Keeley v New Zealand Transport Agency

[2020] NZHC 2453

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-132

[2020] NZHC 2453

BETWEEN

JOSEPH KEELEY

Plaintiff

AND

NEW ZEALAND TRANSPORT AGENCY

Defendant

Hearing:

4 September 2020 with further memoranda on 15 and 16

September 2020

Appearances:

C A Donaldson for the plaintiff

N S Wood and O E Battell-Wallace for the defendant

Date of judgment:

18 September 2020

JUDGMENT NO 2 OF PALMER J

This judgment was delivered by me on Friday 18 September 2020 at 3.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Solicitors:

Wynn Williams, Christchurch Chapman Tripp, Wellington

KEELEY v NEW ZEALAND TRANSPORT AGENCY NO 2 [2020] NZHC 2453 [18 September 2020]

Summary

[1]    On 16 July 2020, the New Zealand Transport Agency, or Waka Kotahi as it is now known, revoked the appointments of Mr Joseph Keeley and his company TTP Taupō Ltd (TTP) as a vehicle inspector and inspecting organisation for warrants of fitness (WOFs). Mr Keeley and TPP apply for judicial review and seek interim orders preserving their position until that is heard. I accept their inability to operate the business will likely have a significant economic and financial impact on Mr Keeley, his family and employees. Mr Keeley’s failure to spent at least 30 minutes on each of his inspections, as envisaged in a condition to which he has been subject, counts against his application. But I do not consider there is evidence of an acute public safety risk deriving from that. I grant interim orders subject to more restrictive conditions on the time Mr Keeley spends on inspections until determination of the application for judicial review that will be heard on 15 and 16 October 2020.

What happened?

[2]    Under the Land Transport Act 1998, the Land Transport Rule: Vehicle Standards Compliance 2002 empowers Waka Kotahi to appoint vehicle inspectors and inspecting organisations to carry out activities including WOF inspection and certification. Clause 3.2 of the Rule empowers Waka Kotahi to require an inspector or organisation to undergo an investigation if it is satisfied on reasonable grounds that they have failed to comply with the conditions of their appointment. If Waka Kotahi is satisfied of that after investigation, it may require remedial action, or suspend or revoke an appointment. Before revoking an appointment, Waka Kotahi must notify the inspector or organisation of the action being considered, the reasons for it, offer the opportunity for submissions to be made and consider the submissions. Alternatively, under cl 3.3, Waka Kotahi may immediately suspend an appointment if it has reason to believe an inspector or organisation has failed to comply with a condition of appointment and that presents a significant risk to land transport safety.

[3]    In the early 1990s, Mr Keeley was appointed as a vehicle inspector for WOFs but did not use the appointment.12 Around 2005, he reapplied and was appointed

1 Affidavit of Joseph Keeley, 31 July 2020 (Keeley), at [3].

2      Affidavit of Neil Adams, 31 August 2020 (Adams), exhibit NLA-1 at 47.

again. His then-company, HVR Holdings Ltd, held the equivalent appointment as an inspecting organisation until 2011, when it was liquidated. In 2012, Mr Keeley reapplied for appointment again and began inspecting vehicles for TTP Taupo Ltd (TTP). In 2015, he became a shareholder and director of TTP which held the organisation appointment. He estimates he has inspected over 70,000 vehicles in the 15 years since 2005.

Reviews and suspension

[4]In 2015, Waka Kotahi conducted three reviews related to Mr Keeley:

(a)On 12 October 2015, Waka Kotahi recorded that: the Quality Management System (QMS) inspection manual was not on site; the most recent vehicle inspector certificate was not displayed; and the check sheets needed to be completed accurately.

(b)On 19 October 2015, Waka Kotahi recorded: the delegations, staff and training records required updating, labels needed to be kept in the WOF label book; care needed to be taken to complete check sheets fully; and steering self-centring checks could not be done on a brake roller machine.

(c)On 23 November 2015, Waka Kotahi found Mr Keeley and TTP to be compliant.

[5]In 2019, Waka Kotahi conducted three more reviews. On 5 September 2019,

Waka Kotahi told Mr Keeley:3

(a)He had to apply for his own organisation appointment because TTP was appointed before he was a director and had changed ownership. He did.

3      Adams, exhibit NLA-1 at 48; Keeley at [16](a).

(b)The QMS records needed to be updated to identify the person responsible. Mr Keeley says he took steps to do that.

(c)There had been no recent relevant training or internal assessment available or recorded for some time. Mr Keeley undertook a personal assessment.

(d)The large number of vehicles inspected was of concern. Mr Keeley implemented a booking system to eliminate the high numbers, allowing 30 minutes per inspection.

