Monarch Airlines Ltd v Civil Aviation Authority
[1994] FCA 138
•18 Mar 1994
L1 M \ T E Y >!STC\ ~ L J T 1 0 d
1 3 8 , 9-
JUDGMENT No. ........ ........ .. ..... ....
IN THE FEDERAL COURT OF AUSTRALIA ) 1
A U S T ~ I A N CAPITAL TERRITORY j
I No. ACT G 37 of 1993
DISTRICT REGISTRY
) )
GENERAL DIVISION 1
BETWEEN: MONARCH AIRLINES LIMITED
Applicant
AND: CIVIL AVIATION AUTHORITY
Respondent
MINUTE OF ORDER
RECEIVED
JUDGE MAKING ORDER : Neaves J. 2 5 MAR 1994
FEDERAL COURT OF
DATE OF ORDER 18 March 1994 AUSTRAUA PRINCIPAL REGLSTRy WHERE MADE Canberra THE COURT DIRECTS THAT:
which the aircraft the subject of this proceeding made the landings by reason of which
such amounts became payable; and1. The respondent, Civil Aviatlon Authority, on or before 22 April 1994, file and serve a document or documents -
(a)
identifying, by reference to the paragraphs and items in the determination dated 26 June 1991 made pursuant to subs.66(2) of the Civil Aviation Act 1988 (Cth), the charge, rate or formula by reference to which each amount, being a component of the sums of $2,515,469.55 and $2,486,718.31 referred to in the particulars appended to par.17 of the statement of claim herein, was calculated;
(b) listing, where relevant, the aerodromes at
(c)
in relation to each rate so identified, including any rate forming part of a formula so identified, the basis upon which, and the methodology by which, that rate was determined.
2. The applicant, Monarch Airlines Limlted, on or before 27 May 1994, file and serve an amended statement of claim, supplemented if necessary by another document or other documents, identifying which of the charges, rates or formulae so identified by the respondent, Civil Aviation Authority, are alleged to have been fixed otherwise than in accordance with s.67 of the Civil Aviation
Act 1988 (Cth), stating the matters of fact on which
it relies to support such allegations and setting out with particularity the grounds upon which it relies.
3. The application be listed for further directions on 3 June 1994.
4. Each party have liberty to apply generally on 7 days' notice.
THE COURT ORDERS THAT -
5. The motion on behalf of the applicant, Monarch Airlines Limited, notice of which is dated 2 August 1993 be adjourned generally.
6. The motion on behalf of the respondent, Civil Avlation Authority, notice of which is dated 4 August 1993 be adjourned generally.
7.
The costs of each motion be reserved. 8. Each party have liberty to restore its motion to the list on 7 days' notice.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) I AUSTRALIAN CAPITAL TERRITORY j
) No. ACT G 37 of 1993 DISTRICT REGISTRY ) GENERAL DIVISION
BETWEEN: MONARCH AIRLINES LIMITED
Applicant
AND: CIVIL AVIATION AUTHORITY
Respondent
CORAM: Neaves J.
W: 18 March 1994
REASONS FOR JUDGMENT
In this proceeding, whlch was ~nstltuted in the High
Court of Australia and remitted to this Court pursuant to s.44 of the Judiciary Act 1903 (Cth), Monarch Airlines. Limited
the Civil Aviation Act 1988 (Cth) is invalid and judgment in ("Monarch") seeks a declaration that Division 2 of Part V1 of the sum of $5,002,187.86 together with lnterest thereon from 29 January 1992. The respondent to the proceeding is the Civll Aviation Authority ("the Authority") established by s.8 of that Act. The sum of $5,002,187.86 which Monarch seeks to recover was paid by it to the Authority under protest pursuant to a deed dated 29 January 1992 in circumstances to which it will be necessary to refer. Before doing so, however, some reference should be made to the motions that are presently before the Court.
Monarch has moved the Court for orders that the Authority give further and better discovery and that it have leave to serve on the Authority a notice requiring it to answer interrogatories in the form annexed to the relevant notice of motion. The Authority has moved the Court for orders that Monarch file and serve further and better particulars of par.22 of the statement of claim filed on its behalf and that the Authority have leave to file and serve an amended defence.
Before proceeding further it may be convenient to refer to certain provisions of Division 2 of Part V1 of the Civil Aviation Act (comprising ss.66 to 83 inclusive) as in force at the relevant time. Section 66 relevantly provided:
"66. (1) In this section: 'charge' means :
(a)
a charge for a service or facllity provided by the Authority; or
(2) Subject to this section, the Board may make
determinations:
(a)
fixing charges and specifying the persons by whom, and the times when the charges are payable; and
(b)
fixing the penalty for the purposes of subsection (8).
(3) Before making a determination, the Board shall give the Minister notice in writing of the proposed determination:
(a) specifying the day on and from which the determination is intended to operate; (b) if it fixes a charge or penalty, specifying the basis of the charge or penalty; and (c) if it varies a charge or penalty - specifying the reason for the variation.
(4) The Minister may, within the period referred to
in subsection (5A) give the Board notice in writing
approving or disapproving the proposed determination.
(6) The Board may make a determination only if:
(a) the Minister has approved it; or
(b) . . .
(8) Subject to subsection (g), where a charge is not paid within the period determined by the Authority, being a period beginning on the day on which the charge became due and payable, the person liable for the charge is liable to pay the Authority, in addition to the charge, a penalty, calculated upon the unpaid amount of the charge from the day on which the charge became due and payable,
and compounded. (11) Charges and penalties may be recovered as debts due to the Authority."
The references to the Board in s.66 are references to the
Board of the Authority established by s.32A.
It may be noted that certain of the provisions of s.66 set out above were amended by s.22 of the Transport and Co~nmunications Legislation Amendment Act (No.3) 1992 (Cth), that section being taken to have commenced on 15 June 1988
(see s.2(2) of that Act). As so amended, subs.(2), (2AA) and
(3) read:
"(2) The Board may make a determination:
(a) fixing the amounts of charges; or
(b)
setting out a method by which the amounts of charges may be worked out; or
(c)
fixing penalties for the purpose of subsection (8).
(2AA) A determination under paragraph (2) (a) or (b)
must specify the persons by whom and the times when the
amounts of the charges are payable.(3) Before making a determination, the Board shall give the Minister notice in writing of the proposed determination:
(a)
specifying the day on and from which the determination is intended to operate;
(b)
if it fixes amounts of charges, sets out a method by which amounts of charges may be worked out or fixes a penalty - specifying the basis for the charges, method or penalty; and
(c) if it varies a charge, method or penalty -
specifying the reasons for the variation." Section 67 provided:
"67. The amount or rate of a charge shall be reasonably related to the expenses incurred or to be incurred by the Authority in relation to the matters to which the charge relates and shall not be such as to amount to taxation."
Section 68 provided for the establishment of a Register of Statutory Liens. Section 69(1) provided:
"69. (1) Subject to sectlon 76, where:
(a) at the end of the payment perlod after a charge became payable in respect of an aircraft, the charge is not paid; and (b) at the end of that period, a statutory lien is not in effect in respect of the aircraft; and (c) the charge or penalty in respect of the charge remains unpald;
then, if an appropriate officer so directs at any time, the Registrar shall make an entry in the Register in the manner prescribed and, upon the making of the entry, there is vested in the Authority in respect of the aircraft a statutory lien covering the following:
(d) the charge or penalty;
(e) any penalty that becomes payable in respect of the charge after the entry is made; (f) any further outstanding amounts in respect of the aircraft."
The expression "appropriate officer" was defined in s.69(2) but it is unnecessary for present purposes to refer to that definition. It is also unnecessary to refer to the provisions
Section 70(1) provided:
"70. (1) Where a statutory lien has been registered in respect of an aircraft and until the lien ceases to have effect, the following provisions of this Dlvision apply, in spite of any encumbrance in respect of the aircraft and any sale or disposition of, or dealing in, the aircraft or an interest in the aircraft, and whether or not the Authority has possession of the aircraft at any time."
One of the provisions referred to in s.70(1) was
s.78A which provided:
'78A. A person who knows or has reasonable
grounds to believe that a statutory lien is in effect in respect of an aircraft must not remove that alrcraft from Australian territory without the prior approval of an authorised off icer. Penalty: Imprisonment for 3 years."
