Endeavour Energy v Precision Helicopters Pty Ltd [2015] NSWCA 169

Readers may recall our March 2014 newsletter1 canvassed the NSW Supreme Court decision in the matter of Edwards and Ors v Endeavour Energy and Others Precision Helicopters Pty Limited v Endeavour Energy and Ors; Endeavour Energy v Precision Helicopters Pty Limited and Anor (No. 4)2(Edwards Decision).

This matter was recently considered by the NSW Court of Appeal with an ensuing decision which alters the findings of the trial judge as to the issue of whether the Civil Aviation (Carriers’ Liability) Act 1967 (NSW) (CACLA)3 had application to the claim and secondly, whether Mr Simeon Edwards (Edwards) was a passenger for the purpose the CACLA. The Court of Appeal judgment also has liability implications which power and communication asset owners ought take note of.

Facts revisited

The matter arises out of a helicopter accident at St Albans in New South Wales on 4 April 2006. The accident resulted when the skid, and then tail rotor of the helicopter, caught a catenary wire owned by Telstra Corporation Limited (Telstra). Following contact with the catenary wire, the helicopter lost directional control, failed to affect a level landing and rolled onto its right-hand side.

At the time of the accident the helicopter, owned and operated by Precision Helicopters Pty Ltd (Precision), was being utilised for intra-state aerial power line inspections on behalf of Integral Energy, now Endeavour Energy (Endeavour).

On board the helicopter at the time of the accident was Edwards, an employee of Endeavour Energy. As a result of the accident, Edwards suffered catastrophic head injuries and a claim for compensation ensued.

Primary Decision

Application of the CACLA

In the primary decision, the trial judge noted the intra-state nature of the accident flight was not in itself determinative as to the application of the CACLA, instead stating it was critical to assess the ‘nature of the activity upon which the helicopter and its occupants were engaged’4 at the time of the accident.

On that basis, the trial judge characterised the accident flight as a low-level aerial work operation for the purpose of power line inspections and concluded it was difficult see how the nature of the work fit ‘within the concept of intrastate airline and charter operations of the type caught by section 4’5 of the CACLA and thus seemed ‘far removed from any notion of commercial transport operations’ by the holder of a ‘charter licence’.6

For this reason, the trial judge held the CACLA did not apply to the Edwards’ claim. Despite the finding in regards to the application of the CACLA, the trial judge nonetheless turned to consider whether Edwards was a passenger for the purpose of the CACLA.

Was Edwards a passenger?

Absent a definition of ‘passenger´ in the CACLA, the trial judge took guidance from leading international and local cases7and applied the principles laid down in those cases to the facts of this matter.

In finding Edwards to have been ‘an essential part of the crew’, and therefore not a passenger for the purpose of the CACLA, the trial judge looked to the contract for aerial services as between Precision and Endeavour noting the following critical features:

  • Two Endeavour employees were supplied to Precision as an ‘inspector’ and ‘observer’;
  • The observer was to ‘assist the pilot by providing advance warning of approaching hazards, tracking flight developments to determine changing risks and recording the condition of the powerline’;8 and
  • At the time of the accident, and in accordance with the contract, Edwards fulfilled the role of observer.

The trial judge found Edwards’ role as observer was central to the pilot’s conduct of the aerial inspections of the overhead lines and the pilot had relied on Edwards to assist with the navigation of the aircraft as well as to provide advance warning of hazards.

Court of Appeal fecision

Application of the CACLA

The Court of Appeal did not accept the findings of the trial judge in the primary decision finding that the scope of the CACLA (by dint of section 4) ‘should not be identified by reference to a concept of intrastate airline and charter operations’and further that it was not appropriate to ‘assume, because the AOC [Air Operator’s Certificate] differentiated between charter operations and aerial works operations, that such a distinction was to be found’9 in the CACLA. In view of this, the Court of Appeal considered it instead important to focus on the concept of carriage of a ‘passenger’.

Was Edwards a passenger?

