HELILOGGING LIMITED (IN RECEIVERSHIP AND LIQUIDATION) v CIVIL AVIATION AUTHORITY OF

NEW ZEALAND [2015] NZHC 2503 [13 October 2015]

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

CIV-2014-485-011204

[2015] NZHC 2503

BETWEEN

HELILOGGING LIMITED (IN

RECEIVERSHIP AND LIQUIDATION)

First Plaintiff/Respondent

MARK WAYNE FORD IN HIS

CAPACITY AS TRUSTEE OF THE

WESSEX TRUST

Second Plaintiff/Respondent

MARK WAYNE FORD

Third Plaintiff/Respondent

AND

CIVIL AVIATION AUTHORITY OF

NEW ZEALAND

Defendant/Applicant

Hearing:

8 and 9 June 2015, with supplementary submissions, 22 June

2015

Appearances:

L J Taylor QC, G M Richards and C Zhu for

Defendant/Applicant

P J Dale and E Telle for Plaintiffs/Respondents

Judgment:

13 October 2015

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

ON DEFENDANT'S SUMMARY JUDGMENT

Introduction

[1] The plaintiffs (collectively “Helilogging”), by an amended statement of

claim, sue the defendant (the CAA) for losses sustained on their intended heli-

logging business from 2005.1 Helilogging asserts three causes of action in tort

being:

1 Heli-logging, or helicopter logging, uses helicopters to remove felled trees from forests by

lifting them on cables attached to a helicopter.

deceit;

misfeasance in public office; and

negligent misstatement.

[2] On this interlocutory application the CAA seeks summary judgment

(defendant’s) on all causes of action. Alternatively it seeks an order striking out all

Helilogging’s claims.

[3] The plaintiff’s original statement of claim pleaded deceit as a single cause of

action. The defendant’s initial application therefore related only to that cause of

action. On the very day timetabled for the defendant’s submissions, the plaintiffs

filed their amended claim containing what are now three causes of action.

[4] The CAA is a Crown entity for the purposes of s 7 Crown Entities Act 2004.

It regulates and promotes civil aviation safety for heli-logging.

Background

The heli-logging project

[5] Mark Ford (Mr Ford) is variously a director of the first plaintiff, the second

plaintiff (in his capacity as a trustee) and the third plaintiff in his personal capacity.

He was based in Taranaki and worked in the logging industry in the late 1970s.

From 1987, he conducted heli-logging operations using single engine helicopters.

[6] In 2000, another operator imported a twin-engine helicopter (a Wessex

Mark 5) into New Zealand for heli-logging purposes. Mr Ford investigated the

opportunity, finding the Wessex to be highly regarded, safe, and capable of lifting

much bigger loads than the helicopters he had used. From 2002, he consulted

experts as to a potential operation involving Wessex helicopters. The CAA was

consulted through its Manager of Aircraft Certification. As a result Helilogging

prepared a proposal for a heli-logging operation employing Wessex Mark 2

helicopters (Wessex Mk 2).

[7] The Wessex Mk 2 had in New Zealand an external load prohibition.

Discussions identified that Helilogging would need to obtain an exemption from the

general prohibition on external loading and, in the view of the CAA, would also

require an exemption from the hire and reward provisions of the Civil Aviation Act

1990. There were discussions about those particular requirements and the need for

Helilogging to satisfy conditions as to support from the Wessex manufacturer, the

implementation of specific maintenance programmes, and the testing and

implementation of a manual of operational practices for the Wessex Mk 2. In

January 2003, Helilogging identified two Wessex Mk 2 as appropriate for purchase.

In February 2003 it paid $2,863,000 for their purchase. Discussions continued

through 2003 and the first half of 2004 which Helilogging understandably (upon the

evidence filed in this interlocutory context) found to be encouraging.

[8] In May 2004, as Helilogging was preparing for flight trials in relation to the

Wessex Mk 2, Mr Ford detected what he considered to be a change of attitude by the

CAA. The change was evidenced by the CAA’s refusal to permit flight trials which

involved actual logging practice. As the year proceeded, Mr Ford also observed

what he considered to be a change in the attitude of the CAA in relation to the hire

and reward issue. Mr Ford increasingly found a disparity between affirming

statements by some CAA personnel and a reservation of the ultimate decision. In

November 2004, Mr Ford wrote directly to John Jones, the Director of the CAA

(with whom he had not previously spoken). Mr Ford stated that he was at his wits’

end after two years on the project and he requested an immediate response as to

when a decision would be made. However, a substantive response was not

immediately forthcoming.

[9] On 26 July 2004, Helilogging presented to the CAA an exemption petition in

relation to external loading.2 Exemptions from the Civil Aviation Rules may be

made by the Director of the CAA pursuant to s 37 of the Civil Aviation Act 1990 (the

CA Act).

[10] In November 2004, Helilogging issued proceedings against the CAA and the

Director. Helilogging sought either an order in the nature of mandamus or a

2 Under Civil Aviation Rules 1995, r 21.43(1).

mandatory injunction as to the finalising of the applications. Helilogging then

presented a second exemption petition to the CAA, this time in relation to the hire

and reward provision of the CA Act 1990.3 (I will refer to the petitions collectively

as “the applications”.)

[11] The Director filed an affidavit identifying a “seven stage process”, including

the receipt of a written report before Christmas 2004, which he deposed he was

pursuing.

[12] When the matter came before the High Court on 16 December 2004,

MacKenzie J declined to intervene with directions as to process.4 His Honour

indicated an expectation that the Director would do his best to action the matter

expeditiously according to the seven stage process the Director had outlined. On

that basis the Court made no orders other than to adjourn the proceeding.

[13] The seven stage process then in place, which Helilogging accepted, was:

(1) written recommendation report to Director;

(2) letter to Helilogging requesting any further information;

(3) written recommendation report to the Director;

(4) consideration of report and preliminary consideration by Director;

(5) preliminary decision to be provided to Helilogging for comment;

(6) receipt of comments and consideration by the Director with

technical advisors needed; and

(7) final decision.

3 Civil Aviation Rules 1995, r 91.105(a).

4 Helilogging Ltd v Civil Aviation Authority of New Zealand HC Wellington CIV-2004-485-2558,

16 December 2004.

[14] On 25 November 2004, the Director had appointed John Fogden (the CAA

Manager “Rotary Wing”) to manage the Helilogging issues in place of previous

personnel, notably John Lanham, the CAA’s General Manager of General Aviation.

Mr Fogden provided a report to the Director (the Director’s stage 1) on 23 December

2004 recommending that more information be obtained from Helilogging before

further consideration was given to granting any exemption. On 24 December 2004,

the Director forwarded the Fogden Report to Helilogging requesting further

information. This completed the Director’s stage 2.

[15] Extensive discussion and exchange of further information followed. Jim

Barclay of Aaleda Systems Limited provided expert advice to Helilogging as to the

safety and other aspects of Helilogging’s proposed operation. He did so by

numerous iterations of a report commencing in February 2005 and culminating in a

revised report on 20 June 2005 (the Barclay Report). Earlier iterations and the

June 2005 version were provided to the Director in answer to the Director’s requests

for further information.

[16] Through this period Helilogging’s lawyers (in particular Graham Takarangi)

were involved. In February 2005, the Director, in response to a request from

Mr Takarangi, identified Mr Fogden and David Gill as the persons advising the

Director in relation to the Helilogging issues. The Director received a written report

from Mr Fogden dated 10 May 2005. Mr Fogden recommended that the Director’s

preliminary decision should be to decline both applications for exemptions.

[17] Charles (“Bernie”) Lewis became involved with the Helilogging issues

around this time. Mr Lewis has filed two affidavits in this proceeding in relation to

the events of 2005. The first dealt with events from June or July 2005. In the

second, a reply affidavit which responded to plaintiffs’ evidence concerning

Mr Lewis’s earlier diary records, Mr Lewis explained the beginning of his

involvement in April 2005.

[18] Mr Dale, for Helilogging, takes the position that Mr Lewis and the CAA

witnesses have seemingly misled the Court about the circumstances of Mr Lewis’s

engagement and the reasons for a letter he subsequently provided. The CAA

strenuously denies that contention. Factual differences and inferences cannot be

resolved in a summary judgment context, but the general narrative of Mr Lewis’s

involvement (stripping out suggestions of manipulation and dissembling conduct) is

clear. A brief chronology is:

Mr Lewis was in his mid-seventies.

Mr Lewis was a very experienced and respected helicopter test pilot

and had been involved in the United Kingdom in the early Wessex

development work.

Mr Lewis and Mr Barclay (Helilogging’s expert) had subsequently

overlapped as employees at the CAA some years earlier.

In April 2005, Mr Fogden engaged Mr Lewis to become part of a

CAA working group reviewing rules on a project unrelated to

Helilogging.

In early May 2005, the CAA provided Mr Fogden with a copy of the

then-current version of the Barclay Report; Mr Fogden and Mr Lewis

had extensive discussions on the Wessex development.

While in Auckland on 19 May 2005, Mr Lewis visited Mr Barclay,

discussing his report and commenting on it as a good and well

researched report.

Mr Barclay formed the view that Mr Lewis should be approached to

contact the CAA to provide support for Helilogging’s applications.

