FOR LIMITED DiSTRiBaTION/ 'F TINT Wo. Gl / JUBGRI IN THE FEDERAL COURT OF AUSTRALTA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISTON BETWEEN : AND: BETWEEN : AND: CORAM: BEAUMONT J PLACE: SYDNEY DATE: 11 MARCH 1988 fos pan sey No. G667 of 1987 wee wwe AMANN AVIATION PTY. LIMITED Applicant COMMONWEALTH OF AUSTRALIA Respondent COMMONWEALTH OF AUSTRALIA Cross Claimant AMANN AVIATION PIrY. LIMITED Cross Respondent MINUTES OF ORDER THE COURT ORDERS THAT: 1. Leave to file draft reply and defence to cross claim dated 10 March 1988 be refused. 2. Liberty be granted to the applicant to re-plead. 3. Applicant pay the respondent's costs of this application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. on rs eae OTF —- Bene ae ee gee IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G667 of 1987 GENERAL DIVISTON wee BETWEEN: AMANN AVIATION PTY. LIMITED Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent BETWEEN: COMMONWEALTH OF AUSTRALIA Cross Claimant AND: AMANN AVIATION PTY. LIMITED Cross Respondent CORAM: BEAUMONT J PLACE: SYDNEY DATE: 11 MARCH 1988 REASONS FOR JUDGMENT (ON APPLICATION FOR LEAVE TO FILE DRAFT REPLY AND DEFENCE TO CROSS CLAIM) The respondent opposes the grant of leave to the applicant to file a reply and defence to cross claim on the ground that the principal allegations in the reply and defence to cross cClaim are frivolous and vexatious and disclose no reasonable cause of action. At the conclusion of argument, I indicated that I was against the applicant and that I would publish my reasons shortly. The following are my reasons. Argument in the application concentrated in the first instance on para.16 of the draft reply. It is as follows: yee eee wn. topes ee a a an ee - "16. In further answer to the breaches or failures of the CWC alleged in paragraphs 16, 19 and 22 of the Defence, Amann says that any failures to fulfil the CWC resulted from the failure of the Commonwealth to do all that was necessary to be done on its part for the carrying out of the CWC." This appears to be an allegation that the contract was subject to the usual implied obligation that each party was bound to do all that was reasonably necessary to secure performance of the contract (see my earlier judgment dated 11 February 1988 at p.7). The classic authority in this area is Mackay v. Dick (1881) 6 App. Cas. 251 where it was held that upon breach by a party of the implied duty of co-operation, the other party was excused from performance in that respect. Taken at face value, para.16 of the draft reply appears to be consistent with the reasoning in Mackay v. Dick. However, difficulties arise when one descends into the particulars given of the pleading. It will be necessary to deal with each of them separately as follows: "CL) It was asserted by the Commonwealth which was accepted as correct by Amann, that Amann was required to commence operations on 12th September 1987." This appears to be an allegation of estoppel by conduct (cf. Bullen & Leake and Jacob, Precedents of Pleadings, 12th ed. at p.1057). If so, it is not appropriate to raise it as particulars of a pleading of a Mackay v. Dick situation. Moreover, if it were intended to be a pleading of estoppel by conduct, it does not assert each of the material facts required to constitute such a cause of action. "(ii) Late inspection by the Commonwealth of the aircraft on 12th September 1987 thereby causing delay in flying operations on that day." ae ae we wo ene oe ees we hewn ee This may be an attempt to raise a Mackay v. Dick plea but fails to plead the material ingredients (see Mona _ Oil Equipment and Supply Co. Ltd. v. Rhodesia Rlys Ltd. £19491 2 All E.R. 1014 at pp.1016, 1017; Halsbury's Laws of England, 4th ed., Vol. 9 at pp.234; 358). "(ii2) The Commonwealth reversed its requirements stated to Amann in the representations referred to in the particulars to paragraph 25 of the Points of Claim thereby rendering impossible installation of the equipment by the commencement of operations." This appears to be an attempt to raise a plea of estoppel by conduct. It is inappropriate and inadequate. "Civ) The Commonwealth failed to co-operate with Amann by refusing permission to Amann to operate certain of its aircraft on the CWC while certain of its aircraft retained their United States Registration thereby causing delay in fulfilling the requirements of the CWC." This could constitute conceivably a Mackay v. Dick plea. Again, it 15 not clear whether this is so. Nor is it clear how the obligation to co-operate extended as far as the plea seems to suggest. "(v) The Commonwealth communicated confidential information to Chatwin Pty Limited trading as Skywest Airlines concerning the arrangements which Amann was making to fulfil its obligations under the CWC, thereby resulting in delay to Amann. (vi) The Commonwealth permitted information, known by it to be of a confidential nature relating to Amann's preparations, to be released for publication resulting in adverse media speculation and hindrance to Amann's preparations." pee ages - ~~ ' eh ete ' ro . —— Ue mn me ee ee ett: rer These appear to raise an independent cause of action of breach of confidence or, possibly, an economic tort. It is inappropriate in the present context. "(vii) The Commonwealth made statements to the media concerning Amann which had the effect of dissuading third parties from dealing with or extending credit to Amann during its preparations to carry out the CWC and thereby caused delay in effecting those preparations." This appears to be a plea of defamation or something similar. It is not a Mackay v. Dick plea or a plea of estoppel. It is