Bay Flight 2012 Ltd v Flight Care Ltd Hc Nap

JurisdictionNew Zealand
CourtHigh Court
JudgeHon Justice KÓS
Judgment Date21 Mar 2012
Neutral Citation[2012] NZHC 484
Docket NumberCIV 2012-441092

[2012] NZHC 484

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2012-441092

BETWEEN
Bay Flight 2012 Limited
Plaintiff
and
Flight Care Limited
Defendant
Counsel:

K B Johnston for Plaintiff

K Sullivan for Defendant

Application for summary judgment — defendant undertook repair work of aircraft and submitted invoice — aircraft redelivered to owner for a photo shoot in belief that it would be returned for completion of work — aircraft not returned and owner went into liquidation — new owner delivered aircraft for further work — defendant locked aircraft in its hangar claiming lien in respect of unpaid work undertaken for former owner — whether defendant had a right to retain aircraft under a common law worker's lien — if so, whether lien was lost by repossession of the aircraft by the former owner.

The issue was: whether the defendant, FCL, had a right to retain the aircraft under a common law “worker's” lien; or whether FCL's lien was diminished by repossession of the aircraft by its original owner.

Held: Possession was at the heart and soul of a common law worker's lien; such a lien was lost where the creditor voluntarily relinquished possession of the chattel. The possessory lien was lost when the aircraft was returned to BFL for the photo shoot, unless the exception in Albemarle Supply Co Limited v Hind applied. The Albemarle exception required that redelivery be for a limited and specific purpose with the chattel to be returned on completion, and that there be an agreement or acknowledgment before redelivery that the lien would not be lost.

Although the aircraft was delivered to BFL for the photo shoot on the understanding that it would be returned to FCL for completion of the work, there was no express agreement or acknowledgment between the parties about the existence of a lien or that repossession would not diminish the lien.

FCL's response to BFL's continued repossession was wholly inconsistent with an Albemarle arrangement. There was no immediate protest based on the lien agreement - especially after BFL went into liquidation. The existence of the lien was not advanced until the aircraft was back in FCL's hangar, after BF 2012 returned it for further works. Furthermore, FCL's acts were inconsistent with the existence of a lien. eg it re-issued invoices (no longer addressed to BFL) as proof of debt as an unsecured creditor.

Summary judgment granted in favour of plaintiff.

JUDGMENT OF THE Hon Justice KÓS

Introduction
1

An aircraft is being repaired for its owner. An invoice for work to date is sent. Before the final date for payment the owner asks the repairer to return the aircraft so that some photographs may be taken. It is common ground the aircraft will be returned for the rest of the work to be done. The photographs are taken, but for one reason or another, the aircraft is not returned. Then the owner goes into liquidation. The liquidator sells the aircraft to someone else. The new owner wants the repair work completed. It takes the aircraft back to the repairer. The repairer then locks the aircraft up in its hangar. It insists that it holds a lien over it for the unpaid work done for the former owner.

2

The question in this application for summary judgment – brought by the new owner — is whether it can show the repairer has no realistic prospect of showing at trial (with the benefit of full evidence and discovery) a right to retain the aircraft under a common law “worker's” lien.

The saga of the ZK-KID
3

The ZK-KID is a Cessna 152 aircraft. It was built in 1979. For many years it was owned by a company called Bay Flight Limited (BFL). BFL operated a fleet of aircraft from a hangar at Tauranga airport. Mostly Cessna 152, A152 and Piper aircraft. A significant part of BFL's business appears to have been flight training.

4

Adjacent to BFL's hangar were the premises of Flight Care Limited (FCL), the defendant. FCL provides aircraft engineering services. It appears to have had a longstanding relationship with BFL. BFL's fleet was serviced by FCL. It held the log books for all BFL's aircraft.

5

In April 2011 BFL delivered ZK-KID to FCL for servicing. The precise terms on which the aircraft delivered are unclear, but invoices were rendered and paid monthly as work progressed. On 11 December 2011, for instance, an invoice for $36,826.88 (inclusive of GST) was rendered. No terms of payment are set out on the invoice, but it is common ground that the final date for payment would be either 21 days later or (more likely) on the 20th of the month following. That is, on 20 January 2012.

6

On 21 December 2011 FCL returned ZK-KID to BFL. The following account is drawn directly from the evidence of Mr Jared Best, an aircraft engineer, employed by FCL:

  • 4 By December 2011 the rebuild was largely complete, but there was still some work needed to finish the job. On or about Wednesday 21 December 2011 I was contacted by Brian Brooker, a representative of Bay Flight Aviation. Mr Brooker told me that Steve Rowe, a director of Bay Flight Aviation, wanted to borrow the aircraft for the purpose of taking photographs of it.

