Idle Time Pty Limited v Greinert [2024] NSWSC 901 | Case summary

Judgment (7 paragraphs)

[1]

Introduction

These proceedings were commenced by summons filed in Court in the duty list on 3 July 2024. In very broad terms, they relate to a dispute between the plaintiff and the defendant concerning a project to restore a Lockheed P-38 Lightning (P-38) aircraft. The plaintiff agreed to buy an aircraft from the defendant and engage a company associated with the defendant (Historic Aircraft Restorations Pty Ltd) (HAR) to restore that aircraft into a flying P-38.
The relationship between the plaintiff and the defendant broke down and HAR went into liquidation on 17 May 2023. The plaintiff relevantly seeks the following final relief: 4. Delivery up of: (a) the Lockheed P-38 Lightning parts and components belonging to the Plaintiff; and (b) the certification records, worksheets, invoices, and other documents relating to the provenance and/or traceability and/or airworthiness of the Lockheed P-38 Lightning parts and components belonging to the Plaintiff. 5. Damages.
On 3 July 2024 in the Duty List, I made an ex parte search order against the defendant in the form annexed to these reasons (3 July Search Orders). It is to be observed that the orders did not include any ability to seize any items during the inspection.
On 4 July 2024, prior to the execution of the 3 July Search Orders, but after service of them, the defendant sought a stay of the 3 July Search Orders until further order of the Court to enable the defendant to apply to vary or discharge those orders. The defendant undertook, in broad terms, not to deal with any of the relevant items during the period of the stay.
At 2 pm on 4 July 2024, I then heard argument as to whether the 3 July 2024 Search Orders should be discharged. I ordered that the 3 July Search Orders should be discharged and the plaintiff should pay the defendant's costs of that application.
The plaintiff did not seek reasons for that discharge which were made apparent during the course of the argument. A central aspect of my reasons for discharging those search orders - which may have background relevance for the matters set out below - was that it became apparent that the plaintiff was using the search orders to enable an inventory to be prepared of certain parts and records in the possession of the defendant, with a view to then using that list to identify particular items in respect of which the plaintiff would then seek further injunctive relief. In my view, this is not a proper use of the search order power which is recognised as an extraordinary remedy designed to secure or preserve evidence (see Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 25.19) and not a mere investigatory tool for plaintiffs: see Microsoft Corporation v Goodview Electronics Pty Ltd (1999) 46 IPR 159 at [26] per Branson J. Further, UCPR r 25.3(2) does not provide a basis to justify the search orders as being ancillary to an order under UCPR r 25.3(1) for the preservation of property.