inappropriate in the present context. "(viii) The Commonwealth delayed preparation of the final contract which caused a considerable delay in Amann attempting to arrange its finance for the CWC." This may constitute a Mackay v. Dick plea but it does not state clearly upon what basis it proceeds. "(ix) The matters referred to in paragraph 25 of the new points of claim and the particulars thereunder which caused delay and disruption to Amann's preparations." Para.25 of the new points of claim alleges that representatives of the respondent made a number of representations to the applicant in July and August 1987. This 1s apparently a plea of estoppel by conduct (cf. Waltons Stores (Interstate) Limited v. Terrence Maher, High Court of Australia, unreported, 19 February 1988). As such, it is inappropriately raised in a Mackay v. Dick plea and, in any event, is inadequate as a plea of estoppel. — een oer oat ' ncanahanunliaakndanrnmadeenaea) ee "(x) Certain matters which had caused delay were communicated to Roger Beale, Secretary of the Department of Transport, by Amann in Canberra on 10th 'September 1987, namely: a. Problems occasioned by Skywest being: 1. Potential sabotage of aircraft leading to strict security. ii. Skywest interference with supply of loan funds by AGC, Westpac and Bains Leasing. iii. Skywest statements that Amann had or would fail thereby causing staff to become unsettled and suppliers to refuse to extend credit. b. By reason of the economic power of companies controlled directly or indirectly by Sir Peter Abeles and the amount of business which they could provide to aircraft workshops, there were very few aircraft workshops available to work on Amann's aircraft which were not under the economic influence of companies so controlled and this was a cause of delay. c. Adverse publicity arising from the 760 Minutes' programme on Channel 9 and the statements of Peggy Sue Danner, such statements being engineered by Mr Meeke of Skywest which hampered and disrupted Amann. d. The presence of Mr Meeke at bases where Amann's aircraft were being prepared in the United States thereby causing disruption and consequential delays." None of these matters amount to a Mackay v. Dick plea or a plea of estoppel. "(xi) Delays caused by the Commonwealth being unwilling to assist with diplomatic requirements in Egypt and Singapore to facilitate ferry flights of aircraft to Australia." This could conceivably amount to a Mackay v. Dick plea but its basis is obscure. wn ar ne eee an + . " aye da Given these difficulties is, in my view, a bad plea and leave refused. The respondent further concentrated attention on para.17 of the draft reply and defence of cross claim as follows: "17. Amann says that insofar as it failed to fully perform the CWC on 12 September 1987, such failure was caused or contributed to by the Comnonwealth and for that reason the Commonwealth cannot complain about such failure." Particulars of this allegation were given to which I will return shortly. However, it will be noted that this plea seems to be a mixture of a Mackay v. Dick plea anda plea of estoppel by conduct. This is confirmed when one goes to the particulars which I will deal with separately as follows: "(1) Misinformation provided by the Commonwealth relating to wing spar inspection procedures resulting in substantial delay to the preparation of aircraft." This may be a plea of estoppel or it may bea Dick plea. There are no Mackay v. details given and the plea is bad on either count for want of material allegations. "(2) Refusal to give concession for operation on U.S. Register resulting in additional time required before the aircraft could operate in Australia." This appears to be a Mackay v. Dick plea but no are given. details with the particulars, para.16 to raise it should be eye - is Ne "(3) The Commonwealth gave to Skywest confidential information as to the location of aircraft, causing disruption, a need for strict security and delay." This appears to be an allegation of breach of confidentiality or perhaps an economic tort. It is inappropriate. "(4) The Commonwealth warned off a Regulation 40 Engineer from performing work for Amann thus causing additional delays." This appears to be an allegation of an economic tort and is inappropriate. If it is intended to raise a Mackay v. Dick plea, it is bad for lack of material allegations. "(5) The Commonwealth advised Amann that only 8 aircraft were required on 12th September 1987, and Amann relied upon such advice in making its preparations for the 12th September 1987." This appears to be a plea of estoppel but gives no details. If it is a plea of estoppel, it should be specifically pleaded. "(6) The Commonwealth issued an ambiguous notice of acceptance ('8 by 36 aircraft-months') which was amplified by verbal explanation that this meant three years from the date on which the 8th plane became available. Later the Commonwealth changed its requirements to demand all 14 planes on first day." This appears to be a plea of estoppel but gives no Getails. If it is a plea of estoppel, it should be specifically pleaded. "(7) The Commonwealth told Skywest of Amann' s dealings with Westpac resulting in Westpac declining to provide financial assistance." - 495 wrest wen eee This appears to be an allegation of an economic tort. As such, it is inappropriate. "(8) The Commonwealth refused to give a concession to permit operation of Amann's aircraft for the purposes of training aircrew until wing spar inspection had been performed." This appears to be a Mackay v. Dick plea but lacks detail and a statement of the essential allegations. "(9) The Commonwealth changed