Cathay Pacific Airways Limited v Assistant Treasurer and Minister for Competition Policy and Consumer Affairs

[2010] FCA 510

FEDERAL COURT OF AUSTRALIA

Cathay Pacific Airways Limited v Assistant Treasurer and Minister for Competition Policy and Consumer Affairs [2010] FCA 510

Citation:		Cathay Pacific Airways Limited v Assistant Treasurer and Minister for Competition Policy and Consumer Affairs [2010] FCA 510
Parties:		CATHAY PACIFIC AIRWAYS LIMITED (ARBN 479514) v ASSISTANT TREASURER AND MINISTER FOR COMPETITION POLICY AND CONSUMER AFFAIRS and AUSKAY INTERNATIONAL MANUFACTURING & TRADE PTY LTD (ACN 078 654 243)
File number:		VID 1094 of 2008
Judge:		GOLDBERG J
Date of judgment:		28 May 2010
Catchwords:		ADMINISTRATIVE LAW – Trade Practices Act 1974 (Cth) – conduct outside Australia relied upon – Ministerial consents required – whether the relevant conduct adequately specified – Minister not satisfied that conduct was required or specifically authorised by law of foreign country – whether consent in the national interest – whether irrelevant consideration – whether Minister permitted to grant consent when extant proceeding on foot.
Legislation:		Administrative Decisions (Judicial Review) Act 1977 (Cth): ss 5, 13 Judiciary Act 1903 (Cth): s 39B(1A) Trade Practices Act 1974 (Cth): ss 5(3), 5(4), 5(5), 45(2), 82, 87, 163A Pt IV Federal Court of Australia Act 1976 (Cth): Pt IVA
Cases cited:		Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Limited (2008) 251 ALR 166, cited Craig v South Australia (1995) 184 CLR 163, considered Yamaji v Westpac Banking Corporation (No 2) (1993) 42 FCR 436, followed
Date of hearing:	16 & 17 December 2009
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	108
Counsel for the Applicant:	M Sloss S.C. and A M Dinelli
Solicitor for the Applicant:	DLA Phillips Fox
Counsel for the First Respondent:	T Howe QC and D O’Donovan
Solicitor for the First Respondent:	Australian Government Solicitor
Counsel for the Second Respondent:	Dr K P Hanscombe S.C. and T D Cordiner
Solicitor for the Second Respondent:	Maurice Blackburn Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1094 of 2008

BETWEEN:

CATHAY PACIFIC AIRWAYS LIMITED (ARBN 479514)
Applicant

AND:

ASSISTANT TREASURER AND MINISTER FOR COMPETITION POLICY AND CONSUMER AFFAIRS
First Respondent

AUSKAY INTERNATIONAL MANUFACTURING & TRADE PTY LTD (ACN 078 654 243)
Second Respondent

JUDGE:	GOLDBERG J
DATE OF ORDER:	28 MAY 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.The application filed by the applicant on 24 December 2008 and amended on 6 March 2009 be dismissed.

2.The applicant pay the costs of the first respondent and the second respondent of and incidental to the application.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1094 of 2008

BETWEEN:

CATHAY PACIFIC AIRWAYS LIMITED (ARBN 479514)
Applicant

AND:

ASSISTANT TREASURER AND MINISTER FOR COMPETITION POLICY AND CONSUMER AFFAIRS
First Respondent

AUSKAY INTERNATIONAL MANUFACTURING & TRADE PTY LTD (ACN 078 654 243)
Second Respondent

JUDGE:	GOLDBERG J
DATE:	28 MAY 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. On 11 January 2007 Auskay International Manufacturing & Trade Pty Ltd (“Auskay”) filed a proceeding in the Federal Court of Australia (VID 12 of 2007) (“the proceeding”) in which it sought relief pursuant to various provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the “ADJR Act”), the Judiciary Act 1903 (Cth) and the Trade Practices Act 1974 (Cth) (“the Act”) against nine international airlines, Cathay Pacific Airways Limited, Deutsche Lufthansa Aktiengesellschaft, Singapore Airlines Limited, Singapore Airlines Cargo Pty Ltd, British Airways PLC, Japan Airlines International Co Limited, Air New Zealand Limited, Air New Zealand (Australia) Pty Ltd and Qantas Airways Ltd. The proceeding was filed as a class action pursuant to the provisions of the Federal Court of Australia Act 1976 (Cth).

2. The group members to whom the proceeding related were Australian residents who during the period 1 January 2000 to 11 January 2007 paid more than $20,000 for the carriage of goods to or from Australia by air.

3. Auskay claimed that it and the group members suffered loss and damage by reason of the conduct of the airlines alleged in the statement of claim and claimed declaratory and injunctive relief, damages pursuant to s 82 of the Act and further orders to compensate the applicant and the group members for the loss and damage they had suffered pursuant to s 87 of the Act.

4. On 17 April 2008 the solicitors for Auskay wrote to the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs (“the Minister”) seeking ministerial consents pursuant to ss 5(3) and 5(4) of the Act.

5. Section 5 of the Act provides:

   “(1)     Each of the following provisions:

   (a)       Part IV;

   (b)       Part IVA;

   (c)       Part V (other than Division 1AA);

   (e)       Part VC;

   (f)the remaining provisions of this Act (to the extent to which they relate to any of the provisions covered by paragraph (a), (b), (c) or (e));

   extends to the engaging in conduct outside Australia by:

   (g)bodies corporate incorporated or carrying on business within Australia; or

   (h)Australian citizens; or

   (i)persons ordinarily resident within Australia.

   (1A)In addition to the extended operation that section 46A has by virtue of subsection (1), that section extends to the engaging in conduct outside Australia by:

   (a)       New Zealand and New Zealand Crown corporations; or

   (b)       bodies corporate carrying on business within New Zealand; or

   (c)       persons ordinarily resident within New Zealand.

   (2)In addition to the extended operation that sections 47 and 48 have by virtue of subsection (1), those sections extend to the engaging in conduct outside Australia by any persons in relation to the supply by those persons of goods or services to persons within Australia.

   (3)Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

   (4)A person other than the Minister, the Commission or the Director of Public Prosecutions is not entitled to make an application to the Court for an order under subsection 87(1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.

   (5)The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister:

   (a)the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and

   (b)it is not in the national interest that the consent be given.

6. On 2 December 2008 the Minister gave his consent pursuant to s 5(3) of the Act in the following terms:

   “I, Chris Bowen, Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, HEREBY CONSENT to the Applicant in proceedings in the Federal Court of Australia, namely Auskay International Manufacturing & Trade Pty Ltd, relying upon conduct which is alleged to have been engaged in outside Australia (i.e. in the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong), to which a provision of the Trade Practices Act 1974 (the Act) may extend by virtue of section 5 of the Act, for the purpose of a claim under section 82 of the Act.

   The alleged conduct is described in the Applicant’s Second Amended Statement of Claim, a copy of which is annexed to this consent.”

7. On 2 December 2008 the Minister gave his consent pursuant to s 5(4) of the Act in the following terms:

   “I, Chris Bowen, Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, HEREBY CONSENT to the Applicant, namely Auskay International Manufacturing & Trade Pty Ltd, applying to the Federal Court of Australia for an order under section 87 of the Trade Practices Act 1974 (the Act), in proceedings in respect of conduct alleged to have taken place outside Australia (i.e. in the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong) and to which a provision of the Act may extend by virtue of section 5 of the Act.

   The alleged conduct is described in the Applicant’s Second Amended Statement of Claim, a copy of which is annexed to this consent.”

