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.