upon CAA to exercise at will. Techfuel had no interest in 'compelling' CAA to terminate the fuel agreements. Further, CAA was not 'in default' by exercising such right.
9. Although the language in the area of penalties doctrine refers to 'punishment' (with the connotation of 'penal'), it is unnecessary for the Court to try to look to find any (or any predominant) subjective purpose in one party to punish the other party where there is non-compliance with a primary stipulation. The test is whether the totality of the circumstances gives rise to the objective inference that the only (or predominant) purpose was to impose a detriment on a contracting party in the event that the primary stipulation is not observed in order to deter non-observance of the principal stipulation. This involves a comparison between what Gageler J (at [164]) referred to in Paciocco as the negative incentive to perform being so far out of proportion with the positive interest in performing that the negative incentive amounts to deterrence by threat of punishment.
10. Here, the negative incentive was payment of Techfuel's daily fee payable for 90 days. From the CAA's perspective of a "service period", that may appear exorbitant, because the service period represents the actual days, or date range in which the services are supplied (or, with reference to the prospective period of notice identified in cl 6.2) or a prediction of the period in which services would be supplied. But set against my interpretation of the expression 'fire season', as I have interpreted it (running to 6 months or about 180 days), it is not so plainly extravagant. I accept Techfuel's submission that, whilst the clause confers a right upon CAA, another part of the clause protects Techfuel's commercial interests. CAA did not establish, for example, that there was a ready market for aviation operators such as itself, whom Techfuel could turn to in the event that it had to scramble, within a relatively tight timeframe before the commencement of the season, to find alternative aviation aircraft operators. CAA clearly valued its entry into the contract with Techfuel, indicated, amongst other things, by the circumstance that Techfuel was its exclusive supplier. The losses here were not only a loss of potential revenue stream, but also, because of the time CAA exercised the right, possibly also opportunities foregone in supplying other aircraft operators. These were matters that would have been difficult to estimate at the time the fuel agreements were entered into.
11. The measure of extravagance or disproportion is from the date of entry into the contract, not subsequently. The focus is the loss or damage that "might be anticipated" to follow from the breach. Its terms, and the circumstances known to the parties in which the contracts were entered into on 1 October 2021, did not obviously suggest disproportion between the stipulated fee and possible damage. If it did, it might have been expected that a corporate group as substantial and sophisticated as CAA would not have agreed to the stipulated fee, being at the daily rate. To adapt what Keane J said in Paciocco, as the price for negotiating an exclusive right in the last sentence in cl 6.2, CAA's willingness to run the risk of incurring the fee should it not exercise that right was not apt, in the circumstances of its contemplated operation, to have an effect in terrorem of CAA. [17]
12. The monetary analysis conducted by CAA in its closing verbal submissions was, contrary to principle, conducted as it was conducted retrospectively in view of what was known in 2023 about the financial position of Techfuel at the time of the contract. It also erroneously assumed that it was necessary that Techfuel was required to establish a genuine pre-estimate of loss; when it appears from Paciocco that caselaw is moving away from such requirement.
13. The calculation for the fee was a fee which no more and no less reflected the daily rate in the fuel agreements within a discrete period that was something much less than the 'fire season' on my interpretation of that expression (Schedule 1). The 'loss' to which the provision is directed reflected the commercial object premised on the expectation that Techfuel would suffer financial loss for a period if CAA terminated at will within a period fairly proximate to the start of the fire season. It would have to find an alternative purchaser, or purchasers. How long it might take to find an alternative purchaser (if at all) at a point fairly proximate to the beginning of the next fire season was inherently uncertain. The number of competitors to CAA, as a potential alternative source of business to Techfuel, was not identified. Insofar as the way the fee was calculated, CAA did not complain about the daily rate and it did not complain about the number of days by which that rate was multiplied.
14. This was unsurprising in light of the provenance of the impugned provision. The pre-contractual correspondence, which CAA did not dispute was available to be used as an aid when considering this doctrine, also tells against the notion that deployment of the daily fee is 'unconscionable'. On 26 October 2021, Mr Bruner, for CAA, sent an email to Mr Bower in which he set out CAA's proposed termination for convenience clause. This contained cl 6.2 in terms that corresponded with the final version of cl 6.2 "as requested" by CAA. Mr Bruner was not called by CAA as a witness in relation to the provenance of the clause. However, Mr Bower's unchallenged evidence (13/5/24, paragraph 24) was that he did not have any input into the content of clause 6.2, which he surmised was prepared by Mr Bruner and which amendment he accepted. That correspondence indicates that CAA was responsible for the insertion of the last sentence in cl 6.2. CAA's Counsel did not dispute that proposition (T162.26). It is curious that a clause initially proposed by a 'contract specialist' at the behest of a very significant corporate group, conferring a right upon it, at the price of a fee bargained for, could be impugned as being 'unconscionable'. [18]
15. As Keane J observed in Paciocco (at [284]) the agreed calculation of the fee was intended (albeit unsuccessfully in this case) to avoid the uncertainty and expense of litigation involved in establishing the quantum of any damages for any breach. His Honour also emphasised that within the confines of statutory intervention, the doctrine of freedom of contract is important (at [220]).
16. The fee bargained for in the last sentence of cl 6.2 has not been shown to be out of all proportion to Techfuel's interests. I am not persuaded that the last sentence of cl 6.2 is a penalty and therefore unenforceable.

