Wiseway Logistics Pty Ltd and Secretary, Department of Home Affairs
[2024] AATA 2250
•24 June 2024
Wiseway Logistics Pty Ltd and Secretary, Department of Home Affairs [2024] AATA 2250 (24 June 2024)
Division:GENERAL DIVISION
File Number(s): 2023/8442
Re:Wiseway Logistics Pty Ltd
APPLICANT
AndSecretary, Department of Home Affairs
RESPONDENT
DECISION
Tribunal:Senior Member A Poljak
Date:24 June 2024
Place:Sydney
The decision under review is affirmed.
............................[SGD]............................................
Senior Member A Poljak
Catchwords
AVIATION TRANSPORT SECURITY - Review of decision not to renew Applicant’s designation as a regulated air cargo agent (RACA) - Consideration of Applicant’s history non-compliance – Consideration of Applicant’s current capacity to perform the functions of a RACA – Consideration of Applicant’s current systems and culture – Decision under review affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Aviation Transport Security Act 2004 (Cth)Aviation Transport Security Regulations 2005 (Cth)
Cases
Taufahema v Minister for Immigration and Citizenship (2010) 183 FCR 515, [2010] FCA 328
Wiseway Logistics Pty Ltd v Secretary, Department of Home Affairs [2024] FCA 427
Wiseway Logistics Pty Ltd and Secretary, Department of Home Affairs [2024] AATA 1032.Wiseway Logistics Pty Ltd v Secretary, Department of Home Affairs (AAT, 7 February 2024)
REASONS FOR DECISION
Senior Member A Poljak
24 June 2024
The Aviation Transport Security Regulations 2005 (Cth) (Regulations) establish a scheme under which certain persons that carry on a business that includes the handling, or making arrangements for the transport, of cargo are designated as a regulated air cargo agent (RACA).
RACAs perform a vital element of the secure air cargo supply chain and are responsible for examining air cargo. Cargo screening is almost exclusively focussed on either dangerous goods or improvised explosive devices, and the process of screening can vary in complexity due to the nature of the goods scanned or screened. RACA’s must securely store, and transport cleared air cargo at all times such that the cargo remains in their custody so as to maintain the integrity of the secure air cargo supply chain. As with any chain, the weakest link can compromise the whole.
The applicant, Wiseway Logistics Pty Ltd (Wiseway), is a freight forwarder which was designated as a RACA under the Regulations on 8 February 2019 for a period of five years. On the same date, Wiseway was issued with a RACA Security Program. On 27 February 2019, Wiseway was given the Enhanced Air Cargo Examination (Wiseway Logistics Pty Ltd) Notice 2017, which set out the requirements in relation to how cargo that is loaded onto an aircraft must be examined at the facilities covered by its RACA designation. Wiseway was approved to handle, examine, store and clear air cargo that was able to be uplifted on board domestic and international air services. Wiseway’s export business involves primarily export of Australian made food products by air freight to China.
Wiseway has a history of non-compliance issues which began shortly after it obtained its RACA designation.
On 4 February 2021, Wiseway was issued a proposed revocation of its RACA designation and Examination Notice (proposed revocation). The notices described the various types of noncompliance that had been identified by the Department of Home Affairs (the Department) since Wiseway obtained its RACA designation. On 16 March 2021, Wiseway proposed a number of actions to rectify and mitigate against committing further contraventions, and, on 13 April 2021, a delegate of the Secretary of the Department, found Wiseway had taken numerous steps to be responsive to the Department and had shown a willingness to comply, accepted Wiseway’s proposals and decided not to revoke Wiseway’s RACA designation and Examination Notice.
After the decision not to revoke Wiseway’s RACA designation and the Examination Notice, the Department continued to engage with Wiseway about its compliance. After numerous inspections, a large volume of infringement notices, observations notices and non-compliance notices were issued to Wiseway which covered a wide range of conduct, including failing properly to examine homogenous/non-homogenous cargo; failing to maintain explosive trace detection logs; failing to maintain physical security (including access and perimeter control); failing to comply with requirements for handling and treatment of cleared cargo; failing to comply with requirements for security declarations; failing to keep records of staff and security awareness training.
On 15 September 2023 Wiseway applied for renewal of is RACA designation. On 31 October 2023 a delegate of the Secretary decided to refuse to grant that renewal so that, with effect from 8 February 2024, Wiseway was not authorised to handle, examine or clear air cargo. After referring to the history, the delegate said that Wiseway have not demonstrated responsiveness to educative or administrative approaches on, and enforcement action has not proven to be an effective deterrent towards achieving [,] compliance’. In the delegate’s view, Wiseway ‘have not adequately demonstrated the capability and maturity to meet, maintain and make a meaningful contribution to the safeguarding of aviation. The delegate also found that Wiseway’s recurring breaches ‘poses an unacceptable risk to aviation security’. This is the decision under review in these proceedings (refusal decision).
Following the refusal decision, the Respondent provided Wiseway with a Statement of Findings on Material Questions of Fact and Reasons for Decision dated 15 December 2023 (Statement of Reasons).
PROCEDURAL HISTORY FOLLOWING THE REFUSAL DECISION
Having regard to the impending expiration of Wiseway’s RACA designation on 8 February 2024, and the likelihood that the Tribunal’s review of the refusal decision could not have been completed before that date, on 13 December 2023, Wiseway sought a stay of the refusal decision. The application invoked the Tribunal’s power under subsection 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).
The Tribunal refused the stay on 7 February 2024; see Wiseway Logistics Pty Ltd v Secretary, Department of Home Affairs (AAT, 7 February 2024). The same day, Wiseway obtained ex parte orders from Nicholas J as duty judge of the Federal Court staying both the Tribunal’s decision and the refusal decision. On 16 February 2024, his Honour continued the stay on conditions. Namely, that Wiseway:
(a)will cease conducting examinations under the Act and Regulations;
(b)is only to handle cargo from existing customers who are prescribed as ‘known consignors’ under the Regulations;
(c)will only conduct the handling of cargo in accordance with the security program in force with respect to the applicant; and
(d)will engage an independent auditor, to be agreed by the respondent (such agreement not to be unreasonably withheld), who will supervise the conduct of the applicant on a daily basis and report weekly to the respondent as to the applicant’s compliance with the Act, the Regulations, and this undertaking.
The final hearing of the Federal Court proceeding was expedited and on 26 April 2024, Kennett J dismissed the applicant’s application for judicial review of the Tribunal’s refusal of the applicant’s first stay application; see Wiseway Logistics Pty Ltd v Secretary, Department of Home Affairs [2024] FCA 427 (26 April 2024) (Wiseway). His Honour continued the stay ordered by Nicholas J, with the same conditions, until 5pm on 1 May 2024.
The applicant filed a fresh stay application in this Tribunal on 29 April 2024, claiming changed circumstances since the original stay application. Following a short extension of the stay by the Tribunal until 10am on Monday, 6 May 2024, Wiseway moved on the stay application. The stay application was refused in a decision dated 6 May 2024; see Wiseway Logistics Pty Ltd and Secretary, Department of Home Affairs [2024] AATA 1032.
THE STATUTORY SCHEME
The statutory scheme was outlined by Kennett J in Wiseway at [16]-[36]. What follows is drawn from his Honour’s reasons, with some additional references.
The Act
The Regulations are made under the Aviation Transport Security Act 2004 (Cth) (the Act). Subsections 3(1) and (2) of the Act identify the ‘main purpose’ as follows:
1)The main purpose of this Act is to establish a regulatory framework to safeguard against unlawful interference with aviation.
Note: Division 4A of Part 3 and Divisions 2A and 10 of Part 4 have additional purposes (see sections 38AA, 44C and 74J).
2)To achieve this purpose, this Act establishes minimum security requirements for civil aviation in Australia by imposing obligations on persons engaged in civil aviation related activities. In particular, it obliges certain aviation industry participants to develop, and comply with, aviation security programs.
Another purpose of the Act in subsection 3(4) is to meet Australia’s obligations under the Convention on International Civil Aviation (known as the Chicago Convention).
‘Unlawful interference with aviation’ is defined by section 10 and comprises doing or attempting to do any one of several things without lawful authority (subsection 10(1)), including:
(e) placing, or causing to be placed, on board an aircraft that is in service anything that puts the safety of the aircraft, or any person on board or outside the aircraft, at risk.
Part 4 of the Act deals with, among other things, screening and clearing of passengers, weapons, prohibited items and on-board security. Division 2A deals with examining and clearing air cargo. Section 44B defines these concepts:
(1)Cargo is ‘examined’ when it undergoes examination in accordance with regulations made under section 44C before being taken on to an aircraft.
(2)Cargo ‘receives clearance’ if, after being examined, it has been handled in accordance with regulations made under section 44C that prescribe how it is to be handled for this purpose. Cargo can also receive clearance if it is within a category prescribed as not requiring examination and has been handled in accordance with applicable regulations.
(3)Cargo is ‘cleared’ if it has ‘received clearance’ and, since that time, has been handled at all times in accordance with regulations made under section 44C.
