Edwards v Yugul Mangi Clan Development P/L
[2006] NTMC 23
•17th March 2006
PARTIES: HONE PIHAMA EDWARDS
(FILE 20426607)
&
E. R. AIR SERVICES PTY LTD
(FILE 20426309)
v
YUGUL MANGI CLAN DEVELOPMENT P/L
(FILES 20426607; 20426309)
&
HONE PIHAMA EDWARDS
(FILE 20426309)
TITLE OF COURT: Local Court
JURISDICTION: Local Court
FILE NO(s): 20426607, 20426309
DELIVERED ON: 17th March 2006
DELIVERED AT: Darwin
HEARING DATE(s): 24, 25, 26, 27 & 28 October 2005; Written submissions 21 November 2005
JUDGMENT OF: Jenny Blokland SM
CATCHWORDS:
EMPLOYMENT LAW – CLAIM FOR OUTSTANDING LEAVE
Annual Leave Act (NT) ss 4, 10, 11, 13, 16
Pilots (General Aviation) Award
Roping-in Award No. 1 of 1999
Common Rule Declaration, Australian Industrial Relations Commission, Commissioner Eames, 31 March 2004.
EMPLOYMENT LAW - EMPLOYMENT CONTRACT – FIDUCIARY DUTY
Breen v Williams (1996) 186 CLR 92
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Daily Cleaning Service v Pavlovic (1992) 34 AILR 359
Paul Finn, “Contract and the Fiduciary Principle”, 12 UNSW Law Journal 76
Breen Creighton and Andrew Stewart, “Labour Law” 4th ed, Federation Press, 2005
REPRESENTATION:
Counsel:
Plaintiff: Mr Waters QC
Defendant: Mr McQueen
Solicitors:
Plaintiff: Ms Scicluna
Defendant: Mr McQueen
Judgment category classification: B
Judgment ID number: [2006] NTMC 023
Number of paragraphs: 84
IN THE LOCAL COURT
AT DARWIN IN THE NORTHERN
TERRITORY OF AUSTRALIA
No. 20426607, 20426309
BETWEEN:
HONE PIHAMA EDWARDS
(FILE 20426607)
Plaintiff 1
E. R. AIR SERVICES PTY LTD
(FILE 20426309)
Plaintiff 2
AND:
YUGUL MANGI CLAN DEVELOPMENT P/L
Defendant
AND:
HONE PIHAMA EDWARDS
(FILE 20426607)
Third Party
REASONS FOR DECISION
(Delivered 17th March 2006)
JENNY BLOKAND SM:
Introduction
1. These reasons concern two closely related matters that have been amalgamated. Both matters were heard at the same time and although the issues are more contained in the action in file 20426607, there are cross over evidential issues that relate to both matters. The claim brought by Mr Hone Pihama Edwards on file 20426607 concerns a claim for unpaid employment entitlements being the alleged balance of monies owed to him in lieu of annual and recreational leave, and leave loading. What is not in dispute is Mr Edwards commenced working for the defendant Yugul Mangi Clan Development P/L, (referred to also throughout these proceeding as “Ngukurr Air”), in 1998 and the employment ceased on 24 November 2004. As a result of the statutory requirements set out in the Amended Statement of Claim, the plaintiff claims $36,460.39 plus superannuation entitlements. This is calculated after a deduction to take account of $4,210.03 that the defendant acknowledged was owing and was paid. In general terms the defendant denies that the plaintiff was employed subject to the Pilots “General Aviation” Award until it was declared a common rule on 24 March 2004; it denies that the plaintiff accrued annual leave pursuant to the Award, although it admits that the defendant had entitlements to annual leave, the defendant denies that it owes the sum alleged in the Amended Statement of Claim. It is not in dispute that the plaintiff (Hone Edwards) at all material times was employed by Ngukurr Air.
2. In action 20426309 the plaintiff is E.R. Air Services Pty Ltd. E. R. Air Services Directors are Hone Edwards, (the plaintiff in the first mentioned action), along with his wife Roseanna Edwards and Mrs Edward’s sisters. It is alleged that by virtue of “Operating Lease” agreements the plaintiff’s aircraft, VH-XGN and VH-SYT were hired or leased to the defendant. The defendant admits that it leased these aircraft from the plaintiff company at the respective rates but denies that it entered into the lease arrangements on the dates alleged by the plaintiff or with awareness of certain of the terms set out. Because of alleged breaches of the operating leases the plaintiff company claims $53,501.80 plus interest and costs. Those sums are calculated by reference to alleged breaches of guaranteed minimum hiring hours. The defendant denies it is liable to the plaintiff company for those outstanding amounts. Further proceedings filed in action 20426309, concern the defendant Yugul Mangi Clan Development P/L issuing third party proceedings against Mr Hone Edwards (the plaintiff in the previous action and a Director of E. R. Air Services in this action). The third party claim in general terms alleges that, Hone Edwards was employed as a manager by Yugul Mangi Clan Development P/L; it alleges Ms Roseanne Edwards was responsible for the allocation of the aircraft owned or hired and the booking of those flights; it alleges that Mr Edwards as an employee of Yugul Mangi Clan Development P/L was under a fiduciary duty, and owed a duty of fidelity and of disclosure. Yugul Mangi Clan Development P/L alleges that the third party (Mr Edwards), with authority of or as agent of E. R. Air Services Pty Ltd made a number of representations to Yugul Mangi Clan Development P/L, namely that E. R. Air Services Pty Ltd were interested in purchasing the two aircraft from Yugul Mangi and that Mr Edwards had authority to negotiate a purchase of those two aircraft on behalf of E. R. Air Services Pty Ltd; further, that Mr Edwards represented that the value of aircraft VH-XGN was $175,000 to $180,000 plus GST and that the value of VH-SYT was $85,000 plus GST; further it is alleged that Mr Edwards made a representation that if E. R. Air Services Pty Ltd purchased those aircraft, those aircraft would be made available to the defendant Yugul Mangi Clan Development P/L on similar commercial terms to other aircraft leased to the defendant company by E. R. Air Services Pty Ltd.
3. It is alleged that at a meeting in 2003 the directors of Yugul Mangi Clan Development P/L agreed to sell both aircraft to E. R. Air Services at $160,000 for VH-XGN and $80,000 for VH-SYT. It is alleged that Mr Edwards was present at that meeting. It is alleged that Mr Edwards breached his fiduciary duty and duty of fidelity in respect of various aspects of the sale of the aircraft. It is also alleged that Mr Edwards prepared the “Operating Leases” omitting certain common provisions and at the same time including certain minimum flying hours for each aircraft. In general terms it is also alleged that there was a failure to disclose the minimum hours to the CEO of Yugul Mangi Clan Development P/L and that he did not disclose certain other issues that may have a bearing on this matter namely, that other aircraft belonging to E. R. Air Services Pty Ltd that had no minimum fixed time requirement were being used in preference over VH-SYT and VH-XGN. The third party claim is for $50,000 plus GST for loss of profit on the sale of aircraft VH-XGN; plus $11,818 being the loss of profit on the sale of aircraft VH-SYT less the charges claimed for VH-XGN and VH-SYT being $48,638 plus GST.
