Ansett Australia Holdings Ltd & Ors v International Air Transport Association [2006] VSCA 242

Ansett Australia Holdings Ltd & Ors v International Air Transport Association [2006] VSCA 242 - VSCA 2006 case summary — Zoe

[15]

14 It follows, in my view, that the contractual relationship between Carrier and Issuer, in respect of the relevant charge, is not a relationship of debt. Nor, as between Carrier and Issuer, is there any chose in action generating liability for, or entitling recovery of, any amount. Because of the terms of their agreement, Issuer owes nothing to Carrier in respect of the provision of the transportation service to Passenger, and Carrier has no right of action against Issuer. No debt or other chose in action ever exists between them. Issuer never has an obligation to pay money to Carrier.[7] That is the bargain which they struck when they became parties to the Agreement.

15 The incorporation of the Regulations into clause 8.1 is decisive in this regard. If the phrase "in accordance with the Clearing House Regulations" did not appear at the end of clause 8.1 - and if the Regulations were otherwise inapplicable[8] - Issuer would be obliged "to pay to [Carrier] transportation charges applicable to the transportation performed by [Carrier]." An obligation expressed in these terms would signify a conventional debtor/creditor relationship. Issuer's promise to pay the transportation charge to Carrier would be enforceable by Carrier (as creditor) against Issuer (as debtor).

16 But clause 8.1 is not in that form. The clause incorporates the Regulations, and Regulation 9(a) declares that the clearance transaction gives rise to no rights or liabilities as between the operators which are parties to that transaction. Instead - "in lieu" - of those rights and liabilities, the operators have rights against, and liabilities to, the Clearing House - and no other person. In my view, the parties to the Agreement could hardly have made their intention clearer.

17 The commercial advantage of the system of monthly clearances through the Clearing House is obvious. As explained in evidence by the Director of Legal Services of IATA, there is a very large number of clearance transactions. The Clearing House process enables airline operators to avoid the necessity of having to make and receive numerous payments to and from other airlines in respect of such transactions. As already described, the monthly clearances result in settlements involving either a payment by an airline operator to the Clearing House, or a payment by the Clearing House to an operator, but never in payments being made to or between operators. The number of actual financial payments is small compared to what the position would be if there was no such scheme and the operators instead had to make payments to each other.[9]

A coherent framework

18 Read as whole the Regulations provide a coherent framework for the clearance system. As already noted, every clearance transaction must be notified to the Clearing House. In relation to each such transaction, Carrier will lodge a credit claim and Issuer will lodge a debit claim.[10] Notification authorises the Clearing House to clear the claims, and to pay or collect any balances due by or to the Clearing House.[11] The effecting of a clearance, and the payment or collection of balances, together constitute -

[26]

The term "debtor member" is not defined but it is plain that it means a member which has a balance due to the Clearing House resulting from a clearance. That this is so is confirmed by the provisions whereby -

• debtor members must remit their balances to the account of the Clearing House (Regulation 28);

• debtor members who do not remit their balances on time are charged interest (Regulation 29);

• the Clearing House remits balances to creditor members "forthwith after completion of debtor settlements" (Regulation 30).

21 Regulation 31 provides for the circumstance where the Clearing House has a deficiency in funds available to settle with creditor members "because of the delayed or partial payment by one or more debtor members". In that case, the Clearing House Manager is entitled to "abate at his discretion" settlement to creditor members, who are entitled to interest on the amount abated. As already noted, the nexus between payments by debtor members and settlements with creditor members is made explicit in Regulations 38 and 39.

No internal inconsistency

22 As noted earlier, members are obliged (by Regulation 15) to "bill each other for transactions to be cleared through the Clearing House". As appears from the definition of "billing", this involves one member giving written advice to the other of a clearance transaction which is to be notified to the Clearing House for clearance. Under Regulation 21, the member notifying an "item" for clearance must promptly dispatch to the other party to the transaction the invoice and supporting documents. So understood, the procedure for billing does not connote - and could not by itself create - any debt between the members concerned.

23 Ansett draws attention to Regulations 22, 23 and 24, which concern disputed billings. Thus, a member can protest to the Clearing House Manager on the ground of "improper billing" when it objects to "an invoice or invoices relating to items notified to the Clearing House". (Using my example, Issuer may protest that it has been "improperly billed" by Carrier in respect of the credit claim notified to the Clearing House by Carrier.) There are, as might be expected, dispute resolution procedures.[15]

24 None of this detracts in any way from the efficacy or coherence of the clearance scheme. The billing procedure is necessary to ensure that each airline has the opportunity to check that a claim made to the Clearing House against that airline is a valid claim. Obviously, the intention of the parties is that the monthly clearance - the ascertainment of credit and debit balances - should be done on accurate figures and in respect only of valid claims.

25 Likewise, the notion of one member notifying a claim against another member[16] is consistent with the clearance scheme. When Carrier notifies a credit claim in respect of the transportation of Passenger, this is - obviously enough - a claim against Issuer. The amount of the claim will be a debit against Issuer in the monthly clearance. The phrase "claim against a member" involves no inconsistency with the terms of Regulation 9(a).

26 Counsel for Ansett argued that there was "a host of other provisions" in the Regulations and the Agreement which were "flatly inconsistent" with the construction of the Regulations adopted by the trial Judge (with which I agree). According to Ansett:

[31]

29 That the Clearing House does not bear the commercial risk of default is hardly surprising. Its function is to effect a monthly clearance of claims made by members against each other. It is not a bank. It has no funds of its own. Hence the Clearing House is not obliged to pay a credit balance to a creditor member until the debtor members in the clearance have paid their debit balances (Regulation 39). The Clearing House's immunity from risk is consistent with its function, and in no way inconsistent with its having debtor/credit relationships with its members. After all, a secured creditor does not bear the commercial risk of a default by the debtor, but is no less a creditor for that.

30 The Regulations providing for the payment of interest by a defaulting debtor member, and the payment of interest to a creditor member affected by such default, are also entirely consistent with the scheme of rights and obligations created by Regulation 9. The entitlement to interest is an entitlement as against the Clearing House, and no other party. The obligation to pay interest is an obligation owed to the Clearing House, and to no other party. The fact that funds for the payment of interest to the creditor member are sourced from the defaulting debtor member is but a further illustration of the position of the Clearing House. Of necessity the Clearing House discharges its obligations to members using funds provided by other members. The existence, and character, of those obligations is unaffected. Exactly the same may be said of the provisions for exchange losses (Regulation 32). While the Clearing House is not a party to the clearance transactions themselves, it is plainly a principal in respect of the balances which emerge from the clearance process. It can sue, and be sued, in its own right (in the name of IATA). That is a defining characteristic of the scheme.

31 The clearance scheme, which is incorporated into clause 8.1 of the Agreement, binds members of the Clearing House, but only for so long as they are members. It will be recalled that Regulation 9(a) applies to, and only to, transactions "between members of the Clearing House which are subject to clearance through the Clearing House".

