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Rotorup Proprietary Limited and Civil Aviation Safety Authority [2009] AATA 81; (2009) 108 ALD 199 (9 February 2009)

Last Updated: 4 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 81

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2007/4045

GENERAL ADMINISTRATIVE DIVISION
)

Re
ROTORUP PROPRIETARY LIMITED

Applicant
And
CIVIL AVIATION SAFETY AUTHORITY

Respondent

DECISION

Tribunal
Senior Member R W Dunne

Date 9 February 2009

Place Adelaide

Decision
The Tribunal sets aside the decision under review and remits the matter for further consideration by the respondent. The Tribunal directs that the applicant does not fail to comply with the requirements of ss 28(1)(a), (b)(i) and (b)(ii) of the Civil Aviation Act 1988 by reason of its appointment of Mr Albert James McBride as its chief executive officer and chief pilot.

..............................................
R W DUNNE
(Senior Member)

CATCHWORDS

CIVIL AVIATION – application for Air Operator’s Certificate (AOC) – application refused – prior involvement by director, shareholder and chief pilot of applicant in the performance of unauthorised maintenance of helicopter – involvement in conspiracy to cover up unauthorised maintenance – whether applicant fit and proper person to hold AOC – decision under review set aside
Civil Aviation Act 1988 ss 3A, 9A, 20AB, 27, 28

Civil Aviation Regulations 1988 Reg 42ZC
In the matter of an application for admission as a legal practitioner [2004] SASC 426
Sobey v Commercial and Private Agents Board [1979] 22 SASR 70)

Re Grant and Civil Aviation Safety Authority [2007] AATA 2055

REASONS FOR DECISION


9 February 2009
Senior Member R W Dunne

INTRODUCTION

  1. On or about 1 March 2006, Rotorup Pty Ltd (“Rotorup”) applied to the Civil Aviation Safety Authority (“CASA”) for the issue of an Air Operator’s Certificate (“AOC”). Albert James McBride and his wife were directors and shareholders of Rotorup. On 22 June 2007, the application was refused because CASA’s delegate found that Mr McBride had, on a prior occasion, been involved in the performance of unauthorised maintenance of a helicopter for which he was then the chief pilot. The delegate also found that Mr McBride had made false statements (in conspiracy with others) in an attempt to conceal the unauthorised maintenance and had provided false documents to advance the concealment. Rotorup has applied to this Tribunal for review of the decision of the delegate refusing to issue an AOC.
  2. At the hearing, Mr Craig Ellis appeared for Rotorup and Mr Joe Rule (from CASA Legal Services Group) appeared for CASA. The documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“T documents”) were admitted into evidence (as Exhibit R1). In addition, the Tribunal admitted the following documents into evidence:

ISSUE FOR THE TRIBUNAL

  1. The issue for the Tribunal is whether the applicant meets the requirements of s 28 of the Civil Aviation Act 1988 (“Act”) to be entitled to the issue of an Air Operator’s Certificate.

THE LEGISLATIVE FRAMEWORK

  1. The main object of the Act is contained in s 3A, which provides:
“3A Main object of this Act
The main object of this Act is to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents.”

