McKenzie and Ors and Civil Aviation Safety Authority
[2008] AATA 651
•25 July 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 651
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/2431; 2432; 2447
GENERAL ADMINISTRATIVE DIVISION ) Re SCOTT WILLIAM McKENZIE; SIDNEY MICHAEL SMITH; LIP-AIR PTY LTD Applicants
And
CIVIL AVIATION SAFETY AUTHORITY
Respondent
DECISION
Tribunal Deputy President P E Hack SC Date25 July 2008
PlaceBrisbane
Decision In each of application 2008/2431 and 2008/2432
(a) the Tribunal orders, pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth), that implementation of the decision under review be stayed until the hearing and determination of the application or earlier order;
(b) there is liberty to apply to vary the order in paragraph (a).
..................[Sgd]............................
Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – application for a stay of decision – Chief Pilot’s approval – Check Pilot’s delegation – air safety the paramount concern – stay granted
REASONS FOR DECISION
25 July 2008 Deputy President P E Hack SC 1.The corporate applicant, Lip-Air Pty Ltd, which trades under the name Aero Tropics, is a small airline operating in far North Queensland. According to its chief executive officer, Mr Ricci Lippmann, it provides a transport services to approximately 110 small remote stations airstrips and islands in North Queensland and the Torres Strait and operates to 81 regular public transport operator ports. It carries on average 150 people per day. Mr Lippmann says that it is effectively the only means of regular air transport in the Torres Strait and North Queensland. It carries passengers as well as urgent cargo, mail and medical supplies.
2.Lip-Air holds an Air Operator’s Certificate (AOC) issued by the respondent, the Civil Aviation Safety Authority. One of the conditions on which the AOC has been issued is that Lip-Air is obliged to employ a Chief Pilot. The applicant Mr Scott McKenzie is employed in that role. In addition Lip-Air is required to employ a Check Pilot, that is, a pilot whose task it is to ensure that other pilots within the organisation maintain proper levels of proficiency. The other applicant Mr Michael Smith is the Check Pilot for Lip-Air.
3.In September 2007 the Authority undertook an audit of the compliance by Lip-Air with the regulatory scheme. A number of matters arose in the course of that audit that concerned the Authority. In the result, in March 2008, the Authority gave to each of Lip-Air, Mr McKenzie and Mr Smith a “show cause” notice, that is, an opportunity to demonstrate why action ought not be taken by the Authority against approvals held by them. In the case of Lip-Air notice was given that consideration was being given to the suspension or cancellation of Lip-Air’s AOC or, alternatively, the imposition of additional conditions on the AOC. The notice summarised the concerns of the Authority as being,
“… that the company has failed to maintain required standards of compliance in relation to:
(i) its Training and Checking system under Regulation 217 of the Civil Aviation Regulations 1988 (“CAR”) where false and abbreviated training, testing and checks have been undertaken on a regular basis;
(ii) dangerous goods training and documentation;
(iii) weights control;
(iv) fuel planning;
(v) the reporting of accidents or incidents to CASA;
(vi) the reporting of conditions at remote aerodromes used by the company;
(vii) the Chief Pilot Scott McKenzie forging Alan Trickey’s signature on a request form in order to obtain a CASA aircraft endprsement[sic], approval and rating certification sticker book (form 214).”
4.In relation to Mr McKenzie, the Authority’s notice stated that it considered his performance as Chief Pilot to be unacceptable because,
“(i) The company’s training and checking organisation which you are required under CAO 82.3, Appendix 2, 2.1 to manage has conducted abbreviated training and checking to company pilots and company pilot records have been falsified to hide non-compliance;
(ii) You have failed to monitor operational standards as the company’s induction training for its pilots have not been carried out in accordance with the company’s operations manual;
(iii) You failed to ensure compliance by the company in relation to;
(a) the carriage of dangerous goods,
(b) the training of company employees in the carriage of dangerous goods,
(c) aircraft load control,
(d) fuel load control,
(e) the reporting to the ATSB and CASA of accidents and incidents,
(iv) You have rostered unqualified pilots on regular public transport flights;
(v) You forged Alan Trickey’s signature on a request form to CASA for an endorsement certification sticker book;
(vi) You rostered company pilot John Beaton on flights where he exceeded CAO 48 flights and duty limits.”
