Air carrier liability and application of state laws to assessment of damages

In brief - Recent Federal Court decision in Grueff v Virgin Australia Airlines Pty Ltd [2021] FCA 501 (Grueff v Virgin) provides a useful summary of the relevant principles governing claims for damages arising from injuries to passengers on aircraft 

The decision highlights the requisite elements of a cause of action under the Montreal Convention 1999 and also provides a detailed analysis of the relevant law applicable to assessing damages in that cause of action and, in particular, the differences in approach taken by the courts in New South Wales to those in Victoria.

Australian air carriers' liability to passengers for personal injury and death is based on a succession of international treaties adopted and implemented by Australia. The Montreal Convention, as adopted by the Civil Aviation (Carriers' Liability) Act 1959 (Cth) (CACL Act), applies to commercial international carriage of persons by aircraft between countries which have implemented the Montreal Convention. Part IV of the CACL Act applies to passengers injured during domestic travel.

Pursuant to sections 9B and 9E of the CACL Act, the liability of a carrier (a person engaged in an air transport operation for the carriage of passengers) for personal injury suffered by a passenger is governed exclusively by the Montreal Convention (for international travel) and Part IV of the CACL (for domestic travel), and this is to the exclusion of any civil liability of the carrier under any other law in respect of the injury. 

Can applicants' symptoms be characterised as a "bodily injury" caused by accident during flight, satisfying Article 17 of the Montreal Convention?

In May 2019, Phillip Grueff and Rebecca Saltmarshe (applicants) flew from Denpasar to Sydney on Virgin Australia Airlines (Virgin) flight VA34. During the flight the applicants were mistakenly served water which had been "tainted" with perfume. 

The applicants experienced a range of symptoms after drinking the tainted water, including stomach cramps, nausea, diarrhoea, sore throat, lack of energy, anxiety, loss of weight and food intolerances. Although the applicants ultimately returned to full health, they claimed that for several months they both experienced food sensitivities.

The applicants brought proceedings in the New South Wales registry of the Federal Court of Australia. The applicants sought damages from Virgin pursuant to the CACL Act on the basis that Virgin was liable by reason of Article 17 of the Montreal Convention, which provides:
 
The Montreal Convention imposes strict liability on an air carrier for bodily injury sustained by a passenger during international carriage which is caused by an accident and sets a statutory limit on the damages payable, which is currently approximately AU$240,000 for each passenger. In Australia a higher limit applies for claims involving carriage within Australia as part of an international carriage contract (approximately AU$895,000) and for claims involving domestic carriage (AU$925,000).

Accordingly, if a claimant is able to satisfy Article 17 of the Montreal Convention, it is unnecessary to prove negligence or fault unless the damages sought are in excess of the statutory limit.

If a claimant claims damages beyond the statutory limit, Article 21 of the Montreal Convention provides that the carrier will not be liable if it proves:
 
The applicants' case concerned a claim for damages which was below the statutory limit. Accordingly, the case turned on whether the applicants' symptoms satisfied Article 17 of the Montreal Convention in that they could be characterised as a "bodily injury" caused by an accident on board the aircraft. The question of negligence was not an issue.

Virgin accepted that the provision of tainted water was an "accident" on board the aircraft but denied the symptoms complained of by the applicants constituted a bodily injury and denied the symptoms were caused by the accident.

Court's findings on "bodily injury"

As "bodily injury" is not defined by the Montreal Convention, the Court conducted an analysis of the relevant case law, including various overseas decisions which have applied the Montreal Convention. 

The Court accepted a number of key principles necessary to establish "bodily injury", namely:

• A claimant must produce clear evidence of a physical injury to the body, caused either by the accident or flowing from the psychological trauma from the accident.

• The injury must not be a mere transitory discomfort or inconvenience. Whilst it need not be permanent or incurable, it must be of sufficient duration. A symptom of a few days duration is not normally sufficient to be described as an injury.

• An injury which requires treatment to enable a person to return to normal is typical of an injury, but not essential.

• Contracting an illness may be described as an injury depending on the degree to which the illness departs from the normal. For example, a cold is not an injury but a disease such as AIDS or hepatitis would be.

• Emotional distress is not a bodily injury.

• Physical manifestations (such as weight loss) from emotional distress is not a bodily injury although organic injuries (such as coronary thrombosis or stroke) from emotional shock could be.

• Pure psychiatric/psychological injury unaccompanied by any physical injury is not a bodily injury.

• Psychiatric/psychological injury consequent upon a physical injury may be a bodily injury.

Justice Griffiths concluded that the health conditions suffered by the applicants did not constitute "bodily injury" within the meaning of the Montreal Convention.

Court's findings on causation

The judge also considered whether the injury complained of by the applicants could be said to have been caused by the accident, namely, the ingestion of tainted water. 

Justice Griffiths found that the applicants' symptoms were not caused by the tainted water. There was no medical evidence which established any link between the ingestion of tainted water and the applicant's health conditions. In this regard, the expert evidence from the applicants' treating medical practitioner was not allowed to be admitted in evidence as it was served late and prejudiced Virgin's defence in that Virgin had insufficient time in which to obtain any expert evidence in response. 

The Court was therefore left with the treating medical practitioner's progress notes only, which did not identify any link between the tainted water and the health conditions complained of by the applicants.