4. In his defence Mr Edwards denies the representations concerning the price of the aircraft to Yugul Mangi Clan Development P/L, suggesting the representations were made on the basis of estimates obtained from a valuer who had been retained by Yugul Mangi Clan Development P/L previously. Mr Edwards claims that at the meeting between himself and the defendant company concerning the purchase, the then Chief Executive Officer Ms Lynn Mott, its accountant Kevin Blacker and its solicitor Peter McQueen were present. Essentially as third party Mr Edwards claims the invoices for the cross-hire of the planes followed a meeting between himself and the CEO of Yugul Mangi Clan Development P/L and that there was advice that one of the lease agreements could commence in October 2003 notwithstanding the purchase of the planes had not been finalised. The third party agrees that Yugul Mangi Clan Development P/L sold the two aircraft to the plaintiff company E. R. Air Services Pty Ltd on or about 14 November 2003 for $201,500. Mr Edwards denies he was in breach of his fiduciary duty and duty of fidelity as alleged by the defendant Yugul Mangi Clan Development P/L.
Evidence Called in the Proceedings
Leah Lynette Mott
5. Ms Mott was the previous CEO of Yugul Mangi Clan Development Pty Ltd; she gave evidence that in 1998 she and Mr Edwards set up the airline with local people of the Yugul Mangi Clan; she said Mr Edward’s credit cards were used to operate the service prior to commencement of the company and that Yugul Mangi was incorporated around October 1998. Ms Mott said that from 1998 Mr Edwards was an employee, he was never a Director of Yugul Mangi. Exhibit P1, (the employment agreement), was identified by Ms Mott. She said she was responsible for the terms of the employment of Mr Edwards as she was CEO at the time. She said as CEO she had general instructions from the Directors to run the company. She said she remained CEO of Air Ngukurr until February 2004 when she resigned; between October 1998 and February 2004 she told the court Mr Edwards was a pilot; she said she had responsibility for wages. She said she did not work out the pays but she had the overview of the pays through subordinate employees and the records were generated by the MYOB (“Mind Your Own Business”) programme. The records before the court that form Exhibit P2 are records commencing in the year 2000. She said that the pre 2000 records, (along with other earlier records), may have been burnt in a fire at Winnellie. She said Mr Edwards very rarely took leave, he had taken no long service leave and had no advance concerning leave.
6. She told the court that in 2003 a decision was made to sell two of Yugul Mangi Clan Development Pty Ltd’s aircraft known in these proceedings as “XGN” and “SYT”; the motivation for the proposed sale was that the company was having cash flow problems and it was decided to sell them after discussions with Mr McQueen, (Yugul Mangi/Air Ngukurr’s lawyer), and a Mr Blacker (their accountant); she said she consulted and took the idea to the Directors of Yugul Mangi Clan Development Pty Ltd who resolved to sell the aircraft; she said Hone Edwards was involved in the meeting with the Directors; she told the court she asked Hone Edwards to contact a Mr MacLean concerning the value of the aircraft; she said Mr Edwards had expressed interest in buying the aircraft. Ms Mott said that Air Ngukurr had consulted Mr MacLean previously when the issue of sale of aircraft had arisen. She said she did not recall whether any commission was paid to Mr MacLean. She said it was at a Director’s meeting in July 2003 that it was agreed to sell the particular aircraft; she said present at that meeting were Mr McQueen, Mr Blacker, Andrew Robertson, a person named “Ishmael” and “two others”; she said Hone Edwards advised he was making inquiries to see if he could raise the money to purchase the aircraft. Ms Mott said she had seen the letter from Mr Edwards to Mr McQueen dated 29 August 2003 (Exhibit P4). That letter reads:
“Attention: Peter. These are the independent valuations for XGN and SYT. I am offering $80,000 for SYT and $160,000 for XGN. The reason I differ from XGN value is that the engine and prop times for this aircraft have increased by approximately 200 hours from the date of the valuation. I will send the SAETAS engineering pre purchase details to you later on.”
The valuation opinion from Mr Richard MacLean from “Aircraft Sales” became Exhibit P3. In relation to the aircraft XGN Mr MacLean states:
“I conducted a “walk around” inspection of VH-EGN whilst in Darwin recently and found the presentation to be average for its current operating environment. Avionics are of a very good standard for this operation and based upon information supplied I believe the total airframe time to be 6,432.9 hours, engines had 1,426.7 hours on the RH side and 1,248.9 hours on the LH side since overhaul TBO of 1,870 leaving 443.3 hours to run to overhaul on the right and 621.1 to run on the left engine propellers pad 45.4 hours on the right and 1,619 on the left since overhaul leaving 1,549.6 hours to run to overhaul on the right and 381 hours on the left. I believe the current value of this aircraft as is where is to be in the region of $175,000 AUD to $180,000 AUD plus GST given reasonable marketing time and exposure”.
7. In relation to the aircraft known as SYT in these proceedings Mr MacLean’s memorandum stated:
“I conducted a “walk around” inspection of VH-SYT whilst in Darwin recently and found it to be in need of repaint and interior refurbishments. Avionics are of a standard commensurate with that expected of the model and for the operation in which this aircraft and based upon information supplied I believe the total airframe time to be 7,823.1 hours, the engine had 1,866.8 hours since overhaul with a TBO of 1,870 hours leaving 3.2 hours to run to overhaul therefore virtually time expired the propeller had 1,866.8 hours since overhaul leaving 130 hours to run to overhaul. I believe the current value of this aircraft as is where is to be in the region of $80,000 AUD - $85,000 AUD plus GST”.
8. In relation to Exhibit P4 (the offer made by Mr Edwards for the purchase of the aircraft), Ms Mott told the court that letter had not come to her attention; she said she was overseas at the time. In relation to how a final price would be settled Ms Mott said there were some negotiations looking at issues concerning the fact that the aircraft may have been used for a few months after the valuations were received and there may need to be compensation for that and that engine life would have to be looked at. Ms Mott said she did not discuss with Mr Edwards what that compensation would be; she said she was aware that E. R. Air Services Pty Ltd had agreed to lease the aircraft back to Air Ngukurr. Ms Mott was shown Exhibit P5 being the “operating lease” concerning aircraft SYT and Exhibit P6 being the “operating lease” concerning aircraft XGN. Ms Mott agreed that those operating leases were from the standard template used by Air Ngukurr and that the standard template provides for minimum hours; she said that she had looked after that type of lease previously. She said other persons including the current CEO, (her successor, Mr Bleakley), also had an “operating lease” regulating the hiring of one of his aircraft: (see Exhibit P7). Ms Mott said she was not a party to the minimum flying hours being increased from 300 to 600 hours. She said she had no association with Mr Hone Edwards or E. R. Air Services Pty Ltd beyond their time being employed at Air Ngukurr.
9. In cross-examination Ms Mott agreed that the genesis of Air Ngukurr was with Hone Edwards and herself; she told the Court “Yugul Mangi” refers to the indigenous people of the area of Ngukurr. She agreed that the role of the Yugul Mangi Clan Development P/L was to benefit the community. She said that on or about 1998 Deloitts were asked to set up the company and the shares were held by the Yugul Mangi Council; she agreed the split of shares was that sixty percent was held by Directors and forty percent by the Council. She agreed the contract of employment for Mr Edward’s employment was prepared by her and signed by each of the relevant persons at Air Ngukurr; she thought the relevant agreements were still available at the office when she left Air Ngukurr; she agreed that there had been a fire but could not say what would have happened to original documents that were missing at the time of the hearing.
