Osman v Ministry of Transport [2005] NSWADT 142

CITATION: Osman v Ministry of Transport [2005] NSWADT 142 DIVISION: General Division APPLICANT PARTIES: Mohamed Osman RESPONDENT Ministry of Transport FILE NUMBER: 043128 HEARING DATES: 8/04/2005, 22/06/2005 SUBMISSIONS CLOSED: 06/22/2005 DATE OF DECISION: 06/27/2005

BEFORE: Montgomery S - Judicial Member APPLICATION: Passenger Transport Act - taxi driver - cancellation of authority - Taxi driver - cancellation of authority MATTER FOR DECISION: Preliminary matter LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Passenger Transport Act 1990 Battenberg v Union Club [2005] NSWSC 242 CASES CITED: Oates v Commissioner of Taxation 99 ALR 167 Re Hayes; Ex parte Hayes (1984) 59 ALR 219 The Commissioner for Railways (New South Wales) v Cavanough (1935) 53 CLR 220 APPLICANT REPRESENTATION: M Mayell, barrister RESPONDENT A Wozniak, solicitor ORDERS: The annulment of Mr Osman's bankruptcy does not operate retrospectively to cause the decision by the Director-General of the Department of Transport to cancel Mr Osman's accreditation to operate taxicabs to be ultra vires.

