AMERICAN AIRLINES INC v GEORGEOPOULOS [NO 2] SUPREME COURT OF NEW SOUTH WALES — CouRT OF APPEAL 5 MEAGHER, SHELLER and BEAZLEY JJA 10 July, 5 August 1998 [1998] NSWCA 273 The respondents began actions in the Local Court based upon Article 17 of the Warsaw Convention (Article 17) to recover damages for nervous shock they suffered whilst travelling as passengers on the appellant's aircraft. 15 The Magistrate held that the respondents were not entitled to recover because the nervous shock they suffered were not covered by Article 17. Each stated case came before a single Judge of the Supreme Court by way of summons. The Judge held that nervous shock was to be classified as bodily injury and, therefore, fell within Article 17. The appeal from this decision was adjourned until after the matter had been remitted to the Magistrate to make findings of fact and to amend the stated case accordingly. 20 The Court of Appeal overruled the single Judge's decision in Kotsambasis v Singapore Airlines Limited (1997) 42 NSWLR 110 which held that purely psychological injury was not covered by Article 17. On the adjourned hearing of the appeal, the appellant submitted that on the basis of Kotsambasis the verdicts in favour of the appellant in the local court were right. The respondent accepted the law as stated in Kotsambasis but submitting that this case could be distinguished on the facts. Held: 1. Under Article 17 of the Warsaw Convention, the carrier is liable if the damage is sustained "in the event" of, relevantly, bodily injury suffered by the passenger. 2. The US Supreme Court in Eastern Airlines Inc v Floyd 499 US 530 left open the question of whether a passenger could recover damages for mental injuries flowing from bodily injuries. 3. Under Article 17 of the Warsaw Convention, recovery of damages for psychic injury is limited to situations in which mental anguish follows and is caused by physical injury and where the psychological injury is proven to be a species of the bodily injury: Kotsambasis. 35 4. In this case, the respondents mental injury was not a consequence of the physical injury and is, therefore, not covered by Article 17 of the Warsaw Convention. 5. A condition of the grant of leave to appeal was that the appellant would pay the costs of both parties to the appeal and the leave application. Therefore, the appellant should pay the costs of the appeal. Eastern Airlines Inc v Floyd 499 US 530 (1991) In re Aircraft Disaster near Roselawn, Indiana, on October 3, 1994 954 F Supp 175 (ND Ill 1997) Jack v Trans world Airlines Inc 854 F Supp 654 (ND Cal 1994) Kotsambasis v Singapore Airlines Limited (1997) 42 NSWLR 110 45 Meagher JA. I agree with Sheller JA. Beazley JA. I agree with Sheller JA. Sheller JA. INTRODUCTION In each of two actions begun in the Local Court the respondents, Peter 50 Georgeopoulos and Victoria Jimouras (Georgeopoulos), sought to recover damages for injuries they suffered on 20 January 1991 while travelling as 2 UNREPORTED JUDGMENTS passengers from Sydney to Hawaii on an aircraft operated by the appellant, American Airlines Inc. The actions were based upon Article 17 of the Warsaw Convention, which, relevantly, made the carrier 'liable for damage sustained in the event of ....wounding of a passenger or any other bodily injury suffered bya passenger, if the accident which caused the damage so sustained took place on board the aircraft ....'. See ss 24 and 13 of the Civil Aviation (Carrier's Liability) Act 1959. DECISION AND STATED CASE The Court (Mr Rustin SM) gave a verdict and judgment for the appellant. The Magistrate decided the matter in favour of the appellant by answering in the negative a preliminary question whether Mr and Mrs Georgeopoulos were entitled to bring an action for nervous shock and/or mental suffering by reason of Article 17 of the Warsaw Convention. In so doing, he followed the decision of the United States Supreme Court in Eastern Airlines Inc v Floyd 499 US 530 (1991). In each action after giving his decision, the Magistrate stated a case in identical terms, mutatis mutandis, for the opinion of the Supreme Court pursuant to s 101 of the Justices Act 1902. In the stated cases, the Magistrate said that for the purposes of the preliminary question as to whether Mr and Mrs Georgeopoulos were entitled to bring actions for nervous and/or mental suffering by reason of Article 17 the parties agreed on the following facts, inter alia, that: The Appellant claims damages for nervous shock or mental suffering and [on] no other basis.'"'The Magistrate set out the contentions of Mr and Mrs Georgeopoulos in the stated cases as follows: (a) The ordinary meaning of "any other bodily injury" includes injury arising from nervous shock and/or mental suffering. (b) That the decision of Eastern Airlines Inc v Floyd should not be followed because the decision is based on policy reasons seeking to limit the type of claims that could be brought pursuant to Article 17 of the Warsaw Convention. (c) Section 3 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) is applicable to the matter. (d) The decision in Floyd is unduly