The Court states
The appellants in these two proceedings (Councils) are councils for municipal areas in the State of Tasmania. In these proceedings, the Councils seek to obtain declaratory relief in respect of the interpretation and application of contracts to which the Councils are not parties. The question for determination is whether they are entitled to do so. This raises interrelated issues concerning this Court’s jurisdiction and power to award declaratory relief, a party’s standing to obtain such relief, and the common law doctrine of privity of contract.
The appellant in the first proceeding, Clarence City Council, administers a municipal area covering the eastern suburbs of Hobart and surrounding localities. The appellant in the second proceeding, Northern Midlands Council, administers a municipal area that extends from the south of Launceston to the Tasmanian central midlands. Relevantly for the present case, the territories administered by the Councils include the Hobart International Airport and Launceston Airport (Airports) respectively.
Due to constitutional limitations, the Councils do not have power to levy rates or charges in respect of the sites covered by the Airports, which are owned by the Commonwealth. At the time of the privatisation of Australia’s federal airports in the 1990s, this was perceived to create a competitive imbalance between the operators of the Airports (amongst other newly privatised airports) and their actual or potential competitors. To implement a policy of “competitive neutrality”, the Commonwealth resorted to a contractual solution, which is now the subject of the present litigation.
The Councils seek declarations in respect of two separate leases (leases) between the first respondent in each proceeding, the Commonwealth, and the second respondents in each proceeding, the respective lessees of the Airports—Hobart International Airport Pty Ltd and Australian Pacific Airports (Launceston) Pty Ltd (collectively, Lessees). The leases include a mechanism to the effect that, where council rates and taxes are not payable by the Lessees because the Airport site is owned by the Commonwealth, the Lessees must pay to the relevant Council an amount, as notified by the Council, calculated according to certain parameters described in the leases. The Councils, however, are not parties to the leases.
As a result of events detailed in these reasons, the Councils (which are opposed in this respect by the Commonwealth and the Lessees) contend that the Lessees have failed to pay the Councils the amounts which the Lessees are obliged to pay under the leases. The dispute results from differing interpretations of the leases relating to the manner in which the payments are to be calculated. The difficulty for the Councils is that, despite being ostensible participants in (and purportedly intended recipients of benefits under) the leases, they are not parties to the leases and are accordingly not entitled to enforce the leases’ terms. In these circumstances, the Councils instead seek declaratory relief in this Court in respect of the interpretation and application of the leases.
However, the primary judge held that the Councils had no standing to seek such relief. According to his Honour, to grant the Councils standing in the present case would be to jettison the fundamental and binding common law doctrine of privity of contract. The primary judge consequently dismissed the Councils’ proceedings.
With great respect to the primary judge, the claim in this proceeding by a third party to a contract for declaratory relief in respect of the interpretation of that contract does not raise the privity doctrine. Instead, the question of standing is to be determined by reference to, in particular, the constitutional and statutory requirement for a “matter”, and the test for standing applicable to claims for declaratory relief. In the present case, these matters centre on, first, the existence and quality of the controversy regarding the Councils’ claim to declaratory relief and, second, the quality or character of the Councils’ interest in that relief.
For these reasons expressed below, the Councils have standing to seek the declaratory relief in respect of the interpretation and application of the leases. Although the parties to the leases—the Commonwealth and the Lessees—are not in dispute, this is not, by itself, an impediment to the crystallisation of a justiciable controversy. Moreover, in the present case, the Councils, which are participants and beneficiaries under the terms of the leases, have a sufficient interest in the declaratory relief sought, which, if granted, would be of real commercial and practical importance to the Councils.
On this basis, we allow the Councils’ appeals and dismiss the Lessees’ notices of contention. Although the Councils have standing, it remains to be determined whether the Councils are entitled to the declaratory relief sought in the circumstances of the present case. The proceedings will be remitted to the primary judge to determine that question.
