HIGH COURT OF AUSTRALIA
MACROBERTSON MILLER AIRLINE SERVICE v COMMISSIONER OF STATE TAXATION (WA)
BARWICK CJStephen and Jacobs JJ
3 September 1975 - Perth 10 December 1975 - Sydney
Barwick CJ The Stamp Act 1921-1971 (WA) imposes stamp duty upon the instruments described in its second schedule, the duty being payable by the person or persons named in the appropriate margin of the schedule. The presently relevant item of the schedule is "agreement or any memorandum of an agreement under hand only …" the duty being payable by "the parties thereto".
The Supreme Court (Jones J) has found upon a case stated for the opinion of the Court that an airline ticket issued by the appellant to an intending passenger, was dutiable as "a memorandum of a completed agreement" (5 ATR 44).
The appellant is the airline operator which issued the ticket. Its submission is that the ticket was not itself an agreement nor a memorandum of an agreement within the scope of the relevant item in Sched 2 of the Stamp Act. Its principal ground is that to proffer the ticket is to make an offer which is verbally accepted by its recipient. In such a situation it is claimed that cases such as Drant v Brown (1825) 3 B & C 665; Hudspeth v Yarnold (1850) 9 CB 625; and Beeching v Westbrook (1841) 8 M & W 411 are authority for the proposition that the ticket is not dutiable. The respondent Commissioner disputes these submissions and supports the reasoning of the learned primary judge.
In the instant case, the ticket contains two flight coupons, one for a journey from Perth to Port Hedland and the other from Port Hedland to Perth. On its outside cover the flight ticket provides a form of boarding check to be filled in by airline traffic staff not later than 15 minutes before the flight departure time indicated on the appropriate coupon. Provision is made on the coupon to indicate the flight and the seat allocation to the passenger on the flight or on the various stages of the flight if it is to be performed in separate stages.
Within the outer cover of the ticket, the passenger is reminded that it is necessary to present the flight ticket at the Airport Office at least 15 minutes prior to the scheduled departure time of the flight "to avoid the possibility of reservations being cancelled or re-allocated". The time shown on the coupon is said to be the departure time of the aircraft.
The passenger's name appears on the coupon which states the date of travel, the flight number, the departure time, the places of departure and of arrival, the index, the class, the status of the ticket (ie whether confirmed or not) and the fare. It may be observed that the ticket may be obtained by a company or person who is not an intending passenger. It does not appear whether in such a case the passenger's name will be upon the ticket when issued.
The coupon is endorsed "valid for travel between places enclosed by heavy rule" and contains the names of the places of departure and destination. The place and date of issue of the ticket, along with some identification of the person issuing it, appears at the foot of the ticket along with a statement as to whether the fare has been paid or has been debited to some nominated account. Attention is directed to "conditions of carriage" to be found "inside of back cover". As these conditions are regarded as important to the resolution of the questions asked in the stated case, I set them out in full:
"1. The Companies reserve the right to substitute any other aircraft for that originally scheduled, to despatch the aircraft before or after date or hours advertised or announced for its departure, to deviate from any advertised route for any purpose or to transfer the passengers or their baggage to any other aircraft at any airport including intermediate places and all the conditions of this ticket shall apply to carriage by such substituted aircraft or other means of transport.
"2. The Companies reserve the right at any time to abandon any flight or, whether the scheduled flight on which the passenger or goods were booked takes place or not to cancel any ticket or booking of any passenger or goods or to carry the passenger for portion only of any booked flight. In the event of a flight being abandoned or altered by the Companies wholly or in part or a ticket or booking being cancelled by the Companies wholly or in part, the passenger shall be entitled only to a refund of so much of the passage money as shall be proportionate to the part of his flight so cancelled or abandoned and the Companies shall not under any circumstances be under any further or other liability to the passenger for failure to carry him at the booked or scheduled time or at all.
"3. Times of arrival and departure are not guaranteed. The passenger must be ready at the aerodrome or other place of departure fifteen minutes before the stated or advertised time of departure, otherwise no claim for refund will be considered.
"4. If, in the opinion of the Pilot, the aircraft cannot be safely landed at any airport, passengers for such airport may be landed at the next practicable airport of call and will be entitled to a flight back to the airport of original destination by the first aircraft of the Companies having room. Passengers must bear their own expenses while waiting for their flight back, and the companies shall be exempt from all claims by the liability to the passengers arising from any cause due to such overcarriage and delay.
"5. The Companies are not common carriers, and reserve the right to refuse to carry any passenger, baggage or goods without assigning any reason therefor.
"6. Each fare-paying passenger is allowed thirty-five pounds of personal effects free of charge, but excess baggage will be carried at the Companies' usual freight rates, if loading is available. If required, the Companies will endeavour to arrange to forward excess baggage at the passenger's risk and expense by other means of transport specified by the passenger.
"7. The passenger shall comply with the conditions of this ticket and the instructions of the Companies and their officers, and shall be responsible for any damage or loss occasioned by failure to do so. In particular the person shall not carry either on his person or in his baggage or goods any alcoholic liquors, matches (other than safety matches), explosives, volatile spirit, or other goods of a dangerous or inflammable nature without notice to and written consent of the Companies. The passenger must not enter or remain in any aircraft whilst he is in the opinion of any officer of the Companies, intoxicated and must not commit any act which, in the opinion of the Companies or any officer thereof, may endanger the safety of the aircraft or its passengers or goods, or may constitute a nuisance and must not smoke (except as specifically permitted by the Companies) in or in the vicinity of the aircraft, leave his seat during take-off, landing or taxying, or throw anything from the aircraft while in flight. While entering or leaving the aircraft the passenger must not walk in front of the same or in the vicinity of any of the engines, owing to the risk of injury by airscrews. In the event of the passenger being required not to embark or to disembark from the machine under the provisions of this conditions, the Companies' officer so requiring the passenger not to embark, or to disembark, shall not be bound to state his reasons, and the Companies shall not be under liability to such passenger of any kind whatsoever.
