Federal Court of Australia

Four Air Leitchville Pty Ltd v Hurlad Pty Ltd (No 4) [2026] FCA 976

ORDERS

THE COURT ORDERS THAT:

1.    The originating application dated 24 February 2020 be dismissed.

2.    The third and fourth respondents’ cross-claim dated 12 December 2022 be dismissed.

3.    The first and second respondents’ cross-claim dated 20 December 2022 be dismissed.

4.    Within 21 days of these orders, the parties are to confer and inform the court of the position as to costs; and, thereafter and as required, the matter will be listed for further hearing directed to that question, such hearing to take place on a date to be determined.

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

REASONS FOR JUDGMENT

Table of contents

SNADEN J:

Introduction

1    On 11 December 2017, the applicant (“FAL”) purchased from the first respondent (“Hurlad”) a 1982 Fairchild SA227-TT Merlin III-C aircraft, registered “VH-RCI” (hereafter, “VH-RCI” or the “Aircraft”). The sale price was $880,000.00 (inclusive of GST).

2    Before completing the sale, FAL engaged the third respondent (“Interair”) to conduct a pre-purchase inspection of the Aircraft. The terms of the contract that established that engagement (the “PPI Contract”) are important and it will be necessary to return to them momentarily. For now, it suffices to note that Interair and its director, the fourth respondent (Mr Ermis (Ernie) Shapanis), conducted a pre-purchase inspection and, in that regard, prepared a report dated 6 November 2017 (the “PPI Report”). Amongst other things, the PPI Report recorded that the Aircraft was “…in re[a]sonable condition for its age and hours”.

3    The subsequent contract of sale between FAL and Hurlad (the “Sale Contract”) contained a number of warranties, including that the Aircraft was sold “…in an airworthy condition”. “Airworthiness”, it seems, is a concept that can mean different things in different contexts; but, for present purposes, there is no dispute (or, certainly, no longer a dispute) that, at the time of the sale (and of Mr Shapanis’s inspection of it), the Aircraft in fact was not in an airworthy condition.

4    In fact, descending to a colloquialism (fair or otherwise), the Aircraft may have been something of a lemon. Within months of its purchase, it emerged that it required various remedial works, which are particularised in some detail below. That reality led, ultimately, to the filing of this application in February 2020. As against Hurlad and its director, the second respondent (Mr Gavin Bullas), FAL sought damages and other relief for what it claimed was conduct in which each had engaged in contravention of ss 18 and 29(1)(a) of the Australian Consumer Law (the “ACL”). It also sued Hurlad for breach of contract; specifically, for breach of the warranty of airworthiness that was contained in the Sale Contract. As against Interair, FAL sought (and still seeks) damages for breach of contract; and, as against each of Interair and Mr Shapanis, it seeks damages and compensation under the ACL for what is alleged to be conduct engaged in by each in contravention of ss 18 and 29(1)(a) of the ACL.

5    Over the course of FAL’s ownership of it, the Aircraft spent very little time in the air. In August 2021, it was damaged as a result of a ground collision, which led to FAL’s receiving a sum of money from an insurer. Ultimately, in August 2023, the Aircraft was sold for $30,000.00. It has since been restored but is no longer registered in Australia.

6    In February 2023, the claims that FAL pressed as against Hurlad and Mr Bullas (to whom I shall refer hereafter and collectively as the “Hurlad Parties”) were resolved by agreement. It will be necessary later in these reasons to explore the terms of that compromise.

7    What remains for the court’s consideration are the claims that FAL presses as against Interair and Mr Shapanis (to whom I shall refer hereafter and collectively as the “Interair Parties”); specifically, its claims for damages in contract and for equivalent relief under the ACL.

8    In the event that the court accepts that FAL has established a cause of action against either or both of the Interair Parties, a related question arises as to the quantum that it might recover. That engages questions of FAL’s own role in the damage that it has suffered, both at common law and pursuant to s 137B of the Competition and Consumer Act 2010 (Cth) (the “CC Act”); as well as the relative responsibility of the Interair Parties (as compared with others who might have caused the same loss or damage) pursuant to the provisions of pt VIA of the CC Act and pt IVAA of the Wrongs Act 1958 (Vic) (the “Wrongs Act”). I shall return to those provisions momentarily.

9    In addition, the Hurlad Parties (on the one hand) and the Interair Parties (on the other) cross-claim against each other for indemnity against, or alternatively amounts in contribution toward, those that were paid or might be payable to FAL (including, in the case of the Hurlad Parties, amounts referable to their settlement of the claims that FAL advanced against them). The indemnities or contributions are sought pursuant to pt IV of the Wrongs Act.

10    Both Interair and the Hurlad Parties raise by way of defence (to FAL’s claim and to the Interair Parties’ cross-claim, respectively) the role that a separate and now defunct entity, Australasian Jet Engineering Pty Ltd (“AJE”), played in occasioning FAL’s loss. Prior to its demise, AJE operated an aircraft maintenance business located at Essendon Airport. Throughout the period over which Hurlad owned the Aircraft, it engaged AJE to maintain it. It is alleged that, by issuing the maintenance paperwork that it did in respect of VH-RCI, AJE engaged in conduct in contravention of the ACL.

11    For the reasons that follow, I am satisfied that:

(1)    Interair did not breach the terms of the PPI Contract; and

(2)    Interair did not make representations in contravention of ss 18 or 29(1)(a) of the ACL.

12    Although the other questions that arise in the matter are, to varying degrees, addressed in these reasons, those conclusions alone suffice to dictate the outcome. The application should and will be dismissed on that basis. So too will the Hurlad Parties’ cross-claim against the Interair Parties and the Interair Parties’ cross-claim against the Hurlad Parties. To the extent required, I will hear from the parties as to costs.

The proceeding

13    The matter has a lengthy history.

14    Commenced in February 2020, its first three years appear to have been the subject of recurring interlocutory skirmishes, which it is unnecessary to trace to any considerable degree. It suffices to note that various orders were made regarding the pleadings, security for costs, and the organisation and content of expert evidence (including joint expert evidence).

15    In November 2022, it was resolved that a referee would be appointed pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) to consider and determine (on the basis of at least partly agreed facts) questions relating to the value of the Aircraft. To that end, Mr David Crick, an accredited machinery and equipment appraiser with a specialty in aviation assets, was retained to produce a report directed to that end. That report was received on 13 January 2023 and, by order dated 2 February 2023, it was adopted in full.

16    In October 2024, having found itself under the control of at least four other judges throughout the course of its life, the matter was reallocated to my docket. It had, by then, already been set down for hearing in April and May of 2025.

17    That hearing proceeded as scheduled. Lay evidence was led from eight witnesses. All of those witnesses gave evidence by affidavit (the content of which was the subject of various objections that were resolved in the usual way). All gave oral evidence at the trial.

18    FAL led evidence from:

(1)    Mr John Smith, its director;

(2)    Mr Andrew Gibbs, who acted as FAL’s agent in relation to its purchase of the Aircraft;

(3)    Mrs Noelene Smith, a former FAL director who, perhaps amongst other things, performed a bookkeeping role for it at times of relevance;

(4)    Mr Nirefs (Sam) Iliades, who also acted as FAL’s agent in relation to that purchase; and

(5)    Mr Reha (Ray) Ekinci, to whom FAL ultimately sold the Aircraft.

19    The Hurlad Parties led evidence from two lay witnesses, Mr Bullas and Mr Walter Van Dort. Mr Van Dort is a former engineer who worked for AJE and was involved in the Aircraft’s maintenance throughout the years that Hurlad owned it.

20    The Interair Parties led evidence through Mr Shapanis.

21    Additionally, the parties led expert evidence in respect of multiple topics. The Interair Parties led written and oral evidence from Mr Robert Simpson in relation to certain Aircraft maintenance processes to which the Aircraft was or ought to have been subjected after (and, as it happens, before) FAL acquired it. FAL led written and oral evidence from Mr Ekinci in relation to (amongst other things) the Aircraft’s value at various points in time.

22    Further (and under the supervision of a registrar of the court), individual and joint reports were received from four witnesses with expertise in aircraft maintenance. They gave oral evidence during a joint session at the trial.

The relevant background

The Aircraft

23    The Merlin III-C is a pressurised, twin-engined turboprop aircraft. The type was first developed in the 1960s by American aircraft manufacturer, Swearingen Aircraft, and later manufactured by Fairchild Industries, principally at its facility in San Antonio, Texas. Although earlier variants began production in the 1970s, the SA227-TT Merlin III-C variant was produced in the early 1980s.

24    The Merlin III-C was designed to ferry up to nine passengers (and up to two crew) at high speeds and over long distances (relative to other turboprop aircraft). The Aircraft that is the focus of this matter assumed an eight-passenger configuration. It was manufactured in 1982 and was powered by two Garrett (now Honeywell) TPE331 turboprop engines.

25    Hurlad purchased the Aircraft in 1999. It was then owned by American interests and was registered there. After travelling to San Antonio and completing the purchase, Mr Bullas flew the Aircraft to Australia, whereupon it was certified as airworthy and assumed the registration “VH-RCI”. It was hangared at Essendon Airport in Melbourne for the entire period that Hurlad owned it. At all such times, it was maintained by AJE, which Hurlad engaged to keep it in a properly maintained—which is to say, an airworthy—state.

26    Whilst owned by Hurlad, the Aircraft remained subject to a program that was offered by the manufacturer of its engines, Honeywell, and known as the Honeywell Maintenance Service Plan (the “MSP”). Under the MSP, Hurlad paid what was essentially a periodic subscription fee to Honeywell; and, in return, Honeywell undertook to administer (at its expense) such maintenance or repairs as the engines required.

The legislative and regulatory architecture

27    There are several layers to the framework that regulates civil aviation in Australia. At the apex sits the Civil Aviation Act 1988 (Cth) (the “CA Act”). Its “main object” is “…to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents”: CA Act, s 3A.

28    Subject to presently irrelevant exceptions, s 20AA(1) of the CA Act establishes a foundational (and criminal) prohibition against the operation within Australia of aircraft that are required to be but are not “registered”. The prerequisites for (and the mechanics of) registration are not the subject of separate legislative provision. Instead, the CA Act reserves unto the executive a broad regulation-making power that extends to the making of regulations for or in relation to “…the registration, marking and airworthiness of aircraft”: CA Act, s 98.

29    There are at least two sets of regulations made pursuant to that power that bear upon the present matter, namely the Civil Aviation Regulations 1988 (Cth) (the “CARs”) and the Civil Aviation Safety Regulations 1998 (Cth) (the “CASRs”).

30    Part 47 of the CASRs is entitled, “Registration of aircraft and related matters”. Amongst other things, it charges the Civil Aviation Safety Authority (a statutory authority established by the CA Act—hereafter, “CASA”) with maintaining (or ensuring the maintenance of) what is called the Australian Civil Aircraft Register: CASRs, reg 47.025. It otherwise identifies the aircraft in respect of which the requirement for registration referred to in s 20AA of the CA Act applies and makes provision for the related registration process. It is uncontroversial that the Aircraft was subject to that requirement and that, prior to its sale to FAL, Hurlad held the certificate of registration in respect of it.

31    Each of the CASRs and CARs contains regulations that make extensive provision for the circumstances that must exist before applicable aircraft may lawfully be operated. In addition to registration requirements, they also advert to the maintenance requirements without satisfaction of which the flying of an aircraft is also proscribed: CA Act, s 20AA(4). Insofar as concerns VH-RCI, those requirements are (or were) contained predominantly within the CARs. What follows is an attempt to distil, from the vast volume of rules that find expression within the CARs, the requirements that are relevant to these reasons.

32    Part 4A of the CARs is entitled, “Maintenance”. Division 2 of that part identifies items of maintenance for which the holder of a certificate of registration is held responsible. Subdivision 2 applies in respect of “class B” aircraft. It is not in dispute that VH-RCI was a class B aircraft. Regulation 41 provides that the holder of a certificate of registration for a class B aircraft must ensure that all maintenance that an aircraft requires under its “maintenance schedule” is carried out as and when that schedule requires. For present purposes, it is uncontroversial that the Aircraft was to be maintained according to a maintenance schedule known as the “M7 aerospace letter check inspection procedures inspection program” (hereafter, the “M7 Program”). It will be necessary later to consider the content of that program.

33    Division 4 of pt 4A is entitled, “How maintenance is to be carried out”. It requires that a person who carries out maintenance works on an aircraft does so in accordance with applicable provisions of the aircraft’s “approved maintenance data”: CARs, reg 42V. That concept—“approved maintenance data”—is the subject of definition in reg 2A. That definition incorporates multiple species of criteria; but, relevantly for present purposes, they include the requirements concerning how maintenance is to be carried out that are expressed within:

(1)    directions (howsoever described) made under an airworthiness directive (CARs, reg 2A(2)(a)); and

(2)    specifications identified in other provisions of the CARs as to how maintenance on an aircraft is to be carried out (CARs, reg 2A(2)(b)); and

(3)    instructions issued by aircraft manufacturers that specify how maintenance upon their aircraft is to be carried out (CARs, reg 2A(2)(c)).

34    Although “airworthiness directive” is not defined in the CARs, it appears to be a concept well understood within the civil aviation industry. Section 98(5A) of the CA Act permits the making of regulations that empower CASA to issue instruments relating to the airworthiness of aircraft; and reg 39.001 of the CASRs appears to answer that description. It authorises CASA to issue “airworthiness directive[s]” that, amongst other things, require that identified actions be taken in respect of identified aircraft in identified circumstances. For aircraft not designed in Australia, the term also encompasses certain airworthiness directives issued by the national aviation authority for the designing country: CASRs, reg 39.001A.

35    Division 5 of pt 4A of the CARs identifies by whom aircraft maintenance may be undertaken. Relevantly, reg 42ZC provides:

Maintenance on Australian aircraft in Australian territory

(1) The holder of the certificate of registration for, the operator of, and the pilot in command of, an Australian aircraft must not authorise or permit any maintenance to be carried out on the aircraft in Australian territory by a person if the person is not permitted by this regulation to carry out the maintenance.

…

36    Subsequent sub-regulations identify when a person is “permitted by this regulation to carry out the maintenance”. Different rules apply in respect of different types of maintenance. At the risk of over-simplifying, maintenance works are restricted to those who hold aircraft engineer licences. Such people appear generally to be known within the civil aviation industry as (or, perhaps otherwise, include) licensed aircraft maintenance engineers (or “LAMEs”).

37    Division 9 of pt 4A of the CARs is entitled, “Maintenance releases”. Again at the risk of over-simplifying, a maintenance release is a document issued in respect of an aircraft that contains certain information pertinent to its operation. It may only be issued in respect of an aircraft if the aircraft has been maintained in accordance with regulatory requirements: CARs, reg 43(7). For the purposes of issuing a further maintenance release, the prior release can, in the absence of evidence to the contrary, be accepted as proof that all required maintenance has been carried out: CARs, reg 43(8).

38    Regulation 47 makes provision for the circumstances in which a maintenance release might cease to be in force. One such circumstance is when the holder of a certificate of registration for an aircraft (amongst others) becomes aware that a requirement or condition imposed by the regulations in respect of the aircraft’s maintenance has not been complied with. If, in that circumstance, there is a likelihood that the aircraft will be flown before that requirement or condition has been complied with, the person must endorse the maintenance release with a statement that the aircraft is unairworthy, whereupon it ceases to be in force: CARs, reg 47(1).

39    At the trial, the parties appeared to proceed upon the proposition that the Aircraft could not legally be flown unless it was subject to an in-force maintenance release. For present purposes, little if anything turns upon whether or not that is so but there would appear to be at least some force to the proposition. By a document published by CASA in December 2022 and entitled, “civil aviation advisory publication caap 43-01 v2.1”, it was noted:

2.1.1    The maintenance release is central to safe operation of aircraft that are not maintained under Part 42 of the [CASRs]. It provides certificate of registration (COR) holders, and pilots with evidence that an aircraft has had the required maintenance carried out, provides details of any defects that may require rectification before a flight can commence and also provides essential information about any scheduled maintenance actions that may become due before completion of a planned flight.

2.1.2    The maintenance release also provides a maintainer with a record of deferred defects and other maintenance actions that require attention during both unscheduled and scheduled maintenance. The maintenance release also provides a certification record for the purpose of recording maintenance that has been completed during the life of the maintenance release.

…

40    Division 10 of pt 4A of the CARs is entitled, “Aircraft log books”. Subject to exceptions, its provisions require that a holder of a certificate of registration for an aircraft must maintain a log book in respect of it that complies with instructions issued to that end by CASA: CARs, reg 50A(1). Those instructions apparently have assumed (or assumed for purposes relevant to this matter) the form of a separate CASA advisory publication entitled, “civil aviation advisory publication caap 50A/B-01 v2.2”. It is unnecessary to explore the content of that instruction at this juncture: it suffices to note that the irreducible obligation of a LAME performing maintenance upon an aircraft is to certify the completion of such maintenance (CARs, reg 42ZE(1)). In the case of VH-RCI, that certification was required to be made in the Aircraft’s log books.

41    It might bear mentioning that, separately (or perhaps antecedent) to the various requirements for the continued maintenance of an aircraft, the CA Act prohibits the flying of aircraft in Australia in the absence of a certificate of airworthiness: CA Act, s 20AA(3). Such a certificate was issued in respect of VH-RCI on 8 October 1999.

The M7 Program

42    The M7 Program is the maintenance schedule that was applicable to the Aircraft throughout the period that Hurlad and FAL owned it. It is (and was) a highly detailed inspection and maintenance program designed to ensure the continuing airworthiness of the aircraft to which it applied. That design is achieved by prescribing inspections and works to be performed at specified intervals and in identified sequences. Itself running to some 100 pages, it is accompanied by a much longer maintenance manual that prescribes how those various maintenance tasks ought to be carried out.

43    The M7 Program contemplates planned aircraft maintenance divided into four “letter checks”, designated “A” through “D”. Each is to be performed, in sequence, after applicable aircraft accumulate 50 hours of operation since the previous check. The program thus requires that a complete “cycle” of the four letter checks is performed for every 200 accumulated hours that an aircraft is operated.

44    The M7 Program contemplates three practical ways in which that sequence may be implemented. First, it may be used as a continuous program, with the tasks comprising each letter check performed incrementally during each 50 flight-hour period. Second, the respective letter check may be performed in its entirety at the end of the relevant 50 flight-hour period. Third, an operator may combine letter check “A” with letter check “B”, and letter check “C” with letter check “D”, performing each combined check at 100 (rather than 50) flight-hour intervals.

45    Built into the M7 Program is a limited tolerance for operational flexibility. The prescribed intervals between checks (50 or 100 hours of operation, as the case may be) may be exceeded by not more than 10 hours; but any such excess is then deducted from the following interval, such that subsequent checks must still be performed at the designated times.

46    Additionally, the M7 Program imposes calendar-based obligations directed to aircraft that are infrequently operated. Aircraft must undergo all four letter checks at least once every 12 months, even if they are not operated for the maximum 200 hours that each cycle otherwise contemplates.

47    An additional organising feature of the M7 Program is its use of numbered “cycles”. Each letter check is divided into ten consecutive cycles, numbered 1 through 10. Thus, the M7 Program contemplates that each aircraft will undergo inspection and maintenance according to a 40-check block that must be completed every 2,000 hours or 10 years (whichever comes first). Once an aircraft completes its tenth cycle “D” check, the program resets and the next check to be undertaken becomes the first cycle “A” check (or, as the case may be, the first cycle “A” and “B” checks).

48    The M7 Program—or perhaps, the maintenance manual that accompanies it—also incorporates measures relating to the maintenance of TPE331 engines (such as the ones that were fitted to VH-RCI). The particulars of those measures (or some of them) are explored below.

The lay evidence

49    It is prudent, at this juncture, to offer something by way of summary of the lay evidence that the court received. Although there were some, the respects in which the evidence of witnesses conflicted were limited.

50    I will organise the summary that follows principally (although not wholly) by party.

Mr John Smith

51    Mr Smith is, no doubt amongst other things, a successful agriculturalist. At relevant times, he was FAL’s director and secretary. For all intents and purposes, he was its directing mind and will insofar as concerned its purchase and use (or intended use) of the Aircraft.

52    Mr Smith is also an aviator. He has been a qualified pilot for more than 30 years. In early 2017, he found himself in the market for an aircraft that he hoped to use for personal transport and commercial charter purposes. With the assistance of Mr Gibbs, he settled upon a Merlin aircraft as one that would suit those purposes. It was through Mr Gibbs that Mr Smith happened upon VH-RCI. It was, at the time, advertised for sale as a “[b]eautifully presented Merlin IIIC” that was in “[a]mazing condition”.

53    Via the agency of Mr Iliades and Mr Gibbs, Mr Smith made some inquiries about the Aircraft, which led to some email exchanges as between Mr Iliades and Mr Bullas. One of those referred to the Aircraft “…just finishing up [a] fresh ABCD inspection”, apparently in reference to the requirements of the M7 Program. Other communications confirmed that the Aircraft’s engines were subject to a “fully paid up to date MSP”. Those matters, Mr Smith’s evidence recorded, were “…critical to [his] decision to commit to purchasing the Aircraft”.

54    On 5 October 2017, Mr Smith travelled to Melbourne for the purposes of inspecting the Aircraft. He was accompanied by Mr Gibbs and Mr Nigel Wettenhall, a pilot based in Deniliquin, New South Wales, who later assisted FAL in relation to the purchase of the Aircraft (and, perhaps more significantly, in relation to its approach to the pre-purchase inspection report that Interair provided to it, which is discussed below). They came away from that initial inspection with good impressions, which seem to have extended beyond a second inspection that occurred a few days later at Deniliquin, New South Wales. Discussions ensued and came to something of a point toward the end of October 2017, when Mr Smith and Mr Bullas signed a “letter of intent”. That document recorded that the Aircraft and associated documentation would, upon the signing of a sale agreement and the payment of a deposit, be made available to Interair across a 10-day period for the purposes of a more fulsome inspection.

55    On 30 October 2017, Mrs Smith transferred a deposit in the amount of $88,000.00 to an account belonging to an escrow agent. Consistently with the letter of intent, the Aircraft was then made available to Interair, together with its maintenance documentation.

56    Mr Smith was not personally involved in retaining Interair for the purposes of conducting a pre-purchase inspection. That was left to Mr Gibbs and Mr Iliades to handle.

57    On 1 November 2017, FAL and Hurlad entered into the Sale Contract. Mr Smith signed it on behalf of FAL. Clause 3 of the Sale Contract provided as follows (emphasis original):

3.     After the signing of this agreement and the payment of the deposit to ACJC P/L, the Purchaser shall have the right to perform a pre-purchase inspection of the Aircraft. Such inspection shall be the Purchaser’s exclusive decision. Aircraft Condition. The Aircraft is to be delivered to and accepted by Purchaser after the inspection in “As Is, Where ls, condition and With any Faults”, and delivered with:

•    The following programs paid up to date and transferrable:

•    Honeywell MSP (engines)

•    Enrolled in MSP contract 10070 maintenance tracking program.

•    Engine trend reports/downloads complete and up to date if applicable.

If the Purchaser does not have the pre-purchase inspection performed within TEN (10) days after the execution of this Agreement, the Purchaser shall have waived his right to such inspection.

Seller warrants that:

(a)    the Aircraft is in airworthy condition;

(b)    the Aircraft has a current maintenance release;

(c)    the Aircraft has a currently effective airworthiness certificate;

(d)    all of the Aircraft’s logbooks are accurate, current and complete, beginning with the date of manufacture of the aircraft to the present;

(e)    all applicable Airworthiness Directives and Service Bulletins have been complied with;

(f)    the damage history to the aircraft is as follows: NO DAMAGE HISTORY

(g)    Hurlad Pty Ltd owns legal title to the above Aircraft and that title will be assigned to Purchaser free and clear of any liens, claims, or encumbrances.

58    The Sale Contract also contained some disclaimers. Relevant for present purposes were cll 13 and 14, which provided (emphasis original):

13.     Seller's Disclaimer. EXCEPT FOR THE WARRANTY OF TITLE AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, (i) THE AIRCRAFT IS BEING SOLD AND DELIVERED BY SELLER ON AN “AS IS, WHERE IS” BASIS, WITH ALL FAULTS, AND (ii) SELLER DISCLAIMS ANY AND ALL DUTIES, OBLIGATIONS AND LIABILITIES AND ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE REGARDING THE AIRCRAFT OR ANY ASPECT THEREOF, INCLUDING, BUT NOT LIMITED TO, MERCHANTABILITY, MATERIAL, MANUFACTURE, WORKMANSHIP, DESIGN, FITNESS FOR ANY PARTICULAR PURPOSE, AIRWORTHINESS, VALUE, CONDITION, SAFETY, OPERATION OR PERFORMANCE. IN NO EVENT SHALL SELLER BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER KNOWN OR UNKNOWN AND HOWSOEVER ARISING.

14.     Purchaser’s Disclaimer. EXCEPT FOR THE WARRANTY OF TITLE AND TO THE MAXIMUM EXTENT PERMITTED BY LAW (i) THE AIRCRAFT IS BEING PURCHASED AND ACCEPTED BY PURCHASER ON AN “AS IS, WHERE IS” BASIS IN AN AIRWORTHY CONDITION, WITH ALL FAULTS FOLLOWING COMPLETION BY PURCHASER OF AN INSPECTION OF THE AIRCRAFT AND ITS RECORDS THAT WAS FULLY SATISFACTORY TO PURCHASER, AND (ii) PURCHASER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL DUTIES, OBLIGATIONS AND LIABILITIES OF SELLER WITH RESPECT TO THE AIRCRAFT OR ANY ASPECT THEREOF AND ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE REGARDING THE AIRCRAFT OR ANY ASPECT THEREOF, INCLUDING, BUT NOT LIMITED TO, MERCHANTABILITY, MATERIAL, MANUFACTURE, WORKMANSHIP, DESIGN, FITNESS FOR ANY PARTICULAR PURPOSE, AIRWORTHINESS, VALUE, CONDITION, SAFE'I'Y, OPERATION OR PERFORMANCE.

59    History records that the Aircraft then made its way to Interair, whereupon Mr Shapanis undertook (or, as FAL submits, purported to undertake) the inspection that he had agreed to undertake on it. Although Mr Smith was told how much Interair would charge for its report (and agreed to the figure of which he was advised), he otherwise had no interaction with Mr Shapanis or Interair over this period.

60    On 6 November 2017, Mr Shapanis emailed a copy of Interair’s PPI Report to Mr Gibbs, who in turn sent it to Mr Smith (or, possibly, to Mrs Smith, who then gave it to Mr Smith). The terms of the PPI Report warrant close attention. Again, I will return to them shortly.

61    The PPI Report adverted to a number of maintenance or condition concerns pertaining to the Aircraft. At Mr Smith’s request, Mr Gibbs sent a copy of the PPI Report to Mr Wettenhall so that he might provide “…his views on who should be responsible for rectifying the matters raised by Interair”. On 7 November 2017, Mr Wettenhall sent to Mr Gibbs an annotated version of the PPI Report, in which he recorded the views that he was asked to form. Mr Gibbs promptly forwarded that version of the report to Mr Bullas and Mr Shapanis, so that the process of attending to what had been identified could get underway.

62    On 20 November 2017—and, plainly enough, in anticipation of the Sale Contract proceeding—Mr Smith signed an agreement on behalf of FAL with Mr Wettenhall’s aviation charter business, Wettenhall Air Services. Pursuant to that contract, it was agreed (amongst other things) that Wettenhall Air Services would hire the Aircraft from FAL for use in its charter operations.

63    Over the course of November 2017, works associated with the items that were identified in the PPI Report appeared, at least to Mr Smith, to proceed with less haste than he had anticipated or hoped. Mr Smith had a discussion (or, possibly, multiple discussions) with Mr Gibbs about what he perceived was that want of urgency. On 1 December 2017, Mr Gibbs wrote to Mr Bullas in the following terms (errors original):

Dear Mr Bullas,

RE: CANCELLATION OF ACQUISITION CONTRACT FOR THE FAIRCHILD MERLIN IIIC VH-RCI

Due to an ongoing failure by your engineering contractor to finalise and execute the required service and airworthy items as per our contract, including failure to meet 4 independent delivery dates, we have been left with little recourse than to advise it is now highly probable that the acquisition will no longer proceed.

The only manner in which this may be avoided is listed below and we highlight that we still would have to seek a stay of action from our client, should he agree to allow the sale to proceed under set conditions, otherwise we have been instructed this afternoon to withdraw the offer and void the sale for breech of terms. This outcome will be determined by the written response we seek from Hurlad Pty Ltd within the next 24 hours.

Upon having the aircraft reviewed this afternoon, as per our original instruction that today was to be the final acceptance of the aircraft, we have been advised that parts are still not fitted and allegedly still enroute, despite all being confirmed to arrive yesterday. Further an item on our original list hasn't been addressed at all. Further, the Inter Air report was delivered to you 29 days prior, with the works scope involved to be at worst case a 14 day project time, given we confirmed this afternoon that each item is available in stock with a min of two US suppliers.

My client feels deeply concerned by the lack of trust and assurance that has now developed due to the many irregularities that have taken place. He was asked to take a significant leap of faith in the matter relating to your failure to properly log engine operations for a period of 26 months, yet after making calls to verify your credentials to a select group who have been exposed to business with you, he allowed the sale to proceed in good faith on our recommendation. You should know that alone was almost deal breaker in itself.

What has also been a real concern, most of these issues we have had to find out ourselves, including the fact that no work took place the first two weeks, then the aircraft being unairworthy despite Nigel travelling down to fly it. When added together with the misleading, delaying and dishonest communications by your engineering contractor on what had been actioned and when, the trust of my client has been exhausted raising an overall confidence collapse in the deal, leaving suspicion lingering on all that we told up until this point. To learn ourselves via the final report this afternoon that once again Monday would not have seen the transaction being completed, has exploded concerns in his mind how many other surprises may he incur once the sale was finalised and little recourse available should his concerns be validated.

