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MacRobertson Miller Airline Services v Commissioner of State Taxation (WA)

(1975) 133 CLR 125


The appellant (airline operator) issued tickets to passengers. It argued the tickets were not an agreement or 'memorandum of agreement' (which would make them subject to stamp duty) on the basis that there was no concluded agreement until a passenger proferred their ticket (constituting an offer) which the ariline accepted. The Commissioner of taxation argued there was an agreement which was dutiable.

Supreme Court (Jones J) found that the airline ticket issued in this case was subject to stamp duty as 'a memorandum of a completed agreement'.

In three separate judgments the High Court unanimously agreed that the appeal should be allowed, finding there was no relevant agreement/contract at the time the ticket was issued.

Note: compare Commissioner of Taxation v Qantas Airways Limited [2012] HCA 41




The Stamp Act (WA) imposed stamp duty on certain instruments, including agreements or memorandum of agreements 'the duty being payable' by the parties.

The issue for consideration was whether there was such an agreement in this case.

Conditions of carriage contained on the ticket stated [emphasis added]:

1. The Companies reserve the right to substitute any other aircraft for that originally scheduled, to despatch the aircraft before or after date or hours advertised or announced for its departure, to deviate from any advertised route for any purpose or to transfer the passengers or their baggage to any other aircraft at any airport including intermediate places and all the conditions of this ticket shall apply to carriage by such substituted aircraft or other means of transport.

2. The Companies reserve the right at any time to abandon any flight or, whether the scheduled flight on which the passenger or goods were booked takes place or not to cancel any ticket or booking of any passenger or goods or to carry the passenger for portion only of any booked flight. In the event of a flight being abandoned or altered by the Companies wholly or in part or a ticket or booking being cancelled by the Companies wholly or in part, the passenger shall be entitled only to a refund of so much of the passage money as shall be proportionate to the part of his flight so cancelled or abandoned and the Companies shall not under any circumstances be under any further or other liability to the passenger for failure to carry him at the booked or scheduled time or at all.

3. Times of arrival and departure are not guaranteed. The passenger must be ready at the aerodrome or other place of departure fifteen minutes before the stated or advertised time of departure, otherwise no claim for refund will be considered.


5. The Companies are not common carriers, and reserve the right to refuse to carry any passenger, baggage or goods without assigning any reason therefor.



Judgment (Barwick CJ)

Held that the airline operator did not, by the terms of the ticket 'assume or offer to assume any obligation to carry the intending passenger', pointing in particular to clauses 2 and 5.

[para 8, page 133] 'It is, in my opinion, clear that the issuing airline operator does not by the terms of the ticket assume or offer to assume any obligation to carry the intending passenger. ... The exemption of the ticket in this case fully occupies the whole area of possible obligation, leaving no room for the existence of a contract of carriage'.

His Honour described the legal analysis as follows [para 9, page 133; emphasis added]:

In my opinion, the proper legal analysis of the situation which arises on the making of a reservation for a seat upon a flight, the payment of the fare appropriate to that flight and the issue of a ticket as in this case, is that if, without any antecedent promise to do so, the airline operator in fact conveys the passenger in accordance with the reservation or any variant of it permissible under the terms of carriage indorsed on the ticket, the airline operator will have earned the fare which has been prepaid and be entitled to retain it: otherwise the amount which has been prepaid against the possibility of such carriage will be refunded. But if, in any case, the described carriage eventuates it shall be upon the indorsed terms of carriage. To this statement there is a possible qualification, namely, if the airline operator has been able, ready and willing to carry the passenger in accordance with the particulars on the ticket and the intending passenger has not presented himself in due time at the airline traffic office at the designated airport, the airline operator may claim to have earned the fare. In general, therefore, the entitlement of the airline company to retain the prepaid fare is dependent on the actual performance of carriage. The situation is an example of the payment of a reward for an act performed at request with no antecedent promise by the person performing the act to do so. ...

Further [para 11, page 134; emphasis added]:

... quite apart from the particular terms of the ticket in the instant case, the issue of a ticket by an airline operator neither constitutes an agreement nor a memorandum of an agreement. I apprehend that the normal procedure in making a reservation of a seat on an aeroplane flight is that inquiry is made of the airline operator or its agent, usually being a travel agent, whether, having regard to existing reservations, a seat is available on a nominated flight. If it is, the appropriate fare is paid or promised to be paid and a ticket appropriate to the reservation issued. Now, supposing the airline ticket does not contain an express promise to carry the ticket holder on the nominated flight, it could be inferred from this procedure that the airline company by the issue of the ticket had bound itself by agreement to carry the intending passenger on the specified, or for that matter on any, flight, a promise which being broken would require the payment of damages. On a proper analysis of the procedure described, the airline operator was not in contractual relations with the intending passenger until it had provided him with a seat on the aeroplane. Then, in consideration of the fare prepaid, such obligations as the conditions of the ticket impose on the airline operator attached. The issue of the ticket, in my opinion, is mainly a receipt for the payment of the fare, though it also stipulates an occasion when the fare may not be refundable though actual carriage has not ensued. The payment made on the making of the reservation ought, in my opinion, to be regarded as no more than the prepayment of the fare payable for an actual carriage performed. Having regard to the known continguencies of airline operation it would be incongruous to infer the making of a promise to carry from the mere payment of the fare and its acknowledgment by the issue of a ticket. The ticket, apart from any specific terms it might contain, would not be regarded as entitling its holder to a place on a particular flight. It should be regarded as doing no more than denominate the carriage which, if performed, will earn the prepaid fare. If, as in the present case, the ticket contains terms of carriage, these will, given the performance of the denominated carriage, regulate the relationship of the parties during and in connexion with such carriage and thus their respective rights in relation thereto.

Based on this analysis his Honour allowed the appeal


Judgment (Stephen J)

Justice Stephen agreed the appeal should be allowed.

[para 3, page 136] ... in the present appeal it will be critical to determine whether the issue by the appellant of its ticket was merely the making of an offer, to be later accepted either orally or by conduct, or whether, on the contrary, an agreement, of which it contained the terms, was concluded at or before the time of its issue, the ticket either being that agreement or being a memorandum of it.

His Honour noted circumstances in which there may be challenges in applying the traditional doctrine of 'formation of contracts by offer and acceptance' to contracts of carriage:

[para 6, page 137] ... [The] doctrine, of the formation of contracts by offer and acceptance, encounters difficulties when sought to be applied, outside the realms of commerce and conveyancing, to the everyday contractual situations which are a feature of life in modern urban communities. Contracts for the carriage of passengers, one of the most common classes of contract in a commuter society and one which ordinarily involves the attempted imposition of contractual restrictions upon the passenger's rights should he suffer loss or injury, provide an instance of these difficulties. The circumstances in which mass transportation occurs frequently permit of no time for prior negotiation, which would in any event usually be pointless with prevailing contracts of adhesion; moreover the transportation often will begin before there has been any communication at all between the passenger and the carrier's agent, the contract being "inferred from the acquiescence of the carrier in the presence of the passenger on the conveyance" ...

[para 7, page 137] The conventional analysis of the formation of contracts for the carriage of passengers in those somewhat more leisurely transactions which involve the issue of a ticket in return for payment of a fare and the subsequent performance of the contract by the act of transportation, is to regard the ticket as the offer, the contract being made upon acceptance of that offer by the passenger, usually by conduct. Lord Denning describes this analysis, referring to the authorities which establish it, in Thornton v. Shoe Lane Parking Ltd ... . He does so in the course of demonstrating its inappropriateness in situations in which there in fact exists no opportunity either of considering the terms of the proffered contract or of declining to enter into it on the terms which are offered.

His Honour did not consider that airline carriage presented an example of these circumstances"

[para 8, page 137] ... In the present case there is no such inappropriateness. It is just such a case as that for which the conventional analysis was devised. This analysis affords to the intending passenger an opportunity, no doubt but rarely availed of, of ascertaining the conditions which the carrier seeks to impose and of accepting or rejecting them. The conventional long-distance rail or passenger liner situation is therefore applicable, a ticket is purchased in advance of the carriage and that ticket constitutes an offer available for acceptance by the passenger ... Although the economics of mass transportation in fact lead to an absence of much real choice on the passenger's part whether or not to accept conditions sought to be imposed, he at least retains the ability to learn of those conditions and to refuse to travel by the intended means if he sees fit. ...

[para 9, page 138; emphasis added] 'The general run of so called "ticket cases" involving contracts of carriage has been concerned with mishaps occurring during transportation and with the effect, if any, which conditions, sought to be imposed upon the passenger by the ticket issued to him, may have upon his rights against the carrier. The precise time at which the carrier's offer is accepted has not been the central question, although it has been indirectly involved in the central question of whether or not the conditions on the ticket have been incorporated as terms of the contract. The authorities make it clear that, in the absence of particular conduct on the part of the passenger, acceptance of the offer which a carrier makes when a ticket is issued does not occur immediately upon its receipt by the passenger; the whole concept of a passenger's acceptance of ticket conditions and of the need adequately to draw those conditions to his attention ... is dependent upon this.'

[para 10, page 138; emphasis added] 'It is enough to refer to three authorities, over a span of almost a hundred years, in which, when the ticket itself contains conditions or a reference to conditions elsewhere available, the passenger's acceptance of the carrier's offer is treated as occurring some time after issue of the ticket. ...'