narrow and inconsistent with other decisions (such as R v Miller (1954) 1 All ER 288) where words similar to those appearing in Article 17 have been interpreted to include injury arising from nervous shock and/or mental suffering. DECISION ON STATED CASES AND APPEALS Each stated case came before Ireland J by summons. On 10 December 1993 his Honour gave his reasons for judgment and said: I have thus come to the conclusion 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 (Carrier's Liability) Act 959 (C'th). I therefore order that the matter be remitted to the learned Magistrate for determination in accordance with this decision. On 14 February 1994 the appellant sought and obtained leave to appeal from 5 that decision. In announcing the order of the Court the presiding Judge, Mahoney JA said: The order I propose is this: Leave to appeal should be granted on terms that the applicant agrees to pay the costs in the Court of Appeal of both parties to the appeal and of the leave to appeal application. The filing of notices of appeal to be agreement to those terms and notices of appeal to be filed within fourteen days. URJ AMERICAN AIRLINES INC v GEORGEOPOULOS [NO 2] (Sheller JA) 3 HEARING OF APPEAL On 16 September 1996 this Court (Clarke, Sheller JJA, Simos AJA) made the following orders: 1. 2. 3. 4. 5. 6. Appeal allowed; Set aside the orders of Ireland J of 10 December 1993; 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; Adjourn the further hearing of the appeal until the stated case has been amended or further order; Stand the appeal into the Registrar's list for mention when the stated case has been amended; The costs of the appeal are reserved. These orders are internally inconsistent. The orders 1 and 2 cannot stand with orders 3, 4 and 5 and should be set aside under the slip rule. The parties proceeded in accordance with 3 and 5. FURTHER HEARING BEFORE MAGISTRATE Further hearing of the matter occurred before the learned Magistrate on 3 March and 15 September 1997. In accordance with order 3 of this Court, Mr Rustin, in a judgment given on 9 March 1998, made findings of fact and amended the stated case so as to include and take account of such findings offact. His findings of fact in relation to bodily or physical injury were as follows: Victoria Georgeopoulos. 1. The only direct physical injuries suffered by Mrs Georgeopoulos were bruising around her hip and back pain experienced the next day. This was probably the result of passengers pushing and shoving when making their way to the front of the aircraft. Such injury is unrelated to the post traumatic stress disorder suffered by her. As a result of her experience on board the aircraft, Mrs Georgeopoulos suffered nervous shock in the form of a mild post traumatic stress disorder. The evidence does not establish that the nervous shock in the form of a mild post traumatic stress disorder suffered by Mrs Georgeopoulos caused or resulted in: . Any physical or bodily injury to her. . Any structural alteration to bodily tissues or alteration in the function of an organ or neurochemical change or any other form of damage to tissues or organs.' Peter Georgeopoulos. 1. 2. 3. The evidence does not establish that Mr Georgeopoulos suffered any direct physical injury as the result of what occurred on board the aircraft. As a result of his experience on board the aircraft, Mr Georgeopoulos suffered nervous shock in the form of a mild post traumatic stress disorder. The evidence does not establish that the nervous shock in the form of a mild post traumatic stress disorder suffered by Mr Georgeopoulos caused or resulted in: . Any physical or bodily injury. . Any structural alteration to bodily tissues or alterations in the function of an organ or neurochemical changes or any other form of damage to tissues or organs.' The Magistrate amended the stated cases to include his further findings of fact. KOTSAMBASIS v SINGAPORE AIRLINES LIMITED 4 UNREPORTED JUDGMENTS On 13 August 1997 the Court (Meagher, Powell and Stein JJA) in Kotsambasis v Singapore Airlines Limited (1997) 42 NSWLR 110 overruled the decision of Ireland J in this case. That appeal and cross-appeal were from a decision of Judge Cooper awarding damages to a passenger on a Singapore Airlines aircraft who suffered psychological injuries as a result of an incident which occurred shortly after departure from Athens airport en route to Singapore. The passenger's claim for damages for back injuries failed. Judge Cooper found in favour of the passenger following Ireland J's decision. Upholding the cross-appeal the Court held that the term 'bodily injury' in Article 17 was not intended to, and on a proper interpretation of the Warsaw Convention did not, include psychological injury; 115, 120 and 121. In his reasons for judgment, Meagher JA at 115 noted that the decision of the United States Supreme Court in Eastern Airlines Inc v Floyd specifically left open the possibility that recovery might be available where psychological injury was accompanied by physical injury; see 499 US at 552-3. Stein JA at 121 said: Until the Supreme Court of the United