Whilst I appreciate you personally have made attempts to rectify these issues, the point remains the ultimate responsibility for the aircrafts failure in missing four delivery dates is your liability. It has now seen us have to offload $34,569 worth of Charter booked to other entities and miss two commercial television media opportunities that were FOC but realised almost $20,000 in free publicity reaching 322,000 viewers.

I stressed clearly our lack of confidence in your Engineering contractor as the exact same nonsense took place when the Citation was withdrawn from their management some years ago. I deliberately asked you to take the project to Interair, our preferred partner, yet as you had the right to refuse our request, you did so,

Proposed terms we would put to the buyer in a final action to permit the sale, if accepted by you:

I can recommend to the buyer the following if you agree, which may be accepted by him to stay the cancellation, but there is no certainty of this until I can present him with an amended set of conditions.

•     The Aircraft is collected by Interair first thing Monday 4 December 2017 and all remaining works identified are completed by them, including all agreed items and any items that have been attempted to be fixed by Ausjet but not a standard deemed acceptable by our engineers.

•     You agree to cover the cost of Interair for the works

•     You further agree that for the first 90 days after the aircraft is accepted, should any items need attention by Engineers that can be Identified back to the works recently undertaken by Ausjet that you will accept the cost liability of the aircraft being returned to Essendon including fuel, pilots costs and travel related costs. This is a now required from the diminished belief my client has that the major overhaul and recent smaller tasks have been executed by trustworthy or reliable engineers, given the recent delays and mistruths.

If this can be confirmed to me by 7pm on Sat 2 December, 2017 in writing by email, then I will seek acceptance from our client Four Air Leitchville. If not, we will proceed with the cancellation, issue notice for the deposit to be fully refunded for breech of contract, and withdraw from any further engagement.

Please trust us when we advise you that our client has almost no tolerance remaining any further complications.

64    Those hiccups notwithstanding, the sale of the Aircraft progressed. The remainder of the purchase price was paid and FAL took delivery of the Aircraft (and associated paperwork) on 11 December 2017. Thereafter, FAL became the registered owner of the Aircraft.

65    Shortly after FAL took delivery of it, the Aircraft began to exhibit signs that not all was right with it. It failed to stop properly on its first landing and ran off the end of the runway. The brakes were assessed as “under tolerance” and, in late December 2017, the Aircraft was flown back to Essendon Airport to have them addressed. A month later, there emerged a problem with the Aircraft’s batteries, the principal consequence of which was that its engines could not be started. In May of 2018, the Aircraft’s autopilot system failed, resulting in a need to operate it manually.

66    In July of 2018, things appeared to get more serious. A fuel leak was discovered, which resulted in damage to a tyre that was discovered shortly before a scheduled flight. Upon the return of the Aircraft to its hangar, the latching mechanism on the main cabin door broke, meaning that it could no longer be opened. Screws that affixed the Aircraft’s emergency exit door then had to be drilled out to enable access to the interior of the plane so that repairs could be undertaken.

67    A few weeks later (in early August 2018), there was a problem with a pneumatic air-oil shock absorber on the Aircraft’s front wheel strut, which had to be repaired. Later that month, a seal on the main cabin door failed, leading to a loss of cabin pressure. It, too, had to be replaced; but its replacement also failed only a few weeks later. That was in mid-September 2018.

68    The Aircraft did not fly again for the remainder of the time that FAL owned it.

69    On 17 September 2018, Mr Gibbs wrote to Mr Bullas about the issues that FAL had experienced with the Aircraft. By reply correspondence the following day, Mr Bullas denied any responsibility for the issues that Mr Smith had identified and suggested that they might have been related to the manner in which the Aircraft had been flown since FAL took ownership of it. He reiterated that AJE had maintained the Aircraft throughout the period that Hurlad had owned it.

70    In late September 2018, the Aircraft was moved from Interair’s facility at Essendon Airport to a different engineering services company, “Avionics 2000”. Mr Smith requested of its manager, Mr Gordon Cox, that Avionics 2000 carry out “a full ABCD check” on the Aircraft to “make it airworthy and enable it to be returned to service”.

71    That process was commenced but short lived. A few days after assuming possession of the Aircraft, Mr Cox telephoned Mr Smith and informed him that “numerous significant defects” had been discovered in the Aircraft and that “the maintenance records for the Aircraft appeared to be inaccurate”.

72    On 31 October 2018, Mr Smith (via Mr Gibbs) received a report that had been prepared in relation to the Aircraft by Mr Shane Mclauchlan, of Aircraft Airworthiness Management Pty Ltd. That report followed an “airworthiness review” that Mr Mclauchlan had undertaken in relation to the Aircraft. By the covering email under which that report was provided, Mr Mclauchlan stated by way of summary the following:

The key facts from the review are:

It is unknown if the Cabin Interior complies with FAR 21.853 as per the FAA Type Certificate.
There is undocumented maintenance that has been completed on the aircraft.
The Propeller fitted in the RH position is not approved to be fitted to SA227-TT Model aircraft.
The aircraft has not been maintained in accordance M7 Maintenance Schedules.
Mandatory Airworthiness Limitations Inspections have been missed.
Mandatory Time Life Items Inspection/Replacements have been missed.
No Storage / Preservation measures were taken when the aircraft was out of service.
There are no Authorised Release Certificates in the Aircraft Log Books to validate any of the Time Life Item Log Book entries.

The undocumented maintenance issue is a major issue as clearly there has been a deliberate approach to not enter details of refurbishments, repairs, door upgrades into the CASA Aircraft Log Books which forms the historical records of the aircraft. If one item was missing you could call it an oversight but several major events on this aircraft are not documented which raises an immediate concern on what further items have occurred that I am not aware of and therefore cannot assess.

Please advise if any further additional information needs to be provided.

73    A few weeks later, Mr Smith and Mr Gibbs met with Mr Cox and Avionics 2000 owner, Mr Michael Kus at Essendon Airport. Together with another Avionics 2000 engineer, they conducted a “walk around” of the Aircraft, during which Mr Cox and Mr Kus identified several problems with it.

74    The first concerned the seal on the main cabin door. It was explained to Mr Smith that too many rivet holes had been drilled into the door frame and that, as a result, it had lost a degree of its structural integrity. It was explained that, when the cabin was pressurised during flight, that loss of strength was such that the frame would flex to such an extent that a proper seal would be lost. Mr Smith was told that the problem was fixable but at “very significant” cost.

75    Next, Mr Smith was informed that there was evidence of biological contamination in the Aircraft’s fuel tanks, so much so that there had been (and remained) a chance of a fuel blockage.

76    Third, Mr Cox and Mr Kus explained that an interior refurbishment of the cabin had not been recorded in the Aircraft’s log books, with the result that it “was not airworthy”.

77    Fourth, Mr Smith was told that the inside of the Aircraft’s tail section appeared not to have been maintained for “at least 15 years”. In particular, “bushes” had not been replaced as scheduled, which had led to significant internal damage. Mr Smith was told that it would cost “hundreds of thousands” of dollars to address the damage, potentially more than the Aircraft was worth.

78    Finally, Mr Cox and Mr Kus explained that the propeller that was fitted to the right-hand engine was “a mismatch”.

79    Plainly, this was not welcome news for Mr Smith. The report provided by Avionics 2000 estimated the cost to repair the Aircraft at nearly $690,000.00. Mr Smith thereafter directed that work on the Aircraft cease and that it be hangared as he worked out what to do with it. That undertaking was assumed by a business controlled by Mr Iliades, Airstream Jets Pty Ltd, which housed the Aircraft at its facility at Essendon Airport. For the period that the Aircraft remained at Mr Iliades’s facility, periodic engine runs were conducted to maintain (or, at least, for the purpose of maintaining) its engines.

80    In June 2019, FAL received correspondence from CASA in the form of a direction issued under the CARs. The effect of the direction was to prohibit the operation of the Aircraft until such time as CASA gave notice in writing otherwise. Among a number of alleged defects, that correspondence alluded to there having been “…a breakdown in the tracking and recording the M7 Letter Check Inspection Program”. In particular, it referred to checks having “…been entered in the logbooks with no reference to cycles or the cycle 10 ever being implemented” and to there being “no logbook entries to record parking or storage maintenance [which was understood to have] resulted in extensive micro-biological growth in the aircraft fuel tanks”.

81    Thereafter, the Aircraft remained grounded at Mr Iliades’s facility at Essendon Airport.

82    In August 2021, the Aircraft was involved in a ground collision. It was stationary at the time but was struck by another plane that had suffered a brake failure during an engine test. The collision caused significant damage to the Aircraft’s starboard wing and propeller. Fortunately (for FAL, at least), the Aircraft remained insured against ground risks of that kind. Two years after the collision, FAL accepted from its insurer, QBE Insurance, payment in the sum of $430,000.00, less a $9,500.00 policy excess.

83    At around the same time, Mr Smith resolved to sell the Aircraft—still in its damaged condition—to Air Combat Australia Pty Ltd (“Air Combat”), a company controlled by Mr Ekinci. That came on the heels of the compromise that FAL reached with the Hurlad Parties in February 2023 (by which Hurlad agreed to pay FAL the total sum of $800,000.00, payable in periodic instalments). In the months thereafter, FAL had explored what appeared to be the limited options that presented for the Aircraft’s disposal, ultimately agreeing to sell it to Mr Ekinci for $30,000.00.

84    Overwhelmingly, Mr Smith’s evidence was historical (and largely chronological). Very little of it touched upon matters of factual controversy. That being so, little is to be gained by recording observations about the manner in which Mr Smith’s evidence was given. That notwithstanding, I would have little hesitation in accepting as honest and truthful the testimony that he gave. During his time in the witness box, it was plain that Mr Smith’s experiences with the Aircraft were a source of personal discomfort. Nonetheless, he impressed as a careful and collected witness, whose answers, though occasionally laced with expressions of opinion, were given openly and genuinely from his recollections. He made concessions when they were appropriate and presented as a plain-speaking, “no-nonsense” type. Insofar as it conflicts with the evidence of others in ways that it is necessary for me to resolve, I accept his evidence.

Mr Andrew Gibbs

85    At times of relevance to these reasons, Mr Gibbs was the managing partner of a business known as Primary Policy Partners Pty Ltd. He was retained by Mr Smith (or, more likely, by FAL) to assist in the purchase of the Aircraft.

86    That assistance assumed a number of forms. Initially, Mr Gibbs had some input into the kind of aircraft that might be suitable to meet Mr Smith’s needs. His researches led him, amongst other things, to speak with Mr Wettenhall about using the aircraft that might be purchased in Mr Wettenhall’s charter business, as well as about the characteristics that might otherwise make an aircraft suitable for Mr Smith’s needs.

87    After settling upon a Merlin aircraft, Mr Gibbs set about locating one for purchase. He spoke to various trading houses and other aviation professionals, one of whom was Mr Iliades. It was Mr Iliades that initially located the Aircraft as one that Mr Smith (or FAL) might potentially purchase. It was also Mr Iliades that made the initial contact with Mr Bullas.

88    Mr Gibbs was involved in Interair’s retention for the purposes of conducting a pre-purchase inspection of the Aircraft. Mr Gibbs recounted that, after the test flight of VH-RCI, he had raised with Mr Shapanis whether he was qualified to perform a pre-purchase inspection of that species of aircraft and engine. Mr Shapanis set Mr Gibbs’s concerns to rest, explaining that he had quite a few years dealing with TPE331 engines and that he was very familiar with Merlins. He explained to Mr Gibbs that there was only one other individual on the airfield—who was retiring—who had that sort of experience. That was, at least, the conversation as Mr Gibbs remembered it: Mr Shapanis couldn’t recall that conversation.

89    In another conversation, Mr Gibbs spoke directly to Mr Shapanis about, perhaps amongst other things, the purpose of the inspection. So Mr Gibbs recalled, he had told Mr Shapanis that:

…the purpose of the [pre-purchase inspection] was to ensure that the Aircraft was airworthy, that all maintenance required to be carried out had in fact been carried out, and that the log books and other maintenance records for the Aircraft were up to date and reflected the true maintenance status of the Aircraft.

90    Mr Gibbs and Mr Shapanis also discussed (so Mr Gibbs recalled) the price that Interair would charge for conducting a pre-purchase inspection of the Aircraft. Specifically, Mr Gibbs recalls Mr Shapanis nominating a range of between $11,000.00 and $15,000.00, which Mr Gibbs indicated was satisfactory. That estimate, Mr Gibbs recalled, was provided responsively to Mr Gibbs’s impressing upon Mr Shapanis that Mr Smith wanted VH-RCI to undergo a “full and thorough” inspection before he decided whether to proceed with the purchase. In an email that he sent to Mr Bullas on Friday, 27 October 2017, Mr Gibbs recorded that the price of the pre-purchase inspection would be $9,000.00 but he accepted that that was wrong and ought to have been higher.

91    It was Mr Gibbs who arranged with Mr Bullas for the Aircraft to be made available to Interair for the purposes of conducting the pre-purchase inspection. Those arrangements included the signing of the letter of intent and the payment of the refundable deposit; both of which were attended to.

92    On Monday, 30 October 2017, Mr Gibbs received an email from Mr Shapanis. Its terms assume central significance to the matter and are appropriate to be replicated in full (errors original):

Dear Andrew

This is to let you know we are going to carry out the following items as part of the pre purchase inspection,

1.    Full review of aircraft log books

2.     Full AD Compliance report

3.     Review aircraft due list

4.     Carry out History report

5.     Carry out STC List

6.     Review FM status

7.     Carry out full Avionics functional tests

8.     Carry out full power engine runs

9.     Carry out brake wear check

10.     Carry out cabin windows and windshields inspection

11.     Carry out air conditioning functional checks

12.     Carry out De-Ice functional checks

13.     Inspect seats and Harnesses

14.     General visual inspection of aircraft for corrosion and damage.

Andrew if there is anything else you specifically want us to look at please advise me.

Kind Regards

Ernie Shapanis
Interair Pty Ltd

93    Saturday, 4 November 2017 was “Derby Day” at Flemington Racecourse in Melbourne. According to Mr Gibbs, he and Mr Shapanis spoke by telephone that morning, not long prior to Mr Gibbs’s boarding of a helicopter that was to take him from the Melbourne central business district to Flemington. He recalls that Mr Shapanis told him, during that call, that he (Mr Shapanis) was yet to commence the pre-purchase inspection of the Aircraft, and asked whether Mr Gibbs wished to add anything to the items that the inspection would cover. Mr Gibbs recalls telling Mr Shapanis that Mr Smith “…was concerned to know whether the Aircraft was airworthy and properly maintained in all respects…” He maintains that he said to Mr Shapanis, “I want you to check it as if you’re giving it to your young son for his wedding present”; and that Mr Shapanis replied, “right”. Although, as will become clear, nothing much turns upon it, Mr Shapanis denied that that was said.

94    After the PPI Report was finalised and received, there unfolded an email exchange between Mr Gibbs and Mr Bullas, by which Mr Gibbs expressed a preference for Interair to undertake the works that FAL required to be undertaken before completing the Aircraft’s purchase. Mr Bullas responded to Mr Gibbs:

[AJE has] done the work on my aircraft since 1999 the only time anyone else has worked on it was when we had guys from Fairchild fly out to work on it here.

The items will be repaired and the aircraft presented in an airworthy condition as per the contract…

95    On the morning of Monday, 13 November 2017, Mr Shapanis forwarded to Mr Gibbs and Mr Iliades an email that he had received the previous week from Mr Steve Murphy, a representative of Honeywell (the Aircraft’s engine manufacturer). That email concerned the Aircraft’s engines, which had been advertised as being (and, so Mr Gibbs and Mr Smith had understood, remained) subject to the Honeywell MSP. The email from Mr Murphy—apparently sent to Mr Shapanis in consequence of inquiries that he had made for the purposes of conducting his pre-purchase inspection—suggested otherwise. It read as follows (errors original):

Hi Ernie

The Honeywell Damaged Engine Review Board have reviewed the data and have placed both engine serial numbers P35022C and P35174C on the Damaged engine list due to non-preservation.

A Inspection and repair workscope is in process and I will forward it to you once it has been completed.

Kind Regards,

Steve

96    Mr Shapanis’s email of 13 November 2017 made the suggestion to Mr Gibbs and Mr Iliades that “…Gavin gives a statutory declaration or speak[s] to Honeywell in order to get this sorted.”

97    That suggestion appears to have been actioned. On 14 November 2017, Mr Bullas affirmed a statutory declaration by which he attested:

RE: VH-RCI Engine runs

All engines have been started and run monthly for the last 18 months, according to the Honeywell MSP contract number 10070.

98    Mr Bullas sent a copy of his statutory declaration to Mr Murphy. On 16 November 2017, Mr Murphy replied by email, copied to Mr Shapanis, Mr Iliades and Mr Gibbs, noting that “…[t]he engines in VH-RCI have been removed from the Honeywell Damaged Engines list.”

99    Over the next few weeks—extending beyond FAL’s execution of the Sale Contract and its receipt of the Aircraft—Mr Gibbs negotiated with Honeywell to have Hurlad’s interest in the MSP assigned to FAL. That process was successfully completed on 17 January 2018.

100    Over the first half of 2018, as the defects in the Aircraft emerged, Mr Gibbs had occasion to discuss them with Mr Shapanis. In July 2018, he and Mr Iliades asked Mr Shapanis to recheck the maintenance status of the Aircraft. Interair subsequently provided a catalogue of problems that it had uncovered, including that the “‘A & B’ Check”, which would normally be conducted every 100 flight-hours (or at least once every 12 months), appeared not to have been attended to since October 2012.

101    In a subsequent telephone discussion, Mr Shapanis told Mr Gibbs about an additional problem with one of the Aircraft’s horizontal stabiliser fittings, which he (Mr Shapanis) described as being “in near catastrophic condition”. Thereafter, Mr Gibbs and Mr Shapanis collaborated on the terms of a letter that Mr Gibbs intended would be sent to a solicitor for the purposes of obtaining some advice. On 23 July 2018, Mr Shapanis obliged, sending to Mr Gibbs correspondence on Interair letterhead that contained the following observations (errors original):

It is my professional opinion that not only was the aircraft not airworthy (which was discovered a month or so later after purchase) but there appears to be many items in the C and D checklist which were simply not done at the appropriate level one would expect. The new owner has only flown 32 hours since purchase. He's only owned the aircraft for six months and in that time it has had to make nine maintenance visits to Melbourne with the aircraft total down time as at today is now approaching 114 days.

…

The Horizontal Stabilizer fittings where in near catastrophic condition. One had been grinded down to half its thickness and buckled so badly it could have cracked and failed anytime. The repair attempted on this plate was highly illegal.

All up the new owner has spent close to $165,000 ex GST bringing this aircraft to date of which around $42,000 are costs he would have been likely to have incurred but the rest has been a result (in our opinion) of neglect or half measures …

102    Thereafter, Mr Gibbs played various roles in the course that the Aircraft took, none of which need to be explored for the purposes of these reasons.

103    Although not to an extent that is dispositive, I have some concerns about Mr Gibbs’s evidence. Throughout his time in the witness box, he impressed as a man who projected considerable confidence. His answers to the questions that he was asked were often summary in nature; occasionally to the point of dismissive, although I would not suggest deliberately so. He appeared unusually prone to quick response and even quicker delivery (a reality to which he adverted at least once when he acknowledged, “I do talk fast. Sorry…”). Although his evidence was confident and assured, there were occasions when his ability to articulate detailed accounts of conversations and events with the pace that he did—without any apparent need to pause first and consider what was asked of him or how he might address it—suggested that his evidence was something of a performance. Those observations should not be mistaken for rejection of the evidence that Mr Gibbs gave. For the most part, there is no real reason to reject it. Nonetheless, to the extent that Mr Gibbs’s evidence conflicted with that of Mr Shapanis, I prefer the latter’s.

Mrs Noelene Smith

104    At relevant times, Mrs Smith served as a director of FAL and as its accounts manager and bookkeeper. Her evidence was directed predominantly toward the costs that FAL incurred after it purchased the Aircraft. Those costs were said to feature as components of any loss that FAL might hope to recover from the Interair Parties.

105    At the time that she gave her evidence, there remained some areas of dispute about what expenses FAL had incurred over the course of its ownership of the Aircraft and whether, or to what extent, they might accumulate to a point reflective of the losses that it might legitimately recover in damages or statutory compensation.

106    There still remains, at the level of legal principle, some dispute about the calculation of FAL’s loss; but there is no longer any dispute about the quantum of its constituent parts. That reality founds what is now a regrettable level of redundancy to Mrs Smith’s evidence. What was controversial about the principal topic upon which her evidence touched has since been resolved. Nothing can be gained now by summarising what she said.

Mr Nirefs (Sam) Iliades

107    Mr Iliades is and, at relevant times, was the managing director of Australian Corporate Jet Centres Pty Ltd (“ACJC”), an aviation business that he has managed at Essendon Airport for more than a decade.

108    In 2017, Mr Gibbs contacted Mr Iliades about Mr Smith’s desire to purchase an aircraft. It was through Mr Iliades that Mr Gibbs and Mr Smith happened upon VH-RCI. Mr Iliades knew Mr Bullas and was aware that he was in the market to sell the Aircraft. At relevant times in 2017, the Aircraft was stored in the hangar of one or another of Mr Iliades’s businesses at Essendon Airport.

109    At Mr Gibbs’s request, Mr Iliades made inquiries about the Aircraft, the fruits of which he fed back. Those inquiries came to something of a head in late October 2017, when Mr Gibbs told Mr Iliades that Mr Smith was considering purchasing the Aircraft, subject to its undergoing a pre-purchase inspection. That led to Mr Iliades’s contacting Mr Shapanis.

110    At some point in late October 2017, Mr Iliades visited Mr Shapanis at Interair’s facility at Essendon Airport. He asked Mr Shapanis whether Interair would be able to complete a pre-purchase inspection on the Aircraft. Mr Shapanis indicated that it would. According to Mr Iliades, he told Mr Shapanis that the purpose of subjecting the Aircraft to a pre-purchase inspection was to confirm that it “…was airworthy and that all maintenance required to be carried out had in fact been carried out.”

111    Mr Iliades’s evidence was that there was no discussion at that point about the price that Interair would be paid for conducting a pre-purchase inspection of the aircraft. Mr Shapanis’s recollection was somewhat different. I shall return to that conflict later in these reasons.

112    On 25 October 2017, Mr Iliades sent Mr Shapanis an email in which he set out some of the Aircraft’s specifications. He attached the Hurlad Parties’ advertisement for the sale of the Aircraft and requested that Mr Shapanis:

…please provide a scope for the pre-purchase on the basis of the attached information, A good check of the avionics, hydraulics, flight control cables, corrosion, fuel contamination and check how often it was run when it wasn’t flying etc, etc…

113    Amongst other things, the email identified that the “Maintenance Program is the M7 Aerospace Letter Check Program”.

114    After the completion of the PPI Report and the delivery of the Aircraft to FAL, Mr Iliades’s involvement with it continued. ACJC became a registered operator of the Aircraft (although, ultimately, it only ever conducted one flight in that capacity). Later, after the Aircraft was grounded, it was hangared in one of his businesses’ hangars. Consequently, Mr Iliades was kept abreast with the ongoing maintenance works that were performed on it.

115    In July 2018, it was Mr Iliades who outlined for Mr Shapanis’s attention a suite of issues that then bedevilled the Aircraft. By an email that he sent on 16 July 2018, he catalogued them as follows:

Cabin door is now stuck closed. Either a handle or click clack issue
One recog light blown. One Nav light blown. Rotating beacon U/S
Inverter NO.2 fails intermittently
Nose Wheel Steering pressure switch leak (since oleo was done)
Gear actuators showing signs of leakage (since olea was done)
Minor oleo leak (since oleo was done)
Nose Wheel Steering fails to test properly (since oleo was done)
NO. 3 main wheel tyre distorted from fuel leak
LH brake has moderate brake rub when aircraft moved on ground. Master cylinder issue maybe??
Oxy requires filling

116    On 5 April 2019, ACJC received an “Aircraft Survey Report” from CASA, which recorded a series of “Code A” issues with the Aircraft, the significance of which was that it was prohibited under the CASRs from flying until such time as they were rectified. Under a heading, “Brief details of deficiency, defect or damage…”, the report recorded:

noncompliance to m7 maintenance program

r/h propeller part no not as per type certificate

major defects in empennage area

no log book entries for cabin refurb/repaint

117    Mr Iliades denied that he ever pressed Mr Shapanis for a speedy turnaround of the PPI Report (as Mr Shapanis maintained). Similarly, he denied having ever received from Mr Shapanis a hard copy of the PPI Report on 6 November 2017 (as Mr Shapanis also maintained). In particular, he denied having met with Mr Shapanis at Essendon Airport on the morning of 6 November 2017. He maintained that he was, in fact, not in Melbourne on that day, although it later emerged that he was for at least part of the morning. He flew out from Melbourne airport at 10:00am.

118    Mr Iliades was an impressive witness. He was candid and forthright in the witness box, and presented as considered, articulate and dispassionately honest. He acknowledged the lapses in his recollection when they emerged and made concessions when it was appropriate to do so. Save for in a handful of respects (to which I shall return), I accept his evidence to the extent that it conflicted with Mr Shapanis’s.

Mr Gavin Bullas

119    Mr Bullas is (or, at material times, was) a director of Hurlad. Save insofar as it was directed to establishing the measures that Hurlad undertook to maintain the Aircraft in an airworthy state, his evidence was largely chronological and did not materially deviate from that of other witnesses.

120    Mr Bullas deposed to the agreed process by which the Aircraft came to undergo the pre-purchase inspection that Interair and Mr Shapanis conducted. So far as needs be explored here, that process began on 31 October 2017, when Mr Bullas received from Mr Shapanis an email requesting access to the Aircraft’s “log books and records”. Mr Bullas responded later that morning, indicating that access to the requested material was approved and referring Mr Shapanis to representatives of AJE, Mr Van Dort or Mr Glenn Elliott, “…if you need any additional information”.

121    In the weeks following receipt of the PPI Report, Mr Bullas and Hurlad directed various works on the Aircraft (specifically, works consistent with what Mr Wettenhall had identified). Mr Bullas provided to Mr Gibbs the assurance recorded at [94] above and attended to the assignment to FAL of the Honeywell MSP. That assignment was the subject of minor delay on account of Honeywell’s placing the Aircraft’s engines on its “damaged engines list”, apparently for want of routine running. After Mr Bullas attested to those engine runs having been completed as required under the MSP, the engines were removed from the list and, ultimately, the assignment was effected as planned.

122    It was through Mr Bullas’s affidavit that a copy of the contract between Hurlad and Honeywell was received into evidence. By that instrument, Hurlad warranted that “all known or suspected Abuse or damage to Engine Units will be reported to honeywell or to the Authorized Service Center repairing or receiving the Engine Unit”. “Abuse” was relevantly defined to include “[t]he failure to have accomplished the proper maintenance, repair and/or modifications of Engine Units required by honeywell’s…maintenance manuals”. The rectification of any such abuse by Honeywell was not covered by the MSP.

123    Very little, if any, of Mr Bullas’s evidence touched upon matters of controversy, at least not so far as is dispositive. It is unnecessary to offer much in the way of assessment of his evidence or the manner in which he gave it.

Mr Ermis (Ernie) Shapanis

124    Mr Shapanis was, at all material times, a director of Interair (and, at the time of the trial, its sole director). He is (and was) also a LAME. In October and November of 2017, he held licences issued by CASA that permitted him to work on Merlin aircraft airframes and TPE331 engines. He additionally held CASA delegations that permitted him to (amongst other things) issue certificates of airworthiness.

125    The PPI Report was not the first pre-purchase inspection on which Mr Shapanis had worked. He told the court that the terms upon which he agreed to conduct pre-purchase inspections differed from engagement to engagement; and were typically determined according to how much a client was willing to spend and how quickly they required an inspection to be performed.

126    In late October 2017, Mr Iliades visited Mr Shapanis at Interair’s Essendon Airport facility to discuss the possibility of a pre-purchase inspection of the Aircraft. According to Mr Shapanis, their discussion touched upon the price that Interair might charge. His evidence was that he asked Mr Iliades how much might be budgeted for the inspection. Mr Iliades nominated $5,000, to which, Mr Shapanis maintains, he replied, “Five grand is going to get you jack shit.” Instead, Mr Shapanis says that he suggested that he could “…do a logbook review against the IAS Reports…for 10 grand.”

127    On 25 October 2017, Mr Iliades emailed Mr Shapanis, requesting that he (Mr Shapanis), “…provide a scope for the pre-purchase [inspection]” on the basis of certain specifications. I have already set out the relevant terms of that email (above, [112]) but it repays to repeat them. The email continued (ungrammatically but not ambiguously): “A good check of the avionics, hydraulics, flight control cables, fuel contamination and check how often it was run when it wasn’t flying etc, etc”. Also in that email Mr Iliades conveyed that the Aircraft had “just come out of a fresh ABCD check”.

128    Two days later, Mr Shapanis received (or reviewed) an email that Mr Gibbs sent to Mr Bullas, Mr Smith (via Mrs Smith), Mr Iliades and Mr Wettenhall, which indicated that Interair would “make contact with Ausjet and arrange for the [A]ircraft to be tugged to Interair on Monday morning to start the pre-purchase inspections”. That email attached the binding offer that would later form the letter of intent that was exchanged as between Hurlad and FAL in late October 2017, which made certain representations about the scope of the pre-purchase inspection. However, Mr Shapanis was not a party to that letter of intent and nor did he read it.

129    At that stage, the scope of Interair’s retention had not been agreed. That led to Mr Shapanis sending to Mr Gibbs his email of Monday, 30 October 2017 (above, [92]). Mr Gibbs later forwarded that email to Mr Bullas—copying, amongst others, Mr Shapanis—so that he (Mr Bullas) could “see the full list of activities that Interair would execute as part of the pre-purchase checks”.

130    At this juncture, it repays to decode the jargon and acronyms to which Mr Shapanis’s 30 October 2017 email referred. None was the subject of contention at the trial. Mr Shapanis explained them in his affidavit as follows:

45.    The abbreviations in the [30 October] SOW Email have the following meanings:

(a)     Item 2: Full AD Compliance report: “AD” stands for airworthiness directives. An airworthiness directives report is a document mandating actions to be performed on a specific aircraft in a specific timeframe to restore an acceptable level of safety, when evidence shows that the level of safety may otherwise be compromised. ADs are issued by CASA.

