Air New Zealand Ltd v Disputes Tribunal
[2016] NZHC 393
•9 March 2016
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ORDER PROHIBITING PUBLICATION OF NAME(S), ADDRESS(ES) OR IDENTIFYING PARTICULARS OF THE SECOND DEFENDANT(S).
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2015-409-000673 [2016] NZHC 393
BETWEEN AIR NEW ZEALAND LIMITED
Plaintiff
AND
THE DISPUTES TRIBUNAL First Defendant
AND
X
Second Defendants
Hearing: 24 February 2016 Appearances:
N Gedye QC for the Plaintiff
No appearance for the defendantsJudgment:
9 March 2016
JUDGMENT OF NATION J
Introduction
[1] Mr and Mrs Green (not their real names) travelled to England on Air New Zealand in November 2015. It was autumn in England. They were to attend a significant event and related social functions at one of England’s oldest and most respected institutions. Appearances were going to be important and they no doubt wished to dress accordingly.
[2] One of Mr and Mrs Green’s suitcases did not arrive with them at London. The day after their arrival, they were advised it was in Los Angeles. Despite
frequent contact with Air New Zealand representatives in London, always initiated
AIR NEW ZEALAND v DISPUTES TRIBUNAL [2016] NZHC 393 [9 March 2016]
by Mr or Mrs Green rather than Air New Zealand, their luggage was not made available to them in London until some nine days after their arrival.
[3] In the meantime, Mr and Mrs Green were told by Air New Zealand representatives that they could replace the items they were missing but that they should keep the receipts.1 Mrs Green said she specifically asked whether this meant they could replace the clothes they had lost on a like-for-like basis. She was told they could. Mr and Mrs Green spent over $26,000 on replacing the items they had lost. They recovered $1,900 from an insurer on a travel policy they had taken out. They brought a claim in the Disputes Tribunal for $15,000, the extent of the Tribunal’s jurisdiction, for costs they had been put to by reason of their baggage
going astray.
[4] The Greens’ claim in the Disputes Tribunal was accompanied by statements from Mr and Mrs Green which provided details of the dispute and their contact with Air New Zealand. Their account of what happened has been summarised above. The statement also recorded:
On receipt of our claim for £10,000 sterling approximately, Air NZ advised us that reimbursement was governed by the “Montreal Convention” and limited to $NZ2125.90. This was the first time this convention had been made known to us.
[5] In response to the claim in the Disputes Tribunal, Mr McDonald, a representative from Air New Zealand, the Customer Relations Team Leader, wrote to the Court Registry Officer responsible for the proceeding stating:
From reviewing this case, it relates to delay in the carriage of baggage on an international flight which is governed by the Montreal Convention. We refer to the Disputes Tribunal’s decision in 2014 that it does not have jurisdiction over matters where the Montreal Convention applies.
[6] Subsequently, he provided to the Disputes Tribunal a summary of the decision in ACH v ZXW Ltd.2 The Tribunal, nevertheless, set the claim down for
hearing. When advised of the hearing, Mr McDonald was told by the Registry
1 There is no reference in the decision as to there being any representation that the Greens would be compensated to the extent of the full cost of replacing the items or to any other level. The Disputes Tribunal decision is not, however, being challenged on that basis.
2 ACH v ZXW Ltd [2013] NZDT 46.
Officer that she had just spoken with the referee “who has advised that yes all parties are required to attend and the matter of jurisdiction will be dealt with at the beginning of the hearing”.
[7] Mr and Mrs Green appeared personally at the hearing. Mr McDonald participated by telephone.
Proceedings before the Disputes Tribunal
[8] Mr McDonald submitted to the referee that the Disputes Tribunal did not have jurisdiction to hear the claim as a claim arising out of the Montreal Convention (the Convention). The referee responded that she believed it was a personal decision of the referee and, in her view, she did have jurisdiction to rule on the claim.
[9] The referee then invited the parties to see if they could come to an agreement. Mr McDonald says he advised her that the Convention limited the airline’s liability to 1131 Special Drawing Rights (SDRs) which was about NZD 2,125 at the time of travel. On behalf of the airline, he offered payment of that amount plus $300. The offer was not accepted.
[10] I do not have a record of all that happened before the Disputes Tribunal but it appears, from the referee’s decision, there was discussion as to the evidential basis for the Greens’ claim and Air New Zealand’s response. The referee’s decision records:
Air New Zealand did not produce any first hand evidence to support its contention that it did not give Ms [Green] the advice she says it did. It said the telephone conversations between Ms [Green] and its baggage service were not recorded. It said its English baggage service denied that it had given the advice she said it did. While it does tell customers that they may replace misplaced items of baggage, it does not use the terminology “like for like”. It does not tell customers that its liability to reimburse them is limited by the Montreal Convention but most customers’ purchases would not exceed this limit anyway.
As applicant Ms [Green] and Mr [Green] bear the onus of proof. The standard of proof is on the balance of probabilities. This means that in order to succeed in their claim they must satisfy me that what they allege is more likely than not to be correct. This is not a very heavy onus. I accept Ms [Green’s] evidence in this regard. Her evidence was corroborated by Mr [Green] who overheard her conversations with Air New Zealand’s
representatives. Ms [Green’s] behaviour is consistent with what she and Mr [Green] contends she was told. Ms [Green] agreed that Air New Zealand’s English baggage service did not use the terminology “like for like”. She said that this was her terminology: she asked it whether she could replace the mislaid items like for like, to which it agreed. Air New Zealand conceded that it does not tell customers that its liability to reimburse them is limited by the Montreal Convention. As a result the only limit that was imposed by it on Ms [Green] purchasing replacement items was that they were indeed “like” the items she was replacing. Air New Zealand did not dispute that Ms [Green] and Mr [Green] purchased goods of an equivalent standard and value to the ones that were mislaid.