[para 11, page 139; emphasis added] 'The cases ... are replete with references to passengers who elect not to read ticket conditions, no doubt the common behaviour of most passengers; they, it is said, do not thereby escape being bound by those conditions. This rule of law, which is directed to identifying the agreed terms of the particular contract, does not detract from but, rather, supports the proposition that acceptance, and the resultant formation of the contract, does not occur upon tender of the ticket. It occurs after that event, either when the passenger has by actual conduct intimated his acceptance of the offer, for instance by immediately boarding the vehicle in question, or, absent any such conduct, when a reasonable time has passed during which the passenger has had an opportunity of reading the conditions appearing on the ticket and has not then rejected the offer and demanded the return of his fare. In other words, acceptance will normally be by conduct and this conduct will consist either of an overt act consistent only with acceptance or, in its absence, of the passenger's failure to reject the offer after he has had an opportunity of learning of the conditions upon which carriage is offered.'


[para 13, page 140; emphasis added] '... in the typical circumstances referred to in the stated case the completed ticket itself will not, when it comes into existence, then record any existing agreement nor itself be an agreement; it will be no more than a written offer open for acceptance. Hence it is not dutiable ...

[para 14, page 140; emphasis added] 'The conditions appearing in the appellant's ticket are not easy to interpret; they appear to relieve the appellant very substantially from performance of those obligations relating to the carriage of the passenger which are to be implied from the description, in the ticket, of the destination, the flight number and the departure time and date. However I think it unnecessary to arrive at any conclusion as to whether the presence of these conditions is such as to prevent the formation of any contract between the appellant and its passenger before transportation commences. It is enough for me to conclude that at date of issue the ticket was not an agreement or any memorandum of agreement. I would therefore allow this appeal.'

His Honour allowed the appeal


Judgment (Jacobs J)

Agreed that there was no dutiable agreement.

[para 11, page 144] '... principle and authority lead to the conclusion that the appellant, when through its servant it handed over the ticket to Mr. Knight, should be regarded as the offeror and that Mr. Knight should be regarded as the offeree.' 

His Honour continued:

[para 5, p 146] '... there can be no doubt that the passenger, even if he did not obtain the issue of the ticket and the accompanying promise of carriage, does enter into a contractual relationship with the carrier. However, his contract arises when he presents the ticket and embarks on the carriage. He will be bound by any special conditions of the carriage, not because he was a party to the executory contract when the ticket was issued but because he presents the ticket and embarks on the carriage with knowledge of the conditions upon which the carrier accepts him for that carriage. Where the agreement for carriage at or about the time of the purchase of the ticket is not made by the proposed or named passenger, and probably even where it is so made, there are really two agreements: first, the executory agreement which is made by the tender of the ticket to the purchaser and its acceptance in return for the price, and, secondly, the agreement between the actual passenger and the carrier which arises upon the passenger presenting himself with the ticket to the carrier. Thus the ticket is an offer capable of acceptance by the promisee on the executory contract of carriage and, after that acceptance, will be an offer to the proposed passenger capable of acceptance by him by presentation of that ticket. But in neither case is it the actual agreement of carriage or a memorandum of that agreement. ...

In addition, his Honour considered that clause 2 (reserving the right to abandon flight) mean that any enforceable promise to carry that might be implied between the parties from issuing the ticket was 'negatived' because it could be cancelled at will by the company.



In Commissioner of Taxation v Qantas Airways Limited [2012] HCA 41 the High Court was also called on to consider the tax consequences relating to the issue of airline tickets (in this case the GST).

The High Court concluded that the issuing of an air ticket did constitute a promise to use best endeavours to carry the passenger.

[Justices Gummow, Hayne, Kiefel and Bell JJ; para 33] 'The Qantas conditions and the Jetstar conditions did not provide an unconditional promise to carry the passenger and baggage on a particular flight. They supplied something less than that. This was at least a promise to use best endeavours to carry the passenger and baggage, having regard to the circumstances of the business operations of the airline ...'

In addition, in the course of his judgment Justice Heydon stated:

[para 42] 'The transaction between the respondent and an intending passenger was not a nullity. It was not a sham. It was not illusory. It was not analogous to a "promise" to supply peas, but if there were no peas, to supply beans, or anything else, or nothing at all. On the appellant's case, the transaction between the respondent and the intending passenger created a duty on the respondent and a correlative right in favour of the intending passenger. The duty on the respondent was to take all reasonable measures to carry the intending passenger and his or her baggage without delay. The transaction was a contract of carriage by air – a conditional contract in numerous respects, but still a contract of carriage by air. Under that contract the respondent promised to supply the service of an air journey. Because the passengers with whom this appeal is concerned did not make themselves available to enjoy that service, the respondent did not supply them with any air journeys.''

See, eg, Anthony J Cordato, 'Why airlines can refuse to fly passengers' (Balance, 2012)