32 Naturally, the Regulations contain provision for the suspension and termination of membership. According to Regulation 49(c), the suspension of a member -

[45]

What is involved in the "set-off of all claims" is, in the case of a particular member, the setting off of the total of the debit claims notified against that member against the credit claims notified by that member.

42 The process of set-off in relation to the relevant member is likely to include both debit claims against the member by a particular member airline and credit claims by the member against that same airline. The debit and credit claims will be set off against each other. For the reasons already given, there are no debts owed by the one airline to the other, so the claims are not "mutual debts". In order to remove any doubt about the ability of the Clearing House to set off such countervailing claims, so the argument goes, all clearance transactions were deemed to be (that is, to give rise to) mutual debts. (Of course, a single transaction between Carrier and Issuer would not give rise to "mutual debts". It would give rise to a unilateral debt. The provision presumably means that such transactions collectively give rise to mutual debts.)

43 The explanation advanced on behalf of IATA seems to me to be plausible. The requirement for mutuality of debts as a condition of set-off is not, of course, confined to insolvency law. Mutuality was a requirement for inter partes set-off at common law.[25] In the event, however, it is unnecessary to reach a final conclusion on the object sought to be achieved by the deeming clause or, indeed, as to whether the efficacy of the clearance scheme depended upon the inclusion of such a clause.

44 Two things are, I think, quite clear in relation to Regulation 12. The first is that the deeming provision confirms the intention of the parties as expressed in Regulation 9(a), namely, that clearance transactions did not create debts as between the parties to those transactions. It was therefore necessary to create a deemed state of mutual indebtedness. Secondly, whatever the true import of the first sentence of Regulation 12, it could not possibly have the effect of subverting, or overriding, the clear and unequivocal intent of the clearance scheme, whereby the only rights and liabilities which arise are rights against and liabilities to the Clearing House. This last point needs to be made more generally, as follows.

Resolving any inconsistency

45 For the reasons given, I do not consider any of the provisions referred to by Ansett to be inconsistent with the characterisation of the rights and obligations which I have set out. None of those provisions provides support for the proposition that the relationship between the members in a clearance transaction is, in truth, that of debtor and creditor.

46 But even if the position were otherwise, and there were some inconsistency between the provisions relied on by Ansett and the scheme of rights and obligations established by Regulation 9(a), I consider that the Court would nevertheless be bound to give effect to the contractual intention expressed in Regulation 9(a). This seems to me to be the inevitable conclusion, whichever canon of construction were brought to bear.

47 Several rules of construction provide guidance. The first is that, in the event of inconsistency between provisions in a contract, it is "the main object and intent" of the contract which must prevail. In Glynn v. Margetson & Co[26], a particular clause was read down because, read literally, it would have defeated "the manifest object and intention" of the contract.[27] Lord Halsbury L.C. said:

[51]

51 As mentioned below, it is common ground that the amendments which introduced Regulation 9(a) were made with the intention of overcoming the decision of the House of Lords in British Eagle. The House of Lords decided that, under the Regulations as then in force, debts did arise between members as a result of transactions of the kind under consideration here. That was "the genesis" of the contract in its present form. That context establishes - incontrovertibly, in my view - the paramountcy of Regulation 9(a).

52 Other rules of construction lead to the same conclusion. Thus, precedence should be given to the "dominating factor" in the contract, or the provision which is of "preponderant importance".[37] Again, where a later clause is inconsistent with an earlier clause, the earlier clause prevails.[38] In the present case, Regulations 8 and 9(a) come first, as might be expected. They define the clearance scheme. They are of preponderant importance.

The decision in British Eagle

53 As noted by Nettle JA[39], the House of Lords in British Eagle held (by majority) that the effect of the Interline Agreements and of the IATA Clearing House Regulations, as they then stood, was that debts did arise between members as a result of transportation transactions and that, upon the liquidation of a member, the ordinary rules of liquidation should prevail. The Clearing House arrangements were held to be an invalid attempt to contract out of the company law provisions requiring the payment of unsecured debts pari passu.

54 Following the decision in British Eagle, both the Agreement and the Regulations were amended. It is common ground that the amendments were made with the intention of overcoming the decision in that case. Both at first instance and in this Court, however, Ansett has contended that there is no relevant difference between the provisions which applied at the time of British Eagle and the provisions which now apply and, accordingly, that the decision in British Eagle remains applicable and should be followed.

55 In my opinion, that submission must be rejected. As Nettle JA points out[40], the new Regulation 9 is significantly different from the corresponding Regulation 18 with which the House of Lords was concerned. The differences are readily apparent upon examination of the terms of former Regulations 18(b), (c) and (d), which were as follows:

[60]

64 These are appeals from judgments given in the Corporations List of the Commercial and Equity Division on 22 April 2005. The judge held that IATA Clearing House Regulations did not cease to apply to Ansett Australia Holdings Ltd ("Ansett") upon Ansett entering into a Deed of Company Administration on 2 May 2002. In so holding, the judge rejected Ansett's contention, based on the decision of the House of Lords in British Eagle,[45] that the IATA Clearing House Regulations were repugnant to Australian corporate insolvency legislation and thus contrary to public policy.

The facts

65 As appears from his Honour's reasons for judgment, international airline operators regularly sell tickets to passengers for journeys which are partly or wholly over the routes of other airline operators and engage likewise for goods, baggage and cargo. To facilitate those transactions, airline operators enter into IATA Multilateral Interline Traffic Agreements ("Interline Agreements") with other airlines and undertake many such transactions pursuant to those agreements. In order to avoid the necessity of having to make and receive numerous payments to and from other airlines, the IATA Clearing House regulations provide for the Clearing House to enter debits and credits against and in favour of each operator in respect of its dealings with other operators and to set off credits against debits in

order to produce monthly balances to be cleared by payment by an airline operator to the Clearing House or payment by the Clearing House to an airline operator of the balance found to be due or owing. The "turnover" in relation to the transactions thus "cleared" runs to billions of dollars.

The Interline Agreeements

66 The IATA Multilateral Interline Traffic Agreement - Passenger and the IATA Multilateral Interline Traffic Agreement - Cargo are substantially the same and, as it was below, it is necessary for present purposes to refer only to the terms of the Passenger Agreement. They include the following:

[61]

"Article 2 - Issuance of Tickets and MCOs

2.1 ISSUANCE

2.1.1 Each party hereto is hereby authorised to issue or complete:

2.1.1.1 tickets, or MCOs exchangeable for tickets, for transportation of passengers,

2.1.1.2 all other documents necessary or appropriate for such transportation;

all in the form approved by, and in accordance with the tariffs and the terms, provisions, and conditions of the tickets, and other documents of the party over whose routes the passenger is to be carried ...

2.2 ACCEPTANCE

2.2.1 Each party agrees to accept each such ticket, or other transportation document and to honour each MCO issued by any other party hereto and to transport passengers and baggage as specified therein, subject to its applicable tariffs and subject to the terms of this agreement and applicable regulations and clearance procedures of the IATA Clearing House ...

