Bay Flight 2012 Ltd v Flight Care Ltd [2012] NZHC 484; (2012) 10 NZBLC 99-705; [2012] NZAR 436 (21 March 2012)

Last Updated: 27 March 2012

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2012-441-92 [2012] NZHC 484

BETWEEN BAY FLIGHT 2012 LIMITED Plaintiff

AND FLIGHT CARE LIMITED Defendant

Hearing: 20 March 2012 (Held in Wellington) Counsel: K B Johnston for Plaintiff

K Sullivan for Defendant

Judgment: 21 March 2012

_{JUDGMENT OF THE HON JUSTICE KÓS}

Introduction

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

[2] The question in this application for summary judgment – brought by the new owner - is whether it can show the repairer has no realistic prospect of showing at trial (with the benefit of full evidence and discovery) a right to retain the aircraft

_{under a common law “worker’s” lien.}

BAY FLIGHT 2012 LIMITED V FLIGHT CARE LIMITED HC NAP CIV 2012-441-92 [21 March 2012]

The saga of the ZK-KID

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

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

[5] In April 2011 BFL delivered ZK-KID to FCL for servicing. The precise terms on which the aircraft delivered are unclear, but invoices were rendered and paid monthly as work progressed. On 11 December 2011, for instance, an invoice for $36,826.88 (inclusive of GST) was rendered. No terms of payment are set out on the invoice, but it is common ground that the final date for payment would be either

21 days later or (more likely) on the 20th of the month following. That is, on

20 January 2012.

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

4. By December 2011 the rebuild was largely complete, but there was still some work needed to finish the job. On or about Wednesday

21 December 2011 I was contacted by Brian Brooker, a representative of Bay Flight Aviation. Mr Brooker told me that

Steve Rowe, a director of Bay Flight Aviation, wanted to borrow the aircraft for the purpose of taking photographs of it.

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

6 On or about the morning of 21 December 2011, Flight Care had the aircraft in its hangar. Just before lunch time, we took the aircraft

out the front of Flight Care’s hangar for the photo shoot. Bay Flight Aviation took the aircraft onto their property, and lined the aircraft up with Bay Flight Aviation’s other planes.

7 Flight Care was due to break for the Christmas period. At around

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

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

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

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

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

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

[10] On 4 January 2012 the governing director of FCL, Mr Brian Hare, visited BFL’s premises at Tauranga airport. He met the liquidator, Mr Thomas Rodewald, and one of his colleagues. All three have provided affidavit evidence. None, least of all Mr Hare, say he asserted the right to a lien over, or continued possession of, ZK- KID. It is however common ground that he said that had he been on site on

21 December 2011 he “would not have given possession back to BFL”.

[11] On 15 January 2012 the liquidator sold the assets of BFL to the plaintiff, Bay Flight 2012 Limited. Those assets included ZK-KID. Prior to the sale it seems there may have been a discussion between Mr Hare and a representative of the plaintiff. Mr Hare’s evidence of that discussion does not suggest he claimed any property or security interests in the aircraft. Again on a conservative basis, I will proceed on the basis that the plaintiff in this proceeding was not a bona fide purchaser for value without notice of the claimed lien. That proposition may not be correct, but it is the appropriate course for present purposes. Of course the plaintiff had nothing to do with the narrative of events in December 2011. It emerged as a suitor only in January 2012.

[12] On 18 January 2012 there was telephone conversation between the liquidator and Mr Peter De Luca. He is a director of FCL, and also a solicitor in partnership at the firm Tompkins Wake. During that conversation Mr De Luca said FCL was claiming a lien over the log books for at least two aircraft, one of which was ZK- KID. No claim to a lien over the aircraft itself was made. That happened only on

15 February 2012, after FCL had recovered the aircraft from the plaintiff.

[13] Before then, on 26 January, FCL’s Mr Hare changed direction. He re-issued the invoice of 11 December (and one sent after that). Now they were addressed instead to Mr Rowe personally. But otherwise they were the same bills, and had the

same dates. The plaintiff says this represented an election, the effect of which was to abandon any claim of debt against the now insolvent BFL. And that with that abandonment of the debt claim must go abandonment of the lien. I will revert to that issue later in the judgment. For completeness I note that Mr Rowe immediately denied personal liability for the work the subject of the re-issued invoices.

