There is good news and bad news about drones, as they become increasingly popular, says Peter Axelrod, Special Counsel at Meridian Lawyers, in Brisbane.
He told an AILA Qld function late last year that drones would become smarter and more capable. “Just like iPhones, they will have more features, more autonomy and more performance.”
He said as costs declined and ease of operation increased more people would get drones.
“The bad news is that a certain percentage of new owners will be idiots who will use their drones to cause accidents either deliberately or accidentally. The good news is that those accidents will make more work for lawyers and keep insurance claims officers gainfully employed,” he said.
Mr Axelrod said because drones operated digitally, both internally and in their communication with the operator, they would be hacked. He also predicted uses would develop that no one had yet thought of. “Some of these will be of great benefit and make our lives easier and richer and some will be dangerous or annoying and make us long for simpler times.”
Mr Axelrod told Resolve a large drone with eight rotors, capable of carrying a passenger, was exhibited at a Chinese consumer electronics show.
Drones had wide disparity in size, mission, power plant and sophistication. “The first drones I became aware of, other than the radio-controlled models of my youth, were relatively large aircraft, flown remotely and used by the US military first for reconnaissance and then armed with missiles,” he said.
A parallel development on the civilian side, at first for hobbyists and then for commercial users, was small, multi-rotor devices powered by batteries with increasing cost, size and sophistication.
Mr Axelrod said the most common use for drones was video photography, for example, “getting a new perspective on your own property, your neighbour’s, your neighbour’s wife; or recording events from footy matches to bush fires. The uses are endless”.
He said drones were being used for power line patrol, agriculture, movie production, real estate sales promotion and in many other industries.
Larger drones could deliver goods, for example, medical supplies to remote or difficult-to-reach locations.
Mr Axelrod said there was no restriction on who could buy drones and who could fly one depended on the size, location, purpose and route of the mission.
Australia’s Civil Aviation Safety Act defined drones as aircraft and they potentially shared the sky with manned aircraft.
“When what we now call drones were called model aircraft and flown by enthusiasts in an empty paddock far from anyone and at very low altitude there was little chance of conflict. But as model aircraft mutated to drones and increased in size, range and endurance, the chance of conflict became significant,” Mr Axelrod said.
Under Australian rules, model aircraft flown below 400 feet above ground level and more than three nautical miles (1.8km) from airports were exempt from most regulations.
Commercial use of drones was subject to the Civil Aviation Safety Regulations 1998. The principal requirement was an operator hold a licence issued by the Civil Aviation Safety Authority (CASA).
“CASA does nothing by half measures and therefore has two separate licences with different requirements but, so far as I can tell, exactly the same privileges. Remarkably, having either licence gives no more operational rights than you would have operating a model aircraft, except that you can do it for a commercial purpose.”
Mr Axelrod said the same height limit, distance from airports, operating away from populated areas, in visual conditions and within sight of the operator all applied. “This distinction between hobby use and commercial use seems bizarre.”
Mr Axelrod said risks from drones included hazards to people and property on the ground, including operators. “Apart from direct physical injury, drones can cause injury indirectly such as by distracting a driver or spooking a horse. Property damage might arise, for example, from contact with a power line or breaking a window.”
He cited an example of a drone photographing skiers, which crashed only metres from the skiers.
The serious risk was damage to other aircraft. A 1kg drone could, under the right circumstances, damage or destroy a 100,000kg airliner. Ingestion into an engine could cause engine failure, loss of control or a serious fire. He said aircraft windscreens were strong enough to withstand bird strikes, but not designed to resist larger drones.
Drones had the potential to create serious invasions of privacy. “How is use of drones going to be regulated so we can achieve the benefits of new technology while making sure people have a remedy if their privacy is breached through misuse of technology?” Mr Axelrod asked. Regardless of regulations, enforcement was “tricky”.
A federal government inquiry into drones and the regulation of air safety and privacy recommended in July 2014:
- CASA educate drone users that it is their responsibility not to monitor, record or disclose individual’s private activities without consent.
- Introduce legislation to protect against privacy-invasive technology (particular emphasis on protecting individual’s private affairs), including creating a tort of “serious invasion of privacy”.
- Harmonise Australia’s surveillance laws covering use of listening devices, tracking devices, surveillance devices etc.
- Introduce measures/legislation regulating use of drones by Commonwealth law enforcement agencies.
- CASA and government to review adequacy of privacy and air safety regarding drones in June 2016.
States and territories have legislation that may make it illegal in certain circumstances to use surveillance devices to record or monitor private activities or conversations via listening devices, cameras, data surveillance devices or tracking devices.
Mr Axelrod said antiquated legislation in Queensland, Tasmania and the ACT made no reference to cameras at all, let alone cameras hovering overhead.
Some common law torts relevant to drone use, including trespass, nuisance or breach of confidence, may be available to people whose privacy has been invaded by drones, depending on the circumstances.
“CASA approval does not grant an operator any rights against owners or occupiers of land over which drone operations are conducted; nor does it grant immunity from claims [for] injury to persons or damage to property,” Mr Axelrod said.
The Damage by Aircraft Act 1999 (Clth) provided protection to those who suffered injury or damage to person or property because of an impact with an aircraft or something that fell from an aircraft.
Section 11 of the Act imposed strict liability without proof of intention, negligence or other cause of action.
Because of the limitations of s51 of the Constitution, the Commonwealth Act only applied to owners and operators that are financial corporations or operating in interstate commerce. The private operator operating within a single state was not covered. However, all states had filled the gap with legislation imposing similar strict liability on individuals and non-financial corporations operating within the state or territory.
“The definition of aircraft under the Act is taken from the Civil Aviation Act 1988 but excludes model aircraft. It is yet to be seen whether damage caused by drones would be covered but, because commercially used drones are not, by definition, model aircraft, my belief is all but hobby use drones would be captured by the state acts,” Mr Axelrod said.
As drone use moved away from the model aircraft paddock, insurance became both necessary and desirable.
Hull insurance provides first party coverage for loss or damage to the drone itself. Mr Axelrod suggested underwriters change the agreed value language to read the agreed value or replacement cost, whichever were less. “It will cut down on fraudulent claims and save money,” he said.
Liability insurance covered claims by those injured or killed by drones or whose property was destroyed. “What most policies may not cover are the kinds of claims drones can create that regular aircraft usually do not, such as trespass, nuisance and claims arising from surveillance, improper use of images and the like. Likewise, most policies do not cover the cost of defending prosecutions by CASA for rule violations,” he said.
“The serious issue for insurers is what limits will be available. While damages are reasonably capped for personal injury under such legislation as the Civil Liability Act 2003 (Qld) and its fellows in the other states, the exposure for colliding with an airliner is well beyond the limits of most normal aircraft policies.”
Mr Axelrod said drone makers may require products liability insurance. “Because many drones are made in China, it is important for the vendors to obtain insurance since the chances of recovering from a Chinese manufacturer are close to zero.
“Importers in Australia are deemed to be manufacturers if the actual manufacturer does not have a place of business in Australia. Thus anyone importing drones should seriously consider products liability insurance.”
Published in Resolve, March 2016. Republished with permission of AILA and written by Kate Tilley, Resolve Editor. Resolve is the official publication of the Australian Insurance Law Association and the New Zealand Insurance Law Association.
Meridian Lawyers Principal Ed Zappert is a committee member of the Queensland branch of AILA.
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