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Accident Compensation Cases

Wallace v McDermott (HC, 10/06/04)

Judgment Text

JUDGMENT OF MACKENZIE J 
MacKenzie J
Introduction 
[1]
This is an appeal against a decision of Judge Henwood delivered in the District Court at Wellington on 30 May 2003. In that judgment, Her Honour awarded exemplary damages to the respondent (the plaintiff in the court below) arising from an aircraft accident, in which the appellant (the defendant in the court below) was acting as a flying instructor, conducting a lesson with the respondent as a learner pilot. The appeal raises important issues, both as to the nature of the conduct which is necessary to found an award of exemplary damages, and as to the appropriate level of quantum of an award of exemplary damages. 
Facts 
[2]
The facts are carefully and comprehensively set out in the judgment under appeal. I can do no better than to repeat that summary: 
“[8]
There are a number of undisputed facts which have been covered by documentary evidence, oral testimony and admitted allegations in the pleadings. Among the undisputed facts are the qualifications and experience of both parties. 
[9]
The training session in question was conducted in a small aircraft ZK PAG (a ‘Tomahawk’) operated by the Wellington Aero Club Inc. The aircraft departed from Wellington on 3 June 1995 at 9.39 am and flew across Cook Strait to Omaka Airfield. The defendant was the pilot in command as the instructor and the plaintiff was flying the aircraft during that part of the flight. 
[10]
At about 10.20 am the aircraft entered the Woodbourne control zone and flew inland to the Waihopai Bridge area. It remained in that area for 5-10 minutes before continuing on to land at Omaka Airfield arriving at 10.40 am. Whilst at Omaka the defendant spoke with local pilots at the Marlborough Aero Club and enquired as to an appropriate place to practice force landings. It was his intention to instruct the plaintiff on how to execute force landings. 
[11]
It was established that there was a low flying area LFA 59 within the vicinity of the Waihopai Valley some 3-4 nautical miles out from the site of the accident. The defendant was directed to that area. 
[12]
At 11.15 am the aircraft departed Omaka and headed towards a second low flying area LFA 50 located near the coastline and bounding the east sector of the Woodbourne control zone. It remained in the low flying area for approximately 30 minutes before calling Woodbourne tower and obtaining clearance to the Waihopai Valley. 
[13]
The transponder readouts indicate that at 23:43 hours (11:43 am) the aircraft was overhead at Omaka at approximately 1,700 ft heading towards the Waihopai Valley. It continued to climb to 3,000 ft. At 23:54 hours (11:54 am) the aircraft indicated an altitude of 2,900 ft before initiating a descent. The last altitude readout was shown at 23:58 hours (11:58) of 2,200 ft with the aircraft heading in an easterly direction after a 180° left turn. 
[14]
The aircraft then descended to below 500 ft at a point near a residence known as the Farnell house and at that time the plaintiff was at the controls. The plane proceeded in a generally south-easterly direction towards a property known as the Newman house, flying parallel to a ridge of hills on the left hand side of the aircraft. At that time the precise height of the aircraft was in dispute but it was low flying at the time. 
[15]
The plaintiff claims that the defendant stated that he did not want to ‘buzz’ the Newmans property by flying low over it, and that the defendant assumed control of the aircraft and executed a violent left turn towards rising ground. Full engine power instituted and the aircraft climbed sluggishly. The defendant uttered the words to the effect of ‘come on you bastard’ but the stall warning buzzer sounded immediately following the left turn and remained continuously on from that point. The aircraft could not over fly the ridge line and would have impacted with the terrain below the ridge if that flying course had been maintained. 
[16]
The defendant then initiated a sharp right hand turn. The aircraft rapidly lost height, narrowly missing power lines and in a stalled condition struck the ground in a nose high position, the tail of the aircraft striking the Newman driveway. 
