Air Canada v Evans

HCA 65 Grein v Imperial Airways Ltd [1937] 1 KB 50 Grueff v Virgin Australia Airlines Pty Ltd [2021] FCA 501; 395 ALR 249 Gulf Air Company GSC v Fattouh [2008] NSWCA 225; 251 ALR 183 Holmes v Bangladesh Biman Corporation [1989] 1 AC 1112 Johnson v Miller (1937) 59 CLR 467; [1937] HCA 77 Lahey Constructions Pty Ltd v The State of New South Wales [2021] NSWCA 69 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Page v Sydney Seaplanes Pty Ltd (2020) 277 FCR 658; [2020] FCA 537 Parkes Shire Council v South West Helicopters Pty Ltd (2019) 266 CLR 212; [2019] HCA 14 Povey v Qantas Airways Ltd (2005) 223 CLR 189; [2005] HCA 33 Price v KLM-Royal Dutch Airlines 107 F Supp 2d 1365 (2000) Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 R v Halton; Ex parte AUS Student Travel Pty Ltd (1978) 138 CLR 201; [1978] HCA 26 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13 Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142; [1980] HCA 51 South West Helicopters Pty Ltd v Stephenson (2017) 98 NSWLR 1; [2017] NSWCA 312 Studorp Ltd v Robinson; Robinson v Studorp Ltd [2012] NSWCA 382 United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; 289 ALR 682 Texts Cited: B Cheng, "A New Era in the Law of International Carriage by Air: From Warsaw (1929) to Montreal (1999)" (2004) 53 International and Comparative Law Quarterly 833 M Clarke, Contracts of Carriage by Air (Lloyd's List Law, 2nd ed, 2010) PS Dempsey and M Milde, International Air Carrier Liability: The Montreal Convention of 1999 (McGill University, 2005) LB Goldhirsch, The Warsaw Convention Annotated: A Legal Handbook (Kluwer Law International, 2000) B Havel and G Sanchez, The Principles and Practice of International Aviation Law (Cambridge University Press, 2014) P Herzfeld and T Prince, Interpretation (Thomson Reuters, 2nd ed 2020) Shawcross & Beaumont: Air Law (LexisNexis) Category: Principal judgment Parties: Air Canada (Applicant) Renae Evans (First Respondent) Stephanie Evans (Second Respondent) Representation: Counsel: J T Gleeson SC, G O'Mahoney, D Habashy (Applicant) R S McIlwaine SC, R E Quickenden (Respondents)

Solicitors: Norton White (Applicant) Shine Lawyers (Respondents) File Number(s): 2023/465441 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Common Law Citation: [2023] NSWSC 1535 Date of Decision: 12 December 2023 Before: Rothman J File Number(s): 2021/185107

