Adelaide Steamship Co Ltd v Spalvins

SOUTH PACIFIC AIR MOTIVE PTY LIMITED & ANOR v KENNETH MAGNUS & ORS

NG 1079 of 1997 BEAUMONT, HILL AND SACKVILLE JJ. SYDNEY 9 SEPTEMBER, 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: SOUTH PACIFIC AIR MOTIVE PTY LIMITED

THE COURT ORDERS THAT:

1. The appeal be allowed in part.
2. The following answers should be substituted for those given by the primary Judge in answer to the questions determined separately from and prior to all other issues in the proceedings:

Question 1: Is a cause of action on behalf of a passenger whose alleged injuries are psychological injuries independent of physical injury an action for damage sustained by reason of 'personal injury' suffered by a passenger within the meaning of the term in s 28 of the Civil Aviation (Carriers' Liability) Act 1959? Answer: In the circumstances of the present case, Yes.

Question 2: Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by passengers for psychological injuries independent of any physical injury? Answer: Yes.

Question 3: Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by non-passengers for psychological injuries independent of any physical injury? Answer: No.

1. On the question of costs, the appellants file written submissions within seven days and the respondents file written submissions within seven days thereafter. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT BEAUMONT J: INTRODUCTION This is an appeal, by leave granted, from orders of a Judge of the Court answering a series of preliminary questions of law in representative proceedings arising out of an aircraft accident. The questions were put to the primary Judge in the context of facts agreed by the parties for the purposes of determination of the preliminary questions. The appeal raises for consideration several important questions with respect to the meaning and operation of the provisions of Part IV of the Civil Aviation (Carriers' Liability) Act 1959 ("CA Act").

The agreed facts included the following: · South Pacific Air Motive Pty Ltd ("South Pacific"), the first appellant, was the owner, and Group Air Pty Ltd ("Group Air"), the second appellant, was the operator, of the aircraft, which was chartered to convey a party of students from Sydney to Norfolk Island. · On 24 April 1994, the aircraft took off from Sydney Airport, but shortly thereafter ditched in the waters of Botany Bay. · The passengers were on board an aircraft which was engaged in domestic carriage by air to which the provisions of Part IV of the CA Act applied. (Parts II, III, and IIIA of the Act provide for international carriage by air in the manner prescribed by the Warsaw Convention, the Hague Protocol amending that Convention, and the Guadalajara Convention. Part IV deals with domestic carriage.) Kenneth Magnus, the first respondent, instituted the representative proceedings on 17 March 1997, almost three years after the accident, on behalf of a group of persons; some were passengers, others were not - being, it appears, parents of the students. The significance of this lapse of time is that under Part IV (and under the Warsaw Convention) there is provision for the extinguishment of claims not brought within two years. By his statement of claim, the first respondent sued the appellants upon several causes of action, both statutory and at common law. He alleged that the appellants had engaged in misleading conduct, contrary to s 52 of the Trade Practices Act 1974, by, inter alia, holding out that the aircraft was adequate; that the appellants had falsely represented that their air service was, inter alia, of a particular standard, contrary to s 53 (aa) of the Trade Practices Act; and that the appellants had been guilty of common law negligence. No claim was made under Part IV of the Act. The appellants sought summary dismissal of the whole or part of the proceedings on the grounds that the claims had been extinguished upon expiration of the two year limitation period. This application was dealt with by the determination of the preliminary questions.

For the purpose of deciding the preliminary questions, the primary Judge classified the claims made in the proceedings as follows: (i) passengers' claims for one or more physical injuries without any psychological sequelae from the injury or those injuries; (ii) passengers' claims for one or more physical injuries with some psychological sequelae (psychological damage) as a result of that injury or those injuries; (iii) passengers' claims for psychological injuries that were independent of any physical injury ("pure mental injury" or "nervous shock"); and (iv) non-passengers' [sc. the parents'] claims for nervous shock.

THE RELEVANT LEGISLATIVE SCHEME IN OUTLINE The relevant provisions of the CA Act are found in Part IV (ss 26 - 41). These provisions are to the following effect (I will return to the detail of their language later): Section 28 provides, so far as is presently material, that - "Subject to this Part [IV], … the carrier is liable for damage sustained by reason of … any personal injury suffered by [a] passenger resulting from an accident which took place on board [an] aircraft … " (Section 28 also deals with the death of a passenger, but, fortunately, this did not occur in the present case.) A question thus arises in the operation of s 28 as to the effect of its introductory qualifying words "[s]ubject to … Part [IV]". That Part, in ss 31(1), 32, 33, 34, 36, 39 and 40, relevantly provides as follows with respect to "damage sustained by reason of … personal injury suffered by [a] passenger resulting from an accident which took place on board [an] aircraft…" - · Subject to the regulations made under the Act relating to passenger tickets, the liability of a carrier under Part IV in respect of each passenger by reason of his or her injury or death is limited to a specified amount (s 31(1)). The carrier's servants and agents are also entitled to invoke this limitation (s 33). · Contracting out is prohibited (s 32). · The right of a person to damages under Part IV is extinguished if an action is not brought by him or her or for his or her benefit within two years after (whichever is the later of) (i) the date of arrival of the aircraft at the destination, or (ii) the date on which the aircraft ought to have arrived at the destination; or (iii) the date on which the carriage stopped (s 34). · With some immaterial exceptions, the liability of a carrier under Part IV, in respect of personal injury suffered by a passenger, is in substitution for any civil liability of the carrier under any other law in respect of the injury (s 36). · Nothing in Part IV shall be deemed to exclude any liability of a carrier under Part IV: (a) to indemnify an employer of a passenger in respect of any liability under a workers' compensation law; (b) to pay contribution to a tort-feasor who is liable in respect of the death of, or injury to, the passenger - but this provision does not operate so as to increase the limit of liability of a carrier in respect of a passenger beyond the amount fixed by or in accordance with Part IV (s 37). · If, in an action against a carrier under Part IV, the carrier proves that the damage was caused or contributed to by the negligence of the passenger, the damages recoverable should be assessed in accordance with s 39 (s 39(1)). · The regulations may make provisions relating to, inter alia, passenger tickets, being provision for, inter alia, the non-application of a provision of s 31 in certain cases (s 40(c)). (No such regulation applies here in any material respect.)

THE DECISION AT FIRST INSTANCE His Honour reserved for determination the following preliminary questions: "1. Is a cause of action on behalf of a passenger whose alleged injuries are psychological injuries independent of physical injury an action for damage sustained by reason of 'personal injury' suffered by a passenger within the meaning of the term in s 28 of the [CA] Act…? 2. Does Part IV of the [CA] Act…operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by passengers for psychological injuries independent of any physical injury? 3. Does Part IV of the [CA] Act…operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by non-passengers for psychological injuries independent of any physical injury?" The primary Judge ordered that each question be answered in the negative.

As has been noted, Part II of the CA Act adopts the Warsaw Convention in the case of international carriage by air. Part IV, in dealing with domestic carriage, does not in terms, or otherwise, adopt the Convention. Yet, whilst Part IV is a free-standing provision, it is similar to the Convention in some respects. In the absence of any square authority on the meaning of the relevant provisions of Part IV, I propose to examine the cases which have considered the operation of the Convention for the purpose of ascertaining whether they can illuminate the present questions.

In Preston v Hunting Air Transport Ltd [1956] 1 QB 454, Ormerod J upheld a claim under Art. 17 of the Convention by two infant children of a widowed mother. (Article 17 is in terms similar to s 28 of the CA Act. Relevantly, Art. 17 makes the carrier "liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury".) Ormerod J rejected an argument that Art. 17 permitted only financial loss to be taken into account as "damage sustained". He said (at 461):

"[Article 17] does not refer particularly to financial loss, it refers to damage, and the question does arise - and it is probably a very important question in this case - whether that damage should be calculated purely on what may be estimated as the financial loss which these infants have sustained, or whether it should be calculated on the broader basis of the loss which they inevitably must have sustained beyond the actual financial loss by the fact that they lost their mother as young children aged some three or four years, who were, at the time of her death, already deprived of a father. As I interpret the words of article 17 it does seem to me that this is an item of damage for which the plaintiffs are entitled to be compensated. I must take into account, in calculating any sum which should be awarded to them, something more than the purely financial loss and award some sum - a sum extremely difficult to arrive at - for the loss which they have sustained by reason of the fact that they have lost the care of their mother at an age when probably they needed it most." Preston has been criticised in the Supreme Court of the United States. In Zicherman v Korean Air Lines Co. 133 L Ed 2d 596 (1996), it was held that a plaintiff may not recover damages under the Convention for loss of society resulting from the death of a relative in an aircraft accident because (1) in Art. 17, which provided that a carrier would be liable for damage ("dommage" in the official French text) sustained in the event of a passenger's death or bodily injury, the term "dommage" meant legally cognizable harm, but Art. 17 left it to adjudicating courts to specify what harm was cognizable as determined by domestic law; (2) where, as in the case at hand, an airplane crash occurred on the high seas, the U.S. Death on the High Seas Act supplied the substantive United States law; and (3) that Act permitted only pecuniary damages. Scalia J said (at 607): "Canada has adopted legislation setting forth who may bring suit under Article 24(2), but has left the question of what types of damages are recoverable to provincial law. Haanappel, supra, at 70-71. The Court of Appeals of Quebec has rejected the argument that Article 17 permits damages unrecoverable under domestic Quebec law. Dame Surprenant v Air Canada, [1973] C.A. 107, 117-118, 126-127 (Ct. App. Quebec) (opinion of Deschnes, J.). But see Preston v Hunting Air Transport Ltd., [1956] 1 Q.B. 454, 461-462 (granting damages under Convention, but without considering Article 24). Finally, the expert commentators are virtually unanimous that the type of harm compensable is to be determined by domestic law."

Article 24(2) provided, in effect, that, in the cases covered by Art. 17, any action for damages, however founded, can only be brought subject to the condition and limits set out in the Convention; and that this is without prejudice to the questions as to who are the persons who have the right to bring suit and what are their rights. Although a claim made under the CA Act, and not under the Convention, McKenna v Avior Pty Ltd [1981] WAR 255 may be noted here. The plaintiff claimed damages for the death of her son in an aircraft crash. Section 35(8), in dealing with death claims, provides that in awarding damages, the Court is not limited to the financial loss resulting from the death of the passenger. It was held (1) that damages were to be assessed on the same principles as claims under the Fatal Accidents Act - damages were to be assessed by ascertaining the balance of the pecuniary loss to the deceased's relatives from his death over the pecuniary gains accruing from that event; and (2) that the plaintiff was entitled to damages for the lost benefit of household services performed by and financial benefits received from the deceased, but was not entitled to damages for the grief and mental anguish she experienced in consequence of his death. In Gatewhite v Iberia Lineas [1990] 1 QB 326, the owner of goods damaged in transit sued, although it was not named as either consignor or consignee in the air waybill. Gatehouse J rejected the defendant's argument that the Warsaw Convention limited the right of action against a carrier to the consignor and consignee. Gatehouse J said (at 334-335): "In my view the owner of goods damaged or lost by the carrier is entitled to sue in his own name and there is nothing in the Convention which deprives him of that right. As the Convention does not expressly deal with the position by excluding the owner's right of action (though it could so easily have done so) the lex fori, as it seems to me, can fill the gap. While bearing in mind the need to guard against the parochial view of the common lawyer, I see no good reason why the civil lawyer's approach to the construction of the Convention, based on the importance of contract, should be of overriding importance. The fact is that the Convention is silent where it could easily have made simple and clear provision excluding the rights of the 'real party in interest' , had that been the framers' intention. It would be a curious and unfortunate situation if the right to sue had to depend on the ability and willingness of the consignee alone to take action against the carrier, when the consignee may be - and no doubt frequently is - merely a customs clearing agent, a forwarding agent or the buyer's bank. It would seem artificial in the extreme to require a special contract in the air waybill itself under article 15(2) to provide the goods owner with a remedy in such a normal situation." Gatewhite has been critically examined in the House of Lords in Sidhu v British Airways [1997] AC 430. Lord Hope said (at 450-451): "This decision, however, does not sit easily with the idea that the object of the Convention, in the areas with which it deals, was to provide uniformity of application internationally. As Shawcross & Beaumont, Air Law, 4th ed. (looseleaf reissue), vol. 1, VII (188) have observed, the rule in civil law countries is that only a party to a contract of carriage, or a principal for whom he was acting, is regarded as the appropriate plaintiff. In common law countries the proper plaintiff is the owner of the goods, whose right to sue depends on his interest in the goods, not on the fact that he may also be a party to the contract. It would seem to be more consistent with the purpose of the Convention to regard it as providing a uniform rule about who can sue for goods which are lost or damaged during carriage by air, with the result that the owner who is not a party to the contract has no right to sue in his own name. We were not asked to review the Gatewhite case in detail however, and as the point was not fully argued I would not wish to cast further doubt on the decision which Gatehouse J. reached. It is sufficient for present purposes to say that I am not persuaded that we should apply his reasoning to the question which is before us here, which is not concerned with the question of standing or title to sue but with the question whether a person who has an undoubted title to sue under the convention can pursue a claim outside the Convention where the Convention itself does not provide him with a remedy." In Eastern Airlines, Inc. v Floyd 499 U.S. 530 (1991), passengers on an aircraft which narrowly avoided ditching sued for damages for mental distress. They advanced claims under state law in contract and in tort; and they also sued under the Warsaw Convention. The Supreme Court addressed only the Convention claim (at 533). This claim was made under Article 17, which is, as has been said, in similar terms to s 28 of the CA Act. The Supreme Court held that Art. 17 did not permit recovery. Marshall J said (at 552 - 3): "… our construction of Article 17 better accords with the Warsaw Convention's stated purpose of achieving uniformity of rules governing claims arising from international air transportation… As noted, the Montreal Agreement subjects international carriers to strict liability for Article 17 injuries sustained on flights connected with the United States… Recovery for mental distress traditionally has been subject to a high degree of proof, both in this country and others... (American courts require extreme and outrageous conduct by the tortfeasor);… (British courts limit such recovery through the theory of foreseeabilty;… (French courts require proof of fault and proof that damage is direct and certain). We have no doubt that subjecting international air carriers to strict liability for purely mental distress would be controversial for most signatory countries. Our construction avoids this potential source of divergence. We conclude that an air carrier cannot be held liable under Article 17 when an accident has not caused a passenger to suffer death, physical injury, or physical manifestation of injury. Although Article 17 renders air carriers liable for 'damage sustained in the event of'… such injuries,… we express no view as to whether passengers can recover for mental injuries that are accompanied by physical injuries. That issue is not presented here because respondents do not allege physical injury or physical manifestation of injury… Eastern urges us to hold that the Warsaw Convention provides the exclusive cause of action for injuries sustained during international air transportation. The Court of Appeals did not address this question, and we did not grant certiorari to consider it. We therefore decline to reach it here." In American Airlines Inc. v Georgeopoulos, NSW Court of Appeal, 26 September 1996, unreported, passengers on an aircraft claimed damages in the Local Court for personal injuries, including nervous shock and mental suffering. The Local Court held that damages for shock were not recoverable because the phrase "any other bodily injury" in Art. 17 of the Convention did not include nervous shock and mental suffering. An appeal by way of stated case was brought to the Supreme Court. The stated case was based on agreed facts. But, because no finding had been made by the Local Court as to the nature of any injury caused to body tissues by the shock alleged, the Court of Appeal ordered that the matter be remitted to the Local Court, so that these findings might be made. Sheller JA said: "Nervous shock as a condition or a cause of a condition for which a defendant may be liable in negligence describes a non-impact injury which may or may not give rise to body tissue alteration. In Bell v The Great Northern Railway Company of Ireland [1891] 26 LR (Ir) 428 at 441, Palles CB pointed out the error in assuming, as a matter of law, that nervous shock is something which affects merely the mental functions and is opposed to actual physical injury. In Jaensch, Mrs Coffey suffered severe anxiety and depression and her psychiatric condition caused gynaecological problems;…" His Honour went on to say: "Assuming shock, the question is did that shock cause injury and if so what was the nature of the injury. These are matters for expert evidence; Bell v Great Northern Railway Company at 442. The findings on that evidence are vital to any conclusion whether the injury was 'bodily injury' with the meaning of Article 17. In this regard the caution of the United States Supreme Court [in Floyd] is worthy of remark. As their Honours observed at 540, the type of mental injury claimed in that case described as 'mental distress arising out of the incident' was 'injury caused by fright or shock - absent an incident in which someone sustained physical injury'. …the Court pointed out that it expressed no view as to whether passengers could recover for mental injuries that are accompanied by physical injuries. That issue was not presented because the respondents did not allege physical injury or physical manifestation of injury. To my mind and with the greatest respect it was inappropriate for the Local Court to decide a question of the sort here posed using a label of dubious medical acceptability as the benchmark, without finding precisely what injury, if any, the passenger suffered. It follows that the point argued and carefully considered by the Magistrate was not one appropriate to be taken as a preliminary point." In Potter v Delta Air Lines Inc 98 F.3d 881 (5th Cir. 1996), a passenger claimed, both under the Warsaw Convention and in state law, negligence as a result of tearing a ligament as she returned to her seat. It was held that this was not an "accident" within Art. 17, and that the Convention pre-empted state law claims including claims not arising from accidents. Smith J said (at 887): "It is not axiomatic that the Convention's limitation of liability for personal injury to 'accidents' connotes an intention to give plaintiffs who are not injured in an 'accident' recourse to state law causes of action. In fact, given the Convention's underlying goals of uniformity and certainty in the application of carrier liability law and its use of broad language to sweep into its ambit 'all international transportation of persons, baggage, or goods performed by aircraft for hire,' see article 1(1), quite the opposite is true."