  1. The power reposed in CASA to issue AOCs for the purposes of its functions is contained in s 27 of the Act. This section further provides, amongst other things, that an aircraft shall not operate in an Australian territory for a commercial purpose unless the operations are authorised by an AOC. The issue of AOCs by CASA is governed by s 28 of the Act, which reads as follows:
“28 CASA must issue AOC if satisfied about certain matters
(1) If a person applies to CASA for an AOC, CASA must issue the AOC if, and only if:
(a) CASA is satisfied that the applicant has complied with, or is capable of complying with, the provisions of this Act, the regulations and the Civil Aviation Orders, that relate to safety, including provisions about the competence of persons to do anything that would be covered by the AOC; and
(b) CASA is satisfied about the following matters in relation to the applicant’s organisation:
(i) the organisation is suitable to ensure that the AOC operations can be conducted or carried out safely, having regard to the nature of the AOC operations;
(ii) the organisation’s chain of command is appropriate to ensure that the AOC operations can be conducted or carried out safely;
(iii) the organisation has a sufficient number of suitably qualified and competent employees to conduct or carry out the AOC operations safely;
(iv) key personnel in the organisation have appropriate experience in air operations to conduct or to carry out the AOC operations safely;
(v) the facilities of the organisation are sufficient to enable the AOC operations to be conducted or carried out safely;
(vi) the organisation has suitable procedures and practices to control the organisation and ensure that the AOC operations can be conducted or carried out safely;
(vii) if CASA requires particulars of licences held by flight crew members of the organisation—the authorisations conferred by the licences are appropriate, having regard to the nature of the AOC operations; and
(c) if the AOC sought is:
(i) an AOC (other than an Australian AOC with ANZA privileges) authorising the operation of a foreign registered aircraft on regulated domestic flights; or
(ii) an Australian AOC with ANZA privileges authorising the operation of a foreign registered aircraft, other than an aircraft registered in New Zealand, on regulated domestic flights;
CASA is also satisfied that the additional conditions in section 28A are satisfied; and
(d) CASA is satisfied that the person does not hold a New Zealand AOC with ANZA privileges that covers all or any of the AOC operations; and
(e) if the AOC sought is an Australian AOC with ANZA privileges—the additional conditions in section 28B are satisfied.
(2) The financial position of the applicant is one of the matters that CASA may take into account in forming a view for the purposes of paragraph (1)(a).
(3) In this section:
AOC operations means the operations covered by the application.
applicant’s organisation means the organisation established, or proposed to be established, by the applicant to conduct or carry out the operations covered by the application.
key personnel means the people (however they are described) that hold, or carry out the duties of, the following positions in the applicant’s organisation:
(a) the chief executive officer;
(b) the head of the flying operations part of the organisation;
(c) the head of the aircraft airworthiness and maintenance control part (if any) of the organisation;
(d) the head of the training and checking part (if any) of the organisation;
(e) any other position prescribed by the regulations.”

BACKGROUND

  1. There was little dispute between the parties about the material facts. They are contained in Mr McBride’s witness statement (Exhibit A1) and, where relevant, were unchallenged. They are set out at paragraphs 3-7 of CASA’s statement of facts and contentions and are substantially mirrored at paragraphs 13-24 of Rotorup’s statement of facts, issues and contentions. Taken from the statements, they may be repeated as follows:

EVIDENCE OF MR MCBRIDE

  1. It was Mr McBride’s evidence that, following the unauthorised maintenance, TGC had flown 40 more hours before returning to Alice Springs for 25 hourly maintenance. The failed lower pulley assembly had occurred on the first flight after the 100 hourly maintenance the previous day, which had been undertaken by Mr Grant. As a result of the unauthorised maintenance and subsequent cover up, Mr McBride’s employment options were restricted to flying overseas and he was currently working in Dili, East Timor. He worked for Hevilift Dili East Timor (“Hevilift”), a New Guinea aviation company that specialised in helicopters in the South Pacific. Mr McBride was told about the problem with the failed pulley assembly in a phone call from Mr Houston on 16 November 2005. He asked Mr Houston to contact Mr Bolton to obtain a new pulley and to organise an engineer to do the work. He then left it to Mr Bolton and Mr Houston to sort out the repairs. On 17 November 2005, he telephoned Mr Bolton and was told that Mr Houston could install a new pulley, as it was a simple job. Mr Bolton would recondition the removed pulley and return it with Mr Grant on his regular run to do the next 25 hourly maintenance a few days later. Mr Grant could sign the maintenance logbook as the licensed engineer performing the work.
  2. Mr McBride was concerned about what had been proposed but, as Mr Houston was non-contactable, he did nothing further. When the competitor became aware of the unauthorised maintenance and reported the matter to CASA, Mr McBride was contacted by CASA’s investigators and the cover up began. Mr Grant had signed off on the logbook and, in a statement to CASA, said that he had flown from Brisbane to Alice Springs to do the work. As a result, Mr Houston, Mr Grant and Mr McBride had all implicated themselves in the cover up by lying to CASA’s investigators. When asked who he thought started the cover up, Mr McBride said that probably Mr Bolton and Mr Houston had done so because he had delegated to them what needed to take place to sort out the problem. They would have done this in an attempt to keep the machine flying. They were practical people and saw the unauthorised maintenance as the quickest and easiest way to solve the problem.
  3. After speaking with CASA’s investigators, Mr McBride (along with Mr Bolton and Mr Houston) decided to “come clean”. By 20 February 2006, Mr Grant had prepared a truthful statement to CASA and, on 22 March 2006, Mr McBride told the investigators that he would give an accurate account of what had taken place. After that, he received a notice to show cause and his qualifications as a chief pilot were called into question. He resigned as chief pilot of Helihire and the operations manager, Mr Craig Ellsley, took over. In speaking more about Helihire, he had established the company to fly TGC around Burra. It was initially meant to be a small venture, but others bought into the company. Eventually it operated four or five helicopters. Following the unauthorised maintenance incident, he sold his shareholding in the company to other members. When Mr Ellsley qualified, he became chief pilot and the AOC stayed with the company.
  4. In cross-examination by Mr Rule, Mr McBride acknowledged that, with TGC and Helihire, he had been chief pilot and the head of aircraft maintenance. When Mr Houston experienced the problem with the helicopter’s lower pulley assembly, he had been in a remote location and had no access to an engineer. With the assistance of Mr Bolton, he decided to take matters into his own hands and fix the bearing himself. Although Mr McBride knew this had taken place, he admitted that he had allowed the helicopter to operate for a period of time before it could next be inspected by a licensed engineer. He did not do this for his own financial advantage, but to fulfil his obligations to the clients who had cattle that needed to be worked. Although Mr Houston had performed the unauthorised maintenance, it was not done to avoid the cost of bringing Mr Grant back to Alice Springs. Every effort had been made to get Mr Grant or another engineer back, so cost was not an issue. If an engineer could not be obtained, the cattle work could not be finished and the client would go to the nearest competitor. Following the unauthorised maintenance, he accepted that Mr Houston would continue to fly the helicopter until Mr Grant undertook the next 25 hourly maintenance. He estimated that TGC would have flown about 40 hours during this period and, on average, this would have meant about eight days flying five hours each day. Once Mr Houston and Mr Bolton had obtained the new bearing, he had not tried to contact Mr Houston to tell him not to fly the helicopter until Mr Grant could come back to look at it. He thought Mr Houston would be out of range of a mobile phone and uncontactable. He said he should have tried calling him on other phones, but he did not and he admitted that this had been a mistake.
  5. As to the application for an AOC for Rotorup, he said the helicopter would be used for stock mustering and shooting, in a similar vein to the operations of Helihire. Because of the logistical difficulties associated with operating in remote locations in South Australia and the Northern Territory, following on the first maintenance incident, an engineer had been paid to set up his own business so his services could be accessed and provided to the various areas in which the operations were to be conducted. Operating in these remote areas required effective communication and the ability to make judgments about how the work was to be carried out. Although he was now working for Hevilift in Honiara and Papua New Guinea, with present day communications, he could effectively supervise the activities of an AOC in Australia. He would always be contactable in Honiara because he would always be carrying a phone, even when flying an aircraft there. He would not use the phone while flying with Hevilift unless there was an emergency. Otherwise, he would wait until he was on the ground and then use his own phone. He preferred using Hevilift as his primary source of income and operating Rotorup as a source of supplementary income. With Hevilift’s consent, he would be able to engage in commercial flying in Australia, whilst on leave. He would have to let Hevilift know the sort of flying he was doing, how many hours were involved and the type of machine. This was because the time off in Australia was meant to be for rest and recreation.

