The Aviation Legislation Amendment (Liability and Insurance)
Bill received its second reading speech on 22 August 2012 and
addresses issues raised in the Federal Government's 2009
Aviation White Paper. For our discussion of the White Paper please
What will change?
Specifically the Bill makes amendments to the carriers'
liability legislation by:
increasing the cap on domestic carriers' liability for
passenger death or injury on domestic flights from $500,000 to
increasing the minimum amount of mandatory insurance required
to be held by a domestic carrier from $500,000 to $725,000 for
replacing references to 'Montreal Protocol Number Four'
with '1999 Montreal Convention'.
The liability cap of $500,000 was set in 1994 and the 45%
increase is to reflect the changes in the consumer price index
since that time. The minimum insurance required by the carrier has
also been adjusted accordingly.
The Bill also harmonises a significant area of inconsistency
between the treatment of liability for mental injuries under the
Australian legislation and the 1999 Montreal Convention. By
replacing the domestic carrier's liability for 'personal
injury' with a liability for 'bodily injury', domestic
carriers will only become liable for mental injuries if they are
causally connected with a physical injury. This will bring
Australian domestic law in line with the international conventions
by excluding claims for pure mental injuries.
Claims for pure mental injuries will also be excluded under the
Damage by Aircraft Act 1999 (Cth) (DBA
Act). This will provide some relief to carriers or owners
of aircraft who could have been strictly liable to people who have
witnessed accidents from afar.
Further, the Bill provides that in relation to claims brought
under the DBA Act, defendant owners or operators will be allowed
reduce their liability where the victim was partially
responsible for the damage (in the NSW Court of Appeal decision in
ACQ Pty Ltd v Cook  NSWCA 161, the Court held that
the defence of contributory negligence was unavailable in claims
under the DBA Act)
seek contribution from third party tortfeasors who may have
contributed to the damage.
On current information we have obtained, the bill is likely to
be enacted by the end of the year.
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Whereas most insurance policies exclude liability arising under contract, insurers can
positively benefit where an insured has limited or excluded its liability under contract.
This usually arises where the insured's contract has a limitation or exclusion of liability clause in the insured's favour.