Zahradnik v The Department for Administrative and Information Services - [2004] SADC 171

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
In the Matter of THE EXPLOSIVES (FIREWORKS) REGULATIONS 2001
ZAHRADNIK v THE DEPARTMENT FOR ADMINISTRATIVE AND INFORMATION SERVICES
Judgment of His Honour Judge Rice
2 December 2004
ADMINISTRATIVE LAW - APPEALS FROM ADMINISTRATIVE AUTHORITIES
Decisions by Director, Workplace Services, Department for Administrative and Information Services to refuse licences for Pyrotechnics Displays Business Licence and Import Licence - both decisions the subject of appeal upon the basis of a misapplication or misunderstanding of the Explosives (Fireworks) Regulations 2001.
Held: both decisions held to be unreasonable - decisions rescinded - decisions granting licences made but leaving it to the Director to impose whatever conditions are considered appropriate in accord with the Regulations.
Explosives Regulations 1996 Regulations 7.15(2), 13.02 and 13.03 ; Explosives (Fireworks) Regulations 2001 Regulations 14, 21 and 33; District Court Act 1991 s 42E; Explosives Act 1936 s 23, referred to.

ZAHRADNIK v THE DEPARTMENT FOR ADMINISTRATIVE AND INFORMATION SERVICES
[2004] SADC 171
Introduction

This is an appeal pursuant to Regulation 33 of the Explosives (Fireworks)Regulations 2001 against two decisions of the Director of the Department for Administrative and Information Services. The Director made the decisions through an authorised delegate. The appellant, Mr Zahradnik, had applied for a Licence to Import Explosives and a Pyrotechnic Displays Business Licence. The Director refused both applications for licences by letter dated 5th August, 2004.
Nature of the appeal
Regulation 33 gives a right of appeal to the Administrative and Disciplinary Division of the District Court.
Section 42E of the District Court Act 1991 provides as follows concerning the conduct of an appeal:-
“42E    (1)   The Court must, on an appeal, examine the decision of the original decision-maker on the evidence or material before the original decision-maker but the Court may, as it thinks fit, allow further evidence or material to be presented to it.
(2)    The Court, on an appeal –
(a)is not bound by the rules of evidence but may inform itself as it thinks fit; and
(b)must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
(3)    The Court must, on an appeal, give due weight to the decision being appealed against and the reasons for it and not depart from the decision except for cogent reason.”
The combined effect of those provisions is to make the nature of the appeal neither an appeal in the strict sense nor a hearing de novo. It is an hybrid variety with a requirement that there not be departure from the original decision “....except for cogent reason.”
Pyrotechnic Displays Business Licence
It is convenient to deal first with the appeal as it relates to the application for, and refusal of, the Pyrotechnic Displays Business Licence. The application for such a licence was made on 10th December, 2003. The decision to refuse the application relates to the public liability insurance. There is no doubt that Mr Zahradnik had public liability insurance and this was known to the Director before the decision of 5th August, 2004 (see date of receipt stamped on exhibit R5). There is no contest about that. However, the decision to refuse that licence was based upon the suggestion “....that your insurance policy does not cover other pyrotechnicians who may work for you. Therefore, you have not demonstrated that you can ensure Regulations 14 and 21 are being complied with.”
As it transpires, the public liability insurance that Mr Zahradnik had in place did in fact cover pyrotechnicians who were working for him (see exhibit A4). A dispute arose during the argument on the appeal as to whether the Director knew that as at the date of the decision on 5th August, 2004. There was also a dispute as to whether that was a matter that was raised by the Director with Mr Zahradnik before the date of the decision. Those disputes were not resolved at the hearing of the appeal. I encouraged the Director to reconsider the application because the stated reason for the refusal had, as a matter of fact, been met. On that basis, I indicated that I would not decide that aspect of the appeal unless I was requested so to do.
After the decision was reserved, I was advised by Mr Kerin, counsel for the appellant, by letter dated 19th November, 2004, that the parties asked that I decide the appeal as it related to this decision. This I proceed to do.
