Trans Air Ltd and Civil Aviation Safety Authority [2010] AATA 42 (22 January 2010)

Last Updated: 1 February 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 42

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/1487

GENERAL ADMINISTRATIVE DIVISION		)
	Re		TRANS AIR LTD

Applicant

And

CIVIL AVIATION SAFETY AUTHORITY

Respondent

CORRIGENDUM

Tribunal

Deputy President P E Hack SC

Date 1 February 2010

Place Brisbane

Decision

Pursuant to s 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth) the Tribunal directs the Registrar to alter the text of the decision published on 22 January 2010 so that the decision reads “The Tribunal sets aside the decision under review and substitutes a decision that a Foreign Aircraft Air Operator’s Certificate be issued to the applicant”.

.............................................
Deputy President

REASONS FOR DECISION

1 February 2010

Deputy President P E Hack SC

1. On 22 January 2010, for reasons I published that day, I made a decision setting aside the decision under review and remitting the matter to CASA for reconsideration in accordance with a direction that a FAAOC be issued to Trans Air subject to the conditions ordinarily imposed upon certificates of this type. I made a decision in those terms because CASA did not suggest that any particular condition ought to be placed on the FAAOC and because I imagined that there would be standard conditions ordinarily imposed on FAAOC’s. I had used that form of words in order to forestall any further disputation about what conditions, if any, ought to be imposed.
2. Since then CASA have written to the Tribunal taking issue with the form of words. The matters raised by CASA were able to be raised at the conclusion of another matter where counsel for the parties were both present. It might be thought that the issue is somewhat sterile however since both parties agree that the wording of the decision ought be changed and since that satisfies me that there is an obvious error in the text of the decision I will make an appropriate direction to the Registrar under s 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth).
   

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 42

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/1487

GENERAL ADMINISTRATIVE DIVISION		)
	Re		TRANS AIR LTD

Applicant

And

CIVIL AVIATION SAFETY AUTHORITY

Respondent

DECISION

Tribunal

Deputy President P E Hack SC

Date 22 January 2010

Place Brisbane

Decision

The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with a direction that a Foreign Aircraft Air Operator’s Certificate be issued to the applicant subject to the conditions ordinarily imposed by the respondent upon certificates of that type.

.............Signed..................
Deputy President

CATCHWORDS
CIVIL AVIATION – Foreign Aircraft Air Operator’s Certificate – compliance with safety rules – repeated failure to obtain permission or authority for flights – within ambit of safety rules – evidence of oral permission not accepted – applicant likely to comply with safety rules in the future – applicant capable of complying with safety rules – some, not serious, safety deficiencies in another country – these deficiencies remedied promptly – risk of person who is not a fit an proper person participating in the management of the operations requires three key officers to seriously neglect their duties – judgement that they would not do so – set aside the decision under review and remit matter to CASA for reconsideration in accordance with a direction that a Foreign Aircraft Air Operator’s Certificate be issued to the applicant subject to the conditions ordinarily imposed by the respondent upon certificates of that type

WORDS & PHRASES – “safety rules”

Civil Aviation Act 1988 (Cth) ss 3, 9, 25, 26, 27, 27A, 28, 28AA

Finance Facilities Pty Ltd v FCT [1971] HCA 12; (1971) 127 CLR 106

Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Re Farnaby & Military Rehabilitation and Compensation Commission [2007] AATA 1792; (2007) 47 AAR 11

REASONS FOR DECISION

22 January 2010	Deputy President P E Hack SC
INTRODUCTION

3. By virtue of the Civil Aviation Act 1988 (Cth) a foreign registered aircraft may not fly into, nor out of, Australia except with the permission or authority of the Civil Aviation Safety Authority. CASA may give permission on an incidental basis or it may give more general authority for the conduct of commercial flights by granting a foreign aircraft Air Operator’s Certificate (a FAAOC).
4. The applicant, Trans Air Pty (Trans Air), is a private company incorporated in Papua New Guinea (PNG). By application dated 3 December 2008 (and a later varied application dated 13 January 2009) Trans Air applied for the issue to it of a FAAOC. CASA decided to refuse to grant that FAAOC and notified Trans Air of that decision by letter dated 3 April 2009. Trans Air now seeks a review of the refusal decision.

THE LEGISLATIVE BACKGROUND

5. Section 9 of the Civil Aviation Act specifies CASA’s functions. Those functions include the conduct of the safe regulation of civil air operations in Australia[1]. It is important to acknowledge, at the outset, that in exercising its powers and performing its functions, CASA, and hence the Tribunal in its stead, is obliged by s 9A of the Civil Aviation Act to “regard the safety of air navigation as the most important consideration.”
6. The Civil Aviation Act regulates foreign aircraft arriving in, operating in, and departing from, Australia. A foreign registered aircraft may operate in Australia[2]:
   • as a non-scheduled international flight for reward with permission granted by CASA under s 25 of the Act;
   • as an international flight for non-traffic purposes with permission from CASA under s 26 of the Act;
   • as authorised by a FAAOC granted under s 27 of the Act; and,
   • for the conduct of regulated domestic flights for a period of not more than seven days with permission of CASA under s 27A of the Act.
7. So far as is presently relevant s 25 of the Civil Aviation Act provides as follows:

“(2) Where a foreign registered aircraft possessing the nationality of a Contracting State makes a non-scheduled flight into Australian territory, it shall not take on or discharge passengers, cargo or mail in Australian territory (being passengers, cargo or mail carried, or to be carried, for reward) except with the permission of CASA and in accordance with any conditions to which the permission is subject.

(3) A foreign registered aircraft not possessing the nationality of a Contracting State shall not make a non-scheduled flight over or into Australian territory except with the permission of CASA and in accordance with any conditions to which the permission is subject.

(4) If a person applies to CASA for a permission under subsection (2) or (3), CASA must grant the permission if CASA is satisfied that the person has complied with, or is capable of complying with:

(a) if the person does not have a commercial presence in Australia—the condition referred to in paragraph (5)(a) (if applicable); and

(b) in any case—the safety rules.

Permissions—conditions

(5) A permission granted under subsection (2) or (3) is subject to:

(a) the condition that section 41E of the Civil Aviation (Carriers’ Liability) Act 1959 (which deals with personal injury liability insurance) is complied with (if applicable); and

(b) any conditions specified in the permission.

(6) CASA must not do either of the following, except to ensure compliance with the safety rules:

(a) specify a condition under paragraph (5)(b);

(b) vary a condition specified under paragraph (5)(b).”

8. CASA has a policy of limiting permissions under s 25 to eight per year. Beyond that a foreign operator will be directed by CASA to apply for a FAAOC. Division 2 of Part III of the Civil Aviation Act deals with the application for, and the issuing of, FAAOC’s. Section 27AE, within that Division, assumes that it is within power to issue a FAAOC, that is, “an AOC authorising the operation of a foreign registered aircraft on flights that are not domestic commercial flights”. Section 28 of the Civil Aviation Act provides that the Authority must issue an AOC if it is satisfied about certain matters. It provides:

“(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 safety rules; 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.

(1A) For the purposes of paragraph (1)(a), if the AOC sought is an AOC authorising the operation of foreign registered aircraft into Australia, out of Australia, or both, or on regulated domestic flights, other than:

(a) an Australian AOC with ANZA privileges; or

(b) an Australian AOC with ANZA privileges authorising operations of an aircraft registered in New Zealand on regulated domestic flights;

CASA may have regard to the matters set out in section 28AA.

