Govt of Japan v Global Air Leasing P/L
[2003] QSC 221
•17 July 2003
SUPREME COURT OF QUEENSLAND
CITATION:
Govt of Japan v Global Air Leasing P/L [2003] QSC 221
PARTIES:
GOVERNMENT OF JAPAN
(plaintiff)
v
GLOBAL AIR LEASING PTY LTD (ACN 090 602 118)
(defendant)FILE NO:
11193 of 2001
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court
DELIVERED ON:
17 July 2003
DELIVERED AT:
Brisbane
HEARING DATE:
30 June 2003
JUDGE:
Muir J
CATCHWORDS:
CONTRACTS – CONSIDERATION – FAILURE OF CONSIDERATION – ILLEGAL AND VOID CONTRACTS – where the plaintiff and defendant entered into a written agreement for the charter of an aircraft – where pursuant to the contract the plaintiff paid the defendant US$1.2 million for the charter services and US$6 million by way of a security deposit – where the plaintiff claims the repayment of both sums on the basis of either a total failure of consideration or pursuant to clause 12 of the contract – where the defendant argued the contract was unenforceable owing to illegality – whether there was a failure of consideration and whether the contract was in any event unenforceable due to illegality – application of doctrine of election – whether implied term
Criminal Code (Qld) s, 12, s 354, s 355 s 541
Ashton Mining Ltd v Commissioner of Taxation [2000] FCA 590
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Carpenter v Carpenter Grazing Co Pty Ltd (1987) 5 ACLC 506
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 334FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-330Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26
National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209
Neal v Ayers (1940) 63 CLR 524Norton v Angus (1926) 38 CLR 523
Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) (1994) 1 WLR 161
Payne v McDonald (1908) 6 CLR 208
R v Governor of Brixton Prison, Ex parte Soblen[1963] 2 QB 243
Tribe v Tribe [1996] Ch 107
Tropical Traders Ltd v Goonan (1964) 111 CLR 41
Znaty v Minister of State for Immigration and Ethnic Affairs (1972) 126 CLR 1COUNSEL:
A M Daubney SC with G Beacham for the plaintiff
P W Hackett for the defendant
SOLICITORS:
Blake Dawson Waldron for the plaintiff
Morgan Conley for the defendant
MUIR J: The plaintiff, Government of Japan, claims against Global Air Leasing Pty Ltd, a Queensland incorporated company, payment of the sums of US$1.2 million and US$6 million paid by it to the defendant under a charter flight contract entered into between the plaintiff by its agent, Air Charter International Co Ltd (“ACI”) and the defendant on or about 8 March 2000.
The circumstances preceding the entering into of the contract
The claims are resisted by the defendant on a number of grounds and it is convenient, before considering them in detail, to set out the factual background to the dispute and the details of the plaintiff’s claims.
In February 2000 Mr Shinichira Yanamoto, a director of ACI, was approached by two agencies of the plaintiff, the National Police Agency of Japan (“NPAJ”) and the Tokyo District Public Prosecutors Office of Japan (“TDPPO”) to arrange the charter of an aircraft with a view to transporting personnel of NPAJ and TDPPO to the Middle East to meet and collect five members of the Japanese Red Army and transport them to Japan. Mr Yanamoto, after unsuccessfully attempting to charter an aircraft from an airline, approached Mr Luke Butler, then a director of the defendant. Initially, MrYanamato did not reveal the purpose of the charter, referring to the proposal merely as a “oneway charter flight from Middle East to” to Japan for about 40 VIPs.
On 25 February, Mr Yanamoto, in an email to Mr Butler, advised –
“Security: Now I am now authorized to disclose nature of flight by our government. This mission is to pick up terrorist group of Japanese Red Army of five, who are going to be released from prison in Lebanon on either 7th or 8th March, after having served long prison term there.”
He also advised that approximately 50 other personnel would join the flight in Japan with another 10 Japanese personnel joining in the Middle East, and further that the most likely departure date was 7 or 8 March.
In an email of 27 February 2000, Mr Yanamoto advised Mr Butler that two airlines had rejected approaches from the Government “due to fear of indirect attack to their fleet”. The email discussed a flight to arrive in Amman on the morning of 8 March with a view to collecting the Red Army personnel and departing for Narita Airport, Tokyo between 8am and 8.30am. Although the red army members were being held in prison in Lebanon, it was understood by representatives of the plaintiff, presumably as a result of diplomatic exchanges, that they would be flown to Jordan which would deny them entry and place them on an aircraft bound for Japan.
Mr Butler advised Mr Yanamoto in an email of 29 February that the defendant had an aircraft available and could deliver it in Tokyo by 5 March. He advised that “it was fresh from Czech and in good condition”. In the email Mr Butler raised the notion of a charge to cover the defendant against uninsurable loss, with the possibility of “a rebate” if no loss arose within three years from the date of the flight. The defendant’s proposal quickly became one for a charter fee and a separate security deposit which would be refundable at the expiration of 12 months from the date of the last flight on the charter in the event that no damage was suffered through terrorist actions within that period.