A brief overview of the facts

The plaintiff relied on two affidavits: 1. An affidavit of Mr Shane Traynor, the sole director of the plaintiff, sworn 3 July 2024 and exhibit ST-1 to that affidavit; and 2. An affidavit of Ireneusz (Eric) Cieslar, an aircraft maintenance engineer engaged by the plaintiff to, in effect, take over the project and identify what parts are missing, affirmed 3 July 2024 and exhibit IC-1 to that affidavit.
Neither deponent was cross-examined. The defendant did not rely on any evidence.
The following brief summary of the facts is sufficient for present purposes.
Mr Traynor has an interest in historic WWII aircraft (although he has no flight training or experience) and became interested in the restoration of aircraft. In early 2014, he began to search for WWII aircraft to purchase and restore to be fit to fly. He came to learn that the P-38 was a very popular WWII aircraft and one of the rarest in the world. He learned that the potential resale value of a P-38 which could fly was very high due to their rarity and popularity.
He searched for a P-38 to buy and subsequently, in the middle of 2015, found a P-38 restoration project for sale in Classic Wings Magazine. The defendant was the seller of the project - being in effect the purchase of the components and parts which were available with a separate offer to carry out the restoration work. The selling price was $450,000, which was for the components and parts. Mr Traynor inspected the aircraft at HAR's workshop at Shellharbour Airport on about 8 August 2015. He was shown parts of a plane wreckage and a number of other components that were identified as belonging to the P-38 project that was for sale.
During that inspection, the defendant apparently said to Mr Traynor that he (the defendant) was lucky enough to buy the largest collection of P-38 parts in the world, known as the Pruitt collection. Mr Traynor was subsequently apparently told by the defendant that the plane would not fly without the Pruitt collection - thus emphasising the importance of these parts to the project.
On 20 November 2015, the plaintiff and the defendant executed a "Sale and Purchase Agreement Aircraft - Lockheed P-38 'Lightning' Project" (Contract). The Contract states, inter alia: Having inspected the P-38 project on 8th August and confirmed that he wished to purchase it, the Buyer agreed to purchase the project, as outlined in the INVENTORY record of four elements (A, B, D and E); and A separate agreement may then also be entered into in which the buyer may take advantage of the offer by The Seller and his company HAR Pty Ltd., to provide new-build replacement structures, built to airworthy standards for the project, as described in related documentation already provided to the Buyer.
Attached to the Contract was a one-page document describing elements A to E in more detail.
The plaintiff also contended that an email from Graham Orphan (the proprietor of Classic Wings Magazine and effectively an intermediary between the plaintiff and the defendant) dated 31 July 2015 entitled "P-38 outline" formed part of the Contract. That email provides further detail about what is comprised in Elements A to F. Element F was "[b]ringing it all together and making it serviceable and licensed". The email also stated that the defendant or his company was not to do this work. The Contract also contains a clause suggesting this work was to be done by a company in New Zealand if Mr Traynor wanted this.
Mr Traynor paid the $450,000 purchase price in several tranches.
Mr Traynor was advised to carry out the restoration project in a standalone business entity and the plaintiff was incorporated for this purpose.
Mr Traynor became aware by at least 4 November 2015 that the defendant was carrying out a further P-38 restoration project for the PIMA Air and Space Museum in Tucson, Arizona (PIMA). He also became aware, he does not say when, of another P-38 project being carried out by the defendant for a museum in Papua New Guinea. There were thus three P-38 projects being carried out to the knowledge of the plaintiff.
Mr Traynor contends that he was led to believe that the restoration work would take approximately two years.
Work commenced on the project in late 2015/early 2016. The first invoice for work was issued on 15 February 2016. All invoices were made payable to HAR and were paid by the plaintiff. In total, 195 separate invoices were issued, the last of which was dated 14 July 2022. Mr Traynor estimates that he paid HAR and its sub-contractors in the order of $2,000,000, in addition to the $450,000 purchase price paid to the defendant for the components and parts.