[11] In the reasons for her decision, the referee also stated:
3. Gratuitous promises are generally not enforceable. However a promise can be enforceable under certain circumstances. One such circumstance is when the doctrine of estoppel applies. It provides that if a statement is made that is untrue or misleads a person who relies on it to their detriment, the maker of the statement is estopped (that is prevented) from denying the truth of it.
Am I required to consider whether the Disputes Tribunal has jurisdiction to hear matters to which the Montreal Convention applies?
4. I conclude that I am not required to consider whether the Disputes Tribunal has jurisdiction to hear matters to which the Montreal Convention applies. I have found that Air New Zealand is estopped from raising the defence that the Montreal Convention applies. Therefore whether the Disputes Tribunal has jurisdiction to hear matters to which the Montreal Convention applies is irrelevant.
Did Air New Zealand make a representation upon which Ms [Green]
and Mr [Green] relied to their detriment?
5. I find that Air New Zealand made a representation upon which Ms [Green] and Mr [Green] relied to their detriment. Ms [Green] was told by Air New Zealand that she could replace her mislaid items and agreed that she could do so on a like for like basis. On the strength of this representation, she replaced them like for like incurring considerable expense and inconvenience to her and Mr [Green].
…
Conclusion
8. Air New Zealand made a representation upon which Ms [Green] and Mr [Green] relied to their detriment. The cost of the replacement items like for like exceeds the Tribunal’s jurisdiction. I therefore order that Air New Zealand pay Ms [Green] and Mr [Green] $15,000.00.
Proceedings in the High Court
[12] Air New Zealand has made an application for judicial review of the Tribunal’s decision. Crown Law, on behalf of the Disputes Tribunal, has formally advised it will abide the decision of the Court and has taken no further part in the proceedings. The Greens, as second defendants, have also advised the Court that they do not wish to be heard and will abide the decision of the Court. Given that these proceedings originate from proceedings before the Disputes Tribunal where hearings are private matters, all parties agreed that the names of the second defendants and any details that might identify them should be suppressed. An order was made accordingly on 25 November 2015.
[13] As a result of all this, when these proceedings went to a hearing before me, I only received submissions from counsel for Air New Zealand, Mr Gedye QC. He made it clear in his submissions that Air New Zealand considered the judgment I would be giving to involve important issues of principle and precedent. He said the issue of whether the Convention confers exclusive rights of action is of widespread importance and significance given the 119 countries who are signatories to the Convention, the 256 airlines which operate on the basis their businesses are subject to the Convention regime and the approximately 3.6 billion annual international passengers who, in their travel, are bound by the terms of the Convention.
[14] In the context of those submissions, it is a little challenging to be issuing a judgment over a claim for $15,000 with the benefit of submissions from just one side of the argument. I will however deal with issues that the Court has been asked to address through the detailed and helpful submissions which I received from Mr Gedye. During the course of his submissions, I did endeavour to put to him, as best I could, propositions that might have been a counter to the arguments he was presenting.
The judicial review jurisdiction
[15] It is settled law that Disputes Tribunal decisions are amenable to judicial review, being the decisions of a statutory body. The High Court will normally make
an order setting aside orders which are made ultra vires and outside the Tribunal’s
jurisdiction.3
Was the decision outside the Disputes Tribunal’s jurisdiction?
[16] The Tribunal’s decision in ACH v ZXW Ltd is available to the public on the Disputes Tribunal’s website so is of some practical importance to those who might be contemplating bringing a claim against an airline in connection with air travel. In ACH v ZXW Ltd, the Tribunal commented that there would be benefit in having a decision from the District Court on the approach taken on the issue of jurisdiction in
terms of its decision.4 There was no such decision from the District Court. Mr
Gedye said there would be benefit to the public having a decision from the High Court on this issue. He submitted these proceedings would provide the opportunity for the Court to make such a decision.
Estoppel
[17] Mr Gedye submitted the claim was outside the Tribunal’s jurisdiction because the referee reached her decision on the basis of an estoppel. He submitted this was thus a claim based on equity rather than on contract, quasi-contract, tort or pursuant to a power conferred on it by an enactment listed in Part 1 of Schedule 1 to the
Disputes Tribunals Act 1988.5 While he acknowledged that there were provisions in
the Act which permitted the Tribunal to determine a dispute “according to the substantial merits and justice of the case”, that was different from giving the Court jurisdiction to deal with claims brought on the basis of equity to which a whole range of equitable principles and precedents would normally apply.6
[18] I agree the Tribunal does not have jurisdiction to deal with claims based on equity and in this instance the referee, in her limited discussion as to jurisdiction,
referred only to the Greens having the right to recover on the basis of an estoppel.
3 NZI Insurance New Zealand Ltd v District Court at Auckland [1993] 3 NZLR 453 (HC) per Thorpe J; Earthquake Commission v Disputes Tribunal (1996) 10 PRNZ 317 (HC); Auckland City Council v Henderson District Court [1998] 1 NZLR 253 (HC).
