Morkos and Department of Transport (formerly known as NSW Transport and Infrastructure)

[2011] NSWADT 228

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Morkos and Department of Transport (formerly known as NSW Transport and Infrastructure) [2011] NSWADT 228
Hearing dates:	31 May 2010, 11 August 2010, 17 September 2010, 15 October 2010, 20 December 2010 and 24 February 2011
Decision date:	23 September 2011
Jurisdiction:	General Division
Before:	E Grotte, Judicial member
Decision:	The decision of the Director-General is affirmed.
Legislation Cited:	Administrative Decisions Tribunal Act 1997 Passenger Transport Act 1990 Passenger Transport Regulation 2007 Insurance Act 1973
Cases Cited:	Gomes v Department of Transport and Infrastructure [2010] NSWADT 318 Hughes and Vale Pty Ltd v New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 127 Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 Sobey v Commercial and Private Agents Board 20 SASR 70 Maythisathit and Registrar of Motor Vehicles [1996] ACT 16 Haining v Commissioner of Police, NSW Police Service (1999) NSWADT 6
Category:	Principal judgment
Parties:	Peter Morkos (Applicant) Department of Transport (formerly known as NSW Transport and Infrastructure) (Respondent)
Representation:	P Morkos (Applicant in person) Smythe Wozniak Solicitors (Respondent)
File Number(s):	103046

REasons for decision

Background

1. On 16 December 2009 a delegate of the Director-General of the Department of Transport, formerly known as NSW Transport and Infrastructure (NSW Transport or the Department) made a decision to cancel Mr Peter Morkos's accreditation to operate public passenger vehicles (Bus). The decision was as follows:

"Facts, Evidence and Material

The Director-General, NSW Transport and Infrastructure relies on the following facts, evidence and material when considering the cancellation of Operator Accreditation 14163.

On 15 February 2008 you submitted an Annual Self Assessment Report (ASAR) to NSW Transport & Infrastructure (previously Ministry of Transport), where you stated that all of the required systems were in place including the Third Party Property Damage Insurance cover of at least $5 Million per bus. The completed ASAR was received at the Ministry was (sic) signed by Peter Morkos and dated 14 December 2007.

On 4 March 2009, you submitted an Annual Self Assessment Report (ASAR) to NSW Transport & Infrastructure (previously Ministry of Transport), where you stated that all of the required systems were in place including the Third Party Property Damage Insurance cover of at least $5 Million per bus. However, the subsequent audits conducted of operator accreditation 14163 have confirmed that this is not the case. The completed ASAR was received at the Ministry was signed by Peter Morkos and dated 17 February 2009.

On 24 May 2009, an independent audit was conducted on your operation by an independent auditor. The audit detected the following deficiencies within your operation.

Section 7 Management Information System

The operator was unable to provide any records indicating that the vehicles operating under the Operator Accreditation 14163 were duly insured and the operator hold (sic) Third Party Property Damage Insurance cover of at least $5 Million per bus. Therefore, the operator failed to comply with Clause 22 of the Passenger Transport Regulation 2007.

The operator answered "Yes" to the question "are there any gaps in previous year's (sic) policies which would indicate that buses were operated whilst uninsured". However, this could not be ascertained by the independent auditor as the operator was unable to provide any records for current or previous Third Party Property Damage Insurance policies.

On 31 July 2009, as a result of the independent audit NSW Transport & Infrastructure conducted a further audit on your maintenance system. The deficiencies detected in the independent audit conducted on 24 May 2009 were confirmed.

During the audit, you were questioned in relation to providing NSWTI with evidence that you have held Third Party Property Damage Insurance cover for your vehicles operating under your accreditation from previous years. You have admitted that between 2007 and 2009 you did not hold insurance and operated your vehicles uninsured. You further commented that it was an oversight.

Evidence of the above facts is in the form of:

Passenger Transport Act 1990.

Passenger Transport Regulation 2007.

NSW Transport & Infrastructure records, including the original application for Operator Accreditation, the application for re-accreditation and the Bus Operator Accreditation System (BOAS) standards.

Industry Course attended and successfully completed by Peter Morkos in 1995 titled The Certificate of Coach Management conducted at the Institute of Transport Studies, Graduate School of Business, University of Sydney. This course is designed to meet the competency requirements to carry on a bus service under Clause 9(b) of the Passenger Transport Regulation 2007.

Records and information obtained at the audit.

Applicable Law

Division 1 Accreditation of Operators

Section 7(2) of the Passenger Transport Act, 1990

a) The purpose of the accreditation under this division is to attest:

That the accredited person is (or, in the case of an accredited corporation, the designated directors and managers of the corporation are) considered to be is good repute and in all other respects fit and proper to be responsible for the operation of a public passenger service; and

b) that the accredited person has demonstrated the capacity to meet the government's standards of:

i) financial viability; and

ii) safety of passengers and the public ; and

iii) vehicle maintenance,

to the degree and in the manner required in respect of services of the kind specified in the accreditation.