In a powerpoint presentation to the CAA on 13 June 2005, the

Helilogging representatives (including Mr Barclay) identified

Mr Lewis as being a person who supported Helilogging but without

first having obtained Mr Lewis’s approval to do so.

The final version of the Barclay Report followed on 20 June 2005.

In July 2005, the Director and Mr Fogden met Mr Lewis in

Wellington and asked him to provide a letter as to the safety of

Helilogging’s proposed operation.

On 23 July 2005, Mr Lewis provided a letter to the Director in

relation to the “Wessex 2” (the Lewis letter).

The Lewis letter

[19] The Lewis letter (amended by hand in two places) is Schedule 1 to this

judgment. The Lewis letter was received by the Director without the handwritten

alterations.

[20] It is common ground that when Helilogging was provided with a copy of the

Lewis letter, the copy contained the two alterations. The first amendment was to the

penultimate paragraph of the letter where the word “viability” was deleted and

replaced (in handwriting) with the word “safety”. The second amendment was in the

third paragraph of the letter where the reference to a Wessex helicopter flown by Mr

Lewis was amended by deleting the number “5” from “Mk 52” so as to appear to

read “Mk 2”.

[21] The Director had reached stage 3 of the seven-stage process, in that he now

needed a written recommendation report. Mr Fogden was again to be the report

writer.

[22] On 9 August 2005, Mr Fogden presented to the Director a document entitled

“Final report: Helilogging Limited’s proposal and exemption applications”. In a 48-

page report, Mr Fogden reviewed, amongst other material, the Barclay Report and

the Lewis letter. Mr Fogden noted that Mr Lewis’s technical and operational

knowledge was unique and concluded:

I place a great weight on Mr Lewis’ operational experience of the Wessex

aircraft. On this factor alone, you could not, in my view, be satisfied that the

“risk to safety will not be significantly increased”.

Mr Fogden concluded his report by recommending that the Director decline both

applications.

[23] On 19 August 2005, the Director prepared a memorandum recording the

reasons for a final decision to decline both Helilogging’s applications. The decision

referred to a number of factors including Mr Lewis’s comments regarding his “grave

doubts about [the Wessex’] safety for the tasks as suggested by Heli-logging”. The

Director concluded that he was unable to be satisfied that the risk to aviation safety,

in the event the applications were granted, would not be increased.

[24] On the same day, the Director, by letter, advised Helilogging of his decision

to decline Helilogging’s applications. With the declinature letter, the Director

provided Helilogging with a copy of his memorandum and of the Lewis letter which

contained the two handwritten amendments.

[25] On 15 and 22 August 2005, Mr Barclay wrote to the Director and to the

Chairman of the CAA requesting clarification of the Director’s decision. On

22 August 2005, the Director replied directly to Helilogging explaining his position.

Scope for a 2005 judicial review proceeding

Helilogging’s evidence for the hearing

[26] Mr Ford provided a lengthy affidavit as to Helilogging’s dealings with the

CAA. The first portion (approximately 144 paragraphs) covered events up to the

Director’s declinature. There then follow some 30 paragraphs concerning the Lewis

letter and “its wrongful alteration”. The affidavit concludes with the effects of the

CAA’s actions upon Helilogging and the Fords.

[27] I have considered Mr Ford’s evidence carefully. A notable omission is any

account by Mr Ford of Helilogging’s appreciation of flaws in the Director’s

19 August 2005 decision or understanding of the rights which Helilogging and the

Fords may have had to pursue redress. In that regard, I was left to review the

evidence of witnesses other than the Ford family and the documentary record.

[28] Terence Haydon was a director of one set of Helilogging’s financiers.

Mr Haydon deposes that Mr Ford contacted him in August 2005 to advise him of the

Director’s declinature. Mr Ford explained that safety concerns were the primary

reason given, and that the CAA had relied upon the Lewis letter. Mr Ford invited

Mr Haydon to a meeting to discuss the way forward after the Director’s declinature.

Mr Haydon deposes that Mr Ford and a colleague said that they wanted to discuss

Mr Haydon’s funding of an application for judicial review. Mr Haydon declined the

request concluding that if the CAA had safety concerns, there was little prospect of

the applications being granted. Mr Haydon’s company subsequently decided to

exercise its legal remedies against Helilogging. It placed Helilogging in receivership

in October 2006. Mr Haydon deposed that later, in June 2008, his company and the

receivers negotiated a settlement package with Mr Ford. Mr Ford continued to seek

funds for a judicial review but Mr Haydon declined for the same reasons as before.

[29] It appears that those associated with the Helilogging interests met in Taranaki

upon receipt of the Director’s declinature to discuss it. In an email to Mr Lewis on

24 August 2005, Mr Barclay recorded that he had been involved in the meeting and

that those present had “reviewed the Fogden report, your letter, compensation claim,

etc”. Mr Barclay recorded that the Helilogging interests had noted a number of

significant errors in the information Mr Lewis had presented to the CAA, including:

(a) technical changes to the helicopters and/or engine (including fuel

drains, control computer system and engine features) which had

occurred since Mr Lewis’s “era”;

(b) Mr Lewis had made assumptions without foundation (including in

relation to fuelling practices, spare parts and a 2001 accident at

Motueka);

(c) ground resonance should not have been regarded as a significant

issue; and

(d) Mr Lewis’s “huge leap” from “information of [his] “era” to the

current state of the helicopter was in error.

Mr Barclay concluded that much had changed since Mr Lewis’s time. He invited Mr

Lewis to review his letter.

[30] Mr Lewis responded in a brief email the following day in which he recorded:

Thanks Jim.

I take on board what you have said. As I said before, your report was very

good. It still is.

Regards,

Bernie.

Mr Lewis has deposed that he did not consider that he needed to change his letter.

[31] It appears that around mid-September 2005, Helilogging made some

important decisions as to how it would proceed. On 16 September 2005, it filed a

discontinuance of the 2004 High Court proceeding.5 Around the same time, it

endeavoured to lodge a notice of appeal under s 66 of the CA Act against the

Director’s declinature of the two applications. The District Court declined to accept

the notice of appeal as the Act did not contain a right of appeal from the decision to

decline an exemption under s 37 of the CA Act.

[32] The Court has not been provided with detail of communications between the

parties for the eight weeks following the attempted appeal. Mr Ford, in that period,

spoke to Brian Taylor, who was to have been responsible for the training side of

Helilogging's operations. Following the Director’s declinature, Mr Taylor travelled

to Stratford on 14 December 2005 and reviewed the correspondence. At Mr Ford’s

request, he wrote a short letter. He recorded his comments on the eight numbered

paragraphs in the Lewis letter. He concluded that the Mk 2 Wessex would be as safe

as any other helicopter (assuming good pilot training, engineering maintenance

practices and high standards for spares, storage and environmental control).

[33] Mr Ford forwarded Mr Taylor’s letter to Mr Lewis on 14 December 2005.

He noted the great weight which the Director had attached to Mr Lewis’s conclusion

as to “safety” and also Mr Lewis’s change of the word “viability” to “safety”.

5 Above at [10].

Mr Ford stated that he did not see how Mr Lewis could say that the Wessex was

unsafe and invited Mr Lewis to retract his letter on the basis of Mr Taylor’s letter.

[34] In response, Mr Lewis maintained that what he had said in his letter was fact

but he admitted that it was 40-year old fact and that things could have changed.

Mr Lewis said that, upon the basis of his discussions with people in the industry, it

would appear that Helilogging had a very good case. He stated that Mr Barclay had

put up a very good and compelling case for the Helilogging operation and he

(Mr Lewis) thought that Mr Ford should continue with it. Mr Lewis concluded that

he did not feel that he could withdraw what he had written to the Director.

[35] On 9 January 2006, Mr Barclay sent a brief email to Mr Lewis. He stated

that the damaging effect of Mr Lewis’s letter was immense and that Mr Lewis should

consider his liability for its use (or misuse). He stated that Mr Lewis’s letter would

receive some scrutiny in 2006 at some fairly high level forums. To this brief email,

Mr Barclay attached what he described as his “estimate of what would happen”. In

the six-page “question scenario” which follows, Mr Barclay sets out a point-by-point

cross-examination of Mr Lewis upon his letter. Questions are put which are intended

to show that Mr Lewis based his letter on incorrect premises and irrelevant

considerations. Mr Barclay concludes that there seems to be a “huge leap” from

information of Mr Lewis’s “era” (three or four decades earlier) to the conclusion that

the Wessex Mk 2 was unsafe for the proposed tasks. The cross-examination scenario

also asked Mr Lewis to identify who (if anyone) asked him to change the word

“viability” to “safety”. There is no evidence of a response by Mr Lewis to

Mr Barclay’s email.

[36] On 3 March 2006, the Director issued a prohibition pursuant to s 21(2) of the

CA Act. He prohibited the operational use of New Zealand aircraft registered with

special category airworthiness certificates on hook-load operations. On 30 March

2006, Helilogging filed an appeal against the prohibition order. (The appeal was

discontinued subsequently on 19 September 2006).

[37] On 21 July 2006, Helilogging, above the signature of Mr Ford, wrote a

16 page letter to the Director as to the outstanding issues between Helilogging and

the CAA. These included the Director’s 19 August 2005 declinature of the two

applications. Mr Ford introduced the discussion of those applications thus:

On the 19th August 2005, you declined these applications. Unless a solution

can be found in respect of these applications, HLL will have no option but to

pursue a legal remedy.