(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.”

9. The present application is one that comes within s 28(1A) of the Act and accordingly it is necessary to consider s 28AA of the Act[3]. It provides:

“(1) For the purposes of subsection 28(1A), the matters which CASA may have regard to are:

(a) evidence of any serious safety deficiencies in relation to the applicant’s operations in another country; and

(b) evidence of the applicant’s ability and willingness to address those safety deficiencies; and

(c) evidence relating to the authority or authorities responsible for:

(i) the safety oversight of the applicant’s operations; and

(ii) the registration, certification and airworthiness of aircraft used by the applicant in its operations or to be used under the AOC sought; and

(d) evidence relating to the management and control of the applicant’s operations.

(2) For the purposes of paragraph (1)(a), examples of the kinds of evidence of serious safety deficiencies include all or any of the following:

(a) a report that identifies serious safety deficiencies;

(b) the applicant’s failure to address deficiencies identified during ramp inspections, or similar inspections, carried out by the aviation authority of another country or group of countries;

(c) the fact that another country or group of countries has imposed an operating ban on the applicant because of deficiencies relating to international aviation safety standards;

(d) information relating to an accident or serious incident that indicates systemic safety deficiencies in relation to the applicant’s operations.

(3) For the purposes of paragraph (1)(b), examples of the kinds of evidence of the applicant’s ability and willingness to address safety deficiencies include either or both of the following:

(a) how the applicant responds to requests from CASA for information about the safety aspects of the applicant’s operations;

(b) if the applicant has presented a plan for corrective action to CASA, the aviation authority of another country or group of countries, ICAO or another relevant body or organisation—whether the corrective action proposed is appropriate and sufficient.

(4) For the purposes of paragraph (1)(c), examples of the kinds of evidence mentioned in that paragraph include all or any of the following:

(a) how a relevant authority responds to concerns or issues raised by CASA about:

(i) the safety of the applicant’s operations; or

(ii) the safety of aircraft used by the applicant or another carrier licensed or certified by that authority;

(b) a relevant authority’s reputation for implementing and enforcing relevant aviation safety standards, including:

(i) audits and related corrective action plans established under ICAO’s Universal Safety Oversight Audit Programme or any other similar program; and

(ii) whether the applicant’s authorisation (however described) by the authority is not, or is no longer, recognised by another country or group of countries; and

(iii) if the applicant’s authorisation was not issued by the authority of the country in which the applicant has its principal place of business—that fact;

(c) in relation to aircraft used by the applicant in the country in which the aircraft is registered—whether the aviation authority of that country administers its obligations in accordance with the Chicago Convention.

(5) For the purposes of paragraph (1)(d), examples of the kinds of evidence relating to the management and control of the applicant’s operations include either or both of the following:

(a) whether a person who is participating in, or is likely to participate in, managing the applicant’s operations is not a fit and proper person to participate in the management of the operations of a holder of an AOC;

(b) whether a person who has, or is likely to have, effective control over the applicant’s operations is not a fit and proper person to have effective control over the applicant’s operations.”

10. The term “safety rules”, which appears in both s 25 and s 28(1)(a) of the Civil Aviation Act is defined in s 3 of the Act in these terms:

“safety rules, in relation to a permission or AOC, means the provisions of this Act, the regulations and the Civil Aviation Orders that relate to safety (including rules about the competence of persons to do anything that would be covered by the permission or AOC).”

FACTUAL BACKGROUND

11. Trans Air is a company incorporated in Papua New Guinea in 1992. Up until quite recently its shareholders were Mr Leslie Wright, Mr Roger Downs and Mr Alastair Mackellar, each holding 33 of the 101 issued shares[4]. In May 2007 the shares held by Mr Downs and Mr Mackellar were transferred to Mr Gerard Wright, the son of Mr Leslie Wright[5]. The circumstances of the transfers were not explained. Given that there is no evidence that Mr Gerard Wright has anything to do with the affairs of Trans Air (as might ordinarily be expected of a majority shareholder) I infer that Mr Leslie Wright is capable of controlling the shares held in his son’s name. Mr Leslie Wright[6] has been a director of Trans Air since its incorporation and remains so. Mr Tim Neville became a director in 1998 and remains so but appears to have little, if anything, to do with the affairs of Trans Air. In January 2009 Dr John Mau was appointed a director, and the Executive Chairman, of Trans Air.
12. The operations of Trans Air over the years have, by and large, been conducted within Papua New Guinea in accordance with the civil aviation legislation of that country. The major exception to that has been the undertaking of “medivac” flights to Australian destinations from PNG and other countries within the region, and the transport of gold bullion from PNG to Australia. Operations in Australia, including regular public transport operations, were undertaken by an associated company, Lessbrook Pty Ltd, trading as Transair Australia (Lessbrook).
13. Trans Air has been authorised by the PNG aviation authorities since 1997 to undertake charter and aerial work operations within PNG. It is unclear whether medivac operations to Australia commenced immediately thereafter. Mr Wright suggested that they did, and that they were the subject of individual approvals. I need not make any finding about that period. It is sufficient to note that in January 1998 Trans Air made application to CASA for a FAAOC. That application was refused in September 1998. The decision was expressed to have been made on the basis that CASA was no longer able to accept the validity of certificates and licences issued by the PNG aviation authorities. The decision, it was said, “in no way reflects on the standards and capabilities of Trans Air”. The letter notifying the decision was directed to Mr Wright in his capacities as director and chief pilot of Trans Air.
14. Shortly after that refusal Mr Wright wrote to CASA on the letterhead of Lessbrook, seeking a “limited International AOC” for Trans Air to operate a particular aircraft into Australia for medivac flights. There is no written response to this letter in the material however I am satisfied that following that letter there was a conversation between Mr Wright and Mr Arthur White who then held a senior position in CASA. The terms of that conversation are controversial and are dealt with below in paragraphs [38] to [43]. It appears not to be in issue that around that time some permissions were granted to Trans Air for medical emergencies on the basis of individual written applications. Mr White, whose evidence I accept, thought that there were three or four applications approved at that time.
15. A further application for a FAAOC was made by Trans Air in January 2003. That application specified a Cessna Citation C550 P2-TAA[7] (TAA). That application was refused in May 2003 on a similar basis, a lack of confidence by CASA in the PNG aviation authorities.
16. Despite the refusal of these applications the fact is that between 1998 and 2008 Trans Air undertook many hundreds of flights into Australia without either authority or permission from CASA. Trans Air put the figure for medivac flights alone as “at least 400 occasions since the year 2000”[8]. There were many cargo flights as well. Trans Air and Mr Wright sought to justify this conduct on the basis of the oral permission said to have been given by Mr White in or about 1998.
17. In early 2008 CASA became aware that Trans Air was undertaking flights into Australia without permission. Enquiries were made of PNG authorities but no response was received to those enquiries. CASA directed further correspondence to the PNG authorities in August and September 2008, again without obtaining a response. On 5 September 2008 CASA wrote directly to Trans Air about reports of flights into Australia on 14 and 29 August 2008 and 4 September 2008. Trans Air was asked to advise “under what basis these flights have been undertaken and what approvals have been obtained to operate these flights”. That letter appears to have prompted contact by Mr Wright with Ms Allison Ingham, CASA’s International Operations Officer, in late September 2008. Mr Wright asserted that medivac flights were exempt from obtaining permission. Ms Ingham confirmed that that was not the case. She forwarded blank copies of the forms required to obtain permissions for flights under s 25 of the Civil Aviation Act and to obtain a FAAOC.
18. During October and November 2008 Trans Air made a number of applications, which were approved by CASA, for permission to undertake flights to Australia. It appears that some 11 flights were approved in this way. Then on 22 December 2008 Trans Air submitted an application for a FAAOC.
19. The application proposed non-scheduled passenger and cargo operations into Brisbane, Cairns, Darwin, Townsville and Horn Island by TAA, the Cessna Citation jet. CASA raised various queries regarding the application in early January 2009. In the result a further application was lodged on 20 January 2009. According to this application Mr James Walker was the chief pilot, Mr Wright was operations manager, Mr Ted Doyle was maintenance controller. There was further correspondence between the parties in January 2009 however I find it unnecessary to detail that.
20. It is next relevant to note that by letter dated 3 February 2009 Trans Air, by Mr Walker, the chief pilot, sought from CASA “blanket coverage” to allow operations into Australia pending the issue of the FAAOC that had been applied for. Reference was made, in particular, to the difficulties for gold cargo flights where there was a requirement to make application to CASA three to five days prior to the proposed flight. There appears to have been no explicit response from CASA to that letter.
21. On the following day there was, apparently, an application made for permission under s 25 of the Civil Aviation Act to operate a flight into and out of Australia on 10 February 2009. CASA responded to the application for a FAAOC and the application for permission by letter dated 6 February 2009. As to the former, the letter requisitioned various documents relating to aircraft registration mark VH-SSM and/or VH-UZB described as:

“including but not limited to lease agreements and payments, maintenance releases (or equivalent documents), trip records, pilot records, invoices, passenger or cargo manifests and flight and duty records”.

It is not clear how those documents were regarded as being “reasonably required ... to consider the application”[9] which related only to TAA.

22. The application for permission under s 25 of the Civil Aviation Act was refused,

“on the basis that it appears you have conducted flights to and from Australia that were not authorised. This is a matter CASA is investigating. Therefore, I cannot be satisfied that aviation safety would not be compromised before that investigation is complete and the documents referred to above, received.”

The flight on 13 February 2009 was subsequently permitted by CASA. There was a further flight made for a medivac on 28 February 2009 that was not authorised or permitted.

23. In March 2009 Trans Air engaged Mr Robert Collins, an aviation consultant and former senior official in CASA, to assist it in its dealings with CASA in relation to the application for a FAAOC. Thereafter Mr Collins undertook a “review of safety and management systems” at Trans Air over three days in late March and prepared a report dated 31 March 2009 setting out his conclusions. A copy of the report was provided to CASA.
24. The decision refusing the application for a FAAOC was made on 3 April 2009 and evidenced by a letter of that date to Trans Air.

THE PARTIES’ CASES

25. It is, I think, unhelpful to seek to categorize proceedings in the Tribunal in terms of adversarial or inquisitorial[10]. Nonetheless, proceedings do resemble adversarial litigation in the sense that an applicant and a respondent each advance contentions that collectively may be regarded as being “the case” of each party. Mr Harvey, counsel for CASA, seemed to take issue with my use of this description when seeking to ascertain what case CASA was presenting. I accept, of course, that ultimately I am required to be satisfied of the matters specified in the legislation before making a decision favourable to Trans Air, that if I am not so satisfied I must affirm the decision under review and that, subject to the need to afford procedural fairness, I am not limited to the matters advanced by CASA. But in a case such as the present, where there are discrete statutory criteria to be satisfied and where the statutory regulator has undertaken a detailed investigation of the matter, it is a useful starting point to have clearly identified, at the outset of the hearing and, if necessary, at the outset of submissions[11], the criteria that the regulator contends are not satisfied and the reasons put forward as to why the criteria are not satisfied.
26. Equally, it is helpful to obtain a clear identification of the criteria, if any, which the regulator accepts have been satisfied. It is trite, but this case demonstrates the need for re-statement, that the identification of the issues in this way enables the parties to know what evidence is needed and the Tribunal to know what questions of fact and law need be decided.
27. It is in that context that the Statement of Facts and Contentions lodged by the parties comes into play. The Tribunal’s General Practice Direction requires that that “statement must clearly and concisely set out the facts upon which the party relies and any contentions to be drawn from those facts” (emphasis added). Sadly, neither the Statement of Facts and Contentions lodged by Trans Air nor that lodged by CASA satisfied that requirement. Neither could be described as concise, neither could be described as clear. And to a large extent the “facts” were in reality the evidence from which those facts might be found. Additionally, many of the matters ultimately relied upon by CASA were not identified in its Statement of Facts and Contentions. That document runs to some 49 pages of text of which approximately 46 pages are devoted to matters concerning the operations (and faults) of Lessbrook, the Australian company formerly operated by Mr Wright. That prompted Trans Air to lodge an equally diffuse document that added, as well, irrelevant assertions about the motives of CASA relating to the operations of Lessbrook. The pattern continued in Trans Air’s written submissions[12] and their irrelevant attacks upon CASA’s decision-making processes and in CASA’s somewhat truculent written submissions in reply[13].
28. It is sufficient for present purposes to say that the case for Trans Air is that I ought be satisfied of the matters specified in s 28(1) of the Civil Aviation Act and that I ought not be dissuaded from reaching that state of satisfaction by the matters relied upon by CASA. As best as I could understand, the case for CASA, expressed in summary form, was as follows:

(a) the frequency of Trans Air’s flights into and out of Australia without either permission or authority meant that I could not be satisfied that Trans Air had complied with the safety rules;

(b) the frequency of Trans Air’s past compliance breaches, together with its compliance history in Papua New Guinea, mean that I could not be satisfied that it is capable of complying with the safety rules if granted an FAAOC;

(c) despite outward appearances Mr Wright is in effective control of Trans Air, is likely to have a malign influence over those in nominal control of the operations of Trans Air, and is not a fit and proper person to have effective control. CASA points to matters involving the operations of Lessbrook, among other things, as warranting that conclusion.

These matters, of course, need to be considered cumulatively, not in isolation.

29. It seems logical to consider first the matters raised by CASA before then considering the statutory criteria.

SOME PRELIMINARY MATTERS

30. Some matters need be noted at the outset. The first concerns matters of technical evaluation of operations manuals and the like which the legislation requires be lodged with CASA. Trans Air’s application was refused prior to any evaluation by CASA of these aspects of the process of authorisation. With the agreement of the parties the hearing was adjourned after the taking of the evidence to allow CASA to undertake, or have undertaken, that process. By letter dated 9 October 2009[14] CASA informed the Tribunal that the “technical aspects of the application are satisfactory”.
31. Next, the parties appear to have evidenced all dealings between CASA and Trans Air and Lessbrook over the years. The documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) exceeded 1,300 pages and the documentary exhibits were of similar size. I have not attempted, in the recitation of background facts, to record all of the factual material that emerges from the vast array of documents. I have attempted to summarize only the salient features. Likewise I do not propose to determine disputed facts except to the extent necessary to decide factual issues of relevance.
32. Next, and unfortunately, there is evident animosity between Mr Wright and CASA’s officers. More unfortunately, that animosity appears to have extended, at times, to the legal representatives of the parties. These matters have a tendency to make a difficult case more difficult.