8. At that time no reasons were provided by the Minister pursuant to s 13 of the ADJR Act.

9. On 24 December 2008 Cathay Pacific Airways Limited (“Cathay Pacific”) filed this proceeding in which it sought to review the decisions of the Minister and sought declarations that the decisions granting his consent were invalid and of no effect.  On 6 March 2009 Cathay Pacific filed an amended application. 

10. Cathay Pacific challenged the decisions of the Minister relying upon s 5 of the ADJR Act, s 39B(1A) of the Judiciary Act 1903 (Cth) and s 163A of the Act. In substance Cathay Pacific contended that the decisions were not authorised by s 5 of the Act and fell within a number of the provisions in s 5(1) of the ADJR Act. In summary, Cathay Pacific’s challenges to the decisions of the Minister fell into five categories:

    (a)Auskay’s application to the Minister seeking his consent failed to specify the “conduct outside Australia” it alleged Cathay Pacific engaged in, as required by s 5 of the Act with the result that the decisions made by the Minister fell outside the scope of the power conferred upon him by s 5 of the Act;

    (b)the Minister incorrectly applied the criterion or condition contained in s 5(5)(a) of the Act, namely his consideration whether the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct;

    (c)the Minister incorrectly applied the criterion or condition contained in s 5(5)(b) of the Act, namely his consideration whether it was in the national interest that his consent be given;

    (d)the Minister had regard to an irrelevant consideration, namely he took into account a request for ministerial consent that had been made and granted in Bray v F Hoffmann‑La Roche (2002) 118 FCR 1, a proceeding concerning an alleged vitamins cartel, the context, process and terms of which had no connection with the consent of the Minister sought by Auskay;

    (e)the Minister was not permitted by the provisions of s 5(4) of the Act to grant ministerial consent pursuant to that subsection.

    BACKGROUND

11. In order to understand the basis of Cathay Pacific’s challenge it is necessary to set out a chronology beginning with the proceeding in respect of which the Minister’s consent was sought. 

12. On 11 January 2007 Auskay commenced proceeding VID 12 of 2007 against Cathay Pacific and eight other airlines alleging contraventions of the Act and seeking relief pursuant to the provisions of the Act. Cathay Pacific is the fifth respondent in that proceeding. In its capacity as a representative party, Auskay has claimed declaratory, injunctive and compensatory relief pursuant to the Act against nine airlines alleging that they made, and gave effect to, certain price fixing arrangements in and outside Australia in contravention of s 45(2) of the Act. Relief was claimed pursuant to ss 82 and 87 of the Act. On 21 September 2007 (pursuant to leave granted by Tracey J on 31 August 2007), Auskay amended its application and statement of claim so as to delete the claim for relief pursuant to s 87 of the Act.

13. On 25 May 2007 Auskay’s solicitors sent a letter to the Minister informing him of the proceeding and requesting ministerial consent under ss 5(3) and 5(4) of the Act.

14. On 27 June 2007, Mr James Chisholm, a Treasury officer wrote to Auskay’s solicitors in response to their letter of 25 May 2007 and set out the procedural requirements of the Minister in relation to applications made under s 5 of the Act. The letter attached a short summary explaining the processes involved in obtaining ministerial consent under s 5 of the Act. That summary stated that a request for consent should be accompanied:

    “… by a copy of the pleadings identifying, by reference to the relevant paragraphs in the pleadings, the conduct which was engaged in outside Australia and upon which the applicant for consent wishes to rely or in respect of which the person wishes to apply to the Court for an order under subsection 87(1) or (1A).”

    The summary also stated that lawyers for applicants for consent were asked to provide independent legal advice obtained from an expert in the law of the relevant foreign country which addressed the question of foreign laws. 

15. On 17 April 2008 Auskay’s solicitors sent a letter to the Minister in response to the letter of 27 June 2007 from the Treasury officer which provided further information in relation to the proceeding. 

16. The letter enclosed the amended application and the second amended statement of claim, amended on 21 September 2007 (which excluded any claim for relief pursuant to s 87 of the Act), which had been filed in the proceeding. The letter identified the alleged conduct in respect of which the Minister’s consent was sought in terms which were set out in the second amended statement of claim and stated that the Global Cartel Arrangement, the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement were made, entered into and implemented in various countries around the world including the relevant countries in respect of the laws of which the solicitors had obtained independent legal advice.

17. The letter noted that independent legal advice had been received from experts in the law of the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong.  Copies of the letters of instructions to the experts and their advices were attached to the letter.

18. The letter also enclosed a letter from Angela Wang & Co dated 14 April 2008 which set out that cargo fuel surcharges and security charges were approved by the Hong Kong Civil Aviation Department (“the Hong Kong CAD”) and the Airport Authority of Hong Kong for parts of the alleged cartel period.  However, the letter noted that: 

    “g)Letter from Angela Wang & Co dated 14 April 2008 (Encl 11).  We refer to Section B of that letter which provides that cargo fuel surcharges and ‘security charges’ were approved by the Hong Kong Civil Aviation Department and the Airport Authority of Hong Kong for parts of the alleged cartel period.  However,

    a.Section A of that letter provides there are no laws or regulations requiring or specifically authorising the alleged conduct in Hong Kong;

    b.Section C of that letter provides that such approval would not have been granted if it was known to the relevant governmental authorities or bodies that the fuel surcharges were set by way of the alleged conduct; and

    c.Section D of that letter provides that it would form a basis upon which such approval would be withdrawn or revoked by the relevant governmental authorities or bodies if the alleged conduct was later brought to the attention of the relevant governmental authorities or bodies.  They did not provide an opinion in relation to security surcharges due to insufficient information.”

19. On 23 May 2008, Mr Scott Rogers, a Treasury officer sent a letter to Auskay’s solicitors noting that the application for the ministerial consent was now accompanied by all the necessary information, that the other parties to the proceeding had been sent copies of the relevant information including the foreign legal advices and that they had been invited to comment on the foreign law issues. The letters to the respondents in the proceeding stated that the conduct in respect of which Auskay had applied for consent was identified in paragraphs 26 to 87 of the second amended statement of claim. The letter also noted that Auskay’s solicitors had obtained written legal advice from legal practitioners based in the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong. The letter invited the respondents to comment as to whether the laws of the relevant jurisdictions required or specifically authorised the conduct alleged to be in breach of the Act.

20. On 25 July 2008 Cathay Pacific’s solicitors sent a letter to the Minister in which Cathay Pacific:

    (a)submitted that the Minister should refuse Auskay’s application for ministerial consent, at least in respect of the conduct alleged to have been engaged in in Hong Kong;

    (b)submitted that insofar as Auskay’s application sought consent to rely upon conduct alleged to have occurred in Hong Kong:

    (i)the law of Hong Kong required or specifically authorised Cathay Pacific to engage in conduct alleged to constitute the Global Cartel Arrangement and the Fuel Surcharge Arrangement; and

    (ii)considerations of comity, and particularly Australia’s diplomatic and economic relationship with Hong Kong were such that it would not be in the national interest to allow the proceeding to be pursued in respect of that conduct;

    (c)enclosed the opinion of a foreign law expert in Hong Kong law, Mr Charles Haddon‑Cave QC and a copy of the instructions provided to him;

    (d)summarised Mr Haddon‑Cave QC’s opinion which was that:

    (i)in respect of the Global Cartel Arrangement, participation by airlines in meetings, conversations and other communications to fix, control or maintain levels of cargo freight tariffs to be proposed to the Hong Kong CAD was clearly specifically authorised by the law of Hong Kong;

    (ii)in respect of the Fuel Surcharge Arrangement, the law of Hong Kong specifically authorised and required collective applications by the airlines for the approval of fuel surcharges such that the Fuel Surcharge Arrangement was specifically authorised at the least or required by the law of Hong Kong;

    (iii)in respect of the alleged fuel surcharges, the Hong Kong CAD specifically authorised and approved fuel surcharge applications made to it by the Board of Airline Representatives Cargo Sub‑Committee (the “BAR‑CSC”) from early 2000 onwards;

    (e)the opinion of Angela Wang & Co was unsound because it failed to address a number of relevant matters.