5.In relation to Mr Smith it is probably a sufficient summary of the Authority’s concerns in relation to his conduct to say that, in addition to his involvement in matters subject of the notices in relation to Lip-Air and Mr McKenzie, it was alleged that he was not performing the task of a Check Pilot. These matters, it was said, could lead to the conclusion that he might not be a fit and proper person to be entrusted with the exercise of the duties and responsibilities of a Check Pilot.
6.In early May 2008 solicitors acting for each of Lip-Air, Mr McKenzie and Mr Smith responded to the notices at some length. The response was not as fulsome as the Authority may have wanted and, importantly, when it came to dealing with allegations of forgery of documents and falsification of records the solicitors expressed the view that “given the criminal nature of the allegations, neither the company nor its personnel will address any of these issues, either in this response or at a show cause conference.”
7.On 2 June 2008 the Authority informed Mr McKenzie of its decision to cancel his Chief Pilot approval under subclause 6.1 of Appendix 1 to Civil Aviation Order 82.0 with effect at the end of the second calendar day after service. On the same day a letter was sent to Mr Smith advising of the Authority’s decision to revoke an instrument which had been made allowing him to undertake the role of Check Pilot that decision was said to take effect immediately upon service of the notice. The decision maker in each case was Mr Gregory Vaughan, the group general manager of the Authority’s General Aviation Operations Group.
8.On 4 June 2008 applications were lodged in this Tribunal by each of Lip-Air, Mr McKenzie and Mr Smith seeking a review of the decisions made in relation to Mr McKenzie and Mr Smith. I should interpolate at this stage to say that Ms Ford, counsel for the Authority, accepts that Lip-Air is a proper party and has standing to bring an application in its own right in relation to cancellation decisions which involve licenses or authorities held by Mr McKenzie and Mr Smith. Once the applications had been lodged the matters were listed for the hearing of an urgent application for a stay of the implementation of the decisions at 9am on 6 June 2008. In the meantime, and because Lip-Air believed that the imminent cancellation of Mr McKenzie’s licence would have had the effect that its operations would have to cease, Lip-Air made urgent application to the Federal Court of Australia seeking relief pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth). That application[1] came before Buchanan J on the afternoon of 5 June 2008. His Honour made an order which had the effect of staying the decisions sought to be reviewed in this Tribunal until 3pm on 6 June 2008[2].
[1] NSD 837 of 2008.
[2] See [2008] FCA 866.
9.On 6 June 2008, after considerable argument, I granted a stay of the implementation of the two decisions until 21 July 2008 and made directions for the lodgement and service, first by the Authority and subsequently by Lip-Air, Mr McKenzie and Mr Smith, of the parties’ respective statements of facts, issues and contentions. The directions that I made ought, if complied with, have resulted in there being a fairly clear picture prior to 21 July 2008 of what factual matters were conceded and what were in issue. I had in mind that a more considered view could be taken of the prospects of success of the applications once the respective cases had been articulated. That was not to be.
10.To this point, that is, early June 2008, the Authority had taken no action to suspend or cancel Lip-Air’s AOC. Mr Vaughan had, at this stage, “serious concerns about Lip-Air’s ongoing capacity to manage its obligations under its AOC” but decided that the best way of dealing with the concerns in the short term was to hold what is called a show cause conference. In the meantime he asked the Authority’s local officers to closely monitor the situation regarding Lip-Air.