COMPLIANCE WITH THE SAFETY RULES

33. The argument for CASA relied upon these propositions:

(a) the statutory requirements to obtain permission or authority to operate a foreign aircraft into or out of Australia come within the ambit of “the safety rules”;

(b) Trans Air has repeatedly failed to comply with those requirements;

(c) the requirement in s 28(1)(a) of the Civil Aviation Act of satisfaction that Trans Air has complied with the safety rules cannot be met;

(d) similarly, that conduct means that the Tribunal could not be satisfied of future compliance with the safety rules[15] because of the likelihood of similar conduct in the future.

34. There is no doubt that Trans Air has repeatedly failed to comply with the requirements to obtain permission or authority for its flights. The first issue is whether the requirements come within the ambit of the expression “the safety rules”. The somewhat elliptical definition of the expression in s 3 of the Civil Aviation Act has already been set out. The legislative context in which the expression is used is critical[16]. The question posed, in that context, is whether the provisions of the Civil Aviation Act that require the permission or authority of CASA to operate a foreign registered aircraft within Australia are provisions “that relate to safety”.
35. In my view they must be so regarded.
36. I take that view because each of the mechanisms by which a foreign registered aircraft may operate in Australia – ss 25, 26, 27 and 27A – require CASA to reach a judgement about whether the applicant has complied or is capable of complying, with the safety rules. Thus when an application is made to CASA for permission under s 25(2) the Civil Aviation Act, CASA must be satisfied of past or future compliance with safety requirements. CASA may specify conditions on the permission but may only do so “to ensure compliance with the safety rules”[17].
37. Sections 26(3) and (5) of the Civil Aviation Act, which deal with non-traffic international flights and ss 27(2) and (4) of the Act, which deal with permissions of not more than 7 days duration, are to similar effect although the phrase “the safety of air navigation” is used in the latter in place of reference to the safety rules. Section 28 of the Civil Aviation Act, which specifies the matters to be considered before the grant of an AOC, is replete with references to the safety rules, operations “being conducted or carried out safely” and such like.
38. In the context where CASA is obliged to “regard the safety of air navigation as the most important consideration” it is abundantly clear that the requirements to obtain permission or authority perform the task of enabling CASA to determine whether the proposed operation can be conducted safely. The flight itself, at least insofar as it is in controlled air space, will be monitored by Air Traffic Control but CASA has the overarching task of ensuring that the proposed operation or operator have in place systems that meet requirements for the safety of air navigation in this country.
39. I am then satisfied that the provisions are provisions that relate to safety and that, subject to the question of an oral permission, I am not satisfied that Trans Air “has complied with ... the safety rules”.

ORAL PERMISSION?

40. In his affidavit sworn for the purposes of these proceedings Mr Wright asserted that some time after the rejection of the September 1998 FAAOC application Mr White had told him “that Trans Air would be able to continue to make flights to Australia without a foreign aircraft Air Operator’s Certificate”. He said this[18]:

“The verbal advice consisted of a telephone call from Mr White I cannot recall if I was in Brisbane or in Port Moresby. The effect of the advice communicated to me was simple ‘keep doing what you are doing, keep coming as you are’. There was no discussion on the need for the company to make individual one-off applications for permissions.”

41. Mr White gave evidence denying any such conversation or, indeed, any conversation from which the result asserted by Mr Wright might reasonably be drawn. But even absent that denial there is considerable reason to doubt the accuracy of the account given by Mr Wright.
42. First, there is the improbability of someone in Mr White’s position giving authority in the terms alleged or in similar terms. At the time in question Mr White had no delegation to give permission even if it had been sought in the ordinary way. The notion that Mr White, who had no power to do so, would give an approval that was wholly outside the statutory scheme, is quite absurd.
43. Moreover, as Mr Harvey’s written submissions point out, the claimed basis on which Trans Air asserted the entitlement to fly without permission or authority has altered significantly over time.
44. But, in any event, it is enough for me to say that I have not reason to doubt the evidence of Mr White and every reason to doubt that of Mr Wright on this aspect of the matter.
45. It follows that I do not accept that Trans Air was ever given oral permission in the manner suggested by Mr Wright. Whether Mr Wright managed to persuade himself that it had such permission is an entirely different question that I will need to consider in due course.

CAPABLE OF COMPLIANCE?

46. At the outset I observe that the second limb of s 28(1)(a) of the Civil Aviation Act does not look at whether an applicant is likely to comply with the safety rules but rather whether the applicant is capable of complying with them. That suggests to me that there are two facets to the question,
    • does the applicant have the equipment, the systems, the organisation and suchlike that are conducive to compliance with the safety rules,
    • do the persons within the organisation know and understand what is required for aviation safety and do they appear to have the capacity and desire to act in accordance with those requirements.
47. The questions overlap to some extent and, so far as the first is concerned, there is considerable overlap with the matters specified in sub-paragraphs (i) to (vii) of s 28(1)(b) of the Civil Aviation Act. Given that latter overlap it is probably as well to examine the structure proposed by Trans Air before considering the persons who constitute the organisation. It is the structure presently proposed, not that proposed in the original application in December 2008, which the parties accept is relevant.
48. The aircraft proposed to be used is the Cessna Citation TAA. There is no suggestion that that aircraft is not suitable for the types of journeys undertaken. Its maintenance is undertaken at a well established and reputable maintenance facility in Cairns. There was some discussion during the course of the hearing about TAA’s compliance with relevant noise standards and whether it was fitted with certain mandatory equipment however I did not understand there to be ultimately any issue regarding these matters. There is certainly no hint in CASA’s final submissions of any non-compliance with technical requirement.
49. Trans Air’s operations are based at Jacksons Airport, Port Moresby. Those operations have been audited by the Civil Aviation Authority (CAA) of PNG and the reports from the February 2009, March 2007, March 2006, February 2006 and March 2005 are in evidence. Those reports indicate that Trans Air’s PNG AOC has been renewed from time to time despite occasional failings. The most recent audit in February 2009 recommended the issue of a one year AOC. The report of that audit indicated a variety of “non conformance” and “non compliance” findings. That which seems to me to be of greatest significance was one that “many dangerous goods [were] stored in hanger”. That deficiency arose from the storage of flammable materials in the hanger by another occupant of the hanger. It was remedied promptly by Trans Air to the satisfaction of PNG Civil Aviation.
50. CASA’s submissions also highlight that earlier audit reports “also identify significant deficiencies in [Trans Air’s] systems, some of which clearly reflect on Mr Wright”. So much may be accepted however it seems to me to be significant that subsequent audits, more proximate in time, no longer identify such deficiencies. Thus the complaint in March 2006 about Mr Wright’s flying currency and a failure to undertake checks appears not to have been made again. I infer that the deficiency was corrected and has not been repeated.
51. It must be remembered that despite the various deficiencies identified, the CAA of PNG has been satisfied throughout that Trans Air ought to be issued with an AOC. The PNG audit reports indicate that Trans Air has some faults in its operation but that they are not of any major concern to the CAA of PNG.
52. In the present context it is helpful to consider the work undertaken by Mr Collins in his examination of the systems of Trans Air, and the opinions that he has reached regarding the company’s operations. Mr Collins has been a commercial pilot since 1981. He was employed by Lessbrook in 1980 and 1990 before joining the predecessor to CASA in October 1990 as an Examiner of Airmen (General Aviation). He was employed by CASA until his retirement in September 2006. At the time of his retirement he held the position of Group General Manager, General Aviation Operations. Since his retirement he has undertaken work in the aviation area as a consultant. That work has included assisting CASA in its investigations of the Lockhart River air disaster.
53. His examination of the operations of Trans Air in March 2009 was “an assessment of the safety and management systems within the company to determine the company’s capability for compliant and safe operation”. He described the methodology of his task in this way[19]:

“The review methodology involved;

1. A review of some of the important procedures which in my experience are essential for safe and compliant operations
2. Interviewing staff individually

100. A group discussion about safety issues

4. Sampling relevant records to determine the level of consistency and compliance with internal procedures
5. Viewing some procedures at work
6. Viewing non-controlled work instructions and guidelines
7. Observing the staff working
8. Discussing general Trans Air issues with the PNG CAA”
   

54. Mr Collins’ findings and conclusions are expressed in this way in his March 2009 report[20]:

“Summary of significant findings

The following is a summary of the key findings;

• With the exception of the Quality Assurance System (QAS), the company has robust systems in place which should provide effective outcomes.
• The CEO is often away for extended periods of time and is ineffectual in the role. Transair have spoken to the PNG CAA about nominating Dr. John Mau as the CEO.
• There is potential for role confusion between Capts. Walker, Wright and the CEO.
• The Operations Manual in a couple of cases prescribes things in excess of the regulatory requirements which Transair occasionally struggles to meet. These include;
  • The requirement for CRM training for all crew
  • Some elements of the QAS.
• Transair’s QAS is less than fully effective and, with the consent of the PNG CAA will start to develop and implement an appropriate SMS to replace the current QAS.

Conclusions

I conclude that the Transair (PNG) operation is generally sound and its safety systems (with the exception of the QAS) are effective. In view of the above, I conclude that the operation has the systems in place to safely provide air services in PNG and Australia, and there are no issues identified in this review to preclude CASA from granting a foreign operator AOC or further s 27A approvals to Transair (PNG) Ltd.”

The recommendations suggested by Mr Collins have been approved by the CAA of PNG where required, and implemented.

55. In his affidavit[21] Mr Collins expresses the opinion:

”that the staff, processes, work practices, facilities, and aircraft of Trans Air are compliant with statutory requirements and Trans Air demonstrates the capacity to comply with relevant Australian legislation.”

Mr Collins has enormous experience in these matters. He was, on my observation, a most impressive witness. His opinion is entitled to considerable weight.

56. I turn then to the persons intended to occupy the key roles in Trans Air’s operations. Mr Wright is a director, Dr John Mua has been appointed to its board quite recently although neither he nor Mr Tim Neville, the third director, are members of the company.
57. Mr John Walker is the Chief Pilot and Head of Training and Checking. Mr Kotu Yakopa has responsibility for ground operations, Mr Collins is the consultant quality manager and Mr Scott Griffen is the maintenance controller. Mr Walker, Mr Wright. Mr Douglas Boyd and a Mr Andrews are the pilots who would conduct flights in TAA. Mr Walker and Mr Wright are endorsed to fly as pilot in command of TAA
58. A considerable part of CASA’s case it that Mr Wright would play a significant role in the management and control of Trans Air’s operations despite not holding a position entitling him to do so. I will deal with that aspect of the matter in the context of considering whether the various operational officers are capable of complying with the safety rules. It is, I think, fair to say, as does CASA, that Mr Wright regards Trans Air as “his” company.
59. Dr Mua, the Executive Chairman of Trans Air, is an experienced businessman. He has an interest in aviation but no great experience in aviation operations beyond having a (legal) interest in an aeroplane. Cross-examination of Dr Mua by Mr Harvey demonstrated that Dr Mua does not have a complete grasp of the day to day detail of Trans Air’s operation[22]. So much may be accepted. A person in the position of Dr Mua has statutory responsibilities and comes within the description of “key personnel” in s 28 of the Civil Aviation Act. However I would not regard a complete grasp of day to day operational details as a requirement for even the chairman of directors of a proprietary company, a fortiori in the case of a company where the operations are the subject of a stringent statutory regime with responsibility imposed by statute on a variety of nominated persons within the organisation.
60. The case for CASA hinted at the notion that Dr Mua’s appointment was something other than a genuine appointment. It was not put as bluntly as suggesting, for example, that the appointment had been made to give the appearance of independence contrary to the reality, rather it was put on the footing that “Mr Wright’s intentions and state of mind will determine the relevant state of mind of [Trans Air].”
61. I do not accept that submission. It assumes that Dr Mua will act contrary to his duty as a director and contrary to the duties owed by him in PNG and Australia under aviation law. Dr Mua is an obviously intelligent man. He has a doctorate from a leading Australian university. He is on the board of a number of PNG public companies. I have no doubt that he would discharge his duties honestly, diligently and competently. I reject as unfounded the contention that he would allow himself to be subverted from his duties by Mr Wright.
62. But as I have already observed, the role of a board in regard to the management and control of the operations of an aviation company are likely to be less critical given the statutory framework. That framework gives significant importance to the tasks of the Chief Pilot, Mr John Walker.
63. Mr Walker has held a commercial pilot’s licence since 1984 and has been flying in PNG for the past 20 years. CASA’s submissions hint at the proposition that he lacks the experience to undertake the role of Trans Air’s Chief Pilot. It is said[23] that the present appointment is his first as a Chief Pilot. Reference is made to his evidence that the bulk of his flying has been done in PNG where he says that flight operations are “significantly different from those pertaining in Australia”. There is, however, evidence from Mr Collins, who held the position of Group General Manager, General Aviation Operations in CASA in 2005 and 2006, and who described him as “eminently qualified” for the role of chief pilot in Trans Air. CASA’s submissions say of that comment that “it is not clear whether that view is based on anything other than Mr Walker’s CV.”
64. I find this veiled suggestion that Mr Walker’s lacks relevant experience curious. So far as I can tell CASA’s statement of facts and contentions (which were filed some months after Mr Walker’s appointment) did not put in issue his qualifications or experience to perform the role. That is to be contrasted to the case of Mr Wright and the former maintenance controller, Mr Doyle. In the case of each of them there is an explicit contention, particularised by reference to matters involving Lessbrook, which puts in issue their capacity to perform the statutory roles assigned to them at the time. There was no cross-examination of Mr Walker of which I am aware that squarely raised the issue of his experience and qualifications. Moreover Mr Collins’s view of Mr Walker’s suitability was not challenged or contradicted and was not the subject of any cross-examination probing the basis of his opinion.
65. I reject CASA’s submission and am satisfied that Mr Walker is competent and qualified to perform the role of chief pilot.
66. Despite these submissions, CASA says that “the more pertinent issue is as to Mr Walker’s capacity to ensure that [Trans Air] complies with Australian aviation rules”. It is said that the evidence does not provide much confidence that he has that capacity. Reference is made to “[o]ne particular incident that stands out”, the incident involving the flight on 28 February/1 March 2009.
67. Mr Walker and Mr Wright have different recollections of the events surrounding the flight although the contradictions were not explored with either of them. However it is not disputed that the flight took place, that Mr Wright and Mr Boyd flew TAA on this occasion and that CASA’s permission was not given to the flight. On either view of the events Mr Walker became aware on the evening of 28 February 2009 of the prospect of a medivac flight later that night. Mr Walker says that that occurred when a call came through to Mr Wright when he and Mr Wright were having dinner together. The only reference to the time of this call, so far as I am aware, is in the cross-examination of Mr Walker where he said “In this case with the medivac, it happened at 9 o’clock and it left at 12 o’clock.” That suggests to me that the time of the call was around 9 p.m.
68. Mr Walker was not on duty and Mr Wright and Mr Boyd were the standby pilots. Mr Walker said that, because he was not on duty, he did not need to concern himself with the flight and went home after dinner leaving Mr Wright and Mr Boyd to deal with the flight. Mr Wright recalls that Mr Walker assisted in preparing TAA for flight. I propose to act on Mr Walker’s account of the events, not merely because I consider he would be more likely to have a better recollection of his activities but because it would be illogical for him to prepare a flight that he was not going to undertake.
69. Numerous attempts were made to contact CASA’s out of hours number between 11.10 p.m. and 11.57 p.m. on 28 February 2009 in order to seek permission for the flight. Contact was unable to be made with CASA. The flight was undertaken at 12.21 a.m. on 1 March 2009 because of the need for urgent medical attention.
70. The criticism levied at Mr Walker, and the basis in part for CASA’s submission that the Tribunal could have no confidence in Mr Walker’s capacity to ensure compliance with the Australian aviation safety rules, is that “at best” he did not consider making an application for approval until the flight was “imminent” and that he did not give consideration to “timely contact” with CASA.
71. I am unable to see the virtue in making contact with CASA, out of hours, at the stage where there is only a “possibility” of a flight. I assume that CASA contends that the vice of “late” notification is that it might put pressure on its officers to give permission which might otherwise be refused. I could not conclude that CASA’s officers would so readily be deflected from properly performing their statutory functions. But that there is, in any event, simply no evidence from which I could conclude that earlier contact would have made any difference to the inability to make contact with CASA. The telephone calls to CASA were not answered. There is no reason in the evidence to suppose that they would have been answered earlier in the night around 9 p.m. when it seems that the possibility of a medivac flight was first raised. I reject this criticism of Mr Walker.
72. But even taking the most adverse view to Mr Walker of the facts, the incident does not sustain the suggestion that the Tribunal should not have confidence in Mr Walker’s capacity to comply with the Australian aviation rules.
73. A further basis of criticism of Mr Walker is that he, as chief pilot, left it entirely to a rostered pilot to determine,

