East Coast Helicopters Pty Ltd v Stirling Helicopters Pty Ltd & Anor [2025] QDC 176

DISTRICT COURT OF QUEENSLAND CITATION: East Coast Helicopters Pty Ltd v Stirling Helicopters Pty Ltd & Anor [2025] QDC 176 PARTIES: EAST COAST HELICOPTERS PTY LTD ACN 164 169 822 AS TRUSTEE FOR THE ASANUMA FAMILY TRUST (Plaintiff) And KEVIN ASANUMA (Second Defendant by Counterclaim) v STIRLING HELICOPTERS PTY LTD ACN 167 011 467 (First Defendant) And STIRLING CONSOLIDATED (QLD) PTY LTD ACN 110 482 203 (Second Defendant) And SCHULTZ EQUIPTMENT PTY LTD ACN 628 405 390 (Third Defendant) And GRANT BERNARD SCHULTZ (Fourth Defendant) FILE NO: 1551/24 DIVISION: Civil PROCEEDING: Claim ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 18 November 2025 DELIVERED AT: Brisbane HEARING DATE: 27 and 30 May 2025 JUDGE: Porter KC DCJ -- 1 of 44 -- 2 ORDER: Preliminary Question: Based on the findings of fact made by the Court arising out of the matters pleaded in paragraphs 58, 59, and 63A to 63E of the Further Amended Counterclaim and the responsive allegations pleaded in the Answer and on the following assumptions: (a) the Second Defendant by Counterclaim personally undertook maintenance of the Aircraft or supervised the maintenance of the Aircraft as pleaded in paragraph 63C of the Counterclaim; or alternatively (b) the Second Defendant by Counterclaim did not personally undertake maintenance of the Aircraft or supervise the maintenance of the Aircraft as pleaded in paragraph 63C of the Counterclaim; and (c) the Plaintiff by Counterclaim suffered losses of the type pleaded in paragraphs 63J and 63L of the Counterclaim, did the Second Defendant by Counterclaim owe the Plaintiff by Counterclaim the duty of care pleaded in paragraph 63EA of the Counterclaim in respect of losses of the type pleaded in paragraphs 63J and 63L of the Counterclaim? Answer: No. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS BEFORE STATE AND TERRITORY COURTS – where proceedings were commenced as a claim by the first defendant by counterclaim (East Coast) on a contract for maintenance work undertaken for the plaintiff by counterclaim (Stirling) – where East Coast is insolvent – where Stirling counterclaimed against East Coast for breach of contract and against the second defendant by counterclaim (Mr Asanuma) in negligence – where the Court has been tasked to determine a preliminary question on East Coast’s claim in negligence against Mr Asanuma PROCEDURE – CIVIL PROCEEDINGS BEFORE STATE AND TERRITORY COURTS – PRELIMINARY QUESTION – whether Mr Asanuma owed a duty of care to Stirling to take reasonable care in carrying out his roles as Chief Engineer and Accountable Manager of East Coast so as to avoid pure economic loss to Stirling -- 2 of 44 -- 3 CASES: LEGISLATION: NEGLIGENCE – DUTY OF CARE: EXISTENCE – PURE ECONOMIC LOSS – where East Coast was a licensed maintenance supplier under the Civil Aviation safety scheme – where Stirling retained East Coast to carry out and record maintenance work on its helicopters – where Mr Asanuma was the Chief Engineer and Accountable Manager under the East Coast’s approved manual – whether by reason of those offices Mr Asanuma assumed responsibility directly to Stirling to take reasonable care in carrying out his duties – where Stirling alleges Mr Asanuma assumed responsibility directly to Stirling to take reasonable care in carrying out his duties by stating he was personally responsible for maintaining logbooks – whether Stirling was vulnerable to suffering economic loss due to negligence by Mr Asanuma because East Coast possessed logbooks of the aircraft and updated Aerotrack records – whether Stirling was vulnerable to suffering economic loss due to negligence by Mr Asanuma where it had contractual rights against East Coast Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185. Mallonland Pty Ltd v Advanta Seeds Pty Ltd (2024) 418 ALR 639. Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515. Civil Aviation Act 1988 (Cth) Civil Aviation Regulations 1988 (Cth) Civil Aviation Safety Regulations 1998 (Cth) Uniform Civil Procedure Rules 1999 (Qld) COUNSEL: J. Peden KC, J. Hughes and R. Liang for the first defendant and plaintiff by counterclaim J. Morris for the second defendant by counterclaim SOLICITORS: McBratney Law for the first defendant and plaintiff by counterclaim Marino Law for the second defendant by counterclaim -- 3 of 44 -- 4 Contents SUMMARY ............................................................................................................................ 5 THE PRELIMINARY QUESTION ..................................................................................... 5 THE STATUTORY CONTEXT .......................................................................................... 6 The Air Operator’s Certificate (AOC) ............................................................................ 6 East Coast not an AMO or CAMO under the Safety Regs ............................................ 7 East Coast’s maintenance approval ................................................................................. 7 East Coast’s approved procedures manual ..................................................................... 9 Maintenance releases and logbooks ............................................................................... 13 ‘LAME’ & ‘AME’............................................................................................................ 15 Aerotrack .......................................................................................................................... 15 Systems of work................................................................................................................ 16 THE FACTS ......................................................................................................................... 16 The parties and witnesses ................................................................................................ 16 Stirling ........................................................................................................................... 16 East Coast ...................................................................................................................... 17 Initial dealings between East Coast and Mr Schultz .................................................... 17 The May 2021 meeting..................................................................................................... 18 The maintenance agreement/s ........................................................................................ 21 Who carried out the work? ............................................................................................. 23 Logbooks and Aerotrack access ..................................................................................... 24 THE PLEADED CASES ..................................................................................................... 26 The contract case against East Coast ............................................................................. 26 The duty of care ............................................................................................................... 27 MALLONLAND PTY LTD V ADVANTA SEEDS PTY LTD ....................................... 32 SUBMISSIONS .................................................................................................................... 36 The plaintiff’s case ........................................................................................................... 36 Assumption of responsibility contentions..................................................................... 36 Salient features contention ........................................................................................... 37 The defendant’s case ........................................................................................................ 37 ANALYSIS ........................................................................................................................... 38 Findings of fact ................................................................................................................. 38 The witnesses ................................................................................................................. 38 Findings on the 21 May 2021 meeting ......................................................................... 38 No duty arose .................................................................................................................... 39 The contract and the refusal of personal liability........................................................ 39 No express undertaking of liability .............................................................................. 40 No undertaking of liability under the Manual ............................................................. 41 Vulnerability not otherwise established ....................................................................... 43 Reasonable foreseeability of loss and ascertainable and determinate class ............... 44 Known reliance ............................................................................................................. 44 CONCLUSION .................................................................................................................... 44 -- 4 of 44 -- 5 SUMMARY [1] The preliminary question can be shortly stated as follows: whether the defendant by counterclaim (hereafter the defendant or Mr Asanuma), owed a duty of care to the plaintiff by counterclaim (hereafter the plaintiff or Stirling) to exercise the standard of care of a reasonably competent “accountable manager” or “chief engineer” (as those terms are relevantly defined) in performing or supervising maintenance work on Stirling’s helicopters to avoid economic loss arising from failures to exercise that standard of care in maintenance tasks and from failures properly to record maintenance tasks in logbooks for the aircraft. [2] For the reasons which follow, the answer to that question is no. THE PRELIMINARY QUESTION [3] On 21 March 2025 I made an order by consent for the determination of a separate question in this proceeding under Chapter 13 Part 5 Uniform Civil Procedure Rules 1999 (Qld) (UCPR). The objective of the order was to determine the question of the existence of a duty of care alleged by Stirling. [4] The consent order was in the following form: Based on the findings of fact made by the Court arising out of the matters pleaded in paragraphs 58, 59, and 63A to 63E of the Further Amended Counterclaim and the responsive allegations pleaded in the Answer and on the following assumptions: (a) the Second Defendant by Counterclaim personally undertook maintenance of the Aircraft or supervised the maintenance of the Aircraft as pleaded in paragraph 63C of the Counterclaim; or alternatively (b) the Second Defendant by Counterclaim did not personally undertake maintenance of the Aircraft or supervise the maintenance of the Aircraft as pleaded in paragraph 63C of the Counterclaim; and (c) the Plaintiff by Counterclaim suffered losses of the type pleaded in paragraphs 63J and 63L of the Counterclaim, did the Second Defendant by Counterclaim owe the Plaintiff by Counterclaim the duty of care pleaded in paragraph 63EA of the Counterclaim in respect of losses of the type pleaded in paragraphs 63J and 63L of the Counterclaim? [5] The answer to the preliminary question is no. [6] The order refers to the version of the pleadings then current. On the first day of hearing, Stirling was granted leave to amend its pleading. Stirling’s current pleading is the third further amended counterclaim (the counterclaim). The current responsive pleading is the further amended answer (the answer). The -- 5 of 44 -- 6 amendments to the counterclaim were made to paragraphs included in the order. They added specific allegations of oral statements relied upon as sustaining the assumption of responsibility and vulnerability contentions of Stirling. Notwithstanding that change to the pleading landscape, both parties wished to push on with the preliminary question. THE STATUTORY CONTEXT [7] Mr Asanuma and East Coast carried out work on Stirling’s helicopters pursuant to the statutory scheme regulating civil aviation. The following statutes are relevant:1 (a) The Civil Aviation Act 1988 (Cth) (the CAA); (b) The Civil Aviation Regulations 1988 (Cth) (the CA Regs); and (c) The Civil Aviation Safety Regulations 1998 (Cth) (the Safety Regs). The Air Operator’s Certificate (AOC) [8] Mr Schultz is the guiding mind of Stirling. He is also the guiding mind of Stirling Consolidated (Qld) Pty Ltd (Stirling Consolidated). Consolidated is the holder of an AOC. The AOC authorises Consolidated “trading as Stirling” to operate single- engine helicopters providing passenger and cargo services. The concept of Stirling Consolidated “trading as Stirling” seems to be accepted under the civil aviation scheme.2 It was not submitted by Mr Asanuma that this arrangement had any impact on whether Stirling suffered the economic loss alleged or whether a duty of care arose. [9] An AOC is issued by the Civil Aviation Safety Authority (CASA)3 which administers the statutory scheme. An AOC authorises the carrying on of identified Australian air transport operations. AOCs are dealt with in Part 3 Division 2 of the CAA. [10] The requirements for obtaining an AOC are set out in s. 28 CAA. They require CASA to be satisfied, inter alia, that the applicant has key personnel with sufficient experience to carry out operations safely. Key personnel are defined to include the head of the aircraft airworthiness and maintenance control part (if any) of the organisation (HAAMC). In this case, Mr Amess was the HAAMC for Stirling. He was approved by CASA as HAAMC for Stirling in September 2021. His role was: (a) Ensuring compliance with the statutory scheme; (b) The management of airworthiness and maintenance; (c) Reporting and investigation of defects; and (d) Liaising with others including East Coast. 1 Others were cited but turned out not to be relevant. 2 TS2-9.40 and one can infer from the use of the expression “trading as Stirling” in the AOC that the arrangement is authorised under the statutory scheme. 