Picking up State laws in federal personal injury compensation claims

In a recent interlocutory judgment in Di Falco v Emirates, Keogh J of the Supreme Court of Victoria considered whether Part VBA of the Wrongs Act 1958 (Vic) imposes limits on the right of a plaintiff to claim non-economic loss damages in respect of personal injury arising in the course of an airline voyage. The facts of the case might have provided an opportunity for a State superior court to address the effect of the High Court’s judgment in Rizeq v Western Australia on the capacity of State ‘tort reform’ provisions to be ‘picked up’ and applied in a claim for personal injury compensation arising under federal law. However, the case was resolved on fairly narrow grounds and Rizeq was not referred to at all. Nevertheless, Di Falco provides an interesting case study in the application (or non-application) of State adjectival law to proceedings in federal jurisdiction.

The facts

The facts in Di Falco can be stated shortly. The plaintiff was a passenger on an airline flight from Melbourne to Dubai. While walking to the bathroom, she twisted her ankle and sustained injury. She claimed compensation from the airline under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (the Carriers’ Act), which incorporates into Australian domestic law the provisions of the Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 29 May 1999.

The claim and defence

Pursuant to the Montreal Convention, a carrier that operates an international passenger aircraft is ‘liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.’ The Carriers’ Act thus creates a right to ‘no fault’ compensation that arises under federal law in the event that a passenger suffers injury aboard an aircraft in international travel; up to an amount of 100,000 Special Drawing Rights (approximately $AU195,000), the carrier cannot contract out of this liability. Pursuant to Art 33 of the Montreal Convention, the right to obtain compensation may be enforced in the territory of any State Party to the Montreal Convention where the carrier ‘has a place of business through which the contract has been made’. Finally, by s 9L of the Carriers’ Act, the jurisdiction of State courts under the Montreal Convention is coextensive with their general federal jurisdiction under s 39 of the Judiciary Act 1903 (Cth). It was pursuant to these provisions that the plaintiff in Di Falco sought compensation from the defendant in proceedings in the Supreme Court.

In response, the defendant submitted that the plaintiff’s rights under the Montreal Convention were subject to Part VBA of the Wrongs Act, which limits the right of a plaintiff to recover damages for non-economic loss ‘in any proceeding in a court in respect of an injury to a person caused by the fault of another person’. Thus the defendant submitted that the plaintiff could not recover non-economic loss damages unless she had sustained a ‘significant injury’ as defined in s 28LF of the Wrongs Act.

Application of State laws in federal jurisdiction

Section 79(1) of the Judiciary Act provides that:

The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

Where it applies, s 79(1) operates to ‘pick up’ a State law and apply its text as a ‘surrogate federal law’. It was on this basis that the defendant in Di Falco submitted that the provisions of the Wrongs Act limited the plaintiff’s entitlement to compensation under the Montreal Convention.

The judgment of Keogh J

Rightly, Keogh J held that the defendant’s submission was untenable. By its terms, Part VBA applies only in respect of fault-based claims for damages. The Montreal Convention explicitly provides for a form of ‘no fault’ compensation. Even leaving aside the operation of s 79(1) of the Judiciary Act, there was simply no way the terms of the Wrongs Act could have been relevant to the plaintiff’s claim. Thus his Honour held that ‘[b]ecause fault is not an element of her cause of action, the plaintiff is not a “claimant”, and she has not made a “claim” for the purposes of pt VBA of the Wrongs Act.’

However, Keogh J went on to consider whether the Carriers’ Act ‘otherwise provided’ for the laws governing a claim made under the Montreal Convention, such that s 79 did not in any event operate to pick up the Wrongs Act and apply it as Commonwealth law. His Honour held that the Carriers’ Act did otherwise provide:

The effect of s 28LE and pt VBA of the Wrongs Act, if applied to the plaintiff’s case, would be to derogate from the right given to her by the Carriers’ Act by extinguishing or restricting her right to recover damages to which she would otherwise have an entitlement. In those circumstances, pt VBA will not be “picked up” by s 79 of the Judiciary Act because the Commonwealth law would otherwise have provided. For this reason, pt VBA is not applicable to the plaintiff’s case.

Thus his Honour appears to have assumed that Part VBA was a law of a kind that was capable of being picked up and applied by s 79. However, it could not be picked up in the case before him, because the Carriers’ Act deals with the calculation of damages ‘otherwise’ than the way in which the Wrongs Act deals with that issue. In my view, Keogh J was clearly right to conclude that the Carriers’ Act ‘otherwise provided’ for the matters dealt with in Part VBA. However, in light of Rizeq, it is interesting to consider whether a law like Part VBA can ever be picked up and applied by s 79.

The effect of Rizeq

In Rizeq, the appellant argued that his conviction by a non-unanimous jury for an offence against s 6(1)(a) of the Misuse of Drugs Act 1981 (WA) was contrary to s 80 of the Commonwealth Constitution and ineffective. In this regard, he submitted that because he was a resident of New South Wales against whom criminal proceedings had been commenced by a prosecuting authority resident in Western Australia, his trial had taken place in federal jurisdiction; according to his submission, it followed that s 6(1)(a) could only be applied by the trial court as a surrogate federal law that was picked up by s 79 of the Judiciary Act. This meant that he had been tried on indictment against a law of the Commonwealth and had been convicted in a manner that did not comply with s 80 of the Constitution.

All seven members of the High Court rejected the appellant’s argument, holding that because it was a law that affected the substantive rights and liabilities of persons in Western Australia, and not the manner in which those rights and liabilities were ascertained and enforced by courts exercising jurisdiction in Western Australia, s 6(1)(a) of the Western Australian Act applied of its own force (and not as a surrogate federal law) in criminal proceedings in federal jurisdiction. In this regard, Bell, Gageler, Keane, Nettle and Gordon JJ stated that because ‘[a] State law can determine neither the powers that a court has in the exercise of federal jurisdiction nor how or in what circumstances those powers are to be exercised’, it is laws that deal with the manner in which jurisdiction is exercised by a court invested with federal jurisdiction that are the subject of s 79, not laws ‘having application independently of anything done by a court.’ To similar effect was the judgment of Kiefel CJ.

In light of Rizeq, it is interesting to consider whether the provisions of Part VBA of the Wrongs Act are of a kind that can be picked up and applied by s 79(1) of the Judiciary Act. Section 28LE of the Wrongs Act – which is central to the operation of Part VBA – is directed to the recovery of damages ‘in any proceeding in a court’. In light of these words, a reasonable argument can perhaps be made that Part VBA is directed to the exercise of jurisdiction and that it is therefore capable of being picked up and applied as a surrogate federal law where the Commonwealth Parliament has not ‘otherwise provided’. However, in its practical operation, Part VBA affects the substantive rights of tortfeasors and their victims independently of any curial proceedings brought by one against the other. Further, by s 28LD of the Wrongs Act, Part VBA is explicitly declared to be substantive law. These matters suggest that Part VBA is not a law that is capable of being applied as a surrogate federal law by s 79. It will be interesting to see whether this question arises again in any future proceedings.