AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton UTZ (A firm) (No 2)
[2019] WASC 306
•28 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: AVWEST AIRCRAFT PTY LTD as trustee for AVWEST AIRCRAFT TRUST -v- CLAYTON UTZ (A FIRM) [No 2] [2019] WASC 306
CORAM: VAUGHAN J
HEARD: 21 MAY - 1 JUNE 2018 & 19 JUNE 2018
DELIVERED : 28 AUGUST 2019
FILE NO/S: CIV 2167 of 2016
BETWEEN: AVWEST AIRCRAFT PTY LTD as trustee for AVWEST AIRCRAFT TRUST
Plaintiff
AND
CLAYTON UTZ (A FIRM)
Defendant
Catchwords:
Professional negligence - Duty of care - Coextensive duty in contract and tort - Scope of duty pursuant to retainer - Where defendant received instructions to review and suggest appropriate amendments to clauses of a contract to ensure clauses fairly weighted and not one sided - Retainer urgent - Duty to provide accurate, complete and balanced advice - Duty to warn of any material risk - Whether defendant failed to exercise the skill, care and diligence expected of a reasonably competent legal practitioner in performance of retainer - Turns on own facts
Professional negligence - Causation - Loss of opportunity - Balance of probabilities - Whether defendant's failure to provide accurate, complete and balanced advice occasioned loss of commercial opportunity - Whether plaintiff proven opportunity would have been taken up - Where opportunity advanced is opportunity not to proceed with contract or to negotiate contract on more favourable terms - Whether break in the chain of causation - Whether plaintiff contributorily negligent - Whether agents of plaintiff concurrent wrongdoers - Turns on own facts
Damages - Measure of damages - Remoteness and causation - Loss of opportunity - Whether hypothetical proven on balance of probabilities - Whether kind of loss was reasonably foreseeable at the time of entering into the retainer - Opportunity to negotiate contract on more favourable terms
Damages - Assessment of damages - Degree of probability - Assessment of the value of lost opportunity - Difference between what plaintiff would have obtained from third-party absent defendant's negligence and the amount reasonably accepted in settlement with third-party - Whether settlement reasonable - Whether plaintiff failed to mitigate against loss - Turns on own facts
Evidence - Fairness - Whether discretion to exclude otherwise admissible evidence on the grounds of fairness in a civil proceeding
Evidence - Best evidence - Whether secondary documentary evidence is admissible - Whether secondary documentary evidence is best evidence available - Where absence of original documentary evidence is explained - Where original documentary evidence is not in the possession, power or control of the parties - Whether exception arises as party in possession of original documents is a stranger to the litigation and beyond the jurisdiction of the court
Evidence - Expert evidence - Expert accountant evidence - Experts' assessment of loss - Competing models for assessment of loss of hypothetical business profits - Whether appropriate to use ex post rate of return analysis - Whether appropriate to use ex ante discounted cash flow analysis - turns on own facts
Legislation:
Civil Liability Act 2002 (WA), s 5C, s 5AK
Result:
Plantiff's claim allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | A S Bell SC & V Whittaker |
| Defendant | : | K Rees SC & K R Lendich |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| Defendant | : | King & Wood Mallesons |
Case(s) referred to in decision(s):
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79
Astley v Austrust Ltd [1999] HCA 6; (1999) 197 CLR 1
Attard v James Legal Pty Ltd [2010] NSWCA 311; (2010) 80 ACSR 585
Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345
AVWest Aircraft Pty Ltd v Bombardier Inc [2018] WASC 139
AVWest Aircraft Pty Ltd v Clayton Utz [2018] WASC 167
Axon v Axon [1937] HCA 80; (1937) 59 CLR 395
Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440
Bennett v Minister for Community Welfare [1992] HCA 27; (1992) 176 CLR 408
Berryman v Hames Sharley (WA) Pty Ltd [2008] WASC 59; (2008) 38 WAR 1
BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd [2007] WASCA 179; (2007) 356 WAR 27
Brown Boveri (Aust) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448
Browne v Dunn (1893) 6 R 67 (HL)
Carmody v Priestly [2005] WASC 120; (2005) 30 WAR 318
Carradine Properties Ltd v DJ Freeman & Co [1955-1995] PNLR 219
CDJ v VAJ (No 1) [1998] HCA 67; (1998) 197 CLR 172
CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232
Chong v CC Containers Pty Ltd [2015] VSCA 137; (2015) 49 VR 402
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325
Doolan v Renkon Pty Ltd [2011] TASFC 4; (2011) 21 Tas R 156
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167
European Bank Ltd v Evans [2010] HCA 6; (2010) 240 CLR 432
Evans &Associates v Citibank Ltd [2007] NSWSC 1004
Falkingham v Hoffmans (a firm) [2014] WASCA 140; (2014) 46 WAR 510
Flack v Chairperson, National Crime Authority (1997) 80 FCR 137
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
GW Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47
Harrison v Bloom Camillin [2001] PNLR 7
Heenan v Di Sisto [2008] NSWCA 25
Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1
Huntingdale Village Pty Ltd v Corrs Chamber Westgarth [2018] WASCA 90; (2008) 128 ACSR 168
Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
Lewis Silkin LLP v Wright [2016] EWCA Civ 1308
Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
May v Mijatovic [2002] WASC 151; (2002) 26 WAR 95
May v State of Western Australia [2018] WASCA 24
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384
Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140
Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388
Neilson v Overseas Projects Corp of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331
Nikolaou v Papasavas, Phillps & Co [1989] HCA 11; (1989) 166 CLR 394
Novotny v Todd [2002] WASCA 79
Olympic Holdings Pty td v Lochel [2004] WASC 61 [121]
Patersons Securities Ltd v Financial Ombudsman Service Ltd [2015] WASC 321
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 77 ALJR 768
Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419
R v Christie [1914] AC 545
R v Nowaz [1976] 3 All ER 5
Riley v Pickersgill [2004] UKPC 14; [2004] 4 LRC 471
Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434
Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666
State of New South Wales v Burton [2008] NSWCA 319
TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83; (2014) 232 FCR 361
The Bell Group Ltd (in liq) v Westpac Banking Corporation Ltd (No 9) [2008] WASC 239
Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321
Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375
West Australian Construction Industry Redundancy Fund Ltd v Ortin [2002] WASC 185
Table of Contents
1. Overview
2. The essential factual background
(1) The parties
(2) The relationship between AVWest and CU
(3) Purchase and refurbishment of Bombardier Global Express XRS SN 9173
(4) The draft Cabin Modification Agreement
(5) AVWest request that CU review and amend draft Cabin Modification Agreement
(6) Negotiation and execution of the Cabin Modification Agreement
(7) Completion of the purchase of the Aircraft
(8) The fire and the insurance claim
(9) Consequential litigation in the United States of America
(10) AVWest settles the insurance claim with the Insurers
(11) AVWest's resumption and settlement of its litigation against Comlux AS in the United States of America
(12) Commencement of the claim against CU
3. Nature of AVWest's claim and CU's defence
4. The issues for adjudication
5. Approach to the evidence
(1) Documentary evidence
(2) Jones v Dunkel and Browne v Dunn
(3) Hypothetical evidence
(4) Admissibility ruling in relation to Mr Pelet's evidence
(5) Evidence of Indiana law
6. The witnesses
(1) Timothy Roberts
(2) Timothy Burton
(3) Christophe Pelet
(4) Kevin Harvey
(5) Ernie Killingsworth
(6) The accounting experts
7. Additional factual matters
(1) AVWest's business and mode of operations
(2) AVWest's relationship with Bombardier
(3) Work undertaken by CU for AVWest and its associated entities
(4) Mr Roberts' approach to risk
8. CU's retainer and its performance of that retainer
(1) The matters relevant to CU's duty of care
(2) The scope of CU's retainer
(3) The duty owed by CU to AVWest
(4) What CU did in performance of the retainer
9. Disposition: CU breached its contractual and tortious duties
10. The counterfactual: what would have happened had CU performed its retainer as a reasonably competent Australian legal practitioner
(1) Damages for loss of opportunity
(2) Scenario 4 is not established on the balance of probabilities
(3) The alternative transactions under Scenarios 2 and 3: AVWest establishes the loss of a valuable opportunity as to Scenario 2 but not Scenario 3
11. Remoteness / Reasonable foreseeability of loss
12. Quantification of loss
(1) The proper construction of cl 10 of the CMA under the law of Indiana
(2) Quantification of loss under Scenario 2
(3) No provisional quantification of loss under Scenario 4
The task of quantification under Scenario 3 and Scenario 4
The accounting experts' assessment of loss
The competing models for assessment of loss
Differences as to the inputs employed by the competing models
Conclusion on quantification under Scenario 3 and Scenario 4
13. No defence based on the resolution of AVWest's claim against the Insurers
14. No defence based on the resolution of AVWest's claim against Comlux AS
15. Contributory negligence
16. Concurrent wrongdoers
17. Conclusion and orders
VAUGHAN J:
Overview
Mid‑morning on 17 September 2010 the plaintiff, AVWest Aircraft Pty Ltd (AVWest), requested that its solicitors ‑ the defendant Clayton Utz (CU) ‑ review four clauses of a draft Cabin Modification Agreement (CMA) and make appropriate amendments by way of mark‑up.
Two solicitors employed by CU reviewed the CMA for about 42 minutes. Later that day the solicitors had no more than a 12 minute telephone conversation with AVWest's representative about the draft CMA. Amendments were recommended. In due course CU charged AVWest $1,183.60.
AVWest now claims against CU in negligence and contract for alleged failure to exercise reasonable skill, care and diligence in the performance of the retainer. On AVWest's case the alleged breach sterilised $US31 million in capital. AVWest seeks damages to compensate it for alleged loss of opportunity due to the $US31 million not being available for deployment in its business. Based on expert evidence the amount claimed is $US36,961,330.
For the reasons developed below I have concluded that:
•In performing its retainer CU failed to exercise reasonable skill, care and diligence.
•CU's negligence caused AVWest to suffer compensable loss; it was deprived of a valuable commercial opportunity, namely, the opportunity to negotiate the CMA on more beneficial terms that would have resulted in AVWest obtaining a materially higher settlement sum at an eventual mediation with the counterparty to the CMA.
•However, AVWest has not established that, had it received non‑negligent advice, it would not have proceeded with the CMA and an associated purchase of an aircraft for $US31 million. Accordingly, AVWest has not succeeded on its loss of opportunity case based on CU's negligence causing or materially contributing to the $US31 million purchase price not being available for deployment in AVWest's business. It was this case that grounded the claim for damages exceeding $US36.96 million.
•The damages for the case on which AVWest has succeeded are quantified in an amount of $US546,725.
It follows that AVWest is entitled to judgment against CU in an amount of $US546,725.
The essential factual background
The parties helpfully provided a relatively detailed statement of agreed facts (SAF). It will assist the exposition of my reasons to draw on the SAF at the outset. In doing so I will, as appropriate, refer to some of the documentary evidence and other uncontroversial evidence. Having identified what is common ground or uncontroversially established on the documents and the other evidence I will be in a position to identify the issues in the litigation.
Insofar as there are seriously contested factual issues for determination, those matters will be addressed later after referring to the witnesses and canvassing the evidence.