On 6 March 2000, Mr Yanamoto, in an email, requested of Mr Butler information concerning the type of aircraft intended to be used, name of operator, registration number, planned routes to Okinawa and estimated times of arrival and departure from Okinawa. Mr Butler responded the next day with some of the information but did not address flight routes and arrival and departure times. He asked Mr Yanamoto to advise “latest timetable estimates for these procedures”.
The contract was entered into on 8 March. Also on that day the defendant entered into an agreement with Queen Air, Aeronaves Queen, SA, a company registered in the Dominican Republic, under which it agreed to allow the defendant to operate the aircraft the defendant proposed to purchase “on the AOC [Air Operating Certificate] of Queen Air”.
Events between 8 March and 17 March 2000
In describing the exchange of emails between the parties I will record the times at which the emails were sent with a view to accurately recording the sequence of events. Although some of the emails use 24 hour time some do not and it is not always apparent whether they were sent before or after noon. Also regard must be had to the time difference between Japan and Eastern Australia.
At 5:19 on 9 March, Mr Yanamoto, in an email to Mr Butler, asked whether the sum of US$7.2 million had been received. He also requested the aircraft number, registration information, information concerning the crew and stated –
“Flight plan from Marana to OKA. Please be sure that QNA001 can land at 1200N March 10 at OKA definitely. In order to do that the flight is to take off at 21:00 JST tonight or 0500 Marana time today. Everybody concerns about the departure time seriously.”
This email is relied on by the plaintiff as an instruction to the defendant pursuant to clause 10 of the contract.
At 18:29 on 9 March, Mr Yanamoto, in an email to Mr Butler, advised that ACI had received US$7.2 million and had given instructions for the money to be remitted to the United States to be paid into a bank account which had been specified by the defendant. He warned that the Japanese Government had started to doubt the trustworthiness of ACI and the defendant and that the Government would be forced to cancel the contract if the flight could not be made in time to collect the Red Army members on their release. He stated –
“In view of timing of release 21:00 JEST (Japanese Standard Time) plus 2 hours would be deadline for this mission.”
In an email sent at 21:02 on 9 March Mr Butler advised Mr Yanamoto that “the money is in the system” but was not yet in the defendant’s account. He added –
“I shall of course update you in the morning about the bank and would appreciate it if you would approach the authorities to try and get more realistic timing schedule worked out and agreed.”
At 5:44 pm on 9 March Mr Butler advised Mr Yanamoto by email that the moneys had not been received in their account and that “in the meantime the aircraft is also held up”. The defendant at this stage had no contractual right to the possession or use of the aircraft it was proposing to use on the charter flight. Nor did the aircraft or its owners have the authorisations or clearances necessary to enable it to depart from the airport at which it was located.
In another email on 13 March at 10am (on which the plaintiff also relies as an instruction to the defendant under clause 10) Mr Yanamoto said –
“I understand that US$1.2 million is for charges for charter flights. You have previously insisted that deposit of US$6 million is in place of insurance.
You said all the time, ‘no money no flights’. Now you have money so that you should fly the flights as planned.
I am not in the position to change insurance law of Japan or any country. You must fly 747SP now to arrive at 1200N JST on March 15 in OKA.”
That email was responded to at 23:51 that day by Mr Butler who explained in his email that the defendant had always intended to get “normal insurance cover”, that there may be a need to nominate insurance arrangements for foreign airports and that a variety of permissions may be needed to permit the flight to take place.
On 13 March 2000 at 17:35, Mr Yanamoto emailed Mr Butler as follows:
“NPAJ requested me to clarify deadline (JST) go-sign for “take-off” for following cases. This is very important for gov’t to judge the timing to pick-up them there.
1 Case of arrival at 1200N JST on 15 March.
2 Case of arrival at 1200N JST on 16 March.”
The same document was transmitted by fax. On it Mr Yanamoto had written in very large bold print “URGENT!!” and “PLEASE REPLY”.
On 13 March 2000, the defendant entered into “a business understanding” with Pratt & Whitney for the sale and purchase of the subject aircraft (“the Aircraft”). That understanding was confirmed in a fax from Pratt & Whitney to Mr Butler on 13 March. It also advised that “the ferry flight of the aircraft requires an FAA certificate of airworthiness” and that “The FAA imposes strict technical requirements, which must be satisfied in order for the FAA to issue a certificate of airworthiness. We have been advised that it will take until Friday, March 17th for the aircraft to be technically prepared and eligible for the certificate of airworthiness.”
On 15 March 2000, the defendant faxed a copy of a signed agreement for purchase of the Aircraft to Pratt & Whitney. The defendant took delivery of the Aircraft on 16 March 2000.
On 15 March 2000, Mr Butler faxed officials of NPAJ details concerning the flight of the Aircraft from Victorville in the United States, noting that he was “in constant contact with Sakai-San regarding this matter and the completion of the engineering, maintenance and checking tasks …”. The reference is to Commander Sakai of the NPAJ.