Article 8 - Interline Billing and Settlement

8.1 PAYMENT OF TRANSPORTATION CHARGES

Each issuing airline agrees to pay each carrying airline the transportation charges applicable to the transportation performed by such carrying airline and any additional transportation or non-transportation charges collected by the issuing airline for the payment of which the carrying airline in responsible, in accordance with applicable regulations and current clearance procedures of the IATA Clearing House, unless otherwise agreed by the issuing airline and the carrying airline.

8.2 BILLING AND SETTLEMENT

8.2.1 Billing of amounts payable pursuant to the Agreement shall be in accordance with the rules contained in the IATA Revenue Accounting Manual as amended from time to time.

8.2.2 Unless otherwise agreed settlements of amounts payable pursuant to this Agreement between parties that are members of the IATA Clearing House shall be in accordance with the Manual of Regulations and Procedures of the IATA Clearing House.

8.2.3 Except as may otherwise be provided in other agreements, rules or regulations, the right to payment hereunder arises at the time such services are rendered by a party hereto or its agent.

8.2.4 Except as provided in 8.2.5, settlements of transactions arising under the terms of this Agreement involving one or more parties that are not members of the IATA Clearing House shall be in accordance with the following procedures:

8.2.4.1 settlements shall be made monthly;

8.2.4.2 each party shall issue a monthly statement of invoices and credit notes rendered by it. The monthly statements shall be dispatched promptly but in any case not later than the 30th day of the month following that of the billing month, e.g. for billing month January not later than the last day of February;

8.2.4.3 settlement shall be effected promptly after the monthly statements are exchanged by offset of balances and cash payment of the net balance in the national currency of the net creditor.

8.2.5 Parties may expressly agree to settle transactions in a manner other than the procedure described in 8.2.4.1- 8.2.4.3."

[75]

(a) With respect to transactions between members of the Clearing House which are subject to clearance through the Clearing House as provide in Regulations 10 and 11 and subject to the provisions of the Regulations regarding protested and disputed items, no liability for payment and no right of action to recover payment shall accrue between the members of the Clearing House. In lieu thereof members shall have liabilities to the Clearing House for balances due by them resulting from a clearance or rights of action against the Clearing House for balances in their favour resulting from a clearance and collected by the Clearing House from debtor members in such clearance;

(b) Notification to the Clearing House of any claim (debit or credit) for clearance shall, subject to the Regulations, constitute an irrevocable authority to clear the same in accordance with the Regulations and current clearing procedures and to pay or collect any balances due by or to the Clearing House as a result of the clearances effected; provided, however, that if the Clearing House receives notification that the amount of a claim that has been notified for clearance has been attached, garnished or otherwise seized by issue of an order of Court, the Clearing House Manager shall, whilst such situation exists, suspend all clearance between the members concerned until notified by both parties that normal clearance between them may be reinstituted. During the period of suspension, the parties affected shall remain absolved from their respective obligations under Regulation 10 to settle only through the Clearing House.

(c) The effecting of a clearance and payment of the balances due to or by the Clearing House in accordance with these Regulations and current clearance procedures shall constitute a satisfaction and discharge of every claim dealt with in such clearance. IATA shall be entitled to recover any balances due to the Clearing House by legal action.

(d) Members of the Clearing House may include in the second clearance in which a new member participates their unpaid claims against the new member referring to pre-membership transactions, unless otherwise agreed between the new member and the member having the claim.

(e) The contract created hereby and the obligations created hereunder shall be binding upon the successors in interest, including administrators, trustees and receivers, of each member.

SCOPE OF CLEARANCE

[94]

81 It follows, in the appellants' submission, that there is no relevant difference between the regulations as they were at the time of British Eagle and as they are now and therefore that the decision in British Eagle is as much applicable to the regulations as they are now as it was to the regulations as they were at the time of the decision.

The respondents' contentions

82 The respondents submit that the judge was right. They say that the judge was correct that Regulation 9[50] is now the fundamental provision of the regulations dealing with the effect of admission to membership of the Clearing House and that it constitutes an express agreement between all members and between each member and IATA that, with respect to transactions subject to clearance: "no liability for payment and no right of action to recover payment shall accrue between members of the Clearing House". In the respondents' submission, Regulation 9 negates the existence as between member airlines of any chose in action generating liability in respect of any amount between them and the existence of any chose in action entitling recovery of such an amount, and puts in place liabilities to (and only to) and rights of action against (and only against) the Clearing House.

83 The respondents add that, if there were any doubt about the effect of Regulation 9, it is significant that it was was added only after British Eagle was decided and therefore, presumably, with the intention of overcoming the decision in that case. They argue, in accordance with the principle that courts should strive to give effect to the perceived intentions of the parties,[51] that this court should construe the IATA Clearing House Regulations as overcoming British Eagle.

84 The respondents also emphasise that the Interline Agreements and IATA Clearing House Regulations are parts of a world-wide scheme, evidently designed to be given effect in many different legal systems, and that the parties to the scheme are drawn from numerous countries of the world. They submit that those circumstances provide added reason to construe Regulation 9 as a clear statement of the fundamental characteristics of the scheme and, therefore, as prevailing over any "discordant elements" apparent in the drafting of other elements of the documentation.

85 In the result, the respondents say, individual transactions between member airlines yield nothing by way of liabilities or rights of action - only "items" for submission to the Clearing House for computation of ultimate monthly balances - and there is, therefore, only ever one chose in action each month - a chose in action as against the Clearing House for the balance - susceptible to the description of a debt or an "innominate chose in action"[52] having many of the features of debt.

86 The respondents concede that the right to have "items" placed into the clearance process may be counted as "property" of some species, but they say that if it be so, it is property which of its nature can only ever be fulfilled and realized upon and by notification to IATA and entry into the clearance process. Consequently, they contend, it is not property that is available for distribution among creditors.

The effect of the amendments to the IATA Regulations

87 I accept the respondents' submissions, up to a point. Despite the ingenuity of the appellant's argument, I do not think that the new Regulation 9 can be sloughed off as merely putting into express terms what was already implicit in the terms of the old Regulation 18. For even allowing for the apparent similarity as between Lord Cross's description of the effect of the old Regulation 18 and the terms of new Regulation 9(a), the two are significantly different. Lord Cross spoke of regulation 18 as depriving the carrying airline of any "right to enforce payment of the amount in question by legal proceedings". Arguably, that corresponds with the provision in Regulation 9(a) that there shall be "no right of action to recover payment". But Regulation 9(a) goes further than that - by providing that "no liability for payment... shall accrue", and in terms that is the very converse of the view taken in British Eagle under the regulations as they then were that a liability for payment did accrue. The additional words are seemingly calculated to preclude the possibility of the process of clearance being characterised as one of clearing debts.