The parties
AVWest is a company and the trustee of the AVWest Aircraft Trust.[1] At all times Tim Roberts was the chief executive officer of AVWest.[2] He was also (from incorporation until 10 June 2017) the sole director of AVWest.[3] At the time of the events in the litigation Tim Burton was the chief financial officer of AVWest.[4] However, Mr Burton was employed by Warburton Group Pty Ltd.[5] Warburton Group Pty Ltd is one of the entities in the Warburton group, a private investment and operating group established by Mr Roberts in May 2004.[6] Warburton Group Pty Ltd was engaged by AVWest to provide management services including the services of Mr Burton.[7]
CU is a leading firm of solicitors in Australia. Among other places it has an office in Perth, Western Australia.[8]
AVWest was incorporated on 17 January 2008.[9] Before then another Warburton group entity, AVWest Pty Ltd (not to be confused with the plaintiff AVWest), conducted an aircraft charter, maintenance and operations business. This had commenced in 2002.[10] AVWest was incorporated to be a vehicle through which the Warburton group (ie Mr Roberts) was to conduct an aircraft purchase and sales business.[11] As Mr Burton explained it, AVWest's core business activity between the years ended 30 June 2011 and 30 June 2014 was the purchase and sale of new and used aircraft and contracts for the manufacture and delivery of aircraft at a future time.[12] The latter were referred to as aircraft 'positions' or 'slots'.
More must be said of the nature of AVWest's business in due course.
The relationship between AVWest and CU
[1] SAF, par 1.
[2] SAF, par 2.
[3] Ex 4A, par 16.
[4] SAF, par 3.
[5] SAF, par 3.
[6] Ex 4A, par 5.
[7] SAF, par 4.
[8] SAF, par 5.
[9] Ex 4A, par 15.
[10] Ex 4A, pars 11, 14.
[11] Ex 4A, pars 13, 17.
[12] Ex 4A, par 18.
Between at least 2008 and September 2010 AVWest and other entities controlled by Mr Roberts engaged CU on many occasions for the purpose of obtaining legal services on a range of matters. This included matters connected with the business and operations of AVWest and other entities in the Warburton group. Relevantly, the legal services provided included services in relation to the purchase and sale of aircraft.[13]
[13] SAF, par 12.
Later in these reasons it will be necessary to address in more depth the nature of the instructions undertaken by CU for AVWest and its associated entities; and CU's consequential understanding of the nature of AVWest's business. For now it suffices to note that by its pleadings CU accepted that between September 2007 and September 2010 it had acted for AVWest and its associated entities (such as AVWest Pty Ltd) on at least 31 occasions before the instructions the subject of these proceedings.[14]
[14] Defendant's Answers and Objections to the Plaintiff's Request for Further and Better Particulars of the Amended Defence dated 13October 2017 (DFBP), answers 1(b), 1(c) and sch A, B.
Mr Burton was directly involved in the process of engaging and instructing CU over the period from 2008 to September 2010. One of the CU lawyers Mr Burton had engaged and provided instructions to was David Hodgkinson.[15] Mr Hodgkinson was a 'special counsel' at CU who Mr Burton understood to have significant experience in the aviation industry.[16]
[15] SAF, par 13.
[16] Ex 4A, par 55.
The relationship between the Warburton group entities and CU preceded the incorporation of AVWest. The documentary evidence included an email from Mr Burton to CU dated 17 August 2007 as to the sale of a Westwind II aircraft by AVWest Pty Ltd.[17] The responsible partner at CU on‑sent the email to Mr Hodgkinson stating:
Can you call me to discuss when you are in the office. The client have [sic] not expressly asked us to review the contracts, though I think you should give them a quick once over, then, if you think warranties, indemnities etc need further work, we can take instructions on whether our role is limited to mechanistically attending settlement or whether we are to apply some intuitive thinking to the job.
These are pretty good clients, the instructor (Tim Burton) being the rep fro [sic] Tim Roberts, who own about $100m+ of aircraft which he runs as an executive charter business via Av‑West [here referring to AVWest Pty Ltd]. As far as I can tell, they have a pretty regular business of buying and selling craft ranging in values from $3m upwards to the expensive toys.[18] (emphasis added)
[17] TB 1/263.
[18] TB 1/263.
The email suggests, and I find, that this was the first instruction Mr Hodgkinson was involved in for a Warburton group entity. In total, including the instructions as to the draft CMA the subject of these proceedings, Mr Hodgkinson (as a CU special counsel) acted for AVWest Pty Ltd, AVWest or associated entities on approximately 25 matters between 2007 and 2010. The subject of the engagements included, among other things, the purchase and sale of aircraft and helicopters.[19]
[19] Further Amended Defence dated 16 November 2017 (FAD), par 6(f); DFBP, answer 4 and sch C.
Not all of those instructions were for AVWest. But some eight matters were for AVWest.[20]
[20] DFBP, answers 1(c), 4 and sch B, C.
Contractually the terms of the relationship between AVWest and CU was governed by the terms of an umbrella retainer agreement dated 11 August 2010.[21] Although addressed to AVWest Pty Ltd it was common ground that the terms of the retainer agreement applied to AVWest.[22]
[21] TB 2/914 - 921.
[22] FAD, pars 6(c), 7A - 7C; ts 130 - 131.
The retainer agreement contained provisions as follows:
1.Professional relationship
Our key obligation: We will perform the work with professional skill and diligence acting as your independent legal advisers and unless we are authorised by you to act for other parties, solely in your interest. We will not perform work for you if factors such as conflict of interest prevent us from accepting your instructions.
Our reporting obligations: We will keep you informed of the progress of the work. You may also request, at any time, a report of the progress of the matter and statements of fees and costs since your last bill. We reserve the right to charge for the provision of progress reports but no charge will be imposed for provision of costs statements.
Multi party or joint work: Where you instruct us jointly with one or more other parties, you and each other party will be jointly and severally liable to pay our bills.
Your obligations: You agree:
•to provide us with timely, accurate and proper instructions, and all documents and other records relevant to the services we are providing to you; and
•that you are solely responsible for satisfying yourself as to the commercial viability of any transaction, the bona fides of the other parties to any transaction, the financial matters relevant to and the commercial soundness of the transactions, and have the sole responsibility for all these matters and will act reasonably and take reasonable care to do so and otherwise to protect your own interests.
Facts and assumptions: In providing legal services we may need to base our advice or conclusions on facts or assumptions. If that occurs, we will tell you what facts and assumptions we are relying on. You agree to check that all those facts and assumptions are correct.[23]
[23] TB 2/918.
8.Apportionment of liability
If you claim compensation, damages or contribution from us for loss or damage arising from acts or defaults (including negligence) on our part and some or all of that loss or damage was due to or contributed to by:
•your own acts or defaults or by the acts or defaults of other persons for whose actions or defaults you are responsible; or
•the acts or defaults of one or more other persons, not being partners, employees or agents for whose conduct we are responsible,
then we will be liable only for that proportion of the loss or damage which our acts or defaults bear relative to the totality of the conduct of all persons causing or contributing to the loss or damage.
Where any law relating to proportionate liability applies to a claim against us, this clause does not seek to exclude the operation of that law but will continue to operate to the extent that its operation is consistent with that law.[24]
Purchase and refurbishment of Bombardier Global Express XRS SN 9173
[24] TB 2/919.
Between 31 July 2010 and 14 September 2010 AVWest, by Mr Roberts and Mr Burton, negotiated two agreements in relation to the purchase and refurbishment of an executive jet aircraft ‑ a Bombardier Global Express XRS with serial number 9173 (Aircraft).[25] The purchase and interior refurbishment of the Aircraft were regarded by Mr Roberts as a package deal. AVWest intended to have the refurbishment works completed and then to on‑sell the Aircraft for a profit.[26]
[25] SAF, par 6.
[26] SAF, par 7.
AVWest carried out the negotiations in relation to the Aircraft with representatives of Comlux Management AG (Comlux),[27] a Swiss company.[28] Comlux brokered transactions for the sale and purchase of aircraft.[29]
[27] SAF, par 6.
[28] MFI 18A, par 1.
[29] MFI 18A, par 2.
Comlux conducted negotiations as to both:[30]
(1)the terms of an aircraft sale agreement for the purchase of the Aircraft from its owner, Air Luther AG (Air Luther). (Mr Burton's recollection, which I accept, is that the Aircraft was being operated by Comlux Aviation AG and there was a close relationship between Comlux and Air Luther);[31] and
(2)the terms of a proposal for the interior refurbishment of the Aircraft by Comlux Aviation Services LLC (Comlux AS), a company incorporated in the United States of America (and located at Indianapolis, Indiana) which was part of the group of Comlux companies.[32]
[30] SAF, par 6.
[31] Ex 4A, par 36. See also MFI 18A, par 4.
[32] ts 435, 446.
An in‑house lawyer at Comlux, Christophe Pelet, was responsible for drafting both the aircraft sale agreement and the cabin modification agreement.[33]
[33] MFI 18A, pars 7 - 8.
Mr Burton received an initial draft of the aircraft sale agreement by email on 31 July 2010.[34] Mr Burton dealt with review and negotiation of the terms of the aircraft sale agreement without involvement on the part of CU. A number of drafts were exchanged. The first mark‑up of the initial draft appears under cover of an email from Mr Roberts dated 18 August 2010.[35] Relevantly, by cl 1.4 as inserted into that draft AVWest sought an amendment so that the seller was responsible for cabin modification works to the Aircraft (to be performed by Comlux AS) and the intended purchase price of $32 million was to include those works.
[34] TB 2/895 - 913.
[35] TB 2/922 - 945.
The amended draft aircraft sale agreement prompted an email exchange between Mr Pelet and Mr Roberts over 18 August 2010.[36] Among other things Mr Pelet stated:
The aircraft will be delivered (paid, de‑registered, title transfer..) BEFORE the cabin modifications … The delivery location will, therefore, not be in Indianapolis …
[36] TB 2/946 - 947.
To that Mr Roberts responded:
We need to discuss this as I have no control in regards to the deliver [sic]. I am looking for a turnkey arrangement and that was my understanding of how the transaction was to be structured. This is a matter we will need to discuss along with LD's [liquidated damages] for late delivery ‑ timing is of the upmost [sic] importance and I have been advised that the aircraft works will take no longer then [sic] 12 weeks post pre buy … (emphasis added)
Mr Pelet circulated a further draft of the aircraft sale agreement on 19 August 2010.[37] In relation to the earlier exchange the covering email stated:
Note also that I have stayed with an aircraft delivery before the cabin modification work, and will not be in a position to consider your request to have it after (the seller is a third party to Comlux). (emphasis in original)
[37] TB 2/948 - 993.
Separately, on 25 August 2010, the President of Comlux AS ‑ Ettore Rodaro ‑ sent Mr Roberts a proposal for the cabin modification works to the Aircraft.[38] This provided for maintenance and refurbishment works at a price of $US1 million. There was also a proposal for service bulletin installations.[39]
[38] TB 2/994 - 1007.
[39] TB 2/1008 - 1012.
Mr Burton proceeded to review the draft aircraft sale agreement and finalised his review on 7 September 2010.[40] As part of that review Mr Burton inserted a new cl 1.4 (on Mr Roberts' instructions).[41] This read:
1.4Comlux interior refurbishment, maintenance and additional works
In the event that the Purchaser is not able to agree, to its satisfaction, a scope of works with Comlux Aviation Services for the interior refurbishment, maintenance and additional works to be carried out on the Aircraft within 5 Business Days of the execution of this Agreement, this Agreement shall be terminated and the Purchaser shall recover the Deposit in full and neither party shall be bound by any further obligations under this Agreement.[42] (emphasis added)
[40] TB 2/1016.
[41] Ex 4A, par 43.
