Federal Airports Corporation v Makucha Developments Pty Ltd

FEDERAL AIRPORTS CORPORATION v. MAKUCHA DEVELOPMENTS PTY LTD; VANESHA PTY
LIMITED and PAUL MAKUCHA
Nos. NG184 and G201 of 1993
FED No. 444
Number of pages - 26
Lease and Licence
(1993) 115 ALR 679

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J(1)

CATCHWORDS

Lease and Licence - whether agreement for use and occupation of land was lease or licence - whether agreement terminated - termination not reviewable under Administrative Decisions (Judicial Review) Act - requirement of good faith - unconscionable conduct - discretion to grant relief against forfeiture.

Administrative Decisions (Judicial Review) Act 1977 (Cth) - ss.3, 5

Federal Airports Corporation Act 1986 (Cth)

Australian National University v. Burns (1982) 43 ALR 25

Shiloh Spinners Ltd v. Harding (1973) AC 691

The Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447

Legione v. Hateley (1983) 152 CLR 406

Walton Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387

Stern v. McArthur (1988) 165 CLR 489

Chaka Holdings Pty Ltd v. Sunsim Pty Ltd (1987) NSW Conv R 55-367

HEARING

SYDNEY, 5-7 May 1993 and 17 June 1993

#DATE 6:7:1993

Counsel for the applicant: P G. Hely QC

R.W. White Miss C.A. Needham

Solicitors for applicant: Malleson Stephen Jaques

Counsel for the respondents: Sir M. Byers QC

B. Coles QC C.A. Sweeney QC T. Onisforou

Solicitors for the respondents: Pike Pike and Fenwick

ORDER

The Court orders that:

Counsel bring in within 14 days minutes of the orders which they propose.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DAVIES J These two proceedings have been heard together. In proceedings G184 of 1993, which were commenced in this Court, the Federal Airports Corporation ("FAC") seeks injunctions restraining Makucha Developments Pty Ltd and an associated company, Vanesha Pty Ltd (both of which I shall refer to by their trading name "Makucha T-P") and Mr Paul Makucha from occupying or using certain land adjoining the north side of Qantas Drive, Mascot Airport. A declaration is sought that a licence, which had been granted to Makucha T-P for the use of the land, had been validly terminated. In those proceedings, there is a cross-claim seeking an order that the decision of the FAC in terminating the licence be set aside under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act").

Proceedings G201 of 1993 were commenced in the Supreme Court of New South Wales and were subsequently transferred to this Court. In those proceedings, Makucha T-P and Mr Paul Makucha seek an order of relief from the forfeiture of the estate or interest under the licence agreement effected by that termination.
At the hearing, Mr P G. Hely QC and Mr R.W. White of counsel appeared for FAC and Sir Maurice Byers QC, Mr B. Coles QC and Mr T. Onisforou of counsel appeared for Makucha T-P and Mr Makucha. At a further hearing on the issue of discretion, Miss C.A. Needham of counsel appeared for FAC and Mr C.A. Sweeney QC appeared for the Makucha interests.
The land, formerly acquired and owned by the Commonwealth of Australia for the purposes of Mascot Airport, had been vested in FAC which had the management and control of the Airport under the Federal Airports Corporation Act 1986 (Cth). In the late 1960s, Qantas Drive was constructed near the northern boundary of that land, thereby linking the domestic and international terminals. However, Qantas Drive also joined into public roads at either end and as a matter of practical fact, if not in law, it became a public thoroughfare.
Makucha T-P is controlled and managed by Mr Paul Makucha and is the lessee from the State Rail Authority of Lot 20, which is a long narrow lot running roughly east-west along the northern boundary of FAC's land. Parts of that land and of FAC's land were used for many years as a car park for the use of Qantas staff and lines were marked on bitumen surfaces setting out the car parking spaces. Entrance to this car park was from Qantas Drive.
The land with which these proceedings are concerned is the land between the northern edge of Qantas Drive and Lot 20. The land varies in width and in places is reduced to a mere sliver. The entrances to Lot 20 traverse this sliver. As Lot 20 is bordered on its northern side by a railway line, there is no entry to the lot save from Qantas Drive and across FAC's land.
Another of Mr Makucha's companies, Paskaidorjums Pty Ltd, owns or leases Lot 201, which abuts Lot 20 and FAC land, but that property is not the subject of these proceedings.
After Makucha T-P had taken the lease of Lot 20 from the State Rail Authority, Mr Makucha developed ideas as to how the area might be put to use. Mr Makucha undertook the task of improving the property and did so, in the first instance, by way of improving it for use for car parking purposes and also as a site for billboards or environmental screens, as they are called. Mr Makucha filled in an area along the Alexandra canal where there had been a creek or drain and he had pipes laid. He applied for permission to erect a large structure to support environmental screens and, after a hearing in the Land and Environment Court which was opposed by FAC, obtained qualified permission to do so. Mr Makucha improved the area generally, as he saw fit, including the removal of what he considered to be unsightly trees on FAC's land, by constructing grassed mounds on that land where it abutted Qantas Drive and so on. Save that the construction of the grassed mounds removed a path which Qantas employees had used and which FAC wishes to be restored, it is not in dispute that the works improved the area so as to be more visually attractive from Qantas Drive.
Mr Makucha did not have permission to undertake many of these works. Mr Makucha is a man whose personality does not respond well to the attitude taken by some officers of FAC, particularly Mr John Austin, Manager, Commercial Development. Mr Makucha finds it difficult to accept the answer "no" to any action which he considers should be undertaken. However, fault does not lie with Mr Makucha alone. Mr Makucha is a man of action and Mr Austin had allowed matters to develop without taking any decisive step. It should be said, however, that Mr Austin's main concern was probably to maximise the commercial return to FAC from the land, rather than to preclude the use by Makucha T-P of its land for any purpose for which planning permission had been granted.
It should be noted, moreover, that Mr Makucha perceived the attitude of officers of FAC to be unreasonable. When Makucha T-P leased Lot 20, there were several points of entry into it from Qantas Drive and whilst the Qantas car park continued to operate under the control of Makucha T-P, those points of entry were used continuously. Mr Makucha found it difficult to accept the view of FAC that there was no right of entry. Indeed, if Qantas Drive had been constructed as a public road, which it appeared to Mr Makucha to be, there would have been a verge on either side of the bitumen which formed part of the roadway. Had there been such a verge, Lot 20 would have adjoined the roadway. Mr Makucha regarded the FAC officer's refusal to accept this fact as a discriminatory exercise of power on their part. I make no observation on these matters other than to point out that Mr Makucha, as well as Mr Austin, had a view for which there was a rational basis.
Mr Makucha observed all due proprieties when commencing negotiations with FAC. On 25 February 1988, he wrote to Mr P. Snelling, General Manager of FAC, Sydney:-

"As we understand, from 01 January 1988, Sydney (Kingsford Smith) Airport now comes under the control of the Federal Airports Corporation, therefore we formally request that should any areas, and in particular, locations for advertising structures be made available, our Company be given notification and the opportunity to Tender and/or make an offer.

Also as our company controls a large part of land adjoining Qantas Drive we would like to meet to discuss points for vehicular entry and exits particularly those which are in existence."

On 2 March 1988, Mr Makucha wrote again to Mr Snelling:-

"We refer to the attached aerial photography which identifies in colour orange portion of this company's land holding and outlined in colour pink land which now comes under the control of the Corporation. To obtain access to our land we formally request permission for access via the area under your Corporation's control. Naturally all relevant costs associated with the provision of the access strip will be borne by our company."

On 8 March 1988, Mr B.S. Armstrong, who was then Acting General Manager, responded:-

"I wish to make it clear that access rights have not been approved at this time and until the matter has been discussed and resolved, you are not to assume that you have such rights over any Corporation property."

But, of course, the Qantas car park was already being used and Mr Makucha was undertaking improvements in the area.

A discussion was held between Mr Makucha and officers of FAC on 25 March 1988. On 11 April 1988, Mr Makucha's general manager wrote to Mr Snelling:-

"Makucha Agenda

1. Access via Qantas Drive

To enable design options to be undertake approval in principle for access is required (ref. Makucha letter 02 March 1988). Accordingly, our formal request to the Corporation for approval in principle still stands.

