In this newsletter:

The Future of Australian Aviation

• International Aviation
• Consumer Protection
• Aviation Safety Regulation and Investigation
• Air Traffic Management
• Aviation Security
• Airport Planning and Development

Case Note - Repacholi Aviation Pty Ltd –v- Civil Aviation Safety Authority [2009] FCA 1487

• Common Law Duty of Care
• Breach of Statutory Duty
• Misfeasance in Public Office

Montreal Convention 1999 Limits Rise

Does a departure from industry standards amount to an “accident” under Article 17?

The Future of Australian Aviation

On 16 December 2009 the Minister for Infrastructure, Transport, Regional Development & Local Government released the Australian Government’s National Aviation White Paper: Flight Path to the Future. The Paper can be found at www.infrastructure.gov.au.

As we reported in June 2009, the process culminating in the release of the White Paper actually commenced in April 2008 with the dissemination of an Issues Paper, attracting nearly 300 submissions. A further 236 submissions resulted from the release of a Green Paper in December 2008. A Liability and Insurance Discussion Paper released in May 2009 generated similar interest.

The White Paper contains in excess of 130 policy initiatives and its importance as a comprehensive framework for the future of Australian aviation is seen from the following snapshot of the industry’s recent growth.

• In the 2008/2009 financial year, over 23 million people travelled on air services to and from Australia;
• Domestic air travel has trebled over the last 20 years, with more than 50 million passenger movements last financial year;
• The Sydney to Melbourne sector was the seventh busiest route in the world during last year and Sydney to Brisbane was the 15th busiest;
• The aviation sector contributes nearly $6.3 billion to the national economy.

However this growth presents significant challenges. There are pressures to maintain high safety and security standards, to contain costs, to meet growing demand, and to minimise the impact of aviation on the environment and the community. The White Paper outlines policy initiatives to address these imperatives.

Some of the key policy initiatives are summarised below.

International Aviation

An open and competitive international aviation market that serves the national interest by benefiting tourism, trade and consumers, allows Australia and overseas airlines to expand, and maintains a vibrant Australian-based aviation industry.

The government recognises that this goal is more likely to be achieved in the short to medium term by pursuing liberalisation within the current bilateral air services system rather than relying upon consensus at multilateral forums like the World Trade Organisation.

For example, the Government will consider:

• Granting generally protected cabotage rights (the right of a foreign airline to carry domestic passengers in Australia) where this may achieve an open skies agreement with a major trading partner or, to gain reciprocal cabotage rights in a significant aviation market.
• The expansion of seventh freedom rights (the right of a carrier to operate stand-alone services between two foreign countries) for passenger and cargo services.
• Offering foreign airlines unlimited access to secondary gateway markets.

Further, with the movement towards rationalisation within the global aviation industry, the Australian Government will introduce changes to assist Qantas to take advantage of future opportunities but at the same time maintaining the requirement for majority Australian ownership.

Whilst Australia allows 100% foreign ownership of its domestic airlines, foreign ownership of its international airlines is restricted to 49%.

Qantas foreign ownership restrictions are governed by the Qantas Sale Act 1992. The Act further restricts foreign airlines to a total of 35% ownership of Qantas, with any individual foreign airline ownership being capped at 25% ownership.

The Government will remove the secondary 25% and 35% restrictions to give Qantas the flexibility of entering into more substantial equity arrangements.

Consumer Protection

Protection and fairness for aviation consumers and the broader community without imposing unnecessary cost or impeding innovation in the aviation industry.

The introduction of low cost travel and increased competition between airlines has caused the Government to focus on the transparency and fairness of the relationship between the airlines and its customers.

A new Australian Consumer Law will introduce laws to prevent airlines from advertising misleading fares. A national regulation of unfair contracts (which includes airline tickets) will mean that any unfair term in a standard form contract is void.

Airlines are being asked to develop “Corporate Charters” that will set the benchmarks or minimum standards for handling consumer complaints.

The limitation on liability for domestic carriage will increase from $500,000 to $725,000 per passenger. The compulsory insurance for airlines will rise in similar terms.

Aviation Safety Regulation and Investigation

To ensure safety is maintained as the first priority for the Australian Government and the aviation industry.

The Government has recently extended the powers of two key safety agencies, Civil Aviation Safety Authority (CASA) and the Australian Safety Transport Bureau (ATSB).

CASA’s powers to inspect and regulate the safe operation of international airlines operating into Australia have been enhanced. Provisions to protect passengers from the carriage of dangerous goods and to take enforcement action against operators where there is an imminent risk to public safety have been strengthened.

