Federal Court of Australia

Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381

ORDERS

THE COURT ORDERS THAT:

1.    The Originating Application and Statement of Claim be dismissed as against the first and second respondents.

2.    Judgment for the applicant against the third respondent in the sum of $240, together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

3.    The parties to file and serve any written submissions on the question of costs (not exceeding 3 pages), together with any affidavit in support by 4 May 2023.

4.    The parties to file and serve any written submissions in reply (not exceeding 3 pages), together with any affidavit in support by 9 May 2023.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J

INTRODUCTION

1    These proceedings concern claims made by the applicant, Kane’s Hire Pty Ltd (Kane’s Hire), in relation to the purchase of a two-seat Bristell Aircraft with serial number 375/2019 (Bristell Aircraft). The claims are made in contract and for contravention of the statutory prohibition on misleading or deceptive conduct pursuant to s 18 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth). The first respondent (Anderson Aviation) was the seller of the Bristell Aircraft. The second respondent, Mr Anderson, was and is the sole director of Anderson Aviation. The Bristell Aircraft was manufactured by the third respondent, BRM Aero S.R.O (BRM Aero), a company incorporated in the Czech Republic. Anderson Aviation was and is a seller and distributor in Australia of aircraft manufactured by BRM Aero, including the BRM Aero Bristell “Light Sports Aircraft” (LSA).

2    Pursuant to the Sale and Purchase Agreement dated 12 July 2018, Kane’s Hire agreed to purchase the Bristell Aircraft from Anderson Aviation for $253,660.00 inclusive of GST (or $230,600 plus GST). The essence of the claims is that the Bristell Aircraft delivered was heavier than was represented to Kane’s Hire and than was promised under the Sale and Purchase Agreement, and that the applicant thereby suffered loss.

the regulatory framework

3    The Civil Aviation Safety Authority (CASA) was established by s 8(1) of the Civil Aviation Act 1988 (Cth) (CAA). CASA has the functions set out in s 9(1) of the CAA and in the regulations under that Act. CASA is responsible for issuing certificates, licences, registrations and permits in respect of aircraft: s 9(1) of the CAA. That function includes issuing documents known as special certificates of airworthiness for LSAs. In exercising its powers and performing its functions, CASA must regard the safety of air navigation as the most important consideration: s 9A(1) of the CAA.

4    Regulations contained within Pt 21 of the Civil Aviation Safety Regulations 1998 (Cth) (the Regulations) make provision for the issuing of special certificates of airworthiness for LSAs. LSAs are relevantly defined in Pt 1 of the Dictionary to the Regulations as:

Light sport aircraft means an aircraft that:

a)    has:

i)    if the aircraft is not intended for operation on water – a maximum take-off weight of 600 kilograms or less …

The definition then sets out other cumulative criteria (for example relating to the engine, stall speed, cabin and maximum seating capacity), but none of those other criteria are in issue in this case.

5    Regulation 21.186 deals with special certificates of airworthiness for LSAs, and provides that an applicant is entitled to a special certificate of airworthiness for a light sport aircraft if, relevantly, the applicant gives CASA, inter alia, a statement of compliance by the manufacturer that complies with subreg (2): reg 21.186(1)(b)(i) of the Regulations. Subregulation (2) requires the statement of compliance to be signed by the manufacturer and to include a number of items, including a statement specifying which of the LSA standards apply to the design of the aircraft, including a statement to the effect that the design of the aircraft complies with the specified standards: subreg 21.186(2)(b) of the Regulations.

6    The term “LSA standards” is defined in reg 21.172 of the Regulations relevantly as meaning “the standards for the design, performance or continuing airworthiness of light sport aircraft issued by the American Society for Testing and Materials, as enforced from time to time”. The term “special certificate of airworthiness” is defined in reg 21.175 as having various meanings, including a certificate of airworthiness issued for a light sport aircraft covered by reg 21.186 (paragraph (a)(iv) of the definition) and an experimental certificate (paragraph (c) of the definition).

7    One of the LSA standards, which is central to the present dispute, is known as the Standard Specification for Design and Performance of a Light Sport Airplane, with the designation F2245-16c, being a standard issued by ASTM International, an acronym for the American Society for Testing and Materials. Section 4.2 of that standard deals with load distribution limits, and provides relevantly that the minimum useful load shall be equal to or greater than the sum of:

(1)    an occupant weight of 845N (190 lbf) for each occupant seat in aircraft, plus

(2)    the weight of consumable substances, such as fuel, as required for a 1-hour flight at maximum speed.

The occupant weight of 190 pounds force is about 86 kg. It is common ground between the parties that the fuel required for a 1 hour flight at maximum speed would weigh about 29.3 kg for the Bristell Aircraft. It is also common ground between the parties that the total weight of the two occupants and the fuel referred to in section 4.2 is 202.02 kg. If one deducts from the maximum take-off weight (MTOW) of 600 kg the figure of 202.02 kg, the balance represents what is known as the “dry empty weight” of approximately 397.98 kg.

8    Accordingly, it is admitted by the respondents that in order to have an MTOW of 600 kg or less and to be compliant with ASTM 2245-16c and the Regulations, the aircraft needed to have a dry empty weight of approximately 397.98 kg or less. It is also admitted by the respondents that the Bristell Aircraft in the present case in fact had a dry empty weight of 411 kg by reason of the options and modifications requested by Kane’s Hire. Accordingly, the Bristell Aircraft did not comply with the requirements of the Regulations in order to validly obtain and hold a special certificate of airworthiness as a 2-seater LSA pursuant to reg 21.186.

9    In addition to the weight restrictions which apply at the time of purchase of the aircraft, it is the responsibility of the pilot of an LSA to ensure at the time of taking off that the weight of the aircraft, including passengers, fuel and any baggage, does not exceed 600 kg. Under the original certificate of airworthiness of the Bristell Aircraft as an LSA under reg 21.186, the requirement of a MTOW of 600 kg arises from the definition of “light sport aircraft” in the Dictionary to the Regulations. Under the experimental certificate of airworthiness for the Bristell Aircraft granted on 4 August 2020, the requirement arises under condition 2 in that certificate (“In accordance with the definition of a light sport aircraft, this aircraft must not be operated with a MTOW of more than 600 kg.”). The restriction of 600 kg is also referred to in the Aircraft Operating Instructions for the Bristell Aircraft at paragraphs 2.11 and 6.4.6.

10    In the case of Mr Kane (who said that he weighed 105 kg in 2019) and his son, Branden (who said that he weighed 80 kg in 2014 and 94 kg now; the mid-point being 87 kg), and allowing for an hour’s fuel of at least 29 kg, the dry weight of the aircraft would have had to be less than about 379 kg in order for them both to have flown in it on a short journey in 2019.

11    Another aspect of the regulatory framework concerns registration of the aircraft with Recreational Aviation Australia (RAA). A certificate of airworthiness stops being in force if the aircraft ceases to be registered in Australia: reg 21.181(4)(a) of the Regulations, and, in relation to an experimental certificate, reg 21.195B(4).

principal witnesses

12    The principal witness for the applicant was Mr Con Kane, also known as Constantine Kanavas. He is the director and controlling mind of Kane’s Hire. My impression of Mr Kane as a witness was that he was honestly trying to recall the events which took place some years ago, but had difficulty recalling the events and placing those events in their chronological sequence. His recollection of events overall was not clear or detailed. He appeared to have a fixation with the communication to him of what he perceived was a dry weight of the aircraft of about 378 kg, and tended to make reference to that figure irrespective of whether it was responsive to the questions which he was asked. I attribute that to an inability to place the relevant events in their correct chronological sequence, together with an understandable determination to put his case in the best possible light. I have referred below to instances where Mr Kane’s evidence of conversations was contrary to the known facts or contemporaneous documents. On the whole, I found Mr Kane’s recollection of events to be unreliable.

13    I found Mr Anderson to be a credible and reliable witness. He gave evidence generally in a straightforward manner, readily conceding when his recollection was unclear, and firmly and cogently denying propositions with which he disagreed. He made no attempt to exaggerate the quality of his memory. I attribute any hesitancy on his part to an understandable degree of nervousness in appearing in an unfamiliar setting. In relation to the various disputed conversations referred to below, I have preferred the evidence of Mr Anderson over that of Mr Kane.

14    For completeness, I should add that I found Mr Bristela to be a credible and reliable witness, whose testimony should be accepted. He gave unhesitating affirmative answers where appropriate, and offered cogent explanations where he disagreed with propositions put to him in cross-examination. Mr Bristela gave his evidence through an interpreter.

15    I have dealt below at some length with the form in which evidence of conversations was given by the principal witnesses. As I have stated in that section, I have not taken the form of such evidence into account in assessing the credibility of the witnesses.

Salient FaCTS

16    In about 2014, Mr Kane and his son, Branden, who was then aged 20, became interested in having flying lessons and becoming pilots. In that year, they started having flying lessons with Central West Flying School at Bathurst Airport, where their main flying instructor was the principal and chief flying instructor of that school, Mr Chris Stott. Initially, Mr Kane’s flying lessons were undertaken in a 2-seater Australian-made aircraft called a Jabiru, but he soon switched to a plane manufactured by BRM Aero, a Bristell aircraft. At some point, which was not identified in the evidence, Branden Kane lost interest in flying, and he never obtained a pilot’s licence.

17    In about the middle of 2014, Mr Kane began considering purchasing an aircraft, partly so that he and his son could fly together recreationally, and partly because he thought the aircraft could be used in the business of renting construction industry equipment conducted by Kane’s Hire. Mr Kane also considered that Branden could do his flying lessons in an aircraft with modern electronic flight displays. Mr Stott put Mr Kane in touch with Mr Brett Anderson of Anderson Aviation. Mr Anderson provided Mr Kane with a price list of Bristell aircraft valid from June 2012.

18    Mr Kane received his pilot’s licence in May 2015. In about July 2015, Mr Kane and Branden travelled to the Osh Kosh Airshow in the United States. Mr Anderson and Mr Stott were also present, and they discussed the possibility of Mr Kane purchasing an aircraft for the above mentioned purposes, and both Mr Stott and Mr Anderson recommended a Bristell aircraft. Mr Anderson pointed out that BRM Aero would have a much more powerful plane with a new 915 turbo engine coming out soon. BRM Aero’s US distributor had a pavilion at that airshow, which Mr Kane and his son visited a number of times. At around this time, Mr Anderson sent Mr Kane a copy of an email from Mr Bristela of BRM Aero referring to the prototype of the 915iS turbo engine, which was said to be 10 kg heavier than the 912 ULS. The email foreshadowed that the new engine would be added to the price list in 2017.

19    In September 2017, Mr Kane gained his Recreational Cross Country Pilot’s Endorsement. On 18 October 2017, Mr Kane sent an email to Mr Anderson saying that he was considering purchasing a Bristell, and asked for advice on the following when convenient:

Up dated price list and weights like attached previously emailed. However I could not work out what goes with what

New Rotax 130hp [horsepower] option Electronic Fuel Injection

What if we price up about three options including weights

Option 1 with full glass Garmin cock pit

Option 2 semi glass

Option 3 Analogue

I think will require the following as well depending on how weights work out. [sic]

There was then set out a lengthy list of other features of the aircraft. The reference to the “New Rotax 130 hp option” was a reference to the 915 turbo engine which Mr Anderson and Mr Kane had discussed at the Osh Kosh Airshow.

