A LONG-RUNNING dispute over a lease agreement for Cessnock Airport dating back 22 years will cost Cessnock City Council $3.7 million in damages, plus interest and legal costs.
At the time, in 1998, the council had called for expressions of interest to use and develop the airport site, and went with a proposal belonging to vintage aircraft enthusiast Peter Roberts and his company, Aviation and Leisure Corporation. His idea was to build hangars with attached residences for aircraft owners, known as 'hangar homes'.
He signed a short-term agreement with plans to sign a longer lease - for 25 years - when the council subdivided the site, which was to occur by September 2011. In April 2004, James Johnston and his business partner Phil Unicomb also met with the council to discuss a suitable site for a hangar to incorporate an aviation museum, and an entertainment venue. That plan was also contingent upon the council registering the subdivision and granting a 30-year lease for proposed Lot 104.
Both visions, and both plans appealed to the council of the day. However, the subdivision never eventuated.
By 2010, the council's consultants reported it would have to spend $1.3 million to complete the subdivision and in June, the then general manager, Lea Rosser, told Mr Roberts that the council was not going ahead with the subdivision. "Council has no intention of spending about a million dollars fixing the sewerage," she said. "We don't have the money and won't be doing it."
In 2011, the council ended the lease with Mr Roberts who recovered $500,000 in damages for what was described as an "unlawful and ill-advised" termination of his contract.
Meanwhile, Mr Johnston spent nearly $3.7 million designing and building a hangar, as planned, and purchased planes, to operate an adventure flight business which he did in 2009. By November of that year he decided it was not profitable, and tried to use the hangar as a museum, which also failed.
In August 2012, the council applied for a grant of $2 million to buy the hangar, refurbish it and use it for terminal, office and hangar space, but was unsuccessful. At the end of September that year Mr Johnston disconnected the power to the hangar because he couldn't afford the bills. He abandoned the site in 2012.
The council ended its agreement with Mr Johnston in 2015 and took ownership of the hangar. Mr Johnston has sought compensation for the cost of the hanger ever since, claiming the council breached its contract by failing to complete the subdivision.
Mr Johnston has finally won that battle in the Supreme Court of Appeal where a judgement was handed down on Monday (February 20).
It was plain, the judgement said, that Mr Johnston would spend a substantial amount of money building the hangar, and "it was, or ought to have been plain" that the council's failure to deliver on its obligations would waste it.
The council was ordered to pay $3.7 million with interest, plus legal costs.
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