Pioneer International Pty Ltd and Greenhouse and Energy Minimum Standards Regulator

Pioneer International Pty Ltd and Greenhouse and Energy Minimum Standards Regulator [2022] AATA 1587 (8 June 2022)
Division:GENERAL DIVISION
File Number(s): 2020/8475
Re:Pioneer International Pty Ltd
APPLICANT

AndGreenhouse and Energy Minimum Standards Regulator
RESPONDENT

Decision
Tribunal:Deputy President J W Constance
Senior Member A Poljak
Date:8 June 2022
Place:Sydney

The reviewable decision made 2 December 2020 is affirmed.
............................[SGD]...................................
Deputy President J W Constance
Catchwords
GREENHOUSE AND ENERGY MINIMUM STANDARDS (GEMS) – GEMS Regulator – regulation of energy efficiency regulated products – where products must be registered on the GEMS Register – products required to meet determined standards of energy efficiency – check testing of products – where Applicant registered model of air conditioning unit on the GEMS Register – where GEMS Regulator not satisfied that the product met energy efficiency standards – issue of statutory notice by GEMS Regulator to Applicant requiring Applicant to cancel registration of the product or arrange for check testing of the product – non-compliance with notice – where GEMS Regulator may suspend or cancel the registration of products for non-compliance with notice – decision to cancel registration of product – decision under review affirmed
Legislation
Greenhouse and Energy Minimum Standards Act 2012 (Cth) ss 4, 54, 61, 71, 126
Greenhouse and Energy Minimum Standards (Air-Conditioners and Heat Pumps) Determination 2013
REASONS FOR DECISION
Deputy President J W Constance
Senior Member A Poljak
8 June 2022
introduction