20    On 25 October 2017, Mr Anderson sent an email to Mr Kane with comments in relation to various of the features which Mr Kane had listed in his 18 October 2017 email, and also included three documents entitled “Anderson Aviation PL Australian Price List”. Those lists were price and option lists for three differently optioned Bristell aircraft. They each bore the date 1 July 2017. Each of those price lists has a column for weight in kilograms and also a column for total weight. Many of the items which have a dollar figure beside them, however, do not have a corresponding figure either for weight or total weight. Two of the price lists have a total weight of 334.09 kg and the other has a total weight of 334.35 kg. However a plain reading of those documents would indicate that many of the items for which a dollar figure has been included do not have a corresponding weight measurement.

21    Mr Kane claims that shortly after receiving those price and options lists on 25 October 2017, he had a conversation with Mr Anderson in words to the following effect:

Mr Kane:     “A Bristell looks to be a good option for flying with Branden and for him to do his lessons in. I can also use it for my company’s business. But what about all the different options and their weights? I know I want two parachutes, for example. I am also definitely looking at the bigger 915 engine. But how do I work this options list? Half the things I don’t even know what they are. How do I know that I am not choosing the wrong stuff?

Mr Anderson:    When you are ready, I will go through the options list with you and explain each item. You can choose what you want. In the end a dry weight of around 350 kg is about the ideal weight. You can also option the plane with a reinforced spar bar. This option will increase the aircraft’s legally allowable flying weight.

Mr Kane:    Thank you. I will have a talk with Chris and get back to you.”

22    Mr Anderson denied that conversation. He pointed out that the Bristell aircraft does not offer two parachutes. Rather, the rescue system consists of a single parachute for the aircraft itself, not parachutes for the pilot and passenger. Mr Anderson also explained that the purpose of the reinforced spar is to increase turbulent penetration speed, not to carry extra weight (T177.1-12).

23    The reinforced spar bar is referred to in the options and price lists as “HD Spar 750 kg”. HD stands for “heavy duty”. Mr Kane gave evidence that he was aware that there was a potential in the future to have aircraft registered in a 750 kg category, but he knew that Australia did not yet have such a category. Mr Kane thought that such a category existed in Europe or elsewhere. He believed that CASA had said that this would never happen in Australia (T56.15-47), although it is possible (but unclear) that he formed that belief only after taking delivery of the Bristell Aircraft. In the light of that evidence, I regard it as highly improbable that Mr Anderson made the comment attributed to him by Mr Kane that the reinforced spar bar would increase the aircraft’s legally allowable flying weight and equally improbable that Mr Kane would have relied on any such comment. I reject Mr Kane’s evidence of the conversation on 25 October 2017.

24    Mr Kane gives evidence of a second conversation with Mr Anderson in October 2017 in which Mr Kane again says he expressed his desire for the aircraft to have the more powerful engine and also parachutes. Mr Anderson pointed out that if Mr Kane chose the 915 engine then he would also need the heavier MT propeller. Mr Kane says that he and Mr Anderson then went through line by line one of the three price and options lists sent on 25 October 2017. Mr Kane says that he asked Mr Anderson what each item on the list was and Mr Anderson gave him an explanation. If the option was something which Mr Kane thought he wanted for the aircraft then he said to Mr Anderson that he would choose that. That conversation is not disputed by Mr Anderson.

25    On 31 October 2017, Mr Anderson sent a further email to Mr Kane as follows:

Attached is the price list for what we discussed.

The new 915iS is the biggest factor for the increase in price.

Also given the current Euro rate it has pushed the figure up.

26    The email attached a price list dated 1 January 2018. That list begins by referring to the Bristell 912 aircraft and describes it, among other things, as “LSA (600 kg)”. It then has a lengthy options list. The list includes the Rotax 915iS 130 hp engine, but does not give a weight figure for that engine. It includes the MT propeller at a weight of 10 kg, but that figure is not included in the “weight total” column. The frame options include the “HD Spar 750 kg” but no weight figure is given for that option. The parachute is referred to as “Rescue System Magnum M 601 LSA” at a weight of 13.5 kg. In relation to many of the items for which a dollar figure has been inserted, there is a corresponding weight figure; however, there are also numerous items for which a dollar figure has been included, but there is either no weight figure at all or no weight figure included in the “total weight” column. The list ends with a figure for total weight of 353.39 kg. However, a plain reading of the document indicates that not all of the options which have been selected and which have accordingly been given a dollar figure, have been allocated a weight figure. It is therefore readily apparent from the document that the total weight figure of 353.39 is incomplete and understated.

27    On 22 November 2017, Mr Bristela sent Mr Anderson an email saying:

it is good combination 915 with rescue and sleeping pack. Thanks seeiping pack it will be fine. MT is for the while the best choice for 915iS engine. [sic]

28    Mr Anderson forwarded that email to Mr Kane on the same day saying: “he has not given me weight figures yet. I expect they will arrive later tonight or in the morning.” Both Mr Anderson (T174.2-17) and Mr Bristela (T209.16-26) said in their oral evidence that the reference to “good combination” was a reference to considerations of balance of the aircraft or the centre of gravity (T209.16-26).

29    On 27 November 2017, Mr Bristela sent Mr Anderson a document setting out the weights for various options for the Bristell 912 aircraft. Mr Anderson forwarded that to Mr Kane the following day by email, referring to the attachment as “Bristell 2018 Weight CK17 10 31.xls”. The attachment gives a weight allocation for the Rotax 915iS 130 hp engine of 10 kg, and also allocates a weight of 10 kg for the MT propeller. The HD spar 750 kg is given a weight allocation of 2 kg. The document concludes with a total weight of 391.37 kg. The document does not include dollar figures for the various options.

30    In about June 2018, Mr Kane renewed his interest in purchasing a Bristell aircraft. Mr Kane gives evidence that he and Mr Anderson had a conversation towards the end of June 2018 in words to the following effect:

Mr Kane:    “I am ready to finalise the purchase of a Bristell. Can you re-send to me the options list we selected last year so I can have another look. One thing I have been thinking about is the reinforced spar and whether to get that or not.

Mr Anderson:    I will send you the price list that you selected last year. With the spar, if you get it, you can upgrade to certified registration with CASA for a maximum take-off weight of 750 kg.

Mr Kane:    OK. Thanks. Send the options list when you can.”

I reject Mr Kane’s evidence concerning the reinforced spar, for the same reasons as given above.

31    Mr Anderson gave evidence that in June 2018, he received a number of telephone calls from Mr Kane. Mr Kane said that he was considering purchasing a Bristell with the more powerful 130 hp Rotax 915iS together with a lot of extras he wanted to be installed in the Bristell. Mr Anderson says that he told Mr Kane that the 915iS engine was much heavier than the original 100 hp 912 engine and that he would need to get a heavier duty propeller to match the more powerful 915iS engine. Mr Anderson also says that he told Mr Kane that the 915iS engine was new on the market and the weights were as yet unknown. Mr Anderson also says he told Mr Kane that with all of the additional equipment Mr Kane sought to have fitted to the aircraft, in particular the installation of the much heavier engine and propeller, care had to be taken not to make the aircraft too heavy because it had a MTOW of 600 kg. Mr Anderson says that Mr Kane responded that weight was not critical as he was only intending to use the aircraft by himself as the only occupant, to travel from his work in Sydney to his farm in the central west area.

32    I accept that evidence of Mr Anderson. I add that it was not denied by Mr Kane, nor was it challenged in Mr Anderson’s cross-examination.

33    There was then an exchange by emails on 29 and 30 June 2018 as follows. On 29 June 2018 at 6.52 pm, Mr Anderson sent an email to Mr Kane saying:

Here is the price list that you selected back in 2017.

Nothing has changed price wise.

I notice you had two grips chosen and you will only need one of the two chosen so the price will be a bit less but not really worth mentioning.

The attached price list is dated 1 January 2018. It includes dollar figures for the various options which Mr Kane had selected. However, in relation to many of those items, there is no weight figure allocated either at all or in the column headed “Weight Total”. The total weight figure at the end of the list is 353.39kg, however that does not include any weight allocation for a number of items including the Rotax 915iS 130 hp engine, the MT propeller, various items of Garmin equipment, and numerous other items of equipment.

34    On 29 June 2018 at 7.12 pm, Mr Anderson sent a further email saying:

The price list that you had was based on .66 and now it is at .63.

I will have to go over it and work it out again.

I will try to do that tomorrow.

Those figures were a reference to the exchange rate between the Australian dollar and the Euro.

35    On 30 June 2018 at 5.00 am, Mr Kane replied:

Please include weight breakdown in case I have to remove items to save weight.

Three minutes later, Mr Kane sent a further email as follows:

Was adjustable speed propeller included? Or is that what constant speed means?

I noticed weights are in spread sheet. Thank You.

The reference to “constant speed” is part of the description for the MT propeller in the price list which Mr Kane had forwarded on 29 June 2018.

36    On 30 June 2018 at 5.24 am, Mr Kane sent an email to Mr Stott as follows:

What do you think of weight attached, seems a bit heavy?

That email attached the same price list that Mr Anderson had sent to Mr Kane on 29 June 2018 at 6.52 pm.

37    Mr Kane claims that at about this time, and in early July 2018, he had a further conversation with Mr Anderson including words to the following effect:

Mr Anderson:    “With all the options you have chosen, I can’t get you an aircraft at 350 kg dry weight. I can get you the plane at a total dry weight of about 378 to 380 kg. We are going for a maximum take-off weight of 600 kg, which gets registration with the RAA and a Certificate of Airworthiness with CASA as a light sport aircraft. At an empty weight of 378 to 380 kg you are under the 600 kg. But if you get a reinforced spar then the entire plane can handle a total weight of 750 kg and you can upgrade to certified registration directly with CASA and get a Certificate of Airworthiness for a maximum take-off weight up to 750 kg.

Mr Kane:    Okay, it is sounding good. I will talk to Chris about the spar.”

38    I reject that evidence. As noted above, the alleged comments concerning the reinforced spar are highly improbable. As the price and option list which was the subject of the emails of 29 and 30 June 2018 does not give a weight allocation for the Rotax 915iS engine or the MT propeller and leaves blank the weight of numerous other items, it is highly improbable that Mr Anderson would have committed himself to being able to say that the dry weight of the aircraft with the options which Mr Kane wished to have would be about 378 to 380 kg.

39    Mr Kane says that after the conversation which he claimed to have had with Mr Anderson, he rang Mr Stott and Mr Stott said to him:

“If you get the spar then you can get the registration under General Aviation with CASA and the allowable weight goes up to 750 kg take-off weight.”

I reject that evidence for the reasons given above concerning the heavy duty reinforced spar.

40    Mr Stott responded to Mr Kane’s email of 30 June 2018 at 5.24 am at 9.07 am that day, saying:

It’s OK – 9kgs lighter than the latest I delivered.. And with 140 HP and your new slimmer self, no problem And the 760kg weight limit will come in in time.

Mr Kane responded at 11.12 am that day saying:

The 760kg is for certified only according to Brett.

