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Wahba v Carroll & O’Dea Lawyers: The damages regime in airline cases – Federal or State?

The recent decision in Wahba v Carroll & O’Dea Lawyers [2018] NSWDC 128 (“Wahba“) has followed the judgment in Arefin v Thai Airways International Public Company Limited (District Court of New South Wales, 21 August 2007, unreported) (“Arefin“) without clarifying the constitutional tension between the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (the “CACL Act“) and relevant State legislation which purports to impose a regime for assessment of damages for personal injury claims in respect of ‘accidents’ under the CACL Act.

In this case, Ms. Wahba was injured after slipping on a wet staircase while disembarking an aircraft. Ms. Wahba consulted Carroll & O’Dea Lawyers for the purposes of bringing a claim however proceedings were not filed within the 2 year time period under s34 of the CACL Act. Ms. Wahba brought a suit against Carroll & O’Dea Lawyers in professional negligence claiming damages for loss of opportunity to bring a claim regarding her injury. Her claim for damages was dismissed.

However, the significance of this case turns upon a constitutional question.

Governing law – State or Federal?

The issue was whether State law governed the assessment of damages for liabilities under the CACL Act – a Commonwealth enactment, or whether the CACL Act itself and the general law provided the correct regime for assessment of damages. Further, if the Court was to apply the Civil Liability Act 2002 (NSW) (the “CLA“) in assessing damages, did this create an inconsistency pursuant to s109 of the Constitution?

The Court, rather unhelpfully, declined to conclude on the constitutional issue and instead chose to follow the judgment in Arefin.

In Arefin, the Court considered whether the CLA provided the correct regime for assessment of damages for non-economic loss and home care assistance for liability under the CACL Act. The Court found that the CACL Act picked up the Warsaw Convention relating to liability of airlines in the advent of passenger injury, and provided for damages to be paid according to the general law. However, the CACL Act did not provide any legislative system for the assessment of damages. Therefore a s109 Constitutional inconsistency did not arise and the CLA was the correct legislative instrument to assess damages.

The Court noted that Arefin has also been applied in Pel-Air Aviation Pty Ltd v Casey (2017) 93 NSWLR 438 (“Pel-Air“). However, in Pel-Air the parties agreed that the CLA was to apply to the assessment of damages and the Court was not required to make a determination as to the above constitutional issue.

Accordingly, following Arefin, the Court in Wahba held that the damages regime in the CLA could be applied in assessing damages for loss of opportunity for a claim under the CACL Act. However, Gibson DCJ noted that it was still open to a superior court to resolve the constitutional question.

Policy arguments considered by the Court

Gibson DCJ also considered a number of non-judicial materials including the Australian Government’s discussion paper ‘Department of Infrastructure, Transport, Regional Development and Local Government, “Review of Carriers’ Liability and Insurance- Discussion Paper” (May, 2009). This paper considered Arefin and stated that the Government’s preferred option was to ensure that damages are assessed in accordance with state government legislation. Further that to apply common law rules risks re-introducing outmoded and outdated principles relating to damages assessment.

Gibson DCJ also considered the Aviation Legislation Amendment (Liability and Insurance) Bill 2012 (Cth) where it was stated that the Government’s preferred option is to ensure that damages are assessed in accordance with civil liability schemes and that the CACL Act should be amended to reflect this.

Gibson DCJ did not rely on these materials in giving judgment. However, it appears that there is legislative impetus to clarify the constitutional issue.

Conclusions

As it stands, there is no precedent handed down by a superior court that addresses the tension between damages regimes created by State legislation, damages that can be claimed under the CACL Act and whether an inconsistency arises pursuant to s109 of the Constitution.

As a District Court decision, Arefin stands as a somewhat shaky precedent. Wahba and Pel-Air have also failed to clarify the constitutional issue. Until this issue is decided by Court at a higher level, Arefin will remain the leading authority on damages regimes in airline cases.

This article was written by Matthew Brooks, Partner and Jonathan Yee, Graduate-at-Law.

Matthew Brooks

P: +61 2 9334 8740

E: mbrooks@hwle.com.au

Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice.