Cape York Airlines Pty Ltd and Anor and Civil Aviation Safety Authority

[2004] AATA 727

DECISION AND REASONS FOR DECISION [2004] AATA 727

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  Q2004/477

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CAPE YORK AIRLINES PTY LTD; ARTHUR WILLIAMS

Applicants

And CIVIL AVIATION SAFETY AUTHORITY

Respondent

DECISION

Tribunal Senior Member McCabe

Date8 July 2004

Place Brisbane

Decision The Tribunal declines to dismiss the application for review pursuant to s 42B Administrative Appeals Tribunal Act 1975.
The Tribunal orders a stay of the decision not to renew the chief pilot approval of the second applicant pursuant to s 41(2) Administrative Appeals Tribunal Act 1975.  The stay takes effect on 7 July 2004.  It shall remain in place for a maximum of 30 days, but shall be vacated if a replacement chief pilot is approved by the respondent.

................Sgd.........................

SENIOR MEMBER  

CATCHWORDS

PRACTICE AND PROCEDURE – applicants applied for stay of decision not to renew chief pilot approval – whether application should be dismissed under s42B Administrative Appeals Tribunal Act 1975 – whether chief pilot approvals under the Civil Aviation Act 1988 are  reviewable decisions – whether Tribunal has jurisdiction to order stay of decision not to renew chief pilot approvals – whether Tribunal should order stay – stay ordered

Administrative Appeals Tribunal Act 1975

Civil Aviation Act 1988

Re Surf Air and Civil Aviation Authority (1991) 22 ALD 118

McInerney v Civil Aviation Authority (1992) 27 ALD 201

Seaview Lord Howe Pty Ltd and Civil Aviation Authority (1995) 38 ALD 422

Crossroads Aviation and Sheehan and Civil Aviation Authority [1993] AAT No. 8822

The Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73

Re Alexander and Migration Agents Registration Board (1995) 40 ALD 99

Medtest Pty Ltd and Minister for Health and Ageing [2002] AATA 317

Shi v Migration Institute of Australia Ltd [2003] FCA 1304

Re Griffiths Grif-Air Helicopters Pty Ltd and CAA (1993) 31 ALD 380

Re Ramsay and Department of Transport (1977) 2 ALD 97

McPherson v Civil Aviation Authority (1991) 22 ALD 754

REASONS FOR DECISION

8 July 2004

Senior Member McCabe

Introduction

1.      Cape York Airlines Pty Ltd (the airline) is the first applicant in these proceedings. Arthur Williams, the airline’s chief pilot, is the second applicant. The Civil Aviation Safety Authority (CASA) is the respondent. CASA cancelled Mr Williams’s approval to be chief pilot several weeks before the approval was due to expire on 30 June 2004. CASA gave Mr Williams a further approval that expires at midnight on 7 July 2004. The delegate who made the decision warned that no further extensions would be given.

2.      Mr Williams and the airline have asked the Tribunal to review CASA’s decisions in relation to the chief pilot’s approval. The applicants have also asked the Tribunal to order a stay of the respondent’s decisions under s 41(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act). (The applicants acknowledge that decisions in relation to the chief pilot’s approval are not subject to an automatic stay under s 31A of the Civil Aviation Act 1988 (the CA Act).) The airline cannot carry on business without a chief pilot, and it says it will be grounded if the decision in relation to Mr Williams is not stayed – at least until a replacement can be found.

3.      The respondent says the proceedings are pointless and should be dismissed pursuant to s 42B of the AAT Act. It also disputes the Tribunal’s jurisdiction to review the decision: it says decisions in relation to a chief pilot’s approval are not reviewable decisions within the meaning of s 31 of the CA Act. CASA says that if the Tribunal does not dismiss the application and is satisfied that it has jurisdiction, the Tribunal nonetheless does not have the power to make an order under s 41(2) in the circumstances. CASA adds that the Tribunal should not make an order in any event.