States determined Eastern Airlines Inc v Floyd there had been a considerable conflict of authority on the meaning of "bodily injury" in the United States courts. EasternAirlines Inc v Floyd held that there could be no recovery for "psychic" injury unaccompanied by physical injury. However, where mental anguish follows and is caused by physical injury, recovery for both injuries is covered. I would agree with this latter statement. Moreover, if the psychological injury is proven to be a species of bodily injury, then it would constitute "bodily injury" within the article. ADJOURNED HEARING OF THE APPEAL On this adjourned hearing of the appeal before the Court differently constituted, Mr Street SC, who appeared for the appellant, reviewed the cases and submitted that the appeal should be allowed and orders made setting aside Ireland J's orders and dismissing the stated cases on the basis that the verdicts in the Local Court were correct. This submission was based on the Magistrate's finding that both the respondents suffered nervous shock in the form of mild traumatic stress disorder and that it was not established that the nervous shock suffered by either resulted in any physical or bodily injury or any structural alteration to bodily tissues or alteration in the function of an organ or neuro-chemical change or any other form of damage to tissues or organs. Accordingly, Mr Street submitted that since Kotsambasis had held that the term 'bodily injury" in Article 17 did not include purely psychological injury, the verdicts in favour of the appellant were right. Mr Evatt, who appeared for the respondents, by consent and with leave filed the following notice of contention: 1. Damages for nervous shock may be claimed pursuant to the Convention if the claimant also suffered bodily injury in the same accident. 2. Damages for nervous shock may be claimed pursuant to the Convention if it is accompanied by, caused by, followed by or preceded by physical or bodily injury. 3. A claim may be brought pursuant to the Convention for physical manifestations of psychological injury or emotional distress. 4. Aclaim may be brought pursuant to the Convention for bodily injury. 5. The fact that a Plaintiff pleads "nervous shock" rather than "bodily injury" would not of itself permit a Defendant to move for judgment or suggest that damages are not recoverable providing the Plaintiff also suffered bodily injury in the same accident or if the nervous shock was accompanied by, caused by, URJ AMERICAN AIRLINES INC v GEORGEOPOULOS [NO 2] (Sheller JA) 5 followed by or preceded by physical or bodily injury or that there were physical manifestations of the nervous shock suffered. Mr Evatt accepted the law as stated in Eastern Airlines Inc v Floyd and in Kotsambasis. However, he submitted that these cases could be distinguished on the facts. In Eastern Airlines Inc v Floyd the US Supreme Court had said at 552-3 that the issue of whether passengers could recover for mental injuries that were accompanied by physical injuries was not presented 'because respondents do not allege physical injury or physical manifestation of injury'. The Magistrate found that after Mr Georgeopoulos noticed a small gap in the door 'his reaction was one of shock. He was panicked and scared. His hands broke into a cold sweat. He was frightened of disaster, dying. He continued to sweat.' This, Mr Evatt submitted, was an example of what the US Supreme Court referred to as 'physical manifestation of injury.""Mr Evatt relied upon two decisions in the United States for the proposition that the requirements of Article 17 were satisfied if in consequence of the accident there was physical injury or manifestation of physical injury, even though neither were causative of psychological injury nor caused by psychological injury. The Magistrate had found that there was bruising around Mrs Georgeopoulos" hip and she experienced back pain the next day. Mr Evatt accepted that these injuries were not the result of her nervous shock. The principal decision relied on was that of the United States District Court ND Illinois in In re Aircraft Disaster near Roselawn, Indiana, on October 31, 1994 954 F Supp 175 (ND Ill 1997) which concerned the question whether the Warsaw Convention prohibited recovery for pre-impact fear by passengers killed as the result of the crash of an aircraft. The case was said to be one of psychic injuries accompanied by physical injuries and hence not governed by the decision in Floyd. In the Roselawn Disaster case, District Judge Castillo at 178 said there was little doubt that the Roselawn crash caused all of the passengers to sustain physical injuries (and death) in addition to any pre-impact fear they might have felt. 