We believe that the matters which caused you to reach your decision narrow

down to a very few issues, all of which can be dealt with to your satisfaction,

if you are prepared to consider our proposals. We are aware that at this stage

the normal forum would be a High Court Judicial Review. However, it

would be in both parties’ interests in terms of time and costs, if these issues

could be dealt with by negotiation.

[38] Mr Ford first identified a failure by the Director to comply with the seven-

stage process. He next referred to what he described as “a genuine misunderstanding

by both parties” of the intended role of the Regulatory Authority, which had affected

the applications.

[39] Mr Ford then turned to the Director’s conclusion that there would be a

significant, increased risk to safety. He critiqued the Lewis letter identifying four

concerns:

1. CAA do not appear to have verified the evidence knowing that it was

very dated and could be no longer applicable.

2. CAA have chosen to accept this evidence without question over that

of expert evidence from Mr J. Barclay and the Manufacturers, GKN

Aerospace, which is more current and therefore of greater relevance.

3. CAA did not give HLL the opportunity to respond to this new

evidence contrary to the undertaking you gave to both the Court and

the Transport Select Committee.

4. CAA actions suggest a “confirmation bias” whereby you appear to

have wanted the evidence to match a pre-determined outcome to the

applicable process.

[40] Mr Ford challenged conclusions relied upon by the Director as to ex-military

helicopter accident rates, concluding that it was “unreasonable” to apply particular

rates. In relation to the Director’s exercise of a broad discretion, Mr Ford made a

number of criticisms including that new policies had been introduced without advice

to Helilogging and in breach of the seven-stage process. In a four-page set of

conclusions, Mr Ford complained of misunderstandings, improper assessments, and

retrospectively applied policies. He complained that the Lewis letter represented

evidence as to “the position 40 years ago”. He proposed that the litigation cease and

that the CAA implement new policies. Mr Ford required a response by 7 August

2006.

[41] On 28 July 2006, Mr Barclay spoke to the Director directly, a conversation

recorded in an email shortly afterwards. Mr Barclay asserted that there was no

safety issue with the Wessex Mk 2. He stated that the Lewis letter had been shown

to be flawed and should have been promptly rejected by the Director. He went on to

note a number of areas (including in relation to the hook-load prohibition) on which

the Director had been “badly advised”.

[42] The Director responded directly to Mr Ford by letter dated 22 August 2006.

He regarded Mr Ford’s letter of 21 July 2006 as raising no new information. He was

not prepared to review the declinature in the absence of any further relevant

information of a technical nature.

[43] On 19 September 2006, Helilogging discontinued its prohibition order

appeal. Receivers were appointed to Helilogging on 6 October 2006 and remain in

place.

The 15 March 2007 agreement

An agreement to enable Helilogging to pursue judicial review

[44] The events described by Mr Ford and Mr Haydon in their affidavits in

opposition did not cover developments around March 2007 between the receivers,

Mr Haydon’s company (as a financier) and Mr and Mrs Ford. Mr Haydon referred

to a settlement package negotiated between those parties in June 2008 but not to an

earlier (15 March 2007) agreement between the same parties. The receivers’ third

report dated 20 December 2007 identifies in paragraph 2 the Director’s declinature

decision and then states:

Mark and Suzanne Ford, through their solicitor, Graham Takarangi, and

Barrister, Timothy Castle, wished to challenge this decision. On 15 March

2007, an agreement was reached with the financiers of HHL and various

other Ford Entities to challenge this decision in the High Court.

The Judicial review did not proceed and on 3 September 2007 the receiver

terminated that agreement. The decision to terminate was made as a result of

continued and long standing breaches of disclosure and the receiver not

obtaining the full co-operation required under that agreement from Mark

Ford.

The receivers have requested all the files and documents relating to the CAA

application but have not yet been provided with the information.

[45] As the Court became aware of the matters referred to in the receivers’ report

after the close of submissions, I invited further submissions. Counsel accepted that

the evidence available to the Court should include the information as to the

15 March 2007 agreement. Counsel filed supplementary submissions concerning it.

The plaintiffs filed additional affidavits of Mr Haydon and of David Miller.

[46] The 15 March 2007 agreement was entered into both by the company in

receivership (now the first plaintiff) and, amongst others, Mr Ford (who in different

capacities is both second and third plaintiff). By 15 March 2007, those parties had

apparently identified the opportunity to apply for judicial review in relation to the

Director’s declinature decision. The reason that the company itself (as against

Mr and Mrs Ford) elected not to pursue the judicial review lies in the receivers’

3 September 2007 termination of the 15 March 2007 agreement.

[47] A peculiar feature of Mr Ford’s initial evidence (I refer to both his first

affidavit in opposition and his affidavit “in reply”) was that he did not identify why

judicial review was not pursued. Nor did he identify discussions or agreements

reached with the receivers (or Helilogging’s financiers) about challenging the

Director’s decisions.

[48] I turn to the additional evidence and submissions filed after the hearing.

Mr Haydon’s evidence on the 15 March 2007 agreement

[49] Mr Haydon filed an additional affidavit, attaching a copy of the 15 March

2007 agreement between Helilogging (including the Fords) and their financiers, the

3 September 2007 letter by which the receivers cancelled the 15 March 2007

agreement, and other correspondence.

[50] By the 15 March 2007 agreement, the parties dealt with judicial review. The

agreement contained a definition clause:

Judicial Review (JR) is defined as completion of the High Court Judicial

Review and any reconsideration by the Director of the NZ CAA as may be

ordered by the Court. This does not include any appeals following the

Judicial Review and any reconsideration by the NZ CAA. Proceeding with

any appeal will be at the discretion of the Finance Companies and the

Receiver.

[51] The agreement contained a regime for dealing with the assets of Helilogging

(including the Fords) dependent upon the outcome of the judicial review. The

agreement was expressed to be conditional upon the full cooperation of the Fords in

the implementation of the agreement (including the judicial review aspects) to the

satisfaction of the receivers. The agreement was also conditional upon Helilogging’s

total disclosure to the receivers (and their agent) of all assets relating to the securities

and the receivers’ being satisfied with that disclosure. The agreement contained

provisions as to what would happen until the final result of the judicial review was

known and what would happen if the judicial review was successful. The parties

agreed that Tim Castle, a barrister, would be engaged to conduct the judicial review

in the High Court and, if necessary and meritorious (which was to be decided by the

finance companies), to the Court of Appeal. The finance companies undertook to

provide finance up to a maximum of $150,000 for the judicial review which would

be held in the receivers’ trust account and released at their discretion.

[52] In his second affidavit, Mr Haydon deposes that he did not support the

judicial review and that his finance companies were not prepared to fund or assist in

funding a judicial review. He deposes that he felt that any judicial review was

doomed to fail because the Director’s declinature had been for safety reasons.

[53] The other new affidavit filed for Helilogging was of Mr Miller, a director of

Helilogging’s remaining creditors whose security ranked after that of Mr Haydon’s

companies. Mr Miller confirms that Mr Haydon had made it clear that he did not

have any confidence in the success of a judicial review application.

[54] Mr Haydon deposes that he was of the view that his companies would effect

an acceptable recovery if the Wessex helicopters were sold in an unregistered state.

This contributed to Mr Haydon’s decision not to support a judicial review. Mr

Haydon deposes as to his belief that the receivers had no option but to be a party to

the 15 March 2007 agreement by reason of the 2005 deed. He explains that all the

finance companies (that is, both Mr Haydon’s and Mr Miller’s) had “to some extent

to go along with” the 15 March 2007 agreement because of an earlier security

sharing deed which required the agreement of all parties to the sale of the

helicopters.

[55] In submissions accompanying the additional evidence of Mr Haydon and

Mr Miller, Mr Dale submitted that the contents of the 15 March 2007 agreement did

not undermine Helilogging’s case and that Mr Haydon had “acted consistently

throughout”.

[56] Mr Taylor, in reply, submitted that the new material supports the CAA’s

applications in that the 15 March 2007 agreement evidences the plaintiffs’ actual

knowledge of their ability to challenge the Director’s declinature. By reference to

both the agreement and Mr Haydon’s second affidavit, Mr Taylor submitted that the

following is clear:

(a) By 15 March 2007, Helilogging had received legal advice and

obtained agreement to fund a judicial review proceeding to challenge

the Director’s Declinature.

(b) The judicial review proceeding was not pursued by Helilogging

because there was subsequently a breakdown between Mr Ford and

the receivers.

(c) The evidence provided by Helilogging in opposition to the CAA’s

applications (as contained in Mr Haydon’s first affidavit and by the

omission of any detail in Mr Ford’s affidavit) was misleading.

[57] Helilogging took issue with the submission that Mr Haydon had misled the

Court. I gave leave to Helilogging to have Mr Haydon file a third affidavit.

Mr Haydon did so. He went into some detail as to the complexity of arrangements

surrounding the 15 March 2007 agreement. He emphasised that his refusal to fund

Helilogging’s judicial review application was by reason of his confidence in the

CAA’s concerns as to safety as an issue.

[58] I observe at this point that it is unnecessary (and undesirable in a summary

judgment context) that I reach conclusions as to any intent on the part of Mr Haydon

to mislead the Court, whether by his initial failure to refer to the 15 March 2007

agreement or otherwise. I do not make any such finding.