2. Access via Qantas Drive to Qantas Carpark Sinclair Knight and Partners have been commissioned to prepare a carpark plan to maximise carparking for this area. Accordingly, confirmation is sought from the Corporation that present access will remain."

On 22 June 1988, Mr Austin replied:-

"1. ccess via Qantas Drive

To allow further consideration to be given to this matter of access please advise the proposed land utilisation options you have in mind. The integrity and safety of the traffic flow on Qantas Drive is of concern. Approval, in principle, or otherwise is not given at this stage.

2. Access via Qantas Drive to Qantas Car Park Confirmation that the present access will remain is not given at this stage. We would be prepared to consider entering into a month to month Licence Agreement with you provided the financial consideration you might propose is considered satisfactory."

In late 1988, Makucha expended approximately $78,000 in rubbish removal and the improvement of the car park surface. On 19 January 1989, Mr Makucha wrote to FAC:-

"I have been improving the surface of and extending the carpark to improve its capacity and in the process find that I have inadvertently encroached on Federal Airports Corporation land.

It would be desirable for the whole of the area to be used for carparking to be covered by leases so that the improvements can take place and the surface properly prepared and maintained.

Would you therefore please consider leasing to me the residue of land between my lease and the Qantas Drive kerb so that I may proceed with these improvements."

During 1989 there were some further discussions and correspondence which I need not set out. There was no resolution of the issue of access to the car park or of the development of the environmental screens. Over a period, Makucha T-P made several applications to the Botany Council in respect of roadworks and the upgrading of the car park area and also for the construction of environmental screens on Lot 20. FAC opposed many of those applications, but I need not discuss the disputes, which concerned matters for the town planning authorities to resolve.
In early 1990, Mr Makucha was planning to upgrade the car park area and had written to Botany Council for approval for roadworks. On 16 February 1990, Mr Austin wrote to Mr Makucha:-

"In respect of the site on Qantas Drive to be used for employee car parking, on the condition that you seek and obtain authorisation from the Corporation to cross Corporation land to gain access to your proposed Environmental Screen off Qantas Drive as described later in this letter, the Corporation is prepared to offer you a licence of that area as shown delineated and stippled on the attached plan No. FSD-5828/1/A2 subject to receiving your written acceptance of the following further terms and conditions:-

1 the term of the licence will be for six (6) years; 2 the date of effect will be 1 March 1990; 3 the initial rental will be thirty three thousand two hundred dollars ($33,200) per annum, payable on or before the thirty first day of July each year adjusted in accordance with the CPI each year;

4 the purpose will be for a car park for Airport employees or for access to car parking facilities; 5 all other conditions are the same as those set out in the attached draft licence document.

...

On the condition that you accept this Licence offer the Corporation will authorise you to use Corporation land between Qantas Drive and your proposed Environmental Screen for the purpose of intermittent access to construct and maintain the Screen and the plants and thirteen advertising panels as submitted in your Development Application to Botany Municipal Council on the further condition that you pay to the Corporation a fee of three hundred thousand dollars ($300,000) per annum for these access rights, payable on or before the thirty first day of July each year adjusted in accordance with the CPI each year subject to receiving your written acceptance of the following terms and conditions:

1 access will be authorised for a period of six (6) years; 2 the date of effect will be 1 March 1990; 3 the initial access fee will be three hundred thousand dollars ($300,000) per annum, payable on or before the thirty-first day of July each year automatically increased on the first day of July each year by the amount by which the Consumer Price Index increased over the preceding period of twelve (12) months;

4 the purpose of the authorisation will be to permit intermittent access across Corporation land to construct and maintain an Environmental Screen and the plants and thirteen advertising panels thereon as submitted in your Development Application to Botany Municipal Council Number 1888 dated 19 September 1988 and for no other purpose .."

Mr Austin therefore sought to associate with the licence to use land for car parking, at a rental of $33,000 per annum, a requirement that Makucha T-P pay $300,000 per annum for access to the environmental screens which were to be erected on Makucha T-P's land. Not surprisingly, Mr Makucha did not accept the offer and on 7 June 1990 it was withdrawn.

By then a pattern was established and FAC held back while Mr Makucha slowly went ahead with his plans for improving the area. Mr Makucha ceased to regard Mr Austin as a person with whom he could have useful discussions. Mr Austin, for his part, allowed the development to continue, or at least failed to take decisive steps to prevent it. In late 1990, Qantas ceased use of the car park for its staff but the improvement of the area for car parking purposes continued.
On 3 September 1991, Mr Austin wrote to Makucha T-P indicating, inter alia, that a fence would be erected on the boundary of the land, thus precluding access to Lot 20. There were letters from and between solicitors and the erection of the fence did not proceed. In 1992, Mr Makucha went over the properties with Mr Armstrong, who was then Manager of Technical Services for FAC, and explained what uses he proposed for the Makucha T-P land. At about this time, Mr Makucha had work done to create a proper entry lane so as to improve the entrance to the car park. The kerbs and the driveway entrances were remodelled accordingly. Provision was made for a bus station, as Mr Makucha had sought permission to establish a mini bus service from the car park to the domestic and overseas terminals. A problem arose with respect to a light pole which needed to be moved and Mr Makucha sought approval for this work. On 12 May 1992, Mr Austin wrote:-

"The Federal Airports Corporation has not approved any works on land it owns near the northern boundary of Sydney (Kingsford Smith) Airport in the area described by you. I understand from your letter that you wish to relocate a Corporation owned light pole in this area. In these circumstances you might care to re-consider whether or not you would accept licence agreements along the lines originally offered to you in my letter dated 16 February

1990. You will recall this offer of licence lapsed through your non-acceptance."

Regardless, Mr Makucha proceeded with his works and FAC cooperated to some extent in them. When Qantas Drive was repaved by FAC in about July 1992, the paving was taken right across the entry lane to the new kerbing and guttering. This work on the part of FAC complemented and completed the work undertaken by Makucha T-P in creating a proper entry into and exits from the car park and in beautifying the area.

On 12 June 1992, Mr Makucha wrote to the Commonwealth Ombudsman complaining that FAC's demands for a large licence fee amounted to discrimination against his companies, as Qantas Drive was used by the public and his land adjoined it.
In about October 1992, Mr Makucha established boom gates and payment boxes at the entry to and the exit from the car park. Some of this work and much of the earlier landscaping work was situated on or encroached on FAC's land. Makucha T-P had expended approximately $400,000 on these works. In about October 1992, the car park was opened as a public car park. In December 1992, Mr Makucha applied to the Botany Council for the appropriate permission; but that approval had not been received at the time of this hearing.
I do not wish to be critical of the officers of FAC, for my impression is that Mr Makucha may be a difficult man to deal with. Nevertheless, the fact remains that the development of the area, including the development of FAC's land, was allowed to proceed and proceeded with FAC's support so far as the roadworks were concerned, without any person with authority in FAC making a decision as to whether or not it should happen. Attached to Mr Austin's affidavit of 4 May 1993 is a schedule of works in respect of which Mr Austin deposed that he did not consent. But those works include erection of a chain mesh fence in late 1989, removal of trees in December 1991, removal of light pole in April 1992 and a series of works during July to October 1992, including the boom gate control and associated works. There is a degree of unreality about FAC's attitude to this matter, for there could not have been any doubt as to how Mr Makucha wished to develop the Makucha T-P land, or that he wished to use a part of FAC's land for the car park or that any question of road design and safety could be dealt with by the Botany Council. The important issue appears to have been that of price. In 1990, Mr Austin had requested an annual fee totalling $330,000, which Mr Makucha considered to be exorbitant and discriminatory. Mr Makucha had agreed to pay a fee of $117,000 for access to other land from Joyce Drive, but considered that also to be discriminatory. The fee or fees payable for access from roads on FAC land was the general subject of his complaint to the Ombudsman in June 1992. It should be noted that, by the time FAC had widened the pavement of Qantas Drive up to the new kerbing and guttering, the remaining sliver of FAC land between the pavement and the car park was only one to two metres in width and was crossed, in the vital area, by two large bitumen surfaces fully guttered and kerbed. It was perhaps not surprising that Mr Makucha thought that $330,000 was a large fee to pay for the use of what, to him, appeared to be a driveway from a public road.
I should interpose that, when these proceedings were commenced, it was claimed on the part of Makucha T-P that FAC was estopped from alleging that the works were done without consent and it was further claimed that Qantas Drive was a public road, that the entry into and exit from the car park were driveways from and into a public road and that no consent from FAC to this use was necessary. However, these allegations were withdrawn when Sir Maurice Byers accepted a suggestion from the Bench that they were ill-suited to parties who were claiming relief against forfeiture.