In Sidhu, passengers detained on landing in a war zone sued the carrier for damages at common law for physical and psychological damage. It was held that their rights were extinguished by the limitation provision, Art. 29 of the Warsaw Convention, two years after their detention. It was accepted as common ground that no claim under Art. 17 was open for two reasons: (1) there had been no "accident"; and (2) the psychological consequences claimed to have been suffered (there was no finding at that stage) did not constitute a "bodily injury". Thus the House of Lords did not need to express a view on either question. It was also common ground that, if a passenger had a claim under Art. 17 against the carrier, there was no concurrent common law remedy. It followed, as Lord Hope noted (at 441), that the issue for determination was whether a passenger who had sustained damage in the course of international carriage by air due to the fault of the carrier, but who had no claim against the carrier under Art. 17, was left without any remedy; or, as Lord Hope had earlier put it (at 435) the question was whether the Convention, as set out in the Schedule to the Carriage by Air Act 1961 (UK), provided the exclusive cause of action and sole remedy for a passenger who claims against the carrier for loss, injury and damage sustained in the course of, or arising out of, international carriage by air. The House of Lords held that it did. In so holding, Lord Hope said (at 447): "The reference in the opening words of article 24(2) to 'the cases covered by articles 17' does, of course, invite the question whether article 17 was intended to cover only those cases for which the carrier is liable in damages under that article. The answer to that question may indeed be said to lie at the heart of this case. In my opinion the answer to it is to be found not by an exact analysis of the particular words used but by a consideration of the whole purpose of the article. In this context the purpose seems to me to be to prescribe the circumstances - that is to say, the only circumstances - in which a carrier will be liable in damages to the passenger for claims arising out of his international carriage by air. The phrase 'the cases covered by article 17' extends therefore to all claims made by the passenger against the carrier arising out of international carriage by air, other than claims for damage to his registered baggage which must be dealt with under article 18 and claims for delay which must be dealt with under article 19. The words 'however founded' which appear in article 24(1) and are applied to passenger's claims by article 24(2) support this approach. The intention seems to be to provide a secure regime, within which the restriction on the carrier's freedom of contract is to operate. Benefits are given to the passenger in return, but only in clearly defined circumstances to which the limits of liability set out by the Convention are to apply. To permit exceptions, whereby a passenger could sue outwith the Convention for losses sustained in the course of international carriage by air, would distort the whole system, even in cases for which the Convention did not create any liability on the part of the carrier. Thus the purpose is to ensure that, in all questions relating to the carrier's liability, it is the provisions of the Convention which apply and that the passenger does not have access to any other remedies, whether under the common law or otherwise, which may be available within the particular country where he chooses to raise his action. The carrier does not need to make provision for the risk of being subjected to such remedies, because the whole matter is regulated by the Convention." In Kotsambasis v Singapore Airlines Ltd (1997) 42 NSWLR 110, a passenger failed in a claim under the Warsaw Convention for nervous shock after an emergency landing. Meagher JA (Powell and Stein JJA concurring) said (at 112 - 3): "I cannot agree that the term 'bodily injury' used in the Convention includes a psychological injury. I note that the term 'bodily injury' or an equivalent is used in some municipal legislation and that the trend in Anglo-Australian law is to interpret the phrase as including a psychological or mental injury: see, eg, Boyle v Nominal Defendant [1959] SR (NSW) 413; 76 WN (NSW) 598. However, the interpretation of a particular phrase used in municipal law and the change over years in that interpretation cannot guide the interpretation of the same phrase that might appear in an international agreement. The interpretation of an international convention proceeds in much the same way as the interpretation of an Act of Parliament: the words used usually mean what they say, but if they do not or the meaning is unclear or capable of differing interpretations, then courts are to give effect to the meaning intended. It is, therefore, quite proper to look at the intention of the signatories to an international convention in order to ascertain the meaning of the words that appear in it." His Honour went on to consider Sidhu and Floyd, saying (at 114 - 5): "The words 'bodily injury' appear, in the authentic French texts, as 'lésion corporelle'. Those phrases can be regarded essentially as equivalents. They both have the same ambiguity, namely whether the phrase can be taken to refer to a psychological injury. This ambiguity can only be resolved by looking at the intention of the contracting parties and adopting a purposive approach to the interpretation of the Convention. It is immediately apparent that the adjective 'bodily' is a word of qualification or limitation. It is a general principle of statutory interpretation, equally applicable to the interpretation of international agreements, that courts are not at liberty to consider any word as superfluous or insignificant - Commonwealth v Baume (1905) 2 CLR 405 at 414 - and, more specifically, that effect is to be given to words of limitation: Randwick Municipal Council v Rutledge (1959) 102 CLR 54 at 94. It is clear that the draftsmen of the Convention did not intend to impose absolute liability in respect of all forms of injury. Other provisions in the Convention are indicative of the approach which should be adopted in the interpretation of art 17. The monetary liability of the carrier is limited by art 22. Article 23 states that any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in the Convention shall be null and void. That article is intended to prevent carriers from contracting out of any of the provisions of the Convention. The surrendering by carriers of their freedom of contract was an important concession which must be seen in the context of the entire Convention, which amongst other things dealt with carriers' liabilities by providing limitations and certainty." In his concurring judgment, Stein JA referred to Floyd and to a decision to the contrary of the Supreme Court of Israel in Daddon v Air France (1984) S & B Av R VII/141. His Honour said (at 121-2): "What is plain is that Cooper DCJ found that Ms Kotsambasis did not suffer any form of physical injury on the airplane, but only a psychological one. That is, she suffered a psychological injury unaccompanied by any physical injury within art 17. Cooper DCJ, it seems, found in favour of the appellant because he was bound by Georgeopoulos v American Airlines Inc. (Ireland J, 10 December 1993), unreported). However, the Court of Appeal remitted that matter back to the magistrate (who heard the original action) to make further findings of fact on the nature of the injuries suffered. In obiter Sheller JA American Airlines Inc v Georgeopoulos (Court of Appeal, 26 September 1996, unreported) appeared to prefer the reasoning in Eastern Airlines Inc v Floyd over Daddon v Air France. To the extent that Ireland J found that purely psychological injury is 'bodily injury' under art 17 of the Convention, the decision is in my view erroneous. I would favour the construction adopted by the United States Supreme Court in Eastern Airlines Inc v Floyd in preference to Daddon v Air France. I agree with Meagher JA that 'bodily injury' in art 17 was not intended to include purely psychological injury." Finally, in Tseng v El Al Israel Airlines 122 F. 3d 99 (2nd Cir. 1997), US Court of Appeals for the Second Circuit, the plaintiff alleged that the airline caused her to suffer personal injury when it subjected her to an intrusive security search prior to boarding an El Al flight. It was held that her complaint was not an "accident" within Art. 17 of the Warsaw Convention because "accident" does not include illness suffered by a passenger "as a reaction to the ordinary events and procedures of air transportation". The question then arose whether it was open to the plaintiff, notwithstanding authorities to the contrary, (for instance Potter and Sidhu), to pursue a claim in tort under state law. It was held that she could do so. Cardamone J said (at 106): "We recognize that a construction of the Convention by our sister signatories is 'entitled to considerable weight', Saks, 470 U.S. at 404, but remain unpersuaded to follow the course laid out in Sidhu. For one thing, the Convention is not an exhaustive set of rules and guidelines dealing with international air travel, as is evident from its formal title. As one commentator explained, 'the Convention was not intended to govern the entire relationship between air carriers and passengers…, and does not propose to unify all such rules.' Ras, Warsaw's Wingspan, supra, at 589; see Mankiewicz, The Liability Regime, supra, at 13, 91. For another, neither the text nor the Travaux preparatoires reveal an aim to provide in an exhaustive way for the liability of the carrier for all personal injuries. It is widely accepted that one of the two primary purposes of the Convention was to shield carriers from financial catastrophe following in the wake of a major accident… To that end, the Convention limits airline liability for accidents. But the Convention does not purport to insulate carriers from the ordinary risks of doing business, such as keeping their facilities in good repair. An injury to a passenger caused, for example, by a failure of a carrier to keep its walkways in a safe condition is hardly the type of catastrophic incident that would likely force even a fledgling airline out of business, and cannot be assumed to have been within the contemplation of the drafters of the Convention." Certiorari has been granted by the Supreme Court in Tseng. Georgeopoulos has been further considered by the NSW Court of Appeal (American Airlines Inc v Georgeopoulos (No. 2), Meagher, Sheller and Beazley JJA, 5 August 1998, unreported) after the Local Court made a finding that - "3. The evidence does not establish that the nervous shock in the form of a mild post traumatic stress disorder suffered by Mrs Georgeopoulos caused or resulted in:

· Any physical or bodily injury to her. · Any structural alteration to bodily tissues or alteration in the function of an organ or neurochemical change or any other form of damage to tissues or organs." It was held that there was no entitlement to recovery under Art 17. Sheller JA referred to an observation by Castillo J in Jack v Transworld Airlines Inc 854 F Supp 654 (ND Cal 1994) (at 179) that: "Article 17 does not say that a carrier will only be liable for damage caused by a bodily injury, or that passengers can only recover for mental injuries if they are caused by bodily injuries. No less an authority than our Supreme Court has indicated that the key causal link is between the accident and the damage sustained; see Air France v Saks 470 US 392 (1985) at 396." But Sheller JA said (at 10-11): "… I do not think that Article 17 permits this interpretation. Undoubtedly, it is a pre-condition of the carrier's liability for damage that the accident caused the damage and took place on board the aircraft or in the course of operations of embarking or disembarking. In the present cases, the accident caused a mild post traumatic stress disorder. But the damage must also be sustained, that is to say experienced or suffered, 'in the event of', relevantly, bodily injury suffered by the passenger. This is the damage for which the carrier is liable. I do not think Article 17 means that if the passenger died or suffered bodily injury, the carrier is liable for any damage caused by the accident if the damage was not the result of the death or bodily injury." Sheller JA went on to say (at 11-12): "I think Stein JA in Kotsambasis at 121 correctly delimited the ambit of recovery for psychic injury when he said 'where mental anguish follows and is caused by physical injury, recovery for both injuries is covered… Moreover, if the psychological injury is proven to be a species of bodily injury, then it would constitute 'bodily injury' within the article'. Mr Evatt accepted that the stress disorder was not the consequence of any physical injury. The appellant is not therefore liable under Article 17 for Mr and Mrs Georgeopoulos' nervous shock or mental distress."

(a) Passenger claims for psychological injury only The learned primary Judge accepted that, in some statutory contexts, the words "personal injury" were "apt to include nervous shock; that is, psychological injury not arising out of a physical injury". But, in his Honour's view, having regard to the "scheme and history" of the CA Act, this was not the case here, for two reasons: First, in Floyd, which was followed in Kotsambasis, it was held that the drafters of the Warsaw Convention had no specific intention to include "purely psychic injury". Kostambasis should itself be followed and it should be held that such an injury was not "bodily injury" within Art. 17 and was not excluded by Art. 24 (the counterpart of s 36) or extinguished by Art. 29 (the counterpart of s 34). Secondly, there was no warrant for reading "personal injury" in the CA Act more broadly than "bodily injury" in the Convention. His Honour went on to reject an argument advanced on behalf of the appellants that, in accordance with the reasoning in Sidhu, if the term "personal injury" did not encompass psychological injury, the latter was excluded entirely. The primary Judge said: "I have difficulty with aspects of Lord Hope's reasoning. He concedes the Convention does not purport to deal with all matters relating to contracts of international carriage by air; on the authority of Floyd, purely psychological injury is one of them. The Convention makes a specific provision about exclusion of actions, in Article 24(2). That exclusion is limited to 'cases covered by Article 17'. Yet his Lordship finds in the Convention as a whole an implied exclusion of all other actions arising out of the international carriage of persons, baggage or cargo by aircraft for reward. However, no question arises as to whether I should follow Sidhu; it is clearly distinguishable. The present case concerns Part IV of the Act, not the Convention. Although the principles embodied in the Convention are reflected in Part IV, there are differences of language. I have mentioned the difference between Article 24(2) and s 36. The cap provision of the Convention (Article 22), on which Lord Hope placed much reliance, states 'In the carriage of persons the liability of the carrier for each passenger is limited' etc, whereas s 31(1) says '…the liability of a carrier under this Part in respect of each passenger, by reason of his injury or death resulting from an accident'. Section 31(1) picks up the very words used in s 28 to impose liability and limits the amount of that liability. Similarly, s 345 extinguishes '(t)he right of a person to damages under this Part' after two years. In my opinion, nothing in Sidhu derogates from the conclusion that a purely psychological injury is not a 'personal injury' within the meaning of Part IV of the [CA] Act."

(b) Non-passengers' claims for pure nervous shock His Honour held that Part IV had no application here. Liability in nervous shock was not dependent upon proof of a liability to compensate the initial victim; the liability was for breach of an independent duty of care. It followed, in his Honour's view, that the language of s 28 ("… damage sustained by reason of… any personal injury suffered by the passenger…") did not apply to these claims. As s 28 did not apply, s 36 did not exclude liability for these claims, and s 34 did not impose a relevant time limit. THE APPELLANTS' GROUNDS OF APPEAL By their notice of appeal, the appellants rely upon the following grounds: · His Honour ought to have held that the liability imposed by s 28 of the CA Act provided the exclusive remedy for death or injury, including psychological injury or nervous shock, arising from the carriage of passengers to which Part IV applied. · His Honour ought to have held that s 36 excluded any liability on the part of a carrier other than liability imposed under s 28 to any person for injury caused when a passenger was injured or put in peril during carriage to which Part IV applied. · His Honour erred in holding that s 36 operated to exclude liability on the part of a carrier only in circumstances where liability is imposed by s 28.

