Civil Aviation Authority v Jet Services Ltd

The expression “make available flight accommodation” in regulation 3 of the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 means putting flight accommodation at another person’s disposal. It ordinarily requires the ability to provide the accommodation or the right to dispose of it. The licensing scheme regulates those who make accommodation available, rather than everyone who handles money connected with its purchase. A buyer’s agent who negotiates the purchase of flight accommodation and passes the buyer’s money to the seller, without acquiring any right to provide or dispose of the accommodation, is not within regulation 3(1).

Jet Services Ltd acted for travel organisers purchasing charter-flight accommodation from airlines or other ATOL holders. It negotiated terms, received the purchase price and transmitted it to the seller, but had no authority to conclude the contract and acquired no right to provide or dispose of the accommodation.

The Civil Aviation Authority decided that Jet was a payment-collecting broker which made flight accommodation available and therefore required an ATOL under regulation 3 of the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995. Longmore J granted judicial review, quashed the decision and declared that Jet did not require an ATOL. The CAA appealed.

1. Appeal dismissed. The court upheld the order of Longmore J quashing the CAA’s decision and granting the declaration.
2. The words “make available flight accommodation” were to be given their natural and ordinary meaning in context, having regard to the protective purpose of the statutory scheme. That purpose did not permit the court to replace the statutory criterion with a test based on handling money.
3. The scheme under section 71 of the Civil Aviation Act 1982 and regulation 3 regulated those who made flight accommodation available. A person who handled money connected with the purchase required a licence only if that person also made the accommodation available. Regulations 6 and 7 enabled the CAA to consider financial resources and arrangements when licensing, but did not enlarge regulation 3.
4. Making accommodation available meant putting it at the disposal of the person to whom it was made available. The activity ordinarily required an ability to provide the accommodation or a right to dispose of it. The references to provision of accommodation in section 3(b) and section 71 of the Civil Aviation Act 1982, and in regulations 3 and 4, supported that construction.
5. Jet merely found accommodation, negotiated terms for its disclosed principal and transmitted the principal’s payment to the seller. It neither contracted with the seller nor acquired any ability to provide or dispose of the accommodation. Its activities were facilitative and ministerial, not the making available of flight accommodation.
6. The financial-risk arguments did not alter that conclusion. Money paid for a specific purpose and segregated in a special account might be held on a Quistclose trust, as illustrated by Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567 and Carreras Ltd v Freeman Matthews Ltd [1985] Ch 207. In any event, passengers purchasing through the ATOL-holder principal retained the protection of that principal’s ATOL and bond.
7. The decision in Jet Travel Ltd v Slade Travel Agency Ltd [1983] Comm LR 244 did not assist the CAA. Its reasoning concerning the natural meaning of the words was consistent with excluding facilitative services such as those provided by Jet. Any doubt arising from penal provisions would also be resolved in Jet’s favour, although the court considered the language plain.

• Court of Appeal (Civil Division): Appeal from the Administrative Court dismissed; Longmore J’s decision was upheld.
• Administrative Court: On 6 December 2000, Longmore J quashed the CAA’s decision and declared that Jet did not require an ATOL for the specified activities.