Monarch Airlines Ltd v Airservices Australia - [1997] FCA 65

AVIATION - validity of Part VI Division 2 of Civil Aviation Act 1988 (Cth) - whether charges reasonably related to costs of providing services - whether charges ultra vires.

CONSTITUTIONAL LAW - taxation - charges imposed on carriers - whether fee for service - whether "discernible relationship" between charges and value of what acquired - charges fixed by reference to "price sensitivity" and "economic capacity to pay" - whether incompatible with fee for service.

Civil Aviation Act 1988 (Cth) Part VI Div. 2, ss 3, 9, 11 12, 13, 17, 43, 44, 45, 46, 47, 56, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75
Air Services Act 1995 (Cth)
Civil Aviation Legislation Amendment Act 1995 (Cth) s 11
Civil Aviation Amendment Act 1995 (Cth)
Meteorology Act 1955 (Cth)

Attorney-General for New South Wales v Hunter [1983] 1 NSWLR 366
Simpson v Inland Revenue Commissioners [1914] 2 KB 842
R v Holy Trinity and St Mary's [1853] WR 351
Chandris v Union of India [1956] 1 WLR 147
Matthews v The Chicory Marketing Board (Victoria) (1938) 60 CLR 263
MacCormick v The Commissioner of Taxation of the Commonwealth of Australia (1984) 158 CLR 622
Air Caledonie International v The Commonwealth (1988) 165 CLR 462
Australian Tape Manufacturers Association v The Commonwealth of Australia (1993) 177 CLR 480
Northern Suburbs General Cemetery Reserve Trust v The Commonwealth of Australia (1993) 176 CLR 555

MONARCH AIRLINES LIMITED & ORS v
AIRSERVICES AUSTRALIA
ACT G37, G38 and G39 of 1993

CORAM:    BRANSON J
PLACE:    SYDNEY (heard in Canberra)
DATE:     14 FEBRUARY 1997

INDEX

INTRODUCTION 1

-proceedings

THE PARTIES 2

STATUTORY BACKGROUND 3

FACTUAL BACKGROUND 14

SERVICES AND FACILITIES IN RESPECT OF
WHICH CHARGES DETERMINED 22

THE DETERMINATION 24

THE PLEADINGS 31

-Terminal Navigation Charge                31
Rescue and Fire Fighting Charge           33
En route Charge  34
Meteorological Charge  35
Charges Generally  37

THE EVIDENCE 38

-General  38
Economic Theory  39
Allocation of Costs between Charges       43

Use of MTOW as a basis for charging       44
     Cost of Rescue and Fire Fighting service   45
     Costs of Air Traffic Services                  48
     Costs of Meteorological Services          50
     Return on Capital   52
     Calculation of Rates of Charges           53

SECTION 67 OF THE CIVIL AVIATION ACT 58

TERMINAL NAVIGATION CHARGES 72

RESCUE AND FIRE FIGHTING CHARGES 79

EN ROUTE CHARGES 80

METEOROLOGICAL CHARGES 84

CHARGES GENERALLY 89

DID THE CHARGES AMOUNT TO TAXATION? 91

SECTION 55 OF THE CONSTITUTION 98

CONCLUSIONS 98

GLOSSARY OF TERMS 100

IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY     )    Nos ACT G37, G38 and
DISTRICT REGISTRY                )    G39 OF 1993
GENERAL DIVISION                 )

BETWEEN:     MONARCH AIRLINES LIMITED
                  POLARIS HOLDING COMPANY and
                  CANADIAN AIRLINES INTERNATIONAL LIMITED
  Applicants

AND: AIRSERVICES AUSTRALIA
Respondent

CORAM:    BRANSON J
PLACE:    SYDNEY
DATE:     14 FEBRUARY 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

The applicants file and serve within five days of this date

1.1minutes of order in terms consistent with these reasons; and
1.2written submissions with respect to any consequential matters.

The respondent has…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1997] FCA 65
Decision Date: 14 FEBRUARY 1997

CaseChat Overview and Summary

- **Parties and Dispute**
Monarch Airlines Limited, Polaris Holding Company, and Canadian Airlines International Limited (collectively "the applicants") brought proceedings against Airservices Australia, originally named the Civil Aviation Authority ("CAA"). The applicants sought a declaration that Division 2 of Part VI of the Civil Aviation Act 1988 (Cth) was invalid and sought payment of sums equivalent to certain charges collected from them. The charges related to air traffic services, rescue and fire fighting services, en route services, and meteorological services provided by the CAA.

- **Legal Issues**
The court had to decide whether the charges imposed by the CAA were valid under Division 2 of Part VI of the Civil Aviation Act 1988 (Cth). Specifically, the court needed to determine whether the charges were reasonably related to the expenses incurred by the CAA and whether they amounted to taxation. The court also had to consider the constitutionality of the charges under section 55 of the Constitution.

- **Court's Reasoning and Outcome**
The court held that the charges imposed by the CAA were invalid. The court found that the charges did not reasonably relate to the expenses incurred by the CAA in providing the services. The court also found that the charges amounted to taxation as they were not related to the value of the services received by the applicants. The court concluded that the CAA's charging method, which took into account factors like price sensitivity and economic capacity to pay, did not establish a discernible relationship between the charges and the value of the services. Consequently, the statutory liens created by the CAA were of no force or effect.

- **Final Orders**
The court ordered the applicants to file minutes of order and written submissions within five days and the respondent to file written submissions within ten days. The further consideration of the matters was adjourned to a later date. The court also ordered that the applicants file and serve minutes of order in terms consistent with the reasons for judgment and submit written submissions with respect to any consequential matters. The respondent was granted liberty to speak to the minutes of order.

Orders