10. Ms Mott agreed that on or about December 2001 the Civil Aviation Safety Authority “CASA” sent a letter in relation to Mr Hone Edward’s employment as a Chief Pilot; it was suggested to Ms Mott that he was suspended in December; she said she recalled he was suspended in the long weekend of January; she agreed that in late 2002 Mr Edwards was terminated as the Chief Pilot as a requirement of CASA; she agreed CASA brought proceedings against Mr Edwards at that time. She agreed that Air Ngukurr provided a deal of support to Mr Edwards at that time; she agreed that Air Ngukurr grew and pursued opportunities with Mr Blacker assisting with financial matters from about mid 2002.
11. Ms Mott said that prior to her leaving Air Ngukurr in August (she acknowledged she took leave until around February 2004), there may have been wage records concerning the period prior to MYOB; she reiterated that she did not know whether they existed and that they may have been burnt. She agreed that part of the justification for selling the aircraft known as XGN and SYT was to contain or reduce costs; she said that if those aircraft were cross hired there would be a reduction in some of the costs associated with maintaining and running them. She said there were a number of companies who cross hired aircraft to Yugul Mangi Clan Development P/L. She said there were a number of hire and cross hire arrangements made for aircraft including arrangements made with “Island Air”, “Wimray Air” and “E.R. Air Services Pty Ltd”. She said of the valuations given by Mr MacLean on the sale of the two aircraft that she assumed the values included GST. She agreed the offer made by Mr Edwards for the aircraft was less than the valuations and she understood that to be because the aircraft had continued to fly and certain costs were associated with that. She said the benefit of the sale of those aircraft would be that the balance would be available to improve the cash flow of Air Ngukurr; she said she did not prepare the eventual hiring agreement for the cross hire of those aircraft from E. R. Air Services Pty Ltd; she said Mr Hone Edwards would generally prepare those agreements and that would have occurred until the time that she left.
Hone Pihama Edwards
12. Mr Edwards told the court that at the time of giving evidence he was 43 years of age and had been a professional pilot for 14 years. He commenced employment at Ngukurr Community in 1998 in a part time position and by October 1998 was full-time. He said he was paid in accordance with the agreement that is Exhibit P1 in these proceedings. He said representatives of Air Ngukurr had signed the original agreement and he was paid in accordance with that agreement. He said initially he did not take leave in his position as the work demanded all of his time; he said years later he did obtain leave and on or about the 27th October 2004 he received a document from Air Ngukurr concerning his leave entitlements; he said he had made enquiries concerning his leave entitlements. Mr Edwards acknowledged Exhibit P2 being the payroll advice from August 2000 to November 2004; he acknowledged also the advice prepared by the book-keeper Ms Sarina Shailer concerning his leave entitlements and his own calculations for entitlements being contained in Exhibit P10. He also acknowledged an amendment to his employment relationship noted in Exhibit P11 commencing 27th May 2004. He said that he worked at Air Ngukurr from October 1998 to the end of November or December 2004. He said he was suspended as the Chief Pilot due to “defects” that CASA had accused him of but he continued in his employment in various other roles with no loss of wages or entitlements. Tendered through Mr Edwards was Exhibit P12, a memorandum from the Directors of Air Ngukurr to Mr McQueen and Mr Bleakley that reads as follows:
“We confirm as per our meeting held at your office with Kevin Blacker and Hone Edwards present, that Hone was suspended on normal pay.”
Mr Edwards also identified a statement of entitlements from Air Ngukurr indicating his total entitlements were $4210.03 : (Exhibit P13) and with that entitlement was a letter from Mr McQueen, (acting for Air Ngukurr), offering a sum of $6000.00 in addition to leave entitlements; Mr McQueen wrote:
“I am instructed that if no agreement is reached on the terms as set out above by 1pm Friday 29 October 2004 then action will be taken to terminate your employment at that time”.
Also tendered was a letter from Mr Bleakley, (the CEO of Air Ngukurr dated 25th October 2004) stating amongst other matters,
“I now give notice that I propose to terminate your employment with Air Ngukurr, giving you four weeks notice effective from Wednesday 27 October unless you give notice of your intention to resign beforehand. Upon termination or resignation you will be paid such entitlements as may be due and owing taking into account your period of employment with Air Ngukurr.”
In evidence Mr Edwards said he did not at anytime waive or forego or forgive payment of long service leave and made no other agreements that would be relevant to his employment status.
13. Mr Edwards said that prior to July 2003 he owned aircraft registered and known in these proceedings as “UBK” and “KSS”; they were both leased back to Air Ngukurr in accordance with an agreement for a fixed term of 12 months; there was a minimum 500 hours hire per year set. Mr Edwards said that a minimum limit was always set; this provided a safe guard that the aircraft would actually be hired; he said that a number of other persons were leasing aircraft to Air Ngukurr in a similar way; Mr Edwards advised the court that he had some knowledge of these arrangements because he was involved in negotiating similar arrangements; he said there was some variation between these arrangements concerning the guaranteed minimum flying times and there were variations on issues such as which party would pay for insurance. He said Mr Bleakley, (who owned Wimrays Safaris), had a lease with Air Ngukurr in similar terms as his own lease; he said in relation to the number of hours that would be guaranteed as minimum hours, some operating leases had less than 500 hours but after some time the minimum hours were changed and with his later aircraft, SYT and XGN, the minimum hours agreed were 600 hours.
14. Mr Edwards said that while his new aircraft (“SYT” and “XGN”) were hired at the minimum hiring of 600 hours, Mr Bleakley’s aircraft from Wimrays was also re-negotiated to 600 minimum hours. He described Mr Bleakley as being “in charge”. Mr Edwards referred to Exhibit P15, (the “Operating Lease” concerning an aircraft hired to Air Ngukurr from Mr Bleakley trading as Wimray Safaries), to illustrate the point concerning his evidence that essentially these operating leases were the same for all aircraft. He pointed out the minimum hiring of 600 hours. The operating lease (Exhibit P15) contains clause 3(g) that reads as follows:
“Within one week of completion of each year, the hirer shall the total hours flown in the previous year. If the total hours flown is less than 600, the hirer shall pay to the owner a sum calculated by multiplying the difference between 600 hours and hours actually flown, by the amount agreed between the parties as being the hourly hire rate for the aircraft at the time of completion of the year. The sum shall be in addition to the amounts paid monthly under the terms of clause 3(b)”.
He told the court these were the terms for both of Mr Bleakley’s aircraft. He was asked to compare that with Exhibit P7, (an earlier operating lease between Mr Bleakley trading as Wimray Safaries and Air Ngukurr). That operating lease contains a similar minimum flying hours provision in clause 3(f) except that the minimum set is 360 hours. Mr Edwards confirmed his evidence that the minimum hour clause went up to 600 hours in respect of Mr Bleakley’s aircraft.