Section 10 of the Passenger Transport Act, 1990

1) Having regard to the purpose of an accreditation, the Director-General may at any time vary, suspend or cancel any person's accreditation.

2) The accreditation of a corporation is automatically cancelled when there is no designated director or manager for the purposes of section 7(2)(a).

Clause 22 of the Passenger Transport Regulation 2007

Vehicle Insurance

An accredited operator (unless otherwise notified in writing by the Director-General) must ensure that there is maintained one or more policies of insurance providing cover of at least $5,000,000 for each public passenger vehicle used to provide the relevant services against liability in respect of damage to property caused by or arising out of the use of the vehicle.

The policies must be issued by a corporation authorised under the Insurance Act 1973 of the Commonwealth to carry on insurance business.

Subclauses (1) and (2) do not apply to an accredited taxi-cab operator or an accredited private hire vehicle operator.

Note. See sections 32G and 39G of the act for insurance requirements relating to taxi-cabs and private hire vehicles, respectively. See also clause 131 of this Regulation.

An accredited operator must provide an authorised officer, on request, with evidence that the operator's policies of insurance are current.

The reasoning process that led to the decision

NSW Transport & Infrastructure has a continuing obligation under the Passenger Transport Act 1990 to ensure that the accredited person is (or, in the case of an accredited corporation, the designated directors and managers of the corporation are) considered to be of good repute and in all other respects fit and proper to be responsible for the operation of a public passenger service.

NSWT&I has carefully considered your response to the 'Notice to Show Cause' and noted that you have stated in your letter that you have been trying to establish a third party property damage (TPPD) insurance for your vehicles under accreditation 14163 for the past two years. However, in all cases it has been rejected by the insurance companies. Therefore, during this time you have allowed (sic) to operate buses under the accreditation 14163 uninsured means that you have breached the conditions of your accreditation.

You were afforded the opportunity to 'show cause' as to why NSWT&I should not cancel your accreditation, however the records you submitted in response have failed to provide grounds for NSWT&I to substitute the decision.

For the community to have complete confidence that an operator is providing a service where they are able to ensure the safety of their passengers and other road users, one would expect that maintenance would be carried out to the appropriate standard and vehicles used to provide the service would be insured. The fact that you were unable to demonstrate that the vehicle was appropriately insured from 22 May 2007 to 22 May 2009 indicates that you do not have the capacity to operate a public passenger vehicle in accordance with the required standard.

Based on the above facts and law it can no longer be attested that you are fit to be the operator of public passenger service. Accordingly, the determination has been made to cancel accreditation 14163."

1. On 18 February 2010 an application for an internal review of the decision was received by the respondent. On 19 February 2010 Mr Morkos was informed that an internal review could not be undertaken because the time for the review had expired. He was informed however that he could lodge an application with the Administrative Decisions Tribunal (the Tribunal) to review that decision. Mr Morkos felt aggrieved by the decision to refuse to review, because he claims that he informed the Department that he would be overseas at the time of the issue of the original decision.

1. On 25 February 2010 the Tribunal received an application from Mr Morkos for review of the Department's decision to cancel his accreditation. He stated that he felt that the decision was neither fair nor just, and that it could have been personally motivated. Mr Morkos explained that the delay in applying for a review was caused because he was abroad at the time the decision was made. He said that he had informed the relevant officer that he would be overseas from 2 November 2009 until the middle of January 2010. In support of his application for review Mr Morkos stated that he had been operating as an accredited bus operator safely for 34 years. He stated that the respondent cancelled his accreditation "for an amendment to the regulation, without informing me of changes of regulation", and that "he did not break any regulations or legislation knowingly or deliberately".

1. Mr Morkos stated that on 24 February 2010 he met with David Booth, Manager of the Department and with Matt Hunter, the Compliance Manager. Mr Morkos asserted that Mr Booth acknowledged that the respondent had not informed Mr Morkos, as it usually did, of the legislative changes that insurance was now a legislative requirement. Mr Morkos asserted that although Mr Hunter indicated to him that his application for an internal review might be accepted, Mr Booth refused to extend the time to lodge an application for an internal review. Mr Morkos asserted that Mr Booth told him that he should apply for re-accreditation. Mr Morkos claimed that the conversation led him to believe that insurance was not the real problem, because he had addressed that issue. Mr Morkos attached a copy of a Certificate of Insurance dated 26 May 2009, which showed that his Mercedes 14 Seater, which was a commercial vehicle, was insured for third party property damage by QBE Commercial (Sunrise).

1. Mr Morkos also attached submissions supporting his application for review of the Department's decision. In summary they are as follows:

• He has been a responsible driver and bus operator for 34 years and has complied with the respondent's requirements;
• He was asked by the respondent to provide two years of financial information regarding the operation of his business to show that it was viable, without any justification, and without following the usual procedure of contacting the accountant;
• Initially he was informed this was a random check, only to be later told that it was due to a directive;
• Ms Rebecca Kalkandis told him that she would make a recommendation that his company was not financially viable;
• The insurance question was not the real reason for the audit and cancellation, because the officers of the respondent were initially only concerned with his financial viability;
• The cancellation of his accreditation was retribution for exposing the abuse of power by the respondent's officers, Rebecca Kalkandis and Ralf Otto, and standing up for his rights;
• There are many operators who have deficiencies in their paperwork, and he does not believe that these operators have had their accreditation cancelled;
• He should have been given a chance to resolve the issues rather than have his accreditation cancelled;
• The Department should have let him know of any relevant legislative changes prior to enforcing those changes. If a new law is introduced, he should have been notified of the consequences of failing to observe it;
• He believed that he had insurance covering third party personal, that is the "green slip", and that this was all that was required;
• When he discovered from the auditor that he did not have the requisite insurance, he did not use his vehicle until he obtained the relevant insurance;
• He has an excellent driving record. He is a careful and reliable driver. The bus he operates is the latest model Mercedes Benz fitted with the latest sash-lap seats, dual air-conditioning, and side-impact airbags for passenger safety. The vehicle is a valuable asset, and it is in his interests to insure it;
• He provided all of the relevant paperwork to the auditors but Ms Kalkandis was not satisfied, and told him that she would be recommending that he was not financially viable;
• He later received a letter from the Department that it would be reviewing all operators' financial viability;
• He has complied with all of the legislative requirements for accreditation.
• He believes that he has been unjustly treated by the respondent and its officers.
• Tribunal Hearings and Evidence

1. On 3 March 2010 the Tribunal heard an application to stay the decision to cancel Mr Morkos' accreditation. The stay was granted. It was noted that there had been no internal review, and the requirement was waived. The matter was listed for hearing on 7 May 2010.

1. On 7 May 2010 the proceedings commenced and the respondent's legal representative, Mr Wozniak made his submissions. He relied on documents lodged with the Tribunal pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 (the ADT Act). The documents were also served on Mr Morkos.

1. It was submitted on behalf of the Department as follows:

a) Mr Morkos applied for accreditation to operate long distance and tourist coach services on 6 November 1992. At that time he stated that he had read and understood the legislative and regulatory requirements of the Accreditation Standards for Operators of Long Distance and Tourist Services, and agreed that he would comply with them. He stated that he understood that any breach of the accreditation standards and any false declaration could cause the operator's accreditation to be suspended or cancelled;

b) Mr Morkos' application to operate as a tourist service provider was approved, and he was granted a Certificate of Accreditation on 7 December 1992 to operate two small buses;

c) On 20 July 1993 an anonymous complaint was made to the respondent about Mr Morkos' operation that his bus, believed to be registration number TV 1940, broke down on numerous occasions requiring passengers to be ferried to and from the motel and the snowfields;

d) On 27 July 2003 an inspector of the Roads and Traffic Authority contacted the Department, informing it that Mr Morkos' vehicle, registration number TV1940, was inspected and found to have 15 defects, the most serious of which were the necessity to replace a brake hose and the securing of some of the passenger seats in the vehicle. As a result of this fact, and the fact of the mechanical problems experienced by another of Mr Morkos' vehicles, Geoff Sidery, of the Department, recommended that a random audit be conducted of Mr Morkos' operation, known at that time as Karnak Tours, to ensure compliance with the accreditation standards as an operator of tourist vehicles;

e) An accreditation audit was conducted on 11 August 1993 specifically to verify Mr Morkos' company's compliance with the required standards in respect of driver safety and vehicle maintenance. It was reported that the audit revealed some very serious deficiencies, and, as a result, it was recommended that action be taken against the company's accreditation. Following further investigation and assurances from Mr Morkos, it was decided that no further action would be taken in respect of the deficiencies that were found on that occasion.

f) On 30 September 1994 Mr Morkos was granted a Certificate of Accreditation to operate three buses. He was again reminded of his obligations to complete a course of management for long distance and tourist operations recognised by the Department, and that the accreditation may be suspended, varied or cancelled if there was any breach of the accreditation standards;

g) On 20 July 2006 Mr Morkos was again accredited as a service operator for the purposes of carrying out a long distance tourist and charter service using a maximum of three buses. He was again reminded of his obligations in respect of conditions of accreditation;

h) On 14 December 2007 Mr Morkos completed an Annual Self Assessment Report (ASAR) for the then Ministry of Transport in respect of his bus operator accreditation. He declared that he had third party property insurance with a minimum of $5 million cover per bus, that he had a fleet register and a complaints register, as well as all of the other requirements;

i) On 22 April 2008 Mr Morkos was given a warning by the former Ministry of Transport, Compliance, that he had to rectify identified deficiencies in respect of one of his buses within seven days of the warning;

j) On 17 February 2009 Mr Morkos completed an ASAR, in which he again declared that he had third party property insurance with a minimum of $5 million cover per bus, as well as all of the other requirements;

k) An audit was conducted by Ralf Otto, independent auditor, on 24 May 2009. Mr Otto identified deficiencies, one of which was that no certificate of currency in respect of insurance was supplied at the audit. Other deficiencies identified related to vehicle maintenance. Rebecca Kalkandis, Compliance Officer, reported to David McKerral, Manager Compliance, on 23 July 2009 noting that "the deficiencies detected in the operator's systems are of concern highlighting non-compliance with the Passenger Transport Act 1990 and the Passenger Transport Regulation 2007. She recommended that Compliance conduct "an audit on the deficiencies detected to determine if any action may need to be undertaken, with the focus being placed on vehicle maintenance and previous years insurance in relation to the operator's financial viability".