3 CAA s 27. -- 6 of 44 -- 7 [11] The articulation of the safety obligations of an AOC holder are set out in Part 119 of the Safety Regs. Relevantly, the obligations include the following: (a) That the holder has an approved exposition which explains how it will comply with the obligations under the statutory scheme which it must comply with (Reg. 119.205); (b) The holder must maintain an organisational structure that effectively manages the operations; and (c) The holder must have in place certain key officers including a chief executive, a head of flying operations, a head of training and checking of flight crew and a safety manager. East Coast not an AMO or CAMO under the Safety Regs [12] This proceeding concerns performance of maintenance work on Stirling’s helicopters. It was submitted at the hearing and alleged in the affidavits that that work was authorised under, and regulated by, Part 42 of the Safety Regs which deals with airworthiness and maintenance obligations of AOC holders. It was alleged that East Coast was an Authorised Maintenance Organisation (AMO) within the meaning of that Part and related parts of the Safety Regs. While preparing my reasons, I queried if that was correct. In response, the parties agreed that East Coast was not an AMO under the Safety Regs and that Part 42 did not apply to it. East Coast also submitted, without challenge from Stirling, that Part 42 did not apply to Stirling at all, which seems to be correct.4 (If it was wrong, it would seem Stirling would be in breach of its obligations for airworthiness and maintenance because of the limited approvals held by East Coast compared to the approvals required under Part 42 for AOC holders). Therefore, there is no basis for submissions that statutory offices held by Mr Asanuma under Part 42 are relevant to the duty of care alleged. He held no such offices. East Coast’s maintenance approval [13] East Coast is the holder of an approval to carry out maintenance work. It was not the holder of an approval as an AMO under Part 42 of the Safety Regs, despite the use of that description in evidence. East Coast had only one approval to do maintenance work, and that was under reg. 30 CA Regs. [14] Regulation 30 relevantly provides: 30 Certificates of approval (1) Subject to subregulation (1A), a person engaged, or intending to engage, in any stage of distribution or maintenance of aircraft, aircraft components or aircraft materials may apply to CASA for a certificate of approval in respect of those activities. (1A) A person may make an application under subregulation (1) in relation to the maintenance of an aircraft or an aeronautical product only if Part 42 of CASR does not apply to the aircraft or aeronautical product. (2) An application must be in writing and must: 4 Stirling’s further submissions 19 August 2025; Mr Asanuma’s further submissions 19 August 2025. -- 7 of 44 -- 8 (a) set out the following: (i) a statement of the activities to be covered by the certificate, including any training or assessment in the maintenance of aircraft, aircraft components or aircraft materials that the applicant intends to conduct; (ii) … (b) have with it evidence of: (i) … (iv) a system of quality control that satisfies the requirements of sub regulation (2D); and (c) if maintenance of class A aircraft is an activity to be covered by the certificate—have with it a copy of the procedures manual, in which the system of quality control procedures must be set out, that the applicant proposes to use if the certificate of approval is granted. (2A) CASA must grant the applicant a certificate of approval covering the activities to which the application relates if CASA is satisfied that the applicant is able to carry out the activities in a satisfactory manner. (2B) In deciding whether it is satisfied as mentioned in subregulation (2A), CASA must have regard to: (a) … (e) if the applicant is required by paragraph (2)(c) to have a procedures manual— the applicant’s procedures manual. (2C) A certificate of approval is subject to: (a) a condition that each activity the certificate covers must only be carried out at a place where the facilities and equipment necessary for the proper carrying out of the activity are available to the holder of the certificate; (b) a condition that the activities the certificate covers must be carried out in accordance with a system of quality control that satisfies the requirements of subregulation (2D); and (c) if the certificate covers some or all of the following activities: (vii) the maintenance of aircraft; … a condition that each of those activities that is covered by the certificate must be carried out under the control of a person appointed by the applicant to control the activities; and … (2D) A system of quality control must be in writing and must contain the following: (a) the procedures to be followed in connection with the carrying out of the activities covered by the certificate that, in particular, includes procedures for: (i) the control of the work carried out under the certificate; and (ii) the maintenance, control and calibration of equipment; and (iii) the control of stores; (b) a statement: (i) that sets out the places at which the activities covered by the certificate are, or will be, carried out and which activities are, or will be, carried out at each place; and (ii) that identifies any mobile facilities available to the certificate of approval holder for the carrying out of the activities -- 8 of 44 -- 9 covered by the certificate and which activities are, or will be, carried out using each mobile facility; (c) in relation to each activity covered by the certificate that is required, by paragraph (2C)(c), to be carried out under the control of a person--the name of the position occupied by the person who controls the carrying out of the activity; (d) a description of the applicant's organisational structure, the responsibilities of employees within the structure and the procedures to be followed by the employees in undertaking the activities covered by the certificate; (e) a description of the resources for implementing quality management; (f) a description of the audit system applying to the system of quality control; (g) if the quality control system is set out in a procedures manual required under paragraph (2)(c)--a statement of the procedures to be followed in relation to the amendment of the procedures manual. … [underlining added] [15] East Coast obtained an approval under reg. 30 on 18 February 2020 to work on class A aircraft.5 East Coast had to have a procedures manual of the kind called for in reg. 30(2)(c) and which provided for the matters in the underlined passages above. A procedures manual is a common document in aviation regulations. East Coast’s approved procedures manual [16] East Coast had an approved procedures manual (the Manual). Stirling relies on certain terms to support the alleged duty of care. The Manual relevantly provides:6 (a) By clause 1.6, Definitions: Accountable Manager The person who has corporate authority for ensuring that all maintenance can be resourced and carried out to the standard required by the Civil Aviation Safety Regulations. CAR 30 Approved Maintenance Organisation (AMO) A facility holding an appropriate valid Certificate of Approval issued by CASA permitting the facility to carry out maintenance, repair and modification of aircraft within the scope permitted by the certificate. Chief Engineer The person who has corporate authority for ensuring that all maintenance activity is carried out to the standard required by the Regulations, the approved maintenance data or industry standards, and is the person assigned the responsibility for ensuring that: • all maintenance is carried out IAW approved maintenance data by competent persons, and • facilities, tooling and equipment are maintained to an acceptable standard and used to assure the called-up procedures and processes are correctly applied. Continuing Airworthiness Management Organisation The acronym ‘CAMO’ used for the purposes of this Manual includes: • a Continuing Airworthiness Management Organisation. 5 Asanuma Exhs p. 27. 6 Asanuma Exhs p. 31. -- 9 of 44 -- 10 • the aircraft’s ‘Registered Operator,’ who is ultimately responsible for the aircraft’s maintenance. • The HAAMC or Maintenance Controller as the ‘Person responsible for continuing airworthiness of the aircraft.’ In using the acronym, the intent is to identify the ‘person’ having control of the aircraft’s approved maintenance program and the associated aircraft records. (A Part 42 CAMO may have maintenance control of an aircraft maintained under CAR 30). Release to Service Certification by a LAME or holder of an appropriate approval within the AMO that the maintenance has been competently carried out to approved maintenance data and the aircraft or aeronautical product is airworthy at the date of certification in respect of the maintenance carried out. A Maintenance Release is certifying the aircraft is airworthy at the time of issue and the capability to remain so until the next scheduled inspection. Supervision A person supervising the carrying out of maintenance done by another person shall: a) be physically present at the place where maintenance is being carried out; and b) observe the maintenance to the extent necessary to enable the supervisor to form an opinion as to whether the maintenance has been properly carried out; and c) is available to give advice and answer questions about the maintenance. (b) By Part 4, Organisation Structure & Appointed Persons 4.1. Accountable Manager The Accountable Manager is to maintain an understanding of this MPM and the governing Regulations and be responsible for the direction and oversight of the business operations of East Coast Helicopters Pty. Ltd. The Accountable Manager has an oversight responsibility to ensure the MPM is adhered to in daily operations. They may appoint other staff to undertake tasks and duties required by the manual but the responsibility for maintaining adherence to the complete system remains with the Accountable Manager. In the absence of the Accountable Manager, where contact can be maintained through email, mobile phone, Skype or similar technology the Accountable Manager may rely on that contact capability to maintain operations provided a qualified LAME is available on site for supervision of the maintenance activity during the period of absence. 4.1.1. Duties 1. Ensure proper resourcing of facilities, equipment, materials, data and competent human resources to assure regulatory compliance, and to meet manufacturer’s recommendations and customer expectations. 2. With the Chief Engineer, ensure that appropriately trained and competent personnel who are unaffected by fatigue symptoms are available for the performance of all aircraft maintenance carried out under the Certificate. 3. Before the workshop maintains new or unfamiliar aircraft, components or accessories to assess, on advice of the Chief Engineer, the need for additional training of maintenance personnel or implementation of a skill upgrade program. 4. Liaise with the Authority on airworthiness matters and ensure CASA audit reports are noted and required corrective actions are responded to in a timely fashion. -- 10 of 44 -- 11 5. General supervision of management and staff operations. 6. Record in an appointed person register appointments and the functions delegated, including start/end dates for each appointment and, for each sub- contract LAME the start/end dates for each on-site period they are contracted. 7. Approve changes to this manual and arrange distribution. Arrange any necessary consequential training through the Chief Engineer. 8. Approve and resource the company and supplier audit schedule to assure the Company is conducting maintenance IAW this manual and its CASA approval. 9. To advise CASA of changes IAW CASRs 11.071 through 11.073 as applicable. 4.2. Chief Engineer The Chief Engineer is qualified by training and experience and is appointed with oversight responsibility under CAR 30(2C)(c) to ensure the matters listed below are adhered to on allocated jobs. They may assign other staff to undertake tasks and duties required by this manual but the responsibility for maintaining adherence to the system elements for which they are responsible remains with the Chief Engineer. In the absence of the Chief Engineer, where contact can be maintained through email, mobile phone, Skype or similar technology the Accountable Manager may rely on that contact capability to maintain operations provided a qualified LAME is available on site for supervision of the maintenance activity during the period of absence. When no LAME is available on-site, maintenance activity is limited to the range of activities listed under Schedule 8 of the CAR. (Maintenance that may be carried out on a Class B aircraft by a pilot). Where the Chief Engineer is absent for extended periods without direct communication the Accountable Manager may appoint a suitably qualified person to the Chief Engineer position to cover the absence. The Accountable Manager shall advise CASA within 14 days of the appointment and its duration. 