(b)     Item 3: Review aircraft due list: the aircraft due list is a report that identifies all the inspections required for the aircraft airframe, engines and equipment based on the manufacturer's maintenance program. It also sets out when these works have last been carried out and when they are next due. The “due list” is maintained by the Registered Operator or the Registered Operator's Head of Aircraft Airworthiness and Maintenance Control (HAAMC). At the time of conducting the PPI, I believe that Mr Van Dort at AJE was the HAAMC. After FAL purchased the Aircraft, the HAAMC was initially Mr Wettenhall and then Mr Iliades.

(c)     Item 4: Carry out History report: The history report is a report on the contents of the logbooks reviewed which sets out all recorded issues, major events or incidents that have occurred during the lifetime of the aircraft's operation as recorded in the logbooks.

(d)     Item 5: Carry out STC List: STC is short for “supplemental type certificate”. The STC list is a document prepared by the LAME undertaking the PPI. I prepared the STC list for the Aircraft and included it in the PPI Report. It lists additional equipment that has been added to an aircraft after its manufacture as recorded in the logbooks.

(e)     Item 6: Review FM Status: “FM” is short for flight manual. It has been alleged by FAL that this means flight maintenance, but that is wrong. There is no such thing as a “flight maintenance status”. However, it is important that the “flight manual” is up to date and it is common in the aircraft industry to refer to the “flight manual status” or “FM status”.

131    Mr Shapanis sought to impress upon the court the distinction separating a “log book review” from a “log book audit”. The latter, he explained, would take a considerable amount of time to complete, particularly in respect of a 35-year-old aircraft. Audits, he explained, require cross-checking computer-generated maintenance tracking and scheduling reports against log books and maintenance releases to verify that maintenance works that ought to have been completed were in fact completed. In some cases, he explained, that verification process would require disassembly of parts of the subject aircraft. An audit process, he said, would involve several weeks’ work and be expensive.

132    A log book review, on the other hand, might simply involve a review of the content of the log books and reporting on matters of significance, including matters that might affect the attractiveness of an aircraft’s purchase price or be suggestive of some likelihood of significant or unforeseen future maintenance expenses. Importantly, that would not include an assessment of whether the log books accurately recorded the maintenance performed on the aircraft.

133    In his oral evidence, Mr Shapanis gave some examples of matters that he might uncover upon review of an aircraft’s log books, namely: whether it has had a “wheels-up” landing; whether it has been struck by lightning; and whether it has had a “prop strike” or major alterations or repairs. Under cross-examination, Mr Shapanis conceded that those matters might also fall within other items that he had promised to undertake as part of the pre-purchase inspection, including preparing the “history report” and the “STC listing”. He ultimately conceded that his conception of a log book review would not uncover anything not otherwise uncovered by the other tasks that were enumerated in the 30 October 2017 email.

134    Mr Shapanis’s evidence touched upon the sequence of events that led to his review of the Aircraft’s log books. It was not until the letter of intent was signed that Mr Bullas authorised arrangements for the release to Mr Shapanis of the Aircraft’s log books. It appears that Mr Shapanis received a suite of paperwork from AJE on 31 October 2017.

135    That information included information that Mr Shapanis had expressly requested. On 31 October 2017, Mr Shapanis sent an email to Mr Glenn Elliott of AJE, requesting that he be sent by email “…a status report, AD listing and due list for RCI say 300 hours 3 years”. The reference to a “due list”, he explained to the court, was a reference to a list of maintenance works that were scheduled to be undertaken on the Aircraft within the following three years or 300 hours of operation.

136    Later that same morning, Mr Shapanis received from Mr Elliott what he had requested. The “status list” that was sent to him extended to some 70 pages, and purported to record the Aircraft’s maintenance history as at that date (31 October 2017). The “due list” that Mr Shapanis received was seven pages long and recorded what AJE had identified as the maintenance and testing works that would need to be carried out on the Aircraft for the three years or 300 flight hours following 31 October 2017 (and, in each case, when those works would specifically need to be undertaken and when they had last been undertaken). Mr Shapanis was also given what he described as an Airworthiness Directives Report for the Aircraft, maintained by AJE and running to some 75 pages, which listed airworthiness directives issued by CASA that had some application to the Aircraft.

137    Additionally, Mr Shapanis was given access to what appear to be described all around as the Aircraft’s log books. Also provided was a suite of “maintenance releases” that had been completed for the Aircraft (although not the maintenance release that was current as at 31 October 2017, which was provided on 3 November 2017, after Mr Shapanis expressly requested it). Mr Shapanis did not request—and nor was he supplied with—the “work packs” for the Aircraft (which, so the court was otherwise told, comprise instructional documents that are completed by an aircraft’s maintenance provider, and which record the nature and completion of the constituent tasks by which individual maintenance events are constituted).

138    It became apparent to Mr Shapanis, from his review of the Aircraft’s log books and the maintenance releases that he was given, that there had been no records made of “engine preservation measures” over the 90 days prior to 31 October 2017. He correctly ascertained that the Aircraft had not flown much over that period (nor, indeed, for the previous two-and-a-half years). He was aware, from his experience as a LAME, that it was common for engine preservation processes to be undertaken in order to maintain underutilised aircraft engines in good order.

139    On 1 November 2017, Mr Shapanis sent an email in the following terms to Mr Steve Murphy at Honeywell (the company that operated the MSP to which the Aircraft’s engines were subject):

Dear Steve

Can you please advise me what is the procedure for TPE-331-10 engines that have not had any preservation carried out for more than 90 days but aircraft in hangar. No engine runs carried out. I would just like some information as to what if any maintenance is required.

140    Mr Murphy and Mr Shapanis traded emails over the next few days. Mr Shapanis informed Mr Murphy that Interair was conducting a pre-purchase inspection of the Aircraft and that he was concerned to ensure that a purchaser would not have to overhaul either of the engines merely because they had been idle for a while. Mr Shapanis provided to Mr Murphy some information about the engines (including the results of some spectrometric oil analysis program—or “SOAP”—testing that had recently been performed).

141    The engine preservation concern was significant enough for Mr Shapanis to raise it with Mr Iliades. At some point in early November 2017, he told Mr Iliades that he had been unable to locate any log book entries recording engine preservation measures (or engine runs), despite the Aircraft having not flown much over the preceding two years. He told Mr Iliades that he had inquired of Mr Murphy what, if anything, should be done about that state of affairs.

142    The results of those inquiries were stepped. On Mr Murphy’s instructions, Mr Shapanis first provided to Honeywell a questionnaire addressed to the presenting “preservation issues” with the Aircraft. In the usual course, it seemed that the questionnaire called for accompanying oil samples, but Mr Shapanis instead referred to the SOAP analysis already provided, which reflected, so he said, “nil faults”. That was the stage to which inquiries had progressed at the time of his email to Mr Gibbs enclosing the PPI Report. Mr Shapanis noted in it that “[t]he only other issue is to get the report from Honeywell …”.

143    It was only after the provision of the PPI Report that Honeywell advised that the Aircraft’s engines had been “placed” on its “damaged engines list”, apparently as (or partly as) a result of Mr Shapanis’s inquiries. That email (above, [95]) gave some indication of Honeywell’s view about its preservation status and promised the provision of “an inspection and repair workscope”. No such document (nor indeed any other assessment or report) was ever provided by Honeywell, nor further solicited by any party. As history records, the engines were “removed” from the list and continued on the MSP after Mr Bullas affirmed his statutory declaration of 14 November 2017.

144    In conducting his pre-purchase inspection, Mr Shapanis did not complete the tasks that were listed in Mr Iliades’s email of 25 October 2017 (above, [127]), save insofar as they otherwise fell within the 14 items enumerated in Mr Shapanis’s 30 October 2017 email. For instance, he did not check for fuel contamination or check the Aircraft’s flight control cables.

145    Likewise—and of most significance presently—Mr Shapanis did not review or obtain a copy of the M7 Program. Nor had he himself performed maintenance under it (or its ancestral incarnations) for several decades. So far as he was aware, the content of the M7 Program (or, perhaps, the maintenance manual that underpins it) is and was very lengthy (counsel for FAL suggested that the requirements extended to “thousands of pages”). They are typically accessed online via a subscription service. Mr Shapanis was not a subscriber to the service and did not otherwise have access to the content of the M7 Program or the maintenance manual.

146    He was, however, aware that those documents existed and that AJE had access to them. At one point during his conduct of the pre-purchase inspection, he successfully prevailed upon AJE to print out a section of the manual (specifically, a section concerning the measurement of brake wear) to assist him.

147    For the purposes of conducting his pre-purchase inspection, Mr Shapanis had occasion to consider the current and recently expired maintenance releases that pertained to the Aircraft, as well as the IAS records that AJE had provided (being those documents referenced in [135] to [136], above). None showed any maintenance tasks that were overdue, nor did they allude to any other defects with the Aircraft. He understood from those records that AJE had only recently completed some programmed maintenance on the Aircraft.

148    Mr Shapanis also had occasion to review the eight log books that AJE had provided to him. That took him approximately one full day. Some of the matters that he uncovered during that time were summarised into the form of the “history report” section of the PPI Report, which details “incidents and events” that had occurred throughout the Aircraft’s life. In preparing the PPI Report, Mr Shapanis sought to identify those incidents and events. Section 4.0 of that report, for example, summarised “significant” events in the Aircraft’s history. Sections 4.2 and 4.4 were directed to, respectively, the Aircraft's “Repair History” and “Damage History”, the details of which were also gleaned from Mr Shapanis’s review of the log books.

149    Similarly, Mr Shapanis was able to piece together from the Aircraft’s log books (and set out in his PPI Report) a catalogue of equipment that had been fitted to the Aircraft since its manufacture.

150    Mr Shapanis gave evidence to the effect that, on 6 November 2017, Mr Iliades came to Interair’s office, whereupon the two had a discussion about the provision of the PPI Report. According to Mr Shapanis, Mr Iliades demanded that it be produced that day. He then, so he maintained, had a telephone discussion with Mr Gibbs, who also indicated that he wanted the PPI Report that day. Very little turns upon those discussions. History records that the PPI Report was, in fact, provided late in the morning of 6 November 2017.

151    There is at least some reason to doubt that the discussion as between Mr Shapanis and Mr Iliades occurred as Mr Shapanis recalled it. Mr Iliades maintains that he flew from Melbourne Airport to Coolangatta Airport in the morning of 6 November 2017 and did not visit Interair’s facility at Essendon Airport. During his oral evidence, Mr Shapanis would not be shaken from the proposition that he and Mr Iliades had spoken in person on the morning of 6 November 2017. Nevertheless, it seems tolerably clear that that discussion did not take place, at least not in the manner to which Mr Shapanis attested. As I say, little turns on that fact alone; but I record it nonetheless.

152    The manner of provision of the PPI Report might be of greater moment. At 11:55am on 6 November 2017, Mr Shapanis sent an email to Mr Gibbs, copying Mr Iliades, attaching a file named “VH-RCI inspection Report”. Acknowledging that there were multiple versions of the PPI Report in evidence—not all of which are identical—the best record of what was emailed is contained in an annexure to Mr Shapanis’s first affidavit.

153    On Mr Shapanis’s account, he also provided a hardcopy version to Mr Allan Cullinger, an employee of ACJC (Mr Iliades’s company), in the afternoon of 6 November; a version which contained, in full, the annexures which were abridged or omitted in the emailed copy.

154    FAL maintains that it did not receive that version of the report until the exchange of documents in the course of the proceeding. It submits that Mr Shapanis’s evidence is the subject of recent invention, a proposition that appears to be based at least partly upon Mr Shapanis’s account initially holding that the full printed version of the report had been given directly to Mr Iliades. FAL maintains that the court ought more easily to infer that Mr Shapanis’s evidence is fictitious because the Interair Parties failed to call Mr Cullinger to give evidence at the trial.

155    Relatively little turns upon any of that. I decline FAL’s invitation to reject Mr Shapanis’s evidence in relation to the provision of the printed (and complete) report to Mr Cullinger. Notwithstanding that he is no longer employed by ACJC, Mr Cullinger is and was more readily identifiable as a witness in FAL’s “camp” than that of the Interair Parties. FAL did not seek to lead evidence from Mr Cullinger nor to put to Mr Shapanis that his “revised” account was untrue. There can be no suggestion that the court should reject Mr Shapanis’s evidence (at least in this respect) by application of the rule in Browne v Dunn (1893) 6 R 67. The evidence was not the subject of any direct challenge and I accept it. Given that Mr Cullinger was employed by Mr Iliades (or one of his businesses) on the date in question, and that Mr Iliades was FAL’s agent, I accept (for what little it might be worth) that Mr Shapanis provided the full version of the PPI Report to FAL.

156    With that acknowledged, something might be said of the PPI Report’s content. It is contextually helpful—in order that some picture of its broader content might become apparent—to recreate its index, which was as follows:

1.0 Introduction

2.0 Disclaimer

3.0 Aircraft Specifications

3.1 Aircraft Certification

3.2 Main Engine Status

4.0 History, Log Book Review and Summary of "significant" events.

4.1 Maintenance History

4.2 Repair History

4.3 Certification and Log Book Notes

4.4 Damage History

5.0 Modification Status

6.0 Aircraft Flight Manual and Approval

7.0 Aircraft Maintenance Program

8.0 Noise Certificate

9.0 Electrical Load Analysis

10.0 Navigation Approvals

11.0 ELT Registration

12.0 General Conditional Reporting

12.1 Aircraft Inspection

12.2 Exterior/ Paint

12.3 Safety Equipment

12.4 Avionics Fitted

12.5 Engine runs & Functional tests

13.0 Airworthiness Directives Status

14.0 Summary and Observations

15.0 List of Report Attachments

157    The “disclaimers” (at part 2.0 of the PPI Report) warrant some attention. They provided, amongst other things, that:

…

Interair Pty Ltd gives no representations and makes no warranties, express or implied, with respect to the accuracy, completeness, currency or reliability of any of the material contained in this report. Interair Pty Ltd expressly disclaim all responsibility for any errors in, or omissions from, the information contained in this report, including all liability for any loss or damage suffered or incurred by any person or corporation, as a result of or arising out of that person placing any reliance, whether whole or partial, upon the whole or any part of the contents of the report.

All current times and “times to run” were extracted from the records provided by the current operator.

The aircraft was reported to be in an airworthy (flyable) condition by the current operator.

It is not the intention of Interair Pty Ltd to recommend a “purchase or do not purchase” of the aircraft to a purchaser. It is however our intention to provide an unbiased report of the aircraft as inspected and assessed, in line with regulatory requirements, and limited by this report to assist the purchaser in making a commercial decision where possible.

…

158    On receipt of the PPI Report those disclaimers were, Mr Shapanis says, the subject of some disquiet on the part of FAL or its agents. His evidence was that Mr Iliades called him and said that Mr Gibbs had queried them. Upon Mr Shapanis explaining that they were standard for the aviation industry, his impression was that Mr Iliades accepted the disclaimers. Mr Iliades does not recall that conversation, and Mr Gibbs denies that he ever discussed the disclaimers with Mr Iliades or Mr Shapanis. Little, if anything, turns on any of that; however, I accept Mr Shapanis’s evidence as the more likely (and not directly contradicted) recollection.

159    The PPI Report records Mr Shapanis’s (and, by extension, Interair’s) opinion that, at the time of the inspection, the Aircraft was in reasonable condition for its age and hours. Mr Shapanis formed that opinion having completed (so he maintains) the works that he had outlined in his email of 30 October 2017.

160    Over the course of November 2017, there was an exchange of emails as between FAL and Hurlad (or their respective representatives) concerning, amongst other things, aspects of the Aircraft’s condition to which Hurlad was (via AJE) to attend. Mr Shapanis was retained to ensure that those works were completed. On or about 1 December 2017, he conducted a further inspection of the Aircraft for the purposes of confirming that certain corrective measures—namely, those that Mr Wettenhall had identified by annotations made to a copy of the PPI Report on 7 November 2017—had been attended to. He later sent an email to Mr Gibbs confirming that at least some of them had been. Over the course of that week, as certain outstanding items were addressed (or further addressed) by AJE, Mr Shapanis inspected the Aircraft on three further occasions; and also inspected the work packs recording the works that AJE had performed responsively to the PPI Report.

161    The evidence reflects that at least one—and potentially several—items went unaddressed. As was reported in Mr Shapanis’s email to Mr Gibbs sent on 1 December 2017, there had been no rectification by AJE of an identified issue in respect of the pilot’s oxygen mask, which had a broken strap (notwithstanding its inclusion in Mr Wettenhall’s list of items that ought to be rectified before the Aircraft left Essendon Airport).

162    On 15 December 2017, Interair rendered an invoice to FAL in the sum of $12,100.00 (inclusive of GST), which covered the cost of the pre-purchase inspection and PPI Report, as well as the further inspection work to which Mr Shapanis attended thereafter.

163    Over the months that followed, Mr Shapanis carried out intermittent maintenance works on the Aircraft. They are not the subject of any relevant controversy and, for the most part, have already been rehearsed.

164    There were a couple of respects in which Mr Shapanis’s evidence conflicted with that of others, most notably Mr Gibbs and Mr Iliades. Very few if any of those conflicts loom large in the determination of any of the issues that fall to the court to determine. I have already commented on the evidence of Mr Gibbs and Mr Iliades and the manner in which they gave it. Mr Shapanis, too, presented in the witness box as a careful and honest historian. It was plain, at times, that he regrets having played any role in the Aircraft’s sorry saga. I doubt that he enjoyed the skilful cross-examination to which he was subjected. Nonetheless, I consider that he comported himself with diligence and sincerity. I have already accepted his evidence about the provision of the hardcopy PPI Report to FAL and the discussion of the disclaimers. I also accept that he had the conversation with Mr Iliades about pricing that he said that he had had (above, [111] and [126]). Although I would, to the extent of other conflicts, prefer the evidence of Mr Iliades, I am not certain that there are any of great concern. To the extent that his evidence conflicted with the evidence of Mr Gibbs, I consider Mr Shapanis’s evidence to be the more reliable. That there were such conflicts may be accepted (regarding matters such as the “wedding present” comment that Mr Gibbs claimed to have made); but such conflicts as there are are not dispositive of any issue that I need to resolve.

Mr Walter Van Dort

165    Mr Van Dort is a retired LAME. Between 2009 and 2018, he worked for AJE in Essendon as its aircraft planning engineer. During that time, AJE maintained various aircraft, including VH-RCI (on behalf of its owner, Hurlad). Mr Van Dort’s role was to plan and coordinate the maintenance tasks that needed to be completed on the aircraft that were within AJE’s stable. His duties included maintenance planning, maintaining and managing aircraft maintenance records and log books, updating AJE’s computerised maintenance tracking system (known as the Integrated Aviation System or Integrated Aviation Software—hereafter, the “IAS”), and monitoring manufacturer or regulatory developments applicable to the aircraft under AJE’s care (including, for example, in the form of airworthiness directives or service bulletins).

166    AJE used the IAS as a repository of information concerning maintenance tasks that were to be performed on the aircraft that it looked after. Those tasks were entered into the IAS from time to time from several sources. In the case of VH-RCI, those sources included the M7 Program, CASA airworthiness directives, and service bulletins and updates received from the Aircraft’s manufacturer. The information recorded in the IAS covered both the nature of the various maintenance tasks that were necessary to perform from time to time, as well as the scheduling according to which they became necessary. Completed maintenance, too, was recorded in the IAS.

167    For maintenance planning purposes, AJE kept copies of (or had subscriptions to) the maintenance manuals that pertained to the aircraft under its care—including, for VH-RCI, both the M7 Program and the maintenance manual that underpinned it.

168    Maintenance work that AJE undertook on its clients’ aircraft was typically performed according to “work packs”: written instructions that identified each of the component tasks that comprised a particular suite of maintenance work. In his role as aircraft planning engineer, Mr Van Dort undertook the compiling of work packs as and when required. The constituent tasks that they envisaged were then the subject of discussion with AJE’s Head of Aircraft Airworthiness and Maintenance Control (“HAAMC”), before being distributed for actioning by LAMEs.

169    The work packs that were prepared in respect of maintenance works contained sections in which the LAMEs who performed the constituent tasks could, by means of a signature, verify that what was meant to be done was in fact done. Once work on a particular aircraft was completed, an entry or entries would typically be made within its log books to record it. Those entries would not be nearly as detailed as the information contained within work packs; but would nonetheless stand as a summary of the work performed. The LAME coordinating the maintenance work would sign the maintenance release. Mr Van Dort would then create a separate record of the works in the IAS, so as to maintain as up-to-date a record as possible for each maintained aircraft.

170    Mr Van Dort was AJE’s planning engineer in respect of all of the maintenance work that AJE oversaw on the Aircraft from 2000 to 2001; and then again from 2009. He acknowledged what the Aircraft’s log books recorded (at least implicitly): namely, that at the time that the Aircraft was sold to FAL, the system of cyclical letter checks under the M7 Program had somehow misaligned, in that “A” and “B” check cycle numbers did not match with the cycle numbers that pertained to corresponding “C” and “D” checks, as they ought to have. He could offer no explanation for the misalignment.

171    Nothing more needs to be said about Mr Van Dort’s evidence.

Mr Reha (Ray) Ekinci

172    Mr Ray Ekinci is (or was) a director of Air Combat. It was to Air Combat that FAL ultimately (in 2023) sold the Aircraft for the sum of $30,000.00. Mr Ekinci gave both lay and expert evidence. Insofar as concerned the former, his evidence was of limited compass.

173    Mr Ekinci was introduced to Mr Smith and Mr Gibbs in or about September 2019. That introduction came about through FAL’s solicitor, Mr Maitland. Mr Maitland appears to have identified Mr Ekinci as somebody who might be interested in purchasing the Aircraft, which by that point in time had been “grounded” by CASA.

174    In order to determine his interest, Mr Ekinci inquired of Mr Smith and Mr Gibbs about having the Aircraft transferred to his facility in Camden, New South Wales. That, he determined, would require permission from CASA, which he anticipated would not be provided unless or until he conducted an inspection of the Aircraft where it was then located (Essendon).

175    That appears to have been the situation as it stood at some point in 2020. A contract of sale was prepared and signed by Mr Smith; but Mr Ekinci’s intention to inspect the Aircraft could not be actioned on account of state government covid-19 restrictions that were then in place, which limited travel to and from Melbourne.

176    In March of 2021—by which stage the potential sale of the Aircraft appears to have stalled—FAL inquired of Mr Ekinci how much he anticipated that it would cost to have the Aircraft restored to an airworthy state. He obliged that request later that month, estimating that repairs costing in the vicinity of $440,000.00 would be required (subject to what he identified as a 20 per cent margin of error, and potential additional costs relating to the propellers and engines). As at September 2021, he estimated (based on his experience and some research that he had done for that purpose) that the Aircraft’s market value was somewhere in the order of $200,000.00.

177    The Interair Parties sought to impugn Mr Ekinci’s evidence, mainly upon credit bases that I do not consider it necessary here to explore. Perhaps that was more directed to the opinions that he expressed and the manner in which he expressed them. I shall have more to say about them later. For now, it suffices to note that none of the lay evidence that Mr Ekinci gave was of any significance to the resolution of any controversial factual question.

The expert evidence

178    In addition to the lay witness evidence, the court received opinion evidence from a suite of expert witnesses. Broadly, their evidence touched upon three subjects.

179    The first concerned the Aircraft’s value. In late 2022 and at the direction of a previous docket judge (as has already been noted), that question was the subject of referral to a referee, Mr David Crick. I shall return to his report momentarily.

180    The second—related somewhat to the first—concerned the Aircraft’s engines and the extent to which they were or were not properly maintained whilst the Aircraft was under FAL’s ownership. That was the subject of evidence given by Mr Robert Simpson, to which attention will also return later in these reasons.

181    The third issue (or suite of issues) about which the court received expert evidence concerned the state of the Aircraft at the point that Interair was retained to conduct its pre-purchase inspection and the extent to which that state was ascertainable under the terms of its retainer. Those, too, were the subject of directions issued by previous docket judges, the end result of which was a series of joint reports prepared by four expert witnesses, the content of which was directed to questions that were nominated by orders of the court.

182    Additionally, Mr Ekinci gave expert opinion evidence about discrete matters, to which attention will shortly turn.

Mr David Crick

183    Mr Crick is (or, at material times, was) the managing director of DavAir Group. He is (or was) an Accredited Senior Appraiser of the American Society of Appraisers. His specialty is aviation assets.

184    On 17 November 2022, the court (as then constituted) resolved to refer to Mr Crick a suite of questions about the Aircraft for his consideration and inquiry. Some of the facts upon which that inquiry might be undertaken were agreed as between the parties. Ultimately, Mr Crick produced a report dated 13 January 2023, by which he answered the questions that the court referred to him. By an order dated 2 February 2023, the court resolved to adopt that report in full.

185    In his report, Mr Crick estimated the costs that would likely need to be incurred to return the Aircraft to an airworthy condition. His conclusion was straightforward: namely, that the costs of bringing the Aircraft back to an airworthy state well outweighed the market value that it would then command. He concluded that the Aircraft was “beyond economic repair”. It is strictly unnecessary to understand the conclusions that underpin that assessment but they, too, are straightforward. As at 12 December 2022 (being the date of his assessment), Mr Crick estimated that an airworthy Merlin III-C would have a market value somewhere in the vicinity of US$450,000.00; or, on a good day, US$500,000.00. He estimated the costs of attending to the catalogue of concerns that would need to be addressed to bring the Aircraft back to an airworthy state at a little less than $1.8 million.

186    Those costs were assessed across three broad categories. In the first category were the costs of addressing various maintenance failings identified by the other experts (whose evidence is summarised below). Those costs were variously quantified; but Mr Crick proceeded on the basis that they would be no more than the lowest amount that the other experts had nominated: specifically, a little over $170,000.00. Additionally, Mr Crick identified (much as the other experts had) that the Aircraft would require work to address the lack of log book certification concerning an interior refurbishment that the Aircraft underwent in 2005 or 2006 and some repainting that was apparently performed on it. Mr Crick accepted as fair some estimates that Mr Cox offered as appropriate in respect of those works. Including small additional amounts, Mr Crick estimated that the costs of rectifying the Aircraft’s paint and interior defects would be $167,500.00. Mr Crick also identified that the Aircraft would need to undergo all four “A” “B”, “C” and “D” letter checks, the costs of which he estimated to be $50,000.00. The total estimate of the costs to address what Mr Crick described as “Defects and Airworthiness Rectifications” was $389,373.58.

187    The second category of issues that would need to be addressed concerned the Aircraft’s engines. To understand this component of Mr Crick’s estimate, it repays to record the following observation in his report:

89.     During my investigations I asked all parties “If there is other documentary evidence, please identify that evidence, and provide a copy (such as required contract reporting to Honeywell including SOAP sample reports and monthly engine condition reports).” There were no documents supplied and in conjunction with the lack of evidence I found in my review of the aircraft engine Log Books and records, my conclusion is that there is no evidence that the engines have been maintained or preserved to the standards required by the OEM. [In] this instance, for the engines to be determined capable of flight, they would need inspection and servicing by a maintenance provider as acceptable to the OEM.

188    To estimate the costs of that inspection and servicing, Mr Crick obtained a quote from TAE Aerospace in Adelaide, which he noted was a large, Honeywell-authorised business that was equipped to undertake such work. That quote was significant: $520,000.00 per engine, exclusive of the costs of removing and relocating them.

189    The third collection of issues that would need to be addressed to restore the Aircraft to an airworthy state concerned the damage that was done to it in August 2021 (when another aircraft ran into it on the ground at Essendon Airport). After reviewing documents recording the damage that was inflicted upon the Aircraft, Mr Crick accepted related estimates of the costs that would be necessary to fix it, which totalled $350,000.00.

190    Thus, the total amount that Mr Crick estimated would need to be spent to restore the Aircraft to an airworthy state came to $1,779,373.58.

191    Having formed the view that the Aircraft was beyond economic repair, Mr Crick’s assessment of its worth focused upon the value of its constituent parts—in other words, upon what might be realised as its “parting out” value.

192    That value was assessed at two levels. First, Mr Crick recognised that, even in their present state (requiring overhaul), the Aircraft’s engines remained the “most valuable part of the aircraft”. He valued them at $50,000.00 for the pair.

193    The remainder of the Aircraft, he concluded, would attract limited market interest given the limited number of Merlin III-C aircraft still flying. He found that some components, including the Aircraft’s landing gear, flight controls, avionics and propellers, may carry some market value. He estimated it at approximately $50,000.00.

194    Thus, Mr Crick identified the “parting out” value of the Aircraft, as and where it was on 12 December 2022, at $100,000.00.

195    That was the primary question referred to Mr Crick for evaluation. Nonetheless, he was asked to and did inquire as to the value that the Aircraft might realise, or might have realised, had other circumstances been in play. He concluded, for example, that the market value of the Aircraft would remain as he had assessed it (that is, at its parting out value of $100,000.00) even had it not suffered the damage that it suffered as a result of the collision in which it was involved in August 2021.

196    Perhaps significantly, Mr Crick accepted that the market value of the Aircraft would have been improved had its engines been maintained in compliance with the Honeywell MSP. On that hypothetical scenario, Mr Crick concluded that the Aircraft would remain beyond economic repair; but also that its parting out value would be significantly improved. He noted that each of the Aircraft’s engines was at approximately 50 per cent of its expected lifespan. He estimated that engines of that longevity that had been properly maintained according to Honeywell specifications would be worth approximately $300,000.00 each. Thus, he concluded, the Aircraft’s parting out value would, had that scenario come to pass, have been somewhere in the order of $650,000.00 (being the value of the engines plus the $50,000.00 already identified as the parting out value of the Aircraft’s airframe and components).