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The respondents, Ms Renae Evans and her daughter Stephanie, commenced proceedings against the applicant, Air Canada, in the Common Law Division on 28 June 2021. Their statement of claim sought damages for injuries allegedly suffered from turbulence experienced on an Air Canada flight travelling from Vancouver to Sydney on 11 July 2019. The respondents sought damages for bodily injuries pursuant to Art 17 of the Montreal Convention 1999, which is incorporated into Australian law by s 9B of the Civil Aviation (Carriers' Liability) Act 1959 (Cth). In its defence, Air Canada pleaded that it was not liable for any damages which might be recovered by either respondent to the extent the amount exceeds 113,100 Special Drawing Rights, in accordance with Art 21 of the Montreal Convention. In reply, the respondents alleged that r 105(C)(1)(a) of Air Canada's International Tariff General Rules stipulated that there were to be no financial limits on the compensatory damages recoverable in respect of bodily injuries sustained by the respondents. That provision provides that "[w]here the Montreal Convention applies … [t]here are no financial limits in respect of death or bodily injury". Each party sought and obtained orders pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) for questions to be determined separately from the other issues in the proceeding and prior to the trial of the respondents' underlying claims. The first question, raised by the respondents, was: Does Rule 105(C) [of Air Canada's tariff] provide and have the effect that if this Court assess each plaintiff's compensatory damages in Australian dollars in an amount in excess of [113,100] Special Drawing Rights (SDR), each is entitled to recover that sum from the defendant even if the defendant can prove that the damages were not due to the negligence or other wrongful act or omission of the carrier or its servants or agents or such damage was solely due to the negligence or other wrongful act or omission of a third party? The primary judge answered the first separate question affirmatively. Air Canada sought leave to appeal from the primary judge's determination of that question. The Court (Leeming JA, Payne JA and Griffiths AJA agreeing) held, granting leave to appeal and allowing the appeal: (1) To construe r 105(C)(1)(a), Air Canada's tariff must be read as a whole, in light of its purpose and object, and having regard to the history of the Montreal Convention which the tariff expressly incorporates: at [24]-[28]. Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53, Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36, Lahey Constructions Pty Ltd v The State of New South Wales [2021] NSWCA 69, applied. (2) A variety of textual considerations suggest that r 105(C)(1)(a) did not have the effect of waiving the partial defence created by Art 21(2) of the Montreal Convention, because when Air Canada did waive defences available to it under international conventions, it did so with different language, in a different section of its tariff (r 105(B)), and with reference to the provision of the international convention which authorised waiver: at [29(3)], [77]-[80]. (3) A consideration of the history of the Montreal Convention, and the Warsaw regime which predates it, confirmed that r 105(C)(1)(a) did not alter rights and obligations. The purpose of r 105(B) of the tariff was to ensure that (a) the existing relaxation or waiver of Air Canada's entitlements under the Warsaw regime remained in place, in particular the waiver of the cap upon liability for death or personal injury, while (b) ensuring the Montreal Convention applied in terms, which of itself exposed a carrier to uncapped liability for death or personal injury: at [29(4)], [69], [72]. The purpose of r 105(C) was to comply with notification requirements under regulatory regimes, including that imposed by the Federal Government of Canada: at [29(5)], [75]-[76], [84]. (4) Discussion by Leeming JA of the scheme of liability governing personal injury arising from international carriage by air: at [30]-[57]. (5) Discussion by Leeming JA of how different international conventions may apply to different contracts of carriage on the same flight: at [58]-[63]. Gulf Air Company GSC v Fattouh [2008] NSWCA 225; 251 ALR 183, United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; 289 ALR 682, Grein v Imperial Airways Ltd [1937] 1 KB 50, Holmes v Bangladesh Biman Corporation [1989] 1 AC 1112.

JUDGMENT

1. LEEMING JA: The respondent passengers claim to have been injured in July 2019 on a flight operated by the applicant, Air Canada, travelling from Vancouver to Sydney. It was accepted that the Montreal Convention 1999 applied. Article 21(2) of that convention gives a partial defence to a carrier: speaking generally, the carrier's liability is limited to 113,100 Special Drawing Rights (or SDRs) per passenger (around $224,000) if it establishes that any additional damage was not due to the carrier's own negligence. The primary judge determined, by way of answering a separate question in advance of trial, that Air Canada was not able to rely on that defence, because of a rule in its international tariff: Evans v Air Canada [2023] NSWSC 1535.
2. If the decision of the primary judge is correct, then it potentially affects thousands of passengers who travel on Air Canada flights to or from Australia. Further, Air Canada adduced evidence, bearing on the grant of leave to appeal, to the effect that other carriers which fly to Australia have similar or identical provisions in their tariffs (for they reflect the language of an IATA resolution). As will be seen, the proposed appeal also involves important questions of principle concerning the construction of the terms of a contract of carriage by air. In short, this is a clear case for the grant of leave required pursuant to s 103 of the Supreme Court Act 1970 (NSW), and, to be fair, after hearing what Air Canada advanced in support of a grant of leave, Mr McIlwaine SC, who appeared in this Court and at first instance for the respondents, did not seek to be heard against that course.
3. For the reasons which follow, the appeal should be allowed. Air Canada's tariff does not disentitle it from relying on a partial defence to the claims insofar as they exceed 113,100 SDRs if it proves that damage was not caused by Air Canada's negligence. It should also be said at the outset, in fairness to the primary judge, that this Court received submissions from Mr Gleeson SC, who had not appeared below, which he acknowledged were, at least in part, materially different from those made at first instance.