Mr Ford’s evidence on the 15 March 2007 agreement

[59] I have observed that, in his evidence filed before hearing, Mr Ford did not

identify why judicial review was not pursued. Equally, he did not refer to the

15 March 2007 agreement. There is, in fact, a chronological gap in the events

covered by his evidence which jumps from 22 August 2005 (when the Director

replied to queries raised by Mr Barclay on Helilogging’s behalf) to a meeting with

the CAA in December 2012 which took place on a without prejudice basis. To the

extent that Helilogging referred in its initial evidence to events between August 2005

and December 2012, Mr Ford did that by reference to the evidence of Mr Haydon

who referred to the “settlement package” of June 2008 but not to the 15 March 2007

agreement.

[60] The failure of Mr Ford to refer to the 15 March 2007 agreement in his initial

evidence is a significant omission. More significant still was the absence of

additional evidence from Mr Ford when the Court, following the hearing, identified

the existence of the 15 March 2007 agreement. The only supplementary evidence

produced by Helilogging – that of Mr Haydon and of Mr Miller – speaks clearly of

Mr Haydon’s lack of confidence in relation to Helilogging’s intended judicial review

proceeding. But while both those deponents refer to Mr Haydon’s lack of

confidence, there is no similar observation in relation to Mr Ford.

[61] For his part, Mr Ford has apparently chosen not to give evidence on the

matter. In the absence of such evidence, the irresistible implication of the structure

of the 15 March 2007 agreement is that Helilogging (through Mr Ford) perceived

that it had a good case in judicial review. The correspondence written on behalf of

Helilogging during the course of 2006 evince Mr Ford’s appreciation of

Helilogging’s case. The plaintiffs had identified the particular grounds on which

judicial review might be pursued, including the unreliability of Mr Lewis’s

conclusions. As the 15 March 2007 agreement itself makes clear, the barrister to

have the conduct of the judicial review application and any appeal (namely

Mr Castle) had also been identified. Helilogging has not adduced evidence from

Mr Castle as to the conclusions which he reached and such advice as he gave at the

time. The fund of $150,000 to be established under the agreement for the judicial

review proceeding indicates the seriousness with which the intent of litigation was

being viewed.

[62] Against the background of Mr Ford’s failure to give any evidence in relation

to the 15 March 2007 agreement, the only proper inference is that any sworn

evidence Mr Ford could give on the subject would be against Helilogging’s interests.

[63] It is therefore beyond argument that the plaintiffs knew that they had grounds

to attack the Director’s decision, at least by reason of the following matters:

the Director’s breach of agreed procedures and natural justice through

failing to provide the Lewis letter to the plaintiffs before a decision was

reached;

the Director’s pre-determination on the part of the Director evidenced by

the replacement of an encouraging adviser with a “hostile” adviser;

the Director’s having regard to irrelevant material in the form of the “40

year old” experience of Mr Lewis in Wessex helicopters; and

the Director’s failure to have proper regard to relevant material in the

form of Mr Barclay’s evidence.

[64] These are merely summarised versions of detailed grounds and instances of

grievance which recur and are amplified within the plaintiffs’ contemporary

correspondence. If one applies the “statement of claim” test, the plaintiffs were

clearly in a position by 15 March 2007, if not earlier to complete a particularised

application for judicial review, supported by affidavits.6

Factual conclusions from the evidence

[65] I find the factual position as at 15 March 2007 to have been, beyond

argument, that:

(a) Helilogging had through late-2005 and 2006 identified considered

grounds upon which to pursue an application for a judicial review in

relation to the Director’s declinature decision, including upon the

basis that the Lewis letter was unreliable.

(b) Legal advice had been taken which supported Helilogging’s case.

(c) Helilogging was able to persuade all its financiers to provide time and

some of its financiers to establish a fund enabling the pursuit of the

judicial review application.

(d) Mr Ford, as the animating mind of Helilogging, had confidence as to

his grounds of judicial review application and as to the prospects of

success.

(e) The reason Helilogging did not pursue its judicial review application

in 2007 was the financiers’ termination of the 15 March 2007

agreement, which occurred when Mr Haydon concluded that the

Fords had not provided full cooperation in terms of the agreement.

Events after 2007

[66] Helilogging has not provided evidence as to their “breaches of disclosure”

referred to in the receivers’ third report of 20 December 2007 which led to the

receivers’ decision to cancel the 15 March 2007 agreement.7 What is clear is that the

6 See below at [81].

7 Above at [44].

Fords still wanted to pursue judicial review but by late 2007 no longer had their

financiers’ support.

[67] The next chronological event initially referred to by the deponents for

Helilogging was the June 2008 negotiation of a settlement package between the

receivers, their appointor (CFL) and Mr Ford. Helilogging provides no detail as to

the content of that settlement. But Mr Haydon states that Mr Ford thereafter

continued to seek funds for judicial review which Mr Haydon declined for the

reasons he had earlier given.

[68] Mr Haydon refers to a later incident in November 2011 when he became

aware of a farmer carrying logs under a helicopter using a similar process to that

proposed by Helilogging. Mr Haydon had discussions with Mr Ford. In March

2012, Mr Haydon asked the new chairman of the CAA to have a look at the “Ford

matter”. He says that, around the same time, Mr Ford alerted him to the alteration in

the Lewis letter by which “Mk 52” appeared as “Mk 2”. Mr Haydon sent follow-up

emails to the CAA chairman concerning the second alteration to the Lewis letter.

Mr Haydon was involved with Mr and Mrs Ford in a without prejudice meeting with

the CAA in December 2012. The meeting did not produce a resolution.

[69] Mr and Mrs Ford say that in the meantime they had, around April 2012,

discovered the second alteration to the Lewis letter as a result of Mrs Ford spotting,

for the first time, the alteration when the documents relating to the CAA applications

were spread on her kitchen table. As neither Mr or Mrs Ford knew of a Wessex Mk

52 helicopter, they enquired into its existence. They then had further discussions

with Mr Haydon and were present at the inconclusive December 2012 meeting with

the CAA.

[70] In 2013, Mr Ford prepared to file a claim against the CAA. From October

2014, he consulted a number of experts. Their opinions were obtained in relation to

the safety of the Wessex Mk 2, differences between the Mk 2 and the Mk 52, and

other issues. Following the filing of Helilogging’s statement of claim on 6

September 2014 and the filing of the CAA’s interlocutory application, the plaintiffs’

opposition evidence included that of their experts.

Helilogging’s present proceeding and claims

[71] Helilogging commenced this proceeding with one cause of action in deceit.

In the current (amended) version of the statement of claim, Helilogging additionally

pleads misfeasance in public office and negligent misstatement.

The plaintiffs’ pleadings common to the three causes of action

[72] The plaintiffs’ central allegations, common to all three causes of action, are:

On 26 July 2004, the Wessex Trust (effectively the second plaintiff)

petitioned the CAA for an external loading exemption for the Wessex

Mk 2 helicopter and the Ford Trust petitioned the CAA for a hire and

reward exemption.

Following the 2004 High Court litigation, the CAA agreed to submit the

applications to a seven-stage process.

On 19 August 2005, the CAA declined the applications, relying on the

Lewis letter which was provided to the plaintiffs with two alterations.

The plaintiffs were unaware that the Wessex Mk 52 helicopter is

materially different in design and specification to the Mk 2 helicopter.

Allegations particular to the deceit cause of action

[73] The plaintiffs materially plead:

The CAA on 23 July 2005 fraudulently provided them with copy of the

altered Lewis letter.

The CAA, in approximately November 2012, provided them with what

was represented to be an original Lewis letter but it contained the

“viability”/“safety” alteration and the “Mk 52/Mk 2” alteration.

As a consequence of the CAA’s said actions, the plaintiffs were unable to:

o appreciate that they had grounds to mount a legal challenge; or

o mount such a challenge.

April 2012 was the first date on which the CAA’s said conduct was

reasonably discoverable.

The plaintiffs incurred losses (direct or the loss of a chance), suffered

general damages and are entitled to exemplary damages.

Allegations particular to the misfeasance in public office cause of action

[74] The plaintiffs materially allege:

The Director (as a public officer) acted unlawfully in breaching the

seven-stage process by:

o engaging Mr Lewis;

o not making the Lewis letter available to the plaintiffs before the

Director made his determination;

o pre-determining Helilogging’s applications;

o the CAA instigating alterations to the Lewis letter;

o withholding a copy of the unaltered Lewis letter; and

o engaging Mr Lewis in breach of his fiduciary duties to the

plaintiffs.

[75] The plaintiffs’ statement of claim contains no pleading of an intention on the

part of the Director in relation to the misfeasance pleading.

[76] The plaintiffs rely on the same pleading of damages as for deceit.

Allegations particular to the negligent misstatement cause of action

[77] The plaintiffs materially plead in relation to the negligent misstatement cause

of action:

The Director negligently provided to the plaintiffs the altered Lewis

letter.

The Director did not comply with the seven-stage process.

The plaintiffs were misled because they believed that Mr Lewis was

referring to the Wessex Mk 2 helicopter whereas he was referring to a

Wessex Mk 52 helicopter, a materially different helicopter in 2005.

[78] The plaintiffs plead that, as a result of the defendant’s conduct, they incurred

losses of $5,231,896.50. They seek also unparticularised and unquantified damages

for loss of profits. Finally, Mr Ford as third plaintiff seeks general damages of

$50,000 for stress, anxiety and inconvenience.

