Aerolink Air Services Pty Ltd v Bankstown Airport Ltd

[2022] NSWSC 587

Supreme Court

New South Wales

Medium Neutral Citation:

Aerolink Air Services Pty Ltd v Bankstown Airport Ltd [2022] NSWSC 587

Hearing dates:

10, 11, 12, 13 May 2022

Decision date:

13 May 2022

Jurisdiction:

Common Law

Before:

Leeming JA

Decision:

1. Proceedings dismissed.

2. Direct that by next Wednesday, 18 May 2022, the parties supply to my Associate either any agreed order as to costs or, in default of agreement, the defendant supply by next Wednesday, 18 May 2022 any material and short submissions on which it relies, with the plaintiff to respond by Friday, 20 May 2022, with a view to any question as to costs being resolved by me on the papers unless either side indicates to the contrary in the documents they supply to me.

Catchwords:

DAMAGES – defendant held liable in earlier hearing for loss and damage caused by its destruction in 2014 of such of plaintiff’s chattels as had survived a fire in 2013 – plaintiff sought damages for destruction of the logbooks for five aircraft – evidence suggesting some logbooks had been destroyed in fire and others had been removed shortly thereafter – evidence that plaintiff kept logbooks of other aircraft in the hangar – whether plaintiff had established that the logbooks for the five aircraft had survived the fire and were destroyed by the defendant

DAMAGES – measure – appropriate measure for damages for destruction by bailee contrary to agreement with bailor – tortious or contractual – appropriate characterisation of loss of logbooks necessary to operate and maintain aircraft – significance of logbooks being unique items but of no intrinsic value aside from their use to operate and maintain aircraft – whether plaintiff entitled to cost of recreating the logbooks, or cost of acquiring replacement aircraft, or difference between value of aircraft with logbooks and without logbooks – whether plaintiff established case of consequential loss of business profits – plaintiff entitled to damages based on difference between value of aircraft with and without logbooks – claim for consequential loss not established on the evidence

Legislation Cited:

Civil Aviation Regulations 1988 (Cth), r 50A

Evidence Act1995 (NSW), s 140

Cases Cited:

Admiralty Commissioners v SS Susquehanna [1926] AC 655

Aerolink Air Services Pty Ltd v Bankstown Airport Ltd [2019] NSWSC 1283

Aerolink Air Services Pty Ltd v Bankstown Airport Limited (No 2) [2019] NSWSC 1853

Arsalan v Rixon [2021] HCA 40; 96 ALJR 1

Brown Boveri(Aust) Pty Ltd v Baltic Shipping Company (1989) NSWLR 448

Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136

Chief Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34

Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416

Gagner Pty Ltd v Canturi Corporation Pty Ltd [2009] NSWCA 413; 262 ALR 691

Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311

Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187

Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313

Jiwira v Primary Industry Bank of Australia Ltd [2000] NSWSC 1094

Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64

Kuru v The State of New South Wales (2008) 236 CLR 1; [2008] HCA 26

Livingstone v Rawyards Coal Co (1880) 5 App Cas 25

Murphy v Brown (1985) 1 NSWLR 131

National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252; [2002] VSCA 18

Palmer v Dolman [2005] NSWCA 361

PPK Willoughby v Baird [2021] NSWCA 312

Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] 2 Qd R 335; [2007] QCA 94

Reaper v Vrsecky(Trustee), in the matter of Reaper [2019] FCA 565

Robinson v Harman (1848) 1 Exch 850; 154 ER 363

Skelton v Collins (1966) 115 CLR 94; [1966] HCA 14

State of New South Wales v Moss (2000) 54 NSWLR 536; [2000] NSWCA 133

Taitoko v R [2020] NSWCCA 43

Category:

Principal judgment

Parties:

Aerolink Air Services Pty Ltd (Plaintiff)
Bankstown Airport Limited (Defendant)

Representation:

Counsel:
CP O’Neill (Plaintiff)
D Lloyd SC, T Kane (Defendant)

Solicitors:
TPS & Co (Plaintiff)
Holman Webb Lawyers (Defendant)

File Number(s):

2016/22582

Publication restriction:

Nil

EX TEMPORE Judgment

1. LEEMING JA: This is the assessment of the plaintiff Aerolink’s damages, quantifying a judgment entered in the Common Law Division of this Court on 27 September 2019 following a 5 day trial: Aerolink Air Services Pty Ltd v Bankstown Airport Ltd [2019] NSWSC 1283. By way of overview, there was a fire at premises at Bankstown Airport occupied by Aerolink on 6 March 2013, which started while Aerolink, and its director and co-owner Mr Daniel Patrick Ryan, was in the process of removing items from the hangar. This Court held that the defendant was not liable for the goods lost in that fire. Thereafter, access to the hangar was restricted (parts of the building were constructed with asbestos-containing materials) and it seems that there were only limited opportunities thereafter to access the hangar. On 30 July 2014 such of Aerolink’s chattels as survived the fire which remained in the hangar were taken to landfill. The defendant was found liable for the removal of those goods. The primary judge (White J) concluded at [174]:

“There was no evidence that any of Aerolink’s goods, except logbooks and filing cabinets and the contents thereof, survived the fire. I conclude that Aerolink has established that BAL is liable to it for damages for and consequent upon the removal on or about 30 July 2014 of such of its logbooks, filing cabinets and any other material contained in its filing cabinets that survived the fire, but its claim should otherwise be dismissed. The matter will have to be referred for a new or further hearing for assessment of damages.”

The Court made the following order:

“Give judgment for the plaintiff for damages to be assessed in respect of the loss of such of the plaintiff’s logbooks, filing cabinets and any other material contained in its filing cabinets that were removed on or about 30 July 2014 at the defendant’s direction from the hangar at Bankstown Airport that had formerly been occupied by the plaintiff.”

2. Aerolink makes no claim based on the filing cabinets or any other material. There were a number of logbooks for each aircraft. There were separate logbooks for the airframe, for each engine and for each propeller. Aerolink’s claim until shortly before the trial was based on the logbooks for the following six aircraft:

1. Embraer Bandeirante 11OP1 – Serial Number 110-426: Registration N110EM;

2. Embraer Bandeirante 11OP2 – Serial Number 110-292: Registration VH-WBR;

3. Embraer Bandeirante 11OP2 – Serial Number 110-201: Registration VH-OZF;

4. Piper PA-31 Navajo – Serial Number 31-785: Registration VH-SIN;

5. Cessna 310R – Serial Number 310R0628: Registration VH-XMA;

6. Bell 206 JetRanger – Serial Number 274: Registration VH-BEK.”

3. Only three of those aircraft were mentioned in the pleading.  There has been no complaint before me and the hearing has been conducted on the basis that it extends to claims based on logbooks of aircraft not mentioned in the pleading.  However, the significance of the aircraft mentioned in the statement of claim filed in early 2016 will be something to which I shall return.

4. Prior to the hearing before me, Aerolink abandoned any claim based on VH-OZF, it having been alerted by the service of a report from the defendant that its logbooks were located in Queensland, in Maryborough, where the aircraft was located, having arrived on a ferry permit in 2006 and seemingly without having flown for the last 16 years.

5. The plaintiff’s claim is substantial, totalling some US$3.928m for replacement logbooks plus consequential business losses for A$1,436,763. The first of those amounts excludes damages which had formerly been claimed for VH‑OZF. The Australian dollar amount for business losses reflects the profits on a model that did not include VH‑OZF.

Overview of Issues

6. The elements which Aerolink must establish are as follows:

1. The logbooks for those five aircraft were on the premises and survived the fire on 6 March 2013;

2. The logbooks were not removed from the premises between 6 March 2013 and 30 July 2014, but were, in fact, taken away by a contractor retained by the defendant on 30 July 2014;

3. The appropriate measure of damages is the cost of preparing replacement logbooks, which cost is both reasonable and not too remote (a topic to which I shall return) coupled with damages for consequential loss; and

4. The quantum of those losses. I note, and I will deal with it in due course, that the plaintiff advanced four alternative ways of calculating its loss directly attributable to the loss of the logbooks, in addition to its claim for lost profits.

7. The apogee of the plaintiff’s documentary case was a photograph taken on 8 March 2013 by the plaintiff’s director and co-owner Mr Daniel Patrick Ryan, who was also its main witness both before White J and in the proceedings before me, of what he identified as the remains of a box containing logbooks.

8. Mr Ryan described in his evidence-in-chief what could be seen in that photograph:

“The top one is a propellor logbook and underneath that you can see a green logbook that’s partially sticking out. That would be an airframe or an engine logbook, without seeing the rest of it. Underneath that again there is another blue book that’s charred on the end. That would more than likely be another propellor logbook. Then further down you can see other books similar to the green one, which would be aircraft logbooks as well.”

9. At one stage in his evidence‑in‑chief, Mr Ryan identified – with a level of tentativeness – one or two logbooks associated with the Embraer engines:

“A. Underneath that, that green book, would be possibly an engine for an airframe logbook. The two together, with a charred blue book on top, they would be engine logbooks. And then further down, underneath those to the right hand side there’s a blue; that could be an engine logbook as well.

Q. My question was related to the planes specifically; do you have any insight as to what planes they could relate to specifically, or?

A. Those two engine books, engine logbooks that I can see, about halfway up, they’re probably related to the Embraer, Embraer Bandeirante.

Q. Why do you say that?

A. Because they’re together, their engine logbooks, and they would be for one of the bandits.”

10. I did not understand there to be any dispute, and in any event I find, that the blue logbook at the top of the pile was the logbook for a left-hand propeller of a Japanese aircraft. The letters “LH” can be made out on the cover, as can some Japanese characters and (but only barely) the word “propeller”. That propeller was not related to any of the aircraft the subject of the claim. I accept Mr Ryan’s evidence that that aircraft had been sold and was now located in Darwin (T22.19).

11. The plaintiff also called Mr Craig Smith who is the defendant’s Aviation Facility Manager who said that he too saw logbooks on what I find to be 8 March 2013.  He said that on that day, he walked around the premises for about 45 minutes with Mr Ryan.  He said that he recalled Mr Ryan taking photographs and he then gave this evidence:

“I recall seeing a number of archive type boxes containing records. I also recall at one stage Danny pointing to a box which had some books and other papers and saying words to the effect of:

‘These are logbooks. We should be able to salvage them.’”

12. Mr Smith was not required for cross-examination.

13. Mr Ryan said that the logbooks and other more ephemeral documentation for each aircraft was located in an archive box, on the side of which in texta he had written the registration number of the aircraft. He gave this evidence:

“Q. Just in terms of understanding this, that each of the aircraft you’ve identified, those six aircraft I’ve been asking you about, had its own cardboard box?

