The Federal Court of Australia (the Court) recently considered whether the Victorian Civil and Administrative Tribunal (VCAT) had jurisdiction over a matter in which a defence under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (CACL Act) was relied upon.1

This decision will be significant to aviation industry participants in assessing whether claimants in the context of international or domestic carriage by air have commenced claims in an appropriate forum in Australia.

Background

The claim arose out of a confrontation between two passengers and a Qantas flight attendant when the passengers sought to board a flight from Sydney to Melbourne back in April 2006.

On boarding, the passengers – who had economy class tickets – requested that they be able to hang certain articles in a coat locker. The flight attendant refused this request, informing the passengers that the locker was reserved for business class passengers. A verbal altercation occurred and the flight attendant requested that the passengers disembark from the aircraft.

The passengers subsequently attempted to re-board the aircraft. Following a further altercation with flight staff, the passengers again agreed to disembark and were arrested and charged by the Australian Federal Police. Soon after the incident, Qantas notified the passengers that they had resolved not to carry either of them on any Qantas Group Services.

Six years after this incident occurred, the two passengers separately filed applications in VCAT against Qantas seeking damages for misleading or deceptive conduct for breach of the Fair Trading Act (1999) (Vic) (FTA) and other remedies including an apology and award of frequent flyer points.

In its defence in the VCAT proceeding, Qantas relied upon a provision of the CACL Act to the effect that the CACL Act “applies to the exclusion of any other right of action [not provided for by the Act] and precludes an action after the expiry of two years”. Qantas subsequently applied to the Court for remedies that VCAT lacked jurisdiction to determine the claim, arguing that as it relied on a defence under a federal statute, the proceedings arose in federal jurisdiction while VCAT was only invested with state jurisdiction.

The Court decision

The Court concluded that VCAT lacked jurisdiction because of the federal defence raised by Qantas.

Given this finding, the Court did not consider it necessary to consider whether the claims were federal in nature on the alternative basis put by Qantas that the relevant events occurred in a “Commonwealth place”.

In reaching those conclusions, the Court addressed the following issues:

Can VCAT exercise federal judicial power?

The Court relied on well-established authority to conclude that the conferral of federal judicial power on a body is exclusively provided for by Chapter III of the Commonwealth Constitution.

Under Chapter III of the Commonwealth Constitution, the Commonwealth Parliament can invest any court of a state with federal jurisdiction. It follows that federal jurisdiction can only be invested on VCAT:

  1. by Commonwealth and not state law; and
  2. if it is a “court of a state”.

The Court was satisfied that an administrative tribunal such as VCAT is not a “court of a state”, and was not (and could not be) invested with federal jurisdiction.

Does the matter before VCAT arise under federal law?

As the Court held that VCAT was not invested with federal jurisdiction, the issue for determination became whether Qantas raising a defence under the CACL Act meant that the claim was “federal” in character.

The Court held that once part of a matter is held to arise under federal law, then the whole of that matter falls to be determined by the exercise of federal judicial power. Therefore even though the passengers’ claims were made under the FTA, which is a law of the state of Victoria, in raising a defence to the claims under a law of the Commonwealth, the whole of the matter was rendered federal in character.

In addition, the Court rejected the passengers’ submission that the raising of the federal defence by Qantas was “colourable” as it found that the defence was not raised “for the improper purpose of fabricating jurisdiction”.

Summary

The Court’s decision is a significant one in clarifying the lack of jurisdiction held by VCAT and the various other state administrative and consumer tribunals around Australia in hearing and determining claims involving international and domestic carriage by air falling within the scope of the CACL Act.

As a result of this decision, even where a claim is made under a law of a state, any matter in which a defence under the CACL Act is properly raised must be dealt with in a federal court (or an appropriate state court vested with federal jurisdiction).

It is not uncommon for passenger claims, in particular, to be commenced in one of Australia’s state-based tribunals given the perceived benefits to consumers. Airlines and, in particular, their insurers should take note of the strong objections that can be raised on jurisdictional grounds in such claims on the back of this latest decision.