FEDERAL COURT OF AUSTRALIA

Leonie’s Travel Pty Ltd v Qantas Airways Limited [2010] FCAFC 37

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  The orders made by the primary judge on 17 June 2009 be set aside.

3.                  The appellant’s claim for relief against the respondent for a contravention of s 52 of the Trade Practices Act 1974 (Cth) be dismissed.

4.                  The proceeding be remitted to the primary judge to determine the declarations and orders, consistent with the reasons of the Full Court published today, including any orders for the costs of trial to be made.

5.                  The respondent pay the appellant’s costs of the appeal.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

LANDER AND RARES JJ:

1                     This is an appeal from an order of a judge of this Court dismissing the appellant’s claim for damages for breach of contract: Leonie’s Travel Pty Ltd v International Air Transport Association (2009) 255 ALR 89.

2                     The appellant is a Travel Agent (Agent).  It brought a representative proceeding against the respondent and other airlines in which the appellant represented all Agents who in the relevant period sold published fares for international air passenger transportation on behalf of the respondent, Qantas Airways Limited (Qantas), and a number of other international airlines, and were at some time during the relevant period parties to an international agreement known as the Passenger Sales Agency Agreement (Agency Agreement).  The parties agreed that for the purpose of determining the question of liability the proceeding was to continue against Qantas only.

3                     Airlines throughout the world, including Qantas, are members of the International Air Transport Association (IATA).  IATA issues a standard form Agency Agreement which an Agent must sign in order to sell international transportation on behalf of member airlines of IATA (Airlines).  IATA issues resolutions from time to time which bind its Airlines and Agents who deal with those Airlines.

4                     In addition to the unsuccessful claim for breach of contract, the appellant claimed that Qantas had contravened s 52 of the Trade Practices Act 1974 (Cth) (TPA) and in respect of that statutory cause of action the appellant sought declarations.  Whilst the appellant succeeded in establishing a contravention by Qantas of s 52 of the TPA, the primary judge in the exercise of his discretion refused to grant the appellant any relief: Leonie’s Travel Pty Limited v International Air Transport Association (No 2) [2009] FCA 646.  There is no appeal from the primary judge’s refusal to grant relief under s 52 of the TPA.

5                     On 16 April 1999 the appellant executed an Agency Agreement.  The Agency Agreement is an agreement between each Airline (the Carrier) and the Agent who executes the Agency Agreement.  Clause 1 of the Agency Agreement provided that “this Agreement shall become effective between the Agent and the Carrier upon appointment of the Agent by such Carrier in accordance with the Sales Agency Rules in effect in the country(ies) of the Agent’s Location(s)”.

6                     The Agency Agreement incorporates a number of other documents.  Clause 2.1 of the Agency Agreement which is entitled “RULES, RESOLUTIONS AND PROVISIONS INCORPORATED IN AGREEMENT” provides:

2.1(a)   the terms and conditions governing the relationship between the Carrier and the Agent are set forth in the Resolutions (and other provisions derived therefrom) contained in the Travel Agent’s Handbook (“the Handbook”) as published from time to time under the authority of the Agency Administrator and attached to this Agreement.  The Handbook incorporates:

2.1(a)(i)            the Sales Agency Rules,

2.1(a)(ii)           the Billing and Settlement Plan rules, where applicable, as set forth in the BSP Manual for Agents,

2.1(a)(iii)          such local standards as may be provided for under the Sales Agency Rules,

2.1(a)(iv)          other applicable IATA Resolutions;

2.1(b)   such Rules, Resolutions and other provisions as amended from time to time are deemed to be incorporated in this Agreement and made part hereof and the Carrier and the Agent agree to comply with them;

...

7                     It will be necessary in due course to refer to the Sales Agency Rules.

8                     Clause 2.4 of the Agency Agreement addresses any inconsistency between the incorporated documents and the Agency Agreement itself.  It provides:

2.4       the terms and expressions used in this Agreement shall, unless the context otherwise requires, have the meanings respectively provided for in the Sales Agency Rules.  In the event of any conflict, contradiction or inconsistency between any provisions with which the Agent is required to comply under Subparagraph 2.1 of this Paragraph, and any of the provisions of this Agreement, the provisions of this Agreement shall prevail.

9                     Clause 2.4 has two separate effects.  First, it expressly incorporates the terms and expressions in the Sales Agency Rules into the Agency Agreement.  Secondly, clause 2.4 provides that the Agency Agreement shall prevail where there is any conflict, contradiction or inconsistency between the provisions with which the Agent is required to comply under subparagraph 2.1 and any provisions of the Agency Agreement.  The provisions with which the Agent is required to comply are those provisions which are contained in the Travel Agent’s Handbook.  Relevantly, they will include any applicable provisions in the Sales Agency Rules.

10                  Clause 3 of the Agency Agreement authorises the Agent to sell air passenger transportation on the services of the Carrier in compliance with the Carrier’s tariffs, conditions of carriage and the written instructions of the Carrier as provided to the Agent.  Clause 3.1 relevantly provides:

... The sale of air passenger transportation means all activities necessary to provide a passenger with a valid contract of carriage including but not limited to the issuance of a valid Traffic Document and the collection of money therefor.  The Agent is also authorized to sell such ancillary and other services as the Carrier may authorize;

...

11                  Clause 7 deals with “MONIES DUE BY AGENT TO CARRIERS – REMITTANCE”.  Clause 7.1 requires the Agent to issue a Traffic Document for specified passenger air transportation or ancillary services immediately the Agent receives the money “and the Agent shall be responsible for remittance to the Carrier of the amount payable in respect of such Traffic Document”.

12                  Clause 7.2 provides that the monies collected by the Agent for transportation and ancillary services, including the Agent’s commission, are the property of the Carrier and must be held by the Agent in trust for the Carrier until the monies are accounted for to the Carrier and settlement made.

13                  Clause 9 of the Agency Agreement is entitled “REMUNERATION” and it provides:

9.         for the sale of air transportation and ancillary services by the Agent under this Agreement the Carrier shall remunerate the Agent in a manner and amount as may be stated from time to time and communicated to the Agent by the Carrier.  Such remuneration shall constitute full compensation for the services rendered to the Carrier.

14                  The Agency Agreement is otherwise silent on the question of the Agent’s remuneration.

15                  On 1 January 2004 IATA published the Travel Agent’s Handbook (Resolution 816 Edition) which remained current until 29 February 2008.  That Handbook included two versions of the Agency Agreement.  Version II, which is contained in Resolution 824, is the relevant version for Agents in Australia.  It is in slightly different terms from the Agency Agreement executed by the Agent on 16 April 1999, but the variations are not material in a consideration of this appeal.  Specifically, there are no differences between clauses 2 and 9 of the Agency Agreement executed by the Agent and Version II in Resolution 824.  The Sales Agency Rules (Resolution 816) are incorporated into the Agency Agreement by clause 2.1(a)(i) of the Agency Agreement.  It was not contended by either party that the Sales Agency Rules which are contained in Resolution 816, which were created after the entry into the Agency Agreement and published in the Travel Agents’ Handbook, were not the rules which were incorporated by clause 2.1(a)(i).