A. Yes.

Q. Inside the cardboard box for each of those aircraft were the logbooks for that aircraft?

A. Logbooks and whatever relative paperwork that related to that aircraft is what I believe were in the boxes.

Q. With respect to each of those boxes, your practice was to write in texta the registration number of the aircraft on each box?

A. Yes.

Q. In terms of where those boxes were stored, you say each of those boxes were kept on the top shelf and on the top of the shelving in the storeroom on the premises?

A. Yes.

Q. That was your practice right up to the date of the fire, as to both having separate boxes for each aircraft and where they were stored?

A. Yes.

Q. That is where - just tell me if I got this right - you say that those six boxes for each of those aircraft were stored as at the date of the fire; is that true?

A. Yes.

Q. And you’re sure about that?

A. Yes, I’m sure about that.”

14. According to Mr Ryan, the six boxes were stored on a shelf on the top of a bookcase in one corner of the storeroom. There was a deal of testimonial and photographic evidence to the effect that that bookcase sustained very serious damage either from the fire or from steps taken by firemen to extinguish the fire or both.

15. Mr Mark Pellegrino, called by the defendant, was and is a Senior Forensic Fire Examiner. He attended on 13 March 2013 and also on 28 March 2013, taking photographs on each occasion.  He gave evidence concerning the location at which Mr Ryan indicated the boxes had been stored as follows:

“I do not know the original location of the boxes inside the storeroom. If I assume that the boxes were all the same size and stored together (same location/shelf) then I did not locate an area of remaining debris that would support six ‘full’ boxes worth of burnt booklets inside the storeroom. I would have expected to identify the remains of six boxes or booklets had they been inside the storeroom – books are commonly not completely destroyed during a fire (obviously depending on the severity of the fire).

As with any fire, I cannot completely rule out that six boxes of booklets were inside the storeroom (before/during the fire) as they may have been stored in different locations. However, I consider it unlikely given the degree of fire damage sustained inside the storeroom, from what I observed during my examination and after a review of my scene photographs.”

16. There was no unambiguous documentary evidence establishing that any of the logbooks relating to the five aircraft the subject of this claim were the logbooks seen in Mr Ryan’s photograph. The only logbook which can confidently be identified from Mr Ryan’s photograph is a logbook on the top of the pile. That was the logbook for a propeller which was not associated with one of the five aircraft the subject of this claim.

17. True it is that Mr Ryan gave, in his affidavit, unequivocal evidence that that was the case. This was described by Mr Lloyd, who appeared with Mr Kane for the defendant, as the central portion of the affidavit. Mr Ryan said:

“I specifically recall on that occasion [8 March 2013] seeing that all of the logbooks were still there, and none had been totally destroyed. I recall noticing that some logbooks had some fire damage to the outside covers, but when I flicked through those ones, I could see that the pages inside had not been destroyed. I specifically recall that I was relieved that none of the logbooks would need to be recreated because none had been destroyed.”

18. Mr Ryan was cross-examined about that statement (made on 18 September 2020) as to his recollection from March 2013, some seven and a half years earlier. He conceded that part of his recollection was wrong. He accepted that in fact he did not see the logbooks for VH-OZF. He maintained that the balance was correct.

19. Most of Mr Ryan’s cross-examination (which occupied around one day) was directed to testing his evidence about whether the logbooks in the pile were the logbooks of the aircraft the subject of this claim, and most of both parties’ submissions were directed to this. The plaintiff said Mr Ryan was to be believed. Further, he prayed in aid the fact that Mr Ryan had been denied access to the hangar, that there was precious little more which Mr Ryan could do to establish the identity of the logbooks, such that an onus shifted to the defendant to prove the contrary, relying on what was said in Reaper v Vrsecky (Trustee), in the matter of Reaper [2019] FCA 565 at [230]:

“Mr Reaper carries the burden of proving his damages. In the ordinary course, a bailee who has taken possession of a number of items without cataloguing those items could not dispute a claim of this kind simply because it was based on the claimant’s own memory of the items. That would require the bailor to carry the burden that the bailee knowingly assumed. However that observation assumes the person who is making the claim can be accepted to be a credible witness and has provided plausible evidence of those items’ value.”

20. The defendant said that I should find that Mr Ryan was consciously lying in his evidence to me to the effect that the logbooks which survived the fire and were destroyed on 30 July 2014 included those of VH-WBR, which was by far the most valuable aircraft, and which had been the subject of other litigation in the Local Court. The defendant’s fallback submission was that Mr Ryan’s evidence concerning this aircraft was so reckless or careless that no weight could be given to it. In relation to the other four aircraft, the defendant said that the evidence was false, albeit not knowingly false, and alternatively was so reckless or careless that no weight could be placed on it.

Context and contemporaneous documents

21. The convenient course is to start with the context and the contemporaneous documents, as suggested by Keane JA in Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 at [34], which in turn accorded with what had been said in Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 at [28]-[29]:

“Usually, the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation.”

22. The essential chronology is that Mr Ryan was present at the premises during the fire on 6 March 2013. He then attended hospital to deal with the inhalation of smoke. He returned to the hangar on 8 March 2013 where the photograph reproduced above was taken by him. Mr Hirst was present at the time, who also took photographs. Mr Ryan attended the hangar on 11 March 2013 and spoke with Dr Green, although it seems that he did not on that occasion have access to the hangar. Mr Ryan attended again on 13 March 2013 and met Mr Pellegrino, who took many photographs. Mr Ryan said that thereafter he was never permitted access to the hangar, and he did not do so.

23. A recurring theme in Mr Ryan’s evidence was that on the occasions that he attended the hangar, he had only limited time to inspect what remained, and that he had many more important things on his mind than the logbooks (see for example T26.15; 26.21; 31.38; 35.6; 66.16).

24. There are many photographs, some of quite high quality, of the inside of the storeroom where the fire broke out, and also of the inside of the hangar itself, taken on those occasions.  In particular, the purpose of Mr Pellegrino’s photography on 13 and 28 March 2013, was to document the condition of the hangar.  I note that Mr Pellegrino has personally attended over 900 fire scenes as Principal Examiner.

Photographic evidence

25. From time to time there are statements in judgments as to the caution which must be deployed when using photographs which are tendered in evidence in factual inquiries in courts. Counsel referred to what was said in Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311 at [213]-[224] where it remained unnoticed until the hearing of the appeal that the images of a horse race had been interpreted without regard to parallax error so as to give a seriously erroneous impression of the horses’ speed. There is particular danger in estimating distance, direction and colour from photographs. But, as was said in Taitoko v R [2020] NSWCCA 43 at [81], “Each case will depend on the particular photograph and the particular purpose for which it is sought to be deployed”. I am conscious of those strictures.

25. Despite the quantity of photographic evidence placed before me, I am of the view that there are only really two things that much matter from the photographs. The first concerns the photographs of the logbooks which survived the fire. Some were taken by Mr Hirst, a loss adjuster, on 8 March 2013. Mr Hirst had been retained by the insurer of Aerolink’s spares, which had been stored in the hangar, and a claim had been made on the policy. His photographs show extensive damage to the bookcase, identified by Mr Ryan as the location for the storage of the six boxes containing the logbooks. One photograph also shows what appears to be a pile of logbooks, but if they are in a box, details of that box cannot be identified.

27. An enlargement of Mr Ryan’s photograph reproduced above makes it plain that on the box is written in red texta the letters “VH-xxx”.

28. The V and the H are moderately legible. The remaining letters are a little problematic. The defendant suggested that they should be understood as being LJF and noted that Mr Ryan gave evidence that his company had formerly owned an aircraft registered VH-LJF. The plaintiff, in final addresses, put that the concluding letters might be WBR. I must say I am sceptical that that is so. But caution rightly attaches to discerning what appears from images such as these, and on the view I take, nothing turns on that.

29. I turn to the second matter that emerges from the photographs. That addresses the location in the hangar of a pile of seemingly undamaged materials, which appear in photographs taken on 13 March 2013, and subject to some qualifications to which I shall turn, are absent from a photograph taken on 15 March.

30. In order to make sense of the photography, I start with an uncontroversial document – the floorplan of the hangar, drawn up by Mr Pellegrino on 13 March 2013. I have oriented it so that north is upwards.

31. The diagram is not to scale, although linear measurements are recorded upon it. The footprint is rectangular. All that matters however is that there are large sliding doors on the eastern and western walls. On the southern side is a series of enclosed rooms occupying most of that side. On the northern side is an office occupying the north western corner. A plan attached to Mr Ryan’s affidavit in the earlier proceedings, upon which the plaintiff opened the hearing before me, indicated that that office was associated with a flying school (Ex E p 300).

32. The photograph which is at p 1080 of the court book was taken on 13 March at 10.39am.

33. The rooms occupying most of the far wall shown on that photograph confirm that that is the southern wall. One can clearly see what must be the western doors open (towards the right of the image), as well as sun streaming in and casting some shadows from the eastern doors which are also open (on the left of the image). It is clear that Mr Pellegrino has positioned himself quite close to the eastern wall to take a picture which captures much of the floor area of the hangar. The sloping corrugated iron roof (or so it appears to me) of the hangar is supported by triangular trusses. In the roof there are translucent corrugated roofing panels. It is clear that there are precisely 10 of those translucent, corrugated roofing panels, probably made of fibreglass, letting light into each side of the hangar.

34. Towards the left of the photo at p 1080, further away from the man standing in the foreground, are two piles of boxes and other materials which cannot clearly be identified.

35. Photograph 1079 was taken a few seconds earlier (its time imprint also says 10.39).

36. This photograph shows the western door of the hangar, as is plain from the facts that (a) sunlight is not streaming in through the door on that morning, and (b) to the right of the door is the much smaller office in the north western corner of the hangar. All ten of the translucent corrugated roofing panels on the northern side of the roof are visible, and to the right of the photograph may be seen the sunlight streaming through the eastern door, where what may now be seen to be a rubbish dumpster (which is also visible in p 1080) casts a shadow. Once again, Mr Pellegrino has placed himself very close to the corner of the hangar – this time the south east corner – in order to take a photograph of almost all of the hangar. That is exactly what one might expect a highly experienced forensic expert whose job is to document the site to do.

37. Photograph 1079 is important because it shows two boxes in the foreground on a metal table. In Exhibit I, which is a slightly blown up copy of the same image, it is plain that one of those boxes has written on it in texta VH-BEK, and as much was common ground when it was tendered at trial and provided to Mr Ryan.

38. Photograph 1105 was taken by Mr Pellegrino about 10 minutes later on 13 March. In addition to the two boxes resting on the metal structure, it also shows a second brown “archive” box on the floor, which is obscured in photograph 1079 by the metal structure. Counsel for the defendant accepted (T185.27-38) that no discernible markings could be seen from the photographs on that second brown archive box.

