Evans & Anor v Air Canada ABN 29094769561

[2025] HCATrans 018

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S138 of 2024

B e t w e e n -
RENAE EVANS
First Appellant
STEPHANIE EVANS
Second Appellant
and
AIR CANADA ABN 29094769561
Respondent

GAGELER CJ
EDELMAN J
STEWARD J
GLEESON J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 12 MARCH 2025, AT 10.04 AM

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend MR M. TANEVSKI for the appellants. (instructed by Shine Lawyers)

MR J.T. GLEESON, SC: May it please the Court, I appear with MR G.O.J. O’MAHONEY and MR L.G. MORETTI for the respondent.
(instructed by Norton White)

GAGELER CJ: Thank you, Mr Gleeson. Mr Walker.

MR WALKER: May it please your Honours. The issues before your Honours arise in proceedings in which questions were asked and answered concerning the operation of the 1999 Montreal Convention, which is Schedule 1A to the Civil Aviation (Carriers’ Liability) Act 1959, and its operation in light of the relevant tariff of the respondent, to which I shall come.

It arises in proceedings in which, as your Honours may have observed, so far as concerns the question of fault for the injuries alleged to have been suffered from what I am going to call the turbulence occurrence, it is accepted or was accepted in the courts below by us that the respondent, Air Canada, would be in a position to prove that it did not occur by reason of its negligence, et cetera.

Against that background, can I take you directly, please, to the Convention, which – in part A of the authorities – is found behind tab 3. It is Schedule 1A, as I say, to the Act. Could I pick it up, please, at page 78 of the authorities, Article 17 in Chapter III of the Convention, the chapter being headed:

Liability of the Carrier and Extent of Compensation for Damage –

A heading which obviously contemplates that damages for damage, by way of compensation, will be monetary. It is Article 17(1) which, in our submission, is both at the heart and is the foundation of a proper understanding of the structure of the Convention, including as it contemplates tariffs may tailor‑make the position between the carrier and its passengers. In 17(1), your Honours will see in particular the important word “only”:

The carrier 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.

Which raises factual questions and characterisation of facts, and which includes the notion of a causation. But upon that so‑called “condition” being made out, there is liability for damage. It is a liability which in 17(1) is not subject to any financial limit, or limit of liability expressed in monetary terms by way, for example, of what are familiarly called “caps”.

It is not obviously, at this point, sensible to contemplate that the condition in 17(1) is, for example, itself a limit on liability. It is a condition of liability. When one moves by way of textual contrast between Article 17(1) being directed to death and bodily injury, one can, by way of example, move to the very next Article, 18, “Damage to Cargo”, where one sees similar language in 18(1):

liable for damage sustained . . . upon condition only –

But then in 18(2) the language:

However, the carrier is not liable if and to the extent it proves that the destruction . . . resulted from one or more of –

those matters. In our submission, at least at this stage – perhaps provisionally – a judicial reader would regard 18(2) in this Convention designed to record consensus between state parties with disparate legal systems. That could be understood as being in the nature, say, of a defence law answer to an 18(1) claim.

The same pattern can be seen more tersely in Article 19 with respect to delay. Then another species of an answer – whether by way of defence or not probably does not matter – can be seen in Article 20, headed “Exoneration”, which, in terms familiar to our legal system, resembles – if not completely perfectly – the statutory form of the contributory negligence answer. One sees that there is a focus in Article 20 on those things which in general terms might be regarded as the blameworthiness of the passenger as claimant or the blameworthiness of the passenger with respect to claimants who claim as a result of that passenger’s death or injury.

Then we come to the words which are the hinge into, we say, the question of how this scheme operates in light of tariff adjustments. In Article 21, which is headed:

Compensation in case of Death or Injury of Passengers –

and therefore picks up the subject matter of 17(1), there is, we say, plainly stipulated in the Convention a liability – which is the 17(1) liability – not permitted to be excluded or limited, up to an amount which is, according to the mechanism in this treaty, described as:

100 000 Special Drawing Rights –

That, in our submission, functions as a point in a financial continuum below which the liability is liability that requires only the condition of 17(1) to be made out. In the language of those who discussed this before, it was agreed – and, for that matter, have commented on it afterwards – that describes what has become called, in the figure of speech, the first tier, and it is a first tier which is, again, fairly summarised – but not so as to substitute for the text, of course – as no‑fault liability.

The provisions of Article 21(2) picks up the language which is, of course, redolent of the language to which I have drawn attention in 18(2) or 19, but in this fashion:

shall not be liable for damages arising under paragraph 1 of Article 17 –

and I stress, that is for the no‑fault damages conditioned only upon the loss being occasioned during the flight, or going on or coming off:

to the extent that they exceed –

So, we are now in the language of limit or cap:

100,000 Special Drawing Rights –

but there is a condition on that limit, namely:

if the carrier proves –

one or other of those matters (a) and (b). And as I say, it was conceded for the purposes of these proceedings that the airline would be in a position to prove the 21(2)(a) matter not due to its negligence.

Now, while in the text, at this point I draw to attention that Article 22 – which is concerned with delay, baggage and cargo – starts and continues a pattern of straightforwardly limiting liability by reference to numbers of SDRs. Those limits are then the subject of stipulation by the parties to the treaty in Article 24, which, importantly, commences by the phrase:

Without prejudice to the provisions of Article 25 –

which is finally the pointy end of our analysis. But in 24 you will see that the provisions of Articles 21, 22 and 23 are described as being provisions which – at least as to some of them – prescribe what I will call or quote as “the limits of liability”. Now, those limits of liability, as Article 24 makes crystal clear, are those which are, and are only, financial. It is clear, then, from 24, that 21 is to be regarded as a provision that prescribes such a limit.

BEECH-JONES J: Did you say a financial limit?

MR WALKER: Yes – 24 is and is only a matter of money:

the limits of liability . . . shall be reviewed . . . by reference to an inflation factor –

That is not possible to be done, of course, by reference to conditions of recovery, and one sees that the whole of 24 is concerned with dealing with the fluctuation nature of the purchasing values of currencies, which have been conventionally aggregated for this artificial notion of SDRs.

Article 25 uses the same expression – “limits of liability” – and uses an expression “higher limits of liability” in a way that at least suggests, probably concludes, the question of it being a reference to financial limits. And one sees that what is contemplated there is that there can be an increase of a limit. That means, of course, greater provision for real compensation, that is, complete compensation to a passenger. It does not authorise reduction in limits – I am about to come to 26 – but importantly, and for the purposes of this case, 25 also contemplates – my words – the removal of limits. The Convention words:

A carrier may stipulate that the contract of carriage shall be subject to . . . no limits of liability whatsoever.

And “whatsoever”, of course, conveys the notion: by whatever means, textually, that outcome is achieved. Article 26 obviously rides with Article 25. Article 25 permits carriers to increase their financial exposure; Article 26 renders any decrease in their financial exposure null and void, but addresses more than simply a “limit” – presumably of liability – it also extends further, to:

Any provision tending to relieve the carrier of liability –

That would include, as a matter of ordinary, nonlegal English, answers or defences or conditions, as well as, obviously, the imposition of caps. It may include other matters as well, such as procedures. But any such attempt is
null and void, so long as one recognises the severance required by Article 26.

Then one goes to Article 27, which, notwithstanding it is headed “Freedom to Contract”, of course does not detract from the pattern of provisions that I have already drawn to attention in 25 and 26. Article 27 perhaps – I hope – unnecessarily dispenses airlines from compulsion to contract, and then moves to the wording upon which our friends rely:

Nothing . . . shall prevent the carrier from . . . waiving any defences available under the Convention, or from laying down conditions –

Now, that would include conditions of liability:

which do not conflict with the provisions of this Convention.

We, anticipating arguments against us, note at this point in chief that the notion that defences or conditions are mutually exclusive conceptual categories should be rejected upon first being aware of that possibility in argument.

If you lay down a condition that permits a carrier to raise an answer so as to defeat or limit the financial compensation payable upon a claim, it is, in our submission, of no moment whatever to ask anxiously whether or not that amounts to a defence. As a matter of ordinary, nonlegal English, of course it does, in the sense that is an answer which would defeat a claim or part of it. It is clear that what Article 27 is referring to are matters which will alter the availability of an answer, which can either be a complete answer or a partial answer, along the lines of what has already been noted.

Those are, in our submission, the parts of the Convention which are then required to be understood by reference to what the tariff stipulated. Now, the relevant provisions of the tariff are fond in the respondent’s book of further materials. Behind tab 2, commencing at 121, is the actually extant example at the time of the flight, but my optometrist is not quite equal to them.

Can I suggest that, because the text is the same, even though it is an earlier version, the text that you will find reproduced behind tab 1 – relevantly picking it up at page 113 of the book – is easier to read. This is rule 105, and 105(B)(5), which you will find on page 113, sets out a paramountcy provision:

For the purpose of international carriage governed by the Montreal Convention, the liability rules –

And, relevantly, I have taken you to them:

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.

And there may well be just such inconsistencies. Looking ahead, it may be – though this is not in issue in this case – that that is strikingly true of rule 105(C)(15) that you will find commencing on the foot of page 116, but we need not explore that.

It is true – though, not with the effect that Justice Leeming gave in his reasoning against us – that 105(B)(5) renders the Montreal Convention paramount. Of course, the Montreal Convention, as I have already shown you, has provisions which itself constrain the freedom of contract of a carrier when the carriage is governed by the Montreal Convention.

It is the opening words, or provision or stipulation, of 105(C) upon which we rely, as your Honours know. Rule 105(C)(1)(a), which is posited on the Montreal Convention applying – which it does – and which addresses questions of limits of liability – which is what we are here about – says, and says simply:

There are no financial limits in respect of death or bodily injury.

Meaning there is nothing that functions by way of a cap in answer to a claim when the claim is for compensation that would exceed that cap. Then one sees in paragraphs (b) and (c) some rather exact references to special drawing rights which are, helpfully or otherwise, described as approximately certain figures in Canadian dollars, and then ends up “in most cases” – that is (b) and (c).

BEECH‑JONES J: Mr Walker, those figures in (b) and (c), are they higher than the indexed Montreal Convention rates for those types of damages or do they reflect the indexed number – that may be taken on board – at the time of the tariff?

MR WALKER: No, I think – I have to check about the indexation. They are not the same as in the Convention ‑ ‑ ‑

BEECH-JONES J: They are a bit higher.

MR WALKER: ‑ ‑ ‑ which started off with round figures. So, they may well simply be reflecting indexation. I will have that checked. There will be, we say – it will not matter if that was either rounded up from an indexation or greater than an indexation. I do not think anyone has suggested something would flow from it being less than an indexation.

BEECH-JONES J: I think your opponents, though, say that the rest of this, (b) and (c), reflect the effect of the – equalise the Warsaw Convention to the provisions of the Montreal Convention, unchanged.

MR WALKER: Which is more than just indexation.

BEECH-JONES J: I understand that, but at least so far as Montreal, I think they say, well, that is unchanged – I think; I am not sure – and therefore (a) is not effecting a change now. I will be corrected about that, but I think that is part of the argument against you.

MR WALKER: When I say there is no change, that involves the argument, which we understand is made against us, that what (C)(1)(a) provides – I am trying to pick a neutral expression – is the unaltered effect of 17 and 21.

BEECH-JONES J: So, my query is, is that proposition ‑ ‑ ‑

MR WALKER: And we do not accept that, of course.

BEECH-JONES J: Yes, but is that proposition true for (b) and (c)? That is the effect of what I am asking.

MR WALKER: No, we say, but it would not matter if it were because these are several, that is, individuated stipulations. Now, I am using a tendentious expression, there. I say this is an Article 25 stipulation in (a), and it is only a question of working out its meaning. It would not matter whether (b) and (c) are doing no more than updating, through the 24 indexation, what is provided by way of limits or not.