[17]
It has been agreed, from the topographical maps, that a nearby trig on the ridge shows a height of 823 ft. Regulation 38 of the Civil Aviation Regulations 1953 stipulates a minimum safe height of 500 ft, being; 
the height above the highest point of the terrain or any obstacle thereon, within a radius of 2,000 ft of a line extending vertically below the aircraft 
[18]
In this case therefore the minimum height above the valley floor having regard to the 2,000 ft radius from the aircraft was 1,323 ft (823 ft plus 500 ft). There are exceptions to the minimum safe altitude requirements. These are prescribed in r 38. Such exceptions are for the purposes of specialist operations, during landing and takeoff through stress of weather or when specifically approved by the Director. Mr Paine, an expert witness, makes comments regarding these matters. 
[19]
There was no evidence of structural or mechanical failure of the aircraft. The weather was clear through the morning with good visibility. Conditions were clear with light to nil winds at lower levels. The automatic weather station at Woodburn at 12.00 noon (the time of the accident) provided a temperature of 6°C and humidity of 65%. 
[20]
Evidence shows that the aircraft had stalled. The stall happened as a result of the steep left hand turn undertaken by the defendant, at a time when the aircraft was low flying at a very slow speed. ”
The judgment appealed from 
[3]
The plaintiff's case was set out in the judgment appealed from in these terms: 
“[21]
The plaintiffs case turns on a number of serious allegations against the defendant's conduct. These can be listed as follows: 
No pre-flight briefing was given to the plaintiff. 
The plane was overweight upon take-off. 
The plaintiff was permitted to descend below regulation flying levels in a non- designated area. 
The defendant's decision to avoid buzzing the Newman house. 
The defendant's decision to turn left towards rising terrain. 
The defendant's sharp right hand turn and consequently crashing the plane. ”
[4]
Her Honour then analysed very carefully and comprehensively each of those allegations. She then discussed the law, dealing with the duty and standard of care, and noted that the standard of care for the defendant is that he exercise the ordinary skill of an ordinary competent flying instructor when conducting an exercise with the plaintiff as he was at the relevant time. 
[5]
The learned District Court Judge summarised her findings as to negligence on each of the six matters raised. I see no reason to question any of Her Honour's findings of fact, or her conclusions as to negligence, as set out in the following paragraphs of Her Honour's judgment. The only reservation which I would make is as to Her Honour's use of the terms “reckless and dangerous”. I will need to revert to that later in this judgment. The findings are: 
“[56]
The defendant was negligent in the following ways. First, he failed to carry out any exercise to confirm the weight of the Tomahawk aircraft before takeoff. The professional opinions of the expert witnesses were that, quite apart from the fact that an aircraft should not be operated overweight, the factor of it being overweight would have had a direct bearing on the ability of the aircraft to perform. The defendant did not follow the Tomahawk manual (section 6) regarding calculations for the plane's weight or if he did then he miscalculated because the plane was significantly overweight. 
[57]
Secondly, he failed to give his pupil a pre-flight briefing. Mr Paine was of the view that the defendant owed a duty of care as the plaintiff's instructor to provide him with a full pre-flight briefing and there was no excuse for him in not doing so. The expert opinion was that the defendant's conduct fell well short of his professional obligations to the plaintiff in that respect. 
[58]
Thirdly, the defendant breached the Civil Aviation Regulations 1953, specifically r 38, by flying below 500 ft. Low flying in the circumstances described in this case, namely flying at 200 ft near the Farnell House, and sometimes as low as 60 ft, contributed directly to the accident. The defendant's conduct was reckless and dangerous. Low flying increases the likelihood of hitting obstacles, which increases the likelihood of crashing. 
[59]
Fourthly, the defendant caused the aeroplane to crash by manipulating the aircraft beyond its limitations. He made a decision to make a violent left hand turn at a slow speed and from a low height, and as a flying instructor it is the view of the expert witnesses that he should have been aware of the performance limitations of the aircraft. 
[60]
Fifthly, he made the decision to turn left into rising terrain for personal reasons. He stated that he did not want to buzz the Newman house, he grabbed the controls of the plane and turned left. His behaviour in doing this was completely unprofessional. It is the Court's conclusion that he had in his mind that he was at the time under investigation by Civil Aviation Authority for an earlier incident and that he did not want to be caught low flying over the Newman house and come to the attention of Civil Aviation Authority with a second complaint. This is the only rational explanation that the Court can infer from the evidence in front it. All of the experts were at a loss to explain such a reckless and dangerous manoeuvre on the part of the defendant. 
