IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL BETWEEN: CORAM: DATE: PLACE: V. No. G99 of 1983 DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA EAST WEST AIRLINES (OPERATIONS) LTD Appellant (Applicant) and KENNETH F. WRAITH, DR. D.W. ZINK AND HON. K. M. CAIRNS Respondents (Respondents) Woodward, Northrop and Neaves Jd. 12 December, 1983, Melbourne ORDER THE COURT ORDERS THAT: 1. The appeal be allowed and the orders of the Court of 23 May, 1983 be set aside. 2. The approval of the Independent Air Fares Committee of 8 March, 1983 be set aside. The request from the appellant to the Committee be remitted to the Committee for further consideration of that request according to law. The respondents pay the appellant's costs of the appeal and of the application. IN THE VICTORIA DISTRICT REGISTRY GENERAL DIVISION FEDERAL COURT OF AUSTRALIA eed V. No. G99 of 1983 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: CORAM: DATE: PLACE: being the Chairman, EAST WEST AIRLINES (OPERATIONS) LTD and KENNETH F. WRAITH, DR. D.W. ZINK AND HON. K. M. CAIRNS Woodward, Northrap and Neaves JJ. 12 December, 1983. Melbourne REASONS FOR JUDGMENT On 8 March, 1983 Mr. Wraith, the first Appellant (Applicant) Respondents (Respondents) respondent, Independent Air Fares Committee, notified Mr. Grey, Managing Director of the appellant, East West Airlines (Operations) Ltd., by telex that the Committee, pursuant to 2. sub~section 17(4), Independent Air Fares Committee Act 1981, ("the I.A.F.C. Act") had approved "a dascount fare of $120 on the round trip, originating in Sydney or Melbourne over the route Melbourne-Albury-Sydney on F27 aircraft". By the same telex, Mr. Wraith notified Mr. Grey that the approval was subject to a number of conditions including the condition that the discount fare was to be available for a limited period, namely "the period 8 March to 30 April, 1983 inclusive". The effect *of the approval was that during that period the appellant was able to offer a return fare over that route at the discount rate of $120 return, but that the return journey had to be completed on. er before 30 April, 1983. The appellant, by application under section 5, Administrative Decisions (Judicial Review) Act 1977, sought an order of review of the decision of the Committee in so far as the decision imposed the condition relating to the period during which the discount air fare was available. The Court constituted by a single Judge dismissed that application and the appellant appeals from that judgment. During the hearing of the appeal submissions ranged over Many aspects of the matters arising under the I.A.F.C. Act, but in the event, the issue raised by the appeal comes within a small compass. In substance the issue is to be determined by a consideration of the terms of the request made by the appellant to the Committee for approval of a discount air fare. However, in order to determine that issue it is necessary to make reference to some of the provisions of the I.A.F.C. Act. The appellant is a passenger operator under the I.A.F.C. Act. Pursuant to other statutory provisions, it operates air services between Melbourne-Albury-Melbourne and between Sydney~Albury-Sydney. It charges fares in respect of travel on those routes. The I.A.F.C. Act provides that the normal fares charged are either an economy air fare or a first class air fare. The amount of those fares is determined by the Committee pursuant to the provisions of that Act. That Act constitutes the Committee. The three respondents are the members of that Committee. Among the functions conferred upon the Committee is the function "to approve, in accordance with this Act, proposed discount air fares"; see paragraph 12(1)(d). The phrase "duscount air fare" means: ""... an air fare charged by a passenger operator in respect of travel over a route, being an air fare the amount of which is less than the economy air fare charged by that passenger operator in respect of travel over that route, but does not include an air fare charged in respect of travel by blind persons, students or children." Section 17, I.A.F.C. Act contains detailed provisions relating to the granting of approval of discount air fares and the revocation of approval of "dascount air fares. For the purposes of this appeal, it is not necessary to make reference to all those provisions. Under sub-section 17(1), a passenger operator is entitled to request the Committee to approve a discount air fare that the passenger operator proposes to charge 4. in respect of travel over any route. Under sub~section 1 7(2), the request must be "made by notice in writing to the Chairman" of the Committee setting out specified matters. One of the matters so specified is contained in paragraph 17(2)(b) provides :- the conditions (if any) under which the proposed discount air fare is to be available". which For present purposes sub-section 17(3) and the relevant parts of sub-section 17(4) are set out - (4) Where a passenger operator requests the Committee to approve a discount air fare, the Committee shall, before the expiration