NICHOLLS V AIRWAYS CORPORATION OF NEW ZEALAND HC TAU CIV-2010-470-586

NICHOLLS V AIRWAYS CORPORATION OF NEW ZEALAND HC TAU CIV-2010-470-586 15 August 2011IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYCIV-2010-470-586BETWEEN GRANT STANLEY NICHOLLSPlaintiffAND AIRWAYS CORPORATION OF NEWZEALANDDefendantHearing: 18 March 2011(Heard at Rotorua)Appearances: Plaintiff in personK Murray for the DefendantJudgment: 15 August 2011 at 4:00 PMJUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 15 August 2011 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarCounsel / Solicitors / Parties: Mr G S Nicholls, Tauranga Mr K Murray, Barrister, Wellington Ms H Cruse, Manager Legal Services and Company Secretary, Airways Corporation of NZ, Wellington (instructing solicitor)Introduction[1] Mr Nicholls is an aircraft pilot who operates his own aircraft. He lives in Tauranga and flies out of Tauranga aerodrome.[2] Airways Corporation of New Zealand (Airways) is a state-owned enterprise. It provides aerodrome control services for aircraft movements at 17 aerodromes in New Zealand, including Tauranga aerodrome. Under the State-Owned Enterprises Act 1986 Airways is required to operate on a commercial basis. It charges for the services it provides in accordance with a published schedule of fees.[3] Mr Nicholls contends that Airways is not entitled to recover any sum from him for aerodrome control services. He maintains that Airways is nevertheless bound to provide him, or another pilot of his aircraft, with aerodrome control services.1[4] Airways accepts that, because Mr Nicholls has communicated an objection to its published charges, Airways cannot, from the date it received the objection, recover charges on a contractual basis for aerodrome control services provided to Mr Nicholls. This is on the authority of Airways Corporation of New Zealand v Geyserland Airways Ltd.2 Airways says that it could sue Mr Nicholls on a quantum meruit. It contends, alternatively, that it is entitled to withhold its services unless and until Mr Nicholls agrees to pay the standard charges. Whether it can is a central issue in this case.[5] Airways did withhold its services on two occasions in January 2010. This prompted Mr Nicholls to issue this proceeding. He has acted on his own behalf. He seeks a considerable number of declarations pursuant to five causes of action. Theessence of Mr Nicholls' primary contentions may be summarised as follows:1 Mr Nicholls objects to the use of the word ―services when referring to aerodrome control activitiesfor his aircraft. I will deal with the point of Mr Nicholls' submission in due course, but it isconvenient to continue to use the word ―services because it is part of the statutory definition, alsonoted below.2 Airways Corporation of New Zealand v Geyserland Airways Ltd [1996] 1 NZLR 116 (HC).(a) In the absence of express acceptance of Airways standard charges, Airways cannot recover any sum for aerodrome control services provided to an aircraft operating by visual flight rules (VFR). Mr Nicholls operates his aircraft by VFR. The other type of flight rules relevant to this case are instrument flight rules (IFR).(b) All past invoices from Airways to Mr Nicholls were improperly issued. Issuing the invoices amounted to false representations thatthere was ―a commercial relationship between the parties and thatmoney was owed by Mr Nicholls to Airways. Issuing the invoices constituted breach of the Fair Trading Act 1986 and the Unsolicited Goods and Services Act 1975. There is a claim to recover payments made.(c) Airways is not lawfully entitled to withhold aerodrome control services for an aircraft operating by VFR. In consequence, thewithholding or withdrawal of services for Mr Nicholls' aircraft on 26and 29 January 2010 was unlawful.[6] This summary does not set out the full extent of Mr Nicholls' contentions orthe full extent of the relief he seeks. Nevertheless it does, with some reformulation, cover the main aspects of the contentions which require consideration. Mr Nicholls helpfully provided a concise statement of the essence of what he is seeking at the outset of his written submissions, as follows:1) This case is to clarify how [Airways] can charge the plaintiff for‗aerodrome control' and issue invoices when it is alleged and admitted in part by [Airways] that no contract exists between the parties.2) Further, the plaintiff requires a declaratory judgment on how [Airways] is lawfully able to deny Civil Aviation Authority (CAA) clearances to the plaintiff on commercial grounds when it has been agreed that none exist.Legislative framework and background facts[7] The purposes of the Civil Aviation Act 1990 (the Act) include the following, as set out in the long title:(a) To establish rules of operation and divisions of responsibility within the New Zealand civil aviation system in order to promote aviation safety; and(b) To ensure that New Zealand's obligations under international aviation agreements are implemented; and[8] Civil Aviation Rules (the Rules) are made under the Act. Under the Rules theDirector of Civil Aviation (the Director) may designate airspace as either controlled airspace or special use airspace. Controlled airspace is the relevant category in this case. Controlled airspace is designated where there is need for an air traffic control service for the safety and efficiency of aircraft operations. Relevant definitions in s 2 of the Act are the