16                  As noted above, clause 2.4 incorporates the meanings provided for in the Sales Agency Rules for the terms and expressions used in the Agency Agreement.  Section 1 of the Sales Agency Rules incorporates the definitions of terms and expressions used in Resolution 866.  Thus it is necessary to look to Resolution 866 for any definitions of terms and expressions used in the Agency Agreement. 

17                  Other terms are defined in a glossary in the Handbook.  The glossary does not form part of the Agency Agreement or indeed any part of the contractual documents which determines the relationship between the parties.  It is an aide memoire.  The relevant terms in the Handbook are:

▪      FARE means the amount charged by the carrier for the carriage of a passenger and his allowable free baggage and is the current fare which a Member, in the publication it normally uses to publish fares, holds out to the public, or the appropriate segment of the public, as being applicable to the class of service to be furnished.

▪      FARE, PUBLISHED means a fare, the amount of which is specifically set forth in the carrier's fares tariff.

▪      TARIFFS means the published fares, rates, charges and/or related conditions of carriage of a carrier.

▪      TARIFFS, FARES means the tariff concerned with fares and related charges.

▪      TARIFF, RATES means the tariff concerned with rates and related charges.

▪      TARIFF, RULES means the tariff concerned with the general terms and conditions of carriage.

18                  Section 1 of the Sales Agency Rules also provides that “[p]aragraph headings are for ease of reference only and do not form part of these Rules”.

19                  Relevantly, Resolution 866 provides for “DEFINITIONS OF TERMS USED IN PASSENGER AGENCY PROGRAMME RESOLUTIONS”.  It provides a definition of “ANCILLARY SERVICES”:

[Ancillary services] means services sold on behalf of an airline, secondary to the sale of air transportation, the price of which is included in the overall amount paid to the carrier but which may involve the issuance of a separate Traffic Document.  They typically include excess baggage, surface transportation and car hire.

20                  Section 4 of the Sales Agency Rules provides for the procedure whereby an applicant may become an Agent and the procedure for approval of an application.  Section 4.4 provides the procedure whereby a member of IATA may appoint an Agent to cover approved locations of the Agent.

21                  Section 9 addresses “Conditions for Payment of Commission or Other Remuneration”.  Section 9.1 provides:

9.1       Commission or other remuneration for the sale of international air passenger transportation paid to Agents shall be as may be authorised from time to time by the Member; provided that the Agent complies with the applicable rules governing sales of the transportation.  It is recommended that notification of changes to such commission or other remuneration will be given well in advance.  No commission or other remuneration shall be paid on Miscellaneous Charges Orders unless the air transportation for which they have been issued is specifically described therein.

22                  Section 9.1 contemplates that the Agent may be paid commission or other remuneration for the sale of international air passenger transportation “as may be authorised from time to time by the Member”.  It also contemplates that the Carrier may notify changes to such commission or remuneration and recommends that the Carrier give notification of changes well in advance.  It was not disputed on this appeal that the Carrier had the right to determine whether the Agent was paid commission or other remuneration.

23                  Section 9.4 of the Sales Agency Rules is headed “CONDITIONS FOR PAYING COMMISSION” and it provides:

9.4.1(a)                        where commission is payable to an Agent, it shall be calculated only on the amount of the fares applicable to the air passenger transportation or charter price paid over to the Member, or to the Clearing Bank under the Billing and Settlement Plan, and collected by the Agent; provided that this shall not prevent commission or other remuneration being paid where such sale is made;

9.4.1(a)(i)         pursuant to the Universal Air Travel Plan or a credit plan recognised by the Member (provided the Agent has procured and forwarded to the Member the Universal Credit Card Charge Form or other documents required under the credit plan, validated by an imprint of the date of issuance and Agent’s name), or pursuant to an instalment plan of a Member made available to the public by the Member concerned; or with respect to bona fide immigrants to South Africa, pursuant to a government assisted passage loan or contribution plan wherein the government lends or contributes part or all of the cost of transportation to the passenger;

9.4.1(a)(ii)        on a prepaid ticket advice when the Agent issues the ticket or arranges for the issuance of the ticket and the fare is paid by the purchaser directly to the Member, the Member’s Passenger General Sales Agent or to an air carrier with which the Member has an interline traffic agreement (or such carrier’s General Sales Agent);

9.4.1(a)(iii)        by means of a charter agreement and the Agent has forwarded to the Member a cheque for the entire charter price drawn by a person other than the Agent to the Member as payee, together with written certification by the charterer that the Agent effected the sale;

9.4.1(b)                        the ‘fares applicable’ are the fares (including fare surcharges) for the transportation in accordance with the Member’s tariffs and shall exclude any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges collected by the Agent.

24                  In May 2004, because of the escalating cost of fuel, Qantas introduced a fuel surcharge for both international and domestic itineraries.  At the time of its introduction Qantas advised Agents that base commission would be paid on the fuel surcharge for domestic itineraries but not for international itineraries.

25                  The issue before the primary judge and on appeal is whether Qantas was entitled to unilaterally determine that no commission would be payable on that part of the cost of a ticket which relates to the fuel surcharge.

26                  Airlines inform the Airline Tariff Publishing Company (ATPCO) of their tariffs and other information.  ATPCO, in turn, provides that information to Global Distribution Systems (GDS).  Examples of the available GDS are Galileo, Amadeus and Sabre.  Qantas uses Amadeus.  Agents subscribe to the international ticketing computer systems in order to obtain the information which the airlines have provided to ATPCO.  Agents issue tickets on behalf of the airlines.  The airline which has issued the ticket is known as the “ticketing airline”, the “issuing airline” or the “validating carrier”.  A ticket may be issued to a passenger for an itinerary which is completed by one airline or for an itinerary which involves more than one airline.  Many of the international airlines have entered into arrangements with each other known as “interline agreements”.  Those agreements provide for the manner in which payment is to be made of monies received by the issuing airline for travel on that airline and another airline.

27                  Airlines and Carriers routinely publish their current fares in the media and on the web.  The public thereby have access to an airline’s published fares.

28                  The airline industry has “designator” codes which identify the amounts which are components of the amount payable for a ticket.  The Handbook issued by IATA provides instructions for Agents to issue tickets based on applicable ticketing procedures.  The designator codes include codes which identify various “taxes, fees and charges” which are collected by the Airline on behalf of third parties; for example, government authorities.  Another designator code is used by Airlines to designate fare surcharges that are collected by an Airline relating to the fare for the particular journey to be undertaken by the passenger.  A third group of designator codes, which are described as “airline own use only” codes, is used by an Airline to designate other surcharges or levies that are collected by the Airline for its benefit only.  Two of the codes in the airline own use only codes are the “YQ” code and the “YR” code.

29                  When Qantas introduced the fuel surcharge, it decided to include that fuel surcharge in the YQ designated code.  The effect of that was to include the fuel surcharge in an airline own use only code which meant that the amount collected was not interlineable.  In Qantas’ case, it meant that the fuel surcharge which was collected was retained wholly by Qantas and not distributed to any other Airline which provides transportation for any part of the particular itinerary undertaken by the passenger.

30                  An Agent is paid base commission on any ticket it sells on behalf of an Airline which is paid under the Agency Agreement.  The Agent has the obligation of collecting the amount payable for the fare on the issue of the ticket.  As noted above, if the Agent does not collect the amount payable the Agent is still liable on the issue of the ticket to the Carrier for that amount.