88 That said, however, it is is one thing to make changes to a contract which are calculated to achieve a result and it is another to make changes which have the effect of producing that result. For regardless of what may appear to be the subjective intention of the parties, in the end the meaning of a written contract must be determined objectively by construing each clause according to its natural and ordinary meaning read in light of the contract as a whole.[53] And if then so construed the contract bespeaks a relationship which is of one kind, a provision which purports to proclaim that it is of another kind will be read down or read as ineffective. In the words of Lord Denning in Massey v. Crown Life Insurance Co.,[54] "the parties cannot alter the truth of that relationship by putting a different label on it", and as Lord Brandon observed in a similar context when delivering the judgment of the Privy Council in Narich Pty Ltd v. Commissioner of Pay-roll Tax (N.S.W.),[55] that is so even if the label is added in good faith and with the desire that it should be effective.

89 I accept that the regulations as they now stand are relevantly different to those which were considered in British Eagle. I also accept that the changes made to the Regulations since British Eagle or at least some of them were in all likelihood designed to overcome the decision in that case. But, in my view, when the meaning of the Interline Agreement (including the Clearing House Regulations) is determined objectively, by construing each clause according to its natural and ordinary meaning in light of the contract as a whole, the relationship between issuing airline and carrying airline remains one of debt. Despite the contrary asseveration in Regulation 9(a), it is apparent that a carrying airline's performance of services does give rise to a debt between the issuing airline and the carrying airline and that the debt so created remains in existence until cleared in accordance with the Clearing House Regulations or is otherwise satisfied.

90 As has been seen, clause 8.1 of the Interline Agreement provides for each issuing airline to pay to each carrying airline the transportation charge applicable to the transportation performed by the carrying airline. In turn clause 8.2.3. provides that, except as may otherwise be provided in other agreements, rules or regulations, the right to payment[56] arises at the time the services are performed. Subject, therefore, to any contrary agreement, rule or regulation, upon the carrying airline performing the transportation services in question the issuing airline incurs a definite liability to pay an ascertained sum and the carrying airline acquires a correlative definite right to be paid the ascertained sum. According to ordinary legal acceptation, such an obligation and correlative right is properly described as a debt.

91 Clause 8.2.1 of the Interline Agreement provides that billing of the amount payable shall be in accordance with the rules contained in the IATA Revenue Accounting Manual. Those rules provide for the "creditor airline" charging the "debtor airline" to forward an invoice and supporting documents to the "carrier being billed". Clause 8.2.2 of the Interline Agreement provides that, unless otherwise agreed, settlement of the amount payable[57] as between members of the IATA Clearing House shall be in accordance with the Manual of Regulations and Procedures of the IATA Clearing House. Clause 8.2.4 provides that settlement of the amount payable as between airlines of which one or more is not a member of the IATA Clearing House shall be paid monthly.

92 So, as it seems, the debt is payable in future. But it is still a debt.[58]

93 One turns then to the Clearing House Regulations, and first to the provision in Regulation 9(a), that:

[96]

94 In the respondent's submission, a transaction becomes "subject to clearance through the Clearing House as provided in Regulation 10" either at inception or, at latest, when notified for clearance. According to the respondents, the effect of clause 9(a) is, therefore, to annihilate "the amount payable" (ie.to annihilate the debt) either at the instant of creation of the debt or, at the latest, upon notification of the debt to the Clearing House for clearance. Thereafter, it is said, the carrying airline has no right to payment as against the issuing airline but only a right to be paid by the Clearing House such credit balance as may result from clearance.

95 If Regulation 9(a) stood alone, it would be hard to resist the respondents' argument. Its terms do imply the annihilation of the debt and its replacement with rights as against the Clearing House alone. But, for the reasons already stated, the provision must be read in context and, in particular, having regard to the other paragraphs of Regulation 9. The first and perhaps most important of those for present purposes is Regulation 9(b).

96 As already noticed, Regulation 9(b) provides for the possibility of the Clearing House receiving notice that a claim notified for clearance is attached, garnisheed or otherwise seized by issue of an order of court. In that event, the regulation requires the Clearing House Manager to suspend the clearance and specifies that the parties shall be relieved of their obligation under Clause 10 to settle the claim through the Clearing House. Plainly, however, it would not be possible to garnishee, attach or seize a claim unless the claim were a debt which remained in existence. And, equally, it would not be possible to "relieve" the issuing airline and the carrying airline "of their obligation" to settle through the Clearing House if the debt the subject of clearance had already been transmogrified into rights and obligations vis-à-vis the Clearing House alone. Evidently, therefore, clause 9(b) is premised upon the assumption that there is a debt as between the issuing airline and the carrying airline and that, despite notification, the debt remains in existence until it has been cleared.

97 Regulation 9(c) is more equivocal but in my view to similar effect. As has been seen, it provides that: "The effecting of a clearance...shall constitute a satisfaction and discharge of every claim dealt with in such clearance." In my view that too bespeaks recognition that "claims" (scil. debts due by issuing airlines to carrying airlines for payment of transport amounts under clause 8.2.2 of the Interline Agreements) are not extinguished upon creation or by notification to the Clearing House for clearance, but only once clearance is effected.

98 The respondents submit to the contrary. They say that "claims" in Regulation 9(c) means claims against the Clearing House to have credits and debits included in the settlement process. They also emphasise the expression "claim (debit or credit)" which appears in Regulation 9(b) and they suggest that the idea of a debit claim would be a nonsense if "claim" were a debt owed by an issuing airline to a carrying airline as opposed to a right as against the Clearing House to have either a debit or credit item entered in the clearance.

99 But I do not think that is so. Regulation 9(c) is to be read in the context of and as ancillary to the Interline Agremement. In that context it appears as a means of settling obligations created by the Interline Agreement. As has been seen, the Interline Agreement provides for the creation of debts as between issuing airlines and carrying airlines and provides for settlements of the amounts payable by issuing airlines to carrying airlies in accordance with the IATA Clearing House Regulations. So, when a collecting airline notifies a claim to the Clearing House for clearance, it is in truth notifying the Clearing House of a debt payable by the issuing airline to the carrying airline which is to be settled in accordance with the Clearing House Regulations.

100 Nor does the notion of a "claim (debit or credit)" suggest the contrary. To speak of a satisfaction and discharge by clearance of every claim (debit or credit) dealt with in the clearance is I think simply to emphasise the point that each of the debts the subject of clearance is satisfied and discharged and thereby that the obligations of each debtor as much as the rights of each creditor are satisfied and discharged.

101 I regard Regulation 12 as a further indication that debts which arise under the Interline Agreements remain in existence until satisfied by clearance. It deems "all transactions within the scope of clearance" to be "mutual debts". In that context, "transactions within the scope of clearance" must mean amounts payable by an issuing airline to a carrying airline for transportation charges arising under an Interline Agreement which fall to be settled pursuant to clause 8.2.2 of the Interline Agreement in accordance with the Manual of Regulations and Procedures of the IATA Clearing House. So, by characterising such amounts as "mutual debts", clause 12 confirms that such amounts are debts which are to be set off one against another to produce the monthly balance.

