McCrostie Trucking Ltd v New Zealand Transport Agency
[2018] NZHC 2736
•23 October 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000701 [2018] NZHC 2736
BETWEEN MCCROSTIE TRUCKING LIMITED
Plaintiff
AND
NEW ZEALAND TRANSPORT AGENCY Defendant
Hearing: 9 October 2018 Appearances:
Y E Clarisse for Plaintiff
K South for DefendantJudgment:
23 October 2018
JUDGMENT OF GENDALL J
Introduction
[1] The plaintiff, McCrostie Trucking Ltd (the Company), a goods trucking company, applies for judicial review of a decision of the defendant, the New Zealand Transport Agency (the NZTA) to revoke its Transport (Goods) Service Licence (the Licence). The Company has also filed an appeal against the decision in the District Court.
[2] In the matter before me the Company applies for a stay of the NZTA’s decision pending determination of the review, pursuant to s 15 of the Judicial Review Procedure Act 2016 (the Act). On 28 September 2018, I had made an interim order of stay until I was able to receive and consider full submissions and make a further order. That consideration occurred at the opposed hearing of the stay application that took place
before me on 9 October 2018.
MCCROSTIE TRUCKING LTD v NEW ZEALAND TRANSPORT AGENCY [2018] NZHC 2736 [23 October
2018]
Background
[3] The Company was incorporated on 28 September 2004. It carries on business as a goods transport operator, operating 11 heavy truck and trailer units throughout New Zealand. Among other things, it has a contract with Fastway Couriers.
[4] On 29 September 2004, Daryl McCrostie (Mr McCrostie) applied for a licence on behalf of the Company. He and his father (the sole director and shareholder of the Company at the time) were nominated as being the persons to be in control of the service to be carried on under the Licence. Because of Mr McCrostie’s traffic-related offending at that time, the NZTA was not satisfied that he was a fit and proper person to have control of a transport service. At the time, his name was removed from the application. His father was deemed to be in control of the proposed service and the holder of the requisite qualifications. The NZTA then granted the Licence on
12 October 2004.
[5] In October 2006, Mr McCrostie became the joint holder with his father of 99 of the Company’s 100 shares. This meant he was now a person in control of the Company’s goods service. However, the NZTA was not advised of this. In June 2008, it seems Mr McCrostie and his father had a falling out. The latter was replaced as sole director by Mr McCrostie’s wife, Dominque Larayne McCrostie (Ms McCrostie). Since that time, Mr and Ms McCrostie have held one share each, with the remaining
98 shares still held jointly by Mr McCrostie and his father.
[6] Up until 29 September 2018, Mr McCrostie held driver licence classes 2, 3, 4 and 5. These licences enabled him to drive any heavy motor vehicle or combination unit. He has been driving the Company’s heavy motor vehicles throughout.
Offending
[7] Between October 2004 and March 2018, the Company accrued 105 traffic- related offences. These related to the driving or operation of heavy motor vehicles in or in connection with its transport service. Twenty five of these offences related to operating overloaded and over-dimensional heavy motor vehicles. Thirteen involved operating uncertified heavy motor vehicles and vehicles not up to a Certificate of
Fitness standard. In addition, there were 38 breaches of the road user charges regime and 26 speeding offences.
[8] The Company also failed 34 Police roadside safety inspections. Faults detected included brake faults, damaged towing connections, insufficient tyre tread, damaged or deteriorating suspension components, and non-functioning and non-complying lights or indicators.
[9] In addition to this offending by the Company, 49 of the Company’s drivers have been apprehended for a further 105 safety-related offences while driving heavy motor vehicles in or in connection with the Company’s transport service. These included 57 speeding offences, two offences of carelessly using a heavy motor vehicle, and various offences involving a failure to comply with traffic rules or rules related to logbooks and worktime.