· His Honour ought to have held that s 36, on its true construction, excluded liability on the part of a carrier to any person where that liability arose as a result of injury to a passenger carried in circumstances to which Part IV of the CA Act applied. · His Honour ought to have followed Sidhu and adopted, in the construction of s 36 of the CA Act, the reasoning of the House of Lords in the interpretation of Art. 24 (2) of the Warsaw Convention. · His Honour erred in confining the words "personal injury" in s 36 of the CA Act to mean "bodily injury". · His Honour ought to have held that the words "personal injury" in s 36 of the Act included psychological injury or nervous shock unaccompanied by, or not arising out of, physical injury.

CONCLUSIONS ON THE APPEAL In my view, there is considerable force in the appellants' arguments. The starting point, at least, in the resolution of the present questions must be the language of the relevant legislation, that is, Part IV of the CA Act. I have previously outlined the effect of Part IV. I should now address the actual language of its presently material provisions as follows: The application of Part IV is dealt with by s 27(1): The Part - "applies to the carriage of a passenger where the passenger is to be carried in an aircraft being operated by the holder of an airline licence,… under a contract for the carriage of the passenger: … (b) between a place in a Territory and a place in Australia outside that Territory; … not being carriage to which the Warsaw Convention, the Hague Protocol or the Guadalaraja Convention applies." It is common ground that Part IV applied to the carriage of the passengers here. Section 28 deals with the liability of the carrier for death or injury by providing: "28. Subject to this Part, where this Part applies to the carriage of a passenger, the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft or in the course of any of the operations of embarking or disembarking." As has been mentioned, in order to understand whether, and if so, how s 28 operates, account must be taken of the introductory words "[s]ubject to this Part". Putting that qualification to one side for the moment, the question arises as to the meaning, literally at least, of the language of s 28 itself. Its terms impose a strict liability on the carrier - "for damage sustained by reason of… any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft…" Turning first to those passengers who claim to have suffered psychological damage, but not physical injury, it appears that, if taken literally, the relevant ingredients of s 28 were, at least so far as damage was claimed by the first respondent to have been sustained, apparently satisfied: · There was, at least if as claimed by the first respondent (although no finding has yet been made), "damage sustained by the passengers". In its ordinary meaning, "damage" means "injury or harm" (Macquarie Dictionary). This would, ordinarily, include a psychological injury. · It was, at least if as claimed by the first respondent, sustained "by reason of [a] personal injury". There was an "injury". In its ordinary meaning, "injury" means "harm of any kind done or sustained" (Macquarie). One of the dictionary meanings of "personal" is "pertaining to the person, body, or bodily aspect" (Macquarie); and psychological harm pertains to the passengers' person, body or bodily aspect. · The injury, as claimed, resulted from an accident which took place on board the aircraft. On the assumptions (1) that the facts should be found as claimed by the first respondent; and (2) that the words of s 28 should be given their ordinary meanings, it follows, in my view, that the requirements of s 28 were literally satisfied here, subject of course to the operation of the other material provisions of Part IV, in particular the limitation of actions provision (s 34). The next question is whether, as a matter of construction of s 28 in particular, and of part IV as a whole, the language of s 28 should receive any different meaning; that is whether the adoption of a "purposive" rather than a "literal" interpretation, would give another construction. As has been noted, although the learned primary Judge accepted, correctly in my view, that in some municipal contexts the expression "personal injury" was indeed apt to include nervous shock, his Honour went on to reject this interpretation here, essentially on the ground that the reasoning in Floyd should be applied to Part IV. With all respect, I have difficulty with this approach to the interpretation of Part IV. For one thing, although the NSW Court of Appeal in Kotsambasis followed Floyd in the interpretation of the Convention, it did so for reasons of international comity, yet acknowledging "the trend in Anglo-Australian law… to interpret the phrase ['bodily injury'] as including a psychological or mental injury". The present question is, of course, one of municipal law in the regulation of domestic carriage.

For another, even if it were permissible, in construing Part IV, to give weight to the approach taken to the interpretation of the Convention in this area, it would not really assist the first respondent, for two reasons. First, in enacting s 28 the Parliament chose to use different language. It is reasonable to infer that by using the expression "personal", rather than "bodily", injury it was intended to distinguish them. So far as Anglo-Australian municipal law is concerned, the use of "personal" rather than "bodily" would reflect the modern approach of our courts to the tort of nervous shock. As Sheller JA noted in Georgeopoulos, in Hay or Bourhill v Young [1943] AC 92, Lord Macmillan had observed fifty years ago (at 103): "The distinction between mental shock and bodily injury was never a scientific one, for mental shock is presumably in all cases the result of, or at least accompanied by, some physical disturbance in the sufferer's system. And a mental shock may have consequences more serious than those resulting from physical impact. But in the case of mental shock there are elements of greater subtlety than in the case of an ordinary physical injury and these elements may give rise to debate as to the precise scope of legal liability." And in Jaensch v Coffey (1984) 155 CLR 549, as Sheller JA went on to note, Brennan J said (at 559): "But at least for the last half-century 'neurasthenic breakdown amounting to (psychiatric) illness' has been held to be 'without more… a form of harm or damage sufficient for the purpose of any action on the case in which damage is the gist of the action,… supposing that the other ingredients of the cause of action are present': per Dixon J in Bunyan v Jordan (1937) 57 CLR 1 at 16." Moreover, now, according to Lord Lloyd in Page v Smith [1996] 1 AC 155 (at 188): "In an age when medical knowledge is expanding fast, and psychiatric knowledge with it, it would not be sensible to commit the law to a distinction between physical and psychiatric injury, which may already seem somewhat artificial, and may soon be altogether outmoded. Nothing will be gained by treating them as different 'kinds' of personal injury, so as to require the application of different tests in law." (See the discussion by Christian Witting, A Primer on the Modern Law of 'Nervous Shock' (1998) 22 Melbourne University Law Review, 62 at 68).

In my opinion, the reference to "personal", rather than "bodily", injury in s 28 is an indication that it was intended to pick up all kinds of injury to the person, whether strictly speaking of a "bodily" kind, as distinct from "mental", or not. Another difficulty confronting the first respondent, if reference is to be made to the approach taken to the operation of the Convention, is that in a recent decision of the House of Lords (Sidhu) and in some (albeit not all) of the American cases, it has been held that the Convention operates as a code, to the exclusion of any concurrent remedy under the general law. Although Floyd left the question open, Sidhu dealt with the point squarely; and, with respect, the reasoning of Lord Hope in a case such as the present is convincing, at least so far as the passengers are concerned. (I will consider the position of persons other than passengers below.) In other words, even if it be right to draw a distinction between physical injuries (which would fall within s 28 as "bodily" injuries) on the one hand, and mental injuries (which, assumably, fall outside s 28) on the other, the benefits and detriments provided by Part IV would apply to the former kind of claim but not to the latter. In my view, this would give the Act a capricious and extraordinary operation. In that event, the following well-known observations of Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 (at 321) are in point: "… when the judge labels the operation of the statute as 'absurd', 'extraordinary', 'capricious', 'irrational' or 'obscure' he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions." Another, perhaps similar, way of achieving here the outcome found in Sidhu in the case of the Convention, is to treat Part IV as applicable, if not directly, then indirectly or derivatively, to a claim for purely mental (i.e. "non-bodily") injury. In describing the "gravitational pull" of legislation on evidence upon an ancillary process, Olney, Kiefel and Finn JJ said in Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 (at 428): "In our view such is the significance of the Act's provisions in this that their advent has created an entirely new setting to which the common law must now adapt itself, and adapt itself in such a way as to 'include [the Act] as a fundamental part of its fabric': see G Calabresi, A Common Law for the Age of Statutes, Harvard UP, Cambridge, 1982, p 86; R v Swaffield 151 ALR 98; on the analogical use of statutes in developing common law principles, see French J, ''Statutory Modelling of Torts'' in Mullany, Torts in the Nineties and the references therein; Bennion, Statutory Interpretation, 2nd ed, pp 369-70." Their Honours' reasons for assimilating the statute's principles into the common law, also apposite here, included (a) the undesirability of having two streams capable of producing different results depending on adventitious circumstances; and (b) the impracticality of the consequences that could ensue if differing principles were to be applied by the statute and by the common law. It follows then, in my view, that as a matter of either a literal or a purposive interpretation (or both) a claim for nervous shock, whether free-standing, or as part of a wider claim for personal injuries, should be regarded as within s 28 and the other applicable provisions of Part IV. Section 28 must, as has been noted, be read in conjunction with s 36 which provides: "36. Subject to the next succeeding section, the liability of a carrier under this Part in respect of personal injury suffered by a passenger, not being injury that has 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." In my opinion, the expression "personal injury" should be read in s 36 in the same way as in s 28. Section 34 operates to extinguish the right of a person to damages under Part IV if an action is not brought within the two year period, and this did not occur in the case of the passengers. Once ss 28, 34 and 36 are read together in the way I would interpret them, it must follow that it should be declared that the passengers' claims were extinguished after the two year period.

Turning next to the more difficult questions arising in the case of the claims by persons other than passengers, there is a threshold issue to be resolved in the application of s 28 in such case: that is whether s 28 is capable of making a carrier liable to persons other than passengers. It will be recalled that s 28 is expressed to operate "where this Part applies to the carriage of a passenger"; and that it is expressed to impose liability "for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger". All of this suggests, naturally, that the primary focus of s 28 is upon the passenger, certainly in the event of his or her being injured. The position in the event of death is perhaps not so clear. Yet, it will have been noted that s 28 speaks of a liability "for damage sustained by reason of the death… or … injury". The section does not, at least in terms, purport to limit its operation to damage sustained by the passenger. Nor does s 36. It follows that, taken literally, a person other than a passenger could fall within s 28 or s 36, or otherwise within Part IV, if he or she sustained psychological damage by reason of the death or personal injury of a passenger. Is there any reason, by adopting a purposive method of interpretation, why such a literal construction should not be adopted? In my view, there is not. It is apparent that Part IV was intended to operate exclusively, as a code, in the event of the death or personal injury of a passenger in an aircraft accident. In that area, Part IV provides some benefits not available under the general law, yet is also restrictive of the rights of a plaintiff at common law in some respects. Whilst the position is not so clear as in the case of a claim by a passenger, I think that it is preferable to apply the "seamless web" approach in this context also as a matter of assumed legislative purpose. The policy considerations mentioned by Lord Hope are equally pertinent here, notwithstanding the absence of a contract of carriage between the carrier and this class of claimants. Like Bingham J, who was confronted with an equally difficult question of interpretation on an analogous topic, the construction which I would put upon Part IV may not be irresistible. Nonetheless, it is, I think, the best one, and there is no square authority on Part IV, or any authoritative writing, which leads me to think that my provisional preference should be overridden (see Swiss Bank Corporation v Brink's M.A.T. Ltd [1986] 1 QB 853 at 860).

It follows that I would also declare that the rights of these claimants to damages, if any, were extinguished after the two year period had expired.

ORDERS PROPOSED As has been noted, no findings of fact have yet been made. For the reasons given by Sheller JA, it is difficult, in the absence of actual findings, to describe the injuries as either purely physical or purely psychological. Consequently, there are also difficulties with the form of the questions dealt with by his Honour. In the circumstances, it is appropriate that suitable declaratory orders be made dealing with the limitation aspect. Costs at first instance and on the appeal must follow the event. I would propose the following orders: 1. Appeal allowed. 2. Set aside the orders for separate questions and the answers made at first instance. In lieu thereof make the following declaratory orders: "Declare that - (a) the rights to damages, if any, of passengers, and of persons who were not passengers, on whose behalf these proceedings were brought, were extinguished by the operation of s 34 of the Civil Aviation (Carriers' Liability) Act 1959, no action having been brought within two years after 24 April 1994. (b) Passengers and the other persons mentioned in (a) above, have no rights to any damages other than the rights to damages, if any, granted by Part IV of that Act."

3. Order that the first respondent pay the appellants' costs (a) of the determination of the separate questions at first instance; and (b) of the appeal. I certify that this and the preceding twenty five (25) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

