The pilot and passenger were undergoing a full time flying training course to Commercial Licence standard, and had both recently obtained their restricted Private Pilots Licences (i.e. restricted to flight within the flying training area). On the day of the accident the pilot had spent the morning at lectures, and preparing for navigation exercises. After lunch he approached the Chief Flying Instructor and asked if he could take VH-FLF to the training area for an hour. This was approved and the pilot signed the flight authorisation sheet and entered the time 1340 hours on the sheet. There was no indication on the authorisation sheet that he intended to take a passenger, nor did he mention this to the Chief Flying Instructor. The pilot was later seen sitting in the aircraft, apparently awaiting the arrival of his passenger. There appears to have been no prior arrangement, other than a spur of the moment decision by the passenger, to go on the flight. The pilot called Archerfield Tower at 1351 hours and reported taxiing for the southern training area. At 1359 hours VH-FLF was cleared for takeoff. This was acknowledged by the pilot, and no further radio transmissions from the aircraft were heard or recorded. At approximately 1415 hours, witnesses heard the aircraft flying overhead. The aircraft was seen flying in a south-easterly direction in apparently normal flight, when the engine noise suddenly ceased. The aircraft was then observed descending in a steep spiral or spin from a altitude of about 2000 feet. The spiralling motion appeared to cease momentarily before the aircraft dived into the ground. The aircraft impacted the ground in a steep inverted nose down attitude. Indications are that the aircraft may have been recovered from the spiral briefly, before stalling and becoming inverted during the recovery at a very low height. No mechanical defects were found which may have affected the airworthiness of the aircraft, or which may have contributed to the development of the accident.