Montchel Pty Ltd v Civil Aviation Authority

Re: MONTCHEL PTY. LTD.
And: CIVIL AVIATION AUTHORITY
No. Q G121 of 1991
FED No. 602
Aviation
(1991) 31 FCR 445
(1991) 107 ALR 433

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Aviation - validity of landing charges based on type and weight of aircraft.

HEARING

BRISBANE

#DATE 7:10:1991

Counsel for the applicant: Mr P.R. Dutney QC with Mr G.J. Radcliff

Solicitors for the applicant: Robinson and Robinson

Counsel for the respondent: Mr D.J.S. Jackson QC with Mr J.C. Sheahan

Solicitors for the respondent: Mallesons Stephen Jaques

ORDER

The application for interlocutory relief be dismissed.

The costs reserved on 13 September 1991 be the respondent's costs in the proceedings.

The costs of and incidental to the hearing on 2 October 1991 be costs in the proceedings.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an application for interlocutory relief in a suit in which the validity of certain charges made under the Civil Aviation Act 1988 ("the Act" or "the 1988 Act") is in issue. The proceedings also raise a question concerning the validity of charges under the Air Navigation (Charges) Regulations ("the Regulations"), but it seems to me unnecessary to deal in detail, at this stage, with the contentions concerning the latter point. The sums said to be due under the Regulations form a comparatively minor part of the amounts in issue and one could not grant interlocutory relief based on them alone. The Regulations were made under the Air Navigation (Charges) Act 1952.

The dispute has a fairly long history, but the immediate cause of the present application was a letter sent on behalf of the respondent to the applicant and dated 26 June 1991. By that letter, a Mr Barnes informed the applicant of his decision to deregister eight piston-engined aircraft owned by the applicant from midnight 25 July 1991, unless certain charges were paid by 4 p.m. on that date. The decision was reviewed by a Mr Cathro who informed the applicant's solicitors by letter dated 19 August 1991 that the original decisions were affirmed, but deregistration was to be deferred until 16 September 1991. The applicant then sued for relief under the Administrative Decisions (Judicial Review) Act 1977 and interim relief was granted in this Court on 13 September 1991, in the form of an order that the registrations not be cancelled until further order.
The power to cancel registrations does not require analysis in detail, because its existence is conceded if the charges are validly levied. Section 69 of the Act provides for the imposition of a statutory lien in respect of unpaid charges and, under s.71, the registration of an aircraft in respect of which the lien is unpaid may ultimately be cancelled. In a practical sense, the question is whether or not the applicant should be forced, to avoid deregistration, to pay the amount of the disputed charges pendente lite or whether, on the other hand, it should be relieved from the necessity of doing so by an interlocutory order.
The essential point is the effect of a provision of the 1988 Act, namely s.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 66 of the Act defines the word "charge" to mean, so far as relevant:

"a charge for a service or facility provided by the Authority",

the word "Authority" being defined by s.3 to mean the Civil Aviation Authority established by the Act. The Authority is given power to make determinations fixing charges under s.66(2).

It is convenient to set out, firstly, some considerations as to the construction of s.67. Compliance with the section depends upon the nature of the relationship between the amount or rate of a charge, on the one hand, and the Authority's expenses, on the other. If the two are equal as to each service or facility provided, the relationship is perfect. But it is evident that there is no intention that a calculation must be done in respect of every separate provision of a service or facility. What s.67 contemplates is that there may be a general fixation of charges to relate them to the Authority's expenses, not that an analysis of the expenses shall be made each time a service or facility is provided.
That this is so - i.e. that there may be a general fixation of charges - is clear from three matters. The first is the use in s.67 of the expression "or rate", which allows a charge to be levied on the basis of a formula.
The second is that some charges, under the Regulations in existence at the date of passage of the Act, were at prescribed rates of so much per thousand kilograms and others were imposed on the basis of a mathematical formula. There was, under those Regulations, no attempt to relate the charge for each particular service to the expenses incurred in relation to that particular service. One may safely act on the basis that Parliament was aware, in 1988, of the then existing system of charging; it would surely have used language other than that of s.67 of the Act, had it intended to require that no such method as was then in use be applied in the future.
The third reason is that the origin of s.67 was in an amendment agreed to in the Senate while the Civil Aviation Bill 1988 was being read for a second time in that chamber. I have been referred to the record of the debate which preceded agreement to the amendment and, so far as one can judge from the expressions used by the Senators, the intention of the amendment was merely to ensure that the charging power was not used as a taxing device.
Counsel mentioned a number of authorities on the question whether what is ostensibly a fee for services should be classed as a tax, but I think it necessary to mention two only for the purposes of this proceeding. The first is The General Practitioners Society in Australia v The Commonwealth of Australia (1980) 145 CLR 532. One of the questions in that case was whether a fee payable under the Health Insurance Act 1973 as part of the process of a doctor's becoming an "approved" practitioner was a tax. The leading judgment was that of Gibbs J. who said:

"The amount of an exaction may, I think, be relevant to the question whether it is a fee for services, since an exaction may be so large that it could not reasonably be regarded as a fee ... In the present case no amount has been prescribed, and the amount of $10 is not so large as to give the exaction the character of a tax" (562).