l) On 26 August 2009 Sandra Mussett, Compliance Officer, followed up on the independent audit findings conducted by Ralf Otto. She reported as follows:

"On 24 May 2009 Mr Markos (sic) underwent an independent audit conducted by independent auditor Mr Ralf Otto. On 23 July 2009 a review of the independent audit was conducted and found a number of deficiencies. A recommendation was made to attend Mr Markos' (sic) premises to ascertain his compliance with the Passenger Transport Act 1990 and Passenger Transport Regulation 2007.

...

On 31 July 2009 I attended Mr Markos' (sic) residence with Rebecca Kalkandis, A/Senior Project Officer, BOAS. Mr Markos (sic) was able to produce the majority of records that were requested. The operator stated that the records were produced at the independent audit. This could not be determined as the auditor's stamp was not on all records.

Mr Markos (sic) was questioned regarding his previous years insurance to which he admitted that between 2007 and 2009 he did not hold insurance and had not operated his vehicle. When asked why he did not hold insurance, Mr Markos (sic) stated it was an oversight. He pays his insurance monthly and thought he was still paying the policy to keep it current. However when he discovered he did not have insurance he purchased the correct policy immediately.

Mr Markos (sic) asked what will happen with his accreditation. Officer Kalkandis explained to Mr Markos (sic) that as there were admissions that he operated with no current insurance, the recommendation would be provided to the Manager of Compliance for a financial audit to be contacted on the accreditation. At that point the operator started to rant making statements like "How dare you insult me", "Look at my house does it look like I am not financial", "You come here and threaten me that I am not financial", "Give me your name". Officer Kalkandis gave Mr Markos (sic) her name. At that point the operator was aggressive towards Officer Kalkandis. I said to Mr Markos (sic) "We have upset you so we will leave now". Mr Markos (sic) said, "You haven't upset me (pointing at Officer Kalkandis and saying in a loud voice) she has insulted me. Officer Kalkandis and I then left the premises."

m) Ms Mussett reported that various deficiencies were identified in the areas of vehicle maintenance, risk management and vehicle monitoring. She recommended that a financial audit be conducted.

n) On 3 September 2009 Mr Morkos was notified that a financial review was to be conducted to determine whether there had been compliance with accreditation requirements under the Passenger Transport Act 1990.

o) Mr Morkos was informed that the review was part of a program of financial review of a number of operators.

p) Mr Morkos has given various reasons to explain his failure to have third party property insurance for an extended period, such as, that it was an oversight, that he had a green slip and he believed this is what was required, and that he was unaware that he had to have this type of insurance.

q) The requirement to hold third party property insurance has always applied. It was previously limited to $200,000 and increased in 2000 to $5 million. Mr Morkos signed a declaration in the annual self-assessment reports that he had the requisite insurance.

1. At the conclusion of Mr Wozniak's submissions, Mr Morkos stated from the bar table that he did have the requisite insurance, and that he could produce the certificate of insurance. On the basis of Mr Morkos's statement, I decided that the proceedings should be adjourned to allow Mr Morkos to produce the certificates of insurance from Australian Eagle Services Pty Ltd.

1. The matter was listed for further hearing on 31 May 2010.

1. On 31 May 2010 Mr Morkos produced documents purporting to be documents attesting to insurance of his Mercedes Benz Sprinter 316 CDI TV 3802 for the period 24 November 2006 to 24 November 2009. The documents were typewritten with "Australian Eagle Services Pty Ltd" as their letterhead. The documents were signed by "Director Emelia" and were variously dated 23 November 2006, 19 November 2007 and 18 November 2008.

1. Mr Wozniak challenged this documentary evidence, and submitted that it was not clear from the documents whether the insurance was issued by a corporation authorised under the Insurance Act 1973 of the Commonwealth to carry on insurance business, and whether the company, of which Mrs Morkos appears to be the only Director, is financially capable of insuring a vehicle for $5 million as required. He requested an adjournment so that these matters could be investigated.

1. The proceedings were adjourned to 11 August 2010 and the following directions were made:

a) Leave granted to the respondent's legal representative to issue summonses on Australian Prudential and Australian Eagle Services to produce tax and financial records; and

b) Ms Emelia Morkos, being "Director Emelia", to provide a statement regarding the insurance of the buses used in Mr Morkos' business.

1. On 3 August 2010 the Tribunal received a written statement from Emelia Morkos in the following terms:

"As I have been asked to write a statement re the insurance of TV 3802

I'm not sure what is asked of me, however Australian Eagle Services is a privately owned company, where (sic) we have invested a lot of money in. It has assets of three lots totalling one and quarter acre of medium density development land fully paid owing nothing, in Western Sydney. And it was Australian eagle (sic) Services that invested in the purchase of the bus TV 3802

the (sic) decision to protect our investment as Australian Eagle Services have directly a lot of money invested into the bus, thus it would only be right to cover it officially, in case of any accidents, then Australian eagle services would be liable, and insure (sic) the repairs done quickly and also claim for its losses.

