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Court of Appeal of New ZealandLast Updated: 20 December 2011
IN THE COURT OF APPEAL OF NEW ZEALAND
CA208/04BETWEEN PETER GEOFFREY
MCDERMOTT
Appellant
AND SCOTT MICHAEL
WALLACE
Respondent
Hearing: 12 May 2005
Court: Glazebrook, Hammond and O'Regan JJ
Counsel: B A Corkill and I A Egerton for
Appellant
P S J
Withnall and M J Francis for Respondent
Judgment: 9 June 2005
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JUDGMENT OF THE COURT
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B Judgment is entered for Mr McDermott.
REASONS
(Given by Hammond J)
Table of Contents
Para No.
Introduction [1]
The background facts [6]
The claim as formulated [26]
Mr McDermott succeeds in
his claim in the District Court [33]
The High Court sets the
judgment aside [45]
The
applicable law [57]
Disposition:
liability
Introduction [63]
The inference of
avoidance by Mr Wallace for his own personal benefit [66]
Causation [73]
The expert
evidence [78]
The
sentencing notes [87]
Outrageousness [89]
Disposition: quantum [92]
Costs [104]
Introduction
[1] On 3 June 1995 Mr McDermott was badly injured in an air crash near Blenheim. He was a trainee in a light aircraft, undergoing instruction from Mr Wallace.
[2] Mr McDermott brought proceedings against Mr Wallace claiming exemplary damages of $75,000.
[3] In a judgment delivered on 30 May 2003 NP 296/97 in the District Court at Wellington, Judge Henwood upheld Mr McDermott’s claim and awarded him $50,000 exemplary damages, and costs.
[4] Mr Wallace appealed against that judgment to the High Court. In a judgment delivered on 10 June 2004 CIV-2003-485-1427 MacKenzie J allowed Mr Wallace’s appeal, set aside the judgment of Judge Henwood, and ordered costs against Mr McDermott.
[5] Subsequently, MacKenzie J gave leave for a second appeal, to this Court. By this appeal Mr McDermott seeks to have the judgment of Judge Henwood restored.
The background facts
[6] At all relevant times Mr Wallace was the Operations Manager of the Wellington Aero Club (Inc). He was a Chief Flying Instructor. He held a Commercial Pilot’s Licence with a Category B instructor rating.
[7] Mr McDermott was a bank officer. He was in his early 30’s. He did not hold an aviation document. He had limited flight experience as a student.
[8] Mr McDermott had been taking his flying instruction at the Wellington Aero Club for about a year before the accident. During that time, in his total flying time of approximately 33 hours, he had had seven different instructors. That 33 hours was not continuous - there was a period of some three months during which Mr McDermott did not fly. Mr McDermott had had five prior lessons with Mr Wallace.
[9] The accident with which this Court is concerned occurred on 3 June 1995. This was the Saturday of Queen’s Birthday weekend in that year.
[10] Just prior to that weekend Mr McDermott had completed his Private Pilot’s Licence theory exam. That entitled him to do solo cross-country flights. However Mr McDermott could not undertake his practical exam in flying until he had at least 55 flying hours.
[11] Mr McDermott spoke to Mr Wallace prior to Queen’s Birthday weekend and arranged an intensive weekend of flying with him. This weekend foray was in no sense an assessment, or a “brush up” exercise before undertaking the practical flight exams. It was an opportunity for Mr McDermott to be instructed in safe flying practices, including a final lesson on simulated forced landings. Mr McDermott had twice practised simulated forced landings without power (but not with Mr Wallace). These prior lessons had been conducted in the Southern Wairarapa, in a low flying zone (LFA). This had involved flying down to a low level over flat farm paddocks.
[12] Mr McDermott met up with Mr Wallace at the Wellington Aero Club on the Saturday in question at about 9.00am. It was originally intended to fly in the Wellington region. The weather was not suitable so it was decided to fly to the Marlborough area in the South Island, and land at Omaka.
[13] The aircraft to be utilised was a Piper Tomahawk, which was equipped with dual controls. There were pre-flight checks of the aircraft, but no pre-flight briefing, by Mr Wallace.
[14] Mr McDermott flew the aircraft from Wellington and landed at Omaka. At that airstrip Mr Wallace ascertained where there were LFAs in which forced landings could be practised. One area (LFA 50) was adjacent to Big Lagoon on Clifford Bay. A second area (LFA 59) was inland of Omaka. LFA 59 was apparently often used by local operators for simulated forced landing practises. It was some three to four nautical miles from the site where the accident actually occurred.
[15] Mr McDermott and Mr Wallace took off from Omaka at 11.15am. They flew to LFA 50, on the coast, and remained in that area for 30 minutes whilst some simulated forced landings were made. They then proceeded to the Waihopai Valley, where LFA 59 was located, although they did not in fact descend to that particular area.