"8. The passenger and his baggage are carried subject only to the liability imposed on the Companies by the Commonwealth Civil Aviation (Carriers' Liability) Act 1959-1970, the Western Australian Civil Aviation (Carriers' Liability) Act 1961-1970 or by these conditions. The Companies' liability whether arising out of a contract of carriage to which the said Acts apply or not is limited to a sum or sums not exceeding (a) in respect of death or injury to the passenger $30,000 (b) in respect of registered baggage $300 (c) in respect of baggage not registered $30. Subject to the foregoing and to any other conditions imposed by the said Acts the Companies accept no responsibility for damage of any kind whatsoever (including death injury delay or loss) arising out of or incidental to the carriage or services ancillary thereto (including embarking and disembarking and the transfer of the passenger and his baggage to or from any aerodrome, taking-off or landing place) whether or not such damage be due to negligence on the part of the Companies, their servants or agents or agents or otherwise howsoever and the passenger for himself and his executors administrators and dependants expressly renounces all claims against the Companies in respect thereof (other than claims made pursuant to the provisions of the said Acts) whether they may be due to negligence on the part of the Companies their servants or agents or otherwise howsoever; notwithstanding anything herein contained the Companies will be under no liability for loss of or damage to registered baggage occurring more than 12 hours after such baggage became available for collection or for loss of or damage to any baggage resulting from the inherent defect, quality or vice of the baggage.
"9. The Companies may arrange with any other person or corporation to undertake the carriage hereby contracted for or services ancillary thereto (including the transportation of the passenger and his baggage to or from any aerodrome or take-off or landing place) or any part thereof and the provisions of condition 8 hereof shall ( mutatis mutandis) apply to such person or corporation its servants or agents whilst in the course of undertaking any such carriage or services as though he, it or they were the Companies.
"10. Tickets are available for use within 12 months of date of issue only.
"11. Wheresoever this ticket may be issued, these conditions shall be governed by and construed in accordance with the laws applicable in the State of Western Australia and any proceeding against the Companies shall be brought in the State of Western Australia only.
"12. In these conditions the expression 'the Companies' shall mean and include Ansett Transport Industries (Operations) Pty Ltd, MacRobertson Miller Airlines Services, Ansett Airlines of Australia, Ansett Airlines of New South Wales, Ansett Airlines of South Australia, Ansett Airlines of Papua New Guinea, their servants, agents and employees and any person or corporation with whom Ansett Transport Industries (Operations) Pty Ltd, MacRobertson Miller Airline Services, Ansett Airlines of Australia, Ansett Airlines of New South Wales, Ansett Airlines of South Australia, Ansett Airlines of Papua New Guinea, may have arranged as in condition 9 hereof mentioned, and his or its servants, agents or employees and the expression 'the passenger' shall mean the passenger to whom this ticket is issued or who is carried by virtue of the issue thereof. Words importing the singular or plural number of the masculine or feminine gender shall where the context permits include the plural or singular number or the feminine or masculine gender as the case may be."
It is, in my opinion, clear that the issuing airline operator does not by the terms of the ticket assume or offer to assume any obligation to carry the intending passenger. Clauses 2 and 5 made this particularly clear. The case is not, in my opinion, one in which an obligation is assumed or an offer of an obligation made from or upon which obligations, exemptions or limitations are stipulated. The exemption of the ticket in this case fully occupies the whole area of possible obligation, leaving no room for the existence of a contract of carriage.
In my opinion, the proper legal analysis of the situation which arises on the making of a reservation for a seat upon a flight, the payment of the fare appropriate to that flight and the issue of a ticket as in this case, is that if, without any antecedent promise to do so, the airline operator in fact conveys the passenger in accordance with the reservation or any variant of it permissible under the terms of carriage endorsed on the ticket, the airline operator will have earned the fare which has been prepaid and be entitled to retain it: otherwise the amount which has been prepaid against the possibility of such carriage will be refunded. But if, in any case, the described carriage eventuates it shall be upon the endorsed terms of carriage. To this statement there is a possible qualification, namely, if the airline operator has been able, ready and willing to carry the passenger in accordance with the particulars on the ticket and the intending passenger has not presented himself in due time at the airline traffic office at the designated airport, the airline operator may claim to have earned the fare. In general, therefore, the entitlement of the airline company to retain the prepaid fare is dependent on the actual performance of carriage. The situation is an example of the payment of a reward for an act performed at request with no antecedent promise by the person performing the act to do so. The terms of carriage are akin to the terms of the prospectus in Edgar v Blick (1816) 1 Stark 464, and like them are not dutiable, though admissible to determine the rights of the passenger and airline in respect of the actual carriage.
In my opinion, therefore, the precise question in the stated case should be answered in the opposite sense to the answer given by the Supreme Court.