4.      I decided to make an order under s 41(2) staying the decision on 6 July 2004.  The stay takes effect as of midnight on 7 July 2004. I made the order after reading written submissions from the parties and hearing Mr Langmead, SC on behalf of the applicants and Mr Anastasi on behalf of CASA on 5 and 6 July 2004. The hearings were conducted over the telephone. The written reasons for my decision are more limited than one would prefer given the contentious nature of the application. That is inevitable given the circumstances.

the decisions under review

5.      The applicants originally applied for a review of CASA’s decision to cancel Mr Williams’s chief pilot’s approval. The notice of cancellation is dated 16 June 2004. It is 29 pages long and details a series of concerns about the conduct of the airline’s operations while Mr Williams has been chief pilot. (Mr Williams is also the chief executive officer of the airline.) The decision to cancel was made after Mr Williams had been provided with “show cause” notices dated 19 December 2003 and 26 March 2004 that invited his response to safety concerns. (The file also includes a copy of a “show cause” letter of 19 November 2002.) The cancellation was said to take effect as of midnight on 25 June 2004.

6.      The approval in question (Instrument No. TLFO 04/066) was issued on 30 April 2004 and took effect on 1 May 2004. The instrument of appointment expired at midnight on 30 June 2004 (or at the time Mr Williams ceased employment with the company, if that occurred prior to 30 June 2004).  I note CASA has issued two other short -term approvals covering the last six months:

·Instrument No. TLFO 03/164, dated 19 December 2003, with effect from 27 December 2003 to 29 February 2004;

·Instrument No. TLFO 04/037, dated 21 February 2004, with effect from 1 March 2004 to 30 April 2004.

In each case, the instrument of approval was issued following a last minute request in writing from or on behalf of Mr Williams. Copies of the correspondence between CASA and the applicants is annexed to the affidavit of Peter George Wollerman dated 6 July 2004.

7.      Although the parties did not lead any direct evidence on this point, Mr Langmead suggested the practice of giving short term approvals was unusual. He suggested the respondent adopted the practice in order to keep Mr Williams on a “short leash”. He speculated the decision to cancel the approval and decline to issue a fresh approval with a more reasonable expiry date was made because CASA had reached “the end of its tether”. Mr Anastasi did not disagree with that characterisation. It seems CASA has become frustrated with what it takes to be Mr Williams’s unsatisfactory attitude to his responsibilities as chief pilot.

8.      In any event, CASA’s delegate agreed to allow Mr Williams to remain as chief pilot during the period 30 June 2004 to 7 July 2004 while a replacement was obtained. The delegate explained in his letter of 25 June 2004 to Mr Williams that the delegate decided to “extend the time of the effective date of cancellation of your Chief Pilot Approval.” The delegate’s characterisation of his decision as an “extension” caused some confusion. Mr Anastasi explained the delegate actually issued a fresh approval – the fourth approval that year. The delegate concluded his letter:

I further advise you that CASA will not allow any further extension of time and CYA will require an approved Chief Pilot in place for operations to continue beyond midnight 7^th July 2004.

9.      The import of the final paragraph is clear enough: CASA would not entertain any further applications from Mr Williams. His days as chief pilot with the airline were over. I am satisfied CASA has constructively (if not formally) declined to issue a further approval to Mr Williams.

10.     The applicants originally sought review of the decision to cancel the approval on 25 June 2004. Mr Anastasi pointed out that the approval expired on 30 June 2004 in any event, so the Tribunal’s review would be of historical interest only. Even if the Tribunal stayed the decision to cancel the approval, the stay could only last as long as the approval remained in force – until 30 June 2004. The application for review did not extend to the decision to issue a fresh approval for a limited period. He also pointed out CASA had not formally refused an application for a further renewal after that date.

11.     Mr Langmead sought leave to amend the application so there was no doubt about what decisions were before the Tribunal. In addition to the decision to cancel the approval as of 25 June, Mr Langmead asked the Tribunal to consider the decision not to give an approval with a more appropriate expiry date (i.e. beyond 7 July 2004), and the refusal to issue a fresh approval that would enable the applicant to act as chief pilot beyond that date.

12.     I gave leave to amend the application although I accept there is some difficulty reviewing a decision not to give a more appropriate expiry date given the definition of reviewable decision in s 31 CA Act. I am satisfied however that the refusal to issue a further approval is – subject to what follows – capable of being regarded as a reviewable decision within the meaning of the legislation.

Does the tribunal have jurisdiction to review a decision in relation to approvals?

