AMERICAN AIRLINES INC v GEORGEOPOULOS and ANOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, SHELLER JJA and Simos AJA 11 September 1996, 26 September 1996 [1996] NSWCA 13 PERSONAL INJURY — nervous shock — whether 'any bodily injury' within Article 17 Warsaw Convention — injury sustained while passenger on international flight — appropriateness of a stated case for determination The respondents were passengers on the appellant's aircraft when they claimed to have sustained personal injuries, including nervous shock and mental suffering. In proceedings commenced in the Local Court, judgment was given for the appellant, on the basis that damages would not be recoverable because the phrase "any other bodily injury" in Article 17 of the Warsaw Convention did not include nervous shock and mental suffering. The Magistrate stated a case to be determined by the Supreme Court. An issue for determination was whether "nervous shock and/or mental suffering" was embraced by Article 17, which applied under the Civil Aviation (Carrier's Liability) Act 1959 (the Act). An additional question which would arise if nervous shock" was not within the scope of Article 17, was whether proceedings claiming damages in respect of such an injury could still be brought in New South Wales. Ireland J found that nervous shock could be classified as "any other bodily injury" under the Act and remitted it to the Magistrate for determination. The appellant appeals from this decision. HELD: 1. An appeal by way of stated case was misconceived. because it did not contain a statement of all the ultimate facts which dictated the ultimate conclusion of the Court below. The Magistrate stated the case based on agreed facts, but made no finding as to the nature of the injuries sustained. Absent such a finding, it was impossible to decide whether the respondent suffered "bodily injury" within the meaning of Article 17. 2. "Nervous shock" as a condition or a cause of a condition for which a defendant may be liable in negligence describes a non-impact injury which may or may not give rise to body tissue alteration. Assuming shock occurs, the question is whether that shock caused injury and the nature of that injury. These evidentiary findings are essential to any conclusion whether the injury complained of was a "bodily injury" for the purposes of Article 17. 3. In these circumstances it was inappropriate for the Local Court to decide this question as a preliminary point, having adopted an expression of "dubious medical acceptability", and without determining what injury, if any, had been suffered. ORDERS 1. Appeal allowed; 2. Set aside the orders of Ireland J of 10 December 1993; 3. Send back the stated case to Mr Rustin SM in order that he may list the proceedings for hearing, hear the evidence, make findings of fact and amend the stated case as appropriate to include and take account of his findings of fact; 4. Adjourn the further hearing of the appeal until the stated case has been amended or further order; 5. Stand the appeal into the Registrar's list for mention when the stated case has been amended; 2 UNREPORTED JUDGMENTS 6. The costs of the appeal are reserved. Clarke JA I agree with Sheller JA. Sheller JA INTRODUCTION Victoria Gimouras and Peter Georgeopoulos, to whom I shall refer as "the passengers", each began proceedings (Nos 16986 and 16987) pursuant to the Local Courts (Civil Claims) Act 1970 in the Local Court to recover damages from American Airlines Inc (AA). In each of these proceedings the Court (Mr Rustin SM), after hearing a preliminary question, gave a verdict and judgment for AA and stated a case for determination by the Supreme Court. Both stated cases came before Ireland J by a summons filed pursuant to Pt32 r2 of the Supreme Court Rules. The two cases were both dated 4 January 1993 and, mutatis mutandis, in the same terms. It is sufficient to refer only to the case stated in respect of the claim by Mr Georgeopoulos, in which AA was referred to as "the respondent" and Mr Georgeopoulos as "the appellant". According to it: "The matter to be determined by the Court is whether my determination was erroneous in point of law." The determination was as follows: "On 31 July 1992 I gave verdict and judgment in favour of the Respondent against the Appellant on the hearing and determination of an action commenced by Ordinary Statement of Claim issued under the provisions of the Local Courts (Civil Claims) Act, 1970, whereby the Appellant claimed damages for personal injuries sustained when the Appellant was a passenger on the Respondent's aircraft." The "Facts" stated were: "For the purposes of a preliminary question as to whether the Appellant was entitled to bring an action for nervous shock and/or mental suffering by reason of Article 17 of the Warsaw Convention the parties agreed on the following facts: (a) That the Appellant claims damages for nervous shock or mental