The Federal Court has entered judgment for United Petroleum Pty Ltd (United) against Perth Airport Pty Ltd (PAPL) in United Petroleum Pty Ltd v Perth Airport Pty Ltd (No 2) [2026] FCA 620 over misleading or deceptive conduct under section 18 of the Australian Consumer Law (ACL).
The dispute arose from United’s agreement to lease and develop a service station site on Airport Drive at Perth Airport. United entered an Agreement for Sublease in April 2019 and a Sublease in May 2021. United agreed to pay initial rent of $900,000 per annum, increasing by 3% annually, and constructing a flagship service station at a staggering cost of $7.72 million.
The key commercial context was PAPL’s long-running plan to consolidate Perth Airport’s passenger terminals at Airport Central, including the relocation of Qantas from Terminals 3 and 4 at Airport West. PAPL’s tender material represented that Qantas was “expected” to relocate to Airport Central in the mid-to-late 2020s and that traffic on Airport Drive would almost double after that relocation. United alleged those representations were central to its decision to offer a high rent and build a more expensive “flagship” service station.
Issues before the Court
The main issues before the Court were whether PAPL represented that Qantas would relocate by 2025, or by the mid-to-late 2020s, and whether traffic on Airport Drive would almost double as a result.
The Court also had to consider whether:
- The representations were continuing representations;
- The representations were with respect to future matters;
- PAPL engaged in misleading conduct by silence by failing to disclose difficulties in its negotiations with Qantas;
- United relied on the representations;
- United proved an “alternative transaction” loss case. Namely, that but for the representations, United would have negotiated a substantially smaller and cheaper service station and would have sought to negotiate more favourable terms in respect of the Sublease, including, amongst other things, lower rent.
Considerations and the Court’s findings
The Court found that PAPL’s information brochure conveyed representations that Qantas would relocate by the mid-to-late 2020s and that traffic volumes would almost double. The Court also found that PAPL representatives made an oral representation at a meeting on 27 February 2018 that the Qantas relocation would occur by 2025.
The Court considered that PAPL’s information brochure was a sophisticated commercial document which was designed to promote a substantial business opportunity to establish a service station at a site which, because of relocating all passenger terminal facilities to Airport Central, would have a substantial volume of traffic passing the site each day.
Furthermore, the Court placed significance on the matters in PALP’s information brochure including matters such as:
- The information brochure gave prominence to two matters. First, the relocating all passenger terminal facilities to Airport Central. Secondly the airport traffic volumes doubling on Airport Drive when Qantas relocates to Airport Central in the mid to late 2020s. The Court observed that the information brochure emboldened and capitalised headings, “Airport Central” and “Airport Traffic Volumes” which emphasised the significance of those two matters on the business opportunity that was being promoted by the information brochure.
- The Qantas relocation was the only basis provided for traffic volumes increasing on Airport Drive.
- There were no disclaimers in the information brochure.
- The Qantas relocation was the key selling point which is conveyed by the statements in the information brochure.
- The text of the statements in the information brochure which United relied on as giving rise to the Qantas representations were plainly couched in terms that the Qantas relocation “will” occur. This was further reinforced by statements in the information brochure such as “when Qantas relocates” and statements regarding the consolidation that “will be developed” (emphasis added).
However, the Court did reject United’s case based on later representations that occurred after entering into the Agreement for Sublease. The Court held that the tender-related representations lapsed when the Agreement for Sublease was executed on 17 April 2019 because, by that time, the commercial deal relating to United’s leasing of the service station site was consummated and any “inducement” brought about by the representations was complete.
An interesting key issue in this case was whether statements about Qantas relocating to Airport Central, and the resulting increase in traffic, were representations about future matters under section 4 of the ACL. Whether a statement relates to a future matter depends upon the words used and the context in which they were used. PAPL submitted that such a representation concerned PAPL’s belief or expectation.
The Court rejected PAPL’s argument. The Court treated the Qantas relocation and traffic-volume statements as constituting predictions, promises, or forecasts about future events and outcomes of those future events. That is, whether Qantas would move, when it would move, and whether traffic near the service station would substantially increase.
