Australian National Airlines Commission v Commonwealth of Australia

Re: AUSTRALIAN NATIONAL AIRLINES COMMISSION and ANSETT TRANSPORT INDUSTRIES
LIMITED
And: THE COMMONWEALTH OF AUSTRALIA; PETER FREDERICK MORRIS; RAE MARTIN TAYLOR;
EAST-WEST AIRLINES (OPERATIONS) LIMITED and THE STATE OF QUEENSLAND
No. VG94 and 101 of 1986
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.

CATCHWORDS

Practice and procedure - interlocutory orders - motions for mandatory injunctions - whether serious question to be tried - whether applicants established high degree of assurance of success - relevance of "two airline policy" on powers conferred by Air Navigation Regulations.

Judiciary Act 1901 s.39B

Administrative Decisions (Judicial Review) Act 1977

Airlines Agreement Act 1981 s.8

Airlines Equipment Act 1958 ss.18,19

Air Transport Act 1964 (N.S.W.)

Air Navigation Act 1920

Air Navigation Regulations 82,198A,199,200,205,320A,320B

Customs (Prohibited Imports) Regulations

State of Queensland v. Australian Telecommunications Commission (1985) 59 A.L.J.R. 562.

Ansett Transport Industries (Operations) Pty. Ltd. v. The Commonwealth (1977) 139 C.L.R. 54

Airlines of New South Wales Pty. Ltd. v. The State of New South Wales (1964) 113 C.L.R. 1

Airlines of New South Wales Pty. Ltd. v. The State of New South Wales (No. 2) (1965) 113 C.L.R. 54

Dalgety Wine Estates Pty. Ltd. v. Rizzon (1979) 141 C.L.R. 552

Onus v. Alcoa of Australia Ltd. (1981) 149 C.L.R. 27

Magna Alloys & Research Pty. Ltd. v. Coffey (1981) V.R. 23

HEARING

MELBOURNE

#DATE 19:6:1986

ORDER

THE COURT ORDERS THAT the motion for interlocutory relief be refused and the applicant pay the respondents' costs of the motion.

(Settlement and entry of Orders is dealt with in O.36 of the Rules of Court.)

JUDGE1

These two motions for interlocutory injunctions are but steps in two of a number of proceedings pending in the Court in which Ansett Transport Industries Limited ("Ansett") and Australian National Airlines Commission ("T.A.A.") are seeking to enforce the duopoly created and conferred upon them by the Airlines Agreement Act 1981. East-West Airlines (Operations) Limited ("East-West") is proposing to commence, on 1 July 1986, scheduled domestic passenger air services between Brisbane and Cairns and between Brisbane and Mackay. By their respective motions, Ansett and T.A.A. are seeking orders which will have the effect of preventing East-West providing those air services until the hearing and determination of the proceedings pending in the Court or until further order.

The Airlines Agreement was made on 28 May 1981 and was approved by the Airlines Agreement Act 1981 which was assented to on 18 June 1981. The Commonwealth of Australia, Ansett and T.A.A. are the parties to the Agreement which is to remain in force for not less than eight years from 28 May 1981.
The duopoly conferred upon Ansett and T.A.A. is created and conferred by clause 6 of the Agreement, paragraph 6(1)(a) of which provides:-

"6.(1)(a) The parties shall take all reasonable action within their powers to ensure that the Commission (T.A.A.) and the Company

(Ansett) are the only two operators which provide scheduled domestic passenger air services over trunk routes within Australia."

For the sake of clarity, the effect of other paragraphs of clause 6 are paraphrased in these reasons but for ease of reference, the whole of clause 6 is set out in the appendix to these reasons. For the purposes of the Agreement, a trunk route is a route linking any two trunk route centres. The trunk route centres are specified. They comprise 18 places being the capital cities of each of the six States, Canberra, Darwin and a number of other places in the Northern Territory, a number of places in Queensland including Cairns, Mackay and Coolangatta and Launceston in Tasmania; see paragraph 6(1)(e). For the purposes of these two motions, it should be noted that Brisbane - Cairns and Brisbane - Mackay are trunk routes within clause 6 of the Agreement.
Clause 6 of the Agreement contains a number of exceptions to the duopoly created by paragraph 6(1)(a). Paragraph 6(1)(b) provides:-

"(b) Subject to paragraph (c) of this sub-clause nothing in sub-clause (1)(a) shall prevent other operators from providing scheduled passenger air services over a prescribed route or successive prescribed routes."

For the purposes of the Agreement, a prescribed route includes a route between a place in a State and another place in that State and a route between a place within Australia which is not a trunk route centre and another place in Australia; see paragraphs 6(2)(a)(i)(a) and (c) and paragraph 6(2)(b). For the purposes of these two motions, it should be noted that Brisbane - Cairns and Brisbane - Mackay are each prescribed routes. Although each of Brisbane, Cairns and Mackay is a trunk route centre, each is within the State of Queensland. Likewise, Brisbane - Coolangatta is a prescribed route. In view of submissions put by counsel for Ansett and T.A.A., it should be noted that each of the routes Melbourne - Albury, Albury - Sydney, Sydney - Grafton, Grafton - Brisbane, Perth - Yulara and Yulara - Brisbane are prescribed routes. It should be noted further that the route Sydney - Coolangatta is a prescribed route because of a "grandfather clause"; see paragraph 6(2)(d). The Agreement does not give a defined meaning to the phrase "successive prescribed routes" but for the purposes of these motions, I am prepared to accept that the phrase includes any two or more continuing prescribed routes. Thus the following are examples of successive prescribed routes: Sydney - Grafton - Brisbane; Melbourne - Albury - Sydney - Coolangatta - Brisbane; Sydney - Newcastle, Grafton or Coolangatta - Brisbane - Cairns and Sydney - Newcastle, Grafton or Coolangatta - Brisbane - Mackay. Nice questions arise as to whether each of these successive prescribed routes, viewed as a whole, is an interstate service and thus comes under Reg.199(2) of the Air Navigation Regulations; see later in these reasons.