BETWEEN: south pacific air motive pty limited

REASONS FOR JUDGMENT HILL J: I have had the opportunity of reading in draft both the judgments of Beaumont J and Sackville J. They relieve me from setting out both the underlying circumstances in which the appeal arises and the questions which arise for decision. I agree with both their Honours, and for the reasons they have given, that passengers on a commercial flight in Australia, who suffer psychological harm, but not physical injury are precluded from bringing proceedings against an airline other than in accordance with and subject therefore to the limitation contained in the Civil Aviation (Carriers' Liability) Act 1959 ("CA Act"). In the result, the first two questions posed for decision should be answer in the affirmative. The issue which divides their Honours is a short, but difficult one. It is whether, as Beaumont J observes, the CA Act constitutes a code in respect of non International flights, so that it governs not only claims by passengers against an airline but also claims by non-passengers against an airline at least where the claim is in respect of personal injury suffered by a passenger, the death of a passenger or injury which resulted in the death of a passenger or whether it is to be read as limited to passengers and so inapplicable to non-passengers. Although some assistance may be gleaned from the provisions of the CA Act relating to international air transport and the Conventions dealing with international transport by air which are by the CA Act incorporated into municipal law, the question is ultimately one of construction of the CA Act itself. In saying that I should not be taken as suggesting that the construction of the CA Act is to be undertaken without reference to the Conventions or that a different result would follow in the event that a claim was made by a non-passenger against an airline resulting from an accident which occurred in the course of international transport by air. The language of ss 28, 31(1), 32, 34, 35 and 36 of the CA Act is ambiguous. Section 28, a key provision of Part IV of the CA Act, speaks of : " … damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident…" It leaves open whether the damage of which the section speaks is damage sustained by the passenger (including damages sustained derivatively in the sense of claims by legal personal representatives or under compensation to relatives actions cf s 35(3) and (4)) and damage sustained by a non passenger. The ambiguity is not resolved by s 31(1) which speaks of: "… liability of a carrier under this Part in respect of each passenger, by reason of his injury or death resulting from an accident …" Nevertheless, the language of s 31(1) may marginally support the view that Part IV is limited to claims by passengers rather than claims by non passengers, otherwise if there are claims by both a passenger and non-passengers the prescribed amount must be divided up among the successful claimants not merely the passenger, his or her relatives and legal personal representatives but non passengers as well. This is a result which I would not lightly reach, even if the prescribed amount in accordance with s 35(9) must be divided among persons with derivative claims in the sense I have used that expression earlier. Likewise not conclusive are the provisions of s 29 of the CA Act which governs claims: " … for damage sustained in the event of the destruction or loss of, or injury to, baggage of the passenger … " The claim must under that section relate to baggage which falls within the description "baggage of the passenger" but that leaves open the question whether the section is limited to claims by or on behalf of the passenger. The provisions of s 30(2) which provides as a prerequisite to action that a complaint be delivered to the carrier or served upon it within specific time periods does, however, suggest that the claim is limited to claims by the passenger since the notice can only be given by the passenger or some person on behalf of the passenger. At the heart of the conclusion reached by Beaumont J is that the Conventions applicable to international air travel were intended to be a uniform international code, affording certainty to airlines but at the expense of loss of freedom of contract: cf Sidhu v British Airways plc [1997] AC 430 at 447 per Lord Hope who delivered the principal judgment in that case. One would suppose that such policy as was evident in the principles applicable to international air travel would carry over into those governing Australian air travel in the CA Act, except as modified by specific provisions. An examination of the Conventions applicable to international air travel make it clear that one matter which they were concerned to regulate and in a uniform way among the Convention countries was the liability of a carrier in contract. Absent regulation, a carrier would be free to contract with a passenger on any basis upon which agreement could be reached. It could, presumably, contract out of its liability, if not completely, at least substantially. The treaty prevents contracting out of liability, at least to the extent that it spells out not merely the circumstances in which that liability shall arise, but also a monetary limitation of it. Any contractual provision seeking to relieve the carrier from liability or imposing a lower limit are by Article 23 of the Warsaw Convention to be treated as null and void, although without otherwise affecting the validity of the contract. Article 31 of that Convention is to similar effect. No doubt for that reason the Convention requires an air ticket to indicate that the Warsaw Convention may be applicable and that it governs, and in most cases limits, the liability of carriers for death or personal injury: cf Article 3(1) of the Warsaw Convention and the same article in the Warsaw Convention as amended at the Hague, 1955. The Convention provisions to which I have just referred make it clear beyond doubt that while the contracting states were obviously concerned to protect airlines against claims, a concern no doubt reinforced by the fact that at that time most airlines were government owned, that concern was expressed, so far as personal or bodily injury claims is concerned, apart from derivative claims, in the context of passengers with whom the airline contracted. The limitation of liability was to be notified to the passenger in the ticket and the passenger thus given an opportunity to insure. Likewise, airlines whose liability was thus limited could insure that liability. By contrast, if the treaty was intended to reach out to cover some claims by non passengers, that would involve no notice being given of the limitation of liability to the non passenger and, a fortiori, no opportunity of the non passenger to insure. It would, no doubt, protect the airline and provide certainty to it, but at the expense of a non passenger. Claims against carriers clearly falling outside the terms of the Conventions can easily be imagined. A plane might crash and injure a bystander; a plane might crash and damage property; a plane might run into another plane and injury the pilot or passengers in that other plane; a non passenger might observe a plane crash and suffer physical damage. There is nothing in the Conventions which suggests that there was any intention to limit the liability of carriers in such situations. In these situations the person injured has no contractual relationship with the carrier. No notice of limitation of liability will be drawn to the attention of such a non passenger suffering loss or damage arising out of an aircraft action. So it can not be said, at least to the extent of the above claims, that the Conventions were intended to be a complete code in respect of non passengers. Clearly, however, the Conventions were intended to be a complete code with respect to passengers. Likewise there is nothing in the CA Act which suggests that that Act was intended to govern claims by non passengers of the kind to which I have referred above. Although, therefore, it seems clear that neither the Conventions nor the CA Act were intended to be a complete code governing all claims against airlines and particularly all claims for damages suffered by non passengers, it is possible to say that each constitutes a code in respect of claims by non passengers to the extent that those claims relate to the death or personal (bodily) injury of a passenger. But once it is seen that the Conventions and the CA Act are concerned with questions of contractual limitation of liability and notice thereof it is not difficult to conclude that the rationale for the Conventions or the Act being a code dealing with some, although not all, liabilities of airlines to non passengers falls away. I therefore agree with Sackville J and for the reasons which his Honour has given (supplemented by the above comments) that the CA Act has no application to claims for psychological injury to non passengers arising out of injuries occurring to passengers as the result of an accident on board an aircraft. Accordingly, the third question should be answered in the negative. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT SACKVILLE J: THE ISSUES This is an appeal from answers given by a Judge of this Court to questions determined separately from and prior to all other issues in the proceedings. I shall set out the questions and answers later. The appeal, in substance, raises two issues. The first is whether a passenger on a commercial flight in Australia, who suffers psychological harm (but not physical injury) as the immediate consequence of an accident involving the aircraft, is barred from claiming damages in respect of that harm, except in accordance with and subject to the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("CA Act"). The second issue is whether a non-passenger who suffers psychological harm as the result of the same accident (for example, a parent of a passenger who sustains nervous shock on hearing that an aircraft has crashed) is similarly barred from claiming damages in respect of that harm, except in accordance with and subject to the CA Act. These issues are important because the CA Act establishes a regime of strict liability for air carriers in Australia, but imposes monetary limits on the extent of a carrier's liability (s 31) and provides that liability of a carrier under Part IV in respect of "personal injury suffered by a passenger" is in substitution for any civil liability of a carrier under any other law in respect of the injury. The CA Act also provides that the right of a person to claim damages is extinguished if not brought within two years (s 34). BACKGROUND TO THE APPEAL The Proceedings On 24 April 1994, an aircraft chartered to convey a group of students and their band equipment from Sydney to Norfolk Island ditched into Botany Bay shortly after take-off. The first respondent to the appeal (to whom I shall refer as "the respondent") instituted the present proceedings on 17 March 1997, nearly three years after the accident. He did so as representative of a group of passengers and non-passengers, said to have suffered physical and psychological harm in consequence of a chartered aircraft ditching into Botany Bay. It appears that there are now fourteen represented parties, comprising (so it is alleged) six passengers and eight non-passengers. The proceedings were brought against the present appellants ("South Pacific" and "Group Air", respectively). South Pacific was the owner and Group Air was the operator of the aircraft. The Civil Aviation Safety Authority and Airservices Australia, both of which are authorities established under Commonwealth legislation, have also been joined in the proceedings. While the two authorities were joined as respondents to the appeal, they played no active role. The case pleaded against them therefore does not need to be considered for the purposes of this appeal. The respondent pleads that the appellants negligently caused loss and injury to him and to the represented parties. The particulars of negligence include allegations that the appellants failed properly to maintain the chartered aircraft; failed to implement adequate operational

procedures; and allowed the aircraft to fly when overloaded. The respondent also pleads that the appellants engaged in conduct that was misleading and deceptive, in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("TP Act"). It is alleged that they falsely represented that the aircraft was suitable to carry the students and their band equipment and that it would not be overloaded. The respondent claims damages on behalf of himself and the represented parties, presumably under the general law and under s 82 of the TP Act. The respondent does not plead a claim for damages under the CA Act. The represented parties include a group of identified passengers on the aircraft and a group of identified persons, all of whom are said to be parents of passengers on the flight but who were not themselves passengers on the flight. The members of the latter group claim to have sustained nervous shock in consequence of the incident, although neither the statement of claim nor the particulars specify precisely what induced the nervous shock in each case. The Summary Dismissal Application The appellants applied, pursuant to Federal Court Rules ("FCR"), O 20 r 2, for summary dismissal of the proceedings brought against them, on the ground that no reasonable cause of action was disclosed. Their application was founded on ss 34 and 36 of the CA Act. The primary Judge dealt with the application in a judgment delivered on 27 November 1997. His Honour noted that all claims made in the case had to fall within one or more of the following four categories: "[1] passengers' claims for one or more physical injuries without any psychological sequelae from that injury or those injuries; [2] passengers' claims for one or more physical injuries with some psychological sequelae (psychological damage) as a result of that injury or those injuries; [3] passengers' claims for psychological injuries that are independent of any physical injury ("pure mental injury" or "nervous shock"); and [4] non-passengers' claims for nervous shock." (Emphasis in original.) His Honour observed that there was no dispute that ss 34 and 36 of the CA Act excluded the claims within category 1, since they clearly constituted claims for "personal injury suffered by a passenger" within s 36 of the CA Act. He considered that the claims within category 2 should be treated in a similar fashion since psychological damage resulting from physical injury is also properly to be regarded as "personal injury suffered by a passenger" within s 36 of the CA Act. Since the liability imposed on a carrier under Part IV of the CA Act is in substitution for any civil liability of the carrier under any other law, claims within s 36 could not be brought otherwise than under the CA Act. The primary Judge considered that the cases falling within category 3 were not caught by ss 34 and 36 of the CA Act. His Honour accepted that the words "personal injury" are apt to include pure mental injury or nervous shock: that is, psychological harm not arising out of a physical injury to the person suffering the harm. However, having regard to the scheme and history of the CA Act, he concluded that nervous shock claims are not caught by the CA Act. In particular, his Honour was influenced by "the idea behind Part IV [which] was to extend to domestic carriers the principles made applicable to international carriers by the [Convention for the Unification of Certain Rules Relating to International Carriage by Air, open for signature at Warsaw on 12 October 1929 ("Warsaw Convention")]." His Honour took the view that there was no warrant for reading "personal injury" in Part IV more broadly than the expression "bodily injury" found in art 17 of the Warsaw Convention. The latter expression had been interpreted by courts in the United States and Australia as excluding purely psychological harm sustained by a passenger in consequence of an aircraft accident. Accordingly, his Honour considered that the claims within category (3) were not barred by the CA Act. The primary Judge took a similar view in relation to nervous shock claims by non-passengers (category 4 cases). He concluded that the CA Act does not impose liability in respect of any injury, psychological or otherwise, sustained by a non-passenger. Accordingly, s 36 does not exclude liability under any other law towards a non-passenger as the result of an aircraft accident and s 34 does not impose any relevant time limit within which the non-passenger must institute proceedings.

In the result, the application for summary dismissal succeeded, but only to a limited extent. His Honour dismissed the proceedings to the extent that the applicant claimed relief on behalf of himself and any represented party in relation to any physical injury sustained by that party (including psychological damage as the result of the physical injury). Otherwise the motion for summary dismissal was itself dismissed. The First Appeal The appellants appealed, pursuant to leave granted by the primary Judge, against the orders to the extent that they did not dismiss the entirety of the respondent's application against the appellants. I refer to this appeal as the "first appeal". No cross-appeal was filed by the respondent against the orders to the extent that they dismissed the proceedings. When the first appeal was called on for hearing, members of the Court raised with counsel the form of the proceedings at first instance. In particular, it was put to counsel that although, as a matter of form, the appellants had applied for summary dismissal of the proceedings, the primary Judge appeared to have dealt with the matter on the footing that the question was really one of law for ultimate determination. Similarly, the notice of appeal appeared to proceed on the basis that a question of law required separate determination. Yet no question of law had been identified for separate determination. The appellants did not suggest that the principal proceedings were without any arguable legal foundation. In the circumstances, the Court took the view that the proper course was to stand the first appeal over to give the parties an opportunity to reconsider the form of the appellate proceedings and, if thought appropriate, to approach the primary Judge for further orders. The Court made orders to that effect, reserving costs. The Separate Questions In the event, the parties did approach the primary Judge for further orders. His Honour, apparently by consent, made orders pursuant to FCR O 29, r 2 that certain questions be determined separately from and prior to all other issues in the proceedings. The questions were as follows: "On the basis of: (a) the admitted facts stated in paragraphs (i), (ii) and (iii) at page 2 of the Reasons for Judgment of Wilcox J published on 27 November 1997, namely: (i) At material times [South Pacific] was the owner, and [Group Air] the operator, of a DC3 Aircraft, VH-EDC; (ii) The aircraft was chartered to convey a party of students and their band equipment from Sydney to Norfolk Island; (iii) At about 9.00 am on 24 April 1994 the aircraft took off from Sydney Airport but shortly thereafter ditched in the waters of Botany Bay; (b) the uncontested finding at page 10 of the Reasons for Judgment of Wilcox J that all claims fall within one or more of the following categories: (i) passengers' claims for one or more physical injuries without any psychological sequelae from that injury or those injuries; (ii) passengers' claims for one or more physical injuries with some psychological sequelae (psychological damage) as a result of that injury or those injuries; (iii) passengers' claims for psychological injuries that are independent of any physical injury ("pure mental injury" or "nervous shock"); and (iv) non-passengers' claims for nervous shock; (c) the uncontested finding that the passengers on board the aircraft on 24 April 1994 were passengers on board an aircraft engaged in carriage to which Part IV of the Civil Aviation (Carriers Liability) Act 1959applies; (d) the fact that the represented parties are six passengers and eight non-passengers who are parents of passengers; and (e) the agreed fact (if it be relevant) that the date of the report of the Bureau of Air Safety Investigation was March 1996. 1. Is a cause of action on behalf of a passenger whose alleged injuries are psychological injuries independent of physical injury an action for damage sustained by reason of 'personal injury' suffered by a passenger within the meaning of the term in s 28 of the Civil Aviation (Carriers' Liability) Act 1959? 2. Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended

Statement of Claim in respect of claims by passengers for psychological injuries independent of any physical injury? 3. Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by non-passengers for psychological injuries independent of any physical injury?" By orders made on 9 April 1998, his Honour answered each of the questions in the negative. He did so for the reasons given in his judgment of 27 November 1997. His Honour did not amend the orders made on 27 November 1997. As I have noted, the respondent did not file any cross appeal against those orders, which had the effect of dismissing portions of the proceedings. Since the questions answered by his Honour relate only to causes of action on behalf of passengers and non-passengers sustaining psychological injury, independent of physical injury, it would seem that his intention was not to disturb the earlier orders. The Second Appeal The appellants subsequently sought leave to appeal from the determination of the separate questions by the primary Judge. Leave to appeal was granted by Beaumont J on 1 May 1998 and the appeal itself was argued on 29 May 1998. On the hearing of the second appeal, Mr Hutley SC appeared with Mr Leeming for the appellants. Mr Foord QC appeared with Mr Rowe for the respondent. There was no appearance for the Civil Aviation Safety Authority or Airservices Australia. Their solicitor had appeared on the first appeal and stated that they supported the respondent in opposing that appeal, but had nothing to add to the argument. Although they have not said so expressly, presumably they intend to maintain that attitude in relation to the second appeal. Mr Hutley informed the Court that the first appeal would be discontinued. Thus, subject to any dispute as to costs, there is no need to deal further with the first appeal.

A Procedural Issue Even though this is the second occasion on which this matter has been before the Full Court, I have a reservation about the manner in which the issues have been presented. The questions for determination stated by his Honour classify the claims into four categories, of which two are relevant to this appeal: "passengers' claims for psychological injuries that are independent of any physical injury" (category 3) and "non-passengers' claims for nervous shock" (category 4). However, no findings have yet been made concerning the nature of the psychological injuries sustained by passengers nor as to the causes and nature of the "nervous shock" suffered by non-passengers. It is not clear, for example, whether they witnessed the ditching of the aircraft or whether they learned about the incident later. If the latter, it is not clear what the circumstances were. Moreover, although it is clear that some of the non-passengers were parents of passengers who were injured, it is not clear that all were in this category. The particulars of the applicants' representative claim suggest that two of the non-passengers claim to have suffered nervous shock in respect of an apprehended (but not actual) injury to their child. In American Airlines Inc v Georgeopoulos (NSW CA, 26 September 1996, unreported), the Court of Appeal declined to determine a case stated by a magistrate, arising out of proceedings brought by persons claiming to have sustained "nervous shock or mental suffering" in consequence of an incident on board the appellant's aircraft. In the absence of findings of fact relating to the precise injuries sustained by the passengers, the Court considered it inappropriate to determine whether any of the passengers had suffered "bodily injury" within the meaning of art 17 of the Warsaw Convention. Sheller JA, with whom Clarke JA and Simos AJA agreed, pointed out (at 12) that "'[n]ervous shock', particularly in terms of sequelae, is not an expression of precise meaning". His Honour said (at 14) that the expression "as a condition or a cause of a condition for which a defendant may be liable in negligence describes a non-impact injury which may or may not give rise to body tissue alteration". He gave as an illustration of the consequences of nervous shock the gynaecological problems (in addition to anxiety and depression) experienced by the plaintiff in Jaensch v Coffey (1984) 155 CLR 549, or a heart attack brought on by great fear or distress. The present case is in some respects similar to Georgeopoulos because of the imprecise language used in categories 3 and 4 and the absence of findings of the kind to which I have referred. Having regard, however, to the already complex procedural history and the desire of the parties to proceed on the basis of separate questions, it would be unfortunate if this Court could not address the substance of the issues raised on the appeal. For this purpose I would interpret category 3 cases as those in which passengers do not claim that they sustained any immediate physical injury as a direct consequence of the aircraft ditching into Botany Bay, but do allege that they suffered psychological harm in consequence of the incident (which harm may or may not have ultimately produced physical manifestations of illness or dysfunction). I interpret category 4 as covering cases where non-passengers, all of whom are parents of passengers, claim to have suffered psychological harm in consequence of the incident (whether or not that harm ultimately produced physical manifestations). The separate questions should be construed accordingly. While I think the Court should proceed to determine the separate questions, I think the procedural history of this case demonstrates the difficulties that often attend attempts to identify preliminary issues for determination. Often the speediest and least expensive way of resolving a case is to proceed to a trial at which all the necessary factual findings can be made. THE CONVENTIONS The Warsaw Convention The CA Act operates against a background of conventions dealing with international carriage by air. The first in time was the original Warsaw Convention, to which Australia became a signatory on 12 October 1929. The general objective of the Warsaw Convention, the English text of which is reproduced in Schedule 1 to the CA Act, was described by the Minister in his second reading speech on Civil Aviation (Carriers Liability) Bill 1959 as follows: "[to establish] uniform international rules governing liability of international air carriers to passengers in respect of death or injury and loss of baggage, and also to consignors of goods".