15. Mr Edwards became aware of concerns in relation to Air Ngukurr and its profitability, assets and similar financial matters. He said there were discussions that occurred in which Air Ngukurr expressed its intention to sell two aircraft and that the previous CEO, (Ms Mott) had told Mr Edwards that Air Ngukurr wanted to sell those aircraft. Mr Edwards said he showed interest in purchasing the aircraft to assist in helping the cash flow problems of Air Ngukurr and he made an offer on the two aircraft. He said that prior to making an offer he obtained a valuation and that valuation was obtained from Mr MacLean who was an aircraft salesman. He said Ms Mott had asked him to contact Mr MacLean to make the appropriate assessment and that he had phoned Mr MacLean just as he had over previous dealings with him. He said when the company first purchased XGN there was a valuation and that Air Ngukurr had relied on Mr MacLean’s valuation previously concerning a fair purchase price. He said after his approach to Mr MacLean a valuation was carried out at Air Ngukurr, one in relation to SYT and the other in relation to XGN. He became aware that the valuations were completed and he wrote his own letter of intent on behalf of E. R. Air Services to Mr McQueen; he said Ms Mott was not present at Air Ngukurr at that time and that Mr McQueen needed to be involved with the sale of the aircraft.
16. Mr Edwards gave evidence concerning a meeting of the Directors of Yugul Mangi Clan Development P/L held 10 September 2003. Minutes of that meeting were tendered as Exhibit P18 although I have been mindful that paragraphs 1, 2, 4 and the paragraph under “General Business” do not form part of the evidence in this matter. Mr Edwards said it was clear at that meeting what capacity he was acting in his attendance. He said that the persons present were Andrew Robertson, (a Director, who Mr Edwards said always wanted “to quit”), Carol Robertson, who Mr Edwards described as Mr Robertson’s wife; Ishmael Andrews was present who was a Director, Mr McQueen and Mr Blacker were also present. Reference was made to paragraph 3 of the minutes that reads as follows:
“Peter McQueen discussed the terms of the agreement for sale of the aircraft, which had been faxed to Andrew at Ngukurr earlier that day. The directors were informed that the sale would result in the company obtaining a surplus of approximately $40,000.00 and that that money could be used to meets claims by creditors. The directors were also informed that the aircraft would continue to be made available for cross hire by the company on the same terms as cross hire of other aircraft and that while there would be cross hiring fees the company would not pay the maintenance bill and other expenses associated the ownership of the aircraft thereby reducing the companies overheads.”
“The directors resolved to sign the agreement for the sale of aircraft and fax to McQueens to be passed on to Air Ngukurr.”
“Hone confirmed with the directors that the company purchasing the aircraft was the same company as was already making aircraft available to the company on cross hire.”
“The directors were informed that the business the airline was doing to and from the Tiwi Islands was going well, that people were paying and that the company was taking steps to ensure that early payment was made for flights that were booked and taken.”
17. Mr Edwards explained that it was clear at the meeting that the company referred to making the cross hiring available was E. R. Air Services. He said the company already had previous leasing agreements concerning other aircraft with Air Ngukurr; he says it is clear from paragraph 3 of the minutes that there was discussion of E. R. Air Services and that the Directors were aware that E. R. Air Services were the purchasers. Mr Edwards said he made his offers with reference to the valuations obtained but taking into account that XGN’s value was decreasing as it was still being operated and the expiry time of the engine was accelerating which reduces the value. He was asked whether he had any discussions with Mr Bleakley about this and he said he was not called upon to explain any difference but there were some discussions with Mr Bleakley along the lines that while the aircraft was still being used the value was decreasing. He said Mr Bleakley agreed on the value that he gave it and that Mr Bleakley was acting in the role of CEO as at 10th September 2003 when the directors approved the sale.
18. Mr Edwards was asked about two tax invoices from Yugul Mangi to E. R. Air Services for the sale of the aircraft, dated 14 November 2003; he was asked why the agreement was made on the 10th September but the invoice was not paid until some time later and not invoiced until the 14th November 2003; Mr Edwards said he agreed with Mr Bleakley that if Ngukurr Air continued to operate the aircraft the value would drop and there was an oral agreement that E. R. Air Services would operate the aircraft during that period; he said it took some time to secure finance and there were interim arrangements of various kinds between September and November 2003. He said the invoices, (which became Exhibit 19 in these proceedings), issued by E. R. Air Services and levied on Yugul Mangi for hire of the aircraft in October and November of 2003 were agreed with Mr Bleakley and that they would be contra’d against the purchase price. He said these arrangements were reflected in Yugul Mangi account transactions concerning sale of assets in Exhibit P20.
19. Mr Edwards reiterated that he considered the conclusion of his employment was 4 weeks after 27 October 2004 and that as far as he was concerned Air Ngukurr owed arrears for SYT and XGN; he said there was no money outstanding for the cross hire of other aircraft; he said the relevant invoices (Exhibit P21) concerning the hire of XGN and SYT were given to the book-keeper Sarina Shailer and he was told he would not be paid. He instructed his solicitor to write to Air Ngukurr concerning the alleged sums outstanding. The correspondence between the solicitors has been tendered, the calculation of the sum owed, (according to Mr Edward’s solicitor) is based on breach of clause 3(g) of the agreements plus GST; the letter from solicitors for Yugul Mangi indicates the validity and the enforceability of the agreements was to be challenged stating “a primary objection of the company is that no deduction or allowance as apparently been made for such periods as the aircraft have been unavailable to fly while undergoing maintenance or repairs during the period”. Mr Edwards reiterated that other aircraft generally had minimum flying times of 500 hours, increased to 600 hours and that the 600 minimum hours had never been the subject of dispute with Air Ngukurr. In this regard the court’s attention was drawn to Exhibit 24, an operating lease from March 2000 between Mr and Mrs Edwards and Air Ngukurr concerning an aircraft VH-UBK. Clause 3(g) refers to 500 minimum hours; Mr Edwards also referred to the lease in Exhibit 25 between E. R. Air Services and Air Ngukurr concerning VH-KSS similarly containing a minimum hours of 500 hours. He said this had never been queried by Air Ngukurr in relation to minimum hours.
20. In cross examination Mr Edwards agreed that he and Ms Mott set up Air Ngukurr, that they were both residing at Ngukurr and that Air Ngukurr commenced relying on Mr Edward’s credit card; he agreed that initially Air Ngukurr was being operated without an Air Operators Certificate and that it used another operator’s Air Operating Certificate; he agreed that he was the chief pilot from October 1999 and that other pilots were paid as “line pilots” at a general salary of approximately $30,000.00 but as chief pilot his salary was $60,000.00 per annum; he agreed that he continued in his employment as chief pilot until January 2002 when Rowan Dougall was appointed. Mr Edwards agreed that CASA were conducting an inquiry into allegations concerning himself as chief pilot and that after the 29th January 2002 he was not employed as a chief pilot.