following:Air traffic control service means a service provided for the purposes of—(a) Preventing collisions—(i) Between aircraft; and(ii) Between aircraft and obstructions on any manoeuvring area; and(b) Expediting and maintaining a safe and efficient flow of air traffic:Aerodrome control service means an air traffic control service provided for the control of aerodrome traffic:Air traffic means all aircraft in flight or operating on any manoeuvring area of an aerodrome:[9] Controlled airspace is required to be designated by the Director as a ―control area or a ―control zone. There is a control zone at Tauranga aerodrome. Rule 71.55 makes provision for control zones. The most relevant parts of this rule are as follows:71.55 Control zones(a) The Director may designate as a control zone that portion of airspace around an aerodrome if—(1) the Director determines that an aerodrome control service or an aerodrome and approach control service is required; and(2) the traffic density and pattern requires controlled airspace.(b) A control zone must be as small as practical consistent with the need to protect the flight paths of IFR flights arriving at and departing from the aerodrome.(c) [10] Rule 71.55(a)(1) refers to aerodrome control services and aerodrome and approach control services. There was a determination in the 1960s, under earlier legislation, that an aerodrome control service was required at Tauranga aerodrome. The current criteria applied by the Director include a requirement for an aerodrome control service if there are 60,000 or more aircraft movements per annum for three consecutive years, of which 9,000 or more are IFR movements. Tauranga aerodrome has met these criteria for an aerodrome control service for some years. For example, during 2010 there were 75,615 VFR aircraft movements at Tauranga aerodrome and 11,320 IFR aircraft movements.[11] A range of aircraft operate by VFR including gliders, parachute operators, microlights and smaller fixed wing aircraft and helicopters. Turbo-prop aircraft operated by Air New Zealand subsidiaries use Tauranga aerodrome. These aircraft invariably operate by IFR. The IFR aircraft are under radar control from the area and approach controllers based at Airways' Christchurch control centre until theaircraft is ―handed over to the Tauranga tower controller once it is established onthe applicable instrument approach to Tauranga aerodrome. For departing IFR traffic the tower controller also obtains instrument departure clearances from the Christchurch control centre and provides an aerodrome control service for the departing aircraft.[12] Controlled airspace is required to be classified as one of five classes labelled A through E. The distinction between flights operating by IFR and flights operating by VFR is important in this classification. For example, controlled airspaceclassified as class A is airspace in which: ―(1) separation is required between all flights; and (2) VFR flights are not permitted: rule 71.101. In broad terms, the restrictions diminish from class A through to class E.[13] There is a control zone around Tauranga aerodrome with a class D classification. Under rule 71.107 the class D classification is controlled airspace in respect of which the Director considers in the interests of aviation safety that:(1) separation is required between—(i) IFR flights; and(ii) IFR and special VFR flights; and(iii) special VFR flights when the flight visibility is reported to be less than 5 kms; and(2) traffic information must be provided to—(i) IFR flights about VFR flights; and(ii) VFR flights about IFR flights; and(iii) VFR flights about other VFR flights; and(3) traffic avoidance advice must be provided to IFR and VRF flights on request.[14] There are two classes of ―uncontrolled airspace, class F and class G. Class F requires no comment. The rule for class G is as follows:71.113 Class G airspaceClass G airspace is any uncontrolled airspace that is not Class F airspace and—(1) IFR flights are entitled to receive a flight information service; and(2) VFR flights are entitled to receive a flight information service on request.[15] The pilot of an aircraft operating in a control area or a control zone must (subject to specific exceptions) comply with any air traffic control clearance or instruction and notify air traffic control of certain matters: rule 91.241. A pilot of an aircraft must not enter a control area or a control zone without air traffic controlclearance (subject to specific exceptions): rule 91.245(a). The pilot of an aircraft operating in certain classes of airspace, including class D (as at Tauranga), must maintain two-way radio communications with the air traffic control unit responsible for the airspace: rule 91.245 (c).[16] Rule 91.245(f) provides:Airspace within a control area and a control zone becomes uncontrolled class G airspace during those times when an air traffic control service is not being provided within that control area or control zone.The point of particular relevance for Mr Nicholls is that, when airspace is uncontrolled under class G, a pilot operating on VFR is not required to get any aerodrome control service clearance and is able to operate without any form of assistance.[17] Tauranga Airport Authority holds an aerodrome operating certificate for Tauranga aerodrome. In 1995 the Director gave notice to Tauranga Airport Authority requiring it to maintain an aerodrome control service at Tauranga aerodrome between designated hours each day of the week. The designated hours in the 1995 notice were: Monday to Friday 0630 to 2045; Saturday 0715 to 1845; Sunday 0830 to 1945.