QF32 Class Action Update
LHD have continued to pursue the QF32 class action in the Supreme Court of New South Wales.
Under Court orders, Informal Settlement Conferences have been conducted for the damages claims pursued upon the behalf of 152 QF32 passengers and crew members.
The majority of the passenger and crew claims have resolved with the remainder scheduled to proceed to Court ordered mediation in late 2017.
As a result of the unique facts of this matter, the assessment of damages for each individual claim has been determined under the common law of England & Wales. This has proven to be a complex but beneficial exercise for the damages value of each class member’s claim.
LHD briefed John Rowe Barrister as Counsel for the lead plaintiff and all class members. A synopsis of the application of the common law of England & Wales to the QF32 class action provided by John Rowe appears below.
LAM v ROLLS ROYCE
A CLASS ACTION SETTLEMENT EXPERIENCE
In 2010 a Qantas A380 one hour out of Singapore had one of its Rolls Royce Trent engines disintegrate. The plane returned to Singapore with the passengers observing the damage to the engine, wing and other parts of the plane. The seriousness of the damage, risk of crashing and imminent death was clear to all on board. The pilots exercised great skill in landing the aircraft. Once on the ground the damaged engine continued to spark and the aircraft was in a lake of escaping aviation fuel. The passengers were held on board for another hour before disembarking. As a result of this near death experience many passengers and crew suffered serious psychiatric injury.
LHD lawyers commenced a class action under the direction of Michael Hyland and his team in the NSW Supreme Court. The allegation of liability was against Rolls Royce for negligent design, construction and installation of the engine. The negligence occurred in the United Kingdom which meant the law of England and Wales had to be applied on questions of liability and quantum. The defendant ultimately admitted breach of duty and we set about assessing each claim according to English law.
In relation to “general damages” and the calculation of present value of future economic loss told of England is much different to the law in Australia. This has proved to be a learning experience for us.
In England the Judges are required to refer to a small green book “The Guidelines” in the assessment of general damages. The purpose is to enable consistency between judgments for similar injuries. Psychiatric injuries are divided into two broad categories being General Psychiatric Injuries and Post Traumatic Stress Disorders. Each broad category is divided into four subcategories. Each sub category has a description of the category and a range of the compensation. This system has two practical problems. Firstly, many of the class members have been diagnosed with multiple psychiatric conditions including PTSD so which broad category should be used? Secondly, the descriptions used in the sub categories use terms like “not grossly disabling”. These terms have different connotations to different people but are fundamental to understanding the appropriate box into which the claimant fits.
In PTSD claims the Guidelines provide the following table. The words in bold in my view require interpretation that may be fundamentally different from the point of view of the injured person, lawyers for the plaintiff and defendant and a judicial officer. Not only do they effect the appropriate box but the level of compensation in the range indicated.
|Such cases will involve permanent effects which prevent the injured person from working at all or at least from functioning at anything approaching the pre-trauma level. All aspects of the life of the injured person will be badly affected||£76,500|
|Moderately Severe||£17,600 to|
|This category is distinct from “Severe” because of better prognosis which will be for some recovery with professional help. However, the effects are still likely to cause significant disability for the foreseeable future.||£45,500|
|While there are awards which support both extremes of this bracket the majority are between £22,000 and £28,500.|
|In these cases the injured person will have largely recovered and any continuing effects will not be grossly disabling.||£17,600|
|Less Severe||£3,000 to|
|In these cases a virtually full recovery will have been made within one to two years and only minor symptoms will persist over any longer period.||£6,225|
However the guidelines are interpreted the range of compensation is modest.
Future loss of economic capacity and the Ogden tables.
The calculation of present value of future loss of economic capacity requires the application of the “Ogden tables”. They are complicated and if they do apply generate a compensation that is well in excess of what the Courts in Australia would regard as appropriate. At the time of the incident the capitalisation rate used by the tables was 2.5% (Australia is 5%) and have recently changed to 0.75%. This change generates a vast increase in the calculated compensation.
We engaged accountants who were experienced in the application of the Ogden tables. The first step was to calculate the annual loss caused by the injury. The accountants made assumptions that were open to them on the information available and then applied the tables. A major practical problem for the lawyers was adducing evidence to support the assumptions. In some cases there was no evidence of some of the assumptions in others the weight of the evidence was dubious. The difference between the belief of the group member and the evidence to support that belief was a concept that was difficult to grasp by many group members.
In England the Courts have accepted a number of defences to the application of the Ogden tables, namely:
I. The injury does not cause a loss of economic capacity and the Ogden tables have no application as there can be no claim, alternatively;
- If the injury does cause a loss of economic capacity it is so minimal it would be unfair to apply the Ogden tables and the compensation should be assessed under the principles of the Manchester case. This is much the same as would be applied in Australia. Alternatively;
- If the tables are to be applied, given the minimal effect on the claimant’s loss of economic capacity, the tables should be modified to ensure that the claimant is not overcompensated. The table that has been modified has usually been the multiplier in the disability table which is one step in the application of the tables. When the Court has accepted this argument it has had the effect of halving the amount of the full value of the Ogden tables.
There have been a number of decisions in the UK in which Judges have expressed reservation in applying the tables or have modified the application. In the case of Billett v Ministry of Defence the court has confirmed that Judges can modify the application of the tables.
In Billett the plaintiff was a soldier who, whilst serving in Afghanistan was exposed to very low temperatures and suffered an injury that caused him to have painful feet in cold weather. On leaving the army he obtained employment as a truck driver. His case was that the pain he suffered to his feet in cold weather was a disability that effected his economic capacity.
In applying the full value of the disability tables the value of his future loss of economic capacity was £200,000.
The defendants argued that;
- The plaintiff did not have a loss of economic capacity (his disability did not affect his earnings);
- If the plaintiff did have a loss of economic capacity it was not “significant” and did not engage the Ogden tables; and
- If it did engage the Ogden tables then the multiplier from the disability table should be modified to reflect the minor nature of the injury.
The Judge in the first instance found for the plaintiff on arguments I and 2 but modified the application of the disability table to effectively halve the claim for future loss of economic capacity to £100,000.
On appeal the Court agreed with the primary Judge on arguments I and 2 but held application of the Disability Table was inappropriate given the minor nature of the injury and the calculation should be done applying the Manchester approach (Smith.v Manchester). The Manchester approach require an assessment based on the evidence. The Appeal Court reduced the future loss of economic capacity to about £40,000.
All cases that involved a claim for the present value of future economic loss a careful assessment of the evidence available had to be made and explained to the group member. Some group members grasped the concepts more readily than others but advising and obtaining instructions was often time consuming.
Claims for past economic loss, out of pocket expenses and treatment were calculated as would normally be the case in Australia. Claims for future out of pocket expenses and treatment were calculated as we would in Australia except the capitalisation rate was 0.75%.
4 September 2017
Liability limited by a scheme approved under the Professional Standards Legislation