of 7 days after the Committee obtains such information as it considers necessary to be obtained from the passenger operator who made the request or from any other passenger operator in order to give its decision on the request, give its decision on the request. If the Committee is satisfied that - (a) the introduction of that proposed discount 'air fare is likely to improve the profitability of the operations of that passenger operator in relation to the provision of air services; ... (c) the conditions (if any) under which that proposed discount air fare 1s to be available are reasonable and will be applied without discrimination between persons or classes of persons who can comply with the conditions, the Committee shall approve the proposed discount air fare but, if the Committee is not so satisfied, the Committee shall not approve the proposed discount air fare." The appellant considered it desirable that it utilize to the full facilities arising from its licence to operate its passenger service on the routes Melbourne-Albury-Melbourne and Sydney-Albury-Sydney, by making available a discount air fare for Melbourne-Albury-Sydney and return and Sydney-Albury-Melbourne and return. Of necessity, the service would require a chanye of aircraft at Albury or, as an alternative, a change of crew at Albury. Before the appellant could make that discount air fare awailable, it had to obtain the approval of the Committee. To that end, on 23 February, 1983 by telex, the appellant made a request to the Chairman of the Committee. It was not disputed that the telex constituted a "notice in writing" under section 17, I.A.F.C. Act. The relevant parts of the telex are set out: "APPLICATION IN ACCORDANCE SECTION 17 OF THE IAFC ACT FOR APPROVAL OF A DISCOUNT AIRFARE. ROUTE - MELBOURNE -S YDNEY -MELBOURNE AIRCRAFT - FOKKER F27 FARE - $120.00 ROUND TRIP... CONDITIONS - SOLD ONLY AS ROUND TRIP ORIGINATING SYDNEY OR MELBOURNE ees INTRODUCTION - MARCH 01.1983" On 25 February, 1983 by telex the Chairman notified the appellant that the Committee had given preliminary consideration to the request. The telex continued: "TO FULFIL ITS RESPONSIBILITIES UNDER THE IAFC ACT 1981 THE 6. COMMITTEE REQUIRES THE FOLLOWING ADDITIONAL INFORMATION TO ASSIST IN ITS CONSIDERATIONS. THESE INFORMATION REQUIREMENTS ARE STANDARD FOR THIS TYPE OF PROPOSED DISCOUNT. " Thirteen separately numbered questions were then asked and the telex concluded as follows: "THE COMMITTEE HAS NOTED YOUR PROPOSED INTRODUCTION DATE, HOWEVER, THE COMMITTEE WILL NOT BE ABLE TO GIVE FURTHER CONSIDERATION TO YOUR APPLICATION UNTIL THE ABOVE INFORMATION IS PROVIDED. UNLIKELY THAT APPROVAL WILL BE POSSIBLE BY 1 MARCH. AS SOON AS ABOVE INFORMATION IS PROVIDED YOUR REQUEST WILL RECEIVE URGENT ATTENTION." On the same day the appellant by telex gave answers to the questions raised by reference to the paragraph numbers. The relevant questions and the answers thereto are set out - "QUESTION 2: NUMBER OF PASSENGERS AND PASSENGER TYPE WHO HAVE TRAVELLED ON A ROUND TRIP ORIGINATING IN MELBOURNE OR SYDNEY IN THE PAST SIX MONTHS. ANSWER 2: AVERAGE 4 PER MONTH GOLDEN OLDIES 45PcT DISCOUNT FARES. QUESTION 3: YOUR ESTIMATE OF NUMBER OF PASSENGERS WHO WILL AVAIL THEMSELVES OF PROPOSED DISCOUNT. ANSWER 3: ABOUT 600 ROUND TRIPS PER MONTH WHICH ON CURRENT CAPACITY WILL BRING SYD/ABX/SYD TO 82PCT SLF AND ABX/MEL/ABX TO 57PCT SLF. QUESTION 7: WILL ANY SEATING RESTRICTIONS APPLY. ANSWER 7: FARE ON SALE WITH NO RESTRICTIONS OTHER THAN ROUND TRIP ONLY AND MAXIMUM 30DAYS VALIDITY ALSO PSGRS REQUIRED EITHER CHANGE AIRCRAFT OR CREW AT ALBURY, ENTAILING SOME GROUND TIME. QUESTION 11: FOR WHAT PERIOD OF TIME DO YOU ANTICIPATE THE 7. DISCOUNT WILL BE EFFECTIVE. ANSWER 11: TRIAL PERIOD TO 30 APRIL, 1983 WITH OPTION TO EXTEND ON SAME OR VARIABLE BASIS SUBJECT TO NEGOTIATION WITH IAFC. QUESTION 12: WHAT DO YOU ANTICIPATE WILL BE THE NET REVENUE GAIN FROM THE PROPOSED DISCOUNT. PLEASE PROVIDE FULL DETAILS. ANSWER 12: 600 RT FARES MONTHLY GROSSES DLRS 144,000 MAR/APR LESS COMMISSIONS AND ADVERTISING LEAVES DLRS 98,000 NETT GAIN LESS INFLIGHT cOSTS AND PSGR OVERHEADS LEAVES NETT DLRS 88,000 GAIN." The Committee decided to approve the discount air fare and the appellant was notified of that decision by telex on 8 March, 1983, but the approval was subject to a number cf conditions, including the condition challenged by the appellant. A further telex from the Committee on 9 March, 1983 confirmed that the condition challenged provided that the return journey had to be completed by 30 April, 1983. A reference to paragraphs 17(2)(b) and (4)(c), I.A.F.C. Act makes it clear that the conditions (1f any) under which the proposed discount air fare 1s to be available must be contained in the request, that is in the "notice'in writing given to the Chairman". The Committee has no independent power to impose conditions on the approval of a proposed discount air fare when those conditions are not included in the request. At the most it may have power, in appropriate circumstances, to refuse to give - the approval unless a particular