Yes we are, according to the High Court of Australia.

On an issue that was previously up in the air, the High Court has provided some long awaited clarity on the scope of claims that can be made against a domestic carrier in the event of death or injury to a passenger.

Claims brought by passengers against a carrier for domestic flights are subject ‘exclusively’ to the strict liabilities and caps under the Civil Aviation Carriers’ Liability Act (Cth) 1959 (‘CACL’). In effect passengers’ claims are capped at $725,000 and other causes of action such as negligence are not available. The regime has been criticised due to its limits on prospective damages but this is offset by a strict liability negating the need to establish negligence to access damages.

There has been divergence (not surprisingly it seemed to align with the plaintiff and defendant lawyer communities) about whether a claim by a close family member of a deceased or injured passenger (aka ‘non-passenger claims’) could be brought in tort (i.e. for nervous shock) or if they were also subject ‘exclusively’ to the CACL.

Until the South West Judgment, the most influential Australian authority on this issue was the Full Federal Court decision of South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301 (‘Magnus’). The majority in Magnus decided that non-passengers were entitled to bring claims against the carrier in negligence. Practical effects of Magnus were that carriers faced uncertain and unquantifiable exposure and the rights of non-passengers were often broader than those of passengers.

To maximise available damages, claimants have relied upon Magnus to argue that non-passenger claims are not governed exclusively by the CACL, that they instead fall outside the CACL and can be brought in tort for uncapped damages. This approach does not seem to have taken off, with carriers arguing, as they did in the South West Judgment, that Magnus was incorrectly decided.

There are clear skies ahead for carriers as the High Court resolved this conflict by offering a construction of the CACL that accords with the purpose for its establishment. That purpose, which aligns with the treaty scheme for international passengers, was to both create and limit the liability of the carrier.

The High Court’s decision means non-passenger claims that arise “in respect of” the death or injury of a passenger, are subject exclusively to the CACL, including its cap on damages, strict liability regime and 2 year extinguishment provision.

Implications

Non-passengers who previously sought to rely upon Magnus as a basis to bring nervous shock claims against carriers are unlikely to find support in light of the South West Judgment.

This will likely affect the approach taken by insurers of carriers to such claims when engaging in settlement discussions and plaintiffs may need to adjust their expectations accordingly.