Kardos v Sarbutt

[2006] NSWCA 111

New South Wales

Court of Appeal

CITATION:	Civil Aviation Safety Authority v Sydney Heli-Scenic Pty Limited [2006] NSWCA 111
HEARING DATE(S):	17 March 2006
JUDGMENT DATE:	9 May 2006
JUDGMENT OF:	Giles JA at 1; Santow JA at 2; McColl JA at 84
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	CONTRACT – Whether compromise agreement gave rise to contractual obligations enforceable by the Court – Capacity of Civil Aviation Safety Authority to bind itself in contract – whether agreement unenforceable as a fetter on CASA’s statutory discretion.
LEGISLATION CITED:	Administrative Appeals Tribunal Act 1988 (Cth) s26; s42C, s42D Civil Aviation Act 1988 (Cth) s3A, s9A, s13; s28, s28BA, s28BB, s31,s32
CASES CITED:	Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1997) 139 CLR 54 Australian Woollen Mills Pty Limited v The Commonwealth (1954) 92 CLR 424 South Australia v The Commonwealth (1962) 108 CLR 130
PARTIES:	CIVIL AVIATION SAFETY AUTHORITY (Appellant) SYDNEY HELI-SCENIC PTY LIMITED (Respondent)
FILE NUMBER(S):	CA 40573/05
COUNSEL:	D F JACKSON, QC/ I L HARVEY (Appellant) B W WALKER, SC/ R J BRENDER (Respondent)
SOLICITORS:	Blake Dawson Waldron (Appellant) McLaughlin Riordan (Respondent)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 2584/02
LOWER COURT JUDICIAL OFFICER:	S Walmsley SC DCJ
LOWER COURT DATE OF DECISION:	06/10/2005

CA 40573/05
DC 2584/02

GILES JA
SANTOW JA
McCOLL JA

9 MAY 2006

CIVIL AVIATION SAFETY AUTHORITY v SYDNEY HELI-SCENIC PTY LIMITED

Judgment

1 GILES JA: I agree with Santow JA.

INTRODUCTION

2 SANTOW JA: A statutory authority, the Civil Aviation Safety Authority (“CASA”), was held to have bound itself to a compromise of proceedings in the Administrative Appeals Tribunal (“AAT”), based on a set of agreed conditions henceforth to be applicable to the respondent’s civil aviation licence. The respondent, Sydney Heli-Scenic Pty Limited (“Scenic”), brought those AAT proceedings challenging CASA’s earlier cancellation of its Aviation Operation Certificate (“AOC”).

3 In barest essentials, the circumstances which led to those AAT proceedings were these. CASA had cancelled the AOC of Scenic. Scenic sought to have that decision set aside by the AAT. A delegate of CASA then purported to agree a compromise with Scenic as above, on the basis of a set of agreed conditions to apply to the AOC thereafter. Before the agreement was acted upon, the delegate advised Scenic that “Canberra” had instructed him to withdraw, which in fact CASA then purported to do. The next day CASA told the AAT hearing that there was no agreement. An application to stay the proceedings was heard and, with CASA opposing it, was dismissed.

4 CASA’s capacity to bind itself in an agreement to compromise was put in issue at trial and again on appeal. The two grounds pressed on appeal were these:

(a) that the subject matter of the contract relied upon was not capable of giving rise to obligations that were contractual in nature, meaning of a kind enforceable by the courts, having regard to the paramount consideration of safety of air navigation mandated by the Civil Aviation Act 1988 (Cth) (“the Act”) and in conformity with that statutory purpose; and

(b) that CASA could not bind itself for the future to exercise its powers and discretions in a particular way as a matter of general principle.

5 The trial judge, Walmsley DCJ, rejected both those propositions. He concluded that a binding and enforceable agreement had been reached between CASA and Scenic, which the parties were obliged to implement. It was held that agreement contained an implied term obliging the parties to approach the AAT jointly, asking it

(a) to set aside the decision made by CASA cancelling the AOC, and

(b) make a new decision in substitution for the decision set aside, imposing earlier agreed conditions applicable to the AOC.

6 Scenic having succeeded at trial, the trial judge awarded it damages. No appeal is now maintained against damages.

SALIENT FACTS

7 Save where indicated, the salient facts are uncontroversial.

8 The respondent, Scenic, is a company owned and operated by Mr and Mrs Webster.

9 Scenic ran a business which conducted helicopter flights, mainly for tourists. One part of the business was based in Cairns and the other part in Sydney.