[16] At 11.45am the Tomahawk was at an altitude of 2,900 feet over the Waihopai Valley, before it began a descent. As noted, that descent was not into the area distinctly covered by LFA 59, but to a height of under 200 feet above the Waihopai Valley floor, and almost at the same level as trees and other obstacles, flying south, parallel to a ridge which crested at 2,000 feet to the left of the aircraft.
[17] It was common ground that, under the relevant civil aviation regulations, in the locale in which the aircraft was proceeding immediately before the crash, it should not have been below 1,323 feet, that being a prescribed minimum of 500 feet, plus a margin of 823 feet, having reference to the particular terrain over which the aircraft was in fact flying.
[18] The Tomahawk, with Mr McDermott at the controls, was found by Judge Henwood to have been below 500 feet as it passed over a residence known as the “Farnell” house. The Tomahawk proceeded - descending - in a generally south-easterly direction towards a property known as the “Newman” house, flying parallel to the ridge of hills on the left-hand side of the aircraft.
[19] The Judge found that Mr Wallace allowed the aeroplane to descend well below 200 feet (which is the minimum height at which an aircraft may be flown, even in a designated LFA).
[20] As the aeroplane proceeded towards the Newman house, the Tomahawk was flying at an air speed of 65 to 75 knots. The expert evidence was that a Tomahawk stalls at a speed of 53 knots with no power, and at a speed of 48 knots with power. But if the aircraft is banking, the stalling speed rises. The greater the bank, the greater the aircraft speed needs to be, to avoid a stall.
[21] As the Tomahawk closely approached the Newman house Mr Wallace abruptly assumed control of the Tomahawk from Mr McDermott. He said that he did not want to “buzz” the Newman’s property by flying over it. Under Mr Wallace’s control, the Tomahawk executed a violent left turn towards the ridge on his left.
[22] The expert evidence, which the Judge accepted, was that with an estimated bank of 60 degrees - which the experts thought to have been the case in this instance - the aircraft would have had to have been travelling at 96 knots to avoid a stall.
[23] Mr Wallace immediately realised that the aircraft was not going to be able to clear the ridge, which would now have been directly in front of the Tomahawk. He then made an abrupt right-hand turn. But the Tomahawk was clearly flying beyond its limitations, and stalled. The tail of the aircraft, as the aircraft came to earth after narrowly missing some power lines, hit some stones adjacent to Mr Newman’s driveway. The aircraft then flipped completely onto its back.
[24] Mr McDermott was seriously injured in the crash. He was in the intensive care unit at Wellington Hospital for several days, then in a hospital ward for over a month, and he had to convalesce for several months. Some of his injuries have resulted in life-long consequences: his spine was damaged; there were compression injuries to his body; and he suffers from gait and balance deficiencies.
[25] We will have occasion to return to this matter in greater detail later in this judgment, but Mr McDermott’s case was that had the Tomahawk continued on the path he was flying it, it would have passed safely over the Newman house (albeit very low), or he could have steered slightly to the right of the Newman house with an even greater safety margin. His case was that Mr Wallace foolishly grabbed the controls and effected an impossible emergency turn because he was already in some difficulties with the civil aviation authorities over another flying incident, and was concerned that he may be considered a “serial offender” if he buzzed the Newman house.
The claim as formulated
[26] In the District Court, Mr McDermott’s underlying claim was formulated in negligence. The pleadings on which the matter went to trial stood as follows:
14. The plaintiff was owed a duty of care by the defendant:
14.1 Not to place him in undue danger.
14.2 To take all reasonable precautions and maintain safe flight.
14.3 To supervise the plaintiff properly at all material times.
14.4 To exercise reasonable care as an instructor.
15. The defendant gravely breached the above duties in one or more of the following respects:
(a) The defendant’s attitude to instruction and supervision of the flight was cavalier in a number of respects, for example by permitting the tanks to be overfilled on take-off, by the absence of a pre-flight briefing, and by the defendant’s unwillingness to practise the low flying exercise in a designated low flying area.
(b) The defendant permitted the aircraft to descend dangerously below the height permitted by the Civil Aviation Regulations.
(c) The defendant permitted the aircraft to descend dangerously below a height which was safe in the circumstances.
(d) The defendant permitted low flight in an area where there were numerous obstacles, and which was wholly unsuitable for low flying and/or the practising of simulated forced landings.
(e) The defendant instituted a left turn which was reckless, and where there was a foreseeable risk of stalling and/or engine failure and/or impact with rising terrain.
16. At the time, the defendant was under investigation for an earlier breach of the Civil Aviation Regulations, and his actions were influenced by the desire to avoid detection, and low flying over a residential dwelling.