21. In relation to responsibility for the hire agreements of aircraft Mr Edwards agreed that he was responsible for those agreements and he was given that responsibility by the previous CEO Ms Mott; he agreed he retained that responsibility until about August 2004 when Mr Bleakley removed that responsibility from his duties. He agreed that when CASA proceeded with their investigation concerning his role as chief pilot there was some uncertainty on whether CASA would grant an Air Operators Certificate to Air Ngukurr and solicitors were briefed to represent him. He agreed that he was still employed at the same level of income even though he did not have the responsibilities of chief pilot anymore; he agreed that the salary of $60,000.00 per annum reflected the importance of the chief pilot’s position. He agreed that after he was replaced as chief pilot his role changed but he was an advisor to Air Ngukurr advising the company and the Directors and performing various administrative tasks. In relation to the role of Directors of Air Ngukurr he said it was difficult to define their role as sometimes they would all of a sudden become a manager and he cited the example of Mr William Hall in that regard. In relation to his duties to the Directors he said he would try to perform his duties as an advisor concerning any problems the company had and that at one level he might be described as a manager but he couldn’t manage the company officially because of the restraints imposed by CASA. He said his role was something of a “trade off” with CASA as they had accused him of doing various things and he had been acquitted in court; he said for some time CASA continued with other allegations and a “deal” was reached and all of the charges were dropped; he said a condition was that he was not to be a manager of Air Ngukurr. He said that he “took” that penalty for the sake of Air Ngukurr. He understood that that restriction formed part of the grant of the Air Operating Certificate to Air Ngukurr. He said he continued to receive his salary as the company gave him other duties to perform and it was understood that by agreeing to the suspension of a number of duties it was a “trade-off” so that Air Ngukurr could operate; he said that occurred after Ms Mott’s departure from the company.
22. He told the court Air Ngukurr operated from the Ngukurr community and then from Winnellie but in 2002 because of the fire, he was not sure if all records were transferred. He said Ms Mott worked until August 2003 but he attended a meeting of Directors at Air Ngukurr of the 10th September 2003. He agreed that Mr Bleakley was not present at that meeting; he agreed an issue to be discussed was Mr Bleakley as CEO and that the minutes indicated that Mr Bleakley was formally appointed.
23. He agreed that he was asked to explain the valuations and that the original valuation was sent to Ms Mott. He agreed that when Air Ngukurr purchased XGN in 1999 it was around $200,000.00 and SYT was purchased at about the same time for around $150,000.00
24. He agreed he didn’t approach anyone else apart from Mr MacLean concerning the valuations; he agreed that he contemplated purchasing the aircraft during that period. In relation to the question of the value of the aircraft he confirmed that that was influenced by ongoing costs that needed to be factored in to include the hours accumulating towards the period when the engine would need to be replaced, the costs of running the aircraft and the need to amortise the cost; he cited costs for the need to replace propellers and other repairs. He agreed he had been involved in the sale transaction in circumstances where he knew Air Ngukurr were facing pressure from creditors; Air Ngukurr had borrowed money for the purchase of XGN and SYT and it would be of benefit to Air Ngukurr if it could pay out the loan if those aircraft were owned by someone else. He said he did not know what was left owing on the loans that Air Ngukurr had taken out to purchase the aircraft originally. He agreed that there was no one else at the Directors meeting that confirmed his purchase of the aircraft who had experience or knowledge of aircraft, their cost of maintenance or generally the method of assessing costs over the whole transaction. He said he was unaware that XGN had not done the flying from June that he had calculated; he said his figures were calculated at a rough rate; he said he calculated that rate from engine times. He agreed that the issue of the 200 hours was not the only reason he differed from the valuation.
25. He said that even though Ms Mott was away on holidays from the 3rd August, Mr Bleakley was acting CEO. He agreed that when Air Ngukurr first purchased XGN at the start of 1999, Ms Mott had “some” aviation experience but not as much as himself. He said in relation to XGN, Air Ngukurr operated it prior to purchasing it and the owner gave Air Ngukurr an opportunity to purchase it; he said the purchase took place with Ms Mott bargaining on behalf of Air Ngukurr and he gave her technical advice; he said the Directors agreed to purchase and he gave the technical advice and provided information to them; he said he accepted the cost was reasonable and that was conveyed to the Directors.
26. An advertisement was shown to Mr Edwards for an aircraft of similar engine size as XGN for $270,000.00 plus GST. Mr Edwards said it was a later model with lower hours (Exhibit D26). He was shown an advertisement for a 1977 cessna said to be similar to SYT with similar hours for $240,000.00 plus GST. Mr Edwards said there were a number of variables between that aircraft and SYT. He was shown a range of examples contained in Exhibit D26, (advertisements from “The Aviation Trader”); Mr Edwards made a number of observations concerning differences in models. He said in relation to XGN the new engines and new prop could be well over $10,000.00 plus around $400.00 to install. Mr McQueen drew Mr Edward’s attention to P16, (being an agreement for the sale of the two aircraft that is dated 1 December 2003). Mr Edwards said it would have been dated by someone else and would have been paid on the 1st December because he had to organise finance; he said in September 2003 he did not have the finance and that Air Ngukurr knew he was obtaining a loan; he said the offer was made on the 10th September and it was subject to him obtaining finance; he said the understanding was that the finance had not come through and that finance was obtained from CBFC Ltd. Mr Edwards said between the 10th September and the 1st December 2003 he was trying to find finance and during that time there was an oral agreement between Mr Bleakley and himself that the aircraft would still be operating; he said the company could not afford not to have the aircraft operating; Mr Edwards said he agreed to start operating the aircraft before finance and that meant that he took over responsibility for the aircraft. He said in October when invoices were being processed he assumed that his company owned XGN in October 2003. He said SYT was in need of an overhaul but he assumed responsibility for SYT; he said with XGN there was an oral agreement to commence operating the aircraft as he would have stopped the purchase if there had not been such an agreement. He said with SYT there was an agreement with Mr Bleakley that lead to Mr Edwards arranging maintenance, repairs and certain refurbishments. He said if there was no such agreement he would not have proceeded with the sale. In relation to a maintenance bill totalling $18,682.00 to Air Ngukurr, Mr Edwards said that that work may have been conducted before August of 2003; Mr Edwards could not recall the precise nature of work done by the company SAE and precisely when it was done and levied on Air Ngukurr. He said certain work needed to be done before he took over operating the SYT or else he would not have been able to take over operating that aircraft. Of the invoices summarised in Exhibit P28 he agreed SYT did not operate until November or December of 2003; he said SYT needed to be brought “up to scratch” and that this was done by agreement with Mr Bleakley to get that aircraft operating and that it was done in good faith towards Air Ngukurr; he said Air Ngukurr were responsible for a variety of repairs after the agreement to sell the aircraft was made but this was done by further agreement so that the aircraft would be able to be operated prior to E. R. Air Services obtaining the finance.