11.Late in June three things occurred which, according to Mr Vaughan, changed his state of mind. The first was that Lip-Air put forward for approval a Check Pilot but in doing so failed to comply with its own internal checking and training procedures. Moreover, according to Mr Vaughan that application contained inaccurate information concerning the training and experience of the applicant to hold the position of Check Pilot. To Mr Vaughan the consequence of this was that “Lip-Air had once again supplied incorrect information to CASA in an application to have a pilot approved to a significant position within the company”. Additionally Mr Vaughan became aware that Mr Smith was no longer current (in terms of having the required base or line checks) on any of the aircraft operated by the company with the consequence, according to Mr Vaughan, that he was no longer able to perform the role of Check Pilot within the company’s check and training organisations in accordance with the terms of his approval from the Authority. Mr Vaughan said of this,
“The significance of this from a safety point of view is that the company had allowed a situation to develop where by the pilot responsible for checking pilots on the standard operating procedures required in the company’s operations manual had not himself had a recent check of his own proficiency in the conduct of those procedures …”
12.Moreover, Mr Vaughan ascertained that one of Lip-Air’s pilots had had his instrument rating renewed by an independent approved testing officer outside of the company which, according to Mr Vaughan, was contrary to the requirements of Civil Aviation Regulation 217.
13.Mr Vaughan summarizes his state of mind at this time in the following way,
“41…
(a) I had no confidence in their Chief Pilot and had cancelled his approval – he continued in that position pursuant to a stay from the AAT;
(b) I had lost confidence in their only Check Pilot and cancelled his approval – he continued in the position pursuant to a stay from the AAT;
(c) The only Check Pilot was not current on all of the aircraft in the operator’s fleet and thus not able to conduct checks on other company pilots – but appeared to have been undertaking such checks nonetheless;
(d) Lip Air was reliant on external [approved testing officers] to renew the instrument ratings of their pilots in breach of CAR 217 and the Lip Air Operations Manual and the number of pilots involved was unknown;
(e) The Company seemed unable to follow the procedures in its own operations manual to qualify another pilot to be approved as Check Pilot for the company
42. These elements are critical to the safety of air navigation.”
14.The result of this was that on 27 June 2008 Mr Vaughan made a decision pursuant to s 30DC of the Civil Aviation Act 1988 (Cth) suspending the AOC of Lip-Air on the basis that Lip-Air had engaged in, was engaging in, or was likely to engage in, conduct that contravened s 30DB of that Act, namely conduct that constituted, contributed to or resulted in, a serious and immanent risk to air safety. The scheme of Division 3A of Part III of the Civil Aviation Act, within which s 30DC is found, is that when the Authority takes action to suspend an authorisation on the basis of “serious and imminent risk to air safety” the Authority may make application to the Federal Court before the end of the fifth day after notification of the suspension for an order, in effect, enforcing the suspension for a period not exceeding 40 days to enable the Authority to complete an investigation into the circumstances giving rise to the suspension decision.
15.On 4 July 2008 the Authority lodged in the ACT District Registry of the Federal Court of Australia an application[3] for such an order.
[3] ACD 20/2008.
16.In the meantime, and presumably to forestall an application by the Authority, Lip-Air filed an application in the NSW proceedings on 2 July 2008 seeking final and interlocutory relief from the notice of suspension served on 27 June 2008. After argument on 2 July 2008 Bennett J, having accepted certain undertakings proffered on behalf of Lip-Air, made an interlocutory
order pursuant to s 15 of the Administrative Decisions (Judicial Review) Act suspending the operation of the suspension decision of 27 June 2008. That order preserved the entitlement of the Authority to make an application to the court under s 30DE(1) of the Civil Aviation Act.
17.The Authority’s proceedings have apparently been transferred to the New South Wales Registry of the Court. The proceedings commenced by Lip-Air are listed for directions before the Court on 31 July 2008.
18.The application to continue the stay now falls for consideration.