[79] The plaintiffs rely on the damages as pleaded in relation to deceit.

The knowledge of the plaintiffs after the Director’s declinature

[80] The central basis of the plaintiffs’ damages claims based on deceit or

misfeasance is said to lie in the defendant’s fraudulent or concealing conduct. The

plaintiffs pursue either damages for the loss of a chance (the chance to successfully

pursue judicial review) or a complete recovery of losses including both capital losses

and loss of profits (on the basis that the two exemption applications would or should

have been granted). The third cause of action, for misstatement, pursues damages

assessed on the same basis.

[81] The state of mind of the plaintiffs is directly relevant to the issue of reliance

on the alleged misrepresentations, to causation of loss and to mistake. I have found

it to be established, beyond argument, that by 15 March 2007, at the latest, the

plaintiffs knew that they had a good right of action for judicial review of the

Director’s declinature decision.8

The defendant’s summary judgment and strike out applications

Defendant’s summary judgment application

[82] The starting point for a defendant’s summary judgment application is

r 12.2(2) High Court Rules, which requires that the defendant satisfy the Court that

none of the causes of action in the statement of claim can succeed.

[83] I summarise the general principles which I adopt in relation to the

application:

(a) The onus is on the defendant seeking summary judgment to show that

none of the plaintiff’s causes of action can succeed. The Court must

be left without any real doubt or uncertainty on the matter.

(b) The Court will not hesitate to decide questions of law where

appropriate.

(c) The Court will not attempt to resolve genuine conflicts of evidence or

to assess the credibility of statements and affidavits.

(d) In determining whether there is a genuine and relevant conflict of

facts, the Court is entitled to examine and reject spurious defences or

plainly contrived factual conflicts. It is not required to accept

uncritically every statement put before it, however equivocal,

imprecise, inconsistent with undisputed contemporary documents or

other statements, or inherently improbable.

(e) In weighing these matters, the Court will take a robust approach and

enter judgment even where there may be differences on certain factual

8 Above at [64] – [65].

matters if the lack of a tenable defence is plain on the material before

the Court.

(f) Once the Court is satisfied that there is no defence, the Court retains a

discretion to refuse summary judgment but does so in the context of

the general purpose of the High Court Rules which provide for the

just, speedy and inexpensive determination of proceedings.

Striking out a claim – the principles

[84] Rule 15.1 High Court Rules makes provision for orders striking out all or part

of a pleading. In this case, the CAA as defendant (in the alternative to its summary

judgment application) invokes:

(a) rule 15.1(1)(a): no reasonably arguable cause of action because the

claims are statute barred; and

(b) rule 15.1(1)(c) and (d): frivolous, vexatious or otherwise an abuse of

the process of the court.

The limitation period

[85] By reason of the conclusions I shortly reach, it is convenient to first identify

the statutory provisions of limitation which apply to the plaintiffs’ causes of action.

[86] The plaintiffs’ causes of action fall to be dealt with under the Limitation Act

1950 because the causes of action are based on acts or omissions before 1 January

2011.9 The plaintiffs plead three causes of action in tort – the applicable limitation

period is therefore six years from the date on which the cause of action accrued,

unless the plaintiffs can, in this summary judgment context, show it is arguable that

the limitation period was postponed by reason of the plaintiffs’ cause of action being

concealed by the defendant’s fraud or unknown because of mistake.10

9 Limitation Act 2010, s 59.

10 Limitation Act 1950, ss 4(1)(a) and 28.

Cause of action in deceit

The change of “viability” to “safety”

[87] The Director’s decision relied on safety concerns. A central thrust of the

plaintiffs’ case is that the altered Lewis letter was provided to the plaintiffs in order

to have them accept that there was reputable expert opinion identifying safety issues

in respect of the Wessex Mk 2 helicopter. Responsibly, the plaintiffs do not plead

that the handwritten alteration was unauthorised by Mr Lewis. Mr Lewis has

produced a copy of a letter which he wrote to the Director on 2 August 2005. In it,

he referred back his letter of 23 July 2005 and asked to make the amendment from

“viability” to “safety”. When one has regard to the comments contained earlier in

the Lewis letter, the amendment from “viability” to “safety” is understandable. The

timing of the alteration does not detract from the fact that the Lewis letter, including

the “safety”/“viability” alteration, is as requested by Mr Lewis.

[88] The CAA did not conceal the alteration of “viability” to “safety” from the

plaintiffs at the time. Rather, the Lewis letter was provided to the plaintiffs with the

“safety”/“viability” alteration in place and self-evident.

[89] This fact led Mr Dale to submit that the significance of uncertainty of detail

surrounding the “safety”/“viability” alteration is that it is possible that the CAA

“instigated” the amendment. But the identity of the instigator (whether Mr Lewis or

someone at the CAA) is not material in the sense of “material aspect of the pleading

of a judicial review application”. At the most, it might have been an area for

potential cross-examination designed to establish that Mr Lewis’s opinion (which

raised safety concerns) was flawed and invalid.

The Mk 52/Mk 2 alteration

[90] In relation to the change to the Lewis letter whereby “Mk 52” became

“Mk 2”, Mr Dale’s submission is that the change was not reasonably discoverable

and that it was material.

[91] Mr Dale submits that the evidence of Mr and Mrs Ford as to the April 2012

discovery of the Mk 52/Mk 2 alteration serves to indicate that the alteration was not

reasonably discoverable. I am not persuaded that the Fords’ subjective experience in

detecting the alteration is a measure of whether it was reasonably discoverable.

Reasonable discoverability involves the Court’s objective assessment. Nonetheless,

the copy of the Lewis letter (reproduced at Schedule 1) is likely to reflect the quality

of copy the Fords would have received. On the basis of that document, it is at least

arguable that it is unclear whether there had been a deliberate alteration. It is also

arguable that even a careful inspection of the letter would not have identified (at least

reliably) that what was typed had read “Mk 52”. It is therefore possible that the

Fords and those they consulted could not reasonably have discerned that Mr Lewis

had, at that point of his letter, been writing about a Wessex Mk 52.

[92] I next examine whether the alteration is material. A brief account of the

history of the Wessex Mk 2, common to the evidence for both plaintiffs and

defendant, is required.

[93] Westland Aircraft Limited developed the Wessex helicopter. Mr Lewis was

working for the British Services as a test pilot when the Wessex Mk 1 (a single

engine) helicopter designed for the Royal Navy was developed. The Wessex Mk 2

was developed as a twin-engine version of the Wessex. As the Wessex Mk 2 was

made available to other air forces, it was given a distinct designation (for instance,

Mk 52 in Iraq and Mk 53 in Brunei). A civilian version of the Mk 2 (designated

Mk 60) was also developed. In the Lewis letter as typed, Mr Lewis refers to his

experience with both the Mk 52 and the Mk 60. The particular experience which

Mr Lewis refers to with the Mk 52 and the Mk 60 spans from 1959 into the 1960s

(hence the plaintiffs’ “40-year old experience” description.) The evidence of experts

in this case indicates that the Wessex Mk 2 was relatively well-known. But the

existence of Wessex Mk 52 was not well-known, even to those with some detailed

knowledge of helicopters. This situation is explained by the fact that only a few

Mk 52s were exported to Iraq. Regardless of its notoriety, or lack thereof, it is clear

on the evidence that the Mk 2 and the Mk 52 of the 1960s were materially the same

aircraft.

[94] The evidence establishes the Wessex Mk 2 has since been further developed.

By 2005 it was a substantially different aircraft to that flown by Mr Lewis in the

1960s. The plaintiffs’ experts (for instance, David Ward, an aeronautical engineer)

accept that there would have been safety concerns about the Wessex Mk 2 (as it

existed in the 1960s) if used for heli-logging in 2005. Mr Ward accepts Mr Lewis’s

identification (in the Lewis letter) of computer fuel and control systems which were

susceptible to mis-management. The plaintiffs’ experts’ central criticism of

Mr Lewis is captured in the evidence of Mr Ward when he deposed:

… Mr Lewis in his report somehow fails to make clear and distinguish

between the Mark 2 prior to 1970 and the 2004 version of the Mark 2 which

the plaintiffs sought to use for helilogging.

[95] Another way of stating the criticism is, as the plaintiffs themselves

complained after the Director’s declinature decision, that the Lewis letter was

discussing “40-year old” technology.

[96] Such a conclusion was drawn by the plaintiffs and their advisers on the face

of the Lewis letter as attached to the Director’s declinature decision in August 2005.

Whether the reference in the Lewis letter was to a Wessex Mk 52 or a Wessex Mk 2,

the technology referred to was of precisely the same vintage. As it is, the experts

now establish that it was not only of the same vintage but of materially the same

version of helicopter.

[97] Against this background, I return to the alteration in the Lewis letter which

made it appear that the “Mk 52” which Mr Lewis identified he had flown with the

Iraqi Air Force was in fact a “Mk 2”.

[98] Mr Lewis deposes that he does not recall requesting or authorising the change

to be made (although he does not regard it as significant for the historical reasons

relating to the Wessex Mk 2 which I have discussed above). He deposes that he

would not have had a problem if the reference to “Mk 52” had been changed to

“Mk 2” for those reasons. Accordingly, for Mr Lewis, any difference in reference to

“Mk 2”of “Mk 52” was not material to the conclusions which he expressed as to

safety.