The exception contained in paragraph 6(1)(b) of the Agreement is made subject to paragraph 6(1)(c). Paragraph 6(1)(c) provides that the exception applies where any successive prescribed routes have the effect of linking two trunk route centres unless the Secretary to the Department of Aviation is satisfied that "such scheduled passenger air services are not predominantly for use for the purpose of the carriage of passengers over separate prescribed routes and are to a significant extent used or to be used for the purpose of carriage of passengers between" trunk route centres. Thus successive prescribed routes are excepted from the duopoly created by paragraph 6(1)(a) of the Agreement unless the Secretary is satisfied with respect to two criteria, one negative in nature and the other positive in nature. The exception could apply to routes within a State as well as interstate services.
East-West provides scheduled domestic passenger air services over prescribed routes within Australia. East-West desires to increase the number of scheduled domestic passenger air services it provides by introducing domestic passenger air services between Brisbane and a number of other places in Queensland including introducing a service on the route Brisbane - Cairns and a service on the route Brisbane - Mackay. Each of those two routes is a prescribed route and thus exempt from the duopoly created by paragraph 6(1)(a) of the Agreement. In order to give effect to its desire to increase its air services in Queensland, East-West planned to use some of its own F28-400 aircraft and to import three Boeing 737-300 aircraft. In order to be able to import the Boeing 737-300 aircraft, East-West first has to obtain a capacity determination made by the Minister of State for Aviation under s.18 of the Airlines Equipment Act 1958 and then obtain an acquisition certificate under s.19 of the same Act. On 1 April 1986, in proceeding V. No. G 61 of 1986, the Court granted an interim injunction restraining the Minister from issuing the capacity determination. That injunction has been continued on an interlocutory basis. In that proceeding, the Court is exercising jurisdiction conferred by s.39B of the Judiciary Act 1901. In proceeding V. No. G 65 of 1986, Ansett and TAA are seeking orders under the Admnistrative Decisions (Judicial Review) Act 1977 with respect to the conduct of the Minister in considering whether to issue the capacity determination. Interlocutory orders have been made in that proceeding restraining the Minister from issuing the capacity determination.
Proceedings V. No's. G 94 and 101 of 1986 are similar to each other, the only relevant difference being that TAA is the applicant in G 94 and Ansett is the applicant in G 101. The respondent Morris is the Minister of State for Aviation and the respondent Taylor is the Secretary to the Department of Aviation and thus each is an officer of the Commonwealth. The Court is exercising jurisdiction conferred by s.39B of the Judiciary Act and its accrued jurisdiction with respect to the other respondents. In the applications as amended, Ansett and T.A.A. are seeking declarations, injunctions, specific performance of the Airlines Agreement and damages. The statements of claim raise many different matters. It is sufficient to say similar issues are raised to those in proceedings No's. 61 and 65. In addition, matters are raised which form the basis for these two motions for interlocutory injunctions.
The Air Navigation Act 1920 confers wide powers upon the Governor-General to make Regulations in relation to air navigation. Those Regulations are known as the Air Navigation Regulations. The Regulations confer many powers upon the Secretary to the Department of Aviation. Under Reg.320A, an aircraft is prohibited from landing or taking off at places of a description which include the airports at Brisbane and Mackay "except under the authority of, and in accordance with, a permit issued under this regulation by the Secretary". Under Reg.320B, an aircraft is prohibited from flying in controlled airspace "except under the authority of, and in accordance with, a permit issued under this regulation by the Secretary". An aircraft cannot land or take off from the airports at Brisbane, Mackay or Cairns without flying in controlled airspace. On 11 December 1983 the Secretary, by his delegate, gave a permit under Reg.320A "for any aircraft engaged in operations that are authorised by and are in accordance with Airline Licence No. 3 ... issued to East-West Airlines (Operations) Limited to land at or take off" at the places referred to in Reg.320A and a permit under Reg.320B "for any aircraft engaged in operations that are authorised by and are in accordance with the abovementioned Airline Licence No. 3 ... to fly in controlled airspace in which it is necessary for the aircraft to fly in the course of those operations".
Under Reg.82 of the Air Navigation Regulations, the Minister is empowered to establish and operate aerodromes, air routes and airway facilities. The power extends to apply with respect to airports and controlled airspace. Under Reg.82(2) the Secretary, subject to the Regulations, has power to determine the conditions of use of airports and controlled airspace.
Division 1 of Part XIII of the Air Navigation Regulations, comprising Regs.190A to 205, makes provision for the licensing of air service operations. For the purpose of the Regulations, air transport is divided into a number of classes of operations. For present purposes, the relevant class is "regular public transport operations"; see paragraph 191(d) of the Regulations. This class includes the class described in the Airlines Agreement as "scheduled domestic passenger air services".
Aircraft employed in regular public transport operations are classified as regular public transport aircraft. An aircraft shall not be used by a person in commercial operations except "under the authority of, and in accordance with, a licence issued to the person by the Secretary"; Reg.198. Under Reg.198A, an airline licence authorises, in accordance with the provisions of the licence, the conduct of regular public transport operations. Reg.199 provides for the issuing of licences. Sub-regs.199(2), (3) and (4) are set out in the appendix to these reasons. Under sub-reg.199(2), where the proposed air service is an interstate service, the Secretary is required to issue the licence sought unless the applicant fails to comply with requirements relating to the safety of the operations. In that sub-regulation, "interstate service" means a service by way of, or in the course of, trade and commerce among the States; see Reg.202. Where the proposed service is other than an interstate service, the Secretary has a discretion to issue the licence; sub-reg.199(3) but under sub-reg.199(4), in deciding whether to grant the licence or not, the Secretary shall "have regard to matters concerned with the safety, regularity and efficiency of air navigation and to no other matters".
East-West had a licence under Reg.198A dated 31 December 1985, being Airline Licence No.3, to use aircraft in regular public transport operations between fixed terminals but that licence did not include the routes Brisbane - Cairns or Brisbane - Mackay. By letter dated 31 January 1986, East-West made application for an amendment to Airline Licence No. 3 to include a number of additional routes, including Brisbane - Cairns and Brisbane - Mackay, to be operated by F28-400 aircraft. By licence dated 25 February 1986, the Secretary to the Department of Aviation, by a delegate, issued Airline Licence No. 3 which licensed East-West to use aircraft of specified types "in regular public transport operations" between specified places. Among those places were Brisbane - Cairns, aircraft F28-400 and Brisbane - Mackay, aircraft F28-400. The licence was subject to a number of conditions including a condition that the use of an aircraft on any route other than that specified in the licence required the prior written approval of the Secretary, that the services listed in the licence were to be carried out in accordance with the Air Navigation Act 1920 and the Air Navigation Regulations and, subject to the Regulations, the licence was to remain in force until 30 September 1986. Under Reg.200, a licence remains in force for a specified period not exceeding one year but may be renewed.
In addition to the permits under Regs.320A and 320B and the airline licence under Reg.198A, East-West has obtained permission under the statutory requirements of the State of Queensland, and in particular the State Transport Acts and the Air Navigation Acts of that State, to operate the regular public transport operations Brisbane - Cairns and Brisbane - Mackay.
Prima facie, as a result of the licences and permits obtained by East-West, there is no reason why that company should not commence, on 1 July 1986, scheduled passenger air services between Brisbane and Cairns and between Brisbane and Mackay.
The essential basis for the contentions put on behalf of Ansett and T.A.A. is that the obligation imposed upon the Commonwealth and its officers by the "two airline policy" as expressed in the Airlines Agreement Act 1981 and the Airlines Agreement 1981 is to exercise all the powers conferred upon it or them by the Air Navigation Regulations in such a manner as to prevent East-West from providing the proposed air services between Brisbane and Cairns and between Brisbane and Mackay. To that end, Ansett and T.A.A. are seeking interlocutory orders to the effect of:-