41    The meaning of those last two emails is elucidated by the cross-examination of Mr Anderson on a series of text messages between himself and Mr Kane on 29 June 2018. At 2.53 pm, Mr Anderson texted: “750 won’t apply to RAA only certified aircraft.” That was a reference to aircraft certified only by Recreational Aviation Australia, for which certification is given up to 600 kg. At 5.02 pm, Mr Kane responded: “So if certify [sic: certified] Bristell then 750 may apply?” Mr Anderson replied “Yes” at 5.04 pm. In responding affirmatively, Mr Anderson was referring to a different aircraft, namely the Bristell B23, which was fully certified in the “VH” category (being a category for a range of larger aircraft), but the Bristell B23 was not available in Australia (T178.18-180.5). Mr MacGillivray gave unchallenged evidence that the 750 kg Bristell B23 has been “fully certified to a higher design standard, C5-23, by the European Union Safety Agency”. It appears that Mr Kane has confused what he was being told by Mr Anderson about the Bristell B23, and the requirement applicable for certification in the VH category, with what may be allowable for the Bristell 912. Mr Kane acknowledged in his cross-examination that his email at 11.12 am on 30 June 2018 was referring to “certifying to VH 750 kilo” (T87.11-22). Mr Kane was thus aware at least of the fact that Mr Anderson was not referring to certification in the LSA category, but to certification in the larger VH category.

42    As Mr Stott did not give evidence in the case, it is difficult to understand what his reference to the 760 kg weight limit was intended to mean. In any event, counsel for the applicant acknowledges that there is no evidence that Mr Stott was an agent of either Anderson Aviation or BRM Aero, with authority to make representations on their behalf.

43    On 2 July 2018 at 9.16 am, Mr Anderson sent Mr Kane a further email as follows:

Attached is a current price list.

That is based on .64.

There were two attachments to the email. One was the price list dated 1 January 2018, which Mr Kane had sent on 31 October 2017, with a total weight figure of 353.39kg. The second was a new price list dated 2 July 2018, which gave a total weight of 380.35kg. This second price list gave a weight figure of 18 kg to the Rotax 915iS 130 hp engine. It gave a weight figure of 10 kg to the MT propeller, but it did not include that figure in the column for “weight total”. There were three items of Garmin equipment for which prices were given but no weight figure was allocated. Accordingly, on a plain reading of the document the “total weight” figure of 380.35kg was incomplete and understated.

44    Mr Anderson’s evidence is that at this time, he told Mr Kane that the weights for the 915iS 130hp engine and heavy duty propeller referred to in the price list were unknown and the estimated additional weight for the 915iS 130hp engine over and above the weight of the smaller 100hp 912 ULS engine was provisional, as the final weight had not yet been determined. Mr Anderson also says that he told Mr Kane that the weights for the various constant speed propellers were also not identified at that time, as those components were also new on the market. Mr Anderson says that Mr Kane replied that he understood that the weights were not finalised and that he would wait for the finalised weights. I accept that evidence, which is consistent with the gaps in the weight allocations in the contemporaneous document, being the price and option list which was the subject of the email of 2 July 2018.

45    On 3 July 2018, Mr Anderson sent a further email to Mr Kane as follows:

Attached is the price list with twin screens and also the audio panel.

Milan [Bristela] confirmed my weight estimation was pretty close and if not slightly heavier.

The attached price list allocated weights to many of the optional items but there were numerous items where no weight was given, or no weight was given in the “weight total” column, including the MT propeller and a number of Garmin items. The total weight at the end of the list was given as 378.07 kg, but on a plain reading of the price list that did not include all of the options which Mr Kane had expressed interest in. Further, there are two items which Mr Kane had not yet opted for, namely heated seats and sliding vents in the glass canopy, and accordingly no weight figure was given for those items. In the context of that price list, the comment by Mr Anderson in his email of 3 July 2018 that Mr Bristela had confirmed his weight estimation was “pretty close and if not slightly heavier” was not a reference to the overall total weight but rather was a reference to the weights actually shown for particular items, as Mr Anderson said in his cross-examination (T186.12-22), given that the price list was still missing the weights for some items. Mr Bristela did not agree in cross-examination that he told Mr Anderson that a weight estimate of 378.07 kg was “pretty close to correct”, pointing out that he could not see the propeller’s weight of 10 kg in the right-hand column for “total weight” (T212.20-45). When asked in cross-examination whether he told Mr Anderson in early July 2018 that an aircraft with the options identified in that price list would weigh about 378 kg, Mr Bristela replied that the figure was not stated as absolute but it would be in the vicinity of or very close to that figure (T214.43-45). That answer leaves open-ended the meaning of “vicinity” and “very close” and the significance of the omission of the 10 kg for the propeller which was plainly not included in the 378 kg figure. More significantly, there is an unresolved ambiguity in Mr Bristela’s evidence because the question put to him concerned the weight of a Bristell aircraft with the options identified in the price list, and Mr Bristela thought that the selection of options was indicated by Anderson Aviation inserting the weight of each option in the “total weight” column (T212.41-45, 227.44-228.8). The sum of the weights in that column was 378.07 kg. Mr Bristela could either have been saying that an aircraft with the weights shown for the particular options shown by entries in the “total weight” column would be very close to 378 kg, or he could have been saying that the total weight of an aircraft with those options and any additional ones which could reasonably be expected (thereby including, for example, the MT propeller) would be very close to 378 kg. Accordingly, I do not regard Mr Bristela’s evidence as necessarily inconsistent with that of Mr Anderson, but if it were to be regarded as inconsistent, then I would prefer the evidence given by Mr Anderson, as it is consistent with the fact that both Mr Anderson and Mr Bristela were aware that there was no weight included in the 378.07 kg for the MT propeller and certain other items.

46    This was the last price list received by Mr Kane from Mr Anderson before the entry into the contract of sale and purchase.

47    Mr Anderson gives evidence that he had a further discussion with Mr Kane at about this time during which Mr Kane said to Mr Anderson that he understood his aircraft was likely to be very heavy with the inclusion of all the additional extras and options, including the much heavier 130 hp engine and heavy-duty propeller. I accept that evidence.

48    On 5 July 2018, Mr Kane sent an email to Mr Anderson at 6.59 am saying:

I contacted Chris [Stott] if we need to get the weight down to around 350kg what do you suggest for configuration please?

At 7.57 am, Mr Anderson replied to Mr Kane as follows:

The base empty weight is about 330 and the extra weight of a 915iS is another 18kg so basically there is your 350 give or take.

It is impossible to get to 350 if you go with a 915iS and if you try changing props to a fixed pitch then you negate the reason for going with a 915.

The chute is heavy, the motor is heavy and the prop is a heavy prop.

The DUC is a much lighter prop an[d] can reduce the weight by about 5 kilos but not sure if they have used it on a 915 as yet.

I can find out but it is not going to get back to 350.

Attached is the W&B [weight and balance] for the Central West aircraft . That is the weight after Chris removed all the options that he did not need and it is 335.2 kilos. No Chute, fixed pitch prop, no wing lockers etc. Add 18kg just for the 915 and it brings you up to 353.2 kilos with no other real options attached.

I don’t know how he figures you can get the aircraft to 350 kilos.

The attached weight and balance worksheet shows an empty weight of 335.2 kg. Mr Anderson accepted that the reference in the first line of that email to 330 kg should have been 320 kg, according to the information which was then available to him. No one appears to have been aware of that error at the time. At 3.42 pm Mr Kane forwarded Mr Anderson’s email of 7.57 am to Mr Stott saying:

Any ideas on below?

That question indicates considerable doubt and uncertainty in Mr Kane’s mind concerning the weight of the aircraft.

49    On or about 5 July 2018, there was a further conversation between Mr Anderson and Mr Kane. According to Mr Kane’s version of the conversation it was in words to the following effect:

Mr Anderson:    “With the extra 18kg weight of a 915iS engine and the heavier prop, along with your other options there is no way to get the aircraft down from 378kg to around 350 kg.

Mr Kane:    Yes, I understand. I have been thinking about it. I do my lessons in a Bristell that weighs 363 kilograms empty. When 2 people are in the aircraft we can still fly with sufficient fuel. Thinking about that I am satisfied with the plane being 378 kilograms. I will send you an email shortly.”

That version was denied by Mr Anderson. Mr Anderson said that the telephone conversation did concern the additional options which Mr Kane wanted installed. Mr Anderson’s evidence was that he again emphasised to Mr Kane that the weights of many of the items that Mr Kane wanted installed in the aircraft were as yet unknown and that BRM Aero was still waiting on advice as to those weights from the relevant suppliers. According to Mr Anderson, Mr Kane said that he did not want to wait any longer and wanted to get the order underway. There is a minor inconsistency in Mr Anderson’s evidence, in that in his written evidence in chief he placed this conversation on 5 July, whereas in his oral evidence he placed it on 8 July. I do not see that anything turns on this point, but if it is material then I would find that the conversation took place on 5 July.

50    I accept Mr Anderson’s version of the conversation and reject that of Mr Kane. It seems to me unlikely that Mr Anderson would have referred to getting the aircraft down from 378kg when, as a matter of objective fact, the weight of a number of items had not been included in the price list which reached a figure of approximately 378kg. The most plausible reason for those weights not having been allocated was that those weights were at the time unknown. Accordingly, in addition to the fact that I have expressed a general preference for Mr Anderson’s evidence on disputed conversations over that of Mr Kane, the objective facts point towards Mr Anderson’s version being likely to have occurred. Mr Stott responded to Mr Kane’s email (of 3.42 pm the previous day) on 6 July 2018 at 8.46 am, saying among other things: “I’m not going to be much help to you here. Of course the 915 is heavier.” That response tends to indicate that Mr Kane did not receive any comfort from Mr Stott in relation to the dry weight of the aircraft and remained in a state of uncertainty on the issue, consistently with Mr Anderson’s evidence.

51    On 6 July 2018, Mr Anderson sent an email attaching a sample contract to Mr Kane in response to Mr Kane’s request on 5 July 2018 at 6.42 pm. On 11 July 2018, Mr Anderson sent a draft contract to Mr Kane by email. It appears that Mr Kane was impatient to purchase the aircraft, and was not prepared to wait for further information concerning the weight of the aircraft, including the weights of various particular optional items which Mr Kane had still not been given. Mr Kane gave evidence that at this point, when he received the draft sale and purchase agreement on 11 July 2018, he understood that the Bristell Aircraft including the options referred to in the draft contract weighed about 378.07 kg and was a light sport aircraft. On the contrary, in my view, Mr Kane must have appreciated that the aircraft would weigh significantly more than 378.07 kg, given the uncertainty expressed by Mr Kane about the weights for a number of particular items, and the fact that the price list of 3 July 2018 omitted weights for a number of items. The MT propeller alone was given a weight of 10 kg in the 3 July 2018 price list, but the figure of 10 kg was not included in the column for “weight total”. Accordingly, that weight had to be added to the total of 378.07 kg, as too did the weights for the Garmin items which had not been included, together with the heated seats and sliding vents in the glass canopy which were now included as options in Annexure 1 to the Draft Contract.