27. Mr Edwards agreed that he prepared the operating leases concerning his own aircraft; he agreed he did not prepare the operating lease for Island Air Services. He agreed that in early 2004 there was a meeting between himself, Mr Brown and Mr Bleakley concerning cross hiring and the parties who were creditors for the cross hiring; Mr Edwards said there was a discussion about whether cross hire money would be used to “prop the company up” but that plan was not proceeded with as none of them agreed with it. He said Mr Brown and Mr Bleakley still had some liabilities. Mr Edwards agreed his claim was for the unexpired minimum flying period; he agreed that the starting point for the template of the agreement concerned the cross hire of an aircraft known as UBK signed on 16 March 2000 at Air Ngukurr; the minimum hours rate was 500; the period was 5 years and the agreement was kept at Air Ngukurr with the CEO in a file; it was agreed Mr Ron Lawford had prepared that document: (Exhibit 24). It was agreed the common seal was affixed. His attention was drawn to Exhibit 25 concerning an operating lease between E. R. Air Services and Air Ngukurr concerning the aircraft KSS that is for a 5 year period after the commencement date. Mr Edwards said that operating lease dated the 20th March 2002 was prepared for Mr Bleakley with the minimum hours of 360; the commencement date was the 5th May, it was for an aircraft VH-BIR and Ms Mott had initialled the agreement on behalf of Air Ngukurr.
28. Mr Edwards agreed Exhibit P5 concerning SYT had a minimum flying time of 600 hours and that lease was prepared by him; he agreed the commencement date is noted as 1 September 2004 but he said that must have been a misprint as the previous pages are dated 1 September 2003. On Exhibit P15, (the operating lease prepared for Mr Bleakley trading as Wimrays Safaris), he agreed that agreement was without a schedule but he said he witnessed that agreement. Mr Edwards said he would have prepared that agreement because by that stage he knew to print the agreements out; he said he would not have omitted the schedule and has not held that document in his possession. Mr Edwards was asked about what was termed a “common provision” with reference to Exhibit P15. It was pointed out that the minimum hiring time was 600 hours but that there was also some relief should the hirer be denied the opportunity to utilise the aircraft due to maintenance or other reasons: (clause 3(h)). Mr Edwards said that in some leases that provision was taken out because a lot of owners have maintenance agreements with the operators and the aircraft sits too long on the ground during those periods. In this regard P7, (also an aircraft cross-hired by Mr Bleakley) dated March 2002 with a minimum of 360 hours flying time provided a relief clause in clause 3(g):
“The Hirer shall make a written record of all periods exceeding two consecutive days during which the aircraft was not serviceable and available for flying. The Hirer shall note the number of days in each period, excluding the first two days in each period (here in after called excess days). The Hirer shall total the excess days in each year and the date of completion of each year shall be extended by the total excess days.”
29. It was pointed out to Mr Edwards that the operating leases concerning himself and E. R. Air Services did not include this relief clause. Mr Edwards said Mr Bleakley’s was printed off of the format. He said the hire rate influenced whether this clause was included or not. In relation to the leases concerning SYT and XGN, it was suggested to him that Andrew Robertson, (who appeared as one of the signatories), had faxed his resignation as a Director; Mr Edwards said he had no idea and that he had never seen Mr Robertson’s resignation. It was suggested to him that at no stage had Mr Bleakley as CEO been provided with a copy of the operating leases but Mr Edwards said he must have received it prior to the 1st September 2003.
30. Mr Edwards agreed it was part of Rosanna Edward’s function to keep the records and organise the cross hire of aircraft. Mr Edwards was referred to the cross hire records, in particular to the fact that XGN first appears as an aircraft recorded against E. R. Air Services in October 2003 and SYT appears in November 2003: (Exhibit 29). Mr Edwards was questioned on his knowledge of the pressure that Air Ngukurr was under in the 2003 to 2004 period and agreed that he was both an advisor to Air Ngukurr and had an administrative role; he agreed he was aware of the financial position, that the Directors were under pressure, that there was a letter from the Australian Tax Office concerning liability to pay PAYG and there were questions concerning underwriting the costs of the CASA inquiry that exceeded $150,000.00. Mr Edwards said he was aware of these matters although not the precise figures. In relation to the sum of $40,000.00 recorded in the minutes of Exhibit P18, Mr Edwards was asked if he was aware that there was no cash made available to distribute to creditors; he said he was not made aware of the amount that was paid to creditors; he said there was always an understanding of a contra of around $40,0000.00.
31. In relation to the invoices for the cross hiring of SYT and XGN, Mr Edwards was asked about the accounts being paid on a basis of daily invoices; he said that if Air Ngukurr didn’t pay on a daily basis the old debt would increase, hence the terms were essentially on cash terms. He said the accounts had been with the book-keeper; he said that if the arrears to E. R. Air Services were allowed to increase it would be difficult to keep operating as E. R. Air Services had its cash flow issues as well; he said the move to daily billing was brought about due to E. R. Air Services not being paid. Mr Edwards said that no one person could sign a cheque on behalf of Air Ngukurr; he said that the book-keeper, his wife Rosanna and Mr Bleakley could sign the cheques but one person could not. He was asked about electronic banking transfers of funds and he told the court the CEO maintains and checks those.
32. Mr Edwards was asked about a software package (“OSS”) for bookings that Air Ngukurr had arranged the development of; it was suggested to him that Air Ngukurr paid money to Mr Andrew Grey-Spence to develop the program and that the system ended up with Barrier Air Charter; Mr Edwards was asked if he provided a copy of OSS to Barrier Air Charter and replied “no”.
33. Mr Edwards was asked about maintenance carried out be SAE Engineering for work on SYT when Air Ngukurr was being billed as the customer; Mr Edwards said his company did not own SYT at that stage; he said E. R. Air Services had not taken over full ownership until they’d paid in December and pursuant to an oral agreement it was agreed certain maintenance would be covered by Air Ngukurr; Mr Edwards said he did not tell SAE he was the owner at that point. Mr Edwards reiterated that there was an oral agreement with Ms Mott before they started the purchase process that major maintenance would be completed by Air Ngukurr in particular, he said a “check 2” was required of one aircraft and a “check 4” was to be completed on also. He said this had been agreed with Ms Mott and later Mr Bleakley. He said after the major maintenance was completed, E. R. Air Services had no problems taking over the maintenance responsibility.
34. Mr Edwards agreed that at some stage after an incident he was involved in, (that lead to the CASA investigation), the Directors of Yugul Mangi were faced with the choice of continuing with Mr Bleakley or with himself. In relation to whether the Pilots (General Aviation) Award applied, Mr Edwards said he was always bound by that award initially as chief pilot and later as pilot. Mr Edwards was taken to Exhibit P12, (the letter from the Directors to Mr McQueen and Mr Bleakley confirming Mr Edwards was suspended on normal pay). Mr Edwards said he did not recall who gave it to him. The letter dated the 24th May 2004 concerning his conditions (Exhibit P11) was referred to Mr Edwards; he was asked whether he had forwarded it to Andrew Robertson and Mr Edwards replied he had forwarded it to Ngukurr; he said it was given to Mr Bleakley who had signed “that he had agreed with it” on the 31st of May; he disagreed that he had been informed by Mr Bleakley on the 30th of May that the letter was void. Mr Edwards agreed he had received the letter from Mr Bleakley (Exhibit P33) dated 26th August 2004 requiring him to take leave. Mr Edwards agreed that as CEO from September Mr Bleakley was responsible for looking after the interests of staff and associated matters; Mr Edwards qualified this saying that this was under the direction of the Directors. Mr Edwards denied suggestions that Mr Bleakley was not provided with copies of the contracts concerning XGN and SYT.