Under (C)(1)(a), if we are correct, there were financial limits in respect of death or bodily injury because the 17(1) liability is no‑fault liability and it is limited to 100,000. What the tariff says was there is no limit of 100,000 for that no‑fault liability. There is only one kind of liability provided by the Convention for death or bodily injury: it is 17(1). Article 21 refers to it and affects it. It does not alter 17(1) as the only source of the liability in question.

Your Honours, that being so, in our submission, the matters that appeared to Justice Leeming to regard this as rule 105(C)(1)(a) not being a stipulation under Article 25 for then to be considered against the context as the evident possibility that Article 25 holds out for altering the cap of 100,000 on 17(1), conditioned only on flight or embarking or disembarking. I will call it, loosely, no‑fault liability, which is the subject matter of the Convention benefit for passengers.

I have already, in answer particularly to Justice Beech‑Jones, touched upon what is in our proposition 4 in our outline, the references to other matters in the reasons of Justice Leeming. The wording of “tariff” is responsive, as your Honours have been informed both in Justice Leeming’s reasons and in the arguments of the parties, by a Canadian regulation that you find behind tab 6 of the respondent’s book of further materials starting at page 290. Your Honours can pick the relevant provisions up at 291, and 110, under the heading of “Filing of Tariffs”, requires the filing of a tariff:

before commencing the operation of an international service –

see 110(1), and has certain stipulations thereafter which have the effect of requiring carriage in accordance with tariff only. You see on page 292 that 110(4) and (5) regulate the conduct, including as to the application of the terms of the tariff to the aviation activities of the carrier in question.

On page 293 there are then requirements as to the form, that is, what shall be contained in a tariff, which, as I pointed out, is a compulsory prerequisite to carrying on international carriage. In 122(a), the tariff has to:

contain

(a)the terms and conditions governing the tariff generally –

And it stipulates they have to be:

stated in such a way that it is clear as to how the terms and conditions apply to the tolls –

which might be called the routes:

named in the tariff –

What that adds to the way in which contractual terms and conditions would be stated otherwise, it may be dubious, but, in any event, you have to set out:

tariff shall contain
(a)the terms and conditions . . . in such a way that it is clear –

how they apply. In 122(c), again:

Every tariff shall contain
. . .
(c) the terms and conditions of carriage –

so, repetitive, I suppose, in part of (a):

clearly stating –

what is called:

the air carrier’s policy –

the French:

la politique du transporteur –

does not add any understanding to the English, which will suffice, but it has to be understood that these are terms and conditions, they are binding as terms and conditions, they govern, and so the word “policy” does not, as it were, soften the edges so as to have 122(c) requiring something which is other than the effect of the terms and conditions.

One sees that there are things there, some of which lend themselves to bright line, and some of which might, according to terms and conditions, have room for discretions and exceptions, but suffice it to say that all has to be clearly stated. One of them is, as your Honours know, on page 294, item (c)(xviii), namely the:

limits of liability respecting passengers and goods –

Item (xix) might be regarded as important, that is:

exclusions from liability respecting passengers and goods –

But otherwise it would appear that what, in the language of the Convention, might be regarded as a defence – I have suggested that might be understood as being an answer by an airline, a carrier – is not, in terms, referred to in the description in the Canadian regulation of the mandatory contents of tariffs describing the mandatory content of terms and conditions which are mandated to be set out – and clearly – in the filed tariff.

Nothing, in our submission, emerges from that, that is, that Canadian regulation, which detracts at all from the proposition that the purpose contemplated by Article 25 of the Convention, to be carried out by a term of a tariff such as 105(C)(1)(a) in this case, is simply a matter of what appears in the relevant part of that document to be clearly stated.

STEWARD J: Mr Walker, can I ask, leaving aside issues of meaning and application, is it common ground that 105 is a “stipulation” for the purposes of Article 25?

MR WALKER: No, it is not. That is, we understand it ‑ ‑ ‑

STEWARD J: Also in dispute?

MR WALKER: ‑ ‑ ‑ a matter of diametric opposition.

STEWARD J: What do you say is sufficient for something to be a stipulation by a carrier?

MR WALKER: Language such as you see in this rule – it could not be ‑ ‑ ‑

STEWARD J: So, a solitary declaration?

MR WALKER: Yes.

STEWARD J: It does not need to be contractual, or anything like that?

MR WALKER: It will be contractual, but – if I can be forgiven one piece of facetious cynicism – anyone who has travelled and bothered to waste parts of their lives by reading the terms of travel will wonder about whether or to what extent they are truly contractual in the sense of mutual obligations – am I ever really entitled to be flown anywhere?

STEWARD J: Yes, let us not go there.

MR WALKER: But leave aside that cantankerous approach, the point is the Convention really is the setting against which all of this is possible.

STEWARD J: Is the tariff incorporated into your contract with Air Canada?

MR WALKER: Yes.

STEWARD J: Yes, I see.

MR WALKER: So, subject to those comments, which really do not matter, but which rather tend to indicate that it is the formality of filed documents that is important – it is not handshakes and understandings between a trader’s representative and a passenger at a ticket counter – there could be no more obvious stipulation than the declaratory form, as it happens, comprehensive and without exception or qualification, that you find in the provisions of the tariff upon which we rely.

Now, “stipulation” obviously has as a core but not sole meaning the notion of a contract; a mutual agreement. But it also has, as part of its colloquial and contextual English, the notion of an edict. It does not matter for that purpose as to whether it is consensual or not.

GLEESON J: So, you are saying that the tariff stipulates that the contract shall be subject to no limits of liability whatsoever?

MR WALKER: Yes. For death and bodily injury, and that is all we are talking about. Now, that requires, obviously, characterising what I will call the 100,000 cap for no‑fault liability, which is the liability that the Convention imposes and provides to be compensated in favour of passengers, my argument requires that to be regarded as a limit of liability.

BEECH-JONES J: A financial limit?

MR WALKER: A financial limit, sorry. Yes, a financial limit. I am grateful – a financial limit to which an Article 25 stipulation can speak by way of increasing, never decreasing. So, a more generous compensation beyond that which the combination of 17(1) and 21(1) and (2) would otherwise permit.

That, in our submission, is in every sense a financial limit on a claim of the 17(1) liability against a carrier, because it says that liability – which is no‑fault, in 17(1) – is limited to a financial recovery up to and not exceeding 100,000 SDRs. We say that the language of the rule could not be clearer as to the removal of that limit. That is exactly what Article 25 had in mind in the second alternative as to what can be done favourably to a passenger by a carrier in its tariff.

GAGELER CJ: Mr Walker, the language used in Article 25 – “limits of liability” – is the same as in Article 24 that you noted.

MR WALKER: Yes.

GAGELER CJ: Is it a consequence of your argument that the periodic review of limits of liability under Article 24 would involve, effectively, an entire review – or could involve an entire review – of the structure of Article 21(2), not just how many special drawing rights?

MR WALKER: Probably not, for the reasons I have put already. The review in 24(1) is a review – if you will see, halfway down its text:

by reference to an inflation factor –

Now, that does not compel an answer one way or the other, but it certainly strongly indicates that it has to do with a purchasing value of money, or a basket of currencies inquiry, rather than, for example, a social inquiry as to reasonable expectations of carriers with respect, for example, to extending liability beyond the curtilage of embarking or disembarking to something else – queuing, or being held in one of those pens, for example. If I am right in that regard, that is reinforced by the opening words to 24(1), which are:

Without prejudice to the provisions of Article 25 –

because on any view of it, 25 includes – may be confined to, but certainly includes – the notion of a financial limit, because of the word “higher”.

BEECH‑JONES J: So, both of them are talking about monetary limits, for want of a neutral term.

MR WALKER: They may not be only talking about monetary limits. We think 24 is only talking about the numerically expressed matter, which is a monetary limit, because of this description of the review as being:

by reference to an inflation factor –

That theme continues in 24(2), the relevant conclusion of a review – the one which will trigger something under the Convention – is a conclusion that:

the inflation factor has exceeded 10 per cent –

That makes sense only for money, we submit, respectfully. The same is true with Article 24(3). It maybe that Article 25, particularly the second alternative, which is:

no limits of liability whatsoever.

Is not and cannot be, in its terms, confined simply to money. After all, if you say there are no limits, you are no longer using a figure – there is no cap. But it is saying that there will be nothing in the nature of a cap. And I use “cap” advisedly, because a limit on liability expressed financially operates by saying, even if your loss is such that compensation would be say, 105, if the stipulated limit in the Convention, understood in light of the tariff, is 100, then you will only get 100.

Now, it may be that for that remaining five, the parties then engage in a negligence case, with the onus allocated wherever it is by the Convention – say, on the carrier – with respect to whether there can be recovery. But what we have by the words “no limits” in the tariff, in our submission, picks up perfectly the description of what can be done under Article 25, namely:

stipulate . . . to no limits of liability whatsoever.

That, in our submission, has to be understood as a reference to the kind of liability which this Convention imposes, and the only kind of liability which this Convention imposes is 17(1), as then addressed by the other provisions to which I have taken you. It is addressed by – leaving aside the conditions of 17(1) which are part of the 17(1) liability, if those conditions are fulfilled, other parts of the Convention provide for the possibility of caps operating or for answers by reference to exoneration – not in question in this case – or by reference to what I am going to call blame or fault either on the part of the carrier or on the part of somebody else, but over a certain amount, in other words, beyond the limit of the 17(1) liability.

It is in that sense that we say that Article 25 is plainly engaged by the provision in the tariff, and we ask – I hope, rhetorically only – otherwise, are we to understand that rule simply says – misleadingly, not clearly – there are no limits of liability provided for by the Convention unaltered by the tariff? Because that is not true – there are limits of liability provided by the Convention, unaltered by the tariff. And so, when the tariff says ‑ ‑ ‑

BEECH-JONES J: They may not be financial limits, as in ‑ ‑ ‑

MR WALKER: But they are financial limits – 100,000 is the cap on your 17(1) liability.

BEECH-JONES J: That may be the devil in the detail, but one way you could say you could read Article 21 is to say: even taken with Article 17, there is no ultimate cap on how much you can get. You may get there, you get your no‑fault tier, and you can get the rest through Article 21(2), but there is no ‑ ‑ ‑

MR WALKER: If I may say so, your Honour, it is ironic that the regulation in Canada is called in aid by Justice Leeming, with its requirement for clarity, if what your Honour has proposed is the way in which one should read the Convention and the tariff. It is not a question of reading the Convention, the tariff and the Canadian regulation. Just looking at the Convention and the tariff, Article 21, as the opening words of (1) and (2) in it spell out pellucidly, have to do with Article 17(1) liability, not other liability.

Obviously enough, Article 17(1) – liability and its condition – is subject to a limit imposed by 21, something which the terms of the Convention recognises by the description in 24(1) as of the limits of liability prescribed in, amongst other things, Article 21. It is for those reasons that the scheme contemplates that existing limits in the Convention, first of all, exist – and they do – and they are financially expressed in large measure. Perhaps true limits of liability, if one were to be strict about the language, are only financial. That is, it is not a limit of liability to stipulate to provide for a condition of liability, and it is not a limit on liability to provide for an answer, complete or whole, a so‑called defence.

Without being engaged in the tricky question of understanding, in English, expressions which are intended to bind state parties with different – and quite often, very different – legal systems and concepts of claim and answer, it is, in our submission, clear that 25, by using the expression “higher limits of liability”, is referring to lifting – that is, increasing – the cap, making it more generous to the passenger, or having no cap at all.

There is no doubt about it that the parties are before the Court because the operation of a cap is called in aid against us. So, there is a limit on the 17(1) liability which is the limit that is imposed by Article 21, because – I stress – Article 21 is not saying: and there is another kind of liability, fault liability. It is still saying its liability conditions only on the matters in 17(1), and in 17(1) you are guaranteed that there cannot be any exclusion or limit of that liability by reference to anything – money or otherwise – up to that amount. So, that is a cap on the no‑fault liability which we invoke. We invoke the liability, they invoke the cap, we say the cap is removed by Article 25.