In an email on 15 March 2000, Mr Yanamoto requested Mr Butler to advise by fax the crew lists and the results of the FAA check. Mr Butler’s response at 3.54 on 15 March referred to his “close coordination with Sakai-San about the completion of the delivery and handover of the aircraft to our crew”.
On 16 March 2000, in an email to Mr Butler at 10:10am, Mr Yanamoto referred to the FAA inspection and mentioned discussions with Commander Sakai in that regard. He stated –
“2 Timing
In case one day delay, namely scheduled arrival of 1200 hours or latest 1900 hours JST of 15 March should be further delayed till 16 March, NPAJ will be forced to abandon this contract with us Global Air Leasing & ACI, as there would be no meaning to charter aircraft because it would not be in time for picking up VIPs there.”
On 16 March 2000 at 2:45pm Mr Butler emailed Mr Yanamoto stating –
“Sakai-San has again managed to delay the release of the prisoners for one more day. So we have to base departure tomorrow from VCV (and ask you to please now do a new schedule based on 9am departure – which has been requested from Sakai-San).”
He went on to explain that the reasons for the delay were FAA’s delay in issuing the certificate of airworthiness, an export certificate of airworthiness and a ferry permit. Further, he said that delay had been caused, in part at least, by a mistake on the part of a representative of the inspection authority. He asked “please prepare the new plan and let me have a copy here. Sakai-San stays in the office here with me for now”.
On 17 March 2000, at 18:32 Mr Butler advised representatives of the plaintiff in an email – “The bird has flown! Departure 1am California time.” He went on to note that “Sakai-San has an urgent request from his superiors to direct the aircraft to NRT (Narita) instead of OKA (Okinawa) and then directly to AMM (Amman)”.
Mr Yanamoto met the aircraft on its arrival at Narita and paid the pilot and crew. He also arranged and paid for their accommodation. Mr Yanamoto had that morning, or possibly in the course of the previous evening, heard that the Japanese Government was looking into using another aircraft for the proposed venture.
Mr Butler gave evidence of being in constant communication with Commander Sakai in the days leading up to and including 17 March. He said that Commander Sakai was in his office when he was informed that the plane had taken off and that he told Commander Sakai of its departure. He claims that Commander Sakai said “Congratulations, Mr Butler, your contract is now secure”. He said that some hours later Commander Sakai received a telephone call from Japan requesting that the flight be diverted from Okinawa to Narita, that Commander Sakai conveyed the request to him and that he gave appropriate directions.
The plaintiff, seemingly having lost confidence in the ability of the defendant to perform its obligations on time, chartered an aircraft from Aeroflot on or before 17 March. It was that aircraft which flew to Jordan, collected the four Red Army members (one had been permitted to stay in Lebanon) and returned with them to Japan. These persons had been obliged by Lebanese authorities to board a plane bound for Amman. On disembarking at Amman airport, they were told that they had been denied entry to Jordan and were escorted by Jordanian officials to the waiting Aeroflot aircraft and placed on board. Precisely what took place in that regard will be discussed later.
Events after 17 March 2000
On 18 March 2000 the defendant was given instructions that the aircraft should leave Narita airport and Japanese air space before curfew at 11pm. The defendant complied with the instruction. In the course of cross-examination, Mr Butler said that he told Commander Sakai –
“This aircraft is being held up on purpose. If I were you, I would get another aircraft to do the mission. If we don’t fly, our contract is cancelled and we have to refund the money and you know very well, because I have given copies of everything, that we have spent the money on buying the aircraft and preparing for the mission. … If you are going to use us at all, use us as a decoy.”
In cross-examination he swore that Commander Sakai, after speaking by telephone to a superior in Japan, said “Mr Butler, you are authorised to depart whenever you can get clearance”. This, according to Mr Butler, meant that “the time pressure had gone off”. No evidence of this nature was given in the course of evidence-in-chief.
Mr Butler’s evidence was that it was not until “some weeks” after 17 March that the plaintiff made it plain that it was demanding repayment of some or all of the moneys paid under the contract. I do not accept Mr Butler’s evidence in this regard as other evidence suggests that the plaintiff requested repayment rather earlier than that.
In an email of 18 April to Mr Butler, Mr Yanamato complained of a lack of communication from Mr Butler which was forcing him to “give up negotiation with you” and to leave him to negotiate with NPAJ on his own. Mr Butler responded in an email four days later, referring to various enquiries he had made concerning other aircraft and said –
“The main underlying purpose of these actions has been to preserve and ensure the continuing value of the aircraft, as this is fundamental to our current solid secure position so that at the end of the 12 months we shall be able to honour the terms of our agreement with regard to the return of the security deposit.”
The relevance of the value of the Aircraft is that, by this time, the plaintiff had become aware that the defendant had used the security deposit as part of the purchase price of the Aircraft and Mr Butler was endeavouring to provide reassurance about the defendant’s ability to repay the deposit. Subsequent reassurances as to the return of the security deposit 12 months after 18 March were given in emails.