Factual background, nature of claim and procedural history

1. Ms Renae Evans and her daughter Stephanie commenced proceedings against Air Canada in the Common Law Division of this Court on 28 June 2021. Their statement of claim sought damages for injuries allegedly suffered from turbulence experienced on flight AC033 from Vancouver to Sydney on 11 July 2019.
2. Each respondent alleged that she sustained personal injury as a result of the incident. Renae alleged that she sustained a discogenic injury to two levels of her cervical spine, necessitating a disc replacement at C5-6 and a fusion of C6-7, as well as psychological injuries. Stephanie alleged that she sustained soft-tissue injuries to the whole of her spine as well as psychological injuries.
3. The statement of claim sought "damages for bodily injuries against the Defendant pursuant to Article 17 of the Montreal Convention". Article 17 imposes liability on the carrier for damage for, inter alia, bodily injury for accidents on board the aircraft. However, the pleading correctly proceeded on the basis that the plaintiffs' claim was under s 9B of the Civil Aviation (Carriers' Liability) Act 1959 (Cth), in accordance with what was said (in respect of international carriage governed by the Warsaw regime) by the joint judgment in Povey v Qantas Airways Ltd (2005) 223 CLR 189; [2005] HCA 33 at [12]. In this country, an unincorporated treaty is generally regarded as not creating rights or imposing liabilities (for exceptions, such as the change of status of enemy aliens brought about by a peace treaty, see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [100]). The mere ratification of the Montreal Convention by the executive government of the Commonwealth of Australia in 2008 of itself created no rights upon which the respondents could rely. Instead, the source of the right on which the respondents' claims are based is s 9B which provides that "the 1999 Montreal Convention has the force of law in Australia in relation to any carriage by air to which the 1999 Montreal Convention applies, irrespective of the nationality of the aircraft performing that carriage".
4. That said, it is important to appreciate that while s 9B gives force of law to the Montreal Convention, the Convention itself is to be construed in accordance with the Vienna Convention on the Law of Treaties 1969: Povey at [24] and [60]. The point was captured by McHugh J in Povey at [60] in terms apposite to the present case (although the reference by McHugh J to "Article 17" is a reference to Art 17 of the Warsaw Convention as modified by the Hague Protocol and the Montreal Protocol No 4, which (not accidentally) closely resembles Art 17(1) of the Montreal Convention): Article 17 must be construed in the context of an international agreement that constitutes a Code governing the liability of air carriers from many countries. So, although this Court is concerned with rights and liabilities created by an Australian statute, Australian courts should not take an insular approach to the construction of Art 17. Nor should it be interpreted by reference to presumptions and technical rules of interpretation applied in construing domestic statutes or contracts. Instead, an Australian court should apply the rules of interpretation of international treaties that the Vienna Convention on the Law of Treaties has codified. (Footnotes omitted.)

The reasons of the primary judge

1. It is convenient to address the relevant portion of the reasons of the primary judge immediately. They are short, and they place no weight on much of the contextual material bearing on the Montreal Convention or the decisions in this area or the commercial and regulatory context in which Air Canada's tariff came to be made.
2. As mentioned above, Art 17 imposes liability on the carrier and Art 21 creates two tiers of liability: liability below 113,100 SDRs (at the time of the carriage) which is strict subject to the damage being caused or contributed to by the passenger's own negligent or wrongful act or omission, and liability in amounts above that threshold, which is uncapped but subject to a defence if the carrier can establish that the damage was not due to its own negligence or wrongful act or omission. Article 25 provides that "[a] carrier may stipulate that the contract of carriage shall be subject to higher limits of liability than those provided for in the Convention or to no limits of liability whatsoever".
3. After summarising those provisions of the Montreal Convention, the primary judge referred to rr 105(B)(5) and 105(C)(1)(a) of the tariff, which were agreed to form part of the contract of carriage between the parties. Those sub-rules provide as follows (I shall return below to the balance of those rules, which were not reproduced or analysed in the primary judge's reasons): RULE 105 - LIABILITY OF CARRIERS … (B) Laws and provisions applicable … (5) For the purpose of international carriage governed by the Montreal Convention, the liability rules set out in the Montreal Convention are fully incorporated herein and shall supersede and prevail over any provisions of this tariff which may be inconsistent with those rules. (C) Limitation of liability (1) Where the Montreal Convention applies, the limits of liability are as follows: (a) There are no financial limits in respect of death or bodily injury.
4. His Honour summarised the evidence of a leading aviation expert, Professor Paul Stephen Dempsey, which was admitted over objection, accepting it as "uncontradicted evidence as to the operation of the international law", but nonetheless held that his conclusions about the meaning of r 105(C)(1)(a) were not probative: at [40]. I shall return to Professor Dempsey's evidence. I agree that his ultimate opinion on the legal meaning of the rules does not help the Court: see Studorp Ltd v Robinson; Robinson v Studorp Ltd [2012] NSWCA 382 at [16] and [28]. However, his authoritative and uncontroversial account of the context and object of the Convention and the tariff are invaluable.