EVIDENCE OF WILLIAM DAVID RICEMAN

  1. Mr Riceman was currently employed as the Flying Operations Team Leader in the Adelaide office of CASA. Amongst other things, he was responsible for leading a team of flight operations specialists involved in the co-ordination and conduct of surveillance of general aviation operators. Although he was not the delegate acting on the application by Rotorup, he had made an initial recommendation to the delegate in relation to the AOC. Although Rotorup was the applicant, it was the recent history of Mr McBride, the principal of Rotorup, that was of concern. Shortly after the application was received, Mr McBride changed the nominee for Rotorup’s chief pilot to himself. In the initial application, Mr Houston had been nominated. This raised the question of whether CASA could proceed to consider the application.
  2. After discussion with the delegate, Mr Riceman invited Mr McBride to a meeting to discuss his concerns. At this stage, Mr Riceman was unsure whether CASA could be satisfied in relation to the various matters referred to in s 28 of the Act, especially because Mr McBride was the nominee for chief pilot. Speaking about the role of a chief pilot in an AOC organisation, he was one of the “key personnel” upon whom the safety of the organisation rested. There needed to be absolute trust between CASA and the chief pilot. The delegate needed to be satisfied that there was a track record that showed Rotorup could comply with the Act. At the meeting on 19 March 2007, Mr Riceman suggested that, as a way of moving forward, the AOC would be severely limited in its scope to allow aerial work operations only. There would be no passengers, a limited number of aircraft and a limited number of pilots employed. Mr Riceman agreed with Mr McBride that Rotorup’s operation would be aerial work only, one or two helicopters and one or two pilots. No decision was made as to whether or not Mr McBride would be allowed to be chief pilot. On this basis, Mr Riceman recommended to the delegate that the application could proceed for consideration.
  3. Subsequently, Mr McBride sought an expansion of the AOC proposed by CASA. He asked for an endorsement on a turbine powered helicopter and for Rotorup’s operations to include charter. The carriage of passengers was a problem and Mr Riceman was again concerned whether the application could proceed. He understood Rotorup was to be involved in cattle mustering in Alice Springs and central Australia. The difficulty in having operators in remote areas was the ability of CASA to oversee and maintain surveillance of these operators. CASA had to rely more heavily on maintaining good communications with the chief pilot and, if anything went wrong, for the chief pilot to make immediate contact. If the operator was in a remote area, it was harder for CASA to check on its activities because there were not adequate staff available. As Mr McBride had ultimately failed to persuade CASA previously that he was suitable to occupy key positions in an AOC organisation, this did not mean the opportunity would be closed to him forever. If a mistake was made, but was corrected over time and a satisfactory track record established, CASA would reconsider the situation.
  4. In cross-examination by Mr Ellis, Mr Riceman acknowledged that the rejection of Rotorup’s AOC application had been solely on the question of whether or not Mr McBride was a fit and proper person. Almost nothing had been done in considering Rotorup’s operations manual, its maintenance records or whether there was an appropriate licensed aircraft maintenance engineer. CASA could not be satisfied that Rotorup, and in this case Mr McBride himself, was capable of complying with the provisions of the Act, the Civil Aviation Regulations and the Civil Aviation Orders that related to safety. It had not been Rotorup involved in unauthorised maintenance and a cover up. It had been Mr McBride himself. In substance, he was not a fit and proper person to have an AOC because, on one occasion out of a 30 year flying history, he had allowed unauthorised maintenance to occur and then had tried to cover it up. In answer to a specific question, he denied that Mr McBride’s obvious dissatisfaction with CASA’s handling of the matter of the bogus blades on his helicopter in 2002 had influenced him in recommending the refusal of the application for an AOC. That matter was largely irrelevant to Rotorup’s application because decisions had to be made on the basis of the requirements mentioned in the Act. In other words, it was not possible to say that, because CASA had made a mistake (in Mr McBride’s view), it was acceptable for him to have made a mistake. There had been an “elaborate ruse” involving the preparation of a false invoice as evidence of a person (Mr Grant) having travelled from Brisbane to Alice Springs to carry out aircraft maintenance that was not conducted. When put to him by Mr Ellis, Mr Riceman acknowledged that there had been an earlier incident of unauthorised maintenance in June 2005 involving Mr McBride. On that occasion, Mr McBride had signed off on the unauthorisation and there had been no attempt to cover up. CASA was aware that Mr McBride was acting outside his authority, but he was only counselled. He acknowledged that, after a flying history of almost 30 years, there had, in fact, only been two occasions in June 2005 and November 2005 when Mr McBride had come to the attention of CASA.