(e)Some vehicle faults were not identified during the review, including an underinflated tyre, and a LW plate’s details not matching the vehicle. Mr Keeley made improvements to his processes, including testing trailer stopping, rotating driveshafts, feeling brake hoses, jacking the rear of the cars of different places, checking rear headrests and driving trailers around to see if they would stop within 7 metres at 30 km/h.

(f)More care was required with interior seat belt webbing inspections. Mr Keeley says he started inspecting seatbelts more closely.

(g)A vehicle emissions test was not completed. Mr Keeley responded at the time that it was completed.

[6]On 20 November 2019, Waka Kotahi recorded that:4

(a)The previous concerns had not yet been addressed. Mr Keeley engaged a consultant to rewrite the QMS manual as requested, to make recommendations for further improvements, and to provide onsite training on 13 December 2019.

(b)Multiple inspection fails had not been entered into Waka Kotahi’s system.

4      Adams, exhibit NLA-1 at 48-49; Keeley, at [16](b).

(c)Multiple checksheets had omissions.

(d)Multiple processes needed improvement. For example, Mr Keeley was to jack up cars from the chassis or spring eye,  not the rear axle.      Mr Keeley disagreed with this method.

(e)Data entry continued to be an issue.

[7]On 3 December 2019, Waka Kotahi recorded:5

(a)There  had  been  some  improvements  but  more  were  required.   Mr Keeley advised he was continuing to make improvements and was willing to do what was required.

(b)The QMS manual had still not been updated. Mr Keeley’s consultant was still doing that.

(c)The data entry and checksheet completion continued to require improvement. More care needed to be taken when filling out checksheets.

(d)Damage to a seatbelt was not  recorded  as  a  reason  for  rejection. Mr Keeley considered it was safe and compliant but Waka Kotahi told him he needed to fail it. Mr Keeley says the driver had it inspected by another inspector who passed it.

(e)Emission tests needed to be carried out to requirements.

[8]    On 17 December 2019, Waka Kotahi immediately suspended Mr Keeley’s appointment as an inspector under cls 2.1(1), 2.1(2) and 3.3(1). On 19 December 2019, Waka Kotahi advised Mr Keeley it was considering revoking his appointment as a vehicle inspector on the basis of the same factual matters as his suspension.6 On 20 December 2019, Waka Kotahi sent Mr Keeley a letter entitled “notice of immediate

5      Adams, exhibit NLA-1 at 49-50; Keeley, at [16](c).

6      Keeley, exhibits F and G.

suspension of the TTP Taupo’s appointment as an inspection organisation”, though the text of the letter bore no relation to that. It also sent him three notices of proposal, to revoke his appointment, to revoke TTP’s appointment and to decline his application for an inspecting organisation appointment.

[9]    From late December 2019 to February 2020, Mr Keeley arranged for the consultant to conduct onsite training, finish updating the manual and provide advice about compliance with Waka Kotahi requirements.7

Interim relief and surveillance

[10]   On 19 December 2020, Mr Keeley appealed his suspension to the District Court under s 106 of the Act. But the section is explicit that an appeal does not excuse a person from complying with the decision appealed from. So Mr Keeley also brought these judicial review proceedings in the High Court and applied for interim relief.

[11]   On 20 December 2019, Brewer J granted interim relief without notice, to preserve Mr Keeley’s position pending determination of an on notice application for interim relief or until Mr Keeley’s appeal and application for judicial review had been determined.8 Brewer J considered there was force in Mr Keeley’s submission that the reasons given by Waka Kotahi for suspension “arguably do not demonstrate that the plaintiff ‘presents a significant risk to land transport safety’”.9 Brewer J was satisfied the interim relief would not compromise public safety.10 The interim relief prohibited Waka Kotahi “from taking any further action that is or would be consequential on the decision to suspend the plaintiff’s appointment as a Vehicle Inspector”.11 Later on 20 December 2019, in light of the letter apparently about suspension of TTP, Brewer J also granted interim relief on a without notice basis in favour of TTP.12

[12]   On 29 January 2020, the parties filed a joint memorandum of counsel agreeing the interim relief ordered be varied and continued and the proceeding be adjourned.