the schedule 5 flights on the first day to 7 thereby imposing an unnecessary requirement on Amann. (10) The Commonwealth scheduled inspections on the first day of operations, using up daylight hours necessary to complete the flying schedule." These appear to be a plea of estoppel but are obscure and in any event lack the necessary detail. "(11) The Commonwealth failed to produce aé final contract which was necessary to establish any lease finance arrangement thereby severely inhibiting Amann's financial arrangements." This seems to be a Mackay v. Dick plea but does not contain any statement of the material allegations necessary to sustain such a pleading. "(12) The Commonwealth refused to permit Amann to commence operations from Darwin on lst September 1987 despite the fact that Amann had a plane in place and was anxious to start to relieve pressure of the media and speculation about Amann." This appears to be an allegation of breach of contract and as such is presently inappropriate. green cer por ym in nee et KOs ' ee "(13) The Commonwealth refused to accept the Department's internal advice that bubble windows were not really necessary at least in the short term. (14) The Commonwealth refused to accept the Department's internal advice that long-range tanks were not urgent and would only be required in the wet season." These pleas are bad on their face. "(15) The Commonwealth refused to allow concessions which it was within its power to grant, and in particular: (i) refused to let Amann train observers in non-Coastwatch aircraft; (ii) refused to let Amann use cross-hired aircraft; (iii) refused to grant reasonable concession on propellors of aircraft allocated for use in Cairns. (iv) grounded aircraft EXP on llth September 1987 because of window crazing, Which plane had just completed 100-hourly inspection in NSW." This appears to be a Mackay v. Dick plea but does not contain all the material allegations appropriate for such a plea. "(16) The Examiner of Airmen refused to assist in low level flying and turbine endorsement process for Amann pilots thereby hindering Amann. (17) The Department of Aviation refused to give Amann a sample operations manual to work from, insisting instead that Amann create such a manual ab initio, thereby wasting more of Amann's time. (18) The Commonwealth never issued employee ID badges as required under the contract." These pleas are obscure but may be Mackay v. Dick pleas. They are also deficient for lack of detail. on een wee pero oy epee ee Te tet ae ei 7 zy ST er pressing "(19) This appears to be an allegation of breach of confidence or possibly of an economic tort. As such, the allegations are inappropriate. "(20) The Commonwealth made unexplained 'statements to (21) (22) (23) (24) 10. The Commonwealth discussed with. Skywest full details of the progress of Amann''s aircraft importation paperwork thus assisting Skywest to conduct a campaign of adverse publicity against Amann." : the press shortly before 12th September 1987 to the effect that Amann still had only one or two planes on the register and failed to state that Many more were about to be placed on the register. Such failure resulted in an adverse campaign in the media, leading to less confidence among employees and suppliers and hindering its preparations. ry The Commonwealth wasted Amann''s time and disrupted its preparations by investigating Skywest's false allegations that: (i) Amann and associates were drug users or smugglers; (ii) Amann would be sued by White Industries for fraud; (iii) Amann's costs would be so high that the company would fail. The Commonwealth permitted drug smuggling allegations made against Amann to gain wide publicity by failing to issue any sort of denial although it was aware as a result of investigation by the Australiian Federal Police that there was no basis for the allegations. The Commonwealth encouraged Skywest in its covert activities by accepting the 'Jeff Brock' report without complaint or rebuke to Skywest, thereby promoting speculation concerning Amann's integrity. The Commonwealth refused to make any positive statement about Amann, providing no relief from the incessant political attacks' and nuisance enquiries such as those of Senator Vanstone ~ 77 ae ey ee eee eter er ery ar, a 11. although it was in a position so ta do, thereby resulting in lack of confidence and hindrance to Amann. , (25) On 13th August 1987 Senator Evans announced that Skywest's operations would be extended, as it appears 'unlikely that Amann will achieve' its start-up .date thereby lessening the public, employee and trade confidence in Amann. (26) The Commonwealth deliberately circulated misleading information within the Department of Aviation officials with the purpose of impeding Amann's preparations. These appear to be allegations of defamation and as such are inappropriate. Given the confusion arising from these pleadings, the preferable course is to refuse leave to file the draft pleading as a Whole but to grant liberty to re-plead. The applicant must pay the respondent's costs of this application. I certify this and the TEN (io) preceding pages to be a true copy of the Reasons for Judgment of his Honour Mr Justice Beaumont. Associate: Lng Date: 11 March 1988 on ee = an eye ar} oat son id ? eer Counsel and Solicitors for Amann Aviation Pty. Ltd. Counsel and Solicitors for the Commonwealth of Australia Date of hearing: Date Judgment delivered 12. L.C. Gruzman Q.C., D.A. Cowdroy and A.M. Gruzman instructed by Owen D. Hodge & Son. D. Grieve Q.C., S. Robb, P. Comans instructed by Australian Government Solicitor. 10 March 1988 11 March 1988 Ry re tee ot ee Ut