Quantum of claim for fee under the last sentence of cl 6.2

1. CAA does not dispute that the working out of that clause results in an entitlement in Techfuel, in relation to the two fee agreements, to the fees in the liquidated sum of $277,200.

The dubious utility of resolving the issues

1. In light of my resolution of the first, second, third and fourth issues, and the quantum of the fee under cl 6.2 the case has been determined favourably to Techfuel.
2. The remaining issues in the case are all predicated upon Techfuel's alternative case, being that on 5 August 2023, CAA only 'repudiated' the fuel agreements that Techfuel itself terminated them by accepting that repudiation; and that it was entitled in law, to damages. Such claim for damages would have the advantage of outflanking the contention that the last sentence in cl 6.2 was a penalty.
3. When there is an impugned clause that the court determines is a penalty, the party relying upon it may sue for damages for breach: MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015] EWHC 283 (Comm) at [114]. However, Techfuel did not ultimately challenge the validity of CAA's exercise of its right to terminate under cl 6.2 and therefore the validity of its act of termination. In other words, it was not suggested that CAA's purported exercise of its right was in breach. If it was not a repudiation to lawfully exercise its right, damages could not be recovered on that basis either: by the date in September 2023 that it "accepted" CAA's 'repudiation' of the fuel agreements (subject to surviving rights), the fuel agreements were already at an end. Techfuel should not now be permitted to approbate and reprobate. It is therefore unnecessary to determine whether CAA was justified in terminating the fuel agreements on a different basis to that which the parties eventually accepted was valid; being Techfuel's breach of an implied term to terminate the fuel agreements in the event of the counter party's insolvency.
4. It is also unnecessary, in the eventuality that such an implied term was: (a) established and (b) proven by CAA to have been breached by Techfuel; to finally (c) consider further several issues associated with quantum of the putative damages claim (including the construction of the limiting clause in cl 9.1).
5. Some of these questions involved dense factual inquiry in respect to which, either evidence was less than satisfactory and/or the parties' submissions were not, with respect, entirely fulsome; probably itself a reflection of what the parties regarded as the really important issues.
6. However, in deference to the parties' submissions, I will address, succinctly, some of the non-dispositive legal issues that remained.

Implied term as to solvency

1. CAA cites express terms in the fuel agreement, being Techfuel's obligation in cl 2.2 and warranty in cl 3.1. It argues that compliance with laws "necessarily" entails not acting in a way that would engage a prohibition in s 588G of the Corporations Act 2001 (Cth).
2. It then cites the express right (of either party) under cl 6.1(a)a to terminate if the other party becomes an 'externally administered body corporate' or 'insolvent under administration'. CAA then argues that, properly construed, this express clause would itself extend to conferring a right of termination in the event of the opposing party's insolvency to give efficacy to that clause. In this way, it contends that cl 6.1(a)a was breached thus giving CAA the express right to terminate (albeit with notice).

Implied term to give business efficacy

1. In Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, at 346 Mason J said about implied terms to give business efficacy to a contract: "For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made. The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the difficulty of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question."
2. I do not accept that, as a matter of construction, cl 6.1(a)a extends to conferring a right of termination on a party in the event of the other party's insolvency per se. That would represent a substantial extension of protection beyond what the parties agreed to by their contract. By its terms cl 6.1(a)a signifies a distinct concern of the parties that the other party would enter into external administration; which is to say that the control of the company's business would pass from its directors and officers to an external administrator. Although that result often occurs through the onset of corporate insolvency, that is not necessarily so.
3. That being so, cl 6.1(a)a means what it says. CAA did not contend if, contrary to the finding I have made against its posited construction of that provision, that Techfuel became an "externally administered body corporate" or "insolvent under administration". The first expression, as it happens, was defunct. In the light of the specific definition of the latter (under statute), it is untenable to suggest that during the term of the fuel agreements, Techfuel fell within that expression as well.
4. That, then leaves CAA's alternative argument, based as that is on the provisions of the contract as a whole, including cl 6.1 but also the other provisions in the contract including obligations and warranties owed or given by Techfuel.
5. CAA's difficulty here, in the absence of any express termination right for insolvency per se, is that it is arguable, I do not say that it is necessarily a strong one, that cl 6 of the Fuel Agreements provides a code in which the right to terminate in general law is excluded. A stronger argument for Techfuel is that it is likely that for contracts of this nature, it would be inefficacious for the term to be implied. This contract was not of an overly long-term duration; comprising, as it did, a fixed term of three 'seasons' (half a year each) with limited options for renew. Proof of insolvency is a necessarily time-consuming and sometimes complex task. Being embroiled in litigation to prove insolvency may itself have been productive of ruinous financial circumstances, especially to Techfuel. Mr Bower explained that its primary clients were NSW and Victorian aircraft who flew in the bushfire season which, as discussed earlier, in a limited period throughout the calendar year. A change of status, being that of entry into administration, is, by contrast, a signal event requiring little proof. It is an incontrovertible external event.
6. I am not persuaded that the posited implied term to give business efficacy is substantiated.