During the work, the defendant sent email updates to Mr Traynor, including photographs. Mr Traynor also spoke to the defendant by telephone and exchanged text messages. Every three to six months, Mr Traynor would visit the HAR workshop.
The progress of the work was slow and not without issue. One particular issue concerned the cockpit. Mr Traynor contends that when he visited the workshop during 2018 and early 2019 he was shown his cockpit which was in an advanced state. On 10 August 2019, the defendant sent him an email which included three photos of the cockpit which was much less advanced than the one he was shown by the defendant on his earlier visits. When he then raised this issue with the defendant, he was told that the cockpit that he was previously shown was the PIMA P-38.
Mr Traynor says that he was unsettled by the defendant's reply, and felt that he had been previously misled.
On 24 December 2019, Mr Traynor sent an email to the defendant about the project's costs and delays. The defendant's response includes: First of all I would assure you that we are not going to leave you with a 'pile of plane parts'. Our commitment to the success of the flying P40 is absolute.
Mr Traynor says that despite his concerns, he felt that he had little option other than to see the project through.
The relationship began to break down at the end of 2021. When Mr Traynor visited the HAR workshop in February 2022, he was told by HAR employees that they were not working on either of Mr Traynor's projects (the other being the restoration of a P-40). Thereafter, Mr Traynor stopped paying invoices and by about October 2022, Mr Traynor considered his relationship with the defendant untenable, and he decided to seek advice and assistance to retrieve the P-38 and P-40 from the defendant.
Solicitors then became involved. Mr Traynor retained Mr Cieslar to assist him in relation to the project. Mr Traynor and Mr Cieslar twice visited the HAR workshop, including on 16 December 2022, when Mr Traynor went there to collect his planes. The defendant told Mr Traynor he was not ready to hand over the P-38 and only the P-40 was collected on 16 December 2022.
As events transpired, Mr Traynor and Mr Cieslar attended the workshop on 12 July 2023 and collected a pile of parts and components. Earlier on this same date, the defendant's solicitor sent an email to the plaintiff's solicitor to the following effect: Further to my below email, for completeness see below updated list of P38 items (nos. 14-17) for Albion Park collection today 12 July 2023 1. Two Gun Bay doors 2. One Wing centre section 3. One cockpit 4. Flap Drive 5. Rudder Pedals 6. Control Wheel (dismantled) 7. One Electric Pitch Motor 8. Gas Gauges (mounted in wing centre section) 9. Flap Tracks (mounted in centre section) 10. Fuel Tank Sumps (in centre section) 11. Quantity of Pulley wheels 12. One Instrument Panel 13. One wing jig 14. Two centre section control cables 15. All wing materials made or refurbished (see attached PDF) 16. Two Lower engine mount supports L&R 17. Hard Drive containing CAD drawings My client will provide a copy of the updated list and attached PDF to your client upon his arrival on site. Again, I request you confirm the 10.30am Revesby meeting next Monday.
At the time of collection, Mr Cieslar told Mr Traynor that a number of components were missing. Mr Traynor raised this with the defendant and was told: Everything that's yours is here. There is nothing else.
In the meantime, HAR had gone into administration on 11 April 2023 and liquidation on 17 May 2023. On 19 April 2023, Mr Hillig, then the administrator of HAR, wrote to the plaintiff's solicitor indicating that the administrator did not object to the plaintiff making arrangements to collect the aircraft and parts although Mr Hillig was not able to confirm that all parts remain in the possession of HAR.