4.2.1. Duties The Chief Engineer is responsible to the Accountable Manager for the overall operation of the workshop facilities and is the final authority on releasing aircraft to service. … 20. Ensure all company maintenance and certification records are suitably filed and retained to meet CASA requirements. … 29. For each scheduled maintenance event, the Chief Engineer will appoint a maintenance coordinator for the purposes of coordinating scheduled maintenance in accordance with the approved system of certification. They will ensure that: • all maintenance called up on the applicable worksheets has been completed and properly certified. • maintenance performed during or after scheduled inspections which would nullify certifications previously made have been completed and re-certified. • where work is carried out away from the main location, the security of the work records will be maintained until they can be returned to the main location for archiving. • Maintenance Releases are properly completed and signed. [17] Part 5 is headed “Work Procedures – Maintenance”. It relevantly provides -- 11 of 44 -- 12 (a) By clause 5.1, General control of maintenance activities: The Chief Engineer will provide control of all maintenance work and the main and temporary locations via the systems and procedures laid out in this manual. They are responsible for the complete and efficient performance of inspections carried out by the company and the accomplishment of all work in accordance with approved data. The work requiring specialist non-destructive inspection by X-ray, magnetic particle, eddy current or ultrasonic test will be accomplished to CASA approved procedures by outside vendors. Modifications and repairs will be subject to inspection by the Chief Engineer or assigned LAME. Upon completion of a specific operation, an AME or tradesperson will sign off the records using his initials indicating that the item is complete and ready for inspection. The Chief Engineer or assigned LAME will then inspect the item to assure conformance to specifications and established workmanship standards. Functional checks of any system affected by the work involved will be accomplished before final acceptance. Inspection acceptance will be indicated by the inspector’s signature. Any work performed by another organisation for the East Coast Helicopters Pty Ltd will be inspected by the Chief Engineer or assigned LAME. This inspection will be used to verify that the work was performed in an airworthy manner, that parts and materials used were of such a quality to be airworthy, and that the paperwork received verifies the authenticity of the part and work performed. The ECH organisation shall not release any parts made by, or parts having had work performed by a subcontractor until the Chief Engineer or assigned LAME has approved the parts as being ‘serviceable’. (See definition Section 1.6). Generation of Work Order Numbers, maintenance tracking, recording of all maintenance activities and store inventory control is controlled on the Aerotrack system. (b) By clause 5.5: 5.5. Work done under an arrangement (sub-contract work) Before any work is carried out on behalf of East Coast Helicopters, it is a responsibility of the Chief Engineer to evaluate the suitability of all sub-contact individuals or organisations with which the company has, or will have, working arrangements. Where maintenance of an aeronautical product removed from an aircraft is performed by another organisation not holding a Certificate of Approval, then that work must be inspected and certified by East Coast Helicopters under the terms and conditions of the ECH Certificate of Approval and IAW this manual. Prior to contracting in any outside maintenance, East Coast Helicopters will provide the Sub-Contractor with a Work Order detailing the work required, technical data to be used and material specification. In return the Sub-Contractor will be asked to provide assurances that the work can in fact be achieved and supplied with the appropriate documentation to satisfy East Coast Helicopters Pty Ltd requirements. 5.5.1. Monitoring sub-contract staff CASA licences or approvals It is the responsibility of each sub-contract LAME to provide East Coast Helicopters with copies of personal qualifications, licence changes and licence renewals. It is the LAMEs responsibility to ensure licenses are not exercised unless they are current under Part 66 and are applicable to the maintenance carried-out. When hiring sub-contract LAMEs the company shall ensure that each licence is current under Part 66 for the intended duration and is appropriate to the intended maintenance tasks. A Statutory Declaration, (Sat Dec), is required from the -- 12 of 44 -- 13 intending sub-contract LAME declaring that the 6 months maintenance activity in a 24-month period required by CASR Part 66 is met. A hard copy of all East Coast Helicopters LAME and sub-contract LAME licences, approvals and Statutory Declarations will be held in an applicable personnel file. The Accountable Manager shall record in the Sub-Contractor Registry the start and finish dates for each period a LAME sub-contactor is engaged by the company. (c) By clause 5.11 Work Packs - Unscheduled and Schedule Maintenance: 5.11.1. Details in the Work Order Register … The Chief Engineer is ultimately responsible for the creation of each work pack and will ensure the work required is entered onto the applicable forms and the forms are assembled into a work pack. … (d) By clause 5.20, Maintenance release issue: The MR Part One shall be endorsed with details of any maintenance required during the period of validity of the MR as assessed from details in the aircraft’s logbook, the immediately preceding MR and taking account of any recurrent AD’s. … The person certifying a Maintenance Release on behalf of the Company must be the person who makes the coordination and final certification in the Log Book. A Maintenance Release shall only be issued for the period stated on the approved aircraft Log Book Statement or system of maintenance and endorsed with the highest operational category (Day VFR, NVFR, IFR), pursuant to the Log Book Statement of the aircraft being released. The coordinating LAME or Chief Engineer is responsible for checking the maintenance work pack is complete and will use the Form WCC/01Work Completed Checklist to record the check. The check shall include, checking that appropriate entries and signatures are made in the aircraft Log books and maintenance release. (e) By clause 5.21 Logbook and Logbook Records: The aircraft logbook in use shall meet the requirements mentioned in.... [various provisions] Before an aircraft is returned to service, the coordinating LAME will check that records of maintenance requiring logbook certification are traceable to a completed work pack ready for entry into the aircraft logbook. The coordinating LAME shall ensure that a final certification in the logbook encompasses all necessary items in the detail identified by CAR Schedule 6 and include: … [underlining added] Maintenance releases and logbooks [18] Maintenance releases and logbooks require further explanation. I gratefully adopt Stirling’s opening submissions on these two points. -- 13 of 44 -- 14 [19] Every aircraft must have a physical logbook. The logbook, and other documents referred to in the logbook, must be made available to CASA and to persons engaged in maintenance on the aircraft.7 A logbook must, among other things:8 (a) Identify the aircraft’s maintenance programme (including details of maintenance release inspections); (b) Have provision for the recording and certification of maintenance carried out on the aircraft; (c) Have provision for the recording and certification of maintenance carried out on the aircraft’s engine; (d) Contain a record of when the engine was installed or removed and a record of the date and aircraft time-in-service of the installation or removal; (e) Contain a record of when any time-lifted components were installed or removed, including a record of the date and aircraft time-in-service of the installation or removal; and (f) Contain a record of compliance with all applicable airworthiness directives, including a record of the date and time-in-service of the compliance. [20] While the parties did not identify the specific statutory provisions, it was common ground that if a logbook was not properly maintained, it could mean that the AOC holder was in breach of the relevant statutory duties, the aircraft might not be certified airworthy and may be grounded. Further, the logbook would have to be reconstructed so as to be accurate and all necessary work would have to be shown to have been completed. [21] The Safety Regs also require that if maintenance has been carried out on an aircraft since it was last operated, a certificate of release to service called a maintenance release must be issued for the aircraft.9 [22] The person signing a maintenance release must ensure that the following information is recorded on the maintenance release at the time it is issued: (a) The details of the aircraft to which the release relates; (b) The name of the person authorised to carry out the maintenance who has issued the maintenance release; (c) The place, date and time, of issue of the release; (d) The time at which the maintenance release ceases to be in force; (e) The total time-in-service of the aircraft at the time of issue of the release; and (f) All requirements and conditions relating to maintenance (other than daily inspections) required to be carried out on the aircraft by the Regulations and the Civil Aviation Orders during the period the maintenance release is to remain in force, including the total time-in-service or date at which that maintenance is due.10 7 Regulations, reg. 50A(1). 8 Civil Aviation Order 100.5, s 3.2. 9 Safety Regulations, reg. 42.030(2)(b). 10 Civil Aviation Order 100.5, section 6.5. -- 14 of 44 -- 15 [23] A maintenance release may be issued in respect of an aircraft only if all maintenance required to be carried out to comply with any requirement or condition imposed under all regulations has been certified to have been completed.11 [24] A person must not issue a maintenance release in contravention of the Regulations.12 A person must not sign a maintenance release in respect of an aircraft if the person is aware that information entered on the maintenance release is incorrect or the maintenance release does not contain all information that it is required by or under the Regulations to contain.13 [25] On the completion of flying operations on each day that an aircraft is flown, the owner, operator or pilot in command must record on the maintenance release the total time-in-service of the aircraft on the day.14 [26] It would appear similar consequences can flow from improperly prepared maintenance releases as from an incomplete or inaccurate logbook. ‘LAME’ & ‘AME’ [27] There is a distinction between a Licensed Aircraft Maintenance Engineer (LAME) and an Aircraft Maintenance Engineer (AME). I gratefully adopt the explanation in Mr Asanuma’s submissions. While AMEs are qualified maintenance engineers they have not sat additional exams and fulfilled the licencing criteria under reg. 66 CA Regs to be licenced by CASA. Accordingly, an AME is not qualified or permitted to sign off on maintenance releases or other documents certifying maintenance or other works as having been completed to statutory standards. A LAME is required to ‘sign off’ such documents and affix their licence number.15 [28] Consistent with the qualifications of a LAME, the Manual permits a LAME to sign off on maintenance releases and to do other work independently of supervision or checking by the Chief Engineer: see [16] to [17]. Aerotrack [29] As part of its system of work, East Coast used a software platform called Aerotrack. Use of Aerotrack or any other software platform was not a statutory obligation. However, the system assists in tracking and recording maintenance and airworthiness work. It also facilitates recording time, costs and generating invoices. Aerotrack permits its users to do the following (amongst other things): (a) Create a file for a specific aircraft to record particulars of its components, maintenance and operations; (b) Generate a “runout”, which is a list of upcoming scheduled maintenance for an aircraft. Runouts can be viewed online and printed; 11 Regulations, reg. 43(7). 12 Regulations, reg. 43(11). 13 Regulations, reg. 43(13)(d). 14 Regulations, reg. 43B(1). 15 Asanuma Affidavit at [19-21]. -- 15 of 44 -- 16 (c) Record particulars of maintenance work including hours done, consumables used and generate invoices for work done. [30] It appeared uncontentious that only a LAME could (or perhaps should) enter technical particulars in Aerotrack. This seems consistent with the statutory status of a LAME under the scheme. [31] East Coast had a subscription for Aerotrack and could provide its clients with external log in details so that they could view the information held for an aircraft. However, it appears only a subscriber could edit the data recorded for a particular aircraft. Systems of work At all material times to this proceeding the system for the performance of maintenance of aircraft that was implemented by East Coast and required to be followed by employees and agents (sub- contractors) of East Coast, in respect of aircraft for which it was appointed as AMO (the East Coast System), was that: a. ECH would request and take possession of the Logbook for the aircraft; b. ECH would request transfer of a copy of any existing Aerotrack file and in the absence of same would create its own file on its Aerotrack system based upon the Logbook; c. maintenance works to be performed on an aircraft were allocated to a LAME by the Accountable Manager (Mr Asanuma); d. the Accountable Manager (Mr Asanuma) would ensure that logistical arrangements, parts, and resources, were arranged and made available for the task; e. the allocated LAME completed the required maintenance works; f. the allocated LAME completed the maintenance release, certification documents, and Logbook entries; and g. the allocated LAME updated the Aerotrack file. THE FACTS The parties and witnesses Stirling [32] Stirling and Stirling Consolidated are part of a group of companies controlled by Mr Bernard Schultz and his wife. Mr Schultz trained as an engineer but qualified as a helicopter pilot in 2019. From that time the Schultzes have invested in helicopter operations businesses. They acquired their first helicopter in 2019 through a related company (Schultz Equipment) and acquired a further helicopter sometime after that. [33] Stirling and Stirling Consolidated were established in 2013 and operated a commercial helicopter charter business. It appears Stirling Consolidated held the AOC and Stirling operated the business (as described in paragraph [8] above). In July 2021, the Schultzes acquired Stirling and Stirling Consolidated through another group company. When the Schultzes acquired Stirling and Stirling -- 16 of 44 -- 17 Consolidated, Stirling already owned three helicopters. The Schultzes leased two helicopters owned by another group company to Stirling and acquired another four aircraft through Stirling over February 2022 to March 2023. [34] Mr Digby Amess trained as a helicopter pilot in 2008 and has been involved in aviation since then. He worked for Stirling from about 2010 and at the time of the acquisition by the Schultzes, he was chief pilot for Stirling. In September 2021 he became HAAMC for Stirling. East Coast [35] East Coast was incorporated in 2013. Until its liquidation in September 2024, it provided maintenance services for helicopters. Mr Asanuma was its sole director and shareholder. As explained from paragraph [13] and [15] above, East Coast held the reg. 30 approval to carry out maintenance consistent with the terms of that approval. It was an AMO, within the loose industry meaning of that term, though not an AMO within the strict statutory definition of that term as