Background
Four Air Leitchville Pty Ltd (FAL) sued Hurlad Pty Ltd, Gavin Bullas, Interair Pty Ltd and Ermis Shapanis over an aircraft. Its claims against Hurlad and Bullas settled in February 2023. In the substantive judgment, the Court dismissed FAL’s remaining claims against Interair and Shapanis, and also dismissed Interair and Shapanis’s cross-claim for contribution or indemnity against Hurlad and Bullas.
The parties then disputed costs. FAL relied on a 2020 notice to admit concerning the aircraft’s airworthiness and whether required C and D checks had been performed. Interair and Shapanis sought indemnity costs based on an unaccepted 2025 offer, while Hurlad and Bullas relied on unaccepted offers concerning the cross-claim.
The Court’s Holding
Justice Snaden held that FAL was entitled to its costs of proving that not all required C and D checks and inspections had been carried out. That was a factual matter capable of admission under the Federal Court Rules. But the requests to admit that the aircraft was “not airworthy” were conclusory mixed questions of fact and law, not facts for the notice-to-admit procedure. To avoid double recovery following FAL’s settlement with Hurlad and Bullas, Interair and Shapanis must pay 50% of FAL’s costs of proving the C and D check issue before 7 February 2023, and all such costs thereafter.
Otherwise, FAL must pay Interair and Shapanis’s costs of defending the primary proceeding. It must also pay, directly, both Interair and Shapanis’s costs of their cross-claim and Hurlad and Bullas’s costs of defending it. The Court declined indemnity costs: neither FAL’s rejection of Interair and Shapanis’s offer nor the rejection of Hurlad and Bullas’s cross-claim offers was unreasonable. All costs are on a party-and-party basis and are to be assessed as lump sums if not agreed. The $536,500 security for costs was ordered released to Interair and Shapanis.
Key Takeaways
- “Airworthiness” was not a standalone fact capable of admission because it involved rolled-up factual and legal conclusions.
- A disputed, provable factual matter in a notice to admit can carry separate costs consequences even when the party proving it loses the overall case.
- FAL bore the costs of the contingent contribution cross-claim because it arose from FAL’s unsuccessful non-apportionable Australian Consumer Law claim.
Why It Matters
The decision distinguishes between specific factual admissions and broad legal characterisations in the notice-to-admit process. Parties seeking costs protection should frame proposed admissions with precision.
It also illustrates that a claimant whose unsuccessful non-apportionable claim prompts a reasonably necessary contribution cross-claim may be ordered to bear the costs generated by that cross-claim, including the costs of its defence.