Mr Robert Simpson

197    Mr Robert Simpson is (or, at material times, was) the managing director of Simpson Aeroelectrics Pty Ltd, an aircraft maintenance business based at Moorabbin Airport in Victoria. He is (or was) a licensed aircraft maintenance engineer. He holds (or held) multiple licence endorsements, including an endorsement specific to Honeywell TPE331 series engines, such as those that were fitted to VH-RCI. It was in respect of those engines, their maintenance and their preservation during periods of inactivity that his expertise was here engaged.

198    At the request of the Interair Parties (which comprised, partly and in the usual way, of a series of questions pertaining to the Aircraft and, in particular, its engines), Mr Simpson provided a report on 11 January 2024 entitled, “Independent Expert Report of Mr Robert Simpson into the preservation of the engines of 1982 Fairchild Merlin IIC [sic] Aircraft serial number TT-474 and registration VH-RCI”. By that report, Mr Simpson purported to explain the manner in which the Aircraft’s engines were, under the M7 Program—or, perhaps more accurately, the manual by which it was accompanied—to be “preserved” during periods of inactivity (which is to say, periods over which the aircraft was not flown).

199    Central to Mr Simpson’s report were some assumptions that appear not to be controversial, specifically as to engine preservation works that were or were not performed after FAL assumed ownership of the Aircraft. I shall return to the specifics underlying those assumptions momentarily.

200    Mr Simpson explained, by reference to requirements expressed in the manual, the measures that aircraft operators must take to preserve engines in a properly maintained state. Those measures are (or were) bifurcated across two forms: one for short-term engine preservation (which may be conducted, once, within 60 days of an aircraft’s last flight); and one for long-term engine preservation (which must be undertaken at least once for every 180 days of inactivity).

201    At the risk of oversimplifying, the short-term procedure requires (or required) that an engine be operated for a minimum of ten minutes at or above its “ground idle” speed, so as to ensure that parts enjoy a proper distribution of approved engine oil. Thereafter, the process requires that the engine speed be increased to 95 per cent of its maximum “…to ensure adequate charging of the fuel manifold purge system”, after which the speed can be reduced back to idle before the engine is shut down. Once that occurs, the engine is to be allowed to cool, after which an inspection is to be made of its inlet area, which should remain clean and dry. Then, the engine’s inlet and exhaust openings must be capped, plugged or covered to prevent the entrance of water or foreign matter. All of those things may be done by an aircraft’s pilot.

202    I said earlier that that process must be undertaken within 60 days of an aircraft’s last flight. That may or may not be accurate. The maintenance manual appears to contemplate that it will be undertaken “at the beginning of the period of idleness”. Perhaps it applies in respect of periods during which it is known that an aircraft will not be operated. That was not made clear but, for reasons to which I shall shortly advert, nor is it material.

203    The longer-term engine preservation procedure is more detailed. It applies when an aircraft is not flown for more than 60 days. In addition to the running of the engine (first at idle and then, before shut down, at speed), it requires that fuel supplies and ignition sources be disconnected and that other steps be taken to retard the potential for corrosion, oil contamination and fuel contamination. Those tasks are maintenance tasks that only LAMEs can lawfully perform; and, like any such maintenance work, they must be recorded in an aircraft’s log books. The long-term engine preservation process can be repeated indefinitely (for each 180-day period that the aircraft doesn’t fly).

204    Again, I am not certain that the evidence permits me to state with certainty when it is that the 180-day period to which the M7 maintenance manual’s long-term engine preservation procedure pertains is taken to begin. It might be that it begins upon completion of short-term preservation; alternatively, it might begin at some other point. For reasons that will shortly be made apparent, not much turns on that for the purposes of this matter.

205    Mr Simpson was asked to inspect VH-RCI’s engines and to review records provided to him as to the measures that FAL took (or that were taken on FAL’s behalf) to preserve them. For reasons that are not apparent, he was unable to conduct a physical inspection; but, instead, was provided with what he was told were (or, in any event, appear to have been) photographs of the engines that were taken in November 2023. From those photographs—which included close-up imagery of the engines’ air intakes and compressor sections—he opined that the engines appeared not to have been sealed in the ways that the M7 maintenance manual contemplates. That left open the possibility of moisture and foreign debris making their way into what should have been sealed parts of the engines; and indeed, Mr Simpson noted that the photographs showed evidence of the ingress of spiderwebs, foreign objects and debris.

206    Mr Simpson was also asked to consider records pertaining to the ground running of the engines. For that purpose, he was supplied with correspondence that purported—apparently without controversy—to record the dates upon which “engine runs” had been conducted between January 2019 and April 2021. That correspondence appears to have originated with Mr Iliades on behalf of ACJC. It might be recalled that ACJC was the registered operator of the Aircraft and that it was hangared at another of Mr Iliades’s businesses for parts of the period that FAL owned it.

207    From those records, Mr Simpson opined as follows (references omitted, errors and emphases original):

8.     Looking at the short term preservation requirements from the SA227 manual, the engines must be run and then sealed to prevent moisture ingress. The limit of this type of preservation is limited to 60 days and is available to be performed once only. Please see item 6 of the up to 60 day’s inactivity which states: There shall be no renewal of the 1 to 60 day preservation. The reason it is allowed once only is that if the engines are not being operated regularly, the fuel system of the engine must be preserved in accordance with the long term storage procedure. Also, it must be noted that the time interval from the first engine run to the second engine run is 69 days, this is past the 60 day limit.

9.     If there is an assumption that long term preservation of the engines was actually performed, the time limit for this is 180 days if all of the procedures have been complied with. There is no record of the procedure being performed in any of the annexures E through G supplied which would be classified as maintenance on the engines and this must be certified by a licenced aircraft maintenance engineer in accordance with CASA Regulation 42zc for the performance of the maintenance and CAR 42ze for the certification of any performed maintenance, of the Civil Aviation Regulations 1988. No documentation other than emails contained in annexure E through G for the recorded engine runs and the video contained in annexure H that detail the engine runs was supplied. There was no supplied documentation stating the maintenance performed was actually certified by an appropriately Licenced Aircraft Maintenance Engineer (LAME).

10.    It can be seen looking at the time intervals between engine runs reported, there is one interval of 293 days which then voids the limit of the requirements from the SA227 manual. The engine manufacturer, Honeywell, has procedures over and above listed here in the overhaul manual for detailed internal inspection of the engine and the fuel system if the engines have not been preserved in accordance with the listed procedure.

Further indication that the procedures have not been followed is the photo images attached in Annexure D of this report showing both engines with no covers installed visible foreign objects and debris present in both the air intakes and exhaust ducts. The debris seen in the air intakes, compressor inlet and turbine tail pipe indicates that these engines have not been run for an extended period of time and would require detailed internal inspections by an overhaul shop prior to being returned to service.

208    Later in his report, Mr Simpson observed:

If the engine runs were carried out in accordance with the preservation manual, there would be evidence of certification for the maintenance performed carried out in accordance with the CASA regulation CAR 42ze of the Civil Aviation Regulation 1988. It appears as if the engine runs carried out were an attempt to comply with the short term preservation (1 to 60 days) although this preservation is allowed only once, and then long term preservation (61 to 180 day) is to be carried out and repeated at times not to exceed the 180 day limit.

209    It is to be recalled that the Aircraft was damaged as a result of the ground collision that occurred on 25 August 2021. Mr Simpson noted that, “[d]ue to the damage on the aircraft, further engine runs for the purpose of preservation is not possible”. He accepted that that situation obtained for the 831 days that had passed since the collision (to the date of his report).

210    Mr Simpson was further asked to estimate the costs that would have been incurred had proper engine preservation been undertaken. In that regard, he opined (errors original):

To carry out the depreservation of the engine, carry out ground runs, perform preservation of the fuel system and close up the aircraft to prevent any moisture ingress would be AU$ 750 in labor costs, AU$20 in oils, AU$40 in fuel per engine per cycle. As the cycle would be required each 180 days, the total cost per year for both engines would be AU$3,240 + GST (approx.). These costs have been calculated at the rates relevant to the time period of 2019 to 2021

211    From the point of the collision that occurred on 25 August 2021, Mr Simpson opined that it was no longer possible for VH-RCI’s engines to be preserved in accordance with the M7 maintenance manual whilst they remained attached. He continued:

…the only way to preserve the engines is in accordance with the Honeywell TPE331 long term storage procedure which requires removal of the engines from the airframe and sending them to an Authorised Honeywell service centre for inspection and long term storage.

Costs to remove each engine and pack for shipping would be AU$2400 + GST, Costs for shipping to Adelaide for inspection would be approximately AU$600 + GST for each engine and inspection and storage at the Honeywell service centre is reported to be a biennial fee of AU$ 5000 + GST for each engine. These listed prices do not include shipping back to Melbourne or reinstallation in the airframe.

212    Perhaps of most significance—and significance to some of the conclusions to which Mr Crick was drawn—was Mr Simpson’s following observation:

It should also be noted that as the 180 day period of preservation has been exceeded, the ability to preserve the engines in accordance with the procedures in the SA227 manual can no longer be complied with. Once the time limits to comply with any preservation of the TPE331 engine has been exceeded, the engine must be inspected by a Honeywell service centre to identify additional scope of works to be carried out prior to the engine being returned to service. The depth of this inspection can only be determined once the engine has been inspected.

213    As already adverted to, Mr Simpson was particularly animated by the longest interval in the engine runs performed by FAL prior to the ground collision (293 days, spanning September 2019 to June 2020); an interval that he considered “voids the limit requirements of” the M7 maintenance manual. At the risk of stating the obvious, that interval—and its implication as to the engines’ state of compliance with the manual—means that I do not need to resolve the ambiguity in the evidence with respect to the ‘start date’ of either the short-term or long-term preservation measures for which the manual provides.

214    Under cross-examination, Mr Simpson endorsed the distinction between engine preservation and engine restoration. The former is the subject of prescription by the M7 maintenance manual. The latter is what must occur when that prescription goes unmet.

215    It was suggested to Mr Simpson—and he agreed—that long-term engine preservation work would be the subject of record in an aircraft’s log books and, possibly, in current or prior maintenance releases. He further agreed that the absence of such records for a seldom-flown aircraft would “ring alarm bells” to a LAME who became aware of it; and, in the case of VH-RCI, the absence of records pertaining to the period leading up to its purchase by FAL—including in respect of three storage periods in excess of 180 days—was something that “…would leap off the page to an engineer about the need to have a serious look at these engines”.

216    Excepting that last component of his evidence, none of what Mr Simpson said was especially controversial. His evidence was illuminating and I accept it mostly without reservation. The only caveat to my doing so concerns what was or ought to have been apparent to a LAME who came to appreciate that the log books of an infrequently flown aircraft made no record of engine preservation measures. If he meant, by what he said in cross-examination on that subject, to suggest that any competent LAME would naturally be alarmed by the absence of such records, irrespective of his or her familiarity with the requirements of the M7 maintenance manual, then there is reason to doubt—and I do not accept—that proposition. The preponderance of expert opinion (given orally by the joint experts referred to below) favoured the contrary view.

Mr Ekinci

217    Insofar as FAL engaged him to express statements of admissible opinion, Mr Ekinci’s evidence was of limited utility. It touched upon the regulatory architecture pursuant to which the Aircraft was required to be maintained; albeit not in a way that was or remains controversial (and, hence, there is no need to recount what Mr Ekinci said).

218    Mr Ekinci also gave evidence about the engine preservation procedures that applied in respect of the Aircraft and its value at the point that he (via Air Combat) came to acquire it. As to the former, his evidence did not completely align with Mr Simpson’s. Mr Ekinci opined that the Aircraft’s engines could be preserved otherwise than in the ways about which Mr Simpson opined. Specifically, he maintained that “ground runs” of its engines should suffice and that there was not a need to subject the Aircraft’s engines to the long-term preservation measures spelt out in the M7 maintenance manual. He also sought to refute Mr Simpson’s opinion about the state of the Aircraft’s engines in November 2023 (see above, [205]).

219    As to the Aircraft’s value, Mr Ekinci disagreed with Mr Crick’s valuation. He maintained that the Aircraft’s value at the point that FAL sold it was what he (or Air Combat) paid for it.

220    Although, at a general level, I have no reason to doubt his expertise, Mr Ekinci did not present as an independent expert witness. On the contrary, he appeared very much aligned with FAL (on whose behalf he had been retained). During cross-examination, it emerged that he has had a relationship of some standing with FAL’s solicitors, dating back at least to the resolution of some regulatory problems of his own. That, perhaps in and of itself, is not reason to reject the opinion evidence that he gave; but it might go some way to explaining the manner in which he gave it. At times during his cross-examination, his answers were needlessly dismissive and, on occasion, confrontational. He presented as partisan and invested. To the limited extents—indeed, I think, very limited extents—to which his evidence conflicts with that of other experts, I very much prefer the latter.

221    Particularly do I take that view as concerns Mr Ekinci’s evidence about the engine preservation processes that applied to the Aircraft. By its closing submissions, FAL appeared to accept the evidence of Mr Simpson in that regard; in particular that “[e]ngine runs do not satisfy the [preservation] requirements”. Insofar as Mr Ekinci opined otherwise, I prefer what appears to be the less controversial opinion that Mr Simpson expressed.

222    I otherwise consider Mr Ekinci’s opinion evidence (including as to the Aircraft’s value at the point that FAL sold it) to be of limited assistance.

The conclave

223    Over the matter’s early stages, the parties retained witnesses with expertise in aircraft maintenance to provide opinion evidence on matters relevant to the proceeding. In particular, their evidence touched upon the condition of the Aircraft at the point that FAL purchased it and the extent to which any of its maintenance or airworthiness deficiencies ought to have been discovered by Interair and Mr Shapanis when the pre-purchase inspection was undertaken.

224    By July 2022, four such experts had been identified: FAL had retained and received two reports from Mr Shane Mclauchlan, of Aircraft Airworthiness Management Pty Ltd and CAMO Australia Pty Ltd, and had foreshadowed its engagement of another expert, Mr Gordon Cox, then of Avionics 2000 Pty Ltd (from whom it had already received one report); the Hurlad Parties had retained and received a report from Mr Robert Eastgate, of General Aviation Maintenance Pty Ltd; and the Interair Parties had retained Mr Jeff Wyckelsma, of Aircraft Maintenance Engineering Solutions Pty Ltd.

225    Mr Mclauchlan has, since the early 2000s, occupied specialised roles in airworthiness or the maintenance thereof. He is an appointed maintenance controller responsible for ensuring continuing airworthiness at multiple companies. He holds CASA delegations, including those held at relevant times by Mr Shapanis. He is also authorised to issue or amend systems of maintenance on fixed-wing aircraft such as VH-RCI. Earlier in his career he worked as a LAME and he continues to hold a licence as such (although not one endorsed to work on aircraft such as VH-RCI). He describes his recent duties as being “off the tools” and he has never performed a pre-purchase inspection on a twin turboprop.

226    Mr Cox is a LAME who, at the time that he gave evidence, was transitioning to retirement. In the early part of his career, he maintained both Merlins and Metroliners (the latter being a related aircraft type, also manufactured by Fairchild, which is very similar to the Merlin, save for its stretched fuselage and larger passenger capacity). In recent decades, he has held senior roles at AMOs with responsibility for maintenance and operations of complex general aviation aircraft, with a specialty in avionics. Over that period, he has worked on five or six Merlins or Metroliners. He has performed several pre-purchase inspections.

227    Mr Wyckelsma is a LAME with a specialty in mechanics. He has held positions as a HAAMC for a number of charter companies and regional airlines. He has some experience with Merlins and Metroliners and his licence has included an endorsement (or endorsements) with respect to those aircraft (or their engines) for close to a decade. He estimates that he has performed between 10 and 12 pre-purchase inspections on twin turboprops.

228    Mr Eastgate is currently the chief engineer (or similar) at multiple AMOs. His licence has been endorsed to work with Merlin aircraft (or their engines) since the early 2000s; however, his primary experience is with Metroliner aircraft. For the past several years, he has performed heavy and line maintenance work on a fleet of ten Metroliners. Mr Eastgate has never done a pre-purchase inspection on a twin turboprop.

229    The companies at which Mr Eastgate, Mr Wyckelsma and Mr Cox work (or worked) are each—like Interair and AJE—aircraft maintenance organisations (“AMOs”). That term is, they agreed, synonymous with “aircraft maintenance service provider”. They are the “service centres”, to put it colloquially, for class B aircraft such as VH-RCI. It was accepted that, in issuing a maintenance release for a particular aircraft (consistently with the presumption provided for in reg 43(8) of the CARs) an AMO does not usually check that maintenance issued under any prior maintenance release has been performed.

230    Mr Mclauchlan’s companies are continuing airworthiness management organisations (“CAMOs”). In his oral evidence, Mr Mclauchlan acknowledged that a CAMO is “principally concerned with ensuring that the airworthiness process has not broken down”, including confirming, where required, that “prior certifications were, in fact, permitted to be made”. As will become apparent, that distinction had implications for the way in which the different experts considered that a pre-purchase inspection might be approached.

231    By orders made on 6 July 2022, a previous docket judge convened a conference of experts to be directed and supervised by a senior judicial registrar of the court. That conference was to comprise of Mr Mclauchlan, Mr Cox, Mr Eastgate and Mr Wyckelsma (to whom I shall refer, hereafter and collectively, as the “Joint Experts”). Its purpose was to produce a report, the content of which was to address a schedule of questions identified by the court; and, in particular, to identify, in respect of each such question, the matters about which the Joint Experts agreed or disagreed (and, insofar as concerned disagreements, the reasons why there was disagreement).

232    That Joint Experts conference proceeded as directed and led to the production of a report dated 27 July 2022, which was jointly authored by Mr Mclauchlan, Mr Cox, Mr Eastgate and Mr Wyckelsma (the “Joint Expert Report”).

233    On 17 November 2022, the court made orders requiring that those same experts meet in conference again for the purposes of producing a further joint report, addressing in more detail the reasons underpinning certain of the conclusions that were expressed in their Joint Expert Report. That conference also proceeded as directed and led to the production of a supplementary report dated 16 December 2022 (the “Supplementary Joint Expert Report”).

234    On 23 October 2024, a different docket judge made orders requiring that the Joint Experts attend yet another conference before a senior judicial registrar, directed to addressing certain further questions upon which the parties had agreed. On 20 November 2024, a report was produced responsive to those orders (the “Further Supplementary Joint Expert Report”).

235    Those three joint expert reports were received into evidence at the trial and all four Joint Experts gave oral evidence in conclave. It is convenient to summarise at the outset the content of each of the joint reports.

236    The Joint Experts were agreed that, for the entirety of the period between 6 September 2017 and 11 December 2017, the Aircraft was unairworthy. That was so because it had not been maintained in accordance with the M7 Program and because there were “physical defects” by reason of which “…the Aircraft was not in a safe condition to fly”.

237    The Joint Experts agreed that, to get the Aircraft back into airworthy condition, it was necessary that it undergo a complete cycle of letter check maintenance: that is, cycles 1 to 10 of each of the “A”, “B”, “C” and “D” letter checks described in the M7 Program. Additionally, it would be necessary that any defects identified during the course of those works would need to be addressed. The Joint Experts estimated that the cost of undertaking the complete set (cycles 1 to 10) of letter checks would be somewhere in the vicinity of $50,000.00 to complete (which would not cover the costs of rectifying any defects that were identified). Additional costs would be associated with certifying a refurbishment of the Aircraft’s interior and some repainting works that had been performed but not appropriately certified.

238    The Joint Expert Report also considered the extent to which the pre-purchase inspection that Interair was engaged to perform ought to have uncovered the fact that the Aircraft had not been properly maintained in accordance with the M7 Program. For that purpose, the Joint Experts were asked to, and did, consider three possible bases upon which FAL might have engaged Interair to conduct the pre-purchase inspection.

239    The first—described as the “First Possible Retainer”—envisaged that Interair had been retained to perform, with reasonable care and skill, each of the tasks that were identified in Mr Shapanis’s email to Mr Gibbs of 30 October 2017 (above, [92]).

240    The second—described as the “Second Possible Retainer”—posited that Interair had been retained to perform, with the same care and skill, all of the elements of the First Possible Retainer, as well as “…a good check of the Aircraft’s avionics, hydraulics, flight control cables, corrosion, fuel contamination and how often it was run when it was not flying, including checking the storage and preservation measures that were taken in relation to the Aircraft when it was out of service” (in other words, the matters that Mr Iliades identified in his email to Mr Shapanis of 25 October 2017; above, [112]).

241    The third—described as the “Third Possible Retainer”—posited that Interair had been retained to perform, with the same care and skill, all of the elements of the first two, and also to “…conduct a thorough and full inspection of all aspects of the Aircraft and its equipment sufficient to ascertain and advise whether or not it was airworthy” and to “…advise FAL if [Interair] considered that the Aircraft was not airworthy”, apparently in reference to the conversations Mr Gibbs and Mr Iliades say that they had with Mr Shapanis about the purpose of the PPI Report (above, [90], [93] and [110]).

242    It is convenient to record here that the Joint Experts were later asked, in the course of preparing the Further Supplementary Joint Expert Report, to consider a further retainer—described as the “Fourth Possible Retainer”. It posited only that Interair had been required to exercise the reasonable care and skill of an aircraft maintenance service provider in performing the pre-purchase inspection; and that it review certain, specified documents in doing so.

243    The Joint Experts were initially asked to consider whether it ought to have been apparent to Interair, had it done with reasonable care and skill the things that were the subject of each of the First Possible Retainer, the Second Possible Retainer and the Third Possible Retainer, that the Aircraft had not been maintained in accordance with the requirements of the M7 Program. All four of the Joint Experts agreed that that maintenance failure would have been ascertainable had Interair directed itself with reasonable care and skill to the requirements of the Third Possible Retainer. Only Mr Mclauchlan considered that it would have been ascertainable under the First Possible Retainer and the Second Possible Retainer. The reasons for that discrepancy were explored in the Supplementary Joint Expert Report, and expanded upon in the Further Supplementary Joint Expert Report, to which I shall later return. Mr Mclauchlan was similarly alone in his view that the maintenance breakdown was ascertainable under the Fourth Possible Retainer.

244    The Joint Experts were agreed as to certain aspects of the Aircraft’s condition at the time that the pre-purchase inspection was completed. In particular, they agreed as follows:

245    Further, they agreed that it was likely that, at the time that the pre-purchase inspection was completed, there was mould present in a part of the Aircraft’s air conditioning system.

246    The Joint Experts were also agreed about what was and was not recorded in the Aircraft’s log books. It was agreed, for example, that the log books did not properly record the completion of various works, including the refurbishment and repainting earlier mentioned. Other maintenance matters were omitted. Further, they were agreed that, at the time that the pre-purchase inspection was completed:

(1)    mandatory airworthiness limitation inspections had been missed in respect of the Aircraft;

(2)    airworthiness limitation items had not been completed in respect of the Aircraft;

(3)    mandatory time life inspections and/or replacements had been missed in respect of the Aircraft; and

(4)    there had been no storage or preservation procedures undertaken or implemented in relation to periods during which the Aircraft was out of service.

247    There were other errors in the log books. For instance, the Joint Experts accepted that, contrary to Mr Cox and Mr Kus’s findings at [78] above, the propeller that had been attached to the Aircraft’s right engine was one that was approved for the aircraft type; however, the log books did not accurately reflect that it was the propeller that had in fact been fitted.

248    There were other aspects about the Aircraft’s condition and the state of its log books about which the Joint Experts were agreed. None of them, however (including those identified above), was considered a matter that would have been ascertained by undertaking the pre-purchase inspection.

249    The sole exceptions were the existence of substantial fuel leaks in the fuel tank in the right wing of the Aircraft, and the presence of “visible damage and cracks” on the door frame, attempted repairs to which, “did not meet basic aviation standards including M7 structural repair manual standards”. The Joint Experts considered that each would have been observable (and should have been—and, indeed, were—detected) during the pre-purchase inspection.

250    I turn, next, to the content of the Supplementary Joint Expert Report and the Further Supplementary Joint Expert Report. It is convenient to record in full the matters upon which the Joint Experts agreed:

8.     The experts agree:

a)     What is required by a PPI is indicated by the agreed scope (and time/cost) and who is engaged to do the PPI (including their level of training and responsibility). A PPI is a discretionary activity and scope depends on factors such as any specific instructions given, time and cost agreed, and the expected outcome (e.g. confirmation someone has looked at the books/aircraft). It depends on the context and purpose of the PPI. Depending on these matters a PPI could range from a light desktop review to a more detailed inspection.

b)     From the perspective of a Continuing Airworthiness Management Organisation (CAMO), for a full log book review you need to understand what you are reviewing in the log book: if the log book indicates that the Aircraft should be maintained in accordance with the M7 inspection program then you review/interrogate the log book to validate that that work has been correctly certified.

c)     From the perspective of an aircraft maintenance organisation (AMO), the inspection relies heavily on the representations by previous responsible parties being true and accurate. As an AMO, a full log book audit is not usually done. The industry relies on certain documentation as evidencing the airworthiness of an aircraft – for example, accepting an aircraft maintenance release as evidence that the work was done.

d)     The weight AMOs place on previous log book entries differs from the weight place on them by CAMOs. An AMO’s focus is on the physical aspect of the aircraft rather than interrogating the log books. Areas of expertise are investigated more favourably than others – a CAMO review of items [1 to 6 of Mr Shapanis’s 30 October 2017 email] would be more thorough and he/she would not usually focus on [items 7 to 14], and items [7 to 14] would be the AMO’s area of expertise. One person undertaking all items might perform unevenly across this spectrum of tasks according to their particular training and perspective.

251    The Joint Experts were, thus, divided as to what was involved in carrying out “a full review of [an aircraft’s] log books”. Mr Mclauchlan approached that question from the perspective of a CAMO. He considered that a “full review” of an aircraft’s log books required some understanding of what was being reviewed. To understand, from such a review, whether an aircraft’s log books correctly record what they are meant to record, a reviewer would need to appreciate what the maintenance requirements for the aircraft were. In this case, those requirements were spelt out in the M7 Program, which, amongst other things, required that the Aircraft undergo each of the “A”, “B”, “C” and “D” letter checks at least once every 12 months.

252    Mr Cox, Mr Eastgate and Mr Wyckelsma disagreed. They were of the view that a log book review would not involve any process of validating the completion of work that was required to be completed. Instead, they took the view that an AMO, such as Interair, would, in conducting a log book review, confirm that an aircraft’s log books were present and that the works that they recorded were properly certified, and otherwise would advert to any matters apparent from those records that might require consideration (such as, for example, whether the aircraft had previously sustained any damage). In that sense, they were of the view that a log book review was not a species of audit. At trial, they confirmed that they would not have sought access to the M7 Program to perform a log book review on the Aircraft.

253    In the Further Supplementary Expert Report, Mr Cox, Mr Eastgate and Mr Wyckelsma considered that a pre-purchase inspection under the Fourth Possible Retainer would not involve or require any knowledge of or reference to an aircraft’s maintenance schedule (in this case, the M7 Program). Whilst Interair “might have picked [non-compliance with the M7 Program] up” if it were familiar with the M7 Program, it would not necessarily have detected it from just checking the Aircraft’s log books.

254    Each of the Joint Experts presented as learned in his field and keen to assist the court in its task. That acknowledged, much of what they said, individually and collectively, was of limited application. The parties acknowledged as much. Perhaps the issue of greatest significance upon which the Joint Experts were invited to opine considered the extent to which Mr Shapanis and Interair ought to have discovered the problems that affected the Aircraft at the time that the pre-purchase inspection was carried out. That turns principally upon the scope of the works to which Interair must be understood contractually to have committed itself; and, perhaps more so, upon what does and does not constitute a “full review” of an aircraft’s log books.

255    It does not appear to me that those are questions that lend themselves to expert opinion. The role that an aircraft’s log books play within the complex regulatory architecture was helpfully explained; as was the manner in which LAMEs and pilots rely (and are entitled to rely) upon, for example, former and current maintenance releases. Nonetheless, there is no suggestion presently that “[f]ull review of aircraft log books” is a phrase that carries, within aviation circles, a meaning different from what it might ordinarily carry. The Joint Experts acknowledged that “a full review of [an aircraft’s] log books” is not normally a component of a pre-purchase inspection. Intending no disrespect, what that phrase might ordinarily mean is not something that the Joint Experts are better placed than I am to assess.

The issues to be determined

256    Thus far, these reasons have focused upon the factual and regulatory landscapes with which the court is confronted. It is convenient, now, for attention to turn to the legal issues that arise on the various cases that are advanced.

257    Insofar as concerns the relief for which FAL moves, the questions for the court’s consideration are as follows, namely:

(1)    what was it that FAL engaged Interair to do;

(2)    did Interair fail to do any of those things—either entirely or to the standard that was agreed;

(3)    did Interair or Mr Shapanis engage in conduct that was, or was likely to be, relevantly false or misleading for the purposes of ss 18 and 29(1)(a) of the ACL;

(4)    insofar as the Interair Parties conducted themselves in breach of contract or otherwise in contravention of the ACL, to what extent did FAL act in reliance thereupon; and

(5)    to what, if any, extent has FAL suffered loss in consequence of any such reliance?

258    The Hurlad Parties’ cross-claim against the Interair Parties is dependent upon the court’s accepting that the latter are liable to FAL as FAL asserts. Insofar as that suggestion is accepted, the Hurlad Parties’ cross-claim requires that the court consider the extent to which the Interair Parties might also be liable, by means of contribution, for a component of the amount that the Hurlad Parties paid to FAL in settlement of its claims against them.

259    Similarly, in the event that FAL’s claims against the Interair Parties succeed in a way that sounds in an award of damages or statutory compensation, the cross-claim that the Interair Parties press against the Hurlad Parties calls for consideration of the equivalent question: specifically, whether the Hurlad Parties might be made liable, by an order for contribution, for a component of those damages or that compensation.

The relevant statutory schemes

260    FAL’s claims against the Interair Parties are founded partly in contract and partly under the ACL. Insofar as the latter is concerned, the following provisions assume central relevance. They are said to apply to the present circumstances principally in the form that they assume as sch 2 of the CC Act; but also as adopted (in materially identical form) as Victorian law by operation of pt 2.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

261    Chapter 2 of the ACL is entitled “General protections”. It incorporates s 18, which is (and, at relevant times, was) in the following terms, namely:

18 Misleading or deceptive conduct

(1)     A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)     Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).