For the purpose of considering the motions before the Court it may be accepted that, at all material times, Monarch was the lessee of two alrcraft which it sub-leased to Compass Airlines Pty Ltd ("Compass Airlines"), a company which, untll 20 December 1991 was engaged in the business of air transport and air freight services within Australia; that the two aircraft in question, which may be identified by the nationality and registration markings given to them after they were sub-leased to Compass Airlines, namely VH-YMJ and VH-YMK, were used by that company in carrying on its business in Australia; that, during the period between August 1991 and 2 0 December 1991 the Authority demanded that Compass Airlines pay to it, pursuant to s.66 of the Civil Aviation Act and the
determination dated 26 June 1991 made thereunder, sums representing charges for services and facilities provided to that company by the Authority; that Compass Airlines, on or before 18 December 1991, made part payment of the sums demanded; that on 18 December 1991 an appropriate entry was made in the Register of Statutory Liens so as to vest a statutory lien in the Authority in respect of each of the aircraft pursuant to s.69(1) of the Clvil Aviation Act, such lien covering the charges and penalties payable in respect of the appropriate aircraft; and that, as at 20 December 1991,
the amounts outstanding were $2,473,188.12 in respect of aircraft VH-YMJ and $2,440,747.34 in respect of aircraft VH- YMK.
Monarch alleges that on 17 December 1991 it gave notice in writing to Compass Airlines to terminate the leases on 21 December 1991 because of the non-payment of rent and other moneys.
It may also be accepted that on 20 December 1991 a provisional liquidator of Compass was appointed. Monarch alleges that such appointment was an event of default under the terms of the leases of the aircraft and entitled Monarch to terminate the leases and remove the aircraft from Australia. It is agreed that by virtue of s.78A of the Civil Aviation Act Monarch was prohibited from removing the aircraft from Australia without the Authority's prior approval while the statutory liens under s.69 of that Act had effect. Monarch alleges that the Authority would not approve the
removal of the aircraft from Australia unless the outstanding
amount on account of charges and penalties was paid.
It is common ground that on 29 January 1992 Monarch, in order to secure a discharge of the liens, paid to the Authority under protest the amount then said to be outstanding, namely $5,002,187.86, being $2,515,469.55 in respect of aircraft VH-YMJ and $2,486,718.31 in respect of aircraft VH-YMK; that the liens were discharged; and that the
a i r c r a f t w e r e removed from A u s t r a l i a . I t i s a l s o common
ground t h a t t h e t e r m s of t h e deed d a t e d 29 Janua ry 1992
e n t i t l e Monarch t o recover t h e moneys p a i d t o t h e A u t h o r i t y
t o g e t h e r wi th i n t e r e s t " I£ a Court dec ides t h a t , a s a g a i n s t
[Monarch], t h e Liens d i d n o t v a l i d l y s e c u r e t h e Charges o r f o r any reason t h e Liens o r Charges o r bo th i n whole o r i n p a r t 1s
o r a r e i l l e g a l , vo id o r unenforceab le" .
Paragraph 22 of t h e s t a t emen t of c l a i m f i l e d on
behalf of Monarch a l l e g e s t h a t t h e amount o r rate of t h e
charges was no t reasonably r e l a t e d t o t h e expenses i n c u r r e d o r t o be i ncu r r ed by t h e Au tho r i t y i n r e l a t i o n t o t h e m a t t e r s t o
which t h e charges r e l a t e d . I t may be accep ted t h a t t h i s a l l e g a t i o n i s conf ined t o t h e charges t h a t w e r e payable i n
r e s p e c t of t h e two a i r c r a f t VH-YMJ and VH-YMK and n o t t o o t h e r
charges payable by v i r t u e of t h e de t e rmina t ion d a t e d 26 June
1991. Paragraphs 23 and 24 a l l e g e t h a t t h e A u t h o r i t y
purpor ted t o c o l l e c t t h e charges from Monarch which d i d n o t
r e c e i v e t h e s e r v i c e s and t h a t , i n t h e premises , t h e charges
w e r e such a s t o amount t o t a x a t i o n . Paragraph 2 5 a l l e g e s
t h a t , by reason of t h e f a c t s a l l e g e d i n p a r s 22 t o 24
i n c l u s i v e , t h e charges w e r e u l t r a v i r e s t h e C i v i l Av ia t ion A c t
and vo id by reason of s . 67 of t h a t A c t and t h e cha rges w e r e ,
t h e r e f o r e , i l l e g a l o r unenforceable and t h e l i e n s d i d n o t v a l i d l y s ecu re t h e charges . I t is f u r t h e r a l l e g e d ( p a r . 2 6 ) t h a t s s . 68 t o 83 i n c l u s i v e of t h e Act d e a l w i t h m a t t e r s o t h e r
t han t h e imposi t ion of t a x a t i o n and, by r ea son of s . 5 5 of t h e
C o n s t i t u t i o n , a r e of no e f f e c t and t h e l i e n s d i d n o t v a l i d l y
secure the charges. In the further alternative it is contended that the operation of Division 2 of Part V1 of the Civil Aviation Act was to effect an acquisition by the Authority, otherwise than on just terms, of property of Monarch in the alrcraft contrary to s.5l(xxxi) of the Constitution.