31                  IATA provides a Billing and Settlement Plan which has the effect of causing the Agents to pay the Carriers the amount payable less any commission due to the Agent.  The Agents advise IATA of the tickets which have been sold and the amounts which it has collected and the commission which it claims.  IATA causes the amount which is payable to the Carrier to be paid by the Agent to itself less any relevant commission.  IATA then accounts to the Carrier for the amount which the Agent has paid it.

32                  At the hearing before the primary judge, Qantas advanced three arguments as to why it was entitled not to pay an Agent any commission on the fuel surcharge.  First, it argued that the fuel surcharge was not and never had been part of the fare for transportation in accordance with Qantas’ tariffs.  It argued that the fuel surcharge was not included in the expression “fares applicable” in section 9.4.1(b) of the Sales Agency Rules.  The primary judge rejected that argument, but it is advanced by Qantas by way of notice of contention on this appeal.  Secondly, it argued that the fuel surcharge was included in the expression “other charges collected by the Agent” in section 9.4.1(b) of the Sales Agency Rules and, by operation of the exclusion, could not be treated as part of the fares applicable for the calculation contemplated in section 9.4.1(a).  That argument was also rejected by the primary judge and it is not pursued on this appeal.  Thirdly, Qantas argued that, even if the fuel surcharge formed part of the applicable fare for the purposes of clause 9.4, commission was not payable because Qantas had determined pursuant to clause 9 of the Agency Agreement that base commission would not be paid on the fuel surcharge except for Australian domestic itineraries.  The primary judge accepted that third argument and concluded that Qantas was entitled by reason of the provisions of clause 9 of the Agency Agreement to determine that no commission was payable to Agents on the fuel surcharge.  Because that third argument was accepted by the primary judge he dismissed the applicant’s claim for damages for breach of contract.

33                  Both before the primary judge and on the appeal the appellant relied upon a decision of the Court of Appeal in England in Association of British Travel Agents Ltd v British Airways plc [2000] 2 All ER (Comm) 204, which it claimed was determinative of the contractual claim.  The primary judge described the decision as “underpinning the applicant’s contractual claim”: Leonie’s Travel 255 ALR 89 at [34].  For that reason, he dealt with this authority at the outset.  We shall adopt the same approach.  As the citation shows, the decision of the Court of Appeal was given nearly four years before IATA published the presently relevant version of its Travel Agents Handbook.  The appellant contended that the decision of the Court of Appeal was again determinative on the issues raised on the appeal and the issue raised in Qantas’ notice of contention.

34                  In the appeal in England, the three appellant Agents entered into standard form Agency Agreements between December 1993 and October 1997.  They were in the form of Resolution 824 “Passenger Sales Agency Agreement (Version II)” which incorporated the Sales Agency Rules (Resolution 814).  Resolution 824 included clauses 2, 3, 7 and 9 which were in the same terms as those same mentioned clauses in the Agency Agreement on this appeal.

35                  Section 9 of the Sales Agency Rules (Resolution 814) was in similar but not identical terms to section 9 of the Sales Agency Rules on this appeal.  It provided:

       9.1.    RATE OF COMMISSION

       commission paid to Agents for the sale of international air passenger transportation shall be as may be authorised from time to time by the Member, provided that the Agent complies with the applicable rules governing sales of the transportation ...

       9.2     AUTHORITY TO PAY COMMISSION

       Agents duly appointed by the Member shall be paid commission for the sale of international air passenger transportation.

       9.3     INTERLINE SALES

       The amount of fare on which commission shall be computed may include interline passenger transportation over the services of other Members with which the Agent’s principal as an interline traffic agreement ...

       9.4     CONDITION FOR PAYING COMMISSION

       9.4.1  commission shall be paid to an Agent on the amount of the fares applicable to the air passenger transportation or charter price paid over to the Member ...

       9.4.2  The “fares applicable” are the fares (including fare surcharges) for the transportation in accordance with the Member’s tariffs and shall exclude any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges collected by the Agent.

36                  The British Airports Authority in 1972 introduced a charge levied on Airlines by reference to the volume of passengers the Airline put through the airport’s terminal facilities.  It was called “Passenger Service Charge” (PSC).  It was not a tax, but a convenient method of charging the airline for the use of the airport facilities.

37                  Between 1972 and 1999 the Airlines treated the PSC no differently from other user charges and simply treated it as a part of their overheads which they sought to be recouped in the cost of the airline ticket.  The PSC was not referred to in the ticket which was issued to the passenger.  Commission was paid to Agents calculated by way of percentage of the price of the ticket, inclusive of the PSC but exclusive of taxes.  In January 1999 IATA issued IATA Bulletin No. 52 in which it claimed that the PSC was not only a tax but a new tax.  It said that in the future the PSC would be shown as a tax on the tickets and that Agents would not be entitled to any commission on the amount of the PSC.  The Agents treated Bulletin No. 52 as an IATA instruction to include the PSC as a tax in the tax box shown on the ticket issued after 1 February 1999 for travel after 1 April 1999.

38                  On 14 May 1999 IATA wrote a covering letter enclosing IATA Bulletin No. 55 to Travel Agents advising that as a consequence of PSCs being shown separately on tickets, “PSCs do not form part of the fares applicable to the air passenger transportation for the purposes of the calculation of commission”.  The Airlines argued that if IATA Bulletin No. 52 was not an exercise of the Airline’s power to vary an Agent’s commission under clause 9 of the Agency Agreement (Resolution 824), the covering letter of 14 May amounted to such an exercise of power.

39                  Lord Justice Clarke, with whom Aldous and Sedley LJJ agreed, identified three issues on the appeal.  The first was whether the definition of “fares applicable” in section 9.4.2 of the Sales Agency Rules included the PSC.  In relation to that issue Clarke LJ said that the appeal did not raise any new questions of principle and the Court was required to construe the particular contractual provisions in the context of the contract as a whole and in its factual matrix.  He was of the opinion that the expression “fares applicable” should not be given too narrow a meaning and that “fares applicable” would include those fares applicable to “air passenger transportation” and would therefore include the payment for the use of airport facilities (PSC).  He construed section 9.4.2 as the total price to the passenger including charges like PSC, but excluding the matters referred to in section 9.4.2.  He was of the opinion that the PSC was not included in the term “other charges”.

40                  The second issue before the Court of Appeal was whether the Airlines had exercised their rights under clause 9 so that they were no longer liable to commission in respect of PSC after the publication of the IATA Bulletin No. 52.

41                  Lord Justice Clarke identified the two questions which arose in relation to the second issue at [44]:

Two questions arise, or potentially arise, for decision.  The first is whether para 9 empowered the airlines to alter the remuneration as alleged and the second is whether, if it did, the letter of 14 May had that effect.  It is convenient to consider the second question first.

42                  It was contended before the Court of Appeal that the Airlines were entitled to alter the Agents’ contractual rights to remuneration in any way the Airlines liked.  It was contended that the Bulletin which had been published was the basis of the alteration of the Agents’ remuneration.  It was contended before the trial judge but not on appeal that the Airlines exercised that right by publication of IATA Bulletin No. 52. On appeal the Airlines simply argued that the covering letter of 14 May which enclosed Bulletin No. 55 was the exercise of the Airlines’ power to alter the Agents’ contractual right to remuneration.