“(a) whether a particular medivac flight should be undertaken;

(b) whether, and if so what, approval(s) is/are needed for the flight;

(c) how that approval or those approvals should be obtained;

(d) the timeliness of the making of any application to the relevant authority; and

(e) importantly, where the ‘required’ permission has not been obtained by the rostered line pilot, it is a matter for that pilot alone to decide whether to conduct the flight in any event.”[24]

74. The submission assumes that it was Mr Walker’s responsibility to undertake these tasks even when he was off-duty. I am not aware of, and was not referred to, any evidence that that was the case, whether as a matter of fact or of law, and it was not suggested to Mr Walker in cross-examination that he had that responsibility. Thus I reject, as well, this criticism of Mr Walker.
75. Next, CASA is critical of Mr Walker for having flown to Australia from PNG (and return) as pilot in command without having obtained permission. The evidence makes plain that he did so on many occasions. It is then said that Mr Walker “at no stage challenged the basis of the undocumented blanket ‘permission’ from CASA that Mr Wright claimed to be the basis of [Trans Air’s] operations into Australia from 1998 to 2008”. The difficulty I have with that submission is that Mr Walker’s view of the authority to conduct flights into Australia and the basis for that view were not canvassed in his evidence. It seems to be a fair inference that he had a belief, presumably one influenced by Mr Wright, that no individual permissions were required. But in the absence of any exploration of the basis of that belief I am unable to conclude whether that view was reasonable or unreasonable. That, if I may say so, is the result of CASA failing to properly identify, in its Statement of Facts and Contentions, the matters relied upon to sustain findings of fact adverse to Mr Walker, compounded by the failure to take the matters up in cross-examination with the witness.
76. It remains to consider the relationship between Mr Walker and Mr Wright and whether that relationship might impact upon Trans Air’s capacity to comply with the safety rules. That question was addressed in the report of Mr Collins’ review of Trans Air’s operations in March 2009. Mr Walker spoke of the “potential for role confusion” between Mr Wright and Mr Walker[25] but, at least in the context of dealings with the CAA of PNG, suggested that that potential “was ameliorated because of the close working relationship between Walker and Wright”. Mr Walker struck me as a person with a good grasp of the technical requirements of his role as Chief Pilot. Mr Collins regarded him as “capable and motivated to improve” Trans Air’s operation. I see no reason to regard him as susceptible to pressure from Mr Wright (assuming that Mr Wright might apply such pressure) to disregard, or act contrary to, his statutory duty.
77. Mr Quinn, counsel for Trans Air, asked Mr Walker questions in chief relating to the likelihood of his being influenced malignly by Mr Wright. CASA’s submission characterises the questions as “contrived” and Mr Walker’s answers as “highly qualified (and less than pellucid)”. I did not regard either the questions or the answers in that way. It was obvious that a significant part of CASA‘s case was based upon the notion that Mr Wright, and not Mr Walker, would be in charge of the flying operations of Trans Air. Necessarily, that involved the contention that Mr Walker would allow himself to be “pushed around”[26] by Mr Wright in the performance of his duties. I see nothing contrived about inviting Mr Walker to comment on the allegation in that way. I have no reason to doubt the sincerity of his answers to the series of questions put to him.
78. Mr Yakopa is the operations manager of Trans Air. CASA made no particular criticism of him. I note from his curriculum vitae[27] that he has considerable experience in ground operations comprising some 15 years employment with the PNG national carrier. He seems eminently qualified to perform his allotted role.
79. Mr Collins is Trans Air’s consultant quality manager. His impressive qualifications have already been noticed. Again, CASA did not suggest that he was not perfectly qualified to undertake this task or that he would not reform it properly.
80. Similarly, there is no criticism of Mr Griffen, Trans Air’s maintenance controller. CAA of PNG regards him as a fit and proper to undertake his role within Trans Air. I have no reason to suppose that he would do other than perform his functions competently and in accordance with the requirements of the relevant legislation.
81. I have left to last consideration of Mr Wright. He holds no formal position within Trans Air beyond that of line pilot. CASA does not assert that he lacks technical competence in such a role. He is a one third shareholder in the company and his son holds the balance in circumstances which were not explained. It seems safe to assume that Mr Wright is capable of controlling the whole of the members’ voting interests[28].
82. CASA criticizes Mr Wright on two principal bases. First, it is said that he was the controlling mind behind the operations of Lessbrook and that the systemic failures of that company had tragic consequences in the Lockhart River disaster of May 2005. Additionally, it is said that on many hundreds of occasions for over a decade he breached the requirement to obtain permission for flights into Australia from PNG. And, in relation to that latter aspect, he undertook flights, or was party to flights, without permission even after September 2008 or left it to the last moment to seek permission, thus leaving CASA with little alternative but to approve flights.
83. As I have already observed the acts and omissions of Lessbrook have been set out extensively in CASA’s statement of facts and contentions. Additionally reference is made in CASA’s written submissions[29] to the findings of the Australian Transportation Safety Board and of the Queensland coroner into that disaster. Mr Collins was asked to comment on what should be made of the failures of Lessbrook in the present context. I found his answer most helpful. The questions, and his responses to them, were as follows:

“What ought I make of the earlier compliance history of Lessbrook, and particularly in the context of this expression of a safety culture, you know, who we are? I mean, if Mr Wright has an unsafe culture, and he is perceived as being at least one of the important people in the organisation, I mean, he is a third shareholder and his son owns the other two-thirds, and a director and even if he’s only a line pilot, what should I make of that, of the earlier matters of history and how he would – can he, as it were, put those matters behind him, or would people take from him an unsafe culture? What do you say I should make of that?---I think there are two issues that need to be considered. The first is: that in respect of Lessbrook, the reason that a lot of non-compliance and activities started to develop and, in fact, it’s a common reason, is actually that the governance in the control of the organisation breaks down. Now, as a consultant, working for CASA, prior to the inquiry I had to go through intimate detail, and it would appear to me if this is useful, that Mr Wright lost control of the organisation and in that allowed, albeit unintentionally, non-compliance and unsafe acts started to proliferate – happen. Frankly, in this organisation it is entirely different to the Lessbrook organisation in both its size, in its personality, the number of bases, the type of aircraft it uses, it’s quite different. Mr Wright, as we currently have it, is not in control, and I think the devolution of control and proper governance of the organisation is enhanced by different people having different roles, which wasn’t the case in Lessbrook.