Australian Eagle services (sic) also markets and invoice, for work done, by bus.

Please note that, the arrangement was under the condition of terminating as soon as insurance cover by insurance company commences.

Director

Emelia Morkos"

1. At the hearing on 11 August 2010 financial records and statements were produced pursuant to the summonses. Mr Morkos objected to the respondent's legal representative obtaining access to the material, submitting the material was not relevant to the decision under review. Mr Wozniak submitted that he was trying to ascertain whether Australian Eagle Services Pty Ltd had permission to insure or self-insure. He submitted that the financial material produced was directly relevant to the question of insurance. The Tribunal agreed that the question of insurance cover for the period 2007/2008 was directly relevant to the decision under review, so access to the documents was granted.

1. Following Mr Wozniak's perusal of the material produced under Direction, he sought leave to cross-examine Mrs Emelia Morkos. He submitted that there were serious credit issues emerging in the matter. Mr Morkos had made various inconsistent statements regarding insurance throughout the matter. The Tribunal questioned whether this could be done by telephone, mindful of the fact that there had been several hearing dates already. Mr Wozniak indicated that he needed to show Mrs Morkos documents in order to ask her questions about them, and that telephone evidence would not be adequate.

1. The hearing was adjourned until 17 September 2010. On that day Mrs Morkos was present at the Tribunal. Mr Morkos objected to her giving evidence. He stated that he and his family were being intimidated, and that he was being denied the chance to explain himself. I determined that Mrs Morkos' evidence was relevant to determining the question of insurance. Mrs Morkos was sworn in. She confirmed that she was the Director and Secretary of Australian Eagle Services Pty Ltd. She was asked some questions about the letters signed by her on behalf of Australian Eagle Services Pty Ltd in respect of the subject bus, as well as about the assets and liabilities of the company.

1. Mrs Morkos' answers were vague, and it was not clear whether she understood the questions. Mr Morkos objected to the questions on the basis that they were improper and intimidating. Mr Wozniak pressed the cross-examination on the basis that credit had now become a serious issue. He stated that the business is a family business, and that he strongly suspected that Mrs Morkos did not know the details of the business, or that she understood what she had signed. It also appeared to the Tribunal that Mrs Morkos did not understand the full import of either the questions or the answers, and that to allow her to continue without legal advice may result in an injustice.

1. The Tribunal was asked to rule on whether the cross-examination should continue. The following decision was delivered ex-tempore:

"The fundamental issue in this matter is whether the correct and preferable decision was made by the Director-General, NSW Transport & Infrastructure in cancelling Mr Morkos' operator accreditation. In determining this application for review by Mr Morkos, I now stand in the shoes of the Director-General, and my obligation is to review the whole of the matter.

The decision by the Director-General to cancel the accreditation was based on a conclusion that Mr Morkos was not a fit and proper person to operate a passenger service. This conclusion was primarily based on annual self-assessment reports concerning statements made by Mr Morkos in respect of third party property damage insurance. In statements for 2008 and 2009 Mr Morkos declared that he had the requisite insurance.

It is noted that any insurance policies must be issued by a corporation authorised under the Insurance Act 1973 of the Commonwealth to carry on such business.

Mr Morkos has made various statements throughout the investigation conducted by the Director-General and to the Tribunal, notably on the first day of hearing, when he indicated that he did have the requisite insurance. It was for this reason, to enable Mr Morkos to produce evidence regarding the insurance he claimed to have, that the proceedings have been adjourned on so many occasions. On the second day of hearing documents were produced purporting to show that Australian Eagle Services was the relevant insurer. Mrs Emelia Morkos is the Director and Secretary of that company. She has been cross-examined today, and during that course of that cross-examination I have become very concerned about several matters.

Mr Morkos has submitted that I should not be allowing the questions being posed by Mr Wozniak as they are not relevant to the matters to be determined by me. He has submitted the questions are intimidatory and improper. I do not agree.

My task is to determine whether Mr Morkos is a fit and proper person, and his honesty and integrity are matters I must consider in making that determination. On the face of it, Australian Eagle Services Pty Ltd is an unorthodox insurer. Some of the evidence today suggests problems with whether or not there are sufficient assets behind the company to properly cover the amount of necessary insurance. A matter which has not yet been addressed is whether the company was authorised to insure and whether Mrs Morkos was aware of the obligations on an insurer.

I am concerned about Mrs Morkos' general ability to communicate on business issues of the kind necessary in this case without the benefit of an interpreter. In my view, despite Mrs Morkos' evidence that she is comfortable to continue without an interpreter, I am of the view that the matter cannot proceed without one.