Summary of reasoning

1. This appeal cannot be resolved merely by an examination of the provisions relied on by the respondents and nothing else. The reasons which follow develop this in some detail. The following summary may assist. 1. Under the Warsaw regime, liability for personal injury is, for practical purposes, subject to limits, however, those limits have been waived by most carriers (including Air Canada) pursuant to the IATA Intercarrier Agreements of 1995 and 1996. Air Canada's obligations under those agreements are directly reflected in r 105(B) of its tariff. 2. Air Canada's tariff had to accommodate the reality that it would apply to some passengers whose carriage was governed by the Warsaw regime and others whose carriage was governed by the Montreal Convention. It also had to comply with a range of international regulatory requirements. 3. A variety of textual considerations, most notably the absence of the language of waiver ("shall not invoke", "shall not avail itself of" and "liability will be waived") which are elsewhere found in the tariff, and the wording in r 105(C)(1)(a) of financial limits suggest that sub-para (a) does not have the effect of waiving the partial defence created by Art 21(2) of the Montreal Convention. This is also confirmed by the absence of any reference to the provisions in the Montreal Convention which authorise waiver, and the placement of the sub-paragraph. In short, many considerations suggest that r 105(C)(1)(a) does not have the effect attributed to it by the respondents, because when Air Canada did waive defences available to it under international conventions, it did so with different language, in a different section of its tariff, and explained with words of utmost clarity that that was what was being done. 4. The purpose of r 105(B) was to ensure that (a) the existing relaxation or waiver of Air Canada's entitlements under the Warsaw regime remained in place, in particular the waiver of the cap upon liability for death or personal injury, while (b) ensuring the Montreal Convention applied in terms, which of itself exposed a carrier to uncapped liability for death or personal injury. 5. The purpose of r 105(C) was quite different. It was to comply with notification requirements under regulatory regimes including that imposed by the Federal Government of Canada. That is why its provisions are expressed differently, including references "to your journey" and "in most cases" in r 105(C)(1) itself; those are words which summarise a complex regime, rather than themselves creating or qualifying the rights and obligations of the parties. That is also why, unlike the provisions in r 105(B)(1) which waive entitlements under the Warsaw regime doing so explicitly pursuant to Art 22(1), there is no mention of Art 25 of the Montreal Convention in r 105(C)(1). That is also why there is no conflict between rr 105(B)(5) and 105(C)(1) (noting that if there were a conflict, the former which "fully incorporates" the Montreal Convention is expressed to prevail).

Conventions governing international carriage by air

1. Claims for damages for personal injury arising from international carriage by air are governed by a series of international conventions. Since the Warsaw Convention was done on 12 October 1929, various further international agreements have been made to regulate carriage by air and modify the rules relating to carriers' liability, including the Hague Protocol in 1955, the Guadalajara Convention in 1961 and the Montreal Protocol No 4 in 1975. All of these were modifications of the Warsaw Convention, and it will be convenient to refer generically to "the Warsaw regime". (I am adopting the terminology in PS Dempsey and M Milde, International Air Carrier Liability: The Montreal Convention of 1999 (McGill University, 2005) at 2.)
2. The convention applicable to the carriage by Air Canada which gives rise to this appeal is the Montreal Convention of 1999. This represents a departure from the Warsaw regime, both by reason of its being a self-standing regime, rather than a further amendment to the Warsaw Convention, and also substantively, especially because instead of there being, for practical purposes, an upper limit to a carrier's liability in respect of the death or injury of a passenger, there is strict liability to a limit, above which the carrier's liability is presumptive but subject to defences. The position is well captured in the title of Professor Bin Cheng's article, "A New Era in the Law of International Carriage by Air: From Warsaw (1929) to Montreal (1999)" (2004) 53 International and Comparative Law Quarterly 833. The Second Circuit Court of Appeals has also said that the Montreal Convention was promulgated in order to "reform the Warsaw Convention so as to 'harmonize the hodgepodge of supplementary amendments and intercarrier agreements' of which the Warsaw Convention system of liability consists": Ehrlich v American Airlines, Inc 360 F 3d 366 at 371 (2d Cir 2004). As will be seen below, that "hodgepodge" of intercarrier agreements is material to an understanding of Air Canada's tariff.