52    On 12 July 2018, the contract for the sale and purchase of an aircraft was entered into between Anderson Aviation as the Seller and Kane’s Hire as the Purchaser. Clause 1 defines the “Aircraft” as meaning:

The aircraft described in paragraph 1 of Schedule 1 – Description of Aircraft and Delivery Documents, including the specified airframe and engine and all parts, components, appliances, accessories, instruments and other items of equipment installed in or attached to such airframe or such engines at Delivery and the related Delivery Document.

Clause 2.1 provides as follows:

In consideration of payment of $230,600.00 exclusive of GST and associated registration costs [“the purchase price”], in cash or cleared funds the Seller sells to the Purchaser and the Purchaser buys from the Seller the goods on the terms and conditions of this agreement as detailed at Annexure 1.

Clause 10 provides the following warranties by the seller:

10.1 The Seller warrants that the goods are as described in the Schedule, that the aircraft will be on the RAA register, unless otherwise agreed between the Seller and the Purchaser, that it will hold a Certificate of Airworthiness (if applicable); and that it will hold an aircraft log book pursuant to CAR & CAO.

10.2 The Purchaser acknowledges that the Seller does not make under this agreement or outside of it any representations or warranties regarding the goods which is or might be relevant to the Purchaser buying or selling the goods other than the representations or warranties expressed in this agreement and by the manufacture of the aircraft.

10.3 The Purchaser acknowledges that it has not carried out an inspection of the goods and the maintenance and registration records of the aircraft, and that the Purchaser is reliant upon the seller to ensure that the goods are as described in the Schedule.

10.4 Any performance figures given by the seller are the aircraft manufacturer’s figures and should be considered estimates only. The seller is under no liability for damages for failure of the goods to attain such figures unless specifically guaranteed in writing. Any such written guarantees are subject to the recognized tolerances applicable to such figures.

Clause 20.1 of the contract provides as follows:

This agreement, and any documents referred to in it, constitute the whole agreement between the parties and supersede any previous arrangement, understanding or agreement between them relating to the subject matter they cover.

53    Schedule 1- Item 1 provides a description of the aircraft and its equipment as follows:

Type:    Bristell FG / Longwing (9.1M) as per Annexure 1 below.

For full description of inclusions and options for this aircraft see Annexure 1.

        As per Excel price list spread sheet.

The reference to the Excel price list spread sheet, in my opinion, is a reference to the last of the Excel price lists provided by Anderson Aviation to Kane’s Hire, namely that of 3 July 2018. There is no such Excel price list spread sheet in the annexures to the contract itself. Accordingly, the Excel price list of 3 July 2018 was incorporated by reference into the contract.

54    Annexure 1 to the contract provides a list of aircraft specifications as ordered. It begins by referring to the aircraft as a Bristell, Fixed Gear, Ready to Fly, “912 LSA (600 kg) 100Hp, painted white”. That is a reference to what may be described as the basic aircraft before the addition of options, because one of those options which is referred to in Annexure 1 was the Rotax 915iS 130hp engine (rather than 100 hp). Annexure 1 does not itself give weights for the individual items which it refers to, nor does it give a total figure for dry empty weight.

55    On 12 October 2018, Mr Anderson sent Mr Kane an email saying that his aircraft was ready for test flying in the Czech Republic, and attached the Aircraft Operating Instructions for a Bristell 915 Aircraft which arrived the previous week for another customer. Section 6 of the Aircraft Operating Instructions which were attached deals with weight and balance, and refers to the basic weight of the empty aircraft as being 403kg. Given that that aircraft was for another customer, I do not attach any significance to that particular communication of a weight figure to Mr Kane.

56    Also on 12 October 2018, Mr Bristela on behalf of BRM Aero signed a Light Sport Aircraft Statement of Compliance for the aircraft sold to Kane’s Hire. The manufacturer’s certification included a declaration that the design of the aircraft complied with the standards listed under section 3, which included the ASTM standard referred to above, namely F2245-16c. The document also refers to the MTOW as being 600 kg. As I have said above, for that standard to be complied with, the dry empty weight could not exceed 397.98 kg, whereas it is common ground that the Bristell Aircraft had a dry empty weight of 411 kg. Accordingly, BRM Aero’s certification was incorrect, as Mr Bristela on behalf of BRM Aero admitted to CASA (as a genuine oversight) in a letter dated 22 February 2020.

57    On 19 November 2018, Mr Anderson sent an email to Mr Kane saying that his aircraft was about to be shipped, which triggered the third payment under the contract of sale. The contract in Schedule 1 referred to four payments, each of $63,415.00, being 25% of the total purchase price, payable at the four stages of signing, painting, shipping and delivery.

58    On 23 December 2018, Mr Anderson sent an email to Mr Kane confirming that final arrangements had been made to ship Mr Kane’s aircraft to Melbourne with an expected docking date of 14 February 2019. Mr Anderson’s email also attached a copy of the Aircraft Operating Instructions for Mr Kane’s aircraft. Section 6 of those Aircraft Operating Instructions related to weight and balance, and gave a final weight for the empty aircraft at 411.0 kg. Mr Anderson’s email also refers to Mr Kane now having “some reading to do over the break”. Mr Kane raised no concerns or issues with Mr Anderson concerning the empty weight of his aircraft at 411.0 kg.

59    On 19 March 2019, a special certificate of airworthiness for the Bristell Aircraft sold to Kane’s Hire was issued. On 21 March 2019, the Bristell Aircraft was registered with RAA, and it was established by the evidence of Ms MacGillivray that the Bristell Aircraft was still registered with RAA through until March 2023. I would infer in the absence of evidence to the contrary that it remains registered with RAA. On 26 March 2019, Kane’s Hire paid the final instalment of the purchase price. On 28 March 2019, Mr Anderson delivered the Bristell Aircraft to Mr Kane at Bathurst Airport.

60    On 4 April 2019, Mr Kane raised a query for the first time as to why the empty weight of the aircraft was 411.0 kg, prompted by his instructor, Mr Cavieres. Mr Anderson sent an email to Mr Kane that day stating:

When you and I discussed the aircraft we both knew the weights on the price list were not complete as we did not have all the details and it was always going to be north of the value on the list.

I know you are conscience [sic] of the extra options you were adding but got to the point of thinking they would not add up to much.

I did question Milan [Bristela] tonight and he too was surprised by the weight and mentioned the original prototype with the original engine supplied from Rotax was much lighter.

Your comment has prompted Milan to investigate if Rotax have change [sic] anything to make the engine heavier as BRM have not made any changes to the airframe or elsewhere that should amount to the perceived difference. This is one of those cases where Milan, you and I did not really know the actual end weight at the time or [sic] ordering due to some of the specifications that were being ordered. I will follow up when I received [sic] the list of weights and information from Milan.

61    Mr Anderson’s summary of the events corresponds to the findings which I have made above and is a fair and accurate summary. Mr Kane gave evidence that if he had been aware that the Bristell Aircraft had a dry weight of 411 kg and could not comply with the requirements of the MTOW of 600 kg and was not entitled to a Certificate of Airworthiness as an LSA, he would not have caused the applicant to pay the final instalment payment under the Sale and Purchase Agreement for the Bristell Aircraft and he would not have caused the applicant to take delivery of the Bristell Aircraft on 28 March 2019; rather, he would have instead retained legal representation to explore the applicant’s immediate legal rights. I reject that evidence. In my opinion, Mr Kane on behalf of Kane’s Hire entered into the contract of purchase and paid the remaining instalments of the purchase price knowing that he had not been given a total figure for the dry empty weight of the aircraft with all the options he had selected, and being prepared to take the risk that the final weight may have meant that it would not qualify for a certificate of airworthiness as an LSA under reg 21.186 of the Regulations.

62    On 28 November 2019, CASA wrote to Mr Kane giving notice that it was considering the suspension or cancellation of the certificate of airworthiness for the Bristell Aircraft. The letter points out that on 8 May 2019, Mr Kane had enquired with CASA as to whether there was a way in which he could increase the MTOW of the aircraft, which had been delivered with an empty weight of 411 kg. CASA advised Mr Kane that it was not possible to increase the MTOW of the aircraft, as to do so would take the aircraft outside the definition of an LSA and it was beyond the weight limit specified in the standards set by ASTM, pursuant to which the aircraft manufacturer had certified that the aircraft was constructed. The letter points out that the Statement of Compliance for the aircraft, signed by its manufacturer, declared compliance with the design and performance standard ASTM 2245-16c. The letter says that in order to conform with the ASTM standard, the aircraft would need to have a minimum useful load of 202.02 kg; however with an empty weight of 411 kg, that left the aircraft with only a 189 kg useful load. In order to meet the minimum useful load component of the ASTM standard, the empty weight of the aircraft would need to be not more than 398 kg.

63    While the letter refers to CASA’s power to suspend or cancel a certificate of airworthiness if CASA considers that it is necessary to do so in the interests of aviation safety, the letter also refers to reg 21.181(4)(c)(iii) of the Regulations, which states that a certificate of airworthiness for an LSA stops being in force if it does not comply with the LSA standards, and stated that CASA considers that the Bristell Aircraft should not have been issued with a certificate of airworthiness as it does not comply with the LSA standards. The letter allowed Mr Kane 21 days to show cause why the certificate of airworthiness should not be suspended or cancelled, and also invited Mr Kane to participate in a “show cause conference”. Mr Kane paid the CASA fee of $240.00 for the experimental certificate application.

64    On 27 April 2020, prompted by a suggestion made by Mr Poole of CASA, Mr Kane applied to CASA for an experimental certificate for LSAs. On 4 August 2020, the previous special certificate of airworthiness for an LSA was cancelled, and a new special certificate of airworthiness was issued in the category “Experimental Light Sport Aircraft”. The purpose for which the certificate was given was described as “Private operations only”, which may be contrasted with the original certificate of airworthiness, which was issued for the purpose of “Private Operations/Flight Training”. The only material difference between the two certificates is that the aircraft cannot now be used for purposes of flight training. An email of 24 April 2020 from Mr Poole of CASA to Mr Kane sets out other requirements of holding an experimental certificate, including placing a warning notice in the cockpit, putting the letter “E” in front of the registration on the aircraft on both sides of the plane, and putting the word “EXPERIMENTAL” on the aeroplane near each entrance to the cockpit. None of the expert witnesses suggests that those requirements affect the aircraft’s value.

65    It also appears that after April 2019, suggestions were made to Mr Kane by Mr Stott and also by Mr Anderson as to how the empty weight of the Bristell Aircraft could be reduced so as to bring it under 398.98 kg. The suggested changes included replacing the 915iS engine with a 912iS engine, removing the sleeping tube, replacing the battery, and removing the parachute. Although there was some dispute as to the proposed terms of payment, I accept the evidence of Mr Anderson and Mr Bristela that BRM Aero offered to cover the full cost of parts and labour. Mr Kane rejected the suggestions and the offer.

66    Mr Kane continued to fly the Bristell Aircraft until 2 October 2020. Mr Kane gave evidence that the Bristell Aircraft has not been flown since that date, and that is consistent with the log book for the Bristell Aircraft. The Bristell Aircraft still has the benefit of the experimental certificate of airworthiness, and, as Ms MacGillivray said in her unchallenged evidence in chief, it can still be flown as a two-seat aircraft.

contractual claims

67    Kane’s Hire makes a number of claims under the Sale and Purchase Agreement of 12 July 2018. Kane’s Hire relies on four express terms and six implied terms which it alleges are contained in that contract.

