Federal Court of Australia

Grueff v Virgin Australia Airlines Pty Ltd [2021] FCA 501

ORDERS

THE COURT ORDERS THAT:

1.    The originating application be dismissed.

2.    The applicant pay the respondent’s costs as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The originating application be dismissed.

2.    The applicant pay the respondent’s costs as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GRIFFITHS J:

1    On 30-31 May 2019, the applicants in these proceedings (which were heard together) travelled from Denpasar to Sydney on Virgin Australia Airlines flight VA34. The overnight flight arrived in Sydney around 6 or 6:30 am. Towards the end of the flight, each applicant was served by a Virgin Cabin Crew member with a small cup of water which was poured from a plastic bottle. The male applicant (Mr Grueff) drank the entire contents of his cup, whereas the female applicant (Ms Saltmarshe) drank two mouthfuls. Both then noticed the water to be “tainted” and alerted the Cabin Crew. The Cabin Crew confirmed that there had been a mix up and that they had been served with water that contained perfume.

2    On the day of their return to Sydney, both applicants sought medical advice from their local GP, Dr Ulysses Crosson. Apart from advising Mr Grueff to obtain a pathology report (because Dr Crosson thought that Mr Grueff’s diahorrea may have been due to something he had consumed in Bali), Dr Crosson gave no further medical advice at that time. He simply advised Mr Grueff to wait and allow the perfume to leave his systems.

3    As to Ms Saltmarshe, after telling Dr Crosson that she had a sore throat and had an upset stomach, Dr Crosson advised her that he would not prescribe any medication and that she should return to him if the symptoms persisted.

4    Both applicants allege that, after consuming the perfumed water, they experienced a range of medical symptoms, including a sore throat (Ms Saltmarshe), nausea (both applicants), diahorrea (Mr Grueff), a head cold (Mr Grueff), reduced appetite (both applicants), temporary weight loss (both applicants) and food intolerances (both applicants). It appears that after a few weeks each returned to full health, however, both say that for several months they experienced food sensitivities.

5    Both applicants seek damages under Art 17(1) of the 1999 Convention for the Unification of Certain Rules for International Carriage by Air, opened for signature 28 May 1999, 2242 UNTS 309 (entered into force 4 November 2003) (Montreal Convention) (see Sch 1A of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (CACL Act)). The Montreal Convention has the force of law in Australia pursuant to s 9B of the CACL Act.

6    Article 17(1) of the Montreal Convention, as set out in Sch 1A to the CACL Act, provides:

Article 17—Death and Injury of Passengers—Damage to Baggage

1.     The carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.

…

7    This is in similar but not identical terms to Art 17 of the Warsaw Convention as amended at The Hague in 1955 (Protocol to amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed at Warsaw on 12 October 1929, opened for signature 28 September 1955, 478 UNTS 371 (entered into force 1 August 1963)). The Warsaw Convention is set out in Sch 2 to the CACL Act.

8    Virgin denies that the applicants are entitled to any relief.

9    The proceedings are in federal jurisdiction. There is an issue whether the provisions of the Civil Liability Act 2002 (NSW) (CL Act) are “picked up” and apply by virtue of either ss 79 or 80 of the Judiciary Act 1903 (Cth). This could affect the heads of damage available to both applicants.

The applicants’ evidence summarised

(a) Mr Grueff

10    Mr Grueff described how he felt immediately ill after he had consumed the entire contents of the cup. He described how, after raising the matter with a member of the Cabin Crew, he was told that he and Ms Saltmarshe had been provided with water which contained a perfume which had been used as a deodoriser in the lavatory of the plane. Mr Grueff was told that there had been a mix-up and that they had been incorrectly provided with the tainted water. Mr Grueff stated that before landing, he “was continually belching and feeling quite unwell” and was also “suffering from a burning sensation” in his eyes.

11    Mr Grueff described how, after landing at Sydney International Airport, he immediately went to the toilet and experienced severe diahorrea. He said that upon returning to their home at Blaxland he and Ms Saltmarshe went to see their GP, Dr Crosson, in Penrith. Dr Crosson advised him to obtain pathology results on a stool sample.

12    Mr Grueff said that several days after returning home from Bali, he had “a very bad head cold”. He said that for the first week after 31 May 2019, he was very ill. He said that Dr Crosson subsequently told him that the stool sample did not highlight any major problems.

13    Mr Grueff described how, for several months, his stomach would become bloated and sensitive after he ate his usual food. He also said that in May 2020 he arranged for a blood test and an online allergy and intolerance test to be done. He did not say in his evidence what the results of that test were, nor did he annex a copy to his affidavit.

14    Mr Grueff annexed to his affidavit an email exchange he had with employees of the respondent. One such email, dated 5 June 2019, records Mr Grueff telling Virgin that the previous day had been a “very bad day” for him and that he had slept 15 hours because his body seemed to be “fighting something”. Mr Grueff was told in a reply email from Virgin that although its investigation into the matter was ongoing, it was understood that the Cabin Crew member “sprayed a perfume called ‘Tocca’ 4 or 5 times into approximately 750mls of water”.

15    In cross-examination, Mr Grueff was taken to medical records prepared by Dr Crosson at the Tindale Family Practice. Dr Crosson’s notes of his consultation with Mr Grueff on 31 May 2019 at 12:48 pm are as follows:

Flew home from Bali today

Was given water which tasted awful - later found out it was water with perfume in it which was being used to deodorise

Has had diahorrea x 1 today , sore around left eye & flickering

Afeb. Looks well

BP: 115/85 [Heartbeat: Regular, Position: Sitting, Origin: Practice]

exam NAD

Suggest check stool cult (diahorrea could be related to bali rather than the perfumed water)

Pathology Request to Barratt And Smith Pathology for the following tests:

stool mcs/cop, faecal pathogen pcr

16    Mr Grueff was also cross-examined on Dr Crosson’s notes of a subsequent consultation he had with Mr Grueff on 8 July 2019 at 2:30 pm, where reference is made to a solicitor wanting Mr Grueff to have a blood test “following ingestion in the plane”.

17    In cross-examination, Mr Grueff said that Dr Crosson had not expressed any doubts to him about whether the symptoms may have been related to something he had eaten or drunk in Bali. Mr Grueff accepted that the weight loss he suffered did not last very long but he maintained that he had a reduced appetite for a couple of weeks after 31 May 2019. With reference to the head cold which he said he experienced after he returned to Australia, he said that he did not go to Dr Crosson about that matter because he was waiting on the results of the stool pathology.

18    Mr Grueff confirmed that the stool pathology was negative.

19    In re-examination, Mr Grueff said that he and Ms Saltmarshe had dined together during the six week period they were in Bali and that neither had experienced any physical symptoms, nor had he experienced any cold or flu symptoms, while he was in Bali.

20    I accept Mr Grueff’s evidence. I found him to be truthful and responsive to questions.

(b) Ms Saltmarshe

21    Ms Saltmarshe described the flight home from Bali and her consumption of about a half a cup of the water she was provided towards the end of the flight. She said that immediately after she ingested the water she felt unwell and had an upset stomach. She described her consultation with Dr Crosson around noon on 31 May 2019, which was held jointly with Mr Grueff. She said that she told Dr Crosson that she was feeling extremely unwell and had an upset stomach. She said that she was advised by Dr Crosson that he would not prescribe any medication and that she should monitor the situation and return if the symptoms persisted.

22    Ms Saltmarshe said that she had a sensitive stomach for several weeks after the incident. She revisited Dr Crosson and had blood tests on 8 July 2019 in circumstances where she said her symptoms had not been “completely relieved”. She said that the blood tests revealed that she had a creatinine reading of 105 and that she had subsequently had an ultrasound done on her kidneys, as well as a second blood test. The second blood test revealed that the creatinine levels had returned to normal. Ms Saltmarshe described how she had an upset stomach, appetite loss and food sensitivities after 31 May 2019.

23    Ms Saltmarshe was cross-examined. She confirmed that during the six weeks she and Mr Grueff had spent in Bali they had consumed local food and drinks, including cold drinks. Although she did not have any specific recollection of what she had eaten before she caught the flight home, she said that she believed that she had eaten “normally”. Ms Saltmarshe said that she had had a couple of hours sleep during the flight, and that this was less than normal. She confirmed that she told Dr Crosson that she had a “bit of a sore throat” and a “sore stomach”. She confirmed that Dr Crosson did not take her temperature or blood pressure and that no tests were ordered at the consultation on 31 May 2019.