explained in paragraph [12] and [13] above. [36] The Manual required an Accountable Manager and a Chief Engineer to be appointed by East Coast. Mr Asanuma filled both roles. Mr Asanuma was also a LAME. However, Mr Asanuma did not carry out all the work done by East Coast. From time-to-time East Coast: (a) Employed an apprentice; (b) Employed AMEs (though not at the times relevant to this proceeding); and (c) Retained LAMEs on a subcontract basis to perform work on behalf of East Coast. Initial dealings between East Coast and Mr Schultz [37] Mr Schultz first met Mr Asanuma at Archerfield Airport in January 2019. At that time, Schultz Equipment acquired its first helicopter (VH-ITM). East Coast was already doing the maintenance for that aircraft. Mr Schultz asked Mr Asanuma if East Coast would continue in that role. Mr Asanuma agreed. It is uncontentious that Mr Schultz knew that East Coast was the entity which supplied those services. [38] East Coast already had the logbook for VH-ITM and Mr Asanuma told Mr Schultz that East Coast would retain it. East Coast also already had an Aerotrack file for the helicopter which East Coast would continue to update. There was no written contract with East Coast for this retainer. [39] Schultz Equipment acquired its second aircraft in about September 2020 (VH- LBT). Mr Schultz asked Mr Asanuma if East Coast would take on maintenance of VH-LBT. East Coast took on the job. Mr Asanuma asked for the logbook to be provided. Again, no written contract was suggested. [40] It appears that in about early May 2021, Mr Schultz rang Mr Asanuma and asked if East Coast would enter into a maintenance agreement in relation to VH-ITM and -- 17 of 44 -- 18 VH-LBT. The precise reason given by Mr Schultz for this request was disputed. It seems likely however it was proposed because of the plan to lease Schultz Equipment’s aircraft to Stirling. Whatever the reason, the initiative for this written agreement came from Mr Schultz. Mr Asanuma was agreeable and invited Mr Schultz to send something through. The May 2021 meeting [41] In mid-2021, the Schultzes were in the process of acquiring the Stirling companies. At that time Stirling owned three aircraft and Schultz Equipment was leasing (or planned to lease) VH-ITM and VH-LBT to Stirling. Mr Schultz and Mr Amess decided it would be convenient if East Coast maintained all of Stirling’s aircraft. Mr Amess was not the HAAMC of Stirling at this stage. [42] A meeting between Mr Schultz, Mr Amess and Mr Asanuma occurred at Archerfield Airport in May 2021, likely 21 May. The discussion at this meeting is said by Stirling to establish an assumption of personal responsibility by Mr Asanuma for the accuracy of logbooks and maintenance releases which underpins one strand of the submission in support of the alleged duty. What was said is contested. [43] It was common ground that the holder of an AOC has three options for managing maintenance and airworthiness compliance: (a) First, there is what might be called the full-service option. For this option, the operator entrusts the entire maintenance process, including holding and updating logbooks, to a maintenance contractor. In that case, the maintenance contractor is responsible for planning and carrying out all the work. (b) Second, the operator might employ its own maintenance planner. In that case, the operator would undertake responsibility for planning and timing of maintenance but use a maintenance contractor to carry out the work in accordance with directions from the operator. In this case, the operator’s planner would hold the logbooks. (c) Third, the operator might undertake its entire maintenance planning and work schedule in house. [44] It was also common ground that all of Mr Schultz’s dealings with Mr Asanuma (at least until September 2022) were carried out on the understanding that Mr Schultz’s companies adopted the first option. [45] The evidence of the discussion on that day was as follows. [46] Mr Schultz swore in his affidavit that: (a) He told Mr Asanuma that Stirling did not have anyone who could perform maintenance on its whole fleet and that it wanted East Coast to take on that task. Mr Asanuma agreed; -- 18 of 44 -- 19 (b) He told Mr Asanuma he would update the maintenance agreement to add the further aircraft; (c) Mr Asanuma asked Mr Schultz to provide the logbooks and Aerotrack files for the aircraft; (d) Mr Asanuma said words to the effect that he wanted the logbooks because it was his “personal responsibility to make sure the logbooks were updated and correct”; and (e) Mr Asanuma said East Coast would update the Aerotrack files. (f) He asked Mr Asanuma if he would “sign a supplier agreement on behalf of [East Coast] which contained a director’s guarantee. He told me he would not sign the supplier agreement, saying words to the effect of ‘we don’t sign those’.” [47] In cross examination, he said that: (a) He communicated that they were acquiring more aircraft and asked Mr Asanuma if he could look after those aircraft. There was a discussion about capacity and Mr Asanuma said he could get more people “if we have to”; (b) He knew at the time that Mr Asanuma probably had subcontractors and knew that one person could not care for all the Stirling aircraft. [48] As to discussion about logbooks, Mr Schultz said in cross examination:16 (a) He had no particular recollection of discussion about logbooks other than that the logbooks would have to be provided; (b) He later said that Mr Asanuma said “he was the accountable manager, he would [sic: was] required to personally have the logbooks”; (c) He then said Mr Asanuma might have said accountable manager, chief engineer or LAME. (d) When challenged about the inconsistency between the detail in (b) to (c) and his initial evidence in (a), he said that the first statement was not in respect of the of 21 May meeting. He explained his evidence on the basis that he meant to refer to other conversations. That explanation is not accepted. It is not supported by the transcript.17 [49] In cross examination on the director’s guarantee issue, he said: (a) Mr Asanuma said he did not know what a director’s guarantee was; (b) Mr Schultz told Mr Asanuma that it meant that Mr Asanuma would be personally liable for any failure of East Coast. [50] Mr Amess swore that at the meeting: 16 TS2-24.27 to 25.49. 17 TS2-24.27 to .40. -- 19 of 44 -- 20 (a) Mr Schultz asked if East Coast would be willing to be AMO for Stirling’s fleet and Mr Asanuma said yes and would hire more people if required; (b) Mr Asanuma said he wanted to keep possession of the logbooks for the aircraft because “it was his responsibility to make sure they are up to date” and wanted the Aerotrack ‘system’ (file) for each aircraft transferred to him “to make sure he was in control of updating it”; (c) Mr Schultz asked Mr Asanuma if he would sign a supplier agreement that had a director’s guarantee. Mr Amess said he did not know what a director’s guarantee was at the time but that Mr Asanuma said, “no we do not need one”. [51] In cross examination, Mr Amess: (a) Agreed that Mr Asanuma said that East Coast had multiple LAMEs subcontracted and could get more people if required; (b) Said that he did not query why Mr Asanuma wanted the logbooks because that was a general practice in the industry; (c) Agreed Mr Asanuma said the logbooks and Aerotrack files would be updated by East Coast when maintenance was done; (d) Maintained that Mr Asanuma did not say that he did not know what a director’s guarantee was. [52] Mr Asanuma said as follows in his affidavit: (a) Mr Schultz said he was getting more aircraft and asked whether East Coast could be the AMO for all of them, though Mr Asanuma denies Mr Schultz mentioned Stirling; (b) He was asked if East Coast could handle the extra work and said that East Coast had multiple LAMEs subcontracted and could get more people if required; (c) He asked for the logbooks and Aerotrack files for all aircraft to be sent to East Coast. Mr Amess asked why East Coast needed the logbooks and Mr Asanuma said it was so East Coast could update the logbooks and input Aerotrack data when maintenance was done; (d) He denied saying it was his personal responsibility to update logbooks; (e) As to the guarantee, he said he was asked to give one by Mr Schultz and did not know what it was and that: He said words to the effect that it was me as a director guaranteeing to be personally liable for any failure of [East Coast] I remember I laughed and said words to the effect that there was no way I would agree to be personally liable… (f) He denied any discussion about any maintenance agreement. -- 20 of 44 -- 21 [53] In cross examination on that meeting, he maintained his evidence from his affidavit.18 [54] I will make findings on this discussion later in these reasons. The maintenance agreement/s [55] The evidence touching on the written maintenance agreement/s is disputed, though the email traffic allows findings as to what occurred. [56] Mr Schultz swore that on 1 May 2021, Schultz Equipment and Sterling entered into an agreement with East Coast for maintenance of VH-LTB and VH-ITM. He swore that Schultz owned the aircraft but transferred them to Stirling once it was acquired by the Schultz’s company. [57] The agreement he exhibits is in the simplest terms and relevantly imposes obligations on Schultz Equipment as the owner and on East Coast as the maintainer to ensure complete regulatory documents are maintained and on East Coast to carry out all maintenance which was required ‘at the direction of the owner’. [58] The agreement he exhibits has the following heading: [59] It has the following signing block: [60] Mr Asanuma, on the other hand, exhibits an e-signed agreement with an audit history showing that it was created on 14 July 2021 and signed by Mr Asanuma on 15 July 2021. It is in identical form to the agreement exhibited by Mr Schultz, except that: (a) It has the following heading: 18 TS2-63 to 64 and 71 to 72. -- 21 of 44 -- 22 (b) It has the following signing block: [61] I find Mr Asanuma’s version is the first maintenance agreement and that Mr Schultz’s evidence is wrong on that point. This finding is consistent with Mr Amess’ evidence set out next, and the audit of the document in evidence history. It is also signed by Mr McNab, who remained the operator at the time. I find that this is the first maintenance agreement. [62] The version relied upon by Mr Schultz as the 1 May 2021 agreement was prepared later, as the documents confirm. It resulted from Mr Amess’ realisation that the first maintenance agreement only had VH-LTB recorded. He sent a revised version to Mr Asanuma on 30 August 2021, which Mr Asanuma signed and returned on the same day. This is the second maintenance agreement. [63] The rest of the evidence about the alleged maintenance agreements from Mr Schultz and Mr Amess is wrong, and clearly so. Mr Schultz swears that between 1 May 2021 and 16 January 2023, the maintenance agreement was updated on three occasions to add additional aircraft. He exhibits “these versions”. The exhibited documents, however, are the first and second maintenance agreements, along with a third maintenance agreement which is identical to the second, but which includes five aircraft, the two in the second maintenance agreement plus three more. [64] The third maintenance agreement is identical to the second, except for the addition, in different sized text, of the identifying letters for three additional aircraft. The document could easily have been prepared using the second as a draft. There is nothing in the evidence to support the conclusion it was ever provided to East Coast, much less signed or otherwise approved by it. The electronic signatures do not support any such conclusion. [65] Mr Amess, like Mr Schultz, swears that he sent three further versions over the same period. I infer this refers to the three identified by Mr Schultz. He does not identify any others. The only alternatives are the three maintenance agreements already identified, only one of which could possibly be a further version. He was cross examined about the maintenance agreements.19 He agreed in cross 19 TS2-45.4 to 46.16. -- 22 of 44 -- 23 examination that he had looked at the “various maintenance agreements”. He agreed he had no cause to be involved with amending maintenance agreements before 21 September 2021, when he became HAAMC. [66] Mr Asanuma swears that he signed no further maintenance agreements after the first and second agreement. [67] The objective evidence strongly supports Mr Asanuma’s evidence that the only two maintenance agreements were the first and second identified above which were entered into on 15 July 2021 and 30 August 2021. It also supports the conclusion that there was no legally binding agreement in the form of the third maintenance agreement. I find accordingly. [68] Further, I reject Mr Schultz’s evidence that he or Mr Amess had conversations with Mr Asanuma each time a new aircraft was acquired in which there was oral agreement to vary the written maintenance agreement. That account is inconsistent with the documentary record. It is reconstruction at best. [69] Mr Schultz’s evidence and Mr Amess’ evidence about these agreements shows a troubling lack of attention to the correctness of their affidavits. [70] Given those findings, the question arises as to the basis upon which other work was done. To my mind, any such work would have been done pursuant to an implied retainer with East Coast to carry out work as directed for a reasonable fee. This must follow because: (a) All parties agree that East Coast was the entity that Mr Schultz dealt with; and (b) The arrangement was a formal one in the sense that East Coast was being retained at arm’s length to carry out work for reward, consistent with the requirements for maintenance under the statutory scheme known to the parties. [71] A term would be implied into that retainer that such work would be carried out with due care and skill. There is a question as to whether Stirling or Stirling Consolidated was the party to the maintenance and retainer agreements. Nothing seems to turn on that for the purposes of this preliminary point because it appears that if Stirling Consolidated had the contractual rights, they would have been exercised for the benefit of Stirling, at least in practice. See paragraph [8] above. Who carried out the work? [72] East Coast did maintenance work for Stirling from about May 2021 until January 2023. Mr Asanuma explained that work increased from late 2021 when COVID-19 restrictions ceased to affect activity. East Coast engaged three LAMEs as subcontractors over that period, with Mr Asanuma spending a lot of his time co- ordinating job allocation, arranging travel, ordering supplies and performing administration tasks. He only spent about a third of his time doing actual maintenance work. -- 23 of 44 -- 24 [73] Mr Schultz swore that East Coast and Mr Asanuma as LAME performed all maintenance on Stirling’s aircraft.20 Mr Asanuma swore in response that Mr Schultz and Mr Amess were aware he used LAMEs as subcontractors. He based that suggestion on the fact that they knew he could not possibly do all the work himself, they received maintenance releases signed by other LAMEs and that they would have discussions about where the experienced LAME was located so that that person could work on a particular aircraft. [74] Mr Schultz made a quick concession in cross examination, that he knew Mr Asanuma was not doing and could not do, all the work himself. 