Four Air Leitchville Pty Ltd v Hurlad Pty Ltd
[2024] FCA 167
•29 February 2024
FEDERAL COURT OF AUSTRALIA
Four Air Leitchville Pty Ltd v Hurlad Pty Ltd [2024] FCA 167
File number(s): VID 120 of 2020 Judgment of: BUTTON J Date of judgment: 29 February 2024 Catchwords: PRACTICE AND PROCEDURE – pleadings – where multiple attempts made to propose new pleading – where directions made at interlocutory hearing regarding form of pleading – whether applicant complied with those directions – leave granted Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 24 Date of last submissions: 27 February 2024 Date of hearing: 5 February 2024 Counsel for the Applicant: D Shirrefs Solicitor for the Applicant: Maitland Lawyers Counsel for the Third and Fourth Respondents: C G Juebner SC with O Nanlohy Solicitor for the Third and Fourth Respondents: SBA Law ORDERS
VID 120 of 2020 BETWEEN: FOUR AIR LEITCHVILLE PTY LTD (ACN 006 929 219)
Applicant
AND: HURLAD PTY LTD (ACN 063 476 415)
First Respondent
GAVIN BULLAS
Second Respondent
INTERAIR PTY LTD (ACN 005 884 042) (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
BUTTON J
DATE OF ORDER:
29 FEBRUARY 2024
THE COURT ORDERS THAT:
1.Pursuant to r 16.53 of the Federal Court Rules 2011 (Cth), the Applicant have leave to file and serve the Second Further Amended Statement of Claim in the form of the draft Second Further Amended Statement of Claim filed on 14 February 2024, save that the particulars to paragraph 45 should not include reference to the transcript of the hearing on 5 February 2024; and the particulars to paragraph 52(i) should not include a cross-reference to paragraph (1)(iii) of the particulars to paragraph 50.
2.The Applicant file and serve the Second Further Amended Statement of Claim by 4:00pm on 1 March 2024.
3.Within two business days from the date of these orders, the Applicant and the Third and Fourth Respondents are to notify each other if they seek a different costs outcome to that indicated in these reasons.
4.If one or more of the parties seeks a different costs outcome, the parties each have leave to file written submissions (of not more than two pages) on the question of costs, within four business days from the date of these orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BUTTON J:
BACKGROUND AND CONTEXT
On 4 October 2023, the Applicant filed an interlocutory application seeking to further amend its Further Amended Statement of Claim (the Application). The statement of claim, as proposed to be amended, will be referred to as the 2FASOC. That application followed an earlier application (made on 19 June 2023) to file and serve a 2FASOC, which application was dismissed.
The proceeding concerns an aircraft, purchased by the Applicant. The Applicant has advanced several causes of action against the Third and Fourth Respondents (the Interair parties). The Third Respondent conducted the pre-purchase inspection, and the Fourth Respondent is the principal of the Third Respondent.
The Interair parties objected to leave being granted to file and serve the 2FASOC, in the form proposed by the Application.
The Application was first heard on 5 February 2024. At that time, I determined that many of the Interair parties’ objections concerned the merits of the claims sought to be advanced by the 2FASOC. I further determined that, while the other objections of the Interair parties had merit, the Applicant may be able to further amend its proposed 2FASOC to address those points. Accordingly, on 5 February 2024, I ordered that the Applicant propose a further version of its 2FASOC, which was to address the points detailed on the transcript, and provided an opportunity for the Interair parties to respond to that proposed pleading.
On 14 February 2024, the Applicant provided its proposed 2FASOC. Unless otherwise stated, I refer to this proposed pleading as the 2FASOC in what follows.
On 21 February 2024, the Interair parties submitted a document that described their objections to three paragraphs of the updated proposed 2FASOC (paragraphs 45, 52(i) and 52(k)).
The Applicant responded by a note dated 27 February 2024.
Neither side sought to make oral submissions in respect of the remaining points of objection to the 2FASOC.
By way of context, it should be noted that, although the proceeding was filed some years ago, and its progress has been bedevilled by a great many interlocutory disputes, it has not yet been set down for trial. A further matter of context is that, for some time, the Applicant has consistently wished to advance a further alleged retainer, by which it would allege that the pre-purchase inspection of the aircraft included an obligation to inspect maintenance records and, had this been done, various non-compliances with the “M7” Program (being the Civil Aviation Safety Authority approved maintenance program applicable to the aircraft) would have been identified. Subject to other case management considerations, the Applicant should be able to plead the case it wishes to run. There is also a risk that denying leave to plead a case that a party wishes to run will give rise to later case management issues where the conduct of the case reflects the substantive case the litigant wishes to run, but the pleadings do not wholly accord with that case.
THE INTERAIR PARTIES’ OBJECTIONS
No objection was taken to the form of paragraph 45, which includes an amendment to link the plea of a particular term of the pre-purchase inspection agreement to the maintenance records specified in the following paragraph. Rather, the objection to paragraph 45 was that it was inappropriate for particulars to refer to transcript. That objection can readily be addressed by directing that the particulars to the filed version do not refer to the transcript.