The evidence from Mrs Morkos is critical to the case. Mr Morkos has stated clearly that he does not want to adjourn. He wishes to proceed on the evidence before the Tribunal. In my view this is dangerous. The case has reached a point where first, I cannot be satisfied as to the adequacy of the insurance policies, and second, where there is significant doubt as to whether Mr Morkos has complied with operational obligations. This could be addressed by independent evidence from an accountant who would be able to explain the insurance situation."

1. The proceedings were therefore adjourned to allow for Mr Morkos to obtain the relevant information and advice.

1. On 1 November 2010 Mr Wozniak lodged with the Tribunal, and served on Mr Morkos, copies of sworn statements of Sandra Mussett dated 3 June 2010, Rebecca Kalkandis dated 3 June 2010, and Ralf Otto dated 29 October 2010. Mr Wozniak also lodged copies of letters to Mr Morkos from the former Ministry of Transport dated 11 July 2005, 20 July 2006, and Bus Operator Accreditation Update dated June 2005, February 2006, December 2006 and February 2007.

1. The letters remind the bus operators of the requirements and conditions of accreditation and the newsletters provide information regarding any changes to the requirements and/or conditions.

1. In summary Ms Mussett stated the following:

a) She has been a Compliance Officer with Transport NSW for 10 years;

b) On 24 July 2009 she was instructed to conduct a full compliance audit on Mr Morkos' accreditation;

c) An independent audit conducted by Ralf Otto on 24 May 2009 disclosed a number of deficiencies;

d) She contacted Mr Morkos to arrange a time to attend his business to conduct the full accreditation audit. She informed him that Mr Otto had detected some deficiencies. Mr Morkos asked, "What deficiencies?". She detailed them to him. He disputed them;

e) She arranged to attend his home on 31 July 2009. She attended with Officer Rebecca Kalkandis. Officer Kalkandis went through each identified deficiency with Mr Morkos and wrote down a comment on each point. Mr Morkos produced a number of records that he said he had provided to the independent auditor;

f) Ms Musett said that she told Mr Morkos that his claim that he provided the documents to the independent auditor could not be verified, because there was no stamp on the documents indicating that the auditor sighted them, but she said that she told him that they could attach them to his records to show that he had the correct documentation;

g) Ms Kalakndis asked Mr Morkos who was his insurer in the period 2007 to 2009. Mr Morkos said that he did not have insurance. Ms Kalkandis asked him to explain why he did not have insurance. He said that he was paying monthly and believed that he was paying his insurance, but when he discovered that he had not paid for any insurance, he purchased the correct policy immediately;

h) Ms Kalkandis asked him whether he had driven passengers around while he was uninsured. He admitted that he had, and asked her what would happen. Ms Kalkandis told him that the admission required her to recommend that a financial audit be carried out. Mr Morkos accused Ms Kalkandis of insulting him and threatening him. He demanded her name. She spelt her name. Mr Morkos was very aggressive towards Mr Kalkandis. They left and when they were away from his house they pulled the car over and called the Manager of Compliance to inform him of what had happened. A recommendation was made that a financial audit be conducted on Mr Morkos' accreditation.

1. In summary Ms Kalkandis stated the following:

a) She has been a Senior Project Officer for the respondent for one year;

b) On 23 July 2009 she recommended to the Manager of Compliance that, due to deficiencies detected by an independent audit conducted on Mr Morkos' bus accreditation, a full compliance audit be conducted on the operations;

c) She attended Mr Morkos' home on 31 July 2009 with Officer Mussett;

d) She read out to Mr Morkos the deficiencies identified by the audit. Mr Morkos was able to produce records showing that systems and policies were in place and that there had been compliance. She said that Mr Morkos told her that he had provided the same documentation to the auditor. She said that could not be determined because there was no stamp on the documents by the auditor to indicate that he had sighted them, but she could add them to Mr Morkos' records to show that he had the correct documentation;

e) She asked Mr Morkos for copies of his insurance documents, and after perusing them, asked about insurance for the period 2007 to 2009. Mr Morkos said that he did not have insurance for that period. He explained that he was paying his insurance by the month and he believed that he was continuing to pay for it. When he discovered that he did not have insurance he immediately took out a policy. He admitted that he had transported passengers while uninsured. She informed him that as a result of that admission she would have to recommend that a financial audit be conducted on his accreditation. Mr Morkos became upset, began to yell that she had insulted him suggesting that he was not financial, and became very aggressive towards her. She and Officer Mussett left Mr Morkos who continued to rant.

