ULTT T s, AOK ys EF, IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. GS of 1987 ) GENERAL DIVISION ) ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA BETWEEN: MARK BERNARD EVERARD McCAULEY Applicant AND: HAMILTON ISLAND ENTERPRISES PTY. LIMITED First Defendant First Cross-Defendant in First and Second Cross- Claim AND: KEITH WILLIAMS (QLD) PTY. LIMITED Second Defendant Second Cross-Defendant in First and Second Cross- Claim AND: GREAT BARRIER REEF MARINE PARK AUTHORITY Third Defendant Second Cross-Claimant AND: COMMONWEALTH OF AUSTRALIA Fourth Defendant First Cross-claimant AND: AUSTRALIAN AVIATION UNDERWRITING POOL PROPRIETARY LIMITED Third Party AND: ADRIAN ALISTAIR PATE Third Cross—Defendant to Second Cross-—Claim AND: CHRISTOPHER JOHN MAINPRICE Fourth Cross-Defendant to Second Cross Claim CORAM: M. L. FOSTER, J. DATE: 8 JULY, 1988. PLACE: SYDNEY. REASONS FOR JUDGMENT ( EXTEMPORE ) HIS HONOUR: In these proceedings, the applicant has sued, inter alia, the first and second defendants, in order to recover damages for serious injuries incurred by him in a crash between two helicopters occurring on a pontoon adjacent to Hamilton Island in Queensland. The plaintiff has sued those defendants on a number of claims for negligence and for breach of statutorty and regulatory duties imposed under the Air Navigation Regulations, passed under the Air Navigation Act, 1920 (Cth). Those claims 1n respect of breach of regulation are set out, at length, in the Statement of Claim, and I do not propose to repeat them in these short reasons. The first and second defendants have claimed indemnity under a policy of insurance with the Australian Aviation Underwriting Pool Proprietary Limited. Indemnity has been denied under that policy and that company has been joined in the proceedings as a third party. The Great Barrier Reef Marine Park Authority has been sued as a third defendant, and the Commonwealth of Australia as a fourth defendant. It is not necessary 1n these reasons to set out the causes of action alleged against them. Additionally, the pilots of the respective helicopters have been joined as cross-defendants by the third and fourth defendants, and pleadings between those parties are, at this stage, not complete, The motion that I have before me is one by the third party brought under order 5 rule 12 sub-rules 2(c) and (2)(d). The third party, by this application, seeks that an order be made un its favour giving it leave to defend the plaintiff's claim against the first and second defendants in respect of whom, 1t 1s currently denying indemnity under the insurance policy. It also seeks appropriate orders in relation to the trial, on the basis that that leave be granted. The precise orders are set out in the Notice of Motion, and I shall not set them out here. The granting of such leave has been opposed on behalf of all other parties to the action. The plaintiff has 4. submitted that the Court should not exercise its discretion to grant such leave, on the basis that the empowering of the third party to play an extended role in the trial, by way of defending the plaintiff's action, would unduly lengthen the trial and impose hardship on the plaintiff to the extent that the plaintiff would be combatting, in effect, two defendants acting in identical interest with rights of cross-examination and all other relevant rights in the trial. It is put on behalf of the plaintiff that, quite apart from the inevitable lengthening of the trial, this would impose upon him an undue and unreasonable hardship, having regard to the fact that the real issue that brings the third party to these proceedings is an issue that exists only between it and the first and second defendants on the basis of whether indemnity can or cannot be properly denied under the relevant insurance policy. The further submission is, as I understand it, made by the plaintiff, and, indeed, by all parties, that there 1s a quite unacceptable inconsistency in the position of the third party, should this leave be granted. The first and second defendants point - in my view, with considerable force - to the fact that, as currently particularized, the third party's main claim to withhold indemnity lies in allegations that those defendants have been in breach of the Air Navigation Act, 1920 (Cth) and Regulations in their conduct towards the plaintiff. S. It 18 put that those breaches disentitle 1t to indemnity. The defendants say that it would produce a marked distortion of the trial if, as a result of leave being granted, the third party, who comes only as an insurer refusing indemnity, should be enabled to, in effect, assist the plaintiff on those major issues, by way of supporting the claim for indemnity, whilst, at the same time, taking all possible steps, by way of conduct of the trial, to thwart the plaintiff in 1ts claim against the defendants. It is put by those defendants (and this submission 1s supported, all round, by other parties) that the third party should not, by way of a granting of leave under the relevant rules, be put in a position where it could play such a role in the trial. I thank 1t must be borne in mind that the third party zs currently in the proceedings only on the basis of a claim against 1t that 1t has an obligation to insure the first and second defendants. If 1t succeeds in establishing that 1t 1s under no such obligation, then, of course, the first and second defendants are left in the position that, 1f the plaintiff succeeds against them, they must bear the results of the planitiff's verdict. It is clearly not a case where an insurer could suggest that, unless it could play some role in the proceedings, there was a real prospect that the insured defendant would not take all possible steps to dispute liability and minimize any resulting damages that might be awarded against it. The defendants in these proceedings have a very clear unterest in disputing the plaintiff's claim on all sides, and in taking all possible steps to confine any award of damages which might be given. It 1s not, 1n my view, a case, on the material before me, where 1t can be said that the third party putative insurer need feel under any apprehension that all things would not be done by way of defence and minimisation of damage 1n the proceedings, such that there was some necessity that 1t should, as a matter of justice, take a role in that aspect of the case itself. In all the circumstances, I have come to the conclusion that 1t has not been demonstrated to my satisfaction that the Court's discretion should be exercised in favour of allowing the third party any greater role in the proceedings than it will he entitled to fulfil as a result of its being present as a third party, with the issue of indemnity to be litigated. I consider that its role in the trial should be restricted to the issues between itself and the first and second defendant as are currently established by the pleadings. It does appear, however, that the whole purpose of the third party procedure, which has been set in train in this case, would be thwarted unless the quite necessary ancillary order be made that the cross-claimants and the third party shall be bound, as between themselves by the judgment from the plaintiff's claim against the defendants, and I make that order. In what I have just said, I am indicating that the first defendant, Hamilton Island Enterprises Proprietary Limited, the second defendants, Keith Williams (Queensland) Pty. Limited, and the third party, should be bound, as between themselves, in the manner that I have indicated. As between the third and fourth respondents and the third cross-defendant, I make the order, by consent, which 1s set out in the short minutes, which I shall date today and initial. I reserve the question of costs. I make the orders set out in the short minutes, which I will sign, and have placed with the papers. I certify that this and the six preceding pages are a true copy of the reasons for judgment herein of his Honour, Mr. Justice M. L. Foster. Associate: (Baro Dated: 1 August, 1988.