CONSIDERATION

Does the applicant meet the requirements of s 28 of the Civil Aviation Act 1988 to be entitled to the issue of an Air Operator’s Certificate?

  1. Although the issue postulated relates to Rotorup, the real question is whether Mr McBride, the principal and chief pilot of Rotorup, is a fit and proper person. Mr Rule has made it clear that CASA seeks to rely not only on the matters in s 28(1)(a) of the Act, but also those referred to in ss 28(1)(b)(i) and (b)(ii). However, he has acknowledged that the essence of CASA’s objection is Mr McBride and has submitted the Tribunal should be satisfied that, in relation to Mr McBride and on the facts of the case:

(a) he has a demonstrated history of failing to ensure compliance with the Act whilst chief pilot of Helihire;

(b) he has been guilty of serious misconduct in a manner demonstrating a lack of personal integrity in his dealings with CASA;

(c) he has been guilty of allowing his personal animosity towards CASA, arising out of the incident concerning the bogus blades on TGC, to adversely effect both his professional judgement and his personal relationship with CASA; and

(d) having regard to his dealings with Mr Riceman in the context of the Rotorup AOC application, there are significant grounds for doubting his commitment to the maintenance of high personal and professional standards and his ability to work constructively with CASA in the future.

Based on these factors, it was CASA’s further submission that Mr McBride is not a fit and proper person. In considering this issue, the Tribunal will obviously bear in mind that, by virtue of s 9A of the Act, CASA, in exercising its powers and performing its functions, and the Tribunal when performing its role, must regard the safety of air navigation as the most important consideration.

  1. It is clear that an individual’s fitness and propriety will depend upon the facts of each case. Mr Ellis referred the Tribunal to two decisions of the South Australian Supreme Court involving fitness and propriety, they being In the matter of an application for admission as a legal practitioner [2004] SASC 426 and Sobey v Commercial and Private Agents Board [1979] 22 SASR 70). Based on their own individual facts, the Tribunal found these cases to be of little assistance.
  2. On the evidence, it is clear that Mr McBride did not initiate the unauthorised maintenance of TGC that took place in November 2005. He was drawn into the incident by associates who, finding themselves in a remote location, saw it as necessary, in their perception, to perform unauthorised maintenance in order to get the problem fixed and have TGC flying again. A replacement pulley was sourced from Mr Bolton. There was no licensed engineer available, but Mr McBride was told by Mr Bolton that it was a simple job and Mr Houston could replace the part. However, what took place involved a bad error of judgement on the part of Mr McBride and his associates. Mr Ellis himself described what took place as a “bumbling scheme” that was bound to fail from the outset. Had the Tribunal been satisfied that Mr McBride had initiated the scheme, it may well have had a different view of his integrity and of his appreciation of the regulatory scheme.
  3. There were two aspects to the incident in which Mr McBride was involved. He was party to unauthorised aircraft maintenance and, more seriously, to an attempt to cover up the unauthorised conduct. Along with Mr Grant, Mr Houston and Mr Bolton he was prosecuted in the criminal courts and fined. In Re Grant and Civil Aviation Safety Authority [2007] AATA 2055, Deputy President P E Hack SC (at paragraph 15 of his reasons that follow) detailed how the various individuals were dealt with criminally:
“... Mr Houston, who might be regarded as the instigator of the episode, pleaded guilty to one count of failing to record a defect in an aircraft, two counts of carrying out unauthorised maintenance and one count of hindering a Commonwealth public official. He was convicted and fined a total of $5000. Mr McBride pleaded guilty to three counts of hindering a Commonwealth public official, constituted by the provision by him to investigators of a false document. In respect of two counts he was discharged, without a conviction being recorded. On the other count he was convicted and fined $1000. Mr Bolton pleaded guilty to one count of hindering a Commonwealth public official, in relation to the provision of a false document, and was fined $2500. Mr Grant pleaded guilty to two counts of hindering a Commonwealth public official – one in relation to his conversation with Mr Goode on 28 November 2005 and the other in relation to the later false statement to Mr Saffery. He was fined a total of $5000.”