[10] Mr McCrostie has himself personally committed more than 80 traffic offences since he gained his licence in 2000, at least 39 of these while driving heavy motor vehicles (some being counted within the 105 offences noted in the previous paragraph). As a result, he has had seven terms of disqualification from driving and paid over $18,000 in fines.
[11] Between 2001 and 2018, Mr McCrostie has been given some 16 warnings by the NZTA in the interests of public safety. Peter William Stevenson (Mr Stevenson), the delegated decision maker for the NZTA, has deposed that some of those warnings have included concerns that Mr McCrostie’s fitness and propriety could have an adverse effect on the Company’s Licence. Ms McCrostie disputes this. She considers that, in essence, the warnings referred only to Mr McCrostie’s personal licences.
The NZTA’s decision
[12] On 9 July 2018, the Company’s files were referred by the NZTA to
Mr Stevenson. After reviewing the relevant information, he made a preliminary determination that public safety required the Company’s Licence to be revoked. He was satisfied that the Company was no longer a fit and proper person to be the holder of a Goods Service Licence and that Mr and Ms McCrostie by association were no
longer fit and proper persons to have any position of control or involvement in the operation of a transport service.
[13] In reaching this decision, Mr Stevenson took into account the traffic related offending history of the Company and individual drivers; Mr McCrostie’s serious traffic-related offending history; the warnings Mr McCrostie had been issued; and the repeated operation of substandard and uncertified heavy motor vehicles. He considered that, while historic matters carried less weight, the instances of non- compliance demonstrated a consistent course of conduct and a culture of non- compliance within the Company.
[14] On 17 August 2018, Mr Stevenson issued individual notices of proposal to the Company, Mr McCrostie and Ms McCrostie. They outlined the decision he had come to about their unfitness, stated that he proposed to revoke the Licence, and gave them an opportunity to make submissions. Mr Stevenson said he had decided not to give a warning or require further remedial action because of previous warnings given to
Mr McCrostie which were unheeded and the long history of non-compliance.
[15] Mr Stevenson also issued Mr McCrostie with a separate notice of proposal to revoke his driver licence classes 2, 3, 4 and 5, and to prohibit him from driving any transport service vehicle or hold those licence classes for three years.
[16] Ms McCrostie then made submissions to Mr Stevenson on behalf of the Company. She accepted that Mr McCrostie was not a fit and proper person to be in control of or a driver in a transport service. However, Ms McCrostie defended the Company’s safety record, emphasising that the breaches had been over a long period of time and contending that the Company usually had good safety standards. She also outlined the various steps the Company had taken to ensure compliance. She highlighted the consequences the loss of the Licence would have on the company, its suppliers, and its employees and their families.
[17] On 21 September 2018, Mr Stevenson made a final determination that the
Company and Mr and Ms McCrostie were not fit and proper persons. He issued a
notice of decision in respect of each. A few days later, the Company’s solicitor contacted Mr Stevenson requesting a “grace period” but Mr Stevenson refused.
Submissions
The Company
[18] The Company submits that its application for judicial review will be rendered nugatory if the stay is not granted. The effect of the revocation of the Licence it says means that all the Company’s drivers will be without a job and its customers without a transport provider. Given the length of time until the appeal or judicial review is to be heard, it is said the business would likely be impossible to resurrect, even if the Court found in its favour. This impact is severe.
[19] The Company also maintains that it is bona fide in its application for judicial review. It says that the issues it raises with the decision are seriously arguable. The Company will argue that the NZTA took into account irrelevant considerations such as the traffic-related offending of Mr McCrostie, who it is claimed is no longer driving for or involved in the operation of the Company. The Company will also argue that the NZTA failed to take into account relevant considerations such as the Company’s compliance scheme and the significant steps it says it has taken towards reducing its offending.
[20] The Company argues that neither the NZTA nor other road users will be injuriously affected by a stay of the decision. The main reason the NZTA considered the Company to pose a risk to public safety was Mr McCrostie’s driving record. The Company accepts that Mr McCrostie is not a fit and proper person to continue driving under the Licence and has removed him from its driving shifts. The Company likens its case to that of Travlon Coachlines (2005) Ltd v New Zealand Transport Agency.1
[21] Finally, the Company submits that the overall balance of convenience here allows the Court to stay the decision pending review.