To ensure the independence of the ATSB and that its powers and investigative functions are performed without direction from others, the ATSB has been re-established as a distinct statutory authority, subject only to the Minister’s oversight.

Air Traffic Management

Enhanced aviation safety delivered by an effective, efficient and responsive Air Traffic Management System.

The management of Australia’s air traffic movements is currently based around two air traffic centres, Brisbane and Melbourne.

The Government supports the adoption of ICAO’s Global Operating Concept for the future delivery of air traffic management, including greater use of satellite surveillance and navigation. Existing ground-based aids, such as radar, will be updated and will continue to be relied upon.

In addition, the increased adoption of other systems will be implemented, such as Terrain Avoidance Warning Systems (TAWS), Approach with Vertical Guidance (APV), Required Navigational Performance (RNP), Aircraft Collision Avoidance Systems (ACAS) and Wide Area Multilateration (WAM).

The Government has issued a new Australian Airspace Policy Statement (AAPS) effective 1 January 2010, confirming the safety of public transport services as the first priority in airspace administration. Early in 2010, updated AAPS will outline how the new policy objectives will be implemented.

Aviation Security

An effective, focussed and proportionate aviation security system which mitigates the risk to Australia’s air travellers and the general public from terrorism and criminal interference.

The maximum takeoff weight of an aircraft (MTOW) will become the trigger for implementing certain security measures rather than the aircraft’s seating capacity. It is considered that a terrorist attack is more likely driven by a combination of size, number of passengers, and the capacity range of aircraft to reach and cause damage to target structures. The MTOW is a more accurate appreciation of this risk.

Consequently:

• From 1 July 2010, passenger and checked baggage screening for all aircraft operating RPT services with MTOW of 30,000 kg will be mandatory;
• The trigger will reduce to 20,000kg MTOW by 1 July 2014;
• Similarly, ICAO hardened cockpit doors to ensure flight deck security will be mandatory for all aircraft greater than 10,750kg MTOW.

Airport Planning and Development

Improved planning at Australia’s airports to facilitate better integration and coordination with off-airport planning and continued investment in Australia’s airport infrastructure and land transport links.

Between 1997 and 2003, the Government privatised the operation of Australia’s 22 federal airports by selling long-term leases to private sector operators. Those lessees have now invested heavily in the development of new aviation infrastructure. The planning and construction of that infrastructure are subject to Commonwealth law. State and local governments are therefore concerned there is inadequate integration with their own planning framework, which seeks to regulate and protect the amenity of neighbouring communities.

The Government proposes to develop a new and balanced national framework for land use planning and development to safeguard airports and surrounding communities from inappropriate development. Essentially, by ensuring that commercial or residential developments do not occur in areas close to runways, both the community and the aircraft operators will be protected from the risk of loss or damage.

State governments will be asked to legislate to prohibit unauthorised construction that interferes with published Obstacle Limitation Surfaces (OLS) and Procedures for Air Navigation Services Aircraft Operations (PAN-Ops).

Planning Coordination Forums for each primary capital city airport will be established. Development with a significant community, economic or social impact will be required to go through a Major Development Plan assessment, although this requirement can be removed for high priority, low impact aviation facilities. The current Australian Noise Exposure Forecast (ANEF) system will be reviewed and prospective purchasers of properties in noise-affected areas should receive notice and information of the exposure and the likely impact of the noise.

Case Note

Repacholi Aviation Pty Ltd –v- Civil Aviation Safety Authority [2009] FCA 1487

This Federal Court decision examines an operator’s attempt to sue the regulator for breach of duty of care and misfeasance in public office.

CASA had taken enforcement measures against Repacholi Aviation Pty Ltd and Mr Repacholi, as its chief pilot, since 2002. Repacholi had sought review of these decisions in the Administrative Appeals Tribunal on several occasions, with some success. As a consequence, Repacholi commenced Federal Court action against CASA and an employee of CASA seeking damages for economic loss.

Repacholi applied to amend the statement of claim to join four more individual CASA employees and allege that:

• in exercising its powers and functions, CASA has a common law duty of care to ensure its actions do not cause economic harm to entities whose conduct it regulates and that CASA had breached that duty;
• CASA owed a statutory duty to exercise its powers in accordance with the Civil Aviation legislation and that CASA had breached that duty; and
• there has been misfeasance in office by the individual CASA employees.

CASA opposed the application and sought to have the proceeding dismissed on the basis that the causes of action were untenable.

The Federal Court found:

Common Law Duty of Care

• that public authorities are subject to a common law duty of care;
• it was not possible on the presently pleaded facts to conclude that a claim in negligence was not open to Repacholi;
• although the current pleading was inadequate, the Court was not prepared to strike it out.