REASONS FOR DECISION 1 Mr Osman is seeking a review by the Tribunal of a decision of the Ministry of Transport to cancel his accreditation to drive a taxicab. Mr Osman submits as a preliminary argument in support of his application that the reasons for the decision to cancel his accreditation to operate taxicabs are flawed and as such, the decision based upon such reasons is also flawed. In this regard the history of the matter is significant. 2 Mr Osman was an accredited taxicab operator under the Passenger Transport Act 1990 ("the Act"). On 15 June 1999 the Director-General of the Department of Transport, as it was then, determined that Mr Osman's accreditation to operate taxicabs should be cancelled. The Statement of Reasons for this decision relies upon numerous vehicle defects and sets out why the accreditation standard has been breached in relation to each particular vehicle. 3 By a Notice of Review dated 18 August 1999 the Director-General advised Mr Osman that the 15 June 1999 decision had been rescinded subject to the condition that the operator accreditation was varied from ten vehicles to a maximum of three vehicles. 4 The Director-General subsequently received notice that Mr Osman had entered into an arrangement of bankruptcy on 1 December 1999. Following this event Mr Osman was issued with a Notice to Show Cause as to why his accreditation to operate taxicabs should not be cancelled. His accreditation was cancelled on 24 January 2000. The reason for this decision alleged that Mr Osman was a bankrupt and accordingly, was not a person who could be attested as acquiring financial viability as defined within the Act. 5 Section 10 of the Act allows the Director-General to cancel any person's Operator Accreditation, having regard to the purpose of an accreditation. Section 7 of the Act provides that the purpose of an accreditation is to attest that an accredited person is considered to be of good repute and in all other respects fit and proper to be responsible for the operation of a public passenger service; and that the accredited person has demonstrated the capacity to meet the government's standards of financial viability; safety of passengers and the public; and vehicle maintenance. 6 The Director-General reasoned that the fact that Mr Osman was Bankrupt showed that he could not demonstrate the capacity to meet the government's standard of financial viability. Accordingly it could no longer be attested that he was considered to meet the standards required for accreditation as an operator. Mr Osman was then advised that his accreditation to operate taxicabs was cancelled. 7 Mr Osman's bankruptcy was annulled in August 2000. Mr Mayell submitted, on Mr Osman's behalf, that the effect of the annulment is that any bankruptcy acts by Mr Osman were also annulled. It follows, he contends, that Mr Osman was not bankrupt at the time the decision to cancel his Operator Accreditation was made and therefore the very reason for the Director-General's decision is flawed. It is further submitted that as the reasons behind the decision is flawed, then each subsequent decision which arises from the application or findings of the original decision is equally flawed and as such, "ultra vires". The issue arises of procedural fairness by the decision-maker in the first instance. The original decision and subsequent decisions arising from it are therefore flawed. 8 Mr Osman was prosecuted on the basis of his continued operation of his taxi service after his accreditation was cancelled. On 13 February 2004, Mr Osman was convicted of 99 offences of operating a taxi service without being accredited and total legal costs and fines of $106,039.00 were imposed. These convictions formed that basis of the decision to cancel Mr Osman's authority to drive a taxicab. That decision is the subject of this application. 9 Mr Mayell submitted that the decision to cancel Mr Osman's authority is directly related to the original decision and is likewise flawed. He referred to a number of authorities in support of this contention. He seeks an order that the decision under review is "ultra vires" and accordingly, that it be set aside. 10 Mr Wozniak disputes Mr Osman's submissions that the decision cancelling the accreditation and subsequent events were "ultra vires". He contends that the original decision was regular and reasonable and based upon reasonable facts. Mr Osman was subsequently convicted of the offences and fined the amount set out. Mr Wozniak argues that at the time the decision was made, the decision was correct. At that time Mr Osman was an undischarged bankrupt. It may well be that at some later time the bankruptcy was annulled however that does not retrospectively make the decision of the Director General invalid. 11 Mr Wozniak further contends that when Mr Osman's bankruptcy was annulled in August 2000, he should have reapplied to the Ministry because he would need to prove to the Ministry that at that later time he was capable of satisfying the standards of financial viability, whether or not he was bankrupt. The simple fact that Mr Osman's bankruptcy was annulled does not affect the original decision. Accordingly, Mr Wozniak asks that Mr Osman's application be dismissed. Findings 12 The issue for determination is essentially the extent of the retrospective operation of the annulment of Mr Osman's bankruptcy. The law in relation to this issue was considered recently by Campbell J in Battenberg v Union Club [2005] NSWSC 242. In that matter his honour discussed a number of authorities that dealt with exceptions to the retrospective operation of the annulment of a bankruptcy that are recognised by the general law. He noted, however, that there are some limits to the type of action that will be held not to be reversed if a bankruptcy is later set aside. Some of the authorities discussed in Battenberg are relevant to the issue under consideration in this matter. 13 In Oates v Commissioner of Taxation 99 ALR 167 Hill J stated at 176 "it seems clear that it will not be correct to say that the consequence of annulment is that the bankruptcy is avoided for all purposes ab initio . Further, it is clear that an offence committed during the period in which the bankruptcy continues under s.43(2)(c) is still an offence notwithstanding the annulment: Director of Public Prosecutions v Ashley [1955] Crim LR" 14 A similar view was expressed in Re Hayes; Ex parte Hayes (1984) 59 ALR 219 at 223 "It was not contended by the applicant that an annulment means void ab initio , at least for all purposes. One reason is in s.154(2) [of the Bankruptcy Act 1966 (Cth)], whereby the validity of acts done by the trustee or any person acting under the authority of the trustee or of the court before the annulment is expressly preserved. Another is that an offence committed during the period of bankruptcy prior to an annulment is still an offence and is not undone retrospectively as it were by an order annulling the bankruptcy". 15 In the High Court decision in the matter of The Commissioner for Railways (New South Wales) v Cavanough (1935) 53 CLR 220 Rich, Dixon, Evatt and McTiernan JJ said, at 224-5: "Acts done according to the exigency of a judicial order afterwards reversed are protected: they are "acts done in the execution of justice, which are compulsive" ( Dr Drury's Case (1610) 8 Co Rep 141 b at p.143 a; 77 ER 688 at p.691). And proceedings which, although based upon a judgment, are brought to completion before its reversal are not avoided. For "collateral acts executory are barred, but not collateral acts executed" ( Dr Drury's Case (1610) 8 Co Rep 141 b; 77 ER 688)." 16 In Battenberg Campbell J observed that annulment of a bankruptcy has the potential to alter what would otherwise be the legal situation in a very wide variety of contexts. He urged caution in making quick generalisations about what is the effect of annulment. At paragraph 69 of the judgement he stated: "69 Treating an act in the law as having a retrospective effect has considerable artificiality in it – it involves saying that in the eyes of the law what happened is different to (and sometimes the opposite to) what, on more everyday standards, actually happened. However that sort of artificiality is inherent in the notion of an event which happened being "annulled". If Parliament has legislated that a bankruptcy will in some circumstances be annulled, it has legislated that this sort of artificiality will occur." 17 He further stated at paragraph 71 of the judgement: "71 The principles about when an action taken in reliance on a court judgment will be upset apply in the present case because the sequestration order which was made against the plaintiff is itself a court judgment. The protection that the general law gives to actions taken in reliance on a court judgment arises, in part, from two different considerations. One is that while ever there is a court order on foot, it is to be obeyed by those to whom it is directed. The other is that people ought be able to order their affairs on the basis that once a court decision has been given it is to be taken as correct." 18 In my view, these principles are particularly applicable in the circumstances of this matter. I am satisfied that the actions taken in cancelling Mr Osman's accreditation fall within the exceptions to the retrospective operation of the annulment of a bankruptcy that are recognised by the general law. 19 At the time the decision was taken to cancel Mr Osman's accreditation Mr Osman was an undischarged bankrupt. The Director-General of the Department of Transport was entitled to rely on that fact to determine that Mr Osman's accreditation to operate taxicabs should be cancelled. The fact that Mr Osman's bankruptcy was subsequently annulled does not act retrospectively to alter that situation or to make the Director-General's actions ultra vires. 20 In any event, section 63 of the Administrative Decisions Tribunal Act 1997 provides that in determining an application for a review of a reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it. Accordingly, a finding that the Director-General's actions were ultra vires would not preclude the Tribunal from considering other relevant material. Order The annulment of Mr Osman's bankruptcy does not operate retrospectively to cause the decision by the Director-General of the Department of Transport to cancel Mr Osman's accreditation to operate taxicabs to be ultra vires.