On 9 March 2001, the plaintiff’s solicitors wrote to the defendant alleging breach of contract and demanding repayment of the sum of US$1.2 million “as GAL completely failed to carry out its obligations under the Agreement”. Repayment of the sum of US$6 million was demanded by 18 March 2001. No such payments have been made.
Relevant contractual provisions
The contract recites –
“The parties are desirous of entering into an agreement whereas ACI has contacted Global Air with a request to provide full turn key basis ‘Charter Flight arrangement’ for NPAJ & TDPPO to provide for the air transportation of NPAJ & TDPPO’s personnel from Japan for NPAJ & TDPPO to meet and collect certain other personnel in the Middle East and return with them to Japan.”
Other relevant provisions of the contract are as follows –
“1.CHARTER REQUIREMENTS
…
(iii)The aircraft shall be used by ACI for the carriage of up to 60 passengers or otherwise as mutually agreed by the parties concerned for flights provisionally intended to originate from either Narita (NRT) or Okinawa(OKA) Japan (at the ACI’s option) then a positioning flight to Cairo (CAl) Egypt for flight to Amman (AMM) Jordan (at ACI’s option this may be another port in the Middle East) then returning to the originating airport in Japan provisionally either NRT or OKA.
…
2. CHARACTERISTICS OF AIRCRAFT
Global Air shall forthwith from the date of this agreement and receipt of the transfer of cleared funds as set out in clause 7 hereof provide for the use of ACI, on their nominated timetable for the flights herein, one (1) Boeing 747 aircraft in good and airworthy condition to comply with stage 111 noise requirements in passenger configuration.
…
6. FORCE MAJEURE
Neither party shall be liable for any delay or failure in the performance of any flight or any other obligation under this agreement due to any cause beyond that parties reasonable control including but not limited to maintenance, fires, floods, storms, strikes, lockouts or other labour disputes, embargos, riots. insurrection, war, terrorism or Acts of public enemy or acts of God.
7. CHARTER PRICE
Subject to ACI receiving payment from its principals pursuant to their separate agreement, ACI shall be liable to pay the Charter Price of US$1,200,000.00 upon the signing of this agreement in the following manner
(a)The sum of $US1,200,000 shall be paid by SWIFT wire transfer in accordance with the bank details provided by Global Air in its advice to ACI this day;
(b)ACI shall after signing of the agreement and payment of funds set out in paragraph (a) hereof may prior to the nominated aircraft’s departure to be positioned for this purpose of this charter flight elect not to proceed with the charter flight arrangements and upon such notice in writing from ACI then Global Air shall refund to ACI all monies paid hereunder less those funds expended by Global Air. In that ACI shall have no further liability under this agreement and Global Air shall have no further claim under the agreement. The parties acknowledge and agree that because of the nature of the Charter Flight arrangements and the urgency of the requirement for aircraft no refund shall be available to ACI after to (sic) commencement of the positioning flights excepting the provisions of clause 12 hereof.
(c)ACI shall facilitate and cause to be paid a security deposit to Global Air in the amount of $US6,000,000 which at the option of ACI may be secured over the aircraft and the guarantee of ACI that in the event of loss of the aircraft through acts committed against Global Air or ACI during these flights and for a period afterwards that Global Air shall be held blameless for such loss and the security deposit shall in such case be forfeit in whole or in part at the discretion of Global Air in proportion to the loss suffered. Otherwise this amount of $US6,000,000 shall be repaid to ACI or its principals NPAJ & TDPPO at the expiration of 12 months from the date of the last flight under this Charter Flight arrangement.
…
10.ACI TO NOMINATE PORTS AND FLIGHTS IN SCHEDULE.
ACI acting for its principals NPAJ & TDPPO shall nominate the ports of destination in the Middle East and Japan until arrival of the flight designated Global Air #1 and Mr Kazuharu Hirano, Senior Superintendant of NPAJ, leader of the delegation who shall nominate the ports (in place of ACI) thereafter and the times of arrival and departure from those ports provided always that such schedules do not affect those areas reserved solely for the decisions of Global Air as set out in Clause 9 above.
12.REFUND PROVISIONS
In the event of any significant unremedied act of default by Global Air, Global Air shall refund to ACI the unexpended amounts of its payment received for the Charter Flight as herein contracted. In addition, in the event that such acts happen prior to the first flight Global Air shall refund the whole amount without deduction upon receipt of demand notice from ACI.”
Clause 15 provides that the law of the contract is that of the State of Queensland.
The plaintiff’s claims for recovery of the sums of US$1.2M and US$6M.
In the statement of claim, the claim for recovery of US$1.2M charter fee is based entirely on an alleged total failure of consideration. On the trial, without seeking leave to amend, the plaintiff claimed an entitlement to repayment of the subject monies under clause 12 of the contract. There was no objection to that course, probably because the material facts necessary to support the claim under clause 12 , other than the clause itself, were pleaded. Return of the security deposit of US$6M was claimed to be recoverable under clause 7(c) of the contract and on the basis of a total failure of consideration.