7      Affidavit of Joseph Keeley, dated 21 February 2020 (Keeley February), at [51]-[55].

8      Keeley v New Zealand Transport Agency [2019] NZHC 3464.

9 At [11].

10 At [12].

11     At [14](a).

12     Keeley v New Zealand Transport Agency (No 2) [2019] NZHC 3496.

This was on the basis that it was “almost inevitable” that the suspension decision, and the challenge to it, would be overtaken by Waka Kotahi’s consideration of revocation. The parties agreed that no suspension of TTP had been made and that the interim orders regarding TTP should be rescinded. They also sought for the interim relief to be subject to the additional condition that “Mr Keeley must ensure that he allow at least 30 minutes for each warrant of fitness inspection that he carries out”. (Waka Kotahi had originally sought at least 45 minutes for each inspection but had agreed to Mr Keeley’s proposal of 30 minutes.) On 7 February 2020, Peters J made orders accordingly.13

[13]   On 18 June 2020, Waka Kotahi’s lawyers wrote to Mr Keeley’s lawyers suggesting that he had apparently breached the terms of the interim relief orders.14 Waka Kotahi’s analysis of the information filed in its system by Mr Keeley was that, from 28 April to 14 May 2020, Mr Keeley was consistently carrying out WOF inspections for initial inspections  in  less  than  30  minutes.15  Its  surveillance of  Mr Keeley’s premises on three days in May 2020 confirmed that most vehicles arriving for an initial inspection were inspected in under 30 minutes.16 Waka Kotahi also had specific concerns about individual inspections.

[14]   In response, on 8 July 2020, Mr Keeley’s lawyers said the condition “only requires that Mr Keeley allows 30 minutes for each inspection, not that each inspection takes at least 30 minutes”.17 Regarding the more significant specific concerns, they said: one vehicle which did not appear to enter the inspection premises at all was a re- check; the four trailers for which brake tests were apparently not completed were not braked so did not need testing; Mr Keeley had already driven a neighbour’s vehicle on which a steering test was apparently not completed; and he disagreed that one inspection only took 11 minutes but did not respond to the suggestion that a sticker on the rear window should have resulted in rejection.

13     Keeley v New Zealand Transport Agency HC Auckland CIV-2019-470-132, 7 February 2020

14     Keeley, exhibit I.

15 At [16].

16 At [21].

17 Keeley, exhibit J, at [6].

Revocation and proceedings

[15]   On 16 July 2020, Mr Neil Adams at Waka Kotahi  issued notices revoking  Mr Keeley’s appointment as a vehicle inspector and TTP’s appointment as an inspecting organisation under cl 3.2(2). Mr Adams’ evidence is that he was satisfied Mr Keeley and TTP had failed to comply with conditions of their appointment and failed to carry out inspection and certification activities competently and diligently as required.18 Mr Adams was concerned by the high number of inspections taking less than 30 minutes, despite Mr Keeley and TTP being on notice of the concern and the condition for interim orders. The expert evidence of Mr Scott Thacker of Waka Kotahi is that a competent vehicle inspector takes, on average, 45 minutes to an hour to complete the required steps to inspect and certify a light motor vehicle for its WOF.19 He considers a competent inspector could not routinely do so competently and diligently in less than 30 minutes.20 He acknowledges that trailer inspections would take less time.21 Mr Thacker’s evidence is that, during November and December 2019 reviews, the fastest time he observed Mr Keeley complete an inspection was 33 minutes and that inspection was non-compliant.22

[16]   On 22 July 2020, I continued the interim orders prohibiting Waka Kotahi from taking any further  action consequential on its revocations of the appointments of   Mr Keeley as a vehicle inspector and TTP as an inspecting organisation, until any application for interim orders made by 31 July 2020 was determined.23 That continued to be subject to the condition that “Mr Keeley must ensure that he allows at least 30 minutes for each warrant of fitness inspection that he carries out”.

[17]   Mr Keeley’s evidence is that he, his children, TPP and its other two employees will suffer irreparable harm if the interim orders are not continued because they will have to shut up shop and will not have any cashflow to meet commercial lease payments and will lose their customer base.24 He believes there is no risk to public

18     Adams at [4.1].

19 Affidavit of Scott Thacker, 14 August 2020, at [140].

20 At [142].

21 At [144].

22 At [143].

23     Keeley v New Zealand Transport Agency [2020] NZHC 1768 at [12].

24     Keeley at [46]-[55].

safety in him continuing his business because he is experienced and qualified, he has made improvements to practices and procedures, and the November and December 2019 reviews only allege technical non-compliance and do not represent an acute risk to public safety.25 At the hearing, his lawyer said Mr Keeley and TPP are willing to work co-operatively with Waka Kotahi to address the concerns raised and he has now implemented a system where inspections are booked 45 minutes apart.