[27] The pleadings aver that Mr McDermott had suffered serious injuries of a character already noted.
[28] The plaintiff then went on to allege:
19. By reason of all or any of the matters referred to in the preceding paragraphs, the actions of the defendant are deserving of punishment by means of an award of exemplary damages.
20. That for the purpose of this claim, the plaintiff is not alleging that by reason of the defendant’s actions, he is claiming damages arising directly or indirectly out of a personal injury.
[29] The relief sought was a declaration that Mr Wallace was liable to pay exemplary damages; the sum sought was $75,000.
[30] The claim was pleaded in this way because although, undoubtedly, Mr McDermott would have been able to bring a claim at common law for personal injuries occasioned by negligence, in New Zealand, by virtue of s 317 of the Injury Prevention, Rehabilitation, and Compensation Act 2001 (and its predecessor sections) he was not able to maintain such an action.
[31] Nevertheless, by virtue of s 319 of that statute, which we set out hereafter, Mr McDermott was able to maintain an action for exemplary damages. No argument has been made that Mr McDermott could not resort to s 319; the question was whether, in the circumstances of this particular case, exemplary damages should be awarded.
[32] Section 319 provides as follows:
319 Exemplary damages
(1) Nothing in this Act, and no rule of law, prevents any person from bringing proceedings in any court in New Zealand for exemplary damages for conduct by the defendant that has resulted in—
(a) personal injury covered by this Act; or
(b) personal injury covered by the former Acts.
(2) The court may make an award of exemplary damages for conduct of the kind described in subsection (1) even though—
(a) the defendant has been charged with, and acquitted or convicted of, an offence involving the conduct concerned in the claim for exemplary damages; or
(b) the defendant has been charged with such an offence, and has been discharged without conviction under [section 106 of the Sentencing Act 2002 or convicted and discharged under section 108] of that Act; or
(c) the defendant has been charged with such an offence and, at the time at which the court is making its decision on the claim for exemplary damages, the charge has not been dealt with; or
(d) the defendant has not, at the time at which the court is making its decision on the claim for exemplary damages, been charged with such an offence; or
(e) the limitation period for bringing a charge for such an offence has expired.
(3) In determining whether to award exemplary damages and, if they are to be awarded, the amount of them, the court may have regard to—
(a) whether a penalty has been imposed on the defendant for an offence involving the conduct concerned in the claim for exemplary damages; and
(b) if so, the nature of the penalty.
Mr McDermott succeeds in his claim in the District Court
[33] It is convenient to record here that Mr Wallace endeavoured to have Mr McDermott’s claim struck out in 1999 on the footing that it disclosed no reasonable cause of action and was an abuse of the process of the Court. Judge Gaskell declined to adopt that course in a judgment delivered on 30 September 1999.
[34] By the time the merits of the claim for exemplary damages came on for hearing in February 2003 the law had been distinctly clarified by the decision of the Judicial Committee of the Privy Council in A v Bottrill [2003] 2 NZLR 721. The delay in bringing this case forward, on the merits, was in large part due to the recognition by counsel of the desirability of having that decision of the Privy Council available to the trial Judge.
[35] After traversing the facts, Judge Henwood made the following findings of negligence against Mr Wallace.
[36] First, he failed to carry out any exercise to confirm the weight of the Tomahawk aircraft before take-off. The Judge found that the factor of the Tomahawk being overweight “would have had a direct bearing on the ability of the aircraft to perform”.
[37] Secondly, the Judge found that Mr Wallace had failed to give his pupil, Mr McDermott, a pre-flight briefing of an appropriate character.
[38] Thirdly, the Judge found there had been a breach of Rule 38 of the Civil Aviation Regulations 1953 by flying below 500 feet. The Judge held:
Low flying in the circumstances described in this case, namely flying at 200 feet near the Farnell house, and sometimes as low as 60 feet, 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.
[39] Fourthly, the Judge found Mr Wallace caused the aeroplane to crash “by manipulating the aircraft beyond its limitations”. This came about because he made “a violent left-hand turn at a low speed and from a low height”.
[40] Fifthly, the Judge found this decision to make this left turn into rising terrain was “for personal reasons”. The Judge went on:
[Mr Wallace] 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 mind that he was at the time under investigation by [the] 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 [the] Civil Aviation Authority with a second complaint. This is the only rational explanation that the Court can infer from the evidence in front of it. All of the experts were at a loss to explain such a reckless and dangerous manoeuvre on the part of the defendant.
[41] Sixthly, the Judge found that Mr Wallace had then realised he was unable to fly over the rising terrain in front of him, and had made an abrupt right-hand turn, narrowly missing power lines, and crashing the (by now) out of control aircraft.