In December 1992, FAC finally took action and instituted proceedings in the Supreme Court of New South Wales seeking an order preventing Makucha T-P from using FAC land or from crossing FAC land when passing from Qantas Drive to Lot 20. Had FAC been successful, Makucha T-P would have had a lease of an area of land which was landlocked without access to a road. Those proceedings were settled on 5 March 1993 by the grant of a licence by FAC to Makucha T-P to use a portion of FAC's land for the purposes of a public car park and also to use the land for the purpose of the construction and maintenance of what has been described as Stage 1 of the environmental screens.
Terms of the licence agreement dated 5 March 1993 read inter alia:-

"RECITALS

A. The Sydney (Kingsford Smith) Airport ('Airport') in the State of New South Wales is a Federal airport within the meaning of Part IV of the Act. B. The parties have been in dispute as to their respective rights and obligations in relation to lands held by them within and in the vicinity of the Airport and enter into this agreement to resolve their dispute without admissions and without prejudice save to the extent provided by and for the period of this agreement.

C. The Corporation has agreed to certain limited rights to conduct the business of a public car park concession and courtesy bus service on and from premises within the Airport. ...

OPERATIVE PROVISIONS

...

2.1 General

The Corporation HEREBY GRANTS to the Concessionaire for the Term the right in common with the Corporation and persons authorised or permitted by the Corporation for the Concessionaire to use portions of the Airport for the purpose of entry and exit of the Cars to the Car Park. 2.2 Car Park

In consideration of the covenants of the Concessionaire hereinafter contained the Corporation HEREBY GRANTS to the Concessionaire the right to use the Car Park during the period of this Agreement for the purposes set out in clause 3.

3. AUTHORITY FOR USE OF CAR PARK

Subject to the terms and conditions hereinafter set out the Corporation HEREBY GRANTS to the Concessionaire AUTHORITY to use the Car Park pursuant to section 9 of the Act for himself his servants or agents to:

(a) conduct the public car park concession for use by the Cars on and from the Car Park;

(b) access for maintenance purposes only over the strip of land at the Airport lying between Qantas Drive and Lot 20 in Deposited Plan 747023 as restricted under clause 6.3 and clause 6.4;

(c) access for construction purposes only over the strip of land at the Airport lying between Qantas Drive and Lot 20 in Deposited Plan 747023 as restricted under clause 6.3 and clause 6.4;

(d) erect and display one car park identification sign relating to the Business (subject to clauses 6.50 and 8.16). ...

5. CONSIDERATION

...

(i) for each year of the Term and pro-rata for part of a year a fee of $50,000 per annum

(hereinafter called the 'Car Park Fee') payable by equal monthly instalments in advance on the date of this Agreement in respect of the period from the Commencement Date to 1 April 1993 and thereafter payable in advance on the first day of each month; ...

(b) Fixed Maintenance Access Fee

(i) for each year of the Term and pro-rata for part of a year a fee of $10,000 per annum

(hereinafter called the 'Maintenance Fee') payable in advance on the date of this Agreement in respect of the period from the Commencement Date to the First Anniversary Date and thereafter payable in advance on each Anniversary Date;

6. CONCESSIONAIRE COVENANTS

The Concessionaire covenants and agrees with the Corporation: 6.1 (Deleted)

6.2 Authorised Use of Premises

To use the Car Park solely for the parking of Cars and for the Courtesy Bus Service and no other use or purpose PROVIDED THAT the Concessionaire must forthwith on demand make good any damage caused by such use and must forthwith on demand cease access for any unauthorised use and PROVIDED FURTHER THAT to the extent that (if any) part of the land shown coloured yellow on the plan annexed and marked 'A' is required for the widening of Qantas Drive and possession is required for such road widening works the authority to use that land granted by this clause 6.2 is terminated over the land required for road widening purposes. ...

6.23 Requirements of Authorities

At the Concessionaire's own cost to comply with the By-Laws and all statutes ordinances proclamations by-laws orders or regulations present or future affecting or relating to the Car Park or the Business or any matters contemplated by this Agreement and with all lawful requirements which may be made or notices or orders which may be given to the Corporation or the Concessionaire in respect of such premises or the user thereof by any competent authority including without limitation the Corporation acting the Corporation's Official Capacity) having jurisdiction or lawful authority over or in respect of such premises or the user thereof and will keep the Corporation indemnified in respect of all such matters in this clause referred to PROVIDED ALWAYS that if the Concessionaire fails neglects or refuses to comply with any such statute ordinance proclamation by-law order regulation requirement or notice it shall be lawful for but not obligatory upon the Corporation to comply with the same and all moneys paid by the Corporation in connection therewith shall be payable by the Concessionaire to the Corporation on demand as a liquidated debt.

6.24 By-Laws and the Act

To acknowledge and accept that in addition to acting in its capacity as licensor under this Agreement the Corporation is also charged with the responsibility of administering and enforcing the By-Laws and administering and operating Federal airports in accordance with the Act and any conduct of the Corporation in such a regulatory capacity is deemed not to be a breach of any of the Corporation's covenants for quiet enjoyment or otherwise under this Agreement. The Concessionaire will not do or suffer to be done any act or neglect or omit to do any act or permit any other person to neglect or omit to do any act where such conduct neglect or omission may obstruct the Corporation from performing its obligations under this clause and the Concessionaire must indemnify the Corporation against any costs claims or expenses suffered by the Corporation as a result of such conduct neglect or omission by the Concessionaire. To the extent that there is any inconsistency between any of the terms conditions and covenants in this Agreement and the By-Laws and the Act or between the Corporation's functions as landowner compared with the Corporation's Official Capacity then the statutory obligations and rights shall prevail to the extent of any inconsistency. The Concessionaire will not be entitled to claim any compensation or bring any proceedings against the Corporation on account of any loss or damage suffered by the Concessionaire on account of any performance by the Corporation of its obligations under this clause. ...

6.29 Performance Bond

(a) To give to the Corporation at the time required by the Corporation (which time, unless specified by the Corporation to the contrary shall be within 14 days of the dating of this Agreement) and in any event within 14 days of the Commencement Date a performance bond ('Performance Bond') in terms acceptable to the Corporation (namely a guarantee given by an Australian trading bank acceptable to the Corporation or another financial institution acceptable to the Corporation either in the form of the guarantee set out in Annexure 'D' or a security otherwise acceptable to the Corporation) in the sum of $50,000 for the due and faithful performance and observance of Clause 5(a) of this Agreement by the Concessionaire. ...

6.73.1 The Concessionaire may operate a courtesy bus service ('Courtesy Bus Service') from the Car Park to the Domestic Terminal and to Sydney International Terminal ('SIT'). ...

8.2 Essential terms

The following obligations of the Concessionaire are essential terms of this Agreement:

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

(b) the obligations under clauses 6.2, 6.3, 6.4, 6.5, 6.29, 6.48, 6.51.2, 6.68 and 8.27(1). This clause 8.2 does not prevent any other obligation under Agreement from being an essential term. 8.3 Events of Default

8.3.1 An Event of Default occurs if:

(a) the Concessionaire repudiates this Agreement; or

(b) the Concessionaire fails to comply with an essential term of this Agreement; or

...

8.3.2 The Concessionaire must ensure that no Event of Default occurs.

8.4 Termination Events

A Termination Event occurs if any essential term of this Agreement is or becomes wholly or partly void, voidable or unenforceable but is not claimed to be so by the Concessionaire or by anyone on its behalf. 8.5 Corporation's right to terminate

The Corporation may:

(a) terminate this Agreement by re-entering the Car Park without notice, or if required by law, with notice; or

(b) terminate this Agreement by notice to the Concessionaire; or

(c) convert this Agreement by notice to the Concessionaire into a licence which may be terminated at the will of the Corporation but not of the Concessionaire

if an Event of Default or a Termination Event occurs. If the Corporation takes action under clause 8.5(c) the Concessionaire remains bound under this Agreement as if that action had not been taken. 8.27 Acknowledgments

The parties agree that and the Concessionaire acknowledges that:

...

