A Narrow Ruling with Wide Implications: Insurer Joined in Claim Arising from Sydney Seaplanes Crash as Supreme Court Finds PTSD Is Arguably a "bodily injury”
In Page v Airag Aviation Services Pty Limited [2026] NSWSC 1030, the Supreme Court of New South Wales granted the plaintiff leave to join QBE Insurance (Australia) Limited (“QBE”) as a second defendant to proceedings against aircraft maintenance provider Airag Aviation Services Pty Limited.
On 31 December 2017, a De Havilland Canada DHC-2 Beaver floatplane crashed into Jerusalem Bay in the Ku-ring-gai Chase National Park. The pilot and all five passengers were killed, including the plaintiff’s 11-year-old daughter.
The plaintiff alleged that the accident was caused by negligent maintenance by the maintenance provider, and that the defective maintenance allowed carbon monoxide to enter the aircraft, causing the pilot to suffer hypoxia. Relevantly, the plaintiff had not suffered physical injury but claimed that learning of his daughter’s death caused him to suffer post-traumatic stress disorder (“PTSD”).
The plaintiff applied to join the maintenance provider’s insurer to the proceeding on the basis that if the plaintiff was successful against the maintenance provider, it may not be able to pay the damages awarded against it. In order to obtain leave under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), the plaintiff had to establish an arguable case that the maintenance provider was liable to him, an arguable case that the policy responded to that liability, and a real possibility that the maintenance provider could not satisfy any judgment in full. The first and third requirements were satisfied, leaving only the issue of whether the policy would respond.
The policy was an Airport Owners & Operators Liability Policy (often referred to as a hangar keeper’s policy) and the insuring clause provided the insurer would pay damages for “bodily injury including death at any time resulting therefrom” arising from an accident occurring during the period of insurance and arising from the hazards described in sections 1 to 3. QBE contended that the policy did not extend to cover PTSD, which it contended was not a bodily injury, and further contended that the injury sustained by the plaintiff was too remote to the risk covered by the policy, which was intended only to cover injuries of those directly affected by the use of aircraft parts repaired, serviced, treated or supplied by the insured.
The Court rejected QBE's contention that the connection between the maintenance work and the plaintiff's injury was too remote to fall within the scope of the policy. The Court held that the expression "arises from" requires some connection between the claim and the relevant matter, but the requisite nexus is satisfied by a less proximate relationship than that demanded by the phrase "caused by". It was arguable that the plaintiff’s alleged injury was caused by the crash, which itself arose from the allegedly negligent maintenance and use of incorrect and non-approved aircraft parts.
In respect of the argument that PTSD was not a “bodily injury” within the meaning of the policy and therefore not covered, the Court noted that the plaintiff relied on evidence that the PTSD caused a physical injury to his brain. The Court held that, if there had been a physical injury to the brain, which had to be determined at the trial, it was arguable that the plaintiff had suffered a bodily injury and that it was arguable that the policy responded to the liability for the loss the plaintiff had suffered. In Pel-Air Aviation Pty Ltd v Casey [2017] 93 NSWLR 438 (“Pel-Air”) the Court of Appeal held that a physical destruction of a part or parts of the brain would constitute bodily injury. In that case there was no proof that the plaintiff’s PTSD resulted from physical damage to the brain. While there was evidence of biochemical changes in her brain, the Court of Appeal held that such changes could not fairly be described as injuries to the body. The distinction between Pel-Air and the present case is that the plaintiff’s medical expert described the changes in the plaintiff’s brain that affected his capacity to interact with his environment as a physical injury to his brain. That is a very subtle distinction and in practical terms could undermine the effect of Pel-Air, but of course this is only an interlocutory decision which found that the plaintiff’s contentions were arguable.
It is premature to assess the implications of this decision as it is not a final determination of the relevant question. However, there is a potential to re-open the question of whether or not pure nervous shock might be compensable under the Warsaw/Montreal Conventions and the domestic analogue regime.
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