The same is obviously the matching provision which is really ancillary in 21(2), which states the question of what it is within – or placed on the carrier, in our legal language – as its onus or burden to prove. It does not alter the fact those are understood to be terms which apply to a claim for damages arising under paragraph (1) of Article 17. That is exactly what it says it is doing.

STEWARD J: Mr Walker, if your construction is correct, why would there then need to be 105(C)(15), which limits the liability of:

the carrier of a passenger whose status, age or mental or physical condition ‑ ‑ ‑

MR WALKER: I have drawn that to attention to something that is probably void. What you would not do – I am so sorry.

STEWARD J: No, it is all right. And (D), which follows on, says that a passenger can pay an extra consideration to be covered.

MR WALKER: I do not think anyone – maybe my friend – will defend every syllable of the tariff as both complying with the Canadian regulation – for what that is worth – and, more to the point, fitting within that which is permitted by the Convention, and that really does matter. It suffices to say, in answer to your Honour’s first formulation of the question, we are here to understand the relevant part of the rule. Nothing in 15 casts light on the plain language of the opening words that we rely upon in (1)(a).

STEWARD J: I suppose you might say 15 is simply a qualification.

MR WALKER: It is all to be read together, but it is all to be read, as well, against the Convention which – if I can turn an argument used against us in our favour – as you will know, is said in case of inconsistency to govern. We are not hurt by that provision, because we invoke Article 25.

We say this is a stipulation as to “no limits of liability whatsoever”, and there is no inconsistency in that provision at all with the Convention and its limits because 25 invites those limits to be relaxed in favour of a passenger. But apropos 15, to which Justice Steward draws attention – which I noted earlier – its status in light of Article 26 is, to put it mildly, problematic. It does read like a:

provision tending to relieve the carrier of liability –

The Convention does say that will be:

null and void –

In our submission, let it be assumed that 15 is extravagantly irregular. That is no reason and provides no textual indication of why you would read otherwise, and according to the ordinary English of the matter, the words of 105(C)(1)(a), upon which we rely.

GAGELER CJ: Mr Walker, do I understand your case to be based on Article 25, not Article 27?

MR WALKER: Can I come to that immediately. In the reasons of Justice Leeming, your Honours will see the vestiges of, or the references to forensic events in the Court of Appeal. Before the argument, the proposition that Article 25 was not available because what the rule did was not a stipulation for “no limits of liability whatsoever” within the meaning of Article 25. By way of argument, contrast was drawn in the argument with Article 27.

As Justice Leeming notes, there was an argument in court, which I suppose amounted to an objection to that on the basis that it had not been argued below. It is obviously not a Suttor v Gundowda point, it might be a broader question. In any event, that did not go anywhere, but what did turn out, to our detriment, was the fact that there was no notice of contention filed or relied upon by us, notwithstanding what might be called more than one opportunity to do so.

Your Honours will see in paragraph 90, at page 93 of the core book, in – if I may say so – elaborately not deciding the point, Justice Leeming says, picking it up on the fourth line from the top of that page:

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.

We think that means the Article 25 question would be arid because it would not answer the matter. Then you see a reference to the matters I have just noted, and then his Honour continues:

Even so, the respondents did not see fit to serve a notice of contention.

Then the court declines to resolve that submission. In our submission, this is – as I said in going through the terms of the Convention – something which precedes on an unspoken premise, which we submit is surely wrong – unsound – that Article 25 and Article 27, as it were, do not speak to each other, or more to the point, that the different kind of discourse that they employ means they cannot be overlapped.

Plainly enough, looked at functionally, a successful stipulation under Article 25 will work an effect which could also formally be described by reference to elements of Article 27. Particularly if, as must be the case, Bullen and Leake does not inform an understanding of any of these documents, particularly the Convention, and the notion of strict defence, allocation of onus, et cetera, is really just not to the point.

We have onus allocated by terms of the Convention. So, when I went through those terms, I pointed out some things which on any view of the matter might be sensibly understood as being within the notion of defence in the expression in Article 27, waiver of defence, because there is a provision for liability and then a following provision saying: but no liability if the carrier approves, which sounds like something which, on some globalised view of legal claims, is a defence. It is an answer that defeats.

More than an answer that simply says a condition of liability does not apply, it seems to be what we sometimes call in our system a positive defence. Your Honours, that is how the question was dealt with or not dealt with in the court below. In our submission, this Court can take a view that – it does not matter whether it is 25 or 27, on any view of it, this is a stipulation which in terms says there are no limits of liability.

The obvious way in which that is within the purview of the Convention is Article 25. But if – and it is a large if – the answer that proving no negligence is in the nature of a defence and its availability over a certain amount of claimed compensation does not amount to a financial limit – and that is the most favourably it could be put against us – then, in our submission, of course, these are provisions that say there are no such limits to the no‑fault liability under 17(1). It all comes back to – starts with and must come back to – 17(1). Your Honour, I hope that answers your question, I am sorry.

GAGELER CJ: Not quite, no. I know you say this is a “stipulation” for the purpose of Article 25, and that is ground 5 of your notice of appeal.

MR WALKER: Yes.

GAGELER CJ: Do you also contend that it is a “waiver” for the purpose of Article 27, because I do not see that in your notice of appeal, although I see ‑ ‑ ‑

MR WALKER: No, it is not, in terms of the notice of appeal. Based upon the reading that I urge concerning Articles 25 and 27, I do have as a variant in my argument that the provision for “no limits . . . whatsoever”, the language of 25, echoed in the provision of the rule, no limit of liability, if that amounts only to addressing a defence rather than a limit of liability, notwithstanding its language, it is entirely effective to say that the no‑fault liability in 17(1) cannot be answered by reference to money or by reference to no negligence.

Now, the Court of Appeal has not, with respect – and it records a positive argument and contest, which obviously affects my position – in our submission, explained why or in what sense one sees the very general provision of 27:

Nothing contained in this Convention –

does not cover ground which can be specifically addressed, say, under Article 25. In our submission, it is obvious that what Article 25 permits to be done in the contract of carriage is something that can answer the description of at least the second and third of the categories referred to in Article 27. We can put to one side the:

refusing to enter into –

but we have:

waiving any defences available under the Convention –

and we have:

conditions which do not conflict with the provisions of this Convention.

Obviously, or not, it is a condition that does not conflict with the provisions of this Convention to say there will be a higher limit, or no limit expressed financially at all, up to which you get no‑fault liability under 17(1); that would not conflict.

That would be framed in terms of Article 27, but it would be doing that which Article 25 permits, and vice versa. Yes, we do say that it was no proper answer to say – of course, the Court of Appeal did not say this – it had to be 27, could not be 25. The Court of Appeal studiously said they are not deciding that. But, with respect, they were wrong to think that it was either/or, for the reasons I have put, and we do embrace, as entailed in that form of argument, that if I am wrong on those premises, then Article 27 suffices.

With respect to travaux, our friends have been so good as to involve us in early notice of the aide-mémoire that your Honours have, and our response – which really, for efficiency’s sake, should await reply – is to this effect. Language, even at the evocative stages of travaux, like summaries and self‑congratulatory descriptions of what has been achieved, should be only very warily taken into account if, as we understand it to be, the object of this exercise is to press an analysis of the relation of Article 25 and Article 27 with respect to Article 17 and Article 21 principally, whereby one works fatal effects by way of distinction between what I am going to call answers and defences, so‑called, whether from the figure of speech of

tiers – two tiers which triumphed over the proposed three tiers, et cetera, or not. Nothing in the travaux, in accordance with the Vienna Convention, can possibly overcome the clarity of the language in 25 and, for that matter, in 17 and 21.

May it please your Honours.

GAGELER CJ: Thank you, Mr Walker. Mr Gleeson, we will take a morning adjournment before we hear from you.

AT 11.06 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.21 AM:

GAGELER CJ: Mr Gleeson.

MR GLEESON: Thank you, your Honours. As per our outline, could I start at paragraph 2 with some principles of construction, most of which are not in dispute, but some of which may be.

It is not in dispute that the cause of action arises under the statute, section 9B of the Civil Aviation (Carriers’ Liability) Act 1959, which gives the Montreal Convention the force of law in Australia. And it is not in dispute that Montreal, and in turn, the statute, must be construed in accordance with the applicable principles of international law. We have given your Honours reference to Povey v Qantas 223 CLR 189, particularly at paragraphs 24 to 25 and 59.

The next proposition is the role of the tariff and how it is to be construed. In answer to your Honour Justice Steward’s question, the case was run on the agreed basis that the tariff was a part of the contract between the carrier and the appellants. There were two versions of the tariff in evidence. The difference ultimately does not matter to the issue before you. The two‑page semi‑illegible version of the tariff is the actual form of rule 105 at the time of the incident. The longer document that your Honours have been asked to work off – and the Court of Appeal worked off – is, in fact, the 2022 tariff, therefore after the accident.

The only relevant change is that in the financial limits for baggage and cargo that your Honour Justice Beech‑Jones asked about, those figures are the indexed figures following an amendment under Article 24, which took place after the accident. The answer to your Honour’s question otherwise is yes, those figures are simply the Montreal figures indexed as at the time of the relevant tariff.

BEECH‑JONES J: This may take you out of your course, but does the same – in 105(B)(1)(b), which is referrable to Warsaw – is that figure of 113,100 the indexed value under the Article 21 of the Montreal?

MR GLEESON: It is, your Honour.

BEECH‑JONES J: All right.

MR GLEESON: Could I hand up a second aide‑mémoire, which gives the Court the references, to show that is true for all of the cases. This aide‑mémoire, in the first column, takes the relevant provisions of the tariff that you have been looking at this morning – 105(C)(1), (2) and (3), which is firstly Montreal, that is (C)(1); then Warsaw, that is (C)(2); then the residual category, (C)(3), is where neither Convention applies. The second column explains where that numerical figure comes from, either in the relevant Convention or in one of the updating provisions under Article 24. It also, for example, in relation to the residual category of 105(C)(3), says that that comes from a Canadian Air Passenger Regulation, which stipulates a limit for that particular category.

The second column of the document is designed to anticipate that question, namely, allow us to say, in respect of the tariff, in every other case except for the one that is in dispute, what we see in (C)(1), (2) and (3) is simply a faithful reflection of an amount. The third column is designed to demonstrate, as per our written submissions, that in every case, there is – if one understands the full Convention, there are either available defences which could be internal to the particular provision, or they could be general defences like contributory negligence.

In the case where there are what we would call true financial limits of liability, which is the whole of Warsaw and is Montreal, but not the passenger case, which is where, as I will come to, it is unlimited financial liability, there is a mechanism for breaking or exceeding the limit, either by special declaration or by the passenger proving – which is very difficult – intentional or reckless conduct.

The point of the third column is to say that in none of the instances does this part of the tariff purport to identify or summarise the defences for the mechanisms for breaking or exceeding the limit, and that allows us to submit that the purpose of the provision in dispute, as with all of its neighbours, is about identifying the monetary limit without going into the question of whether there may be defences or means of breaking the limit, let alone waiver of defences. I will come back to that document, if I might.

So, your Honour, returning to paragraph (2), having indicated that the tariff is part of that contract, the case, again, was conducted below on the basis that in terms of choice of law, Australian principles would be either directly applicable or presumed to be applicable, even though there might have been an argument that it was governed by Canadian law.

However, a point where the parties do start to diverge is that we submit that when applying Australian contractual principles to the tariff, a matter that must be taken into account is that this is not simply a document between a carrier and an Australian consumer, it is a document that the carrier prepares, which is speaking to passengers flying on a Canadian airline to and from various parts of the world, often with no connection to Australia, whose carriage may be governed by Montreal, or Warsaw, or no Convention at all.

It therefore becomes important, in understanding the tariff, to look at the provisions which you have not been taken to this morning, which is the Warsaw provisions, to see how it all works together. Indeed, it is likely to be regulated by the rules of non‑Australian jurisdictions, particularly Canada, as the home country of the carrier. It is for that reason that Justice Leeming, with respect, was correct to say that some weight, but not exclusive weight, could be placed on the Canadian regulation as part of the construction exercise, because it would be within the reasonable contemplation of the parties understanding this broader context that a carrier may be governed by regulations of its home state.