39. There may also be noted on the left of photograph 1105 what appear to be sliding doors, from the level of the floor rising to the bottom of the triangular trusses, comprising of panels supported by diagonal struts.

40. Photograph 1080 may be contrasted with a photograph taken on 15 March 2013.

41. It is true that the photograph does now show the entirety of the south eastern corner of the hangar, although it does show all of the offices and a small portion of the eastern door (with most of one set of diagonal struts visible). It is plain that at least some of the material which is shown in that corner on the photographs taken two days earlier, including the box labelled VH-BEK and other boxes, has been moved from the south eastern corner.

42. An appropriately qualified submission was made by the defendant about the inferences that could be drawn from the 15 March 2013 photograph.

“in our submission, the better view of the photograph on the 15th, to the extent things can be extracted for it, is more consistent with Mr Ryan’s admission, recorded at 43 [scil, 46.3], than with the inconsistent evidence about not having removed things. That’s as high as I put it.”

43. I have dealt with the photographic evidence quite carefully because I do not agree with a submission made in closing address by the plaintiff concerning the location of the undamaged archive box with VH-BEK written upon it resting upon a metal cabinet. It was said that:

“[Y]our Honour could have no confidence as to where from a depth perception perspective, so that is either to the foreground or the background where in orientation to depth of the hangar that pile of documentation and the silver cabinet and the trolley are when one is looking towards the depth.”

44. For the reasons I have given (which draw upon an exchange during the hearing at T208-209), I consider that it is possible to determine the location of the metal cabinet and the VH-BEK box. My reasoning does not rely on the perception of depth, but on objectively identifiable features of the hangar.

Mr Ryan removed some items on 13 March 2013

45. Mr Pellegrino noticed that items photographed on 13 March 2013 were missing on 28 March 2013. He said that Mr Ryan “was salvaging other items during my first examination and was removing other contents from the Hangar because he was in the process of vacating the hangar when the fire occurred”. Mr Pellegrino also gave evidence of an intact box, marked VH-BEK, in the south eastern corner of the hangar. He said that the location of the box indicated that it had probably been removed from the storeroom before the fire occurred.

46. In cross-examination, Mr Ryan appeared to concede, repeatedly, that he removed some boxes and other materials from the premises on 13 March 2013 (this was the passage at T46.3 containing the admission to which counsel referred in the submission reproduced above):

“Q.  On 13 March, Mr Ryan, when you were, you were engaged in, and I’m not being critical of you doing this, please understand, but you were engaged in removing some of your possessions from the premises, weren’t you?

A.  Yes.

Q.  The things that you were removing from the premises included those things that you can see in the bottom right‑hand corner of the photograph at 1079; that’s right, isn’t it?

A.  Yes.

Q.  And you removed all of those things from that portion of the hangar on that day; correct?

A.  Yes.”

47. Later in his evidence Mr Ryan appeared to deny doing so. After argument, I permitted re-examination on this topic, with a right to further cross-examination if the defendant so chose. Mr Ryan was directed to the inconsistency between his evidence that he never removed anything from the hangar, and his evidence that he did remove things from the hangar. He then gave this evidence:

“Q.  Can you explain the inconsistency?

A.  I was of the opinion that Mr Lloyd was asking me if I’d removed some of Aerolink’s possessions from the storeroom that were in the hangar before I was given permission by the airport authority to remove them, and the answer was, I didn’t remove anything from the hangar until I was given consent by the airport authority to remove them.”

48. That evidence corroborates Mr Pellegrino’s evidence, given very precisely in cross-examination, that he did not in fact see Mr Ryan removing anything from the hangar, but that he believed that Mr Ryan was present with him for the purpose of retrieving his things, and that it was necessary for Mr Pellegrino to tell him not to touch anything until Mr Pellegrino had documented the site.

“Q.  At any time did you observe Mr Ryan picking up the blue esky?

A.  I can recall a time that we were discussing the little esky, and we were both inside the storeroom.

Q.  Did you see him move it, or pick it up?

A.  He may have attempted to move it and that’s when I’ve had the discussion, saying, ‘Just don’t touch anything,’ like, ‘Let me just do what I need to do and then it’s all yours.’

Q.  At any time did you see him pick up the box of logbooks or booklets?

A.  No, I can’t recall.

Q.  Do you actually recall now any time when you observed Mr Ryan removing anything from the hangar externally, so leaving the hangar completely?

A.  He did leave the hangar at some stage.

Q.  With anything?

A.  Not that I saw, because I wasn’t paying attention of what he was doing, but anything outside of the storeroom I’d recorded already and I wasn’t concerned with at that time.”

49. Mr Pellegrino confirmed this in cross-examination and re-examination. When challenged as to whether he could remember seeing Mr Ryan salvage anything from the hangar, he said:

“Q.  [You can’t now be sure] relevantly, whether you can remember him salvaging anything at all?

A.  I didn’t see him do it, but that’s what he was there to do.  I remember that’s what he was there to do.  He was there to clean out the rest of the hangar.

Q.  Is that because you understood that was what he was undertaking before the fire?

A.  That’s what I understood he was taking before the fire, and then that’s why he was there that day, because he wasn’t allowed access previously.

Q.  But you never saw him actually do it?

A.  I wasn’t observing what he was doing, no, not at the time.

RE-EXAMINATION BY MR LLOYD

Q.  Mr Pellegrino, you just said in answer to a question within the last minute that on the 13th your understanding was that he was there to clean out the rest of the hangar.  That was my note of your answer.  Do you remember saying that?

A.  Yes.

Q.  Why did you have that view?

A.  Because he wasn’t allowed access to the hangar prior to me being there.  So he got access when I got access, because he was locked out of the hangar.  I remember, because the lady had to give us access.

Q.  How did you come to this knowledge about what you’ve just described?

A.  Because I was there and that’s why he was allowed there, because we had the conversation, and that’s why I basically said, ‘Don’t touch anything until I’ve recorded it.’

Q.  Did he say something to you, is what I’m getting at?

A.  We definitely had conversations while I was there, because I even - yeah, we’d had multiple conversations while I was there, yes.”

50. The conclusion, which accords with most of Mr Ryan’s evidence-in-chief, the entirety of Mr Ryan’s evidence in re-examination on this issue, the entirety of Mr Pellegrino’s evidence on this issue, and is consistent with the photographic evidence I have summarised above, is that on 13 March 2013, after Mr Pellegrino had documented the surviving goods, Mr Ryan took some of them from the hangar. I have dealt with this somewhat elaborately because this aspect of Mr Ryan’s evidence was strongly contested on the second day of the trial, and because at one stage I understood the plaintiff to be submitting that Mr Ryan had not removed anything from the hangar on 13 March 2013, although in closing submissions, counsel did not cavil with the natural inference to be drawn from Mr Ryan’s evidence in re-examination (T241.32-49). Nonetheless, the plaintiff still submitted that what was removed on 13 March 2013 did not include any logbooks which had survived the fire (T241.50).

The reliability of Mr Ryan’s specific recollection of the logbooks

51. Mr Ryan contended that he had, until recently, believed that when he inspected the surviving documentation on 8 March 2013 he had a specific recollection of being relieved that all of the logbooks for all six aircraft although slightly burnt on the outside remained usable. As previously noted, he withdrew the claim for VH-OZF when it turned out that those logbooks had not been destroyed. He said that that was because they had been required by engineers doing maintenance work on the aircraft in Maryborough.

52. The essence of the plaintiff’s case was well summarised in oral submissions in reply this morning:

“[M]y case … is as follows. Aircraft owned by Aerolink had logbooks. For the purposes of this case that is the two Embraer, the Piper, the Cessna and the helicopter; and relevantly, OZF as well, and I’ll deal with OZF in a second. Those logbooks were kept in six boxes in the storeroom ordinarily, and that’s where Mr Ryan believed they were at the time of the fire. There are, we know, additional logbooks, random logbooks for parts, including the logbook for the Japanese [propellor] that’s sitting on top of the stack. … Immediately after the fire the logbooks were in situ on the ground, covered in debris, maybe with a blue logbook on top, but unclear from the photographic evidence that your Honour has. They were salvageable. They have not been removed by Mr Ryan at any time. They certainly weren’t removed from the storeroom and they definitely were not removed from the hangar. They remained in the possession of the defendant. Some time between December 2013 and January 2014, Ms Burnicle noticed logbooks and a filing cabinet that were salvageable to her mind, as a lay person, indifferent to what they were and indifferent to what they contained.

There was no attempt made by anybody from the defendant to catalogue those, to store them in a separate spot within the hangar, to ensure that Mr Ryan could have access to them. That included when they were cleaned up and they were disposed of by workmen engaged by the defendant. There was no audit process, it was simply picked up and taken to the tip, and in doing so, the defendant is a wrongdoer. Your Honour will take a robust approach against the wrongdoer, when your Honour comes to assess the damages.”

53. The difficulty with accepting that summary is that it does not squarely attend to all of the relatively contemporaneous documents which bear upon the conclusion for which the plaintiff contends.

Dr Green’s report

54. First, Mr Ryan met Dr Green on 11 March 2013 at the site. Dr Green made a report in 2016 which was tendered in Aerolink’s case on liability. The report records at paragraph 31, referring to the meeting on 11 March 2013, that

“Danny stated to me that the fire had destroyed paperwork on the history of the aircraft. He also said that without stringent paperwork on the maintenance of aircraft the aircraft become unserviceable and that serviceability can only be regained by a full maintenance overhaul and replacement of components. This situation had affected two and maybe three aircraft”.

55. I did not understand it to be contentious that the appropriate inference to draw from the structure of those two pages of Dr Green’s report was that, rather than his attempting to record from memory something he had been told more than three years before by his client, he was reproducing the gist of notes he had taken at the time of what his client told him on the day. Of course, notes can be and often are inaccurate. However, the likelihood is that the notes made on 11 March 2013 reflected a statement made by Mr Ryan that “two or maybe three” aircraft had been affected by the destruction of the paperwork.

56. Mr Ryan was cross-examined about the inference which paragraph 31 of Dr Green’s report sustains. He agreed in cross-examination with the first and second sentences, but at T39.43 he said he did not recall telling Dr Green the third. I find that Mr Ryan did tell Dr Green the third. That is not by any means fatal to the plaintiff’s case. As was emphasised to me, at this stage Mr Ryan had only attended the warehouse on one occasion after the fire, namely 8 March 2013, and it preceded his attendance with Mr Pellegrino on 13 March 2013. But there is no other plausible explanation for what appears in Dr Green’s report, and as will be seen, it conforms with other contemporaneous documents bearing on this issue.

