Barclay v Penberthy

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: French CJ,Gummow,Hayne,Crennan,Bell JJ.,Heydon J.,Kiefel J.
• Judgment Date: 02 October 2012
• Neutral Citation: [2012] HCA 40,2012-1002 HCA C
• Docket Number: Matter No P55/2011
• Date: 02 October 2012

Aaron Barclay

Appellant

and

Alec Penberthy & Ors

Respondent

Alec Penberthy & Anor

Appellant

and

Aaron Barclay & Ors

Respondent

[2012] HCA 40

French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ

Matter No P55/2011

Matter No P57/2011

HIGH COURT OF AUSTRALIA

Barclay v Penberthy

Penberthy v Barclay

Negligence — Pure economic loss — Plane crash caused by engine failure and negligent response of pilot — Whether damages recoverable for pure economic loss suffered by employer due to injury to employees.

Tort — Action per quod servitium amisit — Whether absorbed into tort of negligence — Whether action per quod servitium amisit exists under common law of Australia.

Tort — Action per quod servitium amisit — Measure of damages — Remoteness — Whether damages recoverable calculated by price of substitute less wages no longer paid to injured employee.

Tort — Rule in Baker v Bolton — Whether employer can recover for death of employee.

Words and phrases — ‘per quod servitium amisit’, ‘pure economic loss’, ‘vulnerability’.

Crimes Act 1914 (Cth), Pt IB ..

Representation

B W Walker QC with H J Langmead SC and M D Rush for the appellant in P55/2011 and the first respondent in P57/2011 (instructed by DLA Piper Australia)

D J Fagan SC with S A Richards for the first and second respondents in P55/2011 and the appellants in P57/2011 (instructed by SRB Legal)

W A Harris SC with A Golem for the third respondents in P55/2011 and the second respondents in P57/2011 (instructed by Herbert Smith Freehills)

Submitting appearance for the fourth to eighth respondents in P55/2011

Submitting appearance for the third to seventh respondents in P57/2011

ORDER

In Matter No P55/2011

• 1. Subject to orders 4 and 5, appeal dismissed.

• 2. Special leave be granted to the third respondents to cross-appeal, the cross-appeal be treated as instituted and heard instanter and dismissed.

• 3. The appellant pay the costs of the third respondents of the appeal, and the third respondents pay the costs of the appellant of the cross-appeal, the costs to be set-off.

• 4. The appellant and the first and second respondents, and the third respondents have leave, within 21 days of the date of these orders, to bring in agreed draft orders finally disposing of the appeal, including consequential orders dealing with the orders made in the Court of Appeal and with the further conduct of the trial in the Supreme Court.

• 5. In the absence of agreed draft orders as provided in order 4, the appellant and the first and second respondents, and the third respondents have leave, within 28 days of the date of these orders, to file written submissions as to the appropriate orders finally disposing of the appeal as indicated in order 4.

In Matter No P57/2011

• 1. Subject to orders 4 and 5, appeal dismissed.

• 2. Special leave be granted to the second respondents to cross-appeal, the cross-appeal be treated as instituted and heard instanter and dismissed.

• 3. The appellants pay the costs of the second respondents of the appeal, and the second respondents pay the costs of the appellants of the cross-appeal, the costs to be set-off.

• 4. The appellants and the first respondent, and the second respondents have leave, within 21 days of the date of these orders, to bring in agreed draft orders finally disposing of the appeal, including consequential orders dealing with the orders made in the Court of Appeal and with the further conduct of the trial in the Supreme Court.

• 5. In the absence of agreed draft orders as provided in order 4, the appellants and the first respondent, and the second respondents have leave, within 28 days of the date of these orders, to file written submissions as to the appropriate orders finally disposing of the appeal as indicated in order 4.

1 French CJ, Gummow, Hayne, Crennan and Bell JJ. These appeals from the Court of Appeal of the Supreme Court of Western Australia 1 were heard together. They arise from litigation instituted in the Supreme Court in 2008 after the crash of an aircraft in 2003. The issues in this Court turn upon liability in negligence for ‘pure economic loss’, the action per quod servitium amisit (‘ per quod’) and the retention of what is known as the rule in Baker v Bolton2, namely that the death of a person cannot constitute a cause of action giving rise to a claim for damages 3.

2 Something first should be said respecting the circumstances giving rise to the litigation.

The facts

3 Fugro Spatial Solutions Pty Ltd (‘Fugro’) was the holder of an Air Operator's Certificate issued by the Civil Aviation Safety Authority (‘CASA’) pursuant to the Civil Aviation Act 1988 (Cth) (‘the Act’) in respect of a Cessna 404 Titan Twin Engine Aircraft with the registration number VH-ANV (‘the Plane’). The certificate authorised the conduct of activities including aerial survey work. There has been no issue as to whether the flight in which the Plane crashed was authorised by that certificate.