[61]
Lastly, the defendant finding that he was unable to fly over the rising terrain has made a dramatic right hand turn, narrowly missing power lines and crashing the plane. Taking all those matters into consideration, the Court has no difficulty in finding that the defendant was in breach of his duty of care to the plaintiff. I also find that the defendant's actions caused the plane to crash. It is of course foreseeable that the plaintiff would suffer injury or loss of life if the plane crashed and, if there were persons on the ground as there were on this occasion, their lives would also be threatened. ”
[6]
Her Honour then went on, having established that the defendant's behaviour was negligent, to consider whether his conduct was so outrageous that an award of exemplary damages was appropriate in order to punish the conduct. After considering the Privy Council decision of A v Bottrill [2003] 2 NZLR 721, she said: 
“[67]
In this case, therefore, it is not necessary for the Court to find that the defendant intentionally or consciously proceeded with reckless indifference. It is enough that his conduct as a flying instructor is truly exceptional and departed so far and so flagrantly from the dictates of ordinary professional precepts of prudence, or standards of care as determined by experts in the aviation industry, that the test of outrageousness is satisfied. 
[68]
The Court has considered this matter very thoroughly, and has listened closely to the defendant's arguments, which were presented through counsel. The defendant was of the view that his behaviour came nowhere near the threshold for exemplary damages. The Court disagrees with him. Here we have a situation where the defendant is a senior flying instructor. The plaintiff had every reason to place his trust in him; that he would instruct him with due care and skill. The defendant as a senior flying instructor undertaking this lesson with the plaintiff held himself out to be a competent instructor; a person well able to handle the Tomahawk aircraft which they were flying, presumably familiar with the workings of that aircraft and the requirements for handling the aircraft safely. He held a licence pursuant to the Civil Aviation Regulations which did apply to him and it was reasonable to expect that the defendant understood and would comply with the Civil Aviation Regulations particularly in regard to issues of safety and low flying. 
[69]
The defendant ascertained during the course of the flight a low flying zone which he could have used to carry out the exercise with the plaintiff but instead he elected to carry out the manoeuvres in territory that he was unfamiliar with, where there were considerable obstacles by way of trees, power lines, houses and rising terrain. He allowed the plane to drop to under 200 ft (in breach of the Civil Aviation Regulations) and continued to fly at a low height towards the Newman property and for personal reasons, he executed a reckless left hand turn under conditions of slow speed and low height far beyond the ability of the aircraft to respond. Even though it had full power, a crash was inevitable and a crash ensued. The life of his student, the plaintiff, was put at risk and he suffered serious physical injuries as a result of the pilot's behaviour on that day. 
[70]
It is the Court's view that the accident was completely avoidable and followed as a direct consequence of the defendant's unprofessional behaviour. When he grabbed the controls and executed the violent steep left hand turn, his conduct fell so flagrantly away from the dictates of the ordinary standards of prudence, that his conduct was completely inexplicable in the eyes of the experts, whose evidence clearly stated that he should never have undertaken that manoeuvre. 
[71]
In addition, the expert evidence showed that he had other options readily available to him, if he did want to avoid the Newman house. Mr Sattler testified: 
‘a shift of 2 or 3 degrees to the right and the aeroplane would have missed Mr Newman's house by many -several hundred yards … from my eye it looked relatively suitable terrain, reasonably flat, but perhaps very slightly rising. ’”
[72]
Any other theories that the defendant may have been executing some sort of ‘teaching manoeuvre’ do not square with the facts found at this hearing. The defendant, as a flying instructor exercising ordinary skills, should have known that the manoeuvre was extremely dangerous, but he chose to perform it regardless. 
[73]
In addition to the crash itself, the accumulation of the defendant's indifference to good flying practice was remarkable. The worst of which was to low fly with his pupil in terrain unfamiliar to him when he had just established that there was a designated low flying zone in close proximity. Certainly, the totality of his behaviour as the plaintiffs flying instructor on this occasion was negligent. 