More needs to be said by way of background. On 22nd December, 2003, the Director wrote to Mr Zahradnik concerning the licence application of 10th December, 2003. On this topic, the letter said:-
“Your application for a Pyrotechnic Business Displays Licence and an Importation of Explosives licence, requires the following information to be provided to receive further consideration:
1.Please note that a pyrotechnic business displays licence is not required if you hold a pyrotechnician’s licence to arrange and conduct fireworks displays. Therefore you may not require a pyrotechnic business displays licence. However, if you feel that you do require one, please outline your intended business activities and how you will provide adequate arrangements to comply with the Explosives (Fireworks) Regulations 2001 (eg. public liability insurance etc).”
There was no further communications relating to public liability insurance before the letter of decision of 5th August, 2004. Concerning this aspect of the case, it gave the following as the reason for the decision:-
“The decision to not grant you with a pyrotechnic business displays licence was due to the following reason:
Regulation 20 of the Explosives (Fireworks) Regulations 2001 requires all practicable steps to be taken to ensure that displays under the control of the business are carried out in accordance with the Regulations. Regulation 14 of the Explosives (Fireworks) Regulations 2001 requires pyrotechnicians carrying out displays to maintain public liability insurance with respect to the displays. Information supplied suggests that your insurance policy does not cover other pyrotechnician’s who may work for you. Therefore, you have not demonstrated that you can ensure Regulations 14 and 21 are being complied with.”
The reference to Regulation 20 must be an error because that Regulation refers to the term and renewal of a Pyrotechnic Displays Business Licence. I take it to be a reference to Regulation 21, which provides as follows:-
“21―Requirement to ensure displays conducted in compliance with regulations
It is a condition of a pyrotechnic displays business licence that the holder of the licence must take all practicable steps to ensure that each display conducted or arranged to be conducted in the course of the business authorised by the licence is conducted in accordance with these regulations.”
Regulation 14 provides as follows:-
“14―Public liability insurance
It is a condition of a pyrotechnician’s licence that the holder of the licence must ensure that, for each fireworks display conducted under the authority of the licence, a policy of public liability insurance is maintained in respect of death, personal injury and property damage arising out of the display in an amount of―
(a)if the display involves the use of aerial fireworks, at least $5 million; or
(b)in any other case, at least $1 million.”
Regulation 14 is expressed in terms wide enough to encompass the need for public liability insurance for other pyrotechnicians working with Mr Zahradnik.
I have already referred to exhibit R5 which is the Confirmation of Cover for public liability insurance held by Mr Zahradnik with Accent Insurance Corporation.
I have also referred to exhibit A4, which is a copy of the terms and conditions that applied to the policy held by Mr Zahradnik. That exhibit was received by the Court upon the hearing of the appeal at the request of the appellant and without objection from the respondent (TP6). That policy operated in Mr Zahradnik’s favour when he held displays pursuant to an existing pyrotechnician’s licence. It was accepted on the appeal that he had public liability insurance for those displays (TP27). The contentious point is whether, as at the date of the decision on 5th August, 2004, the Director was aware that that cover extended to Mr Zahradnik’s employees in the event he was granted a Pyrotechnic Displays Business Licence.
The Director contends that he was not aware of that fact at that time and that there was no obligation on the Director’s part to enquire further to ascertain whether the existing insurance covered employees of Mr Zahradnik. Both submissions should be rejected.
It was obviously proper for the Director to write to Mr Zahradnik on 22nd December, 2003 seeking details of public liability insurance (exhibit R7). Cover was obtained by Mr Zahradnik on 23rd December, 2003 as evidenced by exhibit R5. That Confirmation of Cover was received by the Director on 9th July, 2004. At about the same time the Director received exhibit A3 which included the following paragraph:-
“Regards Business License (sic):
For the time being as I have no Import License (sic) yet, I will purchase Firework form (sic) local pyro-technicians and pick it up on the day of use. I will employ licensed pyro-technicians only, in case I need help to proceed with conducting Fireworks.”
