McCauley, M.B v Hamilton Island Enterprises Pty Ltd

[1988] FCA 408

IN THE FEDERAL COURT OF AUSTRALIA)

1

NEW SOUTH WALES DISTRICT REGISTRY) NO. G5 of 1987

)

DIVISION GENERAL 1

ON REMITTAL FROM THE HIGH COURT

OF AUSTRALIA

BETWEEN: MARK BERNARD EVERARD

MCCAULEY

Applicant

AND :	HAMILTON	ISLAND
-

ENTERPRISES PTY. LIMITED

Flrst Defendant
Flrst Cross-Defendant ln

Flrst and Second Cross-

Clalrn

AND :	KEITH WILLIAMS (QLD)
-	PTY. LIMITED

Second Defendant
Second Cross-Defendant In

First and Second Cross-

Claim

. AND : GREAT BARRIER REEF MARINE

- PARK AUTHORITY

Flrst Cross-claimant

Third Defendant

Second Cross-Clalmant

AND :	COMMONWEALTH	OF	AUSTRALIA
-

Fourth Defendant

L .

AND :

-	AUSTRALIAN AVIATION
UNDERWRITING POOL
PROPRIETARY LIMITED

Thlrd Party

- AND : ADRIAN ALISTAIR PATE

Thlrd Cross-Defendant to

Second Cross-Clalm

AND :	CHRISTOPHER	JOHN	MAINPRICE
-

Fourth Cross-Defendant to

Second Cross Clalm

CORAM:  M. L. FOSTER, J.

DATE :	8 JULY, 1988.
PLACE:	SYDNEY.

REASONS FOR JUDGMENT

( EXTEMPORE)

HIS HONOUR: In these proceedings, the appllcant has sued, lnter

alla, the flrst and second defendants, in order to recover

damages f o r serious ln~uries lncurred by hlm In a crash between

two helicopters occurring on a pontoon adlacent to Hamllton

Island in Queensland. The plalntiff has sued those defendants on

a number of claims for negligence and for breach of statutorty

and regulatory duties imposed under the Air Navlgatlon

Regulatlons, passed under the Alr Navlgatlon Act, 1920 (Cth).

Those claims In respect of breach of regulation are set out, at length, In the Statement of Clalm, and I do not propose to repeat them in these short reasons.

The flrst and second defendants have clalmed indemnity

under a policy of insurance with the Australian Avlation

Underwrltrnq Pool Proprletary Llmlted. Indemnity has been denied

under that policy and that company has been	]oined in the
proceedings as a third party.

The Great Barrier Reef Marine Park Authority has been sued a s a third defendant, and the Commonwealth of Australia as a

fourth defendant. It is not necessary In these reasons to set

out the causes of action alleged aqalnst them. Addltionally, the

pilots of the respective helicopters have been ~olned as

cross-defendants by the third and fourth defendants, and

pleadings between those parties are, at thls stage, not complete.

The motion that I have before me IS one by the third

party brought under order 5	rule 1 2 sub-rules 2(c) and (2)(d).
The thlrd party, by this application, seeks that an order	be made
In its favour glvlng it leave to defend the plalntiff's	claim

agalnst the first and second defendants in respect of whom, ~t 1s

currently denying lndemnlty under the insurance policy. .

It also seeks appropriate orders In relation to the

trial, on the basls that that leave be	granted. The precise
orders are set out In the Notice of Motion, and	I shall not set
them out here. The granting	of such leave has been opposed on

behalf of all other parties to the actlon. The plalntlff has

submitted that the Court should not exercise its discretlon to grant such leave, on the basis that the empowerrng of the third

party to play an extended role In the trial, by way of defendlng

the plaintiff's actlon, would unduly lengthen the trlal and

impose hardship on the plalntlff to the extent that the plalntlff

would be combattlng, in effect, two defendants actlng ln

identical interest with rights of cross-examination and all other

relevant rights in the trial.