Section 44C provides, relevantly, as follows.
44C Requirements for examining and clearing cargo
1)For the purposes of safeguarding against unlawful interference with aviation or preventing the use of aviation in connection with serious crime (or both), the regulations may:
(a) prescribe requirements in relation to one or more of the following)
(i) examining cargo;
(ii) receiving clearance;
(iii)the circumstances in which cargo is required to be cleared; and
(aa) establish a scheme under which certain persons that carry on a business that includes handling, or making arrangements for transport, of cargo are approved as known consignors;
(b) establish a scheme under which certain persons that carry on a business that includes the handling, or making arrangements for the transport, of cargo are designated as regulated air cargo agents; and
Note: Regulated air cargo agents are a kind of regulated agent: see the definition of regulated agent in section 9.
(c) establish a scheme under which certain persons that carry on a business that includes the handling, or making arrangements for the transport, of cargo are accredited as accredited air cargo agents; and
Note: Accredited air cargo agents are a kind of regulated agent: see the definition of regulated agent in section 9
(d)prescribe conditions that must be complied with by:
i.all known consignors, all regulated agents or all aircraft operators; or
ii.one or more specified classes of known consignors, regulated agents or aircraft operators; or
iii.one or more specified known consignors, regulated agents or aircraft operators; and
(e) …
(f)prohibit a person from carrying on a business to the extent that it consists of:
i.handling cargo; or
ii.making arrangements for the transport of cargo;
unless the person is a known consignor, a regulated agent or an aircraft operator; and
(g...)
(1A) …
(2) Without limiting subsection (1), the following matters may be dealt with by regulations made under that subsection:
a)the examination of cargo:
(i) all known consignors, all regulated agents or all aircraft operators; or
(ii) one or more specified classes of known consignors, regulated agents or aircraft operators; or
(iii) one or more specified known consignors, regulated agents or aircraft operators;
b)the procedures for dealing with cargo examined as mentioned in paragraph (a);
c)the places where examination is to be conducted;
d)the methods, techniques and equipment to be used for examination;
e)the things to be detected by examination;
f)the procedures for dealing with things detected by examination;
g)the circumstances in which cargo may receive clearance:
(i) all known consignors, all regulated agents or all aircraft operators; or
(ii) one or more specified classes of known consignors, regulated agents or aircraft operators; or
(iii) one or more specified known consignors, regulated agents or aircraft operators;
(ga) how cargo is to be handled (including methods, techniques or
equipment to be used) in order to receive clearance;
(gb)how cargo is to be handled (including methods, techniques or
equipment to be used) after receiving clearance in order to maintain
its status as cleared;
h)the supervision and control measures for dealing with cargo that has received clearance;
(ha) the method for applying for approval as a known consignor and how such applications are dealt with;
i)the method for designating a person as a regulated air cargo agent;
j) the method of applying for accreditation as an accredited air cargo agent and how such applications are to be dealt with. [Emphasis added]
19.By section 9, a ‘regulated air cargo agent’ is ‘a person designated as a regulated air cargo agent in accordance with regulations made under section 44C’. The only purpose of the definition seems to be to include a person thereby designated in larger categories of persons which are subjected to obligations by or under the Act. A ‘regulated air cargo agent’ is included in the definition of ‘regulated agent’, which in turn is within the definition of ‘aviation industry participant’ (both defined in section 9).
The Regulations
20.A ‘regulated air cargo agent’ is referred to as a ‘RACA’ in the Regulations: see regulation1.03.
Clearance of cargo
21.Regulation 4.41CA deals with the requirements for cargo to receive clearance (part of the subject matter identified by paragraph 44C(1)(a)). The cargo needs to satisfy one of three tests:
(a) examination by a RACA in accordance with an ‘examination notice given to the RACA’, followed by handling by the RACA in accordance with relevant aspects of its ‘security program’, together with a ‘security declaration’ (regulation 4.41CA(2));
(b) examination by a ‘cargo examining aircraft operator’ in accordance with an ‘examination notice given to the operator’, followed by handling by that operator in accordance with relevant aspects of its ‘TSP’ (defined in regulation 1.03 to mean ‘transport security program’), together with a ‘security declaration’ (regulation 4.41CA(2A)); or
(c) specification in regulation 4.41C or an instrument under subparagraph 44B(2)(b)(i) as a form of cargo not requiring examination, handling by a RACA or a cargo examining aircraft operator in accordance with relevant aspects of its security program or TSP, and a security declaration (regulation 4.41CA(3)).
Each test also requires the cargo be free of unauthorised explosives.
A ‘security program’ must be provided to each RACA at the time it is designated (regulation 4.46). Subdivision 4.1A.2A of the Regulations provides for the contents of security programs and for their amendment and variation.
A ‘security declaration’ is a document evidencing certain matters that can be issued by a RACA, a cargo examining aircraft operator or a ‘known consignor’. A ‘known consignor’ is a person approved as such by the Secretary under Subdivision 4.1A.1B of the Regulations. That form of approval is available to persons who carry on ‘business that engages in originating cargo’ (regulation 4.41M(1)). Goods that originate with a known consignor and are handled in accordance with its security program do not require examination (regulation 4.41C(1)) and can thus receive clearance under regulation 4.41CA(3). Thus, approval as a known consignor allows an entity that sends goods to customers by air to have those goods cleared without the need for examination by another party.
Goods that require examination in order to receive clearance must be examined in accordance with an ‘examination notice’ given to the RACA or the cargo examining aircraft operator. Regulation 4.41J provides for the Secretary to make an examination notice that sets out requirements as to how cargo must be examined. Pursuant to regulation 4.41J(5), the Secretary must give an examination notice to a RACA or operator if the notice provides that it is to be given to the RACA and the Secretary is satisfied that:
a) the RACA or operator is capable of examining cargo in accordance with the notice;
b) the RACA or operator intends to examine cargo in accordance with the notice; and
c) giving the notice to the RACA or operator is in the interests of safeguarding against unlawful interference with aviation.
Under regulation 4.41JB(2), the Secretary may revoke an examination notice given to a RACA if satisfied on reasonable grounds that:
a) the RACA or operator:
(i) is not capable of examining cargo in accordance with the notice; or
(ii) is not examining cargo in accordance with the notice; or
b) revoking the notice is in the interests of safeguarding against unlawful interference with aviation.
Designation as a RACA
Regulation 4.42 provides that a person is a RACA, for the purposes of paragraph 44C(2)(i) of the Act, if the person:
a) carries on a business that includes:
i.the handling, or making arrangements for transport, of cargo to be carried on a prescribed aircraft; and
ii.the examination, in accordance with an examination notice given to the person, of cargo to be carried on a prescribed aircraft; and
b) is designated as a RACA under regulation 4.43A.
Regulation 4.43 provides that a person may apply to be designated as a RACA if the person intends to carry on a business that includes the activities referred to in regulation 4.42 (that is, handling cargo or making arrangements for its transport and examining it in accordance with an examination notice). Under regulation 4.43A(1), the Secretary may either designate or refuse to designate the applicant as a RACA. Regulation 4.43A(5) provides (subject to provision for ‘stopping the clock’ if further information or access to premises for inspection has been sought) for a deemed refusal.
If the decision under regulation 4.43A(1) is to designate the person as a RACA, the designation commences on the day specified in the notice of the decision (regulation 4.43B(1)) and continues in forces until the end of the period specified in the notice unless the designation is revoked (regulation 4.43B(3)). The specified period must be at least 12 months but cannot be more than five years (regulation 4.43B(4)). The day specified for commencement cannot be earlier than the day the applicant begins to carry on a business that includes the handling of cargo (regulation 4.43B(2)).
Under regulation 4.43D(1) a RACA may apply to the Secretary for renewal of its designation. The application may only be made within the last 12 months of the period of the current designation (regulation 4.43D(2)).
Regulation 4.43E(1) provides that the Secretary may either renew the RACA’s designation as a RACA or refuse to renew the RACA’s designation as a RACA. The Secretary may take into account any further information provided by the RACA or obtained as a result of any inspections under regulation 4.43D(4) and ‘any other information the Secretary considers relevant’.
If the Secretary decides to renew the designation, the renewed registration must also be for a specified period (subject to revocation) of at least 12 months but not more than 5 years (regulation 4.43G).
