70 years worth of Cessnock Council grant money blown on $1.3M legal bill

The legal bill accounts for more than $1.3 million of the count.

Of that, $295,000 went towards a high court appeal which it was warned against pursuing.

The rest is what the council must pay in damages to a company known as Cutty Sark for breach of contract.

And there is more to come - the council says it is yet to receive a claim for costs from the other side on the High Court component of the saga

The figures are revealed in documents obtained by the Newcastle Herald under freedom of information legislation, a tranche of 104 items tracking the saga's cost to ratepayers back to 2016.

The $1.3 million spent on the airport legal battle is equivalent to 70 years worth of council's grants and contributions to community groups, through its Community and Cultural Development Dollar For Dollar Grant Scheme, which saw $18,514 steered to nine different community groups in 2022-23.

Neath-based resident and ratepayer Ron Van Egmond, who has followed the airport saga, said the whole issue had been badly managed.

"It's been such an atrocious waste of money," Mr Van Egmond said.

"Especially in light of the waste of expenditure when Cessnock Council takes so long to do even the minimum amount of maintenance needed on our roads...

"That whole airport project was just so badly managed, they should have known from the start that they'd be responsible for all the services out there. It just kept getting worse and worse and they just kept fighting it."

Cessnock City Council took the long-running airport saga all the way, exhausting all legal avenues when it lost an appeal in the High Court of Australia against a $6 million payout in May.

Appealing in the High Court alone, after it failed in the Supreme Court and was warned against it, cost ratepayers $295,000.

Most applications - up to 90 per cent - fail at the first hurdle in the High Court and Supreme Court Justice Jeremy Kirk warned the council not to go ahead but ultimately allowed the appeal, with reservation.

Council went ahead, engaging former solicitor-general Justin Gleeson SC, whose fees are understood to run up to between $20-25K per day, to represent them at a hearing on February 13 (2024).

At the heart of the dispute is a lease agreement for the use and development of Cessnock Airport.

In late 1998, having decided to develop the airport site, the council started laying the ground work, obtaining a consultant's report known as the "Cessnock Aerodrome Development Plan", putting out an expression of interest for its development and management, and negotiating potential tenders.

Property developer James Johnston joined forces with commercial and instructing pilot Phil Unicomb who together were keen to operate an adventure flight business specialising in "unique and warbird aircraft" .

They met with the council in 2004 to discuss a suitable site for a hangar to incorporate an aviation museum, and an entertainment venue.

That plan was contingent upon the council registering a subdivision of the site and granting a 30-year lease for proposed Lot 104.

In 2010, the council's consultants said it would cost $1.3 million to complete the subdivision and decided not to go ahead.

However, Mr Johnston had already 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. He abandoned the site in 2012.

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.

After reporting landing equipment failure a plane circled the runway for three hours in Newcastle before making an emergency landing.

The council won in the first instance, but lost at appeal and was ordered to pay $3.7 million with interest, producing a final figure of $6.154 million, plus legal costs.

In dismissing the appeal with costs, High Court Justice Jayne Jagot said the Court of Appeal had been correct in finding the case against council proven - if it had stuck to its contract, the lessee would have recouped its expenditure.

"No good can come from a circumstances in which a local government body takes action to foster the development of its area without also being willing and able to fund the action it has contractually promised to undertake," Justice Jagot said.

"In this case, the hazard inherent in that circumstance has come to pass," Justice Jagot said.