[18] An aerodrome control service must be provided under the authority of an airways service certificate issued under appropriate Rules. Airways is certified to provide aerodrome control services. It is the only organisation in New Zealand with such a certificate.[19] Airways is a state-owned enterprise, subject to the State-Owned Enterprises Act 1986. Section 4(1)(a) of the State-Owned Enterprises Act provides:4 Principal objective to be successful business(1) The principal objective of every State enterprise shall be to operate as a successful business and, to this end, to be—(a) As profitable and efficient as comparable businesses that are not owned by the Crown;There are other objectives which I have not overlooked in relation to Mr Nicholls'claims, but this one is the one of relevance. This provision is, in as many words, express statutory authority for Airways to charge for services it provides.3 Section 4(1)(a) places a positive obligation on Airways to charge for services it provides. This includes the provision of aerodrome control services at Tauranga aerodrome. This power and general obligation to charge for services will be subject to any statutory provision to the contrary. There is no statutory provision which provides that Airways may not charge for particular services, or in particular circumstances, or which otherwise qualifies the power and general obligation, in any way relevant to this case. This is a central conclusion against Mr Nicholls. It is discussed further below.[20] Airways does not enter into individual written contracts with aircraft operators. Rather, it publishes on a website its standard terms and conditions, with a schedule of charges, and issues invoices to aircraft operators who use the services. The standard terms and conditions applying at times most relevant to this proceeding include the following:1.1 ‗aerodrome service charge' means a charge covering the provisionof aerodrome control services and aerodrome flight information services‗aerodrome traffic' means all aircraft traffic on the manoeuvring area of an aerodrome and all aircraft flying in the vicinity of an aerodrome‗Airways [Corporation of New Zealand Ltd] services' means thefollowing services:air traffic control service for aerodrome traffic (‗aerodromecontrol services')air traffic control service for controlled flights in controlledair space (‗area controlled service')air traffic control service for arriving or departing controlledflights (‗approach control service')3 Airways Corporation of New Zealand v Geyserland Airways Ltd [1996] 1 NZLR 116 (HC) at 121,discussing and following Federated Farmers of New Zealand (Inc) v New Zealand Post Ltd [1990-92]3 NZBORR 339.services provided to IFR aircraft in uncontrolled airspace(‗IFR services in uncontrolled airspace')‗controlled airspace' means an airspace of defined dimensions for which an air traffic control service is provided in respect of controlled flights‗IFR' means instrument flight rules‗operator', in relation to an aircraft, includes the person flying orusing the aircraft, or causing or permitting the aircraft to fly, be used or be in any place, whether or not the person is present with the aircraft or the owner or the hirer‗VFR' means visual flight rules2 Provision of Airways Services2.1 Airways will provide services only in accordance with these standard terms.2.2 Airways services shall be provided in accordance with the applicable requirements contained in the Civil Aviation rules and any other applicable registrations.2.3 Airways may, in addition to any other right available to it under the standard terms or at common law, refuse to provide Airways services to any operator who refuses to abide by these standard terms or, upon reasonable notice pursuant to clause 12, to any operator who is in breach of these standard terms.5 Charges for Airways Services5.1 Every operator who receives, or owner whose aircraft receives, any Airways service under these standard terms, shall make payment to Airways for such service in accordance with the charges for the time being specified in the pricing schedule, including any amendments notified pursuant to these standard terms.[21] The standard charges set out in the schedule are calculated by reference to a range of variable factors which include the following: VFR operations; IFR operations; the type of aircraft; the weight of the aircraft; and the aerodrome. From 1October 2009, the standard charge at Tauranga Aerodrome for Mr Nicholls' aircraftwas $3.40 for each landing. Before that, the standard charge for Mr Nicholls'aircraft was $3.25 for each landing.[22] According to Airways' records Mr Nicholls has been an Airways customersince February 2002. Invoices were issued to him by Airways on a monthly basis, recording charges for aerodrome control services provided to him over the preceding month. Over a period in excess of seven years, from February 2002 to May 2009, the total charged to Mr Nicholls was $399.29. This has been paid by Mr Nicholls. There are invoices for the period August to October 2009 totalling $78.46 which have not been paid, for reasons I now come to.