There are four provisions under which a RACA designation can be revoked:
a)Regulation 4.44 requires the Secretary to revoke a designation upon the request of the RACA.
b)Regulation 4.44A(1) provides that the Secretary may revoke a designation at any time by notice in writing if the Secretary is ‘satisfied on reasonable grounds that revoking the designation is in the interests of safeguarding against unlawful interference with aviation’. Revocation has effect on the day notice is given (regulation 4.44A(3)). Reasons must be given (regulation 4.44A(2)); however, there is no provision for the RACA to be given notice of a proposed revocation under this provision.
c)Regulation 4.44B(1) provides for revocation on any one or more of nine more specific grounds. These grounds include provision of false or misleading information and various instances of non-compliance with requirements under the Regulations (including noncompliance with the RACA’s security program: para (g)). Revocation is also authorised, under regulation 4.44B(1)(f), if:
(f) the RACA’s business no longer includes:
(i) the handling, or making arrangements for transport, of cargo to
be carried on a prescribed aircraft; or
(ii) examining cargo, in accordance with an examination notice given to the RACA, that is to be carried on a prescribed aircraft; …Before a decision is made to revoke a designation under regulation 4.44B(1), the RACA must be notified and invited to make a submission within a specified period (regulation 4.44B(2)). Any submission must be considered (regulation 4.44B(4)). If the Secretary has not notified the RACA of their decision within 28 days of the end of the period allowed for making a submission, they are deemed to have decided to revoke the designation at the end of that period (regulation 4.44B(7)).
d)Finally, designation as a RACA is automatically revoked by operation of regulation 4.44C if the person designated is subsequently accredited as an AACA (accredited air cargo agent).
Kennett J made several important conclusions of significance to this review. It is convenient to set out the passage in full:
87. Other arguments were raised by the appellant concerning the statutory scheme which appear to be separate from the point raised by the ground of review.
(a) It was submitted in connection with reg 4.43G that, having regard to the scheme of the regulations, risks in relation to aviation security fell to be addressed by revocation and not by decisions on renewal. It can be accepted that, in circumstances where a person is designated as a RACA for a period of up to five years, it will often (perhaps usually) be the case that consideration of revocation under reg 4.44A or 4.44B is the appropriate response to non-compliance with a RACA’s obligations that poses a risk to the safety of aviation. However, it does not follow that these matters are irrelevant to the decision on a renewal application. The whole regime of the Regulations is directed at minimising risks of unlawful interference with aviation, and Division 4.1A is dedicated to minimising the risk of dangerous items finding their way into air cargo. It is hard to see why the process of applying for and renewing designation as a RACA exists, if not to provide a vehicle for the periodic consideration of the level of these risks in connection with the RACA’s operations. Further, as noted above, reg 4.43E(2) confirms the relevance to the decision of information obtained by inspecting the RACA’s sites.
(b) It was also submitted that risks arising from a RACA’s non-compliance or suspected non-compliance with an examination notice ought to be dealt with through the separate provision that exists for revoking such notices in reg 4.41JB. To the extent that it was submitted that the Tribunal erred in law by approaching the question of the applicant’s prospects of success on the footing that its non-compliance with its examination notice was significant, I reject this submission for two reasons.
(i) Designation of a person as a RACA or renewal of that designation, where the person does not carry on or intend to carry on a business involving inspection of cargo, is inconsistent with the definition of a RACA in reg 4.42 and the description of the persons entitled to apply for designation under reg 4.43(1). (Arguably also, ceasing to carry on both limbs of a RACA’s business (examination and handling) is a ground for revocation under reg 4.44B(1)(f), although the disjunctive “or” in that paragraph is ambiguous.) These provisions indicate that the ability to examine cargo for the purpose of clearance is at least relevant to whether a person should be designated as a RACA or have their designation renewed.
(ii) Serious or persistent non-compliance with an examination notice is not only relevant to whether the examination notice should be revoked. It is potentially relevant to an assessment of the RACA’s attitude to its obligations under the Regulations, its commitment to aviation safety, and its capacity to implement and maintain systems of work that meet legislative requirements. These are matters relevant to the discretionary decision whether to renew a RACA designation, and correspondingly relevant to consideration of the prospects of successful merits review of a refusal decision. [Emphasis added]
Wiseway contends that, in circumstances where it contributes tangible benefits to aviation security, including access to significant screening and storage infrastructure, the availability of a large, predominantly bilingual (English and Chinese) workforce and a substantial client list focussed on exports to China, renewal would be found to be in ‘the interests of safeguarding against unlawful interference with aviation’, subject to whether there would thereby exist an unacceptable risk of unlawful interference with aviation during the period of any renewed designation. On that test, the RACA designation should be renewed unless the decision-maker finds unacceptable risks in both the applicant’s examination of cargo, and in the applicant’s handling of cargo from known consignors which does not require examination.
While I accept that there is an inherent assessment of risk when considering the question of renewal of a designation as a RACA, as a finding of an unacceptable risk of unlawful interference with aviation will preclude the renewal, an unsatisfactory finding against the applicant is not contingent upon the existence of such an unacceptable risk on a renewal application.
Additionally, it is inconsistent with the Act, Regulations, and Kennett J’s reasons in Wiseway, to designate a person or company as a RACA if they cannot perform either or both of the prescribed functions of a RACA, namely, examination and handling.
Wiseway further submitted that the Tribunal should engage in a ‘probabilistic assessment’ based on the ‘likelihoods of the applicant complying with the minimum standards prescribed in accordance with subsection 3(2) such that the interests of safeguarding aviation will be served’ which is a ‘purely forward-looking exercise’. This, however, is inconsistent with Kennett J’s decision in Wiseway at [87(b)(ii)] in that a forward-thinking approach excludes past conduct and behaviour. As for the probabilistic assessment put forward by Wiseway, there is nothing in the text to support the application of a criterion based on an exercise of balancing competing probabilities or likelihoods of potential future compliance with the statutory scheme.
In determining whether to renew Wiseway’s RACA designation, relevant matters for consideration include the history of Wiseway’s non-compliance; Wiseway’s current capacity to perform the functions of a RACA; and Wiseway’s current systems and culture; all of which bear upon its attitude to its obligations under the Regulations, its commitment to aviation safety, and its capacity to implement and maintain systems of work that meet legislative requirements. These matters properly focus attention on Wiseway’s conduct and capacity and whether it should continue to play a vital role in securing the supply chain in aviation transport.
WISEWAY’S COMPLIANCE HISTORY PRIOR TO PROPOSED REVOCATION AND PRIOR TO THE REFUSAL DECISION
Compliance incidents are to be treated strictly by the regulator to ensure a RACA is safeguarding against unlawful interference with aviation in the correct examination, clearance, and secure handling of cargo. The supply chain must be safeguarded at all points across the supply chain through compliance; persistent lapses cannot be tolerated until a risk has materialised as the consequences of unlawful interference with aviation may be catastrophic. Similarly, the integrity of the system is maintained by a firm approach to RACA designations.
Wiseway’s compliance issues began shortly after it obtained its RACA designation on 27 February 2019. The history of inspections, documented compliance events, and corrective plans, prior to the proposed revocation are detailed in the respondent’s closing statement of facts and are recreated below:
(a)On 24 May 2019, Aviation Security Inspectors of the Department (ASIs) attended Wiseway’s premises at Tullamarine and Thomastown. On 18 June 2019, the Department issued a non-compliance notice (NCO-2242) identifying non-compliance at the Tullamarine and Thomastown premises for non-homogenous cargo being screened at the consolidated level, that screening officers failed to obtain clearly discernible images of the screened cargo and failure to use the correct secondary screening method of internal explosive trace detection (ETD) or physically search cargo for explosives.
(b)The covering letter requested immediate rectification of the compliance issues and warned that the Department may undertake further compliance steps or pursue enforcement action. On 1 July 2019, Wiseway provided a proposed corrective action plan in response to NCO-2242. Wiseway’s proposed corrective actions included identifying a nominated security contact, conducting online RACA awareness training, providing training to screening officers, and conducting daily screening audits.
(c)On 30 August 2019, inspectors attended the Beverley, Thomastown, Archerfield, Kewdale and Tullamarine sites. On 28 October 2019, 2 non-compliance notices (NCO-2360 and NCO-2377) were issued to Wiseway regarding a failure to comply with the Examination Notice and Security Program observed during the inspection on 30 August 2019. The notices stated that at Thomastown and Tullamarine, Wiseway had failed to deconsolidate and examine at piece level non-homogenous cargo, that examining officers had failed to provide documentation declaring the contents of the cargo before examining it, and that ETD Equipment Calibration Checklists test logs did not contain required particulars. In Archerfield, inspectors found that four pallets containing non-homogenous cargo were not deconsolidated for screening. Inspectors also saw this at Kewdale and Chipping Norton.
(d)On 11 November 2019, Wiseway provided a corrective action plan in response to the non-compliance notices of 28 October 2019. This mentioned changes to X-ray examination procedures and staff uniform, implementing staff identification cards, improving the security of cargo transport vehicles and integrity during transport, adhering to the requirement to display ASIC cards and to protect the Examination Notice and Security Program documents from unauthorised access, and to improve physical security and access control. On 25 November 2019, the Department accepted these corrective actions, noting that ongoing assurance would be needed to ensure the corrective action plan was implemented.
(e)On 18 December 2019, inspectors conducted inspections at the Archerfield, Chipping Norton, Beverley, Thomastown and Tullamarine sites. Two non-compliance notices (NCO-2519 and NCO-2523) were issued to Wiseway for failing to comply with its examination notice. At Archerfield, inspectors discovered 18-20 foil covered pallets of non-homogenous cargo that had not been deconsolidated prior to screening. At Chipping Norton, inspectors found the ETD software contained the incorrect software version and there was a deficiency in the test logs. At Beverley, insecure cargo transport vehicles were observed and staff did not display ASICs as required. At Thomastown and Tullamarine, personnel were not wearing uniforms, staff cards were not tamper-resistant, ASICs were not being displayed or worn, and security sensitive information was not stored securely, as the Examination Notice and Security Program was available to all employees on the intranet. At Chipping Norton, it was observed that a cleared consignment comprising six pallets was stored outside a warehouse, next to uncleared cargo.