68    First, Kane’s Hire alleges that it was an express term of the Sale and Purchase Agreement that the Bristell Aircraft be as described in Annexure 1 to the contract, including the aircraft having a dry empty weight of 378.07 kg (Dry Empty Weight Term). That term is particularised as arising from clauses 2.1 and 10.1, Schedule 1, Annexure 1 and the Excel spreadsheet of 3 July 2018.

69    I accept that there was an express term of the contract that the Bristell Aircraft be as described in Annexure 1, that term arising from the provisions of the contract which are particularised. As I have indicated above, I accept that the Excel spreadsheet of 3 July 2018 was incorporated into the contract by the language used in Item 1 of Schedule 1. It is a document referred to in the agreement within the meaning of clause 20.1. However, the breach relied upon requires also that the express term extend to the alleged requirement that the dry empty weight be 378.07 kg. I do not agree that that aspect is part of the express term. The figure of 378.07 kg is given in the Excel spreadsheet of 3 July 2018 at the foot of the column headed “Total Weight”, but it is plainly the sum only of those items which have a weight allocated in that column. As I have said above, there is no figure for weight in the “Weight Total” column for the MT propeller and several items of Garmin equipment, and there is no weight given for heated seats or sliding vents in the glass canopy (which became options chosen by Kane’s Hire only after 3 July 2018). Accordingly, in my view, the warranty given in relation to the total weight figure was no more than that the total weight of those items for which a weight had been included in the “Weight Total” column amounted to 378.07 kg. It was not a warranty that the dry empty weight of the aircraft would be 378.07kg, as there were plainly some blanks still to be filled in in relation to the weights of certain items, and two items referred to in the final contract had not been chosen as at 3 July 2018.

70    The second of the express terms alleged is that the Bristell Aircraft be as described in Annexure 1 to the contract, including being an LSA having a MTOW of 600 kg (MTOW Term). That term is said to arise from clauses 2.1 and 10.1, Schedule 1 and Annexure 1 to the contract. The only place where there is reference in the contract to the aircraft being an LSA of 600 kg is in the initial section of Annexure 1, in which there is a line which describes the Bristell Aircraft as fixed gear, ready to fly, “912 LSA (600 kg) 100 Hp, painted white”. As I have already indicated, the Bristell Aircraft as fully described in Annexure 1 was not a 100 hp aircraft, because Kane’s Hire had opted to include the Rotax 915iS engine which was expressly described in Annexure 1 as “130 HP”. One fact which was commonly known to both Kane’s Hire and Anderson Aviation at the time of the contract was that the Rotax 915iS engine would be heavier than the standard engine for the Bristell 912 aircraft. Construing Annexure 1 as a whole and in a harmonious way, in my view the reference early in Annexure 1 to the aircraft being an LSA of 600 kg is no more than a reference to the standard Bristell 912 aircraft. It cannot be construed as a reference to the aircraft as fully described in Annexure 1 with all of the options which Kane’s Hire had decided to take up. Accordingly, in my view there was no contractual term that the Bristell Aircraft would be an LSA and would have a MTOW of 600 kg.

71    In any event, the Bristell Aircraft is in fact a “light sport aircraft” as defined in the Regulations with a MTOW of 600 kg. The definition of “light sport aircraft” in the Dictionary to the Regulations sets out a number of cumulative criteria which are satisfied by the Bristell Aircraft. The problem which emerged does not concern that definition. Rather, the problem is that Bristell Aircraft cannot be certified as a light sport aircraft under reg 21.186, because it does not satisfy one of the applicable LSA standards, namely ASTM 2245-16c. However, it can be, and is, certified as an experimental LSA. It is then the responsibility of the pilot to ensure that its take-off weight does not exceed 600 kg. Accordingly, even if the description “LSA (600 kg)” were construed as applicable to the full Bristell Aircraft with all the chosen options listed in Annexure 1, there would be no breach of the term requiring compliance with that description.

72    The next express term which is alleged is that Anderson Aviation warranted that the Bristell Aircraft would:

(a)    be registered on, and capable of validly being registered on, the RAA register; and

(b)    hold, and would validly hold, a certificate of airworthiness from CASA as a 2-seater LSA (the Certificate of Airworthiness Term).

That term is said to arise from clause 10.1 of the contract. Clause 10.1 does indeed include a warranty that the aircraft will be on the RAA register. However, there is no evidence of any breach of that warranty. Mr Anderson on behalf of Anderson Aviation applied for registration with RAA on 18 March 2019, and that application was successful. Ms MacGillivray proved that, at the time of her supplementary expert report, the Bristell Aircraft remained on the RAA register through until March 2023, and there is no evidence that it was ever removed from the register.

73    As to the aspect of the alleged term concerning a certificate of airworthiness from CASA, clause 10.1 provides only for a warranty that the aircraft will hold a certificate of airworthiness, if applicable, and the term “Certificate of Airworthiness” is not defined in the contract. I accept that in the context of the contract, the reference to “Certificate of Airworthiness” should be construed as such a certificate issued by CASA, and it is also clear from the context of the contract that such a certificate would be in relation to a 2-seater aircraft. However, the contract does not require that the certificate of airworthiness be for an LSA, or that it be for an LSA pursuant to reg 21.186 of the Regulations. In my view, there is no reason why the concept of certificate of airworthiness from CASA for a 2-seater aircraft could not also be satisfied by the issue of an experimental certificate, being one of the various kinds of “special certificate of airworthiness” as defined in reg 21.175 of the Regulations. Accordingly, in my view at all times there has been compliance with the warranty as to a certificate of airworthiness, initially by way of a certificate for an LSA under reg 21.186 until 4 August 2020, and subsequently from 4 August 2020 by way of an experimental certificate. The experimental certificate was also for an LSA, but not an LSA pursuant to reg 21.186.

74    The next express term alleged is that Kane’s Hire was reliant upon Anderson Aviation to ensure, and Anderson Aviation would ensure, that the Bristell Aircraft was as described in Schedule 1 to the contract including that the Bristell Aircraft be an LSA having an MTOW of 600 kg (Reliance Term). That term is particularised by reference to clause 10.3 of the contract. Clause 10.3 does provide that Kane’s Hire is reliant upon the seller to ensure that the goods are as described in the Schedule, and in context that should be construed as a warranty on the part of Anderson Aviation that the goods are in fact as described in the Schedule. To the extent that the Reliance Term is focussed on the reference to 378.07 kg in the 3 July 2018 Excel spreadsheet, I have dealt with that already in relation to the Dry Empty Weight Term. Further, for the reasons already given, I do not think that the clause extends to any warranty or term that the aircraft would be an LSA having a MTOW of 600 kg, but in any event the Bristell Aircraft is in fact an LSA under the definition in the Dictionary to the Regulations, and does have a MTOW of 600 kg. Accordingly, in my view the express term does not go as far as the alleged Reliance Term, and there is no evidence of breach of the term in any event.

75    Four implied terms which are relied upon in the Statement of Claim are that the Bristell Aircraft:

(a)    would have a TOW and an MTOW of 600 kg or less;

(b)    would be an LSA, in accordance with regulations applicable in Australia to LSA;

(c)    would hold, and would be capable of validly holding a certificate of airworthiness as a 2-seater LSA; and

(d)    would be capable of being legally used as a 2-seater LSA in Australia.

76    The implied terms are all said to be implied in fact. Accordingly, as counsel for the applicant accepts, the relevant principle is that laid down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-283 (Lord Simon):

[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1)    it must be reasonable and equitable; (2)    it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

See generally the analysis of this principle in J.D. Heydon, Heydon on Contract: The General Part (2019), at [10.620]-[10.860].

77    In my opinion, the alleged implied terms do not satisfy the first three of those conditions. The fundamental flaw in the first alleged implied term is that the seller has no ability to supervise the weight of the aircraft when it actually takes off. An aircraft which satisfies ASTM 2245-16c at the time of sale, based on the assumed weight of two occupants of about 86 kg each, and only enough fuel for one hour, may well be too heavy if it is in fact occupied by two unusually heavy occupants, a full tank of fuel, and perhaps some luggage. That would be beyond the seller’s control. Such a term is not reasonable, necessary for business efficacy, or so obvious that it goes without saying.

78    The fundamental flaw in the other three implied terms, if they are read as intended to refer implicitly to reg 21.186 of the Regulations, is that they ignore the reality that the Bristell Aircraft was capable of being issued, and flown, with a certificate of airworthiness as an “experimental light sport aircraft”, which conferred all of the benefits of a certificate of airworthiness as an LSA pursuant to reg 21.186, with the only material exception being that it could not be used for flight training. Kane’s Hire does not operate a flying school, and does not contend that flight training was an essential aspect of its use of the aircraft. The alleged implied terms are thus not reasonable, necessary for business efficacy or so obvious that they go without saying. In any event, there is no breach of those alleged implied terms because the Bristell Aircraft is in fact an LSA under the definition in the Dictionary to the Regulations, and holds a certificate of airworthiness as such, albeit in the experimental category.

79    Kane’s Hire also makes a claim pursuant to the term implied by s 19(a) of the Goods Act 1958 (Vic) which provides relevantly that:

where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment and the goods are of a description which it is in the course of the seller’s business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose ….

The Bristell Aircraft falls within the definition of “goods” in subs 3(1), being “all chattels personal other than things in action and money”.

80    The particular purpose alleged for which the Bristell Aircraft was required was “as a 2 seater LSA to be used legally by 2 persons at once as an LSA in Australia”. The alleged breach of the condition implied by s 19(a) is that the Bristell Aircraft “is not an LSA within the Regulations and is not legally permitted to be used as a 2 seater LSA in Australia”.

81    The first difficulty with these allegations is that there is no evidence by Mr Kane that he had, or made known to Anderson Aviation, the particular purpose of the Bristell Aircraft being an LSA. The highest that Mr Kane’s evidence goes is that he had a particular purpose of flying the Bristell Aircraft with two occupants (namely himself and his son) in Australia, and I would infer that his purpose was to do so legally. The second difficulty is related to the first, namely that Mr Kane is legally permitted to fly the Bristell Aircraft as a 2 seater LSA in Australia, with all the benefits of a certificate of airworthiness for an LSA pursuant to reg 21.186 of the Regulations, except that it cannot be used for flight training. That is the effect of the experimental certificate of airworthiness granted on 4 August 2020, and the continued registration of the Bristell Aircraft with the RAA. There was no challenge to Ms MacGillivray’s evidence that the Bristell Aircraft may lawfully be flown in Australia as a 2-seat light sports aircraft by reason of the experimental certificate of airworthiness and its continued registration with RAA. I note that there is no pleading of a case that flight training was a particular purpose which Kane’s Hire made known to Anderson Aviation.

82    The sixth implied term alleged is pleaded in the Reply, being a term that the Bristell Aircraft would have:

(a)    a dry empty weight of 378.07 kg; or

(b)    a maximum dry empty weight of 398.98 kg or less; or

(c)    a maximum dry empty weight which still enabled the aircraft to have a MTOW of 600 kg or less.