21. On 8 August 2008 Cathay Pacific’s solicitors sent a letter to Mr Rogers (copied to the solicitors for Auskay) which enclosed a copy of a letter dated 28 July 2008 from the Hong Kong CAD to the Minister regarding former air cargo fuel surcharge approvals in Hong Kong.  That letter was in the following terms:

    “  Former Air Cargo Fuel Surcharge Approvals

    At the request of Cathay Pacific Airways Limited, the Hong Kong Civil Aviation Department (“CAD” or “this Department”) is providing the following background information to you for the purposes of your consideration of whether collective surcharge applications filed by the Hong Kong Board of Airline Representatives Cargo Sub‑Committee (“BAR‑CSC”) on behalf of certain carriers can be taken into account in class action proceedings in Australia. 

    2.        The CAD required, and continues to require, that all carriers wishing to impose any surcharge on air cargo originating in Hong Kong receive prior approval from this Department, as we consider surcharges to be a form of tariff, as this term is used in the Air Services Agreements (“ASAs”) between Hong Kong and its aviation partners.  For example, from 2000 to early 2007, the CAD reviewed vigorously and scrutinized fuel surcharge applications filed by the BAR‑CSC on behalf of member carriers.  This application process was open and transparent.  It took into account the express input and interests of all relevant parties:  the BAR‑CSC for the carriers and the Hong Kong Shippers’ Council for the shippers and freight forwarders (as the Hong Kong Association of Freight Forwarding and Logistics is a member of the Hong Kong Shippers’ Council).  The collective application was an efficient manner by which to apply for, review and approve surcharges.  It was also consistent with the process contemplated by the applicable ASAs, most of which have provisions contemplating discussion and agreement on tariffs among carriers.  Certain ASAs or similar arrangements have provisions requiring agreement on tariffs among carriers.

    3.        The fuel surcharges specifically approved by the CAD between 2000 and early 2007 were based upon widely used fuel indices – the IATA index until 2002; and the Lufthansa fuel price index thereafter.  This Department noted their wide use and acceptance.  These indices were dynamic and responded quickly to fuel cost fluctuations and thus we specifically approved their use ex‑Hong Kong.

    4.        In addition to the fuel surcharge, from October 2001 to January 2004, the CAD specifically gave approval to some BAR‑CSC carriers to impose an insurance surcharge on cargo shipments ex‑Hong Kong pursuant to collective applications.  The CAD employed the same level of review and scrutiny to these applications.  Eventually in 2004, the CAD rejected the BAR‑CSC’s application to continue imposing the insurance surcharge.

    5.        For those carriers participating in the fuel surcharge process between 2000 and early 2007 and the insurance surcharge process between October 2001 and January 2004, it is the CAD’s opinion that their conduct was lawful, efficient, and consistent with the applicable ASAs.  Further, the CAD specifically gave approval to the participating carriers to only levy the surcharge either specified in the collective applications or resulting from the specified fuel indices.  We also feel that their actions were reasonable and consistent with the applicable ASAs, and the interests of users of air services had been taken into account in our close supervision and the transparent process employed by the carriers.  Had the CAD felt the surcharges were unfair or detrimental to users of air services, we would not have specifically approved them.

    6.        The CAD has the right to implement and administer in Hong Kong any tariff approval system which is consistent with the applicable ASAs.  Accordingly, we request that any regulator reviewing this Department’s processes or the carriers that participated in the collective applications respect and defer to our approval system.  Additionally, we ask you to acknowledge that it is lawful in Hong Kong for any carrier to levy a surcharge ex‑Hong Kong based upon a collective application specifically approved by CAD and that the relevant fuel surcharges have been specifically approved by CAD”

1. On 25 July 2008 the solicitors for Lufthansa sent a letter to Mr Rogers in which they responded to his letter dated 23 May 2008 seeking submissions in relation to Auskay’s application for ministerial consent.  In the course of that letter, the solicitors stated:

   “As stated, Auskay has not identified in the Proceeding the alleged conduct outside Australia upon which its claim is based. It follows that section 5 of the TPA has no application and the Minister has no power to consent to Auskay’s pursuit of the Proceeding.”

   The letter also stated:

   “The foreign law advice obtained is also defective because it is premised upon hypothesised conduct.  Such advice does not assist the Minister to make a decision about whether or not the conduct the subject of the Proceeding, is required or authorised by the law of the relevant foreign country. …”

2. The letter concluded by stating that the Minister did not have the power to give the consent sought for the reasons set out in the letter and that even if he did have power to do so, for other reasons set out in the letter the Minister ought not to accede to the application in its present form.

3. On 5 September 2008 Auskay’s solicitors sent a letter to Mr Rogers in which they responded to Cathay Pacific’s solicitors’ letter of 25 July 2008 and 8 August 2008 and to the legal advice of Mr Haddon‑Cave QC.  In particular, they noted the assumptions upon which Mr Haddon‑Cave QC was instructed to give his advice and challenged and criticised those assumptions. 

4. On 29 September 2008 Tracey J, in the proceeding, ordered that the second amended statement of claim filed on 21 September 2007 be struck out and that Auskay be given leave to file and serve a further statement of claim on or before 31 October 2008:  Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Limited (2008) 251 ALR 166.

5. On 9 October 2008 Auskay’s solicitors wrote a letter to Mr Rogers, referred to the orders made by Tracey J on 28 September 2008 and stated that: 

   “The applicant will exercise the leave granted by the Court to replead its case.  The conduct to be pleaded in the Third Amended Statement of Claim in this Class Action will be the same as the conduct pleaded in the SASOC.  In fact, there were no complaints included in the pleadings motions by the respondents as to the allegations concerning the conduct said to constitute the making of or giving effect to the cartel arrangements.  Accordingly, the application proposes that the Minister proceed to consider and determine its application for ministerial consent based on the conduct as described in the SASOC.” 

   The letter also addressed a number of matters relevant to the Minister’s consideration of the national interest pursuant to s 5(5)(b) of the Act.

6. In an undated letter, presumably sent shortly after 9 October 2008, Mr Rogers sent a letter to Cathay Pacific’s solicitors and to the other respondents in the proceeding in similar terms inviting their comment on the national interest issues raised in Auskay’s solicitors’ letter of 9 October 2008.

7. On 7 November 2008:

   (a)the solicitors for Lufthansa sent a letter to Mr Rogers in which they stated, inter alia, that for the reasons outlined in their earlier letter of 25 July 2008 it remained beyond the power of the Minister to consider Auskay’s application for ministerial consent.  This letter was not discovered by the Minister and it does not appear that it was placed before him before he gave his consent;

   (b)the solicitors for Singapore Airlines sent a letter to Mr Rogers in which, for the reasons set out, they stated that Auskay had failed adequately to identify the “conduct outside Australia” required for the purpose of consideration of ministerial consent under s 5(1) of the Act;

   (c)the solicitors for Japan Airlines sent a letter to Mr Rogers in which they stated that the granting of the ministerial consent would be contrary to the national interest for the reasons set out in the letter.  

8. On 10 November 2008 Cathay Pacific’s solicitors sent a letter to Mr Rogers in which they stated that Cathay Pacific generally adopted the submissions made by the solicitors on behalf of Lufthansa, the solicitors on behalf of Singapore Airlines and the solicitors on behalf of Japan Airlines.  In particular, Cathay Pacific’s solicitors stated: 

   “Aside from the Applicant’s unsubstantiated allegations, the only probative material regarding the CAD’s processes is that contained in the CAD letter.  However, by its submissions, the Applicant invites the Minister to re‑examine, and ultimately impugn, the actions of another sovereign entity (namely, Hong Kong acting through the CAD).  In Cathay’s submission, to do so would be an affront to principles of international law and potentially cause great embarrassment to Australia, and its long‑standing and beneficial diplomatic and economic relationship with Hong Kong.”