Mr Ryan’s dealings with Ms Burnicle

57. Next, Mr Ryan wrote to an employee of the airport, Ms Melanie Burnicle, on 18 December 2013:

“Dear Melanie,

How are we going with getting a date for access into this hangar?

I have spoken to Hans Aeberli from Embraer, and he is basically of the same opinion as Gary Arnold from CASA. In light of their opinions I think it is a waste of time for us to try and salvage anything, we are just going to clean up the residue from the fire and take it to the tip.

Regards

Danny Ryan”

58. This was addressed by White J at the previous trial at [154], where his Honour said:

“Mr Ryan deposed that in sending that email he had intended to refer only to damaged spare parts and not to aircraft logbooks and paperwork. The email does not say so. Rather, he advised that he thought it a waste of time to try and salvage ‘anything’.”

59. The ordinary sense of Mr Ryan’s email is that he believed that nothing valuable remained in the hangar.

60. True it is that subsequently further emails from Ms Burnicle demonstrate that she was inside the hangar and inspected what remained in the aftermath of the fire. An email from her to an executive loss adjuster from Integra Technical Services (Australia) Pty Ltd, Mr Gibson, stated:

“From my perspective, I’m just waiting on Mr Ryan (the former tenant) to advise whether he’s going to abandon his salvage operation. I looked through the site myself and confirm there does not appear to be much able to be salvaged, save for some logbooks and the contents of a couple of filing cabinets. I’m not willing to let Mr Ryan in there with machinery (as he has suggested) given the nature of the damage to the office area.”

61. The plain inference which the plaintiff asks me to find, and which I do not understand the defendant ultimately to dispute, is that some logbooks which had survived the fire remained in the premises in January 2014 and thereafter until they were destroyed by a contractor of the defendant on 30 July 2014. The issue is whether those logbooks were associated with any of the five aircraft the subject of this claim.

The plaintiff had owned more than six aircraft

62. It is convenient to note at this point that no contemporaneous financial corporate or accounting information was tendered before me concerning the business operations of the plaintiff. No doubt, at least some of such information was destroyed in the fire. The plaintiff relied upon a depreciation schedule attached to its financial statements for the year ended 30 June 2018 which identified precisely six aircraft, but Mr O’Neill properly acknowledged the limitations upon that. That schedule does not establish that there were only six aircraft owned or operated by the plaintiff at the relevant time in 2013. Further, and for present purposes rather more critically, it falls far short of establishing that the only logbooks in the hangar at the time of the fire were logbooks pertaining to the five aircraft the subject of this claim. As noted above, it is plain beyond argument that in the hangar at the time of the fire were stored logbooks from aircraft which are not on the depreciation schedule (namely, the left-hand propellor logbook to which I have referred above), and it is known that Aerolink formerly owned at least one other aircraft (VH-LJF).

62. Mr Ryan’s company had had, as its principal place of business, according to ASIC records, that particular hangar at Bankstown Airport since 10 December 1999. 

Mr Newberry’s quotation

64. At some time prior to 22 April 2014, Mr Ryan asked a Mr Graham Newberry to provide an estimate for the cost of recreating three aircraft logbooks. Mr Ryan was cross-examined on the basis that Mr Newberry was the maintenance controller for at least one of those aircraft: T81.21. Mr Newberry advised in a document tendered before me that for the two Embraer aircraft, N110EM and VH-WBR, it would cost $120,000 and $130,000 and for the Piper VH-SIN it would cost between $10,000 and $12,000. Although Mr Ryan was, as I understand it, required to produce the correspondence, no record of his request for the quote, or for any other quotes, was produced. Mr Newberry’s quotation described his document as “estimate to recertify and create aircraft logbooks from fire damage”.

65. As I raised during the hearing, it is a little strange that no similar claim or quotation was obtained from Mr Newberry in relation to VH-OZF. Why obtain a quote for only two of the three Embraer logbooks said to have been in the storeroom? In response, (T214.13-20) this explanation was given:

“HIS HONOUR: Why doesn’t he ask – in your submission, why doesn’t he ask Mr Newbury how much it’s going to cost to re certify and create OZF?

O'NEILL: Because OZF is never going to fly. So, what’s happening here, the only recertification and creation that needs to be undertaken is so that these aircraft can be made airworthy. The logbooks for OZF – and he gave your Honour some evidence about this under cross examination – are less important to him for the operation of the business because it’s going to be effectively cannibalised for spare parts.”

66. That may be so, but a similar question arises in relation to the other two aircraft the subject of this claim, the Bell helicopter and the Cessna.

67. A further point made by plaintiff’s counsel in closing submissions was an elaborate submission based on the inference that, at that stage, when asking Mr Newberry for his quote, Mr Ryan believed that in due course he would recover logbooks – no doubt singed on the outside, but with the information they contained intact – from the defendant, and that the best way of reading the quote was that Mr Newberry was advising what extra work would need to be done to restore those readable logbooks so that they would pass muster at the hands of Customs. Mr O’Neill emphasised that the quotations given by Mr Newberry were substantially less than the evidence relied upon in this case from Mr Polley to recreate logbooks for the same aircraft.

68. It is best to reproduce the explanation in its terms:

“HIS HONOUR: Although, $120,000 seems like a lot of money to me, you say I should find that that estimate is based upon a readable logbook that’s going to be coming back his way, if Ms Burnicle is as good as her word?

O’NEILL: Correct.  And the difference between the quotes ‑ see, there’s not even a distinction made between 110EM and VBR by Mr Newberry, because it doesn’t matter.  It doesn’t matter what parts it’s got on it or how many engines or whatever.  It’s a matter of looking at what you’ve got and transferring that across through an audit process.  But PA31, being an aircraft that wasn’t Brazilian and probably doesn’t have a significantly difficult history to obtain, is an easier process and so therefore significantly cheaper.  So, far from being the crux of this deception, which is how it’s put, it is indicative of the fact that these aircraft – he’s going to recover those aircraft’s logbooks and he thinks he’s going to be able to do that for 120,000, 130,000.  Does your Honour understand the submission?

HIS HONOUR: You say the best way of reading the document at 359 is it’s drafted on the basis that Mr Ryan hopes to get back a suite of logbooks for those three planes that aren’t going to be satisfactory for CASA, need to be created, but there’s going to be usable information in what comes back to do so?

O'NEILL: Yes.  Depending on the extent of that, there’s a range of the quote, 120 to 130, because there could be a range of information, but one’s assuming that it’s mostly intact.  That point is made good by the fact of what’s required to be undertaken:  research for modification status; service bulletins; service instruction; incorporation of lifed items.  That’s looking at something that has a life, not looking at something that's taken back to zero, as a matter of being overhauled.  Overhaul is expressly excluded from this quote.  So it’s not, as is put by my learned friends, evidence of an instantaneous attempt to go out and get a quote for the three things that have been destroyed.  It’s completely the opposite.”

69. Although some credit must be given to the ingenuity of this explanation, which is supported at least in part by Mr Ryan’s evidence (T56.8-17), it is a little difficult to reconcile with the subsequent appearance of the amounts in Mr Newberry’s quotation in the initiating process which started these proceedings, to which I shall now turn.

The original statement of claim

70. Aerolink’s initial statement of claim in these proceedings was filed on 22 January 2016. That pleading made no mention of any claim based on the unauthorised removal of Aerolink’s chattels on 30 July 2014. Aerolink alleged that the defendant’s negligence had caused the fire. It alleged loss and damage from the fire of:

1. $130,000 “for the recreation of an aircraft logbook for the aircraft known as EMB11-N110EM” (para 26(d));

2. a materially identical allegation for the Embraer aircraft VH-WBR (para 26(f)), and

3. in para 26(g) “$12,000 AUD for the recreation of an aircraft logbook for the aircraft known as PA31-VH-SIN”.

71. They represent amounts formulated in originating process filed on the Supreme Court of New South Wales at a time when it was known that logbooks would not be returned - even if singed, but, nonetheless, legible - by the defendant. There was also no evidence before me, as opposed to submission in closing address, for why some $272,000 needed to be spent in order to turn three sets of singed, but legible, logbooks into something acceptable to CASA. That may be the case, but there was no evidence explaining why that should be so.

72. More importantly, in the statement of claim, it is to be expected that the plaintiff would, in a formal way, articulate the loss that it sought and, naturally read, those three allegations are references to the cost of recreating aircraft logbooks which had been destroyed in the fire. If it would cost $272,000 to recreate singed logbooks to a state when they would be acceptable to CASA, and very substantially more if the logbooks had been destroyed, why only sue for the lesser amount?

73. When Mr Ryan was cross-examined about those allegations, he gave no satisfactory answer as to why Mr Newberry had given those estimates for only those three aircraft, rather than the six (now five) aircraft the subject of this claim (T56.19-34).

74. A deal of attention was given to the concluding paragraphs of the pleading which propounds an alternative claim based on bailment. That claim is more broadly drafted than the claim in negligence, and includes an allegation that the defendant breached its duties as bailee, by “failing to return the plaintiff’s property safely” [para 45 (a)]. But Mr Ryan was explicitly directed to the more narrowly drafted allegations in the negligence pleading in his cross-examination:

“Q. Let me take you back then to paragraph 26, and I’ll put this question to you: you understood in this part of the pleading that the plaintiff’s case was that by various failures by the defendant, there was the need to recreate the logbooks for those three aircraft I asked you about, caused by the fire; that was your understanding, wasn’t it?

A. Yes.”

75. That evidence reads as an admission that the logbooks for those three aircraft were destroyed by the fire, although in fairness I would add that “caused by the fire” might, perhaps, be understood as extending to the destruction on 30 July 2014 in the aftermath of the fire.

The VH-BEK archive box

76. An enlargement of a photograph taken on 13 March 2013, as noted above clearly shows (and counsel agreed as much) a brown archive box, undamaged by fire, with a texta handwritten label VH-BEK. Mr Ryan agreed that he removed that box from the hangar on 13 March 2013, and I so find as noted above.

77. Consistently with the practice Mr Ryan described, there seems no reason to doubt in light of all that I have read and heard that that box contained the logbooks (and other documentation) for the Bell helicopter, that it was not damaged by the fire, and that it was removed more than a year prior to 30 July 2014. But I should explain the evidence that was given in relation to that box.

78. In the version of the court book provided in advance of trial, and, certainly, in its physical form exhibited to the defendant’s evidence, the fact that that archive box had a legible handwritten label, VH-BEK, was not obvious. For that reason, an enlargement of the photograph was tendered at trial. It may well be that Mr Ryan appreciated for the first time that the photography exposed a label VH-BEK when he was being cross examined. Understandably, he was cross-examined about that photograph.