Cth Parl Deb, Sen, 25 February 1959 (Minister for Shipping and Transport and Minister for Civil Aviation), at 187. The Carriage By Air Act 1935 (Cth) provided that the provisions of the Convention were to have the force of law in the Commonwealth: s 3(2) (operative from 30 October 1935). The Warsaw Convention has the force of law in a number of the Territories, including Norfolk Island: Cth Statutory Rules 1935, at 845. By 1959, forty-six countries, including Australia, had become parties to the Warsaw Convention. In 1955, at The Hague, representatives of forty-four States, including Australia, signed the Protocol to Amend the Warsaw Convention (the "Hague Protocol"). Article 19 of the Hague Protocol provided that, as between the parties to the it. "the Convention and the Protocol shall be read and interpreted together as one single instrument." The text of the Hague Protocol was reproduced in Schedule 2 to the CA Act, as originally enacted. The CA Act was amended in 1991 by the Civil Aviation (Carriers' Liability) Amendment Act 1991 (Cth) to substitute for the text of the Hague Protocol reproduced in Schedule 2 the full text of the Warsaw Convention as modified by the Hague Protocol. The Warsaw Convention has been further amended or supplemented by the Convention Supplementary to the Warsaw Convention opened for signature at Guadalajara on 18 September 1961 (the "Guadalajara Convention"); the Protocol done at Guatemala City on 8 March 1971 (the "Guatemala City Protocol"), and the Protocols done at Montreal on 25 September 1975 (the "Montreal Protocol No 3" and "Montreal Protocol No 4"). These instruments, or the Warsaw Convention as amended by them, are reproduced in Schedules 3, 4, 5 and 6 to the CA Act. The Guadalajara Convention provides rules relating to international carriage by air performed by a person other than the contracting carrier. It has the force of law in Australia in relation to any carriage by air to which the Convention applies: CA Act, s 25A. The Guadalajara Convention does not, however, bear on the present case.

Certain provisions of the Guatemala City Protocol, the Montreal Protocol No 3 and the Montreal Protocol No 4 amended articles of the Warsaw Convention relevant to the present proceedings. However, the sections of the CA Act giving the Protocols the force of law in Australia (ss 25D to 25N) have not yet been proclaimed. These Protocols do not need to be considered further for the purposes of the present proceedings. The Terms of the Warsaw Convention The only authentic version of the Warsaw Convention, in its original form, is in French: art 36. The text of the Warsaw Convention, as reproduced in Schedule 1 to the CA Act, is the English translation of the authentic French text. The Hague Protocol provides for authentic texts in French, English and Spanish, although in the case of any inconsistency "the text in the French language, in which language the Convention was drawn up, shall prevail". The text of the Warsaw Convention as amended by the Hague Protocol, which appears in Schedule 2 to the CA Act, comprises the English text of the original Convention, as modified by the authentic text of the Hague Protocol. Section 8(2) of the CA Act provides that, if there is an inconsistency between the text of a Convention set out in a Schedule and the text that would result if the authentic French texts of the instruments making up the Convention were read and interpreted together as one single instrument, the latter text prevails. Any differences between the authentic French text of the original Warsaw Convention and the English translation of that text are immaterial to the present case, with one significant exception. That exception concerns art 17, which relates to the liability of a carrier under the Warsaw Convention for what is referred to as "bodily injury" in the English text ("lésion corporelle" in the French text). The Hague Protocol, as the primary Judge noted, left the provisions of the original Warsaw Convention largely intact, although it changed the particulars required on the passenger ticket (art 3), increased the monetary limit of a carrier's liability (to 250,000 francs: art 22(1)) and removed the limit altogether where the damage resulted from an intentional or reckless act or omission of the carrier or its servants or agents (art 25). The substitution of a new art 3 for the original version is of some significance, since the authentic English text uses the expression "personal injury" as the equivalent of the French "lésion corporelle". The following outline of the relevant provisions of the Warsaw Conventionincorporates amendments effected by the Hague Protocol. The Warsaw Convention is expressed to apply "to all international carriage of persons, baggage or cargo performed by aircraft for reward": art 1(1). It is common ground that the charter flight in the present case did not satisfy the definition of "international carriage" in art 1(2). Thus, the Warsaw Convention (which has the force of law in Australia under CA Act, s 11(1)) does not of itself apply to the circumstances of the present case. However, the terms of the Convention are said by the respondent to be relevant to the construction of Part IV the CA Act, which enacts a similar regime for domestic air travel (excluding intra-State air carriage). Chapter II of the Warsaw Convention deals with documents of carriage. Article 3(1)(c) provides that in respect of the carriage of passengers a ticket shall be delivered containing "(c) a notice to the effect that, if the passenger's journey involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect of loss of or damage to baggage." (Emphasis added.) This provision was inserted by the Hague Protocol in lieu of the previous art 3, the English translation of which did not use the expression "personal injury". Chapter III is headed "Liability of the Carrier". Article 17 is as follows: "The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking." (Emphasis added.) The French text of art 17 reads as follows:

"Le transporteur est responsable du dommage survenu en cas de mort, de blessure ou du toute autre lésion corporelle subie par un voyageur lorsque l´accident qui a causé le dommage s´est produit á bord de l´aéronef ou au cours de toutes opérations d´embarquement et de débarquement." (Emphasis supplied.) Article 18 provides that the carrier is liable for damages sustained in the event of the destruction or loss of, or damage to, any registered baggage or any cargo. Article 19 imposes liability on the carrier for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Articles 17, 18 and 19 must be read with art 24, which provides as follows: "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." The "conditions and limits" include the provision in art 29 that "the right to damages shall be extinguished if an action is not brought within two years". (As to the operation of art 29, see Timeny v British Airways plc (1991) 56 SASR 287 (FC).) Article 20 exempts the carrier from liability "if he proves that he and his servants and agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures". Article 21 provides that, if a carrier proves that the damage was caused or contributed to by the injured person's negligence, the Court may, in accordance with its own law, exonerate the carrier from liability in whole or in part. Article 22(1) provides as follows: "In the carriage of persons the liability of the carrier for each passenger is limited to the sum of two hundred and fifty thousand francs". By special contract the carrier and the passenger may agree to a higher limit of liability. Monetary limits are also imposed by art 22 in respect of carriage of baggage and cargo. Article 23 renders null and void any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in the Warsaw Convention. Article 25 makes the monetary limits imposed by art 22 inapplicable if the damage was inflicted intentionally or recklessly. Article 25 has proved to be of particular significance in litigation brought in the United States, where jury awards of compensatory damages tend to be higher than in other jurisdictions. THE CA ACT Part II of the CA Act Part II of the CA Act is headed "Carriage to which the Warsaw Convention and The Hague Protocol Apply". Section 11(1) gives the Warsaw Convention (defined in s 10 to mean the "Warsaw Convention as amended at the Hague") the force of law in Australia: "11(1) The provisions of the Convention have, subject to this Part, the force of law in Australia in relation to any carriage by air to which the Convention applies, irrespective of the nationality of the aircraft performing that carriage." Section 12 applies "in relation to liability imposed by the Convention on a carrier in respect of the death of a passenger (including the injury that resulted in the death)". The section sets out detailed provisions relating to liability in respect of the death of a passenger. These provisions are similar to those contained in s 35 in Part IV of the CA Act, to which I refer later. Section 13 of the CA Act is as follows: "13 Subject to the next succeeding section, the liability of a carrier under the Convention in respect of personal injury suffered by a passenger, not being injury that has 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." Section 14 provides that nothing in the Warsaw Convention or in Part II of the CA Act shall be deemed to exclude any liability of a carrier, inter alia, to indemnify an employer of a passenger or any other person in respect of any liability of that employer or other person in the nature of workers' compensation. However, the section does not operate to increase the limit of the carrier's liability in respect of a passenger beyond the amount fixed by or in accordance with the Convention. Section 15 provides that, in assessing damages in respect of liability under the Warsaw Convention, damages are not to be reduced by a sum paid or payable, inter alia, "on the death of, or personal injury to, a passenger under a contract of insurance". Section 16 gives directions as to the implementation of art 21 of the Warsaw Convention, which relates to the defence of contributory negligence. Part IV of the CA Act Section 27 of the CA Act applies Part IV of the Act to certain domestic air carrier operations. It provides as follows: "27(1) This Part applies to the carriage of a passenger where the passenger is or is to be carried on an aircraft being operated by the holder of an airline licence or a charter licence in the course of commercial transport operations, or in an aircraft being operated in the course of trade and commerce between Australia and another country, under a contract for the carriage of the passenger: (a) between a place in a State and a place in another State; (b) between a place in a Territory and a place in Australia outside that Territory; (c) between a place in a Territory and another place in that Territory; or (d) between a place in Australia and a place outside Australia; not being carriage to which the Warsaw Convention, the Hague Protocol or the Guadalajara Convention applies." The expression "commercial transport operations" is defined by s 26 to mean "operations in which an aircraft is used, for hire or rental, for the carriage of passengers or cargo". Paragraph (c) of the separate question incorporates the uncontested finding made by the primary Judge, in his judgment of 27 November 1997, that the aircraft in this case was engaged in carriage to which Part IV of the CA Act applies. Section 28 imposes liability on carriers in terms similar to, but not identical with, the English text of art 17 of the Warsaw Convention: "28. Subject to this Part, where this Part applies to the carriage of a passenger, the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft or in the course of any of the operations of embarking or disembarking." The most significant difference is the use of "personal injury" in s 28 in lieu of "bodily injury" in art 17. Sections 29 and 30 deal with the carrier's liability for loss of or damage to baggage; it is unnecessary to consider the terms of those sections. Section 39 provides for the reduction of damages under Part IV if the carrier establishes contributory negligence on the passenger's part. Section 31(1) provides that, subject to the regulations or to a contract specifying a higher amount, the "liability of a carrier under this Part in respect of each passenger, by reason of his injury or death resulting from an accident is limited to [$100,000 or such amount as is prescribed]". The section also limits the carrier's liability in respect of the loss of or damage to baggage: s 31(2), (3). The amount prescribed for the purposes of s 31(1) is $500,000: Civil Aviation (Carrier's Liability) Regulations, reg 4, Schedule. Section 32 deals with the question of contracting out in terms similar to those of art 23(1) of the Warsaw Convention. Section 33 provides that the limitation imposed by s 31 applies to an action against a servant or agent of a carrier acting within the scope of his or her employment or authority. Section 34 of the CA Act closely mirrors the language of art 29 of the Warsaw Convention: "34. The right of a person to damages under this Part is extinguished if an action is not brought by him or for his benefit within two years after the date of arrival of the aircraft at the destination, or, where the aircraft did not arrive at the destination; (a) the date on which the aircraft ought to have arrived at the destination; or (b) the date on which the carriage stopped; whichever is the later." The language of s 36 is substantially identical to that of s 13 of the CA Act: "36. Subject to the next succeeding section, the liability of a carrier under this Part in respect of personal injury suffered by a passenger, not being injury that has 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." Section 37 is to the same effect as s 14 of the CA Act, to which I have already referred. Section 35 deals with the liability imposed by Part IV on a carrier in respect of the death of a passenger in terms similar to s 12 in Part II of the CA Act. While none of the passengers in the present case was fatally injured, s 35 was referred to in the argument. Section 35(2) mirrors s 36 in that it provides that, subject to s 37, liability under Part IV 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 the passenger." Sub-sections 35(3) and (4) make the liability imposed by Part IV enforceable for the benefit of "such of the members of the passenger's family as sustained damage by reason of his death", except for some claims in respect of pecuniary losses which can be enforced only by the passenger's personal representatives. Section 35(5) identifies the persons who are to be regarded as "members of the passenger's family". Section 35(8) specifically provides that, in awarding damages, the court "is not limited to the financial loss resulting from the death of the passenger". Section 35(6) permits an action to enforce the liability to be brought by the personal representative of the passenger or by a person for whose benefit the liability is enforceable; but only one action may be brought in respect of the death of any one passenger and the action "shall be for the benefit of all persons for whose benefit the liability is so enforceable". Section 35(9) provides that the amount recoverable in the action shall be divided amongst the persons entitled in such propositions as the court directs. Section 35(10) permits the Court to make such order as is just and equitable in view of the provisions of Part IV limiting the liability of the carrier and in view of any proceedings commenced against the carrier. Section 40 of the CA Act authorises regulations to be made providing for the circumstances in which passenger tickets must be issued by carriers and the matters to be included in such tickets. The regulations may also provide for the non-application of s 31 where specified provisions of the regulations relating to the issue, form and contents of such tickets have not been complied with: s 40(c). Curiously enough, no regulations under s 40 have been promulgated.