However, quite apart from the particular terms of the ticket in the instant case, the issue of a ticket by an airline operator neither constitutes an agreement nor a memorandum of an agreement. I apprehend that the normal procedure in making a reservation of a seat on an aeroplane flight is that enquiry is made of the airline operator or its agent, usually being a travel agent, whether, having regard to existing reservations, a seat is available on a nominated flight. If it is, the appropriate fare is paid or promised to be paid and a ticket appropriate to the reservation issued. Now, supposing the airline ticket does not contain an express promise to carry the ticket holder on the nominated flight, it could be inferred from this procedure that the airline company by the issue of the ticket had bound itself by agreement to carry the intending passenger on the specified, or for that matter on any flight, a promise which being broken would require the payment of damages. On a proper analysis of the procedure described, the airline operator was not in contractual relations with the intending passenger until it had provided him with a seat on the aeroplane. Then, in consideration of the fare prepaid, such obligations as the conditions of the ticket impose on the airline operator attached. The issue of the ticket, in my opinion, is mainly a receipt for the payment of the fare, though it also stipulates an occasion when the fare may not be refundable though actual carriage has not ensued. The payment made on the making of the reservation ought, in my opinion, to be regarded as no more than the prepayment of the fare payable for an actual carriage performed. Having regard to the known contingencies of airline operation it would be incongruous to infer the making of a promise to carry from the mere payment of the fare and its acknowledgement by the issue of a ticket. The ticket, apart from any specific terms it might contain, would not be regarded as entitling its holder to a place on a particular flight. It should be regarded as doing no more than denominate the carriage which, if performed, will earn the prepaid fare. If, as in the present case, the ticket contains terms of carriage, these will, given the performance of the denominated carriage, regulate the relationship of the parties during and in connexion with such carriage and thus their respective rights in relation thereto.
It should be observed that in Hood v Anchor Line (Henderson Bros) Ltd [1918] AC 837; [1918-19] All ER Rep 98, the question was whether a part of the ticket which had been issued by the steamship company formed part of the terms on which the actual carriage took place. The action was for negligence in the performance of that carriage. Thus, even if there had not been in that case an antecedent promise to carry, the condition by which the appellant was held to be bound would have been part of the terms governing the relationship of the parties during the performance of the actual carriage. But, in fact, the ticket issued by the ship owner in that case contained an express engagement "to provide passage with certain accommodation on a particular voyage". The ticket in that case, as Lord Finlay observed (at 841) "really professes to be a memorandum of the contract".
In any case, a promise to carry may be more appropriately made by a steamship company than by an airline operator. The marked degree of certainty on the one hand and of uncertainty on the other affords good ground for distinguishing the inferences which, apart from express provisions, might be drawn in the one case though not in the other.
Therefore, although the terms of the ticket in this case with their express and extensive limitations and exclusions preclude the existence of an antecedent contract of carriage, it is my opinion that, in any case, without the presence of these express provisions and in the absence of an express provision to carry, the ticket would not represent an agreement or a memorandum of agreement to satisfy the relevant portion of the schedule to the Stamp Act. Thus, I do not find it necessary to pass upon the submission of the appellant that the issue of the ticket was an offer of a promise, orally accepted, and for that reason not dutiable. But I do not wish by taking that course to cast any doubt on the correctness of the authorities which the appellant suggested in support of its proposition.
For these reasons, I would allow the appeal.
Stephen J In this appeal the question is whether the learned primary judge was correct in regarding an airline ticket issued by the appellant to an intending passenger on one of its scheduled flights as liable to duty as an "agreement or any memorandum of an agreement under hand only" - Stamp Act 1921-1971 (WA) Sched 2.
Until 1970 the United Kingdom stamp duty legislation contained a similar provision and a wealth of authority as to its meaning has developed which is directly applicable to the provisions of the Western Australian legislation. It establishes that a document containing a written offer which is subsequently accepted orally or by conduct does not thereby become either an agreement or a memorandum thereof for the purposes of stamp duty. The leading authority in a long line of precedent cases on the point is the judgment of Hawkins J, at first instance, in the otherwise celebrated case of Carlill v Carbolic Smokeball Co [1892] 2 QB 484 at 490. The point has ever since been regarded as well settled -Monroe - Stamp Duties (4th ed 1964) p 41; Hill - Stamp, Death, Estate and Gift Duties(1970) at p 44, which speaks of "the classic statement of Hawkins J". I disregard, as presently irrelevant, the special case of a written offer which, after the conclusion of the contract by oral acceptance, is specifically adopted as a memorandum of the contract, "something being said or done by the parties to indicate that in the future it is to be so considered" - per Hawkins J at 490.
Accordingly, in the present appeal it will be critical to determine whether the issue by the appellant of its ticket was merely the making of an offer, to be later accepted either orally or by conduct, or whether, on the contrary, an agreement, of which it contained the terms, was concluded at or before the time of its issue, the ticket either being that agreement or being a memorandum of it. Each of these two latter possibilities will be excluded if that fact be that when the ticket was issued to the passenger no agreement had yet been concluded but instead awaited the passenger's acceptance of the offer constituted by the ticket.
The matter came before the learned primary judge by way of a case stated by the Commissioner and no facts appear in that case which relate to the actual circumstances affecting the particular passenger, a Mr J C Knight. Instead the case, while annexing the ticket issued to Mr Knight, speaks of the circumstances of its issue as typical and then goes on to describe such typical circumstances. A prospective passenger makes known his requirement, is informed whether and when the passage is available and the cost, a ticket is then written out in duplicate on a printed form and tendered to the passenger in return for the price; in due course, on the day of travel, the passenger uses his ticket to secure transport of his baggage and himself on the relevant aircraft.
It is to these facts that the accepted doctrine of the formation of contracts must be applied so as to determine whether the ticket is merely an offer, antecedent to agreement, or is itself the agreement or a memorandum of it.
This doctrine, of the formation of contracts by offer and acceptance, encounters difficulties when sought to be applied, outside the realms of commerce and conveyancing, to the everyday contractual situations which are a feature of life in modern urban communities. Contracts for the carriage of passengers, one of the most common classes of contract in a commuter society and one which ordinarily involves the attempted imposition of contractual restrictions upon the passenger's rights should he suffer loss or injury, provide an instance of these difficulties. The circumstances in which mass transportation occurs frequently permit of no time for prior negotiation, which would in any event usually be pointless with prevailing contracts of adhesion; moreover the transportation often will begin before there has been any communication at all between the passenger and the carrier's agent, the contract being "inferred from the acquiescence of the carrier in the presence of the passenger on the conveyance" - Lord Dunedin in Hood v Anchor Line [1918] AC 837 at 846; [1918-19] All ER Rep 98 at 103 and see Wilkie v London Passenger Transport Board [1947] 1 All ER 258 per Lord Greene MR at 259.
The conventional analysis of the formation of contracts for the carriage of passengers in those somewhat more leisurely transactions which involve the issue of a ticket in return for payment of a fare and the subsequent performance of the contract by the act of transportation, is to regard the ticket as the offer, the contract being made upon acceptance of that offer by the passenger, usually be conduct. Lord Denning describes this analysis, referring to the authorities which establish it, in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 at 169; [1971] 1 All ER 686 at 689. He does so in the course of demonstrating its inappropriateness in situations in which there in fact exists no opportunity either of considering the terms of the proffered contract or of declining to enter into it on the terms which are offered.
In the present case there is no such inappropriateness, it is just such a case as that for which the conventional analysis was devised. This analysis affords to the intending passenger an opportunity, no doubt but rarely availed of, of ascertaining the conditions which the carrier seeks to impose and of accepting or rejecting them. The conventional long-distance rail or passenger liner situation is therefore applicable, a ticket is purchased in advance of the carriage and that ticket constitutes an offer available for acceptance by the passenger - Watkins v Rymill (1883) 10 QBD 178 per Stephen J at 188, Nunan v Southern Railway Co [1923] 2 KB 703 per Swift J at 707 and Thompson v L M & S Railway Co [1930] 1 KB 41, per Lord Hanworth MR at 47; [1929] All ER Rep 474 at 478. Although the economics of mass transportation in fact lead to an absence of much real choice on the passenger's part whether or not to accept conditions sought to be imposed, he at least retains the ability to learn of those conditions and to refuse to travel by the intended means if he sees fit.
The general run of so called "ticket cases" involving contracts of carriage has been concerned with mishaps occurring during transportation and with the effect, if any, which conditions, sought to be imposed upon the passenger by the ticket issued to him, may have upon his rights against the carrier. The precise time at which the carrier's offer is accepted has not been the central question, although it has been indirectly involved in the central question of whether or not the conditions on the ticket have been incorporated as terms of the contract. The authorities make it clear that, in the absence of particular conduct on the part of the passenger, acceptance of the offer which a carrier makes when a ticket is issued does not occur immediately upon its receipt by the passenger; the whole concept of a passenger's acceptance of ticket conditions and of the need adequately to draw those conditions to his attention - Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379 per Griffith CJ at 387 - is dependent upon this.
It is enough to refer to three authorities, over a span of almost a hundred years, in which, when the ticket itself contains conditions or a reference to conditions elsewhere available, the passenger's acceptance of the carrier's offer is treated as occurring some time after issue of the ticket. In Parker v South Eastern Railway Co (1877) 2 CPD 416; [1874-80] All ER Rep 166 Bramwell LJ, on three occasions, at CPD 426-428, refers to the passenger being afforded, if he wishes, the opportunity of reading the conditions on a ticket which is proffered to him before becoming bound by them, that is before the contract can be regarded as concluded, and see also per Baggallay LJ at CPD 425. Then in Hood v Anchor Line Lord Finlay LC and Lord Parmoor each refer to this. Lord Finlay said, at AC 843; [1918-19] All ER Rep at 101, that "when the passenger or his agent gets the ticket he may examine it before accepting, and if he chooses not to examine it when everything reasonable has been done to call his attention to the conditions he accepts it as it is".
Lord Parmoor said, at AC 848-9; All ER Rep at 103: "If an intending passenger, either personally or through his agent, has reasonable notice that the ticket or document handed to him by a carrier contains certain conditions, and accepts the document or ticket as handed to him without objection, and without taking the trouble to make himself acquainted with such conditions, he must be taken to have assented to them," - and see also per Viscount Haldane at 845; 102. In the Shoe Lane Parking Case Lord Denning, at 169; [1971] 1 All ER at 689, refers to the acceptance of the ticket and its retention without objection as being regarded as an acceptance because of the theory "that the customer, on being handed the ticket, could refuse it and decline to enter into a contract on those terms". Megaw LJ at 173-174; 693, says, of customers of a car park to whom tickets are issued which refer to conditions displayed on the premises, that they must have "a fair opportunity, before the contracts are made, of discovering the conditions by which they are to be bound". Such a customer, who, by the issue of a ticket, becomes the recipient of an offer, must be afforded an opportunity of learning, from the ticket, what are the terms of that offer before he can be said to have accepted it.