13.     CASA says the decision to cancel or refuse to issue a chief pilot’s approval is not a reviewable decision that can be brought before the Tribunal. Section 31 of the Civil Aviation Act 1988 says (relevantly):

"reviewable decision" means:

(a) a refusal to grant or issue, or a cancellation, suspension or variation of, a certificate, permission, permit or licence granted or issued under this Act or the regulations; or

(b) the imposition or variation of a condition, or the cancellation, suspension or variation of an authorisation, contained in such a certificate, permission, permit or licence;

14.     CASA argues a chief pilot’s approval is not a certificate, permission, permit or licence granted or issued under this Act or the regulations. It says the decision in relation to the approval was made under the Civil Aviation Orders (the orders), not the Act or the regulations. Mr Anastasi says the absence of any reference to the orders in the definition section was a manifestation of parliament’s intention that only decisions made under the Act or regulations were to be reviewable by the Tribunal.

15.     Mr Anastasi relied on the Tribunal’s decision in Re Surf Air and Civil Aviation Authority (1991) 22 ALD 118. In that case, O’Connor J explained (at 122):

While I am of the view that an “approval” may come within a “permit or permission”, the decision to cancel the approval in this case was not made under the Act or regulations. It was made under an order. The decision is thus not reviewable by this Tribunal as it does not come within the definition of reviewable decision in s 31(1).

16.     The applicants note there is no question over whether an approval is a permit or permission. CASA says the difficulty arises out of the fact that the approval is not given under the Act or the regulations. The applicants dispute this interpretation of the law.

17.     Mr Langmead noted in his written submissions that the views of O’Connor J in Surf Air were doubted by the Federal Court in McInerney v Civil Aviation Authority (1992) 27 ALD 201. In that case, French J (at 202):

On the other hand the argument may be available that the approval of a person to act as Chief Pilot is the grant or issue of a permission "under the Act or Regulations" in the relevant sense which would attract the jurisdiction of the Administrative Appeals Tribunal by virtue of s.31(1).  It is not necessary, however, for me to decide that jurisdictional question here.

18.     I was also referred to the Tribunal’s decision in Seaview Lord Howe Pty Ltd and Civil Aviation Authority (1995) 38 ALD 422. Matthews J said (at 425) decisions taken under the Orders should be regarded as decisions under the Act. I note Senior Member Muller (as he then was) reached the same view in Crossroads Aviation and Sheehan and Civil Aviation Authority [1993] AAT No. 8822.

19.     I think, with respect, that I should follow the reasoning in Seaview. Decisions made under the orders are made under a legislative scheme of which the orders are part. The orders are made and issued under the Act and regulations. The legislation also provides for a process of review by the Tribunal. There is no reason to suppose parliament intended to limit the review process to decisions made in relation to a matter specifically dealt with in the Act and leave out matters that are mentioned at a general level by the statute but addressed more comprehensively in the orders.

20.     Mr Langmead pointed out the approach in Seaview was consistent with the observations of Dixon J in The Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73. His Honour said (at 101-102):

The existence in Parliament of power to authorize subordinate legislation may be ascribed to a conception of that legislative power which depends less upon juristic analysis and perhaps more upon the history and usages of British legislation and the theories of English law. In English law much weight has been given to the dependence of subordinate legislation for its efficacy, not only on the enactment, but upon the continuing operation of the statute by which it is so authorized. The statute is conceived to be the source of obligation and the expression of the continuing will of the Legislature. Minor consequences of such a doctrine are found in the rule that offences against subordinate regulation are offences against the statute…

21.     Mr Anastasi said the fact that s 31(a) of the CA Act expressly referred to decisions made “under this Act or the regulations” by implication excluded decisions made under the orders. I disagree. Section 98(4A) of the Act authorises CASA to issue orders with respect to a range of matters, including those specified in s 28BA. Section 28BA says Air Operator’s Certificates (AOCs) take effect subject to any conditions specified in the regulations or the orders. It follows that orders attaching conditions to AOCs are made under the Act in the relevant sense. That was certainly the view of Matthews J in Seaview (at 425): with respect, I would adopt her Honour’s reasoning.

22.     I am satisfied a decision in relation to approvals may be reviewed by the Tribunal.

Does the tribunal have the power under s 41(2) of the AAT Act to make the orders sought by the applicants?