1. a mandatory order requiring the Secretary to revoke the permits given under Regs.320A and 320B insofar as they permit East-West to provide those services;

2. a mandatory order requiring the Secretary to impose conditions under Reg.82(2) so as to prevent East-West from providing those services;

3. a mandatory order requiring the Secretary to revoke Airline Licence No. 3 to the extent necessary to prevent East-West from providing those services;

4. an injunction preventing East-West from providing those services on the ground that Airline Licence No. 3 insofar as it purports to licence those services, is null and void and of no effect on the ground that in granting the licence the Secretary failed to have regard to the "two airline policy".

In addition, Ansett and T.A.A. are seeking an injunction restraining East-West from using the airports at Brisbane and Mackay and controlled airspace with respect to the proposed air services on the basis that the permits granted do not apply to aircraft used on those air services since the permits predated the licence under Reg.198A. As a corollary to this injunction, Ansett and T.A.A. seek ancillary orders preventing the Secretary from giving permits under Regs.320A and 320B since to do so would be contrary to the obligations imposed upon him by the "two airline policy".

It is apparent therefore that it is necessary to determine what effect, if any, the "two airline policy" has upon the powers conferred by the Air Navigation Regulations and the permits and licences granted to East-West under those Regulations. On this issue, the attitudes of the parties are clear. Ansett and T.A.A. claim that the "two airline policy" has the effect of supporting the making of the interlocutory orders sought. The respondents deny that effect and contend that at least with respect to the permits and licences the subject of these motions, the "two airline policy" has no effect or application. It is accepted by all parties, and indeed it appears from the statement of reasons for granting the licence under Reg.198, that the Secretary in granting the licence had regard "to matters concerned with the safety, regularity and efficiency of air navigation and to no other matters"; see Reg.199(4). In that respect, he had no regard to the "two airline policy". The respondents contend further that if the Secretary, in exercising his powers under the relevant Regulations, did have regard to the "two airline policy", he would be having regard to matters which were improper for the exercise of those powers and his decisions could be challenged successfully.
It must be remembered that the motions are for interlocutory orders only. It is undesirable therefore, that the expressions of opinion contained in these reasons should be regarded as final.
The essence of the orders sought by Ansett and T.A.A. are mandatory. The principles to be applied in considering whether an interlocutory mandatory injunction should be granted are discussed by Gibbs C.J. in State of Queensland v. Australian Telecommunications Commission (1985) 59 ALJR 562. The first question to consider is whether there is a serious question to be tried. Where a mandatory injunction is sought, the existence of such a question of itself does not justify the granting of the mandatory injunction. In this respect the Chief Justice said at p.563:-

"The first of those considerations is that what is sought is a mandatory injunction. In Redland Bricks Ltd. v. Morris (1970) AC 652, the House of Lords held that the grant of a mandatory injunction is never made as of course and that a factor to be taken into consideration is that the defendant has not behaved unreasonably but only wrongly. According to Halsbury's Laws of England, Vol.24, par.948, the position regarding the grant of a mandatory injunction on an interlocutory application is as follows:

`A mandatory injunction can be granted on an interlocutory application as well as at the hearing, but, in the absence of special circumstances, it will not normally be granted. However, if the case is clear and one which the court thinks ought to be decided at once, or if the act done is a simple and summary one which can easily be remedied, or if the defendant attempts to steal a march on the plaintiff, such as where, on receipt of notice that an injunction is about to be applied for, the defendant hurries on the work in respect of which complaint is made so that when he receives notice of an interim injunction it is completed, a mandatory injunction will be granted on an interlocutory application.'