[42] As noted, by the time of trial, Judge Henwood had the benefit of the recent decision of the Privy Council in Bottrill (above) holding that, in New Zealand, as a matter of principle, exemplary damages should not be restricted to cases of intentional or consciously reckless conduct. We will refer further to that judgment in more detail later, but Judge Henwood took the view that, given that authority:
It is enough that [Mr Wallace’s] 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 (emphasis added).
[43] It appears that the matter which weighed most heavily with the District Court Judge was the extraordinary turning manoeuvres performed by Mr Wallace. She was of the view that the accident “was completely avoidable and followed as a direct consequence of [Mr Wallace’s] unprofessional behaviour”. The reference to “completely avoidable” was a reference to the fact, as found by the Judge, that had the aircraft continued on course or, better yet, drifted slightly to the right of the Newman house, the accident was completely avoidable. The Judge considered that Mr Wallace was negligent in all the respects alleged against him, but “even without taking into account all of the preceding acts and omissions of the defendant such as the lack of pre-flight briefing ... ”, what might be termed the “bail out” actions of Mr Wallace in front of the Newman house met the “outrageous” test, on that point alone.
[44] As to the quantum of the award, the Judge’s reasoning was very brief. She noted only that she had had regard to the consequences of the negligence in this case, and the need for moderation (as suggested in McLaren Transport Ltd v Somerville [1996] 3 NZLR 424), in settling on an award of $50,000.00.
The High Court sets the judgment aside
[45] On the appeal to the High Court, MacKenzie J began by noting that the facts had been “carefully and comprehensively set out in the judgment under appeal”. So much so that the Judge expressly said that he could do no better than recite substantial portions of the District Court judgment.
[46] As to breaches of the duty of care (which the High Court Judge does not appear to have questioned had been properly established) the Judge then said, “I see no reason to question any of Her Honour’s findings of fact, or her conclusions as to negligence ...”. The Judge said, “The only reservation which I would make is as to Her Honour’s use of the terms ‘reckless and dangerous’”. In short, MacKenzie J saw this as being a single issue, “characterisation” case.
[47] The Judge then canvassed the authorities as to awards of exemplary damages in New Zealand. He formulated the issue before him as being “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”.
[48] What the High Court Judge then did was to narrow the range of appropriate considerations for exemplary damages by reference to the doctrine of causation. He considered that the absence of a pre-flight briefing did not play any part in causing the crash. Nor did the overweight factor on take-off. The Judge said the aircraft must have “burned a quantity of fuel” whilst airborne, and that “[t]here 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”.
[49] Having regard to that reasoning, the Judge considered that those factors should be excluded from a consideration of whether the test for outrageous conduct for the award of exemplary damages was satisfied.
[50] On the allegation of a descent below the level fixed by the relevant regulations over a non-designated area, the High Court Judge accepted that that was “a serious breach of the duty of care owed by [Mr Wallace] to his student”. However he had “considerable reservations” as to whether that was “reckless and dangerous”. The Judge’s view appears to have been that, without more, the low flying in this case was not causative or dangerous.
[51] The Judge then considered that the aspects of the sudden decision to avoid buzzing the Newman’s house, turning left towards rising terrain, and the subsequent right-hand turn, could appropriately be dealt with together.
[52] On that global issue, the High Court took the view that the views of the experts expressed in the District Court were “relevant to fixing the standard of care expected, but the assessment whether the departure from that standard of care is outrageous is one for the Court to make, not for the experts”.
[53] The fundamental difference in viewpoint taken in the High Court from that in the District Court, was that rather than these manoeuvres indicating serious errors of judgment, there was instead “a momentary error of judgment”.
[54] The High Court Judge also noted the prosecution of Mr Wallace which had resulted from the accident. He referred to the sentencing notes of Judge Ongley in the District Court, in which that Judge had said of this incident and the resultant charges:
Broadly, they involved a single negligent act which had unfortunate and disastrous consequences ... I regard this as a breach that did not involve cavalier risk taking. If that were the case, it would naturally warrant a heavy penalty ... the penalties available under the quasi-criminal law were adequate to reflect the appropriate condemnation of the appellant’s conduct.
[55] In the result, the Judge concluded that Mr Wallace’s conduct “fell far short of that type of outrageous conduct which may, in rare and exceptional cases, give rise to exemplary damages”.
[56] On quantum, the High Court Judge held that the award in fact made “was outside the range which could properly have been awarded”. He referred to a schedule of cases made available to him by counsel, to which we will refer later in this judgment, in reaching the view that if he was wrong on the liability question, an award of $15,000 would have been appropriate.