24    Ms Saltmarshe said that she had asked Dr Crosson on 8 July 2019 to arrange for a blood test because she was concerned about her health and her stomach was sensitive. Ms Saltmarshe confirmed that she was taking medication for lower stomach pain both before and after the Bali trip. She confirmed that the stomach pain she experienced after ingesting the water was in her higher stomach, not her lower stomach.

25    I found Ms Saltmarshe to be a credible and responsible witness. I accept her evidence.

(c) Rejection of tender of Dr Crosson’s “expert report”

26    At the commencement of the hearing, the applicants sought to tender as expert evidence a letter dated 26 March 2021 written by Dr Crosson. After describing the joint consultation with the applicants on 31 May 2019, Dr Crosson said:

Given the history as stated above and the negative stool tests, I consider it highly likely that their symptoms were related to the contaminated water they were given during the flight.

27    Virgin objected to the tender of this evidence principally on the basis of prejudice. The prejudice was described in an affidavit of Ms Carol Cheng affirmed on 14 April 2021.

28    The parties provided both written and oral submissions in relation to the tender of Dr Crosson’s letter. I rejected the tender of the letter. My reasons for doing so are as follows.

29    Dr Crosson’s evidence was not served on the respondent until 30 March 2021, being three weeks prior to the scheduled hearing. The evidence should have been filed by 10 July 2020, as required by the Court’s orders dated 17 April 2020. Ms Cheng described how, after being served with a copy of Dr Crosson’s evidence, she set in train efforts to obtain evidence in response from an appropriate medical expert. She described how, on 30 March 2021, she contacted an agency called “Experts Direct” on 30 March 2021. She received a response from them on 31 March 2021, which identified a Dr Michael Robertson as a suitable expert. She participated in a teleconference on 6 April 2021 with Dr Robertson and Counsel to discuss the matter. Ms Cheng said that Dr Robertson advised that, for him to carry out his investigations and provide a written report for the hearing on 22 April 2021, he would need to be provided with a bottle of the Tocca so that he could confirm its ingredients and identify the actual qualities of the perfume added to the water, as well as information concerning the type of bottle of water and type of cup which was used so as to confirm the dilution of the perfume at the time of consumption. Ms Cheng said that 9 clear business days was insufficient to brief Dr Robertson and for him to produce a written report for use in the proceeding.

30    I accept Ms Cheng’s evidence. The late service of Dr Crosson’s evidence left Virgin with insufficient time to obtain expert evidence in response. Nor am I satisfied that the applicants provided a sufficient explanation for the late service of the proposed evidence.

31    For these reasons, the proposed tender was rejected.

Issues for determination

32    The primary issues for determination are as follows:

(a)    Did either of the applicants suffer a “bodily injury” as referred to in Art 17(1) of the Montreal Convention?

(b)    If so, was any such bodily injury caused by the accident which Virgin accepts occurred, namely the provision to the applicants of tainted water?

(c)    If liability is established, are damages to be assessed by reference to the common law generally or by specific reference to Pt 2 of the CL Act, which raises two sub-issues:

(i)    whether the relevant provisions of the CL Act are “picked up” by one or other of ss 79 or 80 of the Judiciary Act; and

(ii)    in any event, are those provisions applicable to liability under the CACL Act, which is a form of no-fault liability?

33    I will now address each of those issues.

(a) Bodily injury

34    Article 17(1) of the Montreal Convention is set out at [6] above. As previously mentioned, Virgin did not deny that there had been an “accident” in serving the applicants tainted water.

35    The relevant issue is whether the applicants suffered a “bodily injury” within the meaning of Art 17(1).

36    In his statement of claim, Mr Grueff gave the following particulars of the bodily injuries which he said he suffered as a result of the accident:

    Stomach cramps.

    Nausea.

    Diahorrea.

    Increased tiredness.

    Lack of energy.

    Sensitivity to all types of food.

    Irritation to both eyes.

    Loss of weight.

    Difficulty in eating or drinking fluids for several weeks after the incident.

37    In her statement of claim, Ms Saltmarshe gave the following particulars of the bodily injuries which she claims she suffered as a result of the accident:

    Stomach cramps.

    Nausea.

    Diahorrea.

    Increased tiredness.

    Lack of energy.

    Sensitivity to all types of food.

    Anxiety.

    Elevated creatinine levels.

    Loss of weight.

    Difficulty in eating or drinking fluids for several weeks after the incident.

38    Virgin denied that either applicant suffered “bodily injury” within the meaning of Art 17(1).

39    As Virgin pointed out in its submissions, the expression “bodily injury” is not defined in the Montreal Convention but it has been the subject of many cases, both overseas and in Australia. Virgin also correctly pointed out that much of the litigation has focussed on whether a psychological injury constitutes a “bodily injury”.

40    Helpful guidance on the meaning of the expression “bodily injury” is to be obtained from the decision of the House of Lords in Morris v KLM Royal Dutch Airlines [2002] UKHL 7; 2 AC 628, particularly in the speech of Lord Hobhouse of Woodborough. The Court there considered the meaning of the expression “bodily injury” in Art 17 of the Warsaw Convention, as opposed to Art 17 of the Montreal Convention. Although those Articles are not in identical terms they are sufficiently similar to justify regarding what Lord Hobhouse said as providing useful guidance. At [140] and [141], his Lordship said (underlining added to give emphasis):

140    The composite expression bodily injury involves a combination of two elements. The word injury in the context of personal injury involves a condition which departs from the normal, which is not a mere transitory discomfort or inconvenience and which, whilst not permanent or incurable, has, in conjunction with its degree of seriousness, a sufficient duration. It includes a loss of function. A person who is concussed or who is in clinical shock or who is made deaf or blind is properly described as injured. (As to deafness, see, for example, Air France v Saks 470 US 392.) A condition which requires treatment to enable the person to return to the normal is typical of an injury though not essential; many injuries heal over time without intervention. Contracting an illness may amount to an injury depending upon the degree to which the illness departs from the normal. One would not normally describe a person who caught a cold as having suffered an injury but, on the other hand, one would certainly describe someone who contracted a serious disease or condition, say, AIDS or hepatitis, as the result of the deliberate or negligent act of another as having suffered an injury.

141    The word bodily is simpler. It means pertaining to the body. There must be an injury to the body. It is, as it must be, accepted that the brain, the central nervous system and the glands which secrete the hormones which enable the brain and the rest of the central nervous system to operate are all integral parts of the body just as much as are the toes, heart, stomach and liver. They are all susceptible to injury. The mechanisms by which they can be injured vary. An ingested poison might injure the stomach or liver. A lack of oxygen will injure the brain by causing the death of brain cells. An injury to the heart may be caused by a blow or by a traumatic experience or by over-exertion. In every case there is a cause, external to the organ in question, which produces a change in the structure or ability to function of the organ. If the change, either alone or in conjunction with changes in other organs, is properly described as an injury, it is a bodily injury. Since the body is a complex organism depending for its functioning and survival upon the interaction of a large number of parts, the injury may be subtle and a matter of inference not direct observation. The medical science of diagnosis exists to enable the appropriate inferences to be drawn from the observed evidence. Medicinal treatments (as with drugs) are prescribed on the basis that there is a physical condition which can be reversed or alleviated by physical means.

41    Lord Hobhouse observed at [142] that “bodily injury” does not “import disability nor palpability nor externality”. His Lordship stated at [143] that “bodily injury simply and unambiguously means a change in some part or parts of the body of the passenger which is sufficiently serious to be described as an injury …”. I respectfully agree with, and will adopt, that reasoning (bearing in mind that the evident intention of the CACL Act is to create uniform and exclusive rules as to the liability of a carrier consistently with the terms of the Montreal Convention and Warsaw Convention).

