FEDERAL COURT OF AUSTRALIA Lip-Air Pty Limited v Civil Aviation Safety Authority [2008] FCA 866 Acts Interpretation Act 1901 (Cth) s 33(1), s 33(3) Administrative Appeals Tribunal Act 1975 (Cth) s 41(2) Administration Decisions (Judicial Review) Act 1977 (Cth) Civil Aviation Act 1988 (Cth) s 28, s 28BA(1)(aa), s 28BA(3), s 28BAA, s 31A, s 31C Civil Aviation Regulations 1988 Part 16, Regulation 217(3) Civil Aviation Safety Authority v Boatman (2004) 138 FCR 384 Civil Aviation Safety Authority v Boatman [2006] FCA 460 LIP-AIR PTY LTD, SCOTT WILLIAM MCKENZIE and SIDNEY MICHAEL SMITH v CIVIL AVIATION SAFETY AUTHORITY NSD837 OF 2008 BUCHANAN J 5 JUNE 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD837 OF 2008 BETWEEN: LIP-AIR PTY LTD First Applicant SCOTT WILLIAM MCKENZIE Second Applicant SIDNEY MICHAEL SMITH Third Applicant AND: CIVIL AVIATION SAFETY AUTHORITY Respondent JUDGE: BUCHANAN J DATE OF ORDER: 5 JUNE 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The decisions contained in letters dated 2 June 2008 to Sidney Michael Smith and Scott William McKenzie respectively, which have been marked exhibits 7 and 9 in the interlocutory proceedings, are stayed until 1500 hours on 6 June 2008. 2. The application filed in Court today is adjourned for attention in due course by the docket judge to whose docket the matter is allocated. 3. The costs of today's proceedings are reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD837 OF 2008 BETWEEN: LIP-AIR PTY LTD First Applicant SCOTT WILLIAM MCKENZIE Second Applicant SIDNEY MICHAEL SMITH Third Applicant AND: CIVIL AVIATION SAFETY AUTHORITY Respondent JUDGE: BUCHANAN J DATE: 5 JUNE 2008 PLACE: SYDNEY REASONS FOR JUDGMENT BUCHANAN J: 1 This judgment deals with an urgent application which I granted leave to file in court this afternoon. The first applicant is a company which offers passenger, freight and charter services in North Queensland. It is the holder of an Air Operators Certificate ('an AOC') issued by the respondent, Civil Aviation Safety Authority ('CASA'). The second applicant is a person who was, with the approval of CASA, appointed to the position of chief pilot of the first applicant. The third applicant is a person who was, with the approval of CASA, appointed to the position of check pilot with CASA. The positions of chief pilot and check pilot are ones which fall within the organisation of the first applicant. Those positions appear on the facts of the present case, to fall within the term 'key personnel' as defined in s 28 of the Civil Aviation Act 1988 (Cth) ('the Act'). 2 Under s 28(1)(b) of the Act, CASA must be satisfied that the chain of command is appropriate to ensure that operations can be conducted or carried out safely (see s 28(1)(b)(ii), and that the organisation has a sufficient number of suitably qualified and competent employees to conduct or carry out the operation safely (see s 28(1)(b)(iii)). That state of satisfaction must, in accordance with ensuing provisions of the Act, be a continuing one. Section 28BAA(1) provides that 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. Section 28BA(1)(aa) provides that an AOC has effect subject to the condition that the requirements of section 28BAA are in place. 3 Under s 31A of the Act certain decisions of CASA, which are reviewable by the Administrative Appeals Tribunal ('the AAT'), are automatically stayed for five days, and if an application is made to the AAT against such a decision within that time a stay is kept in place for up to a further 90 days. The provisions of s 31A apply to decisions under the Act or Regulations where CASA is required to give a show cause notice. 4 Examples where the regulations made under the Act provide some instances for a show cause notice are to be found in Part 16 of the Civil Aviation Regulations 1988 ('the Regulations') which deal with the variation, suspension or cancellation of licences, certificates or authorities. 5 By specific provisions which were inserted into the Act in 2003 there are provisions in Division 3A which deal with the suspension by CASA of particular authorisations. Those suspensions and the period during which they have effect are made subject to conditions including a requirement that CASA must apply to this Court within five days in order for the suspension to have continuing effect. The introduction of those legislative provisions and the policy reasons for them were discussed by a Full Court in Civil Aviation Safety Authority v Boatman (2004) 138 FCR 384 and referred to by Madgwick J in Civil Aviation Safety Authority v Boatman [2006] FCA 460. The new provisions were introduced in part to 'address the perception in aviation circles that CASA was somehow judge, jury and executioner'. 6 On 19 March 2008 CASA wrote to Mr Smith, the check pilot, asking him to show cause why his approval as check pilot of the first applicant should not be revoked or varied. Reference was made, as the foundation for such consideration, to Regulation 217(3) of the Regulations and ss 33(1) and (3) of the Acts Interpretation Act 1901 (Cth). 7 On 20 March 2008 CASA wrote to Mr McKenzie, the chief pilot, asking him to show cause why his approval as chief pilot of the first applicant should not be cancelled or suspended. Reference was made to subclause 6.1 of Appendix 1 of s 82.0 of the Civil Aviation Orders. 8 CASA's position is that the invitation to those two gentlemen to show cause why the steps indicated should not be taken was a matter of courtesy rather than in response to any legal obligation. In each case, 28 days was granted for a response. The period was subsequently extended further. In the case of Mr Smith, he in due course received a letter dated 2 June 2008 advising him that the instrument of his approval as check pilot of the first applicant was revoked with immediate effect. Mr McKenzie received a letter dated 2 June 2008 advising him that the approval of his position as chief pilot was cancelled with effect from 4 June 2008. 