1 Travlon Coachlines (2005) Ltd v New Zealand Transport Agency [2018] NZHC 558.
The NZTA
[22] In response, the NZTA submits that its decision as the industry regulator must be accorded heavy weight and the Court should be slow to interfere with the stated need for action.2 The NZTA is required to make decisions in the public interest and to protect public safety. The NZTA says that there has been no satisfactory proposal made by the Company to the NZTA to address the matters of concern.
[23] The NZTA submits that a detailed assessment of the Company’s case before the District Court and in the judicial review is not possible at this point. Nonetheless, the NZTA submits that it can revoke a licence if the individual or company is not a fit and proper person under s 30C of the Land Transport Act 1998 (LTA). The NZTA argues that there is no need for harm to have already occurred and the bar is not set at a very high level.
[24] The NZTA acknowledges here that the consequences of the revocation could be severe for the Company. However, it says the overall interests of justice justify the revocation because of public safety concerns. The NZTA contends that any private detriment that may occur to the Company does not outweigh that.
Law
The Land Transport Act regime
[25] The LTA provides the regulatory framework governing transport services. Its purpose is to promote safe road user behaviour and vehicle safety, and to provide a system of rules to govern road use and licencing.3 The Company requires a Transport (Goods) Service Licence (TSL) to carry out its business. These licences are granted by the NZTA, on application, to natural persons or companies if it is satisfied that the applicant is a fit and proper person and that any person who is to have, or is likely to
have, control of the transport service is a fit and proper person.4
2 Director of Civil Aviation v Air National Corporation Ltd [2011] NZCA 3 at [35].
3 Land Transport Act 1998, preamble.
4 Land Transport Act 1998, s 30L.
[26] The holder of a TSL has an obligation to ensure that every vehicle to be used in the service is maintained in a fit and proper condition.5 It also has a duty to detect and eliminate traffic-related offending committed by employed drivers in the interests of public safety,6 and to ensure that all its activities are carried out by it, and its employees, safely and in accordance with the relevant prescribed safety standards and practices.
[27] Section 30S(1) of the LTA provides that the NZTA may revoke a TSL if satisfied that either the holder of the licence, any person who has control of the transport service, or any driver is not a fit and proper person.
[28] In Cheyenne Haulers Ltd v New Zealand Transport Agency, Keane J
summarised the transport service licencing regime as follows:7
…the intent of Parliament is clear. A transport service licence is a privilege not a right. The safety of the public is always an issue. The corollary is that licensees must continue to earn their privilege. If they infringe sufficiently seriously or persistently and in either of those ways compromise public safety, their licences can be revoked.
[29] There is a right to appeal a decision to revoke a licence to the District Court, as the Company has done. However, s 106(3) of the LTA expressly provides that the revocation remains in effect pending this appeal.
Interim relief
[30] Alternatively, a revocation decision can be challenged by judicial review. This brings with it the ability of the Court to make interim orders to preserve the applicant’s position pursuant to ss 15 and 16 of the Act.
[31] The Company has to prove that an interim order deeming its revoked Licence to continue in force until its appeal or judicial review is determined is necessary to
preserve its position as a matter of justice.8
5 Land Transport Act 1998, s 30A.
6 Land Transport Act 1998, s 4(3) and (5).
7 Cheyenne Haulers Ltd v New Zealand Transport Agency HC Auckland CIV-2011-404-2456,
12 May 2011 at [41].
8 Cheyenne Haulers Ltd v New Zealand Transport Agency, above n 7, at [65].
[32] The Court of Appeal noted in Director of Civil Aviation v Air National Corporation Ltd that interim relief should not ordinarily be given to preserve an applicant’s right to a judicial review of the decision.9 Such relief does not sit well with the fact that the District Court is prohibited from granting a stay pending an appeal of the decision to it. At the very least, the Court considered that the prohibition in the LTA is a relevant consideration to the exercise of the discretion to grant interim relief.