102 The respondents argue to the contrary. They submit that inasmuch as Regulation 12 deems claims to be mutual debts it recognises that such amounts are in truth not debts. In other words, they say that the the expression "deemed [to be] mutual debts" is used in the sense of creating a fictional state of indebtedness for the purposes of clearance where, otherwise, there would not be any debts in existence. But when asked what would be the purpose of creating a fictional state of mutual indebtedness for the purposes of clearance, counsel for the respondents could offer only that it may have been to put beyond question the authority of the Clearing House to set one claim off against another in order to produce a balance, or perhaps to put beyond doubt that claims the subject of clearance are extinguised. And asked then why that result was not already achieved by the "irrevocable authority" conferred on the Clearing House by Regulation 9(b), and by the provision in Regulation 9(c) that clearance constitutes a "satisfaction and discharge of every claim dealt with in [the] clearance", counsel could offer only that clause 12 was possibly included out of an abundance of caution or as an example of what Lord Morris described in British Eagle as particular wording here and there which cannot cloud the purpose and intention of those agreeing to the scheme.[59]

103 I am not persuaded. Regulation 12 was added to the IATA Clearing House Regulations following the decision in British Eagle. In my view, therefore, it most likely employs the expression "mutual debts" in the sense used in s.31 of the Bankruptcy Act 1914 (UK)[60]. That section has a long history. As Gibbs, C.J. observed in Day & Dent Constructions Pty Ltd (in liq) v. North Australian Properties Pty Ltd (Provisional Liquidator appointed) :

[106]

108 As the High Court noted in Gye v. McIntyre,[65] the introduction of the reference to "other mutual dealings" gave rise to a linguistic problem, in that "credits" and "debits" will ordinarily represent the outcome of dealings rather than the dealings themselves. Conversely, "dealings" commonly do not of themselves, as distinct from their outcome, represent credits or debts susceptible of direct set-off. That is why the section speaks of set-off due in respect of those dealings. Nevertheless, it is clear that to come within the section the dealings must involve rights and obligations between the same parties, in the same interests and, whether absolute or contingent, be of such a nature that afterwards in the events that happen they mature or develop into pecuniary demands capable of set off.[66]

109 Section 31 of the Bankruptcy Act 1914 (UK)[67] is in relevant terms identical to s.39 of the 1869 Act. Accordingly, claims are not to be regarded as mutual debts within the meaning of s.31[68] unless they are claims between the same persons, in the same interests and which ultimately sound in money.[69] It has also long been established that s.31[70] is self-executing in the sense that its operation is automatic and not dependent "upon the option of either party."[71] Parties therefore cannot choose to make s. 31[72] apply to claims which are not mutual debts, mutal credits or other mutual dealings. It is not quite as clear, however, that parties cannot agree to exclude the operation of provisions like s.31. In England, the decision of the House of Lords in National Westminster Bank Ltd v. Halesowen Presswork & Assemblies Ltd[73] established that parties may not do so. But in Australia, the question is technically still open.[74]

110 It may be assumed that IATA and those who advise it are familiar with the law relating to bankruptcy, at least as it is in England, and therefore would know that it would be an exercise in futility to provide contractually for a fictitious state of mutual indebtedness for the purposes of s.31. It is, therefore, unlikely that Regulation 12 was intended to have that effect.

111 On the other hand, there is reason to think that those who drafted Regulation 12 were keen to ensure that the operation of s.31 of the Bankruptcy Act[75] was not excluded, perhaps as a result of implication derived from Regulation 9(a). In the circumstances, I am inclined to think that that was the object of the regulation. The words "deem" and "deemed" need not import artificiality or fiction - they may simply be a statement of an "indisputable conclusion"[76] - and it seems to me that "deemed" in Regulation 12 is most probably used in that fashion. As such the regulation is a recognition of the "indisputable conclusion" that claims the subject of clearance are debts, and that they remain such until extinguished by clearance, and a declaration of intention that they should count as such in the event of an insolvency.

112 There are some further lesser indications to the same effect. The provision in Regulation 9(b) that the Clearing House is "irrevocably authorised" to clear a claim suggests that the Clearing House is appointed as agent of the obligee whose claim it is and it is inconsistent with the idea that Clearing House acts as principal for the purposes of clearance. It is only after clearance that the Clearing House becomes a principal to whom and by whom balances are payable pursuant to Regulation 9(a).

113 Regulation 9(c) provides that:

[114]

The notion of set-off is consistent with the idea that the function of the Clearing House is to set-off debts owed to and by members and so to obtain a balance which is then payable to the residual creditor through the medium of the Clearing House.

117 Based on the provisions to which I have referred, I conclude that the effect of the Interline Agreements and the Clearing House Regulations read as a whole is that the members of the Clearing House stand as to claims to be cleared in relation to each other as debtors and creditors and that in relation to each such debt for clearance the relationship of debtor and creditor inures until the debt is cleared in accordance with the clearing house procedures or otherwise settled. Until then it remains as a debt and therefore subject to garnishment, attachment and seizure, as is expressly recognised in Regulation 9(b).

118 Authority is clear that where the parties to a written contract include in the contract an express provision which purports to define their contractual relationship but which contradicts the effect of the contract as a whole, the provision cannot receive effect according to its terms.[77]

119 It follows in my view that Regulation 9(a) cannot receive effect according to its terms. It is instead to be interpreted, looking at the contract as a whole, as meaning that, although there is a prohibition on enforcement of Interline Agreement debts otherwise than by clearance through the clearing house, such debts are not extinguished or annihilated until and unless they have been cleared.[78]

120 In effect, that is as matters stood at the time of British Eagle and so, other things being equal, British Eagle still applies.

The scope of the British Eagle principle

121 The respondents contend in the alternative that if, despite the changes made to the IATA Clearing House Regulations since British Eagle, the effect of the Regulations remains as it was at the time of British Eagle, this court should reject the construction of the Regulations which was adopted by the majority in British Eagle and instead adopt the construction of the Regulations which found favour with Lords Morris and Simon. It follows, it is submitted, that this court should be persuaded that the claims of members against each other do not constitute debts and that the correct analysis is that the various services and transactions rendered between members take place pursuant to perfectly valid multilateral contracts which provide that any resultant receipts or payments are only from or to IATA.

122 For the reasons already given, I have come to the view on the basis of my own analysis of the Interline Agreements and the Clearing House Regulations that the claims the subject of clearance are debts. Strictly speaking, therefore, it is unnecessary to make any choice as between the majority's and the minority's constructions of the regulations as at the time of British Eagle. Practically speaking, however, I recognise that, if the minority were correct, one could not properly construe the documents as they are now in the way that I have done. Simply, if the claims of members against each other were not debts under the old agreements, a foritori they could not be debts under the new agreements.