[99] For completeness I record that the CAA went further in relation to evidence

than simply relying upon the documentary record. It filed an affidavit of Sydney

Wellik, a solicitor who was working for the CAA in 2005. He produced a further

copy of the Lewis letter. He deposes that various handwritten notes on the letter

must be his because they are in his handwriting (although he has no recollection of

making the notes or alterations). The exhibit contains the alteration of “viability” to

“safety” which was on the copy subsequently sent to the plaintiffs. Mr Wellik

deposes that that particular alteration is in someone else’s handwriting. The copy of

the letter exhibited has an alteration whereby the “5” in the “Mk 52” reference is

deleted by a handwritten oblique stroke similar to but more obvious than that in the

copy of the letter sent to the plaintiffs. Mr Wellik deposes that he must have made

the change because he would have been discussing it with a technical person with

the relevant aviation knowledge.

[100] I turn then to consider materiality from the viewpoint of Mr Ford and his

interests. The alleged materiality is pleaded in the first amended statement of claim

in terms of consequences. The plaintiffs plead consequences at two levels, namely

the consequences of the alteration on the plaintiffs’ knowledge and the consequences

of the plaintiffs’ unawareness on their legal challenge. In particular, the plaintiffs

plead as to their knowledge as a consequence of the Mk 52/Mk 2 change:

(a) they were unaware that Mr Lewis was actually discussing a non-

existent or irrelevant Wessex version helicopter in the Lewis letter;

(b) as a consequence of the plaintiffs’ unawareness of the Mk 52/Mk 2

change:

(i) the plaintiffs’ funders withdrew their support to the legal

challenge because Mr Lewis, as a purportedly independent

expert, had advised the CAA that the Mk 2 helicopter was not

safe;

(ii) the plaintiffs were consequently unable to pursue their legal

challenge; and

(iii) the plaintiffs were misled as to the availability of grounds for

challenge because Mr Lewis had been referring to the Mk 2

Wessex.

[101] Mr Ford gives brief evidence which touches upon the consequences of the

Mk 52/Mk 2 alteration. It is contained in five paragraphs of his initial affidavit in

opposition:

181. I did not notice the alteration to the Lewis letter at the time. The

focus was on challenging the context of the report but in the

mistaken belief that Mr Lewis was referring to the Mk 2 helicopter.

182. As I explain below I was not aware that there was even such a model

as the Mk 52 in 2005, and so it did not occur to me that Mr Lewis

was proceeding on a completely erroneous assumption.

…

192. In or about early April 2012 my wife and I discovered the alteration.

As I have done over and over again since all this took place, one

weekend I was pouring through all of the documents and looking at

the Lewis letter in dismay. My wife Suzanne was sitting with me at

the time to give me support. It was then that she pointed out the

alteration to me that she thought was odd and the fact that she

[thought] it looked like a 5 had been concealed. She asked me if

there was a Wessex Mark 52. I did not know but immediately

researched this.

193. This was the first time this alteration was noticed by anybody. When

I discovered what the Mark 52 was being a model of Wessex that

went out of production in the 1960s in relation to which only a small

number were ever manufactured, I immediately felt that this was the

piece of the puzzle that had been missing and that the letter had been

fraudulently altered.

194. At the time of receiving the letter in 2005, everyone was so focused

on the change of the word “viability” to “safety” on the last page of

the report that this went unnoticed.

[102] Mr Ford gives evidence as to the special damages suffered by the first

plaintiff through the CAA’s declinature of the applications. He then deposes as to

the extent that he and his wife had personally suffered in terms of both their health

and their financial situations. A later affidavit filed by Mr Ford did not further

address these issues.

[103] Accordingly, as the case in deceit stands, the plaintiffs, by their central

allegations of “consequence” (or causation), implicitly allege that (through Mr Ford)

they relied upon the apparent reference to a Wessex Mk 2 being indeed Mr Lewis’s

reference to a Mk 2 (not a Mk 52). Implicitly, they recognise that to succeed in

deceit they need to show not only that there was a false representation which the

CAA intended the defendants to rely upon, but also that they did act in reliance upon

the representation. Such are the ingredients of the tort of deceit as recognised by the

Court of Appeal in Amaltal Corporation Ltd v Maruha Corporation.11

[104] In this case, the action allegedly taken in reliance by the plaintiffs is said to

flow from their being “misled as to the availability of grounds for challenge to the

CAA’s decision” and in particular the misrepresentation that the original Lewis letter

referred to a Wessex Mk 2 helicopter.

[105] A fundamental difficulty with the plaintiffs’ case is that Mr Ford’s evidence

does not even arguably suggest that he conducted his affairs at the time in reliance

upon a misrepresentation as to a “Mk 2”. As I have noted, it is common to both

parties’ cases, as presented in terms of the expert evidence, that the Wessex Mk 2 and

Wessex Mk 52 were, at the time of Mr Lewis’s experience, essentially the same

aircraft.12

One consequence of a reference to a “Mk 52” would have been that, if

someone had investigated the reference to “Mk 52”, it would have been clear that the

version in question belonged to an era 40 years earlier, and was essentially a Mk 2.

The plaintiffs, following the declinature in August 2005, were soon made aware that

Mr Lewis’s experience of the Wessex Mk 2 was “40 year old experience”. Given the

evidence as to the relationship between the Mk 2 and the Mk 52, the complaint

which the plaintiffs would have made in relation to any experience Mr Lewis

identified in relation to the Mk 52 would have been identical, namely that the Lewis

letter was discussing “40-year old technology”. Nothing turned or could have turned

on the “difference” between a Mk 2 and a Mk 52.

[106] In 2005, Mr Ford and his advisers clearly identified what they perceived as

the critical weakness in the Lewis letter, through their “40 year old technology”

11

Amaltal Corporation Ltd v Maruha Corporation [2007] 1 NZLR 608 (CA) at [46]-[55]. 12

Above at [93] – [96].

criticism. It was a criticism which would have applied whether Mr Lewis’s letter

referred to his experience as being on the Wessex Mk 2 or the Wessex Mk 52. The

information provided them with the knowledge and determination to pursue judicial

relief. To do that, they needed time and financial support from their secured

creditors which they initially obtained but was subsequently withdrawn. As I come

to (below at [119], their inability to pursue judicial review at the time was caused by

the withdrawal of financial support by others. It was not because the plaintiffs had

relied on something apparently stated in the Lewis letter with a consequence that (as

their statement of claim alleges) they were “misled as to the availability of grounds

for challenge to the CAA’s decision”.

Causation of damage

[107] Having found that the plaintiffs’ allegation of material reliance cannot

succeed, I turn briefly to the evidence relating to the proposition that the CAA

caused the plaintiffs’ losses.

[108] The allegation in the statement of claim which particularly identifies the

plaintiffs’ causation argument in relation to the financier’s funding reads:

70. As a further consequence of the alterations to the Lewis letter and/or

the failure to provide the plaintiffs with the actual copy of the letter

provided to the CAA at the time of declining the petitions and

application:

(a) The plaintiffs’ funders withdrew their support to a legal

challenge to the CAA’s declinature of the petition

application because the purportedly independent expert

Mr Lewis had advised the CAA that the Wessex MK 2

helicopter was not safe.

(b) The plaintiffs were consequently unable to mount a legal

challenge to the decisions of the CAA.

…

[109] As the earlier background narrative indicates, the issue of causation is

complicated by the fact that Helilogging’s receivership and its financial

circumstances generally meant that the Fords were dependent on outside financiers

to provide the support and finance for Helilogging’s litigation against the CAA. The

plaintiffs’ pleadings (including the amended claim) do not identify the factual links

in the causation argument. Rather, the plaintiffs plead simply that they have suffered

their particularised losses “as a consequence of the defendants’ conduct”.

[110] I have noted, as a peculiar feature of Mr Ford’s initial evidence, that he did

not identify why Helilogging did not pursue a judicial review following the

declinature decisions. Nor did he refer to his discussions or agreements reached with

the receivers or Helilogging’s financiers about challenging the Director’s decisions.13

[111] In the plaintiffs’ initial evidence, the role played by the financiers was

therefore limited to what Mr Haydon deposed. Mr Haydon at that point referred to

Mr Ford approaching him concerning the August 2005 declinature decision.

Mr Haydon considered that the CAA would have acted in the manner expected of a

statutory body. In particular he deposed:

16. I also concluded that if the CAA had safety concerns there was little

prospect of the exemptions being granted.

17. I assumed that the CAA report would be professionally prepared and

that there would have been a proper process taking into account all

of the relevant evidence, and that Mr Ford would have been given

every opportunity to comment.

18. I believe around this time I also spoke to Mr Miller who was a

director of LDC, another financier with whom the plaintiffs were

involved.

19. Mr Ford and Mr Miller invited me to a meeting to discuss the way

forward after the CAA decision had been released. In particular they

said they wanted to discuss my funding application for a Judicial

review.

20. I advised Mr Miller and Mr Ford that I had no interest in such an

approach, and nor in funding further litigation, and because the

application had been declined for safety reasons. I said that even if

the CAA had not followed a fair process the Court was hardly likely

to reverse a decision based on safety, and in any event the CAA was

hardly likely to change its mind on an issue which was of such

importance.