The cases, including some of the few passages which I have cited, are replete with references to passengers who elect not to read ticket conditions, no doubt the common behaviour of most passengers; they, it is said, do not thereby escape being bound by those conditions. This rule of law, which is directed to identifying the agreed terms of the particular contract, does not detract from but, rather, supports the proposition that acceptance, and the resultant formation of the contract, does not occur upon tender of the ticket. It occurs after that event, either when the passenger has by actual conduct intimated his acceptance of the offer, for instance by immediately boarding the vehicle in question, or, absent any such conduct, when a reasonable time has passed during which the passenger has had an opportunity of reading the conditions appearing on the ticket and has not then rejected the offer and demanded the return of his fare. In other words, acceptance will normally be by conduct and this conduct will consist either of an overt act consistent only with acceptance or, in its absence, of the passenger's failure to reject the offer after he has had an opportunity of learning of the conditions upon which carriage is offered.
Those cases in which a contract is concluded which incorporates ticket conditions despite the passenger's failure to read them are instances either of the occurrence of such an overt act or of the passing of a reasonable time without rejection. In the latter case there is involved the concept of effective acceptance without actual communication to the offerer; but when, as here, the offeree, by tendering his fare, has performed his part of the bargain in advance his acceptance may readily be inferred from his failure, within a reasonable time after receipt of his ticket, to reject the offer and demand the return of his fare - Williston on Contracts 3rd ed vol 1 para 91C. What will be a reasonable time within which to reject proffered terms will be a question of fact in every case dependent upon all the circumstances, including, no doubt, the length and complexity of the conditions which form part of the offer. What Hawkins J, in Watkins v Rymill at 180, and Megaw LJ, in the passage cited from the Shoe Lane Parking Case, each referred to as "a fair opportunity" of reading the tendered ticket will provide the test, recourse being had, for this purpose, to familiar standards of reasonableness.
If this, then, be the correct view of the time of formation of such a contract as the present one, it necessarily follows that in the typical circumstances referred to in the stated case the completed ticket itself will not, when it comes into existence, then record any existing agreement nor itself be an agreement; it will be no more than a written offer open for acceptance. Hence it is not dutiable as an "agreement or any memorandum of an agreement" for the purposes of the Stamp Act.
The conditions appearing in the appellant's ticket are not easy to interpret; they appear to relieve the appellant very substantially from performance of those obligations relating to the carriage of the passenger which are to be implied from the description, in the ticket, of the destination, the flight number and the departure time and date. However I think it unnecessary to arrive at any conclusion as to whether the presence of these conditions is such as to prevent the formation of any contract between the appellant and its passenger before transportation commences. It is enough for me to conclude that at date of issue the ticket was not an agreement or any memorandum of agreement.
I would therefore allow this appeal.
Jacobs J The Stamp Act 1921 (WA) (as amended) brings to duty any "agreement or any memorandum of an agreement under hand only, and not otherwise specifically charged with any duty, whether the same is only evidence of a contract, or obligatory upon the parties from its being a written instrument". There are various exemptions, none of which are presently relevant. The question to be determined is whether an airline ticket in the form commonly used, and which I shall later describe in some detail, is such an agreement or memorandum of agreement.
On 11 January 1972 Mr John Clifford Knight went to the office of the appellant and made it known that he required to travel from Perth to Port Hedland (and return). The circumstances were, it is agreed, typical although the circumstances set out in the stated case were such as typically occur in the case of the issue of a ticket for a single, not a return, flight. On a single flight the prospective passenger is informed that a passage is available on the day required and the cost of it. A ticket is then written out in duplicate by a servant of the appellant and tendered to the prospective passenger in return for the price. The passenger holds the ticket and duplicate until the day of travel when he presents his baggage and the ticket to a servant of the appellant, who records upon it the weight of the baggage, removes the duplicate and returns the original to the passenger.
The ticket is in a booklet form and, within the booklet, there are two coupons in the case of a single flight. If it be a return flight, the booklet contains three coupons. The prospective passenger presents the ticket to a servant of the appellant on boarding the aircraft. A seat is allotted to him. He retains the ticket in its booklet. The booklet has a cover whereon appears the name of the appellant and the words "flight ticket" and in red letters "for conditions of carriage see inside of back cover". The inside of the front cover contains space where information as to coach schedules could be inserted, a notice as to check-in time, and a notice as to onward reservations. On the inside of the back cover and on the back of the ticket coupon which faces the inside of the back cover, there are 12 printed and numbered paragraphs described as "terms and conditions subject to which this ticket is issued to and accepted by the passenger". On the outside of the back cover, there is information concerning return reservations, a statement of the amount of baggage which each passenger is allowed free of charge, a statement of the hand baggage that may be carried free in the cabin, and other information, including a description of goods which may not be carried in passengers' baggage.
The respondent Commissioner claimed that the document which I have described was an agreement or memorandum of an agreement, and was chargeable with stamp duty in the sum of 25c. A case was stated for the opinion of the Supreme Court of Western Australia upon the questions: (a) whether the ticket is an agreement or memorandum of agreement; (b) whether the ticket is chargeable with duty as assessed by the Commissioner;
(c) if not, with what duty (if any) is the ticket chargeable under the Act.
