Post traumatic stress disorder which does not result in physical change is not "bodily injury " and therefore not compensable.

In Issue

  • Whether PTSD is a “bodily injury” within the Civil Aviation (Carriers’ Liability) Act 1959 (Cth)
  • Limitations on the award of funds management damages

The Background

Ms Casey was a nurse who sustained significant physical injuries when the plane that she was travelling in for the purpose of transporting a patient, crashed off the coast of Norfolk Island. The plane was operated by Pel-Air Aviation Pty Ltd. Following the plane crash, Ms Casey suffered Post Traumatic Stress Disorder (PTSD).

At trial, Ms Casey contended that each of her physical injuries and her PTSD constituted a “bodily injury” within the meaning of the Montreal Convention and the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (the Act). Pel-Air argued that the PTSD was not a “bodily injury” and therefore not compensable under the Act.

The Decision at Trial

At trial, Schmidt J entered judgment in favour of Ms Casey in the sum of $4,877,604. Her Honour held that Ms Casey’s PTSD constituted a “bodily injury” under the Act, on the basis that her PTSD was consequent on physical damage or chemical changes to her brain, with the result that her brain was no longer capable of functioning properly.

Schmidt J rejected Ms Casey’s argument that damages for the cost of funds management should be calculated by reference to the estimated fees of the private management fund nominated by her ($872,000). The court held that damages for funds management should be limited to an amount calculated by reference to the rates of the NSW Trustee and Guardian ($515,173).

The Decision on Appeal

Pel-Air appealed on the ground that the primary judge erred in concluding that Ms Casey’s PTSD constituted a “bodily injury” and argued that Ms Casey’s damages should therefore be reduced. Ms Casey cross-appealed against the primary judge’s assessment of damages for funds management.

Macfarlan JA (Ward and Gleeson JJA agreeing) allowed the appeal and set aside the orders of Schmidt J. The Court of Appeal considered that the expression “bodily injury” connoted damage to a person’s body which included physical damage to the brain. The Court of Appeal held that while Ms Casey had established that her PTSD was at least in part caused by her other physical injuries, she failed to establish that her brain itself had been physically damaged. Rather, she had only established that her brain was malfunctioning due to chemical changes resulting from PTSD. This did not constitute a “bodily injury”.

The Court of Appeal also allowed Ms Casey’s cross-appeal challenging the primary judge’s decision regarding the assessment of damages for funds management. The court held that to limit Ms Casey’s award for funds management damages to an amount calculated by reference to the NSW Trustee rates, it was not sufficient for Pel-Air to prove that the NSW Trustee was a cheaper alternative. Rather, Pel-Air would have needed to show that Ms Casey’s decision to appoint a private fund manager was “so unreasonable that it could not be regarded as a consequence” of her injuries.

Implications for you

This decision indicates unwillingness on the part of courts to accept that a “bodily injury” includes a psychological injury which is not, at least in part, caused by a physical injury to the brain. This in turn has important implications in relation to the scope of the term “bodily injury” in the context of public liability insurance policies.

Further, this decision places a heavy burden upon a party seeking to challenge the assessment of an award for funds management damages in circumstances where the claimant has decided to appoint a private funds manager.