4 ACH v ZXW Ltd, above n 2, at [23].
5 Disputes Tribunals Act 1988, s 10(1)-(2).
6 Section 18(6).
Other bases of jurisdiction
[19] The Disputes Tribunal does, however, have jurisdiction where claims can be based on contract, quasi-contract or where any enactment listed in a schedule to the Act confers powers on a Court if the occasion for the exercise of the power arises in the course of proceedings properly before the Tribunal and involves a claim for no more than $15,000.7
[20] Mr Gedye recognised that the Convention and the Civil Aviation Act, which gives the treaty legislative effect in New Zealand, give affected parties the right to bring a claim in accordance with their rights under the Convention although subject to the limitations which that treaty provides for. The Convention and the Act give people like the Greens the right to bring a claim for a loss they may suffer through delays in receiving their baggage in the circumstances that applied in this case.8
[21] The Civil Aviation Act 1990 is not listed in the schedule as an enactment under which the Tribunal may exercise power. It is not an enactment conferring jurisdiction on the Disputes Tribunal as referred to in s 10(2).9
Contract
[22] Mr Gedye drew my attention to the ways in which the Convention and the Civil Aviation Act recognise a claimant’s rights under the Convention also arise out of the contract between the passenger and the carrier (the contract of carriage) which is governed by the Convention. He said arts 26, 27, 39 and 40 of the Convention all recognise the contractual basis for claims which may be brought under the Act.10
[23] Mr Gedye acknowledged that the Disputes Tribunal has jurisdiction where contract claims are brought under the Convention. He submitted, had this claim
7 Sections 10(1)-(2).
8 Convention for the Unification of Certain Rules for International Carriage by Air (opened for signature 28 May 1999, entered into force 4 November 2003) [Montreal Convention], arts 19,
22; Civil Aviation Act 1990, ss 91C and 91G.
9 Disputes Tribunals Act 1988, sch 1, pts 1 and 2.
10 Article 26 declares the invalidity of any contractual provisions purporting to exclude or reduce the carrier’s liability under the Convention; art 27 affirms the carrier’s freedom to contract (provided it complies with the Convention); arts 39 and 40 recognise the roles and respective liabilities of contracting and actual carriers.
been brought or treated as a contract claim, the Tribunal would have had jurisdiction to adjudicate upon it “but it would have been limited to the Montreal Convention limits”.
[24] It is implicit in that submission that the Disputes Tribunal could have had jurisdiction to deal with this claim, given the factual basis on which it was brought, as a claim in contract.
Quasi-contract
[25] I have also considered whether the claim could have been brought within the
Disputes Tribunal as a claim based on “quasi-contract”.
[26] Mr Gedye said it was difficult to say what was meant by “quasi-contract”. He noted that, in their text, Burrows, Finn and Todd had said it was a “rather unfortunate” term, preferring to address it under the heading “Restitution”.11
[27] Mr Gedye did refer me to the discussion in Civil Procedure: District Courts and Tribunals as to what was meant by the term “quasi-contract”.12 That commentary referred to claims which had been traditionally considered to be “quasi- contractual” as discussed in earlier editions of the Law of Contract in New Zealand. Those claims were recorded as being:13
(a) money paid by the plaintiff to the defendant’s use;
(b) money paid under a mistake;
(c) money paid in pursuance of an ineffective contract;
(d) money had and received from a third party to the plaintiff’s use;
(e) claims against wrongdoers; and
11 John Burrows, Jeremy Finn and Stephen Todd Law of Contract in New Zealand (4th ed, LexisNexis, Wellington, 2012) at 26.
12 Civil Procedure: District Courts and Tribunals (online looseleaf ed, Thomson Reuters) at
[DTA10.02].
13 At [DTA10.02].
(f) claims for a quantum meruit where no contract has come into existence.
[28] The common thread of those categories would appear to be that they are all situations where one party has provided a benefit to another, which that other party has taken advantage of so that the courts impose an obligation to pay for that benefit. The obligation which the courts recognise is thus not one imposed unilaterally on that party by another. It arises by reason of what they both do or say. In those circumstances, the liability arises even though there has not been a legal contract or necessarily any agreement.
[29] In National Westminster Finance NZ Ltd v National Bank of New Zealand Ltd, Tipping J highlighted the common element of unconscionability which runs through all manifestations of estoppel in the following terms:14
The broad rationale of estoppel, and this is not a test in itself, is to prevent a party from going back on his word (whether express or implied) when it would be unconscionable to do so.
[30] When a claim can be made on the basis of an estoppel, as in the circumstances here, that entitlement arises because of a representation from one party that they will do something which the other party has relied upon or accepted and acted on to their detriment. It seems to me that such circumstances closely resemble a situation where an agreement has been reached, even if that agreement does not necessarily have all the elements which would give rise to a legal contract.
[31] Section 11(7) states that nothing in s 10A which confers jurisdiction in quasi- contract on the Tribunal “shall be construed as authorising a claim in respect of money due under any enactment”. Section 11(8) defines enactment as “a provision of any Act or of any other instrument that has legislative effect and that is authorised by or pursuant to any Act”.
[32] Applying s 11(7), it would not be possible for the Greens or other passengers to bring a claim in the Disputes Tribunal simply on the basis they have an
entitlement under a quasi-contract pursuant to the Convention or s 91G of the Civil
14 National Westminster Finance NZ Limited v National Bank of NZ Limited [1996] 1 NZLR 548 (CA) at 549.
Aviation Act. What if the claim was made with no reference to the Convention or s
91G but was based on estoppel or any of the causes of action referred to in the Law of Contract in New Zealand as being quasi-contractual or in the nature of restitution?
[33] Such a claim might be based on quasi-contract and not be for any money due under any enactment. However, for other reasons I discuss later, the Disputes Tribunal could not allow the Greens to make a claim based on estoppel.