suffering and no other basis. (b) That a ticket was issued to the Appellant prior to boarding containing terms and conditions as set out in Annexure 'A'. (c) That the occurrence giving rise to the Appellant's claim occurred after the aircraft took off and whilst it was over Australian territorial waters until the aircraft re-landed at Sydney. (d) That the aircraft was registered in the United States where the Respondent is incorporated and is also a foreign corporation in New South Wales. (e) That the Warsaw Convention applies to determining the Respondent's liability." Under the heading "Grounds of Determination", the learned Magistrate stated that AA's liability was determined by the provisions of Article 17 of the Warsaw Convention which applied by virtue of the operation of s13 and s14 of the Civil Aviation (Carriers' Liability) Act 1959, that the entitlement of the passenger to recover damages for nervous shock and mental suffering was dependent upon whether or not nervous shock and mental suffering came within the category of "any other bodily injury" upon the proper construction of that phrase as contained in Article 17, and that, by application of the decision of the Supreme Court of the United States in Eastern Airlines Inc v Floyd 499 US 530 (1990), the phrase "other bodily injury" as contained in Article 17 did not include "psychic URJ AMERICAN AIRLINES INC v GEORGEOPOULOS and ANOR (Sheller JA) 3 injury" which would include nervous shock and mental suffering. His Worship stated that he acceded to AA's submission that in view of his finding the passenger was deprived of any legal cause of action for damages and his case must fail. DECISION AT FIRST INSTANCE In a carefully reasoned judgment of 10 December 1993, Ireland J concluded: "., that the Anglo-Australian approach to nervous shock is such that it is to be classified as 'bodily injury' within the meaning of the Civil Aviation (Carriers' Liability) Act 1959 (Cth). I therefore order that the matter be remitted to the learned Magistrate for determination in accordance with this decision." AA, by leave, appeals from the decision of Ireland J and seeks an order setting aside Ireland J's orders and dismissing the summons. WARSAW CONVENTION Although the stated case, and therefore the reasons for judgment of Ireland J, make no reference to it, the Court was informed that the incident giving rise to the passenger's claims occurred on 20 January 1990. In the form it then took, s9 of the Civil Aviation (Carriers' Liability) Act 1959 (the Act) provided, so far as material, as follows: "(1) Subject to subs(3), the text of the Warsaw Convention shall, for the purposes of this Act, be deemed to be the text set out in Schedule 1, being a translation into the English language of the authentic text in the French language of that Convention. (3) If any inconsistency is shown between the text set out in Schedule 1,..... and the authentic text in the French language of the Warsaw Convention...... the authentic French text prevails." Although not stated in the case, but perhaps discernible from the ticket Annexure 'A', which is not included in the appeal book, the Court was informed that the flight during which, apparently, the passengers claimed to have been injured, was from Sydney to Hawaii. PtlI of the Act concerned carriage to which the Warsaw Convention of 1929 and the Hague Protocol of 1955 applied, and PtlIII, carriage to which the Warsaw Convention without the Hague Protocol applied. Since the United States of America was a high contracting party to the Warsaw Convention but not a party to the Hague Protocol, the carriage was one to which the Warsaw Convention without the Hague Protocol applied; see Schedule 2 to the Act, Articles I and XIX. Accordingly PtIII of the Act applied but not PtII, except to the extent that sections in PtII applied pursuant to s24. The following sections of the Act are material for present purposes. In them "the Convention" meant "the Warsaw Convention". "21. (1) The provisions of the Convention have, subject to this Part, the force of law in Australia in relation to any carriage by air to which the Convention applies, irrespective of the nationality of the aircraft performing that carriage. (2) A reference in this Part to the Convention shall, unless the contrary intention appears, be read as a reference to the provisions of the Convention as having the force of law by virtue of this section." and pursuant to s24: "13. Subject to the next succeeding section, the liability of a carrier under the Convention in respect of personal injury suffered by a passenger, not being injury that has resulted in the death of the passenger, is in substitution for any civil liability of the carrier under any other law in respect of the injury." 