21 Given all those matters, I do not understand how Mr Schultz could have sworn to the contrary if he was giving proper attention to his affidavit. [75] Further, if Mr Schultz had asked Mr Amess, Mr Amess would presumably have told him the true position given that Mr Amess swore he “completely relied on the maintenance releases”, and those documents showed other LAMEs had signed off on a lot of the work done. Logbooks and Aerotrack access [76] There is a significant factual contest about dealings between Mr Asanuma and Mr Schultz in relation to possession of logbooks and access to Aerotrack files. [77] Let us start with Aerotrack. Mr Schultz initially swore to the following effect: (a) Mr Asanuma initially provided Aerotrack log in details but at some point, he changed the log in so Mr Schultz could not access Aerotrack files; (b) In March 2022, Stirling obtained its own Aerotrack access and suggested Stirling take over maintenance tracking and requested return of the aircraft logbooks and Aerotrack login details, and Mr Asanuma refused; (c) The only maintenance records Stirling could access once the Aerotrack files and logbooks were provided to East Coast were the maintenance releases. Mr Amess swore to the same effect.22 [78] In his oral evidence in chief, Mr Schultz conceded that he could log in and see components and run out times. In cross examination, he made broader concessions. He also showed a limited understanding of the availability of work pack information on Aerotrack. It appeared to me his understanding of Aerotrack was very limited. [79] Mr Amess swore that:23 During the period when ECH and Mr Asanuma were performing maintenance works for Stirling Helicopters, I received invoices for payment. On a number of occasions, either by email or phone I asked Mr Asanuma for a copy of the completed work pack and runouts. The completed work packs and runouts would have been another source of information for me to 20 Schultz [45] but cf. [54]. 21 TS2-23.30 to 24.10. 22 Amess [23] and [28]. 23 Amess [29]. -- 24 of 44 -- 25 cross check the maintenance requirements for the aircraft. Mr Asanuma would tell me he would send them, but he never did. [80] “Never did” was quickly shown to be an exaggeration. He conceded in cross examination that he was provided with run outs, though then said they were not complete. [81] Oddly, he also gave evidence he never had access to the Aerotrack files. That is odd because he was the HAAMC and his affidavit complains about lack of information, yet Mr Schultz had access. Should I infer that Mr Schultz did not share log in details for Aerotrack with the officer of Stirling directly responsible for compliance? Whatever the true position on this, it does not engender confidence in the version relied upon by the plaintiff. [82] Mr Asanuma disputed each of those allegations. He swore: (a) He never cancelled Mr Schultz’s log in details; (b) Mr Schultz never asked him for the logbooks or Aerotrack files in March 2022 or later; (c) Mr Schultz did ask him for a copy of Aerotrack schedules in June 2022 and again in September 2022. He did not comply because he considered Stirling owed East Coast money for work done; (d) Stirling could log in to Aerotrack and view runouts and that he provided copies of work packs and runouts from time to time to Mr Amess. [83] The objective evidence tends, yet again, to support Mr Asanuma’s version. Of most relevance is the email exchange of 24 June 2022 and 27 September 2022.24 It is brief but revealing. On 24 June Mr Schultz emailed Mr Asanuma: Hi Kev, Now we have our own copy of Aerotrack, can you transfer across a copy of the schedules for our Aircraft. [84] There was a follow up email on 27 September 2022: Kevin, Further to the below request, can you transfer across the schedules at the end of the week before you go on holidays? Can you also get the physical logbooks to Coolangatta so they can be collected by the auditor next week. [85] The tone and content of those emails is inconsistent with any unmet demand to provide the logbooks to Stirling, much less one in March 2022. I do not accept any such demand was made. Further, the documentary evidence and the concessions by Mr Amess are inconsistent with the allegations that work packs and run outs were never provided. Given the exaggeration in Mr Amess’ affidavit on that point, I am not persuaded that Mr Asanuma’s responses were inadequate. Mr Amess’ 24 Exhibit 3. -- 25 of 44 -- 26 allegation that only the maintenance releases were available to track work done, and to be done, is wrong. THE PLEADED CASES The contract case against East Coast [86] The proceedings were commenced as a claim by Mr Asanuma’s company, East Coast Helicopters Pty Ltd (East Coast) on a contract for payment for maintenance work undertaken by East Coast for Stirling. East Coast is insolvent and the proceedings by it are stayed. [87] Stirling counterclaimed against East Coast for breach of contract and against Mr Asanuma in negligence. The counterclaim on the contract is also stayed. However, allegations in the counterclaim on the contract are relevant to the case against Mr Asanuma. [88] Paragraphs 58 and 59 of the counterclaim25 plead the third maintenance agreement with the following additions: (a) That the contract was between Stirling Consolidated, Schultz Equipment and East Coast (not Stirling); (b) That the aircraft included VH-MTY by conduct; and (c) That there was an implied term that East Coast would exercise reasonable care and skill in providing services under the third maintenance agreement. [89] It also pleads as a term that the owner of the aircraft was Schultz Equipment until later, when Stirling was the owner and by conduct Stirling became a party to the maintenance agreement “by way of novation”. [90] The answer26 relevantly: (a) Admits that the second maintenance agreement was signed on 1 May 2021; (b) Alleges the first maintenance agreement was signed on 15 July and varied the second maintenance agreement; (c) Alleges there was no third maintenance agreement; and (d) Admits East Coast had an implied duty to take reasonable care in performing work under the maintenance agreements. [91] The counterclaim then alleges several breaches of the maintenance agreement. Stirling alleges that East Coast breached the maintenance agreement in that it: (a) Failed to inform Stirling of upcoming maintenance due; (b) Incorrectly completed maintenance releases; 25 Amended Defence and Third Further Amended Counterclaim. 26 Further Amended Answer. -- 26 of 44 -- 27 (c) Issued maintenance releases without having completed required logbook entries; (d) Carried out certain work incorrectly (e) Failed to carry out statutory inspections; (f) Failed to update component cards to correctly record flying hours and life limits of components; (g) Failed complete work packs; and (h) Failed to ensure that employees and contractors signed Review Charts. [92] The failures were designated the defective works, a description I will adopt. Notably for the preliminary question, each of these acts were alleged to breach an implied term that East Coast would exercise reasonable care and skill in providing services under the Maintenance Agreement. The loss alleged was costs incurred in rectifying the defective works, with particulars provided in paragraph 63L. This is the same loss as claimed in negligence against Mr Asanuma. [93] In broad terms, the answer denies the specific allegations of defective work and/or alleges that it did not lead to any loss if it did occur and/or denies the work was part of the scope of work of East Coast and/or alleges the loss arose from conduct of Stirling. The duty of care [94] Stirling’s case on duty of care is articulated as follows. [95] Paragraphs 63A and 63B allege characteristics of Mr Asanuma as follows: 63A. At all material times, the Second Defendant by Counterclaim, Mr Asanuma, was: a. a natural person capable of being sued; b. sole director of the Plaintiff; c. an “accountable manager” of the Plaintiff within the meaning of section 42.575(1) of the Civil Aviation Safety Regulations 1998 (Cth) (CASR); d. a licenced aircraft engineer; e. the Chief Engineer of the Plaintiff; f. authorised and approved under the Civil Aviation Safety Regulations 1998 (Cth) to carry out aircraft maintenance; g. by reason of the matters pleaded in subparagraphs (b), (c) and (e) above, responsible for: (i) supervising the maintenance carried out by the Plaintiff pursuant to the Maintenance Agreement (ii) ensuring that maintenance carried out by the Plaintiff pursuant to the Maintenance Agreement complied with CASR, the Civil Aviation Orders, and the MPM; -- 27 of 44 -- 28 h. in possession or control of the “maintenance records” (as that term is defined in regulation 42.015 of the CASR) for the Aircraft; i. solely responsible for completing maintenance certification for maintenance carried out by the Plaintiff pursuant to the Maintenance Agreement for the purposes of Subpart 42.H of the CASR; and j. exercising special skill or competence when performing and supervising maintenance carried out pursuant to the Maintenance Agreement. 63B. At all material times, to the Second Defendant by Counterclaim’s knowledge, the First Defendant: a. carried on a commercial aircraft charter business; b. used the Aircraft in the operation of its business; and c. was not qualified, and employed no person who was qualified, to carry out or supervise the maintenance to be performed pursuant to the Maintenance Agreement. [96] Mr Asanuma admits 63A(a) to (f) (on the basis that he was a LAME). He denies 63A(h) and (i) on the basis that East Coast was in possession of the logbooks and East Coast was responsible for completing certification. As to 63A(g), Mr Asanuma pleaded: As to sub-paragraph g.; (i) denies as untrue that the matters pleaded have the consequence of making Mr Asanuma responsible for supervising the maintenance carried out by the Plaintiff under the Maintenance Agreement as properly construed they do not; (ii) denies as untrue that the matters pleaded have the consequence of making Mr Asanuma responsible for ensuring that the maintenance carried out by the Plaintiff under the maintenance Agreement complied with CASR, the Civil Aviation orders, and the MPM as properly construed they do not and any such responsibility fell on the Plaintiff. [97] Mr Asanuma denies he had the knowledge of Stirling’s activities because he did not know Stirling, in particular, carried on those activities, and that the maintenance agreements identified Stirling Consolidated as the owner. He denies he knew Stirling had no qualified maintenance persons because he did not know Stirling’s structure and that he did know that it did have a HAAMC and used other maintenance providers. [98] Under the heading “duty of care” Stirling then alleged: 63C. Between about May 2021 to mid-February 2023, the Second Defendant by Counterclaim: a. personally undertook maintenance of the Aircraft on behalf of the Plaintiff pursuant to the Maintenance Agreement; and b. further and alternatively, supervised the maintenance of the Aircraft undertaken by the Plaintiff pursuant to the Maintenance Agreement. Particulars -- 28 of 44 -- 29 [The particulars comprised extensive references to individual acts and omissions involving work on the various aircraft and appear to correlate to the defective works] 63D. The Second Defendant by Counterclaim knew or ought to have known that the First Defendant would rely upon the Second Defendant by Counterclaim to perform, and to ensure that the Plaintiff performed, maintenance of the Aircraft pursuant to the Maintenance Agreement with reasonable care. Particulars Such knowledge is to be inferred from the matters pleaded in paragraphs 58, 59, 63A(b) to (j), 63B and 63C above. 63DA. The First Defendant was vulnerable to suffering the economic harm or loss pleaded in paragraphs 63E and 63L below because: a. of one or more of the matters pleaded in paragraphs 63A(c) to (j), 63B, 63C and 63D above, and paragraph 63E below; and b. the First Defendant was unable, reasonably, to protect itself from the economic harm or loss. 63DB. The Second Defendant by Counterclaim assumed a responsibility to the First Defendant to take reasonable care to avoid the economic harm or loss pleaded in paragraphs 63E and 63L below because: a. of one or more of the matters pleaded in paragraphs 59(j), 63A(c) to (j), 63B, 63C and 63D above, and paragraph 63E below; b. on or about 21 May 2021, Mr Asanuma attended a meeting with Mr Schultz and Mr Amess on the Frist Defendant at Archerfield Airport during which Mr Asanuma: i. requested that the logbooks be given to him and that he would keep them in his possession; ii. said that it was his personal responsibility to make sure that the logbooks were updated and correct; iii. requested the electronic files for helicopters kept on the Aerotrack system; iv. said that ECH would update the Aerotrack system as part of the performance of its maintenance duties; and v. asked that Mr Schultz or Mr Amess arrange for the electronic Aerotrack access for each of the helicopters to be transferred to him to make sure that he was in control of updating it; c. the logbooks were provided to Mr Asanuma and Aerotrack data files were transferred to ECH; d. Mr Asanuma thereafter retained the logbooks; e. at some point prior to March 2022, Mr Schultz asked Mr Asanuma whether a system could be implemented whereby the First Defendant did the maintenance tracking and planning and ECH would do the maintenance work, but Mr Asanuma refused to entertain that arrangement and insisted he must do it himself personally. f. in around March 2022: -- 29 of 44 -- 30 i. Mr Schultz suggested to Mr Asanuma that the First Defendant take over maintenance tracking for the Aircraft; ii. Mr Schultz asked Mr Asanuma to return the logbooks and provide him with Aerotrack log in details; iii. Mr Asanuma refused to do so; iv. Mr Asanuma said words to the effect that it was his sole responsibility to ensure the logbooks and the Aerotrack records were kept up to date and insisted that he kept the maintenance records for that reason. 