The determination dated 26 June 1991 which came into effect on 1 July 1991 provided as follows:
"Pursuant to subsection 66(2) of the Civil Aviation Act
-, 1988 the Board HEREBY DETERMINES that the charges shall
be fixed and the persons by whom and the times when the charges are payable for the period commencing on 1 July 1991 shall be as specified in the schedule numbered 1 to
37 attached hereto."
The schedule referred to comprised 37 pages and fixed the fee or charge in respect of a myriad of services or facilities provided by the Authority. They included landing charges, en- route charges, charges for out-of-hours operation of terminal
navigation and rescue and fire fighting services and fees or charges relating to the implementation of regulatory and other safety functions. In relation to landing charges, different provision was made wlth respect to what were described as "avtur aircraft" and "non-avtur alrcraft", The expression "avtur aircraft" was defined to mean an aircraft powered by an engine or engines uslng avlation turbine kerosene. Landing charges included charges for terminal navigation facilities and services relating to an aerodrome specified in Schedule 1 to the determination and charges for flre fighting and rescue services relating to an aerodrome speclfled in Schedule 2. In respect of each landing of an avtur aircraft at an aerodrome specified in Schedule 1, a charge for terminal navigation facilities and services relatlng to the aerodrome was applicable. A different rate of charge was applicable if the landing was made not at an aerodrome specified in Schedule 1 but at a place, being a place other than an aerodrome at which an Aerodrome Control Service was available at the time of landing, within a control zone associated with an aerodrome specified in Schedule 1. In respect of each landing of an avtur aircraft at an aerodrome specified in Schedule 2 to the determination, a charge for fire fighting and rescue services relating to the aerodrome was applicable. The charges were to be calculated at the rates specified per 1,000 kilogrammes of the maximum take-off weight of the aircraft. A charge was not, however, payable unless, at the time of the landing of the aircraft, the facilities or services to which the charge related were available for use by the aircraft.
Where landing charges were applicable to non-avtur aircraft, the rates were the same as those fixed in respect of avtur aircraft. Landing charges were, however, payable by non-avtur alrcraft only in respect 01 landings at a limlted number of aerodromes, being those specified in Schedule 3 to the determination.
En-route charges were payable in respect of the use
by an aircraft of air route and airways facilities and
services operated or provided in Australian territory. A charge was payable in respect of each land~ng by an avtur aircraft in the case of a flight between two aerodromes in Australian territory, the amount of the charge varying according to the appropriate rate flxed by the determination, the weight or the square root of the weight of the aircraft expressed in tonnes and the distance travelled between the two aerodromes. In the case of a flight between a place outslde and a place within Australian territory, whether by an avtur aircraft or a non-avtur aircraft, an en-route charge was payable in respect of each landing, the amount of the charge varying according to the appropriate rate fixed by the determination, the weight or the square root of the weight of the aircraft expressed in tonnes and the distance travelled within Australian territory. In certain circumstances, the amount of the en-route charge in respect of the flight of an avtur aircraft was to be reduced by the amount of any applicable landing charges.
Meteorological charges were payable in respect of the use by an aircraft of meteorological facilities and services operated or provided in Australian territory. A charge was payable in respect of each landing by an avtur aircraft in the case of a flight between two aerodromes in Australian territory. The amount of the charge was to be calculated by reference to the rates fixed by the determination, the weight or the square root of the weight of the aircraft expressed in tonnes and the distance travelled
between the two aerodromes. In the case of a flight between a place outside and a place inslde Australian territory, whether by an avtur aircraft or a non-avtur aircraft, a charge was payable in respect of each landing, the amount of the charge varying according to the appropriate rate fixed by the determination, the weight or the square root of the weight of the aircraft expressed in tonnes and the distance travelled within Australian territory.
Other provisions of the determination related to fees or charges in respect of such matters as aircraft maintenance engineer licences, airworthiness authorities, flight crew licences, airworthiness and fllght crew examinations, operational permits and approvals, air operators certificates and the registration and marking of aircraft.
