FEDERAL COURT OF AUSTRALIA Civil Aviation Safety Authority v Alligator Airways Pty Limited (No 1) [2012] FCA 574 Citation: Civil Aviation Safety Authority v Alligator Airways Pty Limited (No 1) [2012] FCA 574 Parties: CIVIL AVIATION SAFETY AUTHORITY v ALLIGATOR AIRWAYS PTY LIMITED File number: VID 350 of 2012 Judge: MURPHY J Date of judgment: 18 May 2012 Legislation: Civil Aviation Act 1988 (Cth) Date of hearing: 15 - 18 May 2012 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 20 Counsel for the Applicant: Mr I Harvey Solicitor for the Applicant: Civil Aviation Safety Authority Counsel for the Respondent: Mr J Kewley Solicitor for the Respondent: Maitland Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 350 of 2012 BETWEEN: CIVIL AVIATION SAFETY AUTHORITY Applicant AND: ALLIGATOR AIRWAYS PTY LIMITED Respondent JUDGE: MURPHY J DATE OF ORDER: 18 MAY 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The Respondent is prohibited pursuant to s 30DE of the Civil Aviation Act 1988 (Cth) from doing anything that would otherwise be authorised by its Air Operator's Certificate and Certificate of Approval until 5 pm on Monday 4 June 2012. 2. The parties provide short submissions as to costs within 5 days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 350 of 2012 BETWEEN: CIVIL AVIATION SAFETY AUTHORITY Applicant AND: ALLIGATOR AIRWAYS PTY LIMITED Respondent JUDGE: MURPHY J DATE: 18 MAY 2012 PLACE: MELBOURNE SHORT REASONS FOR JUDGMENT (revised from transcript) 1 I heard this urgent matter over three days from Tuesday 15 May to Thursday 17 May 2012, receiving the respondent's final submissions at midday today. The parties advised that they could complete the application in two days but that proved optimistic. I have reached my decision but, having regard to the time at which the case finished and my commitments next week in the Full Court there is insufficient time for me to urgently deliver properly detailed reasons for judgment. I will provide these short reasons now and, as there are some important issues involved, provide properly detailed reasons later. 2 The respondent, Alligator Airways Pty Ltd is a small general aviation business based at Kununurra in Western Australia which operates 16 light aircraft during the tourist season for sightseeing trips and charter, but substantially less during the off season. The applicant, the Civil Aviation Safety Authority has, pursuant to s 9 of the Civil Aviation Act 1988 (Cth) ("the Act"), amongst other things, the function of conducting the safety regulation of civil air operations in Australia. 3 Pursuant to s 9A of the Act, in the exercise of its powers and the performance of its functions, CASA is required to regard the safety of air navigation as the most important consideration. 4 On 3 May 2012 the applicant, the Civil Aviation Safety Authority suspended with immediate effect the Air Operator's Certificate ("AOC") and Certificate of Approval ("COA") of Alligator pursuant to s 30DC of the Act. CASA did so through its delegate, Mr Roger Weeks, who considered that he had reason to believe that Alligator had engaged in, is engaging in, or is likely to engage in, conduct that constitutes, contributes to or results in a serious and imminent risk to air safety. Such conduct is prohibited by s 30DB of the Act. 5 Such a suspension notice only operates for 5 business days unless application is made to this Court for a prohibition order pursuant to s 30DE. Once an application for a prohibition order is made the suspension notice continues in effect until the judgement of the Court. 6 Under subs 30DE(2) of the Act, if the Court is satisfied that there are reasonable grounds to believe that the holder of a civil aviation authorisation has engaged in, is engaging in, or is likely to engage in conduct that constitutes, contributes to or results in a serious and imminent risk to air safety, the court must make a prohibition order. 7 Importantly, subs 30DE(4) provides that any period of prohibition ordered by the Court is to be for the period of not more than 40 days that the Court considers reasonable to allow CASA to complete its investigation into the circumstances that gave rise to CASA's decision to suspend the authorisation. Having completed its investigation it is for CASA to issue a Show Cause Notice under s 30DH if it then has the belief that a serious and imminent risk to air safety would exist if the civil aviation authorisations of Alligator were not varied, suspended or cancelled. 8 On 9 May 2012 CASA made an urgent application for a prohibition order under s 30DE, and the suspension notice therefore continued in effect. As a result of the suspension notice Alligator's business has been closed since 4 May 2012. This is the commencement of the "dry" period of May to November which is the tourist season, and is approaching the peak of the season. 9 CASA seeks an order prohibiting Alligator from doing anything that would otherwise be authorised by its AOC or its COA. It sought a prohibition order that operated for 40 days but during the hearing, under pressure to advise as to the length of time necessary for an expeditious but appropriate investigation, it reduced the prohibition period sought to 10 business days from today. 10 A matter which has weighed heavily on me is the effect of the suspension notice and any prohibition order that I make on Alligator's business. The evidence is that Alligator has substantial loans for its business and was in some financial difficulty prior to the suspension notice. Since the suspension notice many clients have cancelled their flights and creditors have demanded immediate payment. Alligator has defaulted on some loan repayments and on payments to trade creditors and is losing $12,000 per day which it can ill afford. 11 However, in the exercise of its power to make a prohibition order the Court is required by s 30DE(3) to have regard to s 3A and 9A(1) of the Act. Section 3A provides: The main object of this Act is to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents. Section 9A(1) provides: In exercising its powers and performing its functions, CASA must regard the safety of air navigation as the most important consideration. 12 CASA points to a series of matters over the period 2009 to 2011 that were of concern to it in the operations of Alligator. As at 2 April 2012 these matters included a number of events directly affecting air safety including an engine failure on 24 June 2010 that resulted in an emergency landing, an engine failure of a different aircraft on 17 May 2011, the door of an aircraft coming open midflight on 31 May 2011 allowing passenger items to fall out, and an in-flight electric trim control problem on an aircraft on 31 May 2011 resulting in the pilot temporarily losing control. That these concerning events occurred is not disputed by Alligator. 