(g) that the rights created in this Agreement are contractual only and do not create in or confer upon the Concessionaire any tenancy or any estate or interest whatsoever in or over the Car Park to the intent that the rights of the Concessionaire are those of a licensee only;

(h) that this Agreement confers no rights of exclusive occupation of the Car Park to the Concessionaire and the Corporation may at any time and at all times and from time to time exercise all of its rights as owner of the Car Park including, without limitation, its rights to use possess and enjoy the whole of the Car Park save only insofar as such rights prevent the operation of the Business;

...

(j) the Concessionaire has no right of access from Qantas Drive across the land vested in the Corporation to the land comprising Lot 20 in Deposited Plan 747023 for any purpose other than those rights of access granted pursuant to this Agreement;

(k) access from Qantas Drive to the Car Park is for the Cars and the vehicles operating the Courtesy Bus Service only and is for no other purpose without the prior written consent of the Corporation;

(l) it is noted that the Guarantor executed this Agreement under a power of attorney and the parties agree that if Paul Makucha does not personally execute the part of this Agreement held by the Corporation by 5.00 pm on Friday, 20 March 1993 such failure to execute is both a Termination Event and an Event of Default. At least 48 hours' notice of his intention to sign must be given to the Corporation to enable the relevant part of this Agreement to be available for signing at the office of the Corporation's solicitors or any other place reasonably nominated by the Corporation."

That licence agreement was executed by FAC and by Makucha T-P. Mr Makucha executed the licence by his attorney under power. Mr Makucha was at that time in the United States of America and, on 5 March 1993, was unable personally to sign the licence. On the execution of the agreement, Makucha T-P Pty Limited paid $4,166, being the first monthly instalment in advance on the date of the agreement and also $10,000, being the maintenance fee provided by Clause 5(b)(i).
There were two provisions which were required to be dealt with within a limited time. Makucha T-P Pty Limited was bound to give a performance bond pursuant to Clause 6.29 within 14 days. Mr Makucha was required personally to sign the agreement by 5 p.m. on Friday, 20 March 1993, as provided by Clause 8.27(l). Neither of those events occurred in time. The 20th March was a Saturday, not a Friday as stated in the licence agreement, but that is of no significance.
Mr Makucha described his activities at the relevant time in these words:-

"1. I was overseas at the time the agreement between the Federal Airports Corporation and Makucha Developments Pty Limited and myself ('the Agreement') was entered and did not return to Australia until 15 March 1993. I had been absent from my office for several weeks and as a consequence I had a large number of matters to attend to upon my return, including matters which required my attendance interstate.

2. I was aware that pursuant to the Agreement I was required to personally execute a copy of it when I returned from overseas. I was also aware that I was legally bound by the Agreement as it had been executed on my behalf by an Attorney whom I had appointed for that purpose. I fully intended to execute the Agreement within the time prescribed and in fact arranged to attend at the office of my solicitors to execute the Agreement but was unable to attend as arranged until 24 March 1993.

3. I believe that a photocopy of the Agreement excluding its annexures was made available by the solicitors for the FAC on 17 March 1993. On 16, 17 and 18 March 1993 I was involved as the defendant and a witness in proceedings in the District Court of New South Wales. I gave evidence on 16 and 17 March and was required to attend at other times for the purpose of providing instructions to my solicitor and barrister. On 17 March 1993 I believed that the District Court case would finish that day and made a loose arrangement to attend at the office of Pike, Pike and Fenwick to sign the Agreement sometime on 18 March 1993. As events transpired the District Court proceedings did not conclude until about 3pm and it was then necessary for me to return to the office to attend to urgent matters concerning the construction of stage two of the environmental screen on the Vanesha land.

4. On 19 March 1993 I was involved in various meetings from the early morning including a meeting with a barrister in the City at 8 am, an interview with a new assistant at 11 am at my office as well as my regular work which by then had mounted up as a result of my absence from the office for nearly three days in connection with the District Court proceedings. At 12 noon I flew to Queensland to commence a series of business meetings which extended over the weekend relating to advertising signs on the Vanesha land.

5. I returned to Sydney from Queensland at 2 pm on Monday 22 March 1993 and spent the balance of that afternoon attending to urgent matters at my office and meeting with engineers in connection with stage two of the environmental screen. At 6 pm I again flew to Queensland to attend to an urgent matter relating to other litigation.

6. I returned to Sydney from Queensland at about 9.30 am on 23 March 1993. Apart from the usual matters needing my attention at the office I held a meeting with an employment agency regarding new staff, conducted a site inspection at the Vanesha land, met with engineering and construction advisers in relation to the environmental screen and discussed in detail with the company accountant the terms of the Agreement. That discussion which lasted for several hours, was the first real opportunity I had to go through the details of the Agreement.

7. On 24 March 1993 I was again extremely busy attending to matters which had accumulated in my absence. In addition to those matters I spoke at length with the other director of Makucha Developments Pty Limited, Mr John Goddard, concerning arrangements for the bank guarantee required under the Agreement and other terms of the Agreement. I also held meetings with representatives of Qantas and other companies. I attended at the office of Pike, Pike and Fenwick at 6.30 pm and executed a copy of the Agreement.

8. At the time I returned from overseas I was also aware that the Agreement required the putting into place of a bank guarantee for a reducing sum of $50,000.00. I had not paid particular attention to the date by which that bank guarantee had to be put in place. I had intended and was financially able to put the guarantee in place during the week commencing 15 March 1993. I had a number of discussions with Mr John Goddard regarding the nature of the 'reducing' bank guarantee and what form it should take. When those matters had been agreed between us I instructed the company accountant, Mr Geoffrey Schofield, to make appropriate arrangements with the bank, National Australia Bank at Mascot. Once it had been requested to arrange for the bank guarantee it took the bank a day or two to issue the document evidencing the guarantee. That document was issued on 26 March 1993 and a copy was forwarded to the FAC that day.

9. I was very surprised by the actions of the FAC in purporting to terminate the Agreement merely because I had been a few days late in personally signing the Agreement and arranging for the bank guarantee, both matters which I considered to be relatively minor given that I had paid the sum of $14,166.66 upon entering the Agreement on 5 March 1993 and was not in arrears in any payment as at 19 March 1993."

On Tuesday, 23 March, the solicitor for Makucha T-P, Ms Roslyn McCulloch, happened to meet Ms Jayne Jagot, solicitor for FAC, at about 9:30 a.m. Both solicitors have given evidence. Their accounts differ in minor details. It is sufficient to set out the version given by Ms McCulloch, who deposed as follows:-

"2. On 23 March 1993 I saw Ms Jayne Jagot, a solicitor in the employ of the solicitor for Federal Airports Corporation in these proceedings, at the Land and Environment Court at about 9.30 am.

She said: 'Has Mr Makucha signed the Agreement yet?' I said: 'No, but he is due back from

interstate today and I will see what I can do. It shouldn't really be of

concern to your people though because the Agreement is binding on him

whether or not he executes it personally.' She said: 'Do you know whether the performance bond has been arranged?'

I said: 'I really don't know about that. I expect Makucha will arrange that with the bank and the FAC directly.'"

As can be seen, Ms McCulloch on her part indicated that Mr Makucha had been away but that she expected him to attend to the obligations under the licence agreement shortly. Ms Jagot received this information without giving notice of intention to terminate. Ms McCulloch had earlier obtained from Ms Jagot a copy of the licence agreement for Mr Makucha to sign. There was no indication on the part of Ms McCulloch that this would not occur, though she did not expressly say that it would occur.

On 24 March 1993, the following notice of termination was served upon Makucha T-P:-

"I refer to the Licence and Authority Agreement (the 'Agreement') dated 5 March 1993 entered into by the Corporation, Makucha Developments Pty Limited and Mr Paul Makucha concerning the Pink Park Carpark and the Courtesy Bus Service.

As you have not complied with two essential terms of the Agreement, namely clauses 6.29(a) and 8.27(1) as required, in my capacity as a delegate authorised under section 67 of the Federal Airports Corporation Act 1986, I advise you that under clause 8.5(b) of the Agreement, the Corporation gives notice that the Agreement is terminated."