[14] On 8 February 2012 the plaintiff asked FCL for a quote to carry out further servicing work on ZK-KID. At about that point – the date is not quite clear – a staff member of FCL spoke to one of the plaintiff ’s staff members. He arranged for him to deliver ZK-KID to FCL’s hangar so it could be assessed for quotation. That seems to have occurred on 10 February 2012.

[15] On 15 February 2012 two things happened. First, one of Mr De Luca’s

partners at Tompkins Wake wrote to the plaintiff saying:

We act for Flight Care Limited and have invited Flight Care Limited and Brian Hare in respect of that company’s rights in respect of a Cessna ZK- KID. We have confirmed to Brian that in our opinion Flight Care Limited has a valid lien on the aircraft for the work done and that it is entitled to sell the aircraft in due course if the outstanding amount is not paid in full.

So that was the first explicit claim to a lien over ZK-KID, as opposed to its log book. The second thing that happened was that the quotation for further servicing work on ZK-KID was supplied. Since then, FCL has refused to release the aircraft, despite requests from the plaintiff.

[16] On 16 February 2012, despite the assertion of lien in the solicitor’s email the day before, FCL submitted a creditor’s claim form under s 304(1) of the Companies Act 1993. The form is signed by Mr Hare. The form provides for a creditor to indicate whether it is unsecured, surrendering its security, or making a preferential claim. Mr Hare did not tick any of those boxes. However, a s 304(1) claim is of necessity a claim by an unsecured creditor. No indication of any security or preference is advanced by FCL in the document. I therefore agree with the submission by Mr Johnston for the plaintiff that the form is proof as an unsecured creditor.

Approach to summary judgment

[17] It is common ground between the parties that the principles in Pemberton v Chappell,1 Doyle’s Trading Co Limited v West End Services Ltd2 and Bilbie Dymock Corporation Limited v Patel3 apply. The Court must be sure there is no real defence that may succeed with the benefit of discovery and cross-examination. In Bilbie Dimock4 Cooke P said:

The need for judicial caution has to be balanced, when considering a summary judgment application, with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. In the end it can only be a matter of judgment on the particular facts.

And in Australian Guarantee Corporation (New Zealand) Limited v McBeth5 the

Court of Appeal said:

Although the onus is upon the plaintiff there is upon the defendant a need to provide some evidential foundation for the defences which are raised. If not, the plaintiff’s verification stands unchallenged and ought to be accepted unless it is patently wrong.

[18] An evidential foundation for defences that might be proved with the benefit of discovery or cross-examination must be laid in affidavit evidence.6 In the end the position is as put by the Court of Appeal in Jowada Holdings Limited v Cullen Investments Limited:7

In essence, the Court must be persuaded that on the material before the Court the plaintiff has established the necessary facts and legal basis for its claim and that there is no reasonably arguable defence available to the defendant. Once the plaintiff has established a prima facie case, if the defence raises questions of fact, on which the Court’s decision may turn, summary judgment will usually be inappropriate. That is particularly so if resolution of such matters depends on the assessment by the Court of credibility or reliability of witnesses. On the other hand, where despite the differences on certain factual matters the lack of a tenable defence is plain

1 _{Pemberton v Chappell [1987] 1 NZLR 1 (CA).}

2 _{Doyle’s Trading Co Limited v West End Services Ltd [1989] 1 NZLR 38.}

3 _{Bilbie Dymock Corporation Limited v Patel (1987) 1 PRNZ 84 (CA).}

4 _{Ibid at n 3.}

5 _{Australian Guarantee Corporation (New Zealand) Limited v McBeth [1992] 3 NZLR 54 at 59.}

6 _{Middleditch v NZ Hotel Investments Limited (1992) 5 PRNZ 392 (CA).}

7 Jowada Holdings Limited v Cullen Investments Limited CA248/02, 5 June 2003 at [28] per

McGrath J.

on the material before the Court, to the extent that the Court is sure on the point, summary judgment will in general be entered. That will be the case even if legal arguments must be ruled on to reach the decision.

