The Supreme Court of NSW heard arguments as to whether a defendant’s insurer could be joined to a nervous shock proceeding and considered whether PTSD could be classed as a 'bodily injury' under the relevant insurance policy.
In issue
- In the case of Page v Airag Aviation Services Pty Limited [2026] NSWSC 1030, the plaintiff brought a nervous shock claim against the defendant as a result of the death of his young daughter. During the course of the proceedings, the plaintiff applied to join the defendant’s insurer, QBE, to the action.
- The NSW Supreme Court considered the application for joinder by determining whether there was an arguable case that the policy in question responded to the defendant’s liability, and also whether psychiatric conditions, such as PTSD, constituted 'bodily injury'.
The background
On 31 December 2017, a De Havilland Canada THC-2 Beaver float plane operated by Sydney Seaplanes Pty Ltd crashed into Jerusalem Bay in the Ku-ring-gai Chase National Park. All five passengers on board, as well as the pilot, were killed. Among the passengers was 11-year-old Heather Bowden-Page.
Heather’s father, the plaintiff, brought proceedings against Airag Aviation Services Pty Ltd (Airag) as the entity which, by its employees, performed service and maintenance on the aircraft from time to time.
It was alleged that the pilot became disorientated, incapacitated and lost control of the aircraft, causing it to crash. It was the plaintiff’s allegation that this occurred as a result of the pilot becoming hypoxic from carbon monoxide entering the passenger cabin from the engine bay and that the carbon monoxide entered the passenger cabin due to the negligent maintenance and service of the aircraft by Airag.
The plaintiff alleged that the defendant’s negligence caused his daughter’s death and thereby caused him loss, injury and damage, by way of him developing PTSD.
QBE Insurance (Australia) Limited (QBE) was Airag’s insurer and issued an Airport Owners & Operators Liability Policy (the policy) for the relevant period. The policy insured Airag against liability arising out of an accident to the extent set out in the policy.
The subject proceedings concerned the plaintiff’s application for leave to join QBE as the second defendant pursuant to s 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Act).
The relevant insuring clause covered 'bodily injury including death at any time resulting therefrom' caused by accidents occurring during the policy period and arising out of the hazards set out in sections 1, 2 and 3 of the policy.
The decision at trial
The Court noted that it was common ground that for the plaintiff to obtain leave as required pursuant to ss 4 and 5 of the Act, he must establish three things:
- that he had an arguable case that the defendant is liable to him;
- that there was an arguable case that the policy responds to that liability; and
- that there was a real possibility that the defendant would be unable to satisfy any judgment against it in full.
Having determined that the first and third of the above requirements had been established, the Court confirmed that the issue requiring determination in the case was therefore whether there was an arguable case that the policy responded to the liability of Airag to the plaintiff as alleged in the statement of claim.
The plaintiff submitted that it was plainly arguable that the liability he asserted against Airag was captured by the policy. Specifically, he contended that his claim for damages was for damages for bodily injury caused by an accident arising out of the hazards in sections 1 and/or 3 of the policy and further, that he suffered 'bodily injury' because, as opined by Professor Scott (an expert who produced a report that the plaintiff relied on), he sustained physical injury to his brain 'as a consequence of his psychiatric condition (PTSD) deriving from the sudden and unexpected death of his daughter.'
QBE disputed that any liability of Airag fell within the scope of the insuring clause. In essence, QBE submitted that:
- The only possible section of the policy which identified an insured hazard was section 3 (the hazard being the possession or use of aeronautical products). Nevertheless, the policy did not respond to bodily injury caused by an accident which arose out of the hazard in Section 3 because the plaintiff’s injury was caused by him learning of his daughter’s death and not out of the possession or use by anyone or any product.
- The plaintiff did not plead that 'bodily injury' was caused by the accident (the only plea of loss or damage was limited to the consequence of psychiatric injury). In any event, and with reference to the insuring clause which refers to coverage being for damages '... for bodily injury including death at any time resulting therefrom...', no indemnity was provided for a liability for damages for an injury which results from death. That is, noting that the injury allegedly caused to the plaintiff resulted from the death of the daughter, 'if that is a bodily injury, it is a bodily injury one step further along to which the policy contemplates.'
- The condition precedent in s 6(d) applied to exclude coverage (this clause required the insured to comply with all International and Government Regulations and Civil Instructions).
- The provisions of s 54 of the Insurance Contracts Act 1984 (Cth) (the ICA) would apply, however, the act of non-compliance by Airag with civil aviation regulations could reasonably be regarded as being capable of causing or contributing to the crash of the aircraft such that QBE may refuse to pay the claim under s 54(2) of the ICA. Further, that because the plaintiff could never establish that the carbon monoxide did not enter the passenger cabin due to a breach of the Civil Aviation Safety Regulations via the use of incorrect, non-approved parts (as opposed to another particular of negligence), s 54(4) of the ICA could not apply.
Ultimately, the Court found that it was arguable that any liability of Airag to the plaintiff was captured by the insuring clause. The plaintiff was accordingly granted leave pursuant to s 4 of the Act to join QBE to the proceedings. In reaching this view, the Court held:
- Section 1 did not have any operation – it was not arguable that the plaintiff’s claim was a claim for damages for bodily injury caused by an accident 'in the course of any work or the performance of any duties carried out by the insured or his employees.'
- The plaintiff’s claim for damages for PTSD (if it constituted bodily injury) was a claim for damages for bodily injury which, if the other requirements of the policy were met, would be indemnified. To that end, the Court rejected QBE’s submission that the policy was limited to a claim for damages for bodily injury (or death) to the plaintiff’s daughter.
- With respect to section 3, QBE’s construction was rejected and the Court found that it was arguable that the accident and any bodily injury suffered by the plaintiff arose out of the use of goods (namely bolts and other parts of the aircraft) repaired, serviced, treated or supplied by Airag or its employees, such parts being used in the aircraft after leaving Airag’s possession.
- In reliance upon the opinion of Professor Scott that the plaintiff’s brain sustained physical damage as a result of his PTSD, it was arguable that the plaintiff’s claim was one for 'bodily injury'.
- The Court noted the possibility that the plaintiff would establish negligence by Airag which did not involve any breach of the Civil Aviation Safety Regulations but that ultimately, it was not possible to determine at an interlocutory stage what particulars of negligence, if any, would be made out. It was therefore neither appropriate nor possible for the Court to determine whether s 6(d) would apply at this stage. For the same reasons, the Court was unable to find that s 54 of the ICA operated in the manner as postulated by QBE on this application. The Court did suggest, however, that if an act of Airag was found to breach the Civil Aviation Safety Regulations at trial, then s 54(2) of the ICA might be enlivened.
Implications for you
This decision provides guidance for insurers as to the circumstances in which they may be joined to proceedings and what a Court will consider when applications for leave are made under ss 4 and 5 of the Act.
The Supreme Court’s interpretation and assessment of what may, or may not, constitute 'bodily injury' must also be borne in mind when seeking to enliven or resist the triggering of insuring clauses in cases involving proposed joinder of an insurer to proceedings pursuant to the Act.
Page v Airag Aviation Services Pty Limited [2026] NSWSC 1030