The Warsaw regime

1. The "cardinal purpose" of the Warsaw Convention and its successors, was to "achieve uniformity in the law relating to liability of air carriers, so that, in those areas with which the Convention deals, it contemplates a uniform code that excludes resort to domestic law": Parkes Shire Council v South West Helicopters Pty Ltd (2019) 266 CLR 212; [2019] HCA 14 at [36]; see also at [54].
2. These conventions have been incorporated into domestic legislation by Australia across the years, beginning with the Warsaw Convention being given the force of law by the now repealed Carriage by Air Act 1935 (Cth). That statute was replaced with the Civil Aviation (Carriers' Liability) Act 1959. On 24 January 2009, the Montreal Convention was incorporated into domestic law by amendments to the Civil Aviation (Carriers' Liability) Act 1959: see Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Act 2008 (Cth). The Montreal Convention is contained in Sch 1A of the Civil Aviation (Carriers' Liability) Act 1959.
3. That said, the Montreal Convention is closely informed by the Warsaw regime, and it is trite that to the extent that it employs language and concepts taken from the Warsaw regime, decisions on that regime are directly relevant to interpreting the Montreal Convention. As much was recognised by Allsop P in Gulf Air Company GSC v Fattouh [2008] NSWCA 225; 251 ALR 183 at [60] and [73]; many decisions of Circuit and District courts to that effect are collected in the Second Circuit's decision in Cohen v American Airlines, Inc 13 F 4th 240 at 244-245 (2021). As Professor Dempsey put it: To understand the Montreal Convention of 1999, it is important to understand the Warsaw Convention of 1929 and its progeny (ie the "Warsaw regime"), and the legal, economic and technological environment in which they were promulgated and evolved, because many of the provisions of the Montreal Convention are nearly identical to that earlier multilateral treaty and its Protocol amendments. (Footnotes omitted.)

Warsaw Convention

1. Chapter III of the Warsaw Convention deals with the liability of carriers. The first three provisions impose strict liability on a carrier for death or wounding of or any other bodily injury to a passenger (Art 17), for destruction or loss of damage to registered baggage (Art 18), and for damage occasioned by delay (Art 19). Relevant to this appeal is Art 17, which is substantially unchanged (and is replicated in the Montreal Convention) and which provides 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.
2. Liability under the Warsaw regime in respect of personal injury suffered by a passenger that has not resulted in death is in substitution for any civil liability of the carrier under any other law in respect of the injury. Thus, as Allsop P said in the context of the Warsaw regime in a passage which is equally true of the Montreal Convention: "[The Warsaw Convention] can be taken to prescribe the circumstances, being 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. No other action [is] available to the passenger": United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; 289 ALR 682 at [96].
3. The next three provisions qualify the liabilities created by Arts 17-19. Relevant to this appeal is Art 22(1), which provides: In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of 125,000 francs. Where, in accordance with the law of the Court seised of the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability.
4. In 1955, the Hague Protocol amended the Warsaw Convention, which amendments included increasing the limit of liability to 250,000 francs: see Art 22(1). The Convention was further amended by Montreal Protocol No 4 in 1975, but there was no change to the limit of liability in Art 22(1), which remained at 250,000 francs.

Dissatisfaction with the Warsaw regime

1. As explained in Professor Cheng's article at 835-842, the monetary limit for passenger death or bodily injury under the Warsaw regime was seen to be too low. After the Second World War, inflation and rapid rises in the cost of living rendered the official Warsaw limit "more and more unacceptable". This was especially so in the United States, where the official price of gold was fixed, such that 125,000 gold francs amount to only US$8,292 from 1934 to 1971, although it was raised slightly thereafter. The monetary limit was doubled under the Hague Protocol, but the United States was far from satisfied and came close to denouncing the Warsaw Convention in 1965. Thereafter ensued a period of instability, leading to several other attempts to increase the monetary limit, while at the same time various countries began requiring their carriers to introduce higher limits than that set out in the convention to circumvent the low thresholds. "The Warsaw System was in crisis", ultimately leading to the introduction of the modernised Montreal Convention.