Megarry J. stated the principle in Shepherd Homes Ltd. v. Sandham (1971) 1 Ch 340 at 351, in the following words:

`... on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction.'

Although, as I have already indicated, there is a serious question to be tried in the present case, I lack a `high degree of assurance' that the plaintiff will necessarily succeed:".

Accordingly, as a first step, it is necessary to determine whether there is a high degree of assurance that Ansett and T.A.A. will necessarily succeed on the issues raised by these motions.
A consideration of the reasons for judgments in Ansett Transport Industries (Operations) Pty. Ltd v. The Commonwealth (1977) 139 CLR 54 shows that in an appropriate case, where, pursuant to a policy, the executive government has entered into a contract which has the approval of the Parliament, the terms of the agreement may validly fetter the exercise of powers conferred upon officers of the Commonwealth to the extent, where necessary, of the officer being compelled to exercise the power conferred in a particular way. In this respect, I refer particularly to the reasons for judgment of Mason J. at pp.73-77. The position is summarised at p.77:-

"Where statutory approval for the making of the contract exists and the contract contains an undertaking that the statutory power will be exercised in a particular way, there is no room for the notion that the undertaking is invalid on the ground that it is an anticipatory fetter on the exercise of a statutory discretion. The contract, assuming it to be within constitutional power, is valid and the undertaking is free from attack. There is in such a case the initial question: Does the statute which approves the making of the contract expressly or impliedly amend, for the purposes of the contract, the pre-existing law providing for the exercise of the discretion? The statute may impose on the repository of the discretion a duty to exercise it in conformity with the undertaking or it may leave him with a discretion to arrive at some other result. If it be the former, then the contracting party may be able to compel the government and the person in whom the discretion is vested, though it has been relevantly converted into a duty, to comply with the undertaking. If it be the latter, then the undertaking if it is enforceable will be enforceable by an action for damages only.

It will be perceived from what I have written that in my opinion the doctrine that an agreement of the kind in question may constitute an anticipatory fetter on the exercise of a statutory discretion is closely connected with the question whether the agreement is authorized by statute, or is prohibited by, or incompatible with it. If the agreement is authorized, then it is valid, and any breach of the undertaking it contains will be enforceable by damages but only when the effect of statutory approval is to convert the discretion into a duty will it be enforceable specifically."

The same case is authority for the proposition that a recital to an agreement, even if treated as an object of the agreement, will not of itself make that object a term of the agreement enforceable by injunction. Again, I refer to what was said by Mason J. at p.73:-

"A recital which expresses the object of the parties, as distinct from the terms of an agreement, is open to the construction that the parties intended to secure the announced object by means of the express provisions contained in the agreement and not otherwise. It is reasonable to suppose that their agreement is limited to the specific stipulations set out in the contract and that they did not intend to be bound by other and unexpressed stipulations even though the stipulations would or might enhance the attainment of the object. It would be a bold step to infer from the mere presence of the recital that the parties, to use and adapt the words of Denman C.J. in Aspdin v. Austin (1844) 5 QB, at pp 683-684 (114 ER, at p 1407), were impliedly covenanting `for every act convenient or even necessary for the perfect attainment of' that object."

In that case the Court held, by majority, that an officer of the Commonwealth, in exercising his discretion to grant a licence to import aircraft under the Customs (Prohibited Imports) Regulations, was not compelled by the earlier "two airline policy" as expressed in the then Airlines Agreement and Airlines Agreement Act, to refuse to grant the licence. It is interesting to note that under both the Airlines Agreement Act 1981 and the Airlines Agreement 1981, in exercising the power to grant import licences for aircraft, the officer of the Commonwealth is required to have regard to the terms of that Act and that Agreement; see s.8 of the Act of 1981 and clause 8 of the Agreement of 1981. See also clause 9 of that Agreement and the provisions of the Airlines Equipment Amendment Act 1981 relating to the importation of aircraft.
In the light of the decision of the High Court in the Ansett Case of 1977, the essential contention made by counsel for Ansett and T.A.A. was that the powers conferred upon the Secretary by the Air Navigation Regulations and in particular Regs.320A, 320B and 82 with respect to the permits, and Reg.198, 198A and Reg.199(4), were made subject to the Secretary having regard to the provisions of the Airlines Agreement Act 1981 and the Airlines Agreement 1981. The Secretary, in granting those permits and licence, did not have regard to the provisions of that Act and of that Agreement and therefore the permits and licence were invalid. They contended further that those provisions converted the discretions conferred by those Regulations into a duty to refuse the permits and the licence with respect to the air services proposed by East-West with the result that orders should be made restraining the Secretary from issuing new permits and a new licence pending the hearing and determination of all the relevant proceedings pending in the Court.
For the purposes of considering the interlocutory motions, I accept that the Airlines Agreement 1981 has been approved by the Parliament. Under clause 1(1), the Agreement has no force or effect and is not binding on the parties unless it is approved by the Parliament. Under s.5 of the Airlines Agreement Act, the Agreement, which is set out in the Schedule to the Act, is approved. The effect of clause 1 and s.5 is more than being merely proclaimed for the purpose of specifying the time at which the Agreement is to come into force. They have the effect of Parliament approving the contents of the Agreement; cf. the Ansett Case of 1977.
The use of the expression "the two airline policy" may be useful to describe the effect of the Airlines Agreement Act and the Agreement but its use can be misleading. What must be considered are the provisions of the Act and the Agreement which give effect to that policy. In considering this matter, and in accordance with the view of the majority of the Court in the Ansett Case of 1977, I do not consider that the recitals to the Agreement constitute terms of the Agreement binding on the parties to the agreement. In this respect I reject the contentions of counsel for Ansett and T.A.A. that the recital stating that:-

"... it is expedient in the opinion of the Commonwealth to make provision for the purpose of ensuring -

(a) the efficient and economic operation of air passenger services within Australia;

(b) the continued existence in competition with each other of only two operators of air passenger services over the entire trunk route network within Australia:"

creates a term of the agreement binding upon the Commonwealth. Further, it should be noted that the recital refers to the efficient and economic operation of services, which can be described as commercial air operations. Likewise, the recital refers to operators being the persons who conduct commercial air operations. Further, under clause 7 of the Agreement, Ansett and T.A.A. are enabled to consult "in respect of any matter affecting ... the efficient and economic operation" of the commercial air operations not governed by that clause. On its face, this recital is limited to commercial air operations.

