Air NZ wins lost luggage case that threatened to disrupt Montreal Convention

Wednesday 9th March 2016

Air New Zealand has won its legal action against a Disputes Tribunal decision that the airline contendion carried wider implications for the aviation industry and involved important issues of principle and precedent.

The case centres on two passengers, whose real names have been substituted with Mr and Mrs Green, who travelled to England in November last year on an Air New Zealand flight to attend a significant event at one of that country’s oldest and most respected institutions.

When the couple arrived in London they found their suitcases had been left behind in Los Angeles and the luggage didn’t turn up until some nine days later.

Mrs Green claimed she was told by an Air New Zealand representative that the clothes they had lost would be replaced on a like for like basis and the couple spent over $26,000 replacing the lost items.

Their travel insurer paid out $1,900 in compensation and the couple brought a Disputes Tribunal claim for $15,000 in New Zealand against Air New Zealand for the costs of their baggage going astray.

Air New Zealand contended the tribunal didn’t have jurisdiction to hear the claim as it arose out of the Montreal Convention, which is a multi-lateral treaty that sets rules relating to the international carriage of passengers, baggage and cargo. It said the convention limited the airline’s liability to 1131 Special Drawing Rights (SDRS) which was about $2,125 at the time of travel, and it added on another $300 in payment. The offer was not accepted by the couple.

The Disputes Tribunal found it had jurisdiction to hear the claim despite the Convention because of the verbal assurance from a staff member that the couple’s items would be replaced and it ordered the airline to pay $15,000.

However, the High Court in Christchurch has overruled that decision, saying the tribunal didn’t have jurisdiction on the basis it claimed to have.

In a written judgement out today, Justice Gerald Nation said counsel for Air New Zealand had made it clear in his submissions that the airline considered the outcome of the case involved important issues of principle and precedent.

Air New Zealand’s lawyer Nathan Gedye submitted the issue of whether the convention confers exclusive rights of action is of widespread importance and significance, given there are 119 signatory countries, 256 airlines operate on the basis their businesses are subject to it, and around 3.6 billion annual international passengers are bound by it.

The Greens decided against being heard in the High Court, saying they would abide by the court’s decision.

In the context, of those submissions, it is a little challenging to be issuing a judgement over a claim for $15,000 with the benefit of submissions from just one side of the argument,” the judge said.

While he sympathised with the Greens over the delays in retrieving their baggage, the law means they can’t obtain the remedy they sought, he said.

He ordered Air New Zealand to pay for the costs the couple incurred up to the limits in the convention, without reducing the amount because of the modest recovery made on their insurance policy and allowing for interest at normal rates.

BusinessDesk.co.nz

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