condition is offered, but this 8. is a matter which does not call for decision in the present case. Counsel for the respondents, quite properly in our opinion, conceded the absence of a power in the Committee to impose a condition which had not beeen offered. Counsel for the appellant contended that in the present case any, conditions under which the proposed discount air fare was to be made available had to be set out in the telex of 23 February, 1983. That telex did not refer to a condition relating to the period during which the proposed discount air fare was to be available. They contended, accordingly, that the challenged condition was beyond the powers of the Committee, was void and of no effect. For this contention to succeed it is necessary that section 17, I.A.F.C. Act should be construed in the sense that a request can not be amended or varied before it is either approved or not approved by the Committee. In other words, as counsel for the appellant submitted, if before an approval is given or refused the applicant desires to vary the conditions under which the proposed discount air fare will be available, a separate and distinct request must be made by notice in writing, including that condition as well as all other conditions. In the present case this had not been done. That submission is not accepted. Under the I.A.F.C. Act, the passenger operator is seeking an approval by the Committee. 9. In considering a request for that approval, the Committee 1s empowered to obtain such information as it considers necessary to be obtained from the passenger operator which made the request. The request for that information could suggest to the passenger operator additional conditions under which the proposed discount air fare should be made available. If, as a result, the passenger operator gave notice in writing to the Committee of those additional conditions, but did not make a separate and distinct request containing those additional conditions, it is difficult to see that the Committee would not have power to approve the proposed discount air fare subject to those additional conditions. In this respect, the section should not be given an over-technical construction. The section does not require that the notice in writing must be contained in the one document. The section does not require that all parts of the notice be given to the Chairman of the Committee at the one time. The parties did not suggest that a telex 1s not a notice in writing; and in an appropriate case, the request under section 17 may be contained in a number of separate telexes, some of which are forwarded by the passenger operator following the seeking of information by the Committee under sub-section 17(3). The section must be construed having regard to the practicalities of commerce. The construction contended for by counsel for the appellant would result in unnecessary artificialities and restrictions which should not be encouraged. If, on the proper construction of all the written material before the Committee at the time it grants an approval under sub-section 17(4), it can be 10. said truly that the passenger operator has specified a particular condition under which the proposed discount air fare is to be available, the Committee has power to approve that discount air fare, subject to that condition. This presupposes that the Committee is satisfied as required by sub-section 17(4). Counsel for the respondents submitted that their clients understood the telex of 23 February, 1983 and the questions and answers contained in the telexes of 25 February, 1983 as including, as a condition specified by the appellant, the condition relating to the period during which the proposed discount air fares should be available. They referred in particular to questions 11 and 12 and the answers thereto. They submitted that that understanding was reasonable and therefore the Committee was, in law, empowered to treat the written material as including that condition proposed by the appellant. In our opinion the test is not whether the respondents were reasonably able to come to that understanding. It is notorious that words and phrases can be ambiguous and may be construed in many different ways. In giving the answers the appellant was supplying information at the request of the respondents. In the circumstances it is difficult to impute an intention in the appellant that in giving the information it was specifying a condition that was to apply to the proposed discount air fare as to the period during which the discount air fare was to be available. The language used in the telexes appears to be ll. in abbreviated form and comprises a variation in the form of words normally used; but there was no suggestion that the words used had meanings different from their normal meanings. In these circumstances it is our opinion that the Court must construe the telexes, including the questions and answers, and it is for the Court to determine whether, upon their proper construction, they are to be construed as including a condition proposed by the appellant having the