East West Airlines (Operation) Ltd v Wraith, Kenneth F

[1983] FCA 371

IN THE FEDERAL COURT	OF AUSTrWIA	)
1

VICTORIA DISTRICT REGISTRY	)	V. No.	G99 of 1983
1
GENERAL DIVISION	1

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN : ,

EAST WEST AIRLINES (OPERATIONS) LTD

Appellant

(Applicant)

and

KENNETH F. WRAITH, DR. D.W. ZINK

AND HON. I<. M. CAIRNS

Respondents

(Respondents)

CORAM :	Woodward, Northrop and Neaves	JJ
-	DATE :	12 December, 1983:

PLACE : Melbourne

ORDER

THE COURT ORDERS THAT:

1.	The appeal be allowed and the orders	of the Court
of 23 May, 1983 be set aside.

2. The approval of the Independent A l r Fares Committee of 8 March, 1983 be set aside.

L.

3. The request from the appellant to the Committee be remitted to the Committee for further consideratlon

of that request according to law.

4. The respondents pay the appellant's costs of the appeal and of the application.

.

IN THE FEDERAL COURT OF AUSTRALIA	)
1
VICTORIA DISTRICT REGISTRY	) V. No. G99 of 1983
1
GENERAL DIVISION	1

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

l

BETWEEN:

EAST WEST AIRLINES (OPERATIONS) LTD

Appellant

(Applicant)

and

KENNETH F. WRAITH, DR. D.W. ZINK

AND HON. K. M. CAIRNS

Respondents

(Respondents)

CORAM :	Woodward, Northrap and Neaves	JJ.
-	DATE :	12 December, 1983.

PLACE : Melbourne

REASONS FOR JUEGMENT

On 8 March, 1983 Mr. Wralth, the first respondent,

being the Chalrman, Independent Air Fares Committee, notifled

Mr. Grey, Managlng Director of the appellant, East West	Airlmes
(Operations) Ltd., by telex that the Committee, pursuant to

c.

2.

sub-section 17(4), Independent Air Fares Committee Act 1981,

("the I.A.F.C. Act") had approved "a dlscount fare of $120 on

the round trip, orlginating in Sydney or Melbourne over the

route Melbourne-Albury-Sydney on F27 aircraft". By the same

telex, Mr. Wraith notified Mr. Grey that the approval was

subject to a number of conditions including the condition that

the discount fare was to be available for a limited period,

namely "the period 8 March to 30 April, 1983 inclusive". The

effect*of the approval was that during that perlod the appellant

was able to offer a return fare over that route at the discount

rate of	$120 return, but that the return journey had to be
completed	on or before 30 April, 1983. The appellant, by

application under section 5, Administrative Decisions (Judlclal Review) Act 1977, sought an order of review of the decision of

the Committee in so far as the decision imposed the condition

relating to the period during which the discount air fare was

available. The Court constituted by a slngle Judge dismissed

that application and the appellant - appeals from that judgment.

During the hearing of the appeal submissions ranged over

many aspects of the matters arising under the I.A.F.C. Act, but

in the event, the issue ralsed by the appeal comes within a

small compass. In substance the issue is to be determined by a

consideration of the terms of the request made by the appellant

to the Conunittee for approval of a discount air fare. However,

in order to determine that issue it 1s necessary to make

reference to some of the provisions of the I.A.F.C. Act.

3 .

The appellant is a passenger operator under the I.A.F.C.

Act. Pursuant to other statutory provisions, 2t operates air	-
services between Melbourne-Albury-Melbourne and between
Sydney-Albury-Sydney. It charges fares in respect of travel on
those routes. The I .A.F .C. Act provides that the normal fares
charged are elther an economy air fare or a first class air
fare. The amount of those fares is determined by the Committee
pursuant to the provisions of that Act. That Act constltutes
the Commlttee. The three respondents are the members of that
Committee. Among the functlons conferred upon the Committee is
the function "to approve, in accordance with this Act, proposed
discount air fares"; see paragraph 12 (1) ( a ) . The phrase
"dlscount air fare" means:

". . . an air fare charged by a passenger operator in

respect of travel over a route, being an alr fare

the amount of which is less than the economy air fare charged by that passenger operator in respect of travel over that route, but does not include an

air fare charged in respect	of	travel by blind
persons, students or children."

Section 17, I.A.F.C. Act contains detalled provisions

relating to the granting of approval of dlscount air fares and

the revocation of approval of dlscount air fares. For the

purposes of this appeal, it is not necessary to make reference to

all those provisions. Under sub-sectlon 17 (l), a passenger

operator is entitled to request the Commlttee to approve a

discount alr fare that the passenger operator proposes to charge

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4.

in respect of travel over any route. Under sub-section 17(2),

the request must be "made by notice in writing to the Chairman"

of the Commlttee setting out specified matters. One of the

matters so specified is contained in paragraph 17(2)(b) whlch

provides :-

.