Competing arguments

[19] For the plaintiff Mr Johnston submits it can meet the threshold in the summary judgment authorities for these three reasons:

(a) The possessory lien was clearly lost on relinquishment of possession of ZK-KID on 21 December 2011.

(b) There is no basis on the evidence for the exception in Albemarle Supply Co Limited v Hind8 to apply i.e. an agreement that the property would (1) be returned and (2) notwithstanding the relinquishment, the lien would continue (in effect as a new contractual possessory lien), but still as security for the pre-relinquishment work done.

(c) FCL has abandoned or waived its lien right by the issue of

replacement invoices to BFL’s principal shareholder on 2 January

2012 and proving as an unsecured creditor of BFL on 16 February

2012.

[20] For FCL in response, Ms Sullivan submits:

(a) It is accepted that ordinarily a common law worker’s lien is lost on relinquishment. But if delivery is induced by fraud or the property is otherwise unlawfully removed by the owner, the right is not lost. In oral submissions, however, Ms Sullivan did not advance the fraud exception, and in my view rightly so. At most the evidence suggests that each party may have been somewhat “cute” with the other. Accordingly Ms Sullivan relied on her second ground as her primary

_defence.

8 Albemarle Supply Co Limited v Hind [1928] 1 KB 307 (CA).

(b) The exception in Albemarle applies. There was an agreement to return ZK-KID and to continue the lien right in respect of the pre- relinquishment work. The terms of the agreement reached at the time of relinquishment needs to be examined in light of discovery and cross-examination.

(c) No abandonment or waiver of possessory right occurred by reason either of the revised invoices or proof of debt submitted.

[21] Ms Sullivan did not press an alternative argument initially appearing in FCL’s notice of opposition. It was based on the claimed lien in respect of the log books extending to the aircraft itself. The underlying proposition was that the log books represented an “integral part” of the aircraft. The argument, sensibly, was abandoned.

Lien lost on relinquishment of possession?

[22] The plaintiff did not contest the entitlement of FCL to a common law worker’s lien, by way of security for the work expended in relation to repair of ZK- KID, during the time it remained in the possession of BFL. The invoice rendered on

11 December 2011 would be sufficient to establish the underlying debt needed to support such a lien.9 An issue does arise, however, as to whether the debt was due or merely accruing. Sir Maurice Casey (whose death in January 2012, in the midst of the events described above, is very much lamented) says, in his chapter on Liens in Laws of New Zealand:10

When the right to a legal or common law lien is conferred the debt for which it is claimed must be due and not simply accruing. In respect of a worker’s lien, for example, an arrangement for future payment that is inconsistent with any implied agreement for immediate payment will not give rise to a lien notwithstanding that the work has been done.

A debt represented by an invoice payable at a time in the future is accruing, rather than due.11 In the present case the outstanding invoice of 11 December was by no

9 _{See at [5] above.}

10 _{Casey, Laws of New Zealand: Liens (Butterworths, Wellington, 1999) at [11].}

11 Re Peter Austin Limited [1990] 2 NZLR 245, 253-255 per Tipping J.

means due as at 21 December 2011. The liability to pay arose on receipt of the invoice, but BFL might have paid it on the nail, or at any time before it fell due, but were not bound to do so. The debt was thus due for payment after 21 December

2011.12 An issue, on which I did not receive full argument, therefore arises as to

whether a lien existed at all as at the date possession was relinquished. The counter- argument can readily be conceived, based on the need for continuity of security, and the curious consequence (if the foregoing is right) of the lien being suspended until the debt actually falls due. What then happens in the meantime? However as the matter was not argued at any length, I will proceed on the basis most favourable to the defendant. Namely, that a lien existed here prior to 21 December 2011.

