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Attorney General v Solomon Islands Airways Ltd. [1986] SBHC 3; [1985-1986] SILR 262 (8 December 1986)

[1985-86] SILR 262

IN THE HIGH COURT OF SOLOMON ISLAND

Civil Case No. 321 of 1986

ATTORNEY GENERAL

v.

S. I. AIRWAYS LTD

2 December 1986 at Honiara
Judgment 8 December 1986

Air Transport (Licensing of Air Services) Regulations 1962, Regulation 6(5) - whether Air Transport Licensing Authority and Minister have power to grant air fare increase different from that applied for - judicial review of reasonableness of action of statutory authority.

Facts:

The applicant applied by Originating Summons for the determination of the question whether the Air Transport Licensing Authority and the Minister responsible for civil aviation have the power under Regulation 6(5) of the Air Transport (Licensing of Air Services) Regulations 1962 to grant and approve, respectively, a domestic air fare increase different from that applied for by the respondent. Depending on the answer to that question, the applicant also applied for declarations determining whether the respondent could increase air fares without the approval of the Authority and, if not, whether such an increased air fare should be refunded.

The respondent operated an air transport service under a license granted by the Authority that included the condition that fares for scheduled flights were subject to the approval of the Authority. In the face of serious financial losses in 1985, the respondent applied for a thirty percent interim fare increase. The Authority granted and the Minister approved an interim increase of only fifteen percent. Nevertheless, the respondent went ahead and imposed a thirty percent increase.

The respondent argued that Regulation 6(5) only allows the Authority and the Minister to grant or refuse a requested increase, not to vary it, and, alternatively, that even if the Authority does have the power to vary a requested increase, it exercised that power unreasonably by refusing to grant the requested increase in view of the respondent's financial situation. The applicant replied that the Regulations give the Authority wide discretion to vary the terms of an application.

Held:

1. In the absence of objection, the Attorney General had locus standi to bring this application on the basis that he represented the interests of the members of the public affected by the fare increase.

2. Regulations 6(4) and 6(5), although they allow airlines to apply to have the conditions in their licenses regarding fares to be varied, were not intended to remove the control of the Authority over civil aviation or to limit the wide discretion granted the Authority under Regulation 6(2) to attach such conditions as they may think fit, to the original grant of a license.

3. Accordingly, the Authority had discretion to limit the variation requested by the respondent in any way it saw fit.

4. A court may consider whether a statutory authority has acted unreasonably under the principle that a judicial authority is concerned to see whether a statutory authority has broken the law by acting in excess of the powers confided in it by Parliament. (Picture Houses v. Wednesbury Corporation [1947] EWCA Civ 1; (1947) 2 AER 680 at p. 685 per Lord Greene followed).

5. The Authority considered the respondent's case with great care and also considered the feelings of the travelling public as it was entitled to and as it should have done. Accordingly, the Authority acted reasonably and within its powers.

Accordingly, the first question was answered in the affirmative and as to the second question it was declared that the respondent had authority to increase its fares by only fifteen percent from 15 September 1986 and that any increase before that date or in excess of fifteen percent after that date was in breach of its licence. The third declaration sought regarding refunds was declined. The respondent indicated, however, that it would refund the excess fare.

Case considered:

Picture House v. Wednesbury Corporation [1947] EWCA Civ 1; (1947) 2 AER 680

Reginald Teutao for the Applicant
Francis Waleilia for the Respondent

Ward CJ: The Attorney General has applied by Originating Summons for the determination of a question of construction of Regulation 6(5) of the Air Transport (Licensing of Air Services) Regulations and, depending on the answer to that, a declaration whether the respondent airline is able to increase air fares without the approval of the Air Transport Licensing Authority and, if not, whether such increased fares should be refunded.

I have some reservations over the locus standi of the Attorney General but, in the absence of objection, I have proceeded on the basis that he represents the interests of the members of the public affected by this fare increase.

In these proceedings, counsel for the airline has conceded the position in relation to the second and third matters and so it now only falls to the court to determine the answer to the first question:-

"1. Where the Respondent applies to the Air Transport Licensing Authority under regulation 6(4) of the Air Transport (Licensing of Air Services) Regulations, 1962 for an increase in domestic airfare by a certain percentage, does ATLA and the Minister responsible for civil aviation have power under regulation 6(5) of the 1962 Regulations to grant and approve respectively an airfare increase which is different to that specifically applied for by the Respondent."

The facts are not in dispute.

Solomon Islands Airways Ltd (Solair) operate an air transport service under a 7 year licence granted by the Authority on 28.8.85. The conditions of the licence include, in relation to scheduled flights -

"(d) Fares and Rates

Subject to the approval of the Licensing Authority from time to time."

In the face of serious financial losses during 1985, Solair applied to the Authority at various times earlier this year for an increase in airfares on their domestic routes. The Authority has responded with a request for detailed information of the airline's financial state and, pending receipt of those details, made no decision on the application.