13 CASA describes three incidents in April 2012 as the "straw that broke the camel's back" which led, against the backdrop of the earlier matters, to the issue of the suspension notice. The three recent incidents are an engine failure of a Cessna aircraft on 14 April 2012 leading to an unpowered emergency landing at Theda cattle station, a low-flying incident near the Ord River on 20 April 2012 which could have led to a mid-air collision with a helicopter, and the turbo-failure of a GA Airvan on takeoff from Kununurra on 28 April 2012 which led to an emergency landing. Without descending to the detail of each of these incidents, CASA paints a compelling picture of an airline with a poor maintenance record leading to a poor level of airworthiness of its aircraft and problems with pilot proficiency. 14 Alligator contends that there is no serious and imminent risk to air safety. I cannot in the short time available do justice to all of the factual matters that Alligator relies on for this contention. However, I note in relation to the incidents between 2009 and 2011 that they include the following: (a) that the incidents occurred a long time ago and do not constitute an imminent risk; (b) that a failure to top up the oil in an engine is an everyday risk; (c) that the risk created by a pilot's failure to top up oil was not condoned or directed by Alligator; (d) that those pilots that had committed serious errors had been licensed by CASA as competent; (e) that any lack of competence by the pilots occurred despite the licence and despite proper checks by Alligator; (f) that the likelihood of a pilot displaying poor standards is an everyday risk; (g) that those pilots who had displayed poor standards were either grounded or no longer employed by Alligator; (h) that the Chief Pilot who was argued to have failed in his supervision of pilots was no longer employed by Alligator; (i) that the Chief Engineer who was argued to have failed in relation to maintenance of aircraft was no longer employed by Alligator; and (j) that there was no evidence of systemic problems or a malaise within Alligator that contributed to the incident. 15 Without attempting to deal with all of Alligator's arguments in relation to the more recent incidents, its explanations include the following: (a) In relation to the emergency landing of the Cessna on 14 April 2012, that: (i) the trend monitoring sheets on the aircraft did not show the high oil pressure which they would have if the oil filter been blocked as contended; (ii) the trend monitoring sheets did not show low oil pressure as alleged; (iii) the maintenance performed by Mr Kendrick was adequate and appropriate; (iv) it is not established that the engine failure was caused by low oil pressure; (v) the incident was unforeseen and a one-off failure; and (vi) the incident was not caused any systemic failure within Alligator. (b) In relation to the emergency landing caused by the turbo failure on 28 April 2012, that: (i) the emergency landing arose out of a serious pilot error; (ii) the pilot had been flight checked on three occasions and appropriately tested by Alligator; (iii) Alligator did all it could to ensure the pilot's proficiency before it assigned him to flight duties; (iv) it was not established that the pilot was under pressure to take off using an unserviceable aircraft; and (v) the incident was not caused by any systemic failure within Alligator. (c) In relation to the alleged low-flying incident near the Ord River on 20 April 2012, that: (i) Alligator denies it was involved in this incident, and says that it is not proven to have occurred; and (ii) if the incident did occur, the conduct of the pilot in doing so was not condoned or directed by Alligator. 16 Alligator contends that its safety and checking procedures, whilst deficient in the past, were vastly improved by Captain Street. It argues that it has comprehensive and proficient safety systems in place and that CASA has not established any systems failures to support its claim that Alligator caused or contributed to the recent incidents. However, in order to reassure both CASA and the Court, Alligator will employ a new Chief Pilot and has entered into an agreement to have all maintenance conducted by an external maintenance provider. Mr Kendrick has given evidence that he will have no involvement in the maintenance carried out by the new provider. 17 However, I cannot accept the thrust of Alligator's contentions. Given the serious incidents that have occurred it is difficult to see substantial merit in its argument. I accept the thrust of CASA's contentions although not all of the matters it relies on have been made out. I will set out my view in relation to each of the incidents particularised and the competing contentions as to Alligator's contribution to those incidents when I provide my detailed reasons. 18 I am well satisfied that there are reasonable grounds to believe that Alligator has engaged in, is engaging in, or is likely to engage in, conduct that constitutes, contributes to or results in a serious and imminent risk to air safety. I make the prohibition order sought by CASA for a period of 10 business days until 5 pm on Monday 4 June 2012. 19 I note also that my assessment that 10 business days is sufficient to enable CASA to complete its investigation into the circumstances that gave rise to its decision to suspend Alligator's authorisations was based on the view that CASA will be able to interview Alligator's pilots. Those interviews are scheduled to commence on Monday 21 May 2012, there having been initial difficulties in obtaining their cooperation. I note that if those interviews are unable to be performed or otherwise obstructed it is open to CASA to apply to me to extend the period of my order pursuant to s 30DF. I note too that if the investigations are concluded more expeditiously it is open to Alligator to apply to reduce the period of the order pursuant to the same section. 20 I am presently aware of no reason why costs should not follow the event. I order the parties to file short submissions as to costs in this matter and in VID 348 of 2012 within five days. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy. Associate: Dated: 18 May 2012