123 With great respect, I prefer the view of the majority. But I should be inclined to follow it in any event. Decisions of the House of Lords are not binding in Australia, but cases decided by the House of Lords before the passage of the Australia Act 1986 are of special significance[79] and, despite the passage of the Australia Act, decisions of the House of Lords since the Act are regarded as being of the highest persuasive value. In the absence of Australian authority on a point, an intermediate court of appeal like this one should ordinarily follow a relevant decision of the House of Lords unless clearly convinced it is wrong.[80]

Different insolvency regimes

124 The respondents contend in the further alternative that the public policy considerations which inform the British Eagle principle do not apply to a company like Ansett which enters into a Deed of Company Administration under Part 5.3A of the Corporations Act 2001. They argue that that the British Eagle principle was expressly derived from the statutory regime of pari passu distribution expressed in s.302 of the Companies Act 1948 (UK) which, like the comparable provisions of s.555 of the Corporations Act, 2001 (Com), is limited to companies in liquidation in insolvency. Contrastingly, they say, the statutory regime which applies to a company the subject of Deed of Company Administration is markedly different in at least the following respects:

125 First, in contradistinction to the provisions which apply to the winding up of a company in insolvency, Part 5.3A of the Corporations Act 2001 does not earmark from the outset the totality of the property of the company to go to the satisfaction of those who may be creditors of the company in administration.

126 Secondly, the provisions of Part 5.3A do not prohibit an administrator from propounding, or prevent the company's creditors from resolving to execute, a deed of company administration which provides for the distribution of the company's property on a basis which does not accord with the pari passu principle.

127 Thirdly, beyond the effect of a deed of company administration, the Corporations Act 2001 does not confer general power on administrators to effect a distribution of assets within the administration.

128 Fourthly, it is the creditors of a company and not the Act who determine which assets and which creditors' claims are, or are not, to be the subject of the provisions of a deed of company administration.

129 In the respondents' submission those differences leave no reason to think that the British Eagle principle prevents contracting out of the sort of insolvency regime for which provisions like Part 5.3A of the Corporations Act 2001 (Com) provide.

130 Further, the respondents say that failing all else there is no reason to suppose that such public policy as may inhere in a deed of company administration entered into in 2002 under the authority of Australian legislation passed in 1993 is capable of rendering void a contract with global effect and operation that was entered into in 1976.

131 There is some force in these submissions. It is true that Lord Cross based the British Eagle principle on the rules for distribution of an insolvent's property that apply in bankruptcy and in company liquidation. It is also true that, whereas under those rules, creditors of the same class generally rank pari passu, that is not necessarily if ever the case under a deed of company administration entered into pursuant to Part 5.3A of the Corporations Act 2001 (Com). But in my view, it would be a mistake to think of the British Eagle principle as limited to the pari passu distribution of a debtor's property. Certainly, pari passu distribution is one of the possible manifestations of the principle. But it seems to me that the principle itself rests in the broader conception that the whole of a debtor's estate should be available for distribution among creditors in accordance with whatever regime for the distribution of property may apply according to the laws of insolvency.[81] Hence the effect of the principle, properly understood, is that a creditor may not lawfully contract with a debtor so as to achieve a distribution of property in insolvency which is different to that for which the laws of insolvency provide, or at least may not do so in a fashion which is to the prejudice of other creditors who are not party to the contract. [82] To adopt the words of R.J. Mokal in his learned article on the pari passu myth:

[119]

133 Section 435A of the Corporations Act 2001 provides that the object of Part 5.3A is to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence or, if that is not possible, for the company or its business to continue in existence, in order to produce a better return for the company's creditors and members than would result from an immediate winding up of the company.

134 Clearly enough, the regime for which Part 5.3A provides is in significant respects markedly different to the regime which applies in a winding up. As the respondents point out, Part 5.3A does not earmark from the outset the totality of the property of the company to go to the satisfaction of those who may be creditors of the company in administration. It does not prohibit an administrator from propounding, or prevent the company's creditors from resolving to execute, a deed of company administration which provides for the distribution of the company's property on a basis which does not accord with the pari passu principle. The powers of an administrator to effect a distribution of assets within the administration are constrained by the terms of the deed of company administration. It is the creditors, as opposed to statutory formula who determine which assets and which creditors' claims are, or are not, to be the subject of the provisions of the deed.

135 But, at the same time, the combination of Part 5.3A and the contents of a deed of company administration entered into in accordance with its provisions are no less a collective statutory regime for the distribution of property in insolvency than are the provisions of Part 5.5:

136 Section 444A(4) provides that the deed must specify certain matters, including: "the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors' claims" (s.444A(4)(b)); "the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed" (s.444A(4)(h)); and "the day (not later than the day when the administration began) on or before which claims must have arisen if they are to admissible under the deed" (s.444A(4)(i)).

137 The effect of s.444A(5) and Regulation 5.3A.06 and Schedule 8A of the Corporations Regulations is that the administrator must apply the property of the company coming under his or her control under the deed in the order of priority specified in section 556 of the Act, unless the deed otherwise provides.

138 Section 444A(4)(b) requires that the deed specify, among other things, the property of the company that is to be available to pay creditors' claims.

139 Section 444A(4)(h) requires that the deed specify the order in which proceeds of realisation of the property referred to in s.444A(4)(b) are to be distributed among creditors bound by the deed.

140 Section 444D(1) provides that the deed, once executed, binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444(4)(i).

141 As Batt, J.A. observed in GM & AM Pearce and Co Pty Ltd v. RGM Australia Pty Ltd[85], the effect of ss.444A(4)(b) and (h) and 444D(1) is that, upon the execution of a deed of company arrangement under Part 5.3A, the order in which proceeds of realising the property of the company are to be distributed among creditors bound by the deed is given statutory force and effect.

142 In point of principle, therefore, I see no reason why British Eagle should not apply as much to a statutory regime which like Part 5.3A as it does to a statutory regime like s.31 of the Bankruptcy Act 1914 (UK) or Part 5.5 of the Corporations Act 2001.

143 Such authority as there is on the point is also not inconsistent with that view. To the contrary, a Deed of Company Administration is in some respects akin to a composition with creditors or deed of arrangement under the bankruptcy legislation, and in Ex Parte Milner: In re Milner[86] the English Court of Appeal set aside a composition in which not all creditors shared equally. The arrangement there, which was to be effected by way of deed, was that the creditors would receive 10 shillings in the pound. But after the respondent had executed the deed, the debtor's brother induced several other creditors to execute it by promising to make additional payments to them. When the respondent learned of the arrangement between the debtor's brother and some of the other creditors he applied successfully to have the arrangement set aside. Brett MR stated:

[130]

150 Similarly, in British Eagle, Lord Morris speaking for the minority gave as one reason for rejecting the appeal that in his Lordship's view there was no provision in the contracts under examination which could rationally be regarded as a "device for defeating the bankruptcy laws" and that there could not be any inference of such a device.

151 To the contrary, however, Lord Cross speaking for the majority in British Eagle rejected that analysis on the basis that, whether or not the parties directed their minds to the question how the arrangement might be affected by insolvency of one or more of the parties, the contracting out was contrary to public policy. In other words, it is the objective effect of an impugned agreement rather than any subjective purpose of the parties to the agreement which determines the issue.

