Transglobal Airways Corporation and Civil Aviation Safety Authority [2010] AATA 68 (29 January 2010)

Last Updated: 8 February 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 68

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/0347

GENERAL ADMINSITRATIVE DIVISION		)
	Re		TRANSGLOBAL AIRWAYS CORPORATION

Applicant

And

CIVIL AVIATION SAFETY AUTHORITY

Respondent

DECISION

Tribunal

Deputy President P E Hack SC

Date 29 January 2010

Place Brisbane

Decision

As per the Schedule hereto.

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

CATCHWORDS

CIVIL AVIATION – refusal to issue AOC – CASA no longer satisfied of matters required for the issue of an AOC – whether there is power for the Tribunal to make an order for the issue of an AOC – Tribunal satisfied that power exists

PRACTICE & PROCEDURE – order affecting the operation of a decision – whether the Tribunal’s power to stay excluded where CASA no longer satisfied of matters required for the issue of an AOC

Administrative Appeals Tribunal Act 1975 (Cth) s 41(2)

Civil Aviation Act 1988 (Cth) ss 28(1), 28BA, 28BAA & 31A

Civil Aviation Safety Authority v Hotop [2005] FCA 1023; (2005) 145 FCR 232

Shi v Migration Institute of Australia Ltd [2003] FCA 1304; (2003) 134 FCR 326

REASONS FOR DECISION

1 February 2010

Deputy President P E Hack SC

1. The applicant, Transglobal Airways Corporation, holds an Air Carrier Operating Certificate issued by the Civil Aviation Authority of the Philippines (CAAP). It conducts cargo only flights between Australia, Papua New Guinea and the Solomon Islands using a Boeing 727 aircraft with the registration mark RP-C8017 (Philippines registration). Foreign registered aircraft operating into or out of Australia require the permission or authority of the respondent, the Civil Aviation Safety Authority.
2. CASA first authorised Transglobal to operate in 2006 when it issued a foreign aircraft air operator’s certificate (FAAOC). Transglobal has been issued with a series of FAAOC’s since July 2006.
3. In or about April 2009 CASA apparently became concerned about aspects of the maintenance of RP-C8017. It sought the production of various documents; it corresponded with CAAP. Correspondence ensued between CASA and Transglobal. On 1 June 2009 Transglobal made application for a renewal of its FAAOC. More correspondence ensued in which CASA pressed for the production of documents which it said were relevant to its decision of Transglobal’s application for renewal of the FAAOC. Solicitors were appointed to act for Transglobal and those solicitors corresponded with CASA.
4. CASA’s concerns were not satisfied however on 30 June 2009 CASA issued Transglobal with an FAAOC which took effect on 1 July 2009 and which was endorsed to cease to have effect at the end of 31 August 2009. More correspondence ensued. On 10 July 2009 CASA sent Transglobal a detailed letter outlining its concerns and advising that consideration was being given to refusing to issue a FAAOC on the basis of those concerns. A further application for the issue of a FAAOC was made by Transglobal on 31 July 2009. On 28 August 2009 CASA varied the FAAOC so that it expired on 1 October 2009. That pattern continued as letters were sent, and documents were provided, to CASA and CASA considered the material raised. The FAAOC was varied on 28 September 2009 (to expire on 22 October 2009), 22 October 2009 (to expire on 19 November 2009) and 18 November 2009 (to expire on 28 January 2010). A further application for a FAAOC was made by application dated 6 November 2009.
5. At 8.21 p.m. on 25 January 2010 (the following day being a public holiday) CASA sent to Transglobal’s solicitors a letter which recorded a decision by CASA to refuse to issue Transglobal with a FAAOC.
6. On 27 January 2010 Transglobal lodged an application in the Tribunal for a review of CASA’s decision and an application seeking orders pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The matter came on for an urgent hearing of that latter application on the afternoon of 28 January 2010. At the outset Mr Harvey, counsel for CASA, foreshadowed an argument by CASA that the Tribunal lacked power to make an order of the type sought. That was so, it was said, despite the decision of Siopis J in Civil Aviation Safety Authority v Hotop[1] (the Polar Aviation case) because his Honour’s remarks were obiter and because his Honour was not asked to consider, and did not consider, the effect of s 28BAA of the Civil Aviation Act 1988 (Cth). To permit more informed argument on the point and to allow time for proper consideration of it CASA agreed, as an interim