"(b) the conditions (if any) under whlch the

proposed discount air fare is to be

available".

-

For present purposes sub-section 17(3) and the relevant

parts of sub-section 17(4) are set out -

" ( 3 ) Where a passenger operator requests the

Committee to approve a discount air fare, the

Committee shall, before the expiration of 7

days after the Committee obtains uch

information as it considers necessary to be

obtained from the passenger operator who made

the request or f rom any other passenger

operator in order to give its decision on the

request, give its - decision on the request.

(4 )	If the Commlttee is satisfied that -
(a) the introduction of that proposed

discount 'air fare is likely to improve

the profitabill-ty of the operations	of
that passenger operator in relation to

the provision of air servlces; ...

(c)	the conditions (if any) under which that proposed dlscount all: fare 1 s to be available are reasonable and will be
applied without discrimination between
persons or classes of persons who can comply wlth the conditions,

the Committee shall approve the proposed discount

air fare but, if the Committee is not so satisfled,

the Commlttee shall not approve the proposed

discount air fare. "

0

5.

The appellant considered it desirable that it utilize to

the full facilities arising from its licence to operate Its

passenger service on the routes Melbourne-Albury-Melbourne and

Sydney-Albury-Sydney, by making available a dlscount air fare for

Melbourne-Albury-Sydney and return and Sydney-Albury-Melbourne

and return. Of necessity, the service would require a chaiiye of

aircraft at Albury or, as an alternative, a change of crew at

Albury. Before the appellant could make that discount air fare

available, it had to obtain the approval of the Conunittee. To

that end, on 23 February, 1983 by telex, the appellant made a

request to the Chairman of the Committee. It was not disputed

that the telex constituted a “notice in writing” under section

17, I.A.F.C. Act. The relevant parts of the telex are set out:

“APPLICATION IN ACCORDANCE SECTION 17 OF THE IAFC ACT FOR

APPROVAL OF A DISCOUNT AIRFARE.

ROUTE -	MELBOURNE-SYDNEY-MELBOURNE
AIRCRAFT -	FOKKER F27
FARE -	$120.00 ROUND TRIP ...
CONDITIONS -	SOLD ONLY AS ROUND TRIP ORIGINATING
SYDNEY OR MELBOURNE ...
INTRODUCTION -	MARCH 01.1983 “

On 25 February, 1983 by telex the Chairman notified the

appellant that the Committee had glven preliminary consideration

to the request. The telex contlnued:

“TO FULFIL ITS RESPONSIBILITIES UNDER THE IAFC ACT 1981 THE

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COMMITTEE REQUIRES THE FOLLOWING ADDITIONAL INFORMATION TO

ASSIST IN ITS CONSIDERATIONS. THESE INFORMATION

REQUIREMENTS ARE STANDARD FOR THIS TYPE OF PROPOSED

DISCOUNT. I'

Thirteen separately numbered	questions were then asked and the
telex concluded as follows:

"THE COMMITTEE HAS NOTED YOUR PROPOSED INTRODUCTION DATE,

HOWEVER, THE COMMITTEE WILL NOT BE ABLE TO GIVE FURTHER

CONSIDERATION TO YOUR APPLICATION UNTIL THE ABOVE

INFORMATION IS PROVIDED. UNLIKELY THAT APPROVAL WILL BE

POSSIBLE BY 1 MARCH. AS SOON AS ABOVE INFORMATION IS

PROVIDED YOUR REQUEST WILL RECEIVE URGENT ATTENTION."

' On the same day the appellant by telex gave answers to the

questions raised by reference to the paragraph numbers. The

relevant questions and the answers thereto are set out -

"QUESTION 2:	NUMBER OF PASSENGERS AND PASSENGER TYPE WHO
HAm TRAVELLED ON A ROUND TRIP ORIGINATING IN
MELBOURNE OR SYDNEY IN THE PAST SIX MONTHS.

-

ANSWER 2: AVERAGE 4 PER MONTH GOLDEN OLDIES 45PCT

DISCOUNT FARES.

QUESTION 3:	YOUR ESTIMATE OF NUMBER OF PASSENGERS WHO WILL AVAIL THEMSELVES OF PROPOSED DISCOUNT.
ANSWER 3:	ABOUT 600 ROUND TRIPS PER MONTH WHICH ON
CURRENT CAPACITY WILL BRING SYD/ABX/SYD TO
82PCT SLF AND UBX/MEL/ABX TO 5JPCT SLF.
QUESTION 7:	WILL ANY SEATING RESTRICTIONS APPLY.
ANSWER 7:	FARE ON SALE WITH NO RESTRICTIQNS OTHER THAN
ROUND TRIP ONLY AND MAXIMUM 3ODAYS VALIDITY
ALSO PSGRS REQUIRED EITHER CHANGE AIRCRAFT OR CREW AT ALEURY, ENTAILING SOME GROUND TIME.
QUESTION 11:	FOR WHAT PERIOD OF TIME DO YOU ANTICIPATE THE

7.