[33] In Foreman Automotive Ltd v New Zealand Transport Agency, Katz J set out the approach to granting interim relief:10
First, the Court must consider whether the statutory threshold is met (that orders are necessary to preserve the position of a party). Secondly, the Court has a wide discretion as to whether the grant of relief is appropriate. The exercise of that discretion will usually involve considering all the circumstances of the case. In this case the key considerations are the strength of the judicial review claims, the particular statutory context, and the public and private repercussions of granting relief.
[34] Her Honour went on to say that:11
Parliament has therefore set where the balance should be struck in “ordinary” cases. Public safety is paramount unless and until the Agency is shown to be wrong. It was to avoid undermining this statutory regime that the Court of Appeal in Air National urged caution in cases such as this. This is a significant factor against the granting of interim relief in this case.
[35] Katz J noted too that considerations of public safety will generally prevail over private detriment.12
Discussion
[36] I begin by considering as best I can the strength of the Company’s judicial review claim. On a preliminary analysis, I consider that the Company has an arguable case. There will be an issue as to whether the NZTA’s failure to discuss with the Company that it intended to revoke its Licence, or give it an opportunity to come up
with a plan to address safety concerns may have been a breach of natural justice.
9 Director of Civil Aviation v Air National Corporation Ltd, above n 2, at [30].
10 Foreman Automotive Ltd v New Zealand Transport Agency [2013] NZHC 1167 at [24].
11 At [53].
12 Foreman Automotive Ltd v New Zealand Transport Agency, above n 10, at [58].
[37] There is also a possible argument that the NZTA failed to take into account a relevant consideration, being the steps that the Company claimed it had taken to improve their performance. The Company will also argue that the NZTA took into account an irrelevant consideration, being Mr McCrostie’s driving record, as it will contend he had been stepped down from a driving role. However, I do not consider this argument to be particularly strong because Mr McCrostie has remained in control of the Company, as I discuss below.
[38] In all, I find that, on a brief analysis of the arguments, while it cannot be said that the Company has no chance of success, it is certainly not guaranteed to succeed.
[39] I accept that the revocation of the Company’s Licence will cause hardship to the Company and it is possible that it may struggle to later resurrect its business if its judicial review application does succeed. I note, too, what is claimed that its employees may have some trouble finding alternate employment. Nonetheless, this hardship is common to appeals of this type. It is not sufficient on its own for interim relief to be granted. The overarching factor is the risk to public safety.13
[40] I note too, as suggested by Mr Stevenson in his evidence, that there are actions the Company could take to help maintain its position despite the Licence revocation. For example, it could temporarily pass its work and assets under some appropriate arrangement to a properly licensed surrogate TSL holder in order to retain its staff and current contracts.
[41] The key factor which points against the grant of interim relief here is the potential risk to public safety by allowing the Company to continue to operate. The Company submits that there is now limited danger to public safety given that it says
Mr McCrostie is no longer driving for and is not in control of the Company. It points out that, despite its record, the Company has had no accidents or crashes for over
13 years. Nonetheless, I find the Company’s compliance and safety record is concerning and Mr McCrostie’s particularly so. Moreover, it is appropriate for me to defer to the NZTA’s specialist expertise in this area. As noted by the Court of Appeal,
I should be slow to interfere with the industry regulator’s assessment of the need for action to protect public safety.14
[42] The Company maintains, however, that I should take a position similar to that taken by Nation J in Travlon. The plaintiff in that case ran a commercial passenger service. Its licence was revoked by the NZTA due to safety concerns. These concerns largely centred on the roadworthiness of the vehicles used. The mechanic employed by Travlon was not properly maintaining the roadworthiness of the vehicles, leading to a number of crashes.