[34] Section 11(7) of the Disputes Tribunals Act does not bar a claim in the Disputes Tribunal if it is founded on contract. As mentioned, a claim under the Convention, in terms of the Act and the Convention, can also be considered to be a claim in contract although there was no evidence or discussion as to this when the Disputes Tribunal dealt with the Greens’ claim. Normally there would also be a contract between the passenger and Air New Zealand, acknowledged in the tickets which are issued to the passenger. That contract recognises the Convention. On the basis of that contract, a passenger would be entitled to make a claim.
[35] For these reasons, I find that the Disputes Tribunal will not be excluded from having jurisdiction simply because a claim may arise in circumstances where the rights and obligations of the parties are governed by the Convention. The Disputes Tribunal will have jurisdiction because any claim permitted by the Convention will also be a claim in contract, by reason of the Convention and probably also usually by reason of the contract through the ticketing that also gives effect to the Convention.
[36] In deciding the Tribunal had jurisdiction on the basis of estoppel, the Tribunal was in error. Nevertheless, on the facts before her, the referee could quite properly have decided the Disputes Tribunal did have jurisdiction given that under the Convention the Greens had a right to bring a claim against Air New Zealand in contract. In the exercise of my discretion, I would not set aside the Tribunal’s determination because the Tribunal said it had jurisdiction based on estoppel.
Error of law – Does the Convention govern the Greens’ claim?
[37] The next issue is whether the referee’s decision should be set aside for error of law in that the referee had, in deeming the Convention irrelevant or inapplicable,
failed to have regard to the Convention and the parallel provisions of the Civil
Aviation Act.
[38] The referee found Air New Zealand had a liability to the Greens for the extent of their claim because of representations which had been made by Air New Zealand’s representatives in London and the way those representations had been accepted and acted upon to their detriment by the Greens.
Liability under the Convention
[39] The Greens’ claim arose out of a delay to baggage. It was thus in a form covered by the Convention, incorporated into New Zealand law by s 91C of the Civil Aviation Act. Article 19 of the Convention states:
The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo.
[40] Article 22 of the Convention and s 91G(1) Civil Aviation Act entitle passengers in the Greens’ circumstances to recover damages for lost or delayed baggage but with a maximum liability on the part of the carrier to 1,131 SDRs.15
There was no dispute that, at the time of the loss, that limitation was $2,125.
[41] Article 29 further clarifies that the Convention’s limits apply regardless of the
basis of any claim:
In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non- compensatory damages shall not be recoverable. [Emphasis added]
15 The value of SDRs can be found on the internet and is fixed daily by the International Monetary Fund. IMF Special Drawing Rights: approximately 1 SDR=NZ$2.06 (the exchange rate fluctuates). Although both second respondents pursued the claim and no point is taken about the identity of the owner of the bag, only one suitcase was delayed and only one limit of liability sum is thus involved.
[42] That is further reflected in s 91G. It states that the limitations on liability referred to in arts 21 and 22 of the Convention apply “whatever the nature of the proceedings by which liability may be enforced”.
[43] Mr Gedye’s argument was that the limitations in the Convention, as a matter of law, had to apply, and the domestic law and equitable principles such as estoppel could not be used by a New Zealand Court or by the Disputes Tribunal to circumvent the effect of the Convention. He submitted the Convention provides exclusive causes of action and the sole remedy for passengers who claim against a carrier for loss, injury or damage sustained in the course of or arising out of international carriage by air.
[44] Mr Gedye argued that ss 91C and 91G of the Civil Aviation Act apply the Convention to air carriage as a matter of law and obviate the need to enquire into the contractual arrangements in any case.
[45] Section 91C states:
91C Conventions to have force of law
(1) The provisions of the Montreal Convention, the amended Convention and the Guadalajara Convention have the force of law in New Zealand in relation to any carriage by air to which the Montreal Convention, the amended Convention or the Guadalajara Convention, as the case may require, applies.
(2) Despite subsection (1), the provisions of the Montreal Convention, the amended Convention and the Guadalajara Convention have the force of law in New Zealand only in so far as they relate to the rights and liabilities of carriers, carriers’ servants and agents, passengers, consignors, consignees, and other persons.
(3) The provisions of the Montreal Convention, the amended Convention and the Guadalajara Convention apply in New Zealand in accordance with subsection (1), irrespective of the nationality of the aircraft performing that carriage.
(4) The provisions of the Montreal Convention, the amended Convention and the Guadalajara Convention apply in New Zealand subject to the provisions of this Part.
(5) Each version of Article 22 of the amended Convention set out in Schedule 4 applies in the circumstances outlined in the heading of that version.
[46] Section 91G states:
91G Limitation of liability
(1) The limitations on liability referred to in Articles 21 and 22 of the Montreal Convention or in Article 22 of the amended Convention apply whatever the nature of the proceedings by which liability may be enforced and, in particular,—
(a) Those limitations apply where proceedings are brought by a tortfeasor to obtain contribution from another tortfeasor if the tortfeasor from whom contribution is sought is the carrier or a servant or agent of the carrier; and
(b) the limitation for each passenger referred to in Article 21 of the Montreal Convention or in paragraph (1) of Article 22 of the amended Convention applies to the aggregate liability of the carrier in all proceedings which may be brought against the carrier under the law of New Zealand, together with any proceedings brought against the carrier outside New Zealand.
(2) A court before which proceedings are brought to enforce a liability which is limited by Article 21 or Article 22 of the Montreal Convention or Article 22 of the amended Convention may at any stage of the proceedings make any order that appears to the court to be just and equitable, in view of—
(a) the provisions of Article 21 or Article 22 of the Montreal
Convention or Article 22 of the amended Convention; and
(b) any other proceedings which have been, or are likely to be, commenced in New Zealand or elsewhere to enforce the liability in whole or in part.