[23] Possession is at the heart and soul of a common law worker’s lien. It is a purely possessory security right, devised to assist the worker achieve payment of his or her fee. Rights of sale of the secured property, failing payment, had to be introduced by statute. The common law did not permit it. As Diplock LJ said in Tappenden v Artus:13

The common law remedy of possessory lien, like other primitive remedies such as abatement of nuisance, self defence, or rejection of trespasses to land, is one of self- help. It is a remedy in rem exercisable upon the goods, and its exercise requires no intervention by the courts, for it is exercisable only by an artificer who has actual possession of the goods subject to the lien.

[24] As that passage makes clear, at common law such a lien is lost where the creditor voluntarily relinquishes possession of the chattel. Sir Maurice Casey put it this way:14

As a general rule, a possessory lien is lost by the outright delivery of the article to the owner or his or her agent, and cannot be revived by obtaining subsequent possession. This applies even if the delivery was mistaken. If delivery to the owner is induced by fraud or obtained unlawfully the lien may be revived by subsequent possession.

_{There is ample New Zealand authority for that proposition.}15

12 _{Ibid, 253.}

13 _{Tappenden v Artus [1964] 2 QB 185 (CA), 195.}

14 _{Casey, Laws of New Zealand: Liens (Butterworths, Wellington, 1999) at [15].}

15 Jeffcott v Andrew Motors Limited [1960] NZLR 721, 730 (CA); United Plastics Limited v Reliance Electric (NZ) Limited [1977] 2 NZLR 125, 126–127 (HC); Leeward Holdings Limited v Douglas [1982] 2 NZLR 532, 535 (HC).

[25] It is also clear that a lien may be abandoned.16

A subsequent contract or course of dealing inconsistent with continuation of the lien may also be regarded as superseding it or as abandonment.

I will return subsequently to the question of abandonment.17

[26] In this case it is perfectly clear on the evidence that the possessory lien would be lost by what occurred on 21 December 2011. Unless the exception arising under the decision in Albemarle Supply Co Limited v Hind18 applies, the lien was lost. Ms Sullivan rightly did not attempt to put a case forward on the basis that BFL had obtained repossession of the aircraft by fraud.

[27] This conclusion cannot depend on discovery or cross-examination. So the question is whether the Albemarle exception applies.

Albemarle exception applicable?

[28] The essence of the common law lien is continued, uninterrupted possession. That is the nature of the security obtained. Possession parted with, the lien – and with it the security - is lost. The Albemarle exception is dependent on two things. The first is the redelivery is for a limited and specific purpose, with the chattel to be returned on completion. The second and critical requirement is agreement or acknowledgment before redelivery that the lien not be lost. I agree with Mr Johnston that the consequence of the return of the chattel in these circumstances may be to substitute a contractual lien with retroactive security effect, but for present purposes nothing turns on the distinction.

[29] In Albemarle itself the defendant garage maintained, cleaned and fuelled three taxicabs. The operator had obtained them on hire purchase, and on terms prohibiting the creation of a lien for repairs. But that condition did not bind the defendant. When the hirer defaulted on its hire purchase obligations, the supplier

_{sought to recover the cabs from the defendant. It demurred, claiming a lien for the}

16 _{Casey, Laws of New Zealand: Liens (Butterworths, Wellington, 1999) at [16].}

17 _{At [40], below.}

18 Albemarle Supply Co Limited v Hind [1928] 1 KB 307 (CA).

balance due for its services. The Court of Appeal (which comprised Lord Hanworth MR, Scrutton and Sargant LJJ) held that the garage was entitled to its lien. It had not been lost by allowing the hirer to take the cabs out in the morning. As the Master of the Rolls noted:19

It was argued that the lien was lost by the dispatch of the taxicabs from the garage for use in the ordinary course of their purpose. There was evidence that an agreement had been made by the defendant with [the hirer] in December 1924 that the taxicabs, even if permitted to leave the garage for use, should be treated as in pawn – that is that the lien should not be lost.