The only defence to the latter claim is the defence of illegality which is addressed later.
The claim for repayment of the US$1.2M on the basis of total failure of consideration, must fail as the plaintiff’s entitlement to recover monies paid under the contract is specifically provided for in the contract and, in particular, in clauses 7(b) and 12. In those circumstances, there is no scope for the making of a restitution claim on the basis of total failure of consideration.[1]
[1]C.f. Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) (1994) 1 WLR 161.
The plaintiff’s case in reliance on clause 12 is that the defendant committed at least 3 significant acts of default prior to the “first flight” of the aircraft which gave rise to an obligation by the defendant to refund all moneys paid under the contract “upon receipt of demand notice from ACI”.
The acts of default alleged are the defendant’s failure to comply with the timetables nominated by the plaintiff in these communications –
(a) an email by Mr Yanamoto to Mr Butler of 9 March 2000;
(b) an oral instruction by Commander Sakai to Mr Butler of 11 March 2000; and
(c) an email from Mr Yanamoto to Mr Butler on 13 March 2000.
The defendant admits the sending and receipt of the emails and the giving of the oral instruction and it is common ground that there was a failure to comply with any of the requests contained in those communications. The defendant denies however that they constituted nominations in accordance with clause 10 of the contract. It further alleges that they were notices and, as such, were required by clause 14 of the contract to be served on the defendant at its Fortitude Valley address by registered mail, overnight courier or facsimile transmission.
The defendant also contends that as there was no termination of the contract by the plaintiff prior to the departure of the Aircraft on “the positioning flight from the USA to Japan”, the plaintiff was entitled to retain the charter fee.
The defendant’s case in this regard appears to be based on the premise that the reference to “first flight” in clause 12 encompasses the flight of the Aircraft from the United States to Japan. This conclusion, it is submitted, is supported by the conduct of the plaintiff after 17 March in which it requested a reduction in the charter fee, not its repayment in full, and by its conduct in waiting for 12 months before taking proceedings to recover the security deposit.
Those matters may constitute admissions of sorts against the plaintiff,[2] the strength of which must be gauged in the light of the circumstances in which the admission is made. For example, is the “admission” consistent also with a desire not to rely on a strictly legalistic approach? Also the existing weight of authority favours the view that the construction of a contract cannot be determined by reference to the subsequent conduct of the parties.[3]
[2]Ashton Mining Ltd v Commissioner of Taxation [2000] FCA 590
[3]FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343; Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-330 and Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 164.
Mr Yanamoto’s evidence establishes that the flight from the United States to Narita was a “positioning flight”. He said, in effect, that such a flight was one from the plane’s port of origin to the place at which the passengers are to embark. The expression “positioning flight” is used in clause 1(iii) to include a flight from Japan to Cairo in readiness for a further flight to Amman but I do not think that this affects the construction of clause 12.
Clause 7(b) plainly uses the expression “positioning flight” in the sense in which it was described by Mr Yanamoto.
The defendant alleges that it was an implied term of the contract or it is to be implied by custom and usage within the air charter industry that “first flight” in clause 12 is a reference to a “positioning flight”. I do not accept that argument. There is no credible evidence which supports any implication on the grounds of custom or usage and it was not explained how the test for implication of a term propounded in Codelfa was met.[4]
[4]Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 334 at 336.
Clause 7(b) provides that “prior to the … aircraft’s departure to be positioned” for the purposes of the charter flight ACI may elect not to proceed with the charter and all moneys apart from those already expended shall be refunded in full. The subclause concludes “… no refund shall be available to ACI after to (sic) commencement of the positioning flights excepting the provisions of clause 12 hereof.”
As the unavailability of the refund in the circumstances referred to clause 7(b) is made subject to the provisions of clause 12, there is no compelling reason why “first flight” in clause 12 should have the same meaning as “positioning flights” in clause 7(b). Presumably the parties used the different expressions in interrelated clauses to convey different meanings. In my view the more natural meaning of “first flight” is the “first flight pursuant to the contract” rather than any flight the aircraft operator must undertake to enable it to make the flights required by the contract.
There is an oddity about the use of the plural, “positioning flights” in clause 7(b). Perhaps there may be more than one positioning flight if for some reason an aircraft has to go via another airport on its way to collect its passengers or cargo. I doubt that the expression “positioning flights” in clause 7(b) can include the “positioning flight to Cairo” referred to in clause 1(iii) and the contrary was not urged by the plaintiff. These matters, however, do not bear directly on the questions of construction which need determination in this case.
Returning to clause 12, my conclusion is that “first flight” means the first flight under the contract. That flight is referred to in clause 1(iii) as a flight “provisionally intended to originate either from Narita (NRT) or Okinawa (OKA)”.
Under clause 12, the plaintiff can recover the whole amount paid under the contract if it can establish “any significant unremedied act of default” by the defendant prior to “the first flight”. As there was no first flight the plaintiff need establish only such an act of default.
