Can relief against forfeiture be ordered to nullify a valid termination of contract? 

Ayers Rock SkyShip Pty Ltd v Voyages Indigenous Tourism Australia Pty Ltd  [2019] NSWC 828 (Darke J)

Voyages, the owner and operator of the Ayers Rock Resort entered into an agreement and two leases with Ayers Rock SkyShip (“ARS”) for the construction and operation of a tethered helium balloon Uluru viewing experience at the resort.  ARS claimed that the balloon could operate in all but extreme weather conditions. The agreement required ARS to conduct the business during normal business hours (sunrise to sunset) every day and provided that Voyages could terminate the agreement if ARS discontinued the operation of the business for more than two consecutive days without Voyages’ written consent or for other breach.

Because of problems with an automated rotation system it was necessary to manually turn the balloon into the wind to avoid damage.  Shortly after operations commenced the balloon was destroyed by high winds.  Voyages purported to terminate the agreement by reason of ARS’s cessation of the business.

Darke J rejected ARS’s submission that the termination was invalid because the interruption to the business was caused by exceptional circumstances.  His Honour found that subject to the need to suspend operations for reasons of OH&S or extreme weather as contemplated by the agreement, ARS was obliged to operate the business continuously and ARS should be taken to have assumed the relevant risk.  The judge noted that the parties had chosen not to make provision in the agreement for frustration or force majeure.
ARS also sought relief against forfeiture in respect of the termination, arguing that it would be unconscientious for Voyages to insist upon its strict legal right to terminate the agreement and relying on the notion of “accident” as the reason for its inability to conduct the business.

Darke J referred to the decision Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6)(2016) 329 ALR 1 in which Edelman J was prepared to proceed on the basis that as a matter of principle, relief against forfeiture was not precluded because the relief sought was not in relation to forfeiture of a proprietary right, as distinct from a contractual right (cited in JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159 at [82]).

His Honour observed that the boundaries of the notion of “accident” are indistinct and held that in the circumstances it was not unconscientious for Voyages to insist upon its legal right to terminate the agreement and it was not appropriate for equity to intervene to reshape the parties’ contractual relations. His Honour also rejected ARS’s submission that the right to terminate was exercised for an improper purpose.  (Voyages had contemplated moving an Uluru dining site, at a cost of approximately $700,000, because the balloon site inhibited the view).

Graeme Hellyer
 

Congratulations to Michael Whitten QC on his appointment

Michael Whitten QC, the chair of MTECC, has been appointed as the next Lord Chief Justice of the Kingdom of Tonga, commencing on 1 September 2019.  MTECC congratulates Michael on his appointment and wishes him and his family all the best in his new endeavour. MTECC also extends its gratitude to him for his service as chair of MTECC.
 

Society of Construction Law Australia seminar with Tim Margetts QC on 24 July 2019

Tim Margetts QC is presenting the seminar ‘Quantum meruit following repudiation – what you need to know about Mann v Paterson Constructions Pty Ltd‘ for the Society of Construction Law Australia on 24 July 2019 at King Wood & Mallesons in Melbourne. The details are here.

Society of Construction Law Australia Conference in Perth 1 to 3 August 2019

MTECC is once again sponsoring the SoCLA national conference held in Perth at the Westin from 1-3 August 2019. The conference theme is  “Doing it Overseas – the legal tips and tricks for taking Construction Smarts to foreign jurisdictions”. The details are here.