Royal Victorian Aero Club v Commonwealth

The Royal Victorian Aero Club (the plaintiff) commenced an action in the High Court of Australia against the Commonwealth of Australia (the defendant) seeking recompense for damage to its aircraft and other property. The claim arose under an agreement for the training of Royal Australian Air Force personnel by the club, which stipulated that the Commonwealth would compensate the club for damage caused by the "wilful misconduct" of such personnel. The Commonwealth denied liability and counter-claimed for costs it had incurred in repairing damaged high-tension wires.

The central legal issue before the court was whether an Air Force trainee, Graeme Lowe, was guilty of "wilful misconduct" when he flew an aircraft below the instructed altitude of 200 feet during a forced landing practice, resulting in a crash. The agreement defined "wilful misconduct" in the context of the parties' obligations and liabilities, and the court was required to determine if Lowe's actions met this definition, thereby triggering the Commonwealth's obligation to recompense the club.

Webb J. held that the trainee was not guilty of wilful misconduct. Applying established principles from cases concerning "wilful misconduct" in contracts, particularly railway consignment notes, the court reasoned that the term requires more than mere negligence or an error in judgment. It necessitates knowledge that the act or omission is wrong and an intentional disregard for that wrong. While the trainee was aware he was flying below 200 feet and that this was contrary to instructions, he did not recall the specific instruction at the time of the manoeuvre. His concentration was solely on the complex landing procedure, and he did not appreciate that his actions were wrong or that they were creating an actual danger. Therefore, his conduct, though a breach of instruction, did not amount to wilful misconduct.

Consequently, the court entered judgment for the defendant Commonwealth on the plaintiff's claim and for the Commonwealth on its counterclaim for £47 16s. Od. The plaintiff was ordered to pay the defendant's costs of the action.