Now, your Honours will probably appreciate that the concept of a tariff required by a home jurisdiction was traditionally very common in this area. Australia had required tariffs – it is now gone in Australia. It remains in Canada, it remains in the United States, it remains in the European Union, and that provides part of the background under which the document has come into existence, and it indicates no narrow view should be taken of its construction.

Your Honours, our second‑last construction point is that the ultimate question for you is whether rule 105, properly construed in the light of all the matters I have mentioned, has removed a valuable entitlement that the carrier has under the Montreal Convention. We say it is a defence, but whether it is a defence or, more generally, a valuable entitlement, the ultimate question is whether the carrier has given it up for nothing, and for no obvious reason, as Justice Leeming pointed out, and without clarity of language which has expressly addressed the entitlement said to be given up.

Your Honours, finally, can we take your Honours to The Cape Bari, which is in volume 4 at page 9 – a decision of the Privy Council, with the main speech given by Lord Clarke. What the case demonstrates is that where a person is said to have given up a valuable entitlement or right arising under operation of law, including an international Convention, clear language is required before concluding that has occurred.

In that case, it was a claim by the wharf owner, BORCO, against the vessel owner for damage which the vessel did to the wharf. The owner of the vessel claimed a statutory entitlement, which was the right to a limitation of liability under the 1976 Convention, which in Australia is brought into law under the Limitation of Liability for Maritime Claims Act 1989.

BORCO alleged there had been a waiver of that right of limitation. The basis for the alleged waiver was the clause that you will see in paragraph 6 on page 346 of the book, clause 4 of the conditions of use. It was said there that the owner had given a comprehensive indemnity to BORCO, which it had, and that an indemnity should be construed as the giving up of the right of limitation.

That is the argument that was rejected by the Privy Council, and the statement of principle is at paragraphs 31 to 33, that where it is said that a party has:

abandoned or contracted out of valuable rights arising by operation of law –

there must clarity in the expression of that intention. That is sourced to various contexts and various cases.

GAGELER CJ: I have never heard of this proposition. Is it reflected in our jurisprudence?

MR GLEESON: Yes. So, your Honours – the answer is yes – we have given your Honours Concut v Worrell (2000) 75 ALJR 312 at paragraph [23], where Chief Justice Gleeson, Justice Gaudron and Justice Gummow cited, with apparent approval, what Justice Hope had said in the Court of Appeal in Castlemaine Tooheys v CUB.

EDELMAN J: Which tab is this?

MR GLEESON: Your Honours should have, separately, Concut v Worrell.

EDELMAN J: Is it supplementary material 2?

MR GLEESON: Yes. Sorry, your Honours. So, in that paragraph [23], the authorities that Justice Hope had relied upon at footnote 18 are several of the authorities which are relied upon in The Cape Bari, particularly the Stocznia Gdanska v Latvian Shipping Case decision. More recently, in a different context, three of your Honours approved paragraph [23] of Concut v Worrell, that is in Mann v PatersonConstructions (2019) 267 CLR 560 at paragraph 196, Justices Nettle, Gordon and Edelman.

EDELMAN J: That was a passage that the other members agreed with, was it not?

MR GLEESON: Yes. Your Honours, our proposition 3 is to pause at the Warsaw Convention before we come to Montreal, which will help us to understand exactly what was the great achievement of Montreal in respect to claims for death or personal injury to passengers. Reduced to its essence, we submit that Warsaw was a limited liability Convention in respect to all types of claims, whereas Montreal has become an unlimited liability for passenger death or injury claims and is otherwise a limited liability claim with, then, various defences available in each case and, therefore, Montreal, in departure from Warsaw, provides unlimited financial liability for passenger death and injury claims.

Your Honours have, as one version of Warsaw, “The Warsaw Convention as amended at the Hague”, which is Schedule 2 to the Act and commences at page 115. Article 17 is in similar terms to Article 17 of Montreal. Article 20 provided a defence in language that you will see all through Warsaw and then repeated in Montreal:

carrier is not liable if –

it “proves” something, in this case that:

all necessary measures –

have been taken:

to avoid the damage or that it was impossible . . . to take such measures.

The terms of that defence are important, because that was regarded as very difficult for a carrier to succeed in establishing, and that defence was softened when we come to Montreal, but we see here already the concept of the liability under 17, a defence under 20, and then 21 is exoneration or contributory negligence. Then, in the critical Article 22, which is a limited liability Article, in a case of every category of claim, liability is limited to a monetary amount. So, for injury to the passenger it is limited to:

two hundred and fifty thousand francs.

At the end of that paragraph, there is an ability:

by special contract –

to:

agree to a higher limit –

Then in paragraph 2, for baggage and cargo, there is a limit “unless” there is:

a special declaration –

and a higher sum paid. So, under Warsaw, as we have picked up in our aide‑mémoire this morning, there was an ability to get the higher limit only if either special declaration plus more was paid, or, under Article 25, if the customer could prove intent to damage or reckless conduct. So, they were the two ways in which what was otherwise a limit might be able to be exceeded, but otherwise, it is a limited liability Convention.

EDELMAN J: What is a “special contract”? Is that a specialty?

MR GLEESON: Given the international nature of the document, I would submit not, it is simply a contract that has been made beyond simply the contract of carriage and beyond simply the incorporation of the Convention. There must be, first of all, the customer saying: this is what I am carrying, this is what is in it, and I am prepared to pay whatever supplementary sum you require in order to get a higher limit of liability.

So, under Warsaw, we already see the structure of the basic liabilities are created under 17 to 19. We have general defences such as Article 20. We have limited liability under Article 22, and we have means to potentially obtain a higher limit, if either there is a special contract or there is proof of the very difficult matter in Article 25.

This Court discussed Warsaw in Povey v Qantas Airways (2005) 223 CLR 189 at 20 to 21. I might just go to that, if I can. That is in volume 3 at tab 8. That was the case that said that suffering of DVT is not an “accident” and, therefore, does not come within Article 17. As an aside, that is the answer to your Honour Justice Steward’s question about subclause (15) of the tariff. If what subclause 15 is doing is excluding liability or declaring no liability for something that is not an accident under 17, because it is about your own internal condition, then there is no inconsistency.

STEWARD J: I thought it might have had application where the damage was exacerbated by an incident and a pre-existing condition?

MR GLEESON: And if one is in that exacerbation territory, then the question would be whether that is to cut across Article 17. If it is not cutting across Article 17, then it can be given full weight, but Povey is an example where a DVT is not regarded as a relevant “accident”. So, in Povey at paragraph 20, the Court said that Articles 17 to 19 imposed liabilities, and then, paragraph 21:

The next three provisions limit –

those liabilities. And then, within the genus of limiting the liability, the particular provisions are analysed and the Article 20 defence is referred to. Article 21 is referred to, and then it is said:

Article 22 imposes a cap on the liabilities of the carrier at amounts which are fixed or calculable according to the relevant formula.

Now, the concept of a financial limit or a cap on liability is the very thing that is embedded in the whole of Warsaw and is what Montreal has moved beyond in relation to the passenger death and injury claims.

The other decision of this Court discussing this issue is Parkes Shire Council, which is also in volume 3, at tab 7, commencing at page 236 of the book. In particular, there is Justice Gordon’s statement at paragraph 52. This is in the context of Part IV of the Act, which covers domestic carriers, but in that equivalent context, her Honour refers to making:

the carrier absolutely liable for damage sustained by reason of the death . . . or injury” up to a fixed limit “or a higher sum which might be mutually agreed –

And then at paragraph 57, her Honour describes:

Article 22 of the Warsaw Convention provides a cap on the liability of the carrier “for each passenger”.

So, Justice Leeming correctly analysed that that is the nature of Warsaw. That then allowed his Honour to explain the bridge to Montreal, which was the dissatisfaction with the limits of Warsaw.

The dissatisfaction was twofold. The limits proved too low, but also there was no internal mechanism within Warsaw to revise those limits from time to time, and that led to particular dissatisfaction in the United States and threats to withdraw from the Convention. That, as is seen in the judgment at paragraphs 40 and following, led to the intercarrier agreements. Professor Cheng’s article at paragraph 41 has an evocative title to it. The first movers were Japanese airlines, who:

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.

Your Honours, in that compressed paragraph at 41 of Professor Cheng, we see an accurate summary of the intercarrier agreements, the Japanese antecedent to them, and ultimately of Montreal. So, we agree with Mr Walker that there are two tiers of Montreal. The first tier is a strict liability tier, but you have one defence, that contributory negligence is available across both tiers.

Above that first tier, the critical movement was to provide access to unlimited liability. There is no cap on the second tier. But what the carrier was left with was the ability to disprove negligence. In paragraph 42, Shawcross & Beaumont: Air Law – the classic text – accurately described “this development”, which becomes Montreal:

The effect is that the plaintiff can recover the full amount of proven loss, with no arbitrary financial limit –

and then it goes on:

in respect of potential liability in excess of 100,000 SDRs the carrier may still rely on the art 20 defence.

Few airlines acted individually, following Japan, it thus took IATA in 1995 and 1996 to produce the intercarrier agreements. You will see, at paragraph 44, the 1995 IATA Agreement, which was described as providing:

for “full compensatory recoverable damages”.

That is, the “full” references the fact that it is unlimited liability, once one puts the two tiers together. The mechanism by which it was done was – paragraph 1 – the carriers:

waive the limitation of liability . . . in Articles 22, paragraph 1 –

as to these claims:

so that recoverable compensatory damages may be determined . . . by reference to the law of the domicile –

So, the mechanism was a waiver of the cap otherwise available under Article 22(1) of Warsaw, which is on page 123 of volume 1.

GLEESON J: Mr Gleeson, have you identified the relevant principle of construction that would have regard to Warsaw in interpreting Montreal?

MR GLEESON: Yes, your Honour, that is Povey, that in construing an Australian statute, which has in turn brought into Australian law an international instrument, one can then go to the principles of the Vienna Convention on the Law of Treaties, Article 31, and can therefore understand the relevant treaty both by regard to its text and having regard to its context and its object and purpose and, indeed, the travaux which led to the creation of the instrument.

So, in the present case, a central object of Montreal, which I will show you from the text, but also from the travaux, was to overcome the perceived problem of Warsaw, and the means was to bring into Montreal, effectively, the IATA 1995 and 1996 Agreements, subject to a modification of the language of the defence.

GLEESON J: So, it is through the travaux rather than the context? The reason I am asking is because I am looking at Article 31(2), which seems to state a rather confined rule for reliance on context.

MR GLEESON: Can I take your Honours to two places: firstly, to Vienna, and then to what the Court said about it in Povey. In Article 31, which is in volume 5, page 439, one starts with interpretation:

in good faith in accordance with the ordinary meaning to be given to the terms . . . in their context and in the light of its object and purpose.

At that point, your Honour, I would submit that is not restricted to an argument based on the travaux. The context of Montreal includes the fact that it is a new Convention designed to deal with the problems identified in Warsaw and the partial solution to those problems in the intercarrier agreements, and to now bring this into a Convention between all states parties, instead of simply being limited to those airlines in the IATA umbrella.

GLEESON J: I do actually doubt that what you are saying is – I do not think that what you are saying is controversial or implausible, it is just that when I am looking at paragraph 29 of your submissions, which sets out Article 31(2) of the Vienna Convention, it seems to state quite a narrow proposition as to what is “context”.

MR GLEESON: The fault may be mine, your Honour. I think we are putting it on two levels. One is on a general level, before you get to travaux, which is paragraph 29 of our submissions. At the general level, Montreal can be identified as being negotiated in the context of, as I have said, the limitations of Warsaw, the partial solution in the IATA agreements and the like. The travaux argument ‑ ‑ ‑

GLEESON J: Let me just stop there. You have said that it is agreed that we are applying principles of international law in the interpretation of the Convention. The principle that you have identified sounds very much congruent with Australian principles of statutory interpretation, but you need to identify the international principles in order to apply the agreed approach.