Section 4 of the Greenhouse and Energy Minimum Standards Act 2012 (Cth) (“the Act”) sets out its objects:
The objects of this Act are:
(a)to give effect to certain obligations that Australia has under the Climate Change Convention; and
(b)to promote the development and adoption of products that:
(i)     use less energy; or
(ii)    produce fewer greenhouse gases; or
(iii)   contribute to reducing the amount of energy used, or greenhouse gases produced, by other products.
The Respondent in these proceedings, the Greenhouse and Energy Minimum Standards Regulator, has been appointed to exercise the functions set out in section 71 of the Act. These include the power to administer, and to monitor and enforce compliance with, the Act.
Under section 126 of the Act, the Respondent conducts check testing of energy efficiency regulated products that must be registered on the Greenhouse and Energy Minimum Standards Register (“GEMS Register”) before they can be sold.
The Applicant sells air conditioning units. In 2018 the Applicant registered a particular model of unit on the GEMS Register[1]. In June 2018 the Respondent made arrangements to test a unit of that model to verify that it meets the standards of energy efficiency required by the Act. Initial testing on behalf of the Respondent was conducted in October 2019.
[1] Air conditioning unit model GR-18CHSA/GEF-18CHSA, registration number AAC3139.
After that initial testing, it was determined that the unit did not meet the required standards. The Applicant was advised of this and discussions between the parties followed.
In May 2020 the Respondent, having formed the view that the unit did not meet the required standards, issued a notice under section 61(1) of the Act to the Applicant requiring it to either:
(a)apply to cancel the Unit’s registration within 21 days; or
(b)arrange for Stage 2 check testing at a test laboratory in Australia, in compliance with the requirements set out in the s 61 notice and the GEMS Policy and to provide the results to the respondent within 90 days (being 18 August 2020).
The Applicant was informed that if it did not comply with the notice, the registration of the unit may be suspended or cancelled.
Following negotiations between the Applicant and the Respondent, the Respondent formed the view that the Applicant had not complied with the notice. On 2 December 2020 the Respondent decided to cancel the registration of the unit, under section 54(1)(b)(iv) of the Act, with effect from 9 December 2020. In these reasons we shall refer to the decision of 2 December 2020 as the reviewable decision.
The Applicant has applied to the Tribunal to review the reviewable decision. For the reasons which follow the reviewable decision will be affirmed.
legislation
Section 61 of the Act provides:
Requirement for registrant – testing products or cancelling registration
(1) The GEMS Regulator may give a registrant for a registration of a model in relation to a product class a written notice requiring the registrant to take the action specified in subsection (2) if the GEMS Regulator believes, on reasonable grounds, that the model does not comply with the GEMS determination against which it is registered.
Note: The registrant is taken to have been given a notice under this Act if the notice is given to a contact person for the registration (see section 68).
(2) The registrant must either:
(a)apply under subsection 54(2) to cancel the registration of the model within a period specified in the notice; or
(b)do both of the following within a period specified in the notice:
(i)     arrange for further testing and examination (at the registrant’s own expense) of one or more specified products of the model, or products of another model that is covered by the same registration, as specified in the notice;
(ii)    notify the GEMS Regulator of the results of the test or examination.
(3) A notice under subsection (1) must also specify the following matters:
(a)the day on which the notice is given;
(b)the name of the registrant for the registration of the model in relation to the product class;
(c)the model of the GEMS product;
(d)the manner in which the GEMS Regulator believes that the model does not comply with the GEMS determination against which the model is registered;
(e)for the purposes of paragraph (2)(b)—the manner in which the specified product or products must be tested or examined, including any or all of the following:
(i)     the matters in relation to which the product or products must be tested;
(ii)    the methods for testing;
(iii)   any specified persons who are required to examine or test the product or products;
(f)that the GEMS Regulator may suspend the registration under section 49, or cancel the registration under section 54, if the registrant does not comply with the notice.
Section 54(1) of the Act provides, in part:
(1) The GEMS Regulator may cancel a model’s registration in relation to a product class if the GEMS Regulator is satisfied that:
………………..
(b)the registrant has failed to comply with one or more of the following in relation to the model:
………………..
(iv) a notice under section 61 (testing products or cancelling registration—belief model non-compliant); …
issues for determination
We are reviewing the Respondent’s decision to cancel the registration of the unit.[2] The Act does not provide for the Tribunal to review the decision to issue the section 61 notice.
[2] Section 164 of the Act.
The following issues arise for determination:
(1) Has the Applicant failed to comply with a notice under section 61 of the Act?
(2) If so, should the discretion to cancel the unit’s registration in relation to a product class be exercised?
evidence and findingS of fact
We are satisfied of the following facts alleged by the Respondent in an Amended Statement of Facts, Issues and Contentions dated 25 June 2021 and which are not in dispute:
·in April 2018, the Applicant registered an air conditioning unit on the GEMS Register;