9. On 2 December 2008 Auskay’s solicitors sent a letter to Mr Rogers in which they attached a copy of the third amended statement of claim.  This letter was not found in the discovery made by the Minister and it is arguable that it was not placed before him. 

10. On 4 December 2008 Ms Isobel Lee, a Treasury officer, sent an email to the solicitors for all the respondents in the proceeding informing them that on 2 December 2008 the Minister granted consent to Auskay’s application to rely on conduct allegedly engaged in all the relevant jurisdictions (namely the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong) pursuant to ss 5(3) and 5(4) of the Act. Later that day in response to a query from Cathay Pacific’s solicitors, Ms Lee responded to all the respondents in the proceeding stating:

    “Consistent with the requirements of the TPA, the applicant has only been advised of the terms of the Minister’s decision”.

11. On 17 December 2008 Cathay Pacific’s solicitors sent a letter to Ms Lee in which Cathay Pacific requested reasons for the Minister’s decision and the findings on material questions of fact on which the decision was based.  They also sought her advice as to whether: 

    “… the Minister’s decision was based on the conduct alleged in Auskay’s third amended statement of claim sent to you on 2 December or the preceding statement of claim which was the subject of the decision of Mr Justice Tracey handed down on 29 September 2008.”

12. On 18 December 2008, Cathay Pacific’s solicitors sent an email to Ms Lee which confirmed that the request for reasons was made under s 13 of the ADJR Act, without limiting any other rights which Cathay Pacific might have.

13. Prior to the Minister giving his consent to Auskay’s application he was provided with a Treasury Executive Minute which recommended that he provide the consent sought and sign the Instruments of Consent which he in fact signed on 2 December 2008.  The Minute set out a number of key points and additional information relating to the consent sought.  The Minute was the subject of considerable analysis in submissions at the hearing.  A copy of the Minute is annexed to these Reasons for Judgment as “Schedule A”.

14. On 11 March 2009, the Minister filed in this proceeding and served a “Statement of Reasons” which was stated to be:

    “provided to assist the parties to these proceedings.  Provision of the statement of reasons is not an admission that the first respondent [the Minister] could be ordered to provide a statement pursuant to section 13 of the Administrative Decisions (Judicial Review) Act 1977”.

    A copy of the Statement of Reasons is annexed to these Reasons for Judgment as “Schedule B”.

15. Cathay Pacific’s submissions in respect of the Statement of Reasons were somewhat ambivalent.  Senior Counsel for Cathay Pacific pointed out that the Statement of Reasons was provided by the Minister after amended grounds of review had been filed by Cathay Pacific on 6 March 2009.  Senior Counsel for Cathay Pacific observed that the Statement of Reasons was provided after the Minister was apprised of the grounds upon which his decision was being challenged.  It was said that in the ordinary course the Statement of Reasons would have been provided before Cathay Pacific filed its grounds of challenge.  I asked Senior Counsel for Cathay Pacific whether she was submitting that I should not accept the Statement of Reasons as the reasons of the Minister for making his decision.  Senior Counsel said that Cathay Pacific was not submitting that I should not accept the Statement of Reasons as the statement of the reasons of the Minister for making his decision.  However, Senior Counsel went on to say: 

    “What we say is, the statement of reasons necessarily were prepared against the background that I have just identified.  With the best will in the world, when you come to articulate your reasons against a background of knowing what the complaint is, you can’t help but have present in your mind the challenge that has been made to your reasons and, on a couple of issues, we will say that does matter, and one of them is a reference to the ‘Vitamins’ Cartel case but I would like to develop that.”

    Senior Counsel reiterated that Cathay Pacific did not challenge the Statement of Reasons as being the Minister’s reasons and did not challenge them as being his earnest attempt at providing what were his reasons for making his decision.  In short, Cathay Pacific did not challenge the Statement of Reasons filed on 11 March 2009.

16. Cathay Pacific’s written submission was that:

    “… the Treasury Executive Minute is the contemporaneous record of the Minister’s decisions and, where there is any doubt as to the matters that were taken into account by the Minister or those which were not so taken into account, the contemporaneous record of the decisions, as evidenced by the Treasury Executive Minute, should be preferred to the Statement of Reasons”.

17. I do not consider that there is any doubt as to the matters that were taken into account by the Minister or as to those matters which were not taken into account by the Minister.  I do not consider that the contents of the Treasury Executive Minute are inconsistent with the contents of the Statement of Reasons although I accept that there are a number of matters set out in the Statement of Reasons which were not contained in the Treasury Executive Minute but this does not, in my view, lead to any inconsistency between them. 

    THE GROUNDS OF REVIEW

    The identification of conduct error

18. Cathay Pacific’s principal submission was that because Auskay’s application to the Minister failed to specify or identify with adequate precision the “conduct outside Australia” in respect of which it sought ministerial consent for Pt IV of the Act to have an external operation, the Minister had no power to give the consents sought. It was submitted that the Minister’s failure to consider Auskay’s application on the basis of specified conduct in specified places outside Australia constituted jurisdictional error with the result that the decisions were invalid and of no effect.

19. I accept, as Cathay Pacific submitted, that before the Minister could give his consent under ss 5(3) and 5(4) of the Act, a claim must be made, or proposed to be made, in respect of contravening conduct that is sufficiently particularised to enable the contravention to be formulated as one that gives rise to a claim in the proceeding for loss and damage under s 82 or an order under s 87 and that the criteria in ss 5(5)(a) and 5(5)(b) can be applied in respect of the contravening conduct. Section 5(1) extends the operation of, inter alia, Pt IV of the Act to conduct engaged in outside Australia.

20. Before the Minister could give his consent in writing, in accordance with the provisions of subs (3) or (4) of s 5 of the Act, the Minister had to determine what was the “conduct to which a provision of this Act extends by virtue of subsection (1) or (2)” of s 5 in respect of which the Minister’s consent was sought.

21. Cathay Pacific accepted that the “conduct” referred to in s 5 of the Act in respect of which the Minister’s consent was sought was conduct that contravened a particular provision of Pt IV of the Act, namely s 45(2) of the Act.

22. Cathay Pacific submitted that the level of particularity as to the nature and location of the relevant “contravening conduct” provided by Auskay in its application for ministerial consent was insufficient to enable the Minister to exercise his powers in this regard.  For the reasons to which I shall refer, I reject that submission.

23. The consents signed by the Minister identified the “conduct which is alleged to have been engaged in outside Australia” as being the conduct “described in the Applicant’s Second Amended Statement of Claim”. 

24. In the Minister’s Statement of Reasons the Minister stated that:

    “the alleged conduct was described in paragraphs 26 to 28 of the Second Amended Statement of Claim and further particulars of the alleged conduct were given concerning:

    7.1      The Fuel Surcharge Arrangement
    7.2      The Security Surcharge Arrangement; and

    7.3      The War‑risk Surcharge Arrangement”.

25. Paragraphs 26 to 28 of the second amended statement of claim were in the following terms:  

    “26.On or about 1 January 2000, the Respondents and other international airfreight carriers (including ABSA Cargo Airline, Air Canada, Air China, Air China Cargo, Air France, Air Mauritius, Alitalia, All Nippon Airways, Asiana Airlines Inc, Cargolux Airline International, DAS Air Ltd, Ethiopian Airlines Corp, EL Al Israel Airlines, Emirates, Kenya Airlines Ltd, KLM, Korean Air Lines Co. Ltd, Lan Airlines S.A., Lan Cargo S.A., Martinair, Nippon Cargo Airlines, Polar Air Cargo Inc., Saudi Arabian Airlines, Scandanavian Airlines, South African Airways, Swiss International Airlines and Thai Airways) (“the Other Cartel Participants”) made an agreement or arrangement or reached an understanding containing provisions that or to the effect that each of them would:

    (a)Participate in meetings, conversations and other communications to fix, control or maintain the prices at which international airfreight services were supplied, including in Australia; and

    (b)By their officers, servants and agents, conceal the agreement, arrangement or understanding from the whole world including the Applicant and Group Members

    (“the Global Cartel Arrangement”).