MR GLEESON: Today, it is largely congruent; it may not have in the past. Povey, in fact, was one of the leading cases in which the Court, if I may say, was bringing the principles together, although acknowledging that they still may not be fully congruent. In Povey, if I can give you the key paragraphs, which is tab 8 of volume 3, at paragraph 24, the plurality referred to these Vienna principles. In 25, they said:

international treaties should be interpreted uniformly by contracting states. But, of course, the ultimate questions are . . . what does the relevant treaty provide –

and how does that come into law? Justice McHugh, while dissenting in the judgment, at paragraph 60, went into this point in more detail, which we submit is good law, which is:

Australian courts –

when doing this exercise:

should not take an insular approach –

They should not interpret it:

by reference to presumptions and technical rules of interpretation applied in construing domestic statutes or contracts.

The sources are there referred to; and his Honour says:

“[The] extrinsic sources include the travaux préparatoires and the circumstances of the conclusion and history of the negotiation . . . Primacy must be given, however, to the natural meaning –

So, where, perhaps, international law, apart from the generosity of the interpretation approach, may depart from domestic law is that, because Article 31(2) says context includes ‑ ‑ ‑

GLEESON J: It says:

context . . . shall comprise –

MR GLEESON: Yes:

in addition to the text . . . its preamble and annexes –

EDELMAN J: There has been a huge amount of literature on Article 31 in international law.

MR GLEESON: Yes.

GLEESON J: I am not doubting that, I was just hoping for an authority.

EDELMAN J: In the literature, my recollection is there is quite a lot about the scope and extent and expansion of Article 31(2), as well as the debate about the subjective or objective approach to interpretation.

MR GLEESON: Yes.

EDELMAN J: It may be that these coalesce in a fairly similar way, as one might expect, with general principles of interpretation, but I think Justice Gleeson’s point is that we cannot take that for granted.

MR GLEESON: No, I accept that, your Honour. As I have said, we are putting it on two levels. The general level of context I have already described. The more specific argument, which is at paragraph 29 of our submissions about the travaux, we submit that is available under principles of international law interpretation. If your Honours are giving us the opportunity to find further authorities on that, we will seek to do so.

But what the travaux analysis does in international law, which may be slightly different to simply reading through the entrails of the Hansard for people saying things at different hours at night, the purpose of the travaux is to say the states parties who are negotiating it – which may or may not be the ones signing it – have come together with a particular object of, through their exchange of words and drafting and the give and take of their different interests, come up with a form of language which will inevitably have a form of compromise in it, which will usually be reached in more than one language – French and English, sometimes up to six languages – and through that process, insight can be shared either into matters of true ambiguity or into what exactly it is the parties were trying to achieve.

When I come to the travaux, what we say comes out of the travaux absolutely clearly, consistently with the text, is this. I will just try and put it in bullet point form. The first proposition is the grand object of Montreal was to overcome the limit on liability for passenger injury claims which had provoked dissatisfaction with Warsaw and was only partially ameliorated in the IATA agreements. That was the grand object.

Secondly, the mechanism by which that was to be done, fairly quickly in the travaux process, reached consensus on a first‑tier strict liability layer up to 100,000 SDRs. Thirdly, there was still massive debate between nations, particularly developed nations as against underdeveloped nations or less‑developed nations, as to how many tiers there would be above the first tier and where the burden of proof would lie, particularly in respect to fault, in those higher tiers.

Fourthly, all states parties, despite their conflicting views, fairly quickly converged on the notion that the upper tier, whether it be a second tier or a third tier, would be unlimited in financial amount, and that was the grand achievement of Montreal, to get to an upper limit, an upper tier, which had no limit of liability attached to it.

Fifthly, the 100,000 SDRs was identified as a threshold at which one moved from the strict liability first tier into what ultimately became the second, unlimited tier. And so, the sense in which it was being used as a limit was not as a cap on financial liability, as the appellants put it, but simply as the threshold at which you move from the strict liability tier to the upper tier, which is unlimited, with a rebuttable presumption of fault.

Perhaps finally, there was consensus that contributory negligence or exoneration, which was a defence, would be available against both tiers, whereas what is now in Article 21(2), which was also a defence, would be available only in the upper tier. So, the result of that – when one comes, as we will, to the present tariff – is that the disputed sentence is absolutely accurate as to what it speaks to.

In financial terms, there is no limit to the liability under Montreal. That is its grand achievement. That is achieved through the cooperation of the two tiers and the disputed sentence is simply silent on the defences that may be available, whether they are contributory negligence or the Article 21(2) defence.

Your Honours, if I could just return to Justice Leeming at paragraph 44, the mechanism of the IATA Agreement, paragraph 1, was to:

waive the limit of liability –

or the cap. And then, paragraph 2 was:

To reserve all available defenses . . . nevertheless, any carrier may waive any defense, including the waiver of any defense up to a specified monetary amount –

That is the basic conception that the defence of no negligence would be waived up to the 100,000 SDRs, but not above that. Paragraph 45 is Professor Dempsey’s view that this mechanism was an example of a “special contract” in Article 22(1).

Then paragraph 46 is the 1996 IATA Agreement, which is the one your Honours would pay most attention to, as the revised and operative version of that agreement. And your Honours will see that the 1996 Agreement, if you map it against the tariff, which is respondent’s book of materials at 112, they line up.

BEECH-JONES J: You are coming back to the tariff, Mr Gleeson?

MR GLEESON: Yes, I am, I am just noting at the moment that the IATA Agreement is what is then reflected in the tariff. So, with that as the agreement of the IATA airlines, the problem was still that that did not cover the whole of the industry, and that is what created the critical context in which Montreal came to be negotiated.

Your Honours, can I then move to paragraph 4, which are our textual submissions on the Montreal Convention and our response to the primary argument this morning. On page 78 of joint book of authorities 1, you have been taken to Article 17(1). We agree, consistent with Povey, that what that does is to create the prima facie liability for death or injury. At that stage, the passenger, as part of their case, needs to establish, really, only three things. Firstly, there was death or bodily injury; secondly, it was due to an accident – which was Povey; and, thirdly, the accident occurred during the course of the carriage, as it is there described in the Article.

We would also then draw contextual attention to Article 17(2). This creates the equivalent liability for destruction, loss, or damage to baggage, and again, it follows the same language – “upon condition only” – and then one sees the condition. The next sentence is important:

However, the carrier is not liable if and to the extent that the damage resulted from the inherent defect, quality or vice of the baggage.

So, what has happened here is that within the primary establishment of the liability, there is an internal defence, as we would put it, and the language of an internal defence is:

not liable if and to the extent that –

and that is language which you will see repeated throughout this Convention. You then, in see Article 18 ‑ ‑ ‑

EDELMAN J: Is it really an internal defence, or is it really part of the criteria of liability?

MR GLEESON: I am calling it an internal defence in the sense that the onus rests on the carrier on these matters, but I am drawing attention to the “not liable if”, as the language which is repeatedly used throughout these provisions, to establish something which would answer or defeat what otherwise would be the liability. In our written submissions at paragraph 37 and footnote 48 we have given some references to the concept of affirmative defences. Article 18 is “Damage to Cargo”; again, you see the liability under Article 18(1) – and then, under Article 18(2):

However, the carrier is not liable if and to the extent that –

And then a circumstance is set out. Again, whichever way you view it, that is a circumstance under which what would otherwise be a liability now becomes a non‑liability, and we would submit the onus is on the carrier to allege the defence and then to make it good. In Article 19, you see the same concept. There is the liability in the first sentence, and then in the second sentence:

not liable . . . if it proves –

a certain matter. The matter that is in Article 19 is, in fact, a remnant of the Article 20 Warsaw defence, which has been attached to delay claims but is more generally available.

In Article 20, you have exoneration or contributory negligence where both sides agree that that is available in respect to the whole of any claim, including, in particular, the claim under Article 21. That is made clear in the last sentence of Article 20.

When one comes to Article 21, the first sentence is expressed in the form it is for the reasons I will show you from the drafting in the travaux, but its legal effect is that, to the extent you prove damages up to 100,000 SDRs, it is a strict liability. There is no mechanism for the carrier to exclude or limit that liability – e.g. by proving it was not negligent – but, because of the last sentence of Article 20, the one defence you have is contributory negligence. So, that establishes the first tier. Then, when we come to Article 21(2), we see familiar language we have seen from the defences above:

shall not be liable . . . to the extent that . . . if–

you prove something. What this is saying is, above the threshold established by the first tier of 100,000 SDRs, you will have, as the passenger, access to unlimited damages, but the carrier can reduce that liability to the extent it can make out the defence of non‑negligence. I say non‑negligence, your Honours, but if you compare Article 21(2) with the Warsaw provision I showed you at page 122, Article 20, the burden on the carrier is now softer, and that was part of the critical compromise that got Montreal over the line.

So, the effect of Article 21 is there is unlimited financial liability. It is divided into two tiers. There is a threshold between the tiers. At the threshold, one passes from strict liability subject only to contributory negligence to an unlimited layer. The unlimited layer is subject to two defences, firstly the Article 21(2) defence, and secondly, contributory negligence.

In the supplementary materials, we have sought to give your Honours the explanatory memorandum for the 2008 Amending Act which introduced Montreal into law, and paragraph 3.19 in particular is squarely in point on the present issue. If your Honours read that paragraph together with what is now section 9C of the Act on page 24, what effectively happened was this.

At the stage of the 2008 amendment, the Act already contained provisions like section 11A – that was in the Warsaw‑Hague section – and what Australia had done, out of a desire to protect Australian passengers, was to derogate from the financial cap in Article 22(1) of Warsaw, but only for Australian carriers, by increasing the limit of liability to 260,000 SDRs, or potentially higher. That came in a 1995 amendment to the Act.

The implicit idea behind section 11A was that if Australia imposed more onerous obligations by way of financial caps on Australian international carriers, that would not be in breach of international law treaty obligations.

GAGELER CJ: How does this help us?

MR GLEESON: In this way, your Honour ‑ ‑ ‑

GLEESON J: What are we using this to interpret?

GAGELER CJ: Same question.

MR GLEESON: I am showing you the passage of the explanatory memorandum which brought into law the Montreal Convention. In the passage in paragraph 3.19 the Parliament, absolutely accurately, was told the correct understanding of how Montreal works, as per the submissions I have put.

GAGELER CJ: But that does not make any difference to us, does it? Because your proposition 1 is we interpret the Convention according to international law.

MR GLEESON: You interpret the statute bringing the Convention into law in accordance with international law. If, of course, there were any difference between the statute and the Convention properly construed, you would give effect to that. What I am seeking to highlight here is that the statute, correctly, did not introduce a difference from international law, and what the statute correctly understood – and this comes back to your Honour’s about Article 24 – was that limits of liability are used primarily in the Convention in the sense of financial caps.

That is the way they are used for baggage, cargo, delay, et cetera. They are the financial limits of liability that a carrier might agree to increase under Article 25. What is happening under Article 21, although it is described as a limit of liability, is functionally something different. It is not a financial cap on liability. It is the threshold at which you move from tier 1 to tier 2.

EDELMAN J: But 3.19 really just has no more force than the opinion of an eminent jurist as to what the purpose of Montreal was. It is Parliament’s view, but it is Parliament’s view as to what the purpose of an international convention was.

MR GLEESON: It is, but the element I have not yet got to is that Parliament acted upon that view, because the language it shows in section 9C is different to the language in section 11A. In section 11A, which was the pre‑existing provision dealing with Warsaw, which is about caps, when Parliament decided to increase the number of SDRs, it did so correctly understanding it was increasing a limit on liability. What the Parliament did in section 9C, by creating a regulation‑making power, was to say:

The regulations may specify that a number of SDRs exceeding the relevant number of SDRs applies in relation to the liability of an Australian international carrier –

So, Parliament, there, was acting upon what is in paragraph 3.19, and in particular, in the last couple of sentences of 3.19:

Under the Montreal Convention . . . 100 000 SDR is not a cap on liability, but the level at which a change in the basis of liability occurs (from strict liability, to liability that can be excluded by proving absence of fault).