A similar notice was served on Mr Makucha. The following notice also was served on Makucha T-P:-

"I refer to the above matter and the Notice of Termination of the Licence and Authority Agreement (the 'Agreement') dated 5 March 1993 served on you on 24 March 1993. In my capacity as an authorised delegate under section 67 of the Federal Airports Corporation Act 1986, and pursuant to clause 8.12 of the Agreement, which has been terminated by the Corporation, the Corporation gives notice that you are required to take down, remove and carry away from the Corporation's land, all fixtures, fittings, improvements and other additions placed or erected upon Lot 1 in Deposited Plan 787029 by you, your servants or agents in association with the Pink Park Carpark and its operation within 14 days of the date of this letter.

Structures and improvements to be removed include:

(a) all modified kerbs and gutters;

(b) all pink paint on remaining kerbs and gutters;

(c) all sheds, including the raised base and steps;

(d) all advertising structures;

(e) boom gates;

(f) ticket pillar and booth insofar as they encroach on Lot 1 in Deposited Plan 783029;

(g) all landscaping; and

(h) any other structure or improvement, erected or placed by you, your servants or agents on Lot 1 in Deposited Plan 787029 in association with the Pink Park Carpark. In addition, you are required to restore the land to its general condition prior to the erection or placements of the improvements within 28 days of today's date."

On the following day, 25 March 1993, Mr Makucha signed the licence agreement and, on 26 March, he delivered the performance bond. However FAC refused to accept these steps as compliance with the agreement and refused to reconsider its termination of the agreement. No part of the $4,166 rent or of the $10,000 maintenance fee was returned to Makucha T-P, although it is fair to say that repayment was not sought and no attention was given to it.
Mr Snelling, the General Manager of FAC, gave evidence that the clause which provided for Mr Makucha's personal signature to the licence agreement was regarded as of the utmost importance, as the FAC looked upon Mr Makucha's signature as a demonstration of good faith which in the past had appeared to be absent. Mr Snelling deposed:-

"In my capacity as General Manager, Sydney (Kingsford Smith) Airport, on behalf of the Applicant, I took the decision that the Agreement should be terminated for breach of clauses 6.29 and 8.27(1). My reasons for determining to terminate the Agreement were as follows:

(a) Both clauses referred to above were expressed to be essential and were essential in substance. I had been advised and understood that this had been emphasised to the representatives of the Respondents during the negotiations leading up to the execution of the Agreement and it had also been emphasized that compliance with those clauses was of fundamental importance to the Applicant as a test of the good faith of the Third Respondent. The Third Respondent failed this test.

(b) Further to (a), the clauses were incorporated in the draft Agreement when, at the conclusion of the negotiations which occurred immediately prior to the hearing of proceedings no.6244 of 1992 in the Supreme Court of New South Wales, which had been conducted in the belief by the Applicant that the Third Respondent was present and available (the Third Respondent having been required for cross-examination in the Supreme Court proceedings), it was disclosed that the Third Respondent had departed for overseas prior to the commencement of the negotiations. This was of fundamental concern to the Applicant and the representatives of the Applicant as:

(i) the Applicant has had previous experience of the conduct of the First and Third Respondents, including contractual relations with the First and Third Respondents. For example, the recovery of moneys under the Licence Agreement referred to in paragraph 19 of the Affidavit of John William Gordon Austin sworn in these proceedings on 28 April 1993; and

(ii) the representatives of Applicant believed they had been misled by the disclosure of the representatives of the Respondents, at the conclusion of the negotiations, that the Third Respondent was overseas, despite being required for cross-examination.

It was in these circumstances that the importance of the clauses had been emphasized to the representatives of the Respondents as referred to above. The requirement of good faith, in these circumstances, was further necessitated given that the Agreement contemplated a contractual relationship for a term of approximately 5 years."

Unfortunately, the importance which Mr Snelling placed on compliance with the term had not been adequately conveyed to Ms Roslyn McCulloch, the solicitor for Makucha T-P, or by her to Mr Makucha. Ms McCulloch gave this evidence in cross-examination:-

"Thank you. The second thing I want to ask about is this. Did you take any steps directed towards ensuring that Mr Makucha or Makucha Developments was acquainted with their obligations under the agreement in relation to provision of the performance bond and personal signature of the document by Mr Makucha?---I took some steps, yes. Could you tell his Honour what those steps were?---Well, it sort of comes in two stages. In relation to the performance bond, that was part of the agreement from the outset or at least from the second draft of the agreement and I had sent the second draft of the agreement over to Mr Makucha in the United States by facsimile. But at that stage the agreement didn't contain the clause 8.27(2) so he would not have been aware of that until probably when he returned to Australia. I spoke to him on the telephone about it, I can't remember the date, probably the day that I first made an appointment with to sign the document but he was unable to keep that appointment. ...

Did you tell him that it was important that he should punctiliously comply with his obligations under the agreement? ---I don't think I said, I used any of those expressions. I'm sure you said something much more direct and to the point and could you tell us what it was?---Well, I personally didn't expect the corporation to terminate the agreement and I didn't think that they would for a few days here or there. I did stress to him that I would like him to sign it before Friday. I understood that he was busy and in fact he was unable to keep at least one of the appointments that he had with me to sign it.

Did you stress with him that it was important that he should have the performance bond provided and the agreement signed on or before the Friday?---When you say 'stress' I don't think I - I was really asking him to come into the office so that I could go through the contract with him face to face and explain all its terms and have him sign it. I don't think I separately stressed either of the causes."

FAC was entitled, if it so wished, to have Mr Makucha's signature to the licence agreement and also the performance bond. However Mr Snelling's reference to the failure to make a payment under another licence agreement was a reference to moneys which Mr Makucha had withheld at the time he had written to the Ombudsman alleging discrimination by FAC. Those moneys were subsequently paid. With regard to Mr Makucha's alleged failure to attend for cross-examination, he was not in fact called for cross-examination and therefore did not fail to attend. As to good faith in relation to the licence, there can be little doubt that, since early 1988, Mr Makucha had been seeking to obtain a lease or licence over the land, without the payment of an exorbitant fee. Whilst it is one thing to require the quite sensible provisions in cl.6-29 and 8.27(1) to be inserted into the agreement, it is another to impart to those provisions a special quality, that of a test of good faith, which the solicitor for Makucha T-P and Mr Makucha failed to realise.
Another matter which may have influenced the termination was that, on 5 March 1993, the day on which the licence agreement was executed, Makucha T-P placed on the Makucha land beside Qantas Drive a large sign which read:-

"INFORMATION WANTED

ABOUT KEROSENE POLLUTION LEAKAGE

FROM PIPELINES, TANKS, WASTAGE

AT SYDNEY AIRPORT

WHICH FAC ARE AWARE OF AND ARE DOING NOTHING ABOUT"

Not unexpectedly, the officers of FAC were not pleased with that sign. It was subsequently changed and the sign itself is not an issue.