You have the chief pilot who was the safety officer who was the checking pilot who was wearing lots of hats, many of which were [in] conflict?---Absolutely.

Right?---Added to that, to be frank, Mr Wright is a very good pilot, he’s a very good trainer and checker, but I wouldn’t regard him highly in terms of his managerial ability.

His technical skills are high, but his management skills are low?---Correct. So that’s my observation of him. Whether it’s – in this context, I think we’ve addressed those issues by placing different people in different positions and, frankly it’s my role, and my reputation is at stake here, that I work very hard with, particularly with Dr John [Mua], to ensure that the culture of the organisation is a safety aware and a safety promoting culture, a proactive safety culture, not just a reactive safety culture.”

84. Mr Collins assisted CASA in its investigations of Lessbrook and conducted his own investigations of Trans Air. He has a unique perspective to offer. His evidence satisfies me that Trans Air’s operational structure and its key personnel are quite different to those of Lessbrook where Mr Wright himself performed many of the key roles. In stark contrast to the Lessbrook position, Mr Wright does not have operational control in Trans Air. Other, more competent, managers have that control and I have no reason to doubt that they will do so.
85. I turn then to the question of Mr Wright’s involvement in repeated breaches of the Civil Aviation Act by failing to obtain permission or authority before flights into and out of Australia. I have already considered, and rejected, the notion of a “verbal consent” by Mr White. The next possibility is that Mr Wright consciously and wilfully flouted the law on the many hundreds of occasions of unauthorised flight. I think that to be unlikely. My impression of Mr Wright is that his failing are caused by a lack of administrative competence rather than a conscious flouting of the law. I consider that it is most likely that Mr Wright has managed over time to persuade himself that permission was not necessary. He must, at the outset, have realised that permission was necessary and, in all likelihood, determined to take the risk of flying unauthorized. Over time, and as flight after flight was made quite openly, I rather suspect that Mr Wright persuaded himself that permission was not necessary. But even if that view was too charitable, these proceedings and the enforced suspension of Trans Air’s Australian operations, have provided him with a costly reminder of the need to comply with the requirements of the Civil Aviation Act.
86. CASA’s concern at Mr Wright’s involvement in Trans Air is understandable but in my view the key personnel engaged and the organisational structure in place are adequate to prevent him having a potentially concerning role within the organisation. Moreover Mr Wright, and those persons having responsibility for the safe operations of Trans Air, will no doubt appreciate that its operations will be closely scrutinised by CASA if, as I propose, an FAAOC is issued to Trans Air.
87. These matters satisfy me that Trans Air, whilst it has not complied with the safety rules in the past, is capable of doing so. Subject to any question that arises under s 28AA of the Civil Aviation Act, dealt with below, I am satisfied of the matters in s 28(1)(a) of the Civil Aviation Act. I should add that s 28(2) of the Act permits the financial position of an applicant to be considered for the purposes of forming a view under s 28(1)(a). CASA does not suggest that the financial position of Trans Air is relevant to that question. The only reference in CASA’s submissions to financial matters appears to be an entirely gratuitous, and seemingly irrelevant, reference to the financial position of Lessbrook which is now in liquidation[30].

TRANS AIR’S ORGANISATION

88. CASA made no particular submissions regarding the matters in s 28(1)(b) of the Civil Aviation Act, nonetheless I am satisfied of the matters in sub-paragraphs (i) to (vii) in relation to “applicant’s organisation” i.e. the organisation established to conduct or carry out the operations subject of the application for the FAAOC. I have examined that organization in some considerable detail above and I need not repeat what I have earlier said.

SECTION 28AA

89. Section 28(1A) of the Civil Aviation Act provides that, in the case of applications such as the present CASA “may” have regard to the matters in s 28AA of the Act. This is, in my view, an example of “may” being used in the sense of conferring a power rather that in the sense of conferring a discretion[31].Section 28AA(1) of the Act identifies four areas to which regard may be had for the purposes of s 28(1A). Three – (a), evidence of serious safety deficiencies in another country, (b), evidence of the ability and willingness to address those deficiencies, and (d), evidence relating to the management and control of the applicant’s operations – focus attention upon the applicant’s activities. The fourth, in paragraph (c) focuses attention on the capacities of the “home” regulator.
90. Whilst there was concern about the capacity of CAA of PNG at an earlier time no such concern is raised and I need not consider such matters.
91. The CAA of PNG has identified some safety deficiencies in Trans Air’s PNG operations; these were the subject of the reports discussed in paragraphs [47] and [48] above. They do not appear to me to evidence serious safety deficiencies and such evidence as there is suggests that were not so regarded by PNG CAA. In that

regard I note that Mr Henry Parakei, the Secretary of the PNG Department of Transport referred to Trans Air’s medivac operations having “been conducted safely and efficiently for many years, sufficient to establish the safety of the Trans Air flying operation.” Mr Collins reported a conversation that he had had with Mr De Soyza, the Assistant Director (Flying Operations) of the CAA of PNG, in which that gentleman informed him that “like every company, small deficiencies are found and the company addresses them promptly”. Section 28AA(2) of the Civil Aviation Act provides examples of what may be regarded as evidence of serious safety deficiencies. Nothing in those examples suggests that any other matter need be considered under this head.

92. From this evidence I conclude that there have been no serious safety deficiencies and such deficiencies as have been identified have been remedied promptly. I should add that s 28AA(3) of the Act includes, amongst examples of willingness and capacity to remedy serious safety deficiencies, an applicant’s response to requests from CASA for information about safety aspects of the applicant’s operations. There was some evidence of a delay by Trans Air in providing information to CASA regarding insurance in early 2009. CASA’s submissions did not suggest that that delay fell to be considered under s 28AA(1)(b) of the Civil Aviation Act and I would not regard it so.
93. The final matter to be considered is s 28AA(1)(d) of the Civil Aviation Act, evidence relating to the management and control of Trans Air’s operations. The ambit of that expression is exemplified by s 28AA(5) of the Civil Aviation Act to require consideration of whether a person, who is not a fit and proper person to do so, is participating, or is likely to participate, in the management of the operations of Trans Air or has, or is likely to have, effective control over Trans Air’s operations. CASA submits that Mr Wright is such a person and that he is, or is likely to, participate in managing Trans Air’s operations or has, or will have, effective control over its operations.
94. That submission is founded upon the notion that one or more of Trans Air’s key officers, Dr Mau, Mr Walker or Mr Collins, would allow Mr Wright dictate to them how they ought discharge their statutory duties. For the reasons I have already explained I do not consider that any of them would do so. Even assuming Mr Wright to have effective control of the shares of Trans Air, he holds the position of line pilot only. He could not participate in managing the operations of Trans Air or have effective control over those operations without one or more of the other officers seriously neglecting their duties. My judgment of them is they would not do so. Moreover they and Mr Wright will be conscious of the likelihood of CASA scrutiny and the need to satisfy CASA at the time of renewal of the FAAOC that the operations of Trans Air have been, and will continue to be, undertaken safely.
95. Thus the matters in s 28AA of the Civil Aviation Act do not cause me to doubt the conclusions I reached in relation to s 28(1)(a) and (b) of the Act.