1. In summary Mr Otto stated the following:

a) He is an independent auditor. He contacted Mr Morkos the day before the audit was due to be conducted to inform him that he would need to see third party property damage insurance, a certificate of currency, maintenance records, a certificate of accreditation, a bus operator training course certificate, safety management systems documentation and other relevant documentation. He also told Mr Morkos that he would need to inspect the vehicle;

b) On 24 May 2009 he attended Mr Morkos' home. Mr Morkos was unable to provide any insurance policy or receipt for third party property damage. Mr Morkos told him that he had an email indicating that he had obtained insurance from a broker, but there was no verification that this was a genuine document from an insurance broker;

c) Mr Morkos was informed that the email was insufficient evidence of a third party property damage insurance policy. Mr Morkos became agitated. He was asked to produce previous years' insurance policies. Mr Morkos said that he could not provide records of past insurance policies. He said those documents would be with his accountant;

d) Mr Morkos was informed that the audit could be finalised in a few days time, but if the insurance papers were not received, the audit would have to be submitted without insurance papers and this would be recorded as a deficiency. Mr Morkos was also unable to provide any evidence that he had a system in place for recording and actioning defects. Mr Morkos provided some receipts, but said that most of the receipts were with his accountant. Mr Morkos also said that maintenance records from 2008 onwards were with his accountant. He was only able to provide two inspection reports for 2008. Mr Otto set out in detail all of the deficiencies indentified in the audit. He explained To Mr Morkos how the deficiencies could be addressed. About a week later Mr Morkos provided a certificate of insurance for the period 22 May 2009 to 22 May 2010.

1. Mr Morkos provided a written response to the statements. The response is mainly in the form of submissions. In summary, Mr Morkos submits that the statement of the independent auditor is misleading, and his evidence is fabricated, as are the statements of Ms Mussett and Ms Kalkandis. He submitted that there are contradictions and inconsistencies between the statements of Ms Mussett and Ms Kalkandis. He submitted that he was being victimised by the respondent. He agreed that he did not have third party property damage insurance cover in accordance with the respondent's requirements. He submitted that he believed that the insurance required was third party personal insurance, that is, the "green slip", which covered injury to passengers and the general public. He submitted that the insurance he had with Australian Eagle Services Pty Ltd was only to cover damage to the bus and any other vehicle it damaged. Mr Morkos submitted that he relied on the respondent to ensure he was informed of any updates or changes in the legislation, and he was not informed of the change in insurance requirements. Attached to the submissions was a copy of an email from Gary Dern, Accounts Manager of H & H Tax and Accounting Service. The email stated as follows:

"Peter

The balance sheet of Australian Eagle Services Pty Ltd shows Shares in Henderson Group $147,883 as assets held.

The Liability of $187,462 is money owing to yourself and represents money you lent to the company to purchase the Henderson shares and other money you have lent to the company.

The land is in the company name is no (sic) shown as an assets (sic) because it was purchased before we started and we did not have details of its purchase value to correctly show it in the Balance Sheet."

1. Mr Morkos also provided copies of documents showing maintenance of the subject vehicle, TV 3802 as well as heavy vehicle inspection records dated 19 June 2007, 19 June 2008, 13 November 2008, 2 June 2009 and 29 October 2009.

1. On 24 February 2011 Ms Mussett, Ms Kalkandis and Mr Otto made themselves available for cross-examination by Mr Morkos.

1. Mr Otto was sworn in and confirmed his statement evidence. He told the Tribunal that the audit he conducted was incomplete because Mr Morkos did not provide all of the heavy vehicle inspection records. He said that he only saw two of them, but he needed to see at least four. He saw the documents dated 13 November 2008 and 19 June 2008. He said that Mr Morkos also did not produce any insurance records. Mr Otto said that every public passenger vehicle must be inspected at the time of registration and then six months later, in addition to the manufacturing requirements of regular maintenance. Mr Morkos failed to produce any documentation that regular servicing had been carried out. Mr Otto said that he did receive an insurance document about a week after the audit took place. He said that a risk register was produced, but it was incomplete. Mr Otto said that he had concerns regarding maintenance, lack of documentation and insurance. Mr Otto said that he only reported what he saw. Mr Otto said that he is independent and does not work for the respondent.

1. Ms Kalkandis was sworn in and confirmed her statement evidence. She told the Tribunal that the investigation was based on the independent auditor's report. She said that the independent auditor only provides a "snapshot" of the situation, and the Department then carries out a complete investigation. Mr Morkos produced documentation in respect of maintenance and some insurance records. There was no evidence to immediately suspend Mr Morkos' accreditation, but there were some serious concerns that required further investigation.

1. Ms Mussett was sworn in and confirmed her statement evidence. She told the Tribunal that there had not been any direction to treat this investigation differently than any other. She said that she made contemporaneous notes of the discussion with Ms Kalkandis, Mr Morkos and herself and that her statement was based on those notes.

Discussion and Decision

1. It was submitted on behalf of the Department as follows:

a) The submissions filed by Mr Morkos have little or no relevance to the issues for determination;

b) Mr Morkos has little or no understanding of what is required of him and it appears he has fabricated evidence to justify the various explanations he had made;

c) Mr Morkos variously stated that he did not have insurance, did not know that he had to have the relevant insurance, that he was paying for insurance and then realised that he was not paying for it, and that was an oversight, and finally, that he thought he was required to have third party personal insurance only;

d) Mr Morkos is clearly not a fit or proper person because he tailors his response to suit the particular situation. The Tribunal should have serious concerns about Mr Morkos's honesty;

e) The Tribunal should affirm the Director-General's decision on the basis that Mr Morkos is not a fit and proper person to be the operator of a public passenger service.