43                  His Lordship was of the opinion that the answer to the question whether the letter of 14 May had the effect of altering the remuneration of Agents depended upon the meaning of the letter itself.  His Lordship construed the letter as purporting to do more than to state the consequences of the instruction contained in IATA Bulletin No. 52.  The advice that the PSC should be included in the tax box was no more than a statement by the Airlines of their understanding of the consequences of complying with IATA Bulletin No. 52.  Lord Justice Clarke was of the opinion that the writer of the letter had not intended to exercise any power to state the manner and amount of the Agents’ remuneration.  His Lordship determined that the letter of 14 May did not purport to exercise any right under clause 9 to alter the remuneration which was payable to the Agents.  It merely identified the Airlines’ understanding of the consequences of complying with Bulletin No. 52 by putting a PSC in a tax box.

44                  That was enough to dispose of the second issue but Clarke LJ addressed what was, as his Lordship acknowledged, the anterior question as to whether clause 9 empowered the Airlines to alter the remuneration.  His Lordship was of the opinion that section 9 of the Sales Agency Rules conferred contractual rights upon both parties.  The Airlines had the right under section 9.1 to change the rate of commission.  Section 9.2 gives the Agents the right to receive commission.  He said that clause 9 of the Agency Agreement should be read together with section 9 of the Sales Agency Rules which formed part of the contract by reason of clause 2 of the Agency Agreement.  He said of clause 2.4 of the Agency Agreement at [48]:

By para 2 of Resolution 824, Resolution 814 forms part of the contract and, although para 2.4 provides that in the event of any conflict, contradiction or inconsistency between the  provisions of the two, those in Resolution 824 shall prevail, the two resolutions should, if reasonably practicable, be construed to avoid any such inconsistency.

He was of the opinion that the two clauses of the separate documents could be construed to avoid any inconsistency.  He said at [49]:

Thus in section 9.1 the airlines are given the right to change the rate of commission and in section 9.2 the agents are given the right to be paid commission.  The conditions for the payment of commission are set out in some detail in para 9.4.  The airlines have exercised their right to alter the rate of commission from time to time.  Thus, for example, they (or perhaps some of them) reduced the rate from 9% to 7% some time ago.  At one time it was suggested on their behalf that they could justify the reduction of commission on the facts here by exercising their rights under section 9.1, but that suggestion was abandoned some time ago.

He concluded at [51]:

Paragraph 9 is not drafted in terms which suggest that it was intended to give the airlines unilateral rights to alter the rights and obligations of the parties in other resolutions contained in the handbook such as Resolution 814.  It merely states that the airline shall remunerate the agent in such a manner and amount as may be stated from time to time and communicated to the agent.  In my judgment, that provision should be construed together with resolutions such as Resolution 814 and not as entitling the carrier to change Resolution 814.  Any such change would have to be achieved by the machinery expressly provided in para 2.4 of Resolution 824.  Thus the airlines cannot use para 9 to state some remuneration calculated on some basis inconsistent with the rights of the agents conferred upon them by Resolution 814.  It follows that, even if my view of the meaning of the letter of 14 May were held to be wrong, I would hold that the airlines were not entitled to reduce the commission payable under section 9.2 of Resolution 814 by making a statement under para 9 of Resolution 814.

45                  The Court concluded therefore that clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules were not inconsistent.  Moreover, the Court concluded that clause 9 did not empower the Airlines or Carriers to unilaterally alter the rights and obligations of the parties in the Sales Agency Rules.

46                  It is probable that when his Lordship referred to “any such change (to Resolution 814) would have to be achieved by the machinery expressly provided in para 2.4 of Resolution 824”, that his Lordship meant to refer to clause 2.3 of the Agency Agreement because clause 2.4 of the Agency Agreement does not appear to us to provide any machinery to alter any of the terms and conditions of the Sales Agency Agreement.  Of course, if Resolution 814 (the Sales Agency Rules) were to be amended by a valid resolution of the IATA, then, because of the provisions of clause 2.1, that amendment would form part of the terms and conditions governing the relationship between the Airline and the Agent.

47                  The third issue before the Court of Appeal concerned the making of a declaration which is not important for the purposes of this appeal.

48                  The primary judge acknowledged the obligation on domestic courts to adopt a uniform construction of documents which have international application and to approach their decisions in comity with decisions of other commercial courts.  He said at [46]:

At this point, I should say something about the approach I should take to this authority.  Over 250 years ago, Lord Mansfield said in Pelly v Royal Exchange Assurance Co (1757) 97 Eng Rep 342 at 346:

... mercantile law ... is the same all over the world.  For the same premises, the sound conclusions of reason and justice must universally be the same.

It has been said of an international instrument adopted by many countries regulating international trade that it is “self-evidently desirable to strive for uniform construction of [it]”:Gaudron, Gummow and Hayne JJ in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161; 158 ALR 1; [1998] HCA 65 at [38], which has been said to be an approach of comity that is the settled attitude of the High Court: Siemens Ltd v Schenker International (Aust) Pty Ltd (2004) 216 CLR 418; 205 ALR 232; [2004] HCA 11 at [154] per Kirby J.  In this matter, the Handbook contains a number of documents that have wide international application (putting to one side what, for present purposes, are probably immaterial differences arising from the way decision-making in IATA is undertaken (flowing from the division of the world into three areas)).  For my part, there is much to commend the approach that domestic courts should strive to adopt a uniform construction of documents that have wide international application in international trade, even if their genesis is not an international treaty adopted by nation states or like instruments: see International Air Transport Association v Ansett Australia Holdings Ltd (subject to deed of company arrangement) (2008) 234 CLR 151; 242 ALR 47; 65 ACSR 1; [2008] HCA 3 at [124] (Ansett) per Kirby J.

49                  His Honour, however, was of the opinion that Clarke LJ’s remarks in relation to the construction of clause 9 of the Agency Agreement (the second issue) were “probably only obiter dicta”.  He was of the opinion that Clarke LJ had determined the matter by first deciding that the Airlines had not purported to exercise a power under clause 9 and therefore the Court of Appeal’s construction of clause 9 was obiter.  Secondly, he was of the opinion that there were material differences between the terms of the Sales Agency Rules before the Court of Appeal and the Sales Agency Rules in the proceeding before him.

50                  The first point of distinction between the Sales Agency Rules in the appeal before the Court of Appeal and the proceeding before the primary judge which appealed to the primary judge was the incorporation of the word “only” in section 9.4.1 of the Sales Agency Rules.  His Honour concluded that that word “only” had been used to emphasise that any other amounts after the words “shall exclude” in section 9.4.1(b) were not to be brought to account in the calculation of the commission.  He said of the word “only” at [62]:

The use of the word “only” makes it significantly less obvious to me that the section is intended to be a contractual direction or command to an airline to accept the deduction of commission calculated in a particular way, notwithstanding the airline's otherwise general contractual right to determine the manner and amount of remuneration.

51                  He also observed that the heading to section 9 of the Sales Agency Rules in the proceeding was different to the heading of the Sales Agency Rules considered by the Court of Appeal, in that the heading to the Australian version does not speak of “Rates of Commissions” but “Conditions for Payment of Commission or Other Remuneration”.

52                  The primary judge thereby distinguished Association of British Travel Agents Ltd  [2000] 2 All ER (Comm) 204 and did not apply the reasoning of the Court of Appeal in his construction of the documents before him.