19.As a consequence of the other matters that have occupied the attention of Lip-Air’s solicitors and a postal delay in the receipt of the Authority’s material by those solicitors, it has not been possible for the applicants to lodge their statement of facts and contentions and I have already extended the time for the completion of that step. The effect is that there is no clear definition on the material as to what precisely will be in issue on the final hearing.
20.The argument for Lip-Air may be expressed in this way,
(1)the nature of the decisions made in relation to Mr McKenzie and Mr Smith are such that the commencement in this Tribunal of the proceedings was sufficient to trigger the automatic stay provided for by s 31A of the Civil Aviation Act;
(2)alternatively, and by reference to the Tribunal’s power in s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) a stay ought be granted pending the hearing of the underlying proceedings;
(3)alternatively, a stay ought be granted to enable Lip-Air to answer matters raised quite recently by the Authority concerning conduct of Lip-Air not earlier the subject of attention from the Authority and to file its statement of facts and contentions.
21.By virtue of s 31A of the Civil Aviation Act, certain decisions of the Authority can be automatically stayed for a period of 90 days after notification of decision if a timely application is made to the Tribunal for a review of the decision. The decisions are those set out in s 31A(1) in these terms,
“(1)This section applies to a decision under this Act or the regulations that is reviewable by the Administrative Appeals Tribunal if, before making the decision, CASA was required by this Act or the Regulations to give a show cause notice to the holder of the civil aviation authorisation concerned.”
22.As may be seen two conditions must be satisfied. First, there must be a decision under the Act or the Regulations reviewable by the Tribunal and, secondly, it must be a decision where the Act or the Regulations require the giving of a show cause notice before the making of the decision. In my view neither of those conditions is satisfied in the present case. In the case of Mr McKenzie the decision was a decision made under Civil Aviation Order 82.0. That order deals generally with AOCs including the requirement for a Chief Pilot approved by the Authority and, so far as is presently material, gives to the Authority power to cancel or suspend approval as a Chief Pilot if, in the opinion of the Authority, the performance of a Chief Pilot is no longer of an acceptable standard. The decision in issue was one made under the Civil Aviation Order not the Civil Aviation Act or Regulations made under it.
23.In the case of Mr Smith, the decision that has been taken is one to revoke an instrument earlier made. The stated basis of the revocation of the instrument is ss 33(1) and (3) of the Acts Interpretations Act 1901 (Cth). It is not necessary for present purposes to consider the nature of the power to revoke the delegation granted to Mr Smith; it is sufficient to note that I do not consider that it is a decision made under the Civil Aviation Act or the regulations made under that Act.
24.Moreover neither decision was one where the Authority was required to give a show cause notice before making the decision.
25.It follows that in my view Mr McKenzie and Mr Smith are not entitled to an automatic stay pursuant to s 31A of the Civil Aviation Act.
26.In deciding the question of a stay under s 41(2) of the Administrative Appeals Tribunal Act I should deal at the outset with two arguments raised by Mr De Buse, counsel for Lip-Air, Mr McKenzie and Mr Smith. Both have a superficial attraction but on analysis I do not accept them.
27.The first proposition is that, had the Authority suspended or cancelled the AOC of Lip-Air, Lip-Air would have been entitled (unless the suspension decision had been made under s 30DC of the Civil Aviation Act) to an automatic stay once it commenced proceedings in the Tribunal. It is said that the practical effect of the cancellation of Mr McKenzie’s licence is that Lip-Air, absent a stay, can no longer operate because it does not have a Chief Pilot to take over. As I say there is a superficial attraction in the argument that by proceeding in the way that it has the Authority has deprived Lip-Air of the benefit of the automatic stay. But it seems to me to be wrong in principle to determine the matter by reference to the end result rather than by reference to the terms of the subsection which empowers the grant of a stay.
