The Director of Civil Aviation v Air National Corporate Ltd

• Jurisdiction: New Zealand
• Judge: Arnold J
• Judgment Date: 17 February 2011
• Neutral Citation: [2011] NZCA 3
• Docket Number: CA48/2011
• Court: Court of Appeal
• Date: 17 February 2011

BETWEEN

The Director of Civil Aviation

Appellant

and

Air National Corporate Limited

Respondent

[2011] NZCA 3

Court:

Arnold, Ellen France and Harrison JJ

CA48/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from High Court decision which granted a stay on conditions. Respondent provided charter flights within NZ. The Director of Civil Aviation (“the Director”) completed an audit on the management of the respondent. Several matters concerning the safety and competency of the respondent were discovered. The Director suspended the respondent's air operator certificate for 10 working days to enable him to investigate operations. The respondent applied for judicial review of the decision and the High Court granted a stay of the Director's decision pending determination of the judicial review proceedings — whether the High Court could grant a stay under s8 Judicature Amendment Act 1972 (interim orders) given the prohibition in s66(3) CAA (Appeals to District Court) — whether the respondent had demonstrated it had a strong case and the decision to suspend was not reasonably open to the Director or was irrational.

Counsel:

K I Murray and J F Parnell for Appellant

S S Cook and K J Scott for Respondent

• A The appeal is allowed. The order made by the High Court staying the appellant's decision to suspend the respondent's air operator certificate pending the determination of its judicial review proceedings is quashed.

• B The respondent must pay the appellant costs for a standard appeal on a band A basis plus usual disbursements. We certify for two counsel.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Arnold J)

Introduction

1 On 28 January 2011 the appellant, the Director of Civil Aviation (the Director), wrote to the respondent, Air National Corporate Ltd (Air National), suspending its air operator certificate for 10 working days to enable him to investigate Air National's operations. The Director took this step under's 17 of the Civil Aviation Act 1990 (the Act). The consequence is that for the period of suspension Air National is unable to carry on its business of providing charter flights within New Zealand on behalf of Air New Zealand and others.

2 On 31 January 2011 Air National issued two sets of proceedings in respect of the Director's decision:

• (a) An appeal under's 66 of the Act to the District Court; and

• (b) An application for judicial review. In conjunction with this application Air National sought interim relief under's 8 of the Judicature Amendment Act 1972, namely a stay of the suspension order until the review application was determined.

3 Clifford J heard the contested stay application as a matter of urgency on 2 February 2011. The Judge granted a stay on conditions. 1 We heard the Director's appeal from this decision on 4 February 2011 and issued a results judgment allowing the appeal on 7 February 2011. We now give our reasons for doing so.

4 As will be apparent, this appeal was heard as a matter of urgency. While we have reached a firm view that the appeal should be allowed, the views we express about the merits of Air National's case and the statutory framework are necessarily tentative. Understandably in the circumstances, some points were not argued in any detail by the parties, and in any event we have not been able to consider them in depth.

Statutory context

5 The Director is the chief executive of the Civil Aviation Authority of New Zealand (the CAA). 2 Among the Director's responsibilities are:

• (a) Taking such action as may be appropriate in the public interest to enforce regulatory requirements, including carrying out inspections and monitoring; 3 and

• (b) Monitoring adherence within the civil aviation system to regulatory requirements in relation to (among other things) safety and security. 4

6 Sections 12, 15, 15A, 17 and 19 of the Act are of particular relevance in this context. Section 12 sets out the general obligations of participants in the civil aviation system. In his letter of suspension, the Director said that he considered the suspension was necessary in the interests of aviation safety because Air National was failing to meet its obligations under's 12. Before us, Mr Cook for Air National accepted that Air National had failed to meet its s 12 obligations in certain respects.