(f)On 6 January 2020, the Department wrote to Wiseway to say that it had not implemented the measures outlined in the corrective action plan of 11 November 2019. Wiseway was requested to take immediate corrective actions to rectify the breach.
(g)On 4 March 2020, the Department issued an infringement notice (#1411730144) to Wiseway under regulation 7.04 of the Regulations. The notice stated that during the inspection on 18 December 2019, Wiseway had failed to comply with the Security Program, as not all cargo transport drivers present during the inspection held a minimum of a White ASIC. Wiseway responded to those concerns in a corrective action plan.
(h)On 9 April 2020, Wiseway applied for the infringement notice of 4 March 2020 to be withdrawn. On 23 April 2020, the Department declined to withdraw the infringement notice, and Wiseway paid the infringement notice on 21 May 2020. On 22 May 2020, the Department requested a resubmission of Wiseway’s corrective action plan. The Department notified Wiseway of various reasons why its corrective action plans were insufficient to show a return to compliance or that recurrence of non-compliance would be prevented.
(i)Wiseway, in its resubmitted corrective action plan, said that it had dismissed a staff member, provided records of ETD test log requirements and copies of toolbox talks, implemented a serialised tamper proof seal for cargo, provided ASICs for all drivers, labelled cabinets, placed a cover note on the Examination Notice and Security Program informing readers of who may access the documents, and provided toolbox talks and checklists. On 8 September 2020, the Department accepted the corrective actions proposed by Wiseway.
(j)On 28 October 2020, ASIs visited all of Wiseway’s sites and identified a significant number of failures to comply with the Security Program and the Examination Notice. The Security Program non-compliance identified across each site, by way of summary, included failures by staff to have or display ASICs, to secure cleared cargo (including gaps in perimeter security at various sites, and a maglock system that was not working in Queensland), to affix stickers to cleared cargo, to regularly change passwords and access codes, to produce evidence of staff having completed security awareness training, to retain a copy of a security declaration and to retain CCTV (Kewdale), and to keep a register of access to the Security Program or to produce a copy of the Examination Notice (Beverley). The ASIs also observed a failure to comply with the Examination Notice, again by Wiseway having screened clearly non-homogenous cargo as if it were homogenous and failing to maintain equipment test logs.
(k)On 4 February 2021, Wiseway was issued a proposed revocation of its RACA designation and Examination Notice. The notices described the various types of noncompliance that had been identified by the Department since Wiseway obtained its RACA designation.
(l)On 16 March 2021, Wiseway proposed a number of actions to rectify and mitigate against committing further contraventions. Wiseway stated it had conducted an ‘entire review of its processes around aviation security compliance to ensure we can meet any requirements of [the Department]’ and that it had ‘implemented several significant measures, the most significant being the establishment of a dedicated national Security Committee comprising the leaders of the organisation’ (Security Committee).
(m)The proposed security committee was to comprise Roger Tong (director and CEO), Florence Tong (director and MD), Scott Higgins (head of security committee), Mark Stevens (compliance manager), and Certis Security (adviser). The submission identified 10 immediate actions of the Security Committee. This included having daily toolbox meetings, engaging Certis Security as third-party auditor, daily internal audits, regular meetings with the department, and weekly meetings of the Security Committee. The Security Committee was described as ‘not a token role’ and being ‘a significant time and financial commitment together with a determination to effect real change will be required to ensure an ongoing and consistent improved approach towards aviation security and compliance’.
(n)On 13 April 2021, Michelle Pearce, in her capacity as a delegate of the Secretary, accepted Wiseway’s proposals and did not revoke the RACA designation and Examination Notice. Ms Pearce was satisfied that the Department had other more appropriate actions available, and that revocation of the Examination Notice or RACA designation was not necessary. Balanced against the compliance history between 24 May 2019 to 28 October 2020, Ms Pearce found Wiseway had taken numerous steps to be responsive to the Department and had shown a willingness to comply.
After the decision not to revoke Wiseway’s RACA designation and the Examination Notice, the Department continued to engage with Wiseway about its compliance. The history of inspections, documented compliance events, and corrective plans, following the decision not to revoke, are detailed in the respondent’s closing statement of facts and are recreated below:
(a)On 17 May 2021, the Department issued two infringement notices (#1411720038 and #1411720020) arising out of the inspections on 28 October 2020. The first notice described that, at the Thomastown premises on 28 October 2020, ASIs had observed a void in the cleared cargo fence line due to the removal of electromagnetic detection equipment. This meant cleared cargo was directly located next to uncleared cargo and not stored behind an access-controlled fence. The second notice stated that at Archerfield, ASIs observed a failure to comply with the Examination Notice by clearing non-homogenous cargo as if it were homogenous.
(b)On 28 May 2021, 2 non-compliance notices (NCO-2982 and NCO-2983) were issued following an inspection at Chipping Norton on 12 May 2021. The non-compliance notices identified deficiencies in the ETD log and a failure to produce security awareness training logs. On 31 May 2021, an observation notice (OBS-1424) was issued describing non-compliance with the ETD equipment calibration checklists and ETD equipment test logs.
(c)On 18 June 2021, the Department accepted and acquitted NCO-2983 and OBS-1424 that had been issued on 28 May 2021. The Department indicated NCO-2982 would not be acquitted until the test logs for all screening equipment could be verified as compliant.
(d)On 20 July 2021, ASIs inspected the Thomastown facility. On 24 August 2021, ASIs inspected the Tullamarine facility.
(e)On 2 September 2021, the Department issued a non-compliance notice (NCO-3108) as during the inspection on 20 July 2021 the X-ray step wedge test register did not contain the required information. The Department did not require a corrective action plan due to Wiseway immediately addressing the non-compliance.
(f)On 20 September 2021, the Department issued four non-compliance notices (NCO- 3110, NCO-3111, NCO-312 and NCO-3113) following an inspection at Tullamarine on 24 August 2021. The ASIs observed:
(iv)an absence of required information in the tests for the X-ray and ETD equipment;
(v)that Wiseway had not kept its premises secure by failing to keep a roller door leading from the carpark to inside the facility closed and to close a main facility gate when not in use;
(vi)a Wiseway employee to be moving cleared cargo in the secure area without an ID card or an ASIC; and
(vii)the security program had not been protected from unauthorised access, amendment or disclosure.
(g)On 29 September 2021, the Department issued an observation notice (OBS-1474) based on its 24 August 2021 inspection relating to a failure by screeners to have sufficient knowledge regarding primary and secondary methods for screening cargo. The Department recommended developing a standard operating procedure so that examination officers had access to cargo examination and clearance processes and procedures.
(h)On 30 September 2021, Wiseway provided a corrective action plan to address the noncompliance notices and observation notice issued following the 24 August 2021 inspection at Tullamarine. As part of its corrective action plan, Wiseway said that the staff member, a SNP contractor, would be subject to discipline and a warning letter, that Wiseway would include stricter compliance requirements in its new contract with SNP, and that a new sign in system would be implemented. This was accepted by the Department on 8 November 2021.
(i)On 12 April 2022, ASIs inspected the Kewdale site and an observation notice (FIN-178) was issued on 31 May 2022 for failing to maintain a Regular Customers List.
(j)On 11 July 2022, ASIs attended the Archerfield, Chipping Norton, Thomastown, Tullamarine and Beverley sites. Following those inspections, the Department issued 11 non-compliance notices (FIN-339, FIN-340, FIN-341, FIN-363, FIN-364, FIN-365, FIN-366, FIN-367, FIN-368, FIN-369 and FIN-383) and an observation notice (FIN-342) (T64-T77) based on the 11 July 2022 inspections. The non-compliance notices described failures in the keeping of ETD logs, failure to carry out primary or secondary examination in accordance with the EACE notice, failure to provide manufacturer’s instructions for screening equipment, the screening of non-homogenous cargo at the consolidated level, the issuing of security declarations for cargo not examined in accordance with the examination notice, failing to provide contracted staff that handle cleared cargo with the examination notice, staff required to hold an ASIC did not have an ASIC, failing to maintain staff security awareness training records, failing to ensure staff display identification cards, failing to show evidence of completion of security awareness training, failing to maintain access control procedures, failing to ensure visitors display visitor identification tags, failing to display signage at all secure area access points, failing to audit keys and access devices on a weekly basis.
(k)On 30 August 2022, two infringement notices (#1411710062 and #1411730268) were issued following the 11 July 2022 inspections for screening non-homogenous cargo at the consolidated level at the Thomastown and Archerfield sites. Wiseway provided responses to the infringement notices on 19 September 2022 and paid the infringement notices on 26 September 2022.