There is nothing in this passage to suggest that it was necessary, to avoid a conclusion adverse to the Commonwealth, that it be shown that $10.00 was in every case or, indeed, even in the ordinary case the "right" sum - i.e. a sum which would merely compensate for the cost of doing what was being paid for.
The second case is Air Caledonie International v The Commonwealth of Australia (1988) 165 CLR 462. That case concerned the question whether a fee for immigration clearance payable by an airline was a tax. The Court remarked:

"If the person required to pay the exaction is given no choice about whether or not he acquires the services and the amount of the exaction has no discernible relationship with the value of what is acquired, the circumstances may be such that the exaction is, at least to the extent that it exceeds that value, properly to be seen as a tax" (467).

After making the point that Australian citizens travelling by the airline had a right to re-enter the country, the Court referred to the General Practitioners Society case and added:

"Indeed, one need do no more than refer to the second reading speech of the responsible Minister ... to confirm that the moneys intended to be raised by the purported impost were not related to particular services to be supplied to particular passengers but were intended to provide, when paid into consolidated revenue, a general off-setting of the administrative costs of certain areas of the relevant Commonwealth Department, including, for example, the administrative costs involved in maintaining facilities for the issue of visas in overseas countries and 'general administrative overheads'" (470).

Counsel for the applicant submitted that this passage is authority for the view that administrative costs cannot be taken into account in testing a charge for compliance with s.67 of the Act. That is not so; the passage refers to administrative costs unrelated to the costs of providing the particular services charged for.

Both these cases concerned the construction of the Constitution and during the hearing some reference was made to the question whether notice should have been given in the present case under s.78B of the Judiciary Act 1903. I have proceeded on the basis that notice was unnecessary because all that is raised is a question of construction of s.67 of the statute; the fact that the construction of the Act ultimately adopted by the Court may conceivably throw light upon the meaning of a provision of the Constitution itself does not bring s.78B into operation.
The charges whose validity is presently attacked are made by a determination under s.66(2) of the Act, to which I have referred above. The schedule of charges discriminates between "Avtur" and "non-Avtur" aircraft; the former is an "aircraft powered by an engine or engines using aviation turbine kerosene" and the latter is an "aircraft other than an Avtur aircraft". "Avtur" is short for "aviation turbine" and the intention is to discriminate between aircraft (whether pure jets or prop jets) powered by jet engines, which are Avtur aircraft, and those powered by reciprocating engines, which are non-Avtur aircraft. In relation to each category of aircraft, the rate is set (as under the previous system) at so much per thousand kilograms weight, where "weight" means "maximum take-off weight"; there is also a fixed minimum charge. The two sorts of charges which are in issue are described as:

1. Terminal navigation facilities and services, being such facilities and services relating to an aerodrome specified in Schedule (...).