(3) A court before which proceedings are brought to enforce a liability that is limited by Article 21 or Article 22 of the Montreal Convention or Article 22 of the amended Convention has jurisdiction, where the liability is, or may be, partly enforceable in other proceedings in New Zealand or elsewhere, to—
(a) award an amount less than the court would have awarded if the limitation applied solely to the proceedings before the court; or
(b) make any part of its award conditional on the result of any other proceedings.
(4) The provisions of subsection (3) do not limit the powers conferred on a court by subsection (2).
(5) Unless the context otherwise requires, references in this section to Article 22 of the amended Convention are, subject to any necessary modifications, to be read as references to that Article as applied or supplemented by Article 25A of the amended
Convention and Articles V and VI of the Guadalajara
Convention.
[47] I must therefore decide whether the relevant articles of the Convention and ss 91C and 91G impose a limitation on liability where a claim is made by reason of a delay in delivery of baggage but there have also been representations by an airline or its agents relied upon by the passenger.
The exclusivity principle
[48] The superior courts of State signatories to the Convention have consistently affirmed the intended and effective exclusivity of the liability scheme it establishes. Lord Hope summarised the rationale for such an approach in Sidhu v British Airways, expressed as follows:16
The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international code, which could be applied by the courts of all the high contracting parties without reference to the rules of their own domestic law… in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law…
[The Convention] was not designed to provide remedies against the carrier to enable all losses to be compensated. It was designed instead to define those situations in which compensation was to be available. So it set out the limits of liability and the conditions under which claims to establish that liability, if disputed, were to be made…
The domestic courts are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to the setting alongside the Convention of an entirely different set of rules which would distort the operation of the whole scheme.
[49] In Stott v Thomas Cook Tour Operators Ltd, the United Kingdom Supreme Court recently affirmed those principles and the all-embracing effect of the Convention.17 The Justices affirmed Lord Hope’s description of the Convention as a package.18 It gives the passenger significant rights, easily enforceable, but it
generally imposes limitations.
16 Sidhu v British Airways [1997] AC 430 (HL) at 453–454. This decision was based on the Convention’s precursor, the Warsaw Convention, but the terms of the Montreal Convention make no material difference to the relevance of what was said by the House of Lords.
17 Stott v Thomas Cook Tour Operators Ltd [2014] UKSC 15, [2014] AC 1347.
[50] Stott involved an air carrier’s “serious failure” to make proper provision for the needs of a disabled passenger, contrary to the requirements of the Civil Aviation (Access to Air Travel for Disabled Persons and Persons with Reduced Mobility) Regulations 2007 (the UK Disability Regulations).19 These Regulations implement the European Parliament and Council Regulation concerning the rights of disabled persons and persons with reduced mobility when travelling by air (the EC Disability
Regulation).
[51] Mr Stott brought a claim under the UK Disability Regulations for a declaration that the air carrier’s treatment of him was in breach of its duty under the EC Disability Regulation in that it had failed to make all reasonable efforts to ensure that he and his wife (upon whom he relied to assist with personal needs when travelling) were seated together, and for damages including aggravated damages. The issue was whether a court may award damages for a claimant's discomfort and injury to feelings caused by a breach of the UK Disability Regulations. The courts below had concluded that any such award was precluded by the Montreal Convention, given effect by the EC Montreal Regulation.
[52] The Supreme Court noted that the acknowledged purpose of the Montreal Regulation is to ensure full alignment between the Convention as an international instrument and European Community law.20 The Supreme Court then held that the subjection to maltreatment which formed the gravamen of the claim fell squarely within both the temporal and substantive scope of the Convention, precluding an award of damages. The claim was for damages for the humiliation and distress which Mr Stott had suffered in the course of embarkation and flight. The particulars of injury to Mr Stott’s feelings and the particulars of aggravated damages related
exclusively to events on the aircraft. It was no answer to the application of the Convention that the operative causes began prior to embarkation. Lord Toulson JSC clarified that “[to] hold otherwise would encourage deft pleading in order to
circumvent the purpose of the Convention”.21
19 Stott v Thomas Cook Tour Operators Ltd [2014] UKSC 15, [2014] AC 1347 at [1] per Lord
Toulson JSC.
20 At [59].
[53] Since the Convention is “intended to deal comprehensively with the carrier's liability for whatever may physically happen to passengers between embarkation and disembarkation”, a damages claim for failure to provide properly for the needs of a disabled passenger also fell within its substantive reach.22 Simply put, “what matters is not the quality of the cause of action but the time and place of the accident or mishap”.23 Lord Toulson JSC emphasised the “underlying problem” that the Convention “long pre-dated equality laws which are common today”, and agreed that the Convention should be amended to take account of the development of equality rights.24 His Lordship stated “[it] seems unfair that a person who suffers ill- treatment of the kind suffered by Mr Stott should be denied any compensation”, yet ultimately concluded that amendment was a matter for the countries that were party to the Convention.