[42] TB 2/1020.
The purchase price was amended to $US31 million (presumably reflecting the $US1 million for the cabin modification works). Payment was to occur on delivery at Comlux AS's facility in Indianapolis (cl 6.1, 6.2). The ownership of and risk in the Aircraft was to pass on delivery (cl 6.3).
Mr Roberts circulated that version of the draft aircraft sale agreement on 8 September 2010.[43] Later that day Mr Roberts sent Mr Rodaro (of Comlux AS) an email as to the cabin refurbishment proposal.[44] Among other things this sought a pro‑forma contract and mentioned that AVWest proposed liquidated damages of $US5,000 per day in the event that delivery occurred more than 10 business days after the contractual delivery date. Mr Pelet responded to the amended aircraft sale agreement on 9 September 2010.[45] The delivery location remained under review. There was, however, a willingness to negotiate as to the new proposed cl 1.4.
[43] TB 2/1017 - 1047.
[44] TB 2/1048 - 1049.
[45] TB 2/1178 - 1240.
The draft version of the aircraft sale agreement attached to Mr Pelet's 9 September 2010 email proposed that cl 1.4 be amended as follows:
1.4Comlux interior refurbishment, maintenance and additional works
In the event that the Purchaser
is not able to agree, to its satisfaction, a scope of works withand Comlux Aviation Servicesfor the interiorLLC ("Comlux") are not able to agree, each acting reasonably, on the terms and conditions of a cabin refurbishment, maintenance and additional works to be carried outagreement based on theAircraftComlux Proposal for Interior Refurbishment reference CC56884 RX within 5 Business Days of the execution of this Agreement, this Agreement shall be terminated and the Purchaser shall recover the Deposit in full and neither party shall be bound by any further obligations under this Agreement.[46][46] TB2/1181; TB 2/1212.
The amended version of cl 1.4 was essentially acceptable to AVWest. Later on 9 September 2010 Mr Burton sent Mr Pelet a further marked‑up iteration of the aircraft sale agreement.[47] The only changes to cl 1.4 were inconsequential amendments to the sub‑heading ('Comlux interior refurbishment, maintenance and additional works' became 'Comlux cabin refurbishment agreement').[48]
[47] TB 2/1241 - 1272.
[48] TB 2/1245.
Communications about a cabin modification agreement between AVWest and Comlux AS now commenced in parallel with the communications about the draft aircraft sale agreement.
Mr Rodaro responded to Mr Roberts' email of 8 September 2010 (as to the cabin refurbishment proposal) the next day. Among other things Mr Rodaro stated:
2.Payment:
a.We are not requesting that the USD1.0m be paid to the escrow agent. This amount should be paid directly by you to Comlux Aviation Services according to the payment terms to be included in the cabin refurbishment agreement.
b.Note: we need 50% due at contract signature, 15% due upon aircraft input, 15% due 30 days after aircraft input; 15% 60 days after aircraft input, 5% due upon completion.
c.Liquidated damages: the amount you state (USD 5k per day) is what is given by Bombardier for a sale and delivery of a USD 48m asset, here we are talking about a USD 1.0m contract. Therefore we are not in a position to go beyond the already offered USD 500 per day, capped at 5% of contract price.[49]
[49] TB 2/1401.
In turn Mr Roberts stated in a 9 September 2010 email:
I omitted from my last email to respond to you in regards to item 2. From my perspective the attractiveness of buying this aircraft was as I understood it would be a turnkey arrangement whereby I would enter into an agreement to pay $32m into an escrow account and once the refurbishment works were complete the aircraft would be delivered and settled. As such I would not be taking any delivery risk and comforted by the fact that unless you performed you would not be paid. As you may appreciate I have had a number of very late deliveries in terms of new aircraft along with refurbishments and with no disrespect need to get some comfort that the aircraft can and will be delivered on time.
Furthermore, there is also a major maintenance check required to be undertaken and I simply don't want to get into dispute as to these works being undertaken. If you can provide me some comfort and work out how you can mitigate my concerns then I can give further consideration to your position.[50]
[50] TB 2/1400 - 1401.
Mr Pelet then responded on behalf of Comlux AS on 10 September 2010:
We understand that you see this transaction as a 'package deal' (aircraft + refurbishment), but although Ettore and I are your only interface for both projects, we represent very different interests: those of the current owner of the aircraft and those of Comlux Aviation Services. As a result, the cabin refurbishment agreement must be made on normal terms.
We have no concern regarding the seriousness and credit worthiness of the buyer, and therefore do not ask that the 1mio [sic] for the refurb be put in an escrow account. However, as is normal in any such project, we must have a substantial down payment upon signing the agreement. This money is to be used for the purchase of the required materials.
Regarding a late re‑delivery of the aircraft, we also fully understand your concern. We too have suffered delays from Bombardier and Airbus. But here, we are only talking about a simple cabin refurbishment and maintenance and not a full cabin completion. We have nonetheless offered an LD mechanism but as is normal, capped our liability. You will note that the cap is 5% of the contract price (a typical Bombardier contract is max 2% ..).
So to summarize, we must insist on (i) having normal payment terms as described in Ettore's email and (ii) reasonable LDs. We are willing to reduce the 'grace period' to 15 days but not the amounts of LDs.
I trust you will understand our concerns. We need to clarify these two items before we sign the aircraft contract.[51]
[51] TB 2/1400.
In the meantime the terms of the aircraft sale agreement were finalised. It is common ground that AVWest and Air Luther entered into the Aircraft Sale Agreement (ASA) for AVWest to purchase the Aircraft on 13 September 2010.[52] The purchase price was $US31 million. The ASA as executed included the cl 1.4 as previously negotiated.[53] Delivery was to occur at the Bombardier Service Centre in Hartford Connecticut.[54]
[52] SAF, par 8. See TB3/1651 - 1681.
[53] SAF, par 9. See TB3/1653.
[54] TB 3/1663.
AVWest paid the $US3 million deposit under the ASA on 15 September 2010.[55] Both Mr Roberts and Mr Burton gave evidence, and I accept, that the deposit was paid from AVWest's own funds.[56]
The draft Cabin Modification Agreement
[55] SAF, par 11.
[56] Ex 23A, par 43; Ex 4A, par 47.
On 14 September 2010, after execution and exchange of the ASA, Mr Pelet sent Mr Burton an email attaching the draft CMA.[57] A further version was sent on 15 September 2010.[58] Mr Roberts acknowledged receipt of the draft CMA later that day.[59]
[57] SAF, par 10; TB 3/1716 - 1735.
[58] TB 3/1736 - 1765.
[59] TB 3/1766.
This litigation is primarily concerned with CU's review of cl 10 of the draft CMA. Accordingly, despite the length of the clause, it is necessary to set it out in full.
Clause 10 of the draft CMA as initially circulated by Mr Pelet provided:
10.Indemnity
10.1Client hereby releases and agrees to indemnify and hold Comlux, its directors, officers, employees and agents harmless from and against any and all liabilities, claims, demands, suits, damages and losses, (including without limitations all attorneys' fees, costs and expenses in connection therewith or incident thereto) for deaths of or injuries to any persons whomsoever (including, without limitation, Client's employees and representatives) and for loss of, damage to, destruction of, or delay in the delivery of any property whatsoever (including, without limitation the Aircraft) in any manner arising out of or in any way connected with the goods and/or services provided by Comlux hereunder, regardless of the negligence, active, passive or any other type, of Comlux, its directors, officers, employees or agents; provided, however, the foregoing indemnification will not apply to any such claim or liability resulting from the willful misconduct or gross negligence of Comlux, its directors, officers, employees, or agents. Client will, at the request of Comlux, negotiate any claim or defend any action or suit brought against Comlux or in which Comlux is joined as a party defendant based upon any other matters for which Client has released and indemnified Comlux as provided above.
Notwithstanding the foregoing paragraph, Comlux will be liable for loss of or damage to Client property (excluding airframes and/or any attached or installed engines or equipment) while such property is in Comlux' care, custody, or control provided and to the extent such loss or damage is proximately caused by Comlux' negligence or gross negligence. Client releases any rights it may have against Comlux, its officers, agents, and employees for any loss of or damage to such property from any other cause.
10.2Comlux hereby releases and agrees to indemnify and hold Client, its directors, officers, employees and agents harmless from and against any and all liabilities, claims, demands, suits, damages and losses, (including without limitations all attorneys' fees, costs and expenses in connection therewith or incident thereto) for deaths of or injuries to any persons whomsoever (including, without limitation, Comlux' employees) and for loss of, damage to, destruction of, or delay in the delivery of any property whatsoever in any manner arising out of or in any way connected with the goods and/or services provided by Comlux hereunder arising from the gross negligence or willful misconduct of Comlux, its directors, officers, employees, or agents. Comlux will, at the request of Client, negotiate any claim or defend any action or suit brought against Client or in which Client is joined as a party defendant based upon any other matters for which Comlux has released and indemnified Client as provided above.
10.3Limitation of Liability
NEITHER PARTY HERETO WILL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR EXEMPLARY DAMAGES OF ANY KIND WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT. NO AGREEMENT VARYING OR EXTENDING THE FOREGOING LIMITATION OF LIABILITY WILL BE BINDING UPON EITHER PARTY UNLESS IN WRITING, SIGNED BY A DULY AUTHORIZED OFFICER OF THAT PARTY.[60] (emphasis in italics added; the capitalisation appears in the original)
[60] TB 3/1722 - 1723.
In due course it will be necessary to consider in detail the meaning and effect of the various parts of cl 10. For now, however, it is enough to identify the various components of the clause. Essentially there are four parts of the clause.
Clause 10.1 is itself in two parts. By par 1 of cl 10.1 the client ‑ AVWest ‑ provides a release and indemnity in favour of Comlux AS. The indemnity does not apply to claims and liabilities resulting from Comlux AS's wilful misconduct or gross negligence.
The second part of cl 10.1 is in par 2. It applies notwithstanding par 1. Comlux agrees to be liable for loss of or damage to client property (eg an aircraft owned by AVWest). However, there are two conditions. The covenant only applies where:
(1)the property is in Comlux AS's care, custody or control; and
(2)the loss or damage is proximately caused by Comlux AS's negligence or gross negligence.
The words in parenthesis may be read as words of exclusion. The liability assumed by Comlux AS by par 2 of cl 10.1 excludes loss of or damage to 'airframes and/or any attached or installed engines or equipment'.
By cl 10.2 Comlux AS provides a release and indemnity in favour of the client. This is partially ‑ but not exactly ‑ reciprocal with the release and indemnity provided by the client in par 1 of cl 10.1. Among other things there is no equivalent to the second paragraph of cl 10.1.
Clause 10.3 is a limitation of liability provision which, as drafted, applies to both parties. Among other things it precludes recovery for consequential loss. The parties referred to it as a 'consequential loss' clause. Such clauses are not uncommon in commercial contracts in Australia and have been the subject of academic consideration.[61] As will be seen, I was provided with certain agreed principles of Indiana law. Based on those principles the parties agreed that a claim for lost profits would be a claim for consequential damages.[62]
[61] See eg Thompson J, 'Consequential loss clauses' in Thompson et al Commercial Contract Clauses: Principles and Interpretation (1st ed, 2012) 717 - 731; Christensen S and Duncan W, The Construction and Performance of Commercial Contracts (2nd ed, 2018) [5.4.2.3.1].
[62] Ex 49, p 24.