I t is put on behalf of the plalntiff that, quite apart

from the inevitable lengthening of the trial, thls would lmpose
upon him an undue and unreasonable hardship, having regard to the
fact that the real issue that brings the third party to these
proceedlngs is an issue that exlsts only between it and the flrst
and second defendants on the basis of whether indemnity can or

cannot be properly denied under the relevant insurance pollcy.

The further submlsslon is, as I understand ~ t , made by

the plaintiff, and, indeed, by all partles, that there I S a quite unacceptable . inconsistency in the position of the third party,

should this leave be granted. The first and second defendants
point - in my view, with conslderable force	- to the fact that,
as currently partlcularized, the third	party's maln claim to

withhold indemnity lles In allegatlons that those defendants have
been in breach of the A i r Navlgatlon Act, 1920 (Cth) and
Regulations In thelr conduct towards the plalntlff.

It 1s put that those breaches disentitle it to

Indemnity. The defendants say that 1t would produce a marked
distortion of the trlal If, as a result of leave being granted,
the third party, who comes only as an insurer refuslng Indemnity,
should be enabled to, In effect, assist the plalntlff on those
malor issues, by way of supportlng the clalm for Indemnity,

whilst, at the same time, taking all possible steps, by way of

conduct of the trlal, to thwart the plalntiff	ln lts claim
agalnst the defendants.

It is put by those defendants (and thls submission 1 s

supported, all round, by other parties) that the third party
should not, by way of a grantlng of leave under the relevant

rules, be put in a posltlon where lt could play such a role ln

the trial. I think it must be borne in mind that the thlrd party

1 s currently in the proceedings only on the basis of a clalm

against it that It has an obllqatlon to Insure the flrst and

second defendants.

If It succeeds in establlshlng that lt 1s under no such

obligation, then, of course, the flrst and second defendants are

left in the position that, ~f the plaintiff succeeds against

them, they must bear the results of the planltlff’s verdrct. It
is clearly not a case where an Insurer could suggest that, unless
it could play some role ln the proceedlngs, there vas a real
prospect that the lnsured defendant would not take all possible
steps to dispute llablllty and mlnlmlze any resultlnq damages
that might be awarded against It.

The defendants in these proceedings have a very clear

interest in dlsputing the plaintlff's clalm on all sides, and l n

taklng all posslble steps to confine any award of damages whlch

mlght be glven. It is not, ~n my vlew, a case, on the materlal

before me, where it can be said that the third party putatlve

Insurer need feel under any apprehension that all thlngs would

not be done by way of defence and minimisation of damage in the

proceedings, such that there was some necessrty that It should,
as a matter of justice, take a role in that aspect of the case

itself.

In all the clrcumstances, I have come to the concluslon that It has not been demonstrated to my	satisfaction that the
Court's dlscretlon should be exerclsed in favour of allowlng the thlrd party any greater role	in the proceedings than lt will he

entitled to fulfll as a result of Its belng present as a thlrd

party, wlth the issue of lndemnlty to be lltlgated. I conslder

that its role In the trial should be restrlcted to the lssues

between Itself and the flrst and second defendant as are

currently establlshed by the pleadings.	.
It does appear, however, that the whole purpose of the
third party procedure, whlch has been set	in train In thls case,

would be thwarted unless the quite necessary anclllary order be

made that the cross-clalmants ar?d	the thlrd party shall he bound,
as between themselves by the ]udgment	from the plalntlff's claim
agalnst the defendants, and	I make that order.

l .

In what I have lust said, I am lndlcatlng that the

first defendant, Hamllton Island Enterprlses Proprletary Llmlted,
the second defendants, Kelth wllllams (Queensland) Pty. Llmlted,
and the third party, should be bound, as between themselves, ~n

the manner that I have lndlcated.

As between the thlrd and fourth respondents and the

third cross-defendant, I make the order, by consent, which I S set

out in the short mlnutes, which I shall date today and lnltlal.

I reserve the questlon of costs.

I make the orders set out In the short mlnutes, whlch I wlll slgn, and have placed wlth the papers.

I certlfy that this and the s l x precedlng pages
are a true copy of the reasons f o r ludgment herein

of hls Honour, Mr. Justlce M. L. Foster.

Assoclate: L!& Dated: 1 August, 1988.