Intercarrier Agreements

1. Under the heading "The Dykes Are Open" at 842 of Professor Cheng's article, that author stated: In 1992 Japanese international airlines stunned the aviation world by accepting, in respect of passenger death or injury in Warsaw/Warsaw-Hague carriage, absolute liability up to SDR 100,000 and unlimited liability on the basis of rebuttable presumed fault, subject always to the defence of contributory negligence. (Footnote omitted.)
2. Shawcross & Beaumont: Air Law described this development: The effect is that the plaintiff can recover the full amount of proven loss, with no arbitrary financial limit; issues as to intentional or reckless misconduct under art 25 become irrelevant in cases covered by these conditions. In so far as the claim is for less than the equivalent of 100,000 SDRs, the art 20 defence (ie that all necessary measures have been taken to avoid the damage) is waived [note that the art 21 defence of contributory negligence is not waived]; but in respect of potential liability in excess of 100,000 SDRs the carrier may still rely on the art 20 defence. Although relatively few airlines took individual action to follow this lead, the initiative was profoundly influential and is reflected in the end-result of the discussions which took place under the aegis of IATA in 1995 and 1996: Shawcross & Beaumont: Air Law (LexisNexis), Chapter 33, section J "The IATA Intercarrier Agreement of 1995" at [187].
3. The results in the short term were (a) anti-trust approval for airlines to discuss limits on liability, (b) the IATA Intercarrier Agreement of 1996 and (c) the Agreement on Measures to Implement the IATA Intercarrier Agreement in 1996. The following more detailed account is taken from Professor Dempsey's unchallenged evidence.
4. In 1995, the United States Department of Transportation gave IATA anti-trust immunity to discuss modernisation of the liability regime in international aviation. At its Annual General Meeting, IATA endorsed a new "Washington Intercarrier Agreement" which provided for "full compensatory recoverable damages". The substantive clauses of that agreement commenced as follows: The undersigned carriers agree 1. To take action to waive the limitation of liability on recoverable compensatory damages in Articles 22, paragraph 1 of the Warsaw Convention as to claims for death, wounding or other bodily injury of a passenger within the meaning of Article 17 of the Convention, so that recoverable compensatory damages may be determined and awarded by reference to the law of the domicile of the passenger. 2. To reserve all available defenses pursuant to the provision of the Convention; nevertheless, any carrier may waive any defense, including the waiver of any defense up to a specified monetary amount of recoverable compensatory damages, as circumstances may warrant.

Montreal Convention

1. The Montreal Convention is a departure from the successive amendments of the Warsaw Convention. It also departs from its predecessors substantively, particularly in respect of the limits of liability in respect of death and injury of a passenger.
2. While Art 17(1) of the Montreal Convention is in materially the same terms as Art 17 of the Warsaw Convention, there has been substantial change to the provisions that follow. Relevant to this appeal is Art 21, which provides: Article 21 - Compensation in Case of Death or Injury of Passengers 1. For damages arising under paragraph 1 of Article 17 not exceeding 100,000 Special Drawing Rights for each passenger, the carrier shall not be able to exclude or limit its liability. 2. The carrier shall not be liable for damages arising under paragraph 1 of Article 17 to the extent that they exceed for each passenger 100,000 Special Drawing Rights if the carrier proves that: (a) such damage was not due to the negligence or other wrongful act or omission of the carrier or its servants or agents; or (b) such damage was solely due to the negligence or other wrongful act or omission of a third party.
3. Article 21 of the Montreal Convention differs in substance from Art 22 of the Warsaw regime. Article 22 of the Warsaw regime mandates an upper limit of a carrier's strict liability; whereas Art 21 of the Montreal Convention provides strict liability up to a specific limit, above which limit the carrier's liability is presumptive: see South West Helicopters Pty Ltd v Stephenson (2017) 98 NSWLR 1; [2017] NSWCA 312 at [297]; Dyczynski v Gibson (2020) 280 FCR 583; [2020] FCAFC 120 at [34]; Bradshaw v Emirates at [116]. This is commonly referred to as a "two-tier liability system": Bradshaw v Emirates at [116], [171]; Professor Cheng at 843, 849; Shawcross & Beaumont, Chapter 33 at [222]; Professor Malcolm Clarke, Contracts of Carriage by Air (Lloyd's List Law, 2nd ed, 2010) at 19 [3.3.1].
4. Other provisions of the Montreal Convention retain an upper limit on a carrier's liability. Examples may be seen in Art 22(1)-(3) concerning limits of liability in relation to delay, baggage and cargo: Article 22 - Limits of Liability in Relation to Delay, Baggage and Cargo 1. In the case of damage caused by delay as specified in Article 19 in the carriage of persons, the liability of the carrier for each passenger is limited to 4,150 Special Drawing Rights. 2. In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1,000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger's actual interest in delivery at destination. 3. In the carriage of cargo, the liability of the carrier in the case of destruction, loss, damage or delay is limited to a sum of 17 Special Drawing Rights per kilogramme, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the consignor's actual interest in delivery at destination.

