Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Aerocentury Corporation v Papua New Guinea Air Services Ltd [2017] PGNC 429; N8336 (15 August 2017)

N8336

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 423 OF 2016

BETWEEN:
AEROCENTURY CORPORATION
Plaintiff

AND:
PAPUA NEW GUINEA
AIR SERVICES LIMITED
Defendant

Waigani: Hartshorn J.
2016: 9^th September
2017: 15^th August

Liability for charges imposed by an Aviation Service Provider - s. 85 Civil Aviation Act 2000

Cases Cited:

Norah Mairi v. Alkan Tololo (No 2) [1976] PNGLR 125
MAS International Ltd v. David Sode (2008) SC944
Elema v. Pacific MMI Insurance Ltd (2011) SC1114
Southern Highlands Provincial Government v. Pagini Transport Ltd (2012) SC1170
PNG Power Ltd v. Augerea (2013) SC1245

Counsel:

Mr. M. Mukwesipu, for the Plaintiff

Mr. R. Bradshaw, for the Defendant

15^th August, 2017

1. HARTSHORN J: This is a decision on whether the plaintiff, Aerocentury Corporation (Aerocentury) is liable for the payment of charges imposed by the defendant, Papua New Guinea Air Services Ltd (PNGASL).

Background

2. Aerocentury is the owner of four Fokker F50 aircraft which it leased to two companies known as Travel Air Ltd and Travel Air (collectively referred to as Travel Air). Travel Air operated the aircraft in Papua New Guinea. PNGASL provided certain aircraft services to Travel Air, pursuant to the Civil Aviation Act 2000 (CA Act) and issued invoices for the services provided. PNGASL obtained judgment against Travel Air Ltd for K1,404,864.55 together with interest and costs in respect of the services provided. The sum of K608,844.10 of the judgment sum remains owing. Aerocentury took back control of the aircraft from Travel Air for non-payment of lease rentals. PNGASL registered a lien against one of the aircraft in respect of the sum of K608,844.10. PNGASL permitted Aerocentury to fly that aircraft out of Papua New Guinea once Aerocentury had paid the sum of K608,844.10 into the trust account of the lawyers for PNGASL.

3. Aerocentury seeks declaratory orders that amongst others, it is not liable to pay for the charges claimed by PNGASL for the services provided in respect of the four aircraft when they were leased, operated and registered by Travel Air and that PNGASL is not entitled to the sum of K608,844.10 that was paid into its lawyers trust account.

Civil Aviation Act 2000

Section 104 CA Act is as follows:

“104. Recovery of fees and charges for aviation related services.

(1) Subject to Subsection (2), where a fee or charge is payable under this Act in respect of any function, power, duty, or service carried out or provided by an aviation service provider in relation to an aircraft, the owner, and each of them severally are liable to pay that fee or charge.

(2) A person who would otherwise be liable to pay a fee or charge in relation to an aircraft in terms of Subsection (1) as an operator shall not be so liable where that person—

(a) proves that during any relevant period of use of the aircraft that person was not entitled, whether alone or together with some other person, to possession of the aircraft or that another person was unlawfully in possession of it; and

(b) has taken all reasonable steps to supply the aviation services provider with such information as would identify the actual user.”

4. Section 104 is in Part VII of the CA Act. Part VII is from s. 80 to and including s. 128, and is headed “Service Policies, Charges, Levies, Fees and Liens”. The definition of “owner” in s. 80 for Part VII is:

“80. Interpretation.

In this Part, unless the context otherwise requires—

..........

"owner", in respect of an aircraft, includes—

(a) the person in whose name the aircraft is registered; and

(b) the operator of the aircraft; and

(c) a person in possession of an aircraft as purchaser under a conditional sale or hire-purchase agreement that reserves to the vendor the title to the aircraft until payment of the purchase price or the performance of certain conditions; and

(d) a person in possession of the aircraft as chattel mortgagor under a chattel mortgage; and

(e) a person in possession of the aircraft under a bona fide lease or agreement of hire;”

5. It is not in dispute that PNGASL is an aviation service provider. Section 85 provides for the imposition of charges and relevantly is as follows:

“85. Charges for availability or provision of services.