262    Chapter 3 of the ACL is entitled, “Specific protections”. Amongst other things, it contains provisions that are designed to address what pt 3-1 of the ACL describes as “Unfair practices”. One such provision is s 29, which provides (and, at relevant times, provided) as follows, namely:

29 False or misleading representations about goods or services

(1)     A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(a)     make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;

…

263    Presently, there is no controversy (certainly none that is apparent) that, by making the representations contained within the PPI Report, the conduct in which the Interair Parties may be understood to have engaged was conduct in which they engaged in trade or commerce, and in connection with the supply or possible supply of goods or services.

264    Sections 236 and 237 of the ACL confer various rights to recover damages or compensation. They provide (and, at relevant times, provided) as follows, namely:

236 Actions for damages

(1)     If:

(a)     a person (the claimant) suffers loss or damage because of the conduct of another person; and

(b)     the conduct contravened a provision of Chapter 2 or 3;

the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

(2)     An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

237 Compensation orders etc. on application by an injured person or the regulator

(1)     A court may:

(a)     on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because another person has engaged in conduct in contravention of a provision of Chapter 2, 3 or 4; or

…

make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.

Note: The orders that the court may make include all or any of the orders set out in section 243.

(2)     The order must be an order that the court considers will:

(a)     compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or

(b)     prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured persons.

(3)     An application under subsection (1) may be made at any time before the end of 6 years from the day on which the cause of action accrued that relates to the conduct referred to in that subsection.

265    The circumstances in which a person will be relevantly “involved in” another person’s contravening conduct for the purposes of ss 236(1) and 237(1) of the ACL are identified in s 2 of the ACL, which relevantly provides (and provided) that:

involved: a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person:

(a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced, whether by threats or promises or otherwise, the contravention; or

(c)    has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)    has conspired with others to effect the contravention.

266    There are provisions of the CC Act that bear upon the court’s task in this matter. The first to note is s 4(2), which provides (and, at relevant times, provided) as follows, namely:

4 Interpretation

…

(2)     In this Act:

(a)     a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the engaging in of a concerted practice;

(b)     a reference to conduct, when that expression is used as a noun otherwise than as mentioned in paragraph (a), shall be read as a reference to the doing of or the refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the engaging in of a concerted practice;

(c)     a reference to refusing to do an act includes a reference to:

(i)     refraining (otherwise than inadvertently) from doing that act; or

(ii)     making it known that that act will not be done; and

…

267    Part VIA of the CC Act is entitled, “proportionate liability for misleading and deceptive conduct”. It contains (and, at relevant times, contained) the following provisions of relevance to this matter, namely:

87CB Application of Part

(1)     This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 236 of the Australian Consumer Law for:

(a)     economic loss; or

(b)     damage to property;

caused by conduct that was done in a contravention of section 18 of the Australian Consumer Law.

(2)     For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

(3)     In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

(4)     For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).

(5)     For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.

…

87CD Proportionate liability for apportionable claims

(1)     In any proceedings involving an apportionable claim:

(a)     the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss; and

(b)     the court may give judgment against the defendant for not more than that amount.

(2)     If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a)     liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and

(b)     liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3)     In apportioning responsibility between defendants in the proceedings:

(a)     the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and

(b)     the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4)     This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5)     A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.

268    Section 137B of the CC Act also assumes some significance presently. It provides as follows, namely:

137B Reduction of the amount of loss or damage if the claimant fails to take reasonable care

If:

(a)     a person (the claimant) makes a claim under subsection 236(1) of the Australian Consumer Law in relation to economic loss, or damage to property, suffered by the claimant because of the conduct of another person; and

(b)     the conduct contravened section 18 of the Australian Consumer Law; and

(c)     the claimant suffered the loss or damage as result:

(i)     partly of the claimant’s failure to take reasonable care; and

(ii)     partly of the conduct of the other person; and

(d)     the other person did not intend to cause the loss or damage and did not fraudulently cause the loss or damage;

the amount of the loss or damage that the claimant may recover under subsection 236(1) of the Australian Consumer Law is to be reduced to the extent to which a court thinks just and equitable having regard to the claimant’s share in the responsibility for the loss or damage.

269    Part IV of the Wrongs Act also assumes some significance in this matter. It is entitled, “contribution”. Relevantly for present purposes, it contains the following provisions, namely:

23A Definitions

(1)     For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependents of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise.

23B Entitlement to contribution

(1)     Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).

(2)     A person shall be entitled to recover contribution by virtue of subsection (1) notwithstanding that that person has ceased to be liable in respect of the damage in question since the time when the damage occurred provided that that person was so liable immediately before that person made or was ordered or agreed to make the payment in respect of which the contribution is sought.

(3)     A person shall be liable to make contribution by virtue of subsection (1) notwithstanding that that person has ceased to be liable in respect of the damage in question since the time when the damage occurred unless that person ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against that person in respect of the damage was based.

(4)     Subject to section 24(2B), a person who in good faith has made or agreed to make any payment in settlement or compromise of a claim made against that person in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not the person who has made or agreed to make the payment is or ever was liable in respect of the damage provided that that person would have been liable assuming that the factual basis of the claim against that person could be established.

(5)     Subject to section 24(2B), a judgment given in an action brought by or on behalf of the person who suffered the damage in question against any person from whom contribution is sought under this section shall be conclusive in the proceedings for contribution as to any issue determined by that judgment in favour of the person from whom the contribution is sought.

(6)     References in this section to a person's liability in respect of any damage are references to any such liability which has been or could be established in an action brought against that person in Victoria by or on behalf of the person who suffered the damage and it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a place outside Victoria.

24 Recovery of contribution

*         *         *         *         *

(2)     Subject to subsections (2A) and (2B), in any proceedings for contribution under section 23B the amount of the contribution recoverable from any person shall be such as may be found by the jury or by the court if the proceeding is without a jury to be just and equitable having regard to the extent of that person's responsibility for the damage; and the jury or the court if the proceeding is without a jury shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.

…

270    Part IVAA of the Wrongs Act is entitled, “proportionate liability”. Relevantly for present purposes, it contains the following provisions, namely:

24AE Definitions

In this Part—

apportionable claim means a claim to which this Part applies;

court includes tribunal and, in relation to a claim for damages, means any court or tribunal by or before which the claim falls to be determined;

damages includes any form of monetary compensation;

defendant includes any person joined as a defendant or other party in the proceeding (except as a plaintiff) whether joined under this Part, under rules of court or otherwise;

…

24AF Application of Part

(1)     This Part applies to—

(a)     a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care;

(b)     a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria).

(2)     If a proceeding involves 2 or more apportionable claims arising out of different causes of action, liability for the apportionable claims is to be determined in accordance with this Part as if the claims were a single claim.

(3)     A provision of this Part that gives protection from civil liability does not limit or otherwise affect any protection from liability given by any other provision of this Act or by another Act or law.

…

24AH Who is a concurrent wrongdoer?

(1)    A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

(2)    For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died.

24AI Proportionate liability for apportionable claims

(1)    In any proceeding involving an apportionable claim—

(a)    the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and

(b)    judgment must not be given against the defendant for more than that amount in relation to that claim.

(2)    If the proceeding involves both an apportionable claim and a claim that is not an apportionable claim—

(a)    liability for the apportionable claim is to be determined in accordance with this Part; and

(b)    liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3)    In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.

Applicable legal principles

271    There is no material contest about the legal principles that the court should apply in assessing the claims that each of the parties advances in this matter. It is convenient to identify them; and to do so by reference to the discrete legal questions that arise for the court’s consideration.

272    In Australian Competition and Consumer Commission v Telstra Ltd [2025] FCA 93, [55]-[63] (Snaden J), I set out as follows the principles that are apt to guide the court in assessing claims made under the provisions of the ACL that are presently in focus:

55.     Whether conduct is misleading or deceptive, or is likely to mislead or deceive, is a question of fact: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 341-2 [102] (Gummow, Hayne, Heydon and Kiefel JJ). The answer turns, in each case, upon whether impugned conduct has a sufficient tendency to lead those who are exposed to it into error; that is, to form an assumption or conclusion about a particular fact or subject matter that is wrong: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 197 (Gibbs CJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, 651-2 [39] (French CJ, Crennan, Bell and Keane JJ).

56.     Conduct will be “likely to mislead or deceive” if there is a real and not remote possibility of that outcome. It is unnecessary that that possibility be more likely to be realised than not: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450, 459 [22] (Wigney, O’Bryan and Jackson JJ).

57.    Conduct might be considered misleading or deceptive, or likely to mislead or deceive, notwithstanding an absence of evidence that anybody was, in fact, led by it into error: Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435, 443 [6] (French CJ, Crennan and Kiefel JJ); Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2018] FCAFC 96, [4], [54], [64] (Allsop CJ, Jagot and Lee JJ).

58.    Conduct that is “false and misleading” for the purposes of s 29 of the ACL will generally also be “misleading or deceptive” for the purposes of s 18: Australian Competition and Consumer Commission v Mazda Australia Pty Ltd (2021) 158 ACSR 31, 51 [88] (O’Callaghan J).

59.     A representation may, for the purposes of s 29 of the ACL, be constituted by an express conveyance, or may be implicit in other conduct: Australian Competition and Consumer Commission v Cornerstone Investment Aust Pty Ltd (in liq) (No 4) [2018] FCA 1408, [559] (Gleeson J). Within the realm of such other conduct is included both acts and omissions. Thus, a person might implicitly represent something as much by what he or she says as by what he or she does not say: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477, 489-90 (Bowen CJ).

60.    In order that it might refer to a “particular” standard, quality, value or grade, a representation need not be precise; but it must reference a standard, quality, value or grade that is indicated or certain: Gardam v George Wills & Co Ltd (1988) 82 ALR 415, 423 (French J).

61.    A person’s silence (that is to say, their omission to say something) concerning the existence of a particular fact might be misleading or deceptive (or false and misleading) if there exists on the part of another person a reasonable expectation that the fact would be disclosed if it existed: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, 32 (Black CJ). In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, 370 [21], French CJ and Kiefel J observed that:

To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by statute.

62.     In assessing the existence of a “reasonable expectation” of the kind to which French CJ and Kiefel J referred, the court may take account of the matters referred to in Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2017] FCA 1047, [20] (Middleton J), namely:

•    the circumstances and context of the conduct [that is sought to be impugned];

•    the knowledge of the person to whom the conduct is directed (at least to the extent it relates to the content, context and circumstances of the conduct);

•    the existence of common assumptions and practices established between the parties; and

•    the existence of common assumptions and practices prevailing in the particular profession, trade or industry.

63.    Whether a representation has been made—either expressly by words conveyed or implicitly as a function of identifiable conduct (including silence)—is a question of fact that turns upon consideration of what a respondent has done, understood in its proper context and against the backdrop of all relevant circumstances: Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45, 84 [100] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).

273    That summary applies equally insofar as concerns the claims that are advanced in this matter under the ACL.

274    Representations that convey opinions are treated a little differently. In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, 88 (Bowen CJ, Lockhart and Fitzgerald JJ), it was noted (in respect of a predecessor provision) that:

…[a]n expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing.

275    Thus, a respondent charged with having engaged in misleading or deceptive conduct constituted by the expression of an opinion might defend that charge on the basis that the expression was genuinely held and reasonably based. In most cases (including this one), the former is uncontroversial. The latter is context-specific. Whether there exists a reasonable basis upon which to hold an expressed opinion is informed, at least potentially, by the scale or nature of the inquiries that led to its formation, the skill or expertise of the person who formed it, and the extent to which he or she called upon that skill or expertise: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 321 [33] (French CJ).

276    Thus far, I have identified the matters of principle that are apt to guide that court’s determination of the claims that are advanced under the ACL. It is to be recalled that a substantial component—indeed, the primary component—of FAL’s case against Interair arises in contract.

277    In Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104, 116-7 [46]-[51] (“Mount Bruce Mining”), French CJ, Nettle and Gordon JJ observed (references omitted):

46.    The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

47.    In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

48.    Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

49.    However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice...

50.    Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

51.    Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties … intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

278    For reasons that will become apparent, it is unnecessary that I should explore in any detail now the principles that are apt to guide the court’s consideration of questions of apportionment, contribution and indemnity.

FAL’s case in contract against Interair

279    As has been noted, FAL presses for relief against Interair on two bases: for breach of contract and for breach of the ACL. The latter comprises a claim for relief pressed as against both Interair and Mr Shapanis. I shall return to it later.

280    It is convenient at this juncture to consider whether FAL’s claims in contract are made out. That calls for consideration of two elemental matters: first, what was it that the parties agreed; and, second, what if any aspect of that agreement went unfulfilled.

What was Interair engaged to do?

281    Plainly, the terms of the PPI Contract are of paramount significance. There are, in that regard, two issues that arise for the court’s consideration: first, what was the scope of the agreement that was struck as between FAL and Interair; and, second, in what conduct did the constituent elements of that scope require that Interair engage?

What were the express terms of the contract?

282    By its third further amended statement of claim dated 30 April 2025, FAL alleges that its contract with Interair contained the following terms, some express and others to be implied:

44.     There were terms of the Pre-purchase Inspection Agreement as follows:

(a)     the pre-purchase inspection by Interair would include a good check of the Aircraft’s avionics, hydraulics, flight control cables, corrosion, fuel contamination and how often it was run when it was not flying including checking the storage and preservations measures that were taken in relation to the Aircraft when it was out of service;

(b)     further to sub-paragraph (a) herein, Interair would conduct various works and inspections as part of the pre-purchase inspection of the Aircraft and prepare a report of the results of those works and inspections (“the Interair PPI Report”) that covered as part of that inspection the following aspects relating to the Aircraft:

(i)     a full review of the Aircraft’s log books;

(ii)     a full Airworthiness Directives compliance report;

(iii)     a review of the Aircraft’s “due list”;

(iv)     a history report;

(v)     a supplementary type certificate list;

(vi)     a review of the Aircraft’s flight [manual] status;

(vii)     full functional testing of the Aircraft’s avionics;

(viii)     full power engine runs testing of the Aircraft;

(ix)     a check of the wear on the Aircraft’s brakes;

(x)    an inspection of the cabin windows and windshield of the Aircraft;

(xi)    carry out air conditioning functional checks;

(xii)     a functional check of the de-icing systems of the Aircraft;

(xiii)     an inspection of the seats and harnesses inside the Aircraft;

(xiv)     a general visual inspection of the Aircraft for corrosion and damage;

(c)     Interair and Shapanis in carrying out the pre-purchase inspection would conduct a thorough and full inspection of all aspects of the Aircraft and its equipment sufficient to ascertain and advise whether or not it was airworthy;

(d)     having conducted a proper inspection of the Aircraft covering each of the areas of inspection referred to in sub-paragraphs 44(a), (b) and (c), Interair would advise FAL if it considered that the Aircraft was not airworthy; and

(e)     in conducting the pre-purchase inspection of the Aircraft and preparing the Interair PPI Report, Interair would use reasonable care and skill of an aircraft maintenance services provider.

283    The Interair parties submit that the terms of the PPI Contract—or, at least, the express terms of that contract—are to be found solely in the email that Mr Shapanis sent to Mr Gibbs on 30 October 2017 (above, [92]).

284    FAL submits that the PPI Contract falls to be construed under the light of the representations (written and oral) that Mr Gibbs and Mr Iliades made or were said to have made to Mr Shapanis: including, that he was to (as FAL put it), “…approach the PPI with a view to airworthiness from a safety perspective”. The import of that submission is clear: it is put that a significant objective to which the pre-purchase inspection was directed was the identification of airworthiness or safety concerns that might have given FAL pause to consider whether the Aircraft was worth purchasing. FAL’s submission is straightforward: because the Aircraft was not airworthy at the time that FAL purchased it, it should necessarily follow that Interair, having agreed but failed to bring that reality to FAL’s attention, was in breach of the PPI Contract. Interair submits that airworthiness formed no part of the deal that it struck and that any failure on its part to advert to that cannot sound in contractual breach.

285    I accept that, when he visited Interair’s premises in late October 2017, Mr Iliades indicated to Mr Shapanis that the purpose (or one of the purposes) of subjecting the Aircraft to a pre-purchase inspection was to ascertain whether it “…was airworthy and that all maintenance required to be carried out had in fact been carried out”. Likewise, there can also be no doubt that, by his email of 25 October 2017, Mr Iliades expressed his intention that Interair’s inspection should (or might), by its scope, cover “…[a] good check of the avionics, hydraulics, flight control cables, corrosion, fuel contamination [etc]”.

286    That those representations were made is one thing; that they might stand as evidence of terms that were agreed, expressly or by implication (or as context by which such other agreed terms might fairly be construed), is something else entirely. It is, in that respect, to be recalled that those representations preceded what Mr Shapanis later identified as the tasks that he would perform. Indeed, in the case of Mr Iliades’s email of 25 October 2017 (above, [112]), it is to be recalled that he sought to procure a proposed scope from Mr Shapanis.

287    Insofar as Mr Gibbs and Mr Shapanis gave conflicting evidence about the subject matters that were discussed on 4 November 2017, I have already indicated that I prefer Mr Shapanis’s evidence. So to observe, though, is not to suggest that it might matter much either way. By 4 November 2017, the contract between FAL and Interair had been perfected and Interair had commenced to perform the work for which it had been engaged. Even had I accepted that Mr Gibbs might, some days thereafter, have sought to add some kind of a gloss to Interair’s contractual obligations, it could not sound (and is not alleged to have sounded) as any kind of variation to what had, by then, been agreed. At most, it might have served to impress upon Mr Shapanis the use to which FAL might subject his conclusions. It did not form any part of the contract that had been struck and nor is it conduct that might serve as context against the backdrop of which that contract’s terms might be construed.

288    To my eye, there is no basis to suppose that the express terms of the contract that FAL struck with Interair were to be found externally to Mr Shapanis’s email of 30 October 2017. There are a number of reasons for preferring that conclusion.

289    First—and accepting that, by his email of 25 October 2017, Mr Iliades should be understood to have suggested some matters that might be included within the scope of the then-to-be-agreed PPI Contract—the fact remains that that email cannot be described as anything more than exploratory. It is clear beyond doubt that Mr Iliades (and, by extension, FAL) considered that it should be for Mr Shapanis and Interair to identify what the scope of the pre-purchase inspection should be. That was the invitation that Mr Iliades extended; and it was an invitation that Mr Shapanis accepted by means of his email of 30 October 2017.

290    Second, the terms of Mr Shapanis’s email of 30 October 2017 are significant. They began, “[t]his is to let you know we are going to carry out the following items as part of the pre purchase inspection”. The 30 October 2017 email was, on any view, Mr Shapanis’s response to the request that Mr Iliades had made of him: namely, to identify the tasks that he would undertake by way of the pre-purchase inspection for which Interair was to be retained. The email concluded: “Andrew if there is anything else you specifically want us to look at please advise me.”

291    Third, FAL’s acceptance of the scope of the pre-purchase inspection as Mr Shapanis had identified it cannot be doubted. Neither Mr Gibbs nor anybody else on FAL’s behalf ever indicated to Mr Shapanis that there was “anything else” that Interair should do as part of its pre-purchase inspection. Not only that, Mr Gibbs very clearly accepted the scope as Mr Shapanis had proposed it. Not long after receiving the 30 October 2017 email, Mr Gibbs forwarded it to Mr Bullas, describing the tasks that Mr Shapanis had enumerated as “…the full list of activities that Interair would execute as part of the pre-purchase checks”. His purpose in doing so was to obtain Mr Bullas’s (and Hurlad’s) permission to have the Aircraft subjected to a pre-purchase inspection. Mr Shapanis was a recipient of that email.

292    By his oral evidence, Mr Gibbs sought to walk back somewhat from the observation that he recorded in his email to Mr Bullas. Rather than accept that Mr Shapanis’s earlier email of 30 October 2017 stood as the “full list” of what Interair proposed to do, he sought to impress upon the court that he took the view that Mr Shapanis “…was working off both” that list and the matters that had previously been discussed with him; or, perhaps, that he had assumed that, “…the stuff that Sam had already listed was included” in Mr Shapanis’s email.

293    That evidence was not compelling. Nor, with respect, was it especially helpful. What Mr Gibbs might have presumed at the time is neither here nor there. What matters is what was agreed: what offer was made and accepted. I do not consider there to be room to doubt that the subject of the offer and acceptance that led to the formation of the contract as between FAL and Interair is to be found (at least insofar as concerns its express terms) in Mr Shapanis’s email of 30 October 2017.

294    At the least is that so insofar as concerns the constituent tasks that Interair might be understood to have been engaged to undertake. It may be accepted that Mr Shapanis and Mr Iliades had earlier agreed upon (or, at the very least, had discussed) the price that Interair would be paid for the work that it undertook. I have accepted that the pricing discussion between Mr Shapanis and Mr Iliades transpired as Mr Shapanis recalled it but little turns upon that. Whenever and between whomever it was agreed does not much matter: the point is that it was agreed. On any view, the contract price was a significant feature of the resultant agreement, much as were the tasks that Interair agreed to undertake in exchange for its payment.

295    There can be no doubt that FAL agreed to both. The contract price appears not to have featured as a significant point of contention as between Interair and FAL. Although the evidence conflicts as to the circumstances in which it came to be agreed, the resolution of that conflict is more academic than necessary. Likewise, FAL’s agreement to the scope of the tasks that Interair proposed to undertake as part of the pre-purchase inspection is apparent from the steps that it took to have the aircraft made available for inspection (and from its failure to negotiate matters additional to the scope that Mr Shapanis nominated).

296    Insofar as concerns the constituent tasks that FAL retained Interair to perform by its pre-purchase inspection, I accept that they are to be found solely in Mr Shapanis’s email of 30 October 2017.

297    Additional to those express terms of the PPI Contract, there was a term implied by law. By its third further amended statement of claim, FAL alleges that it was a term of the PPI Contract that, in conducting the pre-purchase inspection of the Aircraft (and providing to FAL the report that it undertook to provide in that regard), Interair would conduct itself with the care and skill of a reasonable aircraft maintenance service provider. Perhaps for obvious reasons, that is not a suggestion with which Interair joins issue and I accept that the term was implied as alleged (at least insofar as concerned the constituent items that Mr Shapanis listed in his email of 30 October 2017).

What did the terms mean?

298    Having found what they were or where they were to be found, attention logically turns to assessing what the expressly agreed terms of the PPI Contract required.

299    Insofar as concerns its claim for breach of contract, FAL’s case concept—at least as it presented at the conclusion of the trial—is straightforward. Put at its most basic, FAL maintains that:

(1)    contrary to what Interair (via Mr Shapanis) had recorded in its PPI Report, the Aircraft was not in reasonable condition and, in fact, was unairworthy;

(2)    had Interair attended to the tasks that it agreed to undertake with the level of care and skill with which it was required to undertake them, it would have discovered and communicated that reality, and FAL would not have proceeded with the Aircraft’s purchase.

300    In order that it might make good on the proposition inherent in subparagraph (2) above, FAL must establish that Interair failed to perform, either at all or with the requisite degree of care and skill, one or more of the 14 things that were enumerated in Mr Shapanis’s email of 30 October 2017.

301    By its third further amended statement of claim, FAL alleges that Interair breached the pre-purchase inspection contract by failing “…to conduct properly or at all” all but items 11, 12 and 13 of the 14 numbered items that were listed in Mr Shapanis’s email to Mr Gibbs of 30 October 2017.

302    Albeit perhaps in a somewhat unorthodox fashion, FAL’s pleading proceeds to particularise those asserted contractual breaches as follows, namely:

Particulars of Breach

Failure to identify and disclose the need to comply with FAA A/D 2016-25-12

The Applicant will refer to independent expert evidence and opinion.

(1)     In conducting the review of the Aircraft’s logbooks and maintenance records    or the Aircraft, Interair and Shapanis failed to identify and report that:

(i)     there had been undocumented maintenance completed on the Aircraft;

(ii)     the propeller fitted in the right hand position on the right engine was not approved to be fitted to the Aircraft type;

(iii)     the Aircraft was not maintained in accordance with the M7 Letter Check Life Cycle Program;

(iv)     mandatory airworthiness limitation inspections were missed;

(v)     Airworthiness Limitation Items were not completed;

(vi)     mandatory time life inspections and/or replacements were missed;

(vii)     there appeared to be no storage or preservation procedures undertaken or implemented in relation to the period when the Aircraft was out of service as per the AMM requirements;

(viii)     no authorised release certificates were recorded in the log books to validate time life item entries; and

(ix)     the Aircraft cabin interior could not be validated for compliance with regulatory requirements including FAR flammability requirements.

Particulars

Joint experts report dated 27 July 2022

303    Respectfully, discerning from FAL’s pleading the term or terms of the PPI Contract that Interair is accused of breaching is more difficult than perhaps it ought to be. There is a general allegation that all but three of the constituent items listed in the 30 October 2017 email went unperformed (or were performed otherwise than to the required standard) but the particulars of breach that follow refer only to one of them (namely, the first one—the obligation to conduct a “[f]ull review of aircraft log books”).

304    That aligns with the written and oral submissions that FAL advanced at the trial. That FAL contends that Interair failed or failed adequately to conduct a “[f]ull review of [the A]ircraft[’s] log books” is very clear. That it contends also that Interair conducted itself in breach of any of the other 13 items listed in the 30 October 2017 email is less so.

305    That acknowledged, attention should focus upon the only aspect of the pre-purchase inspection contract (constituted as I have found that it was) that FAL very clearly does allege was either not performed or was performed otherwise than with the requisite degree of care and skill. The question for the court’s consideration is clear: what did the parties contemplate by the agreed reference to Interair’s conducting a “[f]ull review of [the A]ircraft[’s] log books”?

306    It might be ambitious to suggest that that question could be answered in a way that identifies the full suite of activities that are apt to fall within what a full log book review contemplates. Perhaps for that reason, the parties’ submissions focused upon what Interair did not do: specifically, that it did not familiarise itself with the content and requirements of the M7 Program (or, in some instances, the related maintenance manual). That it did not do so is beyond doubt. At issue is whether it ought to have done so; or, more precisely, whether the discharge of its obligation to conduct a full log book review with the required degree of care and skill necessitated its doing so.

307    That is the contention that FAL advances: that the conducting of a full review of the Aircraft’s log books required, at the least, that Interair first put itself in a position to understand what it was that it was reviewing. A full log book review, FAL contends, envisaged that Interair would be in a position to ascertain the Aircraft’s maintenance requirements and whether they had been met; and that task could not be undertaken unless or until those requirements were identified and understood, which in turn required at least some familiarity with what the M7 Program stipulated.

308    Interair contends that, by its nature, a “full review” of the Aircraft’s log books entailed reading them with a view to identifying two things: first, whether the Aircraft had been involved in any significant events (such as ground collisions, non-standard landings or other incidents that were sufficient to require repairs not aptly described as being directed to normal “wear-and-tear”); and, second, whether they represented that any maintenance was overdue. Importantly, Interair contends that a full log book review did not require any form of maintenance audit, and did not envisage that it should obtain or cross-check the log books against the content or requirements of the M7 Program.

309    The court’s task is to ascertain what reasonable commercial parties in the position of FAL and Interair would have understood by the latter’s commitment to undertaking a “[f]ull review of [the A]ircraft[’s] log books”. That task involves assessing the parties’ bargain against the ordinary meaning of the terms in which it was expressed, having regard to relevant context and purpose: Mount Bruce Mining, 116 [46]-[47] (French CJ, Nettle and Gordon JJ).

310    All of the parties accept that, in conducting the pre-purchase inspection of the Aircraft, there existed no expectation that Interair would effectively audit the maintenance and other work that had been performed upon it over the course of its existence. It logically follows (from that and from the absence of any express requirement) that any need to appreciate the content or requirements of the M7 Program that might be thought to have inhered in Interair’s commitment to undertaking a “[f]ull review of [the A]ircraft[’s] log books” was context-specific. In other words, if it did not inhere as an elemental incident of the log book review process, it must have inhered (if at all) only if and to the extent that there were other circumstances that necessitated it.

311    Although, again, it could have been clearer, that observation appears to cohere with the manner in which FAL advances this aspect of its case. It maintains that, at the time that Interair applied itself to the pre-purchase inspection, there were a number of matters pertaining to the Aircraft that presented as “red flags”, which a competent and diligent aircraft maintenance provider would have recognised as worthy of further inquiry, including as to the content or requirements of the M7 Program or its companion maintenance manual (which, in turn, would have exposed some of the issues with the Aircraft that FAL complains were not exposed by the pre-purchase inspection).

312    None of those “red flags” finds expression in FAL’s third further amended statement of claim (at least not in a way that identifies them as such). Nonetheless, by its submissions, FAL was keen to impress upon the court a number of uncontentious circumstances pertaining to the Aircraft at the time that Interair inspected it. The first is that the Aircraft had only flown for four-and-a-half hours over the previous two-year period. The second is that it was apparent from the Aircraft’s maintenance releases that the “letter check” cycles had somehow gotten out of sequence (in that the cycle numbers that they recorded in relation to its “A” and “B” checks did not match the cycle numbers that they recorded in relation to its “C” and “D” checks).

313    FAL’s contention is that, a diligent aircraft maintenance services provider, engaged to conduct a pre-purchase inspection as Interair was, would have picked up from those “red flags” that there might have been issues concerning the Aircraft’s maintenance that required further consideration; and, in particular, consideration that involved a review of the content or requirements of the M7 Program. That further consideration, had it been undertaken, would have uncovered, so FAL submits, the serious defects that attended the manner in which the Aircraft had been maintained to that point in time; defects that were such as to render it unairworthy at the point that Interair inspected it.

314    I noted earlier that the evidence that the Joint Experts gave in conclave is of limited assistance insofar as it purported to stray into the constituent tasks that might or might not have fallen within the conceptual boundaries of a “[f]ull review of [the Aircraft[’s] log books”. That is so; but where it can assist is in identifying when an aircraft maintenance engineer might, when looking at an aircraft’s log books, be prompted to recognise particular circumstances as what could conveniently (and for want of a better term) be described as “red flags”. In particular, there is assistance to be gained by what they said about the two “red flags” to which FAL points.