Different conventions may apply to different contracts of carriage on the same flight

1. It is important to appreciate that the liability in relation to passengers and cargo on the same flight may be governed by different conventions. As Allsop P observed in Fattouh at [28] and United Airlines v Sercel at [14(a) and (b)], the fundamental approach taken in all of the conventions is to identify the contract for international carriage and to ask by reference to the place of departure and the place of destination what conventions apply. That follows from Art 1(2) of each convention, which provides that a convention applies to "any carriage in which, according to the agreement between the parties, the place of departure and place of destination … are situated … within the territories of two State Parties". Thus, if the State of the place of departure has ratified the Montreal Convention as well as the various conventions constituting the Warsaw regime, but the State of the place of destination has only ratified the Warsaw Convention, the carriage will be governed by the unamended Warsaw Convention. If, however, multiple conventions apply, then the Montreal Convention prevails over the other conventions: see Montreal Convention, Art 55(1).
2. The possibility for complexity, particularly in the case of carriage of passengers, is increased by the provisions of Art 1(2), to the effect that there is a single contract for international carriage, even if there is a break in the carriage and even if there is an agreed stopping place within the territory of a State which is not a party to the Convention. Thus in Grein v Imperial Airways Ltd [1937] 1 KB 50, where a passenger was killed in a crash on the return leg of a return flight from London to Antwerp at a time when the United Kingdom had ratified the Warsaw Convention but Belgium had not, the claim was governed by that convention. In Holmes v Bangladesh Biman Corporation [1989] 1 AC 1112 at 1131, Lord Bridge of Harwich said: But it was decided in Grein v Imperial Airways Ltd and appears never to have been doubted since that carriage of a passenger pursuant to the single contract embodied in a return ticket from a place of departure in a Convention country to a destination in a non-Convention country and back to the original place of departure is "international carriage" within the Convention definition. Thus, if Thai Airways carry a passenger on a return ticket London-Bangkok-London, this is "international carriage" subject to the Hague Convention.

Air Canada's submissions on appeal

1. Air Canada contended that the first separate question before the primary judge should have been answered in the negative for two separate, yet interrelated, reasons. 1. First, Air Canada submitted that Art 25 of the Montreal Convention, which permits a carrier to stipulate higher limits of liability or "no limits of liability whatsoever", has no application to Art 21. Article 25 only applied to financial limits. "One of our core submissions of construction is going to be that, when you see limits of liability used throughout Montreal or Warsaw, it is speaking of limits in the financial or monetary sense, and it is not speaking of matters of mere defence". On that basis, Air Canada contended that r 105(C)(1)(a) of the tariff could not, pursuant to Art 25, remove Air Canada's entitlement to make out a defence that it was not negligent. 2. Secondly, Air Canada submitted that, on its proper construction, properly informed by text and context, r 105(C)(1)(a) of the tariff did not stipulate that there were to be no limits of liability under Art 21.
2. Air Canada candidly acknowledged that the first question of construction had not been argued before the primary judge. No objection was taken during the hearing by the respondents to Air Canada arguing this issue on appeal. In brief submissions supplied pursuant to leave after judgment was reserved, some opposition to the new stance was expressed. I am unpersuaded by the belated opposition. "Because a question of construction is one of law, there is only one true construction, and the task of this [C]ourt in an appeal on a question of construction is to determine for itself the proper construction of the instrument": Chevron (TAPL) Pty Ltd v Pilbara Iron Company (Services) Pty Ltd (2021) 58 WAR 102; [2021] WASCA 193 at [126]. However, it is convenient to address the second question, which was addressed by both the primary judge and the respondents, at the outset.

Does r 105(C)(1)(a) of Air Canada's tariff stipulate that there is to be no limit of liability under Art 21?