meaning and effect of the condition imposed by the rvespondents. The appellant was proposing a new form of fare structure. It involved some unusual features including a change of aircraft or a change of crew at Albury on a Melbourne-Sydney and return flight, or vice versa. There had to be a round trip and the return trip had to be completed within 30 days of the forward trip. Under the proposed discount air fare the appellant anticipated about 600 round trips per month, (question 2 and answer thereto). The answer to question 12 constitutes a mathematical exercise converting the anticipated figures contained in the answer to question 2 to an estimated net gain. It is difficult to see how the estimate of 600 round trips per month would be applicable if the return trips for forward trips undertaken in April had to be completed within the month of April. A shortening period during which the return trip had to be undertaken of necessity would reduce substantially the anticipated round trips in April. The practical result would be that on 30 April the forward and return trip would have to be 12. undertaken on the one day. Question 1l itself is ambiguous. This was a new venture. It might not improve the profitability of the operations of the appellant. The answer to question 11 has its own difficulties. At the very least the answer suggests that the proposed discount rates should be available for round trips commencing up until 30 April, 1983. That would mean that the return trips should be available up to 30 May, 1983. On its proper construction the answer should be read as meaning that the appellant should have an option. If the venture was successful it intended to engage in that venture after 30 April on the basis of the request in writing. If the venture was not successful it would seek to vary the conditions of the approval, but this had to be subject to negotiation with the Committee. Those negotiations, if they eventuated, of necessity would need to be conducted on the basis at least of an implied further request for approval of discount air fares and proposed conditions in the manner discussed earlier in these reasons. The Court is of the opinion that on the proper construction of the written material before the Committee on 8 March, 1983, the appellant's notice in writing making the request for the proposed discount air fare did not contain a condition that the proposed discount air fare was to be available only until 30 April, 1983. It follows that in granting its approval subject to that condition relating to the period of operation, 13. the respondents were acting beyond the powers conferred upon them by section 17, I.A.F.C. Act. The Committee had no power to approve the request subject to that condition. In the present case, the Committee misunderstood the terms of the request made by the appellant. As a result the Committee approved a proposal, including a condition which in reality was not included in the proposal. Counsel for the appellant contended that the approval remained valid, being unaffected by the condition which, they contended, was void in law and of no effect and was severable from the approval. That contention is rejected. On the proper construction of sub-section 17(4), I.A.F.C. Act, the power of the Committee was to approve or disapprove the proposal of the appellant. That proposal contained some conditions, but not the condition relating to the period of operation of the discount air fare. The Committee had no power to impose that condition since it was not nominated in the proposal. On this construction of the power, there is no basis for applying the principles applicable where a condition, if severable, may be declared void without affecting the permit or licence granted at the time the condition was imposed. These principles are illustrated in Kent County Council v. Kingsway Investments (Kent) Ltd. [1971] A.c. 72 per Lord Reid at pp. 90-91, Lord Morris at pp. 102-3 and Lord Upjohn at pp. 112-4. 14. During the hearing of the appeal, the Court was informed by counsel that the appellant was continuing to make the discount air fare available pursuant to approvals given subsequently by the Committee. The current approval operates until June, 1984. Further, the appellant has challenged the validity of parts of the I.A.F.C. Act and that challenge is pending in the High Court. The Court does not know the conditions, if any, which apply to the discount air fare presently available. ~In all the circumstances the Court should allow the appeal, set aside the approval of the Committee made on 8 March, 1983 and remit the request from the appellant to the Committee for further consideration of that request according to law. The respondents should pay the costs of the appeal and the costs of the application before the Court constituted by a single Judge. 4 I certify that this and the Kheetees C13) | preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Weved were, He Honeuratle ] Me Jusher Neo-thpep ond we Herourutle 9° Juthee | Necye, . wes Associate _ we C laren Dated: 12 December MSS ee et TE