On 12 July 2023, Mr Hillig, now as liquidator, wrote to the plaintiff's solicitor to the following effect: I spoke with Mr Greinert this morning prior to speaking with you. As I mentioned to you, he tells me that he is releasing what he has at the premises. He tells me that arrangements were made for your client to collect his goods on Friday, not today. Your client has arrived 2 days earlier than expected. He also tells me that your client does not know, nor is he capable of identifying, the parts he thinks are at the premises. It seems to me that he needs Mr Greinert's assistance in compiling the list of goods to be collected. Your suggestion that Mr Greinert is my agent is incorrect. He does not act under my instructions, nor do I act under his. I have no further involvement with the premises. The letter that I sent in April was simply stating that I did not make a claim to any items that your client claimed might have been at the premises at that time. You would be aware that I also did not warrant that all of the items claimed by your client to be at the premises were, in fact, at the premises. If your client wishes to make a claim in the winding up, please lodge a proof of debt with all supporting evidence for my consideration.
It then appears that because of their respective other business commitments, Mr Traynor and Mr Cieslar only had limited time to investigate what was missing. An investigator was also engaged and commenced work in February 2024.
I infer that it was not until shortly prior to the Court being approached on 3 July 2024 that Mr Cieslar completed a list of the P-38 parts that it is contended were purchased but not provided.
In May 2024, Mr Traynor was told that the PIMA P-38 had been dismantled and was being readied for containerised shipping to the USA.
Mr Cieslar is a licensed aircraft engineer with experience in relation to the restoration of vintage WWII aircraft. As set out above, he has been retained by Mr Traynor to assist in relation to, at least, the identification of what is allegedly missing.
Mr Cieslar was provided with a copy of the Contract as well as a list of components he had received from Mr Traynor, which apparently had been compiled from the invoices issued to the plaintiff. He was also provided a large number of unspecified emails containing invoices and photographs.
Mr Cieslar reviewed this material and created an inventory of components which he says comprise Mr Traynor's P-38 project. He then compared this list with what was returned by Mr Greinert to determine what components he contends were missing.
Mr Cieslar prepared a table setting out the components of Mr Traynor's P-38 project that have not been handed over. A number of components, and the description as to what is missing, are expressed at a high level of generality. Three examples, of many, are: 1. Cockpit (50% missing); 2. Element A - ST is missing much of the wreckage from element A and definitely has no "Identity plates and provenance"; 3. 4 hydraulic components supplied - this is less than 5% of the aircrafts hydraulic system.
Having reviewed all of the invoices, Mr Cieslar also identified a number of components that Mr Traynor paid for but did not receive. Again, some components are identified at a high level of generality. Mr Cieslar acknowledged as much in his affidavit, observing "it is not always possible to tell from the description of arrangements in the Contract or in an invoice exactly what components were being supplied."
Mr Cieslar also gave evidence that in late May 2024, he was informed that one of the P-38 planes had been disassembled and placed in the corner of the defendant's hangar and then on 20 June 2024 that it had been wrapped in plastic, ready to be shipped.
Mr Cieslar also conducted an internet search in early July 2024 and identified a P-38 Lightning Project advertised for sale. I was informed that Mr Traynor observed this advertisement in late May 2024. Based on this advertisement, Mr Cieslar expressed the opinion that the defendant may be selling components of Mr Traynor's P-38 project.
On 15 May 2024, Mr Cieslar conducted another internet search and identified certain P-38 parts for sale. Mr Cieslar asserted that those P-38 parts listed for sale were missing from the components handed over to Mr Traynor, despite having paid for them. There were two components, described as "P-38 Lightning mid boom nacelle kits (PR)" and "P-38 Lightning lower rudders airworthy".
There was no evidence as to how long these advertisements had been online.
Finally, Mr Cieslar gave evidence as to the rarity of flying P-38s, that a flying P-38 last sold for about USD 9 million, and the rarity of the missing parts.
It is against this background that the proceedings were commenced on 3 July 2024. There was no evidence to suggest that there had been any substantive correspondence between the parties since the components and parts were collected in July 2023.