Similarly, Scrutton LJ said:20

The plaintiff next contended that any lien was lost because the cabs went out of the possession of the garage each day to ply for hire. The defendant proved an agreement with [the hirer] at a time when the lien existed that the cabs should go out for hire each day on the terms that they should be returned to the garage each night, the lien continuing when the cabs were in possession of the garage. I do not think any plying for hire under this agreement prevented the lien if any from continuing.

Sargant LJ did not opine on that question. But what is clear is that there was in that case an explicit agreement between the garage and the hirer acknowledging the existence of the lien and specifically sustaining it while possession reverted, albeit temporarily, to the hirer.

[30] And in Rose v CMS Operations Limited21 the defendant did not lose its lien for work done on two motor racing cars where it permitted the owners to regain possession of the cars in limited circumstances. There were arrears in payment and it was agreed that the defendant could retain possession of the cars “as a sign of goodwill”. The owners were permitted to race them at Silverstone, but the defendant’s staff continued to look after the cars at the race meeting. At the end of the races the cars were returned to the defendant, and could not be taken elsewhere. As Jacob J put it:

It is suggested that possession of the cars was given up by the contractors during the race at Silverstone. I do not regard that as realistic. The truth is,

19 _{At 314.}

20 _{At 405-406.}

21 [2002] EWHC 59 (Ch).

the cars were taken to the pits. The owner was given temporary custody so they could be raced. The only way back for the cars was back into the pits where the contractors were waiting for them. Nothing there, to my mind, suggests the giving up of the legal right of possession of the car by the contractors. It is not as though the driver of the car, having been allowed to go on to the track at Silverstone, could turn left on to the M20 and drive away.

The outcome was, therefore, the product of express agreement as to a lien continuing (the “goodwill” agreement) and retention of possession despite the owners being able to go for a spin on the Silverstone track.

[31] If the Albemarle exception is engaged to retain the lien despite loss of possession, there needs to be either clear agreement or pre-release acknowledgment between the parties that this is to be so. Such was the case in Albemarle itself. Otherwise the owner of the chattels should be free to deal with its asset as it pleases. A strict approach is efficient. First, the lienholder is thus encouraged to make clear the basis on which possession is conceded. Secondly, the chattelowner’s rights are thereby least constrained by the uncertainty of a potentially reviving possessory lien.

[32] Against those principles I turn to the facts here. In doing so I rely solely on the evidence of Mr Best. His evidence as to the basis of release of possession goes no further than this:

The aircraft was given to Bay Flight Aviation for the purpose of allowing the photographs to be taken and on the understanding that it was returned to Flight Care.

And that is it.

[33] What is entirely missing from this is evidence of express agreement or acknowledgment before release of each of the following: (1) restriction of permitted use of the aircraft (remembering that it was not then airworthy); (2) the existence of the lien; (3) that repossession is not to diminish the lien, so that it is to continue thereafter; and (4) requirement that the aircraft be returned – as opposed to a mere common expectation that that would happen because there is work still to be done.

[34] At best here there is evidence only of (1). But in my view much more is needed than a mere agreement or arrangement to return the chattel, albeit temporarily. If that were all that was agreed, the chattelowner would remain at liberty to change its mind and enjoy its property rights without restraint. What is needed is that the lien be adverted to in the way described in the preceding paragraph. And that its preservation is expressly agreed or acknowledged. Each aspect occurred in Albemarle and Rose.

[35] Furthermore, the response of FCL to BFL’s continued repossession is wholly inconsistent with an Albemarle arrangement having been made. While the receipt of subsequent conduct evidence remains controversial as to construction of a contract, it is always admissible to ascertain the existence, or variation, of a contract.

[36] In this case if there was a clear arrangement or understanding that FCL’s lien

were not to be diminished by repossession, it is inexplicable that:

(a) There was no immediate protest based on the lien agreement – especially after BFL went into liquidation the next day. There is no evidence of such protest in the documents or affidavits. No such objection is attested to by Mr Hare when he describes going to visit BFL’s liquidator on 4 January 2012.