The basis of this allegation appears to be the view that the only way in which the Bristell Aircraft could receive a certificate of airworthiness as required by the contract would be as an LSA pursuant to reg 21.186 of the Regulations. However, as discussed above, the experimental certificate of airworthiness satisfies the contractual requirement, even though the dry empty weight is 411 kg. As to the implied term referred to in (c) above, a dry empty weight of 411 kg still enables the aircraft to have a MTOW of 600 kg or less, and a problem will arise only if the occupant(s), fuel and baggage combined are so heavy that they exceed 189 kg (being 600 kg less 411 kg).

83    Accordingly, none of the implied terms arise.

claims of misleading conduct

84    As against Anderson Aviation, Kane’s Hire alleges that Anderson Aviation contravened the statutory prohibition on misleading or deceptive conduct imposed by s 18 of the Australian Consumer Law by reason of eight representations, and also alleges that Mr Anderson was knowingly involved in those contraventions.

85    The first set of those representations concerns the dry empty weight of the Bristell Aircraft and are alleged as follows:

(a)    Mr Anderson on behalf of Anderson Aviation said in a conversation in early to mid-2018 that a Bristell LSA:

(i)    plus each option and modification selected by Kane had a total combined dry empty weight of about 378 kg; or alternatively

(ii)    plus each option and modification selected by Kane could be supplied by Anderson Aviation having a total combined dry empty weight of about 378 kg (First Dry Weight Representation);

(b)    on 3 July 2018, Anderson Aviation provided a final quotation for the Bristell Aircraft which included all options and modifications specified by Kane and represented that the Bristell Aircraft plus all options and modifications specified by Kane had a combined dry empty weight of 378.07 kg or alternatively was close to between 378.07 kg and 380.35 kg (Second Dry Weight Representation); and

(c)    between about 3 and 11 July 2018, Anderson Aviation provided Kane’s Hire with an unsigned copy of a draft sale and purchase contract for the Bristell Aircraft by which Anderson Aviation represented that the Bristell Aircraft, plus all options and modifications specified by Kane, had a combined dry empty weight of 378.07 kg (Third Dry Weight Representation).

86    As to the First Dry Weight Representation, I have rejected Mr Kane’s evidence of the conversation he claims to have had in late June or early July 2018 with Mr Anderson in which a figure of 378 to 380 kg was said to have been mentioned by Mr Anderson, and I have also rejected Mr Kane’s version of the conversation on 5 July 2018, in which it was claimed that Mr Anderson referred to 378 kg. There is no other evidence of any such conversation, and accordingly I find that this representation was not made.

87    As to the Second Dry Weight Representation, as I have explained above, the Excel spreadsheet of 3 July 2018 was plainly incomplete and understated in terms of the total weight of the plane together with other items which Kane’s Hire had chosen. Accordingly, the total weight figure of 378.07 kg cannot be taken as a representation relating to the weight of the Bristell Aircraft plus all options and modifications specified by Kane, because there were numerous items which were plainly not included in that figure, as no weight had been allocated to them. I have also accepted Mr Anderson’s evidence as to his conversations with Mr Kane in early July to the effect that the final weight had not yet been determined, the weights of many of the items that Mr Kane wanted installed in the aircraft were as yet unknown and the manufacturer was still waiting on advice as to those weights from the relevant suppliers. Accordingly, the Second Dry Weight Representation was not made.

88    The Third Dry Weight Representation is said to arise from the draft contract provided between 3 and 11 July 2018. However, there is nothing in that draft, other than the incorporation by reference of the 3 July 2018 spreadsheet, which makes any reference to a dry empty weight of 378.07 kg. Accordingly, for the reasons given in relation to the Second Dry Weight Representation, I find that the Third Dry Weight Representation was not made.

89    The next set of representations concerns the MTOW. Kane’s Hire alleges that these representations were made as follows:

(a)    in early to mid-2018, Mr Anderson on behalf of Anderson Aviation represented to Mr Kane in a conversation that a Bristell LSA:

(i)    plus each option and modification selected by Kane had a combined TOW (ie take-off weight) of 600 kg or less and complied with the CASR requirements (ie the Regulations) for LSAs; or

(ii)    plus each option and modification selected by Kane could be supplied by Anderson Aviation with a combined TOW of 600 kg or less in compliance with the CASR requirements for LSAs (First MTOW Representation);

(b)    on 3 July 2018, Anderson Aviation provided a final quotation for the Bristell Aircraft and represented that the TOW of the Bristell Aircraft, plus all options and modifications specified by Kane, was 600 kg or less and thereby complied or would comply with the CASR requirements for the provision of a certificate of airworthiness from CASA (Second MTOW Representation); and

(c)    between about 3 and 11 July 2018, Anderson Aviation provided Kane’s Hire with a draft unsigned copy of a sale and purchase contract for the Bristell Aircraft, by which Anderson Aviation represented that the Bristell Aircraft plus all options and modifications specified by Kane had a TOW of 600 kg or less and thereby complied with the CASR requirements for the provision of a certificate of airworthiness from CASA for a 2-seater LSA (Third MTOW Representation).

90    As to the First MTOW Representation, I have rejected Mr Kane’s evidence of the conversation in late June or early July 2018, and I have accepted Mr Anderson’s evidence that he told Mr Kane at this time that the final weight had not been determined, that the weights of many of the items Mr Kane wanted installed were as yet unknown and the manufacturer was still waiting on advice as to those weights from the relevant suppliers. Accordingly, I find that that representation was not made.

91    As to the Second MTOW Representation, I have already indicated in relation to the contractual claims that I do not regard the reference in the 3 July 2018 spread sheet to a Bristell 912 “LSA (600 kg)” as relating to the Bristell Aircraft with all of the options and modifications included. Rather, that was a reference to the standard aircraft before the additions of those options and modifications. It is axiomatic that the question whether conduct is misleading or deceptive must be approached by examining the relevant course of conduct as a whole, rather than looking at isolated parts of the conduct: see Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [39] and [109]; Campbell v Back Office Investments Pty Ltd (2009) 238 CLR 304 at [102]. It is not permissible to take a single line from a document which contains detailed information over several pages, without assessing how the information in that particular line relates to the whole of the document. Similarly, it is not permissible to take a single document and remove it from the context of other communications at the time between the parties. I find that the Second MTOW Representation was not made.

92    The Third MTOW Representation appears to depend upon the 3 July 2018 spreadsheet, which is incorporated by reference in the draft contract. For the same reasons as given above, I find that the Third MTOW Representation was not made.

93    Further, none of these alleged representations concerning MTOW are confined specifically to meeting the requirements for a certificate of airworthiness for an LSA pursuant to reg 21.186 of the Regulations. They are expressed more generally in relation to the requirements for provision of a certificate of airworthiness for an LSA. As that includes the experimental category of LSA, which was satisfied, none of these representations has been shown to be false.

94    Finally, there is a set of alleged representations concerning the reinforced spar. The allegations are as follows:

(a)    in early to mid-2018, Mr Anderson on behalf of Anderson Aviation represented in a conversation with Mr Kane that if a reinforced spar was added to the aircraft then the aircraft could legally have a TOW of up to 750 kg and thereby;

(i)    comply with the CASR requirements for LSAs and obtain a certificate of airworthiness from CASA for a 2-seater LSA; and

(ii)    CASA can, does and will approve LSAs, with a reinforced spar with a TOW of up to 750 kg (First Reinforced Spar Representation); and

(b)    Mr Kane subsequently had a conversation with Mr Stott, who is alleged to have represented on behalf of Anderson Aviation that Mr Kane should not be concerned about the weight and the TOW of the Bristell LSA, including all the options and modifications selected by him, because if the aircraft is fitted with a reinforced spar then the aircraft could legally have a TOW of 750 kg and thereby:

(i)    comply with the CASR requirements for LSAs and obtain a certificate of airworthiness from CASA as a 2-seater LSA; and

(ii)    CASA can, does and will approve LSAs, with a reinforced spar, for airworthiness with a TOW of up to 750 kg (Second Reinforced Spar Representation).

95    As to the First Reinforced Spar Representation, I have rejected Mr Kane’s evidence of his conversation with Mr Anderson claiming that words to that effect were said. Accordingly, that representation was not made.

96    As to the Second Reinforced Spar Representation, counsel for the applicant acknowledges that there is no evidence to the effect that Mr Stott was an agent of Anderson Aviation with authority to make representations on its behalf concerning the Bristell Aircraft, and abandoned this allegation in final submissions.

97    As I have found that the alleged representations by Anderson Aviation were not made, the claim against Mr Anderson personally for knowing involvement in misleading conduct by Anderson Aviation must also fail.

98    As against BRM Aero, Kane’s Hire alleges that it engaged in misleading or deceptive conduct by reason of two representations.

99    The first alleged representation is that on or about 2 or 3 July 2018, BRM Aero represented to Anderson Aviation that the combined dry empty weight of the Bristell Aircraft, plus all options and modifications specified by Mr Kane, was close to or less than 378 kg (BRM Aero Dry Weight Representation). As I have found above, I accept Mr Anderson’s evidence that when Mr Bristela confirmed that Mr Anderson’s weight estimation was “pretty close and if not slightly heavier” (as expressed by Mr Anderson in his email of Mr Kane of 3 July 2018), Mr Bristela was not referring to the overall total weight of the aircraft but rather was referring to the weights actually shown for particular items. I am comfortably satisfied that that was the case, given that both Mr Anderson and Mr Bristela were aware that there were a number of items for which a weight had not yet been allocated, because Mr Bristela was still waiting for details to be provided by the relevant suppliers. Accordingly, I find that the BRM Aero Dry Weight Representation was not made.

100    The second representation alleged against BRM Aero is that in or about mid to late 2018 or early 2019, BRM Aero provided a Statement of Compliance for the Bristell Aircraft declaring that the Bristell Aircraft complied with ASTM 2245-16c and that the Bristell Aircraft had an MTOW of 600 kg or less (BRM Aero ASTM Representation). In my opinion, that representation was made by BRM Aero, as counsel for the respondents accepted in final submissions. I have referred above to the Light Sport Aircraft Statement of Compliance signed by Mr Bristela on behalf of BRM Aero on 12 October 2018, in which the manufacturer’s certification included a declaration that the design of the aircraft complied with the standards listed under section 3, which included the ASTM standard known as 2245-16c. The document also refers to the MTOW as being 600 kg. It is common ground between the parties that BRM Aero’s certification was incorrect, given that the ASTM standard 2245-16c required that the dry empty weight of the Bristell Aircraft not exceed 397.98 kg once the prescribed weight of occupants and fuel was taken into account, whereas the dry empty weight of the aircraft was in fact 411 kg. Accordingly, the BRM Aero ASTM Representation was false, and constituted misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law.

causation and damages

101    The primary claim for damages is a claim that damages should be measured by the difference between the price paid for the Bristell Aircraft and the true value of that aircraft. This is in effect an application of the so-called rule in Potts v Miller (1940) 64 CLR 282. That principle was explained by the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640. As the unanimous judgment of the High Court in the latter case states, the “rule” is not universal, inflexible or rigid but is based upon the damages being valued as the difference between the purchase price and the true value of the asset at the date of acquisition, and in assessing that value one may have regard to post-acquisition events, provided that they are not independent, extrinsic, supervening or accidental. The applicant did not seek to establish a “no transaction” case to the effect that if the alleged wrongful conduct had not occurred, the applicant would not have entered into the transaction at all.