42    It is also desirable to set out what Lord Hobhouse said at [174] where, in the context of discussing various US cases which dealt with whether or not emotional distress was compensable, his Lordship said (underlining added to give emphasis):

… In two cases Terrafranca v Virgin Atlantic Airways Ltd (1998) 151 F Supp 3d 108, Third Circuit Court of Appeals, and Carey v United Airlines (2001) 28 Avi 15,408, Ninth Circuit Court of Appeals, the passenger sought to satisfy the criteria in Floyd by saying that the accident had caused emotional distress and the emotional distress had caused physical symptoms like, in Terrafranca, loss of weight and, in Carey, sleeplessness, nausea, perspiration etc. These consequences it was argued amounted to “physical manifestations” for the purpose of article 17 so as to bring what would otherwise be mere emotional stress within the terms of that article. It will be appreciated at once that I myself would not accept that argument. What the passenger has to prove is a bodily injury, not something less but with physical manifestations. The argument was based upon the language used in Floyd: but the phrase used there is “physical injury or physical manifestation of injury” (499 US 530, 552–553). If it is simply emotional stress which is causing the person to lose weight, no injury, bodily or otherwise, is proved. For the argument to succeed the plaintiff must prove either that the manifestation proves that there is or has been an underlying bodily injury or that the manifestation itself is a bodily injury. As Rosman 34 NY 2d 385 shows, provided that causation by the accident can also be proved, in the former instance the plaintiff can recover damages for the underlying bodily injury and its consequences and in the latter for the bodily injury but not what preceded it. What I have said corresponds to the reasoning of the Court of Appeals in Terrafranca: see 151 F Supp 3d 108, 110–111 where Rosman is cited. In Carey 28 Avi 15,408, 15,414, Circuit Judge Nelson followed Terrafranca, saying,

“The Third Circuit concluded … that there was no support for the argument that the plaintiff’s physical manifestations of her emotional injury satisfied the ‘bodily injury’ requirement. Because the plaintiff could not ‘demonstrate direct, concrete, bodily injury as opposed to mere manifestation of fear or anxiety’, the court held that she did not satisfy the conditions for liability under article 17 and thus could not recover for her emotional distress. For reasons similar to those articulated by the Third Circuit in Terrafranca, we hold that physical manifestations of emotional and mental distress do not satisfy the ‘bodily injury’ requirement in article 17.”

Carey came after Weaver 56 Fed Supp 2d 1190 and the Court of Appeals referred to it, at p 15,415, in footnote 47 to its opinion without expressing either approval or disapproval. The value of Terrafranca and Carey is that they implicitly approve Rosman and confirm the primacy of the simple bodily injury criterion, not any gloss or paraphrase of it.

43    Lord Hobhouse’s analysis casts grave doubt on whether in the present proceedings many of the applicants’ particularised injuries are truly “bodily injuries” for the purposes of Art 17(1). In the particular circumstances here, stomach cramps, nausea, diahorrea, increased tiredness, lack of energy, anxiety, sensitivity to all types of food, eye flickering, loss of weight and difficulty in eating or drinking fluids for several weeks may possibly be described as manifestations or symptoms of some underlying condition, but the precise nature of any underlying medical condition is left entirely unclear on the evidence before the Court. In particular, the evidence leaves unclear whether any underlying condition is an injury at all, whether bodily or not. In addition, many of the alleged injuries involve conditions which lasted for only a few days (or even less), including the nausea, diahorrea, tiredness and stomach cramps. Such conditions are analogous to a person having a cold which, as Lord Hobhouse pointed out, would not normally be described as involving an injury.

44    Ms Saltmarshe’s higher creatinine levels might appropriately be described as a manifestation or symptom of some underlying condition, but the evidence does not establish the nature of that underlying condition and whether or not it involved a bodily injury.

45    Lord Hobhouse’s reasoning concerning the meaning of the expression “bodily injury” is broadly consistent with the approach taken by the NSW Court of Appeal in American Airlines Inc v Georgeopoulos (No 2) [1998] NSWCA 273. That case involved a claim for damages for nervous shock under Art 17 of the Warsaw Convention. Accordingly, the central focus of the proceeding was on the circumstances in which an airline could be liable for purely psychological injury. After referring to US caselaw on the issue, Sheller JA (with whom Meagher and Beazley JJA agreed) said that the reference in Air France v Saks 470 US 392 (1985) to a “psychic injury unaccompanied by a physical injury” left open the question whether a carrier was liable for mental injuries, consequent upon physical injuries, or emotional shock which had resulted “in organic damage” (such as a coronary thrombosis or stroke) (see page 14 of American Airlines).

46    The need for there to be clear evidence establishing a “bodily injury” is also reflected in the following statement at [704] of the leading text, Shawcross and Beaumont: Air Law (LexisNexis, 4th ed, 2021) (emphasis added):

The case law … tells a complex story, but in general supports an understanding of the relevant phrase which requires clearly-evidenced physical injury to the passenger’s body, caused either by the accident or, less certainly, flowing from the psychological trauma the accident produced.

47    The applicants have not persuaded me that any of the health conditions about which they complain constitutes a “bodily injury”.

(b) Causation

48    Even if, contrary to my findings above, any of the applicants’ particularised conditions constitutes a “bodily injury” for the purposes of Art 17(1), I am not persuaded on the evidence before me that any of those conditions was caused by the accident involving the ingestion of the tainted water. There is no medical evidence which establishes any link between the applicants ingesting the water and the health conditions which they subsequently experienced. Indeed, as noted above, Dr Crosson’s notes of his consultation with Mr Grueff indicate that Dr Crosson advised Mr Grueff to obtain some pathology on stool samples with a view to determining whether his diahorrea was related to something he may have eaten or drunk in Bali, as opposed to what happened on the aircraft. Dr Crosson may not have told Mr Grueff why he was advising him to obtain such pathology but his notes record the reason why he did so.

49    In cases such as the present, where there is real doubt as to what caused the particularised health conditions, some medical evidence will generally be needed to assist the applicants in discharging their onus. There was no satisfactory medical evidence here.

50    The applicants sought to address the deficiencies in their medical evidence by urging the Court to adopt a “common sense” approach to the requirement of causation, citing well known passages in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 515 per Mason CJ and at 522-524 per Deane J (Gaudron J agreed with both and Toohey J agreed with Mason CJ).

51    There are several points to note about the applicants’ reliance on Stramare. The first is the particular nature of the issue of causation which arose there. The plaintiff was injured when his car ran into a truck which had been parked in a position where it straddled the centre line of a six-lane road. It was night time and the truck’s parking and hazard lights were illuminated. The plaintiff was under the influence of alcohol and was driving at an excessive speed. The question was whether the plaintiff’s own negligence was the sole effective cause of the accident, which accident unquestionably produced his injuries, or whether the defendant owner and driver of the truck was also negligent. In other words, the question of causation was whether the truck driver’s negligence in leaving it parked in the middle of the road was superseded or displaced as a matter of causation by the plaintiff’s negligent driving. The High Court held that the defendant’s negligence was the cause of the accident.

52    The observations of Mason CJ and Deane J referred to above are best understood as highlighting the problems thrown up by a “but for” test of causation, which requires causation to be addressed and answered as a matter of common sense. I do not regard those observations as providing much assistance in resolving the different kind of issue of causation in the present proceeding.

53    The issue of causation in Stramare was quite different in character to the issue of causation in the present proceedings, which requires the applicants to establish a causal link between the accident and their particular health conditions. The issue of causation in Stramare did not involve any medical issues of the sort which are at the heart of the applicants’ complaints here. As the High Court emphasised recently in Comcare v Martin [2016] HCA 43; 258 CLR 467 at [42], the application of a causal term in a statutory provision must be determined by reference to general principles of statutory construction.

(c) Application of Pt 2 of the CL Act

54    Strictly speaking, the application of Pt 2 of the CL Act does not arise having regard to my findings above on “bodily injury” and causation. However, in case I am wrong on those issues, I make the following observations in response to the parties’ detailed submissions on the topics.

55    As noted above, the applicability of the CL Act gives rise to two sub-issues. The first is whether the relevant provisions of the CL Act are picked up by either ss 79 or 80 of the Judiciary Act in the exercise of federal jurisdiction. The second is whether, in any event, the provisions of the CL Act relating to the assessment of damages are applicable to liability under the CACL Act, which is a form of no-fault liability.

(1) Is the CL Act capable of being picked up by ss 79 or 80 of the Judiciary Act?

CACL Act

56    Section 9B of the CACL Act relevantly provides that “[s]ubject to this Part, the 1999 Montreal Convention has the force of law in Australia in relation to any carriage by air to which the 1999 Montreal Convention applies, irrespective of the nationality of the aircraft performing that carriage”. Indonesia is a signatory to the Montreal Convention, and it therefore applies to the carriage by air of passengers between Indonesia and Australia.

57    Section 9E provides:

Subject to section 9F, the liability of a carrier under the Convention, in respect of personal injury suffered by a passenger that has not resulted in the death of the passenger, is in substitution for any civil liability of the carrier under any other law in respect of the injury.

58    The effect of s 9E is that where a cause of action arises under Pt IA of the CL Act with respect to “personal injury”, it excludes all other civil causes of action as against a particular airline, whether in tort, contract or otherwise (Pel-Air Aviation Pty Ltd v Casey [2017] NSWCA 32; 93 NSWLR 438 at [9] per Macfarlan JA, Ward and Gleeson JJA agreeing).