Clause 6 of the Agreement is the only clause dealing expressly with the matter of who shall conduct commercial air operations in Australia with respect to scheduled domestic passenger air services. The relevant parts of that clause have been set out or summarised earlier in these reasons and the full terms of that clause are set out in the annexure to these reasons.
In considering what effect, if any, clause 6 has on the powers conferred upon the Secretary by Regs.320A, 320B and Reg.82 and by Reg.198, Reg.198A and Reg.199, it will be convenient to commence with the question of whether the Secretary was wrong in law in failing to have regard to clause 6 of the Agreement when he made the decision to issue the licence under Reg.198A with respect to the services proposed by East-West. The question can be narrowed further. Do commercial air operations, in the sense referred to above, come within the expression "the Secretary shall ... in deciding whether or not to grant a licence ... have regard to matters concerned with the safety, regularity and efficiency of air navigation and to no other matters" appearing in Reg.199(4)?
In considering this narrow question, it must be noted that the only reference in the Airlines Agreement Act or the Agreement to the Air Navigation Regulations is in clause 17 of the Agreement which provides that nothing in the Agreement requires or permits Ansett or T.A.A. to act in any manner inconsistent with the Air Navigation Act 1920 or with the Air Navigation Regulations. The absence of any clause stating expressly that in exercising powers conferred by the Air Navigation Regulations, the Secretary shall have regard to the provisions of the Agreement is to be contrasted with the provisions of clause 8, with respect to powers conferred by the Customs (Prohibited Imports) Regulations, and the provisions of clause 9, with respect to powers conferred by the Airlines Equipment Act 1958.
Counsel for Ansett contended that in the expression "the safety, regularity and efficiency of air navigation" the words "efficiency of air navigation", on their proper construction, included efficient and economic operation of air services and should not be limited to aircraft being used in those operations. Counsel relied upon opinions expressed by Kitto J. in Airlines of New South Wales Pty. Ltd. v. The State of New South Wales (No. 2) (1965) 113 CLR 54 at pp 116-7. In my opinion, there is nothing in that authority to support the contention made. In fact, a reading of the judgments in that case and in the first Airlines Case (Airlines of New South Wales Pty. Ltd. v. The State of New South Wales (1964) 113 CLR 1) shows that the expression used in Reg.199(4) is directed and limited to the regulation of aircraft used in those operations. In fact, those decisions are authority for the more general proposition that the Air Navigation Regulations are not directed to efficient and economic operation of air services but are directed to the regulation of aircraft used in those operations. This principle will be applied when dealing with the broader submissions put on behalf of Ansett and T.A.A.
It is not necessary to make extensive reference to the judgments in the two Airline Cases. In those cases, issues arose as to the relationship between State laws which regulated the operation of air services intra-State and which had regard to the efficient and economic operation of air services, and the Air Navigation Regulations. In the second Airlines Case the constitutional basis for some of the Air Navigation Regulations were considered including Regs.198, 199, 320A and 320B. In the result, the High Court held unanimously, that Regs.320A and 320B were valid, but a majority only, Taylor J. dissenting, held that Regs.198 and 199 were valid. Some of the majority based the validity of those two Regulations upon the trade and commerce power, some upon the external affairs power and some upon both powers. In these reasons, it is not necessary to pursue this matter further except to say that the external affairs power was relied upon because of the ratification by Australia of the Chicago Convention, see s.3A of the Air Navigation Act 1920 and Schedule 1 to that Act which contains the text of that Convention. Article 37 of the Convention includes a requirement that contracting States, including Australia, shall apply practices and procedures including "matters concerned with the safety, regularity and efficiency of air navigation".
Nowhere in the Air Navigation Act or the Air Navigation Regulations are the words "air navigation" defined, but the High Court assumed that it related to flying operations by aircraft and matters incidental thereto.
In the first Airlines Case, Dixon C.J. said at p.27:-

"The legislative power of the Commonwealth to affect air navigation arises under s.51(i.) of the Constitution to make laws with respect to trade and commerce with other countries and among the States but it also may arise under the power to make laws with respect to external affairs (s.51(xxix.)). Obviously power in relation to trade and commerce with other countries and among States must for present purposes be related to inter-State trade and that which is incidental to it. It should be added, however, that trade and commerce with other countries as well as trade and commerce among the States naturally introduces questions of the safety of the terminals and that involves some degree of regulation of air traffic which comes to those terminals wherever it comes from."

In the second Airlines Case, after describing the nature of air navigation, Kitto J. said at p.116:-

"With all this in mind, it is impossible to assume in advance that any impairment of the safety, regularity or efficiency of intra-State air navigation will leave unimpaired the safety, regularity and efficiency of the other departments into which air navigation may be divided for constitutional purposes. It follows from these considerations, in my opinion, that a federal law which provides a method of controlling regular public transport services by air with regard only to the safety, regularity and efficiency of air navigation is a law which operates to protect against real possibilities of physical interference the actual carrying on of air navigation, and therefore is, in every application that it has, a law 'with respect to' such air navigation as is within federal power, and none the less so because it is also legislation with respect to that intra-State air navigation which is not within the power."