  • 5 I recall placing panels that had been removed from the aircraft for maintenance work on the aircraft so that the aircraft would look complete in the photographs. The aircraft was given to Bay Flight Aviation for the purpose of allowing the photographs to be taken and on the understanding that it was returned to Flight Care. I recall sign-writers also attended the aircraft for the purpose of placing Bay flight Aviation's signage on the aircraft.

  • 6 On or about the morning of 21 December 2011, Flight Care had the aircraft in its hangar. Just before lunch time, we took the aircraft out the front of Flight Care's hangar for the photo shoot. Bay Flight Aviation took the aircraft onto their property, and lined the aircraft up with Bay Flight Aviation's other planes.

  • 7 Flight Care was due to break for the Christmas period. At around 3–3.30 pm on the afternoon of 21 December 2011, Bay Flight Aviation returned the aircraft to the front of Flight Care's hangar. We did not have room to put the aircraft into Flight Care's hangar straight away, as we were working on other aircraft in the front part of the hangar. The plan was to finish our work on the other planes, move them further back into the hangar, thereby creating room for ZK-KID. We intended working later than normal to get jobs completed before closing for the three week break.

  • 8 I recall we worked until 5.30 pm on 21 December 2011. When Carke de Malmanche (also from Flight Care) and I went to retrieve the aircraft to place in our hangar, it had already been moved to Bay Flight Aviation's hangar. I went to see Brian Brooker at Bay Flight Aviation. Mr Brooker indicated he had placed the aircraft in the back of Bay Flight Aviation's hangar. The hangar was locked. I assumed the plane had been moved to Bay Flight Aviation's hangar because it was fairly late in the day, and the aircraft had still been sitting outside Flight Care's hangar.

  • 9 As there were now other aircraft in front of the Cessna ZK-KID, and the hangar was locked for the night, it made sense to agree that Bay Flight Aviation would store the aircraft in its hangar until we came back from the Christmas break. We agreed that after we returned from the Christmas break, the aircraft would be delivered back to Flight Care. In any event, we had not completed the rebuild and what had been completed had not been paid for. Accordingly, Flight Care was entitled to retain both the aircraft and its log book.

7

I note that some parts of Mr Best's evidence are contested by Mr Brooker. He was formerly the maintenance controller for BFL. Mr Best has not had the opportunity to respond to Mr Brooker's affidavit, which was only exchanged and filed the day before the hearing. Ms Sullivan, counsel for FCL, took issue with the receipt of Mr Brooker's affidavit. As indicated at the hearing, I elect to take a conservative approach and will in the first instance disregard what Mr Brooker had to say.

8

There is, however, no suggestion that BFL was habitually in arrears in payment. The aircraft was of course its property. It was of course entitled to ask the repairer to release it. Unsurprisingly, FCL agreed to let BFL have ZK-KID back. But as FCL's work was incomplete, it was obviously common ground that the aircraft would be returned to it for the rest of the work to be done.

9

Later the same day the governing director of BFL, Mr Steve Rowe, told his staff that the board was going to “pull the pin”. The company was going to go into liquidation. It is common ground Mr Brooker went next door and told Mr Best and his mother (who also worked for FCL) of these events. A shareholders' resolution was passed late the following day, Thursday 22 December 2011.

10

On 4 January 2012 the governing director of FCL, Mr Brian Hare, visited BFL's premises at Tauranga airport. He met the liquidator, Mr Thomas Rodewald, and one of his colleagues. All three have provided affidavit evidence. None, least of all Mr Hare, say he asserted the right to a lien over, or continued possession of, ZK-KID. It is however common ground that he said that had he been on site on 21 December 2011 he “would not have given possession back to BFL”.

11

On 15 January 2012 the liquidator sold the assets of BFL to the plaintiff, Bay Flight 2012 Limited. Those assets included ZK-KID. Prior to the sale it seems there may have been a discussion between Mr Hare and a representative of the plaintiff. Mr Hare's evidence of that discussion does not suggest he claimed any property or security interests in the aircraft. Again on a conservative basis, I will proceed on the basis that the plaintiff in this proceeding was not a bona fide purchaser for value without notice of the claimed lien. That proposition may not be correct, but it is the appropriate course for...

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