[54] Sharing the regret of the lower courts that damages were not available as recompense for Mr Stott’s ill-treatment and echoing their sympathy for him, the Supreme Court agreed with their reasoning and dismissed the appeal. Although the embarrassment and humiliation which Mr Stott suffered were exactly what the EC and UK Disability Regulations were intended to prevent, the Convention applied to
preclude any award of damages.25
[55] The approach taken in Sidhu and Stott is consistent with that taken by superior courts in other jurisdictions.26
[56] In Emery Air Freight Corporation v Nerine Nurseries Limited, the New
Zealand Court of Appeal expressly adopted the House of Lords decision in Sidhu.27
In this case, Nerine contracted with its air freight agent to transport flower bulbs to
Amsterdam. The agent sent the bulbs by road to Auckland and contracted with
22 At [61].
23 At [61], citing King v American Airlines Inc 284 F 3d 352 (2nd Cir 2002) per Sotomayor CJ.
24 At [63].
25 At [65].
26 El Al Israel Airlines Ltd v Tseng 525 US 155 (1999); South Pacific Air Motive Pty Ltd v Magnus
(1998) 87 FCR 301; Thibodeau v Air Canada 2014 SCC 67, [2014] 3 SCR 340.
27 Emery Air Freight Corporation v Nerine Nurseries Ltd [1997] 3 NZLR 723 (CA). As in Sidhu, Emery Air Freight considered the scope and application of the Warsaw Convention, as supplemented by the Guadalajara Convention 1961, and incorporated into New Zealand domestic law by s 7 of the Carriage Air Act 1967. The Court’s approach is applicable to the more recent Montreal Convention.
Emery for their carriage to Amsterdam. Emery contracted with an Airline carrier to carry the bulbs from Sydney to Amsterdam. The bulbs were damaged while under the Airline’s control. Nerine had obtained summary judgment against Emery in the District Court on the grounds that Emery was a contracting carrier within the meaning of the Warsaw Convention. On appeal, the High Court found that Nerine had failed to prove Emery was the contracting carrier, but sustained the summary judgment on the basis that Emery was a bailee.
[57] The Court of Appeal held that performance in the Convention was limited to physical and not contractual performance. Thus, Emery was not liable for the loss because it was not the physical carrier. Further, and most significantly for this case, the Court held that Nerine’s causes of action in common law were limited by the Warsaw and Guadalajara Conventions and no bailment claim could be brought against a carrier where the Convention provisions did not impose liability. Consequently, Nerine was not entitled to sue Emery in bailment independently of the Warsaw Convention.
[58] Writing for the Court, Blanchard J held that any common law claim governed by the Convention must comply with the conditions and limits set out therein.28
Where the bringing of a claim is inconsistent with a provision of the Convention, it may not be brought. Concurring with the majority judgment of Blanchard J, Henry J noted that the Convention is:29
… concerned to establish a comprehensive regime governing the liability of carriers performing international air carriage which is within the scope of those conventions. To leave open in addition access to the domestic law of any individual country, is in my view contrary to the scheme and its intendment.
[59] The Court of Appeal therefore held that the joint effect of the Conventions was to prohibit a claim in bailment.
[60] Decisions from other jurisdictions show that claimants have been imaginative in attempting to bring claims, relying on causes of action which were not recognised
in the Convention, in an attempt to avoid the limitations of liability contained in the
28 At 735-736.
29 At 728.
Convention. Numerous claims have been made for mental stress or post-traumatic stress disorder arising out of events associated with air travel. The courts of different jurisdictions have been resolute in not allowing claimants to avoid the effects of the Convention in this way.30
Contracting out – a narrowly delineated right
[61] While there is a prohibition against a carrier contracting for a lesser liability, the Convention and the Civil Aviation Act both give a carrier the right to contract for a greater liability than that provided for in the Convention.31
[62] Accordingly, the Convention and the legislation recognise that, if there is such a contract, the limitations in the Convention or in the legislation will not apply. If parties, in particular a carrier, can accept and be liable to a greater extent than would prevail under the Convention, why should they not incur and have to meet such a liability by reason of a claim based on promissory estoppel?
[63] In terms of general notions of fairness, it would be easy to say there should be no such distinction. Carriers could avoid any such increased liability through ensuring that their staff, representatives and agents are always conscious of the liability limitations under the Convention and say nothing to passengers or other customers to suggest that such limitations do not apply.
[64] There are, however, sound reasons why the courts should recognise the purpose and policy of the Convention and the Civil Aviation Act to avoid claims and
disputes arising in this way. As noted above, these have been referred to by the
30 United States authorities include: Eastern Airlines v Floyd 499 US 530 (1991); El Al Israel
Airlines Ltd v Tseng 525 US 155 (1999); King v American Airlines Inc 284 F 3d 352 (2nd Cir
2002); Ehrlich v American Eagle Airlines Inc 360 F 2d 366 (2nd Cir 2004); Lee v American Airlines Inc 29 Avi 18,426 (5th Cir 2004). This approach mirrors that in the United Kingdom (Sidhu v British Airways [1997] AC 430 (HL); Morris v KLM Royal Dutch Airlines [2002] AC
628 (HL); Stott v Thomas Cook Tour Operators Ltd [2014] UKSC 15, [2014] AC 1347), Australia (Kotsambasis v Singapore Airlines (1997) 42 NSWLR 110 (CA); South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301) and Canada (Plourde c. Service Aérien FBO Inc
2007 QCCA 739 (leave to appeal refused by the Supreme Court of Canada [2007] SCCA 400); Simard c. Air Canada 2007 QCCS 4452; Lukács v United Airlines Inc 2009 MBCA 111), among many other signatories.
31 Montreal Convention, arts 25 and 26.
superior courts of state parties to the Convention when affirming the exclusivity principle of the liability scheme established under the Convention.
[65] I accept Mr Gedye’s submission that the Convention is intended to provide certainty for all those who are engaged in the aviation business within signatory countries where they accept their business will be governed by the terms of the Convention. Passengers and airlines travel between different jurisdictions where there may be differences in domestic law. Airlines will be represented or staffed by people in different countries, often not under the direct control of the principal airline concerned. Those who operate airlines and those who deal with them, including insurers, all benefit from having certainty as to the extent and circumstances in which an airline will be liable to its passengers for delays. It will create uncertainty if claims can be brought outside the limits provided for in the Convention.