53                  Some of the terms of IATA’s Agreements were also considered in International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151.  In his concurring judgment, Gleeson CJ adverted to the role that an understanding of the commercial purpose of a contract has as part of the principles of contractual construction.  He reaffirmed, as did Gummow, Hayne, Heydon, Crennan and Kiefel JJ, the role in understanding the genesis of the transaction, the background and the market play in this regard: Ansett 234 CLR 151 at [8], [53], [56].  As the Chief Justice said in Ansett 234 CLR 151 at [8]:

This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning (Singh v The Commonwealth (2004) 222 CLR 322 at 331-338 [8]-[23]). Before considering that history, it is necessary to explain, by reference to the text, how the issue of construction arises.  (emphasis added)

54                  Here, the decision of the Court of Appeal is a vital part of the history of the current form of the agreement.  Likewise, in Ansett 234 CLR 151, the Court had regard to an amendment to the terms on which the IATA clearing house system was structured.  That amendment had been made to negate an earlier decision of the House of Lords.  In contrast, the decision of the Court of Appeal was given on wording and in relation to an issue that is not materially different to the wording and issue here.  Of course, if textual changes were later made to reverse or accommodate the Court of Appeal’s decision, then the task of construction will be assisted by an understanding of those differences.  But no such difference was identified here except for the insertion of the word “only” in clause 9.4.1(a).

55                  The role of the Court of Appeal in construing the current terms forms part of the history and provides an important insight into the commercial purpose of those terms.  And, there is an obvious commercial imperative for the courts of other nations to follow the decision of a court of the standing of the Court of Appeal in proceedings such as these.  This should occur unless the Court is persuaded that the former decision is plainly wrong or clearly distinguishable because of a significant subsequently introduced difference in the wording of the documents being construed.  All Airlines and Agents have an interest in the clear and binding interpretation of these complex but, for them, commercially significant documents.

56                  An invidious commercial result would come about if other courts ignored such decisions, and construed these documents differently.  Airlines and Agents in one country would then have different rights and liabilities to those of their counterparts in, say, the United Kingdom, in respect of exactly the same contractual relationship.  Forum shopping by the unsuccessful side would be encouraged.  That is the antithesis of what international commerce and industry needs.  Business people need to know authoritatively what their rights and obligations are.  If the construction arrived at by the courts is not commercially acceptable, then the documents can be amended by IATA to take account of the court’s reasons so as to bring about a new and different result.  That is what happened after the decision of the House of Lords in British Eagle International Air Lines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758.

57                  The law merchant has recognised for centuries that international business transactions must be decided by courts applying generally accepted principles of law that can operate in different countries, legal contexts and legal systems, including both civil and common law jurisdictions.  The courts must strive to give international trade and commerce certainty and coherence.  Of course, this is not always possible, principally because legislation in the forum sometimes supervenes and governs a result.  But here, there is no benefit to any of the parties to encourage re-agitation of the controversy so capably and authoritatively decided by the Court of Appeal.

58                  It is desirable that contracts of this kind under consideration by the Court of Appeal and on this appeal be given a uniform construction in the common law world and the Court should strive to reach that result: Great China Metal Industries Co Limited v Malaysian International Shipping Corporation, Berhad (1998) 196 CLR 161 at [38].  A decision of a court of the stature of the Court of Appeal given on an agreement which has international application should be followed by an intermediate Court of Appeal in this country, unless the Court is of the opinion that the reasons of the Court of Appeal have no application to the issues under consideration or the Court is of the opinion that the decision is plainly wrong.  A decision of the Court of Appeal is entitled to be given considerable respect.  The commercial world is entitled to expect that the common law courts throughout the world will follow a decision of the kind made by the Court of Appeal, which has not been otherwise challenged, to ensure certainty in commercial dealings.  International comity demands that this Court follow the decision unless, for the reasons given, it is unable so to do.

59                  In our opinion, for the reasons which we will give, the inclusion of the word “only” in section 9.4.1(a) of the Sales Agency Rules in Resolution 816 does not serve to distinguish Association of British Travel Agents Ltd [2000] 2 All ER (Comm) 204 from the documents under consideration on this appeal.

60                  We are not sure how much weight the primary judge put upon the differences in the headings in the respective sections 9.  However, we do not think that any weight can be given to that difference.  First, because as we have already observed, section 1 of the Sales Agency Rules provides that paragraph headings are for ease of reference only and do not form part of the Rules; and secondly, because the heading to section 9 did not impact upon the Court of Appeal’s reasons.  The reason the Court of Appeal does not refer to the equivalent section 1 of the Sales Agency Rules is perhaps because, as we have said, no reliance seems to have been placed upon the heading.

61                  We do not agree that Clarke LJ’s remarks in relation to the construction of clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules were obiter.  Lord Justice Clarke identified an issue to be determined.  He determined the issue adversely to the respondent on the appeal for two separate reasons.  First, because the respondent had not in fact exercised any power to unilaterally alter the remuneration payable to Agents.  Secondly and fundamentally, he found that no such power existed.  The second holding is an anterior question to the first.  If no power existed, then there was no power to be exercised.  If any of his Lordship’s remarks in relation to the second issue were obiter, it is those remarks which relate to the exercise of power, even though that was the question he first considered.

62                  We are not convinced that the Court of Appeal’s decision is plainly wrong or even arguably wrong.  Indeed, in our respectful opinion, the decision is right.  This Court should follow the decision of the Court of Appeal and the reasons of Clarke LJ, and conclude for the reasons he did that there is no inconsistency between clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules, and that clause 2.4 of the Agency Agreement has no part to play in a consideration of the issues to be determined.

63                  As already noted the primary judge rejected Qantas’ first two arguments but upheld the third argument.  In fact, he dealt with the third argument first because he was of the opinion that it should be upheld and the appellant’s proceeding dismissed.

64                  Because Qantas’ third argument is the subject of the appeal, it is convenient to deal with it in the same order as the primary judge.  The primary judge identified the starting point at [58] as:

[W]hether the terms of cl 9 of the Agency Agreement, viewed in isolation, might be thought to confer a contractual right on an airline to determine the manner and the amount to be paid to an agent as remuneration and the correlative right in the agent to be paid that remuneration.  If the answer is yes, the next question is whether, as a matter of construction, s 9 of the Sales Agency Rules (which forms part of the Agency Agreement), at least in relation to remuneration by commission, identifies more precisely the rights of an airline and agent, and potentially limits the rights of an airline, and does not do so in a way that engages cl 2.4 of the Agency Agreement as a “conflict, contradiction or inconsistency”.  In my respectful opinion, it is not a question (as Clarke LJ put it), of whether or not clause 9 of the Agency Agreement confers a right to vary rights conferred by s 9 of the Sales Agency Rules.

65                  His Honour was of the opinion that the inclusion of the word “only” in section 9.4.1(a) of the Sales Agency Rules was used to emphasise that any other amounts forming part of the transaction, being the amounts identified in section 9.4.1(b), are not to be brought to account in the calculation of commission.  He also thought that it would be a very curious result if it was intended that an Airline had a general right that could be exercised to make a payment by a method other than purely by commission and be entitled to vary the rate of that commission, but not alter the mechanism for calculating the commission.