102    The applicant led valuation evidence from Mr Crick, who valued the Bristell Aircraft as follows: (a) $177,845 as at 28 March 2019 (the date of delivery); (b) $142,275 as at 4 August 2020 (the date of the cancellation of the original certificate and the issue of the experimental certificate); and (c) $170,000 as at 29 July 2022 (the date of his report). Those figures are exclusive of GST. The fluctuations in value are mainly due to market dynamics from time to time. The values also reflect the fact that the aircraft would have been seen in the marketplace as a second hand aircraft, even though on 28 March 2019 it would still have been in a new delivery condition.

103    The important integer in Mr Crick’s analysis for the present purposes is the extent to which the value of the plane may have been reduced by reason of the certificate of airworthiness being in the experimental category, rather than the LSA category under reg 21.186 of the Regulations. As to that element, Mr Crick’s reasoning is as follows:

The first option is to assess the supplied aircraft at 411 kg, assuming it not to be compliant for LSA certification and assessing it for a transaction as an Experimental category aircraft. According to experienced LSA brokers this would require a 10% to 20% allowance. As discussed earlier, this allowance is congruent and within market expectations and I have in this instance split the difference of the range and have made a 15% allowance to ensure that there is not a bias towards the buyer wanting a large discount or to the seller minimising the fact of the aircraft having no revenue generating capacity.

The reference to the earlier discussion on this topic referred to the existence of potential purchasers for a similar LSA falling into two primary categories, one being a flight school or pilot training aircraft operator which would be looking specifically for an LSA registered aircraft and the other being private operators who may entertain an experimental category aircraft of the same model. Mr Crick explained that the primary difference between the two aircraft buyers is that the former category of buyers will view the aircraft in terms of its ability to generate revenue. If it has no revenue generating capacity, then it would be seen as something that should sell for a lower amount. Mr Crick made the following comments:

The magnitude of these differences are dependent on a number of factors. Anecdotally the difference between an LSA airworthy aircraft and the same aircraft in experimental category in general terms according to brokers familiar with the type and models of aircraft would be in the realm of a 10-20% discount for an experimental only capacity aircraft. The average usually amounts to a difference of around 15%. This represents a differential between an aircraft capable of revenue generation and one that isn’t capable of the same revenue potential. My experience within the aviation sector is that this is a fair and reliable summary of the differences and represents a reasonable differential.

104    Mr Crick concluded his analysis by deducting from the purchase price of $230,600 a 5% allowance for the aircraft being second hand ($11,530) and a 15% allowance for the experimental category airworthiness, ie without any flight training capacity ($34,590) to arrive at a value of $184,480. That would yield a loss of $46,120.

105    Mr Crick also set out an alternative calculation based upon the removal of various optional items in the Bristell Aircraft so as to reduce the weight of that aircraft to fall within the category of LSA airworthiness pursuant to reg 21.186. That analysis yielded a value of $171,211. Mr Crick’s conclusion of a value of $177,845 was reached by taking an average of the two methods. I do not regard the second alternative as an available option in the present case, given that the proposal to remove optional items was made available to Mr Kane and he refused to engage in that approach, as I have discussed above. On the facts of this case, therefore, the second alternative appears to me to be an artificial and unrealistic analysis.

106    The respondents called their own valuation expert, Mr Kitt. Mr Kitt’s view was that the Bristell Aircraft as at 28 March 2019 was worth what Kane’s Hire had purchased it for, namely approximately $230,000. As at the date of his expert report in June 2022, Mr Kitt valued the aircraft at approximately $230,000 plus GST, and as at the current date, Mr Kitt valued the aircraft at between $220,000 and $230,000 plus GST.

107    Importantly, in Mr Kitt’s view there should be no deduction from the value of the aircraft by reason of it having an experimental certificate of airworthiness, rather than one issued for an LSA under reg 21.186. Mr Kitt said in his report:

There are many Experimental category aircraft flying in Australia. For private use as Con Kane was using it for, there is no effect. If the aircraft was to be sold and required commercial operations such as for a flying school then there could be a reduction in value, however that would be subjective as the aircraft are in high demand with long lead times for delivery.

In his oral evidence, Mr Kitt explained that this particular aircraft would not be purchased by flying schools because of the complexity of the aircraft due to the optional items which had been taken up: particularly the constant speed propeller, the avionics and the 915 engine. Mr Kitt explained that it is designed and manufactured as an advanced aircraft, which would not be looked upon favourably by flying schools. The pool of potential purchasers would be much narrower, as the aircraft is suited to an owner who wants every option which is available (T287.43-288.11). Mr Crick acknowledged that he had not seen an identical or near identical aircraft, and other Bristell Aircraft in his experience had a smaller engine and different functionality. Mr Crick acknowledged that if a commercial flight school would not find this aircraft appealing, then that would reduce the pool of potential purchasers (T288.21-37). Mr Crick did not disagree with Mr Kitt’s basic proposition that the aircraft would not in fact be attractive to a commercial flight school.

108    In the light of that evidence, I do not think that the fact that the Bristell Aircraft has an experimental certificate of airworthiness rather than one issued for an LSA under reg 21.1.6 made or makes any material difference to its value. Mr Crick’s initial evidence in his report did not take into account that the aircraft with all its optional items would not be purchased by the operator of a flying school. The other reasons for the value fluctuating over time since 28 March 2019, including the second hand nature of the aircraft and the overall dynamics of the market for recreational aircraft, fall within the kinds of independent, extrinsic, supervening or accidental factors which are to be disregarded. They would have occurred irrespective of any breach of contract or misleading conduct. Accordingly, I do not think that the applicant has suffered loss from any of the alleged breaches of contract or alleged misleading conduct from any diminution in value which is attributable to those alleged wrongs.

109    In any event, even if I accepted Mr Crick’s evidence as to a diminution in value attributable to the issue of the experimental certificate, it is difficult to see how that alleged loss would have been caused by the misleading nature of the BRM Aero ASTM Representation. I accept that there is no general requirement that damages under s 236 of the Australian Consumer Law can be recovered only where the applicant itself relies on the respondent’s misleading conduct, as cases such as Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 indicate. In the present case, the BRM Aero ASTM Representation was made to CASA, which acted on it by treating reg 21.186 as satisfied. However, in the absence of a finding that a promise or representation was made to Kane’s Hire that the Bristell Aircraft would be issued with a certificate of airworthiness for an LSA specifically under reg 21.186, there is no disparity between what Kane’s Hire agreed to purchase (and was told that it was purchasing) and the aircraft which it actually acquired. Accordingly, in relation to the particular contravention of s 18 of the Australian Consumer Law which I have found to be established, any such head of loss was not caused by the contravention.

110    The applicant also makes a consequential loss claim for insurance premiums in relation to the Bristell Aircraft which it has paid since March 2019, despite the fact that the aircraft has not been flown since 2 October 2020. I do not see that those premiums represent any compensable loss, given that Mr Kane is legally able to fly the plane and he did so for some 18 months until deciding no longer to fly the plane. In this regard, he is in exactly the same position as if the aircraft had retained its certificate of airworthiness pursuant to reg 21.186.

111    The applicant also claims the fee of $240 which it was charged by CASA for the application for an experimental certificate of airworthiness. The respondents concede that that is a proper claim for compensation pursuant to s 236 of the Australian Consumer Law and admit liability for that amount, and I regard that concession as properly made. As noted above, the respondents have also conceded that the BRM Aero ASTM Representation was made, and was misleading. Accordingly, the applicant is entitled to compensation pursuant to s 236 in the amount of $240, plus interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

112    For completeness, as to the issue concerning the appropriate date for assessment of damages, while this issue does not arise on the conclusion which I have formed on the primary claim for damages, in my view the appropriate date for assessing damages would be the date of delivery of the aircraft on 28 March 2019. The date of acquisition of the asset is the basis of the rule in Potts v Miller, as explained by the High Court in HTW Valuers at [34]. It is also consistent with the general rule that damages for torts or breaches of contract are assessed as at the date of breach or when the cause of action arises: Johnson v Perez (1988) 166 CLR 351 at 355, 367, 370 and 380; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 161-162. While those authorities recognise that the rule is subject to exception in particular cases, I do not regard the circumstances of the present case as warranting any departure from the general rule. Counsel for the applicant argued that the appropriate date of assessment was 4 August 2020, being the date when the Certificate of Airworthiness originally granted was cancelled and the experimental certificate was granted, which the applicant contended was the date of the true mitigation of loss and the crystallisation of the applicant’s steps to salvage what was left of the problem. However, on the conclusions which I have drawn, there was no diminution in value of the aircraft by reason of the nature of the certificate of airworthiness, and no reason why the aircraft could not be flown lawfully whether before or after 4 August 2020. The respondents contended that the appropriate date for assessment was the date of the trial, on the basis that it was contended the aircraft has to be disposed of by the applicant and any sale would take place in the current market. However, a sale of the aircraft is not the only option available to the applicant. The aircraft is capable of being used lawfully for its intended purpose as a two seat aircraft, and the applicant is free to choose whether to fly it or leave it idle in a hangar.

113    The respondents also claim that if Kane’s Hire sustained loss, then any excess weight could have been addressed by the removal or variation of options which had been added to the aircraft at the request of Kane’s Hire, in particular the parachute recovery system (13.5 kg), the sleeping container (4.7 kg), modification to the battery (4.3 kg), and a substitution of the 915iS engine for the original 912iS engine (10.0 kg). The respondents contend that they offered to remove the excess weight constituted by those items at their expense so as to arrive at a dry weight of less than 398.97 kg, and that Kane’s Hire refused to allow that to be done, which refusal was unreasonable and any damages to which Kane’s Hire might otherwise be entitled should be reduced to the extent that Kane’s Hire’s loss would have been lessened had it acted reasonably.

114    Such a defence of failure to mitigate loss is available in relation to the claim for damages for breach of contract: Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at [187] (Giles JA, with whom Handley and Stein JJA agreed). As that case points out, a high standard on the part of the plaintiff is not required, and a plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did, with particular reference to Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452.

115    As to the claims for misleading conduct the Full Court said of a claim under the corresponding provisions of the Trade Practices Act 1974 (Cth) in Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 287 that “it has been accepted that an applicant under s 82 has an obligation to take reasonable steps to mitigate his loss consequent upon the respondent’s conduct: Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 351.” With great respect, I do not read Brown v Jam Factory Pty Ltd, whether at 351 or elsewhere, as standing for that proposition. However, I will assume for present purposes the correctness of the proposition as stated by the Full Court.

116    In my view, it was not unreasonable for Kane’s Hire to refuse the offer and suggestions made by the respondents, notwithstanding that those suggestions and the offer fall within the range of reasonable solutions to the problem. Mr Kane was clearly attracted to the new 915iS engine, and he was cross-examined on the basis that he had the objective of buying the best type of this aircraft that could be made available, including the 130 hp engine: T59.42-60.12; 98.33-40. Counsel for the respondents accepted that it was not unreasonable of Mr Kane to refuse to change the 915 engine back to the 912 engine. Apart from the parachute, that leaves only the sleeping container (4.7 kg) and the modified battery (4.3 kg), given the way the defence was particularised. That would have been a saving of 9.0 kg in total, which would not have been sufficient to reach a dry empty weight of 397.98 kg. As to the parachute, there is evidence that many customers in Australia do not choose the option of the parachute, but I do not regard it as unreasonable for a customer to insist upon the parachute being included. Much will depend upon questions of the individual customer’s confidence and experience in dealing with the risks of aviation, and a customer who has decided to take up the option of a parachute cannot be criticised as acting unreasonably for adhering to that decision, even where there is a problem with the weight of the aircraft.