[66] There is the potential for some exceptions or variation and some uncertainty if carriers contract to have a liability greater than that provided for by the Convention. Nevertheless, the scope for that will be much less if the exceptions or variations can arise only by reason of a legal contract with all the essential elements of contract, including consideration and certainty. Moreover, the contracting parties will have control over whether they create an additional liability and the extent of that liability. By contrast, the circumstances in which a claim might arise by reason of an estoppel or otherwise in equity, and the extent of any such liability, are wide open and variable and potentially created by a judgment of the Court rather than conscious decisions of the parties.
Conclusion – error of law
[67] I accordingly find the Disputes Tribunal made an error of law in holding Air New Zealand could be liable to Mr and Mrs Green by reason of an estoppel and in determining Air New Zealand has to pay a sum in excess of the limitations on liability in the Convention and Civil Aviation Act.
[68] The conclusion I have reached in this regard recognises and is consistent with art 29 of the Convention.
The contract of carriage
[69] Mr Gedye also submitted the limitations imposed by the Convention and ss
91C and 91G had to govern the situation because of the contract that had been entered into between Mr and Mrs Green and Air New Zealand.
[70] Amongst the documents annexed to the affidavit of Mr McDonald filed in the judicial review proceedings was “Air New Zealand Conditions of Carriage”. There was nothing in the Tribunal’s decision or in the statements made by Mr and Mrs Green to suggest the conditions of carriage were brought to Mr and Mrs Green’s attention when they were asking the Air New Zealand representatives in London how they could deal with their lost baggage problem. There is also nothing to suggest the Air New Zealand representative referred the Disputes Tribunal to the Air New Zealand conditions of carriage during the hearing or that he explained how those conditions were incorporated into the contract between Mr and Mrs Green and Air New Zealand, and brought to their attention.
[71] These are judicial review proceedings and any declaration which this Court makes should be based on the record that is available as to how the Disputes Tribunal reached its decision. For that reason, it would not be appropriate for me to set aside the Tribunal’s decision on the basis of evidence which was not before the Tribunal. For completeness, I will however refer to the parts of the conditions of carriage which are consistent with the way the courts have said the Convention must govern the rights and obligations of the parties in situations where luggage is lost, damaged or delayed in connection with a flight.
[72] Article 8.11 of the Conditions of Carriage is headed “Liability for delay, loss or damage to baggage during international carriage”. There is an introductory statement advising that, as Air New Zealand’s liability is limited, it is recommended the passenger purchase travel insurance to cover delay, loss and damage to baggage. Article 8.11.3 states:
Our liability in the case of destruction or loss of or Damage or delay to all or any part of your Baggage during International Carriage will be limited to
1,131 SDRs (as defined in Article 15.11) per Passenger unless you prove that the damage resulted from an act or omission on our part, or that of our
employees or agents acting within the scope of their employment, done with intent to cause damage or recklessly and with knowledge that damage would probably result.
[73] Article 8.11.7 states:
We shall have limited or no liability for Damage to or loss of articles not permitted to be contained in Checked Baggage under Article 8.4.1 and 8.4.2, except as otherwise provided by the Montreal Convention and subject to applicable defences therein, including contributory negligence and wrongful acts or omissions by you.
[74] With regard to international carriage, art 15.2 states:
In the case of Passenger claims under Article 15 and Baggage claims under Article 8.11 arising out of International Carriage as defined in Article 1 we shall apply the terms of the Montreal Convention and your rights and our obligations and rights shall be as set out in the Montreal Convention as found in Schedule 6 to the Civil Aviation Act 1990. The terms of the Montreal Convention shall be applied to all international carriage carried out by us irrespective of any other conventions which may apply to your carriage, and notwithstanding the fact that no convention may apply to your carriage.
[75] Article 15.10 explained how, for the purposes of arts 8 and 15, the value of one SDR was to be the value as fixed by the International Monetary Fund. It also explained how information as to that value could be accessed on the internet.
[76] Article 15.11 states:
Except as otherwise expressly provided herein, nothing contained in these Conditions shall waive any defence or exclusion of limitation of our liability under the Montreal Convention or applicable laws. With respect to third parties we reserve all rights of recourse against any other person, including without limitation, rights of contribution and indemnity.
[77] Article 18, headed “No Modification or Waiver”, states:
None of our Authorised Agents, servants, employees or representatives has authority to alter, modify or waive any provision of these Conditions.
[78] Had these conditions of carriage been brought to the attention of the Disputes Tribunal, the referee would have had to consider whether and to what extent they should be taken into account in giving a decision as to what Mr and Mrs Green should recover. If Air New Zealand’s ticketing expressly referred to those conditions
of carriage, it is hard to see they would not also have limited Air New Zealand’s
liability.
Does the Disputes Tribunals Act permit circumvention of the Convention’s
limits on liability?
[79] I have found the Disputes Tribunal did make errors of law in allowing a claim to be brought on the basis of an estoppel and thereby disregarding the limits on liability provided for in ss 91C and 91G and the Convention. Should the Tribunal’s determination be set aside by reason of such errors?
[80] Section 18 of the Disputes Tribunal Act states:
…
(6) The Tribunal shall determine the dispute according to the substantial merits and justice of the case, and in doing so shall have regard to the law but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.