66                  He was of the opinion that there was no conflict, contradiction or inconsistency between clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules but that, in combination, the clause and the section entitled Qantas to exercise its contractual right to determine the manner and amount of Agent’s remuneration by determining that the manner is a calculated percentage commission payable on the total price, less the amount payable to Qantas as the fuel surcharge.

67                  In our opinion, there is no inconsistency between the terms of clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules.  Section 9.2 gives to accredited Agents duly appointed by the Members the right to be paid commission or other remuneration for the sale of international air passenger transport.

68                  Clause 9 in the Agency Agreement empowers a Carrier to remunerate Agents under the agreement in relation to the sale of air transportation and ancillary services “in a manner and amount as may be stated from time to time and communicated to the Agent by the Carrier”.  Clause 9 empowers the Carrier, as does section 9.1, to determine whether the Agent shall be paid either by way of commission or by some other form of remuneration.  That power arises out of the use of the word “manner” in clause 9.  Clause 9 also empowers the Carrier to determine the rate of commission or the sum of the other remuneration.  That power comes out of the use of the word “amount” in clause 9.  Clause 9 of the Agency Agreement gives the Carrier the same bifurcated power as section 9.1 gives an Airline (as the Carrier is there described).

69                  Section 9.1 empowers the Airline to determine whether the accredited Agents shall be paid either commission or other remuneration.  The Airline is empowered to authorise payment of either commission or other remuneration provided that the Agent complies with the applicable rules governing sales of transportation.  Section 9.1 also empowers the Airline to determine the rate of commission which is to be paid.  That power is implicit in section 9.1, because the Sales Agency Rules do not otherwise address the rate of commission which is to be paid.  Section 9.1 would also empower the Airline to fix the other remuneration which is to be paid.

70                  It seems to us that the words in the first sentence of section 9.1 therefore give the Airline both the power to determine whether the accredited Agent shall be paid commission or other remuneration; and if it is to be commission the rate of commission, and if it is to be other remuneration the amount of that remuneration.

71                  If the Airline authorises the accredited Agent to be paid commission pursuant to section 9.1 and fixes a rate of that commission, then the sum upon which the commission is to be calculated is determined by reference to section 9.4.  As the opening words of section 9.4.1(a) show, section 9.4 only applies to commission and where commission is payable to an Agent.  Commission shall only be payable to an Agent if the Airline has authorised the payment of commission in accordance with section 9.1.

72                  The commission shall be payable only upon the amount of the fares applicable to the air passenger transportation paid over to the Airline or to the Clearing Bank under the Billing and Settlement Plan, and collected by the Agent.

73                  Section 9.4 only addresses circumstances where commission is payable to an Agent.  It has no application if the Agent is entitled to remuneration other than by commission.  Section 9.4.1(a) stipulates the money upon which commission is payable.  Commission is payable “only on the amount of the fares applicable to the air passenger transportation or charter price paid over to the Airline, or to the Clearing Bank under the Billing and Settlement Plan, and collected by the Agent”.  The first purpose of section 9.4.1(a) is to ensure, relevantly, that commission is only payable on the fares applicable to the air passenger transportation.  In that sense, it discriminates between air passenger transportation and ancillary services.  Its second purpose is to ensure that commission is only payable on the amount of the fares applicable paid over to the Airline or to the Clearing Bank under the Billing and Settlement Plan and collected by the Agent.  Any money paid directly to the Airline would not entitle any Agent to any commission.

74                  Three exceptions are provided for in sections 9.4.1(a)(i), (ii) and (iii).  Those exceptions do not need to be addressed, save to say they are consistent with the construction we have given section 9.4.1(a).

75                  Section 9.4.1(b) is a definitional provision.  It defines “fares applicable” as including fare surcharges for the transportation in accordance with the Airline’s tariffs, but excludes any charges for excess baggage or excess valuation of baggage as well as taxes and other charges collected by the Agent.  “Fares applicable” thereby also excludes ancillary services.  “Fare surcharges” is not defined in either the definitions in Resolution 866, which were incorporated into the Agency Agreement by the first sentence of clause 2.4 of the Agency Agreement and section 1 of the Sales Agency Rules, or the glossary.  However, fare surcharges typically include surcharges for a stopover or for a flat bed.  The provisions of section 9.4.1.(b) show that commission is payable on fare surcharges because they are surcharges on the fare.  They are not relevant in this appeal.

76                  More relevant is that the drafter has included, in “fares applicable”, fares for the transportation in accordance with the Airline’s tariffs and then excluded “any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges collected by the Agent”.  The definition in section 9.1.4(b) was the subject of debate especially in relation to the respondent’s notice of contention.  It is important in considering what this clause means, and in particular what is encompassed in the word “fares”, that  the drafter thought it necessary to define fares by reference to the Airline’s tariffs and then to specifically exclude charges for baggage or excess valuation of baggage, taxes and other charges.  There would be no need to exclude those items if in fact they did not form part of the fares within the meaning of the agreements.

77                  Section 9.4.1(a) creates a right to commission upon either “the amount of the fares applicable to the air passenger transportation” or “charter price” on two express conditions; first, the fare or price is paid over, either to the Airline or the Clearing Bank and, secondly, it must have been collected by the Agent.  The provision is structured around what the Agent collects – a fare or price – and pays over so that it reaches the Airline.  Next, section 9.4.1(b) defines “fares applicable” to identify the portion of what the Agent has collected on which it will be paid commission.  The fuel surcharge or “YQ” code is not within the excluded items referred to by section 9.4.1(b), namely, excess baggage, excess valuation of baggage, taxes “… and other charges collected by the Agent”.  The term “charges” is defined in Resolution 866 as meaning administrative charges or clearing bank charges of a defined nature.  Thus, the fuel surcharge cannot be included as “other charges”.

78                  Importantly, the definition of “fares applicable” in section 9.4.1(b) is expansive because it provides that these are “fares (including fare surcharges) for the transportation in accordance with the Member’s tariffs” (emphasis added).  The ordinary and natural meaning of this term is that “fares” constitutes what the customer pays for the ticket for air transportation, in order that the passenger be transported “in accordance with the Member’s tariffs” for which the payment was collected by the Agent.  The definition of “fares applicable” then excludes some specific items from the ordinary meaning of fares for that identified air transportation for the purpose of calculating commission payable to the Agent on the sum it collected for the benefit of the Airline.

79                  The ordinary and natural meaning of “fares” is reinforced by clauses 3.1 and 3.2 of the Agreement (in Resolution 824).  In particular, clause 3.1 authorises the Agent “to sell air passenger transportation on the services of the Carrier”.  It then creates its own definition of such a sale being:  “The sale of air passenger transportation means all activities necessary to provide the passenger with a valid contract of carriage …” (emphasis added) including a ticket.  If the passenger did not pay the fuel surcharge he or she would not receive a ticket.

80                  In our opinion, the word “only” appears in section 9.4.1(a) to make it clear that commission is to be paid on “fares applicable” of the particular kind, which are fares paid over to the Airline or to the Clearing Bank under the Billing and Settlement Plan, and collected by the Agent.  As we have said, the exceptions which are provided for in the proviso to section 9.4.1(a) in placita (i), (ii) and (iii) show that some sales, which do not result in the fare being paid over to the Airline or to the Clearing Bank under the Billing and Settlement Plan, and collected by the Agent and which would not attract commission by force of section 9.4.1(a), are excepted from the consequences of clause 9.4.1(a).  Those particular sales will still result in the Agent being entitled to receive commission.

