Helicruise Air Services Pty Ltd v Rotorway Australia Pty Ltd

[1996] FCA 308

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )     No NG 260 of 1996
  )
GENERAL DIVISION                  )

BETWEEN:HELICRUISE AIR SERVICES PTY LIMITED

Applicant

AND:ROTORWAY AUSTRALIA PTY LIMITED

Respondent

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    3 APRIL 1996

REASONS FOR JUDGMENT

Helicruise Air Services Pty Limited ("Helicruise") applies to the Court for an interlocutory injunction restraining Rotorway Australia Pty Limited ("Rotorway"), the respondent, from:

(a)terminating a licence agreement said to exist between them;

(b)excluding the servants and agents of Helicruise and invitees from a heliport located at Wickham close to the centre of the City of Newcastle;

(c)removing any of the applicant's plant and equipment from the heliport site; and

(d)otherwise interfering with Helicruise's operations including denying it refuelling facilities at Wickham heliport.

Helicruise's business consists of providing commercial helicopter charter and air work services in the Newcastle area.  It operates one Bell Jet Ranger helicopter with a carrying capacity of a pilot and four passengers.  It is, so it says, based from a heliport at the corner of Hannel and Cowper Streets, Wickham; the heliport is approximately 2.5 kilometres from the Law Courts building in Newcastle.  When the applicant says that it is based there I do not understand the applicant to be saying that its helicopter is actually left there each night, and indeed it was conceded from the bar table that at least on four nights per week the helicopter was left elsewhere for operational reasons.

The Wickham heliport is the closest heliport to the Newcastle central business district.  It is not the only heliport in what one may refer to as the Greater Newcastle area.  Indeed, helicopters land at airports at Williamtown, Belmont and at Hexham, all of which are, as the crow flies at least, no more than eighteen kilometres from Wickham.  Road distances are no doubt greater than distances measured by reference to the way crows fly.

The Wickham heliport is used not only by Helicruise but also by Sydney Helicopter Services of Parramatta, Helicopter Charters of Mascot, Leed Helicopters at Bankstown and helicopters owned or operated on behalf of various television or radio stations, as well as other operators.
         Helicruise has operated from the Wickham heliport for the last ten years.  Originally the land from which those operations were conducted was owned by the Maritime Services Board and leased to Channel NBN in Newport.  It was used by NBN to operate its own helicopter to serve its own corporate needs.

In 1990, NBN ceased conducting its own helicopter operations and assigned the lease which it had had from the Maritime Services Board to Rotorway.  As and from that time Rotorway commenced commercial charter operations in competition with Helicruise, operating one Robinson R22 and one Bell Jet Ranger Helicopter.  At some stage the Maritime Services Board transferred the land on which the helicopter site is, to a company known as Honeysuckle Development Corporation, a semi- government corporation established and charged with the development of the Newcastle harbour foreshore.  That company is the lessor of a lease to Rotorway which has expired and pursuant to which Rotorway is presently holding over.  When that lease was negotiated representations were made by the solicitor for Helicruise and in the result certain special clauses were ultimately made part of the lease which, as granted by the Maritime Services Board, was for a term of three years and six months terminating as at 31 October 1995.  The special provisions particularly are those contained in cll4.23 and 4.24 which provide as follows:

"4.23Leases and Licenses to Other Helicopter Operators

(a)Subject to Clause 4.25, the Lessee must not unreasonably refuse any request by any other helicopter operator, for a sub-lease or licence on ordinary commercial terms of an appropriate part or parts of the Premises for the purposes of establishing and carrying on helicopter-related services.

(b)The Lessee must ensure that any sub-lease or licence referred to in Sub-Clause 4.23(a), contains provisions to the Lessor's reasonable satisfaction whereby the Lessee is able to provide at all times the access to the Premises for helicopter operators required by Clause 4.24 during the Term (and any holding over).

4.24 Take-off and Landing Operations (Multi-User Facility)

(a)It is the intention of the parties that the Premises be a multi-user helicopter facility in accordance with the provisions of this Lease.

(b)Accordingly, the Lessee must allow all helicopter operators who wish it access to the Premises during the Term (and any holding over) for take-off, landing and ancillary operations.  However, this obligation is subject to:

(i)Established commercial aviation practice;

(ii)Each such operator using the Premises as required of the Lessee by Clause 4.1 and item 16 of the Reference Schedule; and

(iii)Payment by the operator of take-off and landing fees consistent with established commercial aviation practice.

(c)The obligations in the Clause 4.24 are additional to the Lessee's obligations to grant sub-leases and licenses under Clause 4.23."