4 UNREPORTED JUDGMENTS As set out in Schedule 1 of the Act, the Warsaw Convention was headed "Convention for the Unification of Certain Rules Relating to International Carriage by Air". In Chapter 1 of the Convention headed "Scope - Definitions", Article 1, so far as material, provided as follows: "1. This Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking. 2. For the purposes of this Convention the expression 'international carriage' means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention." In Chapter 3 of the Convention headed "Liability of the Carrier" was Article 17 which provided as follows: "The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking." QUESTIONS FOR DETERMINATION One question for decision, not separately raised by the stated case, was whether injury, described in the Local Court proceedings as "nervous shock and/or mental suffering", was embraced by the expression "any other bodily injury" in Article 17. This gave rise to a further question, said by AA to have been resolved by agreed fact (e), whether, if it was not so embraced, proceedings claiming damages in respect of such an injury suffered during an international carriage of persons by air could still be brought in New South Wales. The answers to both these questions are of great importance to international air travellers and have excited differences of opinion between courts of the highest authority in different parts of the world and in learned academic writings. Put in its simplest terms, we were asked to choose between the decision of the Supreme Court of the United States, to which I have referred, on which the learned Magistrate relied to reach his conclusion, and what might be regarded as the contrary decision of three members of the Israel Supreme Court in Daddon and Ors v Air France; Air France v Teichner and Ors decided in 1984 and found in Aviation Reports | S and B AvR VII/141. The second decision accorded more with the conclusion that Ireland J reached. In broad terms the difference was one of approach. The Israel Supreme Court found itself able to take account of changes occurring in civil aviation transport since 1929 and the equating in Israel's domestic law between mental damage or defect and bodily injury. On the other hand, the United States Supreme Court found itself bound to decide the construction of Article 17 by reference to circumstances prevailing in 1929 and the objectives the drafters of the Convention had set out to achieve. Their Honours said this of Teichner: URJ AMERICAN AIRLINES INC v GEORGEOPOULOS and ANOR (Sheller JA) 5 "Teichner arose from the hijacking in 1976 of an Air France flight to Entebbe, Uganda. Passengers sought compensation for psychic injuries caused by the ordeal of the hijacking and detention at the Entebbe Airport. While acknowledging that the negotiating history of the Warsaw Convention was silent as to the availability of such compensation,.... the court determined that 'desirable jurisprudential policy' ('la politique jurisprudentielle souhaitable') favoured an expansive reading of Article 17 to reach purely psychic injuries.... In reaching this conclusion, the court emphasised the post 1929 development of the aviation industry and the evolution of Anglo-American and Israeli law to allow recovery for psychic injury in certain circumstances..... In addition, the court followed the view of Miller that this expansive construction was desirable to avoid an apparent conflict between the French and English versions of the Guatemala City Protocol. Although we recognise the deference owed to the Israeli court's interpretation of Article 17,..... we are not persuaded by that court's reasoning. Even if we were to agree that allowing recovery for purely psychic injury is desirable as a policy goal, we cannot give effect to such policy without convincing evidence that the signatories' intent with respect to Article 17 would allow such recovery. As discussed, neither the language, negotiating history, nor post enactment interpretations of Article 17 clearly evidences such intent. Nor does the Guatemala City Protocol support the Israeli court's conclusion because nothing in the Protocol purports to amend Article 17 to reach mental injuries. Moreover, although the Protocol reflects a liberalization of attitudes toward passenger recovery in that it provides for strict liability,.... the fact that the Guatemala City Protocol is still not in effect after almost 20 years since it was drafted should caution against attaching significance to it. Moreover, we believe our construction of Article 17 better accords with the Warsaw Convention's stated purpose of achieving uniformity of rules governing claims arising from international air transportation...... As noted, the Montreal Agreement subjects international carriers to strict liability for Article 17 injuries sustained on flights connected with the United States..... Recovery for mental distress traditionally has been subject to a high degree of proof, both in this country and others. See Prosser and Keeton on