81                  Section 9.4.1(b) indicates, in our opinion, that the commission will be payable on the whole of the fare, including fare surcharges for the transportation in accordance with the Airline’s tariffs, except “any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges”.  Fares applicable therefore are determined by reference to the whole of the fare including fare surcharges for the transportation collected by the Agent, but excluding those items mentioned in section 9.4.1(b).

82                  Section 9.4 sets out a regime for the calculation of the sum upon which commission is payable, which is not subject to any variation at the instigation of the Airline pursuant to the provisions of section 9.1.  Whilst section 9.1 does empower the Airline to authorise the rate of commission payable to the Agent, section 9.1 does not empower any Airline to vary the sum upon which the commission is to be paid.

83                  Because we are of the opinion that there is no inconsistency between clause 9 of the Agency Agreement and section 9 of the Sales Agency Rules, then clause 2.4 of the Agency Agreement has no presently apposite work to do.

84                  However, if we are wrong and there is an inconsistency between the clause and the section, in our opinion clause 2.4 would not in the circumstances of this case operate to cause clause 9 to prevail over section 9.1.  As we have already said, clause 2.4 operates to have two effects.  First, it incorporates the meanings in the Sales Agency Rules and thereby the definitions of terms and expression used in Resolution 866.  It also causes the provisions of the Agency Agreement to prevail over the documents incorporated in the Agency Agreement by reason of clause 2.1 where “the Agent is required to comply with any provisions under subparagraph 2.1 of this paragraph”.  Relevantly therefore, it only applies where the Agent is required to comply with a provision of the Sales Agency Rules.

85                  Section 9 does not operate to impose any obligations upon the Agent.  There is no requirement in section 9.1 or section 9.4 with which the Agent must comply.  Section 9.1 gives the Airline the powers to which we have referred.  Section 9.2 gives the Agent a right to be paid commission or other remuneration.  Section 9.4 identifies the conditions which apply for commission to be paid if the agreement between the Airline and the Agent is for the payment of commission.  It merely identifies the circumstances in which, and the sum upon which, commission is to be paid.  Clause 2.4 does not operate to cause clause 9 of the Agency Agreement to prevail over section 9 of the Sales Agency Rules, because there is no provision in section 9 with which the Agent is required to comply.

86                  When clause 9 and section 9 are understood as we have described, it can be seen that there was nothing in either the clause or the section which would entitle the Airline to unilaterally change the sum upon which commission is to be paid if commission becomes payable under section 9 of the Sales Agency Rules.  The Airline or Carrier is entitled to change the rate of remuneration by exercising the power given it in section 9 of the Sales Agency Rules, but that rate will always be payable upon the formula which is provided for in section 9.4.1(a).

87                  We agree with the reasons of Clarke LJ in Association of British Travel Agents [2000] 2 All ER (Comm) 204.  We therefore would uphold the appellant’s grounds of appeal.

88                  However, as previously mentioned, Qantas has filed a notice of contention in which it contends that his Honour’s orders can be upheld for reasons which did not appeal to his Honour.  This was Qantas’ first argument.  It contended that the fuel surcharge does not form any part of the fares applicable and therefore no commission is payable upon that surcharge.  The primary judge identified Qantas’ argument as starting with the proposition that the definition of “FARE, PUBLISHED” in the glossary to the Handbook points to the published fare being the amount specified as the fare in the Airlines’ fares tariff.  Next Qantas argued that the fuel surcharge is not, and has never been, part of any amount specified as the fare in Qantas’ fares tariff because the fuel surcharge has been identified as part of the YQ code, and therefore is an amount separate and apart from the fare.  The third step in the argument was, as his Honour said, that if an Agent interrogated Amadeus (which Qantas uses) the Agent would be told of the amount of the fare and would be told of a separate amount payable under the YQ code.  As far as his Honour was concerned, the argument failed on its premise.  The question, so far as his Honour was concerned ,was the meaning of the words “fares applicable” in section 9.4.1(a) and when one looks at the definition of the word “fare” in the glossary it contains two discrete components which he was of the opinion were independent of each other.  The first component is the amount charged by the Carrier, the Airline.  The second component is the current fare that the Airline holds out to the public as being applicable to the class of service to be furnished.  He said at [76]:

As a matter of construction, each component must be taken to inform the content of the other to ensure that the definition is, in its entirety, coherent and harmonious.  Accordingly, although the amount paid to the airline might be disaggregated and coded, the fare is, nonetheless, the amount charged by and paid to the airline in the sense just discussed, namely the amount which was retained by the airline as revenue but subject to subsequent interlining.  The definition focuses on an amount that would be perceived by the passenger as the fare because it is either the amount charged and paid as the fare or the amount published as the fare.  On either basis the characterisation of the fuel surcharge arising from the use of the YQ code would not alter the fact that it is one element of what was paid to Qantas as the issuing airline.

89                  In our opinion, the contentions in the notice of contention must be rejected for the reasons which follow.

90                  The amount upon which the Airline or Carrier must pay commission is the amount referred to in section 9.4.1(a) which is “the amount of the fares applicable to the air passenger transportation or charter price ...”.  The definition of “fares applicable” is not to be found either by reference to the definition of “Fare Published” in the glossary or, indeed, even the definition of “Fare” in the glossary.  Section 9.4.1 provides its own definition of “fares applicable” and fares applicable are the fares for the transportation in accordance with the Airlines’ tariffs, but excluding the items mentioned in section 9.4.1(b).  It is section 9.4.1(b) that determines the sum upon which the commission is to be paid under section 9.

91                  Qantas argued that because section 9.4.1(b) makes reference to the Airline’s tariffs regard had to be had to the Airline’s published fares.  The Airline’s published fares, it was contended, were those fares which the respondent published to ATPCO and which in turn ATPCO published to the Agents by the Agents having access to GDS.  Because Qantas had included the fuel surcharge and the YQ code which was an airlines code only code, then the fuel surcharge did not form part of the fares applicable.  Put shortly, Qantas’ contention was that it could determine for itself what the fares applicable were by what it designated as any particular surcharge.

92                  It was accepted by Qantas during argument that if its contention were to be upheld it could make the fare simply the profit component of the fare and make every other overhead a surcharge.  Indeed, it was accepted during argument that if a particular Qantas route was unprofitable then there would be no “fares applicable”.  Qantas argued that such circumstances would not eventuate because of commercial pressures.

93                  In our opinion the construction contended for by Qantas cannot be accepted.  Section 9.4.1(b) contemplates that “fares applicable” is the whole of the fare charged by the Airline or Carrier for the air transportation of a person from one port to another.  That fare would include the whole of the fare charged by the Airline or Carrier, including any charge for excess baggage and all taxes and charges.  If excess baggage and taxes and other charges were not part of the fare for transportation of a passenger, there would be no need to specifically exclude those items from fares applicable.  The fare for transportation in section 9.4.1(b) is the cost of the fare to the passenger.  However, the definition of “fares applicable” in section 9.4.1(b) means that no commission will be charged on that part of the total fare which is for excess baggage or excess valuation of baggage or for taxes and other charges.  The section makes all of the fare the basis upon which the commission is to be calculated, which is collected by the Agent, with the exception of the items referred to in section 9.4.1(b).  We would in that regard again agree with the decision of the Court of Appeal in England.