Montreal Convention

59    Article 17(1) of the Montreal Convention, like the Warsaw Convention, imposes no-fault liability on a carrier for bodily injury sustained by a passenger, so that it is unnecessary to prove negligence or fault (Pel-Air at [6]; Brannock v Jetstar Airways Pty Ltd [2010] QCA 218; 273 ALR 391 at [24] per White JA (Fraser JA agreeing); South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301; Parkes Shire Council v South West Helicopters Pty Ltd [2019] HCA 14; 266 CLR 212 at [71] per Gordon J). As stated by McHugh J in Povey v Qantas Airways Ltd [2005] HCA 33; 223 CLR 189 at [69], “one of the objects of the Convention is to provide compensation for injured passengers without the need to prove fault on the part of the air carrier”. As a trade-off, the Montreal Convention imposes a monetary cap in Art 21 on the amount of damages available to an injured passenger under the strict liability regime. Article 21 reads:

1.    For damages arising under paragraph 1 of Article 17 not exceeding 100 000 Special Drawing Rights for each passenger, the carrier shall not be able to exclude or limit its liability.

2.     The carrier shall not be liable for damages arising under paragraph 1 of Article 17 to the extent that they exceed for each passenger 100 000 Special Drawing Rights if the carrier proves that:

(a)    such damage was not due to the negligence or other wrongful act or omission of the carrier or its servants or agents; or

(b)    such damage was solely due to the negligence or other wrongful act or omission of a third party.

60    Article 21(1) imposes a monetary cap for the strict liability regime under Art 17(1) at 100,000 IMF Special Drawing Rights (SDRs), which is subject to review by the Depositary (namely the International Civil Aviation Organization) pursuant to Art 24. As at 29 December 2019, the relevant amount is 128,821 SDRs (which as at 12 May 2021 is approximately AUD$236,000). Liability below the monetary cap in Art 21(1) cannot be excluded. Above that monetary cap, the carrier is not liable if it proves the matters in Art 21(2)(a) or (b) (however this is not in issue in the current proceedings, as the damages claimed are below the monetary threshold), and by operation of Art 21(1) such liability may be excluded by contract by the carrier.

61    Importantly for the present case, Art 29 provides (emphasis added):

In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable.

62    An analogous article to Art 29 from the Warsaw Convention (Art 24(2)) was the subject of Gordon J’s obiter remarks in Parkes Shire Council, which are discussed below.

Choice of law in federal jurisdiction

63    As stated by the plurality in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 6; 203 CLR 503 at [2], “with respect to matters that fall within federal jurisdiction, the Commonwealth of Australia is, itself, a law area”. Accordingly, rather than a “choice between laws of competing jurisdictions”, matters arising in federal jurisdiction require “the identification of the applicable law in accordance with s 79 and s 80 of the Judiciary Act” (at [53]).

64    Sections 79(1) and 80 of the Judiciary Act provide:

79    State or Territory laws to govern where applicable

(1)    The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

…

80    Common law to govern

So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters.

65    Adopting the reasoning of Gaudron J in Commonwealth v Mewett [1997] HCA 291; 191 CLR 471, the plurality (Gleeson CJ, Gummow, Hayne and Heydon JJ) in Blunden v Commonwealth [2003] HCA 73; 218 CLR 330 made some important observations as to the combined operation of ss 79 and 80.

66    First, the plurality stated that in identifying the applicable law in the Commonwealth law area, the “inquiry directs attention, in the first instance, to s 80” (at [16]). Then, “only if it is necessary to take it to provide an answer to the particular question that arises”, recourse should be had to s 79 (at [17]). This is a necessary consequence of the fact that s 80 “is one of the “laws of the Commonwealth” to which s 79 is expressly subjected” (at [18]).

67    Secondly, the phrase “laws of the Commonwealth” in ss 79 and 80 “plainly identify statute law” ([29]).

68    Thirdly, where the statute law of the Commonwealth is “insufficient to carry [itself] into effect”, or fails to “provide adequate remedies and punishment”, “the exercise of the necessary federal jurisdiction is by s 80 directed to be the common law in Australia as modified” by the statute law in force in the State or Territory in which the federal jurisdiction is exercised (at [35]).

Section 80 as applied to the CL Act

69    The matters in question are being heard in NSW. Applying Blunden, recourse should first be had to s 80. As the terms of s 80 provide, there are two critical thresholds for the common law, as modified by NSW statute, to be applied as the relevant law for the heads and assessment of damages:

(a)    that the Montreal Convention, as given the force of law by the CACL Act, is “insufficient” to carry itself into effect with respect to the heads and assessment of damages for causes of action under Art 17(1) concerning “bodily injury”, or alternatively fails to “provide adequate remedies”; and

(b)    that the CL Act, being the common law as modified by statute in NSW with respect to the assessment of damages, is not “inconsistent” with the CACL Act (and therefore the Montreal Convention) as laws of the Commonwealth.

The reasoning of Gordon J in Parkes Shire Council

70    As noted above, Gordon J’s obiter reasoning in Parkes Shire Council may have some relevance. Those observations were directed to Art 24(2) of the Warsaw Convention (as opposed to Art 29 of the Montreal Convention which is relevant here) but, given their similar language, those observations are equally applicable. Article 24 of the Warsaw Convention provides:

1.     In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention.

2.     In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights.

71    In describing the scheme of the Warsaw Convention, at [61] Gordon J observed with respect to Art 24(2) (emphasis and underlining added):

61    The first part of Art 24(2) (“[i]n the cases covered by Article 17 the provisions of the preceding paragraph also apply”), when read with Art 24(1), operates to impose the conditions and limits in the Warsaw Convention on any action for damages however founded arising out of the death, wounding or bodily injury of a passenger in the course of carriage. Article 24(2) then goes on to provide that, in those events, the auxiliary questions about who has the right to bring suit (the identity of the plaintiffs) and what are their respective rights (the heads of damage for which they may sue and the legal basis on which they may sue for that damage) are left for determination by domestic law (the local law identified by the law of the forum under its choice-of-law rules).

72    Critically, Gordon J said that the phrase “what are their respective rights” meant the heads of damage available to an injured passenger in relation to an action under the CACL Act, and that the effect of Art 24(2) was to leave such matters to domestic law, as determined by choice of law rules. The same reasoning can be applied to Art 29 of the Montreal Convention – namely that the assessment of what “damages” are available, if the requirements of Art 17(1) liability are established, is governed by domestic law, as determined by choice of law rules. This means that the applicable law in the present proceeding with respect to the assessment of damages would be governed by the operation of ss 79 and 80 of the Judiciary Act (see [63] above).

73    The CACL Act does not provide for the heads of damage available under Art 17(1) of the Montreal Convention for “bodily injury” (except those excluded by Art 29 of the Convention itself, which are not in issue). Section 9E of the CACL Act (which concerns liability in respect of injury) stands in stark contrast to s 9D of the CACL Act, which establishes an explicit regime for damages in the event of the death of a passenger, including as to who can bring such an action (s 9D(5)) and the heads of damage available (s 9D(7)). This suggests that the first threshold for application of s 80 is satisfied, namely that the statute law of the Commonwealth is “insufficient” with respect to the heads and assessment of damages with respect to “bodily injury” under Art 17(1), or perhaps fails to provide “adequate remedies” in this respect. Therefore, recourse must be had to the common law on damages as modified by the statute in the State in which the Court exercises jurisdiction, namely the CL Act.

74    Furthermore, if the heads of damage available and assessment of damages was intentionally left to the domestic law, as reasoned by Gordon J, this would suggest that the CL Act cannot be said to be “inconsistent” with the Montreal Convention. Namely, as stated by Gordon J, the conditions and prescriptions of the Montreal Convention with respect to actions brought under Art 17(1) are said to be “without prejudice” to “what are their respective rights” – which is said to include the assessment of damages.

75    One provision which might give rise to inconsistency between the CL Act and CACL Act is s 9E, which is reproduced above at [57]. However, if the CL Act is understood as merely going to the heads and assessment of damages, and itself does not create “civil liability”, this provision would not create inconsistency.