Under clause 2 the defendant, subject to the conditions therein stated, had an obligation to provide the plaintiff with an aircraft for use on its “nominated timetable”. Nothing is said about how the nomination is to be effected but obviously the contents of the timetable had to be communicated by the plaintiff to the defendant by some means. The mechanism for such communication is set out in clause 10 which relevantly provides that “ACI acting for its principals… shall nominate the ports of destination… and the times of arrival and departure from those ports.”
One of the nominations relied on was given orally and the other two by email. Consequently, if clause 14 applies, they did not meet its requirement that they “shall be served by registered mail, overnight courier or facsimile transfer (sic) to Global Air, ACI at the respective addresses set out as follows:”.
The plaintiff argues that clause 14, which refers to any “notice required hereunder”, has no application to the provision of a “nominated timetable” under clause 2 or to nomination under clause 10. It is pointed out that clause 7(b) refers to “a notice in writing” and it is submitted that clause 14 relates to this notice. It is also submitted that the urgency surrounding the charter flight suggests that any nomination should be able to be given “at a moment’s notice”.
The only provisions of the contract which could conceivably contain reference to a “notice required hereunder”, to use the words of clause 14, are –
Clause 2 – “nominated timetable”
Clause 7 (b) – “upon such notice in writing”
Clause 7 (c) – “bank account nominated in writing”
Clause 9 – “the suggestions or requests of ACI”
Clause 10 – “shall nominate the ports”
Clause 12 – “upon receipt of demand notice”
On the plaintiff’s argument clause 14 applies to the notices mentioned in clauses 7(b) and 12 because they are “notices” not “nominations”. But “notice” in clause 14 is not used in the sense of “any document or thing described as a notice” but in its normal commercial sense of formal notification to a person of some fact or matter. In the Shorter Oxford English Dictionary “notification” is defined as “the action of notifying; an intimation, a notice.”
It is arguable that as subclauses 7(b) and (c) respectively expressly require “notice in writing” and “a bank account nominated in writing”, there is no obligation under clauses 2 and 10 for a timetable to be nominated in writing, and that, where the nomination is oral, clause 14 does not apply. I consider however that this approach would be to treat the contract as a more sophisticated and precisely worded instrument than it in fact is. Some support for this approach may be found clause 12 which speaks of “receipt of demand notice from ACI”. The clause does not specifically require a notice to be in writing but one would think that to be the parties’ likely intention.
I conclude then that the defendant’s argument based on clause 14 is sound. But despite the requirements of the clause, the evidence strongly suggests that the parties adopted email and oral communications as their preferred, if not almost exclusive, means of communication and that the defendant was content to receive any notices or notifications under the contract in this way. The pleadings, however, contain no allegations of waiver or estoppel in this regard and no reliance was placed on waiver or estoppel in addresses. It is thus inappropriate that there by any finding of waiver or estoppel in relation to the nominations of timetables.
There are other difficulties confronting the plaintiff’s claim for recovery of the US$1.2M. The defendant pleaded that the plaintiff acquiesced in the defendant’s delay and alleged that the positioning flight undertaken was one which was made at the request of the plaintiff by its agent, Commander Sakai. A related allegation is that the plaintiff, by Commander Sakai, directed that the port of destination of the positioning flight be changed from Okinawa to Narita during the positioning flight. The acquiescence allegation relies also on –
(a) An allegation that Commander Sakai expressed no objection to the timetable employed by the defendant;
(b) An allegation that Commander Sakai, through his conduct and words, acquiesced in any alleged delay;
(c) An email to the defendant from Mr Yanamoto of 13 March 2000 in which he sought clarification of the deadline for “take-off” for arrival at 12 noon Japanese standard time on 15 and 16 March respectively; and
(d) Various discussions between Commander Sakai and Mr Butler in which Commander Sakai “enquired as to whether the aircraft could be positioned in Jordan on dates after 15 March 2000”.
It is also alleged[5] that on 18 March, after instructions were given to the defendant by the plaintiff that the Aircraft was no longer required to carry out the charter, Commander Sakai told Mr Butler that, as the defendant had commenced the flight before the charter was cancelled, it was entitled to the charter fee. Mr Butler, although giving the evidence referred to in para [27] above, gave no evidence in support of this allegation. It is denied by the plaintiff and is not sustained as the defendant failed to discharge its onus of proof.
[5]In paragraph 7 of the defence.
Although I do not regard Mr Butler as a reliable witness, I find that conversations along the lines of those referred to in para [27] above did take place between him and Commander Sakai. Commander Sakai was not called to give evidence, it was not put to Mr Butler that no such conversations took place and the conversation is mentioned by Mr Butler in correspondence without being refuted. I do not accept, however, Mr Butler’s evidence to the effect that he suggested to Commander Sakai that the Aircraft be used as a decoy and that the plaintiff used it as a decoy. The evidence reveals that the plaintiff came to regard the defendant as unreliable and it was this which caused the plaintiff to obtain the Aeroflot aircraft and to inform the defendant, by necessary implication, that its services under the contract were no longer required. It did this by telling Mr Butler that the Aircraft had to leave Narita airport by a particular time. Contrary to the impression Mr Butler tried to create in his oral evidence, both the plaintiff and the defendant understood and accepted on 18 March 2000 that the plaintiff no longer had any need for the Aircraft and would not use it pursuant to the contract.