As Deputy President Hack found in Re Grant, these matters do not bear directly upon the issue that the Tribunal must decide in the present case, but they form part of the background against which that issue falls to be decided.

  1. In the Tribunal’s opinion, Mr McBride has paid his penalty. On the evidence he has given, the Tribunal is satisfied that he has learnt his lesson. When Mr Ellis suggested to him it was Mr Riceman’s view that he could not be trusted with an AOC, he said:
“I disagree. I think I can be, and I have made some mistakes. My big mistake was not complying with the requirements of chief pilot and head of aircraft maintenance which is the cause for his doubting my abilities and integrity, but I believe I’ve learned enough from the incident to be able to move forward.”

  1. It was Mr Riceman’s evidence that he had failed to be persuaded that Mr McBride was suitable to occupy key positions in an AOC organisation. However, he did not think that CASA would forever close the door. If a person made a mistake at some point, but then managed to correct it by providing a track record of satisfactory operation, CASA would look at the situation. It is clear that, prior to the unauthorised maintenance incident, Mr McBride had a 30 year flying history that entitled him to hold, and to continue holding, an AOC with Helihire. Mr Rule submitted that his sense of grievance with CASA’s handing of the bogus blades episode coloured and affected his judgement in relation to his involvement in the cover up episode. Certainly, Mr McBride harboured some feelings about the way he believed he had been treated, but the Tribunal does not accept that those feelings adversely affected his judgement about being involved in the cover up.
  2. As to the second aspect of the incident, the failed attempt at the cover up, this has raised the question of whether Mr McBride can be trusted in the future. Mr Rule made the point, correctly in the Tribunal’s view, that assessment of the proclivities of a particular individual is never an easy task. The best that can be done is to try and make an assessment of the likelihoods and the potentialities that might be involved. It is clear, on the evidence, that CASA does not have the resources to provide constant monitoring of AOC operators. It relies to a very great extent upon trust. In the case of Mr McBride, that trust was abused. However, is such an abuse likely to occur again in the future? The Tribunal was favourably impressed by Mr McBride in the witness box. It is persuaded by the circumstances of the case, the manner in which he presented his evidence and his unblemished 30 year history that his departure from proper standards was an aberration, rather than evidence of an underlying or symptomatic lack of appreciation of the proper standards required of his position. In the Tribunal’s opinion, a finding of an absence of fitness and propriety is not warranted.
  3. Having regard to the above, it is the Tribunal’s finding that Mr McBride is an appropriate person to hold the positions of chief executive officer and chief pilot of Rotorup for the purposes of satisfying the requirements of ss 28(1)(a), (b)(i) and (b)(ii) of the Act. However, as was stated by Mr Rule in the outline of CASA’s submissions, the Tribunal is not in a position to be able to satisfy itself about Rotorup’s compliance with all of the criteria enumerated in s 28 of the Act so as to be able to issue Rotorup with an AOC.
  4. Having made the finding as to Mr McBride’s competency to hold the administrative positions in Rotorup, the Tribunal notes the comment by Mr Rule in his closing that it would be difficult for CASA to seek to rely on Mr McBride’s past indiscretions when considering the other matters in s 28 of the Act relating to the issue of an AOC to Rotorup.

DECISION

  1. The decision under review is set aside and the matter remitted for further consideration by the respondent. The Tribunal directs that the applicant does not fail to comply with the requirements of ss 28(1)(a), (b)(i) and (b)(ii) of the Act by reason of its appointment of Mr Albert James McBride as its chief executive officer and chief pilot.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne


Signed: .....................................................................................

Associate


Date of Hearing 23 October 2008

Date of Decision 9 February 2009

Counsel for the Applicant Mr C Ellis

Solicitor for the Applicant Moody Rossi & Company

Counsel for the Respondent Mr J Rule

Solicitor for the Respondent CASA Legal Services Group


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