Torts, at 60-65, 359-361 (American courts require extreme and outrageous conduct by the tortfeasor); Fleming 49-50 (British courts limit such recovery through the theory of foreseeability); Miller 114, 126 (French courts require proof of fault and proof that damage is direct and certain). We have no doubt that subjecting international air carriers to strict liability for purely mental distress would be controversial for most signatory countries. Our construction avoids this potential source of divergence. We conclude that an air carrier cannot be held liable under Article 17 when an accident has not caused a passenger to suffer death, physical injury, or physical manifestation of injury. Although Article 17 renders air carriers liable for 'damage sustained in the event of? ('dommage survenu en cas de') such injuries,..... we express no view as to whether passengers can recover for mental injuries that are accompanied by physical injuries. That issue is not presented here because respondents do not allege physical injury or physical manifestation of injury." Although the reasoning in both judgments has been challenged in some detail (Ireland J considered the reasoning adopted by the Supreme Court in Floyd to be "seriously flawed''), on their face they impress me by their depth of learning and 6 UNREPORTED JUDGMENTS research. The US Supreme Court considered the French legal meaning of the phrase "lesion corporelle", the phrase in the authentic French text from which the phrase "bodily injury" was translated in the English text, the French law in 1929, French treatises and scholarly writing covering the period up to the Warsaw Convention, various structural arguments depending in part upon arguments advanced by delegates to the Warsaw Convention and the processes of the Committee of Experts appointed to revise the final protocol for presentation to the Conference. The Court reviewed the documentary record for the Warsaw Conference and considered the signatories post 1929 conduct. Such an approach, well justified by the importance of the matter in issue, must be compared with the position of a court asked to decide the same question on a stated case containing the facts which I have recited. INAPPROPRIATENESS OF PRELIMINARY POINT AND STATED CASE S69 of the Local Courts (Civil Claims) Act provides that all judgments and orders of a court exercising jurisdiction under the Act should be final and conclusive but that a party to a proceeding under the Act who is dissatisfied with the judgment or order of the court as being erroneous in point of law, may appeal to the Supreme Court. The provisions of s101 to s115 of the Justices Act 1902 apply. S101 of the Justices Act enables a party, if dissatisfied with the determination by a Justice as being erroneous in point of law, to apply in writing to the Justice to state a case, setting forth the facts and grounds of such determination for the opinion thereon of the Supreme Court. S106(1) of the Justices Act provides that the Court shall hear and determine the question or questions of law arising on such a case; and shall: "(a) reverse, affirm or amend the determination in respect of which the case was stated; or (b) remit the matter to the Justice..... with the opinion of the Court thereon; or (c) make such other order in relation to the matter as seems fit: Provided that the Court may cause the case to be sent back for amendment, and thereupon it shall be amended accordingly and judgment shall be delivered after it has been so amended." S107 of the Justices Act provides that subject to the Act, the practice and proceedings in reference to the stating of cases shall be as provided by the Supreme Court Rules. Pt32r7(1) in Division 2 of the Rules, which is concerned with stated cases generally, provides that where it appears to the Court that a stated case does not state the facts and documents sufficiently to enable the Court to decide the questions arising or otherwise to hear and determine the proceedings on the stated case, the Court may "(b) send the stated case back to the.... court in which it is stated or to the.... justice... by whom it is stated for the purpose of addition or other alterations." In Collins v State Rail Authority of New South Wales (1986) 5 NSWLR 209 at 211, Street CJ said: "Tt should be recognised at the outset that a stated case is well known as a cumbersome and often unsatisfactory means of bringing a matter up for consideration on appeal. There are occasionally issues of law which can conveniently be dealt with through this appellate procedure. In general, however, it is a procedure which is fraught with difficulties..." Like that case, the present case is no exception from that generality. In my opinion, there is a particular reason why the appeal by way of stated case was inappropriate and misconceived in this case. It is well recognised that a stated case must contain at least a