[23] It appears that on a date prior to 22 May 2009 Airways gave public notice of proposals to increase its prices from 1 October 2009.4 On 22 May 2009 Mr Nicholls wrote to Airways. He said he was writing in his capacity as chairman of theTauranga Airport Users Group in response to Airways' notification of the proposedchanges. The letter continued:The writer and the undersigned members wish to record that they have never agreed to any terms and conditions, or signed or accepted any agreement from or with Airways New Zealand.As a consequence the group do not accept that they are bound by any terms and conditions or are required to pay fees levied by Airways New Zealand.Further, we wish to record that all previous and future payments to Airways New Zealand were and are being made under duress by the group.Furthermore, we do not believe Airways New Zealand have any other form of legal authority to impose their terms and conditions or invoice members of the group and accordingly we request Airways New Zealand to:(a) Refund all moneys levied on group members in the past; and(b) Cease issuing future invoices to members of the group.The letter was signed by Mr Nicholls and 31 other people as members of the Tauranga Airport Users Group.[24] There was correspondence between Mr Nicholls and Airways from June to November 2009 in which a number of the issues now to be determined were debated. Airways suggested to Mr Nicholls that his letter of 22 May 2009 indicated that he misunderstood the legal basis on which Airways charged for its services. Airways4 The evidence for Airways refers to advertisements in newspapers on 6 June 2009. There may have been earlier advice because, as noted in the next sentence, there was a letter of protest from Mr Nicholls dated 22 May 2009. Nothing turns on the precise date.further advised that the issues raised by Mr Nicholls had been ―tested in the Courts.In a later letter, following a request from Mr Nicholls, Airways referred Mr Nicholls to four court decisions. It is appropriate to make a note on three of these decisions at this point.[25] The decision of most relevance is Airways Corporation of New Zealand Ltd v Geyserland Airways Ltd5 (Geyserland). In Geyserland, two aircraft operators gavenotice to Airways that they objected to Airways' standard charges. Airwayscontinued to provide services to the operators, the charges were not paid, and Airways sued to recover the charges. Thorp J on appeal affirmed the District Court decision that Airways was not entitled to recover on the basis that a contract hadbeen formed. He held that Airways could not regard the operators' conduct inrequesting services as acceptance of the standard charges when Airways knew, in advance, that the operators did not accept the standard charges. This conclusion was reached following a survey of the leading authorities on offer and acceptance, including the ticket cases.6 As the Judge said:7Quite plainly the inference to be drawn from the acceptance of supply with no objection to proposed terms of supply is entirely different from that which can be made when there has been repeated objection to those terms.Airways, a party in the Geyserland case, did not argue before me that I should not follow the Geyserland decision on this point. Airways submitted that there are, however, other conclusions and observations in Geyserland which support its case inresponse to Mr Nicholls' claims. Mr Nicholls in turn seeks to draw support fromGeyserland. These points are discussed below.[26] Two of the three other cases referred to by Airways in its letter to Mr Nicholls may be briefly noted:5 Airways Corporation of New Zealand Ltd v Geyserland Airways Ltd [1996] 1 NZLR 116 (HC).6 The Judge referred to and discussed: Smith v Hughes (1871) LR 6 QB 597; Allied Marine TransportLtd v Vale do Rio Doce Navegacao SA [1985] 1 WLR 925, [1985] 2 All ER 796 (CA); Carlill vCarbolic Smoke Ball Co [1893] 1 QB 256 (CA); Rose and Frank Co v J R Crompton and BrothersLtd [1925] AC 445; Wairoa Electric-Power Board v Wairoa Borough [1937] NZLR 211 (SC);Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 537 (CA); FederatedFarmers of New Zealand (Inc) v New Zealand Post Ltd [1990-92] 3 NZBORR 339; Auckland ElectricPower Board v Electricity Corporation of New Zealand Ltd [1994] 1 NZLR 551 (CA); and GeneralNewspapers Pty Ltd v Telstra Corporation (1993) 117 ALR 629; 45 FCR 164.7 At 126, line 25.(a) Sutherland v Civil Aviation Authority8. This was a sequel toGeyserland. Following delivery of the Geyserland judgment, Airways refused to provide air traffic control clearances to the operators. A principal of one of the operators took off from Rotorua aerodrome without obtaining clearance. He was prosecuted and convicted in the District Court. On appeal this conviction was upheld by Fisher J.(b) Airways Corporation of New Zealand Ltd v Tandem Skydiving (2002) Ltd9 is a judgment on a successful quantum meruit claim by Airways for the provision of air traffic control services.[27] Mr Nicholls, and the Tauranga Airport Users Group, were unmoved by the correspondence from Airways. Mr Nicholls said that legal advice had been takenand that the Group found Airways' position untenable in the light of the decision inGeyserland and other cases.[28] On 4 November 2009 Airways advised Mr Nicholls by letter that, in effect, unless he withdrew the objection to the standard terms and charges and paid all outstanding charges, no further Airways services would be provided to Mr Nicholls after 30 November 2009. On 30 November 2009 Airways gave instructions to Airways staff at Tauranga aerodrome to withhold aerodrome control services for MrNicholls' aircraft from 1 December 2009. Nothing occurred in that regard until 26January 2010.