94                  For those reasons, the contentions contained in the notice of contention cannot be upheld.  It follows therefore that the appeal must be allowed and the orders made by the primary judge on 17 June 2009 must be set aside.

95                  At the hearing of the appeal the appellant’s counsel was invited to inform the Court as to the orders that should be made in the event that the appellant were successful on the appeal and the notice of contention was dismissed.  The Court was advised that the appellant sought the declarations identified in the orders sought in the appeal, which in some respects differed from the declarations sought in the amended application.  The orders sought are:

1.         Appeal allowed.

2.         ...

(a)        Declare that on the true construction of the PSA Agreement as in force between 11 May 2004 and the present date, as a consequence of the notifications by the Respondent, under the said PSA Agreement that commission was and is payable on the sale of published fares for international air passenger transportation, the fare applicable upon which commission has to be paid to the Appellant and to each group member on the sale of such fares includes the fuel surcharge;

(b)        Declare that the Respondent is indebted to the Appellant and to each group member in an amount representing the difference between the true amount of commission actually payable to the Appellant and each group member, as applicable, when the fare applicable in respect of which the commission is payable is properly taken to include the fuel surcharge, and the lesser amount of money actual (sic) paid to the Appellant and each group member on each applicable sale purportedly by way of commission but excluding the fuel surcharge from each fare applicable in respect of which the commission payable was calculated, together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 from the due date for full payment of the commission;

(c)        Order than (sic) an account be taken of the monies received by the Respondent from the Appellant and each group member, being monies in truth owed to the Appellant and to each applicable group member as part of the commissions due to them as representing the debts referred to in Order (b) above (“underpaid commission”);

(d)        Order that the Respondent pay to the Appellant and each group member, in respect of underpaid commission, all sums found due and payable on the taking of the said accounts;

(e)        Further, or alternatively to orders (c) and (d) above, directions as to the means for the establishment by group members as to the (sic) their individual entitlements to be paid underpaid commission by the Respondent;

(f)        Declare that the Respondent has breached the PSA Agreement by wrongfully failing or refusing to pay the full amount of commission on the fares applicable on the sale of published fares for international air passenger transportation on which commission is payable;

(g)        Alternatively to orders (b) – (e), an order for the payment of damages as against the Respondent for the said breach of the PSA Agreement, such damages to be calculated on the basis that the measure of damages is equivalent to the amount of underpaid commission (as defined);

(h)        ...

96                  Qantas was given leave to provide the Court with a note in relation to the orders which should be made if the appellant were successful.

97                  Subsequently, Qantas submitted to the Court that if the appellant were successful the proceeding should be remitted to the primary judge to determine the appropriate form of relief subject to such directions as the Court thinks fit in accordance with s 28(1) of the Federal Court of Australia Act 1976 (Cth).  It contended that the declaration sought in para 2(a) was too wide and therefore inappropriate.  It argued that the declaration sought in para 2(e) should only be made after directions: (a) requiring group members to identify themselves; (b) allowing for the consideration in those circumstances of whether it is appropriate to create sub-groups; and (c) if so, allowing for the determination of whether the applicant can properly represent some or all sub-groups.  It also argued that the relief sought in paras 2(b), (c) and (d) is premature and, in any event, the relief sought in para 2(b) is too wide.

98                  The appellant responded to Qantas’ note, taking issue with Qantas’ submission that the relief sought in para 2(a) is too wide.  In the alternative, the appellant submitted that, if that be the case, the words “and in particular clause 9 of the Passenger Sales Agency Rules, namely clause 9 of Resolution 816 as in force up to 1 October 2007, and clause 9 of Resolution 818g as in force from 1 October 2007 to the present date” could be inserted after the words “and the present date”.

99                  It argued that it was too late for the respondent to take issue with the appellant’s claim to be entitled to be a representative of the group.  It contended that a previous application of that kind had been made but an order had been made for the proceeding to continue between the appellant and Qantas.  The appellant conceded that individual group members would need to participate as appropriate in the taking of an account referred to in para 2(c) of the orders sought, but that could be accommodated as an incident of the taking of the account ordered.

100               Lastly, it took issue with Qantas’ contention that the form of the declaration in para 2(b) is far too wide because, as Qantas contended, the parties may be required “to bring to account sums or other benefits which have been received by that group member on the assumption that base commission does not include commission on the Respondent’s fuel surcharge”.  The appellant contended that that issue had been resolved by his Honour’s unchallenged findings that Qantas’ estoppel defences failed.

101               Qantas replied to the appellant’s contentions.  It continued to contend that damages could not be calculated until such time as various payments which had been made by the heads of some national Agents had been identified and, in particular, whether any “override” commission had been paid.

102               It contended that the issues of quantum were not before the Court, nor the subject of the appeal and they should not be dealt with by way of declarations on the appeal.

103               This Court does not have the benefit of the history of this proceeding.  It would seem that the parties have accepted that the primary judge ought to determine the question of liability between this appellant and Qantas.  This Court is not aware of the impact of such an order upon the other applicants and respondents to the proceeding.

104               In those circumstances, it would be unwise of this Court to make a declaration which may affect other parties who should not be affected by such a declaration until such time as either their proceeding is heard or, alternatively, they accept the liability finding in relation to the proceeding between the appellant and Qantas.

105               Although we are reluctant to visit further costs upon the parties, we think Qantas’ contention should be accepted and the matter be remitted to the primary judge to make declarations in accordance with these reasons.

106               No despositive orders were made by the primary judge when he published his reasons for concluding that the appellant’s contractual claim should be dismissed but that the appellant had established a contravention by Qantas of s 52 of the TPA.  He ordered the parties to bring in short minutes of order to give effect to those reasons.  The parties could not agree on the orders.  The appellant sought declarations and an injunction to give effect to the TPA finding and no order as to costs.  Qantas, on the other hand, sought an order that the proceeding be dismissed and that the appellant pay its costs.

107               For reasons that are not under attack and therefore do not need to be stated, the primary judge refused to make the declarations and injunction sought.  He resolved costs in favour of Qantas: Leonie’s Travel (No 2) [2009] FCA 646.  In the end result, he ordered:

1.         The application as against the second respondent be dismissed.

2.         The applicant pay eighty five per cent of the second respondent’s costs of the application.

108               In allowing the appeal, those orders must be set aside.  However, we should make an order, because that part of the primary judge’s reasons and orders has not been challenged, that the appellant’s claim for relief against the second respondent for a contravention of s 52 of the TPA be dismissed.

109               We would remit the proceeding to the primary judge for further consideration and to make the appropriate declarations and any orders as to damages.  We would reserve to the primary judge the question of the costs of trial having regard to these orders.

110               We would order Qantas to pay the appellant’s costs of the appeal.

Associate:

Dated:         4 May 2010

REASONS FOR JUDGMENT

BESANKO J:

111               I have had the advantage of reading the draft reasons for judgment of Lander and Rares JJ.  I agree with those reasons and the orders their Honours propose. There is nothing I wish to add.

Associate:

Dated:         4 May 2010