10 Mr Webster flew Scenic’s helicopters, while Mrs Webster was involved in marketing.

11 Mr and Mrs Webster controlled several other companies, one of which was Detota Pty Ltd. Detota owned the helicopters and leased them to Scenic in an informal arrangement.

12 The appellant, CASA, is a statutory corporation created by the Act.

13 Under the Act and by way of broad summary, the right to operate a commercial airline may be obtained from CASA by applying for and receiving an AOC. CASA has the power to suspend or cancel an AOC if it has concerns about air safety. Before exercising that power, CASA may call upon the holder of the AOC to show cause why the AOC should not be suspended or cancelled. A decision to cancel, suspend or vary an AOC is reviewable, on its merits, in the AAT.

14 For a number of years Scenic had held an AOC. However, CASA had become concerned about the degree of Scenic’s compliance with regulations.

15 On 16 and 21 October 1998, CASA, through its flying operations manager, Mr Leaversuch, issued Scenic with a notice to “show cause” why its AOC should not be cancelled.

16 Some meetings took place between representatives of the appellant and the respondent and a written response to the show cause notice was provided on 11 November 1998.

17 CASA’s relevant statutory powers with respect to AOCs, covering operations by Australian registered aircraft, had been delegated to Mr Leaversuch. On 8 December 1998, Mr Leaversuch sent a letter to Scenic, informing it of cancellation of its AOC effective at midnight on 11 December 1998.

18 On 9 December 1998, Scenic’s solicitor, Mr Dawson, filed an application for review of the decision to cancel the AOC in the AAT, as well as an application for a stay. The stay hearing was listed for 10 December 1998.

19 Also on 9 December 1998, Mrs Webster flew to Hamilton Island to try to finalise the sale of Scenic’s Sydney operation to another aviation company, Heli-Aust Pty Ltd (“Heli-Aust”). Mrs Webster had been discussing the possibility of such a sale with Heli-Aust since late 1997. During her discussions with Heli-Aust representatives on 9 December, Mrs Webster reached agreement in principle.

20 On 10 December 1998, the stay application was adjourned until the following day to permit discussions between Scenic and CASA.

21 After the adjournment of the stay application and prior to the meeting with CASA, Mr Dawson prepared a document called “Undertakings made by John and Sheila Webster to CASA”. In order to allay CASA’s concerns about their continuing role in air operations, the Websters effectively undertook to:

(a) install a Mr Tremain, an experienced pilot, as safety officer for the Cairns office, with the Websters conveying all communications to employees there through him and so that Mr Tremain would have the responsibility of ensuring Scenic complied with CASA’s safety and administrative requirements, and

(b) install a Mr Slingsby as chief pilot to replace Mr Webster (see Red, 46C-47X).

22 Mr Dawson showed this document to Mr Webster but not to Mrs Webster, who did not leave Hamilton Island until the afternoon of 10 December.

23 At about 2.30pm on 10 December 1998, Messrs Dawson, Webster and Tremain went to CASA’s offices. Present from CASA were Mr Leaversuch, Mr Cannell (a legal officer), Mr Sparrow (Acting District Manager for Bankstown) and Mr Cartledge (CASA’s “counsel” for its South East region).

24 Following discussions, Mr Leaversuch said, “I will accept the proposal which you’ve put in this document which will allow the Cairns operation to continue. Sydney however must cease operations.” He requested some amendments to the undertakings, to which Messrs Dawson, Webster and Tremain agreed.

25 A few other matters were discussed. Mr Cartledge then said to Mr Dawson, “It probably remains for the two of use to tidy up the arrangement…”

26 Not long after Mr Dawson left the meeting, he received a call from Mr Leaversuch. Mr Dawson’s account of this conversation was as follows:

“Mr Leaversuch: “I’ve been instructed by Canberra to withdraw from the agreement.” …

Mr Dawson: “John, you are the delegate. It is not open to Canberra to dictate to you.”

Mr Leaversuch: “I’m sorry, it’s policy. My hands are tied.”

27 On 11 December 1998, at the resumed hearing of the stay application, CASA told the AAT that there was no agreement. The stay application was heard, CASA opposed it and it was dismissed.