4 Fugro was a member of an international corporate group and was ultimately owned by a company in the Netherlands. Fugro carried on the business of providing air charter services for commercial purposes, including the testing and development of technology, from premises it occupied at Jandakot Airport, near Perth. Mr Alec Penberthy was employed by Fugro as a commercial pilot.

5 Mr Aaron Barclay was an aeronautical engineer employed by Aeronautical Engineers Australia Pty Ltd (‘AEA’) and was an authorised person, within the meaning of the Civil Aviation Regulations 1988 made under the Act,

to approve the design for a modification to or repair of an aircraft component. In July 2000, AEA was engaged to advise whether a sleeve bearing within an engine driven fuel pump in the Plane could be replaced locally. Mr Barclay advised that this could be done and he drafted the design drawing for the local manufacturer of the sleeve bearing, using an aluminium bronze alloy. The bearing was then manufactured and on 18 October 2000 was installed in the right engine of the Plane. The Plane then went back into service.

6 Nautronix (Holdings) Pty Ltd (‘Nautronix Holdings’) held the whole of the issued share capital of Nautronix Limited (‘Nautronix’) 4. These companies have related corporations in the United States. By assignment from Nautronix made in July 2006, Nautronix Holdings sued in the Supreme Court upon relevant claims of Nautronix.

7 In 2003, Nautronix carried on the business of researching and developing marine technology, in particular, acoustic technology for subsea communications used in defence, oil and gas, and related industries. At its premises on Marine Terrace in Fremantle, Nautronix had about 100 employees. These included the Engineering Director, Mr Harry Protoolis; the Project Manager, Mr Steven Warriner; the software team leader, Mr Malcolm Cifuentes; the Project Manager, Mr Michael Knubley; and Mr Ozan Perincek, who was the Systems Engineer. Mr Protoolis was killed instantly in the crash and Mr Warriner died several months thereafter from his injuries. Messrs Cifuentes, Knubley and Perincek were on the flight and were injured but, with the pilot, Mr Penberthy, they survived.

8 Nautronix was testing equipment of its design which was intended to indicate from aircraft the position of submarines and to provide communications with them. This was being done with a view to Nautronix selling the equipment to the Royal Australian Navy and the United States Navy. The testing involved flying the Plane, as modified by Fugro to accommodate the equipment and its operation, to a destination in the Indian Ocean west of Rottnest Island where there was a naval support surface vessel. Nautronix understood that there also was a submarine on the flight path of the Plane.

9 On Thursday 7 August 2003, Mr Warriner as Project Manager for Nautronix sent an e-mail to two officers of Fugro confirming, ‘Following discussions this morning’, what were ‘the following requirements’:

• ‘1. Aircraft Mobilisation 10:00 — 15:00 Friday 8th August 2003

• 2. Participation in Pre-flight briefing HMAS Stirling 10th August 2003 15:00 (we are currently seeing if they can pickup there passes on Sunday vs Friday)

  • a. Pilots are to go to the Submarine Training Centre (Theater)

• 3. Acoustic Telemetry trial — VH-ANV 15:00 — 19:00 11th August 2003

• 4. Antisubmarine warfare activity with RAAF 0700 — 14:00 13th August 2003

• 5. Antisubmarine [warfare] activity with RAAF 17:00-24:00 13th August, 2003

• 6. Demobilization aircraft 09:00-11:00 14th Aug 2003’.

10 Earlier, on 4 February 2003, Mr Penberthy had signed a document headed ‘Undertaking of Security by a Consultant’ which had been required by the Defence Security Authority for him to be engaged as a pilot on these activities.

11 As indicated in point 1 of the e-mail, on Friday 8 August modifications to mobilise the Plane were carried out by Fugro at the hangar at Jandakot Airport. The modifications included the provision of a sonobuoy launching chute or tube, the installation of two antennae, and the addition of boxes for attachment inside of the Plane to hold the Nautronix equipment which was to be in operation during the flight.

12 At about 3.30pm on Monday 11 August 2003 the Plane took off, piloted by Mr Penberthy with the five passengers, Mr Protoolis, Mr Warriner, Mr Cifuentes, Mr Knubley and Mr Perincek. About two minutes after take-off the Plane crashed near the airport and was immediately engulfed in fire. As noted above, the result was the death of Mr Protoolis and, later, Mr Warriner; the other three passengers and the pilot were injured but survived. The equipment of Nautronix was damaged or destroyed.

13 The accident was caused by the failure of the right-hand engine during take-off and by the negligent handling of the aircraft by Mr Penberthy in response to that...