Sir Maurice Byers submitted that the termination of the licence agreement was amenable to an order of review under the ADJR Act. Sir Maurice submitted that the act of termination had been influenced by considerations which were extraneous to the licence agreement and its purposes; namely by the fact that Mr Makucha had been absent overseas on the day that the proceedings had been listed for hearing in the Supreme Court and by the FAC officer's annoyance over the advertisement concerning kerosene leakage which had been placed on Makucha T-P's land. Sir Maurice submitted that these matters constituted either irrelevant considerations or improper purposes and that the action of terminating the licence agreement was a decision within the meaning of s.3(2) of the ADJR Act which should be set aside on one or more the grounds set out in s.5 of that Act.
However, the ADJR Act is concerned with the determination of the validity of decisions taken under statutory powers and with the control of such powers. Section 3 of that Act limits the decisions in its purview to those taken under "an enactment" as defined in s.3(1). The ADJR Act therefore adopts principles of judicial review developed for the control of powers the force and effect of which are governed by statute. The validity of FAC's termination of the licence on the grounds propounded falls to be determined by reference to private law, by the principles of common law and equity and by statutory laws which govern private agreements. FAC's right of termination arose under the licence agreement, not under the Federal Airports Corporation Act 1986 (Cth), which established FAC and specified its functions and powers.
Section 9(2) of the Federal Airports Corporation Act confers upon FAC the power to grant a lease of or licence to occupy an area at a Federal airport for a purpose specified in the lease or licence. But a lease or licence granted under that provision and a notice terminating such lease or licence is not a decision taken under an enactment to which the ADJR Act and the principles of judicial review apply. It is an act which is governed by the ordinary laws of the land respecting leases and licences and their termination.
The principles which I have discussed were enunciated down by Bowen CJ, Lockhart and Sheppard JJ in Australian National University v. Burns (1982) 43 ALR 25, a decision which has been applied on many occasions since, including in a decision of my own, Post Office Agents Association Ltd v. Australian Postal Commission (1988) 84 ALR 563. Two decisions have distinguished Australian National University v. Burns. They are the decision of Fox, McGregor and Spender JJ in Australian Capital Territory Health Authority v. Berkeley Cleaning Group Pty Ltd (1985) 60 ALR 284 and of Cooper J in James Richardson Corporation Pty Ltd v. Federal Airports Corporation (unreported, 29 September 1992). However, both those decisions concerned strike out applications and should be read in that context, note also being taken of the fact that the principles of natural justice therein relied upon are not limited to the exercise of statutory decision-making powers, but may arise from a relationship having a contractual base. I need not discuss those decisions further. The principal authority is Australian National University v. Burns and that authority governs the present case.
Therefore, there is no jurisdiction under the ADJR Act to make an order of review in respect of the notice of termination.
Sir Maurice Byers submitted that the termination by FAC was not authorised by the licence agreement, as the covenant in the agreement that Mr Makucha personally execute a part of the agreement by 5 p m. on Friday, 20 May 1993, was not a covenant on the part of Makucha T-P which Makucha T-P had failed to fulfil. Sir Maurice pointed to covenants in the licence agreement imposing obligations upon Makucha T-P and he pointed out that, in paragraph 8.3.1, an event of default would occur if Makucha T-P failed to comply with an essential term of the agreement. Sir Maurice submitted that Makucha T-P did not fail to comply with clause 8.27(l), for that paragraph did not require Makucha T-P to do anything. However, it is clear from the terms of paragraph 8.27(l) that, if Mr Makucha failed to execute part of the agreement by the specified time, such failure to execute was agreed to be both a termination event and an event of default. Thus, clause 8.5 applied to entitle the FAC to terminate the licence agreement upon the occurrence of an event of default or a termination event. The failure by Mr Makucha was agreed to be both.
I turn now to the question whether there should be relief against forfeiture, or as Mr W.M.C. Gummow said in his essay "Forfeiture and Certainty: The High Court and the House of Lords" in Finn's Essays in Equity, the exercise of equity jurisdiction to relieve against unconscientious or unconscionable conduct. In a number of recent decisions, the High Court of Australia has given effect to basic principles that were stated in Story's Commentaries on Equity Jurisprudence, paras 1312-6. In para 1316, Story said, inter alia:-

"The whole system of Equity Jurisprudence proceeds upon the ground that a party, having a legal right, shall not be permitted to avail himself of it for the purposes of injustice or fraud, or oppression, or harsh and vindictive injury."

The general nature of the jurisdiction was reviewed by Lord Wilberforce in Shiloh Spinners Ltd v. Harding (1973) AC 691, where his Lordship said at pp 722-3:-

"There cannot be any doubt that from the earliest times courts of equity have asserted the right to relieve against the forfeiture of property. The jurisdiction has not been confined to any particular type of case. The commonest instances concerned mortgages, giving rise to the equity of redemption, and leases, which commonly contained re-entry clauses; but other instances are found in relation to copyholds, or where the forfeiture was in the nature of a penalty. Although the principle is well established, there has undoubtedly been some fluctuation of authority as to the self-limitation to be imposed or accepted on this power. There has not been much difficulty as regards two heads of jurisdiction. First, where it is possible to state that the object of the transaction and of the insertion of the right to forfeit is essentially to secure the payment of money, equity has been willing to relieve on terms that the payment is made with interest, if appropriate, and also costs (Peachy v. Duke of Somerset (1721) 1 Stra.447 and cases there cited).

...

Secondly, there were the heads of fraud, accident, mistake or surprise, always a ground for equity's intervention, the inclusion of which entailed the exclusion of mere inadvertence and a fortiori of wilful defaults."

After referring to certain cases, concluding with Wadman v. Calcroft (1804) 10 Ves Jun 67, Lord Wilberforce went on to say:-

"It was soon after that the critical divide or supposed divide occurred, between the liberal view of Lord Erskine LC in Sanders v. Pope (1806) 12 Ves Jun 282 and the strict view of Lord Eldon LC in Hill v. Barclay. The latter case came to be followed as the true canon; the former was poorly regarded in Lincoln's Inn, but it is important to observe where the difference lay. This was not, as I understand it, in any disagreement as to the field in which relief might be granted, for both cases seem to have accepted that, in principle, relief from forfeiture might be granted when the covenant was to lay out a sum of money on property: but rather on whether equity would relieve against a wilful breach. The breach in Sanders v. Pope was of this kind but Lord Erskine LC said, at p 293: 'If the covenant is broken with the

consciousness, that it is broken, that is, if it is wilful, not by surprise, accident, or ignorance, still if it is a case, where full compensation can be made, these authorities say, not that it is imperative upon the court to give the relief, but that there is a discretion.' To this Lord Eldon LC answers, 18 Ves Jun 56, 63: '... with regard to other cases,' (sc. waste or omitting repairs) 'the doctrine I have repeatedly stated is all wrong, if it is to be taken, that relief is to be given in case of a wilful breach of covenant.'

The emphasis here, and the root of disagreement, clearly relates to wilful breaches, and on this it is still Lord Eldon LC's view which holds the field. The suggestion that relief could not be granted against forfeiture for breach of other covenants was not one that followed from either case: relief was so granted in Bargent v. Thomson (1864) 4 Giff 473. Equally in Barrow v. Isaacs and Son (1891) 1 QB 417, a case of a covenant against underletting without consent, a high water mark of the strict doctrine, the emphasis is not so much on the nature of the breach which may or may not be relieved against, but on the argument that it is enough to show that compensation can be given:

'it was soon recognised that there would be great difficulty in estimating the proper amount of compensation; and, since the decision of Lord Eldon LC in Hill v. Barclay it has always been held that equity would not relieve, merely on the ground that it could give compensation, upon breach of any covenant in a lease except the covenant for payment or rent' (per Kay LJ at p 425). We are not bound by these decisions, certainly not by every shade of opinion they may reflect, but I am entirely willing to follow them in their main lines."

Subsequently, the effect of his Lordship's words may have been diminished in the United Kingdom. However, the general principles which his Lordship adumbrated have been applied by the High Court of Australia.
The equitable principles relating to relief against unconscionable conduct were considered and applied in The Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447. At 461, Mason J said:-

"Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience."

In Legione v. Hateley (1983) 152 CLR 406, Gibbs CJ, Mason, Murphy and Deane JJ, Brennan J dissenting, held that the Court had jurisdiction to relieve a defaulting purchaser against the forfeiture of his interest in land even though he had failed to comply with a condition whereby time was of the essence. Gibbs CJ and Murphy J relied upon the two principal bases which Lord Wilberforce had expounded in Shiloh's case. Mason and Deane JJ favoured the view that the basis of the jurisdiction was relief against unconscionable conduct. At 444, their Honours said:-

"Underlying the approach taken in the Dagenham (Thames) Dock Case (1873) LR 8 Ch App 1022 and Kilmer's Case (1913) AC 319 is an expansive view of the equitable jurisdiction to relieve against forfeiture. This in turn conforms to the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct - see Story, Commentaries on Equity Jurisprudence, 12th ed (1877), vol 2, par 1316."

After referring to Peachy v. Duke of Somerset (1721) 1 Str 447 (93 ER 626) and Sloman v. Walter (1783) 1 Bro CC 418 (28 ER 1213), their Honours said:-

"There is more to be said for the view that when the equitable jurisdiction is invoked to relieve against a forfeiture which is not in the nature of a penalty, equity looks to unconscionable conduct, as Farwell J indicated in Mussen's Case (1938) Ch, at pp 263-264, in the passage already quoted, especially when unconscionable conduct is associated with fraud, mistake, accident or surprise."