[29] On 26 January 2010 Mr Nicholls sought clearance to taxi onto the runway at Tauranga aerodrome in order to take off. Mr Nicholls was advised that clearance was not available ―for commercial reasons. Mr Nicholls protested on the basis that refusal of clearance was not ―an authorised Civil Aviation instruction. Henevertheless complied by not seeking to taxi out and take off.8 Sutherland v Civil Aviation Authority HC Rotorua, AP15/97, 4 June 1997, Fisher J.9 Airways Corporation of New Zealand Ltd v Tandem Skydiving (2002) Ltd DC Wellington, CIV- 2006-069-319, 31 August 2007, Judge S M Harrop.[30] It appears that on 29 January 2010 Mr Nicholls was able to take off at Tauranga aerodrome without need for clearance. No issue arises in that regard. Toan extent it illustrates a point from Mr Nicholls' perspective. No issue arises becausethe aircraft became airborne in uncontrolled airspace; before the aerodrome control service became operative for the day. Sometime after the service became operative, the air traffic controller directed Mr Nicholls to land. Mr Nicholls asked for anexplanation. He was told that ―clearance is not available due to commercial reasons. Clearance to land was nevertheless given and Mr Nicholls landed the aircraft as directed.[31] There was some further correspondence and Mr Nicholls then issued this proceeding.Can Airways charge for air traffic control services to VFR aircraft?[32] The essence of Mr Nicholls' contentions under this heading are set out above at [5](a) and (b) and [6]. Mr Nicholls contends that Airways cannot recover any payment for aerodrome control services provided to an aircraft operating by VFR unless the operator has expressly agreed with Airways that it will pay for the services. He also contends that he should never have been charged in the past.[33] The starting point in respect of these contentions is the discussion above at[19]: Airways has a general statutory power to charge under the State-Owned Enterprises Act. I also recorded there that there is no statutory provision to the contrary. Mr Nicholls submitted that the Rules do, in effect, provide that Airways cannot charge for aerodrome control services provided to aircraft operating on VFR.[34] Mr Nicholls constructed a detailed argument in support of the main contentions. I have, of course, considered Mr Nicholls' submissions. It is notnecessary to refer to all of them. I will consider some of the main points advanced by Mr Nicholls.[35] At the outset of his submissions Mr Nicholls encapsulated a substantial part of his argument in the following paragraph:4) The plaintiff contends that flight in New Zealand is governed by two basic and distinct types of rules. One being VFR the other being IFR flight. VFR flight provides for flight without assistance, IFR flight requiring an ATS [Air Traffic Service] provider. Thedefendant's incorporation under the Companies Act provides forcharging on a contract or no contract basis which fits with VFR (no contract required) and IFR (contract required).[36] The preliminary proposition – that flight in New Zealand is governed by two basic and distinct types of rules, VFR and IFR – identifies a prominent feature ofmany of the Rules, although Mr Nicholls' statement is an over-generalisation.10 Butthe further propositions do not follow from the preliminary and rather generalproposition, and the further propositions are not accurate. It is correct that aircraftoperating on VFR can operate without ―assistance but again only as a generalisedproposition. ―Without assistance, when read in relation to the Rules, can only betaken to mean ―without practical need for outside assistance. But the fact that anaircraft on VFR can at all times be operated without practical need for outsideassistance takes the argument nowhere. Under the Rules, if a control zone is inforce, or, more generally, there is controlled airspace, clearance is required. Thereason the designation was imposed by the Director is noted above at [10]. The number of IFR flights, compared with VFR flights, was a central aspect to this. But the reason for the designation is not the relevant question. The distinction between VFR and IFR is irrelevant in terms of the obligation in law to get clearance. And this is an obligation arising from the Director's designation. The obligation is not something imposed by Airways (or Tauranga Airport Authority).[37] The final sentence of paragraph 4) of Mr Nicholls' submission appears to be intended to encapsulate a proposition, developed in the detailed submissions, that when a clearance is given by Airways to an aircraft operating on VFR, there is no consideration provided by Airways to the pilot. This conclusion is in part based on the false premise already discussed relating to the distinction between VFR and IFR. It is also based on a misunderstanding of what constitutes adequate consideration in the law of contract. Mr Nicholls submitted that, because aircraft on VFR can in apractical sense operate ―without assistance, when they are required by law to get a clearance during the control zone periods, there is no consideration provided by10 It is an over-generalisation if the word ―flight is intended to refer to aviation generally, as opposedto the operation of an aircraft.Airways. This is incorrect as a matter of law. It is also a non sequitur. Clearance given to a VFR operated aircraft provided by Airways constitutes consideration irrespective of the fact that there is an obligation imposed by law to get the clearance. There are many legal obligations imposed by statute which require people to obtain services, or goods, in order to comply with the obligation. The supplier of the services or goods is entitled to charge for them, unless there is a statutory provision prohibiting the supplier from charging. These are elementary propositions. And there is consideration in the circumstances just described, irrespective of the fact that at other times, when there is uncontrolled airspace, the pilot on VFR can, in both a legal and a practical sense, fly without clearances.