More generally the draft CMA provided for the scope of work to be performed by Comlux AS (cl 1) and the performance of the work (cl 4). The draft CMA provided that AVWest would maintain all risk aircraft ground and flight hull insurance covering the Aircraft including engines with a waiver of subrogation against Comlux AS (cl 11). There was a warranty provision (cl 12). Provision was made for excusable and inexcusable delays (cl 13, cl 14). Liquidated damages of $US500 per day would be payable for delay greater than 15 calendar days after the re‑delivery date; but this was not to exceed 5 per cent of the contract sum (cl 14.2). Termination and remedies were dealt with in cl 17. The CMA was to be governed by the law of the State of Indiana in the United States of America (cl 20).
On 16 September 2010 Mr Pelet followed up the draft CMA with Mr Burton stating:
Have you had the opportunity to review the cabin + maintenance contract I sent? Considering there is termination right [sic] in the aircraft sales agreement linked to the cabin contract, I would like to make sure we get this last hurdle out of the way quickly.[63]
[63] TB 3/1821.
AVWest did not provide a substantive response as to the terms of the draft CMA until 6 October 2010.
AVWest request that CU review and amend draft Cabin Modification Agreement
On 17 September 2010 at 9.57 am Mr Burton sent an email to Mr Girdler of CU.[64] Mr Girdler was a senior associate within the corporate section of CU. He was another of the people within CU with whom AVWest had a working relationship.[65] The email referred to a previous telephone conversation and stated:
[A]ttached is a copy of the draft Cabin Modification Agreement. I would appreciate if you can review Articles 10 Indemnity, 12 Warranty, 17 Termination ‑ Remedies and 20 Governing Law and Jurisdiction and make the appropriate amendments by way of mark‑up. In this regard I want to ensure that the provisions of the Articles are fairly waited [sic] between the parties and not one sided.
I would be happy to discuss any comments you have prior to the amendments being made if this would be more efficient.[66]
[64] SAF, par 14.
[65] Ex 4A, par 54.
[66] TB 3/1852.
The email from Mr Burton did not attach a copy of the ASA.[67]
[67] SAF, par 14.
Within seven minutes Mr Girdler on‑sent the email to Karen Bailey of CU (copied to Mr Hodgkinson). Ms Bailey was a lawyer in the corporate advisory team at CU.[68] The documentary evidence showed that Ms Bailey had worked with Mr Hodgkinson on at least three matters for AVWest Pty Ltd and AVWest between 2009 and September 2010. The work done by Ms Bailey included one matter involving the purchase and sale of aircraft.[69]
[68] Ex 4A, par 54.
[69] TB 1/579 - 580; TB 1/740 - 742; TB 3/2081 - 2083.
Mr Girdler's email stated:
Karen, as discussed.
This agreement relates to works on an aircraft which AVWest has contracted to buy. It is a condition precedent to the aircraft purchase agreement that AVWest is happy with the terms of the cabin modification agreement (and the CP expires today ‑ or maybe on Monday but let's assume today) ‑ so Tim is keen to get back to the counterparty asap today.
Over to you …[70]
[70] TB 3/1852.
The documentary evidence included versions of the draft CMA with handwritten annotations of Mr Hodgkinson[71] and Ms Bailey.[72]
[71] TB 3/1884 - 1911.
[72] TB 3/1854 - 1881.
Mr Hodgkinson's version of the draft CMA included highlighting and annotations to cl 8, cl 10.1, cl 10.2, cl 12, cl 17 and cl 20. There was no notation as to cl 10.3. In par 1 of cl 10.1 and cl 10.2 the word 'gross' in the phrase 'gross negligence' was struck through. Paragraph 2 of cl 10.2 was highlighted. The more significant annotations were as to cl 12 (the warranty provision), cl 17 (dealing with 'Termination‑Remedies') and cl 20 (the governing law and jurisdiction clause).
Ms Bailey's version of the draft CMA included highlighting and annotations to cl 10.1 (but only par 1 thereof), cl 10.2, cl 12, cl 17 and cl 20. There was no notation as to cl 10.3. Again in cl 10.1 and cl 10.2 the word 'gross' was struck through where it appeared in the phrase 'gross negligence'.
Later that day a telephone conversation occurred between Mr Burton, Mr Hodgkinson and Ms Bailey.[73]
[73] SAF, par 15.
Mr Hodgkinson and Ms Bailey did not give evidence. Witness statements as signed by Mr Hodgkinson and Ms Bailey had been filed and were referred to in CU's written outline of opening submissions.[74] So too in opening senior counsel for CU referred, albeit briefly, to the intended evidence of Mr Hodgkinson and Ms Bailey.[75] Accordingly, I infer that a forensic decision was made by CU not to call Mr Hodgkinson and Ms Bailey.
[74] Defendant's Opening Submissions dated 10 May 2018 (DOS), fn 20 - 28, 30 - 31, 33 - 35, 39 - 40.
[75] ts 196.
For that reason the only evidence of what was discussed in the telephone conversation consisted of Mr Burton's recollection and some documentary evidence.
Mr Burton's recollection was limited. He did not recall the conversation with Mr Hodgkinson and Ms Bailey in any detail. Mr Burton's evidence, which I accept, is that the only thing he could specifically recall was that he was told to have the word 'gross' deleted from the words 'gross negligence' in cl 10. Otherwise Mr Burton could not recall Mr Hodgkinson or Ms Bailey giving any advice which raised anything he should be concerned about.[76]
[76] Ex 4A, pars 59 - 60. See also ts 320 - 322, 325 - 326, 328 - 329, 331, 334, 406.
However, after the telephone call Ms Bailey prepared an internal memorandum.[77] The contents of the file note are important and bear repeating in full:
[77] SAF, par 16.
Review of portion of Cabin Modification Agreement
Teleconference to discuss the review of clauses 10 (Indemnity), 12 (Warranty), 17 (Termination Remedies) and 20 (Governing Law).
We discussed with Tim:
1.Governing Law clause: we did not see that there were changes that should be made that would be acceptable to Comlux given the contract and the work is performed in Indiana. No amendment recommended.
2.Termination and Remedies clause: in our view, this clause seemed fair and only need the reference to clause 17.3 to be corrected to refer to clause 17.2.
3.Warranty clause: we discussed:
•the use of the defined term Works to ensure the scope attached to the contract is subject to the warranty;
•the removal of paragraph (iv) based on the concern that Client specifications is not defined and the works covered by the warranty should be all the works specified in the agreed exhibits (ie the defined Works). If left as is, Client specifications could be taken to mean any work requested or directed by AVWest and all work that is not undertaken in accordance with Comlux standard operating procedures. It is reasonable for AVWest to request that the Works are subject to the warranty and are carried out in accordance with Comlux SOPs; and
•who should bear the costs of relocating the aircraft in the event there are non‑conforming or defective work. The current wording has AVWest covering these costs and no incentives are given to ensure defective work that could be done in Australia is done here by Comlux engineers (for example) as there are no costs borne by Comlux.
Recommended:
(a)replacing 'services' on the first line with 'Works';
(b)deleting '(iv) work which was performed to Client specifications and was not performed in accordance with the Comlux' standard operating proecures [sic]'; and
(c)in the last sentence replacing "Client" with "Comlux".
4.Indemnity clause: we discussed the fact that the indemnity meant that AvWest [sic] would be liable to cover all costs (claims etc) up to the point that such costs (claims etc) resulted from gross negligence. We noted that this left AVWest bearing all liabilities arising from Comlux negligence (up to the point of gross negligence) unless the loss was damage to the aircraft while in the care of Comlux. Recommended amending the threshold to negligence instead of gross negligence. We recommended amendments to do this, delete from line 8 of clause 10.1 the words 'regardless of the negligence, active, passive or any other type, of Comlux, its directors, officers, employees or agents' and replace the term 'gross negligence' in the second sentence of clause 10.1 and the first sentence of clause 10.2, with 'negligence'.
Tim did not require us to mark up the agreement, he was happy to amend as we directed in this teleconference.[78] (emphasis added)
[78] TB 3/1912 - 1913.
Ms Bailey had reason to send Mr Burton an email on a different subject on 20 September 2010.[79] Ms Bailey took the opportunity to ask Mr Burton how the proposed amendments to the CMA were received by Comlux. Mr Burton did not reply to that email. Nor, after 17 September 2010, did Mr Burton provide any further instructions or request any further advice from CU in relation to the draft CMA.[80]
[79] TB 3/1945.
[80] SAF, par 18.
On 30 September 2010 CU rendered a tax invoice to AVWest.[81] The invoice confirmed that both Mr Hodgkinson and Ms Bailey had spent 0.7 hours (ie up to 42 minutes) reviewing the CMA and conferring as to the clauses and potential amendments. The invoice also confirmed that the telephone call with Mr Burton was 0.2 hours (ie up to 12 minutes). Otherwise Ms Bailey's entries gave a more fulsome description of the work undertaken:
[81] TB 3/2078.
Hours
Details
0.70
Review Cabin Modification Agreement and confer with D Hodgkinson re reviewed clauses and thier [sic] amendment
0.20
Telephone to T Burton re recommended amendments to Cabin Modification Agreement
0.40
Draft file note recording recommended amendments to Cabin Modification Agreement and relevant discussions on clauses reviewed[82]
[82] TB 3/2079.
The invoice thus referred to the CU solicitors making the telephone call 'to' Mr Burton. Based on that evidence I infer that the CU solicitors were the instigators of the telephone call.
Negotiation and execution of the Cabin Modification Agreement
As well as consulting CU, Mr Burton provided the draft CMA to an insurance broker. He did so by a 17 September 2010 email, sent 12.14 pm, that asked the broker to review the insurance clause and provide comments.[83] The broker responded that day (at 4.40 pm) confirming that, while the insurers had a preference that the indemnity be limited, the insurers would agree to note and include the indemnity and insurance conditions of the draft CMA in its current state. Otherwise the email noted: 'We recommend that you run the Indemnity agreement past your lawyer, which you confirmed you had already done.'[84]
[83] TB 3/1914.
[84] TB 3/1943.
Accordingly, the telephone call between Mr Burton and the CU solicitors had occurred before 4.40 pm on 17 September 2010.
On 20 September 2010 Mr Pelet followed‑up Mr Roberts seeking comments on the draft CMA.[85] However, there was no immediate response. That was the position even through cl 1.4 of the ASA could potentially have been triggered in the absence of execution of the CMA.
[85] TB 3/1946.
For reasons I will come to, the explanation for AVWest's delay in responding on the terms of the draft CMA is that AVWest (and Mr Roberts in particular) was awaiting the outcome of an inspection report on the Aircraft.
AVWest Pty Ltd's general manager and head engineer oversaw a pre‑buy inspection of the Aircraft.[86] The findings from the inspection were emailed to Mr Roberts and Mr Burton on 29 September 2010.[87] On 4 October 2010 Mr Roberts sent an email to Mr Rodaro referring to the issues on inspection.[88] That resulted in AVWest issuing a formal Discrepancies Notice under the ASA on 5 October 2010.[89] Apart from noting items to be remedied by the seller, the Discrepancies Notice provided for cl 1.4 of the ASA to be amended so that the time for execution of the CMA was extended to 12 October 2010. In due course Air Luther accepted the Discrepancies Notice, thereby effecting the proposed variation to cl 1.4 of the ASA.
[86] Ex 4A, par 69.
[87] TB 3/1991 - 2077.
[88] TB 3/2084 - 2085.
[89] TB 3/2086 - 2095.