[18]   On 4 September 2020, I heard the application for interim orders. I continued the interim interim orders until determination of the application for interim orders in this judgment. At the hearing, I directed the Registry to establish when a substantive hearing could be set down and the parties to indicate their preferences as to that. The Registry advises that a substantive judicial review hearing could be set down for 15 and 16 October 2020, in the Rotorua High Court.

[19]   Mr Wood, for Waka Kotahi, submits the judicial review should be set down for those dates given the importance of having the proceeding promptly determined and the likelihood the earliest District Court hearing time for an appeal will be many months away. He submits the parties have already generated substantial evidence and little more is required. Ms Donaldson, for Mr Keeley and TPP, submits the judicial review hearing should not proceed on those dates because it would be more appropriate to hear the more cost-effective District Court appeal first and the further evidence they want to file cannot be ready in time.

Relevant law of interim orders

[20]   Under s 15 of the Judicial Review Procedure Act 2016, the court may make interim orders “if, in its opinion, it is necessary to do so to preserve the position of the applicant”. The Court has a wide discretion to consider all the circumstances of the case in deciding whether to grant interim relief.26 Making interim orders involves considering the seriousness of the question to be argued and the strength of the applicant’s case, the balance of convenience between the parties and the overall justice of the case.

25 At [60].

26     Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.

[21]   There have been a number of applications for interim orders in judicial reviews of Waka Kotahi decisions to revoke vehicle inspection appointments. In at least six decisions, the High Court has granted interim relief because the effect of the appointee losing their business was considered more significant than any public safety risks.27 In several of those cases, the public safety risks appear to have been greater than those here.28

[22]   In another case, Foreman Automotive Ltd v New Zealand Transport Agency, interim orders were not granted.29 There, Katz J considered interim relief is likely to be “exceptional” where there are separate statutory appeal rights precluding a stay of a decision and observed that too ready a resort to interim relief has the potential to undermine the statutory regime which is underpinned by important public safety considerations.30 She relied on the Court of Appeal decision in Director of Civil Aviation v Air National Corporate Ltd in relation to a similar provision in the Civil Aviation Act 1990.31

Submissions

[23]   Ms Donaldson, for Mr Keeley and TPP, submits they have a strong, seriously arguable case for judicial review because Waka Kotahi failed to sufficiently consider Mr Keeley’s explanations, took into account irrelevant personal traffic history and its decisions are disproportionate and unreasonable. She submits the public safety risk is directly and effectively addressed by the robust and reliable changes Mr Keeley and TPP have already made to their policies and procedures, and their willingness to take on any recommendations by Waka Kotahi. She submits the safety concerns here are technical, not acute, are not as great as in other cases in which interim orders were

27 Pohoikura Waitoa Logging Ltd v New Zealand Transport Agency  HC Gisborne CIV-2010-416- 277, 19 November 2010; Moffatt v New Zealand Transport Agency HC Dunedin CIV-2011-412- 679, 28 October 2011; Travlon Coachlines (2005) Limited v NZTA [2018] NZHC 558, [2018] NZAR 483; Boss Transport Limited v New Zealand Transport Agency [2019] NZHC 522; Longville v New Zealand Transport Agency [2019] NZHC 1445; Stan Semenoff Logging Ltd v New Zealand Transport Agency [2019] NZHC 1133.

28 Travlon Coachlines (2005) Limited v NZTA; Boss Transport Limited v New Zealand Transport Agency; Pohoikura Waitoa Logging Ltd v New Zealand Transport Agency; Stan Semenoff Logging Ltd v New Zealand Transport Agency.

29 Foreman Automotive Ltd v New Zealand Transport Agency [2013] NZHC 1167, [2014] NZAR 260.

30 At [19]-[20].

31 Director of Civil Aviation v Air National Corporate Ltd [2011] NZCA 3, at [30].

granted, and there has already been seven months since Waka Kotahi proposed to revoke the appointments. She submits trailer inspections and remaining open for longer than usual hours are reasons why more inspections may be completed in a day than Waka Kotahi calculates. Ms Donaldson submits that, whether the appeal or judicial review occurs first, TTP will have to cease operating, with obvious and significant consequences for the business, its employees and Mr Keeley personally, if interim orders are not granted. If interim orders are not granted, she submits the judicial review will be rendered nugatory.

[24]   Mr Wood, for Waka Kotahi, submits interim orders will only be given in exceptional circumstances as it would undermine the statutory regime that does not provide for a stay pending appeal. He submits the merits of each of the grounds of judicial review are weak and can be ventilated at the appeal in any case. He submits Mr Keeley’s non-compliance with the condition and the public interest ensuring competent and safe vehicle inspections favour refusing interim relief. He notes that Waka Kotahi is a highly specialised statutory body and its staff have considerable expertise and experience in vehicle safety, deserving of deference. He submits interim relief is not necessary to preserve the position of Mr Keeley and TPP if it will be a considerable time until the substantive judicial review is heard and determined. He suggests there may be some ability to stop operating for a period without the situation being irretrievable.