'Thus, Floyd does not resolve the issue before us.' Physical injury was a pre-condition to liability but nothing in Floyd stated that once that pre-condition was met, and physical injury or death was present, damages formental distress were not available. The Court said that courts lower than the US Supreme Court had typically held that plaintiffs might recover damages for emotional distress only when that distress arose from physical injuries that the plaintiffs also sustained. Jack v Transworld Airlines Inc 854 F Supp 654 (ND Cal 1994), the other case to which the respondents referred, was one such case. District Judge Castillo at 179 said: These courts hold that emotional distress claims flowing from the accident (as opposed to some physical injury sustained in the accident) are unrecoverable. Article 17 does not say that a carrier will only be liable for damage caused by a bodily injury, or that passengers can only recover for mental injuries if they are caused by bodily injuries. No less an authority than our Supreme Court has indicated that the key causal link is between the accident and the damage sustained; see Air France v Saks 470 US 392 (1985) at 396." With all respect, I do not think that Article 17 permits this interpretation. Undoubtedly, it is a pre-condition of the carrier's liability for damage that the accident caused the damage and took place on board the aircraft or in the course of operations of embarking or disembarking. In the present cases, the accident 6 UNREPORTED JUDGMENTS caused a mild post traumatic stress disorder. But the damage must also be sustained, that is to say experienced or suffered, 'in the event of', relevantly, bodily injury suffered by the passenger. This is the damage for which the carrier is liable. I do not think Article 17 means that if the passenger died or suffered bodily injury, the carrier is liable for any damage caused by theaccident if the damage was not the result of the death or bodily injury. Nor do I think the US Supreme Court suggested otherwise. The question which the US Supreme Court did not decide was whether if the passenger suffered bodily injury, the passenger could recover damages for psychic injuries which flowed from the bodily injury, even though not entitled to damages for psychic injuries if there was no bodily injury. At 544 the US Supreme Court said: Two explanations commonly are offered for why the subject of mental injuries never arose during the Convention proceedings: (1) many jurisdictions did not recognise recovery for mental injury at that time, or (2) the drafters simply could not contemplate a psychic injury unaccompanied by a physical injury. In my respectful opinion, consistent with this it could not be suggested that if a passenger was shocked by the fear of imminent death in a plane crash and thereafter injured her hip in obeying a direction to move to the front of the aircraft, she would be able to recover for her mental injuries, but if she had not injured her hip, such recovery would have been denied. I think the US Supreme Court, when it used the word 'accompanied', had in mind to leave open the question whether the carrier was liable for mental injuries, consequent upon physical injuries, or emotional shock which had resulted in organic damage such as a coronary thrombosis or stroke. I think Stein JA in Kotsambasis at 121 correctly delimited the ambit of recovery for psychic injury when he said 'where mental anguish follows and iscaused by physical injury, recovery for both injuries is covered .... Moreover, if the psychological injury is proven to be a species of bodily injury, then it would constitute "bodily injury" within the article.' Mr Evatt accepted that the stress disorder was not the consequence of any physical injury. The appellant is not therefore liable under Article 17 for Mr and Mrs Georgeopoulos" nervous shock or mental distress. COSTS A condition of the grant of leave to appeal was that the appellant agree to pay the costs in this Court of both parties to the appeal and of the leave application. Accordingly, in my opinion, the appellant should pay the costs of the appeal in this Court. The further hearing before the Local Court should have been part of the original hearing necessary to decide the preliminary question and would have led to the same verdict that the Magistrate gave which, in my opinion, was correct. Accordingly, I think the respondents must pay the costs of the whole of that hearing. CONCLUSION I propose the following orders: 1. Appeal allowed; 2. Set aside the orders made by Ireland J on 10 December 1993; 3. In lieu thereof, dismiss both summonses with costs;4. The appellant to pay the respondents" costs of the application for leave to appeal and of the appeal; URJ AMERICAN AIRLINES INC v GEORGEOPOULOS [NO 2] (Sheller JA) 7 5. The respondents to pay the costs of the further hearing before the Local Court on 3 March and 15 September 1997. Appeal allowed; Set aside the orders made by Ireland J on 10 December 1993; In lieu thereof, dismiss both summonses with costs; The appellant to pay the respondents' costs of the application for leave to appeal and of the appeal; 5. The respondents to pay the costs of the further hearing before the Local 10 Court on 3 March and 15 September 1997. RYN Counsel for the appellant: A W Street SC/D D Farthing Solicitors for the appellant: Dunhill Madden Butler 15 Counsel for the respondent: C A Evatt/M Rollinson Solicitors for the respondent: Teakle Ormsby and Associates