Prior to the matter being remitted to this Court, orders were made by consent in the following terms:
"1. That each party make discovery on oath of the documents which are or have been in its possession or power relating to the matters in question in these proceedings. 2. That there be excepted from discovery from the Defendant at this stage its computerised ledger and the primary financial records used to compile the ledger.
3. That each party make such discovery on or before 6 November 1992."
Discovery was had by the parties pursuant to those orders.
In my opinion much of the difficulty that has arisen in this case stems from the inadequacy of the statement of claim. What Monarch has done in par.22 of that document is to allege a conclusion in the terms of s.67 of the Civil Aviation Act, namely that the amount or rate of the charges was not reasonably related to the expenses incurred or to be incurred by the Authority in relation to the matters to which the charges related. This allegation is made in the absence of any pleaded facts which could lead to a finding that the allegation is established. The matter is compounded by the circumstance that, beyond the suggestion in a letter dated 19 May 1993 from the Authority's solicitors to Monarch's solicitors that the basis of Monarch's complaint as expressed in par.22 of the statement of claim should be more precisely set out in that document as an alternative to providing full particulars of the basis of the allegation made in that paragraph, the Authority has taken no objection to the statement of claim. What it has done is to make a number of
requests for particulars of the basis of the claim -but when those requests were consistently refused by Monarch, it delivered a defence which simply denies "each and every allegation of fact in paragraph 22 of the Statement of Claim"
(see the defence, par.16).In the course of correspondence and in interlocutory proceedings prior to the application being remltted to this Court, Monarch has foreshadowed some of the grounds on which it may wish to rely. Those grounds may be summarised as follows -
(a)
Although the total amount of the charges payable under the determination dated 26 June 1991 bore a reasonable relationshrp to the total expenses incurred or to be incurred by the Authority in providing the facilities and servlces to which the charges related, there was no direct relationship between a particular charge and the cost of providing the facllitles or services in respect of which the charge was payable.
(b)
The amount of the charges payable under the determination dated 26 June 1991, to the extent that they were conditioned upon the aircraft being an avtur aircraft or upon the maximum take-off weight of the aircraft, were not reasonably related to the cost of providing the facilities and services in respect of which they were payable.
In later correspondence, however, Monarch has said that the grounds foreshadowed are not the grounds, or not the only grounds, on which it intends to rely. It has, however, not identified what are the grounds on which it intends to rely.
discovery by the Authority must await the clarification of the In my opinion, the making of any order £02 further issues between the parties. I am also of the opinion that the question whether Monarch should be given leave to administer interrogatories must await such clarification. I should add that, on any view, the interrogatories as set out in the annexure to the notice of motlon filed on behalf of Monarch are oppressive and leave would not be glven to administer a large number of them.
In order to facilitate the clarification of the issues between the parties, I give the following directions -
1. The Authority shall, on or before 22 April 1994, file and serve a document or documents -
(a) identifying, by reference to the paragraphs and items in the determination dated 26 June 1991, the charge, rate or formula by reference to which each amount, being a component of the sums of $2,515,469.55 and $2,486,718.31 referred to in the particulars appended to par.17 of the statement of claim herein, was calculated; (b) listing, where relevant, the aerodromes at which the aircraft the subject of this proceeding made the landlngs by reason of whlch such amounts became payable; and (c) in relation to each rate so identified, including any rate forming part of a formula so identified, the basis upon which, and the methodology by which, that rate was determined. 2. Monarch shall, on or before 27 May 1994, file and serve an amended statement of claim, supplemented if necessary by another document or other documents, identifying which of the charges, rates or formulae
been fixed otherwise than in accordance with s.67 of so identified by the Authority are alleged to have the Civil Aviation Act, stating the matters of fact on which it relies to support such allegations and setting out with particularity the grounds upon which it relies.
3. The application be listed for further directions on
3 June 1994.
4. Each party have liberty to apply generally on 7 I order that the two motions before the Court be
adjourned generally and that the costs of the motions be reserved. Each party IS to have liberty to restore its motion to the list on 7 days' notice.
I certify that t h ~ s and the preceding 15 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justlce Neaves .
Associate
Dated: 18 March 1994
Counsel for the applicant : Mr A. Robertson
Solicitors for the applicant : Allen Allen & Hemsley
.
Counsel for the respondent : M r D.J.S. Jackson QC
and Mr J.C. Sheahan
Solicitors for the respondent : Mallesons Stephen Jaques
Date of hearing : 12 August 1993
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