63E. It was reasonably foreseeable to a person in the position of the Second Defendant by Counterclaim that unless he exercised reasonable care in performing and supervising the maintenance carried out by the Plaintiff pursuant to the Maintenance Agreement the First Defendant could suffer the loss (the Risk). Particulars By reason of the matters pleaded in paragraphs 58, 59, 63A(b) to (j), 63B and 63D above, the Second Defendant by Counterclaim knew or ought to have known that: a. the First Defendant carried on a commercial aircraft charter business; b. the First Defendant used the Aircraft in the operation of its business; c. the First Defendant was obligated to ensure the aircraft were airworthy; d. the First Defendant could not operate or allow to be operated any Aircraft which had not been maintained with reasonable care; e. the First Defendant could not operate or allow to be operated any Aircraft which the First Defendant could not confirm had been maintained with reasonable care; f. the failure to exercise reasonable care when maintaining the Aircraft could result in the Aircraft not meeting the requirements of the CASR; g. the failure to exercise reasonable care when maintaining the Aircraft could result in the Aircraft not being airworthy; h. the failure to exercise reasonable care when maintaining the Aircraft could prevent the First Defendant from using the Aircraft in its commercial operations; i. the First Defendant could be required to repair or undertake further maintenance of any Aircraft which had not been maintained, or which it could not confirm had been maintained with reasonable care. [99] As to paragraph 63C, Mr Asanuma admits he undertook maintenance work on some of the aircraft and supervised his own work but did so as part of his employment as a LAME by East Coast pursuant to the contract it had for that work. He says much of the work particularised was carried out by other employees, agents and contractors not directly under his supervision. [100] As to paragraph 63D, Mr Asanuma denies he had or should have had the knowledge alleged because neither he nor Stirling were parties to the maintenance agreements and it was not part of the terms that he would do the work or supervise the work himself. [101] As to paragraph 63DA, Mr Asanuma pleads, relevantly, that Stirling was not vulnerable to the harm alleged because: -- 30 of 44 -- 31 (a) It was able to review maintenance records via maintenance releases and Aerotrack files and logbooks on request; and (b) It was at liberty to obtain contractual protections. [102] As to 63DB, Mr Asanuma relevantly: (a) Pleaded his version of the 21 May 2021 conversation and his dealings over the Aerotrack and logbooks as set out in the evidence above; and (b) Pleaded no duty arose by reason of his version of events relating to the request for the director’s guarantee. [103] As to paragraph 63E, Mr Asanuma pleads relevantly that there was no reasonable basis for Mr Asanuma to foresee that Stirling would suffer loss from the maintenance agreement because Stirling was not a party to it. [104] Stirling pleads the duty of care as follows; 63EA. In the premises pleaded in paragraphs 63A to 63E above, [Mr Asanuma] owed a duty of care to [Stirling] to exercise the standard of care which is expected of a reasonably competent Accountable Manager and Chief Engineer with [Mr Asanuma’s] skill and competence in performing and supervising maintenance of the Aircraft pursuant to the Maintenance Agreement. [105] Stirling then pleads the alleged breaches of the duty of care in substantially the same form as alleged in the claim against East Coast, albeit the articulation of the specifics and particulars of the breaches is more refined. [106] Stirling then pleads its loss as follows: Causation 63J. As a result of the Breach of Duty, the First Defendant was: a. unable to confirm that the Aircraft were airworthy; b. required to: (i) conduct an audit of the Aircraft logbooks; (ii) replace or remove components of the Aircraft; (iii) rectify, reassemble and repaint the main transmission for VH-LBT; (iv) complete the inspections pleaded in paragraph 63F(f) above; (v) update the logbooks and component cards for the Aircraft; and (vi) repair and replace parts of VH-HOA due to the matters pleaded in 63F(j) above. 63K. But for the Breach of Duty, the matters pleaded in paragraph 63J above would not have occurred. 63L. By reason of the matters pleaded in paragraphs 63J and 63IK above, the First Defendant has suffered loss and damage. Particulars The First Defendant’s loss and damage is comprised of the following: [107] The particulars identify losses in two categories: checking and reinstating the logbooks and other maintenance records and repairing allegedly defective work. -- 31 of 44 -- 32 MALLONLAND PTY LTD V ADVANTA SEEDS PTY LTD [108] Both parties relied on Mallonland Pty Ltd v Advanta Seeds Pty Ltd.27 Mallonland was the producer of sorghum seed. It was sold in bags to farmers who cultivated that crop. The bags of sorghum seed were contaminated with seeds of a plant called shattercane which is related to sorghum but not usable for grain. Its seedhead shatters and spreads seed widely and the plant grows vigorously, outcompeting the sorghum. [109] The seeds were supplied in 20kg bags to distributors who in turn supplied the seed in those same bags to growers. There was no contract between Mallonland and the ultimate purchaser. Nor were the terms of the sales from the distributors to the farmers before the Court. When the seeds were supplied, Mallonland did not know that the sorghum was contaminated by shattercane. [110] The plaintiffs purchased the seed. They had no way of detecting the shattercane seed. They sowed the seed and the shattercane grew with the sorghum, contaminating the sorghum crop and the fields where it had been sown. [111] To eliminate the shattercane contamination required the growers to stop growing sorghum and remediate the fields affected. The growers did not allege property damage or economic loss consequent on property damage. Rather they alleged they had suffered pure economic loss from reduced income and increased expenditure. [112] Printed on the bags was data which, amongst other things, stated that the maximum other seeds comprised .1%. Also printed on the bags was text under the heading ‘Warning’ summarised by the majority as follows (at [10]): It was found that the packaging referred to simple concepts in “plain words” to convey “several clear propositions”, including that the risk of using the product lay with the buyer and that the producer was not accepting any responsibility for damage or loss caused by negligence on its part. The text included clear statements that the bag must only be opened if the buyer had read and agreed with the conditions on the bag and that the buyer should return the bag for a refund if the conditions were not acceptable. [113] It was found that the losses of the growers were reasonably foreseeable if due care was not exercised in the production process of the seeds. It was also found that the contamination arose from failure to exercise reasonable care in carrying out a process called rogueing in a particular field where the contamination arose and in failing to conduct a “grow out” of the seed. It was not in dispute that these breaches caused the shattercane contamination and the consequent economic loss. [114] The defect in the seed was a hidden defect. It was found that the growers’ capacity to protect themselves from the breach of duty was limited to not purchasing the seeds or not sowing it once purchased. It was accepted they could not realistically obtain a warranty from the sellers against a defect in the seed causing economic loss. 27 (2024) 418 ALR 639. -- 32 of 44 -- 33 [115] At trial and on appeal, the warning statements on the seed bags were decisive in the rejection by both Courts of a duty of care to avoid pure economic loss owed by the defendant to the growers. In the High Court: [42] …the growers ultimately argued that the following matters supported the existence of the alleged duty of care: (1) the reasonable foreseeability of the relevant risk of economic loss if reasonable care was not taken in seed production; (2) the producer’s knowledge of the risks of economic loss to which the growers were exposed if reasonable care was not taken in seed production; (3) the producer’s capacity to control those risks by careful production; (4) the growers’ vulnerability, in the sense that they could not protect themselves from the consequences of a want of reasonable care in the production of the seed in such a way that would cast the consequences on the producer; (5) as the intended consumers of the product, the growers were not in an indeterminate class of victims of the producer’s want of care; and (6) the recognition of the alleged duty of care would not give rise to legal incoherence. [116] As to the effect of the warning: [43] The growers also argued that the packaging in which the contaminated seed was sold did not operate to affect the duty of care that was alleged to have arisen at the time of the production of the contaminated seed (that is, before the disclaimer had been given to growers on receipt of the bags of seed). Specifically, the growers submitted that the disclaimer did not “intersect” with the producer’s knowledge because, according to the growers, the disclaimer did not warn of a risk of which the producer was aware. Furthermore, it was said that the disclaimer did not attenuate the growers’ vulnerability and could not have affected whether the producer assumed responsibility for the task of producing the seed. [117] The High Court rejected those submissions. Two judgments were given, one by Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ and the other by Edelman J. The majority restated the general principles applicable to pure economic loss cases. It is as well to recall them: Principles governing the existence of a duty of care to avoid causing pure economic loss [29] An essential element of the tort of negligence is that the defendant owes the plaintiff a duty to take reasonable care when engaging in an activity to avoid causing the plaintiff a particular type of damage or loss that is reasonably foreseeable. “A man is entitled to be as negligent as he pleases towards the whole world if he owes no duty to them.” [30] As a general rule, damages are not recoverable in negligence for pure economic loss, that is, for loss that is not consequential upon injury to person or property. Ordinarily, a person does not owe a duty to take reasonable care to avoid causing reasonably foreseeable pure economic loss to another. [31] This general rule reflects the well-established position at common law that the infliction of economic loss does not, by itself, infringe any right or legally protected interest of the plaintiff. The general rule is also said to reflect policy concerns about the potentially excessive scope of liability for financial loss, referred to by Cardozo CJ as liability “in an indeterminate amount for an indeterminate time to an indeterminate class”. Another policy reason said to justify the general rule is a concern to avoid infringing upon the legitimate pursuit of personal advantage. [32] A consequence of the general rule is that damages for pure economic loss are not recoverable if all that is shown is that the defendant’s negligence was a cause of the loss and the loss was reasonably foreseeable. That is, reasonable foreseeability is a necessary but not sufficient criterion for the existence of a duty of care to avoid causing pure economic loss. Furthermore, indeterminacy of liability, in the sense that the defendant’s liability cannot be realistically calculated, will ordinarily deny the existence of such a duty of care. -- 33 of 44 -- 34 [Footnotes omitted] [118] The majority then turned to the assumption of responsibility: [33] Where a defendant has assumed a responsibility towards the plaintiff to take reasonable care to avoid economic loss to the plaintiff, a duty of care may well be established. The term “assumption of responsibility” has been criticised as “imprecise and beguiling but deceptively simple”. An assumption of responsibility is best understood as an undertaking (whether express or implied) by a person to take on a task or job for another person or class of persons, from which it can be inferred that the first person accepted that he or she would take reasonable care when engaging in that task or job. [34] Where a duty to take reasonable care to avoid causing pure economic loss is said to arise out of an assumption of responsibility by a defendant to a particular person or class of persons, the defendant can negate or limit that assumption and thus the duty by words or conduct directed to that person or class. That is because such a negation or limitation amounts to a denial of an assumption of responsibility on the part of the defendant which the person or class cannot ignore or reject. For example, no duty to avoid causing pure economic loss will arise in connection with the provision of advice or information if the defendant “had effectually disclaimed any responsibility for it”. [Footnotes omitted] [119] As to the general approach, they restated the position as follows: [36] In Sullivan v Moody, the Court observed that “[d]ifferent classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care … The relevant problem will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle.” Since Sullivan v Moody, other than in cases involving an assumption of responsibility, determining whether the relationship between the parties gives rise to a duty of care to avoid causing pure economic loss has been understood in Australia to involve such an evaluation. This “salient features” approach, as it is