It is alleged in the defence that Commander Sakai requested that the flight plan for the Aircraft be altered by redirecting it from Okinawa to Narita. In the reply the request is admitted and it is conceded that the request was made after the departure of the Aircraft from Victorville and that there was compliance with the request. Plainly, this was after it had become apparent that the defendant was not able to comply with any of the three nominations relied on by the plaintiff.
In that combination of circumstances, the plaintiff affirmed the contract and lost the right to determine it in reliance on a prior “significant unremedied act of default”. Keeping the contract on foot in circumstances in which the defendant was obliged to continue expending moneys in an attempt to ensure performance, in my view, is inconsistent with the right to rely on past unremedied acts of default under clause 12 in order to terminate the contract or to require repayment of the moneys paid under it. Consistently with general principle, the plaintiff, upon the happening of an unremedied act of default, was put to its election as to whether to demand repayment under clause 12 or to permit the defendant to continue with performance.
The plaintiff was not bound to elect at once but “any act done by it … consistent only with the continuance of the contract on foot … would … constitute an election against rescinding”. Moreover, it could not keep the matter open if the defendant would be prejudiced by the consequences of the delay.[6]
[6]Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55.
As is explained in the joint judgment in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) – [7]
“The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation: ‘It is of the essence of election that the party electing shall be “confronted” with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice’.”
[7](1993) 182 CLR 26 at 41.
Clause 12 does not provide that the plaintiff must terminate the contract in order to avail itself of its right of refund. That right, on a literal reading of the clause, is triggered by default without any further action being required, apart from demand under the second limb of the clause.
In my view, however, it is implicit in the clause, either as a matter of construction or as a matter of fact by application of the test in Codelfa[8] that if the plaintiff is to avail itself of its right of refund arising out of a default, it cannot, after that default, continue to insist that the contract be performed or act in a way which is consistent only with the continuance of the contract. Were it otherwise, the plaintiff could avail itself of a breach early in the life of the contract to insist on the refund of all moneys paid under the contract even though the defendant, subsequent to the breach, had fully performed its obligations and the plaintiff had enjoyed the full benefit of the contract.
[8](1982) 149 CLR 337.
In view of this conclusion, it is unnecessary to determine the correctness of the defendant’s contention that by changing the flight timetable from time to time the plaintiff effectively abandoned the earlier nominations and relieved the defendant from the obligation to comply with them or, alternatively, waived reliance on any earlier nomination. The pleading uses the term “acquiescence” but I do not consider that anything depends on that. It is merely a legal categorisation of the conduct pleaded and it is open to the defendant to rely on waiver if the facts pleaded support such a case. The defendant’s argument in this regard is a substantial one as after the date of the last nomination relied on there is evidence that the release of the deportees had been deferred in order to accommodate later flight times which were variously discussed and nominated.[9]
[9]See Exhibit 10 for some such nominations.
The defendant also relies on force majeure on the basis that any delay resulted from the Aircraft’s “maintenance” problems. Again, it is not necessary for me to determine this point. I content myself with the observation that “maintenance” is a term which, normally, is referable to the keeping of plant and equipment in good order and condition rather than doing whatever is required to enable the plant and equipment to be put into service in the first place. The “maintenance” to which clause 6 refers, in any event, is something beyond the defendant’s “reasonable control”.
For the sake of completeness, and in case this matter goes on appeal, I record that I found Mr Yanamoto to be a careful witness who gave his evidence to the best of his recollection. Generally, I consider his evidence to be reliable.
Accordingly the defendant succeeds in resisting the claim for repayment of the US$1.2M.
The allegation that the contract is void or unenforceable on the grounds of illegality.
It is pleaded that the contract –
(a) Was entered into for a purpose prejudicial to the administration of justice. (particulars allege that “the purpose of the charter flight” was to participate in the removal of the Japanese Red Army members from Jordan to Japan “without complying with any lawful process for the extradition of individuals from Jordan”).
(b) Is inimical to a friendly State, namely the State of Jordan, in that it would violate Jordanian law by the extradition of Japanese nationals without their consent.
(c) Had as its purpose the committing of the tort of trespass on the Red Army members by their removal from Jordan “by making harmful or offensive contact with them by forcing them to return to Japan without their consent”.
(d) Had as its purpose the participation in the committing of acts that are crimes in the State of Queensland, namely kidnapping under s 354 of the Criminal Code and conspiracy to commit crime under s 541 of the Criminal Code.
Allegations (a) and (b) were not made out as no evidence was led to prove relevant Jordanian law. The content of such law had to be proved as a matter of fact by admissible evidence.[10]
[10]See eg National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209.