measure, to further extend the FAAOC for a period of two days upon Transglobal’s undertaking to CASA that it would not operate RP-C8017 in the meantime. The matter was adjourned to the following day when the matter was further argued. I indicated to the parties that I would, at this juncture, decide only the preliminary issue, that of power. If satisfied of that I would grant an interim stay to allow the parties to deal with the merits of a stay within a short time.

7. Late on the afternoon of 29 January 2010 I made orders under s 41(2) of the AAT Act extending Transglobal’s AOC until midnight on 5 February 2010 or earlier order on the basis that I was satisfied that such an order was within power and ought be made to preserve the status quo until such time as the parties might properly argue the underlying merits of a decision having the effect of extending the AOC until the hearing of the application. What follows are my reasons for that order.
8. There is no doubt that the Tribunal has power to review the decision by CASA to refuse to issue a FAAOC. A decision “to refuse to grant or issue ... a certificate ... granted or issued under this Act...” is a reviewable decision as defined in s 31(1) of the Civil Aviation Act. The making of an application to the Tribunal for review does not affect the operation of the decision[2] however s 41(2) of the AAT Act is in these terms:

“(2) The Tribunal may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.”

9. In Shi v Migration Institute of Australia Ltd[3] Tamberlin J said of this power that “It should be given a liberal interpretation”. That case concerned a decision by the regulator to refuse an application for renewal of registration for a further period of 12 months from 11 December 2002. The regulator did not decide the application until 8 October 2003 however the statute deemed the registration to continue until the authority decided the application. At first instance, the Tribunal decided that it lacked power to stay a decision to refuse registration however Tamberlin J set aside the Tribunal’s decision. His Honour said[4]:

“The question is whether an order for a stay in the present case is in respect of the operation or implementation of the decision not to renew the existing registration. Prior to the refusal to renew, the position was that the agent's registration was taken to continue pursuant to s 300(1) of the Migration Act. This deeming provision is a statutory fiction ...but it requires that the agent must be treated as if he or she were registered. In substance, this means that the agent must be taken to have the same rights as if he or she were registered up to the time of the making of the decision not to renew. Accordingly, the prohibition in s 280 of the Migration Act, which prevents a registered agent from giving immigration assistance, would not apply to him or her. After a decision not to renew is made, the direct legal effect of the decision is that the deemed registration is terminated. That is because the deemed registration is taken to continue only until the MARA decides the application for renewal. Accordingly, in substance, and as a direct consequence of the MARA decision, there has been a termination of the rights of the agent enlivened by the deemed registration. This is quite different from ceasing to have effect a statutory expiry as a consequence of the lapse of time. Accordingly, the decision not to renew has an operation which is capable of being stayed pursuant to s 41(2) of the AAT Act. It is the cessation of the deemed right to be treated as if he were registered as a consequence of the decision not to renew that is the subject of the stay. The "operation" of the decision is the legal impact on the right of Mr Shi to be taken to continue as a registered agent. This is terminated by the decision. Therefore, both as a matter of language, and construing s 41(2) in the light of its purpose, the decision not to renew is capable of being stayed. A stay is therefore within the power of the AAT under s 41(2) of the AAT Act.”

10. The Polar Aviation case has close factual similarity to the present. In May 2004 Polar Aviation applied for an AOC to take effect on the expiry of its then current AOC which was due to expire on 31 July 2004. Prior to its expiry CASA required Polar Aviation “show cause” why CASA ought not refuse the application for an AOC for the period post 31 July 2004. But in what was described in the correspondence as CASA’s policy, the existing AOC was extended by a series of two month extensions, the last of which extended the term from 29 November 2004 to 31 January 2005. By letter dated 14 January 2005 CASA notified Polar Aviation that it had been decided,

“to cancel the Air Operator's Certificate ... currently held by Polar Aviation. The AOC has been extended until 31 January 2005. The consequence of this decision is that the AOC shall cease to have effect beyond that date.”

