Australia: Air carriers' liability update: March 2014

In this update, we will address three recent decisions that touch on some important issues relating to air carriers' liability in Australia.

Family members have a right to sue an air carrier for nervous shock

Cousins v Nimvale Pty Ltd [2013] WADC 175

The Perth District Court held that the parents of two young women killed in a helicopter accident had the right to sue the carrier in separate common law claims for nervous shock, in addition to their statutory right to recover loss of dependency under the Civil Aviation (Carriers Liability) Act 1961 (WA), which incorporated Part IV of the Civil Aviation (Carriers Liability) Act 1959 (Cth) (CACL Act).

The CACL Act gives the force of law to various international conventions by providing a strict liability scheme of compensation for death or injury suffered by a passenger as a result of an accident. A claim in Australia is therefore brought under the CACL Act rather than under the relevant convention.1

Although Part IV of the CACL Act applies to domestic air carriage, to which the conventions do not apply, it contains provisions modelled on the conventions that prescribe the remedies available against a carrier and the limits of liability. In particular, section 35(2) of the CACL Act provides:

Subject to section 37, the liability under this Part is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger or in respect of the injury that has resulted in the death of a passenger.

Can a carrier be sued in respect of a passenger's death other than under the CACL Act? The weight of jurisprudence from around the world indicates that where a convention applies to a claim, the convention provides the exclusive remedy against a carrier. Even if a separate cause of action against the carrier is possible, the remedies in that action will be subject to the provisions of the convention. The issue of exclusivity is not without controversy and there are decisions which preclude a separate cause of action, meaning that the convention is exclusive both as to cause of action and remedy.

Australian courts are able to have regard to these international decisions to assist their interpretation of the CACL Act but care must be taken, as the language of the CACL Act is, in certain respects, different to the conventions.

In Cousins, the claim for dependency loss was founded in section 35(3) of CACL Act, which provides that in relation to the carrier's liability in respect of the death of a passenger:

The liability is enforceable for the benefit of such of the passenger's family members as sustained damage by reason of his or her death.

Are the parents' claims for nervous shock amenable to this provision? The international decisions demonstrate that psychiatric injury to a passenger, absent physical injury, is not compensable under the conventions. More importantly, the District Court referred to the decision of the Full Court of the Federal Court in South Pacific Air Motive Pty Ltd v Magnus [1998] FCA 1107, which held that the CACL Act did not apply to claims by non-passengers for nervous shock occasioned by the death of a passenger.

The District Court properly concluded that Part IV applied only to damages in respect of the death of a passenger, which covered dependency loss but not nervous shock injuries to family members. The exclusivity issue therefore did not prevent the family members from bringing separate common law claims against the carrier in respect of damages that did not fall within the scope of the legislation.

Who is a 'passenger'?

Edwards & Ors v Endeavour Energy & Ors; Precision Helicopters Pty Ltd v Endeavour Energy & Ors; Endeavour Energy v Precision Helicopters Pty Ltd and Anor [2013] NSWSC 1899

The New South Wales Supreme Court held that the plaintiff Edwards was not a passenger but an observer who assisted the crew in undertaking aerial inspection activities, with the result that the Civil Aviation (Carriers Liability) Act (1967) (NSW) (CACL NSW) did not apply to the accident.

Precision Helicopters contracted with Endeavour Energy to supply one of their helicopters and a pilot for the purpose of carrying out low level aerial inspection of Endeavour's power lines. The contract provided that the inspection flights would carry two Endeavour employees, one to act as inspector and the other to act as observer. The roles of each were described in the contract. Relevantly:

The function of the observer, seated beside the pilot, is primarily to assist the pilot by providing advance warning of approaching hazards, tracking flight development to determine changing risks and recording the condition of the power line.
The observer shall be conversant with the overhead power line route and potential hazards to enable the maximum assistance to be provided to the pilot.

During the accident flight, the skid of the helicopter came into contact with one of the wires, causing the pilot to conduct an emergency landing, during which the helicopter rolled over on touching the ground. The plaintiff suffered catastrophic injuries, principally a closed head permanent brain injury.

Precision Helicopters contended that the CACL NSW applied to the carriage and that the plaintiff was a passenger for that purpose. If successful, Precision's liability would be limited to $500,000.2

Precision relied on the UK decision in Herd v Clyde Helicopters Limited [1997] AC 534 in which the House of Lords found that Herd was a passenger for the purpose of the relevant air carrier's liability legislation. Clyde Helicopters contracted with the Strathclyde Police to supply helicopters and pilots for the purpose of aerial surveillance and detection operations. Herd, a police sergeant, was carried on the helicopter to direct the aerial surveillance, inform the pilot of the manoeuvres to carry out, and generally observe and provide information to the pilot. During the accident flight, the engine failed when the aircraft encountered a snowstorm, causing the helicopter to crash and killing Herd.

The House of Lords held that Herd had no responsibility in respect of the operation of the aircraft, which was solely under the control of the pilot. The activities he engaged in could not be regarded as contributing to the carriage of him or the other persons on board. He was therefore properly regarded as a passenger.

Interestingly, the House of Lords referred to the decision in Re Mexico City Air Crash of October 31, 1979 [1983] USCA9859 where the United States Court of Appeals (Ninth Circuit) found that two flight attendants, working aboard an aircraft that crashed, were not passengers within the meaning of the Warsaw Convention as their carriage was undertaken for the exclusive purpose of performing employment duties. The House of Lords distinguished this decision from Herd by saying the US decision turned on whether or not the persons being carried were carried in their capacity as employees of the airline.