As to this question, the Court of Appeal disagreed with the trial judge finding instead that Edwards was a ‘passenger’ for the purposes of the CACLA. In reaching this finding, the Court of Appeal found Edwards ‘did not have a role in operating the helicopter or directing the pilot in his operation of the helicopter’ with his role ‘limited to identifying infrastructure owned by Endeavour with a view to serving the interests of his employer, Endeavour’.10

The Court of Appeal specifically noted Edwards was ‘not employed by Precision as an assistant to the pilot, nor as a navigator’11 and as such, to the ‘extent that there was a division between the aircraft crew and others’, concluded, ‘Edwards fell into the latter category’.12

Finally, the Court of Appeal was satisfied the international authorities cited by the trial judge13 supported the position that Edwards (like Sergeant Herd) had no physical control over the flying of the helicopter and was therefore merely a passenger for the purpose of the application of the CACLA.

Impact of the Court of Appeal decision

Liability of helicopter operator to Edwards

The Court of Appeal’s findings in regards to the application of the CACLA and the question of whether Edwards was a passenger meant the operator, Precision, was strictly liable for the damage suffered by Edwards, but that it was capped at $500,000.00.

As a result of the application of the CACLA, Endeavour and Telstra were found to be liable for the balance of the $16 million owing to Edwards in satisfaction of his successful damages claim.

Liability of communication asset owner

The Court of Appeal was asked to determine whether Telstra was liable in negligence to Edwards (and in turn for contribution to Endeavour and Precision) due to Precision’s helicopter contacting Telstra’s catenary wire.

The Court of Appeal unanimously found Telstra owed a duty of care to the owner of the helicopter and its occupants and was thus liable contrary to the findings of the trial judge.

Telstra relied on the ‘finding of the trial judge that Endeavour made no inquiries of it (Telstra) as to the presence of any telephone service lines in the vicinity of power lines’14 and the resultant inference that such inquiries would have put Telstra on notice of the inspections. This was dismissed by the Court of Appeal.15

In reaching this conclusion, the Court of Appeal noted the ‘long standing practice of conducing aerial inspections of power lines in rural areas combined with public campaigns16 advertising such inspections’17 ought to have been sufficient for Telstra to have ‘reasonably foreseen the possibility that a helicopter may operate in the vicinity of its wire and thus come in contact with a not readily detectable wire’.18

Finally, while ‘the case pleaded against Telstra comprised some 37 particulars of negligence’19 the Court of Appeal noted, as to the issue of breach of duty, the matter actually turned on ‘the simple proposition that the catenary wire served no purpose and could readily have been removed at any time’.20

Comments

The findings of the Court of Appeal in this matter are of significant benefit to operators wishing to avail themselves of the benefit of the strict liability capped damages regime set out in the CACLA (in contrast to the potentially significant exposure to damages which arises at common law). It also creates somewhat greater certainty for insurers as to the potential liability exposures and damages regimes which may be faced by insured’s operating in the aerial work category.

That said, and despite the Court of Appeal overturning the trial judge’s finding on the application of the CACLA and the issue of whether Edwards, as an observer, was crew or a passenger, it remains the case that aerial operators entering into third party contracts ought continue to ensure the roles played by those on board the aircraft at the relevant time are clearly defined at an operational level.

With this in mind, it continues to be the case that operators can put themselves in the best possible position to manage liability exposure by ensuring all third party contracts are clear and unambiguous as to the expectations and roles of the respective parties (in addition to all insurance and indemnity clauses), but also contractually as to the issue of whether an observer is a passenger for the purpose of the CACLA21 (and if it is the operator’s intention to address this, to ensure the appropriate insurance cover is in place with its insurer).

It is possible a special leave application may be made to the Australian High Court to consider the Court of Appeal’s finding in regards to the application of the CACLA (and in turn the strict liability capped damages regime) to the Edwards claim. Carter Newell will continue to monitor this case and report further should developments ensue.

Finally, power and communication asset holders may also wish to take note of the Court of Appeal’s findings in regards to the liability of Telstra. Aerial asset inspection programs are commonplace in Australia, but particularly regional Australia. Asset owners may wish to consider known locations where assets (including redundant or abandoned assets) and aerial operations may intersect and take steps to address the risks arising from such activities.

Given the quantum of the Edwards claim (i.e. approximately $16 million) was born largely by the asset owner and Edwards’ employer, the cost of investigating and implementing a risk management strategy for aerial power and communication assets may well outweigh the risk and costs of an adverse judgment for personal injury or death arising from a wire strike accident.