28.The second argument concerns the effect of the orders made by Bennett J in the Federal Court and it is that the Tribunal would be wary of reaching a conclusion that was contrary in the result to that achieved by Bennett J. Prima facie it is right that this Tribunal would not in an ordinary circumstance reach a conclusion that appeared to set at nought the considered view of a judge of the Federal Court but, as it seems to me, the question before Bennett J was different in substance to the question before me. As I understand the nature of the contest before her Honour, she was required to decide whether it was reasonably arguable that the decision taken by the Authority to suspend Lip-Air’s AOC was affected by legal error. I infer nothing more into her Honour’s decision than that she considered that it was reasonably arguable. Her Honour dealt with the allegations made by Mr Vaughan against Lip-Air, those being the allegations that prompted the suspension of its AOC, by accepting undertakings. Nothing about the proceedings seems to me to indicate that her Honour undertook any review of the nature of the allegations made against Mr McKenzie and Mr Smith.
29.In the result it seems to me that I must approach the matter on the basis of the matters set out in s 41(2) of the Administrative Appeals Tribunal Act. The terms of that subsection are well known and need not be repeated. Similarly the principles that guide the exercise of the discretion are equally well known. The starting point seems to be that there must be demonstrated that a stay is necessary “for the purpose of securing the effectiveness of the hearing and determination of the application for review”. That is made out here where it is accepted by the Authority that Lip-Air has standing to seek a review of the decision in relation to Mr McKenzie. Were a stay not to be granted it is inescapable that Lip-Air would be forced to cease operations, on the evidence before me, for a minimum of a week. The period may be longer but on the most favourable view it would be at least a week before a replacement Chief Pilot could be appointed. The evidence of Mr Lippmann in relation to the effects on the airline of a cancellation are set out in his affidavit. It seems unrealistic to suppose that the airline could recover its goodwill or its financial position were it required to shut down for a period even as short as a week. That being so the question is one of where the balance of convenience lies and that of prospects of success in the underlying proceedings.
30.Without more it seems plain that the balance of convenience favours the grant of a stay. In reaching that view I should say that I put to the side for a moment, because it warrants separate and independent consideration, questions of air safety. Those matters aside there can be no doubt that the balance of convenience warrants the granting of a stay. But in cases such as this air safety is a paramount consideration[4]. The main object of the Act of the Civil Aviation Act is the establishment of a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation with particular emphasis on preventing aviation accidents and incidents. In considering the issues that arise here I have this consideration to the
forefront.
[4] See s 9A, Civil Aviation Act.
31.As it seems to me the question I must consider is whether the grant of a stay will create a real, as distinct from fanciful, risk that the safety of air navigation will be compromised and passengers, staff or other persons put at risk.
32.Whilst I acknowledge the vast array of allegations[5] I shall do my best to provide a summary of the allegations made by the Authority. Given that the applicants have not filed their Statement of Facts and Contentions I propose to look only at the case the Authority puts forward. The starting point is that Mr McKenzie, as Chief Pilot, had overall responsibility for the control and supervision of all pilots including the Check Pilot. A Mr Alan Trickey was the Check Pilot up until September 2007 when he was replaced by Mr Smith. The first group of allegations concern activities of Mr Trickey. On separate occasions in February 2007, March/April 2007 and May 2007 (twice) documents completed by Mr Trickey indicated that he undertook checking of pilots however the Authority’s case, if made out, demonstrates that considerable shortcuts were taken in that testing and that matters were certified as having been done that were not done. There appears to be a considerable pattern of what, on the Authority’s case, amounts to deliberate falsification as distinct from poor record-keeping. The result, the Authority alleges, is that the training of pilots was below the required standard with the further result that a high number of pilots failed flight tests undertaken by the Authority’s inspectors. I assume, however, that there are other ways of dealing with the problem of individual pilots.
[5] The Statement of Facts and Contentions runs to some 58 pages plus attachments.
33.Similar allegations are made in relation to the training received by Mr Smith from Mr Trickey for his role as Check Pilot. Moreover it is said that on an occasion in July 2007 Mr Smith not only purported to conduct testing that he was not authorised to conduct, he was doing so on three different aircraft.