Paragraph 52 pleads various matters that would have been identified had the maintenance records been reviewed as the Applicant contends should have occurred. No objection has been taken to the substance of the various sub-paragraphs of paragraph 52. Rather, objection has been taken to aspects of the particulars to paragraphs 52(i) and 52(k).
By its objection to the particulars to paragraph 52(i), the Interair parties contended that the particulars include a cross-reference to a paragraph of the particulars to paragraph 50 (which pleads breach of the alleged agreement) that is meaningless in the context in which it occurs. The Applicant responded by directing attention to other, substantive, aspects of the particulars provided and submitted that, if the cross-reference is meaningless, it would not prejudice the Interair parties’ ability to plead to the allegation of fact. The particulars to paragraph 52(i) set out, in detail, the maintenance that was required to be carried out under the “M7” Program, but which was not carried out.
This objection can be addressed by directing that the particulars to the filed version do not include the cross-reference objected to. Although the objection is to particulars, it is not desirable that leave be granted to file a pleading that includes meaningless, and therefore potentially confusing, particulars.
The objections to paragraph 52(k) of the proposed 2FASOC likewise concerned the particulars. Four identified complaints were advanced in respect of those particulars.
The first objection asserts that it is unclear what the relevance of the “type certificate” referred to is. That objection does not have merit. The particular in question sufficiently identifies the “Type Certificate” referred to and its connection with the “M7” Program.
The second objection was that there was no connection between the “non-compliances” identified and the contention that the aircraft no longer complies with the requirement that it be in a condition for safe operation. That complaint also has no merit. The link between the non-compliances referred to and the air-worthiness of the aircraft, is clear when the second paragraph of the particulars is read with the first paragraph.
The third complaint relates to a table contained in the particulars. That table set out four tasks under the heading “M7 Inspection Task”, recorded the date when the inspection was due, and the status of the inspection. The Interair parties objected on the basis that the Applicant was seeking to raise, for the first time, four additional alleged breaches of the “M7” Program, and that the Applicant does not allege anywhere in the 2FASOC the source of the obligation to perform those tasks.
It is not entirely correct to say these four items are raised for the first time. All four of those items were referred to in a report of the Applicant’s expert, Mr Mclauchlan (dated January 2020). The third and fourth items concern airworthiness limitation tasks. The particulars to the existing statement of claim (at paragraph 48(d)) refer to airworthiness limitation items that were not completed. The earlier version of the 2FASOC proposed by the Applicant referred to the first two of these items by cross-referencing to Mr Mclauchlan’s report. At the hearing on 5 February 2024, I directed that specifics should be given in the particulars of the maintenance tasks the Applicant wishes to allege were not performed and the nature and timing of that maintenance (cf cross-references to expert reports or earlier pleadings). That has been done in the final form of the proposed 2FASOC.
As to the complaint that the source of the obligation to perform those tasks is not identified, the pleading relates the requirements of, and non-conformance with, the “M7” Program. If the Interair parties nonetheless require further particulars of how the tasks referred to in the table arise from that program, they can seek further particulars. That complaint is not a sufficient reason to refuse leave to file and serve the amended 2FASOC.
The fourth complaint concerns a bullet point below the particulars to paragraph 52(k) which identifies, as one of a number of non-compliances said to render the aircraft not airworthy, that the aircraft was repainted, when the “M7” Program recommends not painting the surface of the wings, and the repainting was not accounted for in the aircraft logbook. The Interair parties’ complaint is that the specific part of the “M7” Program where that recommendation exists should be identified and refers to an “M7” Manual (cf “Program”) which specifies the manner of performing maintenance. The Applicant responded that it is clear from the particulars that the issue is that the repainting is not accounted for in the logbook and is not supported by approved data.
To the extent that any issues arise concerning whether the recommendation regarding repainting is found in the “M7 Program” (vs the “Manual”), that issue can be addressed at trial. To the extent that the Interair parties consider they still need some further detail to fully understand how the repainting issue relates to the allegation (at paragraph 52(k) that the aircraft was not airworthy), they can seek further particulars. This matter is not a sufficient reason to refuse leave to file and serve the amended 2FASOC.
COSTS
As to the question of costs, my preliminary view is that the Applicant should bear the Interair parties’ costs thrown away by reason of the amendment (if any), but that there should be no order as to costs of the Application such that the Applicant and the Interair parties will bear their own costs of the Application, but those costs will be costs in the cause.
Each side had a measure of success. Each side’s approach to the present application is open to criticism. The Applicant should have specified, from the outset, the specific failures to adhere to the “M7” Program that have, finally and after numerous attempts to replead, been identified with precision. The Interair parties can also be criticised for resisting leave on the basis of points that went to the merits of the proposed amendments and were, in some respects, overly finicky.
I will grant the parties an opportunity to make submissions, should they so wish, if they consider that orders for costs should be made that are different from the disposition that I have indicated, on a preliminary basis, above.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Button. Associate:
Dated: 29 February 2024
SCHEDULE OF PARTIES
VID 120 of 2020 Respondents
Fourth Respondent:
ERMIS SHAPANIS
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