Mr Zahradnik had his own pyrotechnicians licence and the necessary public liability insurance. He said he was only going to employ licensed pyrotechnicians who also would have to have the necessary public liability insurance.
The Director’s decision, based upon information then available to the Director, was an unreasonable use of the decision-making power. In the first place, upon the information then available, the Director had been told that those pyrotechnicians who were going to be involved in business displays were licensed. Therefore, public liability insurance was in place for the public and anyone else involved. On that basis, there was compliance with regulation 14 and all employees were covered, albeit possibly via their own insurance.
Secondly, if there was any scope for doubt as to whether all employees were covered by insurance, it was quite unreasonable to refuse the licence without making a further enquiry relating to the actual terms of the policy, the Cover Note of which had been provided to the Director. One would expect such a policy to cover employees as a matter of course and a straight-forward enquiry would have confirmed that to be the case.
Quite apart from the information then available to the Director, the material provided to me upon the hearing of the appeal shows that employees are in fact covered by Mr Zahradnik’s public liability insurance cover.
In my view, not only is there cogent reason to depart from the original decision based upon the information then available, there is also cogent reason to depart from it based upon information now available. Equity, good conscience and the substantial merits rest with the appellant.
The original decision is rescinded and the decision is substituted that Mr Zahradnik be granted a Pyrotechnic Displays Business Licence. The Director has power to impose conditions upon the grant of the licence. That is a matter for the Director.
Licence to Import Explosives
Turning to the other decision appealed against, namely the decision to refuse the Application for a Licence to Import Explosives, it is necessary to say something of the background.
The documentation tendered by consent on the appeal shows that Mr Zahradnik made two applications for a Licence to Import Explosives. The first was dated 10th December, 2003 and the other 6th July, 2004 (see exhibit A2). The reason for the two applications was not explained but no point was taken about that by either party. They are in slightly different terms as to the classification codes of explosives for which the licence was required, but nothing turns on that. The applications were in the appropriate form and the fees paid.
As mentioned by letter dated 22nd December, 2003, the Director wrote to Mr Zahradnik concerning the Pyrotechnic Displays Business Licence and the Licence to Import Explosives (exhibit R7). As to the latter, the letter says:-
“Your application for a Pyrotechnic Business Displays Licence and an Importation of Explosives licence, requires the following information to be provided to receive further consideration:
1.(Not relevant)
2.An application for an explosive import licence must provide evidence that a suitable licensed storage to receive goods in accordance to Regulation 7.15 (2) of the Explosives Regulations 1996.
3.Pursuant to regulations 13.03 of the Explosives Regulations 1996, please provide details of your processes and procedures to inspect, analyse and test firework products imported before onward use by other persons.”
I infer there was some further communication between the Director and Mr Zahradnik because he wrote to Workplace Services South Australia by letter dated 9th July, 2004. Relevantly that letter says:-
“Regards Import License (sic):
For the time being as I have no magazine License (sic) yet, I intend to import Fireworks (see Application) to be picked up on the day of use. I will not store Firework Effects until my magazine is approved. The imported effects will be classified be (sic) the manufacturer.”
As mentioned, the Director refused both applications by letter of 5th August, 2004. As to the application under consideration, it said:-
“The decision to not grant you with an import licence was due to the following reasons:
1.An applicant for an explosive import licence must provide evidence that suitable licensed storage is available to receive goods in accordance to Regulation 7.15 (2) of the Explosives Regulations 1996. Currently you do not have a licensed explosive storage facility. You have not provided any evidence that a licensed storage large enough to store the maximum quantity to be imported at any one time has been arranged or is in place.
