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:
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.
We will report on any further developments.
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