That is the reason why the Parliament has not referred to “limitations of liability” in 9C, it has used the more general language “applies in relation to”, which captures the concept that is it not a cap on liability.

BEECH-JONES J: Could it be characterised as a cap on strict liability?

MR GLEESON: It is the threshold at which you move from strict liability to the unlimited liability, and what Article 21, taken together, does is to give you unlimited liability through those two tiers.

Your Honours, returning to Montreal, I have taken you to Article 21. The heading of Article 21 is evocative – it is “Compensation”. The heading of Article 22 is different: it is “Limits of Liability in Relation to” the other categories of “Delay, Baggage and Cargo”. And in each of those categories, consistent with Warsaw, there is a limit of the liability to a specified amount. Those limits prevail unless, for example, there is a special declaration under subarticles (2) and (3) and more money is paid, or Article 22(5). That is the only remnant of the customer being able to break the limit, by proving intentional recklessness, and it exists only in relation to delay and baggage.

Your Honour the Chief Justice asked about Article 24 and its role. Article 24, which was a critical Article in overcoming Warsaw, was creating the internal mechanism by which the limits could be increased without need to reach a new treaty. But it was limited, as your Honour’s question pointed out, to a particular situation – inflation – in a particular manner. It is not an Article designed to allow a more general reopening of any of the limits that had gone before.

What has happened within Article 24 is that the concept of limits of liability has been used, for convenience, in relation to all of Articles 21, 22 and 23. So, what it is saying is that to the extent – for example, under Article 22 – we have created a true financial cap or limit on liability, if the inflation test is met, that cap will be appropriately increased but not generally reopened, and in respect to Article 21, to the extent we have created a limit, in the sense of a threshold, it also will numerically increase by the same inflation factor.

BEECH‑JONES J: But why would we interpret limit of liability in Article 24(1) differently to the phrase “limits of liability” in Article 25?

MR GLEESON: The general phrase is the same. The question – I will now show you the learned writings which have paid attention to it – is whether the application that it has in different situations indicates something different is functionally occurring. So, perhaps I will take your Honours now to those examples.

If your Honours have volume 5, at pages 590 to 599 there is a general article by Gill and Hocking which discusses, in detail, the need for Article 24, its drafting history and how it came about. Following that, at page 600, and more specifically, you have an extract from one of the texts on the Montreal Convention. This is Leloudas’ The Montreal Convention: A Commentary. At paragraph 24.16, the author says:

The limits to be revised pursuant to Article 24 include all the monetary amounts stated in Articles 21, 22 and 23. The model of earlier instruments in allowing increases only to the limits applicable to death and injury was not followed in the Montreal Convention 1999. While the SDR 100,000 figure stipulated in Article 21(1) could be considered a threshold rather than a ‘limit’ for functional purposes, it is properly referred to as a limit in the context of Article 24.

So, what that is paying attention to is its operation within Article 21 is as a threshold rather than a limit or a cap, but it is referred to as a limit within the context of Article 24, essentially, for convenience, that you put in one place the ability to revise the limits for inflation. Then, at page 609, at paragraph 25.07, you have this statement:

Article 25 applies only to limits of liability, not to any defences or other conditions of liability. These are covered by Article 27.

Then, at page 525 – this is in the text by Clarke, Contracts of Carriage of Air, 2nd edition (2010) – at 3.3.1, the author refers to the limit in Article 21 and says:

This is a “limit” in the sense of the limit of strict liability: it is the line at which liability ceases to be strict and becomes based on fault, however, with a reversal of the usual burden of proof.

Your Honours, in respect to Article 25, we defend the appeal on two bases. The first is the one which the Court of Appeal adopted, which is to assume that it could potentially be available in respect to Article 21, but then to construe the tariff and find that it lacked the clarity of intent necessary to be a relevant stipulation; and secondly, that Article 25 is not speaking to the functional limit in Article 21, and what would have been available to the appellant is a case under Article 27, under which it would need to prove that the tariff was waiving a defence.

Your Honours, Mr Walker answered your Honour the Chief Justice’s question and I am not clear from that answer whether there is an attempt in this Court to, independently of Article 25, say that if they are completely wrong on that, they have a waiver of a defence under Article 27. So, I do not know what I am asked to meet. All I know is, on the record, there is no such notice of contention in this Court.

GAGELER CJ: As I understand his notice of appeal, he relies only on Article 25, and I understood his answer to my question to confirm that understanding of the notice of appeal.

MR GLEESON: Yes. Your Honours, I am going to – if you permit me – go to the travaux, but could I take this out of order and go to the tariff next, because that is critical, and then come back to the travaux in the remaining minutes, if that is a convenient course.

GAGELER CJ: Yes, highlighting the passages in the travaux.

MR GLEESON: Yes. It is a very rich travaux, your Honours.

GAGELER CJ: I am sure.

MR GLEESON: Working off the document at respondent’s book of materials 112, we – unlike Mr Walker – would start at the whole of rule 105(B). That is, start on page 112, rather than page 113. The reason that is important is that the heading to section (B) is:

Laws and provisions applicable –

This is the section, we submit, where the critical choices have been made by the carrier as to whether it is incorporating a relevant Convention in full or whether it is giving up rights under that Convention. Paragraph (B)(1), which is directed to any travel under the Warsaw system – whether the original Convention or as amended by the Hague – has the three prongs of the 1996 IATA Agreement. Firstly, we have:

shall not invoke the limitation of liability in article 22(1) –

There we see express language identifying a relevant entitlement or protection of the carrier under the Convention, and an express statement that it is being given up. That is the sort of language you would expect if the carrier is doing this type of thing, namely, giving up something apparently for no monetary consideration. Then (b):

shall not avail itself of any defense under article 20(1) –

That is the “all reasonable measures” defence, up to the portion not exceeding 113,000. That is what, through agreement, makes the first tier of strict liability. Paragraph (c) otherwise:

reserves all defenses –

Therefore, is reserving contributory negligence and is reserving the Article 20 defence above the threshold. So, that tells the reader that where rights under a Convention are being given up by the carrier, the right is identified with precision and the language of “abandoned” is explicit. That then provides the important contrast for what is over the page.

Just before we come to (B)(5), (B)(4) does not directly engage you. It is a waiver of limits for persons in disability situations. It is required by a relevant Canadian regulation – an anti‑discrimination regulation – but again, if something is being given up, one sees express language of “waiver” and one knows exactly what is being given up. Then, when we come to (5), which draws a clear contrast to (1) and (4), where the Montreal Convention applies:

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.

When that is viewed in the context of what has gone before it in section (B), we would submit it is an explicit statement that the whole of Montreal has been brought into this document, for better or worse. Any protections which Montreal gives the customer prevail over anything in the tariff. Conversely, any entitlements or defences that Montreal gives the carrier prevail over any other word that might be in it. It is an explicit statement, the Court of Appeal was correct to give it significant weight and to find that one of the errors of the primary judge was not to give weight to that provision or to understand it as against the rest of section (B).

If I can come to section (C), and if your Honours have the aide‑mémoire from this morning, the heading is “Limitation of liability”, and subrules (1), (2) and (3) need to be read together as a package because they are all doing the same thing. What each of them is doing is telling the reader whether and to what extent there is a financial limit of liability in respect to a category of claim, and they are doing that by way of explanation or notification of the provisions of the relevant Convention, subject to any choices that are being made under section (B).

None of (1), (2) and (3) of section (C) are seeking to deal with the topic which is in the third column of the aide‑mémoire, which is what defences might be available or what mechanisms might be available for breaking or exceeding any limits of liability. So, if one looks at (C)(1)(a), there are no financial limits in respect of death or bodily injury. That is accurate in the sense that the Montreal system has created unlimited financial liability, divided into two tiers. The first tier and second tier operate in the manner that I have explained. So, that tells the reader: for Montreal, that is the financial position, no limit. Then, when one comes to (b) and (c), that tells the reader that if we are still under Montreal and we are dealing with baggage or delay, then, “in most cases”, these are the financial limits you will get under the Convention.

I have explained in the second column of the aide-mémoire that the limits reflect the Convention updated under Article 24. The reference to “in most cases”, the Court of Appeal observed, indicated this is not the language of preclusion, this is the language of summary explanation, and to understand the full working out of the language, you should, of course read the whole of the Convention.

But I can indicate that perhaps the primary sense in which the words “in most cases” have work to do, they are in fact a reference to the mechanism for a special declaration, which your Honours will see in our aide-mémoire under the second entry, which is for this – rule 105(C)(1)(b), Baggage – the mechanism for breaking the limit. The first mechanism is the Article 22(2), special declaration – if you declare you have a valuable painting, you get more cover, but you pay a lot more money, so, that would be an example where you might get a higher limit, and the reader is warned you will need to read the full terms of the Convention to understand what you get.

But what is critical for (B) and (C) is not only are they simply replicating the limits in the updated Convention, but they are making no attempt to explain the defences, because that is just not a topic dealt with here. And so, as the appellant would read it, paragraph (A) is doing fundamentally different work to its immediate neighbours (B) and (C).

It is now apparently, without saying so in terms, abandoning a valuable entitlement under Article 21(2) without even referring to that Article and without using the sort of language this document uses, which is “shall not invoke”, “shall not avail”, “waives”, and is doing it in the place you would not expect it, because you would expect it in paragraph (b), where these choices are made.

GAGELER CJ: You accept – it is implicit in your submission – that the tariff provision is a “stipulation” within the meaning of Article 25.

MR GLEESON: It could be considered to be a stipulation, whether Article 25 or Article 27 is the relevant home, that is the issue we raise in the notice of contention. But something is being stipulated. But what is being stipulated, we say, is you are getting exactly what the Convention gave you, which is no financial limit on liability.

GAGELER CJ: So, you say either that that is the only sort of stipulation that Article 25 provides for or – this is the Court of Appeal’s view – if it is possible, that it might go further; it does not, by virtue of the language of this tariff. Is that it?

MR GLEESON: Yes. I hope I am not delaying your Honours, but that is where we are going.

GAGELER CJ: No, no, that is – yes.

BEECH‑JONES J: You accept there could be a stipulation for a higher amount for baggage?

MR GLEESON: For baggage.

BEECH‑JONES J: Yes, I understand.

MR GLEESON: So, the effect of the notice of contention is that baggage or delay, which are (b) and (c), they are instances where you have a cap on liability, the purpose of 25 is to say, if you are prepared to raise that, which normally will mean you want some more money, you can raise it. What the notice of contention says is that the logic of the appellants’ argument is the carrier is waiving a valuable entitlement conferred by the Convention, it is a defence, the place you would expect that is Article 27, but whether it is 25 or 27, the more general point is you would expect clarity of language and you would expect identification of the thing that you are giving up, and if you do not have that, you do not get there.

BEECH‑JONES J: So, even if you are wrong about Article 25, on what is a limit, you say this is not a stipulation even then, in relation to death or bodily injury, it is just a description of the effect of Article 21 without a stipulation?

MR GLEESON: Yes, it is an accurate description of an Article which has given you, for the first time, and for the only time within Montreal, even, unlimited liability and no financial limit in respect to death or bodily injury.

EDELMAN J: Putting aside whether it is Article 25 or 27, you do not dispute that it is possible to waive or increase the limits of liability for personal injury or death?

MR GLEESON: We do not dispute that it is possible for a carrier to say ‑ ‑ ‑

EDELMAN J: In clear terms.

MR GLEESON: ‑ ‑ ‑ in clear terms, the very thing that I kept from Montreal was my ability to defeat liability in the upper tier, if I took on the burden. And if a carrier were so minded to say, one would expect, as the Court of Appeal said, to see a quid pro quo. And there has been no dispute to the proposition which Justice Leeming said that there is no evidence of any carrier anywhere having ever done this thing – then it would be possible to do. But what you would need is clarity of language, and you would expect the language to direct itself to the thing that it is giving up.