CONSTRUCTION OF THE WARSAW CONVENTION Before considering the scope and effect of the key provisions of Part IV of the CA Act, it is helpful to refer to the approach to construction of the Warsaw Convention and to two key questions of interpretation. These form the background both to the CA Act and to the argument in the present case. A Purposive Approach First, the courts in common law jurisdictions have adopted a broad, purposive approach to the construction of the Warsaw Convention. Lord Diplock explained the general reasons for such an approach in Fothergill v Monarch Airlines Ltd [1981] AC 251, at 281-282: "The language of that Convention that has been adopted at the international conference to express the common intention of the majority of the states represented there is meant to be understood in the same sense by the courts of all those states which ratify or accede to the Convention. Their national styles of legislative draftsmanship will vary considerably as between one another. So will the approach of their judiciaries to the interpretation of written laws and to the extent to which recourse may be had to travaux préparatoires, doctrine and jurisprudence as extraneous aids to the interpretation of the legislative text. The language of an international convention has not been chosen by an English parliamentary draftsman. It is neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges. It is addressed to a much wider and more varied judicial audience than is an Act of Parliament that deals with purely domestic law. It should be interpreted, as Lord Wilberforce put it in James Buchanan & Co Ltd v Babco Forwarding & Shipping (U.K.) Ltd [1978] AC 141, 152, 'unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation'." Lord Wilberforce considered (at 272) that the Warsaw Convention "represents a special and unique case" because of the need, at least in some circumstances, to consider two texts, the French and English. See also Sidhu v British Airways plc [1997] AC 430, 442, per Lord Hope; Kotsambasis v Singapore Airlines Ltd (1997) 42 NSWLR 110 (NSW CA), at 113-114, per Meagher JA; Air France v Saks 470 US 392 (1985), at 397. It is also necessary to bear in mind that the Warsaw Convention presents special difficulties of construction, quite apart from those identified in Monarch Airlines. An eminent commentator, writing in 1949, considered that "almost every Article of the existing Convention includes defects or obscurities, and some of them contain several. These are not merely theoretical or technical defects. On the contrary, they cause almost daily practical difficulties and problems...". K M Beaumont, "Need for Revision and Amplification of the Warsaw Convention" (1949) 16 Journal of Air Law and Commerce 395, at 411-412. The author expressed the view that there was a very strong case for "drastic revision of almost the whole of the existing Convention" and for the incorporation of new principles to overcome gaps in the existing Convention: at 414. Despite the vehemence of the author's criticisms, the Hague Protocol addressed only a small proportion of the apparent difficulties with the language of the Warsaw Convention. Scope of Art 17 The authorities construing the Warsaw Convention support the proposition that art 17 does not allow recovery for what has been described as purely mental injuries. The question of whether the Warsaw Convention provides a remedy in respect of purely mental injuries has arisen, in part at least, because of the apparent disparity between the French text and the English version of the Convention to which I have already referred, a problem that does not arise under domestic legislation. The Supreme Court of the United States answered the question in the negative in Eastern Airlines Inc v Floyd 499 US 530 (1991), refusing to follow an earlier decision to the contrary of the Supreme Court of Israel, Daddon v Air France (1984) 7 S & B Av R 141. Floyd was followed by the New South Wales Court of Appeal in Kotsambasis v Singapore Airlines Ltd. In Floyd passengers on an international flight claimed under the Warsaw Convention for mental distress arising out of a "near miss" involving the aircraft. Marshall J (who delivered the opinion of the Court) construed art 17 of the Warsaw Convention in the light of the "French legal meaning" of "lésion corporelle", the expression in the French text of art 17. The Court considered that this approach was necessary because the Warsaw Convention had been drafted in French by Continental jurists (at 536). After considering contemporaneous French legal sources, Marshall J could find no materials indicating that the expression "lésion corporelle" was regarded as embracing psychological injury (at 539). There was therefore no basis for translating "lésion corporelle" as anything other than "bodily injury", a narrow meaning which excluded purely mental injuries (at 542). This conclusion was consistent with the negotiating history of the Warsaw Convention, reflecting the fact that many civil and common law countries at the time of the Warsaw Conference did not recognise claims for purely psychological injury (at 544). It was also consistent with the post Convention conduct and interpretations of the signatories (at 546 ff). Marshall J said that the narrow construction of art 17 was consistent with the primary purpose of the contracting parties, namely (at 546): "limiting the liability of air carriers to foster the growth of the fledgling commercial aviation industry". Moreover, the narrow construction was in accord with the Warsaw Convention's stated purpose of achieving uniformity of rules governing claims arising from international air transportation" (at 552). The Convention subjected international carriers to strict liability and to apply such liability for purely mental distress would be controversial for most countries. In Kotsambasis, Meagher JA (with whom Powell and Stein JJA agreed) adopted a similar approach to that taken in Floyd. His Honour pointed out that art 23 of the Warsaw Convention was intended to prevent carriers from contracting out of the Convention. He continued (at 115): "The surrendering by carriers of their freedom of contract was an important concession which must be seen in the context of the entire Convention, which amongst other things dealt with carriers' liabilities by providing limitations and certainty." Meagher JA cited the speech of Lord Hope in Sidhu (at 447) (to which I refer shortly) in support of the proposition that the Warsaw Convention was not designed to provide remedies against the carrier to enable all losses to be compensated. It was intended to define the circumstances in which compensation was to be available, striking a balance in the interests of certainty and uniformity. Kotsambasis was followed in American Airlines Inc v Georgeopoulos (No 2) (NSW CA, 5 August 1998, unreported).

Damages Claims Article 17 of the Warsaw Convention, while stating that the carrier "is liable for damage sustained" in the circumstances specified therein, does not specify to whom the carrier is liable. Moreover, art 17 does not specify for what damage sustained ("dommage survenu") the carrier is liable. Paragraph 2 of art 24 applies par 1 "[i]n the cases covered by Article 17", but does so "without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights". A series of decisions in the United States, arising out of the Lockerbie air disaster of 1988 and the 1983 shooting down of a Korean Air Lines flight after it strayed into Soviet Union air space, has considered the operation of arts 17 and 24. In Zicherman v Korean Air Lines Co Ltd 133 L Ed 2d 596 (1996), the Supreme Court of the United States held that, in an action brought under art 17, the law of the Warsaw 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 contracting states (at 605). In some cases this will require the forums to apply choice of law rules. However, in Zicherman the parties agreed that the law of the United States applied. The relevant rules for a death occurring in an airplane crash on the high seas were provided by the Death on the High Seas Act. Since that Act permitted only compensation for pecuniary loss, loss of society damages were not available to surviving relatives. Notwithstanding Zicherman, it seems that art 17 limits the kinds of damages recoverable by a plaintiff. In particular, American courts have held that art 17 excludes the possibility of an award of punitive damages where the carrier has acted intentionally or recklessly within the meaning of art 25. The expression "damage sustained" (the translation of "dommage survenu") has been held to contemplate compensatory damages only: In re Air Disaster at Lockerbie, Scotland on December 21, 1988 928 F 2d 1267 (2nd Cir, 1991), at 1281; In re Korean Air Lines Disaster of September 1, 1983 932 F 2d 1475 (DC Cir, 1991), at 1486. The courts have taken into account that to allow punitive damages would "severely hobble most of the aims the Convention sought to establish": Lockerbie, at 1286; Korean Disaster, at 1489-1490. An Exclusive Cause of Action? A further issue that arises under the Warsaw Convention is whether it provides the exclusive cause of action and sole remedy for a passenger who claims against the carrier for loss, injury and damage sustained in the course of, or arising out of, international air transportation. While this is a matter of fundamental importance to the operation of the Warsaw Convention, it is not explicitly addressed in the text. It is true that art 24 provides that in "the cases covered by Article 17" any action for damages can only be brought subject to the conditions and limits set out in the Convention. But that does not provide clear guidance in the case where a passenger sustaining injury in the course of a flight has no remedy under the Warsaw Convention, and seeks to rely on a cause of action under domestic law. The issue has proved a difficult one to resolve. In Sidhu v British Airways, the appellants had been passengers on a British Airways ("BA") flight from the United Kingdom to Malaysia, via Kuwait. The flight landed in Kuwait a few hours after Iraqi forces had invaded that country in 1991. The appellants claimed damages for personal injury under the general law of negligence and contract, by reason of their detention by the invading Iraqi forces. They alleged that BA knew, or ought to have known, of the hostile situation between Iraq and Kuwait, and of the possibility of an imminent invasion. Their particulars of damage included allegations of both physical injury and psychological harm. Some of the appellants issued proceedings outside the two year time limit imposed by art 29 of the Warsaw Convention. Lord Hope, who delivered the principal judgment of the House of Lords, accepted that by reason of the adoption of the Warsaw Convention by the Carriage by Air Act 1961 (UK), the solution to the problem depended on the terms of the Warsaw Convention itself. His Lordship outlined the provisions of the Warsaw Convention, particularly noting arts 17 and 24. He continued (at 447): "The structure of these two provisions seems to me therefore to be this. On the one hand the carrier surrenders his freedom to exclude or to limit his liability. On the other hand the passenger or other party to the contract is restricted in the claims which he can bring in an action of damages by the conditions and limits set out in the Convention. The idea that an action of damages may be brought by a passenger against the carrier outside the Convention in the cases covered by article 17 - which is the issue in the present case - seems to be entirely contrary to the system which these two articles were designed to create. The reference in the opening words of article 24(2) to 'the cases covered by article 17' does, of course, invite the question whether article 17 was intended to cover only those cases for which the carrier is liable in damages under that article. The answer to that question may indeed be said to lie at the heart of this case. In my opinion the answer to it is to be found not by an exact analysis of the particular words used but by a consideration of the whole purpose of the article. In its context the purpose seems to me to be to prescribe the circumstances - that is to say, the only circumstances - in which a carrier will be liable in damages to the passenger for claims arising out of his international carriage by air. The phrase 'the cases covered by article 17' extends therefore to all claims made by the passenger against the carrier arising out of international carriage by air, other than claims for damage to his registered baggage which must be dealt with under article 18 and claims for delay which must be dealt with under article 19. The words 'however founded' which appear in article 24(1) and are applied to passenger's claims by article 24(2) support this approach. The intention seems to be to provide a secure regime, within which the restriction on the carrier's freedom of contract is to operate. Benefits are given to the passenger in return, but only in clearly defined circumstances to which the limits of liability set out by the Convention are to apply. To permit exceptions, whereby a passenger could sue outside the Convention for losses sustained in the course of international carriage by air, would distort the whole system, even in cases for which the Convention did not create any liability on the part of the carrier. Thus the purpose is to ensure that, in all questions relating to the carrier's liability, it is the provisions of the Convention which apply and that the passenger does not have access to any other remedies, whether under the common law or otherwise, which may be available within the particular country where he chooses to raise his action. The carrier does not need to make provision for the risk of being subjected to such remedies, because the whole matter is regulated by the Convention. Later, he said this (at 453): "I believe that the answer to the question raised in the present case is to be found in the objects and structure of the Convention. The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international code, which could be applied by the courts of all the high contracting parties without reference to the rules of their own domestic law. The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals - and the liability of the carrier is one of them - the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law. An answer to the question which leaves claimants without a remedy is not at first sight attractive. It is tempting to give way to the argument that where there is a wrong there must be a remedy.... Alongside these principles, however, there lies another great principle, which is that of freedom of contract. Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contract. Exclusion and limitation clauses are a common feature of commercial contracts, and contracts of carriage are no exception. It is against that background, rather than a desire to provide remedies to enable all losses to be compensated, that the Convention must be judged. It was not designed to provide remedies against the carrier to enable all losses to be compensated. It was designed instead to define those situations in which compensation was to be available. So it set out the limits of liability and the conditions under which claims to establish that liability, if disputed, were to be made. A balance was struck, in the interests of certainty and uniformity." Lord Hope referred to cases from other jurisdictions, particularly the United States, dealing with the same issue. He concluded that the point was not settled in the United States, having regard to conflicting decisions and the fact that the Supreme Court in Floyd (at 553) had specifically refrained from considering the question. The pattern of conflicting decisions has continued in the United States. In Potter v Delta Air Lines Inc 98 F 3d 881 (5th Cir, 1996), the Court of Appeals for the 5th Circuit held that the provisions of the Warsaw Convention governing personal injury created the exclusive cause of action and remedy for personal injury sustained in the course of international transportation by aircraft for hire. Thus, a passenger who sustained personal injury in the course of a flight, but not by reason of an "accident" within the meaning of art 17 of the Convention, had no cause of action against the airline under State law, notwithstanding that she had no remedy under the Convention. Smith, Circuit Judge, speaking for the Court, said this (at 885): "A primary function of the Warsaw Convention is to foster uniformity in the laws governing international air carrier liability. Uniformity with respect to liability is required in order to allow airlines to raise the capital needed to expand operations and to provide a definite basis upon which their insurance rates can be calculated. The Convention's goals of uniformity and certainty would be frustrated were we to allow Ms Potter to assert her state law claims, even where the Convention does not provide her a remedy." [Citations omitted.] More recently, however, the Court of Appeals for the 2nd Circuit reached a contrary conclusion: Tseng v El Al Israel Airlines Ltd 122 F 3d 99 (2nd Cir, 1997). The Court permitted a claim under State law to proceed where a passenger alleged that she had suffered psychological harm as the result of an intrusive body search conducted by an airline. The Court specifically rejected the approach taken in Sidhu and held that the Warsaw Convention only bars a cause of action under State law where a claim is available under the Convention. The Supreme Court has granted certiorari in Tseng, (140 L Ed 2d 935) but has not yet determined the appeal. Tseng should be compared with Fishman v Delta Air Lines Inc 132 F 3d 138 (2nd Cir, 1998). In that case, a passenger allegedly suffered nervous shock when her daughter was accidentally injured by a stewardess. It was held that the mother's claim was within art 17 of the Warsaw Convention since it arose from an accident. However, it followed from Floyd that a claim for purely emotional distress was not compensable. Tseng was distinguished on the ground that the invasive body search in that case was not an "accident" and was thus not within art 17. SUBMISSIONS The Appellants' Contentions The appellants contended that Sidhu established that the Warsaw Convention constitutes an exclusive code for the liability of carriers in respect of carriage by air. By applying the same regime to domestic air travel (excluding intra-State air carriage), through Part IV of the CA Act, Parliament intended the legislation to constitute an exclusive code for the liability of domestic carriers. For this reason Parliament chose the broad expression "personal injury" in Part IV, rather than the narrower term "bodily injury" in the English text of art 17 of the Convention. The broader expression should therefore be given its ordinary meaning, which includes purely psychological harm. The appellants' primary contention was that Parliament had chosen the expression "personal injury" because it had a well-known meaning in Anglo-Australian law and was intended to encompass psychological harm, an accepted category of personal injury by 1959. However, the appellants put forward an alternative argument if (contrary to their primary contention) the expression "personal injury" was adopted in Part IV of the CA Act because it appeared in the Hague Protocol. It will be recalled that art 3 of the Warsaw Convention, as amended by the Hague Protocol, uses the words "personal injury' in the English text as the equivalent of the French "lésion corporelle". Mr Hutley submitted that the broader expression was adopted in the English text because in 1955 (when the Hague Protocol was opened for signature) there was uncertainty about the proper translation of "lésion corporelle". He argued that the broader expression had been deliberately adopted. The appellants further submitted that s 36 of the CA Act bars any action by a non-passenger for psychological harm sustained in consequence of an airline accident except in accordance with the Act, at least where, at the time of the accident, there was an appropriate "nexus" between the passenger and the non-passenger. Mr Hutley contended that s 28 of the CA Act conferred a right to compensation on a non-passenger for such harm, where the harm flowed from knowledge that a passenger (for example, a child of the non-passenger) had been injured. He accepted that s 28 (which provides that "the carrier is liable for damage sustained by reason of...any personal injury suffered by the passenger...") would not confer a right to compensation on a non-passenger suffering psychological harm independently of any injury to a passenger. However, he submitted that s 36 should be read as precluding any actions by a non-passenger for psychological harm, where the harm occurred because of the relationship between the passenger and the non-passenger. This conclusion would give effect to the policy of providing certainty to the airlines. Respondents' Submissions The respondents' submissions followed very closely the reasoning of the primary Judge. They emphasised that the expression "bodily injury" ("lésion corporelle") in art 17 of the Warsaw Convention had been construed in Floyd and Kotsambasis as excluding psychological harm. The CA Act was intended to apply the principles of the Warsaw Convention to domestic air carriage. There was nothing to suggest that "personal injury", as used in ss 28, 34 and 36 of the CA Act, was to have any wider meaning than "bodily injury". Thus, the CA Act, in terms, did not purport to bar a passenger from bringing a claim under the general law in respect of psychological harm arising out of an aircraft accident. Nor did Sidhu lead to the conclusion that such a claim was barred. Section 36 of the CA Act was framed differently from art 24 of the Warsaw Convention. Section 36 did not speak of "cases covered by" another provision, but of "liability...in respect of personal injury". If "personal injury" was limited to bodily injury as distinct from psychological harm, the exclusion in s 36 was similarly confined to actions in respect of bodily injury. Nothing in Sidhu compelled a different result. Non-passengers' claims for psychological harm were also outside ss 28, 34 and 36 of the CA Act. The liability of a wrongdoer to a person who suffers psychological harm because another person is injured or put in peril does not depend on the wrongdoer being liable to the person injured or put in peril. The wrongdoer owes an independent duty of care to the first person. Section 28 of the CA Act does not impose a liability on the air carrier to a non- passenger who suffers psychological harm because of knowledge or a belief that a passenger has been injured or is in peril. Such harm is not "damage sustained by reason of...any personal injury suffered by the passenger". Since s 28 does not impose liability on the carrier to the non-passenger, s 36 does not exclude liability to a non-passenger under any other law and s 34 imposes no relevant time limit.