The applicable law
[57] It was common ground that the law to be applied in this case is as laid down by the Judicial Committee of the Privy Council in A v Bottrill (above). Only brief reference is needed to that authority.
[58] Lord Nicholls of Birkenhead noted that in the ordinary case the appropriate response to the commission of a tort is to require the wrongdoer to make good the wronged person’s loss, so far as a payment of money can achieve that end. However:
Exceptionally, a defendant’s conduct in committing a civil wrong is so outrageous that an order for payment of compensation is not an adequate response. Something more is needed from the Court, to demonstrate that such conduct is altogether unacceptable to society. Then the wrongdoer may be ordered to make a further payment, by way of condemnation and punishment ([20]).
[59] The Privy Council referred with approval to the observations of Lord Devlin in Rookes v Barnard [1964] UKHL 1; [1964] AC 1129 at 1228 that such an award is justified only if compensation is “inadequate to punish [the defendant] for his outrageous conduct, to mark ... disapproval of such conduct and to deter him from repeating it”.
[60] Lord Nicholls noted that this will usually involve intentional wrongdoing with:
[a]dditionally, 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 ([23]).
[61] That said:
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 ... 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 ([26]) (emphasis in the original).
[62] Further:
The absence of intentional wrongdoing and conscious recklessness will always point strongly away from the case being apt for an award of exemplary damages. That is a very important factor to be taken into account by the Judge. But if the Judge decides that, although the case is not one of intentional wrongdoing or conscious recklessness, the defendant’s conduct satisfies the outrageous test and condemnation is called for, in principle the Judge has the same power to award exemplary damages as in any other case satisfying this test ([37]).
Disposition: liability
Introduction
[63] We do not find it necessary to traverse in detail the submissions of counsel in this case. Unsurprisingly, in a case in which counsel were supporting two different judgments in which it had been held or rejected that this test was satisfied and where the law was not in dispute, the submissions were inherently factual. Where appropriate we will refer to the submissions of counsel in our consideration of the merits of the appeal.
[64] We do however make this point at the outset. The High Court Judge appears to have felt quite able, in this appeal, to effectively substitute his views on the relevant issues for those of the District Court Judge. At one level that is correct. Both in the High Court and in this Court every appeal is by way of rehearing, which has its traditional meaning of a fresh reappraisal, on the basis of the record in the court below, of all the relevant evidence. That however is subject to the well-established principle that any relevant limitations on the appellate court - such as the ability to evaluate witnesses - should be respected by the appellate court. Sometimes it is true to say that the appellate court is in every bit as good a position as the trial Judge to revisit a matter, but in this instance, at least in some respects to which we will come later in this judgment, the trial Judge was undertaking an evaluative role which, in our view, called for there to be compelling reasons for her views to be departed from.
[65] It is convenient also to note, by way of summary, at the outset of our consideration of the liability issue that we think the High Court Judge was in error in the way he dealt with the evidence in three distinct areas: causation; the setting aside of the expert evidence; and in his use of the sentencing notes. We will deal with each of those points in turn, but before we do so there is one discrete area of evidence of some importance which formed a distinct, stand-alone, ground of appeal which we should dispose of. This is whether Judge Henwood could properly have drawn an inference that the abrupt banking manoeuvres performed by Mr Wallace were performed by him, in essence, to “save his own skin”.
The inference of avoidance by Mr Wallace for his own personal benefit
[66] Mr Withnall strongly argued that it was not open to the District Court Judge, in this case, to have reached the conclusion (above [40]) that these abrupt flight manoeuvres by Mr Wallace were to avoid coming to the attention of the civil aviation authorities again.
[67] The District Court Judge had available to her three kinds of evidence which could potentially support such an inference.
[68] First, she accepted that Mr Wallace had said that he did not want to “buzz” the Newman house. Those words are themselves pregnant with meaning.
[69] Secondly, it is incontrovertible that at the time of this accident (3 June 1995) Mr Wallace was under investigation by the Civil Aviation Authority for an incident which had occurred as recently as 22 April 1995. Mr Withnall correctly pointed out that what was at issue in that incident was a “rules” breach, rather than an accident or near miss event, in that it related to a decision by Mr Wallace, whilst on a charter flight, to take over command of an aircraft from another pilot and to operate it, contrary to the Air Service Certificate held by the Wellington Aero Club Inc. Mr Wallace had been comprehensively interviewed about this incident by Mr Paine of the Civil Aviation Authority as recently as 11 May 1995. The short point, for present purposes, is that Mr Wallace knew that he was under investigation by the authorities at the time of this crash.
[70] Thirdly, the trial Judge accepted the view of the experts, who gave evidence before her, that there was no other explanation for “such a reckless and dangerous manoeuvre”.