315    Insofar as concerned the fact that the Aircraft had not flown much over the two years prior to the point that Interair conducted its pre-purchase inspection, all of the Joint Experts agreed that little if anything arose from that (in the sense that it would not, ordinarily and by itself, prompt in the mind of a diligent aircraft maintenance service provider that there was an issue of concern to the consideration of which additional energies might properly be directed). At the time that the Aircraft was inspected, it was the subject of a maintenance release dated 4 October 2017. All of the Joint Experts agreed that “Interair would be entitled to rely on a maintenance release as evidence of airworthiness, in which case low hours flown would not be significant”.

316    That might bear some qualification. At trial, counsel for FAL secured from the Joint Experts a concession that, because the Aircraft’s log books recorded underutilisation stretching back some eight or nine years, some further inquiry might have been warranted, notwithstanding the existence of a current maintenance release. No opinion as to the form of that inquiry was expressed. Having regard to the totality of the Joint Experts’ evidence, including matters to which I will shortly turn as to the extent to which an AMO would ordinarily cross-reference between log books and the content of the aircraft’s maintenance schedule, I do not consider that the small number of hours that the Aircraft had spent in the air during the two years (or indeed, nine years) prior to the point that Interair conducted its pre-purchase inspection was a “red flag” in the sense that FAL posits; at least, not one that ought to have prompted a reasonably careful and skilful aircraft maintenance service provider to consult the content or requirements of the M7 Program or its companion manual.

317    What, then, can be made of the want of correspondence that the Aircraft’s maintenance releases (or its log books more broadly) disclosed as between its “A” and “B” letter checks and its “C” and “D” letter checks?

318    It repays to revisit the evidence. Mr Mclauchlan explained (and the documentary evidence before the court verified) that, up until approximately 2009, the “A” and “B” letter check cycles tracked properly with the “C” and “D” letter check cycles (which is to say that the cycle number of each “C” and “D” check that was performed on the Aircraft corresponded with the cycle number of the immediately preceding “A” and “B” check, just as the M7 Program envisages; and the cycle numbers progressed annually).

319    In 2010 and 2011, cycle 10 and cycle 1 letter checks were due to be completed. What was instead recorded was two further rounds of cycle 9 checks. It might be of particular significance if the Aircraft had missed its cycle 10 checks, which, so Mr Mclauchlan opined, could have identified one of the major defects identified after purchase. However, Mr Van Dort attested to his belief that there had been a typographical error in recording the cycle numbers (which were in fact performed correctly, and resumed at the correct cycle—cycle 2—in 2012). Insofar as FAL’s pleading identifies anomalies in the letter checks only from October 2012 and onwards, it is unnecessary to resolve whether those earlier cycles were off-kilter.

320    After 2012, things appear to have gone more awry. The Aircraft log books disclosed that “C” and “D” letter check cycle 3 was performed in 2013; but no corresponding reference to the same cycle “A” and “B” checks was to be found. Instead, a log book entry from October 2014 suggests that the Aircraft had undergone “C” and “D” letter check cycle 4, and “A” and “B” letter check cycle 3. By the time of the pre-purchase inspection, the “A” and “B” check next falling due was cycle 4, whilst the next “C” and “D” check was cycle 7. That probably suffices to give a flavour of the disconformity that was said to be apparent from the Aircraft’s log books, upon the existence of which all of the Joint Experts agreed. Indeed, they went as far as to agree that the Aircraft’s log books disclosed “a complete falling apart of the letter check system”. Mr Van Dort—the engineer who had maintained the Aircraft for most of the time that Hurlad owned it—accepted that reality (at least in substance).

321    The Joint Experts went somewhat further. All of them agreed with the proposition, conceptually naked though it was, that the asynchronous cycling of letter checks was a “red flag” observable upon review of the Aircraft’s log books. Some meat was later added to those proverbial bones: the Joint Experts all agreed that the want of correspondence between cycle numbers was anomalous and presented as something of a “red flag”; but only insofar as a person who looked at them might already be familiar with the content or requirements of the M7 Program. In that respect, it was acknowledged that the essential features of the M7 Program were “fairly unique” (even if some form of mandatory calendar-based maintenance is not).

322    A matter of some significance, I think, is the existence of the IAS “due list”. The Joint Experts agreed that the “due list” was something upon which an incoming purchaser of an aircraft might fairly rely in order to understand its maintenance requirements into the future (both the immediate future but also, to the extent that IAS records permitted, a measure of years into the future). Mr Mclauchlan, in particular, accepted that that was the purpose of the due list: that it was, in fact, a better or more reliable source of information about an aircraft’s maintenance requirements than its designated maintenance schedule because “…it gives you a snapshot summary versus having to go back into the manuals”. The other Joint Experts agreed.

323    Also of significance is the content of the Joint Expert Report. All of the Joint Experts agreed with the proposition that “[t]he industry relies on certain documentation as evidencing the airworthiness of an aircraft”. Three of them—the three who did not operate “Continuing Airworthiness Management Organisation[s]” (Mr Cox, Mr Eastgate and Mr Wyckelsma)—were of the view that none of the tasks to which Interair committed by reason of Mr Shapanis’s email of 30 October 2017 was such as would have uncovered that the Aircraft had not been maintained in accordance with the M7 Program. As I have noted, those opinions are not apt to inform what it was that FAL and Interair should be understood to have agreed; but it does shed light on what a reasonably careful and diligent aircraft maintenance services business would or would not make from reviewing an aircraft’s log books.

324    In the Supplementary Joint Expert Report, it was explained that:

From the perspective of an aircraft maintenance organisation (AMO), the inspection [of an aircraft’s log books] relies heavily on the representations by previous responsible parties being true and accurate. As an AMO, a full log book audit is not usually done. The industry relies on certain documentation as evidencing the airworthiness of an aircraft – for example, accepting an aircraft maintenance release as evidence that the work was done.

325    Later, the opinion of Mr Cox, Mr Eastgate and Mr Wyckelsma was recorded as follows:

From an AMO’s perspective, the techniques by which Mr Mclauchlan identified ‘red flags’ in his review would be different. The AMO takes the substance of what is written in the Aircraft log book at face value – he/she checks that all the log books are present, the certifications of work done are present etc and does not further validate that the work was actually done. The Interair report is consistent with a review from an AMO’s perspective for the purposes of a PPI report. The Interair report is not issued under a licence number – it is an opinion and not an endorsement of airworthiness.

326    The analysis just completed distils to the recognition of two propositions. First, the acquisition and consideration of information about the content and requirements of the M7 Program or maintenance manual were things that the reasonably careful and skilful discharge of Interair’s obligation to conduct a full review of the Aircraft’s log books was at least potentially capable of compelling. But, second and more significantly for present purposes, there was nothing that arose from the reasonably careful and skilful discharge of that task that here compelled that course.

327    I am drawn to equivalent conclusions insofar as concerns other aspects of the PPI Contract (comprised expressly in Mr Shapanis’s email of 30 October 2017). FAL contends, for example, that Hurlad’s failure to maintain the Aircraft in accordance with the requirements of the M7 Program ought to have been clear as much from a full review of its log books as from a review of the IAS “due list” or the “carry[ing] out” of a “history report” and an “STC list”. The extent to which FAL alleges that Interair contravened those aspects of the PPI Report could have been made clearer than it was; but, certainly in the main, such allegations as were put were put on the basis that, had those things been done properly, “red flags” would have been discovered, and the content and requirements of the M7 Program would have surfaced. For reasons equivalent to those explored above in respect of Interair’s contractual obligation to conduct a “[f]ull review of [the A]ircraft[’s] log books”, I do not accept that the proper discharge of those other tasks would have led to where FAL asserts that it would have led. In other words, I do not accept that the PPI Contract (properly construed) compelled, upon review or preparation of any of the things that Interair undertook to review or prepare, that regard be had to the content or requirements of the M7 Program or its companion maintenance manual.

Did Interair fail to do anything that it agreed to do?

328    Having determined what the content of the agreement between FAL and Interair relevantly was (and, perhaps more significantly, what it relevantly was not), attention should turn to whether or not, or the extent to which, Interair might be said to have failed to honour its bargain, either at all or insofar as it conducted itself otherwise than with reasonable care and skill.

329    To a significant degree, the analysis that this part of these reasons contemplates flows inexorably from the conclusions recorded above about what was and was not agreed as between FAL and Interair. Having concluded that the PPI Contract did not here compel Interair to acquaint itself with the content or requirements of the M7 Program or the maintenance manual, it must follow that its failure to do so does not sound in breach of its terms. That conclusion suffices to address the bulk of the ways in which FAL maintains that the PPI Contract (comprised as I have found that it was comprised) was breached.

330    To be more specific, it suffices to address several of the Aircraft’s shortcomings that, so FAL asserts, would have been adverted to in the PPI Report had it been carefully and competently prepared consistently with the terms of the PPI Contract. Those shortcomings are, at the least:

(1)    the want of cyclical alignment as between the Aircraft’s “A” and “B” letter checks (on the one hand), and “C” and “D” letter checks (on the other);

(2)    the want of completion of letter checks according to applicable calendar “backstops”;

(3)    the improper recording of the type of propeller that was affixed to the Aircraft’s right-hand engine; and

(4)    Hurlad’s failure properly to maintain or preserve the Aircraft’s engines during periods of extended inactivity.

331    I have rejected the suggestion that Mr Shapanis ought to have realised, upon doing the things that Interair undertook to do, that there were “red flags” sufficient to warrant and compel consideration of the content or requirements of the M7 Program or its companion manual. Insofar as the PPI Report failed to advert to matters that might (or should) have been uncovered had that content or those requirements been considered, I do not consider that to reflect any want of compliance by Interair of the contractual terms that it agreed.

332    That finding probably suffices to dispose of FAL’s contentions with respect to Interair’s identification of the non-compliance with engine preservation requirements and the adequacy of its review of the Aircraft’s “due list”. However, given that certain of the submissions advanced addressed them in a broader way, I address that residue in what follows.

333    The Interair Parties were content to proceed on the assumption that, as an incident of the admitted requirement that Interair undertake a full review of the log books, FAL alleges that there inhered some obligation to detect and advert more generally in the PPI Report to the lack of proper engine preservation measures in circumstances where the Aircraft had not been flown much.

334    So much is consistent with FAL’s closing submission that “… the fact that the engines had been only operated about 95 hours over the last eight-and-a-half years was a huge red flag, and when one made even the most elementary inquiry as a consequence of that, it becomes readily apparent that on reviewing the logbooks, there is not one single entry related to maintenance or engine preservation techniques”. It was the case, FAL submits, that inactive turbine-powered engines routinely require preservation be performed to prevent corrosion, fuel and oil contamination and so on; and that independent of Mr Shapanis’s knowledge of the particular requirements of the manual pursuant to which VH-RCI was maintained, this should have been a matter of attention in the PPI Report.

335    As I have adverted to, some of the expert evidence was to the effect that the existence of a current maintenance release (and earlier maintenance releases) was sufficient to discharge any requirement to identify and report that issue. The Joint Experts agreed that, in the circumstances as they presented to Interair, some further inquiry might have been warranted.

336    Further inquiry in fact occurred: Mr Shapanis did identify to FAL (through its agents, Mr Iliades and Mr Gibbs) that there was a concern about engine preservation, including (albeit elliptically) in the email enclosing the PPI Report (above, [141]-[142]). That FAL was on notice of that issue prior to purchase is documented in Mr Gibbs’s letter to Hurlad dated 1 December 2017 (above, [63]) and confirmed by Mr Smith’s oral evidence.

337    FAL complains that Interair’s inquiries were not drawn to their full conclusion. It is unsatisfactory, FAL says, that a report from Honeywell on the engine condition was never obtained; that FAL’s attention was only drawn to the lack of flying time over the preceding couple of years; and that the statutory declaration that was ultimately obtained from Mr Bullas was only addressed to the preceding 18 months of low-flown hours. In FAL’s submission, Mr Shapanis needed to notate in the PPI Report, that there was “no evidence that these engines have been preserved, which potentially triggers the need for an overhaul…and [that] the cost could be indeterminate.”

338    That, I think, puts too fine of a point on things. Mr Shapanis had made FAL aware of the lack of documented preservation of the Aircraft’s underutilised engines. FAL, like everyone else, considered that adequate protection on this front inhered in their continuing to be covered by the Honeywell MSP. So much might fairly be described as an industry attitude, noting that it was a view that was shared by the Joint Experts. It has not been explained how the terms of the PPI Contract, as I have identified them, might be thought to have required Interair to do more than it did.

339    Another item of the 14 that is alleged to have gone uncompleted—or, perhaps, not properly completed—is the review of the Aircraft’s “due list”, the nature of which I’ve already recorded: above, [130], [135]-[136]). Mr Shapanis maintained that he had reviewed it consistently with the PPI Contract, and that “no maintenance was stated as being overdue”.

340    So much was not expressly recorded in the PPI Report, although it attached (or, perhaps, purported to attach) the Aircraft’s due list for the 300 hours or three calendar years into the future. The parties suggest that little turns on whether or not the full appendix was in fact provided: in FAL’s case, because it was technical data that was largely meaningless to it. For reasons already set out (above, [155]), the full due list should be understood to have been received. Combined with Mr Shapanis’s unchallenged evidence that he had in fact reviewed it and concluded that there was no outstanding maintenance, were these matters sufficient to satisfy his obligation under the PPI Contract?

341    FAL maintains that they were not. It submits that FAL was relying on Mr Shapanis actually to review and provide an opinion on the due list; and that he can’t have reviewed the due list properly because, if he had, he would have detected various anomalies in it. In his evidence, Mr Shapanis explained that he had reviewed the due list with a view to identifying maintenance that was overdue. It showed that there was none. He did not interrogate the due list further than that.

342    The PPI Contract did not require anything further. The experts appeared to agree that a due list could be relied upon in much the way that Mr Shapanis relied upon it (above, [322]). Mr Smith, too, gave evidence (perhaps more accurately, his opinion, upon which little if anything properly turns) of his expectation that what was given to Interair by AJE—including the “times to run”, being the times until service events became due—to be accurate, and that he didn’t expect that Interair would verify them. It is of no moment that Mr Shapanis did not set out forensically to interrogate the due times, or otherwise expand in his report upon why he thought that the list’s contents were insignificant.

343    Might Interair be held in other ways to have contravened its commitments under the PPI Contract? Again, the extent to which FAL urges an affirmative answer to that question perhaps could be clearer, although I say so acknowledging that the contractual contraventions that it alleges are not confined to the PPI Contract as I have found it principally to have been constituted (namely, by Mr Shapanis’s email of 30 October 2017).

344    One respect in which FAL does quite clearly allege that the PPI Contract had been breached concerned Interair’s obligation to prepare a “Full AD Compliance report”. That part of the PPI Report was short and it is convenient to replicate it (errors original):

13.0 Airworthiness Directives and SB Status

345    FAL complains that that part of the PPI Report made no mention of an airworthiness directive issued by the US-based Federal Aviation Administration, FAA AD 2016-25-12. There is no contest that that directive applied in respect of the Aircraft. It mandated the inspection and, as required, the replacement of the pitch-trim actuator fittings within the Aircraft’s horizontal stabiliser. It is uncontroversial to record that it was in place at the point that Interair conducted its pre-purchase inspection of the Aircraft and that it was due to be actioned by 12 January 2018.

346    I do not accept that, by failing to list FAA AD 2016-25-12 as part of its “Full AD Compliance report”, Interair can be understood to have contravened the PPI Contract. That aspect of the parties’ bargain was, by its terms, directed to identifying the extent to which the Aircraft was compliant with the airworthiness directives with which it was required to be compliant. It may be accepted that Interair did, in fact, list directives that fell to be actioned at points in the future; but that is not reason alone to alter the meaning that most naturally accords with the terms of the bargain: namely, that Interair prepare a “Full AD Compliance report”, using the reasonable care and skill of an aircraft maintenance services provider. Interair’s task was to confirm that the Aircraft was compliant with applicable airworthiness directives. It did so.

347    Mr Shapanis’s evidence was that he spent approximately 40 hours reviewing some 855 airworthiness directives. It is unclear whether FAA AD 2016-25-12 was one of them but nothing turns on that. It is simply of no moment that the resultant section of the PPI Report did not specifically mention a single directive, the deadline for compliance with which was some months away. I do not accept that its non-inclusion within the PPI Report suffices to situate Interair in contravention of the PPI Contract.

348    FAL also maintains that Interair breached the PPI Contract insofar as its PPI Report failed to:

(1)    identify undocumented and/or non-compliant maintenance (specifically—although perhaps not exclusively—in the form of refurbishments to the Aircraft’s cabin and some exterior repainting);

(2)    recognise that mandatory airworthiness limitation inspections relating to the Aircraft had not been undertaken;

(3)    recognise that airworthiness limitation items had not been completed;

(4)    recognise that mandatory time life inspections and/or replacements had not been undertaken;

(5)    recognise the improper recording of a propeller that was attached to one of the Aircraft’s engines;

(6)    recognise that time life item entries in the log books were not validated by authorised release certificates.

349    Insofar as the PPI Report did not advert to those matters, it may be accepted that the alleged failures occurred. It was and remains unclear which aspect of the PPI Contract (such as I have found that it was) might be said, in each case, to have been contravened by reason of each such failure. Nonetheless, FAL’s suggestions can swiftly be addressed.

350    To the extent that the Aircraft might have undergone “undocumented maintenance”, it is hard to see how that might (or should) have been uncovered by any of the 14 tasks that comprised Interair’s obligations under the PPI Contract. By their very nature, things that are undocumented cannot be ascertained by reviewing documentation. I will return momentarily to questions about the Aircraft’s interior cabin refurbishment but, at a headline level, I am unable to see—and FAL has failed to explain—how Interair might, by this “failure”, be thought to have contravened any of the obligations to which it was contractually bound.

351    Similar conclusions apply with respect to the suggestions that the Aircraft had missed—or that its records were missing—airworthiness limitation items or inspections and time life inspections or replacements. Even assuming that to be so, the absence of such things having occurred (or been recorded) was not something that Interair could have been expected to discover. The Joint Experts were unequivocal that discovery of those circumstances would have required cross-referencing between the contents of the log books and the M7 Program (Interair’s obligations in respect of which I have already recorded).

352    It is to be recalled that there was a pleaded failure to detect the lack of “authorised release certificates…to validate time life item entries” in the log books. The Joint Experts were, on the material before them, unable to identify any such deficiency; however, Mr Mclauchlan separately opined in his airworthiness review report (above, [72]) that the lack of such authorised release certificates for “[t]ime [l]ife [i]tems replaced” might cause problems should FAL wish later to export the Aircraft overseas or to obtain a certificate of airworthiness. The release certificates, he went on to explain, are (or were) located in the work packs.

353    Those work packs did not form part of the paperwork with which Interair was furnished for the purposes of preparing the PPI Report. FAL has not established that the Aircraft’s log books were deficient in ways that would or should have been identified had a “full log book review” been conducted with the reasonable care and skill of an aircraft maintenance service provider.

354    The issue with the Aircraft’s starboard propeller is of little moment either. It appears that, at the point that that propeller was installed, its model number or description was improperly recorded in the Aircraft’s log book. The propeller itself was one that was approved for use on the Aircraft; but the model number that was recorded in the paperwork pertained to one that was not. Although perhaps not much more than baldly, FAL asserts that that want of correspondence between what was installed and what was recorded as installed was something to which Interair ought to have adverted in its PPI Report.

355    Stated in those terms, the proposition is straightforward. Much less straightforward is the task of identifying any obligation that Interair assumed under the PPI Contract that might be thought, by the conduct that FAL seeks to impugn, to have gone unperformed or to have been performed otherwise than with the required degree of care and skill. It is unclear how the error in the recording of the propeller might have been uncovered by any of the 14 tasks to which Interair committed itself. In order to have known that what was recorded was not approved for use on the Aircraft, it would have been necessary for Interair to consider what was approved. The PPI Contract did not compel that. In order to know that what was recorded did not correspond to what was installed, Interair would have needed to have occasion to check the model number of what was installed (a process that would have required the removal of the propeller’s nose cone, or “spinner”). The PPI Contract did not compel that either and much less did Interair enjoy any authorisation to that end.

356    FAL next submits (or at least appeared to, perhaps in a way that was not central) that Interair’s pre-purchase inspection of the Aircraft was deficient because it failed to identify and report certain matters concerning refurbishments to the interior cabin that were undertaken on the Aircraft as long ago as the late 1990s and early 2000s. Identifying what those matters were and how Interair’s failure to advert to them in its PPI Report might qualify as a breach of the PPI Contract are no easy tasks. It would appear that this complaint is related to—perhaps strongly related to—what was earlier described as Interair’s failure to advert to “undocumented maintenance”. FAL complains that, at the least, there was a lack of paperwork certifying the refurbishment’s compliance with the flammability requirements in “FAR 25.853”. It relies upon expert evidence that suggested that this might have consequences for the Aircraft’s airworthiness.

357    Having not been drawn back to any of the 14 tasks to which Interair committed itself, it is difficult to know how the failure to advert to missing documentation about the cabin refurbishment might be said to sound in contractual breach. It was not put to Mr Shapanis that he was made aware that there had been a refurbishment, although it does appear to have been something of which he was or might have been at least partly conscious (a fact that might be inferred from the reference within the PPI Report to a “complete interior refurbishment” in the context of the Aircraft’s “Repair History”).

358    So far as the evidence permits of conclusions, it is apparent that a refurbishment that was completed in 1999 was the subject of a “CASA Authorised Release Certificate Approval Tag”, which appears to certify that the work was carried out in accordance with airworthiness regulations. Interair did make reference to that work in the PPI Report.

359    Insofar as additional interior works were performed but not adequately recorded in the Aircraft’s log books, it is difficult to know how any allegation of contractual breach (if one is advanced) is put. There was evidence that some wood panelling and a DVD player was installed in the cabin and that at least some of the Aircraft’s seats were re-covered; but there was no evidence that Mr Shapanis was informed about any of that (which is to say, there was no evidence from which he might be thought bound to have realised that work had been done in the cabin that ought to have been but was not reflected in the Aircraft’s log books).

360    I am unable to see how, by reason of its failure to advert to the absence of log book records or other certifications of interior cabin works of which it could not be understood to have had any knowledge, Interair can be said either to have failed to perform a task that it was bound to perform, or to have performed any such task otherwise than with the required degree of care and skill.

361    Equivalent observations are available in respect of the repainting works that appear to have been undertaken on the Aircraft in or around August 2006. FAL complains that Mr Shapanis failed to detect those works; and further that the application of paint to the wings was inconsistent with M7 Aerospace recommendations that form “an integral part of lightning strike protection”. As with the interior refurbishment, there was no evidence that Mr Shapanis was informed about the repainting. FAL instead led evidence from Mr Mclauchlan that Interair would have been able to identify the undocumented repainting from a walk around of the Aircraft (relying on the “very good” condition of the Aircraft’s external paint and a decal on the aft fuselage associated with an Australian company). Mr Mclauchlan, it might be noted, had been informed of the repainting by FAL before he himself first identified it.

362    Mr Bullas’s unchallenged evidence about the small size of that decal might give cause to doubt that a general visual inspection performed with reasonable skill and care would uncover it. In any event, the ‘general visual inspection’ that I have found to be a part of the agreed scope was not one at large: it was one for damage and corrosion. That might have informed the views of Mr Cox, Mr Wyckelsma and Mr Eastgate that the undocumented repaint was not a matter that Mr Shapanis would have identified if he was completing only the 14 items identified in his email to Mr Gibbs sent on 30 October 2017.

363    Insofar as the Aircraft’s log books were silent as to the repainting work—and insofar as the PPI Report failed to advert to that silence—it is difficult to know how any such failure should be understood to ground a conclusion that Interair failed to do what its contract required it to do. I do not accept that any such contravention is established, either in respect of the failure to identify the Aircraft’s repainting altogether or the failure to identify that it ought not to have extended to its wings. That latter conclusion is fortified by the findings expressed earlier about the extent to which Mr Shapanis ought to have been familiar with the content and requirements of the M7 Program or its companion maintenance manual.

364    The third further amended statement of claim identifies a few additional (and discrete) circumstances concerning the condition of the Aircraft at the point that Interair conducted its pre-purchase inspection, the non-reporting of which in the PPI Report is alleged to have constituted the breach or breaches of the PPI Contract. Specifically, FAL complains that the PPI Report did not adequately address the following matters, namely that:

(1)    there was a visible crack in a cabin window of the Aircraft that exceeded the limits prescribed by the maintenance manual;

(2)    the Aircraft’s main cabin door frame had visible damage and cracks;

(3)    repairs to the surrounds of the main cabin door were not “validated” and did not meet basic aviation standards; and

(4)    the Aircraft’s brakes were worn.

365    Under the heading, “General Conditional Reporting”, the PPI Report listed multiple observations about the Aircraft. Under the subheading, “Aircraft Inspection”, 50 such observations were recorded. One of them read, “LH and RH brakes approximately ¾ worn”. FAL maintains, nonetheless, that Interair failed properly to undertake a “brake wear check”. The particulars of that failure are difficult to identify. Mr Smith gave evidence of a conversation that he had with Mr Shapanis in December 2017, when the Aircraft was brought to Melbourne to have its brakes repaired. Mr Smith recalled that he raised with Mr Shapanis how it was that the brakes had required repairs so soon after Interair’s pre-purchase inspection, to which Mr Shapanis replied that he had not personally checked the brakes and that Interair “should have been a bit more careful”. Mr Shapanis gave evidence of his own that he did personally check the condition of the brakes. He described how he did so; and his unchallenged evidence was that he had personally attended upon AJE to obtain a copy of the section of the maintenance manual that dealt with that issue.

366    It is unnecessary that I should resolve that evidential conflict. The essential difficulty inherent in this aspect of FAL’s claim is that there was no evidence, expert or otherwise, that supports the conclusion (assuming, for the moment, that the court is asked to draw it) that the Aircraft’s brakes were more than three-quarters worn at the point that Interair conducted its pre-purchase inspection. It is simply not possible to conclude that Interair failed to “[c]arry out [a] brake wear check”, nor that the check that was done was done otherwise than with the required degree of care and skill.

367    It is unclear to what extent FAL persists with any suggestion that the Aircraft’s cabin windows and windshield were damaged to a degree that reflected the non-performance or incompetent performance by Interair of its obligation to “[c]arry out [a] cabin windows and windshield inspection”. Mr Shapanis’s unchallenged evidence was that such an inspection was carried out and that the results from that inspection were recorded in the PPI Report. The text of the PPI Report would appear to be consistent with that. No fewer than six of the 50 observations that it recorded as matters of “Aircraft Inspection” were devoted to the state of the Aircraft’s cabin windows and windshield. No evidence, expert or otherwise, was led to undermine any of those observations. Again, then, it is impossible to conclude that Interair failed to “[c]arry out [a] cabin windows and windshields inspection” or that the check that it did do in that regard was done otherwise than with the required degree of care and skill.

368    Insofar as FAL’s claim in that regard was linked back to the requirements of the M7 maintenance manual, the observations already made are apposite. There is no moment to suggest that the competent discharge of Interair’s obligations under the PPI Contract obliged it to consider the content or requirements of the M7 maintenance manual.

369    It is also unclear to what extent FAL persists with its pleaded suggestions that Interair breached the PPI Contract by failing to advert to problems with the frame or surrounds of the Aircraft’s main cabin door. No assertion to that effect found expression anywhere in FAL’s closing written or oral submissions. That might reflect its acceptance of Interair’s assertion (with which the Joint Experts agreed) that the problems were in fact adverted to in the PPI Report: above, [344], item 2 in table. Putting to one side the question of whether that is properly a matter upon which the experts could opine, I take FAL’s suggestions, whatever they once were, to have been abandoned.

370    Drawing all of that back to answer the question posed by the heading at the commencement of this section of these reasons—“Did Interair fail to do anything that it agreed to do?”—the answer is “no”.

Causation

371    Having concluded as I have, the question of reliance (or causation) does not arise. Nonetheless, I should record some observations about the extent to which the loss that FAL claims as damages for breach of contract might be said to have been caused by the Interair conduct by which it was suggested that that breach was constituted.

372    As a central point of principle, it can be accepted (which is to say that I accept) that FAL would not have proceeded to purchase the Aircraft had it known the extent to which the Aircraft’s maintenance—that is to say, its adhesion to the requirements of the M7 Program or its companion maintenance manual—had gone awry. I did not understand there to be any real doubt about that proposition and, in any event, it stands inexorably to reason. Had FAL appreciated that the Aircraft’s maintenance had fallen as out of sync with the requirements of that program as it had—both in terms of the cycle of letter of checks and the want of compliance with engine preservation measures—there is as good as no prospect that it would have proceeded with the sale. All the more is that so given the evidence that was led about the costs that it was necessary to incur in order to regularise the Aircraft’s maintenance position. As Mr Crick’s evidence made clear, the Aircraft was beyond economic repair. Armed with the knowledge with which it says that, but for the contractual contraventions that are alleged, it would have been armed, FAL would surely have embarked upon a path that would have led it to that same conclusion.

373    With that observation made, another is unavoidable: had FAL succeeded in establishing that the reasonably careful and skilful discharge of the obligations that the PPI Contract imposed was such as to compel Interair to interrogate or consider the content or requirements of the M7 Program or the related manual, it would follow without much doubt that it would have established a causal relationship between its purchase of the Aircraft (and the losses, if any, that it has sustained in consequence of that purchase) and Interair’s failure so to interrogate or consider. I would have had little hesitation in accepting that that want of maintenance compliance would have sounded as, for want of a better phrase, a significant “red flag” for FAL. It would surely have taken steps to ascertain its significance, which, on the strength of the expert evidence, would very quickly have made clear that the purchase was not in its interests.