It is apparent, however, that at around this time there were also communications between Mr Roberts and Mr Rodaro with a view to identifying precisely what costs of rectification would be borne by the seller and what was to be covered in the cabin modification.[90]
[90] See eg TB 3/2096 (Mr Rodaro's email dated 5 October 2010); TB 3/2142 - 3143 (Mr Rodaro's email dated 8 October 2010).
On 6 October 2010 Mr Roberts sent Mr Rodaro and Mr Pelet an email attaching a marked‑up copy of the draft CMA showing the amendments sought by AVWest.[91] A number of the amendments as sought were consistent with the recommendations in Ms Bailey's internal memorandum. In particular:
•In par 1 of cl 10.1 AVWest struck out the words 'regardless of the negligence, active, passive or any other type, of Comlux, its directors, officers, employees or agents'.[92]
•In par 1 of cl 10.1 and cl 10.2 AVWest replaced 'gross negligence' with 'negligence'.[93]
•In cl 12 (the warranty clause) AVWest adopted the defined expression 'Work', struck out (iv) and amended the clause such that Comlux AS (rather than AVWest) would be liable for transportation or relocation costs.[94]
•In cl 17.2 (the remedy clause) AVWest corrected the typographical error identified by CU.[95]
[91] SAF, par 19 (for the avoidance of doubt, the agreed fact is incorrect so far as it refers to Mr Burton requesting the amendments; the email was sent by Mr Roberts); TB 3/2097 - 2128.
[92] TB 3/2104.
[93] TB 3/2104.
[94] TB 3/2015.
[95] TB 3/2107.
Accordingly, by adopting CU's suggested appropriate amendments, AVWest relied on CU's advice. There was, I find, reasonable reliance in this regard. CU put forward the amendments as being appropriate following its review of the nominated clauses of the draft CMA. It was acknowledged in Ms Bailey's file note that AVWest intended to amend as CU directed in the teleconference.
The amendments to the draft CMA did not adopt CU's recommendations in one respect. The amendments to cl 12 did not replace the term 'services' with the word 'Works'.[96] Mr Burton explains that as an oversight.[97] I accept that evidence. It is inherently plausible given that CU's recommendations were otherwise implemented.
[96] TB 3/2105.
[97] Ex 4A, par 76.
Other amendments were AVWest's own work. For example, AVWest sought lesser amounts for the required insurance policies (cl 11).[98] AVWest also sought liquidated damages of $US2,000 per day, without cap, to commence immediately upon failure to effect delivery on the redelivery date (cl 14).[99]
[98] TB 3/2105.
[99] TB 3/2106.
Mr Pelet responded to Mr Burton (rather than Mr Roberts) on 8 October 2010.[100] With cl 10 there was acceptance of the struck out words within par 1 of cl 10.1.[101] But Mr Pelet rejected the changes providing for 'negligence' instead of 'gross negligence' (in cl 10.1 and cl 10.2).[102] Mr Pelet also rejected AVWest's proposed amendments to the liquidated damages clause.[103] And, as to the warranty provision, Mr Pelet rejected AVWest's changes that provided for Comlux AS to meet for transportation and relocation costs.[104]
[100] TB 3/2159 - 2224.
[101] TB 3/2196.
[102] TB 3/2196 - 2197.
[103] TB 3/2200.
[104] TB 3/2199.
On 11 October 2010 Mr Roberts sent Mr Pelet an email that attached a further amended version of the draft CMA.[105] Among other things the covering email stated:
Liquidated Damages: The inclusion of a minimum 'grace period' and a 'cap' is unacceptable. The original transaction was structured on the basis I would purchase the aircraft once the works had been completed. At your request I reluctantly agreed to the Purchase Agreement and The [sic] Cabin Modification Agreement being 'split' and to purchase the Aircraft in advance of these works being completed. I did so on the basis of your commitment that the works would be completed in a 14 week period.[106]
[105] TB 3/2226 - 2238.
[106] TB 3/2226.
Accordingly, AVWest sought to reintroduce its version of the liquidated damages clause.[107] Also, without showing the amendments, AVWest provided for changes to the draft CMA that sought to reintroduce its changes to cl 10.1 and 10.2 (ie 'negligence' instead of 'gross negligence')[108] and for Comlux AS to assume liability for transportation or relocation costs under the warranty provision.[109]
[107] TB 3/2235.
[108] TB 3/2232 - 2233.
[109] TB 3/2234.
Mr Pelet's next version of the draft CMA was sent under cover of a 13 October 2010 email.[110] This version accepted (or at least did not seek to alter back) AVWest's 'negligence' terminology in cl 10.1 and cl 10.2.[111] A compromise was proposed on the liquidated damages (removal of the grace period ‑ subject to an extended delivery period ‑ and an increased cap of $US100,000).[112] The warranty change was rejected outright.[113] These changes evidently resulted in the parties' impasse being overcome. Later on 13 October 2010 Mr Pelet circulated execution copies of the CMA.[114] Shortly afterwards Mr Pelet provided the Discrepancies List under the ASA for sign‑off.[115]
[110] TB 3/2239 - 2308.
[111] TB 3/2247 - 2248.
[112] TB 3/2239.
[113] TB 3/2239; TB 3/2249.
[114] TB 3/2353 - 2413.
[115] TB 3/2325 - 2333.
AVWest executed the CMA and the Discrepancies List on 14 October 2010.[116] Comlux AS also executed the CMA on 14 October 2010.[117] The CMA provided for Comlux AS to carry out the cabin modifications and refurbishments to the Aircraft for $US1,049,642.[118]
[116] TB 4/2426 - 2427.
[117] SAF, par 20; TB 4/2598 - 2687.
[118] SAF, par 20.
As executed cl 10 of the CMA provided (the strike‑outs below show the differences between the draft version of cl 10 and the version as executed):
10.Indemnity
10.1Client hereby releases and agrees to indemnify and hold Comlux, its directors, officers, employees and agents harmless from and against any and all liabilities, claims, demands, suits, damages and losses, (including without limitations all attorneys' fees, costs and expenses in connection therewith or incident thereto) for deaths of or injuries to any persons whomsoever (including, without limitation, Client's employees and representatives) and for loss of, damage to, destruction of, or delay in the delivery of any property whatsoever (including, without limitation the Aircraft) in any manner arising out of or in any way connected with the goods and/or services provided by Comlux hereunder
regardless of the negligence, active, passive or any other type, of Comlux, its directors, officers, employees or agents,provided, however, the foregoing indemnification will not apply to any such claim or liability resulting from the willful misconduct orgrossnegligence of Comlux, its directors, officers, employees, or agents. Client will, at the request of Comlux, negotiate any claim or defend any action or suit brought against Comlux or in which Comlux is joined as a party defendant based upon any other matters for which Client has released and indemnified Comlux as provided above.Notwithstanding the foregoing paragraph, Comlux will be liable for loss of or damage to Client property (excluding airframes and/or any attached or installed engines or equipment) while such property is in Comlux' care, custody, or control provided and to the extent such loss or damage is proximately caused by Comlux' negligence or gross negligence. Client releases any rights it may have against Comlux, its officers, agents, and employees for any loss of or damage to such property from any other cause.
10.2Comlux hereby releases and agrees to indemnify and hold Client its directors, officers, employees and agents harmless from and against any and all liabilities, claims, demands, suits, damages and losses, (including without limitations all attorneys' fees, costs and expenses in connection therewith or incident thereto) for deaths of or injuries to any persons whomsoever (including, without limitation, Comlux' employees) and for loss of, damage to, destruction of, or delay in the delivery of any property whatsoever in any manner arising out of or in any way connected with the goods and/or services provided by Comlux hereunder arising from the
grossnegligence or willful misconduct of Comlux, its directors, officers, employees, or agents. Comlux will, at the request of Client, negotiate any claim or defend any action or suit brought against Client or in which Client is joined as a party defendant based upon any other matters for which Comlux has released and indemnified Client as provided above.10.3Limitation of Liability
NEITHER PARTY HERETO WILL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR EXEMPLARY DAMAGES OF ANY KIND WHATSOEVER ARISING OUT OF OR IN CONNECTION WITH PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT. NO AGREEMENT VARYING OR EXTENDING THE FOREGOING LIMITATION OF LIABILITY WILL BE BINDING UPON EITHER PARTY UNLESS IN WRITING, SIGNED BY A DULY AUTHORIZED OFFICER OF THAT PARTY.[119]
Completion of the purchase of the Aircraft
[119] SAF, par 21.
On 15 October 2010 AVWest paid the outstanding balance due under the ASA in the amount of $US28 million.[120] The money was paid to an escrow agent in accordance with the ASA.
[120] SAF, par 22. See TB 4/2688 - 2693.
Mr Roberts and Mr Burton gave evidence that the balance of the purchase price was paid from AVWest's own funds.[121] I accept that evidence. At the time of the acquisition AVWest had funds in a US dollar bank account that exceeded the outstanding balance of the purchase price. AVWest's bank statements show the $US28 million (together with associated charges) as an outgoing on 15 October 2010 as well as a $US521,821 payment to Comlux AS on 25 October 2010.[122]
[121] Ex 23A, par 43; Ex 4A, par 47.
[122] Ex 3A.
In anticipation of completion of the purchase of the Aircraft, and in accordance with cl 11 of the CMA, AVWest obtained insurance cover in relation to the Aircraft. Specifically, AVWest obtained a policy of insurance from QBE Insurance (Australia) Ltd and Allianz Australia Insurance Ltd (together 'Insurers') to insure the Aircraft for accidental loss and damage up to $US35 million for the period 18 October 2010 to 30 June 2011.[123]
[123] SAF, par 23. See TB 4/2754 - 2789; Ex 17.
Condition 1(a) of section 1 of the insurance policy provided that:
The Insurers will at their option pay for, replace or repair, accidental loss of or damage to the Aircraft described in the Schedule arising from the risks covered … but not exceeding the Amount Insured as specified in Part 2(5) of the Schedule …[124]
[124] SAF, par 24. See TB 4/2757.
Completion of the purchase of the Aircraft under the ASA occurred on 18 October 2010.[125] AVWest then took possession of the Aircraft. On or about 21 October 2010 AVWest delivered the Aircraft to Comlux AS in Indianapolis for the purpose of the Aircraft undergoing the cabin modification and refurbishment works under the CMA.[126]
The fire and the insurance claim
[125] ts 413 - 414, 1053; Ex 17.
[126] SAF, par 25.
On 7 November 2010 there was a fire in a hangar occupied by Comlux AS. (The hangar was owned by the Indianapolis Airport Authority, leased to Signature Flight Support Corporation and then sub‑leased to Comlux AS.)[127] The Aircraft was parked in the hangar at the time of the fire.
[127] SAF, par 26.
The fire caused damage to the Aircraft's airframe and engines.[128]
[128] SAF, par 26.
There was little direct evidence before me as to the cause and effect of the fire. The documentary evidence included an AirSafety Network report dated 7 November 2010.[129] This suggested that the hangar fire was caused by a short in an emergency generator during a power outage. However, as will be seen, the precise cause of the fire was never identified. The initial report cannot be accepted as being conclusive on the cause of the fire. Otherwise the report concluded that the fire burned for three hours.
[129] TB 4/2727.