2.Information you have supplied on your processes and procedures for inspecting, analysing and testing of imported fireworks does not provide any detailed description on each process or procedure. Furthermore, the provided flow chart on your proposed processes and procedures was seen to be inadequate. The following issues are raised for you to address:
a.You have not advised the proposed place that would be used to hold and conduct preliminary inspection of the imported products.
b.You have not advised the proposed location in which the testing of the imported products would be conducted.
c.Explosives of classification 1.2G require licensed transport. You have not provided evidence and explained how these explosive items would be moved to the inspection holding area, to the licensed storage area, to the testing site or to the display sites by a licensed vehicle.
d.You have not explained from exactly where or whom the firework products would be sourced either interstate or overseas. Please note that before any type of explosives can be brought into South Australia, you must ensure that the explosive has been classified or authorised by Workplace Services.”
As can be seen, the decision hinges upon Regulation 7.15(2) of the Explosives Regulations 1996. Regulation 7.15 provides as follows:-
“7.15—Receiving consignment of explosives
(1) A person shall not forward a consignment of explosives unless he has given notice to the consignee, and has received from the consignee a statement of the time at which the consignee will be ready to receive the consignment.
(Consignor)
(2) A consignee shall not give an intimation of his readiness to receive a consignment of explosives, or receive such a consignment, unless he is ready, upon receipt, forthwith either to use or to dispatch the consignment, or to deposit the consignment in conformity with the requirements of section 23 of the Act.
(Consignee)”
That regulation refers to s.23 of the Explosives Act 1936 which relevantly provides as follows:-
“Keeping of explosives
23.    (1)    Subject to subsection (2), explosives shall be kept only–
(a)     in a Government magazine; or
(b)    in a magazine duly licensed by the Director; or
(c)    on any premises duly licensed by the Director as premises whereon explosives may be stored; or
(d)    in the underground workings of a mine in accordance with the provisions of the Mines and Works Inspection Act 1920 and the regulations made under that Act.
(2)    This section shall not apply to explosives kept by any person for his own use, the weight of which in the case of gunpowder does not exceed 15 kilograms, or in the case of any other explosive, 3 kilograms, but that in no case shall the exemption provided for by this subsection extend to the keeping of more than one hundred detonators.”
Referring back to the first paragraph of the reasons for refusal, it was based upon the fact that Mr Zahradnik did not then have a licensed explosive storage facility to receive goods in accordance with Regulation 7.15(2). I have assumed that Mr Zahradnik did not want the explosives for his own use and below the stated limits in s.23. From what I was told during the course of the appeal, in conjunction with the nature of the two types of licence that were the subject of this appeal, he wanted quite large quantities of explosives for commercial displays.
It is clear from the terms of Regulation 7.15(2) that there are some situations that do not require a consignee to have a licensed explosive storage facility. If a consignment is to be forthwith used or dispatched, there is no need “....to deposit the consignment in conformity with the requirements of section 23 of the Act.” Section 23 contemplates explosives being “kept” or “stored” and if explosives are going to be forthwith used or dispatched, they are not relevantly “kept” or “stored”. The Director knew from the letter from Mr Zahradnik of 9th July, 2004 (exhibit A3) that he was not proposing to store explosives and intended to import explosives (fireworks) “....to be picked up on the day of use.”
In my view, there is no absolute requirement that Mr Zahradnik have a licensed explosive storage facility, let alone a storage facility for the maximum amount that may be imported at any one time. Even if Mr Zahradnik found himself having to “keep” or “store” explosives, he could use, in accordance with the regulations, a magazine duly licensed by the Director. There was no need for him personally to have such a storage facility.
On behalf of the Director it was submitted that Regulation 7.15(2) should not be considered in isolation. Part 13 of the Explosives Regulations 1996 is headed “Importation of explosives”. The submissions centred about Regulations 13.02 and 13.03. Those Regulations provide as follows:-
13.02—Importing explosives into South Australia
No lot, parcel or consignment of explosive exceeding 15 kilograms of gunpowder or three kilograms of any other explosive shall be brought into the State of South Australia unless the owner, consignee, consignor or carrier—
(a)holds a licence to import explosives; and
(b)has first given at least two clear working days notice in writing (in the form of Schedule A) to the Chief Inspector and, if the explosives are to be landed at a port, to the Harbormaster at Port Adelaide.