21. As a consequence CFL decided to exercise the legal remedies that

were available to it in respect of Mr Ford’s companies.

[112] Shortly thereafter, Mr Haydon’s company appointed receivers to Helilogging.

In his initial evidence Mr Haydon then refers to a settlement package being later

13

Above at [47].

negotiated between his company, the receivers and Mr Ford in June 2008. He

deposed, “Mark [Ford] continued to seek funds for a Judicial Review, but I would

not agree, and for the reasons set out above”.

[113] In summary, the plaintiffs’ case was and remains that Helilogging was unable

to fund its intended litigation because of Mr Haydon’s position. The directors then

lost control through the receivership. It was explained that Mr Haydon had no

interest in funding Helilogging’s litigation because he took the view that a challenge

on safety grounds was unlikely to succeed.

[114] Understandably Mr Taylor, for the CAA, when faced with the Haydon

evidence did not, in his synopsis for the hearing, submit (other than in relation to

reliance) that the plaintiffs had not established an arguable case of causation.

[115] However, the evidence now before the Court puts a different light on the

discussions and agreements reached between the plaintiffs and Mr Haydon. I have

summarised above at [44] to [64] the additional evidence which came before the

Court following the hearing, together with the submissions of counsel.

[116] Mr Haydon’s initial evidence had identified a June 2008 settlement package

negotiated between his company, the receivers and Mr Ford and that he had

continued to refuse to fund judicial review proceedings. But the evidence now

establishes that Mr Haydon’s company and the Ford entities concluded an earlier

agreement on 15 March 2007 whereby financiers (albeit not Mr Ford’s company)

undertook to provide finance up to a maximum of $150,000 for the intended judicial

review proceeding.

[117] The receiver’s third report (quoted above at [44]) records that the receivers

terminated the 15 March 2007 agreement “as a result of continued and longstanding

breaches of disclosure” and the failure of Mr Ford to fully co-operate.

[118] Mr Haydon, in supplementary evidence filed, deposes that his position had

never changed, namely that the proceeding was doomed to fail because of the

Director’s safety reasons for declinature. Mr Haydon deposes that for that reason he

did not support the judicial review.

[119] It is now beyond argument that the plaintiffs secured from their financiers

agreements which provided funding and time precisely to allow them to pursue the

judicial review proceeding. At that point Mr Haydon’s views as to the likelihood of

success are no longer material. The 15 March 2007 funding agreement was

cancelled six months later, not by reason of any view taken of the Lewis letter or the

Director’s grounds for declinature. It was cancelled because, as the receivers

reported, there had been continued and longstanding breaches of disclosure by the

plaintiffs and a lack of full co-operation on the part of Mr Ford in particular. It was

that conduct of the plaintiffs and not a view of the strength or weakness of the

judicial review proceeding which led to the plaintiffs’ inability to pursue the judicial

review.

[120] On this ground alone the plaintiffs’ tort claims cannot succeed under the law.

Bases of plaintiffs’ allegations of fraudulent conduct

[121] By reason of the conclusions I have reached, in relation to the plaintiffs’

deceit claims, it is unnecessary that I rule on an alternative submissions, extensively

developed by Mr Taylor for the CAA. Mr Taylor submitted that there was no

credible basis for the plaintiffs’ allegation that the CAA had acted fraudulently in

presenting the Lewis letter with the “viability/safety” alteration and the “Mk 52/Mk

2” alteration. By reason of a lack of proper particularisation of the allegation of

fraud in the amended statement of claim, I directed in the course of the hearing the

provision of further particulars of the relevant pleading. I recognise the force in

Mr Taylor’s submissions that, even taking into account the further particulars

provided in relation to fraud allegation, there is a distinct lack of evidence to support

an inference of fraud.

[122] The judgment of the majority in the Supreme Court in Z v Dental Complaints

Assessment Committee confirms that, while the civil standard of proof continues to

apply in relation to cause of action involving serious allegations, the Court

accommodates the seriousness of the allegations “through the natural tendency to

require stronger evidence before being satisfied to the balance of probability

standard”.14

[123] In the event, it is unnecessary to determine the defendant’s summary

judgment application by reference to this alternative ground of application and I do

not do so.

Conclusion as to the elements of the tort of deceit

[124] The plaintiffs say the CAA’s conduct in relation to the two alterations to the

Lewis letter constituted deceit. However, they are unable to point to any material

reliance by them upon the representation that Mr Lewis had flown a Wessex Mk 2

rather than a Wessex Mk 52. The claim must fail by reason of the lack of that

element of the deceit cause of action. In relation to the alteration in the Lewis letter

of “viability” to “safety”, the plaintiffs cannot, on the evidence, point to an arguable

misrepresentation. The alteration was plain to see and was authorised by Mr Lewis.

[125] It is therefore unnecessary to explore further Mr Taylor’s alternative

submission to the effect that the plaintiffs did not alter their conduct in reliance on

the viability/safety alteration. Similarly, as explained, I have not had the need to

consider further the alternative submission as to a lack of credible evidence as to

fraud. The plaintiffs’ cause of action in deceit cannot succeed.

Cause of action in negligent misstatement

[126] The tort of breach of duty of care through negligent misstatement shares with

the tort of deceit the elements of a misrepresentation and action by the claimant in

reliance on the representation. Predictably, in relation to those elements, the

plaintiffs’ pleadings are materially identical.

[127] My analysis in relation to the deceit cause of action applies. The plaintiffs

cannot succeed on the negligent misstatement cause of action.

14

Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [102].

Cause of action in misfeasance in public office

The nature and elements of the tort

[128] The Court of Appeal considered the tort of misfeasance in public office in

Commissioner of Inland Revenue v Chesterfields Preschools Ltd.15

The New

Zealand Law Report headnote accurately summarises the Court’s conclusions as to

the elements of the tort:16

(iii) The elements of the tort of misfeasance in public office encompass two

discrete forms of liability with regards to the mental element: targeted and

non-targeted malice. Both involve subjective bad faith: targeted malice

requires the public officer to have specifically intended to injure a person or

persons; non-targeted malice involves bad faith in that the public officer

does not believe that his or her act is lawful. The elements of the tort are

therefore: (a) the defendant was a public officer; and (b) the defendant

purported to exercise powers of his or her office; and (c) the defendant either

(i) acted in bad faith; that is, for an ulterior motive with intent to injure

another (targeted malice); or (ii) knew they were acting outside the scope of

the power conferred, or were recklessly indifferent, and that this was likely

to injure the plaintiff (non-targeted malice); and (d) this caused damage to

the plaintiff. The policy behind the tort of misfeasance in public office is

that, in a legal system based on the rule of law, executive or administrative

power may be exercised only for the public good and not for ulterior or

improper purposes

[129] In Chesterfields, the Court adopted, in relation to the policy considerations

behind the tort of misfeasance in public office, observations the Court had earlier

made in Garrett v Attorney-General.17

In Garrett, Blanchard J, delivering the

judgment of a five-Judge Bench, reviewed Commonwealth authority. His Honour

concluded as to policy matters:18

The purpose behind the imposition of this form of tortious liability is to

prevent the deliberate injuring of members of the public by deliberate

disregard of official duty. It is unnecessary, to attain this objective, to extend

the tort to catch an act which, though known to be wrongful, is done without

a realisation of the consequences for the plaintiff …

In our view this intentional tort should not be allowed to overflow its banks

and cover the unintentional infliction of damage. In many cases the

consequences of breaking the law will be obvious enough to officials, who

can then be taken to have intended the damage they caused. But where at the

15

Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013]

2 NZLR 679. 16

At 681 (drawn from the judgment at [40]–[45]). 17

Garrett v Attorney-General [1997] 2 NZLR 332 (CA). 18

At 350.

time they do not realise the consequences they will probably not be deterred

from exceeding their powers by any enlargement of the tort.

[130] Against that policy background, I turn to consider the plaintiffs’ case and

evidence in relation to the tort.

The impugned decision of the public officer

[131] The exemption power under s 37 of the CA Act lies with the Director.19

While the plaintiffs’ claim is at present against the CAA rather than the Director,

Mr Taylor for the CAA accepted (but only for the purposes of the present argument)

that the Director, in declining the exemption applications, was a public officer and

that the CAA was vicariously liable for his acts.

[132] The exercise of power impugned by the plaintiffs is the Director’s decision to

decline the exemption applications.

Element of knowledge and/or intention

[133] The plaintiffs plead as to the Director’s state of mind:

Mr Jones was aware of all or any of the following facts:

(a) That he was in breach of the seven-stage process by engaging Mr

Lewis and not making the Lewis report available to the plaintiffs

prior to making his final determination.

(b) That he had determined prior to completion of the seven-stage

process to decline the plaintiffs’ application.

(c) That the Lewis letter had been altered in material respects at the

instigation of the defendant or the defendant’s agent by both altering

the word “viability” to “safety” and deleting the number 5 before the

description Mk 52,

(d) Withholding a copy of the unaltered letter from the plaintiff save in

respect of the alteration of the word “viability” to “safety”.

(e) Engaging Mr Lewis as an expert when he was already aware that Mr

Lewis had been consulted by the plaintiff and to whom a fiduciary

obligation of confidentiality already existed.

(“the subjective particulars”)

19

Above at [9].