76    A particular issue of inconsistency might also be said to arise in the circumstances of this case with s 16(1) of the CL Act, which provides that “no damages may be awarded for non-economic loss unless the severity of the non-economic loss is at least 15% of the most extreme case”. The applicants submit this is inconsistent with Art 17(1), as it imposes an additional condition on liability, namely the severity of loss, before damages for non-economic loss can be recovered (see the discussion of some Victorian caselaw below). But an alternative and perhaps a better view of this provision is that it does not go to whether or not Virgin is “liable”, but rather if Virgin was found to be liable under Art 17(1), the “respective rights” of the applicants with respect to damages for non-economic loss are nevertheless contingent on s 16.

77    Indeed, this is how the scheme of s 16 of the CL Act operates with respect to other causes of actions such as negligence and breach of contract in which damages are sought for “personal injury”. A plaintiff may be successful in establishing that a defendant’s negligent conduct or breach of contract caused the plaintiff to suffer “personal injury”, but nevertheless be precluded from recovering damages for non-economic loss as the “personal injury” suffered does not pass the threshold of 15% of the most extreme case: see, for example P & M Smallgoods Pty Ltd v Leap Seng [2013] NSWCA 167 at [101] per Barrett JA (Hoeben JA and Tobias AJA agreeing); Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 78 NSWLR 641; Sklavos v Australasian College of Dermatologists [2016] FCA 179 at [438] per Jagot J.

Relevant US caselaw

78    The observations of Gordon J are consistent with the reasoning of US Supreme Court in Zicherman v Korean Air Lines Co Ltd 516 US 217 (1996) and El Al Israel Airlines Ltd v Tsu Yuan Tseng 525 US 155 (1999). In Zicherman, which considered Art 17 of the Warsaw Convention, Scalia J, in delivering the opinion of the Court, stated at 225:

The most natural reading of this Article is that, in an action brought under Article 17, the law of the Convention does not affect the substantive questions of who may bring suit and what they may be compensated for. Those questions are to be answered by the domestic law selected by the courts of the contracting states.

79    As to what domestic law applied, Scalia J remarked at 229 (emphasis added):

As we have discussed, the Convention itself contains no rule of law governing the present question; nor does it empower us to develop some common-law rule—under cover of general admiralty law or otherwise—that will supersede the normal federal disposition. Congress may choose to enact special provisions applicable to Warsaw Convention cases, as some countries have done. … Absent such legislation, however, Articles 17 and 24(2) provide nothing more than a pass-through authorising us to apply the law that would govern in absence of the Warsaw Convention.

80    This reasoning was affirmed by the US Supreme Court in El Al Israel, where Ginsburg J, delivering the opinion of the Court, remarked at 170:

… the Court in Zicherman determined that Warsaw drafters intended to resolve whether there is liability, but to leave to domestic law (the local law identified by the forum under its choice-of-law rules or approaches) determination of the compensatory damages available to the suitor.

81    Some weight must be accorded to these authorities. The High Court has repeatedly emphasised, including in the context of considering the Warsaw Convention as given the force of law by the CACL Act, that “international treaties should be interpreted uniformly by contracting states” (see Povey at [25] per Gummow, Hayne and Heydon JJ and the cases cited therein) (see discussion of Victorian caselaw below).

Section 79 as applied to CL Act

82    Alternatively, it could be said that the CL Act is picked up by s 79 of the Judiciary Act as a law of the State in which this Court is exercising federal jurisdiction, and for which the “laws of the Commonwealth” (namely statute) do not otherwise provide.

83    As s 79 of the Judiciary Act is expressly subject to s 80, if in considering whether s 80 picked up the CL Act it was found that it could not due to “inconsistency”, then it would necessarily follow that it also could not be picked up by s 79. That is because, as stated in Blunden, s 80 would be a law of the Commonwealth which “otherwise provided” for the purposes of s 79, which is a threshold for the “picking up” of State laws into federal jurisdiction under s 79.

84    Nevertheless, if s 79 was applied, its exercise would be governed by the High Court’s recent reformulation of that provision in Rizeq v Western Australia [2017] HCA 23; 262 CLR 1 and Masson v Parsons [2019] HCA 21; 266 CLR 554. As stated by Kiefel CJ in Rizeq at [16]-[20], s 79 is not directed to the rights and duties of a person, but rather is directed to the Court which is exercising federal jurisdiction as a gap filling provision (footnotes omitted, emphasis added):

16    Section 79 fills the gap created by any absence of Commonwealth laws which provide a court with powers necessary for the hearing and determination of a matter and the presence of State laws of this kind which cannot operate of their own force in federal jurisdiction. It operates by “picking up” State laws and applying them as Commonwealth law.

17    In Commissioner of Stamp Duties (NSW) v Owens [No 2], the Court said that when federal jurisdiction is exercised, the purpose of s 79 is to “adopt the law of the State … as the law by which … the rights of the parties to the lis are to be ascertained and matters of procedure are to be regulated”. It may be observed that the Court did not say that the law to be adopted is that which provides for the rights or liabilities of the parties to proceedings. It is important to an understanding of s 79 that, as that provision fills the gap created by a lack of Commonwealth law governing when and how a court exercising federal jurisdiction is to hear and determine a matter, its terms and its purpose are directed to courts.

18    It has been said that the laws referred to in s 79 include substantive laws. Since that statement was made it has been recognised that there may be difficulties in applying traditional conceptions of whether a law is procedural or substantive, those regulating the mode and conduct of court proceedings generally being regarded as procedural and those concerning the existence or enforceability of rights or duties of the parties to proceedings as substantive. Much may depend upon statutory context.

19     It is not a correct approach to an understanding of the operation of s 79 to determine its application to a law by reference to whether that law is “procedural” or “substantive”. It is necessary to have regard to the purpose of s 79 in connection with the courts to which it is directed.

20     Section 79(1) is not directed to the rights and duties of persons. It is directed to courts exercising federal jurisdiction. Its purpose is to fill a gap in the laws which will regulate matters coming before those courts and to provide those courts with powers necessary for the hearing or determination of those matters. The laws upon which s 79 operates should be understood in this way.

85    At [90]-[92] in Rizeq the plurality confined the ambit and operation of s 79 in similar terms, as well as an answer to the question of the relationship between s 79 of the Judiciary Act and s 109 of the Constitution (footnotes omitted):

90    Relating the purpose identified in Owens [No 2] to the limitation on State legislative power which arises from the exclusory operation of Ch III of the Constitution allows the class of State laws on which s 79 operates to be delineated with more precision. The purpose is fulfilled by aligning s 79’s description of State laws as “binding” on courts with the gap in the law governing the exercise of federal jurisdiction which exists absent other applicable Commonwealth law by reason of the absence of State legislative power to govern what a court does in the exercise of federal jurisdiction. That is how it should be read.

91     That alignment brings s 79 comfortably within the ambit of the legislative power conferred on the Parliament of the Commonwealth by s 51(xxxix) of the Constitution. Filling the gap in which State law cannot govern the exercise of federal jurisdiction by a federal court or a State court, by doing no more than applying as Commonwealth law with its meaning unchanged the text of State law governing the exercise of State jurisdiction, s 79 goes no further than is reasonably necessary “to facilitate the particular exercise of federal jurisdiction by the application of a coherent body of law, elements in which may comprise the laws of the State or Territory in which the jurisdiction is being exercised, together with the laws of the Commonwealth, but subject always to the overriding effect of the Constitution itself”. Whether, and if so to what extent, s 51(xxxix) of the Constitution might extend to permit the whole or some part of that gap to be filled by a Commonwealth law having a different operation is a question which does not now arise for determination.

92    The resulting confinement of the operation of s 79 to an area in which there is an absence of State legislative power also provides a straightforward answer to the vexed question of the relationship between s 79 of the Judiciary Act and s 109 of the Constitution. Within the field in which s 79 of the Judiciary Act operates, State laws have no valid application and s 109 of the Constitution for that reason simply has no operation.

86    Applying Rizeq, the appropriate questions in this case are whether the CL Act is a State law “directed to” courts which should be “binding” on courts exercising federal jurisdiction in NSW as a gap filling measure; and then whether the Commonwealth statute, namely the CACL Act and Montreal Convention, otherwise provide.

Is the CL Act capable of being picked up by s 79?

87    In relation to whether the CL Act falls within the ambit of State laws “directed to” courts and which is necessary to fill the gap in the absence of Commonwealth law governing how this Court should exercise federal jurisdiction in NSW, Windeyer J’s judgment in Parker v Commonwealth (1965) 112 CLR 295 is relevant. In that case, the plaintiff brought an action in the original jurisdiction of the High Court for compensation against the Commonwealth. The plaintiff was a relative of a naval seaman who had been killed in a collision on the high seas. Sitting in Victoria, the parties agreed that Pt III of the Wrongs Act 1958 (Vic) was picked up by ss 79 and 80 to apply with respect to the heads and assessment of damages, providing the plaintiff with a remedy otherwise unavailable if the common law of the Commonwealth without modification by statute was applied (at 306).