152 In this appeal the respondents do not challenge that part of the British Eagle decision. Accordingly, in reasoning to the conclusion that the British Eagle principle may apply as much to the statutory insolvency arrangement for which Part 5.3A of the Corporations Act 2001 provides as it does to the kind of regime that is prescribed by Part 5.5, I have assumed that it is not necessary that the parties be shown to have directed their minds to the nature of the arrangement that might apply in the event of insolvency.

153 But in case it matters, I should say that I have no doubt that the parties did direct their minds to the question of insolvency and that Regulation 9(a) was an attempt to give members of the clearing house a preference in respect of the debts of an insolvent member at the expense of other creditors. To adopt the approach of James, L.J. in Ex parte Williams, and therefore to take a common-sense view of the thing, it is in my view impossible not to see Regulation 9(a) as intended to make alter and disturb the legal distribution of the member's property in insolvency. Indeed its only apparent objective is to quarantine so much of an insolvent member's property as is comprised of debts owing by other members pursuant to Interline Agreements and thereby to make it available for realisation only by and for the benefit of those members.

154 There is then the question posed by the respondents of whether the British Eagle principle should be taken to apply to a deed of company administration entered into in 2002 under the authority of Australian legislation passed in 1993 so as to affect a contract with global effect and operation that was entered into in 1976. In my view the question is misplaced for at least two reasons.

155 In the first place, the question appears to me to proceed upon a misconception of the principle. It is not that one may not contract contrary to a bankruptcy regime but that one may not contract that or with the effect that in the event of bankruptcy property of the bankrupt will not be available for distribution among only some of the bankrupt's creditors. Properly understood, the principle applies universally regardless of the particular bankruptcy regime in question.

156 In the second place, the question assumes that what applies to Ansett must apply to every other airline which is party to an Interline Agreement. That is not so. In this case the problem is confined to the provisions of the Interline Agreements to which Ansett is party and it is restricted in effect to transactions which had not been cleared as at 9 September 2001 and therefore which were not entered into until sometime in 2001, years after s.444D came into force. As has been seen, the Interline Agreements expressly provided that clearance could be effected under the Clearing House arrangements or as the parties otherwise agreed. It is to be inferred, therefore, that as each of the subject transactions was entered into the parties made a determination that the Clearing House principles should apply. In effect, it was those determinations, rather than anything done in 1976 or at any other time or by any other airlines elsewhere in the world which gives rise to the problem with which we are concerned. On that basis I see no difficulty in concluding that the British Eagle principle is capable of application.

The effect of the Deed of Company Administration

157 Section 444D of the Corporations Act 2001 makes the Deed of Company Administration binding on all the creditors of Ansett. They include the other airlines party to the Interline Agreements with Ansett and the Clearing House. "Claim" is defined in clause 1 of the Deed as meaning any debt and all claims present or future, certain or contingent, ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before the Appointment Date. Each airline's claim in respect of "amounts payable pursuant to the [Interline] Agreement is therefore either a debt or claim present or future, certain or contingent, ascertained or sounding only in damages, to which the circumstances giving rise occurred on or before the Appointment Date. Clause 4.2.5 of the Deed prohibits a creditor from taking any action whatsoever to seek to recover any part of its Claim other than pursuant to the Deed. Clause 14 of the Deed provides that the rules and mechanisms to be applied to proofs of debt and the ascertainment of Claims shall be similar to the rules and mechanisms for such things prescribed by the Act in the context of the liquidation of a company, amended or adjusted as appropriate to make the process as cost effective as possible. Clause 1.4.1 of the Deed provides that, to the extent that

there is any inconsistency between the Deed and "any other obligation binding on the Company", the Deed prevails. As I see it, therefore, each of the airlines is bound by the deed to enforce its claims against Ansett only in accordance with the Deed and because the provisions of the Clearing House Regulations for the clearance of claims are inconsistent with the provisions of the Deed, the Deed prevails.

Conflict of laws

158 There is perhaps a further problem about the effect which would be given to s.444D in other jurisdictions. On one view of the matter the section purports to effect a discharge of debts, or at least a partial discharge of debts, as a result of bankruptcy. According to the conflict of laws principles which apply in bankruptcy, such a discharge would not be recognised in England (or presumably in other Commonwealth common law countries) unless the proper law of the debt were the law in force in one of the States or Territories of Australia.[98] Arguably, the same rule operates in the United States of America. It is unnecessary, however, to pursue the question for present purposes. This appeal was expressly argued on the basis that there is no evidence as to the proper law of the Ansett Interline agreements and no reason to suppose that it is any different to the law in force in Victoria. On that basis it may be assumed that the British Eagle principle would be held to apply to the agreements in at least the majority of jurisdictions in which or with which Ansett did business.

Conclusion

159 For the reasons which I have given, I would allow the appeals.

[132]

[1] There are actually four Multilateral Interline Traffic Agreements. This appeal concerns the Multilateral Interline Traffic Agreement - Passenger, and the Multilateral Interline Traffic Agreement - Cargo, which are relevantly identical.

[2] Regulation 12 is to the same effect.

[3] Regulation 9(b).

[4] The term "billing" is defined in Regulation 1 to mean: "Written advice of transactions to be notified to the Clearing House for clearance given by one member to another".

[5] Regulation 1.

[6] Regulation 9(b).

[7] cf. The King v. Brown [1912] HCA 6; (1912) 14 C.L.R. 17 at 25 per Griffith C.J.

[8] In British Eagle International Air Lines Ltd v. Compagnie Nationale Air France [1975] 1 W.L.R. 758, the Regulations were held to be applicable even though not expressly incorporated into the Agreement.

[9] Affidavit of David Hodgkinson (paragraph 8).

[10] Regulation 9(b).

[11] Ibid.

[12] Regulation 9(c).

[13] Ibid.

[14] (Emphasis added). See also Regulations 22(c), 28, 29, 30, 31, 32, 33, 34, 36, 37, and 45.

[15] See Regulations 22(d), 23 and 24.

[16] See Regulations 22(b) and 23.

[17] Outline of Submissions para 76.

[18] Ibid at [68].

[19] Ibid at [67].

[20] Regulation 52.

[21] Regulation 53.

[22] Lord Morris at 767G (minority); Lord Cross at 777F (majority).

[23] At [111] below.

[24] Regulation 1.

[25] Re KL Tractors Ltd [1954] VicLawRp 70; [1954] V.L.R 505 at 507 per O'Bryan J; see further S.R. Derham The Law of Set-Off (3rd ed., 2003) chapter 11.

[26] [1893] A.C. 351.

[27] At 355 per Lord Herschell L.C.; at 358 per Lord Halsbury L.C.

[28] At 357.

[29] [2002] NSWCA 141 at [9] per Handley, J.A. (with whom Sheller, J.A. and Pearlman, A.J.A. agreed).

[30] At 359 per Lord Halsbury L.C.

[31] [2003] 2 W.L.R. 711.

[32] At 718 [10]. See also AWB (International) Ltd v. Tradesmen International (PVT) Ltd [2006] VSCA 210 at [15] per Chernov JA.