The Supreme Court of Western Australia (Jones J) answered questions (a) and (b) in the affirmative. He therefore had no occasion to answer question (c). He found that a binding agreement had been from the moment the servant of the appellant began filling out the ticket in response to Mr Knight's request and that the ticket, when made out, became a memorandum of the agreement that had been made. The agreement, he found, was that in consideration of Mr Knight paying the stipulated fare, the appellant would carry him by aircraft to Port Hedland, and that the subsequent presentation of the ticket at the airport for checking of baggage and seat allocation was merely a step incident to the carrying out of the agreement which had been completed at the booking office when the reciprocal offers - the appellant's to carry the passenger and the passenger's to pay the fare - were made and accepted. As to the special conditions, he took the view that an intending passenger on an aircraft must be taken to know that the ticket will be issued subject to some conditions of carriage and that the airline's offer to carry him is not an offer to carry him simpliciter but to carry him subject to those conditions, and that his request is impliedly not for carriage simpliciter but for carriage subject to such reasonable conditions as may be imposed. Jones J continued: "It is true that he has not been specifically told of the conditions which will appear on the ticket and advised to read them before he decides whether to book his flight or not; but when he receives the ticket he will find, if he looks, that on the face of the cover there appears in bold red type 'For conditions of carriage see inside of back cover', and that this admonition is repeated on the original and duplicate inside. When he accepts the ticket thus indorsed he has in my view impliedly assented to the conditions. No doubt if, later, he reads the conditions and then decides that they are unacceptable he can revoke his consent, abrogate the agreement and get his money back; in that event any duty paid on the ticket which is the memorandum of the agreement will be refunded, less a spoils fee. No doubt also there is, as Lord Hanworth MR said in Thompson v London, Midland and Scottish Railway Co [1930] 1 KB 48 at 50, 'an implied understanding that there is no condition unreasonable to the knowledge of the party tendering the document and not insisting on its being read - no condition not relevant to the matter in hand'. But all that does not affect the fact, in my view, that when the passenger pays the fare and receives the ticket a binding agreement has been made, and the ticket is a memorandum of it." (5 ATR at 46).
I do not think, with respect, that either on principle or on authority the transaction can be analysed in this way. It would mean that the agreement preceded the notification in the ticket of the special conditions upon which the passenger would be carried. It is true that a passenger may be taken to know that the ticket to be issued will be subject to some conditions of carriage, but can it be said that his request is one for carriage subject to such reasonable conditions as may be imposed? I do not think that this can be so. The airline will carry, on the conditions which it proposes and, if the conditions are accepted, they become part of the agreement for carriage. If they are not accepted, there is no agreement, and therefore no question of abrogating an agreement already made. It may be that if an unreasonable condition is included in conditions which are not, and not likely to be, read then there may be no acceptance by conduct or implied consent of the offer containing that condition (cf Parker v South Eastern Railway Co (1877) 2 CPD 416 at 428; [1874-80] All ER Rep 166); but that is different from saying that the presence of such a condition entitles a party to an existing agreement to abrogate that agreement.
It is well accepted that, although an intending passenger requests a ticket and might thereby be regarded as making an offer, in fact the carrier "makes an offer by tendering the ticket, and the contract is formed only by acceptance of the ticket immediately after payment of the fare. This is the view taken, though not always explicitly stated, in the line, by this time numerous, of authorities on such cases. Thus detailed analysis of the process justifies the summary view of lay common sense, which surely is that the party offering terms to be accepted is the railway company or other public undertaker". Pollock, Principles of Contract13th ed at p 41. See also Salmond and Williams on Contracts p 75.
The authorities are very numerous, and I do not think that it is necessary to go to any of them except perhaps to make reference to Hood v Anchor Line (Henderson Bros) Ltd [1918] AC 837; [1918-19] All ER Rep 98. The question there was whether special conditions had been brought to the notice of a person purchasing a ticket or his agent who made the actual purchase. That is the common question which arises in the so-called "ticket cases" and it arises, of course, because the proffer of the ticket is regarded as an offer which may be accepted or declined, and the offer will not include a special condition unless it has been sufficiently brought to the attention of the offeree.
An argument was presented in Hood v Anchor Line (Henderson Bros), Ltd, supra, that the contract was complete as soon as the cheque had been paid and the ticket had reached the hands of the passenger's agent, and that any knowledge subsequently acquired of the conditions could not vary the contract. Lord Finlay LC at AC 843; All ER Rep at 101 said: "It is quite true that, if the contract was complete; subsequent notice would not vary it, but when the passenger or his agent gets the ticket he may examine it before accepting, and if he chooses not to examine it when everything reasonable has been done to call his attention to the conditions he accepts it as it is".
It is true that Lord Parmoor at 847 said: "The contract under which the respondents undertook to convey, and did convey, the appellant as a passenger in their oceangoing steamer was concluded when the agent of the appellant received the document or ticket in return for the cheque handed by him to the respondents". But, on the following page, it becomes clear that he was not expressing any view different from that of Lord Finlay LC because in reference to the notice drawing attention to the special conditions he said: "The object of a notice is to call the attention of the intending passenger to the conditions of the proposed contract, and a clearly printed notice on the enclosing envelope, and on the face of the ticket, is as effective for this purpose as if the representative of the respondents had, at the time when he issued the ticket, verbally called the attention of the appellant to the conditions, and asked him to read them. If an intending passenger, either personally or through his agent, has reasonable notice that the ticket or document handed to him by a carrier contains certain conditions, and accepts the document or ticket as handed to him without objection, and without taking the trouble to make himself acquainted with such conditions, he must be taken to have assented to them, and they thereupon become evidence of the contract or carriage made between such passenger and the carrier" ([1918-19] All ER Rep at 103).