[38] The overall position taken by Mr Nicholls appears to have arisen, at least in part, from a misunderstanding of Geyserland. Geyserland is not authority for a proposition that, and it does not indirectly support a proposition that, Airways is bound to provide aerodrome control services to Mr Nicholls notwithstanding his objection to the standard terms and charges. And it does not support Mr Nicholls'argument that, if aerodrome control services are provided to an aircraft operating on VFR, no consideration is provided. Thorp J expressly held in Geyserland that there was consideration for the air traffic control services provided in that case. The Judge in fact discussed the issue under a heading ―Failure of Consideration.11 He said:In my view, the giving of a clearance to an aerodrome which is carrying a volume of traffic indicated in this case [at Rotorua], involving as it does the co-ordination of movements in and out of the aerodrome, must constitute a material benefit if the service is properly provided.[39] The Judge then proceeded to deal with a further argument relating to consideration advanced by the aircraft operators. This was that there was no consideration because Airways was under a duty to give a clearance. A similar argument was advanced by Mr Nicholls. Thorp J said:12The extent of the duty which was cast upon the corporation was, in my view, of a much more qualified nature than that for which the respondents [the aircraft operators] contended. I do not believe that, had I found the existence of relevant contracts, this argument would have been upheld, having regard11 At 127.12 At 127, line 44 ff.to such decisions as Ward v Byham [1956] 1 WLR 496 and Williams v Williams [1957] 1 WLR 148.I also accept the proposition put by Mr White [counsel for Airways] that although the corporation has a general duty to provide airways services, the fact that these are plainly intended to be provided on a contractual basis, or to be able to be effected on a contractual basis, points strongly against the pre-existing duty rule being applicable.I agree with these observations.[40] It is also to be noted, in respect of other submissions of Mr Nicholls, that the question whether consideration is provided is separate from the question whether a contract has been formed by one party accepting an offer from another; the offer inthis case being Airways' offer to provide the service at the standard charge.[41] Mr Nicholls claims that Airways has never been entitled to recover charges from him. The essence of the contention is set out above at [5](b), including claims under the Fair Trading Act 1986 and the Unsolicited Goods and Services Act 1975,with a claim to recover payments made. Prior to Mr Nicholls' advice to Airways that he objected to Airways' standard charges, Airways was entitled to recover the charges it did recover on a contractual basis. The contract was formed when Mr Nicholls, or whoever was flying his aircraft, requested clearance. The creation of a contract by publication of standard terms and charges for the supply of a service (the offer), and a person with notice (or deemed notice) of those standard terms and charges making use of the service (acceptance by conduct), is explained in the casesdiscussed in Geyserland. Mr Nicholls has not advanced any arguments to displacethe general rule in his case.[42] Mr Nicholls made a submission to the broad effect that, because aerodrome control services are required to be provided under regulations, Airways is not entitled to charge. The submission was put at one point as follows:6) The CAA is charged with the responsibility for the safety and efficiency of flights. The CAA designates aerodrome control zones. When it does this it specifies the dimensions of that zone and specifies the rules applicable when operating in that zone. The activation of an aerodrome control zone by the defendant [Airways] changes the rules in respect of that aerodrome from unattendedprocedures to controlled procedures; however this does not convey an authority to charge.This illustrates some fundamental misunderstandings. The regulatory powers and duties of the Civil Aviation Authority (or the Director) are unrelated to theentitlement of Airways to charge for services it provides. An ―authority to chargedoes not have to be found in the Rules which lead to designation of controlled airspace. Airways is a corporation separate from the Civil Aviation Authority. The power to charge – the power and the duty to operate on a commercial basis – is found in s 4 of the State-Owned Enterprises Act.