79. He gave four different answers concerning that box.

80. The first was, “I don’t know what’s in that box” (T46.26).

81. The second, when it was put to him that he had, prior to the fire, moved the box labelled VH-BEK containing the logbooks from the storeroom out into the space of the hangar, was to say, “If I was going to move the box, I would have moved them all out, not just one” (T47.4).

82. The third answer may be seen at T47.11 - 14:

“Q. And I think you agree that whatever was in VH BEK, that box in 1079, was amongst the things that you removed from the premises on 13 March?

A. No, that box, when I look at it, it’s too small. It looks like a box that had some sort of component in it.”

83. As noted above, it is difficult to make accurate opinions of scale from photographs. But the box in the photograph may be compared with the other archive box on the floor and the cardboard box next to it and it appears to be of substantially the same size as other archive boxes.

84. Mr Ryan then gave this evidence:

“Q. You see, Mr Ryan, in your September affidavit you identified your system for recording in Texta on boxes the registration number for the aircraft where the relevant box contained logbooks for that aircraft, do you remember that?

A. Yes, but that applied to anything-

Q. And this is-

A. -came out of any particular aircraft. It was put down what aircraft, it would have been written on it somewhere what aircraft it came out of.

Q. And what you’d done with this box is you’d written down VH-BEK in accordance with your practice, because it contained the logbooks for VH-BEK, that’s true, isn’t it?

A. No, it’s not.”

85. I note that when Mr Ryan explained the system employed for storing records relating to the aircraft reproduced above, he identified a single box with a handwritten texta labelled on the outside for each aircraft. There was no indication that there might be more than one box per aircraft. It is difficult to avoid the conclusion that Mr Ryan appreciated full well the significance of an undamaged archive box on which was written in texta “VH-BEK” which had survived the fire and was located on 13 March 2013 within the hangar with other chattels which appear to have been removed by him later that day.

The Local Court litigation

86. Mr Ryan and Aerolink commenced proceedings in the Local Court of NSW in 2018 against Allianz Australia Insurance Ltd, the insurer for VH-WBR. They retained different solicitors from the firm retained in these proceedings. The pleading alleged that on 17 December 2012, VH-WBR was located at Nadi Airport in Fiji and was damaged by a cyclone. The statement of claim complained that the insurer had failed to pay a claim for damage to the plane from that event.

87. The significance of the local court litigation is twofold.

88. First, by its defence, the insurer alleged that “the logbooks and other records of the Aircraft were not kept up to date” and that the plaintiffs “did not produce logbooks and other records on request”. That prompted a reply, dated 17 February 2020, in which Mr Ryan personally and Aerolink positively alleged “that logbooks were kept as at the time of the cyclone (and were later lost in a fire)”. Mr Ryan was cross-examined on that reply. In light of the submissions, it is appropriate to reproduce the entirety of the cross-examination.

“Q.  When the insurance company made that allegation, do you remember your side, or you and your Aerolink put on a pleading document in answer called a reply, go to page 130?

A.  Yeah, I have 130.

Q.  That's the start of the document.  If you go to page 131, see in paragraph 2 what you and Aerolink were saying, in this document, in answer to the insurer’s contentions or allegations was that in 2(b) that the logbooks were kept at the time of the cyclone and were lost in a fire, do you see that?

A.  I do.

Q.  And in 4(c) the logbooks were lost in a fire?

A.  I saw that, yes.

Q.  And you were giving instructions to your lawyers to say that in the reply because that was your understanding, that is, the logbooks for that Embraer were destroyed in the fire?

A.  Yes.

Q.  You were giving those instructions to your lawyers that the logbooks for the Embraer were destroyed in the fire because that is what happened, isn't it?

A.  That was my understanding.”

89. The defendant said that those answers were extremely damaging to the plaintiff’s case, and so they are if they are accepted in their terms. It was said by the plaintiff in closing submissions that Mr Ryan’s evidence, when he agreed to understanding that the logbooks for this Embraer aircraft were destroyed in the fire, was mistaken, or for some other reason unreliable (T230.37). Prominence was given to the submission that the mistake was a relatively minor one insofar as it referred to the destruction of the logbooks in a fire, as opposed to their surviving the fire and then being destroyed on 30 July 2014. That is a possibility, although in the proceedings before me, it has been evident from the outset that the key issue in this case turns upon what survived the fire but was destroyed on 30 July 2014, so that it is an unlikely oversight given the context of this case.

90. However, I am also conscious that witnesses can and do make mistakes, that those answers were given by a man who had been – at that stage – cross-examined at length, and that it was late in the afternoon of the first day of the trial. I can understand why the cross-examiner did not take the further step and seek Mr Ryan’s agreement to the proposition that the logbooks for VH-WBR were destroyed in the fire, and not removed on 30 July 2014, and I am not to be taken as suggesting that that further question was necessary; the cross-examiner had in the previous three questions referred only to loss or destruction in a fire. I should also say, so as to be clear about it, that Mr O’Neill candidly acknowledged that there was nothing unfair about the series of questions that had been asked. Hence, and for those reasons, the better way of addressing the plaintiff’s submissions about that evidence to which, understandably, the defendants placed considerable weight, is that it was simply a mistake.

91. Secondly, Mr Ryan made an affidavit on 3 February 2020 in the Local Court proceedings in which he stated:

“In late March 2013 I started to realise the extent of loss and damage that Aerolink had suffered in respect of aeroplane parts that were damaged in the storeroom during the fire. I was not sure whether or not the logbooks for the Aircraft had been destroyed in the fire, if they were in any way salvageable I wanted too retrieve them”.

92. After describing the events of 2014, Mr Ryan concluded:

“In short, the logbooks relating to the Aircraft were lost in this fire and/or its aftermath”.

93. There are two aspects of that affidavit. One, of course, is that it is inconsistent with the unqualified allegation in the reply (as usual, the words “and/or” in an affidavit dealing with a factual matter suggest there has been a failure to attend precisely to the point). The second and more important point is that it is inconsistent with the unequivocal ‘specific recollection’ in paragraph 21 of Mr Ryan’s affidavit, which is a central aspect on this issue of the case.

94. I am conscious of the possibility of confusion. It seems to me highly significant that, for reasons unknown – I am not, by saying that, expressing any criticism – Mr Ryan and his company have, in separate proceedings touching upon the same aircraft but in a different court, retained different solicitors. It is possible that those other solicitors not so familiar with the issues in the then pending proceedings in the quantum hearing in this court, may not have appreciated the significance between destruction in the fire and survival in the fire and destruction afterwards by the agents of the defendant.

Instructions to Mr Polley

95. Some attention was also given by the defendant’s submissions to the form of instructions given by Aerolink’s solicitors in this Court to Mr Polley. I think there is force in Mr O’Neill’s submission that it is difficult to impute the precise paragraphs of the letter of instruction to Mr Polley and instructions given from Mr Ryan. I give that criticism by the defendant relatively little weight.

Findings on the logbooks

96. The reason for reciting above and commenting upon the contemporaneous documentary evidence the confrontation of which occupied the majority of Mr Ryan’s relatively lengthy cross-examination, is of course, so as to comply with the ordinary approach to fact finding of testing the recollection of witnesses, in this case many, many years after the event, with the contemporaneous documents and the context in which they came into existence.

97. There are certain things that I must bear in mind before making findings on this issue. First of all, as was emphatically submitted to me by the plaintiff, by reference to a familiar passage in Palmer v Dolman [2005] NSWCA 361 at [35]-[41], one aspect of the defendant’s submission was nothing less than an allegation of perjury in the witness box before me. The strictures of Briginshaw v Briginshaw and s 140 of the Evidence Act1995 (NSW) apply. I am not going to find that Mr Ryan was consciously telling untruths to me in the witness box, nor that he was consciously telling untruths in his evidence in his affidavit as to his specific recollection of what he saw in 2013.

98. However, I do reject Mr O’Neill’s submission, made to me yesterday that the issue before me was a binary one, either I would find conscious fraud, or he would win. I indicated resistance to that submission yesterday, and I do not understand that submission to have been pressed before me today, where counsel accepted at T242.30 that my task was “to look at all of those matters collectively”.

99. The question is whether, having regard to the entirety of the evidence, both testamentary and documentary, I am persuaded that some or all of the logbooks the subject of this claim survived the fire and were retained in the hangar until they were destroyed on 30 July 2014. Even though I accept that there is force in what might be said to amount to a shifting of an evidentiary onus by reason of the limited access Mr Ryan enjoyed to the hangar, nonetheless, the onus remains upon the plaintiff to make out its case.

100. It is also necessary to bear steadily in mind a difference between on the one hand being confused about whether books and other things which have not been in Mr Ryan’s possession for many years were destroyed in a fire in March 2013 or in the aftermath of a fire in July 2014 when what survived the fire was disposed of, and on the other hand for Mr Ryan to come to the court and to assert that books actually in Mr Ryan’s possession today were destroyed in 2014. But the difficulty that the plaintiff faces on this issue is that the fact of the matter is that Mr Ryan did come to this court, and verified a pleading, and made an affidavit in support saying that one of those planes had logbooks which survived the fire, which he had a specific recollection of seeing on 8 March 2013, and which he believed were destroyed, when in fact it is now known that they were not. That is, of course, the logbooks of VH-OZF. As I pointed out during the hearing, the fact that it was relatively easy for the defendant to uncover that truth, points against fraud (certainly, against sophisticated fraud). It does however point to a certain carelessness in checking the facts upon which Mr Ryan is prepared to bring a claim in this court and to give evidence on oath.

96. The third matter that I bear in mind is something raised yesterday, and to which Mr O’Neill returned this morning. The forensic reality is that in 2016, when these proceedings were commenced and when Mr Ryan’s first affidavit was sworn and when he verified his company’s statement of claim, his case was that the logbooks of three of his company’s aircraft had been destroyed in the fire. I completely accept the gravamen of Mr O’Neill’s response, which was that by the time the first half of these proceedings went to trial, that case had expanded, and that is plain from the way it was opened, and White J held as much. But there is a basal inconsistency which may be articulated as follows.

97. In 2016, the primary case advanced by the plaintiff involved destruction in the fire of logbooks for three particular aircraft. The case that I have heard over the last four days will fail if that aspect of the primary case is made out – that is to say, if I am satisfied that aircraft logbooks were destroyed in the fire. That is a difficulty that has not squarely been confronted by Mr Ryan in his evidence. The way in which important documents (a verified statement of claim and an affidavit) were drafted in 2016 is not explained by the fact that when the matter went to trial in 2018, the plaintiff was permitted to expand its case to an unpleaded claim based on the destruction of chattels on 30 July 2014.