11. Polar Aviation lodged two applications in the Tribunal – one seeking a review of the decision of 14 January 2005 to “cancel” the AOC and the other seeking a review of the decision, implicit in the letter of 14 January 2005, to refuse to issue an AOC beyond 31 January 2005. It lodged an application seeking relief under s 41(2) of the AAT Act in relation to both of the decisions. On 11 February 2005 the Tribunal ordered that the decision of 14 January 2005 to cancel Polar Aviation’s AOC be stayed and that the AOC be extended until the decision of the Tribunal on the ultimate hearing of the application for review. Thereafter CASA sought relief in the Federal Court pursuant to s 39B of the Judiciary Act 1901 (Cth).
12. CASA advanced three arguments before Siopis J.,

(a) the Tribunal lacked power to make the order staying the cancellation decision and extending the AOC under s 41(2) of the AAT Act because that power can only be exercised in support of an application for review where, at the hearing of that application, the Tribunal can make a decision which can have practical effect. Since the AOC would have expired through the effluxion of time by the time of hearing a decision reversing the cancellation decision would be of no practical benefit;

(b) next, CASA argued that there was no scope under s 41(2) of the AAT Act to make an order extending the term of an already expired AOC as that was not an order affecting the operation or implementation of the cancellation decision of 14 January 2005, but rather an order affecting the operation of a much earlier decision, namely, the decision fixing the term of the AOC to expire on 31 January 2005, which was not a decision the subject of any application to the Tribunal;

(c) finally, it was argued by CASA that s 41(2) of the AAT Act did not permit the making of an order having positive effect. The Tribunal’s order extending the AOC until the substantive hearing had impermissibly failed to have regard to the matters in s 28 of the Civil Aviation Act of which CASA was required to be satisfied before issuing an AOC.

13. His rejected CASA’s contentions. Relevant to the present discussion are these observations by his Honour[5]:

“Second, there is nothing in the language of the section that precludes the Tribunal from making an order in positive terms. In fact, the language used is of wide ambit permitting the Tribunal to make ‘such order or orders staying or otherwise affecting the operation or implementation of the decision ... as [it] considers appropriate’ to achieve the specified purpose. In the context of a refusal to issue a statutory licence to an existing statutory licence holder, in a case where effective relief can be granted at the hearing, this language is wide enough to include an order permitting the review applicant to continue in business until the hearing of the application. This is because the Tribunal's order in those terms would ‘affect the operation’ of the impugned decision, which would otherwise operate to preclude the review applicant from continuing to carry on its existing business. In other words, the order of the Tribunal affects the operation of the impugned decision because it neutralises its adverse effect and anticipates that a favourable decision with retrospective effect may replace the impugned decision.”

14. Mr Harvey accepts, as I understand the argument, that s 41(2) of the AAT Act permits the making of an order having positive effect in appropriate cases. But, he says, this is not such a case because of the statutory framework of the Civil Aviation Act. And, he says, the argument now raised was not the subject of explicit consideration by Siopis J in Polar Aviation. Seemingly the argument was not then raised before his Honour.
15. To understand the argument it is necessary to set out some parts of the Civil Aviation Act. Sub-section 28(1) of the Act obliges CASA to issue an AOC if, and only if, it is satisfied of the matters in paragraphs (a) to (e) of that sub-section. An AOC, once issued, has effect subject to various conditions. The statute itself imposes certain conditions and CASA has power to impose others. Section 28BA of the Civil Aviation Act is in these terms:

“(1) An AOC has effect subject to the following conditions:

(a) the condition that sections 28BD, 28BE, 28BF, 28BG and 28BH are complied with;

(aa) the conditions subject to which the AOC has effect because of section 28BAA;

(ab) the condition that section 28BI is complied with in relation to each operation, covered by the AOC, to which that section applies;

(b) any conditions specified in the regulations or Civil Aviation Orders;

(c) any conditions imposed by CASA under section 28BB.