88    In supporting the conclusion that the Wrongs Act applied, Windeyer J remarked that both the common law choice of law rules, and the application of ss 79 and 80 of the Judiciary Act, were capable of rendering that Act applicable (at 307). This decision was cited with approval in Rizeq by both Kiefel CJ (at [28]) and the plurality (at [96]). The latter said:

… The availability of either or both of those pathways to the application of the Wrongs Act is not to the present point. What is to the point is that, the provisions of the Wrongs Act having been rendered applicable, s 79 of the Judiciary Act applied to govern the assessment and apportionment of compensation by the High Court in the manner set out in those provisions.

89    A similar conclusion was reached in Austral Pacific Group Ltd (in liq) v Airservices Australia [2000] HCA 9; 203 CLR 136, where the High Court held that s 6 of the Law Reform Act 1995 (Qld), which concerned contribution as between tortfeasors and the exercise of power to determine the amount of contribution, was picked up by s 79 in the exercise of federal jurisdiction under the Safety, Rehabilitation and Compensation Act 1988 (Cth).

Do the laws of the Commonwealth otherwise provide?

90    As to whether the CACL Act and Montreal Convention have “otherwise provided”, the High Court in Masson confirmed that that phrase should be equated with the concept of inconsistency in s 109 of the Constitution. At [42]-[43], the plurality remarked (footnotes omitted):

42     In coming to that conclusion, there is but little assistance to be derived from principles for resolving conflicts between statutes having the same source. Those principles proceed from the assumption that a legislature generally does not “intend to contradict itself”, and require conflicts to be “alleviated, so far as possible, by adjusting the meaning of the competing provisions” through familiar methods. By contrast, as counsel for the appellant submitted, s 79(1) anticipates State laws regulating the exercise of State jurisdiction which, if picked up and applied in federal jurisdiction, would contradict laws enacted by the Commonwealth Parliament. Where that is so, the State law is not picked up and applied as a law having its source in Commonwealth legislative power because the law of the Commonwealth has “otherwise provided”. And, as submitted on behalf of the Commonwealth Attorney-General (intervening), the meaning of such a State law cannot be adjusted in order to avoid the inconsistency.

43    Further, as was explained in Rizeq, s 79(1) of the Judiciary Act operates only in the area of exclusive Commonwealth legislative power which comprises the regulation of the exercise of federal jurisdiction, and thus in which s 109 of the Constitution necessarily has no application. Acknowledging this to be so, there is no reason to construe “otherwise provided” in s 79(1) of the Judiciary Act as importing a more stringent test than the terms of s 109 of the Constitution, within their respective spheres of application. The coherence of the body of law applicable in federal jurisdiction is maximised by treating the test for contrariety between Commonwealth and State laws applied to regulate the exercise of federal jurisdiction as identical to that between Commonwealth and State laws operating outside federal jurisdiction. The meaning of the expression “otherwise provided” in s 79(1) of the Judiciary Act is thus to be equated with the concept of inconsistency in s 109 of the Constitution.

91    This passage in Masson, while not applied directly to s 80, would also suggest that the same test applies with respect to whether the common law, as modified by statute in a State or Territory, is “inconsistent” with the laws of the Commonwealth, given the same language is used in both s 80 of the Judiciary Act and s 109 of the Constitution.

92    Applying those principles, there is no relevant inconsistency so as to preclude the application of the relevant provisions of the CL Act. That Act does not remove a carrier’s liability: it affects the assessment of damages arising from that liability.

Some other potentially relevant cases

93    The issue of whether State legislation concerning the assessment of damages is picked up by ss 79 or 80 of the Judiciary Act in proceedings brought under the CACL Act has been discussed in various State Courts.

Some NSW caselaw

94    As a general proposition, NSW Courts have generally either assumed or accepted, without detailed consideration, that the CL Act applies to the assessment of damages under the CACL Act.

95    The interaction between the CL Act and the CACL Act arose in litigation involving a claim for damages in the Pel-Air litigation, at both first instance and on appeal (see Casey v Pel-Air Aviation Pty Ltd [2015] NSWSC 556; 89 NSWLR 707 and Pel-Air Aviation Pty Ltd v Casey [2017] NSWCA 32; 93 NSWLR 438). Significantly, however, the parties were agreed in that litigation that the CL Act applied. There was no discussion or analysis of that common position either at first instance or on appeal.

96    The issue has squarely arisen, however, in two decisions of the NSW District Court: Arefin v Thai Airways International Public Co Ltd (unreported, District Court of New South Wales, 21 August 2007) and Wahba v Carroll & O’Dea Lawyers [2018] NSWDC 128. It was held in both those cases that the CL Act was picked up by either ss 79 or 80 of the Judiciary Act.

97    In Arefin, the Court was concerned with whether the limitations on non-economic loss and home care assistance in the CL Act were applicable to a claim brought under the Warsaw Convention as given the force of law by s 25K of the CACL Act. In holding that the CL Act provisions were applicable, Sorby DCJ, after considering Povey, said at [13] and [17]:

13.     I am satisfied on the basis of the two authorities cited that the Carriers’ Act picks up the Warsaw Convention relating to liability of airlines in the advent of passenger injury and further provides for damages to be paid, as capped applying common law principles. I am further satisfied that pursuant to s 80 of the Judiciary Act, the Carriers’ Act does not provide any legislative system for the assessment of damages and is “insufficient to carry then into effect” (the laws of the Commonwealth) or to provide “adequate” remedies. As a result this Court in NSW has jurisdiction through the Civil Liability Act which modifies the common law, unless inconsistent.

…

17.     [Mr Sternberg] said that as the NSW Civil Liability Act created a “scale” for the award of damages for non-economic loss (s 15 of that Act) in respect of an injury, it was inconsistent with s 36 of the Carriers’ Act and to the extent inconsistent, the Carriers’ Act, (and therefore unfettered common law) should apply in determining Mr Arefin’s damages. However, in my view the Carriers’ Act, anymore than the Warsaw Convention, does not provide for a mechanism or system of the assessment of damages and without such, the NSW Act, to the extent that it modifies the common law by imposing thresholds and caps is not inconsistent with the Carriers’ Act.

98    Arefin appears to be the only decision in which s 80 of the Judiciary Act has been used to pick up the CL Act.

99    Wahba is more factually complex. It concerned an action in tort for professional negligence against the plaintiff’s former lawyers who allowed the two year limitation period under s 28 of the CACL Act to elapse with respect to a proposed claim under Pt IV of that Act. Part IV relevantly applies to interstate travel within Australia, and largely replicates the regimes of the Warsaw Convention and Montreal Convention, but with modifications. In considering the quantum of the lost claim due to the solicitor’s negligence, Gibson DCJ was required to determine whether the CL Act applied to the potential cause of action.

100    In considering whether the CL Act was picked up, Gibson DCJ first noted at [85] that no objection was raised in the Pel-Air litigation as to its applicability to actions under the CACL Act brought in NSW. At [86], Gibson DCJ then observed:

86     That would not, however, have prevented the Court from enquiring into this issue, particularly since the appeal from Sorby DCJ’s decision in Arefin proceeded to hearing (although it was settled on or shortly after the day of hearing), which would mean that the issues raised in an unreported decision of the District Court were not unknown to the Court, or for that matter to the parties. If a real issue as to jurisdiction suggests itself to the Court it must be addressed, even if the point is not taken by a party: SAS Trustee Corporation v Rossetti [2018] NSWCA 68, citing Federated Amalgamated Government Railway and Tramway Service Association v The New South Wales Railway Traffic Employees’ Association (1906) 4 CLR 488; Cockle v Isaksen (1957) 99 CLR 155.

101    Despite stating at [98] that “[t]he terms of the Act are strongly suggestive of the legislative intention to cover the field in respect of a carrier’s liability for death or injury of passengers”, Gibson DCJ concluded that she was “in no place” to resolve “the constitutional issue” (which appears to be the alleged issue of inconsistency arising under s 109 of the Constitution (at [99])). Her Honour considered that she was bound to follow Pel-Air and also give comity to Sorby DCJ’s view in Arefin. The reasons for judgment did not clarify whether ss 79 or 80 was used to render the CL Act applicable.