    PARTICULARS

    The Global Cartel Arrangement was partly oral and partly to be implied.

    In so far as it was oral, the Global Cartel Arrangement was made at meetings of representatives of the Respondents and others, including meetings coinciding with airline industry conferences known as IATA Cargo Tariff Coordinating Conferences.  The Conference meetings were held at various places including in the Netherlands in and from about 1999.

    In so far as they were to be implied, the provisions of the Global Cartel Arrangement:

    1.     in 26(a) above are to be implied from:

    A.    the conduct of the Respondents alleged in paragraphs 29, 31 to 51, 56, 58, 64 and 66 below;

    B.    the admissions of the First Respondent in its 12 February 2007 Target Statement filed with the Australian Stock Exchange;

    C.    the admissions of the Ninth Respondent in its 18 May 2007 preliminary annual report and its 2006/2007 Annual Report & Accounts;

    D.   the admissions of the Ninth Respondent to the US Department of Justice that it had conspired to suppress and eliminate competition by fixing the rates charged for carriage of airfreight to and from the USA, including airfreight carried between Australia and the USA;

    E.    the admissions of the Second Respondent contained in its Annual Report published September 2006; and

    2.In 26(b) above are to be implied from the conduct of the Respondents alleged in paragraphs 29, 31 to 51, 56, 58, 64 and 66 and from the need to give business efficacy to the Global Cartel Arrangement, as an arrangement which depended on secrecy for its efficacy.

    Further particulars will be provided following the completion of discovery.

    27.      The provisions of the Global Cartel Arrangement and each provision:

    (a)had the purpose or effect, or were likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining, of the price of international airfreight services supplied by the Respondents or bodies corporate related to them in competition with each other, within the meaning of section 45A of the TPA; and

    (b)by reason of the matters alleged in the preceding subparagraph, are deemed by section 45A to have had the purpose or effect, or been likely to have the effect, of substantially lessening competition within the meaning of section 45(2) of the TPA.

    28.By making the Global Cartel Arrangement, the Respondents and each of them engaged in conduct in contravention of section 45(2)(a)(ii) of the TPA.”

    The Minister’s reference to further particulars concerning the Fuel Surcharge Arrangement is apparently a reference to paragraphs 29 and 30 of the second amended statement of claim which provided:

    “29.On or about 1 January 2000, the Respondents and the Other Cartel Participants and each of them made an agreement or arrangement, or reached an understanding containing provisions that or to the effect that each of them would:

    (a)impose on international airfreight services to and from Australia surcharges attributed to higher fuel costs (“fuel surcharges”);

    (b)monitor and from time to time and agree on variations to the amount or application of fuel surcharges; and

    (c)conceal the agreement, arrangement or understanding as in place from time to time from the whole world including the Applicant and Group Members

    (“the Fuel Surcharge Arrangement”).

    PARTICULARS

    The Fuel Surcharge Arrangement was partly oral, partly in writing and partly to be implied.

    In so far as it was oral, the Fuel Surcharge Arrangement was made at meetings of representatives of the Respondents and others, including meetings coinciding with IATA Cargo Tariff Coordinating Conferences. 

    In so far as it was in writing the Fuel Surcharge Arrangement includes: 

    1.the Lufthansa Fuel Price Index published on the Second Respondent’s website during the Period referred to below;

    2.the British Airways World Cargo fuel index published on the Ninth Respondent’s website during the Period from October 2002 referred to below;

    3.the JAL Cargo Fuel Surcharge Index published on the Eighth Respondent’s website during the Period from October 2002 referred to below;.

    In so far as they were to be implied, the above provisions of the Fuel Surcharge Arrangement are to be implied:

    1.from the conduct of the Respondents alleged in paragraph 31 to 51 below;

    2.in the case of the provisions in paragraphs 29(a) and (b), from the conduct referred to in paragraphs 1.B, C, D and E of the particulars subjoined to paragraph 26; and

    3.in the case of the provision in paragraph 29(c), from the need to give business efficacy to the fuel Surcharge Arrangement, as an arrangement which depended on secrecy for its efficacy.

    Further particulars will be provided following the completion of discovery.

    30By making the Fuel Surcharge Arrangement the Respondents and each of them gave effect to the Global Cartel Arrangement within the meaning of the TPA.”

26. The Minister’s reference to further particulars of the Security Surcharge Arrangement is apparently a reference to paragraphs 56 and 57 of the second amended statement of claim which provided:  

    “56.In or about late September/early October 2001, the Respondents and the other Cartel Participants and each of them made an agreement or arrangement or reached an understanding containing provisions that or to the effect that each of them would:

    (a)impose on international airfreight services to and from Australia a surcharge attributed to the costs of additional airline security measures following the events known to the world including the Respondents as the “September 11 attacks” in the United States of America (“security surcharge”);

    (b)monitor and from time to time agree on variations to the amount or application of security surcharge; and

    (c)conceal the agreement, arrangement or understanding as in place from time to time from the whole world including the Applicant and Group Members

    (“the Security Surcharge Arrangement”).

    PARTICULARS

    The Security Surcharge Arrangement was partly oral and partly to be implied.

    In so far as it was oral, the Security Surcharge Arrangement was made in communications between representatives of the Respondents and others in or around late September/early October 2001.

    In so far as they were to be implied, the above provisions of the Security Surcharge Arrangement are to be implied from:

    1.from the conduct of the Respondents alleged in paragraph 58 below; and

    2.in the case of the provision in paragraph (c) above, to give business efficacy to the Security Surcharge Arrangement, as an arrangement which depended on secrecy for its efficacy.

    Further particulars will be provided following the completion of discovery.

    57.By making the Security Surcharge Arrangement, the Respondents and each of them gave effect to the Global Cartel Arrangement within the meaning of the TPA.”

1. The Minister’s reference to further particulars of the War‑risk Surcharge Arrangement is apparently a reference to paragraphs 64, 65 and 66 of the second amended statement of claim which provided:

   “64.In or about March 2003, the Second, Third, Fourth and Ninth Respondents and each of them made an agreement or arrangement or reached an understanding containing provisions that or to the effect that each of them would:

   (a)impose on international airfreight services to and from Australia a surcharge attributed to increase insurance costs associated with the war in Iraq (“war‑risk surcharge”);

   (b)monitor, and from time to time, agree on variations to the amount or application of the war‑risk surcharge; and

   (c)conceal the agreement, arrangement or understanding as in place from time to time from the whole world including the Applicant and Group Members

   (“the War‑risk Surcharge Arrangement”).

   PARTICULARS

   The War‑risk Surcharge Arrangement was partly oral and partly to be implied.

   In so far as it was oral, the War‑risk Surcharge Arrangement was made in communications between representatives of the Second, Third, Fourth and Ninth Respondents and others in or about March 2003.

