The Federal Court has dismissed a claim against an aircraft inspection firm over a plane that proved unairworthy after it was sold. In a July 24, 2026 decision, the court found the firm, Interair Pty Ltd, did what its engagement required and did not mislead the buyer.
For professional indemnity insurers, the ruling turns on a familiar point: the scope of a service contract can decide a claim before the question of care is even reached.
The buyer, Four Air Leitchville, paid $880,000 for a 1982 Fairchild Merlin III-C turboprop in December 2017. Before completing the purchase, it engaged Interair to carry out a pre-purchase inspection. Interair's report, dated November 6, 2017, described the aircraft as "…IN RE[A]SONABLE CONDITION FOR ITS AGE AND HOURS."
It was not. Within months the aircraft needed extensive remedial work, and expert witnesses agreed it had not been airworthy at the time of sale - a point that was not in dispute. The court observed that, "descending to a colloquialism," the aircraft "may have been something of a lemon."
Four Air Leitchville sued the seller and the inspection firm. It settled its claims against the seller, Hurlad Pty Ltd, in February 2023 for a total of $800,000, leaving only the claims against Interair and its director to be decided.
The case turned on a single line in an October 2017 email setting out the inspection's scope: a "Full review of aircraft log books," one of 14 listed tasks. The buyer argued that a proper review should have revealed the aircraft's maintenance had fallen out of step with its required program, and that Interair should have flagged it.
The court disagreed. It found the inspection contract never required Interair to examine the content of the aircraft's maintenance program or verify that the paperwork matched the work actually done. Expert evidence supported that reading. Several aircraft maintenance experts agreed that, from an inspector's standpoint, "…a full log book audit is not usually done," and that the industry treats documents such as a maintenance release as evidence the work was carried out. Their report, the experts said, "…is an opinion and not an endorsement of airworthiness."
That reasoning also answered the claim under the Australian Consumer Law. The court found the representations the buyer had pleaded were not made, and that, in any event, the "reasonable condition" statement was the inspector's genuine, informed opinion - not a false statement of fact. Interair could not have misled the buyer by staying silent about a problem it had no duty to look for and no knowledge of. As the joint experts put it, a pre-purchase inspection "…is not a certification of airworthiness but a general condition opinion."
The report also carried a disclaimer. Interair "…gives no representations and makes no warranties, express or implied," about the accuracy or completeness of the material, and disclaimed liability for loss suffered by anyone relying on it. It recorded that the aircraft "…was reported to be in an airworthy (flyable) condition by the current operator," passing on the operator's account rather than adopting it.
Insurance featured elsewhere in the history. In August 2021, the aircraft was stationary when another plane that had suffered a brake failure during an engine test struck it, damaging its starboard wing and propeller. It remained insured against ground risks, and Four Air Leitchville accepted a payment from its insurer, QBE Insurance, of $430,000, less a $9,500 policy excess. The aircraft was later sold, in its damaged condition, for $30,000.
The court dismissed Four Air Leitchville's application and both cross-claims between the parties. Costs were reserved, with the parties ordered to confer within 21 days.
For claims professionals, the decision is a reminder that a service provider's liability is measured by what it agreed to do, not by what the client hoped it would find. A carefully defined scope of work - and a disclaimer describing the report as an opinion rather than a guarantee - shaped the outcome.