[43] In Geyserland the Court also dealt with the question whether Airways wasentitled to charge in respect of its ―regulatory functions. There was a submissionfor the operators in Geyserland that Airways was ―obliged to discriminate between those who need the service, and those who are obliged to use it. Submissions alongthese lines were also advanced by Mr Nicholls and have already been touched on to an extent. This argument was addressed at some length by Thorp J in Geyserlandand was firmly rejected. He said:13It follows that I do not accept the arguments that a distinction between regulatory and commercial functions, or between needed and requiredassistance, somehow limited [Airways'] ability to charge for the provision ofair traffic control services.[44] I will note one further submission of Mr Nicholls on the question of Airways'entitlement to charge. This is that s 7 of the State-Owned Enterprises Act means that Airways cannot charge. Section 7 is as follows:7 Non-commercial activitiesWhere the Crown wishes a State enterprise to provide goods or services to any persons, the Crown and the State enterprise shall enter into an agreement under which the State enterprise will provide the goods or services in return for the payment by the Crown of the whole or part of the price thereof.This has no application. There has been no request from the Crown in terms of this provision. The legislation – the Act – empowers the Director to designate a control zone. Having done so, the Director required Tauranga Airport Authority to provide13 At 123, line 10.an appropriate service from a certified air traffic controller. Airways was then engaged to provide its services.[45] The separation of air traffic control ―provider functions and Civil Aviation ―regulatory functions was what might be called an underlying theme in theGeyserland case. It was a case addressing the consequences of the creation of state- owned enterprises by the State-Owned Enterprises Act 1986. I mention this because an underlying theme of Mr Nicholls's submissions would appear to be a fundamental objection of principle to paying ―user charges. This is a political issue. It is not something for a court to resolve. The same observation is conveniently made at this point in relation to some other submissions. There was, for example, an objection to the hours during which there is controlled airspace at Tauranga aerodrome. There is provision for the hours to be adjusted. But again that is not a matter for the Court. There is also an underlying proposition of entitlement: operators of small aircraftlike Mr Nicholls have a ―right to fly. Coupled with this were propositions that Airways does not and cannot ―control airspace (and notwithstanding the fact that itdoes not control airspace in the sense obviously intended here). These are notsubmissions, or underlying propositions, which can advance Mr Nicholls' case,because they are not founded on any legal entitlement or on any correct proposition of law. One observation that might be made in response is that Mr Nicholls is not obliged to fly when the control zone is in force if he objects to paying a fee.[46] For these reasons I am satisfied that, contrary to Mr Nicholls' submissions:(a) Airways is entitled to charge for aerodrome control services, or more generally air traffic control services, provided to aircraft operating by VFR.(b) If an aircraft operator has not given notice of objection to Airways' standard terms and charges, and the operator makes use of Airways'air traffic control services, Airways is entitled to recover its standard charges on a contractual basis.(c) If an operator has given notice of objection and then uses Airways'services, in circumstances as arose in Geyserland, Airways cannot recover on a contractual basis, but is entitled to recover on a quantum meruit – a reasonable sum for the service provided.(d) All invoices issued by Airways to Mr Nicholls before May 2009 were lawfully issued and Airways was entitled to receive and is entitled to retain all payments made.Is Airways entitled to withhold its services?[47] This is the third main issue advanced by Mr Nicholls, and summarised above at [5](c). There are two questions. The first is whether, as a matter of general law, Airways is entitled to withhold its services if an aircraft operator, such as Mr Nicholls, refuses to accept the standard conditions and charges. The second is whether Airways acted unlawfully on the specific occasions on 26 and 29 January 2010 when it withheld or withdrew services.[48] The first general question was considered and answered in Geyserland. Thorp J said:14The position which the appellant [Airways] took in relation to the appeal was that unless the decision of the District Court was reversed the corporation would be compelled to provide air traffic control services without reward, and that the Court should take steps to avoid such a plainly untenable situation, particularly as it related to the provision of necessary services. But as the preceding judgment indicates, I am not persuaded either that the corporation is bound to supply a service, or that if it chooses to do so it is not able to claim a reasonable recompense for the services it has provided.