Four Air Leitchville Pty Ltd v Hurlad Pty Ltd (No 3)
[2024] FCA 238
•13 March 2024
FEDERAL COURT OF AUSTRALIA
Four Air Leitchville Pty Ltd v Hurlad Pty Ltd (No 3) [2024] FCA 238
File number(s): VID 120 of 2020 Judgment of: BUTTON J Date of judgment: 13 March 2024 Catchwords: COSTS – costs following amendment application – where both sides had measure of success – where numerous objections to pleading raised – where Applicant on notice of certain deficiencies for some time Cases cited: Four Air Leitchville Pty Ltd v Hurlad Pty Ltd [2024] FCA 167 Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 14 Date of last submissions: 6 March 2023 Date of hearing: Determined on the papers Counsel for the Applicant: D Shirrefs Solicitor for the Applicant: Maitland Lawyers Counsel for the Third and Fourth Respondents: C G Juebner KC with O Nanlohy Solicitor for the 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:
13 MARCH 2024
THE COURT ORDERS THAT:
1.The Applicant pay 30% of the Third and Fourth Respondents’ costs of and incidental to the hearing of the Applicant’s interlocutory application on 5 February 2024.
2.The Applicant pay the Third and Fourth Respondents’ costs thrown away by reason of the amendment of the statement of claim pursuant to orders made on 29 February 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BUTTON J:
On 29 February 2024, I gave judgment on a contested pleading application: Four Air Leitchville Pty Ltd v Hurlad Pty Ltd [2024] FCA 167. I will not repeat the background to the proceeding and the contested amendment application, recorded in my earlier reasons.
In those reasons, I expressed the following preliminary view on costs (at [22]–[24]):
22As 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.
23Each 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.
24I 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.
The Applicant was accepting of that costs outcome, but the Third and Fourth Respondents (the Interair parties) were not. They filed submissions contending that they should have their costs of and incidental to the 5 February 2024 hearing of the interlocutory application to further amend the statement of claim. Neither side sought to make oral submissions on the costs question.
The principal points advanced by the Interair parties in support of their contention as to costs were as follows. First, that they put the Applicant on notice of their objections to its proposed pleading on 24 October 2023, after the Applicant filed its application to amend on 4 October 2023, and, as part of their submissions on the pleading application, put forward revised objections on 29 January 2024, ahead of the hearing on 5 February 2024. The Interair parties emphasised that the Applicant did not respond to their objections by proposing an amended version of the proposed 2FASOC.
Secondly, they relied on the fact that, having found that some of their objections to the then-proposed version of the 2FASOC had merit, I did not grant leave on 5 February 2024 but required the Applicant to address specific matters in a further iteration of the proposed pleading, and even then only finally granted leave once yet another version was put forward addressing some further complaints raised in respect of the version put forward on 14 February 2024.
Thirdly, they pointed to observations I made on 5 February 2024 acknowledging the frustration that may be experienced by the Interair parties at the Applicant being afforded a further opportunity to make adjustments to its proposed 2FASOC, and the indulgence being afforded to the Applicant by that opportunity.
The Applicant responded by noting that, ultimately, it was granted leave to file its 2FASOC, albeit after a number of iterations of the pleading, and so could, prima facie, have pursued its costs of the interlocutory application, but accepted my preliminary view. They otherwise submitted that the preliminary view I expressed was open and submitted that the Interair parties had, for some time, been seeking to leverage what they perceived as a favourable outcome from the expert conclave process that was created by another judge when they knew full well the substantive case the Applicant sought to run. They submitted as follows (footnotes omitted):
7.In relation to the matters dealt with on 5 February 2024, a review of those objections reveals that they are, effectively, submissions in relation to matters for trial mixed with objections to certain words or particulars of alleged facts. They are otherwise trivial or argumentative. Of the eight objections, effectively only two were maintained.