1. Mr Morkos also made submissions, which reflected what he had previously submitted to the Tribunal. In summary, he submitted that the Department has victimised him and not given him a chance to address the issues raised. He also submitted that the respondent's witness gave false and misleading evidence and that their statements were inconsistent. He did not believe the question of insurance was the real issue, because it was only raised in passing at the end of the conversation with Ms Kalkandis and Ms Mussett.

1. The Tribunal's role is to decide what the correct and preferable decision is, having regard to the material before it. The respondent contends that the applicant is not a fit and proper person to hold accreditation to operate public passenger vehicles. It is necessary to consider that issue.

1. Judicial Member Montgomery in Gomes v Department of Transport and Infrastructure [2010] NSWADT 318 set out a useful analysis of the relevant considerations for a Tribunal when determining whether a person is a fit and proper person in the context of the Passenger Transport Act 1990. Judicial Member Montgomery referred to the decision of the High Court in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 380, in which Chief Justice Mason explained that:

"The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration."

1. He also referred to the joint judgment of Toohey and Gaudron JJ, where their Honours said at 380:

"The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question."

1. Judicial Member Montgomery said in Gomes that:

"A person's fitness is to be gauged in light of the nature and purpose of the activities that the person will undertake: Hughes and Vale Pty Ltd v New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 127. Knowledge, ability, moral integrity and the rectitude of character necessary to fulfil the role for which a licence is sought are proper considerations: Sobey v Commercial and Private Agents Board 20 SASR 70. In H aining v Commissioner of Police, NSW Police Service (1999) NSWADT 6 at [41] the President of this Tribunal made the following comments on the issue, in the context of the security industry:

`Whether a person is `fit and proper' to hold a licence in a regulated industry will be affected by general considerations relating to the character of the person, special considerations that take account of the nature of the industry in issue and the public policy objective leading the legislature to regulate the industry.'

In the past, the Tribunal has cited with approval the test posed by the equivalent ACT Tribunal dealing with an equivalent legislative scheme in Maythisathit and Registrar of Motor Vehicles [1996] ACT 165 per Curtis P:

'One must put oneself, so far as possible, in the position of a member of the public who might travel in a taxi driven by the applicant and ask whether that member of the public, knowing of the applicant's criminal record and what he has done ... to rehabilitate himself, would object to the applicant as the driver of the taxi.'

1. Applying these principles to the facts of this matter, I am not satisfied that Mr Morkos is a "fit and proper person" to operate public passenger vehicles.

1. The legislation is clear that the purpose of the accreditation is to attest that the person so accredited is a person who is considered to be of good repute, and, in all other respects, fit and proper to be responsible for the operation of a public passenger service, and that the accredited person has met the government's standards.

1. Although there is evidence of poor record-keeping by Mr Morkos, the real issue is the failure to have the appropriate insurance for a period of about two years. There is no evidence of any conspiracy on the part of the Department or its officers, as alleged by Mr Morkos. Mr Otto was given the task of carrying out an audit. He did so, and some crucial documentation was not presented at the audit, although it was presented later in time. This resulted in Mr Otto reporting to the Department as he was required to do.

1. The same can be said of Ms Kalkandis and Ms Mussett. There is no evidence of victimisation. I accept that Mr Morkos has felt personally affronted by the process and by what he perceives to be an unwarranted intrusion into his financial affairs. It appears to the Tribunal however, that he does not appreciate that there are serious consequences if he does not comply with the Department's requirements in respect of the accreditation, and that he does not take the responsibilities of the accreditation seriously. His remark that there are many operators whose record-keeping is poor indicates a cavalier attitude towards the requirements. He has sought to be accredited and the requirements of that accreditation include an assessment of his financial viability, as well as appropriate insurance. Mr Morkos needs to satisfy the department that he is able to comply with all of its requirements. This is crucial to maintaining public confidence in the accreditation system of public passenger operators.

1. I do not accept his explanation, and consider it to be disingenuous, that he believed that the insurance referred to in the ASARs was third party personal, nor do I accept that he did not know it was $5 million, because the ASARs completed by him specifically refer to "Third Party Property Insurance Policy with a minimum of $5 Million cover per bus". The question enquiring about the insurance was answered by Mr Morkos in the affirmative, and he completed a declaration that he understood the questions and provided truthful answers.

1. Mr Morkos' various explanations, which were inconsistent with one another created confusion and obfuscation. Moreover, the documentation purporting to attest to insurance cover by Australian Eagle Services Pty Ltd was, in my view, deliberately intended to mislead. His own evidence was that he did not have insurance at the relevant times.

1. Mr Morkos did himself a great disservice. He appeared to me to be an unreliable witness. As a result, his character and honesty are questionable, and, in my view, he has not demonstrated that he is a "fit and proper person" to hold an accreditation. I am satisfied that the decision made by the Director-General in the circumstances of this case was reasonably available to the Director-General, and that it was the correct and preferable decision in all of the circumstances of the case.

1. The decision of the Director-General is affirmed.

**********

Decision last updated: 23 September 2011