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In our bulletin on 30 July 2009 we reported on the decision of
Justice Moore in the Federal Court of Australia in Leonie's
Travel Pty Ltd v International Air Transport Association, Qantas
Airways Limited & Ors.Qantas was found not liable to pay
travel agent commissions and to have not breached its contract with
the travel agents. That decision has now been overturned on appeal
to the Full Court of the Federal Court of Australia in
Leonie's Travel Pty Ltd v Qantas Airways Limited [2010]
FCAFC 37.
The issue in both decisions was whether Qantas was entitled to
unilaterally determine that no commission would be payable on that
part of the cost of the ticket which relates to the fuel surcharge
imposed by the airline.
BACKGROUND
This case was a representative proceeding brought by a travel
agent (Leonie's Travel) representing all agents who had sold
published fares for International air passenger transportation on
behalf of Qantas and a number of other international airlines, each
of which was party to the Passenger Sales Agency Agreement (Agency
Agreement).
In addition to the claim concerning a contractual breach,
Leonie's Travel claimed that Qantas had contravened section 52
of the Trade Practices Act 1974 (Cth) by engaging in
misleading and deceptive conduct.
The issue arose when in May 2004 Qantas introduced a fuel
surcharge for international and domestic itineraries citing the
escalating cost of fuel. Qantas advised agents that base commission
would be paid on the fuel surcharge for domestic itineraries but
not for international itineraries.
At first instance and on appeal consideration was given to
similar litigation in the United Kingdom in Association of
British Travel Agents Limited v British Airways PLC & Ors
[2000] 2 ALL ER (Comm) 204 (British Travel Agents'
Decision).
Justice Moore in the Federal Court of Australia at first
instance distinguished the British Travel Agents' Decision and
did not apply the reasoning of the English Court of Appeal in
construing the documents before him.
On appeal Justices Lander, Rares and Besanko noted:
'[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 subsequent introduced
difference in the wording of the documentsbeing construed. All
Airlines and Agents have an interest in the clear and binding
interpretation of these complex but, for them, commercially
significant documents.'
They saw the commercial imperative as including avoidance of
forum shopping in circumstances where airlines and agents in one
country would have different rights and liabilities to those in
other countries in respect of exactly the same contractual
relationship.
The Court of Appeal Judges did not consider that the British
Travel Agents' contractual arrangements were so different as to
distinguish them from the documents under consideration in this
appeal.
They concluded that commission should be payable on the whole of
the passenger's fare including fare surcharges of the
transportation in accordance with the airline's tariff except
'any charges for excess baggage or excess valuation of baggage
as well as all other taxes and other charges'.
In upholding the appeal the case was remitted to the primary
Judge for further consideration and to make the appropriate
declarations and any order for damages. Qantas was ordered to pay
the appellant's appeal costs.The appellant's claim for
relief against Qantas for a contravention of section 52 of the
Trade Practices Act was dismissed.
CONCLUSION
The case demonstrates the desire of the Australian Courts in
cases of international significance such as this to ensure that,
where possible, a consistent approach is applied. The implications
for airlines, at a time when profit margins are being squeezed from
all directions, may have the consequence that Qantas considers it
worthwhile seeking leave to appeal to the High Court of
Australia.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
www.dlaphillipsfox.com
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
particular circumstances.
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