It appears Solair had no objection to supplying the information requested but felt such detail would take a long time to compile. To ease their position, they applied for an interim increase of 30% on all domestic airfares.

The Authority met on 29th August 1986 and considered written and oral representations from both the transport adviser to the Ministry of Public Building, Works and Utilities and representatives of Solair. At the conclusion of that meeting a motion was passed unanimously that "the Authority grants an interim increase of 15% effective from 15th September 1986 pending a full analysis of the financial position of the company."

This was sent to the Minister for approval on 1st September 1986 and Solair appears to have been informer by a letter dated 18th September 1986 although I note the decision of the Authority is dated 5th September 1986.

Despite the decision, Solair imposed a 30% increase on all domestic airfares on 13th September 1986. Although it is now conceded by counsel for the airline that such an increase was not in accordance with the conditions of the licence and that any excess will have to be refunded, Solair declined to comply with a request in those terms made by the Secretary to the Authority on 2nd October 1986.

The two relevant regulations are:

"(4) The holder of a licence may, at any stage during the period the licence is in force, make application to the Licensing Authority to vary any tariff listed as a condition attached to that licence.

(5) The Licensing Authority may grant or refuse such application on such terms and conditions as it deems fit, subject to the approval of the Minister."

Counsel for Solair contends that the Authority, when considering such an application, may only grant or refuse the application and there is no power to vary it. Alternatively, they suggest that, even if the Authority have [sic] the power to vary the terms of the application, they exercised that power unreasonably.

In answer to the first of these, counsel for the Attorney General points to the words "on such terms and conditions as it deems fit" and argues that this gives the Authority wide lowers to vary the terms.

Section 9(3) of the Interpretation and General Provisions Act provides –

"Each act shall be deemed to be remedial and shall receive such fair and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit."

The Civil Aviation Act is to provide for the regulation and control of civil aviation and the Regulations are part of the means of implementing that object.

Regulation 6(2) gives power to the Authority to "attach such conditions to any licence as they may think fit having regard to the nature and circumstances of the application therefore [sic]." It is clear they have a wide discretion and, in this case, they included condition (d) quoted above.

Regulations 6(4) and 6(5) were added to allow airlines in times of varying demands for air travel and escalating costs to apply to have these conditions varied but it cannot be intended by that to remove the control of the Authority or limit the wide discretion it originally had in the grant of the licence.

Thus, in this case, the application under regulation 6(4) is to vary the fare tariff. Having decided to grant that application, the Authority are entitled to exercise their discretion in limiting that variation in any way it feels advisable. The fact Solair specifically requested a 30% increase is a suggestion by them of the appropriate level but I cannot accept that the amount of the variation is such a fundamental part of the application as to deprive the Authority of its discretion by precluding it from deciding the appropriate level.

I am satisfied that the Authority when considering such an application is entitled to set limits on the variations both in time and form.

I now pass to the question of reasonableness.

The basis of the respondent's submission was that the reports of the transport consultant and the airline's financial controller supported the view that the appropriate interim increased should be 30% in view of the financial state of the company.

The minutes of the meeting on 29th August show that, after a lengthy discussion of the merits of the claim, the deciding factor was not whether 15% was an appropriate rate in view of the financial state of the airline, but was simply the fear that a larger increase would be unpopular with the public.

It is well settled that the court is entitled to consider whether a statutory authority has acted reasonably. The principles were clearly stated in Picture Houses v. Wednesbury Corporation [1947] EWCA Civ 1; (1947) 2 AER 680 and have been applied in subsequent cases. At 685, Lord Greene MR said:-

"I do not wish to repeat what I have said, but it might be useful to summarise once again the principle, which seems to me to be that the court is entitled to investigate the action of the local authority with a view to seeing whether it has taken into account matters which it ought not to take into account, or, conversely, has refused to take into account or neglected to take into account matters which it ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that the local authority, nevertheless, have come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not that of an appellate authority to override a decision of the local authority, but is that of a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in it."

The minutes of the meeting of 29th August show that the Authority considered all the matters raised with care. They gave ample opportunity to the airline representatives to put their case. They considered the expert opinion of the transport consultant.

They also considered the feelings of the travelling public. As a body charged with the duties they have, they are entitled to and, I would suggest, should do so. It is part of the court's power to decide whether or not it would, on the same facts, have come to the same conclusion but to see that the Authority acted reasonably and within its powers.

I cannot accept that the Authority acted unreasonably in the matter they took into account or in the manner in which they considered them.

Thus the answer to the first question is in the affirmative.

There is no dispute about the other two questions.

I make the declaration sought in relation to the second question that the airline had authority only to increase fares by 15% from 15th September 1986 and any increase before that date and any increase in excess of 15% from that date is a breach of the conditions of their licence.

I have insufficient information to give an answer to the third question. The grant of a declaration involves the exercise of the court's discretion. I do not think the declaration sought is appropriate and I decline to make it. However, I note that counsel for the airline has stated that the airline will refund the excess fare.

WARD, C.J.