(1) Without limiting the ability of an aviation service provider to enter into contracts or other rights to raise revenues under this or any other Act, regulation or power, an aviation service provider may impose charges under this Part on a user for the availability or provision of services provided by it or another aviation service provider.

(2) No charge may be imposed under Subsection (1)—

(a) on a user who is a person acting under the authority of the Minister responsible for defence matters; or

(b) on a user in respect of a state aircraft of a foreign country, unless the foreign country has been designated under Subsection (3).

.........

(4) A charge imposed on a user under Subsection (1) is deemed to be in respect of all aircraft operated by that user.”

6. Section 100 CA Act is as follows:

“100. Aircraft owner and operator have joint and several liability.

The owners of an aircraft are jointly and severally liable for the payment of any charge for services imposed by an aviation service provider in respect of the aircraft.”
Consideration

7. PNGASL submits that in considering the provisions of the CA Act, the court should take into account the remarks made as to statutory interpretation in Elema v. Pacific MMI Insurance Ltd (2011) SC1114, that amongst others, the court must give effect to the legislative intention and purpose expressed in language used in the statute, and PNG Power Ltd v. Augerea (2013) SC1245, that amongst others, the court should be taking a more liberal and purposive approach when it comes to interpreting and applying the provisions of the Constitution and other statutory provisions.

8. Whilst acknowledging and agreeing with these remarks, I am mindful that Part VII, the particular part of the CA Act with which this case is concerned, provides for amongst others, Charges, Levies, Fees and Liens, and that s.85(1) refers to an aviation service provider’s right to “raise revenues”.

9. In this regard I refer to the Supreme Court case of Norah Mairi v. Alkan Tololo (No 2) [1976] PNGLR 125 which concerned the imposition of a fee by the Board of Governors of the Port Moresby High School. Prentice DCJ and Williams J said:

“......we think it is incumbent upon the court to follow a well-trodden road of interpretation. This path suggests that for the imposition of a charge upon the subject to be legal, a clear and unambiguous intention must be shown in a Statute. Insofar as the Education Act is sought to be relied on as giving powers to raise revenue, what has been said about taxing acts seems appropriate; "In a taxing Act one has to look at what is clearly said. There is no room for intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, one can only look fairly at the language used." And again, "If the case is not brought within the words of the statute, interpreted according to their natural meaning; and if there is a case which is not covered by the statute so interpreted, that can only be cured by legislation and not by any attempt to construe it benevolently in favour of the (State) ". (See the cases collected in Craies on Statute Law, 6th ed., 113 to 114).”

10. To my mind, these comments apply equally to this case. The CA Act gives powers to an aviation service provider to raise revenue and so the principles of interpretation of taxing acts seem appropriate. In Southern Highlands Provincial Government v. Pagini Transport Ltd (2012) SC1170, the Court at [7] reproduced the following passage from MAS International Ltd v. David Sode (2008) SC944:

“As a matter of general principle, all tax legislations (sic) including the Act must be interpreted strictly and given their plain and ordinary meaning. See, Collins & Leahy Limited v. Collector of Stamp Duties (2001) N2150, Internal Revenue Commission v. Dr. Pirouz Hamidian-Rad (2002) SC692, Norah Mairi v. Alkan Tololo (1976) PNGLR 125, Misima Mines Ltd v. The Collector of Customs (2003) N2497, Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853, Misima Mines Ltd v. The Collector of Customs & Anor (2007) N3206.”

11. The parties agree that the first issue for determination is whether Aerocentury is an owner or operator of the aircraft for the purpose of the recovery of charges under s. 104 or any other provision of the CA Act or any other law.