102    Gibson DCJ made the following concluding remarks at [106]:

… It seems surprising that millions of persons travel by air each year without these essential issues of liability for injury being crystallised, given that the uncertainty as to which statutory regime applies has been known for years, if not decades. Clearly legislative clarification of some kind is called for.

Some Victorian caselaw

103    Seemingly at odds with this jurisprudence in NSW is the decision of Keogh J in Di Falco v Emirates [2018] VSC 472; 57 VR 394, on which the applicants rely. In that decision, Keogh J determined (as a separate question) that Pt VBA of the Victorian Wrongs Act, which relevantly limited claims for the recovery of damages for non-economic loss, could not be picked up by ss 79 or 80 in the exercise of federal jurisdiction under the CACL Act as giving the force of law to the Montreal Convention.

104    In rejecting the defendant’s contention that Pt VBA applied, Keogh J pointed to s 28LE which imposed limits on recovering non-economic losses. That provision stated that the provisions of Pt VBA applied “in any proceeding … in respect of an injury to a person caused by the fault of another person” (emphasis added). At [25], Keogh J remarked that the “plaintiff makes no allegation that the injury was caused by the fault of the defendant”, as it was “not an element of the cause of action” under the CACL Act.

105    At [26]-[27], his Honour said (footnotes omitted):

    … Pursuant to s 28LC(1), pt VBA ‘applies to claims for the recovery of damages for non-economic loss’. Subsection (4) of s 28LC provides that pt VBA extends to ‘a claim ... founded on ... any other cause of action’. Claim has a corresponding meaning to the definition of claimant. Thus, a claim is ‘a claim for damages that relate to an injury to a person caused by the fault of another person’. Because fault is not an element of her cause of action, the plaintiff is not a ‘claimant’, and she has not made a ‘claim’ for the purposes of pt VBA of the Wrongs Act.

27    This construction is consistent with the context provided by the balance of pt VBA. The purpose of pt VBA is to extinguish smaller or more minor claims for non-economic loss damages by imposing the significant injury threshold, so that a claimant who does not satisfy that threshold is not entitled to recover damages for non-economic loss. The operative provision of pt VBA is s 28LE which, as I have already stated, relates only to the recovery of damages caused by the fault of another. Part VBA establishes the procedures by which a person seeking to recover damages for non-economic loss can satisfy the threshold requirement. Each avenue by which a person might satisfy the significant injury threshold requirement, and thus re-enliven an entitlement to recover damages for non-economic loss, applies to a claimant, that is, a person claiming damages for injury caused by the fault of another. There is no avenue for a person other than a claimant to engage the procedures in pt VBA and to satisfy the significant injury threshold.

106    Although strictly unnecessary, Keogh J proceeded to consider whether Pt 1A of the CACL Act has “otherwise provided” so as to render “invalid” Pt VBA of the Wrongs Act. With regard to statements made by the pluralities in Rizeq at [92] and Masson at [43], the use of the word “invalid” in this context may be inappropriate as s 109 of Constitution “simply has no operation” with regards to “picking up” legislation under s 79; the relevant question is whether it is “applicable” as “surrogate” federal law. Nevertheless, it is worth setting out Keogh J’s reasoning at length, as it discusses several of the authorities cited above. It is important to bear in mind, however, that Keogh J’s judgment predates Gordon J’s reasoning in Parkes Shire Council. At [31]-[35], Keogh J remarked (footnotes omitted):

31    The defendant relies on art 29 of the Montreal Convention, and the decision in Zicherman, to argue that the convention leaves to domestic law the questions of who may bring suit and what they may be compensated for. It is important, when considering this argument, to return to the defence pleaded and the preliminary question to be determined. The plaintiff’s entitlement to bring her claim for damages for the injury is not in issue.

32    The defendant’s argument focussed on the Montreal Convention. However, the starting point for consideration of the questions posed by s 79 of the Judiciary Act is the operation of both the Carriers’ Act and the Wrongs Act. What is in issue is the applicability of s 28LE and pt VBA of the Wrongs Act to the plaintiff’s claim. The effect of s 28LE, if it applied to the plaintiff’s claim, would be to extinguish her cause of action and claim for damages in part, subject to her satisfying one of the gateways provided by pt VBA.

33    Part 1A of the Carriers’ Act gives the Montreal Convention the force of law. Article 17(1) of the Montreal Convention creates a liability imposed on a carrier, ‘for damage sustained in case of death or bodily injury of a passenger’. The effect of the Carriers’ Act and the Montreal Convention is to give the plaintiff a right, which corresponds to the liability imposed on the defendant, to recover damages for the bodily injury she sustained. That includes the right to damages for pain and suffering and loss of enjoyment of life. The liability of the defendant, and the corresponding right of the plaintiff, is expressed in s 9E of the Carriers’ Act to be in substitution for any other civil liability or right.

34    The effect of s 28LE and pt VBA of the Wrongs Act, if applied to the plaintiff’s case, would be to derogate from the right given to her by the Carriers’ Act by extinguishing or restricting her right to recover damages to which she would otherwise have an entitlement. In those circumstances, pt VBA will not be ‘picked up’ by s 79 of the Judiciary Act because the Commonwealth law would otherwise have provided. For this reason, pt VBA is not applicable to the plaintiff’s case.

35    The decision in Zicherman is distinguishable. The issues raised by s 79 of the Judiciary Act, which determine the applicability of pt VBA of the Wrongs Act, did not arise in Zicherman. For two reasons, the decision in Casey does not assist. First, in that case the parties agreed damages were to be assessed in accordance with the provisions of the Civil Liability Act and as a result the Court was not required to determine whether pt 2 of that Act was ‘picked up’ by s 79 of the Judiciary Act. Secondly, the provisions of the Civil Liability Act are materially different to those of pt VBA of the Wrongs Act. For example, s 11A(2) of the Civil Liability Act provides that pt 2 of the Act applies ‘whether the claim for damages is brought in tort, in contract, under statute, or otherwise’.

107    This reasoning attracts the following observations. First (and foremost), Keogh J distinguished the Pel-Air litigation on two grounds, the second of which was that the wording of the CL Act was “materially different” to the Wrongs Act. For example, s 11A(2), which governs the applicability of Pt 2 of the CL Act, includes claims for damages “under statute”, with no reference to fault (as discussed below). In contrast, the relevant provision in Pt VBA applied only to damages in fault-based proceedings.

108    Secondly, Keogh J’s reasoning prefers the first of the two views discussed at [76] above. Rightly or wrongly, Keogh J found that Art 17(1) of the Montreal Convention had “otherwise provided” because s 28LE would have the effect of removing the carrier’s liability, rather than viewing the Wrongs Act as being applicable to the assessment of damages arising from such liability. Determination of this question requires consideration of what is the fundamental purpose of the CL Act and Wrongs Act respectively: i.e. whether those Acts, with respect to certain causes of action where “personal injury” is suffered, seek to: (1) to restrict liability; or (2) to govern and restrict the heads and assessment of damages available (see [76]-[77] above).

109    Thirdly, perhaps reflecting how the case was run, Keogh J appears to rely solely upon s 79 of the Judiciary Act as the provision through which the Wrongs Act could be made applicable. As discussed above, the High Court’s reasoning in Blunden suggests the proper starting point is s 80. Indeed, Keogh J stated at [33] that the right to “damages” under Art 17(1) of the Montreal Convention “includes the right to damages for pain and suffering and loss of enjoyment of life”. Nowhere are those heads of damages expressly provided for in either the CACL Act or the Montreal Convention; they are heads of damage available at “common law”. As mandated by s 80, in identifying the applicable law, Court’s exercising federal jurisdiction must have recourse to the common law “as modified by the statute law in force in the State or Territory in which the jurisdiction is exercised”, subject to “inconsistency”.

110    Finally (and related to the third observation), Keogh J described Zicherman as inapplicable, as the issues raised by s 79 of the Judiciary Act are distinguishable. With great respect, this may involve a misunderstanding of the purpose of s 79, when understood through the lens of Blunden and the role ss 79 and 80 play in the “identification” of the relevant domestic law. If Zicherman is understood as holding that the assessment of damages under the Warsaw Convention is left to domestic law as identified by choice of law rules in the forum state, then Zicherman is not distinguishable because of s 79 of the Judiciary Act. Rather, the consequence of Zicherman, if applied in Australia, would be that the assessment of damages for claims under the CACL Act rely upon identifying the relevant law in accordance with ss 79 and 80, where strictly speaking no “choice of law” is required in federal jurisdiction (see Pfeiffer at [53]; Blunden at [10]).