Your Honours, I can more briefly deal with subsections (2) and (3), but only to make, effectively, the same point. Subsection (2) turns to the Warsaw Convention, and the aide‑mémoire explains that those limits are drawn from the Warsaw Convention as updated from time to time.

BEECH‑JONES J: Mr Gleeson, my question is: how does that (2)(a) interact with 105(B)(1), which appears to correlate with the IATA? If you could take that on board ‑ ‑ ‑

MR GLEESON: No, I have it. On their face, there is a tension between them. And it might be thought there is a tension with our argument that the whole of (C) is notification or explanation having regard to the choices made under (B). They do sit together in this fashion – and it is a two‑part answer. If the carriage is on Air Canada – if it is the carrier – then (B)(1) will prevail over (C)(2)(a) and, in that event, the language that introduces it:

the following limits of liability may apply –

is appropriately qualified language because, in the circumstance I have given you, (B)(1) will prevail. However, there is a possibility that these terms may be extended to a carriage or a part of a carriage where the actual carrier is not Air Canada and where that actual carrier has not made a promise in terms of (B)(1). That could be a domestic leg on a different carrier, potentially it could be an international leg on a carrier who has not made a (B)(1) promise. In that event, it may be an uncommon situation but, in that event, (C)(2)(a) would apply.

BEECH-JONES J: But subject to that exception.

MR GLEESON: Subject to that exception, (B)(1) prevails over (C)(2)(a).

BEECH-JONES J: But is one of your points, if (C)(1)(a) specifies a higher amount for Article 21 of Montreal, then you have different regimes for Warsaw, as opposed to Montreal, with your carriers.

MR GLEESON: Yes. You then create this complete disparity, that you have people – potentially on the same plane, depending on where their end destination is – and if they are governed by Warsaw, then (B)(1), in the ordinary case, will prevail and the carrier can defend itself against the unlimited layer, whereas, on this argument, under (C)(1)(a), if the passenger is on Montreal, you cannot defend yourself against the unlimited upper layer.

There is absolutely no sensible commercial reason why that would be the case, and there is no language indicating that disparity as being voluntarily taken on by Air Canada for no money. So, Justice Leeming did correctly emphasise that on the same plane you could have people who were under Montreal, which is (C)(1); you could have Warsaw people, (C)(2); and you may have people under (C)(3), under no Convention at all.

Our other proposition about (C)(2) is simply that, like the whole of (C)(1), it is simply silent on the topic of defences or the like. Then, (C)(3), which you might think is a residual category, if you are under no system, the only information that is given is a limit of SDRs for your baggage.

The reason for that, as per the document, is that that reflects a Canadian Air Passenger Protection Regulation – which is a different regulation – which requires, for baggage, if you are going in and out of Canada, you have to give people the same protection as Montreal. That is why (3) is the same figure as (1)(b). So, once (C)(1), (2) and (3) are looked at together, then, we would submit, the appellants’ argument must be rejected. Is that a convenient time, your Honours?

GAGELER CJ: Yes, thank you. We will take the luncheon adjournment.

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

GAGELER CJ: Mr Gleeson.

MR GLEESON: Your Honours, we rely upon the travaux under Article 32 of the VCLT, which is on page 440, of paragraph 5 as a:

supplementary means of interpretation . . . to confirm the meaning . . . or to determine the meaning –

If there be any:

ambiguous or obscure –

nature of the wording or to avoid a result which would be:

manifestly absurd or unreasonable.

This Court has in two recent cases made detailed reference to the travaux. I will just give the references. Firstly, it is Kingdom of Spain 275 CLR 292 at paragraphs 49 and following; and Carmichael Rail 98 ALJR 445 at paragraphs [33] and following ‑ ‑ ‑

GAGELER CJ: Mr Gleeson, just on that point of the Vienna Convention, although we have had no difficulty looking at travaux in the past, you might give us a note on the relevant interpretation of Article 31.

MR GLEESON: Yes.

GAGELER CJ: You can give us some ICJ authority, and I think you will probably find some earlier statements in this Court in a migration context as well, but we would appreciate a note on that within a week.

MR GLEESON: Yes. Thank you, your Honour.

GAGELER CJ: And Mr Walker, I suspect you will not have anything to say, but you have another week after that to say it if you wish.

MR WALKER: Thank you, your Honour.

MR GLEESON: So, the argument precedes this way. Firstly, in volume 5, I will identify for your Honours the five primary documents which were submitted to the Convention and were discussed in the travaux. I can do that briefly. Firstly, volume 5 at page 487, this was the 1996 ICAO working paper which contained the socio‑economic analysis of limits, based on responses to questionnaires from both states and from airlines ‑ ‑ ‑

EDELMAN J: Could you just give us the tab for that, please?

MR GLEESON: Yes, tab 20, and paragraphs 5 to 7 indicate a dissatisfaction with the present limits. Paragraph 13 indicated the variety of potential positions as to how the problem might be solved. That was, as it were, the document creating the context for the Convention. The second document is the draft Convention, which is – I will just give your Honours the tab references. The draft Convention is also in tab 20. It is at page 461, near the beginning of tab 20, and that is the draft prepared by the special group which was submitted to the Convention.

On page 467, or page 7 of this document – which is document number 3 – that is the Article 20 which was propounded to the Convention as the matter for discussion. It is in different language to the final Article, but conceptually has the same effect, save that the matter the carrier has to prove is the old Warsaw Article 20, which was ultimately relieved in the final draft.

The third document, again in tab 20, page 482, is document 21, which was the comment on the previous document by the 53 African states, and they explained the problems they had with accepting the proposal. They came up with an alternative proposal on page 2, which was a three‑tier system, and the top tier above 500,000 SDRs:

the liability of the carrier would be based on fault –

That is, proven by a passenger:

without a numerical limit of liability.

So, the concept of unlimited financial liability in the top tier was common to all of the proposals. The question was how many tiers, and where would the onus of proof lie in respect to the various tiers?

The fourth of the five documents – also in tab 20, at page 509 – is late in the process. The chairman prepared a draft consensus package, which – on page 510 – at that point had brought the proposals down to two alternatives. The first of which looks like the final resolution, save that the onus in the unlimited upper tier was on the passenger; and the second was the African states proposal was still alive. The final draft consensus package which overtook that is at page 506, which is the final version that was ultimately adopted. They are the five core documents which underpin the travaux.

The travaux is in the respondent’s book of materials. We emphasise firstly, at page 141 – which was on 14 May in the morning – and at page 140, paragraph 20, Article 20 was introduced, and on page 141 the parties were discussing the original proposal plus the African contracting states’ proposal, paragraphs 25 to 26.

From the very outset you see, in paragraph 25, that Côte d’Ivoire, presenting the African proposal, referred to the upper tier as “unlimited liability” and referred to the “defence of non‑negligence”, which ultimately became Article 21(2). So, the concept of unlimited ultimate liability common to all proposals. Over the page, a couple of variations were presented by India, Pakistan and Vietnam. So, there were at least five proposals on the table from the outset.

At page 147 – the meeting on 14 May in the afternoon – at paragraph 3, the chairman, seeking to build consensus, summarised accurately that the attempt was to move:

from a system of limitation of liability on the basis of presumed fault, breakable only upon proof by the plaintiff of wilful misconduct or gross negligence . . . to strict liability up to approximately US $140 000 under the first tier and to unlimited liability on the basis of presumed fault under the second tier.

But there were formidable challenges. At page 150, in paragraphs 18 to 21, there is repeated discussion by the chairman that in all the different proposals, the principle of unlimited liability was subscribed to – see in particular paragraph 19, first sentence; and paragraph 21, first sentence.

Then, commencing at 154, on 17 May in the morning, the commission – still of the whole – moved to Article 21A, which is now Article 22. These are the true limits or caps for baggage, cargo and delay, and so on. In that context, at page 157, paragraph 23, what is there Article 21D and now Article 25 was accepted without any significant discussion of how it related to the issue that is now before you.

At 166, on 17 May in the afternoon, the chairman convened the “Friends of the Chairman” group to attempt to make progress on the difficult unresolved issues. At 178, paragraph 62, all the way over to 181 – perhaps even over to 183 – you will see a detailed discussion that first of all contributory negligence was confirmed as applying to both tiers – that is paragraph 64. Then, at 67, the Director of the Legal Bureau, when talking about the non‑negligence defence, labelled it a defence, and it is repeatedly referred to as a “defence” at 69, 70 – and at 76, contributory negligence and no negligence are both treated as defences.

Of course, you have seen that under the appellant’s argument, contributory negligence apparently remains alive under the tariff, but no negligence in the upper tier does not remain alive under tariff. There is nothing in the text to explain why that result would be reached, particularly when, in the context, they are both treated as a package together.

Then, at 184, the “Friends” have their second meeting, and you will see at paragraph 2, page 185, the chairman is saying that consensus had been reached on the first tier, strict liability, but the challenge – see near the end of that paragraph, about ten lines down – is:

the unrealistic limits which were the heritage of the Warsaw –

In the absence of unlimited liability, that led to many great problems. So, at the foot of paragraph 5, the chairman is urging the group that the challenge is to reach:

common ground –

around where:

there would be unlimited liability.

Over the page, at 186, your Honours would pick up near the end of that paragraph, where the Chairman is discussing whether there should be three tiers rather than two, he twice uses the language of “threshold”, and that is the way we understand the relevant limits to operate as threshold. And 187, at paragraph 7, when he is talking about contributory negligence and non‑negligence, he describes both of them as “defences”.

At that stage, they are still some distance from solving the problem. At page 194, paragraph 31, you see Australia’s contribution, which was Australia was happy with a higher threshold than the 100,000 SDRs because of the domestic threshold I have shown you of 260,000 at the time, but Australia was urging – page 195, lines 4 to 5 – consistently with everyone else, a:

second, unlimited tier –

And the question only being where the threshold was drawn. Then I can skip to page 219, where – on the Wednesday afternoon meeting of the “Friends” – at paragraph 39, the chairman is still operating between two proposals – the original proposal plus the three‑tier African proposal, but even that proposal is unlimited liability. What then happens, at page 223, is the first of the draft consensus packages I showed you is produced, and that is discussed over the page. That is not a successful resolution of the matters.

Then, rushing to page 241, by the morning of 21 May, the chairman reports back to the commission as a whole – paragraphs 2 through to 7 – of where progress had reached. In particular, at paragraph 6 over the page, says there are still two proposals on the table, and part of the debate is where the threshold figure should be established – that is the second‑last line.

And then – we are almost at the denouement – at 2.47 on Tuesday in the afternoon, the chairman presents the second and final draft consensus package which I showed you – volume 5, page 505 – and the relevant discussion which captures the position is, firstly, paragraph 3, that the document:

represented a very fragile balance between the interests –

No part of which could be tinkered with, and then 9 explained that contribution negligence would apply to all provisions, including the first tier, and 20 is the relevant Article. That paragraph 10, on page 249 to 250, is the best summary of the whole of what the Convention had done to date.

So, all of it captures the debate between two tiers and three tiers, the need to get the threshold right – the term “threshold” appears about 10 lines down on page 250 – importantly, that it would be an unlimited liability Convention – that is about 10 lines from the bottom of the paragraph – and then the critical compromise which avoided the three-tier regime was, in the upper tier, that the onus on the carrier would be softened from that which had been reached under Warsaw.

That is the package which you will see on page 253, end of paragraph 17; people said they were pretty happy with it. Then the plenary, at 255. The chairman, at the foot of 256, top of 257, captures in its essence the incredible work that had been done over the course of this negotiation to create what he correctly calls “unlimited liability” above the threshold, but with the burden of proof on the carrier at the lower standard, and then he immediately contrasts the limits of liability for baggage, cargo and so on, which were true caps.