Application of state law to assessment of damages for actions under Montreal Convention

Justice Griffiths then embarked on an academic analysis of the relevant law applicable to assessing the heads of damage which the applicants could claim in a cause of action under the Montreal Convention.

The Court found that the heads of damages available to an injured passenger for an action under the Montreal Convention were governed by domestic law as determined by the choice of law rules (Pfeiffer v Rogerson [2000] HCA 36). 

In other words, the relevant limits and thresholds for recovery of damages as governed by each state law is applicable to damages claimed under the Montreal Convention. This means that relevant thresholds in each state might preclude an applicant from recovering certain heads of damage, depending on the state in which the case is brought. 

For example, in Victoria, the Wrongs Act 1958 (Vic) precludes a claimant from recovering non-economic loss damages unless the claimant has a "significant injury" within the meaning of the Act. In New South Wales, pursuant to the Civil Liability Act 2002 (NSW), a claimant is not entitled to claim damages for non-economic loss unless the severity of the non-economic loss is at least 15% of the most extreme case.

Importantly, each state's application of their respective civil liability regimes on aviation injury claims has differed. 

In New South Wales, various domestic courts have accepted that the Civil Liability Act applied to limit the damages available to a claimant seeking remedies under the Montreal Convention. The NSW courts determined that section 80 of the Judiciary Act 1903 (Cth) was sufficient to "pick up" the state laws for the assessment of damages. In Grueff v Virgin, Justice Griffiths endorsed this approach. Section 80 of the Judiciary Act provides:
 
In Victoria, Justice Keogh in Di Falco v Emirates [2018] VSC 472 determined that the limits found in the Wrongs Act did not apply to a cause of action under the Montreal Convention because the former was concerned with fault-based proceedings and Article 17 of Montreal Convention was a no-fault, strict liability regime. In Di Falco, the Plaintiff made no allegation of fault and it was on this basis that Justice Keogh determined that the limit on damages found in the Wrongs Act did not apply. 

Justice Keogh also said that the Wrongs Act provisions were not "picked up" by the Judiciary Act because, in his view, the CACL Act had "provided otherwise" in that it provided a right to pursue damages, including pain and suffering and loss of enjoyment of life damages, which right would be extinguished or restricted by the relevant provisions of the Wrongs Act. 

Limits on damages imposed by NSW Civil Liability Act found to apply to assessment of damages claimed under the Montreal Convention

In Grueff v Virgin, Justice Griffiths held that if the requirements of Article 17 of the Montreal Convention are established, the assessment of what “damages” are available is governed by domestic law as determined by choice of law rules. This means that the applicable law for the assessment of damages would be governed by the operation of sections 79 and 80 of the Judiciary Act. 

Whilst Justice Griffiths did not disagree with Justice Keogh's reasoning on the application of the Wrongs Act to proceedings involving "fault", his analysis on the application of state of law to the assessment of damages under the Montreal Convention differed. 

Justice Griffiths observed that Justice Keogh's decision omitted references to section 80 of the Judiciary Act and was decided before relevant High Court commentary in Parkes Shire Council v South West Helicopters Pty Ltd [2019] HCA 14, which concluded that relevant provisions in the Warsaw Convention (an earlier treaty which uses the same language as the Montreal Convention) meant that the heads of damage available to an injured passenger were left to domestic law. 

Justice Griffiths took the view that the Civil Liability Act in New South Wales did not remove a carrier's liability, but merely affected the assessment of damages arising from that liability. He said that the right to damages under the Montreal Convention and CACL Act made no reference to the heads of damages available and made no reference to a right to pain and suffering and loss of enjoyment of life damages. Griffiths considered that in this context the CACL Act had not "otherwise provided", such that the applicable law with respect to the assessment of damages under the Montreal Convention would be governed by the state law as modified by statute, pursuant to section 80 of the Judiciary Act.

Nevertheless, Justice Griffiths did not reject Justice Keogh's analysis on the application of the Wrongs Act, noting that Justice Keogh had identified important distinctions in the wording of the Victorian Wrongs Act which, unlike the Civil Liability Act, applied to proceedings involving "fault".  

With respect to the position in New South Wales, Justice Griffiths considered that amendments to the Civil Liability Act in 2002, which removed references in the scope of its application to proceedings "caused by the fault of another person", had the effect of expanding the operation of the Act to no-fault claims, such that it also applied to the no-fault regime under the CACL Act and Montreal Convention.

Accordingly, the Federal Court concluded in Grueff v Virgin that the limits on damages imposed by the Civil Liability Act applied to the assessment of any damages claimed by the applicants under the Montreal Convention.

Lessons for claimants from decision in Grueff v Virgin

The applicants in Grueff v Virgin failed to establish that they suffered any bodily injury within the meaning of the Montreal Convention or that any injury suffered was caused by a relevant accident. The Court nonetheless affirmed the common law as modified by state legislation will apply to the assessment of damages in a claim under the CACL Act. In New South Wales, the Civil Liability Act applies to limit the potential damages available. In Victoria, the Wrongs Act does not apply because its application is limited to fault-based claims. 

This decision reinforces the need for claimants to choose their jurisdiction carefully when commencing proceedings under the Montreal Convention or CACL Act. A claimant will need to consider the various state laws when deciding on which jurisdiction to issue proceedings because it may have significant consequences on the damages potentially available.