It is important to appreciate that the separate questions pose issues of construction of Part IV of the CA Act, not of the Warsaw Convention. Part IV concerns carriage of passengers by air, not being carriage to which the Warsaw Convention applies (s 27(1)). It is true that Part II of the CA Act provides for the provisions of the Warsaw Convention to have the force of law in Australia in relation to any carriage by air to which the Convention applies (s 11). It is also true that the context in which Part IV of the CA Act should be construed includes Parliament's expressed intention that the Warsaw Convention should form part of Australian domestic law so far as the international carriage of persons by aircraft is concerned. But these considerations do not necessarily mean that expressions such as "personal injury", when used in the CA Act, must be given the same meaning as similar, but not identical expressions used in the English text of the Warsaw Convention.

The answer to the first and second questions (which relate to the pleaded causes of action "…by passengers for psychological injuries independent of any physical injury") must depend on the proper construction of Part IV of the CA Act, especially ss 28, 34 and 36. The answer to the third question (which relates to claims "by non-passengers for psychological injuries independent of any physical injury") depends on the same provisions, although their application to non-passengers gives rise to further issues. Thus the questions of construction in this case require the Court to ascertain the intention of Parliament in enacting the relevant provisions; they do not depend exclusively on the intention of the framers of the Warsaw Convention. The position would be different if the case were one to which the Warsaw Convention applied by reason of its incorporation into Australian domestic law (as occurred in Kotsambasis).

Part II of the CA Act is not confined to provisions incorporating the Warsaw Convention into Australian law. Section 13, for example, substitutes the liability of a carrier under the Warsaw Convention "in respect of personal injury suffered by a passenger" for "any civil liability of the carrier under any other law in respect of the injury". This provision and its counterpart in s 12(2) (dealing with liability of the carrier in respect of the death of a passenger) have no precise equivalent in the Warsaw Convention. Article 24 of the Convention, which was examined by the House of Lords in Sidhu, is framed in different language. An Australian court confronted with the question in Sidhu, namely, whether a passenger on an international flight suffering injury can bring an action against the carrier in circumstances other than those described in art 17, would have to consider the operation and effect of s 13 of the CA Act. It is possible that an Australian court would reach the same result as in Sidhu, but would do so by reason of its construction of s 13 of the CA Act rather than (or perhaps in addition to) Lord Hope's analysis of "the objects and structure of the Convention".

Part IV of the CA Act establishes a regime for certain air travel outside the scope of the Warsaw Convention. It does not simply apply the terms of the Convention to the forms of air carriage identified in s 27. Instead, Part IV sets out the provisions governing the liability of carriers in respect of death or personal injury suffered by a passenger. A number of the provisions are obviously modelled on the terms of the Warsaw Convention, but Part IV departs from the language of the Convention in a number of respects. For example, Part IV contains no equivalent to the defence available to carriers under art 20 of the Warsaw Convention, which exempts a carrier from liability if it proves that it took all necessary measures to avoid the damage. Nor does Part IV include any equivalent to art 25 of the Convention which removes the limits on the carrier's liability if it is proved that the damage resulted from an intentional or reckless act or omission by the carrier. Section 36 of the CA Act is the counterpart to s 13 in Part II which, as I have explained, has no precise equivalent in the Warsaw Convention. Other provisions which do not appear in the Convention include s 37 (which provides that certain liabilities of the carrier are not excluded) and s 38 (which provides that the proceeds of insurance policies are not to be taken into account in assessing damages). Sections 37 and 38 have counterparts in Part II of the CA Act: ss 14, 15.

The key to the primary Judge's reasoning on the first two separate questions was his view that the expression "personal injury" in ss 28 and 36 of the CA Act should not be read more broadly than the expression "bodily injury" in the Warsaw Convention. His Honour accepted that the words "personal injury", depending on the context, are apt to include psychological injury not arising out of a physical injury to the passenger. However, he considered that there was nothing in the legislative history of the CA Act to suggest that Parliament intended to give "personal injury" a wider meaning than the expression "bodily injury" in art 17 of the Warsaw Convention. As the decision in Floyd showed, the latter expression excludes purely psychological injury and ss 28 and 36 should be read in the same way.

Mr Hutley conceded, for the purposes of the present case, that Floyd correctly construed art 17 of the Warsaw Convention. Thus, the construction of ss 28 and 36 of the CA Act must be approached on the basis that art 17 of the Warsaw Convention excludes purely psychological injury sustained by a passenger. Nonetheless, in my view, four considerations compel the conclusion that ss 28 and 36 of the CA Act cover psychological injury to a passenger on an aircraft, not arising out of a physical injury to the passenger.

First, when Parliament employed the expression "personal injury" in Parts II and IV of the CA Act, it was well recognised in Australian law that a person who was in breach of a duty to take reasonable care could be liable for nervous or mental shock caused by that breach of duty: Scala v Mammolitti (1965) 114 CLR 153, at 159, per Taylor J. At common law, to establish such liability, it was necessary to prove that the injured person "was so situated in relation to the wrong-doing complained of that the wrongdoer ought to have realised that he was exposed to it and therefore owed him a duty not to expose him to the risk of shock." Anderson v Liddy (1949) 49 SR (NSW) 320 (In Banco), at 323, per Jordan CJ; see also Scala v Mammolitti, at 159; Jaensch v Coffey (1984) 155 CLR 549, at 559-560, per Brennan J. This principle was modified by State legislation such as Part III of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW). Section 4(1) of that Act made it easier for certain family members of a person killed, injured or put in peril to recover damages for mental or nervous shock from the defendant whose act, neglect or default caused the person to be killed, injured or put in peril. In particular, a parent, husband or wife did (and does) not have to show that the defendant could reasonably have foreseen that the plaintiff would be exposed to the risk of nervous or mental shock: Anderson v Liddy, at 323; Scala v Mammolitti, at 159. The State legislation does not detract from the proposition that liability for nervous or mental shock was well recognised by 1959, when the CA Act was enacted. Furthermore, as a matter of legal usage, well before 1959 the expression "personal injury" was accepted as apt to embrace cases of mental or nervous shock. Thus in Anderson v Liddy, decided in 1949, Jordan CJ said (at 321) that the plaintiff was "suing…on his own behalf to recover in respect of personal injury alleged to have been caused to him by mental and nervous shock occasioned by his son's death". (Emphasis added.) It follows that the expression "personal injury", employed in Parts II and IV of the CA Act, is apt to embrace psychological harm sustained by a passenger on an aircraft, notwithstanding that the passenger sustains no physical injury as an immediate consequence of the relevant incident. Secondly, the drafter of the CA Act has employed different language in ss 13, 28 and 36 from that used in art 17 of the Warsaw Convention. Obviously, the drafter was aware that the English text of art 17 uses the term "bodily injury" as the translation of "lesion corporelle", since the English text of the Convention is set out in a Schedule to the CA Act. Just as other drafting changes were made in the CA Act to the text of the Warsaw Convention, so the drafter chose not to adopt the term "bodily injury", but to use the potentially broader (and more familiar) expression "personal injury". By 1959 commentators had already pointed out the difficulties of construction associated with art 17 (see, for example, Beaumont, at 402). In any event, it must have been apparent that "bodily injury" did not necessarily have the same meaning as "personal injury" so far as domestic legislation was concerned. In short, had the drafter wished to employ the same language as art 17 of the Warsaw Convention, it would have been easy to do so. The decision to use a different expression should be regarded as a deliberate choice. I am aware that the English text of the Warsaw Convention (as amended by the Hague Protocol) translates "lesion corporelle" in art 3 as "personal injury". That does not seem to me to detract from the significance of the use of "personal injury" in ss 13, 28 and 36 of the CA Act. Those sections deal with the subject matter of arts 17 and 24 of the Convention. Article 3 deals with the different subject of the contents of an air ticket, including notice to passengers of the limits of a carrier's liability. Whatever the reason for translating "lesion corporelle" as "personal injury" in art 3, it does not alter the fact that the drafter of the CA Act chose to depart from the English text of art 17 of the Convention when addressing the same subject matter. Thirdly, construing "personal injury" in ss 28 and 36 of the CA Act to include psychological harm not caused by a physical injury to the passenger is consistent with the extrinsic materials. In the second reading speech, the Minister for Civil Aviation (Senator Paltridge) said that Part IV of the CA Bill "extends to the principles of the amended convention to all domestic carriage by air within federal competence but with certain modifications which are considered more appropriate for domestic purposes." (Emphasis added.) Cth Parl Deb, Sen, 25 February 1959, at 187. This passage does not suggest an intention to apply the Warsaw Convention, without any alteration, to domestic carriage. The intention was to apply the principles, but subject to certain modifications. Later (at 189) the Minister identified the "main problem" in the domestic field as being to ensure that the carrier could not contract out of liability where it had been negligent. He continued (at 189, 191) "It is thought that the best solution is to establish a system based as closely as practicable on the international rules under which…the carrier is strictly liable up to a prescribed limit…in respect of death or injury of a passenger [subject to the defence in art 20, which the legislation proposed to remove]. …[T]he proposed legislation will ensure a fair balance between the interest of the carrier and the interests of the users of air transport. It will take away the common law right of the carrier to contract out of liability and make him liable in accordance with rules which are substantially more severe than rules applying to any other form of transport. … In place of a voluntary system…it substitutes a system of absolute liability under which passengers or their dependants have a right to recover all damage they suffer up to the limit of Ł7,500 without having to prove that the operator has been negligent. Assuming aviation insurance rates, which are currently very sensitive, remain constant, the domestic air transport industry will as a result of this bill be required to pay about Ł110,000 annually in insurance premiums compared with only Ł42,000 under the present voluntary system." (Emphasis added.) There is nothing in these passages to suggest that passengers suffering purely psychological injury were to be excluded from the regime. On the contrary, the reference to "all damage they suffer" indicates that passengers on domestic aircraft were to be entitled to compensation for any kind of injury sustained in consequence of an accident of the kind referred to in s 28 of the CA Act. Fourthly, the suggested construction of ss 28 and 36 produces a regime that gives effect to the objectives articulated by the Minister. Passengers on domestic flights who sustain injury in the form of nervous shock in consequence of an "accident" are entitled to compensation without the need to establish fault on the part of the carrier. In this respect they are in the same position as passengers sustaining physical injury, or both physical and psychological injury, as a result of such an accident. The carrier cannot contract out of the strict liability regime, but its maximum liability in respect of each passenger is that specified in the regulations. The carrier's exposure to liability for insurance purposes is thus circumscribed, since the carrier's only civil liability to a passenger sustaining any kind of injury as the result of an "accident" on board the aircraft or in the course of embarking or disembarking is that arising under Part IV of the CA Act. I accept that the expression "personal injury" in s 13 of the CA Act is not likely to have a different meaning to the same expression used in ss 28 and 36 of the CA Act. But that does not result in any disparity between the operation of the Warsaw Convention in Australia and

in other countries which are parties to it. Article 17 of the Convention continues to define the extent of the carrier's liability. If the construction adopted in Floyd is correct, "pure" psychological injury to a passenger caused by an accident on board the aircraft is not compensable. Whether or not that construction of the Warsaw Convention is correct, s 13 of the CA Act precludes the carrier being liable to the passenger under any other law. This is the same result that the House of Lords in Sidhu considered flowed from the structure of the Warsaw Convention itself. It is consistent with the objectives underlying the liability limit imposed by the Warsaw Convention, namely, to allow airlines to raise the capital needed to expand their operations and to provide a definite basis on which their insurance rates could be calculated: In re Air Disaster at Lockerbie, Scotland on December 21, 1988 928 F 2d 1267 (2nd Cir, 1991), at 1270-1271; A F Lowenfeld and A I Mendelsohn, "The United States and the Warsaw Convention" (1967) 80 Harv L Rev 497, at 498-500; Herd v Clyde Helicopters Ltd [1997] 2 WLR 380 (HL), at 395-396, per Lord Hope. It follows that, in my opinion, a passenger who suffers "pure" psychological injury in consequence of an accident on board an aircraft, in the course of operations within s 27 of the CA Act, is within ss 28 and 36 of the Act. Thus the carrier is liable to the passenger for damage sustained by reason of the injury. The carrier's liability to the passenger is in substitution for any civil liability under any other law in respect of the injury. By reason of s 34 of the CA Act, the passenger's right to claim damages is extinguished if the action is not brought within the two year limitation period. Thus the cause of action pleaded in the present case on behalf of the passengers in the aircraft is excluded by s 34 of the CA Act.

