Avi Silver’s United Petroleum stands to pocket millions of dollars in compensation, after winning a major court victory over Perth Airport.
The airport has been found to have misled the service station operator about the relocation of the Qantas terminal and a resulting increase in traffic.
Federal Court judge Angus Anderson ruled United would not have agreed to pay $900,000 a year in rent from July 2020, or spent $8.6m for a state-of-the-art service station, if it had known the relocation was not going to happen until 2031, instead of 2025 as believed.
Mr Silver gave evidence during the trial that Perth Airport had provided estimates of traffic volumes suggesting the Qantas relocation would increase traffic volumes from 40,000 a day to 78,000 by 2024, and as many as 94,000 by 2031.
The court heard that Perth’s master plan, approved in February 2017, included steps to achieve the relocation of Qantas to a precinct known as Airport Central by December 31, 2025.
Shortly afterwards, the tender process began for a service station within Airport Central, and United was among those invited to take part.
In response, United, owned by rich-listers Mr Silver and Eddie Hirsch, engaged architect Peddle Thorp to design a distinctive “winged” service station on the site as a selling point to try to win the tender from Perth Airport.
The court was told it was Mr Silver’s understanding that Qantas would relocate all of its international and domestic terminals to Airport Central by 2025, and as a result the traffic passing the site would nearly double and grow each year.
“Mr Silver’s evidence was that the Qantas relocation was absolutely key to determining the rent and capital expenditure for the site, given it would increase the number of customers who purchased fuel and other products from United,” the judgment said.
“For this reason, the Qantas relocation was a significant factor in Mr Silver’s decision to offer the rental amount of $1m a year (in) United’s tender proposal – which was ultimately negotiated down to $900,000 a year.”
Mr Silver told the court that if the relocation had not been a factor then United would not have been prepared to pay more than $500,000 a year in rent, and would have spent about $4m to $4.5m on the new service station.
“I wanted to win the site because in any tender I participate in, I want to win, but my main goal is to make money; it’s all about the return,” he told the court.
A 15-year lease agreement was signed between United and Perth Airport in 2020, and the rent was set at $900,000 a year, increasing by 3 per cent a year.
Justice Anderson described Mr Silver as a “truthful and reliable witness” who was forthright in answering questions put to him under cross-examination.
“I accept Mr Silver’s evidence that he would not have submitted a request for tender offering a rent of $900,000 for the site had he not believed that Qantas would relocate to the new central terminal in the mid 2020s,” Justice Anderson said.
Perth Airport claimed there was never any promise the Qantas relocation would occur in 2025, and Qantas – which was not a party to the case – said there was no enforceable obligation for it to relocate by then.
During the trial, it emerged BP had offered only $350,000 a year for the site, and it was likely Perth Airport would have accepted less than what United ultimately paid.
Justice Anderson ruled that had it not been for the representations about the relocation and traffic volumes, United would have paid $500,000 a year rent and spent significantly less on the new service station.
He asked for further details on the loss, damage, interest and costs incurred by United to help determine what compensation should be paid. The matter has been held over until July 28.
In mid 2024, Qantas and Perth Airport announced agreement had been reached on a new terminal for the airline by 2031.
A Perth Airport spokesman said there was disappointment with the Federal Court’s decision and maintained the airport acted honestly and transparently with United Petroleum.
“Perth Airport will review the court documents and consider any further action in relation to this decision,” he said.
Extracted in full from: https://www.theaustralian.com.au/business/aviation/perth-airport-found-to-have-misled-united-petroleum-over-qantas-terminal-move/news-story/b9a4272d5a4b990339a32b4bbb920009