Section 451E of the Corporations Act

1. This provision relevantly provides that: "(1) A right cannot be enforced against a company for: (a) the reason that the company has come or is under administration; or (b) the company's financial position, if the company is under administration; or (c) a reason, prescribed by the regulations for the purposes of this paragraph, that relates to: (i) the company coming, or possibly coming, under administration; or (ii) the company's financial position; if the company later comes under administration; or (d) a reason that, in substance, is contrary to this subsection; if the right arises for that reason by express provision (however described) of a contract, agreement or arrangement. Note: This result is subject to subsections (5) and (7), and to any order under section 451F. Example: A right to terminate a contract will not be enforceable to the extent that those rights are triggered by the company coming under administration. Period of the stay (2) The right cannot be enforced as described in subsection (1) during the period (the stay period) starting when the company comes under administration and ending at the latest of the following: (a) when the administration ends; (b) if one or more orders are made under subsection (3) for the company as the result of an application made before the administration ends - when the last made of those orders ceases to be in force; (c) if the administration ends because of a resolution or order for the company to be wound up - when the company's affairs have been fully wound up."
2. Techfuel contends that even if it was in administration, that fact alone would not give rise to a right to terminate during the period of administration. This statutory provision requires parties to continue in their contractual relationship in the absence of another basis for termination.
3. CAA contends that this provision does not preclude CAA from relying on a right to terminate for insolvency. It does not operate as a stay upon such right.
4. Both parties referred me to a decision of O'Bryan J in Rathner, in the matter of Citius Property Pty Ltd (Administrator appointed) [2023] FCA 26, which I have considered.
5. In my view, if I am wrong about its implied term argument, s 451E does not provide a bar to CAA terminating for Techfuel's insolvency per se. The statutory provision is directed to the exercise of a contractual right to terminate by reason of the fact of company's changed status, that is, of its having gone into (or being under) administration, or because of its financial position during the period of administration. As CAA correctly says, it is open to a party to rely upon a valid ground for termination at the point of judicial determination even if the ground only became apparent subsequent to its act of termination. [19]
6. As previously explained, even if Techfuel did not validly terminate the fuel agreements on 5 August 2023, it would have been entitled to do so if the insolvency of Techfuel on that date generated in CAA a right to terminate. Section 451E would not affect that right.

COSTS

1. Finally, in their respective written submissions, neither party indicated that it wished to seek any special order for costs in the event of their success. Accordingly, the general rule that costs should follow the event should apply.

ORDERS

1. The Court orders that: 1. The plaintiff has judgment for the sum of $277,000 (the 'judgment sum'). 2. The defendant is to pay the plaintiff interest on the judgment sum under s 100 of the Civil Procedure Act 2005 (NSW). 3. The defendant is to pay the plaintiff's costs of the proceeding. 4. The exhibits may be returned after 28 days.

Endnotes

1. This issue arose after CAA was permitted to further amend its Defence during the hearing, over Techfuel's objection to the amendment.
2. e.g. Papakosmas v The Queen (1999) 196 CLR 297 per McHugh J at [93].
3. Applied in Mount Bruce Mining v Wright Prospecting Pty Ltd (2015) 256 CLR 104 ("Mount Bruce Mining") at [47]; and in Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85 ("Simic") at [78]
4. Mount Bruce Mining at [59]; Simic at [79]
5. Mount Bruce Mining at [50]
6. Mount Bruce Mining at [51]
7. See the definition of 'local authorities' in the Dictionary
8. See the definition of 'fire fighting authorities' in the Dictionary
9. Country Fire Authority Act 1958 (Vic), ss 3 & 4
10. Rural Fires Act 1997 (NSW), s 82(1); Country Fire Authority Act 1958 (Vic), s 4
11. Bower, 13/5/24, paragraph 4; Coulson, 23/7/24, par 6
12. An application by CAA to amend that was brought on day 2 of the hearing, so as to permit it to rely upon the doctrine of frustration of contracts, was refused: T 55-58.
13. Liew & Anor v Barthelmess & Ors [2024] NSWDC 344
14. In a subsequent decision, Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99, the New South Wales Court of Appeal endorsed this proposition at [323] and [329]
15. Arab Bank per MacDougall J at [75]
16. (2016) 258 CLR 525 at [119]
17. Paciocco (2016) 258 CLR 525 at [265]-[267]
18. Clydebank Engineering and Shipbuilding Company v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6 at 13.
19. Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 377-338; with the principle being followed, but not applied on the facts, in Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 February 2025