7 Section 15(1) empowers the Director to require operators of air services (among others) to undergo or carry out 'such inspections and such monitoring as the Director considers necessary in the interests of civil aviation safety and security?.The Director may carry out such inspections and monitoring him or herself. 5

8 Section 15A(1) provides:

Power of Director to investigate holder of aviation document

• (1) The Director may, in writing, require any holder of an aviation document to undergo an investigation conducted by the Director if the Director believes, on reasonable grounds, that it is necessary in the interests of civil aviation safety and security, and if the Director—

  • (a) has reasonable grounds to believe that the holder has failed to comply with any conditions of an aviation document or with the requirements of section 12; or

  • (b) considers that the privileges or duties for which the document has been granted are being carried out by the holder in a careless or incompetent manner.

9 Accordingly, in the present case the power to investigate was dependent on the Director believing on reasonable grounds that:

• (a) the investigation was necessary in the interests of civil aviation safety and security; and

• (b) Air National had failed to meet its obligations under's 12.

  Again, as we understand it, Mr Cook did not dispute that these two preconditions for the exercise of the power to investigate under's 15A were met in the present case.

10 Turning to s 17, relevantly it provides:

Power of Director to suspend aviation document or impose conditions

• (1) The Director may suspend any aviation document issued under this Act or rules made under this Act …, if he or she considers such action necessary in the interests of safety, and if he or she—

  • …

  • (b) is satisfied that the holder has failed to comply with any conditions of an aviation document or with the requirements of section 12;

  • …

• (2) Without limiting the general provisions of subsection (1), the Director may suspend any aviation document relating to the use of any aircraft, aeronautical product, or the provision of any service, or impose conditions in respect of any such document, if he or she considers that there is reasonable doubt as to the airworthiness of the aircraft or as to the quality or safety of the aeronautical product or service to which the document relates.

• (3) The suspension of any aviation document … under subsection (1) or subsection (2) remain in force until the Director determines what action, if any, referred to in subsection (4) is to be taken; but any such suspension … expire 10 working days after the date that the suspension … are imposed unless, before the expiry of that 10-working day period, the Director extends the suspension … for a further specified period.

• (4) The Director may take 1 or more of the following actions:

  • (a) impose conditions for a specified period:

  • (b) withdraw any conditions:

  • (c) suspend any aviation document for a specified period:

  • (d) revoke or partially revoke any aviation document under section 18:

  • (e) impose permanent conditions under section 18.

  • …

• (7) Any person in respect of whom any decision is taken under this section may appeal against that decision to a District Court under section 66 of this Act.

11 Finally, s 19 deals with the criteria for action taken under's 17. Relevantly it provides:

• (1) The provisions of this section shall apply for the purpose of determining whether an aviation document should be suspended … under's 17 …

• (2) Where this section applies, the Director may have regard to, and give such weight as the Director considers appropriate to, the following matters:

  • (a) the person's compliance history with transport safety regulatory requirements:

  • (b) any conviction for any transport safety offence, whether or not—

    • (i) the conviction was in a New Zealand court; or

    • (ii) the offence was committed before the commencement of this Act:

  • (c) any evidence that the person has committed a transport safety offence or has contravened or failed to comply with any rule made under this Act.

• (3) The Director shall not be confined to consideration of the matters specified in subsection (2) and may take into account such other matters and evidence as may be relevant.

• (4) The Director may—

  • (a) seek and receive such information as the Director thinks fit; or

  • (b) consider information obtained from any source.

• (5) If the Director proposes to take into account any information that is or may be prejudicial to a person, the Director shall, subject to subsection (6) of this section, as soon as practicable, but, in the case of the suspension of an aviation document … under section 17, no later than 5 working days after suspending the aviation document …, disclose that information to that person and give that person a reasonable opportunity to refute or comment on it.

• (6) Nothing in subsection (5) or subsection (7) requires the Director to disclose—

  • (a) any information, the disclosure of which would endanger the safety of any person; or

  • (b) any information or the fact of non-disclosure of that information, before suspending an aviation document or imposing conditions in respect of an aviation document under section 17.

  • …

12 There are several important points about ss 17 and 19:

We return to these aspects in the analysis section below.

• (a) The Director's power to suspend arises where he or she considers suspension is “necessary in the interests of safety” and one of the other enumerated preconditions is met. Given...