[33] Homburg (supra) at 719 [12] per Lord Bingham.

[34] cf. Codelfa Construction Pty Ltd v. State Rail Authority of N.S.W. [1982] HCA 24; (1982) 149 C.L.R. 337 at 352 per Mason J. The Full Court of the Federal Court recently held that the decision in Pacific Carriers "should be understood as permitting regard to be had to context ahead of ambiguity": Lion Nathan Australia Pty Ltd v. Coopers Brewery Ltd [2006] FCAFC 144 per Weinberg J at [51]. See also at [100] per Kenny J and [238] per Lander J.

[35] [2004] HCA 35; (2004) 218 C.L.R. 451.

[36] At 462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ (footnotes omitted).

[37] Universal Steam Navigation Co Ltd. v. James McKelvie & Co [1923] A.C. 492 at 499 per Lord Shaw and 500 per Lord Sumner.

[38] Forbes v. Git [1922] 1 A.C. 256 at 259 per Lord Wrenbury; see Lewison, The Interpretation of Contracts (3rd ed, 2004) [299] - [302].

[39] At [77] below.

[40] At [87] below.

[41] At [87] below.

[42] At 778F.

[43] At 778H.

[44] [2001] 4 All E.R. 223 at 251, 255.

[45] British Eagle International Air Lines Ltd v. Compagnie Nationale Air France [1975] 1 W.L.R. 758.

[46] Scil. the day (not later than the day when the administration began) or before which

claims must have arise if they are to be admissible under the deed.

[47] Other than the SEESA Deed and the SEESA Payments Deed.

[48] [1975] 1 W.L.R. 758.

[49] My emphasis.

[50] AB vol 1, B80.

[51] Hillas & Co v. Arcos Ltd [1932] UKHL 2; (1932) 38 Com. Cas. 23 at 29; The Council of the Upper Hunter County District v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 C.L.R. 429 at 437; Reardon Smith Line Ltd v. Yngar Hansen Tangen [1976] 1 W.L.R. 989 at 995-996; Pacific Carriers Ltd v. BNP Paribas [2004] HCA 35; (2004) 218 C.L.R. 451 at 461[22].

[52] [1975] 1 W.L.R. 758 at 778, per Lord Cross.

[53] Australian Broadcasting Commission v. Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 C.L.R. 99 at 109.

[54] [1977] EWCA Civ 12; [1978] 1 W.L.R. 676 at 679.

[55] (1983) 2 N.S.W.R. 597 at 606; 84 ATC 4035 at 4043.

[56] Of the transportation charges.

[57] scil. the transportation charges.

[58] There is debitum in praesenti solvendum in futuro; cf. Federal Commissioner of Taxation v. James Flood Pty Ltd [1953] HCA 65; (1953) 88 C.L.R. 492 at 507.

[59] [1975] 1 W.L.R. at 768, in diss.

[60] To which Lord Cross referred in British Eagle, at [1975] 1 W.L.R. at 781.

[61] [1982] HCA 20; (1982) 150 C.L.R. 85 at 95.

[62] The earlier 4 and 5 Anne c 17 , s.11 spoke in terms of "that there hath been mutual credit given."

[63] (1868) L.R. 3 C.P. 444 at 452.

[64] (1881) 8 Q.B.D. 147 at 149.

[65] [1991] HCA 60; (1991) 171 C.L.R. 609 at 623.

[66] Naoroji v. Chartered Bank of India (1868) L.R. 3 C.P. 444 at 451-2; Hiley v. Peoples Prudential Assurance Co. Ltd (1938) 60 C.L.R. at 497.

[67] And the kindred provisions of s.86 of the Bankruptcy Act 1986 (Com) and s.553C of the Corporations Act, 2001 (Com).

[68] Or the kindred provisions of s.86 of the Bankruptycy Act 1986 (Com) or s.553C of the Corporations Act 2001 (Com).

[69] The authorities are analysed in Gye v. McIntyre (1991) 171 C.L.R. at 624-625.

[70] And kindred provisions.

[71] In re Deveze; Ex parte Barnett (1874) 9 Ch. App. 293 at 295; Day & Dent Constructions Pty Ltd (in liq) v. North Australian Properties Pty Ltd [1982] HCA 20; (1982) 150 C.L.R. 85 at 95; Gye v. Mc Intyre [1991] HCA 60; (1991) 171 C.L.R. 609 at 622.

[72] Or kindred provisions.

[73] [1972] A.C. 785 at 803, 808-9 and 824.

[74] Gye v. Mc Intyre (1991) 171 C.L.R. at 622.

[75] And kindred provisions.

[76] See, for example, Hunter Douglas Australia Pty Ltd v. Perma Blinds [1970] HCA 63; (1970) 122 C.L.R. 49 at 65; Wainer v. Rippon [1980] VicRp 15; [1980] V.R. 129 at 135.

[77] Australian Mutual Provident Society v. Chaplin (1978) 18 A.L.R. 385 (PC) at 389-390, per Lord Fraser of Tullybelton; Narich Pty Ltd v. Commissioner of Pay-roll Tax (N.S.W.) (1983) 2 N.S.W.L.R. 597 at 606-7; 84 A.T.C. 4035 at 4039, per Lord Brandon of Oakbrook.

[78] In re Harmony & Montague Tin & Copper Mining Co (1873) L.R. 8 Ch. App. 407 at 414; Federal Commissioner of Taxation v. Steeves Agnew & Co (Vict) Pty Ltd [1951] HCA 26; (1951) 82 C.L.R. 408 at 421 and Pro-Image Studios Ltd v. Commonwealth Bank of Australia (1991) 9 A.C.L.C. 671 at 674.

[79] Cook v. Cook [1986] HCA 73; (1986) 162 C.L.R. 376 at 389-390.

[80] Britten v. Alpogut [1987] VicRp 77; [1987] V.R. 929 at 939; Lang v. Asemo Pty Ltd [1989] VicRp 67; [1989] V.R. 773 at 776.

[81] Ex parte Mackay (1873) 8 Ch. App. 643 at 647; Ex parte Williams (1877) 7 Ch. D. 138; Ex parte Jackson (1880) 14 Ch. D. 725, and see the incisive analysis of those cases undertaken by R.J. Mokal in Priority as Pathology: the Pari Passu Myth, [2001] C.L.J. 581 at 596-7.

[82] Horne v. Chester and Fein Property Developments Pty Ltd [1987] VicRp 75; [1987] V.R. 913 at 919; Re Maxwell Communications Corporation Plc [1993] 1 W.L.R. 1402 at 1416; United States Trust Co of New York v. ANZ (1995) 37 N.S.W.L.R. 131 at 141 and 143; In the matter of SSSL Realisations (2002) Limited (in liquidation) [2004] EWHC (England & Wales High Court) 1760 (Ch), Lloyd, J. at [22] and [41].

At a glance

Court

Decision date

Before

Source

Judgment (135 paragraphs)

Parties