98. The fourth point to say before making findings is that I saw Mr Ryan give evidence by AVL over around about a day. I do not hold myself out as being in any especially advantageous position, or having any special ability, to distinguish people telling the truth from people reiterating something that they have come to believe to be true or people telling something they know to be a lie or people who haven’t really bothered to work out whether what they are saying is true or false. The reliability of testimonial evidence is best determined by reference to the context, the inherent probabilities, and most significantly, the contemporaneous documents which, as I have sought to explain, in this case are numerous. No part of the findings that I make is dependent upon Mr Ryan’s demeanour. Another way of putting that is that any appellate Court reviewing this trial will be in no worse position than I am.

99. I find that the logbooks for three aircraft N110EM, VH-WBR and VH-SIN were destroyed in the fire on 6 March 2013. That is consistent with what Mr Ryan is recorded as having told Dr Green a few days later. It is consistent with the quotation obtained from Mr Newberry in April 2014. It is consistent with the pleadings that commenced this proceeding. It is consistent with Mr Ryan’s verification of those proceedings. More merely than the verification of a statement of claim, it is consistent with the whole process that I know and everyone at the Bar table knows takes place when proceedings are drafted and instructions are given to commence proceedings. It is also consistent with the primary case that was run and lost before White J in 2018, noting that highly conspicuous by its absence in the case as initiated in 2016 is any allegation of what occurred on 30 July 2014.

100. I find that the logbooks for VH-BEK, the Bell helicopter, were not destroyed in the fire. The box and the logbooks it contained survived undamaged. The box may be seen in the photograph reproduced above, taken on 8 March 2013, and I find that it contained logbooks in accordance with the methodology described by Mr Ryan. I am unpersuaded by any of his attempts to explain that that box contained something other than logbooks. I find that the box was taken away on 13 March 2013 by Mr Ryan. That accords with his evidence in cross-examination and re-examination.

101. I am unpersuaded that the logbooks for the remaining aircraft, the Cessna VH-XMA, were destroyed on 30 July 2014. They may have been destroyed in the fire, although, if they were, it would accord with the inherent probabilities and what has happened in relation to other aircraft, for Mr Newberry to have been asked to obtain a quote for them and for them to have been included as one of the particulars of damage in the statement of claim filed in 2016. It is possible that they were located in the archive box visible in the 13 March photographs which Mr Ryan said he removed and which I find that he removed on that day. But whether or not that is so, it is inherently plausible that if the Cessna’s logbooks survived the fire, they were located by Mr Ryan on 8 March or 13 March, and were taken away by him on the latter day.

102. It is possible, having regard to the way in which Mr Ryan has been prepared to commence proceedings in this Court without checking that logbooks of one of his planes survived both the fire and the destruction (VH-OZF), that the same is true for those pertaining to the Cessna VH-XMA. I do not consider that it is necessary, in order to resolve these proceedings, to make any more precise finding in relation to Mr Ryan’s knowledge of those books. In other words, the finding that I make is consistent with Mr Ryan merely being as careless as he was in his evidence concerning the Cessna logbooks as I know him to have been in relation to those of VH-OZF which is no longer part of this claim.

103. I am conscious of the evidence, especially Ms Burnicle’s emails following her inspection in December or January 2014, that some logbooks remained in the hangar. They may well have been logbooks for aircraft which the plaintiff had formerly owned, such as the logbook for the left hand propeller which may be seen in Mr Ryan’s photograph. But for the reasons I have given, I am unpersuaded that they were logbooks of any of the five aircraft on which this claim is based.

104. The result of those findings is that this proceeding will be dismissed.

Aerolink’s quantification of damages

110. In accordance with what was said in Kuru v The State of New South Wales (2008) 236 CLR 1; [2008] HCA 26, I proceed to determine the balance of the case on the basis that the finding that I have made above may be wrong. That approach also accords with Chief Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34 at [3] to [5] and PPK Willoughby v Baird [2021] NSWCA 312 at [15].

111. There are a number of permutations which are possible, having regard to the five aircraft the subject of this claim. The most convenient course is to assume, favourably to the plaintiff, that the logbooks for all five of its aircraft survived the fire but were destroyed on 30 July 2014. If the appropriate finding, contrary to what I have held above, is that only some of those logbooks survived, then as far as damages based on direct loss are concerned, that can readily be worked out, and as Mr O’Neill, with characteristic candour, acknowledged at T233.29, the impact upon the claim for consequential loss, based on a business case involving deploying all five aircraft, would be “dire” in that event.

112. There were two aspects to the plaintiff’s claim for damages: the cost of restoring the logbooks and a claim for consequential loss based on profit foregone from the time of the fire until March 2020 (that time period curtailed by the extraordinary events of the pandemic, which had a substantial impact upon the aviation industry).

Applicable principles

113. A threshold question is whether the quantification required by the orders is based on a claim in tort (in effect, for the conversion of Aerolink’s surviving logbooks) or in contract (by reason of the defendant’s breach of an arrangement struck between itself and Aerolink - see [163] and [164] of White J’s judgment).

114. The pleading does not assist, because, as I have noted above, this aspect of the claim was not pleaded, although White J records that it was opened on, run and was the subject of evidence served in advance of the case.

115. Both sides agreed that nothing turned on whether the claim was characterised as contractual or tortious. I proceed on that basis, noting that it accords with what was said by Sheller J in Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313 at [37], by the Court of Appeal in Gagner Pty Ltd v Canturi Corporation Pty Ltd [2009] NSWCA 413; 262 ALR 691 at [92], as well as the formulation of principle by Lord Dunedin in Admiralty Commissioners v SS Susquehanna [1926] AC 655 at 661 which Dawson J endorsed in Johnson v Perez (1988) 166 CLR 351 at 386; [1988] HCA 64: “The underlying principle upon which damages are awarded at common law, whether for breach of contract or for tort, is that of compensation”.

116. The second question is how best to regard what was destroyed. The packaging containing a vintage toy adds to its value. So does the dust jacket of a first edition book. It might well be said that the packaging and the dust jacket are in fact part and parcel of the chattel itself in its as new state. A closer analogy might be drawn with receipts showing the provenance of a Canaletto painting or the certificates from a recognised archaeological authority, confirming that an item was in fact an ancient oil lamp lawfully exported from the Middle East. The certificates and the receipts could unquestionably add value to the painting or the antique lamp, even though, in a real sense, they are merely information. If the authenticating documents were burnt in a fire or thrown out and destroyed by mistake, then it is easy to see how the value of the painting or the antique lamp would be diminished.

117. Mr O’Neill pointed to reg 50A of the Civil Aviation Regulations, which require the holder of a certificate of registration for an Australian aircraft to keep a logbook and make it available to CASA. The regulation creates an offence of strict liability, with a maximum penalty of 50 units. To be clear, it is highly likely that Mr Ryan had a defence to any prosecution from after 6 March 2013. But Mr O’Neill’s point was that the regulatory regime gave specific importance to the logbooks, such that it was appropriate in this case for the ordinary principles governing damage to require a measure which permitted their recreation.

118. The “cardinal concept”, as Windeyer J described it in Skelton v Collins (1966) 115 CLR 94 at 128; [1966] HCA 14, is compensation, the one principle that is “absolutely firm, and which must control all else”. Lord Blackburn said in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39:

“[W]here any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.”

119. In Robinson v Harman (1848) 1 Exch 850 at 855; 154 ER 363 at 365, Barke B formulated the compensation principle as follows:

“The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.”

120. Those words of placing a plaintiff, so far as money can do it, in the position they would have been in, conceal or are capable of concealing a deal of subtlety.

121. In the case of damage to goods, it is of considerable significance whether or not the goods are unique. I sought to expose this during argument by the example of Aerolink hypothetically owning and operating the sole surviving World War II Hurricane which had flown with an Australian crew. If its logbooks had been destroyed, then I could, in principle, see an argument for the necessity for their recreation in order to permit Aerolink to continue to fly what was a unique aircraft and by unique aircraft, I do not mean merely that every aircraft, the complicated compilation of components with its own individual history is different, but that this was a particular aircraft whose uniqueness speaks directly to, ultimately, its value, insofar as people would pay a premium to fly in the very plane that had flown Australian aircrews in World War II. There would be no reasonable alternative available to replace that aircraft.

122. Happily, there was common agreement at the Bar table that the following paragraph from Gagner was applicable to both the tortious and contractual cases before me.

“If a chattel is damaged, and can be replaced with a reasonable substitute in the market for a price significantly less than the cost of repair, the measure of damages recoverable is the replacement cost, not the cost of repair: Darbishire v Warran [1963] 1 WLR 106; [1963] 3 All ER 310. Harman LJ, at 1071; 312 said:

‘The principle is that of restitutio in integrum, that is to say, to put the plaintiff in the same position as though the damage had not happened. It has come to be settled that in general the measure of damage is the cost of repairing the damaged article; but there is an exception if it can be proved that the cost of repairs greatly exceeds the value in the market of the damaged article. This arises out of the plaintiff’s duty to minimise his damages.’”

123. I am conscious of some potential confusion in this area. The defendant relied upon Murphy v Brown (1985) 1 NSWLR 131. There, Mahoney JA referred at 133 to what was the requirement of reasonableness in Bellgrove v Eldridge. The defendant relied upon this. Priestley JA was a little more elaborate in dealing with this question as to what the “cardinal principle” required in the case of where there was something special in a good which had been damaged. Relevantly for present purposes, his Honour said this:

“The different ways of stating the relevant rule both flow from what is described in the title ‘Damages’ in Halsbury’s Laws of England, 4th ed, vol 12, as ‘The first principle; restitutio in integrum’ which is said to mean that ‘so far as money can do it, the injured person should be put in the same position as he would have been in if he had not sustained the wrong ...’ (par 1129 at 430). Professor Luntz’s Australian Commentary already referred to does not dissent from this statement. The question in the case of damage to a plaintiff’s motor car, is whether the principle requires his being restored to the position he would have been in if the accident had not happened by being put in the position of having a car substantially identical with the one that he had at the time of the accident or to the position where he has the car that he had at the time of the accident, in its pre-accident condition. In the case where there is something special about the plaintiff’s car the latter position appears to me to be required by the ‘first principle’. In the case where, as here, there is nothing special about the car, and in the absence of any authority dealing with the precise distinction my own inclination is to think that the former of the two ways of putting it is in closer accordance with the ‘first principle’.”

124. Hope JA, the third member of the Court, agreed with both formulations. It is not necessary for me to explore the difference between the reasons of Mahoney JA and Priestley JA, which does not arise on the view I take.