now known, has attracted significant judicial criticism. However, neither the growers nor the producer argued that there should be a departure from the approach in this case. [37] Their Honours’ reference in Sullivan v Moody to “factors … for or against” recognition of a duty of care in a novel case should not be understood as inviting any form of “instinctive synthesis” of competing considerations “without a chain of reasoning linking these factors with the ultimate conclusion”. This is why an incremental and analogical approach, paying close attention to relevant precedents and any risk of incoherence in the principles they establish, is necessary. [Footnotes omitted] [120] Their Honours then made observations about knowledge of risk and vulnerability as factors in the incremental and analogical approach. Relevantly on vulnerability they observed: [39] Another matter that adherence to the required incremental and analogical approach has identified as relevant to the existence of a duty of care to avoid causing pure economic loss is a plaintiff’s “vulnerability” to the particular type of economic loss that eventuated. The relevant vulnerability is the plaintiff’s inability to protect him or herself from the economic loss that eventuated as a consequence of a defendant’s carelessness, either entirely or in a way that would cast the consequence of loss on the defendant (for example, by contractual stipulations). A mere likelihood of suffering economic loss if reasonable care is not taken will not amount to vulnerability. As McHugh J explained it in Woolcock, a plaintiff may be unable to protect him or herself from the risk of economic loss by reason of “ignorance or -- 34 of 44 -- 35 social, political or economic constraints”. Conversely, the capacity of a person to protect him or herself from economic loss by contractual agreement (or, by analogy, by any other reasonable means) is a reason, and often a decisive one, for rejecting the existence of a duty of care. [121] Edelman J agreed in the analysis and conclusion of the majority on the salient features approach, albeit criticising that approach (as did the majority). His Honour’s judgment focused, relevantly, on assumption of responsibility. [122] The plaintiff relied in particular on his Honour’s observation that an assumption of responsibility historically could arise without consideration. His Honour explained: [61] …unlike modern contractual duties, an assumption of responsibility can arise without any consideration. For instance, in actions against gratuitous bailees (and not merely contractual bailees) for a failure to return goods, the courts recognised an assumed duty of the bailee which, “like the action against the surgeon or the carpenter”, was based “on an undertaking (an assumpsit)” and was, in effect, an action “for failure to perform a promise to return”. The assumed duty or undertaking was also recognised as arising by implication from an office or calling without requiring consideration. Hence, a common carrier or innkeeper was held to have assumed responsibility to the public to provide carriage or lodging. In the absence of any requirement for consideration, their duties were recognised to arise “independently of contract, and whether [their] defaults took the form of acts or of omissions”, based upon the “supposition ‘that every one who undertakes any office, employment, trust, or duty, contracts with those who employ or entrust [them], to perform it with integrity, diligence, and skill’”. [Footnotes omitted] [123] His Honour went on: [64] The source of the modern application of assumption of responsibility in the law of torts is the speeches of their Lordships, and particularly Lord Devlin, in Hedley Byrne. Although a disclaimer precluded any finding of an undertaking in that case, their Lordships recognised that liability could arise following an undertaking that care would be taken concerning the accuracy of a statement. As Lord Devlin explained, it would be an “extreme assertion” to suggest that liability based upon an assumption of responsibility could only arise in instances of breach of a “contractual or fiduciary duty”. That assertion would mean that a patient who gave up their occupation could recover damages from a doctor in a private hospital if, for a fee, the doctor had negligently advised the patient that they could not pursue their occupation, but could not recover damages if the same advice had been given in a public hospital without a fee. Lord Devlin rightly explained that this was “nonsense”. It was “a refusal to make sense”. Lord Devlin continued, explaining that an assumption of responsibility could not be confined to categories such as common callings: “If a defendant says to a plaintiff: ‘Let me do this for you; do not waste your money in employing a professional, I will do it for nothing and you can rely on me,’ I do not think [the defendant] could escape liability simply because [the defendant] belonged to no profession or calling, had no qualifications or special skill and did not hold [themself] out as having any.” In other words, Hedley Byrne recognised that liability could arise based upon the breach of an undertaking “which, because there is no consideration, is not enforceable under the rules of contract”. [Footnotes omitted] -- 35 of 44 -- 36 SUBMISSIONS The plaintiff’s case [124] The pleaded duty omits reference to the kind of loss to which it relates. However, Stirling accepts it must be loss of the kind pleaded. The duty alleged is therefore a duty owed by Mr Asanuma to Stirling to exercise the standard of reasonable care expected of a reasonably competent Accountable Manager and Chief Engineer with his skill and competence in performing and supervising maintenance of the Aircraft under the Maintenance Agreement to avoid causing economic loss to Stirling in the form of: (a) The costs of correction of negligent work done; and (b) The costs of correction of incomplete and inaccurate logbooks and component cards. [125] The plaintiff relied on three contentions to sustain the duty alleged: (a) First, that the duty arose from an assumption of responsibility based on Mr Asanuma’s offices as Accountable Manager and Chief Engineer; (b) Second, that the duty arose from an express assumption of responsibility by Mr Asanuma; and (c) Third, that an analysis of the salient features of the relationship sustain the duty. [126] The contentions can be summarised as follows. Assumption of responsibility contentions Mr Asanuma’s roles [127] Stirling relies on the following facts: (a) East Coast was an AMO and Mr Asanuma was East Coast’s Accountable Manager and Chief Engineer; (b) As such, under the Manual he had responsibility for maintaining adherence to the Manual; and (c) As such, he was ultimately responsible for ensuring East Coast complied with the regulatory framework and for supervising maintenance carried out. Express assumption [128] Stirling submits that Mr Asanuma assumed responsibility by reason of his statements made at the 21 May 2021 meeting taken in their context. It relies further on the following allegations: (a) Mr Asanuma said he wanted possession of the logbooks because it was his personal responsibility to keep them up to date, even though it was not a legal requirement to hold them; and -- 36 of 44 -- 37 (b) Mr Asanuma when asked refused to sign a supplier agreement with a director’s guarantee. Salient features contention [129] Stirling relied on the following factors. [130] First, that Stirling was vulnerable to economic loss resulting from lack of reasonable care by Mr Asanuma because it could not protect itself from that risk. It relies on: (a) Mr Asanuma’s refusal to accept personal liability to Stirling; (b) East Coast had possession of the logbooks and Stirling’s only access to maintenance records was maintenance releases, so it could not determine if logbooks were properly maintained. (c) Mr Asanuma had control of the Aerotrack files so Stirling could not check if they were maintained properly; (d) Mr Asanuma cut off access eventually for Stirling so it could not obtain information from the Aerotrack files; (e) Mr Asanuma refused to return the logbooks when requested; and (f) Mr Asanuma’s position of responsibility as stated above. [131] Second, Mr Asanuma had knowledge or means of knowledge of an ascertainable class of persons at risk of foreseeable harm. [132] Third, Mr Asanuma knew or ought to have known that Stirling would rely on him to exercise reasonable care in performing or supervising maintenance. The defendant’s case [133] The defendant contends that no duty arose from Mr Asanuma’s office under the Manual. He submits that the Manual defines employment roles and responsibilities for its own internal management purposes. Further, he submits that on the proper construction of the Manual it was not Mr Asanuma’s responsibility to check that work done by other LAME’s was done correctly. [134] As to the assumption of responsibility from the alleged statement about personal responsibility, the defendant makes three principal points: (a) First, he submits that that matter was not pleaded, and he objects to the point being run; (b) Second, he disputes the allegations relied upon in any event; and (c) Third, he submits the refusal to provide a guarantee is a complete rejection of a willingness to assume personal responsibility. [135] The defendant contends this last point provides an answer to the duty of care case and relies on an analogy with the warning in Mallonland. -- 37 of 44 -- 38 [136] As to salient features, specifically, Mr Asanuma further submitted: (a) Consistent with Mallonland, care should be exercised in extending the scope of a duty to avoid pure economic loss; (b) Stirling was not vulnerable because of its own capacity to check the records. This relates to the loss arising from inadequate record keeping only; (c) It would be reasonably foreseeable that an owner or operator might suffered economic loss from breach of the duty alleged, though Mr Asanuma said the written maintenance agreements did not identify Stirling as either; and (d) As to known reliance, Mr Asanuma cavilled with the factual basis for known reliance. ANALYSIS Findings of fact The witnesses [137] Neither Mr Schultz nor Mr Amess were reliable witnesses. There were significant difficulties with their evidence: (a) In relation to the maintenance agreements, see paragraphs [55] to [61]; (b) In relation to Mr Schultz’s allegation about Mr Asanuma doing all the work on the aircraft (albeit objected to), see paragraph [72] to [75]; (c) In relation to their evidence on Aerotrack access and requests for possession of logbooks, see paragraph [76] to [85]. [138] Those parts of their evidence show a consistent theme of self-serving inaccuracy in both Mr Schultz and Mr Amess. On the other hand, Mr Asanuma’s evidence tended to be supported by the contemporaneous documents. Findings on the 21 May 2021 meeting [139] There was a meeting on 21 May 2021 at which Mr Schultz, Mr Amess and Mr Asanuma attended. At that meeting, Mr Schultz asked Mr Asanuma if East Coast could take on more aircraft maintenance. Mr Asanuma said it could and would take on more staff if required. [140] At that time, Stirling had no capacity to conduct maintenance itself nor to plan the maintenance program and direct East Coast. All parties knew that and acted on that basis. Further, all parties knew that if East Coast was to plan and carry out maintenance, it required possession of the logbooks and control of the Aerotrack files for all aircraft. While Mr Asanuma probably reiterated that East Coast needed the logbooks and Aerotrack files, that was expected by Mr Schultz and Mr Amess. -- 38 of 44 -- 39 [141] It is entirely possible that Mr Asanuma did say something about needing the logbooks and Aerotrack files so they could be kept up to date, but as I have found, that is exactly what all parties expected East Coast would do. [142] I do not accept that Mr Asanuma said that it was his “personal responsibility to make sure the logbooks were updated and correct”. Not only is Mr Schultz generally unreliable, his evidence on this part of the conversation in cross examination was unpersuasive, as explained in paragraph [48] above. [143] Further, even if Mr Asanuma did say something about responsibility, this statement would have been made in the context accepted by all that East Coast, not Mr Asanuma, was supplying the services. Even if I accepted, which I do not, that Mr Asanuma said it was “his responsibility” to maintain the logbooks (as Mr Amess alleges), that does not objectively communicate personal responsibility. Rather, in the context in which it was said, it was a statement on behalf of East Coast. [144] That leaves the conversation about the director’s guarantee. I do not accept the evidence of either Mr Schultz or Mr Amess on the contentious aspects of this discussion. I prefer Mr Asanuma’s version, not only because his evidence is generally more reliable, but it is a likely reaction of a person who had incorporated being asked to give up the protection of that process. [145] Frankly, it matters little which version is correct. Even on Mr Schultz’s version, they were left in no doubt that Mr Asanuma was not willing to accept personal liability. It is hard to place any other interpretation on the statement “we don’t sign those” when asked for a director’s guarantee. Even “we do not need one” is more consistent with “we do not need one because I am not undertaking personal liability” than “we do not need one because I am personally responsible without it”. No duty arose The contract and the refusal of personal liability [146] Mr Asanuma’s refusal to provide a personal guarantee is a factor which prevents the duty alleged by Stirling from arising, particularly in the context in which it was made. [147] Let us first look at the context. All parties agree that, from the start of their dealings, East Coast was the entity which was dealing with Stirling and its related companies. That is reflected in and confirmed by the several written maintenance agreements. The contracts with East Coast provided contractual remedies for work done on the aircraft without reasonable care. [148] Stirling was not vulnerable to any failure of Mr Asanuma or any of East Coast’s other employees or agents to exercise reasonable care as a matter of law because it had those remedies available in contract.28 As the majority observed in Mallonland, capacity of a person to be protected