[71] It must also be recalled that Mr Wallace himself did not give evidence before the Judge. Any suggestion of a “momentary” loss of judgement had to be just that - a suggestion from the bar - which the Judge was quite entitled to put to one side.
[72] In our view the inference of personal interest drawn against Mr Wallace by Judge Henwood was one which was open to her. It has not been shown that she was plainly wrong. We proceed on the footing that the Judge’s finding in this respect therefore remains undisturbed.
Causation
[73] MacKenzie J narrowed the appropriate field of evaluation to what might be termed the “immediate” causative element in the crash. He then assessed “the outrageousness” of the conduct solely against the aspects so identified: effectively, the sudden avoidance manoeuvres.
[74] We think this was wrong in principle. We agree that those manoeuvres were at the heart of this case. But it cannot be said, in a claim for exemplary damages, that the other factors were not (at least) contextual, and of some significance.
[75] The factor of an overweight aircraft was the most problematical element. It could not be shown definitively that the aircraft was overweight at the time of this particular incident - the probabilities have to be that it was not. But there was still some evidence of a lack of care in not ensuring that the aircraft was not overweight on take-off.
[76] A proper briefing, canvassing descending into low flying areas, would surely have emphasised that a pupil should not descend to low heights save in designated areas; have involved instruction as to the methodology involved in locating such areas; and been clear that “near enough” is simply not good enough, as designated low flying areas have obviously been selected because they are “safe” compared to other areas. The lack of a proper briefing was also symptomatic of the lack of a proper flight plan by Mr Wallace in that the area was apparently unfamiliar to him. If there had been a proper flight plan it would have been inconceivable that he would have allowed Mr McDermott to fly so low in what was not a low flying area.
[77] In the result, we consider that the High Court Judge unduly narrowed the area of inquiry and the consideration of the factors to be considered in determining whether there should be an award of exemplary damages in this case, and in what measure.
The expert evidence
[78] It is elementary that in a case such as this, which involved a knowledge of a number of matters beyond the expertise of the Court, that expert evidence could be called and that it would fall into the general pool of evidence which was available to the Judge.
[79] Expert evidence was called for Mr McDermott, but not for Mr Wallace.
[80] Mr Paine, who had been an investigating officer employed by the Civil Aviation Authority for three and a half years preceding this crash, and who had investigated a number of incidents in New Zealand, considered that Mr Wallace’s actions:
... leading up to and immediately prior to the crash were very dangerous. Particularly dangerous, in my view, was the institution of a left turn towards rising terrain by Mr Wallace, which I considered to have been reckless in the circumstances.
[81] Mr Sattler, the Chief Flying Instructor at the Ardmore Flying School, with more than 20,000 flying hours (mainly as an instructor), gave it as his opinion that:
The decision to turn left, therefore, towards rising terrain in an aircraft with limited engine performance and at low air speed was very risky indeed and amounted to unacceptable instructor decision making.
And further, that the cumulative factors he had identified:
... amounted to deliberate and grave errors of judgement, which put the lives of the occupants of the aircraft (and any persons who happened to be in the vicinity on the ground) at risk.
[82] Mr Tucker, the Principal Aviation Examiner for the Civil Aviation Authority gave it as his opinion that:
It should have been obvious [to Mr Wallace] that the aeroplane did not have the performance capability to outclimb the ridge. He should therefore have turned to the right and I simply cannot understand why he chose to turn left up the valley ... Mr Wallace caused unnecessary danger. This decision to turn left resulted in the aeroplane being placed in an irretrievable situation from which a crash was going to result.
[83] These witnesses were examined and cross-examined before the trial Judge. She was therefore entirely well placed to assess how much reliance it was appropriate to place on their evidence.
[84] The High Court Judge took the most unusual course of effectively setting aside this expert evidence, or at least substantially downgrading it. He said:
I consider that caution is required in dealing with the evidence of experts who were called by the plaintiffs, especially when that evidence was unchallenged.
[85] Even literally that statement is not correct - the experts were cross-examined by counsel for Mr Wallace, who chose not to lead any evidence against what had been put before the Court by the experts. And, if evidence goes unchallenged, more rather than less reliance is usually placed upon it.
[86] The High Court Judge correctly noted that the trial was not one by experts and that the trier of fact was entitled, indeed obliged, to reach an independent view. That said, this was the course followed by the trial Judge. There was an unfortunate observation by her ([42] above) - we think no more than a slip of the tongue - that the standard of care is “determined by experts”. But having heard the expert evidence, and the cross-examination on it - and the record plainly shows that the experts were not shaken in their views - it was entirely open to the trial Judge to place heavy reliance on that evidence. We are not satisfied that the High Court Judge was justified in putting this evidence to one side.