At p.147, Menzies J. said:-

"The Commonwealth can control intra-State air navigation only to the extent necessary to render its control over other air navigation effectual; accordingly, it cannot legislate exhaustively upon the subject of intra-State air navigation unless the exercise of complete control of that navigation is necessary for its control of other air navigation."

At p.149 Windeyer J. said:-

"In the earlier case, Airlines of New South Wales Pty. Ltd. v. New South Wales (1964) 113 CLR 1 (the first Airlines Case), I stated, in general terms, my view of the constitutional position of the Commonwealth in relation to air navigation. Air navigation in Australia - using the expression 'air navigation' to mean the use of the air by aircraft, flying and matters incidental thereto - can, I consider, be controlled and regulated by Commonwealth law. But air navigation is not itself one of the matters with respect to which the Commonwealth Parliament is by the Constitution empowered to make laws. Commonwealth control of air navigation comes about indirectly as the result of the power to legislate with respect to trade and commerce with other countries and among the States and of the power to legislate with respect to external affairs."

At p.151, His Honour said:-

"The real strength of the case for the plaintiff and the Commonwealth based upon the commerce power lies not in the attempted importation of exotic doctrine embodied in words descriptive of an economic interdependence or inseparability of inter-State and intra-State commerce. It lies in the much simpler proposition that inter-State and overseas air navigation can only be effectively regulated if all aircraft using the air in Australia are subject to the same code of rules. In my opinion the facts showed this to be so. The great increase in recent times in the volume of air traffic, especially of inter-State and overseas air traffic, the invention and development of new and larger types of aircraft flying at great speed, the increasingly complex procedures and organization necessary for the direction and control of air navigation - all these combine to make it necessary for the safety of inter-State and overseas air navigation that all aircraft should obey the same rules of flight and manoeuvre, the same code of signals, the same procedures in landing and take-off, and so forth; and that to this end they all be subject to the control of one authority. I am satisfied that the facts show that, to this extent and for these purposes, a law with respect to airborne trade and commerce with other countries and among the States may lawfully extend to air navigation within any one State."

For present purposes, the most helpful expression of opinion is taken from the judgment of McTiernan J. The second Airlines Case involved a consideration of the Air Transport Act 1964 of New South Wales which regulated intra-State air transport services, and Regs.198 and 199 of the Air Navigation Regulations. At p.109, His Honour said:-

"There is no conflict between s.3 of the Act and reg.198 so far as it relates to intra-State services: nor between s.6 of the Act and reg.199(4). The carriage of passengers or goods is the subject of the Act and of reg.198 and 199. In my view there is this distinction between the Act and the regulations. The former is an economic control of public transport services enforced by licensing of the aircraft used in it on the principles laid down by s.6: whereas the regulations are concerned only with the safety, regularity and efficiency of the flight of aircraft engaged in those and other transport operations. The licensing of an aircraft as a condition of its being lawfully used in transport operations is a devised method of enforcing regulations and orders pertaining to safety, regularity and efficiency."

Having regard to these authorities, the submission by counsel for Ansett must be rejected. The Air Navigation Regulations relate to the regulation of aircraft engaged in operations within Australia. The two Airlines Agreement relates to commercial operations being air services and to that end are to be likened to the regulation of air services within a State by State legislation. There is no inconsistency between the Airlines Agreement and the Air Navigation Regulations. Under Reg.198 an aircraft is not to be used in commercial operations except under the authority of a licence. A licence is required irrespective of whether the aircraft is being used for inter-State or intra-State operations. When the aircraft is being used in an inter-State service, by Reg.199(2) the licence must be granted unless there is a non-compliance relating to the safety of the operations. It is difficult to see how conditions relating to the efficient and economic operation of air services could be imported into the expression contained in Reg.199(4). To do so would, in all probability, be unconstitutional.