Legislative intent - definition of “owner” s. 80 CA Act

12. PNGASL submits that the answer as to who is an owner is in the definition of the word “owner” in s. 80 CA Act. It is also submitted that to adopt a narrow, restrictive definition of the word “owner” will result in the clear legislative intent of the CA Act being defeated. As to this submission, it can be argued that if the legislative intent was not to have a narrow, restrictive definition of “owner”, the CA Act would not have provided for the separate more restrictive definition of “owner” in s. 80 and instead would have relied upon the definition in s. 3 for Part VII CA Act. That the legislature provided for a specific and more restrictive definition of “owner” for Part VII is in my view, indicative of an intent to have a narrow, more restrictive definition - thus restricting the categories of person who will be liable for a charge imposed by an aviation service provider.

13. This is reflected in s. 104. The intent is to have the “owner” liable for the fee or charge: s. 104(1); but not where that “owner” is not entitled to possession of the aircraft. This is the purpose of s. 104(2). Section 104(2) provides that an “operator” shall not be liable where he is not entitled to possession of the aircraft. The term “operator” is used as although “operator” falls within the definition of “owner” in s. 80, it is the only category in the definition of “owner” that does not have an entitlement to possession of the aircraft. (As to (a) of “owner” in s. 80, a person in whose name the aircraft is registered, s.46(1) requires registration by a person who is entitled to possession.)

14. A further indication of the legislative intent to only have a person entitled to possession of an aircraft liable for fees and charges is evidenced, when examining in the CA Act, the person upon whom an aviation service provider is permitted to impose a charge. Section 85 provides for the imposition of a charge upon a “user”. The term “user” although not defined, is used in ss. 85(2) (a)(b), (4), 88(1)(b),(e)(ii), 89(3)(a)(i)(ii), 90(4)(a)(i)(ii), 92(1)(a)(b) and (c) amongst others. So the legislative intent is to give power to impose a charge upon a “user”.

15. The definition of “owner” in s. 80 reflects this intent by including in the definition persons who are likely to be users of services. That is, persons entitled to possession of aircraft and the operator of an aircraft.

Whether Aerocentury is an “owner” – s. 80 CA Act

16. In considering the definition of “owner” in s. 80 CA Act, from the evidence, I am satisfied that Aerocentury was not in possession of the aircraft in the circumstances described in (c), (d) and (e) of the definition of “owner” in s. 80. Further, the evidence is that Aerocentury was not the person in whose name the aircraft were registered. In this regard, I am satisfied that ‘registered’ means registration under the CA Act. That the CA Act specifically provides for registration: s. 46; a Register of Aircraft: s. 65; and a Registry: s. 66; to my mind indicates that if the registration referred to in the definition of “owner” in s. 80 referred to or included registration other than under the CA Act, then that would have been specifically stipulated.

17. As to whether Aerocentury was the operator, the evidence is clear that it was not. It is not in dispute that Travel Air Ltd and Travel Air managed the aircraft when the subject charges were incurred. The certificates of registration in evidence show Travel Air registered as the operator of the aircraft.

18. Consequently for the above reasons, I am satisfied that Aerocentury does not come within the definition of owner in s. 80 CA Act and therefore is not liable under s. 100 and s.104 CA Act for fees or charges imposed by PNGASL. Given this it is not necessary to consider the other submissions of counsel.

Orders

19. The Court orders as follows:

a) It is declared that the plaintiff is not liable to pay for all or any of the charges claimed by the defendant in relation to operations of aircraft identified as MSN 20122 - P2 TAH, MSN 20177 – P2 TAG, MSN 20202 – P2 TAE and MSN 20192 – P2 TAF for the period when each of the said aircraft were still under lease, operated and registered under Travel Air Ltd or Sarakolok West Transport trading as Travel Air;

b) That the defendant is not entitled to the whole or part of the sum of K608,844.10 paid by the plaintiff into Bradshaw Lawyers Trust Account;

c) Bradshaw Lawyers forthwith shall pay the sum of K608,844.10 to the plaintiff or the plaintiff’s lawyers;

d) The defendant shall pay the plaintiff’s costs of the proceeding to be taxed if not otherwise agreed;

e) Time is abridged.
_____________________________________________________________
Gadens: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the Defendant