   In so far as they were to be implied, the above provisions of the War‑risk Cartel Arrangement are to be implied from:

   1.from the conduct of the Second, Third, Fourth and Ninth Respondents alleged in paragraph 66 below; and;

   2.in the case of the provision (c) above, from the need to give business efficacy to the War‑risk Surcharge Arrangement, as an arrangement which depended on secrecy for its efficacy.

   Further particulars will be provided following the completion of discovery.

   65.By making the War‑risk Surcharge Arrangement, the Second, Third, Fourth and Ninth Respondents and each of them gave effect to the Global Cartel Arrangement within the meaning of the TPA.”

   66.From in or about March 2003 to about 22 April 2003, the Second, Third, Fourth and Ninth Respondents and each of them:

   (a)supplied or offered to supply international airfreight services  to customers in Australia subject to payment by the customers of the war‑risk surcharge as agreed from time to time; and

   PARTICULARS

   The war‑risk surcharge imposed by:

   1.the Second Respondents was 0.10 Euro per kg;

   2.the Third and Fourth Respondents was 0.25 USD per kg;

   3.the Ninth Respondent was 0.07 GBP per kg (approximately 0.10 Euro)

   Further particulars of the level of the war‑risk surcharge imposed by the Second, Third, Fourth and Ninth Respondents will be provided after discovery.

   (b)concealed the existence and terms of the War‑risk Surcharge Arrangement from the whole world including the Applicant and Group Members.

2. Cathay Pacific submitted that the level of particularity as to the nature and location of the relevant “contravening conduct” provided by Auskay in its application for ministerial consent was insufficient to enable the Minister to exercise his powers pursuant to ss 5(3) and 5(4) of the Act. The Minister did not appear to labour under any such difficulty or disadvantage. In his Statement of Reasons the Minister set out the material which was before him for the purpose of him making his decisions. That material contained detailed submissions from Auskay and the airlines in relation to the alleged conduct outside Australia in respect of which independent legal advice was sought and obtained from experts in the law of the relevant foreign countries.

3. The Minister was able to direct his mind and attention to the relevant conduct required or authorised by the laws of other countries.  For example, he said in paragraph 26 of his Statement of Reasons:

   “Further, I was not satisfied that the conduct which was said to be required or specifically authorised by the laws of Singapore, Japan and Hong Kong, in the advices provided by the Airlines, was the same as the alleged conduct, i.e. the concealed price fixing conduct described as the Global Cartel Arrangement in the Second Amended Statement of Claim.”

   His reference to “the alleged conduct” is a reference to the conduct described in paragraphs 26 to 28 of the second amended statement of claim and what he said were the further particulars of the alleged conduct given concerning the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement: see paragraph 7 of the Statement of Reasons.

4. Cathay Pacific submitted that apart from one reference to the Netherlands, the second amended statement of claim and the amended application did not identify the countries in which the alleged contravening conduct was said to have occurred.

5. It is clear that the Minister considered, as was open to him, that the conduct referred to in paragraphs 26 to 28 of the second amended statement of claim and the further particulars of it, to which he referred, was alleged to have occurred in countries other than Australia and he then directed his attention to whether that conduct was said to be required or specifically authorised, in particular, by the laws of Japan, Singapore and Hong Kong.  The material provided to him included foreign legal advices in respect of Japan, Singapore and Hong Kong.  It will also be recalled that in Auskay’s letter of 17 April 2008 to the Minister, Auskay provided the Minister with independent legal advice in relation to seven countries.

6. In my opinion, the paragraphs of the second amended statement of claim which the Minister understood as describing the alleged contravening conduct outside Australia, taken with the focus of the submissions by Auskay and the airlines and their supporting expert legal advices, enabled him to understand that the alleged conduct was said to occur, in particular, in Japan, Singapore and Hong Kong. It was also clear what was the alleged conduct relied upon by Auskay which gave rise to a claim under ss 82 and 87 of the Act.

7. It is not to the point that no claim for relief was made in respect of the Global Cartel Arrangement identified in paragraphs 26 to 28 of the second amended statement of claim.  No relief is claimed in respect of that Global Cartel Arrangement as such because, standing alone, it was not implemented or carried into effect by the airlines.  Rather, it was carried into effect by the airlines implementing it and carrying it into effect by the making of the further agreements, namely the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement.  This can be seen, for example, in paragraph 30 of the second amended statement of claim where it is alleged that:

   “By making the Fuel Surcharge Arrangement the Respondents and each of them gave effect to the Global Cartel Arrangement within the meaning of the TPA.”

8. I do not accept the submission of Cathay Pacific that the Minister exceeded his authority in granting the consents due to an inability to identify the “contravening conduct”.  Adopting and adapting the observation of the High Court in Craig v South Australia (1995) 184 CLR 163 at 179 upon which Cathay Pacific relied, I do not consider that the Minister fell into error at all. He did not identify a wrong issue, nor did he ask himself the wrong question, nor did he ignore relevant material, nor did he rely on irrelevant material in making his finding and reaching his conclusion in relation to the alleged conduct upon which Auskay wished to rely, in respect of which he was giving his consent, which Auskay alleged had been engaged in outside Australia, namely the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong.

9. The Minister proceeded on the basis that the conduct outside Australia alleged by Auskay was alleged to have occurred in the Netherlands, Germany, the United Kingdom, New Zealand, Singapore, Japan and Hong Kong.  So much appears from paragraph 6 of his Statement of Reasons.  It is apparent from paragraph 7 of his Statement of Reasons that he was proceeding on the basis that the making of the Global Cartel Arrangement (paragraph 26 of the second amended statement of claim) and the giving effect to the Global Cartel Arrangement by the making and implementation and carrying into effect of the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement occurred in one or more of those countries. 

10. Having reached that conclusion, he then addressed, relevantly insofar as Cathay Pacific was concerned, whether the law of Hong Kong required or specifically authorised the engaging in of the conduct alleged to have occurred in Hong Kong. This, he was required to do in accordance with s 5(5)(a) of the Act.

11. It was not for the Minister to determine whether there was sufficient material before him justifying the conclusion, or whether he could be satisfied, that the arrangements and meetings referred to in the second amended statement of claim in fact occurred in one or more of the countries to which I have referred.  It was sufficient for his purposes, that he was able, as he did, to identify the nature of the conduct, that is the arrangements, and the countries outside Australia in respect of which it was alleged that the relevant conduct had occurred.  I do not consider that it was necessary for Auskay to put before the Minister that particular meetings involving particular persons or representatives of the several airlines occurred on specific dates and at specific times and at particular locations in particular overseas countries. 

12. Cathay Pacific submitted that the Minister could only give his consent in relation to contravening conduct in a specified country or countries that gave rise to a claim under ss 82 or 87 of the Act. The response to that submission is that the contravening conduct was identified by reference to the Global Cartel Arrangement, the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement in respect of the countries to which I have referred and, relevantly, for Cathay Pacific, Hong Kong.

    Did the Minister correctly apply the condition contained in section 5(5)(a) of the Act?

13. Cathay Pacific submitted that the Minister incorrectly applied the condition contained in s 5(5)(a) of the Act which required him to consider whether the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct which was engaged in in its jurisdiction. It was submitted that the Minister failed to take into account a relevant consideration, namely the conduct approved by the Hong Kong CAD which was described in the letter from the Hong Kong CAD and was also described in Mr Haddon‑Cave QC’s opinion.

14. The Minister had before him the Angela Wang & Co advice, the advice of Mr Haddon‑Cave QC and the letter from Hong Kong CAD.  It is clear from his Statement of Reasons that he had considered them and that he had regard to all of them before reaching his conclusion. 