The sentencing notes
[87] Both the trial Judge and the High Court Judge were correct to have regard to the outcome of the prosecution which followed on this accident. In the course of sentencing Mr Wallace, Judge Ongley said, “I regard this as a breach that did not involve cavalier risk taking. If that were the case, it would naturally warrant a heavy penalty”. The maximum penalties which were open to Judge Ongley were a fine of $10,000 and disqualification for 12 months. He imposed a fine of $1,500 (which sum was directed to be paid to Mr McDermott) with costs, but he did not impose a disqualification.
[88] What happened in the District Court quasi-criminal proceedings was (statutorily) relevant to the decision whether to award exemplary damages. But the trial Judge was bound to assess whether Mr Wallace’s conduct had been “outrageous” on the basis of the evidence which was adduced before her. For MacKenzie J simply to substitute the view of another District Court Judge was in our view wrong.
Outrageousness
[89] On all the evidence which was before her, we consider it was open to the trial Judge to come to the view she did of Mr Wallace’s conduct. It has not been shown that she was wrong.
[90] What Mr Wallace did in this instance could fairly and appropriately be characterised as gross misfeasance in an instructing role in an aircraft. On the trial Judge’s findings of fact, Mr Wallace - in an aircraft already flying low and in an unplanned way in unfamiliar territory - deliberately reassumed control of the aircraft and recklessly performed avoidance manoeuvres of a highly dangerous character to avoid further possible quasi-criminal consequences for himself.
[91] In our view therefore, the judgment of Judge Henwood on liability should be restored.
Disposition: quantum
[92] There is no principled discussion in the District Court judgment, or for that matter the High Court judgment, as to the basis on which the quantum of exemplary damages should be calculated, save a reference to the judgment of Tipping J in McClaren Transport Ltd v Somerville [1996] 3 NZLR 424 (HC).
[93] It is best to start with first principles.
[94] In a corner-stone of the law relating to exemplary damages - Rookes v Barnard [1964] UKHL 1; [1964] AC 1129 - Lord Devlin, who spoke for all their Lordships on this point, suggested three considerations, at 1227-1228. First, it has to be shown that the claimant was “the victim of punishable behaviour”; secondly, there should be moderation in awards; and thirdly, the means of the parties should be considered.
[95] The first point is in one sense tautologous. Of course there must be liability. And if that point is to be taken to referring to the victim having to be alive to be able to claim damages, it is otiose. However, if Lord Devlin’s observations are read as meaning that exemplary damages are available only if a compensatory award does not sufficiently deter and punish, then it is entirely accurate. And that is how the Privy Council appears to have read this point in A v Bottrill.
[96] As to moderation, as early as 1964, the House of Lords indicated that, if necessary, their Lordships would not hesitate to put an arbitrary limit (as was done in Benham v Gambling [1941] AC 157) on awards of damages that are made by way of punishment. See also Broome v Cassell and Co [1972] UKHL 3; [1972] AC 1027, to like effect. “Moderation” also refers to a due sense of proportion.
[97] There does not appear to be any present cause for concern under this head in New Zealand. Mr Corkill made available to us a schedule of the awards in cases which he was aware of. Because the information may be useful to practitioners we reproduce the schedule hereafter, in full.
|
|
Quantum
|
Case
|
Court
|
Year
|
Facts
|
|
NON-INJURY CASES
|
|
|
|
|
|
|
Trimming Trees
|
$1,000
$2,500 $1,000 |
Napolcha v Nash
Cousins v Wilson Percy v Le Heux |
High Court
High Court High Court |
1999
1993 1982 |
Neighbour trimming trees on boundary
|
|
Other
|
$5,000
|
French v Dept of Corrections
|
Employment
|
2003
|
Breach of employment contract
|
|
|
$5,000
|
Harding v Kummer
|
High Court
|
1983
|
Rigging an auction
|
|
|
$5,000
|
Cook v Evatt
|
High Court
|
1991
|
Breaching fiduciary duty
|
|
|
$2,500
|
Fahy v Schofield
|
High Court
|
1990
|
Taking of car
|
|
|
$1,500
Delvin $5,000 Police |
Shattock v Delvin
|
High Court
|
1990
|
Removal of barn from property
|
|
|
$750
|
Brown v Neild
|
District Court
|
2002
|
Breaching quiet enjoyment of a tenancy
|
|
|
$500
|
Jamieson’s Tow & Salvage Ltd v Murray
|
High Court
|
1983
|
Towing a car away
|
|
|
$10,000
|
McIntyre v Bianchi
|
High Court
|
1992
|
Industrial relations
|
|
INJURY CASES
|
|
|
|
|
|
|
Sexual abuse
|
$100,000
$85,000 $40,000 $20,000 $25,000 $35,000 $10,000 $20,000 $20,000 |
M v L
G v G M v J A v M H v H B v R L v Robinson H v R AB v CD |
High Court
Family Court District Court High Court High Court High Court High Court High Court High Court |
1998
1996 2002 1991 2002 1996 2000 1996 1992 |
|
|
Police assault
False arrests |
$15,000
$30,000 $7,500 |
Archbold v A-G
Harris v A-G Hayward v O’Keefe Craig v A-G |
High Court
High Court High Court District Court |
2003
1999 1993 1986 |
|
|
Other
|
$15,000
|
McLaren Transport Ltd v Somerville
|
High Court
|
1996
|
Exploding tyre while inflating
|
|
|
$15,000
|
Williams v Duvalier Investments
|
District Court
|
1999
|
Bouncer assault
|
|
|
$12,000
|
Boyle v Newcomb
|
District Court
|
1997
|
Burns from hairdressing treatment
|
[98] We have also noted the following cases:
|
Cropmark Seeds Ltd v Winchester International (NZ) Ltd
|
HC, Timaru, 28/09/04, CIV2003-476-00008, J Hansen J
|
intellectual property - breach of Plant Variety Rights Act - flagrant
breach of owner’s right
|
$5,000 v each def.