In the light of that travaux, we would submit that confirms unlimited liability, defence in the upper tier, defence operating in the same way as contributory negligence, the limit is a threshold, and ultimately, in terms of what is before you, the disputed sentence is an accurate statement of the financial limit in Montreal, without trespassing on topics such as defences.

Your Honours, my final submission is simply to tie together our ultimate response to the appellants’ argument on the tariff. Reduced to its essence, that argument follows this syllogism. Firstly, Article 21 creates a cap on the Article 17 liability at 100,000 SDRs. Step 2, Article 25 allows for the carrier to stipulate a higher cap, or no cap at all. Step 3, 105(C)(1) is a stipulation that there shall be no cap at all on the Article 17 liability; or put differently, the cap at which the passenger will face contributory negligence, but not no negligence, is raised to infinity.

Our answers to that are: firstly, for the reasons given, it is not a cap, it is rather a threshold at which you pass from tier 1 to tier 2 of otherwise unlimited liability; secondly, properly understanding the Montreal Convention, (C)(1)(a) is an accurate statement that there is no ultimate financial limit in respect of death or bodily injury; thirdly, to read (C)(1)(a) as we do – which is not trespassing upon the topic of defences or answers to the claim, let alone waiving them – is consistent with the surrounding provisions – that is, (C)(1)(a) and (b), and (C)(2) and (C)(3) – it sits comfortably with section (B), and it produces parity for passengers on the same plane, whether they are on Warsaw or Montreal terms; and finally, it avoids, obviously, capricious results for which no explanation has been given.

EDELMAN J: I think it was your third point about why (B) and (C) do not trespass onto defences. Is that because you say “in most cases” is only picking up the special declaration in 22(2)?

MR GLEESON: That is the most obvious thing it is picking up. In addition to that, if you look, for instance, at (C)(2), it does even not have the word “in most cases” in it and it tells you nothing about defences. The purpose of (C) is to give you the financial limits or not, it is not to further explain what may be defences. If you want to see what the defences are, subject to what is in (B), you will need to read the Convention in full.

I should have added on the Canadian regulation. We agree with Mr Walker that the regulation requires you to stipulate limits and exclusions but not defences, and that may be an explanation for why the topic of defences is not covered in the tariff.

GAGELER CJ: Mr Gleeson, I am sorry, your first point of response – could you just restate that please?

MR GLEESON: Yes. That the numerical amount of 100,000 SDRs stated twice in Article 21 is not operating as a cap or a financial limit on liability. Instead, what it is doing is stipulating the numerical threshold at which you move from strict liability – tier 1 – into presumptive liability – tier 2 – of what is overall an unlimited liability scheme.

EDELMAN J: You do not even need to go that far. You just need to say that it is an open reading of no financial limits within the rule (C)(1)(a) to read it that way – and not as including a financial limit in that sense.

MR GLEESON: It is an open reading of it, yes, certainly, and it is then the preferable reading once it is read in the context of the rule, and once the Convention is properly understood. Those are our submissions, your Honours.

GAGELER CJ: Thank you. Mr Walker.

MR WALKER: Your Honours, briefly, only because of the note that may come from our friends, with respect the Vienna Convention, in our submission, there really will be nothing, when one looks at the materials before this Court for this argument which will require any decision about whether jurisprudence has shifted from the tolerably obvious meaning of the Vienna Convention in its relevant provisions which define what admissible context is. In our submission, there is no question of there being admissible context, that is 31.

With respect to 32, that is, resort to travaux, it is very familiar territory – analogous, if not perfectly so, with this country’s Acts Interpretation Act – and, in our submission, you would have to start with identifying what it is in the Convention, given municipal force by the statute, that creates the requisite uncertainty, ambiguity, doubt, potential absurdity, et cetera.

We are left with matters such as “limits of liability”, or the word “higher”, perhaps, and in our submission, they are not expressions which – notwithstanding the best efforts of my friend and me, in opposite directions – can be obfuscated so as to require resort to travaux préparatoires, or more to the point, permit it. That is the first thing. We know, for example, with respect to limits of liability, that the Convention has its own lexicon, which is scarcely idiosyncratic with respect to it. So, in our submission, there is nothing to be gained from the travaux.

In particular, with respect to the tariff, which speaks – if it speaks to anyone, in a formal sense – to a passenger, emanating from a carrier, is not something which can sensibly be understood as, for that commercial discourse, to require, let alone permit or compel resort to the detailed to‑and‑fro, the summary statements, the paraphrases that perhaps even the tendentious descriptions which one finds in the material to which my learned friend has pointed by way of highlights. That is all we want to say about those matters of interpretation.

Next, may we say this, concerning the supposed requirement of some special kind of clarity with respect to the provision in the rule as carrying out the task of stipulating for the purposes of Article 25. It might be doubted whether there is an overall canon of interpretation in this country which is so general as to apply to an understanding of those words in the tariff for the purposes of an Article 25 stipulation.

If there is any such canon of interpretation, it would appear from the authorities to which my learned friend went that it derives from the common law of contract, but not in a general sense. It has particular force, as Mr Justice Hope had explained, where there is a contention that that which is an implication of law – not a Moorcock implication, an implication of law – in certain kinds of contract, in that case, I will call it by its old name, “master and servant”, and whether the dealings in question, the one‑off dealings between the particular parties in question, had displaced the operation of something so organic and important and venerable as a right implied by law – and, I stress, not just by an ordinary Moorcock implication.

That is a world away from the question of whether, with sufficient clarity, the expression in the rule, here, “no financial limits”, is to be given an ordinary meaning as to the plainness with which it speaks. I stress, the plainness cannot be removed by saying: but what if you look at the travaux of the fortnight or so in Montreal? That is, in our submission, utterly illegitimate and gives rise to considerable doubt as to whether there is any usefulness in this Court considering whether there is at all a canon of interpretation of the kind upon which our learned friend relies.

In any event, it surely cannot have no footing when the only question is whether there has been an Article 25 stipulation. Article 25 is not an alien – Article 25 is part of the overall scheme. The Convention contemplates that there may be stipulation for higher limits or no limit of liability whatsoever. That does not have any sensible relation, or comparison, or similarity to questioning whether a particular contrast has operated so as to exclude the operation of an implication of law which would otherwise apply to the contract, given the class of contract to which it belongs. So, in our submission, all that should be put to one side, as well.

Finally, in terms of what might be called methodological matters, in our submission, the explanatory memorandum can add nothing at all with respect to either the meaning of the Convention – it is nothing other than an expression of opinion in paraphrased form, explaining for the purposes of busy legislators, rather than expounding for the instruction of this Court – and, in our submission, in particular it can have nothing whatever to do with a proper understanding measured against Article 25 of the tariff.

Could I then, with respect to what I call other materials, submit that there is nothing of purpose to be gained for your Honours by what might be called the admirably brief but completely unelaborated assertion that you will find in the joint book of authorities at 609 in the treatise of Leloudas and others in its item 25.07 concerning Article 25 and its relation to Article 27. With respect, there is no authority that your Honours could derive from that, and certainly no explanation of how that casts light on what it means to stipulate for a higher limit or no limit of liability whatsoever in Article 25.

Argument concerning the position under Warsaw is one that needs to be evaluated against the evolution of the international regimes that my learned friend has, with respect, fully and fairly captured in his address. There was a move from a cap, notwithstanding negligence, to no cap for what is called the second tier in what was eventually chosen. That is fair.

That does not mean, however, that there are not limits of liability under Montreal. In other words, from the obvious change which was the subject matter of the congratulatory summary with which the travaux really end, does not mean that there are no limits of liability for the Article 17 liability made by Article 21.

It should be enough, textually, to note that that is obviously caught by the references in the Articles themselves to limits on liability. And simply to remind you, the limit of which Article 25 concerns is something of which it can be posited that it may be higher. That is what the possible stipulation is:

shall be subject to higher limits of liability –

The limits of liability which are within the ambit of Article 25 are:

those provided for in this Convention –

Nothing in 25 would single out, in any way, them so as to exclude death and bodily injury. This is not just for delay, baggage and cargo. That much, with respect, must be clear by reference to the description of limits of liability, which can be reviewed and adjusted for inflation to which I have already drawn attention in 24(1):

the limits of liability prescribed in Articles 21 –

et cetera. And so, we are told from within the Convention, in a way that cannot be gainsaid by any resort – we say illegitimately – to travaux or any other outside materials, we are told that 21 involves a limit of liability of a financial kind because it may be reviewed to account for inflation. And here it is, where there is inserted into the argument against us, in a way that we submit is telling, the introduction of a word which is intended to be a contrast with limit, and that is “threshold”. But the limit just means a boundary – that is all it means – and a threshold is a kind of boundary, and you can cross thresholds in both directions, obviously.

It is a limit in 21, as recognised in 24, because it permits the carrier to say: this much and no more, in answer to a claim asserting the liability provided for by the Convention. As Article 21 says – in each of 21(1) and (2) – the liability in question – that is, the liability for damages in question – is that which arises under 17(1). There is not a liability under 21. The liability under 17(1) is emphatically that which is created by the falling into – by the satisfaction of the condition – the sole condition – that is expressed by the words with which your Honours are familiar.

What 21(1) does is to impose a limit on that liability upon demonstration only of that condition – which is why 24, obviously, regards 21 as one of the provisions that can be subject to stipulation in 25. You cannot read it any other way. No travaux can alter that. In our submission, imagining a case different from ours – we say ours is a no financial limit case – if there was a stipulation in a tariff to the effect that instead of 100,000 in 21(1), it would be 200,000 in 21(1), would it be answered by the carrier that that was not under Article 25 – all it was doing was altering the occasions or circumstances in which a defence could be raised? Surely not.

It would be a limit. It would be shifting or changing a limit. It would be making it a higher limit – boundary line – between someone recovering by simply asserting 17(1) liability, and not. It is absurd to suppose that 24 is totally in vain when it refers to 21 as one of the provisions whose financial limits might need to be adjusted by inflation and then to say: got you, you cannot do that under 25, notwithstanding 24 recognises only 25 as not being prejudiced, not 27. You would have to do that under 27.

In our submission, that is anti‑purposive, it is a reading that is corrosive of the object which, if you get anything from the travaux, was to improve the position so far as the, first of all, amplitude and, second, clarity of compensation for passengers was to be improved. The travaux are full of self‑congratulation about having done that and, in our submission, the argument against tends, if I may say so, strongly in the opposite direction.

Now, it is the whole of 21 which provides the limiting question, and that again is because, as each clause of 21 stresses, it affects the availability of damages for the Article 17 liability. It is for those reasons that, just as one could have change the 100,000 in each of 21(1) and (2) to 200,000 under Article 25, surely without that being objected to as not possible except under Article 27, so you can do it by saying there will be no figure which will provide a limit, financially, to your 17(1) liability.

That, with respect, is the difference between the arguments, and it is one which, in our submission, ought to be resolved in our favour, because there can be no sensible shift away from the clarity with which it is Article 17(1) liability that is subjected to what the Convention calls a “limit” in Article 21; which the Convention regards as financial, because of its adjustment under Article 24; and which the Convention therefore permits to be stipulated to be higher or to be non‑existent – there to be none at all – under 25.

There was reference in that regard to that part of the reasoning of Justice Leeming, to the effect that there was no evidence of any carrier ever having done something, and there was a related reference to there being no quid pro quo. Neither of those are, with respect, admissible as considerations.

If I may say so, the notion of tendering evidence to show the generosity or otherwise of international carriers in aid of an interpretation of this tariff with respect to Article 25 is risible. It could not be done. There is nothing to be got from the unavailability in the record of any such evidence. Or to put it another way, it is not true that the first time for everything can never happen.

The second which relates to no quid pro quo is neither here nor there. We are not, surely, listening to arguments about the unconscionability of passengers getting something other than for an identified supplement to the fare. This is a tariff promulgated generally, and it said no financial limits.

May it please your Honours.

GAGELER CJ: Thank you, Mr Walker. The Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.

AT 2.57 PM THE MATTER WAS ADJOURNED

[2025] HCATrans 18

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