(2) If a condition of an AOC referred to in paragraph (1)(a) or (aa) is breached, the AOC continues, despite the breach, to authorise flights or operations to which the condition relates.

(2A) If a condition of an AOC referred to in paragraph (1)(ab), (b) or (c) is breached, the AOC does not authorise any flight or operation to which the condition relates while the breach continues.

(3) If a condition of an AOC is breached, CASA may, by written notice given to its holder, suspend or cancel:

(a) the AOC; or

(b) any specified authorisation contained in the AOC;

whether or not the breach is continuing.

(4) Before making a decision under subsection (3), CASA must:

(a) give the holder of the AOC a notice setting out the reasons why CASA is considering making the decision; and

(b) allow the holder of the AOC to show cause, within such reasonable time as CASA specifies in the notice, why CASA should not make the decision.

(5) If CASA makes a decision under subsection (3), the notice of its decision must include a summary of section 31A. However, a failure to include such a summary does not affect the validity of the notice.”

16. Section 28BAA(1) of the Civil Aviation Act is critically important to CASA’s argument. It provides:

“(1) An AOC has effect subject to the condition that CASA remains satisfied as mentioned in paragraphs 28(1)(a) and (b) in relation to the operations that are covered by the AOC.”

17. The argument for CASA has these elements:

(a) Section 28BAA of the Act subjects Transglobal’s AOC to a condition that CASA remain satisfied of the matters in s 28(1);

(b) CASA is not presently satisfied of those matters (and has refused to issue Transglobal with an AOC for that reason) with the result that the condition in s 28BAA is not being complied with;

(c) in those circumstances an order under s 41(2) of the AAT Act in positive terms has the effect that an AOC is being issued without CASA having the state of satisfaction required by s 28(1) of the Civil Aviation Act and without the Tribunal having had any opportunity to consider that question;

(d) the power in s 41(2) of the AAT Act could not be intended by the Parliament to be used in such a way as to potentially expose an AOC holder to being in breach of a statutory condition.