Should I grant interim orders?

[25]   It is not clear to me that the case for judicial review here is particularly strong. There may be some strength in the ground that Waka Kotahi failed to take into account relevant considerations of changes made after December 2019 and the related ground that it did not give Mr Keeley the chance to take remedial action. But that has not been fully argued before me and is difficult to assess. Ms Donaldson submits the strongest ground is that Waka Kotahi’s response was disproportionate and unreasonable. But serious safety concerns warrant a robust response under the Act. And there is evidence Waka Kotahi held concerns about safety and there was a basis for it to do so.

[26]   In terms of the balance of convenience, I accept that inability to operate his business will likely have a significant economic and financial impact on Mr Keeley, his family and his employees. Against that, I must weigh the public safety risks.

[27]   Mr Keeley has been apparently unwilling to honour the purpose of the condition of interim orders so far that he ensure he allows at least 30 minutes for each inspection he carries out. Waka Kotahi’s evidence strongly suggests he has not spent 30 minutes on each inspection, as does his response to that concern. That counts against his application for further interim orders. But the validity of Waka Kotahi’s expert evidence that a competent inspector could not competently and diligently inspect a vehicle in less than 30 minutes is disputed.32 And it is difficult to identify acute public safety consequences of those inspections. Waka Kotahi identified specific safety concerns in its 18 June 2020 letter. Mr Keeley provided responses to the more significant concerns. Whether those responses adequately meet the concerns as far as the legal test for revocation is concerned will be considered at the substantive hearing. But for now, I consider he has provided sufficient explanation that I do not consider there is an acute public safety risk. Waka Kotahi did not argue there was.

[28]   Waka Kotahi did rely on the submission that interim orders would undermine the statutory regime. I accept that is relevant to my decision about whether or not to grant interim orders. It does not determine my decision, which must also take into account other relevant considerations. But it is also relevant to the conditions of any orders, including questions of timing.

[29]   The final relevant factor is how long interim orders would be in place. One of the most important characteristics of judicial review is that it is supposed to be prompt. These proceedings were filed in December 2019. There has been plenty of time for the applicant to gather their evidence. I do not consider the existence of a parallel appeal in the District Court, which may not occur for several months, affects the desirability of the judicial review occurring now. The applicants are taking advantage of the possibility of interim orders by applying for judicial review, when they are not available for a District Court appeal as a matter of legislative intent. They cannot

32     Keeley February, at [49]-[50].

cherry pick the advantages for them of judicial review without accepting the concomitant pace involved in a judicial review. I set down the substantive application for judicial review to be heard in the Rotorua High Court on 15 and 16 October 2020. I make timetabling orders below.

[30]   On the basis of the balance of convenience, and the overall justice of the case, I do not consider there is sufficient evidence of safety risks to warrant the impact on Mr Keeley’s and others’ livelihood that the lack of interim orders would cause, if the time to the substantive judicial review hearing is relatively short and if there are stricter conditions on the interim orders. I make interim orders subject to new conditions that reflect Mr Keeley’s approach to the previous conditions and the practice he says he has now adopted.

Result

[31]   Under s 15 of the Judicial Review Procedure Act 2016, I grant interim orders prohibiting Waka Kotahi from taking any further action consequential upon its revocations of the appointments of Mr Keeley as a vehicle inspector and TTP Taupō Ltd as an inspecting organisation, subject to the conditions that:

(a)Mr Keeley must allow at least 45 minutes for each initial warrant of fitness vehicle inspection and must not start a new inspection less than 45 minutes after a previous inspection started.

(b)Waka Kotahi has leave to apply to the Court for the interim order to be varied or rescinded on the basis of evidence that Mr Keeley breaches that condition or on the basis of any other material change in circumstances.

(c)The interim order will expire on determination of the application for judicial review by the High Court unless otherwise continued.

[32]I direct:

(a)By 5 pm Monday 5 October 2020, Mr Keeley and TTP will file and serve any reply evidence, their written submissions and a common bundle.

(b)By 5 pm Monday 12 October 2020, Waka Kotahi will file and serve its written submissions.

(c)At 10 am Thursday 15 October 2020, the application for judicial review will be heard in the Rotorua High Court for up to one and a half days.

[33]   Both parties have enjoyed a measure of success in relation to this application. Costs will lie where they fall.

Palmer J