Legione v. Hateley was referred to in Ciavarella v. Balmer (1983) 153 CLR 438. Later in Walton Stores (Interstate) Pty Ltd v. Maher (1988) 164 CLR 387, the concept of unconscionable or unconscientious behaviour was applied in the context of estoppel, where it was held that a company was estopped from denying that an agreement for lease had come into existence notwithstanding that an exchange of parts had not occurred. At 401-402, Mason CJ and Wilson J referred to the principle of promissory estoppel as bearing a relationship to the equitable concept of unconscionable conduct, in that the elements of reliance and detriment attract equitable intervention on the basis that it is unconscionable for the promisor to depart from his promise.

These cases demonstrate an acceptance of the general principle of equity, that a court may relieve against the detriment caused by unconscionable conduct, particularly when it is associated with fraud, accident, surprise or mistake.
In the United Kingdom, recent cases have tended to retreat from the general principle enunciated by Lord Wilberforce. See for example; Scandinavian Tanker Co AB v. Flota Petrolera Ecuatoriana (1983) 2 AC 694; Export Credits Guarantee Department v. Universal Oil Products Co (1983) 2 All ER 205; Sport International Bussum B.V. v. Inter-Footwear Ltd (1984) 2 All ER 321. However, the propositions enunciated in those authorities are inconsistent with the approach taken by the High Court of Australia in Legione v. Hateley and in the other decisions which I have mentioned. The decisions of the High Court of Australia establish the law for this country.
More recently, in Stern v. McArthur (1988) 165 CLR 489, the Justices of the High Court again applied a wide principle. In their joint judgment, Deane and Dawson JJ applied the general approach enunciated by Mason and Deane JJ in Legione's case and regarded that principle as applying to all the circumstances which were outlined by Lord Wilberforce in Shiloh. Their Honours expressed the principle to be applied at 526:-

"In Legione v. Hateley it was said that it is only in exceptional circumstances that orders for relief against forfeiture and specific performance will be made at the instance of a purchaser who is in breach of an essential term: per Gibbs CJ and Murphy J (1983) 152 CLR, at p 429; per Mason and Deane JJ (1983) 152 CLR, at p 449. Gibbs CJ and Murphy J expressed the view that it was nevertheless open to a court to grant relief to prevent injustice. Mason and Deane JJ said that whether exceptional circumstances exist to justify granting relief will hinge upon the existence of unconscionable conduct. We do not understand there to be any significant difference between these two approaches. Moreover, in referring to unconscionable conduct, Mason and Deane JJ were not saying that there must be unconscionable conduct of an exceptional kind before a case for relief can be made out. Rather, what was being said was that a court will be reluctant to interfere with the contractual rights of parties who have chosen to make time of the essence of the contract. The circumstances must be such as to make it plain that it is necessary to intervene to avoid injustice or, what is the same thing, to relieve against unconscionable - or, more accurately, unconscientious - conduct."

Gaudron J adopted a more restricted approach but came to the same view on the facts of the case. Mason CJ and Brennan J dissented on the facts of the case, taking the view that there was nothing in the vendors' conduct in rescinding the contract which equity would regard as unconscionable.

It was contended by Mr Peter Hely QC, senior counsel for FAC, that relief against forfeiture should not be granted in respect of the termination of a personal licence. Clause 81.27(g) and (h) were relied upon. Clause 81.27(g) provides that the rights created by the agreement are contractual only and do not create any tenancy or estate or interest in the land itself. Clause (h) provides that the agreement confers no right of exclusive occupation and that the FAC may continue "to use, possess and enjoy the whole of the Car Park save only insofar as such rights prevent the operation of the Business".
However, those provisions should be read in their context. Clauses 81.27 (g) and (h) must be read subject to the overriding intent and operation of the licence agreement, that Makucha T-P have the right to use and occupy the whole of the land for the purposes of a public car park. In my opinion, although the point was not relied upon by Sir Maurice Byers, the grant of a right so to use the land for a specified term constitutes a lease or an agreement in the nature of a lease of the land. That is because the intended use will occupy the whole or substantially the whole of the land to the virtual exclusion of any other use.
I regard paragraphs (g) and (h) as attempting to achieve two objectives. First, I think the paragraphs seek to oust the jurisdiction of a court of equity to relieve against forfeiture. That, I think, the parties cannot do, for a court of equity will relieve against forfeiture if there is an equity which justifies it in doing so. If such an equity exists, the parties' agreement that there will be no relief against forfeiture, will not override the power of the Court to give just relief. Secondly, the paragraphs give further effect to the point acknowledged in Clause 6.24, that FAC has a function under the Federal Airports Corporation Act and under the by-laws which it may not abrogate merely by entering into an agreement with another party. Thus, paragraphs (g) and (h) ensure that FAC may take all such steps as are necessary to carry out its statutory functions and, if so required, may enter upon the land the subject of the licence provided only that it may not prevent the operation of the business. The reservation of such rights to FAC is not inconsistent with the grant of a lease.
I need not discuss the relevant authorities, many of which were referred to by Young J in Chaka Holdings Pty Ltd v. Sunsim Pty Ltd (1987) NSW Conv R 57,295. I agree with and adopt his Honour's analysis. His Honour considered the label given to an agreement to be only one, albeit important, factor to be considered. His Honour held that the agreement before him was in fact a licence, as a considerable portion of the premises was not the subject of exclusive occupation. In the present case, the agreement provides that the land is to be used by Makucha T-P for the purposes described in the agreement, that is to say, principally as a public car park. FAC has no ongoing, concurrent use for the land and reserves no such use, merely reserving its right to enter upon the land to perform its supervisory responsibilities as the owner of Mascot Airport.
In my opinion, the licence agreement granted to Makucha T-P an interest in the land in the nature of a lease. However, even if the agreement did not constitute a lease, and Sir Maurice Byers did not contend that it did, it conferred upon Makucha T-P a proprietary interest in land, beyond a mere personal interest to use the land in common with others. The agreement granted to FAC the exclusive right to conduct a public car park upon the land, an agreement in respect of which equity would grant specific performance. In an appropriate case, relief against forfeiture may be granted in respect of such an interest in land. In this respect, I agree with the comments of Young J in Chaka Holdings Pty Ltd v. Sunsim Pty Ltd at 57,305-6. See also Milton v. Proctor (1988) 4 BPR 97,314. The principles of equity with respect to unconscionable conduct are not limited to contracts for the purchase of land or leases and the present is not an instance of a mere contractual or personal right in respect of which relief in the nature of specific performance or an injunction would not be granted.
In Legione at 449, Mason and Deane JJ enunciated a number of questions, the answers to which might assist the decision as to whether the facts justify the intervention of a court of equity. Their Honours said:-

"In the ultimate analysis the result in a given case will depend upon the resolution of subsidiary questions which inevitably arise. The more important of these are: (1) Did the conduct of the vendor contribute to the purchaser's breach? (2) Was the purchaser's breach (a) trivial or slight, and (b) inadvertent and not wilful? (3) What damage or other adverse consequences did the vendor suffer by reason of the purchaser's breach? (4) What is the magnitude of the purchaser's loss and the vendor's gain if the forfeiture is to stand? (5) Is specific performance with or without compensation an adequate safeguard for the vendor?"

It is useful to consider the facts of the present case in the light of those questions. I think I might put to one side the default in respect of the performance bond. That breach was trivial and the performance bond was required to protect FAC against a breach having a monetary value. There was no such breach, the first month's rent and the annual maintenance fee having been paid in advance. I have no doubt that equity would relieve against forfeiture for that breach, if that were the only matter, but the focal issue and the principal breach which actuated the termination was Mr Makucha's failure personally to sign the licence agreement within the specified time.
I would answer the questions as follows:-

(1) There was conduct on the part of FAC which contributed to that breach. The first was the imposition of such a condition at a time when Mr Makucha was overseas. Mr Makucha was bound by the agreement, for his attorney under power had executed the agreement on its behalf, but what was required was his personal signature. The requirement that he execute the agreement personally by 20 March 1993 gave rise to the problem. Mr Makucha could not execute the agreement until he returned from the United States and, when he returned, he was caught up with other concerns. It was the imposition of a restrictive time limit which caused the difficulty. Moreover, it is an ordinary part of the law of the land that a notice should be given under s.129(1) of the Conveyancing Act 1919 (NSW) prior to the forfeiture of a lease. It was not argued by Sir Maurice Byers that that provision operated, though if the licence agreement really were a lease, it would have applied. The point is that for present purposes, the giving of such a notice is an accepted part of the relationship between lessors and lessees and therefore notice which a responsible owner of land such as FAC would give to its licensee. No such notice was given, even though FAC's solicitors were aware that Ms McCulloch was holding a part of the agreement for Mr Makucha to sign and that she was awaiting an opportunity to obtain his signature. There were letters and facsimile transmissions between the solicitors on 24 March, but no reasonable notice of intention to terminate was given. Mr Makucha and Ms McCulloch were both taken by surprise when the termination occurred.