[74]
Even without taking into account all of the preceding acts and omissions of the defendant such as the lack of pre-flight briefing, his conduct on that day giving the plaintiff a lesson in forced landings was so unprofessional and fell so flagrantly away from the dictates of ordinary standards and procedure that the Court finds it truly exceptional and outrageous, warranting an award of punitive damages. His acts and omissions cumulatively in flying an overweight aircraft, low flying in a non-designated zone in unfamiliar and unsuitable terrain, making the decision to not ‘buzz’ the Newman house and executing a reckless steep left hand turn, resulting in an inevitable crash, when other options were available, certainly meet the test of ‘outrageous’ in terms of the law for punitive damages. 
[75]
The Court is also of the view that the actions of the defendant in grabbing the controls of the plane and executing the steep left hand manoeuvre from such a low height and at such a slow speed could of itself be found to be so unprofessional and to fall so flagrantly away from the dictates of ordinary standards and procedure that the ‘outrageous’ test is met on this alone. 
[76]
So either way his conduct, cumulatively or in the final action which caused the crash, can in the Court's view attract an award of punitive damages. ”
[7]
Having concluded that the test for the awarding of exemplary damages had been met, Her Honour discussed the amount and noted that an award for punitive damages is not an award for compensation for the plaintiff and that the Court wishes to condemn the defendant for his outrageous conduct when acting as the plaintiff's flying instructor on that day. She said that in fixing the quantum of exemplary damages the Court had considered the consequences of the negligence and the need for moderation in awarding punitive damages. Exemplary damages were awarded in the sum of $50,000. 
Issues on this appeal 
[8]
This appeal raises the issues both of whether exemplary damages should have been awarded and, if so, the quantum of those damages. The appellant's position is succinctly stated in the points of appeal as follows: 
“The learned trial Judge erred: 
(a)
In finding that the conduct of the Appellant on 3 June 1995 cumulatively was such as to satisfy the standard required in law for the awarding of exemplary damages. 
(b)
In finding that the left hand turn made in the circumstances by the Appellant was itself such as to satisfy the standard required in law for the awarding of exemplary damages. 
(c)
Alternatively, in fixing exemplary damages in the excessive sum of $50,000. ”
The test for exemplary damages 
[9]
I must first consider the test which is to be applied in deciding whether a case is appropriate for an award of exemplary damages. The proposition that exemplary damages are available in New Zealand for cases of negligence causing personal injury must be regarded as well settled. The courts in New Zealand have long indicated an unwillingness to adopt the more restrictive approach to exemplary damages followed by the English courts, enunciated in Rookes v Barnard [1964] 1 All ER 367; [1964] AC 1129, and recently discussed in Kuddus v Chief Constable of Leicestershire Constabulary [2001] 3 All ER 193; [2002] 2 AC 122, where the unavailability of exemplary damages for the tort of negligence was noted (Lord Nicholls of Birkenhead, at para 54, p 207; p 142). In addition, Parliament has confirmed the availability of the remedy in cases of personal injury by accident, in (now) s 319 of the Injury Prevention, Rehabilitation, and Compensation Act 2001. 
[10]
The issue, therefore, is the test which is to be applied in determining, in cases involving negligence, whether the conduct of the defendant is of such a nature as to call for the award of exemplary damages. 
[11]
The threshold is a high one. The test has been expressed in various ways in the cases. It is convenient to begin with the description given by Tipping J in McLaren Transport Ltd v Somerville [1996] 3 NZLR 424. He said at 434: 
“The New Zealand cases adopt various formulations which have included the concepts of outrageous conduct, contempt for the defendant's rights and high-handed behaviour. I do not think any purpose would be served in multiplying examples of epithets or phrases which have been employed. Once exemplary damages are allowed in cases of negligence causing personal injury, it is impossible to shy away from the concept of degrees of negligence. The higher the level of negligence the stronger will be the case for exemplary damages. No verbal formula can ever provide an automatic answer for a particular case. It will always be a matter of judgment and the formula can only encapsulate the essential ingredients of the inquiry. 
For myself I would be inclined to keep recklessness out of the test because it is, at best, a difficult concept, capable of varying from the wholly subjective to the wholly objective with various points in between. The concept of gross negligence has a seductive simplicity but I would prefer not to put the test solely on that basis because I do not consider it sufficiently incorporates the various ingredients which go to make up the totality of the criteria. 