The relationship between Helicruise and Rotorway has not always, it would seem, been good.  The two companies are competitors of each other and there have been some items of dispute between them.  For example, Helicruise alleges that Rotorway, through its director, Mr Lipscombe, had said that it wanted Helicruise out of that building which it occupied on the site.  There have been some disputes over fuel; others over which buildings on the site from which Helicruise could operate; safety measures; price of fuel; cheques alleged to have bounced and the like.  These are not matters upon which I propose to make any further comment.  It is not appropriate in an interlocutory application for factual findings in matters of this kind to be made.

On or around January 1991, Rotorway and Helicruise entered into a license agreement.  That license agreement has now terminated.  There was thereafter some period of holding over and a further license agreement was made on 26 July 1993.  Under that agreement, Rotorway granted Helicruise a license to enter and use a part of the heliport, as specified in the schedule to the license agreement, for a period of one year commencing from 28 July 1993 and terminating at midnight on 27 July 1994.  There was provision for an option for a further twelve month license period to July 1995.
         After the license had expired in July 1995, Mr Bazic, managing director of Helicruise, expressed the desire for a further renewal.  Mr Lipscombe did not directly refuse a renewal, on Mr Bazic's evidence at least, but said that the matter should just remain as it was; there being no need for a license as long as Helicruise continued to pay rent.

It seems that relations between the parties fell to a further low in around March of this year (the result of an incident concerning the Newcastle Home and Leisure Show) and on 8 March 1996 Rotorway gave Helicruise notice, in essence, that it should vacate the premises as and from 5 April 1996.  By the letter, Helicruise was required to move all plant, equipment, fixtures and fittings from the premises and cease to use the premises from that date.

Mr Bazic says that he has approximately thirty to forty regular clients.  That client list has been built up over a ten year period and includes persons who charter the helicopter for aerial survey and photo work and VIP passenger service between Newcastle and surrounding areas.  He says that most of his clients are based in the Newcastle central business district, which is no more than five minutes away from the heliport.  He also says he has a contract for collecting and carrying bank mail and documents from Newcastle and Raymond Terrace to Belmont Airport twice a day, from where the mail is flown by a fixed wing aircraft to Sydney.  He claims that, if unable to operate out of the Heliport, that contract would be in jeopardy.

There was a long affidavit filed on behalf of Rotorway in which evidence was given by Mr Lipscombe and which, to varying degrees, contradicts some of the evidence given by Mr Bazic.  For the purposes of deciding whether an interlocutory application should be granted, I have not taken into account the various items of discrepancy between Mr Lipscombe's evidence, on the one hand, and Mr Bazic's, on the other, but have been content to accept the factual version of matters proclaimed by Mr Bazic and the general effect of which I have outlined above.

The principles upon which interlocutory relief are granted are not in dispute.  A party seeking interlocutory injunction is required to demonstrate that there is an arguable question to be tried, and that the balance of convenience favours the granting of an injunction.  Those two matters are inter-related, as shown in the judgment of the Full Court of this Court in Trade Practices Commission v Santos Limited (1992) 38 FCR 382 at 392. Discretionary matters such as delay or that damages may be a sufficient remedy are also relevant matters to be taken into account in determining whether an interlocutory injunction should be granted.
I shall deal first with the issues raised by Helicruise before turning to the balance of convenience. Helicruise, in essence puts its case on two bases. First, it said that for Rotorway to terminate the rights which Helicruise have theretofore exercised involved an exercise of market power in contravention of s46 of the Trade Practices Act 1974 (Cth) ("the Act").  The second argument is that Helicruise was the beneficiary of a third party right under the contract between Rotorway and the Maritime Services Board which it was entitled to enforce as against Rotorway thereby having regard to the terms of cll4.23 and 4.24 being entitled to the grant of a lease or licence from Rotorway, or otherwise, to exercise the rights referred to in cl4.24.

I must say that, in my view, the case for Helicruise could not be said to be a strong one in respect of either of the two matters argued. This is not to say that it is totally unarguable, but certainly it is difficult to see either argument being accepted. So far as s46 of the Act is concerned, there are two problems in the way of Helicruise's argument. The first is that it assumes that the market said to be dominated by Rotorway is a market for helicopter charter flights immediately adjacent to the CBD area of Newcastle. Of course, if one defines the market narrowly enough there will be always be market power in some person. It is difficult, however, to imagine that the market would be defined so narrowly that it would extend only to the one heliport, which happens to be two kilometres from Newcastle, and not include a heliport ten or fifteen kilometres from Newcastle. Clearly if one were to postulate a broader market than Helicruise does, then Rotorway would not have the market power which it is alleged it does have.