Breach of Statutory Duty

• Repacholi failed to identify any statutory provision encapsulating the alleged obligations on the part of CASA and its employees;
• there is no private right for damages arising from the exercise of administrative powers when there is a statutory right of review of the exercise of those powers;
• even if some negligence has been proved, it can be cured by an appeal process;
• the existence of the appeal process is sufficient to remove reliance on breach of any duty of care;
• Repacholi had therefore failed to establish a valid basis for a claim in damages for breach of statutory duty

Misfeasance in Public Office

• the necessary components of the tort of misfeasance are:
  • the defendant must be a public officer;
  • the impugned conduct must be the exercise, or the purported exercise, of a power as a public officer; 
  • there must be malice in the exercise of the power; 
  • the plaintiff must have sufficient interest to found a legal standing to sue; 
  • the wrongful act causes the plaintiff’s injury; and
  • the damage must not be too remote. 
• to establish malice, “the power must be exercised for an ulterior purpose, with the intention of injuring the plaintiff. It is sufficient for the purpose if the public officer acts with knowledge that he has no power so to act, or recklessly disregarding whether he has such power and knowing that his or her action will injure the plaintiff or a class of people which includes the plaintiff, or if there is reckless indifference to the probability of causing injury to the plaintiff”.
• the pleading of misfeasance should be struck out because the allegations of misconduct by individual CASA officers were totally speculative and without foundation;
• the proper course would have been to pursue pre-action discovery to obtain sufficient information to decide whether to commence proceedings and, if so, against whom.

The Court permitted Repacholi to submit a new pleading and ordered them to pay CASA’s costs.

Montreal Convention 1999 Limits Rise

Under Article 24 of the Montreal Convention, the limits of liability are reviewed at five yearly intervals and any increase becomes effective six months after notification to member states unless, within three months after notification, the majority of those member states register their disapproval.

The limits were reviewed by reference to “an inflation factor”* in early 2009. ICAO notified member states in June 2009 that the limits would rise by 13.1%. As the majority of member states did not contest the increase, the new limits (below) became effective from 30 December 2009.  The conversion into Australian dollars has been made as at 15 January 2010.
 

  
The new limits will next be reviewed in 2014.

* The inflation factor corresponds to the accumulated rate of inflation derived from the weighted average of annual rates of increase in the CPI for those States that comprise the SDR.

Does a departure from industry standards amount to an “accident” under Article 17?

This question arose for determination in two recent federal court decisions in California. In both cases the court awarded judgment to the carriers because the plaintiffs failed to establish the relevant industry standard or a violation    of an industry standard. However, some interesting observations arise from the decisions.

To establish an “accident” under Article 17, there must firstly be an event or occurrence and secondly, that event or occurrence must be unexpected or unusual*.

Aziz v Air India Ltd

Mr Aziz was found collapsed in his seat and not breathing upon landing at Los Angeles. Despite the immediate application of CPR and oxygen whilst the aircraft taxied to the gate, a doctor on board was unable to revive Mr Aziz.    When paramedics boarded at the gate, a defibrillator and intravenous drugs momentarily established a heart beat but Mr Aziz succumbed soon thereafter.

The dependents of Mr Aziz alleged that Mr Aziz would have survived if the airline had carried a defibrillator on board. Notably, it was uncontentious that the doctor on board had not requested a defibrillator.

The Court found there was no event because a defibrillator had not been requested nor was there a legal requirement for airlines to have onboard defibrillators.

Further, the Court referred to the decision in Fulop v Malev Hungarian Airlines that said a “major deviation from a standard articulated in recognised practices and procedures represents the exceptional case – the unusual or unexpected happening.” The Court in the instant case therefore accepted that industry standards are relevant to a determination of an “accident”. As there was no evidence of any industry standard concerning onboard defibrillators, no unusual or unexpected occurrence could be established.

Phifer v Icelandair

Mrs Phifer struck her head on an overhead video monitor as she stood up after placing her carry-on baggage under the seat in front of her during boarding procedures. The monitor, as with all monitors in the aircraft, had been lowered during boarding.

Mrs Phifer alleged that the carrier’s practice of lowering the monitors during boarding was contrary to safe practice and industry standards.

Referring to earlier case authorities, the Court said:

• it was open to find that a departure from an industry standard is an unusual and unexpected occurrence;
• that even if a violation of an industry standard was proven, it may not amount to an unusual or unexpected occurrence if the airline had complied with legal and regulatory requirements.

In this case, the plaintiff had failed to establish the existence of any relevant industry standard or any breach of a regulatory requirement.

* see decision in Air France v Saks 470 US 392, 105 S.Ct 1338 (1985)