A court has allowed a father to bring his daughter's insurer into a crash case, finding his PTSD might count as bodily injury.
The crash happened on December 31, 2017. A De Havilland Canada THC-2 Beaver float plane operated by Sydney Seaplanes Pty Ltd crashed into Jerusalem Bay in the Ku-ring-gai Chase National Park. All five passengers and the pilot were killed. One of the passengers was 11 years old. Her father brought the claim.
He sued Airag Aviation Services Pty Ltd, which serviced and maintained the aircraft from time to time. His case is that the pilot became disoriented and incapacitated after inhaling carbon monoxide that leaked into the passenger cabin from the engine bay, and that the leak happened because of negligent maintenance. Airag denied it was negligent, and denied every fact in a Notice to Admit Facts served on it. Those allegations remain untested.
To bring the insurer in, the father relied on section 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). It lets someone who is owed money by an insured party claim it directly from the insurer. Leave from the court is needed first, and the father had to show three things: that he had an arguable case the company was liable, that the policy arguably covered that liability, and that the company might not be able to pay a judgment on its own. The parties agreed the first and third were met, so the fight was over the middle one - whether the policy responds.
QBE had issued an Airport Owners & Operators Liability Policy running from May 4, 2017 to May 3, 2018. The schedule describes the covered operations as “aircraft repair and maintenance” at Hangar 17, Bankstown Airport, Hangar 3, Albion Park Airport, and “elsewhere in Australia during the course of business.”
The insuring clause promises to pay damages “for bodily injury including death at any time resulting therefrom,” where the injury is “caused by accident occurring during the period mentioned in the Schedule and arising out of the hazards set forth in Sections 1, 2 and 3 below.”
QBE relied on no exclusion. Its position was simply that the father could not show an arguable case that the policy responds. It made three arguments.
The first was about whose injury counts. QBE said the only injury the policy could cover was the daughter's, and that a father's psychological shock at learning of her death is really a claim tied to her injury rather than a claim for his own. The court did not accept that. It said the argument ignored the policy's own words - “including death... resulting therefrom” - and found it arguable that the father's claim, if his PTSD counts as bodily injury, is a claim for damages for bodily injury.
The second argument was whether PTSD is bodily injury at all. The father relied on a specialist report concluding he “has sustained a physical injury to his brain as a consequence of his psychiatric condition (PTSD) deriving from the sudden and unexpected death of his daughter.” The court worked through an earlier appellate decision, Pel-Air Aviation Pty Ltd v Casey, which held that changes in how the brain functions, or chemical changes within it, are not enough on their own - “mental injuries are covered only if they are a manifestation of physical injuries, or if they result from physical injuries (including physical injuries to the brain).” Because the report claimed actual physical injury to the brain, the court found bodily injury arguable. Whether that is ultimately proven depends on all the medical evidence at trial.
QBE also argued the injury did not arise out of an insured hazard. On Section 1, the court agreed it did not apply. That section covers injury caused by fault or negligence “in the course of any work or of the performance of any duties carried out by the Insured or his employees,” and the court found the accident - the crash itself - did not happen in the course of that work. It noted the answer might have been different had the clause said “arising out of” rather than “in the course of.”
Section 3 was different. That hazard covers injury “arising out of the possession, use, consumption or handling of any goods or products manufactured, constructed, altered, repaired, serviced, treated, sold, supplied or distributed by the Insured,” where the goods form part of or are used with an aircraft, and only once they have left the insured's control. Bolts and cooling tubes were installed during servicing, and the father alleges they were the wrong parts. The court found it arguable that the accident, and any bodily injury, arose out of the use of those goods. It applied a settled point that “arises from” asks for a looser link than “caused by” - a claim arises from something if it “originates in, springs from, or has its foundation in” that thing. Which parts were actually used, and whether they caused or contributed to the crash, are matters for trial.
The third argument was about a condition in the policy. General Condition 6(d) says the insured only gets cover if “The Insured shall comply with all International and Government Regulations and Civil Instructions” - a requirement the policy treats as a condition precedent, meaning it has to be met before cover applies. QBE argued the case as pleaded involves using non-approved parts in breach of civil aviation rules, and that any non-compliance is enough to switch the condition on.
That fed into section 54 of the Insurance Contracts Act 1984 (Cth). That law generally stops an insurer refusing a claim because of something the insured did, unless the act “could reasonably be regarded as being capable of causing or contributing to a loss.” QBE said the alleged breaches cleared that bar, and that the father could never prove any part of the loss was unconnected to them.
The court declined to decide the point now. Some of the alleged failures rest on breaching aviation rules; others do not. Which are made out, and what actually put carbon monoxide in the cabin, are questions for trial. QBE pointed to a police interview with the maintenance engineer, which it submitted contained admissions, but the court said it could not reach that conclusion at this early stage - the evidence might not be admitted, might be tested, or might be met by other evidence.
Leave was granted. The father may file an amended statement of claim, and QBE was ordered to pay his costs of the motion.
Nothing was decided on the merits. This was a procedural ruling on whether the insurer can be brought into the case. The court held only that the coverage arguments are arguable, leaving the policy questions, the negligence allegations and the condition precedent to be determined at trial.