2. Fire Fighting and Rescue Service, being such a service relating to an aerodrome specified in Schedule (...).

The rates are $3.65 per thousand kilograms for the first and $2.40 per thousand kilograms for the second category, as to non-Avtur aircraft. A number of criticisms is made of this basis of charging, but it is unnecessary to mention all of them. It is said that assessing the charge by reference to the maximum take-off weight can be unreasonably discriminatory; an aircraft may, on a particular occasion, fly at well below its maximum take-off weight. It appears to me that there is nothing in this point if (as seems clearly permissible) charges are to be levied by aircraft weight. The simplification of working on maximum take-off weight, rather than weighing the aircraft on each landing, cannot possibly make the charge invalid.
Then it is said that the discrimination between Avtur and non-Avtur aircraft cannot be defended. There is not a great discrimination in amount per unit of weight between them and its rationale is explained in detail in Mr Barnes' affidavit filed on 30 September; the principal point made is that Avtur aircraft are more likely to be used for commercial purposes than are non-Avtur aircraft. This produces the consequence that the former will ordinarily be flown after lodgment of a flight plan, which can be used to assess a charge in relation to use of airport and airway facilities and services. Non-Avtur aircraft commonly fly without having lodged a flight plan and therefore no record exists to enable the making of a charge based on actual usage of these facilities and services. The system is that non-Avtur aircraft (which are commonly called "Avgas" aircraft because the fuel they use is aviation gasoline) pay specific landing charges only in respect of certain "primary" capital city airports; elsewhere they land and take off free. On the other hand, non-Avtur aircraft make an indirect contribution to costs because they pay a substantial excise duty on the aviation gasoline used. This tends to suggest, but by no means conclusively shows, that the charges levied on non-Avtur aircraft (such as those operated by the applicant) on a take-off weight basis are lower than necessary to recover costs, the deficiency being picked up by the excise duty which is plainly a tax.
Another criticism made of the charging system is that there is no necessary connection between the cost the respondent incurs in relation to, for example, fire fighting services and the weight of the aircraft. One aircraft might be significantly heavier than another, without requiring any additional fire fighting equipment. That is plainly so, but the evidence of Mr Barnes, which is presently unchallenged, supports the view that there is a substantial connection between aircraft weight and facilities provided. He instances a Boeing 747, which under the relevant standards requires a water capacity on the fire fighting vehicles of 24,300 litres, whereas the smaller Boeing 737 requires a water capacity of only 7,900 litres. Again, the service necessary for a Boeing 747 requires, in the respondent's view, thirteen people to man it, whereas that necessary for a 737 requires eight people only. As to terminal navigation facilities and services, Mr Barnes says, in effect, that larger aircraft carrying many passengers require more sophisticated air navigation facilities and services than do small aircraft carrying a small number of passengers.
On the evidence presently available, it appears that it can occur that a flight by a non-Avtur aircraft attracts a substantial charge under the determination, whereas another flight of similar length by the same aircraft will attract no or a much smaller charge. This is necessarily so because of the circumstance I have explained, namely that only certain landings by such aircraft are the subject of a charge. This does not appear to me, however, to give rise to a serious argument that the charges are inconsistent with s.67. One may with some confidence assume that Parliament intended when it enacted the Act that a charging system having a structure similar to that in use in 1988 would not, merely because of that structure, be invalid.
The charging system is relatively simple and no doubt this makes for ease of administration, both for the respondent and for operators of aircraft such as the applicant. I cannot accept that, having regard to the background against which the 1988 Act was passed, it can have been intended that a much more complex charging system had to be introduced, of such a kind as to enable accurate assessment of the proper cost to the respondent of each individual service provided. What seems to have been contemplated was a charging system, whether of the same kind as that then in existence or not, designed to recover expenses (or at least not designed to recover more than expenses) and tending to charge more heavily for those services and facilities whose provision is more expensive.
Mr Barnes' affidavit shows that in the year ended 30 June 1990, a sum of about $426 million was received by the respondent by way of charges, including charges of the kind in issue in this case. The affidavit does not show or estimate the cost of provision of the services and facilities for which the charges were made. It may be that if that matter is investigated it will appear that there is a substantial gap between the total amount of the charges and the expenses associated with their provision. However, there is no evidence before me which would support that and the applicant does not presently seek to make that case.
In my opinion, the applicant has raised arguable questions but the arguments advanced appear to me to be rather thin. It is permissible to take the apparent weight of the applicant's case into account, when exercising the discretion as to the grant of interlocutory relief; see the cases referred to by A.A.S. Zuckerman in 107 LQR 196.
The case first came before the Court, as I have mentioned, on 13 September; it was adjourned until 2 October to enable further material to be filed. I notice that, although the proceeding is merely interlocutory, each party has had a good opportunity to produce affidavits indicating the nature of its case.
As to the balance of convenience, there is a prospect of deregistration, the occurrence of which would no doubt be inconvenient for the applicant, and if there were no way of avoiding deregistration I would be inclined to issue an injunction. But deregistration can be forestalled by the applicant's paying, under protest if so advised, the charges which the respondent has purported to make. Mr Dutney QC, who led Mr Radcliff for the applicant, suggested that I should infer from the respondent's evidence that the applicant is unable to pay or would have difficulty in paying. It would have been simple enough for the applicant to say so and I am not prepared to draw that inference.
Mr D.J.S. Jackson QC, who led Mr Sheahan for the respondent, argued that, if an order were made having the practical effect of preventing the recovery of the charges made against the applicant, then other operators would perhaps refuse to pay and the respondent's stream of income would decline. The implication was that the Court should be slow to do anything likely to produce this result when, presumably, the respondent will be able to repay any monies unlawfully exacted, if the case goes to trial and the applicant succeeds. I do not find it necessary to express a view as to whether this argument has weight; apart from it, I have formed the view that the convenient course is to refuse relief.
The application for an interlocutory injunction will be dismissed. The costs reserved on 13 September 1991 will be respondent's costs in the proceedings. The costs of the hearing on 2 October 1991 will be costs in the proceedings.

[1991] FCA 602

07 OCTOBER 1991