374    The Interair Parties submit that there is reason to believe that FAL would have proceeded, in any event, with the transaction. In that regard, reliance is placed upon Mr Gibbs’s letter to Mr Bullas of 1 December 2017 (above, [63]), which, amongst other things:

(1)    acknowledged (or appeared to acknowledge) that the Aircraft was unairworthy at the point of purchase; and

(2)    referred to Mr Smith’s having taken “…a significant leap of faith in the matter relating to [Hurlad’s or Mr Bullas’s] failure to properly log engine operations for a period of 26 months…”

375    I do not accept that either statement affords reason to doubt the proposition recorded above (namely, that the purchase of the Aircraft would not have gone ahead had the PPI Report disclosed the degree to which its maintenance had deviated from the requirements of the M7 Program). The reference in that correspondence to the Aircraft being unairworthy does not appear to be a reference to anything more than that the action items that Mr Wettenhall had nominated for Hurlad to complete had yet to be completed. The reference to the “leap of faith” was to Mr Bullas’s statutory declaration, which FAL (and, it would seem, Honeywell) was prepared to accept as proof of what might otherwise have been more conventionally established.

376    That suffices to address the causal connection between the losses that FAL hopes to recover and Interair’s failure to consider the content or requirements of the M7 Program and manual (encompassing, as it does, the alleged failures adverted to at [330] above). The situation is less clear as concerns FAL’s other allegations of contractual breach.

377    There does not appear to be any basis to accept (if it is or remains suggested), for example, that Interair’s failure specifically to advert in the PPI Report to the requirements of FAA AD-2016-25-12 might have resulted in any outcome other than the purchase that FAL proceeded to complete. Under cross-examination, Mr Smith accepted that, even if it had been made clear in the PPI Report that the Aircraft would need to have the pitch-trim actuator fittings within its horizontal stabiliser inspected and, possibly, replaced (as that airworthiness directive envisaged), FAL would still have proceeded with the purchase. I accept that it would have.

378    To the extent that the due-list review or flagging of undocumented engine preservation are broader in ambit than the failure to advert to the M7 Program or maintenance manual, there was no evidence led to establish that FAL would not have proceeded with the transaction had those things been done as FAL contends that they ought to have been.

379    It is more difficult to understand how it might be thought (if it was suggested) that FAL might have avoided the transaction had it known of the other matters of which it alleges that Interair was contractually obliged to inform it (above, [348], [364]).

380    Mr Smith was very clear (and I accept) that, had he known that the Aircraft wasn’t airworthy, he wouldn’t have bought it. Does that suffice to establish causation with respect to the various matters that FAL says went undetected?

381    Undoubtedly, many of those matters go to (or went to) the Aircraft’s airworthiness. The proposition was put succinctly by Mr Cox, opining in respect of the Joint Experts’ unanimous view that the propeller’s incorrect paperwork was an airworthiness matter:

The thing is, with our industry, we have to go on the paperwork. We take the paperwork at face value. So if the paperwork is incorrect, then, technically, the aircraft is incorrect.

382    Even so, I do not accept that it necessarily follows that those various airworthiness matters would, necessarily and taken individually, have prevented the sale. There was no evidence to that effect; and indeed, as is recorded in Mr Shapanis’s 1 December email to Mr Gibbs (above, [160]), at least one of the items that Mr Wettenhall—and later the Joint Experts—identified as an airworthiness matter went unresolved. FAL was, at least constructively, on notice of that issue.

383    There was also a suggestion, in Mr Smith’s oral evidence, that had “enough [red] flags” accumulated, he would not have proceeded with the purchase of the Aircraft. He did not suggest that matters other than the Aircraft not being maintained consistently with the M7 Program or its companion maintenance manual (either in terms of letter checks or engine preservation) might have sufficed in that regard. There were many items that were identified in the PPI Report that Mr Smith was “prepared to live with”, including flaws in the copilot’s windscreen and three-quarters-worn brakes. There were others that he was content to have rectified by AJE.

384    In the circumstances, it is not possible to conclude that, had it known of the miscellaneous or discrete issues about which it complains (above, [348], [364]), FAL would not have proceeded with the Aircraft’s purchase.

Conclusions—no breach of contract

385    The terms of the PPI Contract did not oblige Interair to do the things that FAL maintains that it was obliged to but did not do. Interair did not fail to do anything that the PPI Contract required that it do; and it did what it was required to do with the required degree of care and skill. None of the loss to which FAL points can be attributed to conduct in which Interair engaged in breach of the PPI Contract.

386    FAL’s case against Interair in contract must be dismissed.

FAL’s ACL claims against the Interair Parties

387    By its third further amended statement of claim, FAL alleges that, by means of the PPI Report, each of the Interair Parties represented to FAL as follows, namely that, “having inspected the Aircraft and its maintenance records”:

(a)    the Aircraft was in reasonable condition for its age and hours;

(b)     the review of the logbooks and maintenance history of the Aircraft revealed no other deficiencies beyond those disclosed in Part 4.1 of the [PPI Report];

(c)     there were no major repairs or major defects affecting the Aircraft (Part 4.4 of the [PPI Report]);

(d)     the left hand and right-hand brakes on the Aircraft were approximately three quarters worn;

(g)     all the electrical systems on the Aircraft were correctly operating;

(h)     the flaps of the Aircraft were properly operating;

(i)     all Airworthiness Directives were complied with save that –

(A)     the Pitch Trim Actuator in the Aircraft needed to be assessed for applicability (ADSW[SI]A226/95);

(B)     the main cabin door of the Aircraft cutout cracks inspection and repair needed to be assessed for applicability (AD2014-15-01);

(C)     the propeller shaft couplings required replacement at the next access or hot section inspection (AD2015-18-[03])

(D)     the second stage compressor impeller to be removed from service before exceeding 11,500 cycles in service (AD 2016-18-17)

388    The pleading also asserts that the Interair Parties made ancillary representations by silence, namely that:

(a)    there was nothing to suggest that the ABCD Letter Check Inspections under the M7 Aerospace Letter Check Inspection Program had not been carried out or not properly carried out on the Aircraft; and

(b)    the aircraft [would] be airworthy once the defects identified in Parts 12 and 13 of the [PPI Report] were addressed.

389    The pleading does not define what was meant by the reference to the Aircraft’s “maintenance records”. Nonetheless, the term is used elsewhere in the claim and it is clear enough from context that it is intended to refer, compendiously, to the following, namely:

(a)     all of the Aircraft’s logbooks, including the CASA Log Book Statement Part 1 identifying the Aircraft’s maintenance program;

    …

(b)     the Aircraft inventory report dated 31 October 2017 extracted from the Integrated Aviation Software (“IAS”) computer records for the Aircraft held by AJE (Aircraft inventory report):

Particulars

The IAS is a computerised database for storing data in relation to the Aircraft which has been entered into it by AJE. The Aircraft inventory report is output generated from the IAS computerised database held by AJE…

(c)     Maintenance Release A169336 issued 4 October 2017, Maintenance Release A169266 issued 15 March 2016 and Maintenance Release A092183 issued 7 October 2014;

…

(d)     The Letter Check Inspection System Program SA227 series (p/n 27-10054-083) (“M7 Aerospace Letter Check Program”) which was the CASA approved maintenance program applicable to the Aircraft;

…

(e)     workpacks for maintenance carried out on the Aircraft in the previous 12 months;

Particulars

AJE Job Number 8329 Letter check C & D start date 16 March 2017, co-ordination sheet, worksheets various dates between 16 March 2017 and 4 October 2017, Task Card, sundry parts and components card…

(f)     the July 2017 Spectrometric Oil Analysis Program (“SOAP”) test results for the Aircraft’s engines;

Particulars

Left hand engine s/n 35022 SOAP test sample date 26 July 2017. Right hand engine s/n 35174 SOAP test sample date 29 July 2017…

390    The pleaded representations are said to have been made in contravention of s 18 of the ACL. In respect of Mr Shapanis’s liability, FAL pleads two pathways: the first being that he (like Interair) made the representations; and the second being that he was involved in Interair’s making of them. It is not obviously controversial that, to the extent that each of the alleged representations was made, it was made in trade or commerce; and that, to the extent that Interair made it in contravention of s 18 of the ACL, Mr Shapanis was a person involved in that contravention (for the purposes of s 2 of the ACL). The Interair Parties deny both suggestions but those denials appear to have been advanced only on the more fundamental proposition that the representations were not made and that there were, therefore, no contraventions in which Mr Shapanis could have been involved.

391    Separate representations are pleaded in respect of FAL’s claim under s 29(1)(a) of the ACL, namely that the Aircraft:

(1)    was in reasonable condition for its age and hours; and

(2)    would be airworthy once the defects identified in parts 12 and 13 of the PPI Report were addressed.

392    Again, there is no apparent controversy that, to the extent that each of those representations was made, it was made in trade or commerce and in connection with the supply of services.

393    Each set of pleaded representations is alleged to have been false or misleading. So the Interair Parties are at pains to submit, it is more difficult than perhaps it ought to be to identify, from the pleading, the material facts that underpin that assertion. The pleading particularises the false or misleading nature of the representations partly by reference to the contractual breaches that feature in FAL’s case in contract and partly by reference to an intention, baldly stated, to rely upon expert evidence. Fortunately, it is unnecessary to search too hard on this front, as the allegations are answerable in other ways.

394    With that headline summary of the case that is alleged completed, it is convenient to split the analysis that follows into the two components that comprise FAL’s claims under the ACL.

The s 18 claim

395    Critical to the court’s consideration of FAL’s claim that the Interair Parties contravened s 18 of the ACL are two issues: first, were the representations that are alleged made; and, second, were they misleading or deceptive, or likely to mislead or deceive?

396    To appreciate whether, or to what extent, it might be accepted that the pleaded representations were made, it is important to appreciate what they are said to have been. FAL’s third further amended statement of claim does not allege simply that the Interair Parties made the representations that are said to have arisen from the PPI Report (including that the Aircraft was in reasonable condition for its age and hours). It is that they made those representations on the footing that they had “…inspected the Aircraft and its maintenance records”. It is to be recalled that the “maintenance records” were defined by the pleading to include the M7 Program. Might it fairly be said that the Interair Parties expressed to FAL their view (amongst others) that the Aircraft was in reasonable condition for its age and hours and that they had formed that view (and others) after considering records that included the M7 Program?

397    I do not accept that the M7 Program could fairly be described as forming part of the Aircraft’s “maintenance records”. The Joint Experts were agreed in that respect, and their opinion aligns with the definition of “aircraft maintenance record” in the regulatory scheme: CARs, reg 2(1). For reasons aligned with the conclusions expressed earlier in the context of FAL’s claim in contract, I do not accept that Interair was obliged in some way to consult the program for the purposes of carrying out its pre-purchase inspection. More to the point, the PPI Report makes no reference to Interair’s or Mr Shapanis’s having reviewed it for the purposes of forming the opinion that was formed and expressed about the state of the Aircraft. Insofar as a component of the pleaded representations—specifically, that is, the representations said to arise from the content of the PPI Report—was the Interair Parties’ having indicated that they had reviewed records that included the M7 Program, it is impossible to see how FAL can establish them.

398    That, alone, is a sufficient basis upon which to reject FAL’s claims under s 18 of the ACL insofar as they are premised upon representations that are said to have arisen from the PPI Report (perhaps the most significant of which being that the Aircraft was “in re[a]sonable condition for its age and hours”). As pleaded, none of those representations was made.

399    Other bases abound. The suggestion that the PPI Report represented that the Aircraft had “no other deficiencies” beyond what it recorded at part 4.1 is problematic. What constitutes a “deficiency” is unclear. Perhaps some things will more readily qualify as such than others in that regard; but that is beside the point. The court must assess whether the Interair Parties made the representation that is pleaded; not some analogue of it by which it might have been replaced had the pleading been drawn differently. I am not persuaded that the Interair Parties might fairly be said to have represented, by the PPI Report, that “the review of the logbooks and maintenance history of the Aircraft revealed no other deficiencies beyond those disclosed in Part 4.1”.

400    Similarly, the PPI Report does not say that all of the Aircraft’s electrical systems were operative. FAL did not identify which part or parts of the PPI Report should be read so as to have conveyed that suggestion. Perhaps it was meant to be put that it arises implicitly; but, again, the court is confined to the representations that were pleaded, not the representations that, perhaps, could have been pleaded.

401    I do not accept that the Interair Parties can be understood to have made any of the representations that they are alleged to have made by providing the PPI Report. Even if one were to ignore what is pleaded as a component of each of them—namely, that they were premised upon an inspection of the Aircraft and its maintenance records—I would still not consider that they could be understood to have represented that:

(1)    the review of the Aircraft’s log books and maintenance history revealed “no other deficiencies”; or

(2)    all of the Aircraft’s electrical systems were operating correctly.

402    The terms of the PPI Report otherwise speak for themselves. Although, at the risk of repeating myself, I do not accept that any representations were made on the expressed or implied basis that the Interair Parties had inspected the Aircraft and its maintenance records (including the M7 Program), it is otherwise clear that the PPI Report did independently (that is to say, independently of any reference to maintenance records) convey the following opinions, namely that:

(1)    the Aircraft was in reasonable condition for its age and hours;

(2)    there were no major repairs or major defects affecting the Aircraft;

(3)    the left-hand and right-hand brakes on the Aircraft were approximately three-quarters worn;

(4)    (at least implicitly) the Aircraft’s flaps were operating properly; and

(5)    (at least implicitly) all applicable airworthiness directives were complied with, save for those recorded in part 13.

403    What, then, of the representations that were said to have inhered in the Interair Parties’ silence?

404    I do not accept that there is any basis upon which the Interair Parties might properly be thought to have conveyed by their silence at the time of delivering the PPI Report that, upon attending to identified “defects”, the Aircraft would be airworthy. All of the Joint Experts were agreed that a pre-purchase inspection, “…is not a certification of airworthiness but a general condition opinion”. Whether that is properly a matter falling within their collective expertise—or, for that matter, whether it is an observation of any assistance to the court’s present task—might well be doubted; but the difficulty for FAL lies, nonetheless, in establishing why it (or a person in its place) might fairly have been led to conclude that, in the opinion of the Interair Parties, the Aircraft would have been airworthy upon attendance to the identified “defects”.

405    In that regard, it is important to recall the terms upon which FAL and Interair contracted. It was no part of those terms that Interair would venture any opinion as to airworthiness. Rather, it told FAL what it would do and then it went away and did it. The sole comment that it ventured on airworthiness was to convey (without adopting) by its “disclaimer” the current operator’s representations about airworthiness (above, [157]). If anything, that statement suggested that it had not considered the airworthiness of the Aircraft.

406    FAL was invited to indicate whether it wanted Interair to do anything more and it didn’t nominate anything (including anything going to the Aircraft’s airworthiness). It could not properly have formed any opinion other than that “the defects” to which the Interair Parties adverted were matters to which they adverted as a consequence of the work for which the parties had contracted. And, in fact, FAL did proceed on the basis that some further information beyond what was in the PPI Report was required in order to establish which items were critical and which were not to its safe use of the Aircraft: it asked Mr Wettenhall to identify those matters for it.

407    Similarly, I do not accept that the Interair Parties can fairly be said to have represented by their post-PPI Report silence that there was nothing to suggest that the letter check inspection regime mandated by the M7 Program had gone awry in the way (or any of the ways) explored above. History now records that, at the point that the pre-purchase inspection was carried out, the Aircraft’s maintenance had fallen out of sync with the letter check requirements of the M7 Program. The Interair Parties’ silence as to that reality may stand as the conveyance of a representation that was false, misleading or deceptive (specifically, that there was nothing to suggest anything worthy of relevant concern) only insofar as FAL had a reasonable expectation that it would be told were the situation otherwise.

408    Here, FAL could not reasonably have expected that the Interair Parties would disclose to it facts of which they had no knowledge. That observation alone suffices to address the contention; but it may also be addressed in a way that deviates, perhaps, from how FAL advanced it. Although addressed to what is described as silence, FAL’s real complaint is that the Interair Parties did not properly acquit themselves of the task for which they had been engaged. It posits that they ought to have acquainted themselves with the content and requirements of the M7 Program; and ought, thereafter, to have alerted it to the fact that the Aircraft’s maintenance had fallen out of sync with those requirements (which would surely have become apparent from that acquaintance).

409    Had there been any such obligation, it might be that the Interair Parties could be understood falsely to have represented, by their silence, that Interair had attended to it. Plainly, that is not the case that is advanced. Even if it were, the conclusions that I have reached on FAL’s claims for breach of contract would stand to defeat it. For reasons already explored, it is not the case that Interair was here obliged to consider the content and requirements of the M7 Program. There is no question that it did not do so. Absent an obligation of that nature, the Interair Parties’ failure to advert in the PPI Report that Interair had not reviewed the content or requirements of the M7 Program cannot stand as the conveyance of a representation that it had done so (nor of a related representation such as the one that is pleaded). Similarly (and again in the absence of obligation), that representation was not conveyed by the Interair Parties’ failure to identify the matters that Interair might have uncovered had it reviewed that content or those requirements.

410    I do not accept that the Interair Parties made either of the representations that were said to have been conveyed by their silence.

411    Having found that none of the pleaded representations was made, it is strictly unnecessary to explore whether anything that the Interair Parties did was relevantly misleading or deceptive, or likely to mislead or deceive. Nonetheless—and save for the “silent” representations (which are in slightly different territory)—I am of the opinion that there was nothing relevantly misleading or deceptive (or likely to mislead or deceive) about any of the Interair Parties’ representations, pleaded or otherwise.

412    I begin that analysis by reference to the primary representation in the PPI Report: that the Aircraft was in reasonable condition for its age and hours. In truth, the Aircraft was not in reasonable condition at the point that the pre-purchase inspection was conducted (either for its age and hours or at all). The Joint Experts went so far as to opine that it was not airworthy. The particulars underlining that assertion have already been explored and the experts’ conclusion is not seriously in doubt (at least not since the settlement of FAL’s claims against the Hurlad Parties).

413    The observation that the Aircraft was in reasonable condition for its age and hours is to be understood as the expression of Mr Shapanis’s opinion, informed by the work that Interair undertook in completing its pre-purchase inspection. I did not understand that contention to be in doubt and, even if it is, I readily accept it. The observation that was made about the Aircraft’s condition is immediately recognisable—and was surely recognised—as an expression of the opinion that Interair (via the agency of its principal, Mr Shapanis) had formed. Just as clear is that it was an opinion that was formed in consequence of the work that Interair undertook in completing the pre-purchase inspection. So understood, it is not merely a representation that Mr Shapanis held the opinion that he stated; it is properly conceived of as a representation that it was Mr Shapanis’s informed opinion about that subject.

414    In order to establish that the representation was either false, misleading or deceptive, or likely to mislead or deceive, FAL would need to demonstrate one of two things: either that Mr Shapanis did not hold the view that was expressed in the PPI Report or that he did not have an informed basis for expressing it.

415    To indulge a double negative, there is no suggestion that, at the point that the pre-purchase inspection was completed, Mr Shapanis did not think that the Aircraft was in reasonable condition for its age and hours. He said that that was his view and he was not cross-examined about it. There is no reason to doubt that it was genuinely his opinion at the time. His opinion was objectively wrong; but it was genuinely held.

416    Whether or not Mr Shapanis (and, through him, Interair) had a proper basis upon which to have formed and expressed that opinion is more complicated. The starting point of that analysis must, of course, be the agreed scope of the pre-purchase inspection. I have already (and at some length) explored that scope. Might it be said that there was anything inherent in any of the things to which Interair directed itself that warranted (or ought to have warranted) some conclusion other than the one that was expressed in the PPI Report?

417    If there was, it is difficult to identify. It is to be recalled that the opinion that was expressed was an opinion about the Aircraft’s condition. That is not a subject that is necessarily informed by, for example, the extent to which the Aircraft:

(1)    might properly have undergone the system of letter checks mandated by the M7 Program;

(2)    was the subject of as-yet-unactioned airworthiness directives; or

(3)    had recently spent limited time in the air.

418    Certainly, the state of the Aircraft’s brakes would present as a circumstance apt to inform an assessment of its condition, as would the state of the cabin windows and windshield; but it is difficult to see how it might be (which is to say that I do not accept) that VH-RCI should have been described otherwise than in “reasonable” condition merely because it had worn brakes and damaged windows (realities to which, in any event, the PPI Report adverted).

419    It would appear that there were aspects of the Aircraft’s condition that might—and perhaps would—have warranted an opinion other than the one that Mr Shapanis formed. The Joint Experts accepted a number of propositions that were put to them about the Aircraft’s condition at the time that the pre-purchase inspection was carried out. They opined that, although present (or, in one case, likely to have been present) at the time, none of those circumstances would have been apparent to somebody undertaking a pre-purchase inspection; or, for those that would have been, they were in any event identified in the PPI Report. Those opinions were probably external to the Joint Experts’ collective expertise but nothing turns on them. The more significant point is that FAL has not explained whether any of those circumstances (excepting the ones to which the PPI Report adverted) ought to have been discovered as a result of any of the things that Interair was contracted to do.

420    Absent some exploration of those issues, it is simply unclear why the court might have occasion to find that the basis upon which Mr Shapanis formed (and later expressed) his opinion about the condition of the Aircraft was otherwise than reasonable.

421    I turn, then, to the suggestion that “…there were no major repairs or defects affecting the Aircraft”. The manner or manners in which FAL sought to impugn that representation as misleading or deceptive could have been more fulsomely articulated. Given that the Aircraft was unairworthy at the point that the PPI Report was delivered, it is not difficult to see how it could be impugned as wrong when it was made. But, again, how might it be suggested that the Interair Parties lacked a reasonable basis upon which to opine as they did? It is one thing for an opinion to be wrong; quite another for its expression to lack a proper basis (and, thereby, be apt to mislead or deceive).

422    The representation must be understood in its proper context: Interair undertook to do the things that it identified and, upon doing them, certain opinions were formed. This was one of them. FAL has not explained why that should suffice to ground the want of proper foundation that it needs to establish in order to impugn the representation as one that was apt to mislead or deceive. I do not accept that it can properly be understood as anything more than a representation that no major repairs or defects affecting the Aircraft were apparent upon completion of the tasks that Interair undertook to complete. It is not clear that that opinion was wrong; much less so that it was made without a proper basis. Indeed, even were it properly understood as an expression of fact, rather than opinion, it must properly be construed in context, such that it cannot in any event be impugned as false, misleading or deceptive, or apt to mislead or deceive.

423    The PPI Report also recorded that the Aircraft’s brakes were three-quarters worn. I have already noted that there was no independent evidence about the actual state of its brakes at the point that the PPI Report was prepared. FAL appeared, over the course of the trial, to suggest that there might have been some other problem with the Aircraft’s brakes—perhaps something that might have explained or contextualised the runway excursion that occurred on 16 December 2017. Howsoever that might have been hinted at, nothing was ever proved and, by submission, the court was not invited to draw any conclusion about the actual state of the Aircraft’s brakes; and certainly none that might support a finding that what was said about them was false, misleading or deceptive.

424    The suggestion that the PPI Report falsely or deceptively suggested that the Aircraft’s flaps were operating properly was not the subject of submission. Although pleaded, it would appear to have been abandoned over the course of the trial. In any event, it is not explained how (and I do not accept that) that representation was relevantly false, misleading or deceptive, or likely to mislead or deceive.

425    It can be accepted that the PPI Report warranted that, save for those to which it specifically adverted, all applicable airworthiness directives had been complied with. That would appear to have been the animating purpose of that part of the report: to identify applicable airworthiness directives with which the Aircraft was not compliant. FAL’s contention was that, because there was a directive pertaining to actuator fittings within the Aircraft’s horizontal stabiliser that had yet to be actioned, the PPI Report misrepresented the Aircraft’s state of compliance. I have already explained why I do not accept that contention; but even if I were wrong to reject it, it is unclear where that might get FAL. Mr Smith conceded under cross-examination that, even had he known about FAA AD 2016-25-12, that would not have stopped him (or FAL) from proceeding with the purchase. One might readily apprehend why.

426    I turn, next, to what is alleged to have been misrepresented by silence. On the assumption that I am wrong about those representations having not been made, might it be said that they were relevantly false, misleading or deceptive?

427    I shall deal first with the proposition that the Interair Parties represented by silence that the Aircraft would be airworthy once certain problems identified in the PPI Report were attended to. It was very much not the case that the only things that needed to be addressed in order that the Aircraft would remain (or be) airworthy were the matters to which the PPI Report adverted. The letter check and engine preservation concerns, at the least, remained. If that (conditional airworthiness) representation was conveyed by silence—and if it could be said that FAL was reasonably entitled to expect that it would be told if there were other matters upon which the Aircraft’s airworthiness rested—then the Interair Parties’ silence in that regard would have been misleading or deceptive, or likely to mislead or deceive.

428    What of the silent representation concerning the letter check maintenance system? Insofar as the Interair Parties might, contrary to what I have concluded, be understood to have represented that there was nothing to suggest that there were issues of concern pertaining to the letter check inspection regime mandated by the M7 Program, the situation is slightly more complicated.

429    Two things are given: first, that no such concerns were adverted to in the PPI Report; and, second, that significant issues of (relevant) concern in fact existed. That, by silence, the Interair Parties represented that there was nothing to suggest their existence would only be false, misleading or deceptive to the extent that there was something so to suggest. More specifically, it would need to be something about which Interair was obliged to be informed (and about which FAL reasonably expected to be told).

430    I have already addressed Interair’s obligations and my conclusions remain. Had I considered that Interair laboured under some obligation (contractual or otherwise) to consider the content or requirements of the M7 Program or manual, and had it directed itself to the discharge of that obligation, it would surely follow that the letter check problems that plagued the Aircraft would have been discovered. In that universe, I would have accepted that the Interair Parties’ failure to advert to those problems in the PPI Report would have sufficed to establish that, by their silence, they made the representation that they are alleged to have made. Moreover, that representation, in that context, would have been relevantly misleading and deceptive, or likely to mislead or deceive.

431    To recap, then:

(1)    I do not accept that the Interair Parties made any of the pleaded representations (by which I mean those that were said to arise by reason of the PPI Report and those that were said to have arisen by silence);

(2)    I do accept that the Interair Parties can be understood, by reason of the PPI Report, to have made other representations, specifically those recorded at [402] above;

(3)    none of those other representations was pleaded—but, in any event, none was false, misleading or deceptive, nor was any likely to mislead or deceive;

(4)    even if each of the representations that were said to arise by reason of the PPI Report (that is to say, the pleaded representations) was made, FAL has not established that any was false, misleading or deceptive, or likely to mislead or deceive;

(5)    had I reached a different conclusion as to the making of the silent representations, I would have accepted that each such representation was relevantly false, misleading or deceptive, or likely to mislead or deceive.

432    With those headline conclusions stated, the outcome is clear: FAL’s claim under s 18 of the ACL cannot succeed.

The s 29(1)(a) claim

433    FAL’s suggestion that the Interair Parties contravened s 29(1)(a) of the ACL is very closely related to the claims that it advances under s 18. It relies upon the same representations (that is to say, the representations that were said to have been conveyed by the PPI Report and the representations that were said to have been conveyed by the Interair Parties’ silence thereafter). By its third further amended statement of claim, it posits that each of those representations was apt to convey that the Aircraft:

(1)    was in reasonable condition for its age and hours; and

(2)    would be airworthy once the defects identified in parts 12 and 13 of the PPI Report were addressed.

434    The Interair Parties complain that this aspect of FAL’s case has been improperly pleaded, in that what is contained in its pleading is confusing and insufficient to identify with requisite precision how it is that they are alleged to have made representations to the effect that the Aircraft was of a “particular” standard or grade. Further, they again press the complaint that there are no material facts pleaded by which the representations can be identified as false.

435    I do not consider it necessary to address those suggestions. In light of the conclusions that I have reached concerning FAL’s claims under s 18 of the ACL, it is clear that its related claims under s 29(1)(a) of the ACL must fail at least for equivalent reasons. For the same reasons that the representations were not misleading or deceptive, or likely to mislead or deceive, so too were they not relevantly false or misleading. It suffices that I should refer, in that regard, to the summary of conclusions contained at [431] above.

Reliance

436    As with FAL’s claims in contract, having concluded as I have in respect of the claims that it advanced under the ACL, it is strictly unnecessary to explore the extent to which it relied upon any of the Interair Parties’ conduct that was sought to be impugned. Nonetheless, I should wish to address the submissions that were advanced and the findings to which, but for those headline conclusions, I might otherwise have been drawn.

437    To a significant degree, those hypothetical conclusions have already been addressed in the context of FAL’s claims in contract. By the relief that it seeks—both in contract and under the ACL—FAL seeks to be put in the position in which it says that it would find itself had it not proceeded to purchase the Aircraft. In order that it might recover damages or compensation calculated on that basis, it would need to establish that, had Interair either:

(1)    done what FAL says that it was contractually obliged to do; or

(2)    not made the representations that FAL has sought to impugn as contravening ss 18 and 29(1)(a) of the ACL,

the true or complete picture as to the Aircraft’s condition or airworthiness (or one that is closer to it) would have become apparent and it would not have proceeded to purchase it.

438    Insofar as the Interair Parties might be understood to have misrepresented (in contravention of either or both of ss 18 and 29(1)(a) of the ACL) the extent to which the Aircraft’s maintenance cohered with the requirements of the M7 Program, there could be little doubt about FAL’s reliance thereupon. Had it known the true position in that regard (whether because of compliance with contractual terms or through an absence of misrepresentation), FAL would not have proceeded to purchase the Aircraft. I have already explained, in the context of FAL’s claims for breach of contract, why I favour that view and that explanation applies equally in the context of the claims that it advances under the ACL.

439    I would reach an equivalent conclusion inasmuch as the Interair Parties are alleged to have misrepresented their opinion that the Aircraft was in reasonable condition for its age and hours. Mr Smith explained, and I accept, that he would not have relied upon the PPI Report without further inquiry had there not been some general statement of Mr Shapanis’s opinion on the Aircraft. Had I accepted that the misrepresentation (as pleaded) had been conveyed in contravention of the relevant ACL provisions, I would have accepted that FAL relied upon it; and, more specifically, that the transaction would not have proceeded had it not been made.