After carefully reviewing the various authorities and seeking to bring together the relevant factors I would approach the matter as follows. Exemplary damages for negligence causing personal injury may be awarded if, but only if, the level of negligence is so high that it amounts to an outrageous and flagrant disregard for the plaintiff's safety, meriting condemnation and punishment. ”
[12]
The leading recent authority is the decision of the Privy Council in Bottrill. Their Lordships there held that the threshold for the awarding of exemplary damages might be met even though there was no conscious recklessness on the part of the defendant. However, their Lordships made it clear that the power to award exemplary damages arises only where the defendant's conduct is so outrageous as to call for condemnation and punishment. That is emphasised in a number of occasions throughout the majority judgment, delivered by Lord Nicholls of Birkenhead. It is made clear by the way in which the majority stated the issue in that appeal in paragraph 4: 
“[4]
The present appeal concerns, not the existence of this jurisdiction in New Zealand, but its outer limits. The issue raised is whether the Court's power to award exemplary damages is bounded only by the need for the defendant's conduct to be so outrageous as to call for condemnation and punishment. Is this the demarcation of the Court's jurisdiction in cases of negligence? Or is the jurisdiction more specifically, and more narrowly, confined? ”
[13]
The stringent nature of the test is emphasised in the following passage: 
“[23]
The next point to note is that, in the nature of things, cases satisfying the test of outrageousness will usually involve intentional wrongdoing with, additionally, an element of flagrancy or cynicism or oppression or the like: something additional, rendering the wrongdoing or the manner or circumstances in which it was committed particularly appalling. It is these features which make the defendant's conduct outrageous. Either that or at the very least, in cases of negligence, the defendant was aware of the risks involved but he proceeded with a reckless indifference such that this conduct, too, evokes a sense of outrage. Such conscious recklessness approaches very closely to intentional wrongdoing. 
[24]
Overwhelmingly, in the exceptional cases where questions of exemplary damages fall to be considered at all, the defendant's misconduct will be of a subjectively advertent nature as just described. Overwhelmingly, in cases of negligence, whose essential ingredients are objective in character (‘ought to have known’), an award of exemplary damages will be appropriate only where the defendant's wrongdoing was intentional or consciously reckless. 
[25]
It is not surprising, therefore, that when describing conduct meet for an award of exemplary damages Judges have often used adjectives or phrases primarily, or even solely, aimed at advertent conduct. These include: malicious, vindictive, high-handed, wanton, wilful, arrogant, cynical, oppressive, and contumelious disregard of the plaintiff's rights. 
[26]
However, if experience in the law teaches anything, it is that sooner or later the unexpected and exceptional event is bound to occur. It would be imprudent to assume that, in the absence of intentional wrongdoing or conscious recklessness, a defendant's negligent conduct will never give rise to a justifiable feeling of outrage calling for an award of exemplary damages. ‘Never say never’ is a sound judicial admonition. There may be the rare case where the defendant departed so far and so flagrantly from the dictates of ordinary or professional precepts of prudence, or standards of care, that his conduct satisfies this test even though he was not consciously reckless. ”
[14]
The cases in which exemplary damages are awarded will be rare and exceptional. That is emphasised in Bottrill on a number of occasions, as the following passages show: 
“[37]
… If, having heard all the evidence, a Judge firmly believes the case is so truly exceptional and outrageous that an award of exemplary damages is called for, his power to make an award is not dependent upon his being able conscientiously to find that the defendant was subjectively reckless …  
[64]
That said, Their Lordships cannot overemphasise what has already been indicated more than once. The cases where it is appropriate to make an award of exemplary damages are exceptional. The cases where it is appropriate to make an award of exemplary damages in the absence of intentional wrongdoing or conscious recklessness will be exceptional and rare indeed. ”
Application of the test in this case 
[15]
The issue in this case is whether the circumstances are such as to put it in that category of rare and exceptional cases where an award of exemplary damages is appropriate. 