(b) The existence of the lien was not adverted to at all until 15 February

2012. Yet a lien was asserted in relation to those assets FCL retained: the log books. No claim of lien was, for instance, asserted by Mr Hare when he spoke to the liquidator on 4 January 2012.

(c) Instead the existence of a lien over ZK-KID was not advanced until the aircraft was safely back in FCL’s hangar, after the new owner, the plaintiff, returned it for further works to be quoted on.

(d) Also material are acts by FCL apparently inconsistent with the existence of a lien, let alone agreement or acknowledgment that such lien was to survive relinquishment of possession: the re-issued

invoices of 26 January (no longer addressed to BFL) and the

16 February 2012 proof of debt as an unsecured creditor.22

[37] All of this is wholly at odds with an agreement of the kind contemplated by Albemarle as an exception to the plain rule that voluntary loss of possession means loss of the lien.

[38] I have reached this view without reference to the evidence of Mr Brooker. For completeness, I turn to it to see if his account of his conversation with Mr Best at the time of relinquishment of possession offers the defendant any assistance. But it does not. He says, “There was no discussion about lending or borrowing, and no mention of a lien”.

[39] In my view this is a clear case on the evidence before me. It is not one where the defendant has, in the face of a strong prima facie case by the plaintiff, laid a sufficient evidential foundation for the defence it advances, based on Albemarle. It is not one where there is a realistic prospect of a clear Albemarle agreement or arrangement being shown in discovery (the arrangement on 21 December 2011 being wholly oral) or at trial. I am left unmoved by the defendant’s plea that the terms of the arrangement on 21 December need to be tested further. Taking a realistic view of the evidence and the threshold required to meet the exception, I cannot agree that that is so.

Abandonment?

[40] In the circumstances it is not necessary for me to resolve Mr Johnston’s alternative argument based on abandonment of the lien right through inconsistent conduct in January and February 2012.

[41] The first particular is the rendering of new invoices for the work done on ZK- KID, and originally billed to BFL, to its principal shareholder, Mr Rowe instead. Mr Johnston submits that this is inconsistent with a debt due by BFL. Such a debt

_{was needed to sustain the lien. If the debt is dispensed with by re-issue of the}

22 See [13] and [16] above.

invoices, the underlying lien is discharged. The submission is cogent, although an issue arises as to whether the re-issued invoices may yet be cancelled (as appears to have occurred) before detrimental reliance.

[42] The second particular is the submission of a proof of debt by FCL on

16 February 2012. It was in terms noted above at [16]. Mr Johnston submits that the effect of s 305(1)(c) of the Companies Act 1993 is that the creditor, presenting as an unsecured creditor (as here) thus forfeits its security. An issue arises however as to whether the word “charge” (which receives statutory definition in s 2(1) of the Act) contemplates a mere possessory security such as a lien. Be that as it may, the scheme of Part 16 of the Companies Act 1993 is to give secured creditors of all kinds the option to either realise their security (which a mere possessory security precludes) or to surrender that security and prove as an unsecured creditor. That suggests at least that FCL’s actions here in submitting the proof abandoned the lien, if still extant. Mr Johnston was unable to locate relevant authority on the issue. In the circumstances I decline to express a final view.

Disposition

[43] Despite Ms Sullivan’s valiant argument for the defendant, this in my view is a plain case justifying summary judgment. Summary judgment is therefore granted in accordance with the prayer in the plaintiff’s statement of claim:

(a) Ordering the delivery up of aircraft ZK-KID and its log book forthwith to the plaintiff; and

(b) Directing an inquiry into damages (if any) sustained by the plaintiff.

[44] As requested by counsel, costs are reserved. The parties may file memoranda in due course.

Solicitors:

Wadham Goodman, Palmerston North for Plaintiff

Tompkins Wake, Hamilton for Defendant

Stephen Kós J