Herd was later applied by the Court of Appeal in England and Wales in Disley v Levine [2002] 1 WLR 785, where the court remarked that if the helicopter in Herd had been operated by the police, Herd would have been considered a crew member.

Precision submitted that Edwards was essentially directing the pilot having regard to his knowledge of the power lines and of the hazards but this was not a contribution to the flying of the helicopter as had been referred to in the authorities.

The Supreme Court held that the provision of advance warning to the pilot of approaching hazards was central to the conduct of aerial inspection of overhead lines. Mr Edwards assisted with the navigation of the aircraft and therefore formed an essential part of the crew of the helicopter undertaking aerial inspection activities. The Supreme Court held the present case was therefore distinguishable from Herd.

Both Herd and Edwards appear to have played a role in their respective aerial work operations. The question is whether their roles were integral to the operational aspects of the aircraft so that they would no longer be considered passengers.

Although Herd and Edwards appear to have been able to direct the respective pilots in terms of the aircraft's intended flight path, the distinguishing feature between them seems to be that Edwards' role had a greater impact on the pilot's manipulation of the aircraft controls and therefore the safe operation of the flight. That is, the pilot relied upon Edwards to ensure separation from the wires.

It would be wrong to construe the comments from Herd and Disley to mean that if a person is carried in their capacity as employee of the carrier they are to be considered part of the crew. It is relevant to determine if the person is carrying out any duties of that employment during the carriage. The reference to the flight attendants in Re Mexico City Air Crash demonstrates that a person can be crew if they are carrying out an employment duty for the carrier that is relevant for the activity or purpose of the flight but not relevant to the navigation or operation of the aircraft.

Can a Workcover Authority recover compensation from an air carrier liable to a passenger under CACL Act?

Victorian Workcover Authority v Virgin Australia Airlines Pty Ltd & Anor [2013] VSC 720

Pursuant to section 85(6) of the Accident Compensation Act 1985 (Vic) (AC Act), if a person receives workers' compensation under the AC Act and subsequently obtains damages in respect of the injury under the law of any place outside Victoria (whether within or outside Australia), the Workcover Authority is entitled to recover from that person the amount of the compensation paid under the AC Act or an amount equal to the damages obtained, whichever is the lesser amount.

Mr Tzovlas was a passenger on a Virgin Airlines flight from Sydney to Melbourne when, in the airspace above Tullamarine, he suffered a serious injury when a flight attendant dropped a portable Eftpos machine on his head. The impact caused him to twist sharply, badly injuring his back.

As Tzovlas was travelling for the purpose of his employment, he claimed worker's compensation under the AC Act. Tzovlas also commenced proceedings against Virgin for damages under the Civil Aviation Carrier's Liability Act 1959 (Cth) (CACL Act). At the material time, the carrier's liability was capped at $500,000.

A dispute arose about whether any damages awarded under the CACL Act would constitute damages in respect of injury 'under the law of any place outside Victoria (whether within or outside Australia)'. Tzovlas felt he would be greatly disadvantaged if the Workcover Authority could recover the $500,000 because, without the application of the CACL Act, his damages would substantially exceed the capped limit of $500,000.

The Supreme Court found the AC Act is remedial legislation in that it provides an entitlement to compensation which is not fault-based. The entitlement is not unlimited however; there must be a connection between the worker and Victoria, and there is a principle against double-payment of compensation which allows recovery from the worker if other damages are awarded.3

Remedial legislation must be interpreted to give the fullest relief which the fair meaning of its language will allow. This rule however, must be tempered by the actual language used. Where, as in this case, remedial legislation includes a provision like section 85(6) which is not remedial, the court must exercise caution when construing it.

The Supreme Court rejected arguments by Tzovlas that section 85(6) only applied where the other damages were awarded on the basis of the negligence of a third party whereas in this case the damages under the CACL Act are based on strict (no-fault) liability, or where the other damages were adequate to compensate the injured worker whereas in this case the CACL Act imposed a statutory cap.

Tzovlas also contended that the CACL Act was a Commonwealth Act and as Victoria was part of (or inside) the Commonwealth, the claim under the CACL Act was not a claim under the law of any place outside Victoria.

The Supreme Court rejected a construction of the word 'place' as something exclusively physical and considered the reference to 'under the law of any place outside Victoria' was apt to describe non-Victorian sources of laws, including legislation of the Commonwealth. Accordingly, the 'intention of the legislature appears to be that compensation is not payable, and may be recovered, where the worker has been paid damages in respect of the same injury under a law of another jurisdiction'.

As a result, the Victorian Workcover Authority was able to bring recovery proceedings in respect of the CACL Act damages under section 85(6).

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1In the United States for example, the convention is self-executing and automatically becomes the law. The convention therefore provides the cause of action.

2The Supreme Court found that low level aerial inspection operations did not sit comfortably with the statutory formula of a person being carried in an aircraft being operated by the holder of an airline or charter licence in the course of commercial transport operations under a contract for the carriage of the passenger.

Although not addressed by the court, it was possible for an operation to be considered both a charter operation and an aerial work operation depending on the purpose for which a person is carried. If the plaintiff was determined to be a passenger and not part of the aerial work activity, it was possible for the court to find that his carriage was the subject of a charter operation and as a result, a commercial transport operation to which the CACL NSW applied.

Nevertheless, the court said that if it was wrong about the nature of the operation, it would consider the question as to whether the plaintiff was a passenger for the purpose of the CACL NSW.

3Similar provisions exist in the various State worker's compensation legislation in Australia although Queensland has a more specific definition (providing that compensation ceases if payment for an injury is made 'under an entitlement under a law of the Commonwealth or a place other than Queensland').

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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