[43] The plaintiff, Travlon sought interim relief after the revocation. In determining to grant that relief, Nation J was influenced by the fact that the mechanic, who was effectively the main cause of the safety issue, was no longer working for Travlon. He had been replaced with someone who was said to be a very competent mechanic. In addition, Travlon had sought assistance to improve its practices. Nation J also considered that Travlon had some seriously arguable issues in its judicial review and noted that the revocation would have very serious consequences.
[44] Nation J concluded that Travlon had met the threshold for obtaining interim relief, albeit with conditions. He prevented the revocation from coming into force for a number of months to enable Travlon to carry out its high season period of work. Nation J imposed various conditions about the safety procedures for Travlon to follow over that period.
[45] The Company in the present case submits that, like Travlon, it has removed the key safety concern, being Mr McCrostie. In addition, it argues that Travlon was given time to come up with a plan to address its safety issues, whereas it claims it was not. The NZTA in response, however, maintains that the Company has not made any significant effort to make alternative arrangements.
[46] I do not accept that the removal of Mr McCrostie as a driver completely removes safety concerns in this case, although it is a step in the right direction. There have also been infringements by other drivers in the Company and there is little
evidence that the Company has taken its obligations to comply with its LTA obligations seriously. Therefore, the Company still poses a significant risk to public safety.
[47] Moreover, I consider that Mr McCrostie does remain as a person who could be seen as being in control of the Company. Although the Company claims that Ms McCrostie is the only person in control of the Company, in my view, there must be serious doubt over this. Section 2 of the LTA defines control, in relation to a transport service, as:
… direct or indirect control of the management of the whole or part of the transport service by a shareholding or the holding of any position (however described) in the management of the whole or part of the transport service that gives the person a significant influence on the operation of the whole or part of the service (whether or not other persons are also involved)
[48] While he is not a named director of the Company, Mr McCrostie jointly holds
98 per cent of the shares, and 1 per cent on his own. Additionally, he is in charge of overseeing the maintenance of the fleet and has handled public relations.
Ms McCrostie deposed that she has always been in control. She says that
Mr McCrostie carries out her instructions and reports back to her for any decision making. I accept that Ms McCrostie may make many decisions for the Company. I consider it highly unlikely, however, that in all the circumstances here Mr McCrostie has never had a say in the decision making and direction of the Company. He has been the figure in control on the ground and, in the past, has been the public face of the business. He is the one with the experience in the industry. Therefore, even though he may no longer be a driver, he is still in control of the Company and the safety risk remains.
[49] I note also that in Travlon15 Nation J only granted a stay on the revocation decision for two months, to cover the company’s peak season. The stay sought by the Company here is until the judicial review proceeding is heard, which will likely be at least, if not more than, four months away.
[50] Previous cases make it clear that interim relief of this nature will only be given in exceptional circumstances. Parliament’s prohibition on interim relief pending a
District Court appeal shows that the NZTA’s decisions are to be given great respect by the courts.
[51] I do not consider that the hardship the Company faces as a result of the revocation of its Licence and its chances of success in its judicial review are sufficient to outweigh the risk its continued operation poses to public safety. Therefore, interim relief is not appropriate.
Conclusion
[52] I find that the Company has not done sufficient here to establish that an interim order deeming its revoked Licence to continue in force until its judicial review is determined is necessary to preserve its position as a matter of justice. While the Company may well suffer hardship as a result and has an arguable case for its judicial review, in my view, in all the circumstances here, this does not outweigh the risk to public safety, which the statutory scheme requires to be prioritised.
[53] I therefore decline to order the interim relief sought by the Company. The Company’s stay application is dismissed. My interim order noted at [2] above staying the earlier decision to revoke the Licence is rescinded. That earlier Licence revocation decision will now come into effect.
[54] Costs are reserved and may be the subject of memoranda filed in the absence of agreement.
...................................................
Gendall J
Solicitors:
Pitt & Moore, Nelson
Raymond Donnelly & Co, Christchurch
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