The evidence reveals that Jordanian authorities took the deportees to the substitute Aeroflot aircraft and escorted them on board. Plainly, there had been liaison between the Japanese and Jordanian Governments concerning the deportation and there is thus no reason why the presumption of regularity should not apply.[11] In any event, there is no evidence of a purpose to participate in the deportation without complying with Jordanian law or “any lawful process for the extradition of individuals from Jordan”.
[11]Carpenter v Carpenter Grazing Co Pty Ltd (1987) 5 ACLC 506 at 514.
In R v Governor of Brixton Prison, Ex parte Soblen,[12] Denning MR, after referring to Thomas Mann’s case[13] said - [14]
“It seems clear from that case that by international law any country is entitled to expel an alien if his presence is for any reason obnoxious to it; and as incidental to this right, it can arrest him, detain him, and put him on board a ship bound for his own country … It was suggested before us that there was a common law shackle on this power of deportation. It was said that a man could not be deported, even to his own country, if he was a criminal who had fled from it. No authority was cited for this proposition. It cannot stand examination for one moment.”
[12][1963] 2 QB 243.
[13]Unreported. (Recorded in Lord McNair’s International Law Opinions (1956), Vol 2 p 111).
[14]At 301.
In the absence of evidence as to the law of Jordan, or Japan for that matter, it has not been established that there was any impropriety or irregularity in the Government of Jordan selecting Japan as the deportees’ country of destination. The deportees were Japanese citizens and the evidence does not reveal that any other country was prepared to receive them. Indeed, the evidence suggests to the contrary. Questions may arise in some cases as to whether extradition processes are able to be circumvented by the making of a deportation order[15] but no such question arises in this case.
[15]C.f. Znoty v Minister of State for Immigration (1972) 126 CLR 1.
The trespass said to have occurred was of the nature commonly described as false imprisonment. The acts relied on, as I understand the defendant’s submissions, are the confining of the deportees on the substitute flight against their will and on alleged physical contact between Japanese officials and a female deportee. It may be that the defendants rely also on the conducting of body searches on the deportees by Japanese officials.
At her trial in Japan, the deportee Yasushi Yamamoto gave evidence that she was escorted onto the substitute flight by two Japanese officials who positioned her between them and took hold of her arms. That evidence was contradicted by the evidence of a Japanese police officer who swore that the deportees were taken onto the plane by uniformed Jordanian personnel. The court did not make a finding on the point and there is no good reason why I should accept the evidence of the deportee over that of the police officer. No such allegation was made by the other three Red Army members in the course of their Japanese trials and the weight of evidence is thus against Yanamoto’s allegations.
The deportees had been deported from Lebanon and refused a right to stay in Jordan. They were perceived to be members of an organisation which had committed terrorists acts and which advocated revolutionary struggle through the use of armed force. At least one of the deportees had a prior conviction relating to actual or suspected terrorist activity. Having regard to these considerations, it can hardly be said that the matters complained of went beyond that which was reasonably necessary, either to secure the safety of the Aircraft or to effect deportation. Additionally, even if it were shown that a tort of the nature complained of had been committed, it would not follow that “the purpose of the” contract was to commit a tort. The evidence does not establish an intention on the part of the plaintiff when entering into the contract to act unlawfully in any way and the defendant has failed to satisfy its onus of proof in that regard.[16]
[16]Norton v Angus (1926) 38 CLR 523.
As for the allegations that the purpose of the agreement was to participate in committing acts which are crimes in Queensland, namely kidnapping under s 354 of the Criminal Code and conspiracy to commit a crime under s 541 of the Code, the evidence fails to establish that there was any criminality involved in the deportation. Both offences upon which reliance is placed can be committed only if the relevant conduct is unlawful. An element of the offence of kidnapping under s 354 is an “intent to compel (a person)” to work for “the offender”. That element was lacking here.
On the hearing the defendant sought to argue that there had been a breach of s 355 of the Criminal Code. That offence also requires the conduct complained of to be unlawful. Another answer to the allegations is that the subject acts would not be crimes under the law of Queensland unless committed in Queensland.[17]
[17]Criminal Code s 12.
There is the further difficulty for the defendant that if there was an illegal purpose such as alleged, it was not carried into effect. In those circumstances, it is strongly arguable that the plaintiff can rely on the contract to recover any moneys properly claimable under it.[18]
[18]Payne v McDonald (1908) 6 CLR 208, Tribe v Tribe [1996] Ch 107.
Additionally, it is doubtful that if there was a purpose of acting illegally, it went to the substance of the contract and thus rendered it void.[19]
[19]C.f. Neal v Ayers (1940) 63 CLR 524.
Conclusion
The plaintiff succeeds in its claim for US$6M and there is no reason why interest should not be paid on that sum under the Supreme Act 1995. I will hear submissions on the appropriate form of order. As the basis on which I have decided the outcome of the claim for the US$1.2M was not squarely addressed in counsels’ submissions, I will entertain further submissions in writing, if the parties wish to make them, before midday on 21 July.
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