·the Respondent authorised Vipac Engineers & Scientists (“Vipac”) to test the unit to determine if it complied with the requirements of the Greenhouse and Energy Minimum Standards (Air-Conditioners and Heat Pumps) Determination 2013 (“the 2013 Determination”);
·at all relevant times Vipac was accredited as a testing facility by the National Association of Testing Authorities (“NATA”);
·it was agreed between the Respondent and Vipac that the testing was to be conducted in Vipac’s laboratory in Victoria;
·testing was to be carried out in accordance with the Respondent’s Greenhouse and Energy Minimum Standards Check Testing Policy[3];
·on 30 August 2018 the Respondent requested the Applicant to provide the locking instructions for the unit to assist with the proposed testing[4];
·between 5 September 2018 and 11 October 2019 the Applicant and the Respondent engaged in discussions and correspondence in which the Applicant disputed the competency of Vipac to conduct the testing;
·the Applicant refused to supply the locking instructions;
·on 11 October 2019 Vipac conducted a test of the unit in accordance with the Respondent’s request (“the Stage 1 test”);
·on 20 May 2020 the Respondent issued a notice under section 61 of the Act[5]. A copy of the notice is Annexure A to these reasons;
·the notice required the Applicant to either cancel the unit’s registration within 21 days or arrange Stage 2 testing in a laboratory in Australia;
·the Applicant did not cancel the unit’s registration or arrange Stage 2 testing;
·on 2 December 2020 the Respondent cancelled the registration of the unit in accordance with section 54(1)(b)(iv) of the Act[6]. A copy of the notice of cancellation is Annexure B to these reasons.
[3] Exhibit R1 at T32, 246.
[4] Exhibit R1 at 31.
[5] Exhibit R1 at 11.
[6] Exhibit R1 at 9.
Evidence of Mr Grima, Director of the Applicant
Mr Grima gave evidence at the hearing. He holds the qualification of Bachelor of Mechanical Engineering.
Mr Grima is of the opinion that the unit would have been shown to meet the Stage 1 Test requirements if the locking instructions had been available to Vipac.[7] The locking instructions are contained in a remote-control device which allows a tester to set the kilowatt rating of the unit while it is being tested. This gives a more accurate measurement of its energy efficiency.
[7] Transcript 23/09/21 at 8.
Prior to the Stage 1 test being carried out, the Applicant requested the Respondent to advise whether a Hazardous Zone Report was available in respect of the area in which the test was to be performed and whether the person who was to install the unit for testing was properly qualified.[8]
[8] Transcript 23/09/21 at 9.
The Applicant did not provide the locking instructions to the Respondent or to Vipac because the Applicant considered that dangers associated with the proposed testing were not addressed.[9] In the opinion of Mr Grima the Applicant would have been legally responsible for any injury suffered by any person during the testing process if it provided the locking instructions.
[9] Transcript 23/09/21 at 10.
Evidence of Mr Haydock, Director of the Applicant
Mr Haydock gave evidence at the hearing. Mr Haydock is a Director and Sales Manager of the Applicant, a Licensed Refrigeration Mechanic and a Hydrocarbon and Refrigeration Teacher.
At some stage prior to the unit being tested, Mr Haydock spoke to the person who installed the unit for testing. The installer informed Mr Haydock that:
·he did not have experience working with a natural refrigerant air conditioning unit or on a natural refrigerant site;
·he had not undertaken any hydrocarbon training modules;
·he did not know of the safety requirements of working with natural refrigerants.[10]
[10] Transcript 23/09/2021 at 50.
The installation of the unit was not a standard installation as it was installed in the confined space of a test room. In that situation there was a risk of an explosion and the risk of injury to the installer and others.[11]
[11] Transcript 23/09/2021 at 50.
Evidence of Mr Sylvester, Professional and Risk Engineer
Mr Sylvester provided a report dated 6 August 2020[12] and gave evidence at the hearing.
[12] Exhibit R1 at 15.
Mr Sylvester was engaged by the Applicant to advise whether a hazardous area classification was required when the unit was to be tested in an enclosed room.
Mr Sylvester reported, in part:
5.1. Conclusions
An analysis of the testing of an air condition unit in an enclosed room and operating with hydrocarbon gas was conducted to determine whether a hazardous area occurs, based on the air conditioning equipment design and use.
The analysis identified that a leak source is present in the form of a flared joint between the condenser unit and connecting pipework to the evaporator unit. As a leak source has the potential to release gas into the surrounding area, where a flammable gas is released, the gas will pass through the flammable range resulting in the development of a hazardous zone.
The analysis conducted in this study identified that the hazardous zone would extend 1.5m in all direction from the leak source (i.e. the flared joint connecting the condenser to the pipework between the condenser and evaporator units). Whilst the analysis conducted in this study has identified that a hazardous zone exists in the enclosed room, it is concluded that a detailed hazardous area classification assessment is required for the air conditioning test conducted in an enclosed room to ensure appropriate control of ignition sources within the room.[13]
[13] Exhibit R1 at 22.
When he gave evidence Mr Sylvester said that, once there is electrical equipment involved in an area where a hazardous zone may develop, as was the case with the installation of the unit at Vipac’s test site, the risk must be assessed. This is required by Australian Standard 3000 and the 60079 series of standards which followed.[14]
[14] Transcript 23/09/21 at 70.
Evidence of Mr Brigden, Assistant Director of Enforcement, Department of Environment and Energy