(l)On 16 December 2022, the Department accepted the corrective action plans to address the non-compliance findings following the 11 July 2022 inspections but wanted evidence to confirm implementation of the corrective action plans before some of the noncompliance notices were acquitted. The remainder of the non-compliances were acquitted on 30 March 2023 and 4 April 2023.
(m)On 7 February 2023, ASIs conducted an inspection of the Thomastown site and significant compliance issues were identified and an infringement notice (#1411710161) was issued on 3 March 2023. The infringement notice alleged that, contrary to its Security Program, Wiseway did not ensure that all required persons held an ASIC and that persons who did not hold an ASIC were in the secure area and not accompanied by a Wiseway employee with a valid ASIC at all times.
(n)On 21 March 2023, Wiseway responded to the infringement notice and identified corrective actions to change the supervisory management of staff working in secure cargo areas, requested more ASICs, and said it would put up bi-lingual signing to advise staff of access control requirements. On 13 April 2023, the Department requested that Wiseway resubmit further information to demonstrate corrective actions had been implemented correctly.
(o)On 13 April 2023, ASIs attended the Chipping Norton site and issued 2 non-compliance notices (FIN-782 and FIN-817) which described a failure by staff to hold ASICs and that staff without ASICs had been granted access to secure areas. An observation notice (FIN-812) was also issued stating that staff had incorrect ASIC details associated with their file. On 1 June 2023, Wiseway responded to the non-compliances with proposed corrective actions.
(p)On 3 July 2023, the Department accepted the corrective actions proposed by Wiseway on 21 March 2023, following the inspection at Thomastown on 7 February 2023.
(q)On 24 July 2023 and 1 August 2023, the Department issued the following notices based on inspections at the Thomastown, Tullamarine, Chipping Norton and Archerfield sites between 22 May and 20 June 2023:
(i)4 infringement notices (#1411720160, #1411720178, #1411720186, #1411720194);
(ii)22 non-compliance notices (FIN-930, FIN-931, FIN-932, FIN-933, FIN-936, FIN-942, FIN-943, FIN-944, FIN-945, FIN-946, FIN-947, FIN-948, FIN-949, FIN-950, FIN-951, FIN-952, FIN-953, FIN-954, FIN-955 (not in evidence), FIN-956, FIN-957, FIN-958); and
(iii)2 observation notices (FIN-959, FIN-960).
(r)The observation notices identified 15 issues including that ASIs found the format and procedure for issuing staff identification cards varied significantly between sites, security audit reports did not demonstrate that alarm codes were being changed every six months at each site, the examination log contained information that conflicted with the examination methods in the Piece-Level Air Cargo Examination Notice (PLACE) and incorrect examination methods being used. Security vulnerabilities were observed in the form of an examination officer having limited knowledge of X-ray test requirements, equipment functionality and X-ray image interpretation. Wiseway said that disciplinary action against the examination officer was taken.
(s)The non-compliance notices issued following the 22 May and 20 June 2023 inspections included non-compliance with staff identification card requirements, failure to change passwords and access codes, failure to recover identification cards when expired or employment ends, visitors not signed in, failure to implement access control measures identified in the Security Program, failing to examine cargo in accordance with the Examination Notice and issue a security declaration, failure to display correct signage, failure to correctly maintain test logs and provide manufacturer’s instructions for screening equipment, personal items located in cargo handling areas, failure to display ASICs, screening officer failed to undertake physical examination, failure to carry out primary or secondary examination in accordance with the PLACE Notice, failure to conduct visitor access audits, staff not holding required licenses and qualifications, no daily occurrence log kept, failure to ensure that quarterly audits of the Security Program had occurred in the 2019 period, supervision requirements for people accessing secure areas not met, failure to complete security awareness training, not updating security declaration to include examination information, and failure to record reason for external ETD on the register.
(t)The infringement notices issued on 24 July 2023 related to explosive testing failures, failure by examining officers to physically deconsolidate and/or open cargo in order to conduct an internal ETD or physical search prior to undertaking external ETD and an individual who was not an ASIC holder was working unsupervised within the cleared cargo area and completed shrink wrapping of a pallet of cleared cargo. Wiseway paid the prescribed penalty for these infringement notices on 25 July 2023.
Wiseway relies on the evidence of Mr Andrew Christie, director and founder of Andrew Christie Consulting, who was engaged as an independent expert to assess (in particular) the Non-Compliance Notices issued to Wiseway by the Respondent. Mr Christie has provided two reports in these proceedings. One report dated 9 January 2024 and a report in reply to the Respondent’s evidence on 1 May 2024. He also provided a site and competence assessment of the Tullamarine and Thomastown Wiseway sites.
Mr Christie has provided an analysis of Wiseway’s history of non-compliances. His methodology involved categorising the Non-Compliance Notices imposed on Wiseway and assessing whether non-compliances recurred or appeared to have been resolved.
Mr Christie accepted that, on any view, there were a significant number of non-compliances in the period prior to June 2023, and that there were recurring problems with compliance with both the Security Program and the Examination Notice. He agreed that, in that period, the processes put in place by Wiseway up until that point did not produce a compliant organisation. Although he did agree that some measures had been taken to address some compliance concerns and that these has been successfully resolved. Particularly in relation to issues with staff ASIC cards and correct identification; incorrect external ETD method use and record keeping; training and training records; unauthorised access to cleared cargo; screener undertook incorrect secondary inspection procedure; incorrect software of test log; and unsecured security program.
SNP remained as Wiseway’s specialist security provider until 21 January 2022. In the early days of Wiseway’s designation as a RACA, there were numerous and various non compliances by Wiseway with the screening Notice then in force caused by failures by SNP employees. For example, throughout 2020 and 2021, SNP employees repeatedly caused Wiseway to be in breach of its obligations under the screening Notice by repeated failures to correctly complete ETD test logs.
In 2021 Wiseway issued an invitation to tender for the provision of security screening services. From 21 January 2022, MSS Security Pty Limited was engaged as Wiseway’s specialist provider of security screening services. As per the terms of the contract, Wiseway engaged MSS, a large operator with the requisite expertise in terms expressly requiring compliance with relevant regulatory requirements. I do accept that a very substantial and recurring cause of contraventions were failures by third-party screeners engaged by Wiseway to conduct cargo screening. This was also identified by Mr Christie, who opined that the more serious issues concerned the examination of cargo which had been performed by SNP and more recently MSS.
However, he accepted that Wiseway was responsible for supervising and managing its external contracts to ensure compliance and that the measures taken by Wiseway to ensure compliance by MSS in examination of cargo did not provide a level of assurance that the Department required. Despite SNP and MSS examination officers being at fault for a number of non-compliances, Wiseway held the ultimate responsibility with respect to examination.
COMPLIANCE EVENTS SINCE THE REFUSAL DECISION
By a section 109 notice, the Secretary compelled Wiseway to produce CCTV footage of examinations, with the associated security declarations for that cargo, for examination conducted between 6 and 12 November 2023 at Wiseway sites in Victoria, New South Wales, and Queensland. The Department’s subsequent review of that material found several non-compliance issues concerning apparent failures in examination, erroneous security declarations for cargo, and breaches of security arrangements at Wiseway premises. Notices in relation to the identified conduct were issued in January 2024.
Ms Pearce, director, National Operations Compliance and Coordination in the Regulatory Compliance Branch of the Department, provided a statement in these proceedings dated 15 April 2024 (with redactions) and gave evidence orally at hearing. Her written statement was based on a paper review of the documents only and set out documented compliance events since the delegates’ decision. At hearing, she accepted that she summarised the available documents and was not independently providing an opinion as to whether a non-compliance had actually occurred. She also agreed that, in some cases, multiple non-compliance notices had been issued in relation to the one course of conduct.
In her statement, Ms Pearce expressed a view that:
In reviewing the compliance findings by Departmental officers of Wiseway, I consider that the repeated and ongoing offences of the most basic security requirements without rectification indicates an inability or unwillingness to comply.
Despite the Department agreeing or acknowledging corrective actions proposed by Wiseway to remedy offences, the failure to implement sufficiently corrective actions suggests Wiseway may not understand the seriousness and importance of the role of a RACA in securing the supply chain and preventing an act of unlawful interference with aviation.
Ms Pearce’s written evidence referred to matters that had been the subject of non-compliance notices issued by the Department based on the review of the CCTV and security declarations that, in her view, should be withdrawn. Non-Compliance Notice FIN-1453 described 81 instances where the security declaration did not contain the ICAO or IATA codes to denote the departure or destination airports. Ms Pearce stated that, in her view, use of the ICAO and IATA codes was not required by regulation 4.41D. That analysis would also apply to FIN-1461 and FIN-1444 (this Non-Compliance Notice was withdrawn on 25 January 2024); FIN-1445 (this Non-Compliance Notice was withdrawn on 25 January 2024) Pearce also properly accepted that the Non-Compliance Notice should be withdrawn in respect of the following matters:
(a)FIN-1437 and FIN-1438. These Non-Compliance Notices described access gates between a cleared cargo area and the loading dock being left open, with no staff in attendance. It was established that another CCTV view showed workers present at all material times in a position to observe the open gate and ensure no unauthorised access.