|
|
Bird v Hansen
|
|
contract - termination of licence - high-handed conduct
|
$5,000
|
|
Clapham v Russell & Finlayson
|
|
tort - trespass/loss of privacy - felling trees
|
$15,000
|
|
Hire Intelligence Solutions NZ Ltd v Cassin Enterprises Ltd
|
HC, Auckland 19/12/03 CIV2002-404-001797, R Hansen J
|
contract - deceptive conduct in relation to borrowed funds
|
$10,000
|
|
Powell v Koene |
|
tort - conversion, including refusal to return chattels under court
order
|
$10,000
v 1st def, $5,000 v 2 others |
|
Communications Art Ltd v Grant
|
EC, Auckland 13/12/01
AC 83/01, AEC 140/99, Judge Travis |
employment - breach of confidentiality by departing employee
|
$10,000
|
|
Spotless Services (NZ) Ltd v Walters
|
|
employment - breach of confidentiality by departing employee
|
$10,000
|
|
Binnie v Pacific Health
|
EC, Auckland 05/03/01
AC 14/01, AEC 175/99, Judge Colgan |
employment - breach of employer in relation to allegations of serious
misconduct
|
$10,000
|
|
R v Eade |
DC, Auckland 12/05/00
NP 3604/97, Judge M D Robinson |
tort - fiduciary duty/negligence - sexual misconduct by therapist
|
$27,500
|
[99] There appears to have been little reference in the New Zealand cases to Lord Devlin’s third principle: an appropriate regard to the means of the parties. In the present case, we have no real information on Mr Wallace’s means.
[100] A fourth principle is that awards of compensation to a claimant, whether under the criminal law, or regulatory proceedings, are relevant. As noted, in this case $1,500 has already been diverted to Mr McDermott. We were not told whether that sum has been paid or not.
[101] A fifth principle is that regard must be had to the imposition of any relevant criminal penalty. Indeed this is a statutory requirement in this case. A substantial fine or a prison sentence might deflect the appropriateness of exemplary damages. We have already traversed what occurred in this particular case.
[102] A sixth principle is that the conduct of the parties is relevant. “Conduct” in this respect does not have a temporal limitation. This mirrors the principle which has long obtained in defamation cases, that the conduct of a defendant right down to the time of judgment is relevant. See, for instance, Praed v Graham (1889) 24 QBD 53 (CA). And any improper conduct of a complainant can reduce, or even eliminate, exemplary damages if the claimant’s conduct caused or contributed to the behaviour complained of. See, for instance, the observations of Lord Woolf MR in Thompson v Commissioner of Police of the Metropolis and Hsu v Commissioner of Police of the Metropolis [1997] EWCA Civ 3083; [1998] QB 498 (CA).
[103] Having regard to these principles, we regard an award of $20,000 damages to Mr McDermott as appropriate in this case. That is a “moderate” though distinct award. It marks out the outrageous behaviour. The low fine was not sufficient. It might be said that Mr Wallace has persisted in declining to front up to the outrageousness of what he did, but in fairness to him that was dependent on judicial characterisation of the relevant behaviour.
Costs
[104] The costs award of Judge Henwood in the District Court is restored.
[105] In the High Court, Mr Corkill did not seek costs because Mr Wallace was apparently legally aided.
[106] If costs are sought in this Court, counsel can file memoranda in the usual way.
Solicitors:
John Dean Law office, Wellington for
Appellant
Smith Law, Nelson for Respondent
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