from economic loss by contract is a reason, often a decisive one, for rejecting a duty of care. The majority referred to 28 If Stirling strictly speaking was not a party to the retainers, Stirling Consolidated was. -- 39 of 44 -- 40 Woolcock29 and Brookfield30 as authorities supporting and elucidating that proposition. What is notable in both of those cases, is that the plaintiff did not in fact have a direct contractual remedy for the loss. In this case, Stirling did have such a remedy and sued to enforce it by its counterclaim against East Coast. [149] Stirling’s real complaint is not that it was vulnerable to Mr Asanuma not taking reasonable care, but that it was vulnerable to East Coast’s insolvency. That is not a vulnerability relevant to a duty to take reasonable care. Further, in this case, Mr Schultz was well aware of that risk and sought to address it by seeking a personal guarantee from Mr Asanuma. He went ahead despite not obtaining such a guarantee. He accepted the insolvency risk, as do all unsecured creditors. It is not the role of the law of torts to provide commercial comfort to an unsecured creditor. [150] That alone is sufficient to provide a full answer to Stirling’s case. However, the situation for Stirling is worsened by the refusal of Mr Asanuma to provide a personal guarantee. The effect of such a refusal in the above circumstances was to communicate clearly to Mr Schultz that Mr Asanuma would not undertake any liability himself, and that Stirling was left to its rights against East Coast. This is strongly analogous to the circumstances in Mallonland. Paraphrasing the analysis of the ‘Warning’ in the majority judgment at [47], the refusal to give the personal guarantee was positively not assuming the responsibility, which is at the core of Stirling’s case, being personal responsibility for defaults by East Coast under the maintenance agreements and retainers. [151] Indeed, the circumstances here are in some respects more compelling than in Mallonland. The refusal was made to Stirling directly and it addressed directly the question of personal liability. No express undertaking of liability [152] Based on my findings, Mr Asanuma said nothing in that meeting by which he undertook personal responsibility for performance of work under the maintenance agreements or under the implied retainer which applied to work done outside the scope of those written agreements: see paragraphs [70] and [71] above. [153] Further, there is nothing which assists Stirling arising out of the circumstances that East Coast obtained and retained the logbooks and maintained the Aerotrack files. That occurred because all parties knew that Stirling was not in a position at that time to record, track and direct maintenance work itself. In that sense, it was East Coast’s job to provide full-service maintenance. But that is because that is what Stirling needed. It did not involve any suggestion of personal responsibility in Mr Asanuma. [154] Two further points need to be made. (a) First, even if Mr Schultz’s version was accepted, it would fail to make out the whole of Stirling’s case. Mr Schultz’s version alleges a statement about 29 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515. 30 Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185. -- 40 of 44 -- 41 updating the logbooks. That does not extend to work Mr Asanuma did on the aircraft. So that part of the alleged duty would in any event not be supported. (b) Second, and more fundamentally, I consider that Mr Asanuma’s rejection of the invitation to provide a director’s guarantee had the effect of excluding any personal duty to Stirling, even if he had said something suggestive of acceptance of personal responsibility. It is impossible for the former to stand in the face of the latter. No undertaking of liability under the Manual [155] While the above considerations provide a full answer to Stirling’s case, I also address the other matters raised. I turn then to Stirling’s argument that Mr Asanuma undertook responsibility by reason of his offices. [156] Stirling relies on an assumed duty arising by implication from an office or calling without requiring consideration. The office relied upon is Mr Asanuma’s office as Accountable Manager and Chief Engineer under the Manual. Stirling’s argument can be summarised as follows: 76. The following facts are relevant to the first assumption of responsibility by Mr Asanuma to Stirling: (a) … (c) according to East Coast’s own Maintenance Procedures Manual “the responsibility for maintaining adherence to the complete system remains with the Accountable Manager” (which cannot be disputed); (d) Mr Asanuma’s role of Accountable Manager and Chief Engineer of East Coast was to ensure East Coast had resources to comply with its Maintenance Procedures Manual, liaise with the owner/operate [sic: operator] and HAAMC, ensure employees and sub-contractors were suitably qualified and trained, to allocate work to employees and sub- contractors, and generally to supervise the employees and sub-contractors (not disputed); (e) as the Accountable Manager and Chief Engineer of East Coast, Mr Asanuma was ultimately responsible for: (i) ensuring that East Coast complied with the regulatory framework under the Safety Regulations, including those relating to the maintenance of aircraft logbooks and issuing maintenance releases. (ii) supervising the maintenance carried out by East Coast, [footnotes omitted] [157] I do not consider that any duty arose on that basis (even if the contractual rights and refusal of the guarantee is disregarded). It was ultimately accepted that Mr Asanuma did not hold any statutory office. Accordingly, the only basis for Stirling’s argument was the Manual. However, I do not consider the Manual can sustain that argument. -- 41 of 44 -- 42 [158] Mr Asanuma was cross examined on the Manual. The cross examination sought to obtain admissions that Mr Asanuma was personally responsible for his actions as Accountable Manager and Chief Engineer under the Manual. But that begs the question of personally responsible to whom and why? [159] The Manual articulates obligations personal to the Accountable Manager and Head Engineer, roles filled by Mr Asanuma. However, that does not of itself amount to an assumption of responsibility to Stirling. The Manual states how East Coast will meet its safety and regulatory obligations. It is a document which has legal force, in that it is a condition of the license. It identifies persons who have “corporate responsibility” for certain tasks. That communicates that the individual holding the office undertakes responsibility on behalf of East Coast. In my view it cannot be characterised as an assumption of responsibility by those individuals to third parties. [160] That conclusion is supported by the fact that there is no suggestion that the Manual was ever sought out and read by Stirling, nor that it was provided to Stirling. Much less that Mr Asanuma provided it to Stirling in circumstances which would objectively communicate an assumption of responsibility to Stirling in respect of the responsibilities he had under the document. I do not accept that in those circumstances, the content of the Manual insofar as it relates to Mr Asanuma can be relied upon by Stirling as comprising an undertaking of responsibility to it. [161] A further consideration is that if the mere existence of Mr Asanuma’s roles under the Manual is sufficient to sustain a duty of care, it is difficult to see how that duty could be limited just to Stirling or entities in the same position. Failure to exercise reasonable care as Chief Engineer or Accountable Manager could lead to economic loss for many plaintiffs in many situations. Stirling articulated no basis upon which a duty so arising would be limited to entities in its position and there is no obvious basis to do so. The spectre of unlimited liability to an indeterminate class haunts this argument. [162] There remains one issue to deal with. Stirling submitted that Mr Asanuma had a duty under the Manual not only to attend to regulatory compliance, but also a personal duty to see that reasonable care was taken when work was done by persons other than him. I reject that construction of the Manual. Both the context and the terms of the Manual stand against it. [163] As to the regulatory context, it is uncontentious that a LAME can sign off on work done and indeed only a LAME can do so. That stands against construing the Manual as requiring the Chief Engineer to supervise and review all the work done by the LAME and to take responsibility for it. Also relevant is the factual context. Stirling knew that Mr Asanuma would not be doing all the work and could not possibly do so, particularly where maintenance work was done while the helicopters were away from East Coast’s maintenance base. [164] As to the terms of the Manual, I refer to clause 4.2 set out in paragraph [16](b) above. On the proper construction of that clause, it does not require the Chief Engineer to personally sign off on work done by a LAME. The obligation created -- 42 of 44 -- 43 by that clause is for the Chief Engineer to ensure adherence to the system elements, that is the system of work designed to secure safe operations. That construction is reinforced by clause 4.2.1, which focuses on processes and record keeping, not on actual work. It says nothing about the Chief Engineer inspecting and signing off on all actual work done by another LAME. Indeed, the fact that the Chief Engineer is not required to be a LAME makes that conclusion compelling: see all the underlined references in paragraphs [16] and [17] above. [165] That analysis applies a fortiori to the Accountable Manager. Indeed, Stirling’s reliance on the Manual in respect of the duty alleged for the Accountable Manager is articulated without reference to the specific role allocated to that office. It is evident from the terms of the Manual that the Accountable Manager’s role is a management role, not a maintenance work or supervision role: see clauses 4.1 and 4.1.1 in paragraph [16](b) above. I do not think that that role supports the duty articulated by Stirling at all. [166] There is no basis in the Manual to support any undertaking of responsibility by Mr Asanuma for carrying out of work done by other LAMEs with reasonable care. Vulnerability not otherwise established [167] Stirling was not vulnerable to a lack of reasonable care by Mr Asanuma in any sense which supports the duty of care alleged. [168] First, the contractual rights with East Coast meant that Stirling was not vulnerable. It had remedies against East Coast for any failure by Mr Asanuma or anyone else working for East Coast to exercise reasonable care. Stirling was vulnerable to insolvency of East Coast, but that is a different matter. [169] Second, Stirling submits that the refusal of personal liability by Mr Asanuma made it vulnerable in the sense that it could not obtain a warranty in contract from him. But it had a warranty in contract from the entity providing the services. [170] Third, I am not persuaded on the facts that Stirling was vulnerable by reason of not having possession of the logbooks or of lack of access to Aerotrack. While I accept they did not have physical possession of the logbooks, I am not persuaded that they ever asked Mr Asanuma to make them available for inspection or took any other steps to monitor their contents. Nor does the evidence support the conclusion that Mr Asanuma would not have provided access or copies if requested, at least until the falling out between the parties in September 2022 over unpaid invoices. [171] As to Aerotrack, I have found that: (a) Mr Asanuma did not cancel Stirling’s access to Aerotrack, at least prior to September 2022; (b) Mr Schultz seemed to have a limited understanding of the information one could obtain from Aerotrack; (c) Mr Amess’ evidence that Mr Asanuma did not provide information when sought was at best exaggerated; and -- 43 of 44 -- 44 (d) It appears Mr Schultz did not provide the passwords for access to Aerotrack files to Mr Amess, even though Mr Amess was the HAAMC and Mr Amess did not seek them. [172] The evidence supports the view that any vulnerability Stirling suffered by reason of lack of physical access to the logbooks arose primarily from the failure of Stirling to take advantage of opportunities to access or inspect those documents and that Stirling simply did not understand or use Aerotrack properly. Reasonable foreseeability of loss and ascertainable and determinate class [173] Mr Asanuma would have reasonably foreseen that if he did not ensure that the logbooks were kept properly and if maintenance work was done negligently, that economic loss of the kind alleged would likely occur. I also accept that the class of persons to whom such a duty was owed was ascertainable and determinate in the sense of being the operator which utilised the aircraft in its business. Mr Asanuma did not really submit to the contrary. [174] These are necessary but not sufficient conditions for the duty to arise. [175] However, I do not accept Mr Asanuma would reasonably foresee that if other LAMEs did not do their work competently, his lack of reasonable care would cause loss to owners or operators. That is because there is no basis at all to conclude, whether under the Manual or under the statutory scheme, he was obliged to supervise and sign off on the work done. Quite the contrary. Stirling’s submission on this point is inconsistent with the statutory status of a LAME and the construction of the Manual which not surprisingly is consistent with that statutory status. Stirling’s submissions on this point had an air of unreality. Known reliance [176] I accept Mr Asanuma knew or would have known that Stirling was relying on East Coast to perform its contract with reasonable care and skill. It is another matter to conclude he knew or would have known Stirling was relying on him personally, especially after he rejected the proposed personal liability. I am willing to accept that, in broad terms, Mr Asanuma might have expected that Stirling was relying on him as the principal of East Coast to do his work with reasonable care. But beyond that, I am not persuaded. CONCLUSION [177] Mr Asanuma did not owe a duty to Stirling to take reasonable care in carrying out his roles with East Coast so as to avoid pure economic loss to Stirling. I will hear the parties as to costs and further orders in the proceedings. -- 44 of 44 --