Also tendered was a corrosion report dated 24 May 2012 obtained by the then solicitors for AVWest.[130] The report explained ‑ as CU accepted in opening[131] ‑ that the Aircraft was at the opposite end of the hangar relative to the fire. However, firefighters cut a ventilation hole in the wall of the hangar near the Aircraft. This facilitated fighting and extinguishing the fire. It also resulted in a flow of hot gases over and around the Aircraft which caused damage to the Aircraft. Specifically there was visible damage to the empennage including warping of the elevator of the horizontal stabiliser, separation of the left hand faring under the horizontal stabiliser from the vertical stabiliser and discoloration of several components of the empennage.[132]
[130] TB 5/3478 - 3491.
[131] ts 200.
[132] TB 5/3480.
On 9 November 2010 AVWest's insurance broker, Austbrokers ABS Aviation Pty Ltd, gave notice to the Insurers of a claim for indemnity under the policy of insurance for $US35 million.[133]
[133] SAF, par 27.
On 22 December 2010 the Insurers agreed to indemnify AVWest under the insurance policy. However, the Insurers reserved their right to make an election between viable repair or constructive total loss.[134] On 26 April 2012 (ie some 17 months after the fire) the Insurers elected to repair the Aircraft.[135] In the interim, as might be expected, there was considerable correspondence between AVWest, its Insurers and solicitors acting for AVWest and the Insurers. AVWest also obtained various damage assessment reports. Among other things AVWest sought assistance from the Aircraft's manufacturer, Bombardier Inc (Bombardier). Eventually, on 26 March 2012, AVWest commenced proceedings against the Insurers.[136]
[134] SAF, par 28. See TB 4/2818 - 2833.
[135] SAF, par 29.
[136] TB 5/3437 - 3457.
It will be necessary to refer to some of those materials later in these reasons. CU claimed that the delay in resolution of AVWest's insurance claim had implications for causation and remoteness of damage.
Consequential litigation in the United States of America
On 30 October 2012 the Insurers commenced proceedings against Comlux AS, among others, in the Marion Superior Court in Indianapolis, Indiana (Underwriters litigation). The Insurers claimed to be subrogated to the rights of AVWest under the insurance policy.[137]
[137] SAF, par 30. See TB 5/3669 - 3683.
AVWest also took proceedings in the Marion Superior Court in Indianapolis. The following steps ensued in the AVWest litigation:
(1)On 5 November 2012 AVWest filed a summons and complaint against Comlux AS seeking damages for breach of the CMA, breach of warranties in the CMA, negligence and for breach of the bailment contract between AVWest and Comlux AS.[138]
(2)On 2 January 2013 Comlux AS filed a counterclaim against AVWest for alleged balances due on invoices issued to AVWest following the fire.[139]
[138] SAF, par 31. See TB 5/3686 - 3693.
[139] SAF, par 32.
The legal proceedings between AVWest and Comlux AS then spilled over into the Underwriters litigation. On or about 29 March 2013 Comlux AS initiated proceedings against AVWest within the Underwriters litigation by filing a third-party complaint; this claimed that AVWest may have failed to procure the insurance and waivers of subrogation required under the CMA.[140] On 22 November 2013 AVWest filed a motion for summary judgment against Comlux AS in respect of the third‑party complaint.[141]
[140] SAF, par 33. See TB 5/3925 - 3942.
[141] SAF, par 34. See TB 6/4095 - 4097.
Relevantly, the pleadings filed by Comlux AS with the third-party complaint stated (by way of an additional defence to the claim against Comlux AS):
Pursuant to Article 10.1 of the Contract [the CMA], Plaintiffs' insured/subrogor [ie AVWest] waived any claim for damages to the Aircraft's airframe and any attached or installed engines or equipment. As a result, Plaintiffs and their insured/subrogor waived some or all of the claims Plaintiffs asserted in this case.
Pursuant to Article 10.3 of the Contract, the parties waived any claim for special, consequential, incidental or exemplary damages of any kind whatsoever. As a result, any such claim by Plaintiffs in this case has been waived and is barred. [142]
AVWest settles the insurance claim with the Insurers
[142] TB 5/3933 (pars 9 - 10).
In mid‑December 2013 AVWest and the Insurers agreed to release and discharge each other from their obligations under the insurance policy and all actions (including the Underwriters litigation) in consideration of payment by the Insurers to AVWest in the amount of $US30 million.[143]
[143] SAF, par 35.
The agreement settling AVWest's claim under the insurance policy was recorded in a Deed of Release, Discharge and Indemnity dated 17 December 2013.[144]
[144] SAF, par 36. See TB 6/4139 - 4147.
On 24 December 2013 the Insurers paid AVWest the settlement sum of $US30 million.[145]
AVWest's resumption and settlement of its litigation against Comlux AS in the United States of America
[145] SAF, par 37.
On 12 June 2014 AVWest filed an amended complaint against Comlux AS in the proceedings in the Marion Superior Court in Indianapolis.[146] Among other things this alleged:
Pursuant to paragraph 10.1 of the Modification Agreement [the CMA], Defendant [Comlux AS] is liable to Plaintiff [AVWest] for damages to the Aircraft sustained as a result of the negligence and/or gross negligence of the Defendant.[147]
[146] SAF, par 38. See TB 6/4213 - 4313.
[147] TB 6/4218 (par 32).
On 6 August 2014 Comlux AS filed its answer and additional defences to AVWest's amended complaint. This provided relevantly:[148]
Plaintiff's claims in this case are barred by Article 10.1 of the Cabin Modification Agreement [the CMA], wherein Plaintiff waived any claim for damages to the Aircraft's airframe and/or any attached or installed engines or equipment.[149]
Plaintiff's claims in this case are barred by Article 10.3 of the Cabin Modification Agreement [the CMA], wherein the parties waived any claim for special, consequential, incidental or exemplary damages of any kind whatsoever. As a result, all of the Plaintiff's claims in this case have been waived and are barred.[150]
[148] SAF, par 39. See TB 6/4368 - 4381.
[149] TB 6/4376 (par 4).
[150] TB 6/4375 (par 1).
The AVWest litigation against Comlux AS was set down for a two‑week trial before a judge alone beginning on 5 December 2016.[151]
[151] SAF, par 40.
On 21 December 2015 AVWest engaged in a mediation with Comlux AS.[152] At mediation AVWest sought damages of over $US16 million.[153] No immediate resolution was achieved.[154]
[152] SAF, par 41.
[153] SAF, par 42.
[154] SAF, par 41.
The evidence at trial included close consideration of the positions adopted by AVWest and Comlux AS at mediation. Among other things AVWest, by its Australian solicitors, sought advice about Comlux AS's reliance on par 2 of cl 10.1 of the CMA. Consistent with the defence pleaded in answer to AVWest's amended complaint Comlux AS had alleged in its mediation position paper[155] that:
Plaintiff's damages claim ignores the damages exclusions and limitations in the Agreement.
First, the second paragraph of Section 10.1 of the Agreement [the CMA] provides that Comlux's scope of liability excluded damages to any 'airframes and/or any attached or installed engines or equipment.' Despite that, Plaintiff's damages claim above is based largely on damages to, or alleged lost profits that relate to, the Aircraft's airframe, engines and other attached or installed equipment.
Next, Section 10.3 of the Agreement states that neither party would be liable to the other for any special, consequential, incidental or exemplary damages of any kind whatsoever. As discussed below, even if Plaintiff's lost profits claim were not speculative, it is a claim for consequential damages and thus is barred by Section 10.3.[156] (emphasis in original)
[155] TB 7/5508 - 5534.
[156] TB 7/5519 - 5520.
Later in Comlux AS's position paper it stated:
Based on Section 10.1 of the Agreement, Comlux cannot be held liable for any damages to the Aircraft's 'airframe and/or any attached or installed engines or equipment'. In this case, the Fire caused little or no damage to the Aircraft's interior, or to any other part of the Aircraft that would not be covered by the exclusion for damages to the airframe, engines and any attached or installed equipment. As a result, based on Section 10.1 alone, the amount of damages Plaintiff could possibly recover in this case is low.[157]
[157] TB 7/5531. See also TB 7/5533.
In due course it will be necessary to address the advice AVWest received as to cl 10 of the CMA.
It is uncontroversial, however, that following the mediation, the mediator ‑ a retired judge ‑ made a proposal to both parties as to the terms for settlement of the litigation.[158] The proposal as recommended provided for the settlement of AVWest's claim against Comlux AS on payment of $US5 million.
[158] TB 7/5552 - 5553.
AVWest's litigation against Comlux AS settled in accordance with the mediator's recommendation. On 17 February 2016 AVWest and Comlux AS entered into a settlement agreement and mutual release pursuant to which Comlux AS paid $US5 million to AVWest.[159] There was a separate settlement of Comlux AS's counterclaim against AVWest.[160]
Commencement of the claim against CU
[159] SAF, par 43. See TB 7/5574 - 5583.
[160] SAF, par 44.
After the December 2015 mediation AVWest's then Australian solicitor became aware that, before AVWest entered into the CMA, Mr Burton had referred the draft CMA to CU. In a 29 December 2015 email to AVWest's Indianian lawyer the Australian solicitor stated that neither he nor Mr Roberts was previously aware of that matter.[161] Mr Roberts instructed AVWest's Australian solicitor to consider whether AVWest had a claim against CU for the balance of the claimed loss and damage.
[161] TB 7/5556.
The settlement agreement between AVWest and Comlux AS contains a specific provision whereby the parties acknowledge and agree that AVWest is at liberty to commence and pursue proceedings against CU.[162]
[162] TB 7/5576 (cl 5).
In July 2016 AVWest commenced these proceedings against CU.[163]
[163] SAF, par 45.
Nature of AVWest's claim and CU's defence
AVWest proceeded against CU both in negligence and in contract.
AVWest alleged that CU failed to exercise reasonable skill, care and diligence in performance of a retainer to 'review and advise' on the draft CMA by advising on and making appropriate amendments to cl 10, 12, 17 and 20 of the draft CMA with a view to ensuring that AVWest's position 'was protected' and that the agreement was 'fairly weighted between the parties and was not one sided'.[164] CU denied that characterisation of its retainer. According to CU it was not retained to advise on the meaning or alternate constructions of the draft clauses. Rather, CU's instructions were to review and amend to achieve a stated objective ‑ to ensure that the clauses were fairly weighted and not one‑sided.[165]
[164] Further Re-amended Statement of Claim dated 7 February 2018 (FRSOC), pars 6, 45.
[165] DOS, par 24.
In particulars AVWest advanced five respects in which it was contended that CU's performance of the retainer was in breach.[166] In substance they were:
(1)CU was alleged to have failed to advise that it was unable and unqualified to advise how the terms of the draft CMA would be construed under the law of Indiana.
(2)CU was alleged to have failed to advise AVWest that on a proper construction of par 2 of cl 10.1 of the draft CMA there was a real risk that Comlux would not be liable for damage to the Aircraft's airframe and engines while it was in Comlux's possession even when the damage was caused by Comlux's negligence or gross negligence.
(3)CU was alleged to have failed to advise AVWest that on a proper construction of cl 10.3 of the draft CMA there was a real risk that Comlux would not be liable for any special, consequential, incidental or exemplary damages of any kind.
(4)CU was alleged to have failed to advise AVWest that cl 10.3 was not fairly weighted between the parties, and was one‑sided against AVWest, as only AVWest was likely to sustain the type of loss that cl 10.3 would preclude by way of recovery.
(5)CU was alleged to have failed to advise AVWest that on a proper construction of cl 10 of the draft CMA as a whole there was a real risk that AVWest had extremely limited rights to recover damages against Comlux in the event that the Aircraft was damaged while it was in Comlux's possession even if the damage was caused by Comlux's negligence or gross negligence.