15. Angela Wang & Co was asked by Auskay’s solicitors to assume that Cathay Pacific and the other airlines had engaged in conduct substantially in the terms set out in the second amended statement of claim relating to the making of the Global Cartel Arrangement and the making and implementation of the Fuel Surcharge Arrangement, Security Surcharge Arrangement and the War‑risk Surcharge Arrangement.  Angela Wang & Co’s advice was directed to answering whether the Global Cartel Arrangement and the Fuel Surcharge Arrangement, Security Surcharge Arrangement and the War‑risk Surcharge Arrangement were entered into between the airlines was required or specifically authorised by any law or regulation of Hong Kong.  That advice was to the effect that there were no laws or regulations in Hong Kong requiring or specifically authorising the making of the Global Cartel Arrangement, the Fuel Surcharge Arrangement, the Security Surcharge Arrangement or the War‑risk Surcharge Arrangement in Hong Kong.

16. Mr Haddon‑Cave QC was asked to assume that Cathay Pacific, along with the other airlines, had engaged in conduct substantially in the terms set out in of the second amended statement of claim.  This included entering into the Global Cartel Arrangement.  Mr Haddon‑Cave QC expressed the opinion that the Global Cartel Arrangement was “clearly specifically authorised by the law of Hong Kong.”  He based his opinion on a number of matters in particular the Hong Kong-Australia Air Services Agreement specifically authorising the members of the BAR‑CSC to discuss and agree upon carriage of cargo tariffs.  He also expressed the opinion that the Hong Kong CAD had approved the carriage of cargo tariffs upon which the airlines had agreed.  He said that the Hong Kong approval system was conducted in an open and transparent way and that none of the material he had seen suggested any “concealment” of the alleged agreement.  He said that he disagreed with the opinion of Angela Wang & Co that the Hong Kong CAD or the Competition Policy Advisory Group were unaware of the alleged cartel arrangement.  He disagreed because that opinion was inconsistent with the fact that the BAR‑CSC made a joint application on behalf of the airlines for approval in June 2002 of a fuel surcharge based on the Lufthansa fuel index.

17. Mr Haddon‑Cave QC reached the following conclusions:

    (a)In respect of the Global Cartel Arrangement, the participation by airlines in meetings, conversations and other communications to fix, control or maintain levels of cargo freight tariffs to be proposed to the Hong Kong CAD was clearly specifically authorised by the Hong Kong law. 

    (b)In respect of the Fuel Surcharge Arrangement, the law of Hong Kong specifically authorised and required collective applications by the airlines for the approval of fuel surcharges so that the Fuel Surcharge Arrangement was specifically authorised or required by the law of Hong Kong.

    (c)In respect of the Security Surcharge Arrangement, no information was provided in respect of this alleged surcharge or arrangement but any such surcharge would have been part of the tariff which the Hong Kong CAD would have had to approve in accordance with the Air Service Agreements and the Basic Law.

    (d)He expressed no opinion in respect of the War‑risk Surcharge Arrangement as there was no such surcharge imposed in Hong Kong and there was no allegation that Cathay Pacific was involved in this arrangement.

18. In its letter the Hong Kong CAD said that fuel surcharges had been specifically approved by it between 2000 and early 2007 and that they were based upon widely used fuel indices.  The CAD specifically gave approval to some BAR‑CSC carriers to impose an insurance surcharge on cargo shipments from Hong Kong pursuant to collective applications.

19. The Hong Kong CAD also stated:  

    “(c)“For those carriers participating in the fuel surcharge process between 2000 and early 2007 and the insurance surcharge process between October 2001 and January 2004, it is the CAD’s opinion that their conduct was lawful, efficient and consistent with the applicable [Air Services Agreements].  Further, the CAD specifically gave approval to the participating carriers to only levy the surcharge either specified in the collective applications or resulting from the specified fuel indices”;

    (d)“Had the CAD felt the surcharges were unfair or detrimental to users of air services, we would not have specifically approved them”; and

    (e)“we request that any regulator reviewing this Department’s processes or the carriers that participated in the collective applications respect and defer to our approval system.  Additionally, we ask you to acknowledge that it lawful in Hong Kong for any carrier to levy a surcharge ex‑Hong Kong based upon a collective application specifically approved by CAD and that the relevant fuel surcharges have been specifically approved by CAD”.

20. Cathay Pacific submitted that the material before the Minister demonstrated that the law of Hong Kong required or specifically authorised Cathay Pacific to engage in conduct alleged to constitute the Global Cartel Arrangement and the Fuel Surcharge Arrangement.  I reject that submission. 

21. The matters or the conduct to which Mr Haddon‑Cave QC and the Hong Kong CAD directed their attention and in respect of which they expressed their opinions, was not the conduct alleged by Auskay to constitute the Global Cartel Arrangement and the Fuel Surcharge Arrangement.  The opinions of Mr Haddon‑Cave QC and the Hong Kong CAD did not take into account the allegation in paragraph 26(b) of the second amended statement of claim that the Global Cartel Arrangement was concealed.  In short, the Hong Kong CAD did not approve of, require or specifically authorise the Global Cartel Arrangement alleged in paragraph 26 of the second amended statement of claim. 

22. Cathay Pacific submitted that the Minister was required to have regard to the view expressed by the Hong Kong CAD and that he did not give proper consideration to the issues that were raised by the Hong Kong CAD in the letter sent to him.  I reject that submission.  It is apparent in the Statement of Reasons that the Minister gave proper consideration to the issues raised by the Hong Kong CAD.  Cathay Pacific submitted that he failed to take into account a relevant consideration, namely the views of the Hong Kong CAD and took into account an irrelevant consideration by accepting the opinion of Angela Wang & Co.  Cathay Pacific submitted that in so doing he made a decision that was so unreasonable that it should be set aside.  Cathay Pacific did not go so far as to say that he was bound to accept the Hong Kong CAD letter but submitted that he had to “actively consider the CAD letter on its merits”.  It followed, submitted Cathay Pacific, that if he actively considered the Hong Kong CAD letter then he could be satisfied acting reasonably that the conduct that Hong Kong CAD approved was required or specifically authorised.  In short, Cathay Pacific submitted that it was unreasonable for the Minister to reach any other conclusion than that set out in the Hong Kong CAD letter. 

23. The difficulty with that submission is that the conduct that the Hong Kong CAD approved was not the conduct alleged in the second amended statement of claim.  In this context, the crux of the Minister’s reasoning is found in paragraph 26 of his Statement of Reasons where he says:  

    “Further, I was not satisfied that the conduct which was said to be required or specifically authorised by the laws of Singapore, Japan and Hong Kong, in the advices provided by the Airlines, was the same as the alleged conduct, i.e. the concealed price fixing conduct described as the Global Cartel Arrangement in the Second Amended Statement of Claim.”

24. This finding was open to the Minister on the material before him.  Indeed, I am satisfied that it was the correct finding to make.  Cathay Pacific criticised the Minister’s use of the adjective “concealed” in relation to the price fixing conduct described as the Global Cartel Arrangement but that criticism is unwarranted.  It is explicitly pleaded in paragraph 26(b) of the second amended statement of claim that the Global Cartel Arrangement, which is an integer in the equation of the claims made against the airlines, was concealed from the general public.  The fact that Auskay does not seek relief in relation to the Global Cartel Arrangement is not to the point.  As is clear from the second amended statement of claim, it is the implementation of the Global Cartel Arrangement in the form of the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement which gives rise to the relief sought.

25. Cathay Pacific criticised the Minister’s reference in paragraph 26 of the Statement of Reasons to the “concealed price fixing conduct described as the Global Cartel Arrangement” and submitted that he failed to mention in this paragraph the Fuel Surcharge Arrangement, the Security Surcharge Arrangement or the War‑risk Surcharge Arrangement.  Cathay Pacific submitted that in paragraph 26 of his reasons the Minister was confining his consent to the concealed price fixing conduct described as the Global Cartel Arrangement and was not giving his consent to the conduct constituted by the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement.  That submission fails to take into account the conduct in respect of which he was giving his consent which he said in paragraph 7 of the Statement of Reasons was described in paragraphs 26 to 28 of the second amended statement of claim and the further particulars given in relation to the Fuel Surcharge Arrangement, the Security Surcharge Arrangement and the War‑risk Surcharge Arrangement.