DISCOUNT WILL BE EFFECTIVE.

ANSWER 11:	TRIAL PERIOD TO 30 APRIL, 1983 WITH OPTION TO EXTEND ON SAME OR VARIABLE BASIS SUBJECT TO NEGOTIATION WITH IAFC.
QUESTION 12:	WHAT DO YOU ANTICIPATE WILL BE THE NET REVENUE GAIN FROM THE PROPOSED DISCOUNT. PLEASE PROVIDE FULL GETAILS.
ANSWER 12:	600 RT FARES MONTHLY GROSSES DLRS 144,000
MAR/APR LESS COMMISSIONS AND ADVERTISING
LEAVES DLRS 98,000 NETT GAIN LESS INFLIGHT
COSTS AND PSGR OVERHEADS LEAVES NETT
DLRS 88,000 GAIN."

-

The Committee decided to approve the discount air fare

and the appellant was notified of that declsion by telex on 8

March, 1983, but the approval was subject to a number cf

conditions, including the condltion challenged by the appellant.

A further telex from the Committee on 9 March, 1983 confirmed

that the condition challenged provided that the return joarney

had to be completed by 30 April, 1983.

-

A reference to paragraphs 17(2)(b) and (4)(c), I.A.F.C.

Act - makes it clear that the conditions (lf any) under which the

proposed dlscount air fare 1 s to be available must be contalned in the request, that is In the "notice- In wrlting given to the

Chairman". The Committee has no independent power to impose

condltions on the approval of a proposed discount air fare when

those conditions are not included in the request. At the most it

may have power, in appropriate circumstances, to refuse to give

..

the approval unless a particular condition is offered, but thls

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is a matter which does not call for decision In the prcsent case.

Counsel for the respondents, quite properly in our opinion,

conceded the absence of a power in the Committee to impose a

condition which had not beeen offered.

Counsel for the appellant contended that in the present

case any, conditions under which the proposed discount air fare

was to be made available had to be set out in the telex of 23

February, 1983. That telex did not refer to a condition relatlng

to the period during which the proposed discount air fare was to

be available. They contended, accordingly, that the challenged

conditlon was beyond the powers	of the Commlttee, was void and	of
no effect.

For this contention to succeed it is necessary that

section 17, I.A.F.C. Act should be construed in the sense that a

request can not be amended or varied before it is either approved

or not approved by the Committee. In other words, as counsel for -

the appellant submitted, if before an approval is given or

refused the appllcant desires to vary the conditions under which

the proposed discount air fare wlll be available, a separate and

distinct request must be made by notice in wrxting, including

that condltion as well as all other condltions. In the present

case this had not been done.

That submission is not accepted. Under the I.A.F.C. Act,

the passenger operator is seeking an approval by the Committee.

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9.

In considering a request for that approval, the Commlttee 1s

empowered to obtain such information as it considers necessary to be obtained from the passenger operator which made the request. The request for that information could suggest to the passenger operator additional conditions under which the proposed discount

air fare should be made available. If, as a result, the

passenger operator gave notice in writing to the Committee of

those additional conditions, but did not make a separate and

distinct request containlng those addltional conditions, it is

difficult to see that the Committee would not have power to

approve the proposed discount air fare subject to those

additional conditions. In thls respect, the section should not

be given an over-technical construction. The section does not

require that the notice in writing must be contained in the one

document. The section does not require that all parts of the

notice be given to the Chairman of the Committee at the one tlme.

The parties dld not suggest that a telex 1s not a notice In

writing: and in an approprlate case, the request under sectlon

17 may be contained in a number of separate telexes, some of

which are forwarded by the passenger operator followlng the

seeking of informatlon by the Commlttee under sub-sectlon 17(3). The section must be construed having regard to the practicalltles

of commerce. The construction contended for by counsel for the

appellant would result in unnecessary artificialities and

restrictions which should not be encouraged. If, on the proper

construction of all the written material before the Committee at

the time it grants an approval under sub-section 17(4), it can be

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10.

sald truly that the passenger operator has specifled a partlcular

conditzon under which the proposed discount air fare is to be

available, the Committee has power to approve that discount air

fare, subject to that condition. This presupposes that the

Committee is satisfied as required by sub-sectlon 17(4).

Counsel for the respondents submitied that their clients

understood the telex of 23 February, 1983 and the questions and

answers contained in the telexes of 25 February, L983 as

including, as a condition specified by the appellant, the

ccndition relating to the period durlng which the proposed

discount air fares should be available. They referred in

particular to questlons 11 and 12 and the answers thereto. They

submitted that that understanding was reasonable and therefore

the Committee was, in law, empowered to treat the written

material as including that condltion proposed by the appellant.