(b)FIN-1431 and FIN-1432. These Non-Compliance Notices concerned security declarations, stating that the cargo had been misdescribed in those declarations. These notices had been withdrawn by correspondence from the Department on 22 February 2024. Ms Pearce had not been aware that these notices had been withdrawn when she executed her statement in the matter.
Wiseway challenged infringements notices regarding compliance issues related to multiple staff entering secure areas at once through doors secured by a swipe pass in a manner that meant that each did not have to use their individual swipe cards (FIN-1443; FIN-1449; and FIN-1450). In cross-examination, Ms Pearce agreed that if each individual was permitted to be in the secure area, no meaningful breach of the security program occurred and the ability of Aviation Security Inspectors to attend the secure area without holding a swipe card (noting that they are authorised to be there) would not be a contravention of the security program.
Matters not withdrawn or conceded included the following:
(a)Non-Compliance Notice FIN-1404 described a failure to monitor the x-ray of cargo, on the basis of the examiner not facing the x-ray monitor screen at 9-11 Alfred Rd, Chipping Norton, NSW. This conduct also resulted in Non-compliance notice FIN-1405, concerning the issue of a security declaration for cargo that had not been properly examined.
(b)Non-Compliance Notice FIN-1416 and Infringement notice #1411720210 were both issued in relation to one instance of the examining officer leaving his post while the x-ray of cargo took place at 9-11 Alfred Rd, Chipping Norton, NSW. (Non-compliance notice FIN-1416 also referred to not facing the x-ray monitors and using his phone while cargo was passing through the x-ray equipment) That conduct also meant that the security declaration for that cargo was false or invalid, as per non-compliance notice FIN-1417.
(c)Non-Compliance Notice FIN-1415 and Infringement notice #1411710278 were both issued in relation to an incident of the examination officer using a mobile phone, not facing the direction of the x-ray monitors, and walking away from the monitors while the x-ray of cargo took place at Archerfield, Queensland. That conduct also meant that the security declaration for that cargo was false or invalid, as per Non-Compliance Notice FIN-1433.
(d)Non-Compliance Notice FIN-1413 issued on the basis that Wiseway failed to provide required information on a security declaration, in that the time of issue was omitted. Observation Notice FIN-1407 describing approximately 19 instances of examination officers failing to focus on their cargo examination duties as disclosed by CCTV review.
(e)Five non-compliance notices at Tullamarine, Victoria were issued in relation to failures of examination, where either the examination officer did not pay sufficient attention to the x-ray monitor while screening (FIN-1439, FIN-1451, FIN-1448, and FIN-1441), or the x-ray images were not sufficiently clear for a proper assessment of the cargo (FIN-1452).
(f)An infringement notice, #1411710260 (Tullamarine, Victoria), was issued for Regulation 4.41 K Offence - failure to comply with examination notice. While 10 offences were identified because of the review of CCTV and security declarations, only one infringement notice was issued.
(g)On 15 January 2024, eleven non-compliance notices were issued (FIN-1418; FIN-1419; FIN-1420; FIN-1421; FIN-1422; FIN-1423; FIN-1424; FIN-1426; FIN-1427; FIN-1428; FIN-1429) relating to failure to examine in accordance with the Examination Notice. Ms Pearce’s evidence was that these non-compliances could have been subjected to infringement. The X-ray images are not dissimilar to the X-ray image associated with infringement notice #1411710260, and it is my view that Wiseway have failed to ensure the cargo does not contain unauthorised explosives which poses a risk of unlawful interference with aviation.
(h)Ms Pearce also was of the view that four out of the following five non-compliance notices relating to the examination notice should have been issued as infringement notices (FIN-1439; FIN-1441; FIN-1452; FIN-1448; FIN-1451)
The three infringement notices issued to Wiseway have not been challenged.
Following inspection in December 2023, further non-compliance and observation notices were issued to Wiseway in January 2024. Specifically:
(a)Non-compliance notice FIN-1394 related to a gate that was to be secured by swipe card access at Chipping Norton NSW. The door was not locked and did not require a swipe card to access the secured cargo area, where cleared cargo was located.
(b)Observation notice FIN-1414 related to co-locating cleared and un-cleared cargo in the one refrigerated storage area.
(c)failure to maintain a test log of the equipment (FIN-1391).
Following an inspection on 11 March 2024, further non-compliance notices were issued to Wiseway. All of which are challenged by Wiseway, and I accept that the evidence is divided on whether the non-compliance notices are substantiated. Specifically:
(a)Non-Compliance Notice issued for cleared and uncleared cargo being co-located in the main chiller or refrigerated storage area (FIN-1605). A real question arises from the evidence about the level of separation required between the cleared and uncleared cargo, such that the circumstances would not give rise to a non-compliance.
(b)Non-Compliance Notice concerned the failure to properly label cleared cargo with high visibility stickers within the main chilled storage, as required by the security program (FIN-1610). An issue in relation to this notice is the reasonableness of the time in which it takes to label goods that are received, which is a subjective opinion.
(c)Non-Compliance Notice concerning the guard house at 9-11 Alfred Road being left unstaffed at the time of inspection, shortly before 10am on 11 March 2024 (FIN-1612). Depending on the construction of the security program, the question of whether the guardhouse is only required to be staffed at times when examination was occurring or, requires the guardhouse to be staffed during the operating hours, would determine whether there was no requirement to staff the guardhouse and therefore would not amount to a non-compliance.
I also note that on 20 March 2024 the Department issued a Non-Compliance notice (FIN-1611), in relation to a delivery early in the morning in February 2024 where a roller door was opened, and then left open for a period of 2 hours. Correspondence from Wiseway established that there was a locked, high steel security gate, covered by CCTV cameras that ensured that no unauthorised access occurred with the result that this notice is resolved.
Additionally, two observation notices were issued to Wiseway on 15 April 2024 (FIN-1613) and (FIN-1614). For FIN-1613, the same point in FIN-1612 applies. For FIN-1614, aspects of the notice are deficient and incorrect.
Overview
Considering Wiseway’s compliance history since it received its RACA designation in early 2019, there have been a significant number of non-compliances highlighting recurring problems with compliance with both Wiseway’s security program and the examination notice. While I accept that some notices have been withdrawn or conceded, the fact remains that Wiseway’s compliance was frequently seen to be lacking. This is evidenced by the large number of unchallenged infringement notices, non-compliance notices, and observation notices received during the period Wiseway held its designation as a RACA.
As already discussed in these reasons, a large number of compliance issues related to screening. Wiseway outsourced its screening to external third-party contractors, firstly SNP and then MSS. Wiseway’s reliance on large security contractors was not unusual nor inappropriate. The level of oversight Wiseway had over MSS appears, on the available evidence, to be very limited. While some enquiries were made by Wiseway of MSS about issues with examination officers, little was provided by MSS in response. There does appear to have been some internal investigation by MSS of its screeners in response to compliance issues, but what corrective action was taken by MSS and its effectiveness, if any, is unclear. MSS was also unresponsive to routine contract management requests made of it by Wiseway.
Much was made by Wiseway about a rogue screener of MSS being accountable for numerous non-compliance notices. True it is that any organisation, can have a rogue actor. But an attempt to isolate or to explain an incident on the basis of a rogue screener ignores systemic consequences. The robustness of the organisation and system as a whole, depends, in large part, on the strength of the weakest point in any chain and really highlights underlying root causes within Wiseway. Particularly the lack of a security culture at Wiseway. As the evidence of Mr Beaven and Mr Wandmaker showed, part of the inchoate culture of having a security compliant culture involves a “challenge culture”, namely, “when you see something that is wrong, say something”.
While the regulatory framework remitted to Examination Officers the independence of making examining decisions, and MSS are, of course, accountable for their own failings, Wiseway was ultimately responsible for supervising and managing its external third-party contracts to ensure compliance as the RACA. The independence of examination officers does not function or operate so as to make that position sacrosanct in the sense of being not capable of being reviewed for the purposes of assessing compliance by the RACA with their obligations under the Act.
This was also reinforced by the evidence of Mr Christie and Mr Wandmaker. Mr Wandmaker, an aviation security advisor with over 20 years’ experience in aviation working within government and industry, accepted that Wiseway erred by failing to undertake sufficient oversight of the third-party screeners it had engaged. He explained that Wiseway ran into difficulties as a result of not undertaking its own adequate quality control oversight and confirmed that Wiseway could not outsource its responsibility. He attributed Wiseway’s shortcomings to an ‘inadequate understanding’ of the complexity or seriousness of the aviation security environment, compared to those who are ‘steeped in the aviation security tradition”.
WISEWAY’S CURRENT CAPACITY TO PERFORM THE FUNCTIONS OF A RACA AND ITS CAPACITY TO IMPLEMENT AND MAINTAIN SYSTEMS OF WORK THAT MEET LEGISLATIVE REQUIREMENTS
Mr Ken Tong was a director of Wiseway Group Ltd between March 2021 and March 2023. He has been the Chief Operating Officer of Wiseway since March 2023.