CASA’S INSURANCE SUBMISSION

96. There is an additional argument raised by CASA that I ought to deal with. It concerns the question of Trans Air’s carriers’ liability insurance.[32]
97. What is contended, as I understand the argument, is that Trans Air has not demonstrated that it holds insurance providing it with the indemnity required by the Civil Aviation (Carriers’ Liability Act) 1959 (Cth). This contention did not feature in CASA’s Statement of Facts and Contentions nor was it developed during the course of the hearing. CASA’s written submissions do not make clear what use ought to be made of this deficiency, assuming that it be a deficiency.[33]
98. It does not appear that CASA is contending that the deficiency impacts upon the statutory criteria in ss 28(1) and 28 AA of the Civil Aviation Act. The submission identifies a provision in the Civil Aviation (Carriers Liability) Act[34] that empowers CASA to require a carrier to produce evidence that an acceptable contract of insurance is in place. Absent a submission by CASA that the deficiency impacts upon the statutory criteria in section 28 and 28AA (which I do not discern in Exhibit 31) it seems to me that the matter is best dealt with by CASA exercising that power if it be so advised.
99. The submission also involves an attack upon Mr Walker for having only “basic knowledge” of the need for carriers’ liability insurance and for treating “with imperious distain” CASA’s requests for details of the policy in early 2009. Even if it be assumed that Mr Walker only has a basic knowledge of these matters I cannot see how that might reflect upon the questions posed in s. 28(1)(b) of the Act, for example that in sub-paragraph (i), whether “key personnel in the organisation have appropriate experience in an operation to conduct or to carry out the AOC operation safely”? I do not consider that familiarity with the statutory requirements for carriers’ liability insurance has any relationship to issues of experience in an AOC operation.
100. I reject the notion that Mr Walker treated CASA in the manner alleged. In so far as the material deals with the issue, his responses seem to me to have been perfectly reasonable. There was a conversation between Mr Duffy (from CASA) and Mr Walker on 19 February 2009 in which Mr Duffy sought documentation that established that carriers’ liability insurance was held at the time of the 13 February 2009 flight. Mr Duffy followed that conversation with an e-mail of 20 February 2009. Mr Walker became aware that Mr Wright had arranged for Trans Air’s broker to deal with the issue raised by CASA directly with it and it would appear that a copy of a cover note was provided around 5 March 2009. That seems to me to be a perfectly sensible approach by an entity that employs an insurance broker.
101. CASA’s criticism is that the policy document, and not a cover note, should have been provided and that the cover note provided did not demonstrate coverage under the Australian legislation. But I can find no correspondence from CASA to Trans Air thereafter that suggests that the response was regarded at the time as inadequate or that full policy wording was required rather than a cover note.
102. Moreover the submission is distinctly unfair to both Mr Walker and to Trans Air. The question of carrier’s liability insurance formed no part of CASA’s original decision-making and thus, I infer, was not then regarded as relevant, and it formed no part of CASA’s case as articulated in the Statement of Facts and Contentions. Moreover the issue was not canvassed in any detail with Mr Walker in cross-examination. It is, with respect, an unworthy submission in such circumstances and is, in any event, devoid of merit.

CONCLUSION

103. I am then satisfied of the matters in s 28(1)(a) and (b) of the Act and, there being no suggestion that paragraphs (c), (d) and (e) of the sub-section have application in the present case, a FAAOC must be issued to Trans Air. I should add that CASA did not suggest that any particular condition ought to be placed on the FAAOC were I to reach this conclusion. There are, I imagine, standard conditions imposed on FAAOC. I propose, at this juncture, to give effect to my conclusions by setting aside the decision under review and remitting the matter to CASA for reconsideration in accordance with a direction that a FAAOC be issued to Trans Air subject to the conditions ordinarily imposed upon certificates of this type.
104. I will certify that the matter has been determined favourably to Trans Air.
     

I certify that the preceding 102 paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

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

Associate

Dates of Hearing : 17, 18, 19, 20, 24 August and 12 November 2009

Date of last submissions : 15 January 2010

Date of Decision : 22 January 2010

Counsel for the Applicant : Mr T Quinn

Solicitor for the Applicant : J N O’Donoghue

Counsel for the Respondent : Mr I Harvey

Solicitor for the Respondent : CASA Legal Services Group

---

[1] See s 9(1)(a), Civil Aviation Act.

[2] Taken from a helpful summary of provisions handed up by CASA during the course of the hearing.

[3] Sections 28(1A) and 28AA of the Civil Aviation Act were introduced, with effect from 1 July 2009, by the Civil Aviation Amendment Act 2009. The parties agree that they are relevant to these proceedings even though, necessarily, CASA did not have regard to them in making the primary decision.

[4] Seemingly two shares continue to be held by the persons who originally incorporated Trans Air however nothing turns on that curiosity.

[5] As I interpret the document two transfers of 33 shares each were made to Mr Gerard Wright on 18 May 2007.

[6] References hereafter to “Mr Wright” will be to Mr Leslie Wright.

[7] P2 is the prefix for PNG registered aircraft.

[8] Exhibit 22, paragraph 10.

[9] The letter nominates s 27AC(2) of the Civil Aviation Act as the source of power however this seems to be an error. It is s 27AC(1) of that Act which permits the requisitioning of documents.

[10] See Re Farnaby & Military Rehabilitation and Compensation Commission [2007] AATA 1792; (2007) 47 AAR 11 at [16] – [19]

[11] Where, for example, CASA has conceded an issue in the course of the hearing or wants to submit that an additional issue is raised on the evidence.

[12] Exhibit 32.

[13] Exhibit 31.

[14] Exhibit 30

[15] CASA did not confine its “future compliance” case to this point; the balance of the argument is dealt with below.

[16] Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355.

[17] See s 25(6)(a).

[18] Exhibit 4 at [40].

[19] Exhibit 11, paragraph 45.

[20] Exhibit 6, pp. 27 – 28.

[21] Exhibit 11, paragraph 59.

[22] The detail is recited in paragraph 83(iv) of Exhibit 31.

[23] Exhibit 31, paragraph 84.

[24] Exhibit 31, paragraph 90.

[25] Exhibit 6 at pages 27, 34 & 36. CASA’s submissions (Exhibit 31, paragraph 85) which suggest that Mr Collins reported on “the existence of ‘role confusion’ ’’ misstates this evidence.

[26] The expression used by Mr Quinn: see Transcript page 293, lines 16 – 20.

[27] Exhibit 6, pages 6 – 10.

[28] The anomaly with the two foundation shareholders can be disregarded.

[29] Exhibit 31, paragraphs 19 – 22.

[30] Exhibit 31, paragraph 23.

[31] See e.g. Finance Facilities Pty Ltd v FCT [1971] HCA 12; (1971) 127 CLR 106

[32] Exhibit 31, paragraphs 94-99

[33] Trans Air’s submissions describe it as a “false issue” but do not otherwise point to evidence that demonstrates compliance.

[34] s 41JA, Civil Aviation (Carriers’ Liability Act) 1959