In our opinion the test is not whether the respondents

notorious that words and phrases can be ambiguous and may be

construed in many different ways. In giving the answers the

-

were reasonably able to come to that understanding. It is

appellant was supplying information at the request of the

respondents. In the circumstances it is difficult to impute an

intentlon in the appellant that In giving the information rt was

specifying a conditlon that was to apply to the proposed discount

air fare as to the period durlng which the discount air fare was

to be available. The language used ln the telexes appears to be

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in abbreviated form and comprises a variation in the form of

words normally used; but there was EO suggestlon that the words

used had meanings different from their normal meanings. In these

circumstances it is our opinion that the Court must construe rhe

telexes, includlng the questlons and answers, and it is for the

Court to determine whether, upon their proper construction, they

are to be construed as including a condition proposed by the

appellant having the meaning and effect	of the condition imposed
by the iespondents.

.

The appellant was proposing a new form of fare structure.

It involved some unusual features including a change of aircraft or a change of crew at Albury on a Melbourne-Sydney and return

flight, or vice versa. There had to be a round trip and the

return trip had to be completed within 30 days of the forward

trip. Under the proposed dlscount air fare the appellant

antlcipated about 600 round trlps per month, (question 2 and

answer thereto). The answer - to question 12 constitutes a

mathematical exercise converting the anticipated flgures

contained in the answer to question 2 to an estlmated net galn. It is difficult to see how the estimate of 600 round trips per month would be applicable If the return trlps for forward trlps

undertaken in April had to be completed withm the month of

Aprll. A shortening period durlng which the return trip had to be undertaken of necessity would reduce substantlally the anticipated round trips in April. The practical result would be that on 30 April the forward and return trlp would have to be

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- undertaken on the one day.

Question 11 itself is ambiguous. This was a new venture.

It might not improve the profitability of the operations Of the appellant. The answer to questlon 11 has its own difficulties.

At the very least the answer suggests that the proposed discount

rates should be available for round trips commencing up until

30 April, 1983. That would mean that the return trips should be

available up to 30 May, 1983. On its proper construction the

answer should be read as meanlng that the appellant should have

an option. If the venture was successful It intended to engage

in that venture after 30 April on the basis of the request in

writing. If the venture was not successful it would seek to vary

the conditions of the approval, but this had to be subject to

negotiatlon with the Committee. Those negotiations, if they

eventuated, of necessity would need to be conducted on the basis at least of an implied further request for approval of discount

air fares and proposed conditions in the manner discussed earlier	-
in these reasons.

The Court is of the opinion that on the proper

construction of the written material before the Committee on 8

March, 1983, the appellant's notice in writing making the request

for the proposed discount air fare did not contain a condition

that the proposed discount air fare was to be available only

until 30 April, 1983. It follows that in granting its approval

subject to that condltion relating to the period of operation,

13.

- the respondents were actlng beyond the powers conferred upon t h e m

by section 17, I .A.F.C. Act. The Committee had no power to

approve the request subject to that condition.

In the present case, the Committee misunderstood the

terms of the request made by the appellant. As a result the

Committee approved a proposal, including a condition which in

reality was not included in the proposal. Counsel for the

appellant contended that the approval remained valid, being

unaffected by the condition which, they contended, was void in

law and of no effect and was severable from the approval. That

contention is rejected.

On the proper construction of sub-sectlon 17(4), I.A.F.C.

Act,	- the power of the Committee was to approve or disapprove the
proposal of the appellant. That proposal contained some
conditions, but not the conditlon relating to the perlod of
operation of the discount air -fare. The Committee had no power
to impose that condition since it was not nominated in the
proposal. On this construction of the power, there is no basls
for applying the principles applicable where a condition, if severable, may be declared void without affecting the permlt or licence granted at the time the condltion was imposed. These
principles are illustrated in Kent County Council v. Klngswal
Investments (Kent) Ltd. C19711 A.C. 72 per Lord Reid at pp.
90-91, Lord Morrls at pp. 102-3 and Lord Upjohn at pp. 112-4.

During the hearing of the appeal, the Court was informed

by counsel that the appellant was continuing to make the discount

air fare available pursuant to approvals given subsequently by

the Committee. The current approval operates until June, 1984.

Further, the appellant has challenged the validity of parts of

the I.A.F.C. Act and that challenge is pending in the High Court.

The Court does not know the conditions, if any, which apply	to
the discount air fare presently available.

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-- In a l l the circumstances the Court should allow the

appeal, set aside the approval of the Committee made on 8 March,

1983 and remit the request from the appellant to the Committee

for further consideration of that request according to law. The

respondents should pay the costs of the appeal and the costs of

the application before the Court constituted by a single Judge.