statement of all the ultimate facts which, in the URJ AMERICAN AIRLINES INC v GEORGEOPOULOS and ANOR (Sheller JA) 7 opinion of the Court below, dictated its ultimate conclusion; see generally Industrial Equity Ltd v Commissioner for Corporate Affairs (1990) VR 780 at 782, referred to in 65 ALJ 418. In the present case an essential finding was the nature, if any, of the injury the particular passenger had suffered as the result of the accident during the international carriage. The learned Magistrate made no such finding. Instead he stated a case based on agreed facts which included the fact that the particular passenger had claimed damages for nervous shock or mental suffering "and (on) no other basis". Absent a finding as to the nature of the injury, it is not possible to decide whether the passenger suffered "bodily injury", within the meaning of Article 17. For one thing the nervous shock complained of might or might not have caused an injury to the passenger's body tissues. "Nervous shock", particularly in terms of sequelae, is not an expression of precise meaning. As long ago as 1914, Lord Shaw of Dunfermline said in Coyle or Brown v John Watson Ltd [1915] AC | at 14, that physical impact or lesion, meaning, as I would understand it, a morbid structural alteration in body tissues, was not a necessary element in the case of recovery of damage in ordinary cases of tort. By the time the House of Lords decided Hay or Bourhill v Young [1943] AC 92, the crude view that the law should take cognisance only of physical injury resulting from actual impact had been discarded and it was recognised that an action would lie for injury by shock sustained through the medium of the eye or the ear without direct contact. At 103 Lord Macmillan said: "The distinction between mental shock and bodily injury was never a scientific one, for mental shock is presumably in all cases the result of, or at least accompanied by, some physical disturbance in the sufferer's system. And a mental shock may have consequences more serious than those resulting from physical impact. But in the case of mental shock there are elements of greater subtlety than in the case of an ordinary physical injury and these elements may give rise to debate as to the precise scope of legal liability." In Jaensch and Coffey (1984) 155 CLR 549 at 559, Brennan J said: "But at least for the last half-century 'neurasthenic breakdown amounting to (psychiatric) illness' has been held to be 'without more.... a form of harm or damage sufficient for the purpose of any action on the case in which damage is the gist of the action,... supposing that the other ingredients of the cause of action are present': per Dixon J in Bunyan v Jordan (1937) 57 CLR 1 at 16." An ingredient in establishing liability may be shock involving, to use the words of Lord Ackner in Alcock v Chief Constable of South Yorkshire [1992] 1 AC 310 at 401, the sudden appreciation by sight or sound of a horrifying event, which violently agitates the mind. Assuming the presence of other necessary ingredients, liability will depend on the defendant's responsibility for the event which leads to the shock complained of. The shock may cause structural alteration to the plaintiff's tissues or alteration in the function of an organ or both. Leaving aside the case where there is a causal link between shock and some later external injury, Professor Fleming in The Law of Torts, 8th ed, said: "Otherwise emotional shock must amount to 'physical injury', or more precisely, it must have resulted in some organic damage, like miscarriage, coronary thrombosis or stroke, or in severe psychiatric injury like hysteria or anxiety neurosis." In a footnote the learned author remarked: "The distinction is that between primary and secondary responses to traumatic stimulus. The former are means for coping with such a stimulus (eg anger, fright), the latter reflect 8 UNREPORTED JUDGMENTS inability to do so and are invariably manifested by physical symptoms." In simple terms, "shock", rather than physical impact, is the cause of the injury. Another way of treating this sequence is to describe the combination of the event and the shock as nervous shock and consider whether so described it caused the injury complained of. Thus in Jaensch's case Brennan J, after referring to the label as one of dubious medical acceptability, said at 560: "The term 'nervous shock' is useful nevertheless as a term of art to indicate the aetiology of a psychiatric illness for which damages are recoverable in an action on the case when the other elements of the cause of action are present." Later at 566-7 his Honour said: "The notion of psychiatric illness induced by shock is a compound, not a simple, idea. Its element are, on the one hand, psychiatric illness and, on the other, shock which causes it." Nervous shock as a condition or a cause of a condition for which a defendant may be liable in