Conclusion on operation of s 80 of Judiciary Act

111    For these reasons, the better view is that s 80 of the Judiciary Act operates to pick up and apply to the present proceedings relevant provisions in Pt 2 of the CL Act as surrogate federal laws. This accords with the assumption underlying the Pel-Air litigation and with the views expressed in two District Court decisions in New South Wales.

(2) Does the CL Act apply to damages for no-fault based personal injury?

112    As noted above, Art 17(1) of the Montreal Convention creates a no-fault cause of action against carriers, where, as in the present proceedings, a passenger claims to have suffered a “bodily injury” caused by an “accident” which took place on board the aircraft.

113    Assuming that the CL Act is capable of being picked up under ss 79 or 80, the question then arises whether Pt 2 of the CL Act is “applicable”, as a modification of the common law with respect to the heads of damage and assessment of damage for non-fault based “bodily injury”. This raises two questions:

(a)    Does “bodily injury” fall within the definition of “personal injury” in the CL Act?

(c)    Does Pt 2 of the CL Act apply to non-fault based “personal injury” or is it limited in operation to fault-based claims?

114    As to question (a), “injury” is defined in s 11 of the CL Act as including “impairment of a person’s physical or mental condition” and “disease”. This broad definition suggests that the expression of “bodily injury” in Art 17(1) falls within the meaning of “personal injury” in the CL Act.

115    Consideration of question (b) requires a detailed review of the legislative history of the CL Act, which regrettably is unclear.

CL Act as originally enacted

116    The long title of the CL Act, as originally enacted, stated that it was (emphasis added) “An Act to make provision in relation to the recovery of damages for death or personal injury caused by the fault of a person; to amend the Legal Profession Act 1987 (NSW) in relation to costs in civil claims; and for other purposes”.

117    Section 9 provided that Pt 2 applies to and in respect of “an award of personal injury damages, except an award that is excluded from the operation of this Part”. Importantly, personal injury damages was defined in s 3 as meaning “damages that relate to the death of or injury to a person caused by the fault of another person” (emphasis added).

118    The limitation of Pt 2 to damages concerning fault-based personal injury claims accorded with the Explanatory Notes to the Civil Liability Bill 2002 (NSW). The Bill’s purpose was described there (at page 1) as follows:

The following restrictions are imposed on the awarding of personal injury damages (damages that relate to the death of or injury to a person caused by the fault of another person) other than damages covered by other laws such as the Motor Accidents Compensation Act 1999 and the Workers Compensation Act 1987: …

119    Clearly, if the current proceedings were dealing with the CL Act as enacted, it would not alter the common law with respect to damages for no-fault personal injury proceedings, and therefore could not apply to Art 17(1) of the Montreal Convention. This would be consistent with the analysis and findings of Keogh J in Di Falco.

CL Act as amended

120    However, later in 2002, the CL Act was amended by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), which introduced Pt 1A to the CL Act concerning negligence. The new Pt 1A, by operation of s 5A, applies to “any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise”.

121    As a result of the introduction of Pt 1A, the CL Act was restructured, which resulted in a number of amendments relevant to Pt 2. Some of those amendments, perhaps unintentionally, may have significant consequences for the scope of Pt 2.

122    First, the definition of personal injury damages in s 3 was omitted. Secondly, ss 9-11 of Pt 2 were also omitted. In their place, new ss 11 and 11A were inserted into Pt 2 of the CL Act.

123    Section 11 provides relevant definitions for Pt 2, including the meaning of “personal injury damages”. However, the definition is different from that which was omitted from s 3 of the original Act. The new definition provides that “personal injury damages means damages that relate to the death of or injury to a person”. Importantly, the words “caused by the fault of the person” were omitted. Section 11A(1) then states that “[t]his Part applies to and in respect of an award of personal injury damages, except an award that is excluded from the operation of this Part by section 3B”. Section 11A(2) states that Pt 2 applies (emphasis added) “regardless of whether the claim for the damages is brought in tort, in contract, under statute, or otherwise”. Section 3B is not applicable to the current matters.

124    The effect of this change in statutory language may mean that Pt 2 now applies beyond fault personal injury proceedings to any proceedings in which damages relating to the injury of a person are sought. An action under the CACL Act clearly falls within the expression “under statute” in s 11A(2) – there is no suggestion that the CL Act was intended to apply only to NSW legislation.

125    Yet the Explanatory Note to the Civil Liability Amendment (Personal Responsibility) Bill 2002 (NSW) states at p 4 that the relevant amendments to Pt 2 (which are contained in Sch 2 of the Amendment Act) were said merely to be “minor amendments to reorganise the structure of the Principal Act” (emphasis added). There is no indication in the Explanatory Note of any intention to broaden the ambit of Pt 2 by omitting the words of “caused by the fault of the person” from the definition in new s 11. Nor was there any change to the long title of the CL Act (see [116] above).

126    Neither party cited any authority by a NSW Court which addresses this issue in a detailed way. I note, however, that in Coleman v Barrat [2004] NSWCA 27, the NSW Court of Appeal proceeded on the basis that Pt 2 of the CL Act, as amended at the time of the appeal, applied to a claim for damages under the Companion Animals Act 1998 (NSW). That Act (see s 25) imposes no-fault liability on owners and keepers for bodily injury caused by a dog for which they had responsibility.

127    In the interests of comity, I will adopt a similar view with respect to the application of the CL Act to the present proceedings.

Conclusion on whether Pt 2 of the CL Act applies here to no-fault proceedings

128    For the reasons given above, the better view is that the amendments later in 2002 to the CL Act had the effect of expanding the operation of Pt 2 to claims for no-fault personal injury damages, which would therefore be applicable to the statutory no-fault regime under the CACL Act and Montreal Convention.

The applicants’ claims for damages

129    For the reasons given above, I do not consider that either applicant is entitled to damages under Art 17(1) of the Montreal Convention. If I am wrong and it had been necessary to assess the quantum of damages, I would have made the following determinations. First, for the reasons given above the relevant provisions in Pt 2 of the CL Act are picked up and applied by s 80 of the Judiciary Act.

130    Secondly, I consider that the better view is that Pt 2 of the CL Act would operate to limit the claims for damages as follows:

(a)    In circumstances where both applicants claim damages for non-economic loss (i.e. general damages) in the amount of $25,000 each, the Table in s 16(3) of the CL Act would operate to preclude them from recovering any amount for non-economic loss. That is because damages for such loss are only recoverable where the amount of the loss is above the threshold of 15% of a most extreme case, which is not the case here.

(b)    As to Ms Saltmarshe’s claim for an unspecified amount of damages for economic loss “as a cushion or buffer” because she anticipates that her work commitments will be interrupted due to future illness attributable to the accident, she adduced no evidence which establishes any entitlement to such a claim.

131    For completeness, I should also add that, if necessary, I would have rejected Virgin’s claim that the applicants were contributorily negligent.

The applicants’ claim for costs

132    Again, on the assumption that I am wrong and the applicants are entitled to recover damages, an issue arises as to the amount of costs which they would recover. Schedule 1 to the Legal Profession Uniform Law Application Act 2014 (NSW) (LPULA Act) limits legal practitioner’s costs in matters concerning “personal injury damages” (which expression is defined as it is in Pt 2 of the CL Act). Where the amount recovered as damages does not exceed $100,000, the limit on costs is the greater of 20% of the amount recovered or $10,000. Applying the reasoning on ss 79 and 80 of the Judiciary Act as discussed above, the LPULA Act is capable of being picked up as a surrogate federal law, perhaps most appropriately as a NSW statute “directed to” the “hearing and determination of the matter” by this Court exercising federal jurisdiction in NSW, and where Commonwealth statutes have not “otherwise provided” (s 79).

133    One issue which needs to be addressed in determining whether the cap on costs in the LPULA Act applies to these proceedings is the relevance of this Court’s statutory power to award costs. The issue is whether there is a relevant inconsistency which affects the operation of s 79. This Court’s power to award costs is explicitly conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Sub-section 43(2) provides that, except as provided by any other Act, the award of costs is in the discretion of the Court (which, of course, must be exercised judicially). I consider that the reference to “Act” in s 43 is sufficiently broad to encompass a State Act which is picked up by s 79 of the Judiciary Act. Accordingly, because of the wording of s 43(2) of the FCA Act, there is no inconsistency and I consider that the cap on costs imposed by Sch 1 to the LPULA Act would apply to these proceedings.

Conclusion

134    For all these reasons, the originating applications should both be dismissed, with costs.

Associate:

Dated: 12 May 2021