[166] FRSOC, par 45.
The references in the preceding paragraph to 'on a proper construction' are to be understood ‑ having regard to cl 20 of the draft CMA ‑ as referring to the proper construction of the clauses under the law of Indiana.
In oral closing submissions senior counsel for AVWest informed me that the first alleged breach was not alleged to have any causative effect. It was pressed as being no more than indicative of an allegedly negligent approach to the performance of the retainer.[167] Accordingly, it is the other four alleged breaches as particularised which are of primary significance for the proper determination of the proceedings.
[167] ts 966.
In its written opening submissions CU suggested that intellectual agility was needed to navigate AVWest's claim for damages.[168]
[168] DOS, par 85.
In substance, however, AVWest advanced a loss of opportunity claim posited on various counter‑factual bases. Two main possibilities were canvassed: either that there would have been 'no transaction' or that there would have been an 'alternative transaction'. However, under one of the 'alternative transaction' scenarios the position for the quantification of damages was said to be the same as if there was 'no transaction'.
The 'no transaction' case saw damages being quantified on the basis that ‑ had CU not acted in alleged breach of its retainer ‑ the terms of the CMA would not have been agreed and the transactions for the purchase of the Aircraft (under the ASA) and the cabin modification and refurbishment (under the CMA) would not have proceeded. In that hypothetical circumstance, on AVWest's case, it initially would have retained the $US31 million purchase price for the Aircraft. The $US31 million would then have been available for use, and used, in the purchase and sale of other aircraft and aircraft positions, generating a profit. The notional profits which were never derived because of the unavailability of the $US31 million were said to quantify the loss of opportunity.[169]
[169] FRSOC, par 46(f)-(fa); Plaintiff's Opening Submissions dated 1 May 2018 (POS), pars 7 - 8, 75 - 76, 109, 130(b); Plaintiff's Closing Submissions dated 1 June 2018 (PCS), pars 91(iv), 100, 171 (the 'Scenario 4').
The 'alternative transaction' case saw damages being quantified on the basis that ‑ had CU not acted in alleged breach of its retainer ‑ the CMA would have been agreed in different terms. Different hypothetical scenarios were then posited depending on the form that the CMA might have allegedly taken in the particular counter‑factual scenario as posited.
One scenario as pleaded was that the CMA as negotiated would have provided AVWest with an indemnity for all loss suffered as a result of damage to the Aircraft including consequential loss. Then, as on AVWest's case the $US31 million would have been recouped without delay, quantification was the same as under the 'no transaction' case.[170]
[170] FRSOC, par 46(a)-(e); POS, pars 7 - 8, 75 - 76, 106, 109.
Another pleaded scenario was that Comlux AS would have agreed to delete the exclusion in par 2 of cl 10.1 of the draft CMA (thereby, on AVWest's case, providing for liability for damage to the Aircraft's airframe and engine where caused by Comlux's negligence), but not cl 10.3 (meaning that the consequential loss exclusion was maintained), and AVWest would have agreed to proceed on that basis.[171]
[171] FRSOC, par 46(ea)-(eb); POS, par 127; PCS, pars 91(ii), 93 - 95, 149 - 150 (the 'Scenario 2').
In written closing submissions AVWest propounded its case in terms that had CU given proper advice there were four possible scenarios:[172]
•Scenario 1: There would have been no amendment to cl 10 of the CMA (because Comlux AS would not have agreed to any substantive amendments) and AVWest would nevertheless have proceeded with the CMA and the ASA.
•Scenario 2: Comlux AS would have agreed to delete the airframe and engine exclusion in par 2 of cl 10.1, but not the consequential loss exclusion in cl 10.3, and AVWest would nevertheless have proceeded with the CMA and the ASA.
•Scenario 3: The same as Scenario 2, but ‑ in addition to deletion of the airframe and engine exclusion in par 2 of cl 10.1 ‑ Comlux AS would have agreed to delete the requirement in par 2 of cl 10.1 that any damage be due to Comlux AS's negligence. In those circumstances AVWest would have proceeded with the CMA and the ASA despite continuation of the consequential loss exclusion in cl 10.3.
•Scenario 4: AVWest would have walked away from the draft CMA and the ASA because Comlux AS would not have agreed to delete the cl 10.3 consequential loss clause. This is the 'no transaction' case.
[172] PCS, par 91.
None of the four scenarios as propounded in AVWest's closing submissions included that mentioned in par 122 above. It was not contended that there was a possible scenario in which Comlux AS would have agreed to amend the draft CMA by the deletion of the cl 10.3 consequential loss exclusion. Accordingly, the pleaded scenario, as opened, that the CMA as negotiated would have provided AVWest with an indemnity for all loss suffered as a result of damage to the Aircraft including consequential loss, was not advanced in closing. The reason for that will become apparent on consideration of Mr Pelet's evidence.
Nor, in AVWest's closing, was any scenario posited whereby AVWest would have walked away from the draft CMA and the ASA because Comlux AS would have refused to delete the airframe and engine exclusion in par 2 of cl 10.1.[173] Accordingly, such a variant on the no transaction case need not be considered. It was not advanced as a possible scenario within the catalogue of possibilities that AVWest posited in closing submissions.
[173] Cf FASOC, par 46(fa).
The purpose of an award of pre‑judgment interest is to compensate a claimant for the period it has been deprived of a monetary amount that the court has determined the claimant is entitled to.
The award of pre‑judgment interest involves the exercise of a judicial discretion. In the exercise of discretion, in circumstances where no explanation is proffered for non‑commencement of the litigation until 8 July 2016, I will only award pre‑judgment interest from 8 July 2016. There not being any suggestion of prior opportunity for CU to meet a putative liability to AVWest, interest should only run from the commencement of proceedings. I will also provide for interest at 6 per cent per annum. That is the rate prescribed for judgment debts under s 8(1) of the Civil Judgments Enforcement Act 2004 (WA).
I will hear from the parties as to costs.
ANNEXURE A
Contracts with 'Consequential Loss' clause executed by AVWest or associated entity
| Date | Description | Relevant Clause(s) | Signed | TB / Exhibit |
| July 2007 | AVWest Pty Ltd: purchase of Javelin MK‑10 customer delivery position #9 from Danair Aviation Ltd | Schedule C ‑ Sales Agreement with manufacturer 7(e) … In no event shall [Danair] be liable to [AVWest] for any amounts representing [AVWest's] indirect, special, exemplary, consequential or punitive damages including, without limitation, loss of profits, loss of business, and loss of Aircraft use, arising from errors or omissions by [Danair]… | Roberts | TB1/197 TB1/220 |
| July 2007 | AVWest Pty Ltd: purchase of Javelin MK‑10, customer delivery position #105 from Danair Aviation Ltd | Schedule C ‑ Sales Agreement with manufacturer 7(e) … In no event shall [Danair] be liable to [AVWest] for any amounts representing [AVWest's] indirect, special, exemplary, consequential or punitive damages including, without limitation, loss of profits, loss of business, and loss of Aircraft use, arising from errors or omissions by [Danair]… | Roberts | TB1/229 TB1/252 |
| 11/12/07 | AVWest Pty Ltd: purchase of new Eurocopter AS 355 helicopter from Australian Aerospace Ltd | 7.3 No Consequent Loss The Seller's liability to [AVWest] under this Agreement is limited to the obligations set out in this Agreement, and the Seller excludes any liability for any indirect or consequential loss, special damage and harm or injury suffered by [AVWest] or any other person arising out of or as a consequence of this Agreement or any act or omission (including negligence) of the Seller. | Burton | Ex 10 p 7 |
| 14/12/07 | AVWest Pty Ltd: purchase of Hawker Aircraft 800XP | 8. Representations and Warranties; Disclaimer (c) NO OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO ANY TANGIBLE OR INTANGIBLE THING, FOR LOSS OF USE, REVENUE, PROFIT OR TAX BENEFIT, OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND. Annex B ‑ Limited Warranty Bill of Sale … ALL OTHER OBLIGATIONS OR LIABILITIES OF SELLER, WHETHER FOR CONSEQUENTIAL OR OTHER DAMAGES … OTHERWISE ARE EXCLUDED … | Roberts | Ex 53 p 4 p 9 |
| 18/07/08 | AVWest Pty Ltd: purchase of Gulfstream G650 from Gulfstream Aerospace Corporation | F Exclusion of Consequential Damages …Gulfstream shall not be liable for any punitive, special, incidental or consequential damages that arise from or relate in any way to this Agreement … without limitation, damages for loss of use, loss of time, inconvenience, diminution in value or other commercial loss. THE EXCLUSION OF INCIDENTAL AND CONSEQUENTIAL DAMAGES … SHALL APPLY NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT … | Roberts | Ex 54 p 7 |
| 30/04/09 | AVWest: purchase of Bombardier Global Express XRS 9310 from Bombardier Inc | Article 4 – General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL, AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB1/12 STB1/13 |
| 26/06/09 | AVWest: purchase of new Eurocopter EC 145 helicopter from Australian Aerospace Ltd | 8.3 No Consequent Loss The Seller's liability to [AVWest] under this Agreement is limited to the obligations set out in this Agreement, and the Seller excludes any liability for any indirect or consequential loss, special damage and harm or injury suffered by [AVWest] or any other person arising out of or as a consequence of this Agreement or any act or omission (including negligence) of the Seller. | Roberts | Ex 6 p 7 |
| 30/06/09 | AVWest: purchase of DHC‑6 Series 400 Twin Otter Serial Number 851 from Viking Air Ltd | 9. INDEMNIFICATION 9.1 Indemnification of Viking [AVWest] hereby releases, discharges and agrees to indemnify and hold harmless Viking…from and against any and all claims, demands, proceedings, actions, causes of action, judgements, damages (including loss of profits and incidental or consequential damages), losses, liabilities, deficiencies, costs and expenses (including interest, penalties, amounts paid in settlement and reasonable legal fees and disbursements) … which Purchaser … may have… | Roberts | STB1/132 STB1/148 |
| 11/05/10 | AVWest: purchase of DHC‑6 Series 400 Twin Otter Serial Number 871 from Viking Air Ltd | Article 9. INDEMNIFICATION 9.1 Indemnification of Viking [AVWest] hereby releases, discharges and agrees to indemnify and hold harmless Viking…from and against any and all claims, demands, proceedings, actions, causes of action, judgements, damages (including loss of profits and incidental or consequential damages), losses, liabilities, deficiencies, costs and expenses (including interest, penalties, amounts paid in settlement and reasonable legal fees and disbursements) … which Purchaser … may have… | Roberts | Ex 24 |
| 14/06/10 | AVWest: sale of Bombardier Global Express XRS 9310 to Altitude X4 Ltd | 9. General Exclusions 9.2 UNDER NO CIRCUMSTANCES SHALL EITHER THE SELLER OR THE BUYER BE LIABLE TO THE OTHER … FOR ANY ECONOMIC, CONSEQUENTIAL, INDIRECT OR SPECIAL OR INCIDENTAL DAMAGES OR LOSS … | Roberts | STB1/342 STB1/353 |
| 14/07/10 | AVWest: purchase of Bombardier Global Express XRS Vision Serial No. 9467 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB1/500 STB1/502 |
| 14/07/10 | AVWest: purchase of Bombardier Global Express XRS Serial No. 9419 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB1/601 STB1/603 |