35. In re-examination Mr Edwards was asked whether at the meeting of the 10th September 2003 (minutes in Exhibit P18), he was asked any questions about his offer put in Exhibit P4 for the sale of the aircraft; he said Mr McQueen put the letter of offer to the Directors and nobody questioned him about it. In relation to the cost of maintenance of the new aircraft Mr Edwards said he had had negotiations with Ms Mott and later with the CEO who said he agreed with the terms; he said Mr Bleakley agreed with those terms as the maintenance was due and had been agreed by the previous CEO; he said his wife Roseanna was present during that conversation; he said the major maintenance had to be paid some time after the 10th September; he said SYT was not serviceable at that time in September but was serviceable in November. He said the minimum operating hours had been agreed by Mrs Mott originally and later by Mr Bleakley; he said Mr Bleakley’s agreement to 600 hours was on the proviso that he wanted his contracts to have the same provision; he said Mr Bleakley’s companies had some four aircraft chartered on the same terms and that Mr Bleakley had said that he wanted all his aircraft to have the same minimum flying hours; Mr Edwards said the first time he heard that there was any problem with the minimum flying provision was during the court proceedings. He said in relation to Exhibit P5 and P6 operating agreements that the “1st of September” date was not accurate as some things were still being negotiated, for example the date that E. R. Air Services were going to commence operations was still being negotiated. In relation to whether he had been terminated or suspended, Mr Edwards said he was asked to take leave in August 2004 but there was a futher meeting held with Mr Blacker and other officers of the defendant and it was agreed he would stay on normal pay; he said it was agreed that he would stay on normal pay during the investigation; he said he never took leave not withstanding the letter from Mr Bleakley as the meeting that occurred countermanded Mr Bleakley’s attempt to place him on leave; he said his pay was never docked and there was no negative or detrimental action taken.
Rosanna Edwards
36. In her evidence in chief Mrs Edwards confirmed she was a director of E. R. Air Services along with her husband and two sisters. She said she had been employed at Air Ngukurr from the 10th of May 1998; she said she had been operations manager since 2003 involving such duties as booking charters, overseeing certain office work and helping with the leasing and cross hire of aircraft.
37. She said she did not prepare the operating lease for SYT and XGN (Exhibit P5 and Exhibit P6); she said the commencement of the 1st of September 2003 was not correct; she said a number of negotiations had occurred between Ms Mott and Mr Edwards; that the new CEO Mr Bleakley took over in September 2003; she said he was not present for around six weeks but re-appeared after the 15th of September or thereabouts. She said there were discussions that she was present when Mr Bleakley discussed the hiring arrangements towards the end of September; she said Mr Bleakley asked her what the arrangements were for Hone Edwards and that Mr Bleakley was happy with those arrangements but said he “wanted the same for his planes”; that he had said he wanted the same rate and the same hours; she said Mr Bleakley had wanted the same conditions for the aircrafts BIR; XMI; and OEL.
38. In terms of Air Ngukurr covering the maintenance of the E. R. Air Services aircraft after the departure of Ms Mott, Mrs Edwards said Mr Bleakley had said words to the effect of “if that’s what Lynn’s agreed with”. Mrs Edwards said in relation to a number of payments made such as the $11,268.00, that she had asked the accounts person (Sarina Shailer) to check with “Noel” (Mr Bleakley). She said it was always understood that Air Ngukurr would be responsible for major maintenance and that there were particular discussions about this given it was in everybody’s knowledge that a “check 4” was coming up with one of the aircraft. Mrs Edwards denied that she had allocated work to other aircraft in preference to those owned by E. R. Air Services; she denied arranging payment of maintenance bills by Air Ngukurr that should have been paid by E. R. Air Services. She said once the operating leases were prepared they were shown to the CEO and sent to Ngukurr, initialled and signed off. She said the CEO was responsible for keeping the contracts and that the CEO had the seal and she did not affix the company seal herself to any leases.
39. In cross-examination Mrs Edwards agreed the “for work on XGN for October 2003” directed to Yugul Mangi Clan Development was authorised by Mrs Edwards; (Exhibit D37). She agreed she was responsible for allocating work to the various aircraft hired; she said that SYT was getting close to substantial maintenance work and that after it went to SAE for maintenance work it was available for private hire; she said the extent of the private hire was a matter that went through the chief pilot; she said the appropriate records would be with Air Ngukurr. She agreed that in October 2004 XGN was not hired for any period by Air Ngukurr: (see Exhibit 22); she could not explain why except to say that it could have been in maintenance; she said she could not say why it only had 21 hours work for the month before (September 2004 see Exhibit 29). She said the records at Air Ngukurr would explain that. Mrs Edwards said that in September 2003 there had not been final agreement concerning the sale and hire of the aircraft although there was agreement on price. At that stage the hourly rate and minimum hours had not been agreed. Mrs Edwards agreed that the operating leases concerning SYT and XGN did not have a relief clause. In relation to the low flying hours at times of some of the aircraft Mrs Edwards explained that not all aircraft are properly comparable. Mrs Edwards said she did not know where the company seal was kept but assumed that it was with “Noel” (Mr Bleakley). She said in earlier days there was a stamp and it changed to seals but she thought it was with Ms Mott at the offices of Air Ngukurr.
Noel John Bleakley
40. Mr Bleakley gave evidence on behalf of Yugul Mangi Clan Development as the CEO of Air Ngukurr; he confirmed that Air Ngukurr was owned by Yugul Mangi Clan Development P/L. He said he commenced with Air Ngukurr in December 2001 as a line pilot earning around $40 - $45,000.00 per annum; he said he brought two aircraft with him that were available for cross hire being aircraft known as XMI and OEL; he said there was never a hire agreement prepared for those two aircraft. He said he later acquired two aircraft known as BIR and SAQ; he said Ms Mott was CEO when he first worked at Air Ngukurr. Mr Bleakley identified the operational lease (Exhibit P7); he agreed this was for one of his aircraft (BIR); he said this was an agreement that commenced on the 5th of May 2002 for 12 months and there had not been a further agreement; he said this lease was prepared by Mr Edwards and the relief clause on the minimum hours was contained in paragraph 3(g). He said he acquired the aircraft SAQ at a later time. In relation to the operating lease concerning his aircraft “SAQ”: (Exhibit P15), he said he was familiar with that operating lease; he said he was given a template from Mr Edwards and it was produced by Mr Edwards; he said the relief clause was included in clause 3(h); he said the operating leases were dated the 24th of September 2003 but the aircraft didn’t go into service until December 2003. He said there was no schedule attached to that operating lease. He said no tax invoices were sent to Air Ngukurr when the aircraft was out of operation.
41. Mr Bleakley said he was a line pilot with Air Ngukurr until around July or August of 2003; he said he was approached by Mrs Mott to see if he would be CEO; he was asked to stand in on an acting capacity while she was away; he said he took on the responsibility as acting CEO while she was away; he said he went on leave in September 2003 but could not recall the dates; he said prior to becoming acting CEO he had been given some information concerning the sale of XGN and SYT and he knew the aircraft would be placed for sale but not necessarily to be sold to Mr Edwards; he said he did discuss the sale with Mr and Mrs Edwards sometime in July, August or September of 2003. In relation to the agreement for the sale of XGN and SYT (Exhibit P16) Mr Bleakley said he had not seen the agreement until after the court proceedings had begun. Similarly, in relation to the operating leases for SYT and XGN: (Exhibit 5 and 6), Mr Bleakley said he had not seen those until October 2004. He said Mr Blacker faxed him the copy on 13 October 2004.