23.     A stay is intended to preserve the status quo pending a full hearing. The leading Tribunal authority is Re Alexander and Migration Agents Registration Board (1995) 40 ALD 99. Deputy President McMahon said (at 103):

…where the s 41(2) power has been exercised (either by the Tribunal or by a court on appeal) it has been for the purpose of reinstating the applicant to the position he or she was in prior to the making of the operative decision.  Thus, in Re Dekanic and Tax Agents Board of New South Wales 6 ALD 240 and Re Nelson and Tax Agents Board of Queensland 30 ALD 317, the operative decision was to refuse renewal of registration as a tax agent. Similarly in Yolbir v Administrative Appeals Tribunal 33 ALD 8 (a decision of a Full Court of the Federal Court) and in Re Secretary, Department of Social Security and Guner 21 ALD 399 the reviewable decision had the effect of terminating an ongoing pattern of payment of pension.

The Deputy President continued (at 103):

Sub-section 41(2) is not positive in its effects but merely negative. The content of the power is limited by its legislative intendment.  It is intended to preserve the situation obtaining prior to the reviewable decision.  It is not intended to change the situation entirely and put the applicant in a different position from what he would have been in prior to the reviewable decision. 

24.     CASA says that a stay order would have a positive effect in this case – it would confer a right on the applicant he would not otherwise enjoy, even if his licence had not been cancelled.

25.     In the course of the hearing, I considered the decision of Deputy President Handley in Medtest Pty Ltd and Minister for Health and Ageing [2002] AATA 317. In that case, the Tribunal stayed the decision-maker’s refusal to give an extension of time on an authorisation to conduct businesses from particular premises. On one view, the stay had a positive effect. That was not fatal to the application.  The Tribunal did not provide extensive reasons for its decisions: as in this case, the decision had to be made quickly. The Deputy President pointed out the stay was necessary in order to preserve the effectiveness of the hearing.

26.     I also note the comments of Tamberlin J in Shi v Migration Institute of Australia Ltd [2003] FCA 1304. His Honour said (at para. 30) the power “must be given a broad interpretation”.

27.     I am satisfied that the power can be validly exercised in this case. The applicant currently holds an approval. CASA had adopted a practice of giving him short term approvals that it renews at the last moment. I was provided with an affidavit of Mr Wollerman that annexed correspondence between the airline and CASA in this regard. I note there have been four extensions sought and granted since December (although the correspondence on the file makes it clear that CASA does not intend granting any further extensions). To use the language in Alexander, there is an ongoing pattern of approval that will be disturbed by the decision - unless it is stayed. Given the practice of short term approvals, a more restrictive view of the power could make the respondent’s decisions with respect to approvals effectively unreviewable. Most applicants in the airline’s position would not make it to a hearing if they could be grounded through the simple device of giving short term approvals that were allowed to expire if the regulator’s attitude towards them changed.

should the tribunal exercise the discretion to order a stay under s 41(2)?

28.     Having concluded the Tribunal could make an order, it is necessary to consider whether I should exercise the discretion. The principles governing the exercise of the discretion were considered in Re Griffiths Grif-Air Helicopters Pty Ltd and CAA (1993) 31 ALD 380. That case says (at 385) I should consider:

• The prospects of success of the applications for review of the decisions;
• The hardship to the applicant and other parties affected by the decision if the stay orders are not made; and
• Whether public safety is likely to be imperilled if the stay orders are made.

29.     I am not required to conduct a mini-trial of the issues in order to assess merits. I am satisfied there is a serious dispute as to questions of fact that will require careful consideration at a hearing.

30.     There was evidence given of the hardship to Mr Williams (he will not be able to continue to draw a salary as chief pilot) and to the airline (it will be forced to cease operating unless and until it employs a new chief pilot – which means staff will be stood down and contracts with third parties will be affected). There was also discussion at the hearing of the impact on remote communities and search and rescue operations if the stay were not granted.

31.     Mr Anastasi criticised the evidence in relation to the airline’s financial position. He said it was not clear whether the airline would be forced into liquidation if it were grounded. I was not provided with detailed financial information, but that is unsurprising. Mr Williams made it clear in his affidavit that the airline was in a relatively good financial position but he said it depended on revenue from its flying operations. I am satisfied the airline would quickly be in a parlous financial position if it were unable to continue its operations. There is a real prospect it will not make it to the hearing if it is grounded.