9 On 20 March 2008 CASA also wrote to the first applicant giving notice in accordance with s 28BA(3) of the Act that consideration was being given to the suspension or cancellation of its AOC. To date the AOC has been neither suspended nor cancelled. It seems clear, however, that any decision to take either of those courses would engage the operation of s 31A of the Act and the automatic provisions for stay to which I earlier referred. So far as the first applicant is concerned the present position is that no decision has yet been taken. CASA has accepted that there should be a 'show cause conference'. 10 The proceedings, which have been commenced by the application which I permitted to be filed, appear in their form to be proceedings invoking the provisions of the Administration Decisions (Judicial Review) Act 1977 (Cth). Some criticism has been made of the form of the application and there are some matters within it which might require attention in due course. However, I do not propose to allow those matters to deflect me from the matter which requires immediate attention, which is the application for urgent interlocutory relief putting in place a stay of the decisions made with respect to Mr Smith and Mr McKenzie. 11 The reason why action by this Court might be necessary in that respect is twofold. First, it does not appear, although counsel for the applicants has not surrendered this argument, that section 31A of the Act applies to put in place an immediate and effective stay of the decisions. Secondly, although the power of the AAT to grant a stay under its own authority is to be found in s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) and is expressly preserved by s 31C of the Act, the AAT has as yet had no chance to deal with the question whether any stay should be granted. It will, however, sit at 9 am tomorrow for the purpose, I am told, of considering applications to that effect. CASA's position in a communication today to the solicitors for the applicants is that the AAT has the power to stay CASA's decisions and is the appropriate forum in which any such application should be considered. Specific reference was made to the fact that CASA has been advised by the AAT that 'a stay hearing will be convened by the Tribunal today or tomorrow'. 12 In order for the applicants to secure interlocutory relief it is necessary that they satisfy the Court that there is an arguable question to be considered in the proceedings which have been commenced and that the balance of convenience favours a stay. As I understand the links in the ultimate proposition which is to be advanced, which was to the effect that the decisions made with respect to Messrs Smith and McKenzie were ultra vires and not authorised by the Act, those links are as follows: 1. If CASA had taken action in relation to the AOC, any decision to suspend its operation would have been accompanied by an automatic stay and an opportunity, if the procedures of the AAT were invoked, to seek a merits review of that decision in the AAT. 2. The inclusion of Division 3A in the Act discloses a legislative intent that decisions of CASA will be reviewable, and effectively reviewable. 3. The effect of the mechanisms which CASA has invoked with respect to Messrs Smith and McKenzie is to render impossible the continuation of operations under the AOC but without any mechanisms of the kind provided by section 31A being engaged at the same time. 4. Use of those mechanisms, as an alternative to suspending the AOC directly, is ultra vires. 13 In evidence provided on affidavit by Diane Christine Delaney for the purpose of the present interlocutory application it is contended that 'the process of gaining approval of another chief pilot and training and checking pilot will take a number of months'. There is no evidence to the contrary before me for the purpose of the present application. 14 Although the contentions which the applicants wish to advance are by no means self‑evident, having regard to the provisions of the Act itself, even taking into account the policy objectives to which reference has been made, there is nevertheless in my view a sufficiently arguable case at the present stage to provide respectable support for the limited relief which I have in mind at the moment. 15 In my view, the balance of convenience clearly favours a maintenance of the status quo existing before the letters of 2 June 2008 to Mr Smith and Mr McKenzie until in its proceedings which are listed to commence at 9.00 am tomorrow morning, the AAT has an opportunity to consider whether, in aid of its own processes, a stay of those decisions is warranted. I do not have in mind at the moment that further relief would be justified, having regard to the balance of convenience, if the AAT was not so persuaded in the proceedings before it tomorrow. That is a matter which can, if necessary, be addressed if the matter comes back before this Court. 16 What I propose is to grant an injunction staying the operation of the decisions in the letters of 2 June 2008 to Mr Smith and Mr McKenzie until 3 pm tomorrow afternoon, 6 June 2008. If further proceedings are necessary in this Court in relation to the application for interlocutory relief, my Associate may be advised during the course of tomorrow or contact may be made with the Associate of the Duty Judge next week who, in the early part of the week, will be Edmonds J. 17 In the meantime the application will be adjourned and will in due course be allocated to the docket of a judge of the Court for further attention. Costs will be reserved. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 5 June 2008 Counsel for the First, Second and Third Applicants: Mr B De Buse Counsel for the First Respondent: Mr M Robinson Date of Hearing: 5 June 2008 Date of Judgment: 5 June 2008