Loss for airlines as Federal Court of Australia rules legislation limiting damages not applicable

In a blow for the airline industry,  the Federal Court of Australia (FCA) in Bradshaw v Emirates [2021] FCA 1407 has ruled that New South Wales legislation limiting the recoverability of damages does not apply to passenger injury claims brought under the Montreal Convention 1999 (Montreal Convention). The judgment represents a significant departure from the FCA’s decision in Grueff v Virgin Australia Airlines Pty Ltd [2021] FCA 501 only months earlier.

Background

The applicant, Stephen Bradshaw, was struck on the head by a suitcase that fell from an overhead compartment on an Emirates flight from Dublin to Dubai on 1 January 2019. The flight was the first leg of connecting flights terminating in Brisbane. Mr Bradshaw’s injuries included a headache and nausea immediately following the incident, and subsequent neck pain.

The parties agreed that the incident constituted an ‘accident’ and that the injury amounted to ‘bodily injury’ within the scope of Article 17 of the Montreal Convention, as implemented into Australian law through the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (CACL Act).

Key issues

There were two issues before the FCA. The first was an evidentiary question concerning the extent and nature of Mr Bradshaw’s injury. The second was a legal question regarding whether Mr Bradshaw was entitled to recover damages for non-economic loss.

As to the first issue, Stewart J found that Mr Bradshaw had embellished his injury and that it was limited to pain and loss of amenities of life during the period of the flights and the first couple of days after arriving in Brisbane. There was no economic loss established.

The second, more significant, issue centred on whether the claim was subject to the Civil Liability Act 2002 (NSW) (CLA), specifically s 16 which deals with the availability and determination of damages for non-economic loss. Section 16 provides that no damages may be awarded unless the severity of the injury is at least 15% of the most extreme case. Considering the matter was one of federal jurisdiction, the CLA only applied if it was picked up and applied by ss 79 and 80 of the Judiciary Act 1903 (Cth).

Stewart J concluded that the CLA damages thresholds (including s 16) do not apply to claims for bodily injury under Article 17 of the Montreal Convention. His reasoning was as follows:

1. The CACL Act provides the right of action itself – the right flows from the CACL Act – and there is no need for the common law to carry the provisions into effect. The Montreal Convention, and the CACL Act, provide that damages are recoverable in the event of bodily injury, and such damages are compensatory. In terms of the assessment of damages, this is left for the domestic courts to determine by analogy based on insight and experience.
2. The limitations to damages under the CLA would be inconsistent with the CACL Act/Montreal Convention regime, which provides no minimum thresholds and which is uncapped unless the airline can prove that the damage was not due to its negligence or wrongful act, or was solely due to the negligence or wrongful act of a third party.
3. The effect of the application of s 16 of the CLA to Mr Bradshaw’s case ‘would be to derogate from the right given to him by the [CACL] Act by extinguishing or restricting his right to recover damages to which he would otherwise have an entitlement’.
4. Based on the inconsistency of the CLA with the Montreal Convention, it is unnecessary to consider s 79 of the Judiciary Act. The CLA, as state law, could not be picked up by the Court because the Commonwealth law – the CACL Act – ‘otherwise provided’, to use the wording of s 79(1).

Finally, the FCA considered in obiter whether the CLA applies to no-fault liability, as the Montreal Convention provides, or whether it only applies to fault-based claims. It found that to conclude that it applies to no-fault causes of action would be in direct conflict with the long title of the Act which provides that the Act was ‘to make provision in relation to the recovery of damages for death or person injury caused by the fault of another person’ (emphasis added).

Observations

The FCA’s conclusion in Bradshaw is consistent with the decision of the Victorian Supreme Court (Keogh J) in Di Falco v Emirates [2018] VSC 472; 57 VR 394 (concerning similar, but not identical, legislation in the state of Victoria). In contrast, it is inconsistent with the earlier FCA decision of Grueff. The FCA in that case had discussed the issue in obiter as there was no bodily injury established so the application of the CLA was not strictly necessary to consider.

The decision of the FCA in Bradshaw has negative consequences for airlines (and their insurers) operating to and from Australia. In practice, it means that passenger claims involving minor injuries, such as Mr Bradshaw’s, can still attract general damages awards in New South Wales (Australia’s most heavily populated state) when they would otherwise not outside of an aviation context. It may result in more of these minor injury claims being pursued. While the decision provides clarity in an area in which prior judgments had left uncertainty, it is a clear move towards a passenger-friendly approach to the assessment of damages in Australia for bodily injury arising from accidents within the scope of the Montreal Convention.