28 At midnight on 11 December 1998, Scenic’s AOC expired.

29 On 12 December 1998, Heli-Aust faxed a copy of terms and conditions of sale to Scenic. By that agreement, Heli-Aust would pay $1,000,000 to take over helicopter finance, and for the hangar, equipment, fixtures etc, goodwill and intellectual property. The agreement also contained a turnover provision, which provided inter alia that Heli-Aust would pay 5% of gross takings to the Websters for the first three months, provided they remained active in the business.

30 Mrs Webster received the agreement and sent back a signed copy the same day.

31 It was the Websters’ evidence that they did not know that the turnover provision was in the terms negotiated by Mrs Webster when the settlement meeting took place between Scenic and CASA on 10 December.

32 On 14 December 1998, two Heli-Aust employees travelled to Sydney and began work in Scenic’s Sydney office.

33 On 14 December 1998, Mr Dawson wrote to CASA complaining about its conduct in reneging on the agreement which had been reached.

34 On 16 December 1998, CASA’s “senior legal counsel” replied, denying that CASA had acted inappropriately.

35 On 30 December 1998, Scenic and Heli-Aust signed an agreement for the sale of the Sydney operation. For the hangar, fixtures, intellectual property, consultation etc, Heli-Aust agreed to pay $270,000 together with $30,000 if a particular turnover was achieved. The $30,000 was never paid, but the $270,000 was paid.

36 On 14 January 1999, Scenic sold its Cairns operation to Sunlover Helicopter Pty Ltd for $97,000.

37 The substantive application in the AAT to set aside Mr Leaversuch’s decision never proceeded.

First Instance Judgment

38 On credit, the trial judge accepted ‘without hesitation” the evidence of Mr Dawson (Red 51C) and likewise Mrs Webster’s evidence was viewed favourably.

39 The various findings of fact are not now challenged.

40 However, the findings of law or mixed fact and law remain in dispute as follows.

41 As to whether there was a contract, the trial judge accepted Scenic’s argument that a concluded agreement was made between Scenic and CASA on 10 December 1998, whereby CASA agreed to suspend the cancellation of the AOC or issue a new one, on terms agreed between them. The trial judge accepted that Scenic’s forbearance to sue for the cancellation was good consideration (Red, 61Q-Y, 65W).

42 Although the parties were not in a business relationship, and CASA was a statutory regulator, the trial judge concluded that this did not mean they could not make a contract for the following reasons:

(a) There was clear statutory recognition of CASA’s right to make contracts (s13(2)(a) of the Act),

(b) The trial judge saw nothing in the Act limiting CASA’s power to contract with those it regulates,

(c) Section 13(1) gives CASA power to do “all things necessary or convenient to be done for or in connection with the performance of its functions” while s13(2)(a) included in that context a power “to enter into contracts”,

(d) Those functions included conducting the safety regulation of civil air operations (s9(1)).

(e) Given the concerns expressed by CASA in the show cause notice and the outcome reflected in the undertakings, with the amendments, the making of the contract contended for by Scenic was a precise reflection and exercise of its functions and powers,

(f) There was no restriction in the Act on the types of contract which can be made, subject to them being within power, and

(g) The trial judge construed CASA’s power to make contracts as sufficiently wide to permit CASA to contract to settle litigation in which CASA was involved (Red, 63F-64D).

43 On the second issue, fettering future exercise of discretion, the validity of the agreement was held not to be affected by the fact that Mr Leaversuch agreed to use his power or discretion in a particular way, viz to permit the existing AOC to continue, with conditions attached, or to cause a new one to issue. The trial judge found persuasive Mason J’s statement in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 at 77:

“Where statutory approval for the making of the contract exists and the contract contains an undertaking that the statutory power will be exercised in a particular way, there is no room for the notion that the undertaking is invalid on the ground that it is an anticipatory fetter on the exercise of a statutory discretion.” (Red, 64F-S)

44 The trial judge observed that if by s26(1) of the Administrative Appeals Tribunal Act 1988 (Cth) (“AAT Act”), CASA was deprived of the power to reverse the cancellation once the application for review was filed in the AAT either:

(a) the AAT would have used it to give effect to the settlement, or

(b) there would been a power in CASA by consent of the parties to do so.

45 The trial judge found that Mr Leaversuch had CASA’s actual and ostensible authority to bind it at the meeting based on the following:

(a) He had made the decision to cancel, having been deputed to do so by instrument,

(b) He had engaged in correspondence and oral negotiations with Scenic,

(c) He occupied a significantly senior position within CASA at that time,

(d) He held himself out as having authority to agree on behalf of CASA,

(e) He acted as though he had, and the trial judge found he regarded himself as having, the authority and power to make the agreement.