Determination

The form of the proposed injunction is hopelessly broad - capturing all: 1. Parts and components of Lockheed P-38 Lightning aircraft; and 2. Certification records, worksheets, invoices and other documents relating to the provenance and/or traceability of parts and components of Lockheed P-38 Lightning aircraft and/or the airworthiness of such parts or components, which the defendant has possession, custody or control of.
This is against the agreed background that the defendant has been undertaking three P-38 restoration projects - a matter that the plaintiff has been aware of from about 2015. The two projects other than the plaintiff's would be completely captured by the orders.
As drafted, it would effectively prevent any work on the remaining two P-38 projects and would prevent the sale of any P-38 components or parts. This is in the circumstances where the plaintiff only claims delivery up of a limited number of components or parts. It would thus have a significant impact on the defendant and third parties, including those expecting to receive the PIMA.
The obvious difficulty for the plaintiff is that it does not know, with any precision, what components or parts it says should have been delivered up to it, which are presently in the possession, custody or control of the defendant. This emerged as the true purpose underlying the 3 July Search Orders - namely to create an inventory of what P-38 components and parts are there. The intent was then to use that list to craft orders for injunctive relief. Those orders have been discharged.
It is not appropriate, in these circumstances, to make extremely broad injunctive orders, particularly when regard is had to the other circumstances of this case, particularly the delay. It is also not for the Court to seek to craft, of its own notion, some narrower form of injunctive relief. I note that no application was made on 4 July 2024 for the Court to order some form of narrower relief. Rather, the contention was that the Court should order the broad relief sought, but for only a limited period of a couple of weeks, with a view to the plaintiff issuing a notice to produce in the interim to seek to elicit documents to enable it to then refine the interlocutory relief. This is also not appropriate in the circumstances, including the delay to date. There are other less invasive procedures available to the plaintiff.
I am prepared to accept, on the material presented, that there is a serious question to be tried as to whether the defendant has delivered up to the plaintiff all of the components and parts that have, in effect been paid for. The case is, however, by no means straightforward.
There is no pleading, as yet, setting out the material facts relied on, only a summons claiming relief. Reliance was placed on the terms of the Contract, but that related to the purchase of the components and parts in existence as at the time of the Contract. Any agreement since then was apparently with HAR and not reduced to writing. HAR is now in liquidation. The terms of the Contract appear to contemplate that any final work readying the P-38 to fly would not be with HAR, but another company.
The basis for the claim appears to be a claim in detinue for failure to deliver up to the plaintiff that which it owned - having either bought it as part of the Contract or paid for it as part of the work done by HAR.
One particular problem is identifying, with any precision, what components or parts have not been delivered up which should have been.
Much of the material tendered at the hearing which sought to identify what was missing was described with extreme generality. This was a problem that Mr Ceislar in effect acknowledged in his affidavit. It arises out of the very general description used in the documents, including the original Contract and the invoices. The components and parts collected in July 2023 are also described in very general terms. In relation to one item apparently collected - "[a]ll wing materials made or refurbished" - there was apparently a PDF attached to the 12 July 2023 email, but this was not in evidence before me.
In respect of a number of missing components and parts, it is thus far from clear that there is something that has not been delivered which should have been. This bites at many levels - whether there is a serious question to be tried, whether the defendant has that component or part in his possession, whether there is any threat of disposition, and the scope of any interlocutory relief.
One example is the cockpit. The 12 July 2023 email says that one cockpit was available for collection yet Mr Cieslar says that 50% is missing. The description "one cockpit" is quite unclear at least in terms of suggesting that something is in existence in the possession of the defendant which should be handed over.
The position in relation to the documentation - item 2 in the Listed Things - is also quite unclear. The plaintiff contended that it was an implied term of the Contract that proper paperwork would be kept, as that paperwork was necessary to obtain the necessary approval for the P-38 to fly and it was promised that the P-38 would be restored to fly. Reference to the Contract in this regard must be a reference to an agreement with HAR - which is now in liquidation. Whilst it is clear that HAR's liquidator indicated he had no objection to the plaintiff collecting the components and parts, there was no evidence as to who currently holds HAR's corporate records.
It is difficult in these circumstances to make any assessment of the strength of the prima facie case.
The balance of convenience strongly favours refusal of the injunctive relief sought.
There has been an inordinate delay in the bringing of the application. The plaintiff was on notice of problems in relation to the work being carried out and whether or not he was being misled by the defendant from at least early 2019. The problems intensified in early 2022, when Mr Traynor was made aware that no work was being carried out on either of his projects. The relationship had broken down by October 2022. The components and parts were collected in July 2023. At that time Mr Traynor was made aware by Mr Cieslar that not all parts had been provided, he raised this issue and he was told by the defendant that they had.
Yet it was not until one year later that the application for injunctive relief was brought. All the while the defendant no doubt continued to conduct his business - including in relation to the other two P-38 projects.
It is not in dispute that applications for interlocutory injunctive relief must be brought promptly. See generally: Quantum Service and Logistics Pty Ltd v Schenker Australia Pty Ltd [2019] NSWSC 2 at [29]-[31] per Robb J; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [53].
Counsel for the plaintiff relied on the decision of Brereton J in Re Colorado Products Pty Ltd [2012] NSWSC 1251 on the question of delay. At [6], Brereton J stated: [6] It seems to me that in the context of a Mareva application, the plaintiff is not necessarily bound to come to court to seek a freezing order at the first possible opportunity. It is hardly a case in which a plaintiff by not acting promptly occasions prejudice to a defendant. To the contrary, it is the plaintiff who accepts risk by not acting promptly. It may often be prudent for a plaintiff not to make an application at the first opportunity; for example, in this case, a judgment could legitimately have been formed that, so long as the Coxs Road property remained available, the dissipation or alienation of the second defendant's property did not pose such a threat to the enforceability of the plaintiff's judgment as to justify, on the totality of the picture, a Mareva application at that point.
The issue of delay obviously has to be considered in the context of each case. Brereton J's statement was not one of general application.
The present application could and should have been brought much earlier. The explanation offered - namely other work commitments - is not an adequate excuse in the context of this case. As the plaintiff was well aware, the defendant was continuing to carry out the other P-38 restoration work. This work has resulted in, it would appear, the PIMA P-38 being ready for shipment.
It also seems relatively clear that if the plaintiff is ultimately successful in this case, then damages would be an adequate remedy.
Mr Traynor's evidence is that the high resale value of a flying P-38 was what interested him in the P-38 project in the first place. This is consistent with the evidence of Mr Cieslar that the last flying P-38 sold for USD 9 million. Mr Traynor carried out the restoration, on advice of his accountant, through a separate company. There is no suggestion that the project has any particular sentimental attraction to Mr Traynor such that it could be said that damages would be inadequate.
In all of the circumstances, the balance of convenience warrants the rejection of the claim for interlocutory relief.
It was for these reasons that I dismissed the oral application for injunctive relief.

Idle Time Pty Limited v Greinert

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Judgment (7 paragraphs)

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Cases Cited (8)