Accordingly, in my opinion and for the purpose of these interlocutory proceedings, the Secretary was not in error in having no regard to the Airlines Agreement when making the decision to grant Airline Licence No. 3 to East-West.
I turn now to consider whether the terms of the Airlines Agreement 1981 impose a present legal obligation on the Secretary to exercise the powers conferred upon him by Regs.82, 320A, 320B and Reg.200A of the Air Navigation Regulations. To some extent, this question has been answered adversely to Ansett and T.A.A. since I have held, for the purpose of these interlocutory proceedings, the Secretary was not in error when exercising his discretion to grant Airline Licence No. 3, but that conclusion was based upon the specific provisions of Reg.199. The power of the Secretary under Reg.200A to cancel or suspend Airline Licence No. 3 is limited to consideration of matters relating to "the safety, regularity and efficiency of air navigation"; see Reg.200A(b)(ii). For reasons already given, those matters do not include matters arising under the Airlines Agreement 1981. Nevertheless, the broader question now to be considered is another aspect of the same problem, namely the relationship between the provision of commercial air services being the subject matter of the Airlines Agreement and the regulation of air navigation by aircraft engaged in all types of air services.
Under paragraph 6(1)(a) of the Airlines Agreement, the Commonwealth and its officers including the Secretary, is required to take "all reasonable action within their powers" with respect to limiting the number of operators who provide a specified type of commercial air services. East-West is proposing to commence to operate that type of service on 1 July 1986, but under paragraph 6(1)(b), that type of service is exempt from the obligation imposed on the Secretary. The licence given to East-West is limited to separate and distinct prescribed routes which, for practical purposes, cannot be described as successive prescribed routes. Nevertheless, looking at all the prescribed routes which East-West is licensed to operate by Airline Licence No. 3, it is clear that on one view, these may be successive prescribed routes which have the effect of linking two trunk route centres under paragraph 6(1)(c) of the Airlines Agreement. Examples of these are Sydney - Newcastle, Grafton or Coolangatta - Brisbane - Cairns and Perth - Yulara - Brisbane - Mackay. I am satisfied that there is a possibility that each such prescribed route, including others not illustrated, may, to a significant extent, be used for the purpose of carriage of passengers between trunk route centres. It is clear that in exercising his powers under the Air Navigation Regulations, the Secretary did not consider this aspect. Counsel for Ansett and T.A.A. contend that the Secretary should consider whether paragraph 6(1)(c), on the facts of this case, apply to prevent the exception contained in paragraph 6(1)(b) having effect. They contend further that the Court should order the Secretary to vary the permits granted under Regs.320A and 320B with respect to the Brisbane - Cairns and Brisbane - Mackay routes proposed to be operated by East-West at least until the Secretary has investigated the factual matters referred to above or at least impose conditions under Reg.82 to the same effect. During the course of the hearing of these interlocutory injunctions, I ruled that the Court should not make findings of fact in relation to those matters; cf. Dalgety Wine Estates Pty. Ltd. v. Rizzon (1979) 141 CLR 552.
These contentions are rejected. In my opinion, it would not be reasonable action under paragraph 6(1)(a) of the Airlines Agreement for the Secretary to vary the permits or to impose the conditions as suggested. For reaons similar to those expressed above, it would be unlawful for the Secretary, in exercising his powers under the Air Navigation Regulations relating to air navigation to have regard to matters relating to commercial air services. In the Airlines Agreement, there is no express reference to the exercise of powers with respect to air navigation; cf. cl.8 and the Customs (Prohibited Imports) Regulations and cl.9 and the Airlines Equipment Act. Further, there is a grave doubt whether the Commonwealth has the constitutional power to regulate the provision of intra-State air services, a power which is within the power of a State. The position in Queensland is not absolutely clear, but whatever State approval is required to be given under State law, has been given by the State of Queensland to East-West to enable it to commence its proposed services. I am far from satisfied that the Commonwealth or the Secretary has the power to negative that approval under the guise of exercising powers in relation to air navigation to prevent the provision of commercial air services in order to comply with the terms of an agreement even though that agreement has been approved by the Commonwealth Parliament.
In all the circumstances, in my opinion and for the purpose of these interlocutory proceedings, the Secretary is not in breach of the Airlines Agreement in not taking steps to prevent East-West using the Brisbane and Mackay airports and from using controlled airspace at Cairns, Mackay and Brisbane for the purpose of the proposed services between Brisbane - Cairns and Brisbane - Mackay.
For similar reasons, there is no basis for the allegation that East-West, in seeking the licences and permits, is inducing a breach of the Airlines Agreement 1981 by the Commonwealth.
The final contention made on behalf of Ansett and T.A.A. does not depend upon the Airlines Agreement 1981. Under this contention, Ansett and T.A.A. are seeking prohibitory injunctions restraining East-West from relying on the permits issued under Regs.320A and 320B for aircraft used by it on its proposed Brisbane - Cairns and Brisbane - Mackay air services. This contention is based on the fact that the permits were issued prior to the licence under Reg.198A and therefore cannot apply to aircraft engaged in operations authorised by and in accordance with Airline Licence No. 3.
In my opinion, this contention does not raise a serious question to be tried in these proceedings. Under Regs.320A and 320B, permits are issued with respect to aircraft. Of necessity, the permits must relate to aircraft used by persons. In the present case this has been done, the terms of the permits have been set out earlier in these reasons. They relate to "aircraft engaged in operations that are authorised by and are in accordance with Airline Licence No. 3". There is no evidence to show when Airline Licence No. 3 was first issued. In its current form it is dated 25 February 1986 and replaces a licence dated 31 December 1985. In all probability, there have been a number of variations of Airline Licence No. 3 between December 1983, the date the permits were issued, and 25 February 1986. Any one licence cannot extend beyond one year; see Reg.200. In my opinion, the permits are ambulatory in nature and apply to aircraft provided that at the time of use, the aircraft is being used pursuant to a licence. This construction is consistent with the Air Navigation Regulations.
This conclusion is supported by the fact that the licence specifies the type of aircraft to be used on specified routes, not specified aircraft. Another type of aircraft may be used with the prior written approval of the Secretary. Permits under Regs.320A and 320B of necessity must be of a general nature covering use by aircraft generally. There is nothing in the Regulations to suggest that a separate permit must be given with respect to every specific aircraft and with respect to every route on which that aircraft is to be used and that a new permit must be issued for every variation from the normal procedure. Such a construction would make nonsense of the Regulations.
Further, in my opinion, neither Ansett nor T.A.A. has sufficient standing to found this claim. The general rule is "that a plaintiff has no standing to bring an action to prevent the violation of a public right if he has no interest in the subject matter beyond that of any other member of the public; or if no private right of his is interfered with he has standing to sue only if he has a special interest in the subject matter of the action"; see Onus v. Alcoa of Australia Ltd. (1981) 149 CLR 27 per Gibbs J. at pp 35-6. The Air Navigation Regulations contain their own provisions relating to prosecutions for contraventions of the Regulations. At the present time, East-West has not committed any breach of Reg.320A or Reg.320B. The Commonwealth believes that East-West will not contravene those Regulations by using aircraft on the proposed routes in conformity with Airline Licence No. 3. Neither Ansett nor T.A.A. can compel the Commonwealth to take action against East-West on the basis of an anticipated breach of the Regulations. The only interest Ansett and T.A.A. have beyond that of any other member of the public is based upon the Airlines Agreement 1981. Likewise with respect to any special interest either has in the subject matter of the permits. For reasons analogous to those expressed earlier in these reasons, the Airlines Agreement does not grant a sufficient interest in Ansett and t.a.a. to satisfy the test expressed in the Onus Case.
In all the circumstances, with respect to the claims for mandatory orders, I lack a high degree of assurance that Ansett and T.A.A. will necessarily succeed and with respect to the claim for the prohibitive injunctions, I am not satisfied that there is a serious question to be tried.
Accordingly, the motions for interlocutory orders should be refused.
It is not necessary to express any opinion on the question of the balance of convenience, but in case the matters go further, I express in summary form why in the exercise of my discretion, I would refuse the motion on this aspect.
Prima facie, East-West is entitled to commence the proposed air services. The hearing of the proceedings is to commence on 28 July 1986. I am satisfied that if it does commence those services, each of Ansett and T.A.A. will suffer substantial damages both from loss of revenue and from the activities of a third operator and the publicity arising therefrom. If they eventually succeed, they will be in a strong position to recover their position speedily and probably will have a claim for damages against the Commonwealth. Their financial loss, in due course, should not be so great. There has not been undue delay in the bringing of these motions. The loss likely to be suffered by Ansett and T.A.A. is not irreparable.
East-West will suffer loss if it is not permitted to commence its proposed air services. Its financial loss will not be so great since it is taking aircraft from existing services to provide the proposed services. Those services would continue if East-West does not commence its proposed services. As against this, since early this year, East-West has given publicity to the proposed services as well as other services involving aircraft to be imported. If it fails to provide its publicised services, it will suffer loss of reputation as a reliable operator.
For the purpose of this aspect of the matter, I act on the basis that the strength of the claims by Ansett and T.A.A. is not strong and essentially are for mandatory orders even though one is prohibitory in nature. In those circumstances, weighing the balance of convenience factors, I would exercise my discretion against Ansett and T.A.A.; cf. Magna Alloys & Research Pty. Ltd. v. Coffey (1981) VR 23 at 28.
The motions for interlocutory relief are refused with costs.