| 14/07/10 | AVWest: purchase of Bombardier Global Express XRS Vision No. 2 Serial No. 9471 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB1/632 STB1/634 |
| 14/07/10 | AVWest: purchase of Bombardier Global Express XRS Serial No. 9387 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB1/472 STB1/473 |
| 13/09/10 | AVWest: purchase of Bombardier Global Express XRS Serial No. 9173 from Air Luther AG (ie the Aircraft) | 9 Indemnity and Release 9.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) the Inspection or Final Inspection …; (b) any breach of this Agreement by the Purchaser; or (c) the use or condition of the Aircraft after the Closing Date. 9.2 Seller The Seller shall fully indemnify and keep Indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller; or (b) the use or condition of the Aircraft prior to the Completion Date. Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect or consequential (including pure economic) cost, expense, damage or liability. | Roberts | TB3/1651 TB3/1660 TB3/1665 |
| 5/10/10 | AVWest: sale of Eurocopter EC 145 Number 9177 to Lemo investments LLC | 8 Indemnity and Release 8.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by arising out of or in any way in connection with: (a) any breach of this Agreement by the Purchaser; or (b) the use or condition of the Aircraft after the Closing Date. 8.2 Seller The Seller shall fully indemnify and keep Indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller; or (b) the use or condition of the Aircraft prior to the Completion Date. Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect or consequential (including pure economic) cost, expense, damage or liability. | Roberts | Ex 28 p 8 p 14 |
| 29/10/10 | AVWest: purchase of Bombardier Global Express XRS No. 9409 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL, AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Burton | STB1/752 STB1/753 |
| 12/11/10 | AVWest: sale of Bombardier Global Express XRS No 9015 to FMG Air Pty Ltd | 8 Indemnity and Release 8.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser; or (b) the use or condition of the Aircraft after the Closing Date. 8.2 Seller The Seller shall fully indemnify and keep Indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller; or (b) the use or condition of the Aircraft prior to the Closing Date. Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect or consequential (including pure economic) cost, expense, damage or liability. | Roberts | STB1/822 STB1/831 STB1/836 |
| 14/12/10 | AVWest: purchase of Bombardier Global Express XRS 9167 from Movers Global Ltd. | 9 Indemnity and Release 9.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser; or (b) the use or condition of the Aircraft after the Closing Date. 9.2 Seller The Seller shall fully indemnify and keep Indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller; or (b) the use or condition of the Aircraft prior to the Closing Date. Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB1/848 STB1/861 ‑ 862 STB/855 |
| 24/02/11 | AVWest: acceptance of proposal from Jet Aviation St Louis Inc for maintenance, interior, paint and avionics for Global Express XRS Serial Number 9167 | 13. Warranty … IN NO EVENT SHALL COMPANY HAVE ANY LIABILITY WlTH RESPECT TO INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF USE OR PROFITS. Terms and Conditions 14. LIMITATIONS OF LIABILITY IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY LOSS OF USE OF THE AIRCRAFT OR LOSS OF PROFITS, OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING, WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO THE AIRCRAFT RESULTING FROM ANY FAILURE OR REFUSAL TO PERFORM CUSTOMARY RECOMMENDED OR REQUIRED STORAGE AND MAINTENANCE PROCEDURES ON ANY AIRCRAFT REMAINING OR HELD ON THE COMPANY'S PREMISES, UNLESS SPECIFICALLY AGREED IN WRITING. IN NO EVENT SHALL ANY ACTION BE COMMENCED AGAINST COMPANY MORE THAN ONE YEAR AFTER THE CAUSE OF ACTION WITH RESPECT TO WHICH THE CLAIM IS MADE HAS ACCRUED. | Roberts | TB4/2898 TB4/2927 TB4/2930 |
| 18/05/11 | AVWest: purchase of Bombardier Global Express XRS aircraft with Serial No. 9393 from Bombardier Inc. | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB2/976 STB2/977 |
| 19/09/11 | AVWest: sale of Bombardier Global Express XRS Serial Number 9167 to Agility Assets LLC | 10 Indemnity 10.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing …. 10.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB2/1225 STB2/1242 ‑ 1243 STB2/1232 |
| 13/10/11 | AVWest: purchase of Bombardier Global 5000, Serial Number 9226 from Dubai Air Wing | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB2/1260 STB2/1278 STB2/1267 |
| 18/10/11 | AVWest: purchase of Bombardier Global Express, Serial Number 9141 from Indo Aviation Ltd | 11 Indemnity and Release 11.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after the Closing Date … 11.2 Seller The Seller shall fully indemnify and keep Indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to the Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB2/1292 STB2/1309 ‑ 1310 STB2/1299 |
| 16/02/12 | AVWest: sale of Bombardier Global 5000, Serial Number 9226 to Hawkjet Ltd | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB2/1370 STB2/1387 ‑ 1388 STB2/1376 |
| 29/03/12 | AVWest: purchase of Bombardier Global Express XRS Serial Number 9250 from Somero Systems SA | 11 Indemnity 11.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 11.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB2/1516 STB2/1534 ‑ 1535 STB2/1523 |
| 11/04/12 | AVWest Aircraft Trading Pty Ltd: sale of Bombardier Challenger 850 Serial Number 8060 to Raise in Development Limited. | 13 Indemnity 13.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 13.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB3/2132 STB3/2139 STB3/2150 |
| 26/04/12 | AVWest: acceptance of proposal from Jet Aviation St Louis Inc for maintenance, interior, paint and avionics for Global Express XRS, Serial Number 9250 | 10. Warranty … IN NO EVENT SHALL COMPANY HAVE ANY LIABILITY WlTH RESPECT TO INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF USE OR PROFITS. Terms and Conditions 14. LIMITATIONS OF LIABILITY IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY LOSS OF USE OF THE AIRCRAFT OR LOSS OF PROFITS, OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING, WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO THE AIRCRAFT RESULTING FROM ANY FAILURE OR REFUSAL TO PERFORM CUSTOMARY RECOMMENDED OR REQUIRED STORAGE AND MAINTENANCE PROCEDURES ON ANY AIRCRAFT REMAINING OR HELD ON THE COMPANY'S PREMISES, UNLESS SPECIFICALLY AGREED IN WRITING. IN NO EVENT SHALL ANY ACTION BE COMMENCED AGAINST COMPANY MORE THAN ONE YEAR AFTER THE CAUSE OF ACTION WITH RESPECT TO WHICH THE CLAIM IS MADE HAS ACCRUED. | Roberts | TB5/3444 TB5/3462 TB5/3465 |
| 02/05/12 | AVWest Aircraft Trading Pty Ltd: purchase of Bombardier Challenger 850, Serial Number 8060 from Linfox Aircraft Charter Pty Ltd | 13 Indemnity 13.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 13.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB3/2242 STB3/2260 STB3/2249 |
| 07/05/12 | AVWest Aircraft Trading Pty Ltd: sale of Bombardier Global 5000 Serial Number 9346 to AVMAX Group International A.V.V | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB3/2274 STB3/2293 ‑ 2294 STB3/2281 |
| 08/05/12 | AVWest Aircraft Trading Pty Ltd: purchase of Bombardier Global 5000 Serial Number 9346 from Commonwealth Bank Of Australia | 11 Indemnity 11.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 11.2 Operator The Operator shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Operator … (b) the use of the Aircraft prior to Closing … 11.3 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the failure of any of the representations or warranties given by the Seller in clause 9.1 to be true and accurate when made or repeated. Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB3/2309 STB3/2330 ‑ 2331 STB3/2317 |
| 10/05/12 | AVWest: sale of Bombardier Global Express, Serial Number 9060 to Queensland Nickel Pty Ltd | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Burton | STB3/2348 STB3/2366 STB3/2355 |
| 31/05/12 | AVWest: sale of Viking DHC‑6 Series 400 Twin Otter Serial Number 851 to Zimex Business Aviation Ltd | 10 Indemnity 10.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 10.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB3/2432 STB3/2447 STB3/2438 |
| 14/09/12 | AVWest: purchase of Bombardier Global Express, Serial Number 9185 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB4/3131 |
| 14/09/12 | AVWest: purchase of Bombardier Global Express Serial Number 9097 from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB4/3121 |
| 07/12/12 | AVWest: sale of Bombardier Global Express Serial Number 9250 to Pacific Global Ltd | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB4/3357 STB4/3376 STB4/3364 |
| 18/02/13 | AVWest: sale of Bombardier Global Express, Serial Number 9097 to Mirgab Aviation Ltd | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB4/3398 STB4/3419 ‑ 3420 STB4/3406 |
| 19/08/13 | AVWest: sale of Bombardier Global Express, Serial Number 9185 to Delaware Global Operation LLC | 12 Indemnity 12.1 Purchaser The Purchaser shall fully indemnify and keep indemnified the Seller for all Loss or Claims brought against, suffered or incurred by the Seller caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Purchaser … (b) the use or condition of the Aircraft after Closing … 12.2 Seller The Seller shall fully indemnify and keep indemnified the Purchaser for all Loss or Claims brought against, suffered or incurred by the Purchaser caused by, arising out of, or in any way in connection with: (a) any breach of this Agreement by the Seller … (b) the use or condition of the Aircraft prior to Closing … Loss means any direct cost, expense, loss, damage or liability whether present or future, fixed or unascertained, actual or contingent, but does not include any indirect, incidental, punitive, special or consequential (including pure economic) cost, expense, damage or liability of any kind. | Roberts | STB4/3583 STB4/3602 STB4/3590 |
| 29/01/14 | AVWest: purchase of Bombardier Global 7000 No. 6 position from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB4/3640 STB4/3642 |
| 29/01/14 | AVWest: purchase of Bombardier Global 8000 G position from Bombardier Inc | Article 4. General Provisions 4.2 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL AND / OR PUNITIVE DAMAGES OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES OR, WITHOUT LIMITING THE FOREGOING, FOR ANY LOST PROFITS OR ANY OTHER LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF USE OF ANY AIRCRAFT, ANY EQUIPMENT, ANY ACCESSORY OR ANY SPARE PART FOR ANY REASON. | Roberts | STB4/3701 STB4/3704 |
| 08/05/15 | AVWest: acceptance of proposal from Jet Aviation St Louis Inc for the interior refurbishment, of a Global 6000 Serial Number 9515 | 11. Warranty …IN NO EVENT SHALL COMPANY HAVE ANY LIABILITY WlTH RESPECT TO INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF USE OR PROFITS. Terms and Conditions 14. LIMITATIONS OF LIABILITY IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY LOSS OF USE OF THE AIRCRAFT OR LOSS OF PROFITS, OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING, WITHOUT LIMITATION, DIMINUTION OF VALUE, ALTERNATE LIFT, AND ANY LOSS OR DAMAGE TO THE AIRCRAFT RESULTING FROM ANY FAILURE OR REFUSAL TO PERFORM CUSTOMARY RECOMMENDED OR REQUIRED STORAGE AND MAINTENANCE PROCEDURES ON ANY AIRCRAFT REMAINING OR HELD ON THE COMPANY'S PREMISES, UNLESS SPECIFICALLY AGREED IN WRITING ... IN NO EVENT SHALL ANY ACTION BE COMMENCED AGAINST COMPANY MORE THAN ONE YEAR AFTER THE CAUSE OF ACTION WITH RESPECT TO WHICH THE CLAIM IS MADE HAS ACCRUED. | Nick Houseman | TB6/4589 TB6/4607 TB6/4609 |
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EP
Research Associate to Justice Vaughan28 AUGUST 2019
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