Non-Passengers' Psychological Harm The next question is whether Part IV of the CA Act provides the exclusive remedy for non-passengers who sustain nervous shock arising out of an accident of the kind specified in s 27 of the CA Act. The appellants' contention is that the Warsaw Convention provides the exclusive remedy in respect of all causes of action arising out of an accident occurring on board an aircraft, including claims for nervous shock by non-passengers. They acknowledge that some non-passengers suffering nervous shock in consequence of an accident will have no claim. For example, a non-passenger who fears (incorrectly) that her child has been killed in an air crash cannot recover damages, since the child did not suffer death or bodily injury in the accident. But they argue that, as is shown in the passage from Sidhu (at 453) already cited, the Warsaw Convention is intended to operate uniformly in different countries and to be exclusive of resort to rules of domestic law. Mr Hutley submitted that Part IV of the CA Act should be read in the same way. For that reason, it excludes claims by non-passengers in respect of nervous shock, except under and in accordance with Part IV of the CA Act. Non-Passengers' Claims under the Warsaw Convention As with the issues already examined, the answer to the present question turns on the proper construction of Part IV of the CA Act. Nonetheless, it is useful to revisit the relevant terms of the Warsaw Convention as implemented in Australia by Part II of the CA Act. It will be recalled that art 17, while imposing liability on a carrier for damages sustained in the event of the death of a passenger or any other bodily injury suffered by a passenger, does not specify the person or persons entitled to enforce that liability. Article 24(2) of the Warsaw Convention, as the Supreme Court of the United States held in Zicherman v Korean Air Lines, contemplates that the law of the contracting state will determine who may enforce the liability and what compensatory damages are available to them. Section 12 of the CA Act, which addresses the liability imposed on the carrier in respect of the death of a passenger, was clearly enacted on the basis that it was a matter for Australian law to determine the persons entitled to enforce the carrier's liability and the damages that should be available to them. Section 12 seems to have had its origins in the provisions of The Carriage by Air Act 1932 (UK) ("1932 Act"). Section 1(4) of the now repealed 1932 Act provided that any liability imposed on a carrier in respect of the death of a passenger was to be in substitution for any liability of the carrier in respect of the death of that passenger under statute or common law. It also provided that the Second Schedule was to "have effect with respect to the persons by and for whose benefit the liability so imposed is enforceable and with respect to the manner in which it may be enforced." The Second Schedule made provision in terms similar, although not always identical, to those now contained in sub-ss 12(3), (4), (5), (6), (9) and (10) (and the equivalent sub-sections in s 35) of the CA Act. In effect, these provisions applied the entitlement of relatives of the victims of a fatal accident to sue under Lord Campbell's Act to claims under the Warsaw Convention. Similarly, they applied the right of the deceased's personal representatives to maintain an action under the survival of actions legislation to claims under the Warsaw Convention: see generally, J G Fleming, The Law of Torts (8th ed 1990) at 675-679. The current position in the United Kingdom is similar: Carriage By Air Act 1961 (UK), ss 3, 4(2); Shawcross and Beaumont, Air Law (4th ed), VII (164), (165). The question of whether nervous shock claims by non-passengers are excluded under the Warsaw Convention as implemented in Australia raises difficult issues of construction. These relate to the terms of the Convention itself, especially arts 17 and 24. They also relate to s 12(2) of the CA Act (providing that liability under the Convention in respect of the death of a passenger is in substitution for any other civil liability). In this connection, art 24(2) has a dual function. It provides that "[i]n the cases covered by [art] 17" any action for damages, however founded, can only be brought subject to the conditions and limits set out in the Convention. It also contemplates that a contracting state may determine which persons have the right to bring suit and what their "respective rights" should be. Some considerations support the view that Warsaw Convention should be given a broad area of exclusive operation. Article 17 does not expressly provide that only passengers, or the representatives of deceased passengers, can bring claims under the Warsaw Convention. Article 24 clearly contemplates that some third parties (that is, non-passengers) might be entitled to bring suits under the Convention if the law of the contracting state permits such a course. Sidhu demonstrates that, despite the expression "[i]n the cases covered by [art 17]" in art 24(2) a broad view can be taken of the exclusionary effect of the Convention. Indeed, if Sidhu is correct, passengers suffering injury arising out of international air travel may be unable to claim under the Warsaw Convention, yet be denied relief under any other laws. The decision in Sidhu reflects the view of the House of Lords that the Convention was intended to be a uniform international code which afforded certainty to carriers, albeit at the price of loss of freedom of contract. These factors suggest that the Convention might be read as excluding not merely third party claims for the wrongful death of a passenger, but claims by relatives or dependants of passengers for nervous shock. After all, such claims may have a significant impact on carriers and their insurers if they are not subject to the limits on liability imposed by the Warsaw Convention. Other considerations point in a different direction. While art 24 contemplates that some claims under the Warsaw Convention might be made by non-passengers, that does not necessarily mean that the Convention is concerned to eliminate all claims by non-passengers regardless of their juridical character or purpose. Obviously enough, some claims by non-passengers are unaffected by the Convention. For example, the claim of a person on the ground who is injured or killed in consequence of an air crash is unaffected by the Convention. More importantly for present purposes, there is a fairly obvious explanation for the reservation in art 24(2) concerning the rights of persons to bring suit. Different countries have different rules governing the compensation or damages or cases of wrongful death: see P C Haanappel, "The Right to Sue in Death Cases under the Warsaw Convention" (1981) 6 Air Law 66, passim. This was also the case when the Convention was drafted. The drafters considered it necessary for the Warsaw Convention to provide a mechanism for the family or representatives of a deceased person to bring a claim for damages consequential on the death of a passenger. They also had to take into account the diversity of approaches under different legal regimes to what Anglo-Australian lawyers would call wrongful death claims. But it is by no means obvious that they had in mind non-derivative claims, such as that by a non-passenger alleging nervous shock by reason of seeing an aircraft crash or learning that a passenger had been killed, injured or placed in peril. That the exclusionary effect of the Warsaw Convention might be more limited in relation to non-derivative claims by non-passengers is supported by the contractual aspects of the Convention. The Convention imposed two major disadvantages on carriers. They lost the right to contract out of liability and they were subjected to a strict liability regime in the event of a passenger being killed or injured in an aircraft accident. In return, carriers received a considerable benefit, namely, a monetary limit on their liability "in the carriage of persons" (art 22). The passenger was protected by the requirement (in its present form) that the carrier deliver a ticket giving notice that the Warsaw Convention "in most cases limits the liability of carriers for death or personal injury". The notice is of such importance that a failure to give it deprives the carrier of the benefit of the limits of liability imposed by the Convention (art 3(2). The rationale is plainly that a passenger, on being informed of the position, may elect to insure against the risks of air travel and, in doing so, provide additional protection for his or her family. In any event, the passenger is aware that the Warsaw Convention limits the liability of carriers. From a contractual perspective, the non-passenger is ordinarily in a very different position from that of a passenger. The non-passenger does not receive a ticket and thus does not receive direct notice of the limitations on the carrier's liability imposed by the Warsaw Convention. The non-passenger does not ordinarily have the same opportunity as the passenger to insure against the relevant risk. In Sidhu, Lord Hope stressed the importance of the restrictions on the "great principle" of freedom of contract as an element in the reasoning supporting the conclusion that the Warsaw Convention is, in effect, a code governing the carrier's liability to a passenger injured or killed in the course of aircraft operations. That consideration does not apply in the case of non-derivative claims by non-passengers. It is of course true, from a carrier's perspective, that any exposure to unlimited liability increases the unpredictable risks associated with the conduct of an airline. Yet, on any view, some risks are outside the scope of the Warsaw Convention. These include, if Mr Hutley's submissions are correct, nervous shock to a non-passenger who apprehends, wrongly, that a close family member has been killed or injured in an aircraft accident. The question is where the line should be drawn. In my opinion, it is not necessary to resolve that question in the present case, which ultimately turns on the construction of Part IV of the CA Act.

Non-Passengers' Claims for Psychological Injury under Part IV of the CA Act The starting point in considering the effect of Part IV of the CA Act is the language of ss 35(2) and 36. Section 35(2), the counterpart to s 12(2) in Part II, provides that liability under Part IV 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 resulted in the death of the passenger". Section 36, the counterpart to s 13 in Part II, provides that the liability of a carrier under Part IV "in respect of personal injury suffered by a passenger" is in substitution for any other civil liability "in respect of the injury". Section 28 makes the carrier liable "for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger" resulting from an accident. The expression "in respect of", which appears in ss 35(2) and 36 of the CA Act does not appear in the English text of the Warsaw Convention. In The Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642, the plaintiff sued the defendant Board claiming damages for nervous shock and psychiatric illness allegedly suffered in consequence of her husband being injured at work. The question was whether an insurance policy couched in terms of s 8(1) of the Workers' Compensation Act 1916 (Qld) was wide enough to cover the liability alleged against the Board. Section 8(1) referred to an employer's liability "in respect of injury to any worker employed by him". It required the employer to insure with the Board against a "legal liability in the employer to pay damages in respect of that injury". All members of the Court held that s 8(1) did not require the employer to insure against a claim for damages for nervous shock made by a person other than the worker. In their joint judgment, Deane, Dawson and Toohey JJ said this (at 655-656): "The phrase 'damages in respect of that injury' in s 8(1)(b) is clearly a reference to 'damages in respect of injury to a worker'. The natural meaning of the expression is, therefore, damages payable to a worker and assessed by reference to his injury. So construed, the expression would exclude damages for nervous shock to a person other than a worker, not only because such damages are payable to a person other than the worker, but also because the damages are measured by the extent of the nervous shock and its consequences and not by the extent of the injury causing the nervous shock and its consequences: see State Government Insurance Office (Q) v Crittenden (1966) 117 CLR [412] at 422, per Windeyer J." Their Honours went on to say (at 656) that, depending on the statutory context, words such as "liability for damages in respect of an injury" could extend to liability at the suit of some person other than the person sustaining the injury. They cited SGIO v Crittenden, as an instance of this. That case involved a statutory policy indemnifying a motor vehicle owner against "all sums for which he or his estate shall become legally liable by way of damages in respect of such motor vehicle for accidental bodily injury (fatal or non-fatal) to any person…where such injury is caused by, through, or in connection with such motor vehicle". It was held that the policy covered the insured against liability for loss of consortium by the husband of a person injured in a motor vehicle accident. In the joint judgment in Workers Compensation Board, their Honours observed that it was necessary to consider the context in which the relevant expression is used in order to determine its scope. In the context of the Workers Compensation Act 1916 (Qld), they considered that the phrase "in respect of" did not extend the meaning of s 8(1) so as to include damages payable to a person other than the worker (at 657). See also the observation of Wilson and Gaudron JJ (at 646): "Certainly, the primary meaning of the phrase would describe the damages flowing directly to the worker or his dependants from the injury which he had suffered in the course of his employment". The question is therefore whether the context in which ss 35(2) and 36 of the CA Act appear suggests that those provisions, having regard to their "natural" or "primary" meaning, extend to a non-passenger's claim for nervous shock. In this connection, Mr Hutley relied strongly on the terms of s 35 of the CA Act, particularly s 35(8), which provides that in awarding damages the Court is not limited to financial loss resulting from the death of the passenger. He argued that s 35 revealed an intention that claims by non-passengers arising out of death or injuries to passengers should be within the statutory scheme. Accordingly, s 36 prevented such claims from being pursued otherwise than in accordance with and subject to the restrictions imposed by Part IV of the CA Act. There is no doubt that s 36 of the CA Act applies to some claims by non-passengers. Section 35, like s 12, is clearly intended to bring fatal accidents claims and claims on behalf of the estate of a deceased passenger within the structure created by Part IV of the Act. Plainly, s 36 is intended to prevent such claims from being pursued outside Part IV (and therefore outside the limits of liability imposed by s 31). But I do not think that s 35 is intended to create an entitlement in non-passengers to claim damages for nervous shock occasioned by the death of a passenger. Nor do I think that s 36 is intended to preclude claims by non-passengers seeking damages for nervous shock under the general law.

I have referred to the historical origins of s 35 of the CA Act. In my opinion, the section is concerned to provide for fatal accidents claims and claims by legal representatives of a deceased passenger, as those concepts have been generally understood under Australian law. The history of s 35 of the CA Act suggests that the section was designed to bring fatal accidents claims and claims by the legal representatives of a deceased passenger within the scheme created by Part IV of the CA Act. I do not think that s 35(8) was intended to embrace nervous shock claims brought by non-passengers. On one view, the sub-section "does no more than reflect in statutory form the well established principle…that damage sustained by reason of a death of a passenger is not restricted to a 'financial' or 'monetary' loss but extends to a loss of services capable of being valued in monetary terms or to the loss of the reasonable expectation of future financial benefits or services." McKenna v Avior Pty Ltd [1981] WAR 255 (Smith J), at 258. A broader view of the sub-section might well be open, namely, that it permits the court to award solatium to certain relatives for the suffering (not nervous shock) caused by the death. Such awards are permitted in some Australian jurisdictions: Wrongs Act 1936(SA), ss 23A-23C; Compensation (Fatal Injuries) Act 1974 (NT), s 10(3)(F); H Luntz, Assessment of Damages (3rd ed 1990), pars 9.7.1 ff. If this broader view is correct, the effect of s 35(8) of the CA Act is merely to permit the claimant making a wrongful death claim to seek solatium. See also Preston v Hunting Air Transport Ltd [1956] 1 QB 454 (Ormerod J), where it was held that in a claim under art 17 of the Warsaw Convention in relation to the death of a passenger, her infant children could recover damages for loss of their mother's care. Apart from the historical considerations, other factors suggest that s 35(8) is not intended to address nervous shock claims by non-passengers. · The duty of care owed by a carrier to a non-passenger, not to expose him or her to a risk of nervous shock, is independent of the carrier's duty to the passenger: Jaensch v Coffey, at 560. While this may not be a major consideration in the interpretation of the Warsaw Convention, the drafters of the CA Act must have been aware of the distinct nature of the duties owed to a passenger and a non-passenger under Australian law. Had the drafters intended to bring nervous shock claims by non-passengers within s 35 of the CA Act, much clearer language than that used in s 35(8) would have been used. · The CA Act contains no equivalent to s 35 governing claims by non-passengers arising out of injuries occurring to passengers as the result of an accident on board an aircraft. · Had it been intended to embrace nervous shock claims by non-passengers, it is hardly likely that the drafters would have made provision for such claims arising out of the death of a passenger, but ignored claims arising out of injury to a passenger or, for that matter, out of a passenger being put in peril. As the primary Judge observed, the absence of any provision to govern multiple claims in non-passenger nervous shock cases is a telling indication that they were not intended to be covered by Part IV of the CA Act. · To read s 35(8) of the CA Act as embracing nervous shock claims by non-passengers arising out of the death of a passenger would lead to odd results. The CA Act would cover non-passenger nervous shock claims arising out of the death of a passenger, but not those flowing from a passenger being injured or placed in peril. It is difficult to believe that such an arbitrary result was intended. Mr Hutley submitted that, even if s 35(8) of the CA Act did not extend to nervous shock claims by non-passengers, Part IV addressed third party claims. He contended that this supported the view that s 36 was intended to preclude non-passenger nervous shock claims. Mr Hutley pointed to s 37(a), which provides that nothing in Part IV shall be deemed to exclude any liability of a carrier to indemnify a third party in respect of any liability in the nature of workers compensation. See also s 37(b). It is, however, one thing to say that the rights of some non-passengers may be affected by Part IV of the CA Act. It is quite another to say that particular rights or entitlements of a non-passenger, such as a right to claim damages for nervous shock arising out of an aircraft accident involving a relative of the non-passenger, are exclusively within Part IV. For the reasons I have given, I do not think that Part IV has that operation or effect. From a policy perspective, I see nothing strange about this result. Just as there are policy reasons for not construing the Warsaw Convention as excluding nervous shock claims by non-passengers otherwise than under the Convention itself, so there are reasons for not reading Part IV of the CA Act as excluding such claims otherwise than under Part IV itself. Section 40 of the CA Act contemplates that regulations may be made providing for the circumstances in which tickets must be issued and in which the statutory limit on a carrier's liability will be removed by reason of a failure to comply with the regulations. It is true that regulations under s 40 have not been promulgated. Nonetheless, Part IV of the CA Act, like the Warsaw Convention itself, contemplates that passengers will be warned about the limitations on a carrier's liability. Non-passengers ordinarily receive no such warning. Exposing carriers to liability for nervous shock claims by non-passengers doubtless makes it more difficult for them or their insurers to calculate the extent of the risks to which they are subject. But carriers are exposed to many forms of liability to non-passengers. If this particular liability creates unacceptable burdens, the position can be remedied by the Commonwealth Parliament. International agreement is not required. If the appellants' argument were accepted, the dividing line between non-passengers' nervous shock claims within Part IV of the CA Act and those outside it would be difficult to support on any sound basis. On the conclusion I have reached all non-passengers nervous shock claims are treated in the same manner.

CONCLUSION I have explained the manner in which I think the categories of claims identified by the primary Judge should be interpreted. The separate questions should be construed in the same manner. On this basis, the appeal should be allowed in part and the following answers substituted for those given by the primary Judge:

Question 1: Is a cause of action on behalf of a passenger whose alleged injuries are psychological injuries independent of physical injury an action for damage sustained by reason of 'personal injury' suffered by a passenger within the meaning of the term in s 28 of the Civil Aviation (Carriers' Liability) Act 1959? Answer: In the circumstances of the present case, Yes.

Question 2: Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by passengers for psychological injuries independent of any physical injury? Answer: Yes.

Question 3: Does Part IV of the Civil Aviation (Carriers' Liability) Act 1959 operate to exclude the causes of action pleaded in the Amended Statement of Claim in respect of claims by non-passengers for psychological injuries independent of any physical injury? Answer: No. I would give the parties an opportunity to make written submissions on costs. The appellants should file their written submissions within seven days and the respondents should file theirs within seven days thereafter. I certify that this and the preceding forty-three (43) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Counsel for the Applicant: Mr N C Hutley SC with Mr M Leeming

Counsel for the Respondent: J M Foord QC with Mr J E Rowe