Provided that a licence shall not be required where a person imports safety cartridges not exceeding 2 000 in number for his own use and not for sale.
(Owner, consignee, consignor, carrier)
13.03—Inspection, examination and analysis of explosives entering South Australia
Every lot, parcel or consignment of explosive exceeding the limits specified in regulation 13.02 of this Part shall, as soon as practicable after entering South Australia be deposited in a Government magazine or such other place as may be directed by the Chief Inspector for the purposes of inspection, examination and analysis as may be required by the Chief Inspector and shall not be removed therefrom without the authority of the Chief Inspector.
All costs of storage, inspection, examination and analysis shall be borne by the owner or the consignee of the explosives.
(Owner, consignee, consignor, carrier)”

The argument proceeds in this fashion. Any importation above the stated limits requires the owner etc. to give two clear working days notice in writing to the Chief Inspector. Every such consignment “shall”, as soon as practicable after entering the State, be deposited in a licensed explosive storage facility (there no longer being a Government magazine). Such a deposit is for the purposes of inspection, examination and analysis. The explosive cannot be removed without the authority of the Chief Inspector.
In those events, the Director argues that importation of explosives for immediate use is a practical impossibility. The argument proceeds that, in that situation, it was proper to refuse the import licence on the basis that Mr Zahradnik had not provided evidence or details of a suitable licensed storage facility into which the Chief Inspector could direct the deposit.
There is a tension between Regulation 7.15(2) and Regulations 13.02 and 13.03 but they appear to have separate spheres of operation. Regulation 7.15(2) must be contemplating a point of time after any importation. Regulations 13.02 and 13.03 deal with the periods immediately before importation and soon after importation. If anything, Regulation 7.15 picks up after goods are removed pursuant to Regulation 13.03.
In relation to the importation of explosives, Regulation 7.15(2) and s.23 are not relevant. It is certainly not mandatory to have a licensed storage facility pursuant to, and for the purposes of, Regulation 7.15(2).
Regulations 13.02 and 13.03 are obviously relevant in the importation situation. There is nothing in those Regulations requiring an importer to have his or her own licensed storage facility. There must be a licensed storage facility available to the importer to where the Chief Inspector can direct deposit for the purposes of Regulation 13.03.
Why does an applicant for an import licence need to know, when he or she applies for the licence, to which licensed storage facility the explosives are to be deposited upon importation? In my view, such an applicant, at the time of the application, does not need to know. Those arrangements and that information would have to be available at the time of the actual importation and made known to the Chief Inspector, but to my mind it is an unreasonable use of the Director’s power to refuse the application on the basis that, at the time of the application, the arrangements are not then in place.
An applicant for an import licence may not be proposing to use the licence until some time in the future, for example, until consignors are known or commercial arrangements are made with the holder of a licensed storage facility in this State or perhaps until the importer has such a licence (which Mr Zahradnik implies in exhibit A3).
I reject the Director’s reason for refusal of the import licence. It was an unreasonable refusal because it relied upon an incorrect interpretation of the regulations. That is not to say that the Director did not have the power to grant a licence that was subject to certain conditions that would deal with the concern expressed about a registered storage facility and other matters.
As to the other matters raised in paragraph 2 and sub-paragraphs (a) to (d), the argument on the appeal approached them as pre-emptory in nature and not fundamental to refusing the licence. They were, it was submitted, matters upon which Mr Zahradnik would have to provide information at some stage before he could remove explosives from a licensed storage facility. I agree he would have to supply that information at some time so he could benefit from an import licence. They could not have been used as a basis upon which to refuse a licence, as distinct from granting a licence with certain appropriate conditions.
There is cogent reason to depart from the original decision. The original decision is rescinded and the decision is substituted that Mr Zahradnik be granted an Import Licence. The licence may be subject to such conditions as are imposed by the Director in accord with the Regulations.