PAPL was therefore required to adduce evidence to establish that it in fact had reasonable grounds for making the representation.
The Court referred to, amongst others, the following key principles when determining if PAPL had reasonable ground for making the representation:
- PAPL must show: (i) some facts or circumstances; (ii) existing at the time of the representation; (iii) on which PAPL in fact relied; (iv) which are objectively reasonable; and (v) which support the representation made.
- Whilst the reasonableness of a representation must exist when it was made and should not be evaluated with the benefit of hindsight, subsequent events may cast light on the accuracy of a statement made about a future matter or in certain circumstances may offer the most reliable guidance. Nevertheless, the test is one of reasonableness and it is vital to guard against hindsight illusion.
- There will not be reasonable grounds if, at the time of the representation, PALP “did not have facts sufficient to induce in the mind of a reasonable person a basis for making the representation which is to be assessed objectively and not by reference to the maker’s subjective state of mind.
- Even a genuine or honest belief in the representation does not suffice; what must be shown is objectively reasonable grounds.
Ultimately, the Court was not satisfied that PALP’s representations were qualified. The evidence showed that Qantas’ relocation depended on commercial agreement, airline approval, business cases, board approval and funding. PAPL called no witness directly involved in commercial negotiations with Qantas, and the contemporaneous documents showed that agreement with Qantas was uncertain and “very much in doubt”.
The Court’s reasoning reflects the orthodox approach that reasonable grounds require more than optimism, internal confidence, or a hoped-for commercial outcome. The representor must be able to point to facts or circumstances existing at the time of the representation that objectively support the prediction.
The Court ultimately accepted that United’s decision-makers regarded the Qantas relocation and projected traffic uplift as central to the rent and capital expenditure decision. The Court found that, but for the representations, United would not have agreed to pay $900,000 per annum or build the more expensive Millennium Concept service station.
United also succeeded on its alternative transaction case. The Court found that United would have offered $500,000 per annum for a smaller ground lease and would have built a cheaper service station, and that PAPL’s board would probably have accepted that alternative transaction. United was therefore entitled to recover excess rent and excess construction costs, subject to final quantification.
Key takeaways
The Court’s discussion of section 4 of the ACL is a timely reminder that predictions in commercial negotiations are not risk-free. A representation about a future matter will be taken to be misleading if the maker did not have reasonable grounds for making it. Those grounds must exist at the time, must be objectively reasonable, and must support the actual representation conveyed. Optimism, internal planning assumptions and commercial aspirations are not enough, particularly where the predicted event depends on a third party’s agreement or unresolved negotiations.
Expressions such as “expected” or “planned” will not necessarily protect a party. If the commercial message conveyed is that a future event will occur, the representor must be able to prove reasonable grounds at the time the statement is made.
For accountants, valuers and transaction advisers: this case demonstrates that section 4 is especially important because business-sale and leasing decisions often turn on future assumptions: projected revenue, customer growth, foot traffic, development approvals, anchor tenants, supplier contracts, or expected synergies.
For landlords, developers, infrastructure owners and tender proponents: this case is a strong warning that future-facing statements in marketing or tender documents can carry real ACL risk, especially where they concern major third-party events outside the representor’s control.
For business, this case demonstrates that businesses should be careful when relying on major assumptions in commercial negotiations. Traffic forecasts, tenant mix, infrastructure delivery dates and anchor-party relocations should be tested, qualified and documented.
For litigants, this case also highlights the importance of evidence from the actual decision-makers. PAPL failed to adduce any evidence from the board, as the ultimate decision-maker, about whether it would have agreed to lease the site to United for $500,000. PAPL’s failure to call board witnesses mattered when the Court assessed whether the alternative $500,000 transaction would have been accepted. The tendering of documentary evidence as to when members left the PAPL board or employees ceased being employed by PAPL was not sufficient to explain the failure to call any of these witnesses. There was no evidence that the witnesses would not cooperate with PAPL’s legal advisors, or that they refused to give evidence at trial.