On 10 September 2019 Mr Brigden advised the Respondent that the Department recommended that the Respondent proceed with the testing of the unit without further delay.[15]
[15] Exhibit R1 at 50.
The advice included the following:
15. Australian Standard – AS/NZS 3823.1.1:2012 (Clause 5.1.1.2) contemplates scenarios where locking instructions are either not provided or not able to be used. The effective result is that the product compressor works at full load rather than the partial load induced by the locking instructions.
16. Therefore, the EECS expects that should testing of GR-18CHSA/GIF-18CHSA proceed in the absence of locking instructions the test result will indicate a poorer energy efficiency outcome than if the instructions had been properly provided. To this end, it could be argued that it is to the detriment of Pioneer that they are refusing to provide locking instructions.
17. On 3 September 2019 Vipac confirmed that they had the operational capacity to check test GR-18CHSA/GIF-18CHSA on Tuesday 24 September 2019.
18. The EECS therefore recommends that you endorse and sign the attached letter (Attachment A) informing GRIMA that the GEMS Regulator intends to proceed with the testing GR-18CHSA/GIF-18CHSA on 24 September 2019.
19. The letter allows Pioneer a final opportunity to provide either a witness or the required locking instructions.[16]
[16] Exhibit R1 at 52.
When he gave evidence at the hearing, Mr Brigden agreed that Vipac performed testing on behalf of the Respondent and the Respondent determined when, and if, testing should proceed.[17]
[17] Transcript 24/09/21 at 114.
Evidence of Mr Byrne, Manager Energy Efficiency, Department of Energy and Environment
Following the issue of the section 61 notice to the Applicant, Mr Byrne had discussions and email correspondence with Mr Grima as a representative of the Applicant.
Mr Byrne gave evidence at the hearing.
On 3 July 2020 Mr Byrne advised Mr Grima in writing that his enquiries revealed that there were no mandatory qualifications for the use of hydrocarbons, although there were voluntary accreditation courses available.[18] Mr Byrne also advised Mr Grima that WorkSafe Victoria had advised the Department that a hazardous zones assessment was not required in relation to the testing of the unit.[19]
[18] Exhibit R1 at 171.
[19] Transcript 24/09/21 at 127.
By email of 20 August 2020[20], Mr Byrne advised the Applicant that it was required to:
·make arrangements with Vipac for the selected Pioneer air conditioner units to be delivered to Vipac for stage 2 check testing.
·if you so choose, make arrangements with Vipac to have a qualified, experienced, and competent installer available to assist Vipac with the installation and charging of the air conditioner units
·provide Vipac with any inverter locking instructions, software, or controllers required to conduct the check tests.[21]
[20] Exhibit R1 at 182.
[21] At 187.
On 20 November 2020 Mr Byrne advised the Applicant, relevantly, that:
… Pioneer must either apply to cancel GEMS registration AAC 3139 or arrange for Stage (2) check testing and notify the GEMS Regulator of the results by 26 November 2020. If neither action is taken by this date, the GEMS Regulator (or their delegate) will be taking steps to cancel the GEMS registration AAC 3139. Pioneer may seek review of any decision to cancel the GEMS registration after it is made.[22]
[22] Exhibit R1 at 211.
Evidence of Mr Klein, Mechanical Engineer
Mr Klein is the Thermal Team Leader employed by Vipac. He holds an Australian Refrigeration Council licence. Mr Klein gave evidence at the hearing.
The unit was purchased anonymously by Vipac on behalf of the Respondent. It was installed for testing by a refrigeration mechanic employed by Vipac. At the time the installer held an Australian Refrigeration Council licence. There were two refrigeration mechanics on site at the time of the installation, one of whom had previously installed a hydrocarbon air conditioner supplied by the Applicant.
Mr Klein supervised the installation. The installer was fully competent and had completed all relevant courses. The unit was installed in accordance with the instructions in the Instruction Manual provided with the unit by the Applicant at the time of sale.[23] The installation was carried out in accordance with Australian Standards and best industry practice. Steps were taken to test for potential gas leaks before gas was released from the unit. It was not necessary to add or remove gas to or from the unit prior to testing.[24]
[23] Transcript 30/09/2021 at 157 and 182.
[24] Transcript 30/09/2021 at 183.
Prior to the unit being installed, Mr Klein carried out a risk assessment of the proposed installation and testing of the unit and formed the opinion that it was “fully safe”.[25]
[25] Transcript 30/09/2021 at 160; a copy of the Risk Assessment Form is exhibit R3 in these proceedings.
During the risk assessment the following associated risks were identified (as well as others):
Risk of refrigerant leaking from
system during commissioning
·     Inhalation risk to personnel
·     Fire risk for flammable refrigerants
·     Explosive risk if LEL reached.
Controls were listed against these hazards as follows:
Prior to releasing gas into system, complete the following:
1.    Complete installation in a well-ventilated area (Outside chamber, or inside chamber with all doors fully open)
2.    Inspect copper flares to ensure done correctly and deburred
3.    Inspect copper length to ensure no kinks or damage
4.    Check to ensure all flare nuts tightened sufficiently
5.    Pressurise copper pipework to greater than working pressure of system with dry nitrogen
6.    Use leak detector on all joins
7.    Leave nitrogen at pressure for minimum of 30 minutes
8.    Vacuum system to less than 500 microns
9.    Turn off Vacuum pump and ensure that system remains below 500 microns for 30 minutes
10. Test system with leak detector kit once DUT is operational[26]
reasoning
[26] Exhibit R3.
Issue 1: Has the Applicant failed to comply with a notice under section 61 of the Act?