46 The trial judge found that the AAT became the decision-maker, and the fact that its proceedings are inquisitorial, did not detract from the argument that Mr Leaversuch had authority to bind CASA (Red, 65O-66H).

47 The trial judge did not consider that the AAT Act prevented the making of an enforceable agreement between the parties to litigation which is pending before it on the following basis.

48 Section 42C of the AAT Act provides for the AAT to make a decision in accordance with settlement terms without a hearing and there was a powerful public interest in parties being encouraged to settle litigation. The trial judge found that the two conditions precedent to the AAT giving consent were satisfied in this case:

(a) The terms must be reduced to writing.
The parties had agreed on the variations to the undertakings so such a document, even with handwritten amendments, could have been handed up.
(b) The AAT must be satisfied a decision in those terms or one consistent with them would be within its powers:
The agreement was reached at a conference suggested by the Deputy President of the AAT, both parties had legal representation, and CASA had personnel in its area of expertise (civil aviation) present (Red, 68J-69H).

49 The trial judge did not find persuasive the argument put by CASA that there could never have been an agreement reached, since, although orders were to be made by consent, there yet rested in the AAT a discretion as to whether or not to make the order.

50 The trial judge did not consider the AAT’s consent to be a condition precedent. It was never suggested that the settlement would be “off” if the AAT did not make consent orders (Red, 66J-67C, 67P-68F).

51 The trial judge found that CASA was bound to instruct its solicitors to ask the AAT, in company with Scenic’s solicitor, to make consent orders to reflect the agreement (Red, 69H-J).

52 Although it was unnecessary for the trial judge to decide the question (because he accepted the s42C argument), he accepted Scenic’s argument in the alternative that s26(1)(b) and s42D of the AAT Act provided relevant sources of power for the settlement agreement to have been implemented (Red, 69L-R). (Pursuant to s26(1)(b) of the AAT Act the parties to the proceeding and the Tribunal may consent to the making of an alteration to a decision under review. Pursuant to s42D of the AAT Act the Tribunal may remit the decision for reconsideration to the person (CASA) who made it.)

53 The trial judge rejected CASA’s contention that the settlement meeting had nothing to do with how the AAT proceedings were to be resolved and was directed only to how Mr Leaversuch was going to exercise his power. The trial judge found that resolution of the AAT proceedings was one of the central issues the parties intended to resolve. The whole context and content of their discussions supported that (Red, 69T-70D).

54 The trial judge found that on 10 December 1998 at the settlement conference at CASA’s office the parties intended to and did make an agreement which incorporated terms 1, 2 and 3(a) of the document “Terms of the contract for which Scenic contends” (Red, 70I-72X). That document sets out those terms as follows:

“Terms of the contract for which Scenic contends:
1. The Plaintiff and CASA agreed that the following matters were suitable conditions to be imposed upon Scenic’s AOC in lieu of the cancellation of the AOC, such conditions to be effective from midnight 11 December 1998 and continuing until the Defendant chose to dispense with the requirements thereof;


A. The plaintiff and Mr and Mrs Webster shall have no financial or management interest in the Sydney operations formerly conducted by the Plaintiff.

B. The existence of a management agreement with Alfred Tremain or some other suitably qualified person satisfactory to the Defendant which agreement provides for the following:


a. The Websters and each of them shall have no communication with any staff member of the Cains operation pertaining to an operational matter.

b. All directions, correspondence, memoranda and any other communication directed to any member of staff of the Cairns operation shall be forwarded to the safety manager who shall be responsible for assessing whether such communication will have any adverse affect and/or is strictly in compliance with the relevant Civil Aviation Regulations and Orders. The Safety Manager shall be responsible for passing all communications of an operational nature to staff employed at the Cairns operation.

c. The safety manager shall provide written reports to CASA on a fortnightly basis or at such interval as CASA may prescribe, confirming that no communication has passed between the Websters and any employee of the Cairns operation pertaining to an operational matter and the safety manager shall provide any further information which CASA may require.

C. The engagement of Aerosafe Industries to provide a safety audit of the Cairns operation commencing on or before 8 January 1999 (the “Conditions”).