From October or November 2023, he has taken a more active role in Wiseway’s operations — insofar as it functions as a RACA — and a direct approach to compliance. In November-December 2023, Mr Tong reviewed Wiseway’s responses to the notices of non-compliance issued in May 2023 and August 2023 and formed the view that the responses were inadequate and that the corrective actions required improvement ‘to address underlying root causes’. The ‘underlying root causes’ which Mr Tong had identified by December 2023 were:
(a)an overreliance on security contractors for cargo examination and security, and a failure by Wiseway to incorporate measures to manage deficiencies in the contractor’s performance such that Wiseway needed to take more direct oversight of the contractor’s staff to ensure compliance with the security program;
(b)a ‘legacy’ security program that did not reflect Wiseway’s current operations;
(c)‘human error and complacency’ which was the result of insufficient oversight and auditing by Wiseway.
The main elements of Wiseway’s proposals for systemic change are, changes to organisational structure with external advisors; revised security program; pathway to resumed screening; improved governance and documentation process (compliance); training; and fostering, establishing and maintaining a culture of security awareness.
To assist with ensuring a compliant operation, Wiseway has engaged highly regarded aviation security experts. Namely:
(a)Mark Shield as Aviation Security and Compliance Advisor, reporting to Senior Management and the Directors. Mr Shield has held various roles in the Security Department at Virgin Australia for 15 years, including as General Manager of Security, Resilience and Facilitation.
(b)Lisa Nunn as full-time Head of Security and Aviation Compliance. Ms Nunn was the Group Manager of Security Threats and Risk at Qantas for 8 years, a Security Quality and Systems Manager at Sydney Airport for 6 years and worked for the Department of Defence for 5 years.
(c)Mr Wandmaker as an independent auditor, who has been providing guidance to Wiseway in respect of improvements which can be made to aviation security, at the request of Ken Tong and as particular issues arise.
Organisational Structure
The previous organisational structure was put in place as part of Wiseway’s response to the Secretary’s proposed revocation of Wiseway’s RACA designation on 16 March 2021. In its response, Wiseway proposed a new security committee comprising Mr Roger Tong (director and CEO), Mrs Florence Tong (director and MD), Mr Scott Higgins (national perishables manager and head of the new security committee), Mr Mark Stevens (new national compliance and safety manager) and Ms Lisa Cooper (Certis/SNP representative), to which the site security managers reported. The security committee was formed, and Mr Higgins was appointed as head of the security committee. The response document was not completed by Mr Higgins, but he signed it.
During the course of cross examination, Mr Higgins accepted that by signing the response to the Secretary dated 16 March 2021, he was making serious representations to the Department of Home Affairs with respect to proposals to implement change with respect to security operations at Wiseway. Mr Higgins understood as of March 2021 that his role as head of the security committee would be an ongoing and continuing role. He also accepted that the impression he was conveying to the Department was that there was going to be a new security committee at Wiseway to oversee security compliance with respect to aviation security, which was ongoing, if not permanent.
Initially, the security committee met separately on Thursdays from February 2021 until June or July 2021 but was subsequently ‘subsumed’ into senior management meetings on Tuesdays. Although senior management likely continued to discuss security issues, with a higher-level group of people, the security committee was effectively disbanded after only 3 or 4 months. This was despite representations made to the Department by Wiseway about the importance and significance of this new security committee as part of a commitment to ongoing improvement in security management and it not being a ‘token role’.
Since the refusal decision, changes have been made to Wiseway’s organisational structure. The changes were summarised by Mr Tong in an organisational structure document and in his statement dated 30 April 2024 as follows:
“[24] There has been an organisational structural change where the Board of Directors have line of sight to compliance activities and a Senior Aviation Security Advisor has been introduced who will report not only to Senior Management but directly to the Board of Directors. The National Compliance and Safety Manager role has been restructured to the Head of Aviation Security role with more seniority and dedicated focus on aviation security. Senior State Level Managers who each have over ten years of experience in the aviation industry have also been given aviation security compliance responsibilities. Human Resources has been created as a centralised business unit to ensure training and identification requirements are kept up to date.
[25] There have been a number of changes to key personnel. Mark Stevens has been replaced by Lisa Nunn who is a senior manager in the aviation industry with over 15 years of experience at Qantas and Sydney Airport. Her appointment was initially for six months which was the time we anticipated would be required for completion of all of the measures which have been initiated. We would be very pleased if Lisa were to stay for a longer or indefinite term. If Lisa’s career plan is to move on after Wiseway, both Mark Shield and Lisa Nunn are committed to ensure an appropriate replacement with the requisite aviation security skillset is found and that any handover is seamless.
[26] The Senior Aviation Security Advisor role has been filled by Mark Shield. Peter Marvulic and Scott Higgins have now been given dedicated State-level security and compliance responsibilities. Peter Marvulic had over 10 years aviation experience including aviation security roles at Seaway / Airway, both of which are established RACAs. Scott Higgins has had over 25 years of experience, including at C.T. Freight and DHL.
During the course of cross examination, Mr Tong showed a troubling misunderstanding of the separate legal personalities of Wiseway and Wiseway Group Ltd. When questioned about his role at hearing, Mr Tong said, “to be fully transparent, yes, you know Wiseway Logistics Pty Ltd and Ltd are probably quite fluid, but if you’re asking whether I had a role in Wiseway Logistics Pty Ltd, I would have to check my employment contract on whether the legal entity was Pty Ltd or Ltd”, “I just know Wiseway as Wiseway. I mean, we’ve set up the company, so that Wiseway Logistics Ltd is a listed business and it 100 per cent owns Wiseway Logistics Pty Ltd. So, in operational – a fact that – to me, they’ve always been a similar company”. Even allowing for some degree of flexibility within a corporate group as a matter of commercial practicality, such an approach is inconsistent with the Act and the Regulations which focus on the specific entity to be designated.
Looking at the new proposed organisational structure, Mr Higgins reports to Mr Tong as COO but has neither a direct line nor an indirect line of report to Mr Roger Tong as CEO. Mr Higgins does not report directly to Ms Lisa Nunn, as head of aviation security, but she can direct him on aviation security matters. Ms Nunn reports to Mr Tong as COO and has an indirect line to Mr Roger Tong as CEO. Ms Nunn does not report to the ‘Board of Directors’ in any capacity. Mr Roger Tong as CEO reports directly to the ‘Board of Directors’. Mr Roger Tong does not have a direct or indirect line to of report to Mr Shield, as ‘Board and Senior Management Security Adviser’.
The ‘Board of Directors’ is to be understood as referring to the board of Wiseway Group Ltd, not Wiseway. Mr Roger Tong is not a director of Wiseway. The only overlap in directorships is Mrs Florence Tong. On the structural chart provided, Mr Shield is advising the board of Wiseway Group and does not advise the CEO to whom the COO reports.
In light of the evidence of Mr Tong, the proposed organisational chart shows a blend of Wiseway with Wiseway Group and does not accurately reflect what is happening at Wiseway. This is of concern as clearly understanding the structure of Wiseway is plainly important. There must be a clear and certain picture of who is involved in the operations of Wiseway, as a designated RACA, and where reporting lines and responsibility lies. Clarity is not achieved on the face of the current structure advanced.
While Mr Tong asserts that the CEO is available for discussions and as a source of advice, this is entirely unclear on the proposed organisational structure relied upon. Additionally, how direct access of other external advisers to Wiseway’s directors will be achieved, is entirely unclear.
As a matter of continued or sustained corporate governance, its efficacy cannot safely be predicted. This is particularly so given Wiseway’s failure to adhere to prior assurances given to the Department about its commitment to specific organisational change with respect to the security committee.
Revised Security Program
The most recent approved version of Wiseway’s security program is dated March 2023. There is no dispute that it is out of date and did not reflect Wiseway’s operations.
An initial partial revision application of the Security Program was submitted to the Department for consideration on 12 January 2024 (following an earlier proposed variation submitted on 11 September 2023 which was refused by the Department). A more comprehensive revision was prepared by Ms Nunn and submitted to the Department on 19 April 2024.
Mr Wandmaker provided the opinion that Wiseway had taken reasonable steps to have their Security Program updated and approved by Home Affairs, and continues to take action to review, revise and update their Program. He also considered that Wiseway considers ensuring that the Security Program is kept up to date as a priority.
However, Wiseway cannot operate as a RACA under its last approved security program. No prediction can be made as to when there may be an approved security program.
Proposed Changes for Screening
In response to the issues with third party security contractors, Mr Tong terminated Wiseway’s contract with MSS on 8 February 2024. Should Wiseway’s designation be renewed, it proposes to resume screening without relying on third party contractors and instead to take full control of those services itself, on advice of Mr Wandmaker and through a detailed step-by-step plan formulated in consultation with industry experts. Ms Pearce agreed that this was a ‘significant change’. Additionally, Wiseway intends to carry out screening at only two designated sites, being the Thomastown (Melbourne) and Chipping Norton (Sydney) sites. Wiseway contends that these sites have the lowest level of non-compliances issued in comparison to all of Wiseway’s other operational sites over the last 12 months and that narrowing operations and concentration of all resources towards only two dedicated sites facilitates greater focus and control of operations.