[16]
In reaching her conclusion that the test was satisfied in this case, the learned District Court Judge did so, as I have already noted, by looking both at the totality of the appellant's conduct, in respect of all of the six allegations set out in her paragraph [21] which I have set out in paragraph [3] above, and, alternatively, by looking only at the last actions of the appellant, that is those which were directly causative of the crash. 
[17]
The first question which I must consider is whether the approach of looking at the totality of the appellant's conduct, in respect of the matters alleged against him, is permissible or not. 
[18]
While Her Honour addresses the question of whether the appellant/defendant was negligent in respect of each of the six allegations, she does not specifically deal with the question of whether the negligence was causative of the plaintiff's/respondent's loss. I consider that the first two items were not causative. There is no evidence to suggest that the absence of a pre-flight briefing played any part in causing the crash. As to the weight on take-off, the aircraft had been flying for some time before the accident, and would have burned a quantity of fuel. There was no evidence that the aircraft was overweight at the time of the crash, nor that the weight of the aircraft had any causative effect so far as the crash was concerned. Accordingly, I consider that neither of those matters was causative. The other four matters do appear to be ones which, at least on the face of it, would or could have contributed to the crash. 
[19]
In the light of that, I must consider, in determining whether the test of outrageous conduct for the award of exemplary damage is satisfied, whether it is permissible to take into account conduct which is not causative of the loss. I consider that, as a matter of principle, the answer to that question must be no. In an ordinary action, where compensatory damages are sought, the negligence of a defendant will not give rise to a liability unless that negligence was causative of the loss. In my view, the only conduct to which the Court should have regard, when considering whether the defendant's conduct merits the award of exemplary damages, is the conduct which has caused or contributed to the damage suffered by the plaintiff It would be wrong in principle, in my view, for the Court to take into account, as justifying an award of exemplary damages, conduct which could not be taken into account to justify an award of ordinary damages. 
[20]
So, I do not consider that the allegations relating to the lack of a pre-flight briefing, or the plane being overweight on take-off, should be allowed to influence the decision of whether the appellant's causative conduct was outrageous or not. If I am wrong in that and it is permissible to take them into account, I do not think that either of those could, in themselves, amount to outrageous conduct satisfying the test for exemplary damages. Neither of these matters, in my view, comes anywhere near the threshold that either (a) the defendant was aware of risks involved in his conduct in respect of those two matters, but he proceeded with a reckless indifference, or (b) the defendant departed so far and so flagrantly from the dictates of ordinary or professional precepts of prudence, or standards of care, that his conduct was outrageous, even though he was not consciously reckless. 
[21]
The third allegation is the descent below the level fixed by the relevant regulations, in a non-designated area. Her Honour held that that was a serious breach of the duty of care owed by the respondent to his student. I consider that proposition to be correct. Her Honour also described it as “reckless and dangerous”. I have considerable reservations about whether the fact of flying at less than the minimum height can be properly so described. In this case, what caused the crash were the actions taken in making the initial left turn, and the subsequent right turn. The fact that the aircraft was at a low altitude clearly made these actions more hazardous. But, up to the time when those actions were taken, I do not consider that the fact that the aircraft was being operated at a low altitude could, by itself, amount to reckless and dangerous conduct. It is relevant that during the period of low flying it was the respondent, the student pilot, who was actually flying the aircraft. The appellant, as instructor, was in control of the aircraft, but it was the student who was flying it. While it is true that he was a learner pilot only, and could be expected to defer to the views of the instructor, it does seem that if the actions which he was taking, under the instructor's direction, involved acting with reckless disregard to risks of which the appellant was aware, or ought to have been aware, then even a pilot with the limited experience of the respondent should have noted that the situation was untoward. The respondent himself in his evidence said that he was flying the aircraft as it gently descended, and there was no sense of urgency or danger. He said that if he had been permitted to continue to fly the aircraft they would not have crashed. It is also relevant that the aircraft was being operated for the purpose of practising forced landings. The evidence was that this required descent to a low altitude. This should have been done in a designated low flying area, and it was not appropriate to conduct this exercise where the aircraft was at the time of the crash, so the low flying was clearly wrong. But the reason for the low flying does have a bearing on whether the conduct can be described as outrageous. I do not consider that the low flying meets the threshold of outrageous conduct. 

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