125. The principled approach, it seems to me, is this: the logbooks have no intrinsic worth in themselves. They are not especially beautiful for their calligraphy. Their value is both as to the information they contain and to demonstrate compliance with the regime which governs the operation of aircraft. All of this is a means to an end, namely, to achieve the safe and lawful operation of particular aircraft. For those reasons, I think that the logbooks are appropriately characterised for the purpose of the law of damages as ancillary to the aircraft. That accords with the submission made in a note provided to me by the defendant yesterday.

“In the present case there is no special value to the aircraft. The logbooks have only nominal value. The replacement cost for the logbooks is properly characterised as a diminution in the value of the aircraft.”

126. The relevant approach, therefore, is what is required to put Aerolink in a position where it has aircraft, including appropriate logbooks, in the same condition as it had prior to their wrongful destruction on 30 July 2014 which is, of course, the premise for this aspect of the analysis.

127. In Arsalan v Rixon [2021] HCA 40; 96 ALJR 1 at [4], emphasis was given to, in an automobile context, to “a broadly equivalent substitute vehicle”. I do not think that the law requires a defendant to place Aerolink in the position that it would have the very aircraft in service or the very aircraft in a position where it could, with some further work, be placed into service. In other words, this is not a case like the Hurricane example I gave during the hearing. There are other aircraft on the market and a deal of evidence has been provided in relation to those other aircraft which will achieve the purposes of the law of damages.

128. That results in the conclusion that it is not reasonable to spend more time and money recreating the logbooks destroyed on 30 July 2014 than would be spent in going into the market buying equivalent replacement aircraft, including logbooks.

129. There is one further assumption that needs to be made which is particular to this case, but is based on what emerges very clearly from the evidence in this case. In short, as Sir Frederick Jordan might in a very different context once have said, “There are logbooks and there are logbooks”; cf Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420. Mr Ryan had an LH propeller logbook relating to a plane that he had long ago sold. The logbook had no value to him. There must be many, many other logbooks of planes that have fallen out of service that will never again fly and, indeed, have no or next to no value even for “parting out”. On the other hand, there are logbooks which are of very considerable value for aircraft which are in service or, without too much effort, are capable of being put into service.

130. One of the limiting factors confining the damages for which a bailee is liable turns on knowledge. It is plain that this defendant was on notice that there were logbooks in the hangar after the fire (see Ms Burnicle’s emails of January 2014). The test of express notice or special knowledge has been deployed in intermediate appellate courts of this country to qualify the strictness of liability for conversion. That reflects the fact that it is inappropriate for the more generous test of remoteness in negligence to apply. It was said in National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252; [2002] VSCA 18 at [64] that “some more stringent test of remoteness than reasonable foreseeability is required for the strict liability tort of conversion. The obvious candidate seems to me that stated in France v Gaudet, namely, express notice or special knowledge”. This was followed in Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] 2 Qd R 335; [2007] QCA 94 at [70]-[74].

131. The defendant accepted before me that if logbooks which survived the fire remained on the premises until 30 July 2014, then it was on special notice for the purposes of that test. So be it. However, I shall proceed on that basis, assuming, without deciding, whether, on the facts of this case, it was sufficient for the defendant merely to have notice that there were logbooks or whether it was necessary to go further and for the plaintiff to establish that it had notice, that is to say, that the defendant had notice that the logbooks were logbooks of operational aircraft or aircraft which could, in short order, be made operational, for which the logbooks had very substantial value as opposed to, merely, historic logbooks of aircraft which had no material value whatsoever.

The value of the aircraft

132. Determining the property value of the five aircraft is complicated. The value of an aircraft is significantly affected by, for example, the age and condition of its components, especially its engines. The evidence before me was:

“An aircraft is [a] collection of parts, which includes the airframe, structural items (metal and composite), avionics, interior panels, engines, propellers, and landing gear etc. Some of these parts have life limits and some have a predetermined overhaul/repair time limit, and some are assessed and maintained ‘On Condition’. Collectively, these components made up the value of the aircraft. Some of these assets such as the engines, propellers, landing gear, and the airframe major inspections (or ‘heavy checks’) make up as much as 50% of the value of a new aircraft and as much as 95% of an older aircraft.”

133. That is well illustrated by another description of another Cessna 310R which Mr Crick gave, which I admitted over a Makita objection. I should interpolate that Mr Crick is a very impressively qualified aircraft appraiser and, in fact, President of the American Society of Appraisers, International Board of Governors who has valued more than four and a half thousand aircraft over the last 15 years and who lectures at Emory and Farnborough. Mr Crick said:

“I also recall personally working with an operator in northern Queensland in March 2014 that had a Cessna 310R aircraft in their fleet and were making enquiries to sell some of their aircraft. The Cessna 310R from 1974 that I assessed had approximately 11,900 hours of utilisation, upgraded avionics, and was in average or thereabouts condition. The engines had one side with only 200 hours since overhaul and the other one due overhaul and propellers with approximately 700 hours since overhaul on one side and due overhaul on the other side. Market information at the time indicated that $AUD150,000 was optimistic if there were buyers and half that amount to sell it effectively. I believe it sold for under $AUD100,000 in mid-2014.”

134. Without the logbooks, valuation is difficult, primarily because, in relation to a very significant, and possibly in many cases the most significant, component of value, it is not known how close to a required maintenance or overhaul those components are. There is further complexity because some ongoing maintenance requirements depend upon flying time and others depend merely upon calendar time.

135. However, Mr Crick had the advantage when approaching his task of valuing, of viewing reports of inspections of the actual planes by Messrs Swash and Hirst and others. He summarised the assumptions that he was applying in para 27.

Embraer / Bandeirante 110P1 / #110-426	N110EM	1982	32	Unknown	Last flight 2002, No Engines or Props since at least 2013, No Log Books since 2002 when entered Australia
Embraer / Bandeirante 110P2 / #110-292	VH-WBR (DQ-WBI Fiji Reg)	1980	34	22,848	In Fiji with Log Books since 2000/2001. Damaged in Cyclone in December 2012. Condition assessment as ‘very poor’ in November 2013 by John Bajjada with engines and propellers removed. Airframe damage assessment in September 2014 by Colin Miller (approx $175k). Parked outside in Nadi Airport Fiji since approx. 2006 assume not in service.
Piper / PA31-Navajo / #31-785	VH-SIN	1971	43	Unknown	Sighted on 15 July 2020 by Expert with overhauled engines and props being fitted (Log Books also sighted). Advised by LAME as being issued a Maintenance Release (only possible with appropriate Log Books) and assumed not missing
Cessa / 310R / 310RO628	VH-XMA	1976	38	Unknown	Sighted on 15 July 2020 by Expert with overhauled engines and props being fitted, Advised as undergoing SIDS inspection at time of fire (2013) at alternative hangar with Log Books assumed with the aircraft. Old style prop Log Books sighted in 2020 and assumed not missing.
Bell / 206B-JetRanger / #274	VH-BEK	1968	46	Unknown	Sighted by Expert on 15 July 2020 with parts in boxes. No confirmation of components or documentation

136. Mr Crick also relied upon Aerolink’s financial statements to determine the acquisition costs of some of the aircraft. A suggestion was made, including in the evidence of Mr Ryan, that some of those figures might not be reliable because at least one of the aircraft was said to have been acquired, in part, for the payment of money and, in part, to put to one side, unpaid hangar fees. However, no attempt was made before me in any formal way to establish that Aerolink’s own accounting records were inaccurate.

137. Mr Crick expressed the following opinions of value of the aircraft with and without logbooks (values are in US dollars):

1. Embraer N110EM, made in 1982: with logbooks $5,000; without logbooks $5,000

2. Embraer VH-WBR, made in 1980: with logbooks $25,000; without logbooks, $25,000

3. Piper VH-SIN made in 1971: with logbooks $92,000; without logbooks $30,000

4. Cessna VH-XMA made in 1976: with logbooks, $90,000; without logbooks, $25,000

5. Bell 206B VH-BEK made in 1968: with logbooks, $210,000; without logbooks, $50,000

138. By way of summary to explain those values, Mr Crick explained that N110EM was an aircraft which had never been registered in Australia, which had been acquired, according to Aerolink’s accounts, for A$50,000, with no allowance since then for depreciation and he expressed the view that even if the aircraft were at half life, $50,000 would have been an optimistic value. He explained that the likely fair market value for the aircraft on 30 July 2014 would be $5,000. He further explained (para 67) that if that aircraft lacked its logbooks, there would be no material difference, given the significant works required to have the aircraft made airworthy. His view was that the aircraft would most likely be involved in a transaction described as “parting-out”, where the parts were scavenged for use by other aircraft. That is why he ascribed no loss to the loss of the logbooks for that aircraft.

139. VH-WBR, according to Mr Crick, had been located in Fiji for the last 22 years, had been damaged by a cyclone in 2012, was assumed not to be in active service, and had been parked outside since 2006. It was acquired, according to Aerolink’s records, for A$311,000, but had been written down so that it is now valued at $120,000. Again, he says that significant remedial works would be required to ensure that it was made airworthy. His view was that the market value of the aircraft on 30 July 2014 would be $5,000, and for the engines and propellors, some $20,000. Once again he expressed the view that the logbooks would not make any material difference to the value.

140. The Piper Navajo, in contrast to the two Embraers, would, according to Mr Crick, suffer a $62,000 diminution in value for the loss of its logbooks. He explained that the plane was some 43 years old, had been purchased for A$55,227, and he made the favourable assumption that it was, at that stage at mid-life, although he was sceptical of that assumption. He explained the notion of when an aircraft is “Beyond Economic Repair” or “BER”, which is when the cost of restoring an aircraft to a condition in which it can safely fly considerably exceeds the value of doing so. That was the case for this aircraft. For that reason, he was of the view that “the value of the aircraft without the logbooks present would be part-out value only, considering again that the aircraft is approximately 43 years old and towards the twilight of its service life from the perspective of market demand”. He ascribed a fair market value of the craft without logbooks of $10,000 for the aircraft and $20,000 for the engines and propellors.

141. The analysis for the Cessna is substantially the same. It too was, in his view, Beyond Economic Repair, and that leads to a similar calculation recorded in his table.

142. The Bell Helicopter is in substantially the same position, although its residual value without logbooks is more substantial than the others. The helicopter was 46 years old in 2014. Assuming it was at half-life and in average condition with a very basic fit-out, Mr Crick valued it at US$210,000 with logbooks. Without log-books, making the helicopter airworthy would have required reconditioning of its engine, main transmission and both main rotor blades. He said that the average cost of reconditioning a Rolls Royce Allison 250 C20 engine in 2014 would be US$250,000 – 280,000, exclusive of GST. Mr Crick did not bother making inquiries as to the cost of overhauling the transmission and rotors, because it was clear that the cost of reconditioning the engine exceeded the value of the aircraft. In his words:

“Just overhauling the engine would equate to $US250,000 (at the low end), which is approximately 1.2 times the value of the helicopter and in essence deems the helicopter Beyond Economic Repair (BER). In these circumstances, we would consider that the value of the helicopter without the Logbooks present would be part-out value only, considering again that the helicopter is approximately 46 years old and facing significant downward pricing pressure from newer and more capable models …”

143. Mr Crick gave a part-out value of US$50,000 to the helicopter and its core components as at 30 July 2014.

144. The reason for reproducing that evidence, which in very large measure was not challenged, and which I accept, is that it informs both aspects of the claim for damages. I turn first to the damages for the direct loss of the logbooks.