(7) Without limiting the generality of subsection (6), a Tribunal may, in respect of any agreement or document that directly or indirectly bears upon the dispute between the parties, disregard any provision in that agreement or document that excludes or limits—
(a) conditions, warranties, or undertakings; or
(b) any right, duty, liability, or remedy that would arise or accrue in the circumstances of the dispute if there were no such exclusion or limitation.
[81] Given s 18(6), it might have been argued for Mr and Mrs Green that, even if the Disputes Tribunal had accepted the Convention and ss 91C and 91G did govern the situation, it would have been open for it to reach the same decision on the basis it reflected the substantial “merits and justice of the case” and the Tribunal was expressly authorised to disregard any provision in the Civil Aviation Act, the Convention or the conditions of carriage that limited Air New Zealand’s liability.
[82] Mr Gedye argued that these statutory provisions could not be applied in such a way as to allow the Disputes Tribunal to ignore the Convention and ss 91C and
91G. Mr Gedye submitted that ss 18(6) and (7) permit the Tribunal to disregard limitations on liability in agreements or documents dealing with “technicalities or
niceties” of the relationship between the parties, not legislation that was fundamental
to their rights or liabilities.
[83] Section 18(7) does empower the Tribunal to disregard provisions that limit one party’s liability but that expressly relates to “any provision in that agreement or document” that directly or indirectly bears upon the dispute between the parties. Given the Tribunal is required to “have regard to the law”, the reference to any “agreement or document” in s 18(7) cannot be extended to New Zealand legislation which imposes rights, obligations or liabilities on the parties.
[84] Consistent with that, while the Disputes Tribunal has jurisdiction to deal with claims based on a contract or quasi-contract between the parties, the Tribunal does not have jurisdiction to adjudicate on disputes arising out of claims where the rights and obligations are dependent on legislation unless expressly conferred by an agreement listed in sch 1, pts 1 and 2 of the Disputes Tribunals Act.32
[85] The limited right of appeal provided for in the Disputes Tribunals Act is consistent with that interpretation. An appeal can only be brought:33
… on the grounds that—
(a) the proceedings were conducted by the Referee; or
(b) an inquiry was carried out by an Investigator—
in a manner that was unfair to the appellant and prejudicially affected the result of the proceedings.
(2) Without limiting the generality of subsection (1), a Referee shall be deemed to have conducted the proceedings in a manner that was unfair to the appellant and prejudicially affected the result if—
(a) the Referee fails to have regard to any provision of any enactment that is brought to the attention of the Referee at the hearing; and
(b) as a result of that failure, the result of the proceedings is unfair to the appellant.
32 Earthquake Commission v Disputes Tribunal, above n 2 (entitlement to compensation for earthquake damage under the Earthquake and War Damage Act 1944); Auckland City Council v Henderson District Court, above n 2 (dispute over rates).
33 Disputes Tribunals Act 1988, s 50(1)-(2).
[86] Had the issues that had arisen on this judicial review application been put before the District Court by way of an appeal, it would have been appropriate for the District Court to set aside the award on the basis the referee had failed to have regard to the provisions of the Convention and ss 91C and 91G of the Civil Aviation Act and, as a result of that failure, the result of the proceedings was unfair to Air New Zealand.
[87] It follows from this, the Disputes Tribunal had to recognise the way in which ss 91C and 91G and the Convention limited Air New Zealand’s liability on the Greens’ claim.
Resolution
[88] Air New Zealand has established the Disputes Tribunal made an error of law in reaching its decision. This Court has a discretion as to the relief it should provide as a result of that error. The United Kingdom Supreme Court had to express sympathy for Mr Stott and his predicament but found, legally, he could not obtain the remedy he was seeking. So I also sympathise with Mr and Mrs Green and recognise their frustration in having to wait nine days for Air New Zealand to return a suitcase to them from Los Angeles. The law, however, means they cannot obtain the remedy they seek.
[89] Air New Zealand asked for the Tribunal’s decision to be set aside and for declarations as to how the Montreal Convention will affect claims such as that made by Mr and Mrs Green.
[90] I accept the submission made for Air New Zealand that there is no point in remitting the proceedings back to the Disputes Tribunal for further consideration given Air New Zealand has assured this Court that it accepts it has a liability to Mr and Mrs Green to the extent of the limits in the Convention for the costs they incurred as a result of what certainly appears to have been an unreasonable and distressing delay in recovering a suitcase which had gone astray. That liability is not to be reduced by the modest recovery they made on their insurance policy. It would also be appropriate for Air New Zealand to allow for interest on the amount they are paying at Judicature Act 1908 rates.
[91] With the expectation that Air New Zealand will be making payment accordingly, I make an order that the determination of the Disputes Tribunal dated 29
July 2015 is set aside.
[92] I make a declaration that the Disputes Tribunal does have jurisdiction to determine claims where the circumstances of the parties and the circumstances giving rise to the claim are governed by the Montreal Convention and ss 91C and
91G of the Civil Aviation Act and are otherwise within the jurisdiction of the
Disputes Tribunal.
[93] I also make a declaration that, when dealing with a claim where the parties’
obligations, rights and entitlements are governed by the Montreal Convention and ss
91C and 91G of the Civil Aviation Act, the Disputes Tribunal must recognise the limits on entitlements and liabilities provided for in the Montreal Convention and ss
91C and G of the Civil Aviation Act except to the extent those limits have been varied by contract between the parties.
[94] The plaintiff has agreed that no order for costs should be made against any other party. I thus make no such order.
Solicitors:
Tompkins Wake, Hamilton
N S Gedye, Barrister, Auckland
Crown Law, Wellington.
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