(i)The Board of Airline Representatives in Hong Kong Code of Conduct, dated September 2007

(ii)United States Department of Justice Press Release re Major International Airlines’ plea bargain, dated 26 June 2008

(iii)USA v Cathay Pacific Airways Ltd, in the United States District Court for the District of Columbia, Plea Agreement, dated 22 July 2008

(iv)USA v Cathay Pacific Airways Ltd, in the United States District Court for the District of Columbia, Information, dated 26 June 2008

(c)Letter from Maurice Blackburn to the Treasury re scope of respondents’ participation with attachment, dated 8 August 2008

(i)In Re Air Cargo Shipping Services Antitrust litigation, in the US District Court Eastern District of New York, MDL No 1775, Settlement Agreement, dated 10 June 2006

(d)Letter from Maurice Blackburn to the Associate to Justice Tracey with attachments, dated 8 August 2008

(i)Letter from Freehills to the Treasury, dated 19 August 2008

(ii)Letter from Maurice Blackburn to the Treasury, dated 27 August 2008

(iii)Letter from Maurice Blackburn to the Treasury, dated 27 August 2008

Attachment 8

(a)Decision and reasons for judgement of Tracey J in Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458, dated 29 September 2008

Attachment 9

(a)Letter from Maurice Blackburn to the Treasury re Tracey J’s decision, dated 9 October 2008

Attachment 10

(a)Letter from the Treasury to Johnson Winter & Slattery, dated 22 October 2008

(b)Letter from the Treasury to Freehills, undated

(c)Letter from the Treasury to Minter Ellison, undated

(d)Letter from the Treasury to DLA Phillips Fox, undated

(e)Letter from the Treasury to Corrs Chambers Westgarth, undated

(f)Letter from the Treasury to Deacons Lawyers, undated

(g)Letter from the Treasury to Mallesons Stephen Jaques, undated

Attachment 11

(a)Letter from the Treasury to Maurice Blackburn, dated 24 October 2008

(b)Letter from the Treasury to Deacons Lawyers, dated 24 October 2008

(c)Letter from the Treasury to Mallesons Stephen Jaques, dated 24 October 2008

(d)Letter from the Treasury to Corrs Chambers Westgarth, dated 24 October 2008

(e)Letter from the Treasury to DLA Phillips Fox, dated 24 October 2008

(f)Letter from the Treasury to Minter Ellison, dated 24 October 2008

(g)Letter from the Treasury to Freehills, dated 24 October 2008

(h)Letter from the Treasury to Johnson Winter & Slattery, dated 24 October 2008

Attachment 12

(a)Letter from Minter Ellison to the Treasury, dated 7 November 2008

(b)Letter from Deacons Lawyers to the Treasury, dated 7 November 2008

(c)Letter from DLA Phillips Fox to the Treasury, dated 7 November 2008.

Findings on material questions of fact

Was conduct specifically required or authorised by the laws of the relevant countries?

23.Advice provided by Auskay in relation to each jurisdiction was to the effect that in each jurisdiction, the alleged conduct was not authorised or required by the laws of any of the relevant countries.

24.The Airlines responded with submissions, but only three foreign legal advices (in respect of Japan, Singapore and Hong Kong) were provided.  The effect of those advices was that certain air cargo tariffs and surcharges had been approved by local authorities in Japan, Singapore and Hong Kong.  The effect of the Hong Kong advice was that these surcharges had been approved by local authorities on a collective basis.

25.Having had regard to all of the legal advices before me, and the conflict between those legal advices, I was not satisfied that all or any part of the alleged conduct was required or specifically authorised by the law of any of the countries the subject of the application for consent. 

26.Further, I was not satisfied that the conduct which was said to be required or specifically authorised by the laws of Singapore, Japan and Hong Kong, in the advices provided by the Airlines, was the same as the alleged conduct, i.e. the concealed price fixing conduct described as the Global Cartel Arrangement in the Second Amended Statement of Claim.

27.Accordingly, I did not form the opinion that the relevant conduct was required or specifically authorised by the law of any of the relevant countries.

National interest

28.In dealing with the issue of national interest, I considered that I had broad discretion to weigh any national interest considerations under section 5(5)(b) of the Act.

29.I considered whether issues of comity between states might arise as a consequence of the giving of consent.  I considered that an issue of comity would arise if I were to give consent and an Australian court were to subsequently determine the validity of a sovereign state’s acts in its own territory.  I was satisfied that no such issues were raised, because I considered that the validity of the acts of a sovereign state within that states own territory would not arise for adjudication in any legal proceedings consequent upon the giving of consent.

30.Further, I was not of the opinion that, even if a foreign law required or specifically authorised the alleged conduct, the giving of consent would not be in the national interest. In this regard, I was satisfied that the alleged conduct had the potential to impact on Australian consumers and businesses. In those circumstances I considered that, absent any strong countervailing factor(s), it was in the national interest that consent be given, thereby enabling a court to grant relief under sections 82, 87(1) and/or 87(1A) of the Act if the court was satisfied that the alleged conduct came within the extended operation of the Act. I was not satisfied of the existence of any strong countervailing factor(s).

31.I also considered whether consent would lead to the duplication of proceedings in other jurisdictions.  I was satisfied that as the Auskay allegations were limited to:

31.1.losses suffered by Australians;

31.2.freight into and out of Australia; and

31.3.a particular component of the price of that freight,

proceedings in Australia based on those allegations were unlikely to duplicate proceedings in foreign jurisdictions.

Evidence or other material on which findings were based

32.In reaching the finding set out in paragraph 23 I had regard to the material before me, and based my finding particularly on the Treasury Executive Minute and the advices listed in Attachment 3.

33.In reaching the finding set out in paragraph 24 I had regard to the material before me, and based my finding particularly on the Treasury Executive Minute, and the material contained in Attachment 6 and Attachment 7(a)(i).

34.In reaching the finding set out in paragraph 25 I had regard to the material before me, and based my finding particularly on the Treasury Executive Minute, and the material contained in Attachments 3, 6, 7(a)(i), 7(b), 9, 11 and 12.

35.In reaching the finding set out in paragraph 26 I had regard to the material before me, and based my finding particularly on the material identified in the preceding paragraph.

36.In reaching the finding set out in paragraph 28 I had regard to the material before me, and based my finding particularly on the terms of section 5 of the Act and the Treasury Executive Minute.

37.In reaching the findings set out in paragraph 29 I had regard to the material before me, and based my finding particularly on the Treasury Executive Minute and the material contained in Attachments 3, 6, 7(a)(i), 7(b), 9 11 and 12.

38.In reaching the findings set out in paragraph 30 I had regard to the material before me and I based my findings on the material identified in the preceding paragraph.

39.The finding set out in paragraph 31 was based on my findings on the material identified in paragraph 37.

Reasons for Decision

40.I considered that I was obliged under the terms of section 5 of the Act to give consent under each of sections 5(3) and (4) of the Act because:

40.1.I was not satisfied, for the reasons stated above, that the law of any of the jurisdictions required or specifically authorised the alleged conduct; and, in any event,

40.2.I was not of the opinion, for the reasons stated above, that it was not in the national interest that the consents be given.

Date:11 March 2009

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ASSISTANT TREASURER AND MINISTER FOR

COMPETITION POLICY AND CONSUMER AFFAIRS