2. CASA agreed to expedite the proposed application to be made to it for Richard Slingsby to be approved as Chief Pilot of the Cairns operation. 3. To implement the first term of the agreement the parties agreed to jointly approach the AAT and ask it either:


a. to set aside the decision made by CASA cancelling the AOC and make a new decision in substitution for the decision set aside, being the imposition of the Conditions, or

b. to remit the proceedings to CASA, in which event CASA further agreed to set aside the decision, and make a new decision, in substitution for the decision set aside, being the imposition of the Conditions.

c. to consent to CASA altering the decision made by CASA cancelling the AOC, by setting aside the decision and making a decision in substitution being the imposition of the Conditions.

4. Alternatively to 3 above, to implement the agreement by issuing a new AOC effective from midnight 11 December 1999, imposing the conditions.”

55 The trial judge considered those terms provided coverage of all major matters. In particular the undertakings with variations provided the evidentiary foundation for terms 1A, B & C and term 2. The trial judge was satisfied that term 3a satisfied the requirements for an implied term (Red, 73D-O).

56 The trial judge found that the terms of the agreement, as found, reflected, or at least were not inconsistent with, the exercise of CASA’s powers in the interests of safety (Red, 75F-L). No further term was necessary to the effect that CASA could not suspend or cancel the AOC the following day. CASA continued to have that right anyway, subject to proper cause being shown, which it did not attempt to do (Red, 75L-P).

57 The trial judge concluded that

(a) the parties intended to make a concluded agreement and had succeeded, and

(b) CASA was in breach of cl 3a of the agreement which was in binding form (Red, 75-76) in failing jointly to approach the AAT in the manner so agreed.

58 The trial judge concluded that Scenic was entitled to damages as flowed from the breach. These were assessed at $200,000.

DISPOSITION
Was a binding contract precluded by CASA’s duties under the Act?

59 The essential proposition advanced by the appellant is that the Act in its numerous references to safety (see in particular ss3A, 9(1) and 9A(1)), amplified by those of its provisions dealing with the issue of AOCs (see in particular ss28(1) and 28BA) strongly militates against the notion that the exercise of powers relating to safety of civil aviation could be the subject of agreements having binding effect as contracts.

60 Thus s3A of the Act describes the main object of the Act as being:

“(i) …to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents.”

61 CASA is by s9(1) given the function

“… of conducting the safety regulation of the following, in accordance with this Act and the Regulations:

(a) civil air operations in Australian territories …

Section 9(1) then sets out, in paragraphs (c) to (h), means which may be used to perform that function. I interpolate that it does so in a non-exhaustive fashion. One means is that referred to in s9(1)(e), namely the issue of certificates, licences, registrations and permits. This clearly includes the AOC itself.

62 Moreover, s9A(1) of the Act states that in exercising its powers and performing its functions, the appellant:

“(a) … must regard the safety of air navigation as the most important consideration.”

63 No reliance was placed on s28BB(3) of the Act as representing some sort of exclusive code for variation of the conditions applicable to an AOC, this not having been argued below.

64 However, particular importance was attached by the appellant to s28(1) of the Act. It provides that the appellant is to issue an AOC “if and only if”:

“(a) CASA is satisfied that the applicant has complied with, or is capable of complying with, the provisions of this Act, the regulations and the Civil Aviation Orders, that relate to safety , including provision about the competence of persons to do anything that would be covered by the AOC; and

(b) CASA is satisfied about the following matters in relation to the applicant’s organisation:


(i) the organisation is suitable to ensure that the AOC operations can be conducted or carried out safely , having regard to the nature of the AOC operations;

(ii) the organisation’s chain of command is appropriate to ensure that the AOC operations can be conducted or carried out safely ;

(iii) the organisation has a sufficient number of suitably qualified and competent employees to conduct or carry out the AOC operations safely ;

(iv) key personnel in the organisation have appropriate experience in air operations to conduct or to carry out the AOC operations safely ;

(v) the facilities of the organisation are sufficient to enable the AOC operations to be conducted or carried out safely ;

(vi) the organisation has suitable procedures and practices to control the organisation and ensure that the AOC operations can be conducted or carried out safely ;

(vii) if CASA requires particulars of licences held by flight crewmembers of the organisationthe authorisations conferred by the licences are appropriate, having regard to the nature of the AOC operations.” [emphasis added]

65 The appellant contended that those numerous references to “safety” in s28(1) emphasise that the role of the appellant in issuing AOCs renders safety the paramount consideration. It was said to follow that this statutory framework rendered any agreement reached of a kind that courts would not enforce, though deliberately entered into by parties intending themselves to be bound. Reliance was placed on Australian Woollen Mills Pty Limited v The Commonwealth (1954) 92 CLR 424 where the High Court (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ) observed that:

“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.” (at 457)

66 Windeyer J adopted that observation in South Australia v The Commonwealth (1962) 108 CLR 130 at 154 when he stated:

“An agreement deliberately entered into and by which both parties intend themselves to be bound may yet not be an agreement that the courts will enforce. The circumstances may show that they did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts. The status of the parties, their relationship to one another, the topics with which the agreement deals, the extent to which it is expressed to be finally definitive of their concurrence, the way in which it came into existence, these, or any one or more of them taken in the circumstances, may put the matter outside the realm of contract law. Undertakings that are political in character – using the word ‘political’ as referring to promises and undertakings of governments, either to their own citizens or to other states or governments – are therefore often not enforceable by processes of law.”

67 The appellant then contends that:

“In light of the nature and purpose of the appellant’s powers, it involves a large step to treat the appellant as entering into a contract (and thus making itself liable to damages, and claims for injunctions and specific performance) when it agrees not to persist with the cancellation of an AOC, because the operator is prepared to accept certain conditions. It also seems rather odd that the operator would also be liable in contract for failing to comply with the terms of such an agreement.”

68 The appellant then contends that, though there be powers to enter into contracts in s13(1) and specifically s13(2)(a) of the Act, the general power to enter into contracts does not enlarge or alter the nature of the appellant’s functions, these being functions to be exercised in a way whereby safety is the paramount consideration. Such a power to enter into contracts must be in aid of CASA’s functions and was not so here.

69 The answer to this contention is twofold. First, it by no means follows that the statutory requirement that safety be the paramount consideration in the exercise of CASA’s functions precludes entry into a binding and enforceable contract of the kind here in question. The second part of the answer lies in a closer analysis of the precise nature of the contract here in question. One could envisage a contract being precluded which, on its face, was incompatible with the paramountcy of safety under the Act. The question is whether this contract was of such a kind. I consider it was not, for reasons developed below.

70 The true nature of the present contract is that it constitutes an agreement by the parties jointly to approach the AAT and ask it, relevantly, “to set aside the decision made by CASA cancelling the AOC and make a new decision in substitution for the decision set aside, being the imposition of the Conditions”. Those conditions are those earlier agreed between the parties to be suitable to be imposed upon Scenic’s AOC in lieu of cancelling it. There was no evidence to indicate that the substitute conditions endangered air safety.

71 Importantly, by s31 of the Act, decisions of CASA are reviewable by the AAT. I consider that, self-evidently, a relevant function of CASA must be to respond to such review. Response may take a variety of forms from opposition to compromise. Thus such a response necessarily encompasses the possibility of reaching a settlement or compromise of the review process, within the framework of the Act. That would of course preclude a compromise which put safety in jeopardy but there is, as I have said, no evidence that this one did.

72 Under the AAT Act itself, it is expressly contemplated that agreements may be reached between the parties or their representatives as to the terms of a decision of the Tribunal in the relevant proceeding (s42C(1)(a) of the AAT Act). It is also contemplated that the terms of such agreement may be reduced to writing signed by or on behalf of the parties and lodged with the Tribunal (s42C(1)(b) of the AAT Act). The Tribunal must be satisfied that a decision in those terms, or consistent with those terms, would be within the powers of the Tribunal; s42C(1)(c). Thereupon the Tribunal may, if it appears to it to be appropriate to do so, act in accordance with s42C(2) or (3). There is, relevantly under s42C(2), power in the Tribunal to make a decision in accordance with those agreed terms without holding a hearing.

73 There is also under s42D of the AAT Act power at any stage of a review proceeding to remit the decision under review to the person who made it for its re-consideration.

74 Section 26 of the AAT Act provides that after an application is made to the Tribunal for a review of the decision, the decision may not be altered save, importantly, where “the parties to the proceedings, and the Tribunal, consented to the making of the alteration” (s26(1)(b)).

75 There is in my view no necessary inconsistency between, on the one hand, the legislation governing CASA including so far as relevant the AAT Act, and on the other, the capacity for parties to reach a concluded agreement, binding at law, whereby the parties agree jointly to approach the AAT and ask it to set aside the relevant decision on agreed terms. Such a contract does not a priori indicate any failure to have regard to safety considerations. Nor, by subjecting CASA to the sanction of damages, does it prevent CASA from taking into proper account safety considerations in reaching such a binding agreement, and otherwise conforming to the Act in the kind of conditions contemplated. There is no submission made that the conditions here contemplated were incompatible with the Act or not within its contemplation.