117    Accordingly, the amount of compensation payable pursuant to s 236 of the Australian Consumer Law by BRM Aero for its contravention of section 18, being $240 plus interest, is not reduced by reason of any failure by the applicant to mitigate its loss.

THE FORM OF EVIDENCE OF CONVERSATIONS

118    In the present case, the applicant and the respondents took markedly different approaches to the form in which evidence in chief of conversations was given.

119    The applicant expressed his evidence in direct speech, and I have extracted a number of instances of that in the reasons above. That approach may be regarded as usual practice in New South Wales. Until about the mid-1990s (and occasionally still), courts in New South Wales rejected evidence in chief of conversations which was not expressed in direct speech (although this supposed rule of evidence was never insisted upon in cross-examination). That approach failed to accommodate the fact that people routinely remember only the gist of conversations, and perhaps also a particularly striking or important word or phrase which was used. In order to protect the witness against the challenge that the witness could not in fact remember the conversation verbatim, it became customary to preface the direct speech by saying that the conversation occurred “in words to the following effect”. That practice may well have made the evidence appear more precise and weighty than it really was, while allowing the witness some flexibility from verbatim accuracy if challenged on particular words in cross-examination. However, the practice must have struck many witnesses as most peculiar. Many witnesses must have instructed their lawyers of their memory of the substance or gist of a conversation, only to be told by the lawyer that it then had to be fashioned into direct speech, by a process of construction or reconstruction. Witnesses mindful of the duty of candour must have been most surprised by this practice.

120    At the conclusion of Mr Kane’s oral evidence in the present case, I asked him whether in giving evidence of conversations in direct speech he was claiming that his evidence was of the exact words that were used, or whether he was saying that he recalled the substance or gist of the conversation and had then recreated that in direct speech. Mr Kane said very clearly that he was not “talking word for word” (T134.38-40) and said “it was more like the idea, what the conversation was about” (T134.40). Mr Kane said candidly that he did not have a photographic memory, “far from it”(T.135.10-11). The conversations in question were mostly about five years ago, and some were up to nine years ago.

121    Mr Kane’s frankness on the issue exposes the flaws in what has continued to be the usual practice in New South Wales. It is impossible to ascertain from his evidence which words (if any) have been recalled by him as the exact words used in conversations some years ago, and which elements are the product of reconstruction. The appearance of a vivid memory of the conversation which is conveyed by the use of direct speech bears no resemblance to the state of Mr Kane’s actual memory.

122    The respondents, by contrast, have not used direct speech in their evidence of conversations. Their evidence is clearly evidence of memories of the substance or gist of conversations. There is no use of quotation marks, which ordinarily in English grammar are used to indicate the actual words spoken. It may well be that the fact that the respondents’ lawyers are based in Victoria, with a different tradition in this regard, is one of the reasons why the respondents’ evidence took the form that it did.

123    There is ample authority for the proposition that there is no rule of the law of evidence in Australia that evidence of conversations must be given in direct speech: Commonwealth v Riley (1984) 5 FCR 8 at 34 (Smithers, Sheppard and Wilcox JJ); R v Wright (1985) 19 A Crim R 17 at 19 (Mathews, McPherson and Vasta JJ); R v Noble [2000] QCA 523; [2002] 1 QdR 432 at [20] (Pincus JA, with whom McMurdo P and Mackenzie J agreed); LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 688; (2001) 53 NSWLR 31 at [8] (Barrett J); Hamilton-Smith v George [2006] FCA 1551; (2006) 247 FCR 238 at [79]-[83] (Besanko J). Even as long ago as 1984, the Full Court said in Commonwealth v Riley at 34 that the practice of adducing evidence of conversations in direct speech was probably disregarded as often as it was followed. Evidence should be given in direct speech only if the witness can remember the actual words used: Noble at [20]; LMI Australasia at [8]; Hamilton-Smith at [83].

124    The following passage from the judgment of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319, a case dealing with alleged misleading conduct arising from oral statements (which the plaintiff endeavoured unsuccessfully to prove in direct speech) pursuant to the former s 52 of the Trade Practices Act 1974 (Cth), has often been cited with approval:

Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether the spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

125    The passage is characteristically pithy and insightful. I would respectfully add the following observations relevant to the present issue. Whether the evidence of spoken words is sufficiently precise to enable the court to be reasonably satisfied that the words spoken were in fact misleading is plainly a question of degree, not a demand for unattainable perfection. In some cases, that may depend upon the use of a specific word or phrase, but in many cases the court can be reasonably satisfied of the misleading nature of an oral statement from evidence of the substance of what was said. The statement towards the end of the quoted passage, as to what is actually remembered being little more than an impression from which plausible details are then constructed, is particularly pertinent to the present issue, although many would find his Honour’s reference to that often occurring “subconsciously” to be overly charitable.

126    The primary duty of a witness is one of honesty. The oath or affirmation binds the witness to tell the truth, the whole truth and nothing but the truth. Witnesses should not be compelled or encouraged into uttering untruths on oath by giving a form of words in direct speech with which they are not happy and which they cannot actually recollect in preference to their own words in indirect speech: J.D. Heydon, Cross on Evidence (11th ed, 2017) at [17145], cited with apparent approval by Besanko J in Hamilton-Smith at [81]; and see to the same effect Noble at [4] and [19].

127    The practice of witnesses and lawyers working up a version of a conversation in direct speech (whether or not prefaced by the phrase “in words to the following effect”) from the witness’s actual memory merely of the substance or gist of what was said is logically, ethically and grammatically wrong. It is logically wrong because it reverses the logical process of deriving the meaning or substance of what was said from the actual words which were spoken; one cannot derive (as distinct from guess at) the actual words spoken simply from their gist. It is ethically wrong because the evidence given as a result of that process conceals the true nature and quality of the witness’s memory, and conveys a false impression of that memory. It is grammatically wrong because the use of quotation marks indicates as a matter of conventional usage that the relevant expression is a quotation of the exact words which were spoken. It could not be said that this practice is allied to an iron sense of principle.

128    The form in which evidence of conversations is given should reflect the difference between verbatim memory and gist memory. While in general terms gist memory tends to be more stable and durable over time than verbatim memory, possibly because it has engaged with higher reasoning processes which interpret and give meaning to what has been heard superficially, it will often be the case that certain words or phrases can actually be remembered verbatim. It would appear that verbatim memory and gist memory of conversations are not merely different in degree, but are also different in kind: see C.J. Brainerd and V.F. Reyna, “Fuzzy-Trace Theory and False Memory”, (2002) 11(5) Current Directions in Psychological Science, pp 164-169.

129    Applying that reasoning, the following general principles apply to the form of evidence of conversations:

(1)    The form of the evidence should correspond to the nature of the actual memory the witness has of the conversation: Wright at 19; Noble at [4] and [20]; LMI Australasia at [8]; Hamilton-Smith at [83]. There is no reason in the abstract to think that evidence in direct speech is more reliable or credible than evidence in indirect speech, or vice versa.

(2)    If the witness remembers only the gist or substance of what was said, and not the precise words, then the evidence should be given in indirect speech (also known as reported speech), in terms which reflect the witness’s actual memory: Wright at 19; Noble at [4], [20]; LMI Australasia at [8]; Hamilton-Smith at [83].

(3)    If the witness claims to remember particular words or phrases being used, then those words or phrases should be put in quotation marks to indicate that they are verbatim quotations, even if the evidence is otherwise given in indirect speech: see Wright at 19; LMI Australasia at [10].

(4)    If the witness genuinely claims to recall the actual words used in a conversation, then the evidence should be given in direct speech; that is, quoting the words as actually spoken: LMI Australasia at [8]; Hamilton-Smith at [83]. Apart from rare cases of photographic memory, this may well be the case where the witness has made a detailed contemporaneous note of the conversation, and has refreshed his or her memory from the note (in which case this should be expressly stated along with the tender of the note).

(5)    Evidence given in direct speech should not be prefaced by the phrase that the conversation occurred “in words to the following effect”. That expression blurs the important distinction between verbatim memory and gist memory, and leaves the Court unable to ascertain which kind of recollection is being claimed by the witness. This is a different point from the one considered by Bromwich J in Commonwealth Director of Public Prosecutions v Country Care Group Pty Ltd (Ruling No 1) [2020] FCA 1670 at [11], where the only argument against admissibility was the erroneous contention that evidence of conversations can only be given in direct speech of what was actually said.

(6)    Evidence of a witness who claims to remember the exact words of a conversation, but who is found after cross-examination to have exaggerated the nature and quality of his or her memory, may well suffer an adverse effect on his or her credibility (the weight of which will depend on all the circumstances). However, the inability to cross-examine in that manner a witness who gives evidence in indirect speech is not unfairly prejudicial within the meaning of s 135 of the Evidence Act 1995 (Cth): LMI Australasia at [9].

130    In the present case, I have not drawn any conclusions, whether favourable or adverse, from the form of either party’s evidence of conversations. I have taken the view that it would have been unfair to do so without having given the parties fair warning of the reservations which I hold about the longstanding practice in New South Wales of either compelling or encouraging witnesses to turn their memories of conversations into direct speech. Similarly, I make no criticism at all of the legal practitioners involved in the case, in circumstances where they are merely following longstanding common practice.

costs

131    Both counsel expressed a preference for addressing the question of costs after reading my judgment. I set out briefly my preliminary views.

132    Anderson Aviation and Mr Anderson have been wholly successful in the proceedings, and the applicant should be ordered to pay their costs.

133    I have found that BRM Aero did engage in misleading conduct. However, the only meaningful remedy sought by the applicant is damages, and the damages are extremely low, and barely above what would ordinarily be awarded at common law as nominal damages. The damages awarded to the applicant are out of all proportion to the expense of the litigation, involving seven witnesses, including four expert witnesses, and a hearing which has lasted four days. In substance, the result of the case is almost entirely favourable to BRM Aero. In those circumstances, the applicant should pay BRM Aero’s costs.

134    It may well be that there are matters which are not yet before me, which one or more of the parties may wish to submit would justify a special costs order. In those circumstances, I will give the parties an opportunity to put written submissions on the question of costs (not exceeding three pages) together with any affidavit in support. I will then decide the question of costs on the papers.

135    Accordingly, I make the following orders:

1.    The Originating Application and Statement of Claim be dismissed as against the first and second respondents.

2.    Judgment for the applicant against the third respondent in the sum of $240, together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

3.    The parties to file and serve any written submissions on the question of costs (not exceeding 3 pages), together with any affidavit in support by 4 May 2023.

4.    The parties to file and serve any written submissions in reply (not exceeding 3 pages), together with any affidavit in support by 9 May 2023.

Associate:

Dated:    27 April 2023