I also note that when screening large bulk liquid containers, between December 2023 and 8 February 2024, Wiseway had rejected irregular or difficult to screen cargo including Intermediate Bulk Containers (IBCs) and cargo requiring external ETD. This was in response to the large number of non-compliance notices relating to external ETD. Further, if the proposition from an examination officer was that cargo needed secondary examination, either physical examination or internal ETD, that, too, would need to be the subject of, effectively, an application to Wiseway for permission to do it, with reasons, which would then be considered. The practice minimises room for screening errors by third party contractors. Mr Tong’s evidence is that this will continue as part of the pathway to recommence screening. This is despite the potential commercial impact on Wiseway. I accept that this does demonstrate a positive attitude to compliance and aviation security as Wiseway has made the decision, contrary to its commercial interests.
The plan to reintroduce screening includes the following elements:
(d)a dedicated screening supervisor will be employed at both Thomastown and Chipping Norton;
(e)new staff will be recruited, trained and independently accredited to conduct screening operations;
(f)screening will be recommenced in a staged manner;
(g)an appropriate reporting structure will be put in place, with screening supervisors reporting directly to the security manager, who in turn reports directly to the COO; and
(h)independent audits of operations by an independent third party will occur weekly, until compliance is established, and audits can be transitioned to monthly and quarterly.
Mr Wandmaker’s unchallenged opinion was that the implementation plan provides a robust framework which will enable the re-introduction of air cargo screening operations in a secure, sustainable, and compliant manner. Mr Wandmaker’s estimated ‘reasonable timeframe’ to undertake all the activities for the purpose of being able to demonstrate a capacity to undertake examination (screening) is 2 to 3 months from the time of this Tribunal’s decision. I do note, however, that this is dependent on a number of factors such as, a successful recruitment and training process.
In closing submissions, and contrary to its earlier position that screening will be conducted in house and not outsourced to third-party providers, Wiseway submits that given it will take some time to fully implement the planned in-house screening regime, there is an immediate ability to conduct compliant screening with temporary reliance on third-party screening services. Mr Wandmaker’s opinion was that, using an external provider, screening could commence “by Thursday afternoon” (i.e. within 2 days).
As explained by Mr Tong in his evidence, in January 2024, Wiseway was operating an external screening model (with MSS doing the screening), whereby Wiseway site supervisors were monitoring the MSS staff during screening, effectively ‘doubling up’ with a Wiseway person watching an MSS person’s screen. While commercially and practically unsustainable as a longer-term model for conducting screening operations, Mr Tong’s evidence confirmed that this system, which ensures high vigilance that would go well beyond what other RACAs would ordinarily devote to screening, is a viable temporary solution.
While this alternative, temporary, option may address the timing issue of implementing screening, it requires the Tribunal to ignore Mr Wandmaker’s robust framework, and to ignore Mr Tong’s considered reflected position as to what the desired best position is for Wiseway, having received expert advice. It also re-enlivens concerns about Wiseway’s management of external third-party contractors based on the extensive history of non-compliance already detailed in these reasons.
Training
Wiseway’s employees must do the Department’s online training program when they start and every 2 years after.
The evidence of Mr Tong is that the finalisation of the development and implementation of training for section 77G (customs), biosecurity and RACA will fall to Mr Christie, and he would defer to the opinions of Mr Christie with respect to the implementation of a new training program beyond any existing Wiseway training.
Having reviewed some of the training modules drafted by Mr Tong, Mr Christie told Mr Tong that ‘it needed some work’ so that, upon delivery of training, there is a ‘level of assurance that the participants of that training package have the knowledge and are able to demonstrate that knowledge when they leave the training’.
That process to roll out the training involves the development of a suite of guides and assessments to ensure that people who have done the training can apply the job in the context unassisted and to the standard. Mr Christie explained that “It’s not a five-minute job to write a training package like that. It takes a number of weeks to roll the training out to ensure that we can get the level of information to the client – to the staff member, so that they understand it”. The roll-out and anticipated training sessions across a 6-month period is contingent upon the training materials being ready.
Security Culture
One of Ms Nunn’s priorities as Head of Security and Aviation Compliance at Wiseway is to foster a culture of security awareness ‘via training, education and procedures designed to enhance compliance across all levels of the business’.
As for timing, Mr Beaven estimated that, without delays or distractions, it could be achieved within a 6-month period, but it was difficult to provide an accurate estimate given some delays he identified.
Mr Wandmaker opined that “given the somewhat intangible nature of security culture, it is hard to put a timeline on when an organisation will have ‘established and maintained a culture of compliance with security’”.
Ms Nunn said in her statement dated 30 April 2024:
Having now spent around two months in the role, I am reasonably confident that I will complete most of the main priorities identified in my 15 March 2024 statement by the end of the six-months contract term. In saying that, I also acknowledge that building and enhancing a culture of security awareness is not something that can be achieved to a concluded state within a six-months period and that the measures supporting these priorities will need to be ongoing, as will the ongoing management of aviation security at Wiseway more broadly.
On the evidence, nurturing a culture of security awareness within Wiseway remains a work-in-progress. While possible to implement measures to support that culture within a 6-month period, it will require ongoing support.
Additional Measures
To reduce the risk of human error in the operations of a RACA, Mr Tong said in his statement of 30 April 2024:
Wiseway has already developed and implemented a suite of IT and automation tools to reduce human error relating to compliance. For example, previously training registers, and employee ID and ASIC databases were maintained on excel spreadsheets and by the National Compliance Manager. Wiseway has now developed a software tool used by Human Resources during onboarding for managing training and employee IDs and ASICs, which send automated reminders for expiring IDs, ASICs and trainings. Door Closers and Door Alarms have also been installed on key pedestrian doors leading to Secure Areas. No training record, ID and ASIC expiry, or pedestrian door related non-compliances have been identified since these automations were implemented in December 2023.
Recent Audits
From the week starting 26 February 2024, Mr Wandmaker conducted independent weekly on-site audits of the two Wiseway sites where RACA privileges continued to be authorised (Thomastown and Chipping Norton). During his visits, he observed Wiseway’s operations and engaged with both senior management and operational staff. He met Roger Tong, Wiseway’s CEO, on one occasion, but never met Florence Tong.
Mr Wandmaker’s audit reports go to current state of play in relation to Wiseway’s suitability to operate as a RACA. Mr Wandmaker provides the opinion that “Wiseway is currently running a compliant non-screening RACA operation.” [Emphasis added].
Overview
Wiseway’s extensive history of non-compliance is concerning, particularly the extent and nature of the issues, starting shortly after receiving its designation as a RACA. Wiseway has failed to implement systemic change so as to prevent their reoccurrence. Despite the Secretary’s acceptance in individual cases of proposed corrective action and up until the present, Wiseway has tried to place blame on externally contracted examination officers. This does not absolve Wiseway of its ultimate responsibility for examinations as the designated RACA.
Wiseway’s serious and persistent history of non-compliance demonstrates Wiseway’s deficient attitude to its obligations under the Regulations, its lack of commitment to aviation safety, and its limited capacity to implement and maintain systems of work that meet legislative requirements.
As for the current state of affairs, the evidence shows that the applicant does not currently possess the necessary characteristics or features to perform the prescribed functions of a RACA. It is in no position to conduct examinations. I accept that the applicant has a plan in place to resume screening in-house and has begun a process of making significant and positive changes in its attempts to portray an attitude of compliance, but that process is ongoing and not complete. Wiseway’s proposals for change are untested in practice and their success can neither be demonstrated nor assumed.
The purpose of the Act and Regulations to safeguard aviation cannot be met by a decision based on future rather than current readiness. The Tribunal is required to address the material before it and to make a decision on that material, and is not required to wait for circumstances to change so that it can consider material not before it: Taufahema v Minister for Immigration and Citizenship (2010) 183 FCR 515, [2010] FCA 328 at [10] per Jacobson J.
Based on Wiseway’s history with compliance and adherence to proposed corrective action, I do not have any confidence that the applicant can establish and maintain a culture of compliance with security and compliance programs of sufficient durability to warrant the renewal of a RACA designation. At best, Wiseway might be able to show at some point several months away that it has the necessary systems for screening and a culture of security awareness.
On the available material, there is no basis to find that renewal of Wiseway’s RACA designation for any period is in the interests of safeguarding against unlawful interference with aviation.
Decision
The decision under review is affirmed.
I certify that the preceding 107 (one hundred and seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak
.........................[SGD]...............................................
Associate
Dated: 24 June 2024
Date(s) of hearing: 6-10 and 29 May 2024 Senior Counsel for the Applicant: Mr T Brennan SC Counsel for the Applicant: Ms K Heath Senior Counsel for the Respondent: Mr H Bevan SC Counsel for the Respondent: Mr M Rennie
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