ANNEXURE

Clause 6 of the Airlines Agreement 1981:-

"6.(1)(a) The parties shall take all reasonable action

within their powers to ensure that the Commission and the

Company are the only two operators which provide scheduled

domestic passenger air services over trunk routes within

Australia.

(b) Subject to paragraph (c) of this sub-clause nothing in sub-clause (1)(a) shall prevent other operators from providing scheduled passenger air services over a prescribed route or successive prescribed routes.

(c) Where any successive prescribed routes have the effect of linking two trunk route centres that are for the time being trunk route centres for the purposes of sub-clause (1)(e), sub-clause (1)(b) applies unless the Secretary is satisfied that such scheduled passenger air services are not predominantly for use for the purpose of the carriage of passengers over separate prescribed routes and are to a significant extent used or to be used for the purpose of carriage of passengers between two centres that are for the time being trunk route centres for the purposes of sub-clause

(1)(e).

(d) Without derogating from the objectives of sub-clause (1)(a), the parties acknowledge that nothing in this agreement shall preclude the Commonwealth, the Minister or the Secretary from permitting a passenger operator to develop specialised scheduled passenger air services over trunk routes of a nature which in the opinion of the Minister are not adequately provided for either by the Commission or the Company and for which after receiving a request in writing from the Minister neither the Commission nor the Company has, within a reasonable time, provided a service to the satisfaction of the Minister.

(e) For the purposes of this agreement a trunk route is a route linking any two trunk route centres. A trunk route centre shall be any one of the following: Adelaide, Alice Springs, Brisbane, Cairns, Canberra, Coolangatta, Darwin, Gove, Hobart, Launceston, Mackay, Melbourne, Mount Isa, Perth, Proserpine, Rockhampton, Sydney, Townsville and such other centres as the parties hereto shall agree from time to time.

(2)(a) For the purposes of this agreement a

prescribed route is-

(i) a route:

(a) between a place in a State and another place in that State;

(b) between a place in a Territory and another place in that Territory;

(c) between a regional centre and another place in Australia; or

(d) over which the Minister has requested in writing the Commission and the Company to provide a passenger air service and neither the Commission nor the Company has within a reasonable time after the making of that request provided that service to the satisfaction of the Minister; or

(ii) a route, other than a route referred to in sub-clause (2)(a)(i) over which an operator, other than the Commission or the Company, operated a scheduled passenger air service on 1 July 1980, regardless of whether it was the sole operator of scheduled air passenger services over that route.

(b) For the purpose of this agreement a regional

centre is a place within Australia which is not for the time

being a trunk route centre for the purposes of sub-clause

(1)(e)."

Regulation 199(2), (3) and (4) of the Air Navigation Regulations:-

199.(2) Where the proposed service is an interstate

service, the Secretary shall issue the appropriate licence

for the operation of the service unless the applicant has not

complied with, or has not established that he is capable of

complying during the currency of the licence with, the

provisions of these Regulations, or of any direction or order

given or made under these Regulations, relating to the safety

of the operations.

(3) Subject to the next succeeding sub-regulation,

where the proposed service is other than an interstate

service, the Secretary may issue the appropriate licence for

the operation of the service upon such conditions, in

addition to compliance with these Regulations, as the

Secretary considers necessary or may refuse to issue a

licence.

(4) Where the proposed service does not involve air

navigation of a kind specified in paragraph (a), (b), (c),

(d) or (da) of sub-regulation (1) of regulation 6 of these

Regulations, the Secretary shall, on and after the date fixed

for the purposes of paragraph (f) of that sub-regulation, in

deciding whether or not to grant a licence, and in

determining the conditions upon which the licence is to be

granted, have regard to matters concerned with the safety,

regularity and efficiency of air navigation and to no other

matters.

[1986] FCA 246

19 JUNE 1986