negligence describes a non-impact injury which may or may not give rise to body tissue alteration. In Bell v The Great Northern Railway Company of Ireland [1891] 26 LR (Ir) 428 at 441, Palles CB pointed out the error in assuming, as a matter of law, that nervous shock is something which affects merely the mental functions and is opposed to actual physical injury. In Jaensch, Mrs Coffey suffered severe anxiety and depression and her psychiatric condition caused gynaecological problems; 559. In Donoghue v Stevenson [1932] AC 562, the plaintiff complained that as a result of the nauseating sight of the snail and the consequence of the impurities in the ginger beer she had consumed, she suffered from shock and severe gastro-enteritis; 563. Shock such as that suffered by a passenger whose aircraft appears in danger of crashing may lead to a heart attack, a consequence referred to by the Court when discussing Floyd's case in In re Inflight Explosion on Transworld Airlines; Ospina v TWA 778 F Supp 625 (1991) at 638. The passenger may suffer a less dramatic physical manifestation such as a skin rash discussed in Jack v Transworld Airlines Inc 854 F Supp 654 (1994) at 664. In that case the Court pointed out that the Supreme Court had left unresolved the question whether emotional distress is compensable under the Warsaw Convention if accompanied by bodily injuries and held, at 668, that passengers might recover under Article 17 for the physical manifestations of their emotional distress but not for the emotional distress that led to the manifestations. Assuming shock, the question is did that shock cause injury and if so what was the nature of the injury. These are matters for expert evidence; Bell v Great Northern Railway Company at 442. The findings on that evidence are vital to any conclusion whether the injury was "bodily injury" within the meaning of Article 17. In this regard the caution of the United States Supreme Court is worthy of remark. As their Honours observed at 540, the type of mental injury claimed in that case described as "mental distress arising out of the incident" was "injury caused by fright or shock - absent an incident in which someone sustained physical injury". At the conclusion of the judgment in a passage that I have quoted, the Court pointed out that it expressed no view as to whether passengers could recover for mental injuries that are accompanied by physical injuries. That issue was not presented because the respondents did not allege physical injury or physical manifestation of injury. URJ AMERICAN AIRLINES INC v GEORGEOPOULOS and ANOR (Simos AJA) 9 To my mind and with the greatest respect it was inappropriate for the Local Court to decide a question of the sort here posed using a label of dubious medical acceptability as the benchmark, without finding precisely what injury, if any, the passenger suffered. It follows that the point argued and carefully considered by the Magistrate was not one appropriate to be taken as a preliminary point. In my opinion the Magistrate's decision should be treated as erroneous for reason that the procedure by way of preliminary question was inappropriate and the matters should have proceeded to trial. The appropriate course is to send the stated case back for the learned Magistrate to hear the evidence and make findings of fact. The stated case should then be amended to incorporate those findings of fact and returned to this Court. This appeal should be adjourned pending the amendment of the stated case or further order. I would propose the following orders: 1. Appeal allowed; 2. Set aside the orders of Ireland J of 10 December 1993; 3. Send back the stated case to Mr Rustin SM in order that he may list the proceedings for hearing, hear the evidence, make findings of fact and amend the stated case as appropriate to include and take account of his findings of fact; 4. Adjourn the further hearing of the appeal until the stated case has been amended or further order: 5. Stand the appeal into the Registrar's list for mention when the stated case has been amended; 6. The costs of the appeal are reserved. Simos AJA I agree with Sheller JA. 1. Appeal allowed; 2. Set aside the orders of Ireland J of 10 December 1993; 3. Send back the stated case to Mr Rustin SM in order that he may list the proceedings for hearing, hear the evidence, make findings of fact and amend the stated case as appropriate to include and take account of his findings of fact; 4. Adjourn the further hearing of the appeal until the stated case has been amended or further order; 5. Stand the appeal into the Registrar's list for mention when the stated case has been amended; 6. The costs of the appeal are reserved. Representation: Counsel for the Appellant: AM Street/S York Solicitors for the Appellant: Dunhill Madden Butler Counsel for the Respondent: CA Evatt/RC Pincus Solicitors for the Respondent: Teakle Ormsby and Associates