Aerolink’s claim for direct loss

145. The plaintiff advanced four different ways of putting this part of its case.

1. The first was the cost of reconstructing or recreating the logbooks. Mr Polley gave unchallenged evidence of this. It was many millions of dollars.

2. The second way was exposed by the answer Mr Polley gave to question 5 of his report. That was based merely upon the cost of going into the market at about the time of the fire and obtaining a replacement aircraft (including the logbooks). Mr Polley seems mostly to have relied upon offers rather than actual transactions, doing so because there was a very thin market for these craft. That produces again a figure of around $3,300,000.

3. The third way in which the plaintiff quantifies its claim for damages emerged in the joint experts’ report, exhibit B. That involved both experts expressing views about what a ‘middle of the road’ aircraft as Mr Lloyd put it (T140.29) – namely an aircraft of the same type at mid-life and with a mid-time airframe. There was broad agreement that the Embraers would be US$150,000 to $200,000. There was disagreement for the Piper and the Cessna, the source of the disagreement being that Mr Crick relied upon actual transactions, while Mr Polley relied upon asking prices. I prefer Mr Crick’s evidence of value based on actual transactions, and they reflected amounts of US$92,000 for the Piper and US$90,000 for the Cessna already noted. There was also agreement as to the Bell Helicopter at some US$200,000.

4. The fourth way in which the plaintiff put its case was the valuation given by Mr Crick, namely, the difference between the value of these very aircraft with and without logbooks. I have set this out at some length above.

146. Measures 1, 2, and 3 ignore the immense betterment that would be obtained by the plaintiff. It is unreasonable for a plaintiff to spend literally millions of dollars to recreate logbooks of aircraft, some of which are Beyond Economic Repair. Some of the planes have not flown for many years. The unchallenged evidence of Mr Crick is that the realistic value of some of the aircraft was on a part-out basis, and on that basis the logbooks added nothing. The notion that compensation for millions of dollars of obtaining a new aircraft on the market together with logbooks is a better measure of compensation for the destruction of the logbooks of these ageing craft, is not one that I accept. This was captured by Austin J in Jiwira v Primary Industry Bank of Australia Ltd [2000] NSWSC 1094 at [256], upon which the defendant relied:

“Mr Baker is therefore entitled to damages equivalent to the market price of goods of similar quality and condition to those converted. He is not entitled to the amount needed to buy new versions of those goods, as this would place him in a better position than if he had not suffered any wrong, in contravention of the underlying principle: J & E Hall Ltd v Barclays [1937] 3 All ER 620, 623.”

147. The best measure of the plaintiff’s loss on this scenario is Mr Crick’s estimate of US$287,000. To that amount, the plaintiff is concededly entitled to interest. My tentative view, but I have not heard any argument on it, is that because the value was lost on 30 July 2014 on this assumption, then and there, and that loss of value happens to have been measured in US dollars, a conversion to Australian dollars should take place on that day. That is consistent with what Kirby P said in Brown Boveri (Aust) Pty Ltd v Baltic Shipping Company (1989) NSWLR 448 at 463: “The Court’s duty is to express a judgment in the currency which best expresses the loss of the party which is being sued”. Another way of putting this is that this is a case for loss in Australia to chattels located in Australia, which happens to be best measured by reference to an international market priced in US dollars.

Aerolink’s claim for consequential loss

148. I turn to the plaintiff’s claim for consequential loss. That was based upon a model derived by Mr Peter Brown, a chartered accountant. He was not required for cross-examination. In essence, his model involved assuming that the five aircraft would each fly 450 hours each year and would achieve an average margin of 60%. The 60% was derived from industry statistics which noted that on average, operators achieved margins of 55-65% for non-scheduled passenger flights, and 65-75% for non-scheduled carriage of freight. Most of the revenue in the hypothetical business would be derived from the Embraers, which were assumed to be equally occupied in conveying passengers and freight. There were, on his model, chartered flights for the Piper and the Cessna, and recreational flights for the Bell (see para 7.3.2).

149. The opinion expressed in the report amounts to saying that the business will put the planes into the sky and generate revenue sufficient to achieve what happens to be the average – or slightly less than the average – of revenue in this industry. Because the costs of this operation are relatively fixed, the hypothetical margin determines what the likely revenue is said to be.

150. There is no analysis in Mr Brown’s report of how competitive the market is.

151. There is no analysis in Mr Brown’s report of how long it might take a new entrant with these aeroplanes to build up its business.

152. There is no analysis of the need to advertise or to reduce prices, as many new entrants to markets have to do.

153. There is no analysis even of the possibility that it will take a little bit of time for the utilisation rates, which go up to 75% in the case of the Embraers, to be achieved.

154. There is good reason for these silences. There is nothing in Mr Brown’s report to suggest he has any expertise in the market for supplying freight or passenger services by air. There is nothing before me to suggest how readily available pilots to fly these planes will be. Mr Brown allows an amount of up to $1,000,000 to bring the five aircraft to airworthiness. I mean no criticism to him, but that figure has every impression of being an arbitrary amount plucked out of the air. Whether that is sufficient to bring these five ageing aircraft into service is entirely unsupported by evidence adduced by the plaintiff, and Mr Crick’s evidence is to the contrary (in addition to the cost of conditioning the Rolls Royce Allison engine of the helicopter mentioned above, he explained that the cost of overhauling the Cessna’s engines would be some $150,000 exclusive of GST, and Piper engines would be $210,000 exclusive of GST). Whether Aerolink would be able to obtain such funds is also entirely unsupported by evidence.

155. The source of evidence for all of those integers to Mr Brown’s model could have been Mr Ryan. Mr Ryan was stated to be the source of the instructions, and I do not cavil with that, but Mr Ryan gave no evidence before me of any of those matters.

156. Further, there is no evidence before me of Aerolink’s profitability or otherwise in 2013 prior to the fire. All that I really know is that it was leaving the premises where it had had its principal business place for many years at the time of the fire. True it is that Mr Brown candidly says (para 4.2) that no financial records are available for Aerolink, and that may well have been because of the fire, but copies of tax returns are undoubtedly available from the Australian Taxation Office, and if Aerolink retained an accountant, as it now does, then the accountant’s copy of those records would not have been destroyed in the fire.

157. There is also a level of unreality in the business which springs into existence following Mr Brown’s model. As Mr Crick has observed, one of the planes has never made its way onto the Australian register. Another had been sitting exposed to the elements in Fiji for around about a decade at the time business was meant to start. Why should it be assumed that, but for the wrongful destruction of logbooks, there was any realistic prospect that many hundreds of thousands of dollars would have been spent on these aircraft with a view to getting one of them onto the Australian register for the first time, and another back into the country, and flying in the air making money?

158. These points were captured in an exchange yesterday afternoon:

“But there’s no evidence from Mr Ryan about those things. It’s remarkable for an economic loss of $1.4 million that Mr Ryan didn’t say, ‘I had access to these pilots, I had this many staff, I had customers from these people’, it’s just completely absent, in terms of there’s no ability by me to test the underlying features of the case. And that’s underscored particularly by the criticality that Mr Brown records fairly at p 640 at 7.11 and 7.12 about the criticality of those assumptions to his opinion.

In particular 7.11, for example, we know that taking the US, the N110, that has never been airworthy. And we know the Fijian one, being sitting there, Mr Ryan says this, for years and years without being ever been flown, and so not only do we have no evidence about all of the critical integers for an economic loss case, but a critical assumption your Honour knows from the evidence it’s not made out by the plaintiff, so the report is supported by only of an opinion about a hypothetical business.

HIS HONOUR: The hypothetical business involves spending a lot of money upfront to get these aircraft into the air. It’s not entirely clear to me how much of that is factored in; there's an assumption at 5.6.4 about six to nine months and no more than a million dollars to get them in the air. I don’t have much evidence before me, certainly that I’ve been taken to, about whether those times and numbers are realistic and the extent to which this plaintiff had access to those funds.

LLOYD: May I respectfully take issue with one aspect of that. Your Honour has no evidence.”

159. Against all of this, the plaintiff rightly adverted to authorities to the effect that any case for economic loss of this nature is necessarily hypothetical: see State of New South Wales v Moss (2000) 54 NSWLR 536; [2000] NSWCA 133 at [71]. The plaintiff likewise appropriately emphasised that mere difficulties in proof do not stand in the way of obtaining a judgment in such a case: see Moss at [72]. I accept that it is not necessary for the plaintiff to show that, had the logbooks not been destroyed, the business case described by Mr Brown, or something broadly similar to it, would have occurred. But what does need to be done is more than establish a spreadsheet based on inputs, some of which seem on their face to be implausible, and most of which lack foundation in the evidence. I do not accept that the plaintiff has made out a case for any consequential loss.

Orders

160. I turn to the orders. This, as I see it, is not a case for nominal damages. This is a case where the plaintiff's claim for quantification turns on a question of primary fact, namely, that five sets of logbooks survived the fire and were destroyed on 30 July 2014. That claim has not been made out. The plaintiff has already been vindicated for the defendant’s wrongful conduct on 30 July 2014 by this Court’s earlier judgment and the costs order made following the earlier trial: Aerolink Air Services Pty Ltd v Bankstown Airport Limited (No 2) [2019] NSWSC 1853. The appropriate order is that the proceedings be dismissed.

161. HIS HONOUR: Costs orders would ordinarily follow the event. Does anyone want to be heard for some different order?

[DISCUSSION re special costs orders].

HIS HONOUR: I am told that the defendant may wish to rely on an offer of compromise for a different exercise of the costs discretion from that in UCPR 42.1. I direct that by next Wednesday, 18 May, the parties supply to my Associate either any agreed order as to costs or, in default of agreement, the defendant supply any material and short submissions on which it relies, with the plaintiff to respond by - is Friday going to be enough, Mr O’Neill?

O’NEILL: It will, your Honour.

HIS HONOUR: By Friday, 20 May 2022, with a view to any question as to costs being resolved by me on the papers unless either side indicates to the contrary in the documents they supply to me.

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Decision last updated: 16 May 2022