440    The other misrepresentations of which FAL complains are not of the same character. Had I been minded to accept that any of them was made, the representations that FAL alleges were made about the Aircraft’s repair history, the existence of “major defects”, the state of the Aircraft’s brakes, flaps and electrical systems, and the degree to which the Aircraft was compliant with applicable airworthiness directives are all issue-specific. In some cases—for example, as to the supposed misrepresentation about airworthiness directive compliance—it is difficult to see how it might be thought that FAL would not have purchased the Aircraft regardless. I do not repeat the observations already made in that respect in the context of FAL’s equivalent claim in contract (see above, [377]).

441    To the extent that the misrepresentations of which FAL complains are addressed to other issues, the conclusions that I have drawn in the context of FAL’s claims in contract (above, [378]-[384]) are equivalently applicable. I am unable to understand how it might be thought—which is to say that FAL has not explained—that the purchase of the Aircraft would not have gone ahead as it did but for their having been made (assuming, contrary to what I have concluded, that they were made in contravention of the statutory injunctions that are relied upon).

Conclusions—no breach of the ACL

442    The Interair Parties did not make any of the misrepresentations that find expression in FAL’s third further amended statement of claim. Insofar as they might be said to have made representations aligned with (but not properly reflected in) those that were pleaded, none of those representations was false, misleading, deceptive, or likely to mislead or deceive. Even were it otherwise, the only such representations upon which (in that alternative universe) FAL might properly be said to have relied were those concerning the Aircraft’s airworthiness, its adherence to the maintenance requirements of the M7 Program and its overall condition (given its age and hours).

443    FAL’s case against the Interair Parties under the ACL must be dismissed.

Loss

444    Having concluded as I have that FAL’s claims for relief for breach of contract and for contravention of the ACL must be dismissed, the question of loss does not arise. Nonetheless, it is appropriate that I should address the contentions that were advanced.

445    There was no dispute between the parties as to the principles that guide the court in assessing damages for breach of contract. In Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39, 90-1 [117], the plurality (Edelman, Steward, Gleeson and Beech-Jones JJ) observed (references omitted):

…it is now well established that there is only one measure of consequential losses for a breach of contract. As many decisions of this Court have held, that is the measure that provides a sum of money that places the plaintiff “in the same situation … as if the contract had been performed”. This description of damages for breach of contract necessarily requires the rejection of any notion that recovery of contract damages for consequential losses could aim to put the innocent party in the position they would have been in if there had been no contract at all.

446    At least in the presenting circumstances, that standard also informs the assessment of compensation appropriate to conduct in which a respondent engages in contravention of ss 18 and/or 29(1)(a) of the ACL. In contract, the court’s task is to put the victim of breach in the position that he or she would have enjoyed had the contract been performed according to its terms. Under the ACL, the court’s task is to put the victim of an actionable misrepresentation in the position that he or she would have enjoyed had it not been made: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 14 (Mason, Wilson and Dawson JJ).

447    FAL contends that, but for the contractual and statutory contraventions that it alleges, it would not have proceeded to purchase the Aircraft. The loss that its decision to do so has visited is equal, it says, to the amounts that it has reasonably paid in consequence of its purchase and ownership of the Aircraft, less the amounts that it has (or could reasonably have) received as a result of that ownership.

448    Those topics were the subject of Mrs Smith’s evidence. It might be recalled that she was cross-examined about various aspects of her evidence; but, ultimately, the parties reached agreement at least as to some baseline figures. What they are not agreed about is the extent to which individual components of that calculus are properly recoverable (either as damages for breach of contract or compensation under the ACL for statutory misrepresentation).

449    At this juncture, it is convenient to state the agreed numbers. I stress: the numbers are agreed but the extent to which they might inform the calculation of loss (or, more accurately, might have informed such an assessment, had I reached different conclusions on the causes of action that were pressed) are not.

450    It is accepted that FAL reasonably incurred expenses totalling $1,340,479.00 in connection with the acquisition and maintenance of the Aircraft. Consequent upon the compromise of its action against the Hurlad Parties, FAL received (or is to receive) a settlement sum in the amount of (or sums totalling) $800,000.00. The extent to which that figure informs (or would have informed) the proper calculation of its loss is in dispute. FAL maintains that only half of it should be taken to have been received by way of compensation (the other half by way of contribution to its costs of the proceeding). In 2023, FAL received an insurance payout totalling $420,500.00 relating to the damage that the Aircraft sustained as a consequence of the ground collision in which it was involved on 25 August 2021. At around the same time (August 2023), it received a sum of $30,000.00 consequent upon its sale of the Aircraft to Mr Ekinci’s corporate vehicle, Air Combat.

451    Thus, FAL calculates its loss (or the loss that it might have recovered had I reached other conclusions on its causes of action) as follows:

Acquisition and maintenance costs:        $1,340,479.00

Less contribution paid by Hurlad Parties        $400,000.00

Less insurance payout        $420,500

Less proceeds of sale to Air Combat Pty Ltd        $30,000

    Asserted recoverable loss:    $489,979.00

452    I pause to acknowledge that, in the course of oral closing submissions, counsel for FAL handed up an alternative calculation. The only difference is that no account is made of the settlement with the Hurlad Parties, resulting in an asserted recoverable loss of $889,979.00. That contention diverged considerably from the understanding which had predominated throughout the trial and the recording, in FAL’s pleading, that:

In the event that the Applicant succeeds in its claim for loss and damage against Interair and/or Shapanis, it will make an allowance in its claim for relief against them for any contribution to its loss and damage it receives from Hurlad and Bullas.

453    That deviation completed, there are three issues in contest that affect, potentially affect or would potentially have affected the calculation of loss. The first concerns the true market value of the Aircraft at the point that FAL sold it to Mr Ekinci. The second concerns the amount of the contribution that FAL has already received from the Hurlad parties (and the extent to which it is proper that all of it, or otherwise a portion of it, be removed from consideration as a contribution toward FAL’s costs). The third concerns the extent to which FAL has or ought to have mitigated its loss. I shall address each issue in turn.

What was the Aircraft worth when it was sold?

454    In assessing FAL’s loss, regard must be had to any discrepancy as between the amount for which the Aircraft was sold and the amount for which it could or should have been sold. There is no obvious contest regarding that proposition and nor could there be.

455    It is to be recalled that Mr Crick’s report—which the court (as previously constituted) adopted in full—recorded his conclusion that, as at December 2022, the Aircraft was beyond economic repair. Its value was limited to what its owner might receive for its parts. That “parting out” value was said to total $100,000.00. The adoption of Mr Crick’s report was effected by orders that the court made on 2 February 2023.

456    All of that pre-dated the sale of the Aircraft to Air Combat. FAL urges the court to accept that the value of the Aircraft at the point that FAL sold it was the value that Air Combat agreed to pay for it. Beyond that, there was no evidence that might tend to suggest that the value of the Aircraft in August 2023 (when FAL sold it) was materially different to the value that Mr Crick ascribed to it in his report.

457    With that acknowledged, it is difficult to see how the court might accept that FAL sold the Aircraft at a price commensurate with its value (even the very limited “parting out” value that Mr Crick identified).

458    Indeed, there is other evidence to suggest that FAL preferred not to sell the Aircraft simply to realise the value of its parts. Under cross-examination, Mr Smith accepted that “…possibly others were interested [in purchasing the Aircraft] just as scrap”; but noted that his preference was to sell it to somebody who “…was going to restore it and fix it up”. The Interair Parties submit—and I accept—that, to the extent that it resulted in a sale price below the Aircraft’s market value, that preference “…cannot be to the account of the Interair Parties”.

459    The price for which FAL sold the Aircraft was below the price for which it ought to have been sold. FAL cannot reasonably expect to recover from the Interair Parties a sum representing the difference between the sum for which it agreed to sell the Aircraft and the sum that the court has accepted as representative of the Aircraft’s actual worth at (or not long prior to) that point in time.

460    Had it been necessary to make an assessment of FAL’s loss, the amount that it nominated would have needed to be reduced on account of that delta ($70,000.00).

By how much (if at all) did the Hurlad settlement reduce FAL’s loss?

461    In an action to recover against multiple respondents “…compensation in respect of the same damage it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained[; and w]here the claims for damages are concurrent, in the sense that the claims ‘overlap’, recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other[s]”: Boncristiano v Lohmann [1998] 4 VR 82, 88 (Winneke P, with whom Charles and Batt JJA agreed) (“Boncristiano”); SAS Trustee Corporation v Budd (2005) 3 DDCR 382, 389 [32] (Mason P, with whom Handley and McColl JJA agreed) (“SAS Trustee”).

462    On or about 7 February 2023, FAL compromised its claims against the Hurlad Parties for the sum of $800,000.00. The terms of the compromise were reduced to writing and are such that that sum was to (or will) be paid in instalments, the last of which is due at the end of 2026. The settlement amount was (and is) payable in “…full and final settlement of the Claims made by FAL against Hurlad and Mr Bullas…”. “Claim” was defined so as to include costs. The parties did not, by their written terms, apportion any particular component of the $800,000.00 settlement sum to FAL’s costs.

463    It is also uncontroversial that, prior to that compromise, FAL sought to recover from the Hurlad Parties losses substantially identical to those that it hopes to recover from the Interair Parties—that is to say, the amounts that it has incurred in relation to its decision to purchase the Aircraft, which it would not have made but for the conduct of which, by this action, it complained.

464    No evidence was led as to the costs that FAL had incurred at the point that it reached its accord with the Hurlad Parties. It could not possibly be (and wasn’t) said that there weren’t any; nor that there weren’t any that were properly referable to the claims that FAL pressed as against the Hurlad Parties (as opposed to its other claims against the Interair Parties). In that regard it might be recalled that, at the time that the compromise was reached, the matter had already been live for nearly three years.

465    The question that arises—at least on FAL’s case as it was initially advanced—hinges upon consideration of two circumstances, neither of which is controversial. The first is that the written terms of the compromise between FAL and the Hurlad Parties did not contain any apportionment of the settlement sum toward FAL’s costs. The second is that FAL has not led any evidence about what its costs were at the time that that compromise was reached. How or to what extent are those realities material?

466    An entitlement to recover damages is not the same as an entitlement to recover costs. The former arises as a consequence of some recognised cause of action relating to losses sustained on account of a respondent’s (or multiple respondents’) unlawful conduct. The latter arises upon the exercise by a court of a discretionary power conferred by statute. None of that is especially profound. To the extent that authority might be required for those propositions, it may be found in the observations of the New South Wales Court of Appeal in Anderson v Canaccord Genuity Financial Ltd (No 2) (2024) 115 NSWLR 1, 23 [90] (Gleeson, Leeming and White JJA) (“Anderson”).

467    An action to recover both damages and costs may, of course, be compromised; and the parties may, to that end, agree that any amount that becomes payable as part of that compromise will be apportioned as between those two asserted entitlements (damages and costs). If they do so, their treatment of the amount received, although not determinative, will usually be respected, in the sense that the court will give it effect unless or until it uncovers some reason not to: Anderson, 23 [92].

468    Where, as here, a respondent to an action for damages or statutory compensation establishes that the applicant has received from other sources funds that are capable of engaging what some authorities describe as the rule against double compensation, it falls to the applicant to show that what was received was not received to compensate for the loss in respect of which those damages or that statutory compensation is sought: SAS Trustee, [49]-[50] (Mason P, with whom Handley and McColl JJA agreed); Boncristiano, 89-90 (Winneke P, with whom Charles and Batt JJA agreed). Where:

(1)    that contribution from other sources assumes the form of funds that are received or receivable in settlement of concurrent claims; and

(2)    such funds are expressed to be received or receivable in settlement not merely of a substantive claim but also a claim for costs,

the party against whom a defence of satisfaction is pleaded (here, FAL) is not obliged to account to the credit of the respondent so much of the settlement sum as is referable to the costs that were incurred in securing it: Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880, 882 (Steyn J) (“Banque Keyser”). It has been said that there, “…may be room for debate as to how that [costs] figure should be determined”: Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687, 711 [108] (McColl JA).

469    In RACV Insurance Pty Ltd v Unisys Australia Ltd [2001] VSC 300 [555] (Hansen J), the proposition was crisply stated:

In short, when a plaintiff sues two defendants and settles with one but continues to judgment against the other, in the calculation of damages payable by the latter the plaintiff is entitled to treat the settlement sum as allocated first to any claim separate and additional to any claim that was common to the defendants, and the costs of that separate claim, and, second, any excess of the settlement sum necessarily referable to the common or overlapping claim is to be credited in favour of the second defendant.

470    Presently, the Interair Parties complain that FAL has made no attempt to justify the manner in which it accounts for the settlement sum. The contention continues: “…no evidence was tendered by FAL which would enable the Court to reach the conclusion that the $400,000 amount allocated to costs was referable solely to the costs incurred in the litigation between FAL and the Hurlad Parties.” Reliance was placed on the judgment of the Victorian Court of Appeal in Ikosidekas v Glenis [2023] VSCA 134 (Beach, Niall and Hargrave JJA). There, the court had occasion to consider the measure of damages that a plaintiff could recover against one defendant in an action that had been settled as against two others. It was held that the calculation of the damages recoverable from the remaining defendant ought to take account in its entirety of the settlement sum received from the other defendants. In that regard, the court observed (at [53]):

The onus was clearly on Ikosidekas to put evidence before the Court as to the amount of the total legal costs referred to in the trust account statement which it was contended related only to the claims against White and MWL. Such a claim could easily be pleaded and supported by evidence. For example, the solicitor for Ikosidekas could have given evidence based on his records of the work done, and produced the bills of costs rendered to Ikosidekas. None of this was done. Further, the fact that the settlement deed was not produced is relevant. Although Ikosidekas gave unchallenged evidence that the settlement was for all of his claims, including interest and costs, that was second-hand evidence of a document which ought to have been produced in evidence. There was no good reason for not doing so.

471    Although, at first glance, those observations might not seamlessly reconcile with what was said in Anderson and Banque Keyser, I think the position is sufficiently clear. A respondent in a claim for damages may, by payment of a settlement sum, agree with an applicant that a certain proportion of that sum will be paid and received in satisfaction of the applicant’s damages claim, with the rest to be paid and received in satisfaction of an ancillary claim for costs. If that occurs, the court’s starting position will be that that apportionment is legitimate and, unless there is some reason why it should be otherwise, the settlement sum will reduce any liability of a concurrent wrongdoer only by the amount payable as damages. In calculating the extent of that reduction, it is unnecessary that any evidence should be led to establish the factual propositions underpinning the apportionment that was agreed.

472    Where there is no agreement as to how the payment and receipt of a settlement sum might be apportioned, the position is different. Common law rules of attribution reserve to the parties the right to nominate the subject matter in satisfaction of which a payment might be made and received. Typically, that right of nomination inheres to the benefit of a debtor (here, the Hurlad Parties); but, if not exercised, it is legitimately exercisable by a creditor (here, FAL): Poletti v Ecob (No 2) (1989) 31 IR 321, 333 (Keely, Ryan and Gray JJ).

473    It would be legitimate, here—indeed, orthodox—for FAL to treat its receipt of the settlement sum as having been received partially in satisfaction of its claim against the Hurlad Parties for its costs. The question that arises presently, though, is one of evidence: of what must the court be satisfied in order that that kind of unilateral apportionment might apply to discount the extent to which the settlement sum otherwise reduces the Interair Parties’ liability as concurrent wrongdoers (had I found that that is what they are)?

474    It is in that respect that the Victorian authorities referred to earlier are significant. I consider it sufficiently clear that they require proof as to the existence of the costs debt in satisfaction of which it is claimed that part of a settlement amount was received. It is not sufficient simply for an applicant to say, “…I am treating some of this settlement sum as having been received in satisfaction of the claim that I would otherwise have for my costs”. Absent some evidential foundation establishing that claim, the liability of concurrent wrongdoers should be reduced by the entirety of the settlement sum.

475    Had it been necessary to do so, I would have reduced FAL’s loss calculations by the $400,000.00 that it deducted from the settlement sum on account of its costs.

476    There remains to be dealt with FAL’s late-raised contention that the court should not discount its loss by reference to any of the settlement amount paid or payable by the Hurlad Parties. In that respect it relies upon Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd (2008) 21 VR 84, 86 [4]-[5] (Nettle JA).

477    In that matter, the anterior settlement had secured the release of all of the concurrent wrongdoers’ claims. All that was left was the question of contribution under pt IV of the Wrongs Act. I cannot see how it supports the approach for which FAL contends in the presenting circumstances. As FAL properly accepted, if that approach were adopted, the court would, in any event, apply such reductions to any damages awarded as were necessary so as to prevent it from receiving a windfall gain. For obvious reasons, I need not rule on the point; but, the weight of authority demonstrates the orthodoxy of the approach that, for the bulk of the trial (and, indeed, in FAL’s pleading) was assumed to be the correct one: see, for example, Miletich v Murchie (2012) 297 ALR 566, 597-8 [121]-[125] (Gray J); Ewin v Vergara (No 3) (2013) 238 IR 118, 237-8 [690] (Bromberg J).

Efforts in mitigation

478    The Interair Parties charge FAL with having failed properly to maintain the Aircraft after acquiring it. In particular, it is said that FAL was obliged to but did not properly maintain the Aircraft’s engines, with the result that their value was severely diminished at the point that FAL offloaded the Aircraft to Air Combat.

479    It repays to recall Mr Crick’s findings. He noted that, had they been properly maintained, the Aircraft’s engines would have been worth $600,000.00 (at least in December 2022, when his assessment was made). However, having not been properly preserved (in accordance with the requirements of the M7 maintenance manual), the engines’ combined value was only $50,000.00.

480    There is, with respect, a fairly obvious flaw in the Interair Parties’ contention. The reason why the Aircraft’s engines were substantially less valuable at the time that FAL sold it was that, having not been properly preserved, they required substantial overhauling works. That point is significant: the engines did not require overhauling because they were in poor condition; they required overhauling because, in the absence of proper preservation, that was what the manufacturer required. No matter what their actual condition, they could not properly be put back into service until those works were undertaken.

481    As Mr Simpson’s evidence made abundantly clear, the preservation failures that attended the engines well pre-dated FAL’s acquisition of the Aircraft. The circumstances that conspired to rob the engines of most of their commercial value had already occurred. That being the case, it cannot fairly be suggested that there were measures to which FAL ought to have attended in order to maintain what would otherwise have been their more significant commercial value. Proverbially speaking, that ship had already sailed.

482    Had it been necessary, I would have rejected the Interair Parties’ submission about FAL’s alleged failure to mitigate its loss (or, perhaps more accurately, a related proposition going to causation or remoteness of damage).

Conclusions

483    Had it been necessary to do so, I would have assessed FAL’s loss on the basis that, but for the conduct of which it complains, it would not have purchased the Aircraft. On the strength of the observations in this section of these reasons, I would have calculated the Interair Parties’ liability for FAL’s loss as follows:

Aircraft acquisition and maintenance costs:        $1,340,479.00

Less contribution paid by Hurlad Parties        $800,000.00

Less insurance payout        $420,500

Less realisable market value of the Aircraft        $100,000

    Recoverable loss:    $19,979.00

Reductions under section 137B of the CC Act

484    Section 137B of the CC Act operates in respect of FAL’s claim that the Interair Parties contravened s 18 of the ACL. It applies when a claimant incurs loss partly as a result of conduct engaged in by another party in contravention of s 18 of the ACL and partly as a result of the claimant’s own failure to take reasonable care. In that circumstance—and provided that the other party did not intentionally or fraudulently cause it—the loss that is recoverable under s 236(1) of the ACL as a result of the contravention of s 18 is to be reduced in proportion to the claimant’s own share in responsibility for causing it.

485    The Interair Parties submit that, to the extent that they are liable to FAL for losses arising from conduct that contravened s 18, the amount that might be recovered from them should be reduced on account of FAL’s own failure to exercise reasonable care at the point that it purchased the Aircraft. As I have already concluded that the Interair Parties are not liable in that regard, the analysis that follows is moot. Nonetheless and in deference to the submissions that were advanced, I should address it, at least at a headline level.

486    The Interair Parties nominate several respects in which they claim that FAL failed to exercise reasonable care when it proceeded to purchase the Aircraft. Five matters are raised, in that regard, as examples of conduct in which FAL ought to have engaged but did not engage, namely:

(1)    it did not request any certification of the Aircraft’s airworthiness nor any audit of the Aircraft’s maintenance history;

(2)    it did not commission adequate inspections of the Aircraft;

(3)    it did not exercise its right under the Sale Contract to terminate the sale when it had the chance to;

(4)    it did not insist upon rectification of each of the matters that were identified in the PPI Report as requiring rectification; and

(5)    it proceeded with the purchase notwithstanding that it had come to the view that the Aircraft was unairworthy and without satisfying itself that the critical defects had been rectified.

487    I do not accept that FAL’s failure to insist upon obtaining a certificate of airworthiness or to request an audit of its maintenance history inheres as a circumstance apt to reflect any relevant want of reasonable care on its part. It was not unreasonable for FAL to have proceeded with the purchase of the Aircraft on the strength of a more limited assessment. Particularly is that so given, first, that the Aircraft was the subject of a current maintenance release at the time and, second, the time and expense that the obtaining of a certificate of airworthiness would entail was likely to be very significant. The fact that, with the benefit of hindsight, it might have been a good idea to embark down that path is not reason enough to conclude that FAL’s failure to do so bespoke any want of reasonable care.

488    Likewise, I do not accept that much may be made of FAL’s failure to commission inspections of the aircraft more detailed than those that it retained Interair to perform. The Interair Parties submit that, having listed “50 items of interest and/or defects”, FAL ought to have been alerted “…to the need to either withdraw from the purchase or take significant further investigations before committing to purchase the Aircraft”. There is a certain circularity to that suggestion. It is to be recalled that, by the PPI Report, Interair communicated its opinion that the Aircraft was in reasonable condition for its age and hours. The “50 items of interest” were not inconsistent with that. Reasonable care, in those circumstances, did not require that FAL commission additional inspections of the Aircraft.

489    I also do not accept that FAL’s failure to exercise its right of termination of the Sale Contract reflects any failure to conduct itself with reasonable care. Pointing to the correspondence that Mr Gibbs sent on 1 December 2017 (above, [63]), the Interair Parties contend that FAL ought to have terminated the Sale Contract when it had the chance. It is to be recalled that, at that point, FAL had identified concerns about the Aircraft’s airworthiness. The Interair Parties contend that, had it acted with reasonable care then, FAL would have availed itself of its right to avoid the purchase.

490    Why that should be so is anything but clear. As Mr Gibbs’s 1 December 2017 correspondence makes clear, FAL’s concerns fixed much less upon the nature of the issues that had yet to be rectified than on the apparent want of urgency that had attended that work. Why that ought to have prompted a potential purchaser, exercising appropriate care, to terminate the purchase altogether has not been explained. I do not accept that, by not availing itself of its right to terminate the contract, FAL could be understood to have acted without reasonable care.

491    The Interair Parties next suggest that it was unreasonable (or inconsistent with the exercise of reasonable care) for FAL to have proceeded with the purchase of the Aircraft in circumstances where several of the items that had been listed in the PPI Report as matters of defect or concern—including, it would seem, a number that had been reserved for correction by Hurlad—had not been attended to. Again, I do not accept that contention. The loss that FAL seeks to recover from the Interair Parties is the loss that it claims to have sustained on account of its having purchased the Aircraft; a course in which it would not have indulged had it not been misled in contravention of s 18 of the ACL as it claims. It has not been explained why it was inconsistent with reasonable care for FAL to have proceeded with the purchase notwithstanding that there remained matters to be rectified. Those matters were not the subject of the alleged misrepresentations and nor were they matters that have contributed to the loss of which FAL complains. The Interair Parties’ contention in that regard is rejected.

492    I would not (in other circumstances) have been minded to effect any reduction to my assessment of FAL’s loss for any of the contributory conduct to which the Interair Parties pointed.

Apportionment, contribution and indemnity

The Interair defence and cross-claim

493    As with other elements of this matter, it is a consequence of my conclusions about FAL’s causes of action, both in contract and under the ACL, that no question arises regarding the distribution of any loss as amongst the Interair Parties (on the one hand) and the Hurlad Parties (on the other). I should wish to make only the briefest of observations on that front.

494    The Interair Parties’ submissions concerning that distribution are twofold. The first set of contentions concerns apportionment. They are proffered as a shield against FAL’s claims. Insofar as concerns the claim in contract, those contentions are advanced under pt IVAA of the Wrongs Act. Insofar as concerns FAL’s claim of contravention of s 18 of the ACL, they are advanced under pt IVAA of the Wrongs Act or, alternatively, pt VIA of the CC Act. FAL’s claim of contravention of s 29(1)(a) of the ACL is not said to be apportionable.

495    The second set of contentions is advanced only to the extent that FAL’s claims are not apportionable. They are advanced in support of the Interair Parties’ cross-claim against the Hurlad Parties dated 12 December 2022, by which a complete indemnity of (or, alternatively, contribution towards) the Interair Parties’ liability to FAL is sought pursuant to pt IV of the Wrongs Act.

496    There was no obvious dispute between the parties as to the principles that are apt to guide a court charged with considering the degree of responsibility for loss caused concurrently by the conduct of multiple wrongdoers. I do not repeat what was not in contest.

497    Insofar as their apportionment claims were concerned, the Interair Parties sought to constitute AJE as a concurrent wrongdoer. I would not have accepted that contention. The losses that FAL claimed to have sustained arose, so it said, because the respondents, by their conduct, led it to believe something that wasn’t true: namely, that the Aircraft had been maintained in a way and/or was in a condition that did not align with reality. It might be accepted that AJE had a role to play in bringing about that “real” state of affairs; but I do not accept that there was anything that it said or did that led FAL wrongly to act on the basis that the Aircraft’s purchase was in its interests.

498    It was not the state of the Aircraft that caused FAL to proceed with the purchase of the Aircraft; it was what, by their conduct, the respondents are said to have led it to understand about its state. AJE’s conduct did not relevantly bear upon that state of understanding. FAL’s claimed loss arose because of what the Hurlad Parties and the Interair Parties represented to it; not because of how AJE maintained (or failed to maintain) the Aircraft.

499    That each of the respondents was a concurrent wrongdoer (both for apportionment purposes but also contribution purposes) is easier to accept and, in different circumstances, I would have accepted it, at least in some respects. There is little to be gained in speculating about the various ways in which concurrent wrongdoing might have been established had I decided the substantive questions differently to the way that I have. Nonetheless, insofar as each of the respondents might be said, by actionable conduct, to have induced FAL to complete the Aircraft’s purchase (and, by doing so, to have contributed to the incurring of the losses that it incurred on account of that purchase), I would have been inclined to apportion that liability as follows, namely:

(1)    35 per cent as to Hurlad;

(2)    20 per cent as to Mr Bullas;

(3)    35 per cent as to Interair; and

(4)    10 per cent as to Mr Shapanis.

500    That breakdown reflects what I would have considered to be a just apportioning of “blame” for FAL’s predicament. Insofar as (contrary to what I have concluded) all of the respondents played some role in inducing FAL to complete the purchase, I consider that they did so (or would be understood to have done so) in reasonably similar proportions as between the two groups (with the Hurlad Parties being more responsible, albeit only slightly). The bias toward the corporate entities reflects what I consider to be the stronger significance of the contractual terms that FAL agreed with each.

501    For obvious reasons, I needn’t say anything further on that score.

The Hurlad cross-claim

502    By their cross-claim against the Interair Parties, the Hurlad Parties move for relief in the form of indemnity or contribution under pt IV of the Wrongs Act. That relief requires that I accept that the Interair Parties and the Hurlad Parties are concurrently liable for FAL’s loss. The Hurlad Parties seek recompense for the compensation they have already paid or agreed to pay to FAL, reflective of what they say is the extent of the Interair Parties’ responsibility for FAL’s loss.

503    For some reason, the bases upon which the Hurlad Parties contend that the Interair Parties are liable for FAL’s loss are not coincidental with the bases that are agitated to that end by FAL. Whereas FAL presses for relief in contract and for breach of the ACL, the Hurlad Parties contend that the Interair Parties are also liable to FAL in tort. Specifically, they maintain that, by not adverting in the PPI Report to the fact that the Aircraft:

(1)    had not been maintained in accordance with the M7 Program; or

(2)    was not airworthy,

the Interair Parties breached a duty of care that both owed to FAL, namely a duty to carry out the pre-purchase inspection of the Aircraft with reasonable care, skill and diligence. The suggestion that a related (and equivalent) duty was owed to each of the Hurlad Parties was abandoned.

504    Perhaps understandably, the Hurlad Parties’ cross-claim did not feature materially in the parties’ written or oral submissions. It was acknowledged that the duty upon which this aspect of the cross-claim rests was one “coordinate with Interair’s obligations in contract”. Thus, the Interair Parties’ liability in tort is wholly coincidental with their liability in contract (and, in particular, with what was said to be the breach of their contractual obligation to undertake what they contracted to do with reasonable care and skill).

505    Necessarily, then, it follows that the conclusions to which I have been drawn in respect of FAL’s claims in contract suffice to address the Hurlad Parties’ cross-claims in tort. There was no breach of duty by the Interair Parties; and nor is there any consequential loss recoverable by FAL for which the respondents, collectively, might be thought concurrently liable.

506    That conclusion suffices to address in its entirety the claims advanced by the Hurlad Parties in their cross-claim. In the absence of such loss, there is no basis upon which the Hurlad Parties may seek, as they do by their cross-claim, indemnity or contribution in respect of the amount that they have agreed to pay FAL in settlement of FAL’s claims against them.

507    Had I been minded to reach different conclusions about the Interair Parties’ liability to FAL in contract or negligence, it would necessarily have followed that the losses would have been recoverable concurrently as against each of the respondents and the court would have had occasion to consider in what proportions that loss might be recoverable as against each of them individually. For obvious reasons, I needn’t dwell to any extent on that question. It suffices to observe that I would have reached the same conclusions as are stated above—howsoever hypothetically—in connection with the apportionment and contribution claims that the Interair Parties advanced.

Conclusions

508    FAL’s originating application dated 24 February 2020 should (and will) be dismissed, as should (and will) the notices of cross-claim preferred by, respectively, the Hurlad Parties and the Interair Parties. In the absence of agreement, I will hear from the parties as to costs.

Associate:

Dated:    24 July 2026

SCHEDULE OF PARTIES