32.     There was also some dispute over precisely how many isolated communities would be cut off if the airline was grounded. I am satisfied from the evidence of Mr Williams in his affidavit that there is likely to be severe disruption. Contractors dealing with the airline are also likely to be affected.

33.     I am satisfied that – even allowing for some exaggeration from Mr Williams – grounding the airline by refusing to stay the decision in relation to the chief pilot’s approval would adversely affect Mr Williams, the airline and its employees, customers and contractors. It is necessary for me to carefully weigh these matters against the safety concerns that have been outlined by CASA in its correspondence, witness statements and submissions.

34.     I have obviously not had the opportunity to test any of the allegations of fact CASA has made about the performance of the airline and its chief pilot in relation to safety issues. Many of those concerns were set out in detail in CASA’s “show cause” letters. CASA says Mr Williams promises to address the issues and do better in the future, but falls short in his execution.

35.     I am troubled by the sheer volume of the concerns. If the allegations are correct, there are serious systemic problems that require urgent and vigorous action. The regulators concerns on safety issues clearly must be given real weight: see, for example, Re Ramsay and Department of Transport (1977) 2 ALD 97 and McPherson v Civil Aviation Authority (1991) 22 ALD 754. But I was not given to understand that continued operations posed a risk in the short term. I note CASA apparently does not regard the concerns to pose a serious and imminent risk to safety that would justify exercising its powers under Division 3A of the Act. 

36.     Mr Anastasi pointed out a number of incidents had occurred during the course of the year. He referred to a bogging incident (in which a plane became bogged and the replacement aircraft took off in questionable circumstances), a ditching incident off Green Island in which a plane ended up in the water (the applicants say the pilot was a contractor and he was not on company business at the time, and he acted appropriately in any case) and an incident in which one of the airline’s planes strayed into controlled airspace in Cairns (air traffic control or pilot error, say the applicants). 

37.     I was particularly troubled to learn immediately prior to the hearing on 6 July 2004 that the airline had been operating without a check pilot.  Airlines conducting RPT operations are required to have a check pilot.  Mr Anastasi said the airline’s RPT operations should have been grounded: s 28BA(2A).  Mr Langmead disputed whether the absence of a check pilot necessarily meant the airline’s RPT operations would be grounded. He argued the failure to have a check pilot could be interpreted as a breach of a condition imposed by the Act, not the orders. If that were so, s 28BA(1)(a) effectively permitted the airline to continue operations under the AOC until CASA gave notice: s 28BA(3).

38.     The applicants’ argument on this point sounds tenuous to me, but Mr Langmead said it made no practical difference since a new check pilot would in all likelihood be appointed within a few days, and all of the pilots were up to date with their training and certification. He added that if CASA was right and the airline should not have been conducting RPT operations, the effect would be a minor interruption in those operations that would soon be fixed while it carried on charter and other operations that do not require a check pilot – in contrast to the catastrophic effect of grounding the airline because there was no chief pilot.

39.     Mr Anastasi suggests the absence of a checking pilot was more evidence of a lax approach to the rules.

40.     I am conscious of the need to have careful regard for the regulator’s concerns about safety. Safety must take precedence. But I am also satisfied after having read the material (including the witness statements filed by the respondent) and having heard from the parties that the safety concerns are not so pressing as to displace the applicants’ claims about the impact on the airline and its customers (whose service will be interrupted), employees (who will in all likelihood be stood down) and contractors (who will need to find other service providers). I am less concerned about the impact on Mr Williams, who will presumably remain chief executive of the airline whatever occurs.

Conclusion

41.     I am therefore prepared to order a stay of the decision not to renew the chief pilot’s approval under s 41(2) of the AAT Act, although I think it should only be for a maximum period of 30 days to enable the airline to identify and recruit a suitable replacement as chief pilot. The effect of the stay is to permit Mr Williams to remain as chief pilot for up to 30 days or until the airline is able to appoint an approved chief pilot as replacement.

42.     The respondent’s request that I dismiss the matter pursuant to s 42B cannot succeed in light of the amendments I allowed to the application for review and the orders I have made.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member McCabe.

Signed:         .....................................................................................
  Associate: Thomas Ritchie

Date/s of Hearing: 5 July 2004, 6 July 2004
Date of Decision: 6 July 2004
The applicant was represented by Mr Wollerman and Mr Langmead, SC.
The respondent was represented by Mr Anastasi.