34.There are two instances where pilots are said to have exceeded flight and duty times and on one of these the pilot is alleged to have made a false entry to cover up the breach.
35.Next, there are allegations regarding Lip-Air’s unsatisfactory handling of dangerous goods, both on the ground and in the air. It is also said that Lip- Air has inadequate systems for aircraft load control although these seem not to be of any particular significance.
36.The Authority also alleges that there were a series of events, going back to 2003, where Lip-Air failed to adequately report accidents and incidents and that it took steps to mislead the Authority about the circumstances of these incidents. On three occasions, it is said, Mr McKenzie rostered a pilot in command on a particular flight when that pilot had not been route checked into various destinations. Moreover, it is said, Mr McKenzie overrode safety concerns expressed by the particular pilot. Finally it is alleged that on an occasion prior to Mr McKenzie being approved as Chief Pilot he verified the proficiency test of another pilot without authority.
37.The overall thrust of the case for the Authority is that these matters demonstrate that Mr McKenzie failed in his responsibility to endeavour to ensure that Lip-Air’s air operations were conducted in compliance with the regulatory scheme and failed to manage and supervise the training and checking operations.
38.Some of the Authority’s case is capable of explanation on the basis of oversight or occasional lapse. Some is explicable on the basis of differing interpretations of regulatory requirements. What I find most troubling are the allegations that, if proved, would demonstrate a process of systematic cheating in the training and checking of Lip-Air’s pilots. Whilst Mr McKenzie was not directly involved with many of these matters that is not the point. As Chief Pilot he was obliged to undertake the overall supervision of these matters. At best for him he was incompetent and failed to properly supervise the activities of Mr Trickey. Where, as Lip-Air’s solicitors point out, it “operates in one of the most remote and challenging environments in Australia”, I would have thought that checking and training ought to have been emphasised not downplayed and certainly not fraudulently so.
39.Notwithstanding these concerns I consider that it is appropriate to grant a stay of the implementation of the decision involving Mr McKenzie. I take that view for a number of reasons.
40.First, the allegations are not generally ones that have a direct impact upon air safety. The only allegation that answers that description is that involving the rostering of unqualified, i.e. not route checked, pilots on three occasions. Next, the stay will be for a relatively short time since I intend for the hearing to take place at the earliest opportunity. I expect the applicants and the Authority to do all that is necessary to achieve this goal. If it should be that the applicants are dilatory in their prosecution of the proceedings then I imagine that the Authority would seek to have the stay lifted pursuant to the liberty to apply provision that I will give. Finally, I trust that the recent scrutiny by the Authority and its consequences have engendered in Lip-Air and its personnel a greater appreciation than was, on the Authority’s case, evident in recent times. Regardless of the view that the High Court takes of the time at which the Tribunal considers questions of fitness, evidence of matters occurring after the making of a decision is, on the present state of the law, admissible to cast light on the facts at the time of the original decision[6]. There seems to me to be no reason in principle why a subsequent demonstrated breach of air safety could not be relied upon to persuade me to cease the stay.
[6] Shi v Migration Agents Registration Authority (2007) 158 FCR 525.
41.The case against Mr Smith is not as extensive and his responsibilities as Check Pilot not as onerous as those of the Chief Pilot. Some of the matters alleged against him are explicable on the basis of inaccurate record keeping and none, on my reading of them, involve a direct compromise of air safety standards. For similar reasons I would grant a stay of the implementation of
the decision in his case.
42.I propose to hear the parties regarding the directions that ought be made to bring the matter on for hearing at the earliest opportunity.
I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: ............................[Sgd]....................................................
Associate: Jacqui WoodsDate/s of Hearing 21 July 2008
Date of Decision 25 July 2008
Counsel for the Applicant Mr B De Buse
Solicitor for the Applicant McMahon Broadhurst Glynn Lawyers
Counsel for the Respondent Ms E Ford
Solicitor for the Respondent Departmental officer
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