1. It is trite that Air Canada's tariff, no differently from any other written legal instrument, must be "read as a whole". That said, the tariff is a long document occupying 117 pages, dealing with a wide range of topics. The adage that a contract (or a statute: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69]) must be "read as a whole" does not bear its literal meaning - otherwise it would be much more time-consuming to construe provisions of many lengthy contracts (or provisions of the Corporations Act 2001 (Cth) or Income Tax Assessment Act 1997 (Cth) or much modern legislation). But the fundamental approach of reading a legal document as a whole does require at the least an examination of the provisions which deal with the same topic. The starting point is to consider the entirety of the two sub-rules in issue, rr 105(B) and 105(C).
2. Rule 105, which is titled "Liability of carriers", is divided into eight sub-rules ("A" to "H"). Each deals with a discrete topic in relation to the liability of the carrier, in the context of the Montreal Convention as well as the various iterations of the Warsaw Convention. It was not suggested that sub-rules "(A)" or "(D)"-"(H)", which deal with carriage by successive carriers, declarations of higher value cargo, times limits on claims, claims for delays, cancellations or delayed boarding, modification or waiver, and severability) were relevant. Relevant to this appeal are sub-rule "(B)" which deals with "Laws and provisions applicable" and sub-rule "(C)" which deals with "Limitation of liability".
3. Sub-rule (B) contains five paragraphs. Each paragraph identifies the different sources of liability rules. For example, r 105(B)(1) provides: (B) Laws and provisions applicable (1) The carrier agrees in accordance with article 22(1) of the convention for the unification of certain rules relating to international transportation by air signed at Warsaw, October 12, 1929 or, where applicable, that convention as amended by the protocol signed at the Hague on September 28, 1955 (the "convention") that, as to all international carriage or transportation hereunder as defined in the convention: (a) The carrier shall not invoke the limitation of liability in article 22(1) of the convention as to any claim for recoverable damages arising under article 17 the convention. (b) The carrier shall not avail itself of any defense under article 20(1) of the convention with respect to that portion of such claim which does not exceed 113,100 Special Drawing Rights. (c) Except as otherwise provided herein, the carrier reserves all defenses available under the convention to any such claim. With respect to third parties, the carrier reserves all rights of recourse against any other person, including without limitation, rights of contribution and indemnity.

Conclusions and orders

1. For those reasons, the primary judge's answer to the first separate question was incorrect. The appeal must be allowed, and the question answered affirmatively.
2. I return to Air Canada's first submission, which was that the power to stipulate higher limits or no limits at all under Art 25 was confined to financial limits, and did not extend to the waiver of a partial defence such as that in Art 21(2).
3. It is unnecessary to determine that question, and the answer will have no consequence to the litigation. Because the submission was raised for the first time on appeal, this Court lacks the advantage of reasons at first instance. Further, the respondents made no submission to the contrary, so this Court lacks the benefit of any argument on the point. In consequence, anything said in answer to it will be both unnecessary and of doubtful precedential value.
4. In addition to the foregoing, the point is especially arid. It is quite plain that a carrier can waive a non-financial aspect of the liability imposed by the Warsaw regime, and as much occurred for many years pursuant to the IATA Intercarrier Agreements, and may be seen in the promise not to invoke the "all necessary measures" defence in Art 20(1) of the Warsaw regime in r 105(B)(1)(a) of Air Canada's tariff. Article 27 of the Montreal Convention explicitly states that nothing in the Convention "shall prevent the carrier from … waiving any defence available under the Convention". Even if Air Canada's submission is sound and Art 25 does not authorise a provision of a tariff which waives its partial defence under Art 21(2), Art 27 authorises that course. In such a case, although the primary judge would have been wrong to conclude that Art 25 authorised r 105(C)(1)(a), Art 27 would have authorised it, and had there been a notice of contention on this new issue, then the point would be wholly arid. Air Canada's written submissions, supplied well in advance of the hearing, made this point and stated that "the primary judge made no finding of waiver under Art 27; there is no Notice of Contention; and the appeal should be allowed without further enquiry into the construction of the Tariff". Even so, the respondents did not see fit to serve a notice of contention. Accordingly, acceptance of Air Canada's submission would result in a decision of limited or no precedential value. I find it difficult to contemplate circumstances in other litigation when anything would turn on the limitation to Art 25 for which Air Canada contends, assuming that Art 27 was also available. For those reasons, I refrain from resolving Air Canada's first submission.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 June 2024