We may take it, therefore, that principle and authority lead to the conclusion that the appellant, when through its servant it handed over the ticket to Mr Knight, should be regarded as the offeror and that Mr Knight should be regarded as the offeree. Thus there was an offer in writing and an acceptance of the offer orally or by conduct.
It has been established by a long line of authority that an offer in writing which is accepted orally or by conduct does not thereupon become an agreement or memorandum of agreement within the meaning of the Stamp Act. The words which appear in the schedule to the Stamp Act go back unchanged to the language of the English Stamp Act 55 Geo III, c 184, and it has been consistently held that no document can require a stamp unless it be an agreement or memorandum of agreement at the time when it comes into existence unless thereafter it is acknowledged by the parties thereto to be the agreement between them. In this respect, the law which developed in respect of a memorandum of agreement under the Stamp Act diverged from the law which had developed in respect of an agreement or memorandum of agreement sufficient to satisfy the Statute of Frauds. I do not think that it is necessary to go through the various cases to this effect. I shall do no more than mention some of them: Edgar v Blick (1816) 1 Stark 464; 171 ER 531; R v Inhabitants of St Martin's, Leicester (1834) 2 Ad & E 210; 111 ER 81; Drant v Brown (1825) 3 B & C 665; 107 ER 879; Hudspeth v Yarnold (1850) 9 CB 625; 137 ER 1036; Vollans v Fletcher (1847) 1 Ex 20; 154 ER 9. A more recent decision is that of Hawkins J in Carlill v The Carbolic Smoke Ball Co [1892] 2 QB 484 at 490: "If at the time no concluded contract had been arrived at by the contracting parties, it certainly could not in any sense be treated as an agreement, nor could it be treated as a memorandum of an agreement, for there could be no memorandum of an agreement which had no existence. No document requires an agreement stamp unless it amounts to an agreement, or a memorandum of an agreement. The mere fact that a document may assist in proving a contract does not render it chargeable with stamp duty; it is only so chargeable when the document amounts to an agreement of itself or to a memorandum of an agreement already made. A mere proposal or offer until accepted amounts to nothing. If accepted in writing, the offer and acceptance together amount to an agreement; but, if accepted by parol, such acceptance does not convert the offer into an agreement nor into a memorandum of an agreement, unless, indeed, after the acceptance, something is said or done by the parties to indicate that in the future it is to be so considered."
A ticket issued for carriage of a passenger, whether it be a simple ticket for carriage from one place to another with no special conditions or a ticket incorporating special conditions by reference or a ticket which itself sets out special conditions, provides evidence that some executory contract of carriage exists but as such has never been regarded as the actual agreement for carriage or as a memorandum of the agreement for carriage. The more special conditions appear on it, the more it presents the appearance of an agreement in or reduced to writing, but the appearance is deceptive. The travel ticket as such is a voucher, like any other ticket. Lawful possession of it, by reason of the agreement made at or about the time of its issue, may allow the holder thereof or the person named thereon, as the case may be, to have the actual benefit of the preceding agreement for carriage; but it must be noted that mere possession of the ticket or mere naming thereon as the passenger will not entitle a person to that benefit unless he was one of the parties to the executory contract of carriage made when the ticket was issued.
The ticket or the accompanying documents may contain the express promise to carry as in Hood v Anchor Line (Henderson Bros) Ltd, supra, but usually this is not so. It is not so in the present case. Nor does the ticket usually identify in terms the promisee as distinct from the proposed beneficiary of any executory contract of carriage made by its issue. There may be an identity between the proposed passenger and the party to that executory contract or there may not. It may happen that the actual purchaser of the ticket is the agent of the intending passenger but this may not be so. An employer may see to the purchase of a ticket for an employee whose journey the employer requires. It would be artificial to regard the employee as the contracting party when he neither makes the contract nor pays for the ticket.
But at the same time there can be no doubt that the passenger, even if he did not obtain the issue of the ticket and the accompanying promise of carriage, does enter into a contractual relationship with the carrier. However, his contract arises when he presents the ticket and embarks on the carriage. He will be bound by any special conditions of the carriage, not because he was a party to the executory contract when the ticket was issued but because he presents the ticket and embarks on the carriage with knowledge of the conditions upon which the carrier accepts him for that carriage. Where the agreement for carriage at or about the time of the purchase of the ticket is not made by the proposed or named passenger, and probably even where it is so made, there are really two agreements: first, the executory agreement which is made by the tender of the ticket to the purchaser and its acceptance in return for the price, and, secondly, the agreement between the actual passenger and the carrier which arises upon the passenger presenting himself with the ticket to the carrier. Thus the ticket is an offer capable of acceptance by the promisee on the executory contract of carriage and, after that acceptance, will be an offer to the proposed passenger capable of acceptance by him by presentation of that ticket. But in neither case is it the actual agreement of carriage or a memorandum of that agreement. In Cooke v Midland Railway Co (1892) 9 TLR 147; 57 JP 388, an employer bought railway tickets in bulk for his employees. It was held that nevertheless there was a contract between an employee and the railway company, and that the railway company was liable for breach of contract to the employee. In Hobbs and Wife v London and South Western Railway Co (1875) 10 LR QB 111; [1874-80] All ER Rep 458, the plaintiff Hobbs took tickets for his wife and children for travel from Wimbledon Station to Hampton Court Station. They all took places in the train, but the train went on another branch, and they all were obliged to get out at Esher Station, some miles further away from the plaintiff's house. The wife caught cold on the long walk, and it was held that she was entitled to damages and so was the husband on his separate account. Blackburn J at 119; 462 stated that the duty of the railway company was a duty arising out of a contract. It is clear that the wife must have been regarded as a contracting party by embarking on the railway carriage with her ticket.