18. As will appear, I do not accept the argument. I reject the notion that Transglobal is breaching a statutory condition by continuing to operate, with the benefit of an AOC, once CASA no longer has the state of satisfaction required by s 28(1) of the Civil Aviation Act.
19. Section 28BA of the Act needs to be considered as a whole. Sub-section (1) establishes the statutory conditions imposed upon AOC’s. The following two sub-sections deal with the consequences to an AOC of a breach of the statutory conditions. In the case of a breach of any of the conditions referred to in paragraphs (ab), (b) or (c) of s 28BA(1), s 28BA(2A) has the effect that the AOC does not authorise any flight or operation to which the condition relates while the breach continues. But in the case of a breach of a condition referred to in paragraphs (a) and (aa) “the AOC continues, despite the breach, to authorise flights or operations to which the condition relates” (emphasis added). That provision is quite contrary to the notion that an AOC ceases to have effect where CASA no longer has the state of satisfaction required by s 28(1) of the Civil Aviation Act because, explicitly, the AOC continues despite the breach.
20. CASA argued that s 28BA(2) operated only to permit CASA to give effect to its power in s 28BA of the Act to suspend or cancel an AOC. That is a puzzling submission. It finds no support in the language of the statute or in the extrinsic material[6] provided to me by Mr Quinn, counsel for Transglobal. The construction put forward by CASA requires that words of qualification be added to the unqualified terms of the statute. I reject the argument. There seems to me to be no reason why the statute should not be given effect according to its plain terms.
21. The argument that the Parliament could not have intended that the power in s 41(2) of the AAT Act to be used in a way that might potentially expose an AOC holder to being in breach of a statutory condition seems to me to overlook the fact that the Parliament, when enacting s 28BA(2) of the Civil Aviation Act, appears to have expressly contemplated, and authorised, flights and operations during the continuation of a breach of the conditions specified in s 28BA(1)(a) and (aa) of that Act. As it seems to me the Parliament would have needed to have used explicit language to modify s 41(2) of the AAT Act had it been intended to exclude the operation of that sub-section.
22. There is, moreover, contextual support for the proposition that Parliament intended s 41(2) of the AAT Act to take effect according to its terms where an AOC operator breached a condition of an AOC. In such a situation, ss 28BA(3) and (4) provide a mechanism for CASA to call upon an operator to show cause why an AOC ought not be suspended or cancelled and permit CASA to suspend or cancel an AOC thereafter. But a decision to suspend or cancel an AOC under s 28BA(3) of the Act is one that is subject of the automatic stay for five business days provided by s 31A of the Civil Aviation Act. If within that time an application for review is made to the Tribunal, that stay is then continued until an order is made or refused under s 41(2) of the AAT Act. Thus the Parliament has expressly contemplated the use of the s 41(2) power, despite the view of CASA that a breach of conditions had occurred, where an AOC has been cancelled or suspended. It seems absurd to suggest that the Parliament could not have contemplated that the power might not be used where CASA had refused to renew an AOC.
23. Equally, it seems absurd that the question of a stay might depend on whether CASA exercised its power to suspend or cancel an AOC or whether it simply refused to re-issue an existing AOC. The distinction drawn by Mr Harvey that the latter type of order involves the creation of new rights can be seen, on examination, to be a false distinction. When the Tribunal stays a cancellation it revives rights which had ceased to exist by virtue of CASA’s decision. And, as the Polar Aviation exemplifies, it creates new rights where the decision takes affect after the expiry of the term of the AOC.
24. Thus I was satisfied that there was power to make an order under s 41(2) of the AAT Act, it being an order, using the language of Siopis J, that affects the operation of the impugned decision because it neutralises its adverse effect and anticipates that a favourable decision with retrospective effect may replace the impugned decision. It is an order necessary, at least in the short term, to secure the effectiveness of the hearing and determination of Transglobal’s application for review.
25. Whether the order will operate beyond 5 February 2010 will be determined after hearing full argument from the parties on the merits of the exercise of the power, the argument to date being confined to the question of the existence of the power.

I certify that the 25 preceding 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 28 & 29 January 2010

Date of publication of reasons 1 February 2010

Counsel for the Applicant Mr T Quinn

Solicitors for the Applicant Norton White

Counsel for the Respondent Mr I Harvey

Solicitor for the Respondent CASA Legal Group

SCHEDULE – ORDERS MADE

1. Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) the Tribunal orders that the Air Operator’s Certificate 1-1EQPY-16 issued to the applicant on 18 November 2009 be varied so that the expiry date of,

(a) if the holder ceases to be authorised to conduct international air transport operations by the CIVIL AVIATION AUTHORITY OF THE PHILIPPINES; or
(b) 30 January 2010

whichever happens first

is replaced with

(a) if the holder ceases to be authorised to conduct international air transport operations by the CIVIL AVIATION AUTHORITY OF THE PHILIPPINES; or
(b) 5 February 2010

whichever happens first.

2. The AOC authorises the holder to conduct international air transport operations of the type set out in Schedule 1 to the certificate issued 18 November 2009 and is issued subject to the conditions set out in Schedule 2 to the certificate issued 18 November 2009

3. Direct that further consideration of the application for orders pursuant to s 41(2) of the Administrative Appeals Tribunal Act is adjourned to 10.30 a.m. (Queensland time) on 5 February 2010.

4. Direct that the parties lodge and serve on one another any further evidentiary material by 5 p.m. on 3 February 2010.

5. Direct that the parties lodge and serve on one another an outline of submissions by 3 p.m. on 4 February 2010.

6. There is liberty to apply.

---

[1] [2005] FCA 1023; (2005) 145 FCR 232.

[2] See s 41(1), AAT Act.

[3] [2003] FCA 1304; (2003) 134 FCR 326 at [25].

[4] Ibid at [26].

[5] [2005] FCA 1023; (2005) 145 FCR 232 at [45].

[6] Explanatory memorandum, Civil Aviation Amendment Bill 2005.