But the more difficult problem seems to me to be that s46, as a matter of construction, requires that, before there be a breach of the section, there be some conduct by the corporation which actually takes advantage of the market power which is said to exist (assuming the market power here exists). That market power here is the domination of the helicopter market. It cannot be said, in my view, to be taking advantage of market power to exercise a right which one has as a lessee and occupier of land, to terminate the rights of a licensee at will in respect of part of that land. That is the position in which Rotorway presently stands.

It is true that the question of the proper interpretation of s46, in this regard, was left open by Dawson J in Queensland Wire Industries Pty Limited v The Broken Hill Proprietary Company Limited (1989) 167 CLR 177 at 202. However, the matter has been the subject of consideration by judges of this court, see particularly Dowling v Dalgety Australia Limited (1992) 34 FCR 109, Natwest Australia Bank Ltd v Boral Gerrard Strapping Systems Pty Ltd (1992) 111 ALR 631, and Williams v Papersave Pty Ltd (1987) 16 FCR 69. In each case where the matter has arisen it has been held that the exercise of rights at law does not fall within s46 merely because the corporation exercising those rights has market power. For s46 to be called into operation, there must be an actual taking advantage of that power for one of the purposes referred to in the section.

The second argument presents a similar difficulty in kind though not, of course, in subject matter.  There is no privity of contract existing between Helicruise and Rotorway in relation to the lease entered into between Rotorway and the Maritime Services Board.  It is true that there has been some breaking down of the doctrine of privity of contract in recent times.  In part, that may be seen from the judgment of the Full High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1980) 80 ALR 574, a case which as I understand it, should, subject to any further elucidation by the High Court, be seen as confined to its own subject matter, namely, insurance.

I was referred to the decision of the Supreme Court of Canada in London Drugs Limited v Kuehne and Nagel International Limited (1992) 97 DLR (4th) 261 where the doctrine of privity of contract was again relaxed in part to permit an employee to take advantage of a limitation of liability clause contained in a contract made between his employer and a third party. There is nothing in that decision, however, that contemplates a general relaxation of the doctrine of privity of contract or suggests that there should be some principle whereby all contracts for the benefit of third parties may be enforced by the third party.

I think there is much to be said for a different argument, namely, that in construing the lease granted between the Maritime Services Board and Rotorway there was excluded from the grant of exclusive possession to Rotorway matters affecting take off landing and "ancillary operations" as mentioned in cl4.24.  There is an ambiguity as to the boundaries of "ancillary operations", although as a matter of construction I do not think it could be said that those operations could extend to the use of the premises in question, for say an office, from which helicopter operations are conducted.

The proper reconciliation of cll4.23 and 4.24 is not easy, but it may well be that cl4.23 should be limited to the grant of leases or licences dealing with "helicopter-related services" in respect of part only of the premises demised to Rotorway, whereas cl4.24 contemplates a licence covering the whole of the demised premises but limited to take off, land and ancillary operations, whatever the last mentioned term may comprehend.

I should say at this point that Rotorway does not wish to prevent Helicruise from exercising rights to land and take off from the premises nor, it would seem, does it object to selling to Helicruise on appropriate terms aviation oil at commercial prices, at least in emergencies, although it does object apparently to Helicruise keeping stores of fuel on the premises.  I think it is very difficult to see, in the circumstances, Helicruise succeeding in enforcing any right against Rotorway arising out of the Maritime Services Board Lease, other than a right which would fall within cl4.24 and which may, on one version of the construction of the lease document, fall outside the lease altogether.

I turn now to deal with the balance of convenience.  Rotorway, as I have already indicated, does not purport to wish to exclude Helicruise from operating out of the heliport in the sense of taking off and landing from it.  It seems that at least in over half the week the Helicruise helicopter is not in any event parked at the heliport.  In the past Helicruise has operated its services out of offices situated outside the heliport area as well as at offices situated at the heliport area.  It clearly has not been shown to be critical to its operations that its office be situated at the heliport, nor can it be said to be critical to its operations that it store fuel there.  Indeed there is material in Mr Bazic's affidavit which indicates that in the past it has
preferred to purchase its fuel elsewhere rather than to purchase it from Rotorway.

I have no doubt that it will suffer some disruption as a result of the actions of Rotorway but I do not think that Helicruise has satisfied me that the balance of convenience favours the grant of injunctive relief, particularly having regard to the apparent weakness of its case.

In these circumstances I would propose to refuse to grant interlocutory relief.  I direct the applicant to pay the respondent's costs of the interlocutory proceedings.

I certify that this and the
preceding twelve (12) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date: 

Counsel and Solicitors      J Bartos instructed by

for Applicant:              Cornwells

Counsel and Solicitors      S Burchett instructed by

for Respondent:             David Carr and Associates

Date of Hearing:            3 April 1996

Date Judgment Delivered:         3 April 1996