It thus appears that, although a passenger by possession of a ticket or by embarking on the travel may accept the offer constituted by the ticket and be a contracting party to a contract of carriage, it is not a contract of carriage which is in writing by virtue of the ticket; it is a contract which may arise only by presentation of the ticket.
Where the original contracting party and the passenger are different, there are on analysis found to be the two contracts. In the present case, the purchaser of the ticket and the passenger were the same person, but it cannot be said that the ticket itself was the agreement. The ticket nowhere states the parties to the executory contract of carriage created at the time of its issue. It is to be observed that, by the special conditions, the expression "the passenger" means the passenger to whom the ticket is issued or who is carried by virtue of the issue thereof. The form of ticket is not a promise by the appellant to X in consideration of him paying the fare to carry X from point A to point B, and if the promisee is not certainly stated, then it does not appear to me that the document could be regarded as the agreement with that promisee or as a memorandum of that agreement. Despite some earlier authority to the contrary, Ramsbottom v Mortley (1814) 2 M & S 445; 105 ER 446, and statements of text writers, eg Halsbury 3rd ed vol 33, p 295, the agreement or memorandum of agreement which is brought to duty, though it may not need to be signed, must contain all the terms of the agreement including the parties. This appears from the later case, Ward v Lord Londesborough (1852) 12 CB 252 at 259-260; 138 ER 900 at 903. Maule J stated that Ramsbottom v Mortley, supra, was certainly inconsistent with what was said in Moore v Garwood (1849) 4 Ex 681; 154 ER 1388, and further said that, to make an agreement chargeable with stamp duty, it must contain the whole terms agreed on. It is clear that, in that case, the Court declined to take the view that any writing which contained some evidence of a contract but not the whole evidence, was a sufficient memorandum, the view which had been taken in the earlier case. I think that this must be correct. Though the words in the schedule distinguish the case where an agreement or memorandum is only evidence of a contract and the case where an agreement or memorandum is obligatory upon the parties from its being a written instrument, it seems to me that these words in the schedule are intended to distinguish between the formal signed instrument in writing and the memorandum which the parties intend to contain all the terms of a preceding oral contract. In each case all the terms must be expressed and, if the document is not signed, then the identity of the contracting parties must otherwise appear. For this reason also, I cannot regard a ticket which names a passenger, but does not expressly state an agreement with that passenger, or anyone else, to carry him, and thus does not name the passenger as the obligee under a presently constituted agreement, as anything more than what it purports to be, a ticket.
There is a further reason which may be shortly mentioned why, even if an agreement or memorandum of agreement might otherwise be discernible from the ticket, there is certainly no agreement constituted by the ticket in the present case. Clause 2 of the special conditions reads as follows:-
"2. The Companies reserve the right at any time to abandon any flight or, whether the scheduled flight on which the passenger or goods were booked takes place or not to cancel any ticket or booking of any passenger or goods or to carry the passenger for portion only of any booked flight. In the event of a flight being abandoned or altered by the Companies wholly or in part or a ticket or booking being cancelled by the Companies wholly or in part, the passenger shall be entitled only to a refund of so much of the passage money as shall be proportionate to the part of his flight so cancelled or abandoned and the Companies shall not under any circumstances be under any further or other liability to the passenger for failure to carry him at the booked or scheduled time or at all."
By this clause, any enforceable promise to carry which might on the present assumption be implied between airline and passenger from the issue of the ticket is negatived. The ticket may be cancelled by the company at any time and all that will then happen will be that the passenger shall be entitled to a refund, and the company shall not under any circumstances be under any further liability to the passenger. If there could be extracted otherwise from the document an agreement between the appellant and the passenger it would, by such a clause, be made nugatory. The appellant undertakes no executory obligation which creates rights in an obligee. The ticket contains the provision that no claim for refund of the fare will be considered if the passenger is not ready at the aerodrome or other place of departure 15 minutes before the stated or advertised time of departure (cl 3). This provision would be valid if the consideration was the mere issue of the ticket but it is difficult to see how otherwise it would be valid in view of the insertion of cl 2. If the ticket itself is the consideration then this is a further ground for the conclusion earlier expressed that a ticket as such is no more than a voucher.
For all these reasons, therefore, I am of the opinion that the ticket is no agreement or memorandum of agreement, that the appeal should be allowed, and that the questions (a), (b), and (c) in the case stated, should be answered as follows:
- (a) No.
- (b) No.
- (c) None.
Order Appeal allowed with costs. Order of the Supreme Court of Western Australia set aside and in lieu thereof order that the questions asked in the case stated be answered as follows:
(a) Whether the ticket is an agreement or memorandum of agreement? A - No.
(b) Whether the ticket is chargeable with duty as assessed by the Commissioner? A - No.
(c) If not, with what duty (if any) is the ticket chargeable under the Act? A - None.
© Thomson Legal & Regulatory Limited ABN 64 058 914 668 trading as Australian Tax Practice