[49] In Transpower New Zealand Ltd v Meridian Energy Ltd15 Fisher J discussedGeyserland. He cited the passage from Geyserland set out above. He agreed with it and said:[73] It seems to me that where Parliament has chosen a regime inwhich public utilities are left to trade contractually it must have been14 At 127, lines 7-15.15 Transpower New Zealand Ltd v Meridian Energy Ltd [2001] 3 NZLR 700 (HC) at [71]-[74].intended that until a contract was entered into both sides would be treated for legal purposes as if they had been free to accept or withhold their assent, their services and their payments. Whatever may be the commercial, political and practical difficulties if Transpower withheld its services, it is to be treated here in the same way as other persons who are free to offer or withhold goods and services.[50] I agree. Airways is entitled to withhold aerodrome control services from Mr Nicholls and his aircraft if Mr Nicholls is not prepared to accept Airways' standardterms and charges.[51] Mr Nicholls submitted that rule 172.87 means that Airways cannot denyclearances. He argued from this that Airways' actions on 26 and 29 January 2010 were in breach of a rule. He submitted:Simply put the defendant cannot deny clearances when providing aerodrome control under CAR 172.87 this rule being a prohibition on the denial of clearances when providing aerodrome control.(emphasis in the submission)[52] The relevant part of rule 172.87 is as follows:172.87 ATC clearances(a) Each applicant for the grant of an air traffic service certificate in respect of an air traffic control service shall establish procedures for the provision of ATC clearances.(b) The procedures shall ensure that—(1) no person knowingly issues an ATC clearance or instruction that requires or invites a pilot to violate the provisions of any other rule; and(2) clearances and instructions contain positive and concise data and are, where practicable, phrased in a standard manner; and(3) if a pilot advises that a clearance or instruction is unsuitable, an amended clearance or instruction is, if practicable, issued; and[53] Mr Nicholls' submission is incorrect because rule 172.87 does not contain a prohibition on the denial of clearances. Mr Nicholls has read into the rule something which is not there.[54] Mr Nicholls did raise safety issues with the Civil Aviation Authority inrespect of Airways' actions on 26 and 29 January 2010. These matters wereinvestigated and resulted in a report of 28 April 2010 from the Civil AviationAuthority to Mr Nicholls' solicitors.[55] In respect of Airways' actions on 26 January 2010, the Authority concludedthat Airways had acted in compliance with rule 172.157. Rule 172.157 is as follows:172.157 Denial of ATC clearance(a) The holder of an air traffic service certificate in respect of an aerodrome control service shall not deny the pilot of an aircraft an ATC clearance on the basis of non-payment of charges owed to the certificate holder unless—(1) the aircraft is on the ground; and(2) that clearance is for entry onto the manoeuvring area.(b) The certificate holder shall continue to provide normal ATC service for any aircraft entering the manoeuvring area without an ATC clearance.[56] On 29 January 2010, as earlier recorded, Mr Nicholls was airborne when he was directed to land. The Civil Aviation Authority concluded that this direction did not constitute a breach of the prohibition in rule 172.157 on denying clearance on the basis of non-payment of charges. The essence of the Authority's opinion, recorded in the letter to Mr Nicholls' solicitors, was as follows:The CAA's view is that the prohibition in rule 172.157, on denying an ATCclearance for non-payment of charges, does not derogate from the power of an ATC to issue instructions to a Pilot under rule 91.24116 even if the motivation for the instruction is commercial (i.e. non payment of charges) so long as there are no safety issues and the pilot is given appropriate clearances by the ATC to land the aircraft safely.The Authority obtained a copy of the communications between Tauranga tower and Mr Nicholls on 29 January 2010 and confirmed that clearance was given. At MrNicholls' request the record of the transmissions were played in Court and compared with various transcripts. There is no doubt that clearance to land was given to Mr Nicholls.16 See above at [15].[57] To the extent that the incidents on 26 and 29 January 2010 require interpretation of the Rules and their application to the facts, I am satisfied that Airways complied with its general obligations under the Rules. It may also be noted that rule 172.157 is implicit recognition of Airways' general entitlement to operatecommercially. To the extent that there was any issue of safety, this was a matter for the Director and for the Authority.17 The Authority was satisfied that there was no safety issue. Safety issues cannot be considered in this proceeding.Conclusion[58] Mr Nicholls' application for directions and his claims are dismissed.[59] Airways was entitled and, subject to compliance with the Rules, remains entitled to withhold aerodrome control services from Mr Nicholls and any aircraftowned or operated by him unless he agrees to pay Airways' standard terms andconditions and its standard charges.[60] Airways is entitled to costs. If Airways wishes to pursue an application for costs, and agreement cannot be reached with Mr Nicholls as to the quantum, a memorandum should be filed within four weeks of the date of this judgment. A memorandum in response from Mr Nicholls should be filed within three weeks after that._______________________________ Peter Woodhouse J17 See Director of Civil Aviation v Air National Corporate Ltd [2011] NZCA 3.