76 Indeed the very capacity to make such a contract (s13 of the Act) is capable of furthering CASA’s powers under the Act. The parties are able consensually to reach an agreement compatible with safety considerations without the delay and uncertainty inherent in an adversarial contest before the AAT. I agree with the trial judge that there is a powerful public interest in parties being encouraged to settle litigation in the AAT, as in other jurisdictions. I agree in particular with the following observations of the trial judge (at [53]) though with the reservation that I do not consider the AAT would have acted as a mere rubber stamp with respect to the agreement handed up:

“53. … It is true the parties, by the time CASA withdrew from the agreement, had not created just one document to hand the AAT, but they had agreed on the variations to the undertakings so such a document, even a copy of the undertakings with handwritten amendments, I find, could have been handed up. The handing up of such a document would have been consistent with the practice of courts and tribunals when cases are settled. Consideration of the merits appears not to have been necessary. Parliament, as senior counsel for Scenic submitted, provided compromise in the available armoury of dispute resolution. Given the agreement was reached at a conference held at the suggestion of the Deputy President, both parties were represented by counsel and solicitors, and CASA had personnel present and involved in an area where it had special interest and expertise, viz civil aviation, (see: Re Higginbotham and Repatriation Commission 35 ALD 179 at [26]), it is unlikely in the extreme, I find, the Deputy President would not have been satisfied a decision in its terms or consistently with them was within the AAT’s powers. CASA, I find, was bound to instruct its solicitors to ask the AAT, in company with Scenic’s solicitor, to make consent orders to reflect the agreement.”

77 Earlier at [48] the trial judge concluded that, “… as to the question of power, the AAT had power to set aside the AOC’s cancellation and, I am satisfied, would have done so if asked to, as one of the terms of settlement”.

Invalid fetter on future exercise of powers or discretions?

78 The trial judge relied upon these observations of Mason J in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1997) 139 CLR 54 at 77:

“Where statutory approval for the making of the contract exists and the contract contains an undertaking that the statutory power will be exercised in a particular way, there is no room for the notion that the undertaking is invalid on the ground that it is an anticipatory fetter on the exercise of a statutory discretion.”

79 The appellant contends that there were two errors in the trial judge’s judgment on this issue. The first is a repetition of the earlier contention that the trial judge erred in applying s13 of the Act without qualification and without considering the compatibility of such a general power to enter into contracts with the paramount safety considerations of the Act. For reasons I have already stated, I do not consider that argument can be sustained.

80 The second alleged error depends upon treating Mason J’s observations as limited to the kind of “statutory approval” envisaged in that case, namely where “specific approval” was given by the Australian Parliament to the various Airlines Agreements considered in that case. The appellant referred to the judgments in Ansett of Gibbs J (at [62]) and Aitkin J (at [113-4]), with whom Barwick CJ on this point agreed. They were said in each case to justify a narrower reading of Mason J’s statement of principle so that it was limited to those cases of specific statutory approvals of a particular agreement.

81 There is however a short answer to this argument, even were that distinction valid. It is that there was here no anticipatory fetter on the future exercise of a statutory discretion. Rather CASA exercised the discretion there and then by its delegate, who was duly authorised for that purpose under the relevant instrument of delegation to which I have earlier referred. It is readily apparent that ss27 to 32 of the Act, being the specific subject of the delegation, are directly applicable to the issuance of AOCs. It was therefore within the delegated authority of Mr Leaversuch to agree to the substituted conditions which were the basis for the agreement between the parties jointly to approach the AAT. In short, the statutory discretion was not the subject of an anticipatory fetter. Rather the discretion was exercised at the moment when the agreement to compromise was reached.

82 Though the appellant’s written submissions dealt with damages, it subsequently withdrew its appeal on damages. The respondent is entitled to the damages awarded by the trial judge.

OVERALL CONCLUSION AND ORDERS

83 I conclude that there was a binding and enforceable agreement to the effect of that determined by the trial judge and involving no anticipatory fetter. Given that damages are not now in issue, I propose orders as follows:

(1) Appeal dismissed.

(2) Appellant to pay the respondent’s costs of the appeal.

84 McCOLL JA: I agree with Santow JA.

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