8. Furthermore, those matters could have been addressed by correspondence without the need for contested hearings. It was never raised previously that particulars referring to earlier iterations of the Applicant's claim or to expert witness reports were inadequate. The Respondents object to the Applicant's expert evidence being an appropriate level of particularity, but adopt the same practice when it suits them.
Finally, the Applicant contended that, if I were to depart from my preliminary view, it should have its costs of its ultimately successful interlocutory application, and should suffer only an order that it pay the Interair parties’ costs thrown away by reason of the amendment (if any).
In light of the parties’ positions and submissions, I have reviewed the objections advanced by the Interair parties. The Interair parties’ objections, advanced as part of their submissions on 29 January 2024, differed substantially from the objections advanced in late October 2023. A few were dropped, a couple were added, and many of the remainder were significantly revised in terms of the content of, and reasons for, the objection. As such, I do not regard the fact that the Interair parties advanced objections in late October 2023, which were not responded to by the Applicant with a revised proposed pleading, as bearing the significance ascribed to it by the Interair parties.
It is the round of objections that the Interair parties took to the contested hearing on 5 February 2024 that is of more significance in relation to addressing the cost consequences of the amendment. Other than to the extent that that finalised round of objections continued to advance some complaints about lack of specificity, which had been advanced for some time, the finalised objections were only advanced shortly before the contested hearing. The timing of it left limited opportunity for the Applicant to propose a further amended version to address those objections.
Moreover, and as I observed in setting out my preliminary view on costs, many of the objections lacked merit. At the hearing, I raised with counsel for the Interair parties that it seemed that most of their objections went to the merits of the case, and only three objections (to paragraphs 45, 52(i) and 52(k)) were objections going to a lack of clarity in the case the Applicant wished to advance. Counsel for the Interair parties accepted that “some of this gets close to the merits”.
The issues raised by the Interair parties in relation to paragraphs 52(i) and (k) concerned the adequacy of the particulars set out in the then-proposed version of the 2FASOC. While the issues concerned particulars (cf the plea of material fact), the absence of adequate particulars meant that the Interair parties would not have been able to properly understand the case against them without proper articulation of the specific maintenance that the Applicant contends should have been, but was not, carried out on the aircraft, and how it was said that the maintenance records contained discrepancies and did not correctly record the maintenance status of the aircraft in accordance with the M7 program.
On one view, it might be said that the objections taken by the Interair parties that had merit were mixed in with, and clouded by, the very many objections that did not have merit, such that the Applicant cannot be criticised for failing to put forward a version of the proposed 2FASOC that addressed those objections. However, on the facts of this case, the topic of exactly what maintenance the Applicant contended should have been carried out on the aircraft, but was not, and how it was that those deficiencies ought (on the Applicant’s case) to have been revealed by a pre-purchase inspection of the kind the Applicant contends the Third Respondent contracted to undertake, was identified as a significant issue as far back as September 2023. On 6 September 2023, I refused the Applicant’s earlier application to amend, and specifically drew attention to the need for those matters to be specified clearly.
While, as I said in setting out my preliminary view, the Interair parties’ objections lacked merit in many respects, it is the case that the Applicant had not, until 14 February 2024, set out clearly matters which it was clear (from at least the September 2023 hearing) had to be specified with precision. On reflection, there should be some adverse cost consequence for that, besides the Applicant not getting a costs order in its favour. Accordingly, and taking into account also the numerous objections raised by the Interair parties that lacked merit as well as the need to take into account the changes to the Interair parties’ objections over time, I consider that the appropriate order is that the Applicant pay 30% of the Interair parties’ costs of and incidental to the 5 February 2024 hearing. To be clear, and as acknowledged by the Interair parties, this does not extend to any costs incurred after that hearing relating to the pleading amendment application.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Button. Associate:
Dated: 13 March 2024
SCHEDULE OF PARTIES
VID 120 of 2020 Respondents
Fourth Respondent:
ERMIS SHAPANIS
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