Discussion – subjective particulars (a) and (b)

[134] The plaintiffs’ subjective particulars (a) and (b) ([133] above) assert that the

Director was aware that he was in breach of the seven-stage process (through the

process of engaging Mr Lewis and obtaining and using his letter) and that the

Director had pre-determined the declinature decision.

[135] Mr Taylor submitted that in relation to these subjective particulars generally,

the notable feature of the plaintiffs’ amended pleading is an absence of any allegation

that the Director intended to harm the defendants. The way in which Mr Taylor put

that submission reflected the first limb of the “intention” element as identified by the

Court of Appeal in Chesterfields, namely the concept of targeted malice where the

public officer has acted in bad faith.20

Mr Dale emphasised that the plaintiffs relied

also on the assertion in the earlier part of their pleading of deceit in which they

allege that the defendant acted fraudulently and without honest belief in the accuracy

or truth of the altered Lewis letter. I will return shortly to consider that pleading in

the context of the misfeasance cause of action. The plaintiffs’ misfeasance pleading,

in particular with its allegation of the Director’s “awareness” might also be related to

the second intention limb under Chesterfields (non-targeted malice), relying both on

the proposition that the Director knew that he was acting outside the scope the power

conferred or was recklessly indifferent (when injury to the plaintiff was likely to

result).

[136] The subjective particulars (a) and (b) are not pleaded by the plaintiffs in

terms of targeted malice. The earlier pleading of fraud (under the heading of deceit)

relied upon by Mr Dale asserts that state of knowledge only in relation to the

changes to the Lewis letter. Having regard to the seriousness of such an allegation I

am not prepared to infer that the plaintiffs may have intended to allege bad faith in

relation to other aspects of the Director’s or the CAA’s conduct.

[137] That leaves non-targeted malice. I must ask myself whether it is arguable on

the evidence that the Director must have known he was acting outside the scope of

his exemption powers or was recklessly indifferent, with that conduct likely to injure

20

Commissioner of Inland Revenue v Chesterfields Preschools Ltd, above n 15.

the plaintiffs. Mr Taylor did not address submissions focused on non-targeted

malice, focusing instead on the lack of a pleading of any intentional harm.

[138] If the plaintiffs’ somewhat inelegant pleading is taken to imply non-targeted

malice, in my judgment it is viable as a pleading on a strike-out application and, in a

summary judgment context, not capable of dismissal as unarguable. Mr Dale’s case

is that there are inferences to be drawn as to the Director’s knowledge and pre-

determination which at least call for cross-examination.

[139] These observations made, there is nevertheless a fundamental difficulty with

the plaintiffs’ misfeasance claim to the extent it relies on particulars (a) and (b). It

lies in the limitation period. The plaintiffs received the copy of the Lewis letter with

the Director’s declinature letter on 19 August 2005.21

At that point the plaintiffs

were in a position to fully assess the Lewis letter and the extent to which it involved

a departure from the seven-stage process. In the following period, Mr Ford and his

associated entities carefully reviewed the interview and considered their legal

remedies. In March 2006, Helilogging filed its appeal against the prohibition order

issued by the Director that month.22

The process of Helilogging’s review culminated

in its 16 page letter to the Director on 21 July 2006 concerning four outstanding

issues, including the 19 August 2005 declinature.23

In that letter Helilogging

(through Mr Ford) clearly identified issues arising from the Lewis letter. These

included both the absence of an opportunity for Helilogging to respond to

Mr Lewis’s concerns before the Director’s decision was made (that or a breach of the

seven- stage process) and the apparent predetermination of the CAA (to decline the

exemption applications).

[140] Accordingly, by 21 July 2006 at the latest, the plaintiffs were aware of and

were expressing the complaints identified in particulars (a) and (b). Any cause of

action in misfeasance based on particulars (a) and (b) accrued with the making of the

Director’s declinature decisions on 19 August 2005, with the consequence that the

applicable limitation period in that regard expired on 19 August 2011.24

There is no

21

Above at [23]. 22

At [36]. 23

At [37] – [41]. 24

Limitation Act 1950, s 4(1)(a).

ground for asserting that the limitation period was postponed pursuant to s 28

Limitation Act 1950 whether by fraudulent concealment or mistake – the cause of

action was, beyond argument, known to the plaintiffs by August 2011.

Particulars (c) and (d)

[141] Contained in the plaintiffs’ particulars (c) and (d) ([133] above) is the three-

fold allegation in relation to the Lewis letter that:

(a) the alterations of “viability” to “safety” and of “MK 52” to “MK 2”

were material; and

(b) the alterations were effected at the instigation of the CAA or the

CAA’s agents; and

(c) the material alterations were known to the Director.

[142] I have above at [87] to [89] reviewed the evidence in relation to the alteration

of “viability” to “safety”. The contemporary documentary evidence, and Mr Lewis’s

evidence in this proceeding, confirms that the amendment took place at Mr Lewis’s

direction. The amendment to “safety” fits with the earlier observations in the Lewis

letter. It is not arguable that any understanding on the part of the Director as to the

alteration of the Lewis letter could lead to a finding of misfeasance concerning that

alteration.

[143] I have also reviewed above at [90] to [96] the issue in relation to the

alteration of “Mk 52” to “Mk 2”. The plaintiffs’ argument that the Mk 52 alteration

is material fails for the reasons I have identified. These include that the Mk 2 and

Mk 52 of the 1960s were materially the same aircraft. On that evidence, the

plaintiffs’ case of misfeasance, pursuant to particulars (c) and (d), does not pass the

summary judgment (arguability) test.

[144] Given this finding, it is unnecessary that I determine whether the evidence

given by the CAA solicitor, Mr Wellik, as to the Mk 52 alteration renders unarguable

the misfeasance claim based on the Mk 52 alteration.25

I incline to the view that

Mr Wellik’s evidence so decisively, and with inherent plausibility, identifies from

contemporary records the good faith nature of the alteration that it renders a

misfeasance cause of action based on particulars (c) and (d) untenable. But the

misfeasance claim based on the Mk 52 alteration fails in any event for lack of

materiality of the alteration.

[145] As with particulars (c) and (d) (above at [133]) there is no ground for

postponement of the limitation period on grounds of fraudulent concealment or

mistake, as the cause of action was known to the plaintiffs by August 2011.

Particular (e)

[146] By particular (e) ([133] above), the plaintiffs introduced a fresh allegation to

the pleading. The assertion is that the Director engaged Mr Lewis as an expert when

the Director was aware that Mr Lewis had been consulted by the plaintiffs and owed

a fiduciary obligation of confidentiality to the plaintiffs.

[147] By his affidavit in opposition, Mr Ford gave some evidence to explain the

pleaded breach of fiduciary obligation. He exhibited an email dated 19 May 2005

which he received from Mr Barclay. Mr Barclay in his email explained that

Mr Lewis had popped in to see him that day; he and Mr Lewis had overlapped at the

CAA many years ago; Mr Lewis was a “very experienced and respected helicopter

[test] pilot and was involved in the early Wessex development work”; Mr Lewis was

still passionate about the Wessex; and Mr Lewis still did the odd bit of expert advice

“which may be why the CAA had sent him a copy of my latest report”. Mr Barclay

stated that Mr Lewis had described the Barclay Report as superb which might mean

that the CAA would not contact Mr Lewis again. Mr Barclay recorded that he

showed Mr Lewis some of the key documents and gave him copies to take away, and

that Mr Lewis would no doubt contact him in due course with his thoughts.

[148] Mr Ford deposes that Mr Lewis was never formally engaged by Helilogging

to assist. He does not refer to any communication by which he or Helilogging

25

Above at [99].

informed the Director of their contact with Mr Lewis (at whatever informal level it

existed).

[149] On this basis there is no evidence to support the allegation that Mr Lewis

owed a fiduciary duty to Helilogging (by some form of professional engagement) let

alone that the Director was aware of the fiduciary duty or engaged Mr Lewis in the

knowledge that Mr Lewis would be engaged in breach of a duty to Helilogging. The

misfeasance cause of action to the extent it is dependent on particular (e) is not

arguable.

[150] There is also a limitation bar in relation to particular (e). If Mr Lewis had

owed to Helilogging a disqualifying fiduciary duty, those best placed to identify it

were the personnel at Helilogging and their advisors. Such relationship as may have

been formed between Helilogging and Mr Lewis would have come into existence

around 19 May 2005, the day of the Lewis/Barclay meeting. Any cause of action

which relied upon the Director’s knowledge of a breach of duty by Mr Lewis,

accrued on 19 August 2005, when the Director sent the declinature letter. The action

became statute barred six years later.

Overall conclusion

[151] As the defendant is entitled to succeed on its summary judgment application,

I do not further consider the strike-out application.

[152] Costs would normally follow the event. A 2B approach may not be

appropriate. I will therefore reserve all issues as to costs for agreement between the

parties or, failing that, submissions and a determination on the papers.

Orders

[153] I order:

(a) There is judgment for the defendant against the plaintiffs.

(b) Costs are reserved – in the event of disagreement as to costs,

submissions (five page maximum) are to be filed, defendant first and

plaintiffs within five working days thereafter.

Associate Judge Osborne

Solicitors: McVeagh Fleming, Wellington Neilsons Lawyers Ltd, Auckland Counsel: P J Dale, Auckland Darroch Forrest Lawyers, Wellington Counsel: L Taylor QC, Wellington

SCHEDULE 1