Although the decision to issue the section 61 is not the subject of this review, we must be satisfied that a valid notice has been issued to the Applicant before we can decide whether there has been non-compliance with a notice such as to enliven the power to cancel a registration under subsection 54(1) of the Act.
Much of the evidence called on behalf of the Applicant addresses the question of whether or not the Respondent and Vipac, tested the unit safely and in accordance with the law. Mr Grima and Mr Haydock gave evidence of the reasons why the Applicant did not supply the locking instructions to the Respondent to facilitate the testing of the unit. However, this evidence does not affect the validity of the section 61 notice.
Based on the following findings of fact we are satisfied that the notice dated 20 May 2020 was a valid notice:
·the Stage 1 test of the unit was performed by Vipac on 11 October 2019;
·at the time the test was performed, Vipac was accredited by NATA to carry out the test;
·the test disclosed that the unit did not meet the required standards of energy efficiency;
·the notice specified all of the matters required to be specified by subsection 61(3) of the Act.
We accept the evidence of Mr Klein as to how the unit was installed and the test was performed, including his evidence that an appropriate risk assessment was carried out. He is well-qualified to give the opinions expressed and supervised the testing of the unit. He impressed us as an honest witness who gave his evidence to the best of his recollection. However, even if a risk assessment had not been made, there is no evidence to suggest that the result of the Stage 1 test would have been affected.
Issue 2: Should the discretion to cancel the unit’s registration in relation to a product class be exercised?
We are satisfied that after the Applicant received the section 61 notice it did not comply with the notice, that is the Applicant did not apply to have the registration of the unit cancelled nor did it arrange for further testing of the unit. The Applicant did not dispute these findings. For these reasons we are satisfied that the discretion to cancel the registration in accordance with subsection 54(1)(b)(iv) of the Act is enlivened.
Based on the evidence of Mr Byrne we are satisfied that the Applicant was afforded ample opportunity to comply with the section 61 notice. As the Applicant chose to withhold the locking instructions from the Respondent and to not comply with the section 61 notice, we are satisfied that the exercise of the discretion to cancel the registration of the unit was the preferable decision.
conclusion
The reviewable decision, being the decision of the Respondent made 2 December 2020 to cancel GEMS Registration AAC3139, will be affirmed.

I certify that the preceding 45 (forty-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President J W Constance and Senior Member A Poljak

...............................[SGD]....................................
Associate
Dated: 8 June 2022

Date(s) of hearing: 23-24 & 30 September 2021

Representative for the Applicant: Mr D Grima

Solicitors for the Respondent: Mr P Macliver, Australian Government Solicitor
Annexure A
Annexure B

[2022] AATA 1587

8 June 2022

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Remedies

Date(s) of hearing:	23-24 & 30 September 2021
Representative for the Applicant:	Mr D Grima
Solicitors for the Respondent:	Mr P Macliver, Australian Government Solicitor