(2) The breach was, in my opinion, not a significant one. The officers of FAC apparently placed great weight upon Mr Makucha's execution as a sign of good faith, but Mr Makucha had already executed the agreement through his attorney under power. Moreover, the breach did not affect the operation of the agreement in any way. Mr Makucha's solicitor did not regard the matter as being of crucial importance and she was not aware of the importance which Mr Snelling and other officers of FAC placed upon it. In my opinion, the delay of a few days in obtaining Mr Makucha's signature for the agreement, which had a term of five years and which had already been executed on his behalf, was a slight one. In the light of the evidence of Mr Makucha and of his solicitor, I would not hold that the breaches showed bad faith or any lack of good faith on the part of Mr Makucha. The breaches show no more than that the time limits were not complied with by Mr Makucha, who was under considerable pressure and had many matters to attend to at that time. Of course, whilst I must give weight to the parties agreement that the term was an essential term, Ms McCulloch had not had an opportunity to explain that matter to Mr Makucha. Moreover, Mr Makucha's breach was not wilful in the sense of being deliberate. I accept Mr Makucha's evidence that he intended to execute the agreement personally, that he had arranged a tentative appointment with his solicitor for 18 March 1993 to do so and that his failure was brought about by the pressure of other concerns of which the details are set out in his affidavit. Inadvertence may not be the appropriate word to use in relation to the breach but, nevertheless, it appears that Ms McCulloch had not had an opportunity to go through the agreement with Mr Makucha after his return from the United States and had not explained to him the provision of the agreement which specified the requirement as an essential term, breach of which would give rise to a right to terminate. Perhaps if Mr Makucha had seen the agreement in that form, he would have obtained a better understanding of the nature of the term. But, as Ms McCulloch explained, the draft of the agreement which Mr Makucha saw before he left for the United States did not contain that term and she was awaiting an opportunity to see him so as to go through the terms of the final agreement with him. In these circumstances, I would not describe Mr Makucha's breach as wilful.

(3) and (4) There were no adverse consequences to FAC resulting from the breach. FAC may gain from the retention of the first month's rent and perhaps the $10,000 maintenance fee paid in advance and also the ability once more to demand a substantial fee for access to the car park and to the environmental screens, though an appropriate fee has already been negotiated and agreed, and FAC has no use for its land other than the use proposed by Makucha T-P.

Makucha T-P, on the other hand, is at risk at losing the benefit of its five years lease, of the business which it has developed and of the moneys which it has spent in developing the car park in recent years. The sums spent have been substantial, exceeding $500,000 and assets such as mini buses to run from the car park to the terminals have been acquired. A business has been established and this business is at risk.

(5) Specific performance would be an adequate safeguard for FAC. Indeed, in my opinion, it would be highly desirable to tie Mr Makucha and Makucha T-P into the licence agreement, which seems well drawn so as to protect the interests of FAC. It does not appear that anything would be gained by re-opening the conflict over the subject land, although the officers of FAC obviously hold a contrary view.

On the whole of the facts, it appears to me that it would be unconscionable on the part of FAC to take advantage of the breaches of the licence agreement and of the termination. The breaches caused no harm to FAC. They did not result from bad faith on Mr Makucha's part. They resulted from the short time limits imposed in the agreement, which was executed when Mr Makucha was overseas. Not only is Makucha T-P at risk of losing the business, the establishment of which it has worked upon for many years, but FAC proposes no alternative use for the land in question. The two factors which weigh most heavily with me are the element of surprise brought about by FAC's failure to give reasonable notice of intention to terminate if the defaults were not rectified, and the element which Story, in para 1316, described as "an enormous loss wholly disproportionate to the injury to the other party", which Makucha T-P would suffer if relief were not granted. It is to prevent such "a gross violation of the principles of morals and conscience" (Story para 1316) that equity intervenes to prevent "harsh and vindictive injury" (Story para 1316).
Counsel for FAC submitted that the Court's discretion to grant relief against forfeiture should not be exercised for reasons which come down, in essence, to an allegation that Mr Makucha will not approach his obligations under the licence agreement in good faith and will act in flagrant disregard of the rights of FAC.
The first matter relied upon is non-compliance with clauses 6.5.3 and 6.5.5 of the licence agreement which provide:-

"6.5.3 The Concessionaire must reinstate a footpath along the complete frontage of the Car Park adjacent to Qantas Drive and the Concessionaire must ensure that the reinstated footpath:

(a) has a minimum width of 1.5 metres (where physically possible);

(b) has a level concrete or grassed surface suitable for use in all weathers as a footpath;

(c) is maintained at all times to the reasonable satisfaction of the Corporation.

6.5.5 The Concessionaire must remove the stack of steel containers shown on the plan at annexure 'A'."

These clauses of the licence agreement have not been complied with, but it should be noted that no time limit is specified. I regard the failure to perform these obligations as of no significance. It can hardly have been expected that they would have been performed before Mr Makucha returned from overseas and had had an opportunity to turn his mind to them and furthermore, on 24 March 1993, the licence agreement was terminated. I do not regard Mr Makucha's failure to comply with those clauses since that time as having any importance.

The other matter relied upon rose after the hearing on 5, 6 and 7 May 1993. Mr Makucha had been planning to develop Stage 2 of the environmental screens on Lot 20, to the east of the area which is the subject of the licence agreement. Preparation to this end went ahead, but Mr Makucha did not seek the permission of FAC to use any part of its land for access to the new works or to do any works upon FAC's land. Although Makucha T-P had not entered into a contract for these works, a contractor commenced laying sleepers along FAC's land, a short distance away from the bitumen pavement on Qantas Drive. The intent of this wall was to prevent any sludge or rubbish escaping from the proposed works onto Qantas Drive. Officers of FAC required that the work cease and it did cease. That incident is relied upon as demonstrating Mr Makucha's flagrant disregard of FAC's rights.
I do not propose to deal with the incident in any great detail. I am satisfied from the evidence that Mr Makucha had engaged competent engineers to control the work and that there was no particular element of safety which was not being attended to. Nevertheless, the point remains that work was done and planned for which Mr Makucha had not sought the approval of FAC. There is also the further point that the most likely means of access to the area in which Stage 2 of the environmental screens will be developed is across the land which is the subject of the licence. For that use, there is no permission. The licence agreement provides access to the existing environmental screens for the purpose of their construction and maintenance, but it does not provide for access to the area where the new works are planned. A breach of the terms of the licence agreement in this respect has not been alleged, but it is claimed that Mr Makucha planned to disregard the limitations imposed by that agreement.
In my opinion, these matters do not provide a sufficient basis for exercising the Court's discretion in a manner adverse to Makucha T-P. They arise out of the unfortunate past history of this matter. Mr Austin's response to Mr Makucha's requests was to seek a licence fee based, not on the extent of the use of or interference with FAC's property, but on the commercial value of the environmental screens, a development undertaken by Makucha T-P on its own land. Mr Makucha responded by ceasing communications with Mr Austin. Mr Austin and Mr Snelling then formed the view that Mr Makucha's good faith could not be relied upon, and that view led, of course, to the prompt termination of the licence agreement.
This unhappy circumstance involves conflicts of personality, whereas what is required is cooperation between the parties. The licence agreement was a useful step towards changing the pattern. The granting of relief against forfeiture would also assist whereas, in my opinion, the refusal of relief could lead only to more disputes and more litigation. Insofar as I have discretion to exercise, I am firmly of the view that the agreed licence agreement should go forward.
For these reasons, in my opinion, an order in the nature of relief against forfeiture should be granted. I am of the view that a term of that relief should be that Makucha T-P pay FAC's costs of these proceedings. I shall direct that counsel bring in within 14 days minutes of the orders which they propose so as to give effect to these reasons for judgment.

[1993] FCA 444

06 JULY 1993