42. Mr Bleakley said when he took over from Mrs Mott he also took over her desk and filing cabinet and following his appointment he familiarised himself with the office and went through the whole building looking for records and documents. He said the common seal was in a drawer in the CEO’s office and that he had been told by Mr Edwards that Mrs Mott had company seals; he said he had an open door policy as CEO; he said despite all of his searches he found no copies of operating leases. He said both Mr and Mrs Edwards and Sarina Shailer were employees of Air Ngukurr when he took over; he said Ms Shailer left in late 2004; he said he relied on the cross hire records for information concerning cross hire of various aircraft; he said he relied on monthly reports and other information given by Mrs Edwards; he said although he didn’t have regular reports from Ms Shailer concerning bank conciliations he did receive reports from her reasonably frequently; he said the records from the bank did not disclose records of invoices and the origin of invoices and the like. He said there was an ongoing connection between SAETAS and Air Ngukurr; he said there would be little indication from the records on whether invoices were for aircraft or maintenance or other matters. He said 85 – 90% of Air Ngukurr’s payments were paid by EFT and the rest paid by cheque; he said Ms Sarina Shailer had the password and connections to make these payments but he did not; he said Ms Edwards either had the access or was able to access through Ms Shailer. In relation to discussions concerning the sale of XYN or SYJ to E. R. Air Services and whether there was an agreement concerning maintenance, he said he was aware of the documentation contained in Exhibit P38 and presumes he would have had that document at some stage but he said he was not aware of any other discussions in relation to agreements for maintenance; he said none of the invoices for maintenance for XGN and SYT were brought to his attention for approval; he said he trusted Sarina Shailer. Mr Bleakley said he had no part in the Directors meeting of the 10th September 2003 and he was aware that confirmation of his employment was part of the discussion. He said at the time of his appointment as CEO he had an Air Operators Certificate. He said the relationship between himself and Mr Edwards deteriorated during 2004; probably from late 2004. He said that at the time of a Directors meeting in 2004 the Air Operators Certificate had two months to run. Mr Bleakley said he received confirmation from the Directors on or about the 2nd of September 2005 that they had trust and confidence in him and that he should do what he thought was correct. Because of the actions of CASA, Mr Bleakley said he was forced to suspend Mr Edward’s chief pilot duties which is why he gave him notice on the 26th of August 2004 requiring him to take annual leave or recreation leave. Mr Bleakley referred to this letter (Exhibit 33) reading as follows:
“Dear Hone, further to my advice to you on August 23, 2004, I confirm you are now on annual leave.
The information I have received from wage line is that I can insist that you take your annual leave under clause 23.3 in the pilots general aviation award.
Yours faithfully
Noel Bleakley”
43. Mr Bleakley was asked about the lease arrangement with the aircraft SAQ; he said it had the 600 hours minimum flying time; he said that that number of hours was needed so that finance could be arranged; he indicated it was a condition of borrowing money for the purchase of the aircraft to make it available for cross hire to Air Ngukurr. Mr Bleakley agreed that a conversation of some sort had taken place in relation to hourly rates and minimum terms of aircraft cross hired by himself to Air Ngukurr; while he acknowledged it took place, he said it was not as Ms Edwards had described; he said he wanted the hourly rate increased and he didn’t know the terms of SYT and XGN; he said there was no agreement that he made in relation to minimum hours with other aircraft. Mr Bleakley said he had never seen the employment agreement between Yugul Mangi Clan Development P/L and Mr Edwards (Exhibit P1). Mr Bleakley said he had not seen that document until these proceedings although during his searches of the offices he had not located it.
78. In relation to the allegations against Mr Edwards and E. R. Air Services concerning documents not being in the CEO’s office or the company seal not being readily available, that is not a state of affairs that can be attributed to Mr Edwards, (although that may have been the intention in raising that evidence). In any event, there is no evidence I can draw upon to conclude that Mr Edwards was concealing documents or had done something with the seal. I reject that assertion.
79. In my view there is one area where the duty on Mr Edwards to serve his employer faithfully has been breached and that is the failure, without adequate disclosure to include what has been known in these proceedings as the “relief clause”. On that point I am not satisfied that there is an appropriate explanation accounting for why such a clause was not in the agreement. Mr Edwards did make reference to the hourly rate however in my view that is not sufficient. Even though I am prepared to draw the inference on balance of probabilities that Mr Bleakley and the entity of Yugul Mangi were aware of the leases, and would have been aware of the standard clauses, I do not believe they were aware of the exclusion of the “relief” clause. What I intend to do is to calculate an adjustment where it appears that XGN was not available for flying as in that situation the full extent of the minimum hours should not be enforced.
80. There has been an allegation made that work was not allocated the XGN and SYT in preference to other ERA aircraft: (third party notice, paragraph 13(i)). In my view there was no evidence of that. There are irregular patterns of cross hiring but there’s no pattern that comes close to bearing that allegation out. Essentially I dismiss the third party claim save for the failure to disclose the lack of a relief clause for which I make adjustment to the amount awarded to the plaintiff. In any event, if any of the matters pleaded in the defence or third party notice had been made out, there is no evidence as to loss or damage. Even if loss or damage is not the appropriate relief, save for the “relief” clause, in all other respects, the contract is enforceable.
81. Reasons will be forwarded to the parties today.
82. I will list this matter on 22nd day of March at 9:30am where I will make the following orders:
Orders: File 20426607
Judgement for the plaintiff
in the sum of : $36,460.39
Interest $ 3817.99
TOTAL $40,278.38
Order: File 20426309
Judgement for the plaintiff
In the sum of
Being
XGN – reduced from the claimed 163 to
123 hours based on approximately 40
hours average per month @ $250 per
hour. XGN unavailable for one month $30,750.00
SYT – 49.3 hours claimed, (although there
May be more hours according to Ex 29) $7,888.00
Subtotal $38,638.00
GST $ 3863.80
TOTAL $42,501.80
83. I decline to order interest on this claim as unlike file 20426607, this claim is not associated with wage entitlements and I am unaware as to any detriment through not having earlier access to the sum claimed. I dismiss the third party notice save for part of paragraph 13(h) concerning the relief clause.
84. I request the parties confer concerning costs and I will hear any application on 22 March concerning costs.
Dated this 17th day of March 2006.
_________________________
Jenny Blokland
STIPENDIARY MAGISTRATE
Note to Judgement
The following orders were made by the Court on 22 March 2006:
1. The Court noted the reasons were published and forwarded to the parties on 17 March 2006.
2. On 20 March 2006 a letter from the receivers for the Defendant was filed.
3. These proceedings are now stayed unless or until notification is received that the receiver consents to the action proceeding or leave is granted by the appropriate court.
4. Vacate the date of 22 March 2006.
0
2
0