On 20 August 2010, the Civil Aviation Safety Authority (CASA) cancelled the Air Operator's Certificates (AOC) of both Avtex Air Services Pty Ltd (Avtex) and Skymaster Air Services Pty Ltd (Skymaster) following a fatal crash involving an aircraft operated by Skymaster which was attempting to make an emergency landing on Canley Vale Road near Bankstown Airport. An AOC is a permission granted by CASA to conduct certain commercial aviation activities.
In Avtex Air Services Pty Ltd v Civil Aviation Safety Authority [2011] AAT 61, Senior Member Fice of the Administrative Appeals Tribunal (Tribunal) affirmed CASA's decision to cancel Avtex's AOC having accepted evidence of a serious and imminent risk to air safety and breaches of conditions of Avtex's AOC, partly arising from the issues raised in an audit of Skymaster's operation.
Associated companies
Under the Civil Aviation Act 1988 (Cth) (the Act), CASA must be satisfied that certain key personnel in an organisation to which an AOC is granted have appropriate experience in air operations to conduct or to carry out the AOC operations safely. The expression "key personnel" is defined under s28(3) of the Act and it means the people, however described, that hold, or carry out the duties of the following positions in the AOC holder's organisation:
- the chief executive officer
- the head of the flying operations part of the organisation
- the head of the aircraft airworthiness and maintenance control part (if any) of the organisation
- the head of the training and checking part (if any) of the organisation
- any other position prescribed by the regulations.
With the exception of the position of the head of flying operations, Avtex and Skymaster shared the key personnel required by the Act. The companies also had common shareholders and operated out of the same hangar.
It was common ground between the parties that if Skymaster's AOC was cancelled, the operations of Skymaster could have immediately been transferred to Avtex.
Suspension and cancellation of AOC
In May 2010, CASA issued Avtex with a notice of proposed action to vary, suspend or cancel its AOC under s28BA of the Act following suspected breaches of the conditions of Avtex's AOC.
Prior to Avtex responding to the s28BA notice, an accident occurred that resulted in CASA conducting a special audit of Skymaster's operations and concluded that if Skymaster were to continue its operations under its AOC, that would result in a serious and imminent risk to air safety. That conclusion constituted grounds for CASA to vary, suspend or cancel Skymaster's AOC under s30DI of the Act. CASA also formed the view that, in light of the close relationship between Avtex and Skymaster, if Avtex continued its operations under its AOC, that would also result in a serious and imminent risk to air safety.
In applying the evidence raised in the audit of Skymaster's operations to determine the risk to air safety posed by Avtex, the Tribunal focussed on the influence that the common key personnel had on the safety of air operations of both entities. Despite the fact that the entities had different heads of flying operations, who had the responsibility to ensure that the operator's air operations were conducted in compliance with the Act and regulations, the Tribunal determined that it was inevitable that there would be some overlap of the two operations because of common key personnel. Further, there was evidence that the other key personnel had a dominant and negative influence on the respective heads of flying operations.
Despite Avtex's assertions otherwise, the Tribunal found that there was a significantly large overlap between the companies as a result of common key personnel, that the findings in the Skymaster audit were relevant to whether the continued operation of Avtex under its AOC would result in a serious and imminent risk to air safety.
Cancellation valid on two grounds
The Tribunal has jurisdiction to review decisions made by CASA which are described as reviewable decisions under s31 of the Act. The cancellation of a certificate granted or issued under the Act, such as an AOC, is a reviewable decision.
The first question for the Tribunal to determine was whether Avtex's operations presented a serious and imminent risk to air safety, if they were to continue. If that was found to be the case, CASA's decision to cancel the AOC under s30DI of the Act could be affirmed.
CASA also submitted that if the facts did not support such a finding, then the Tribunal should exercise other powers or discretions open to it, such as under s28BA(3) of the Act to make a decision that Avtex's AOC should be cancelled as a result of breaches of the conditions of its AOC. CASA had relied on s28BA(3) of the Act in its original show cause notice when considering whether to vary, suspend or cancel Avtex's AOC. Although Avtex responded to that show cause notice, CASA did not in fact make a decision under s28BA(3) of the Act as subsequent events, namely, the Canley Vale Road accident, heightened CASA's concerns to the extent that it proceeded under s30DI of the Act on the grounds of serious and imminent risk to air safety.
CASA cited the decision of Hill J in Secretary, Department of Social Security v Hodgson (1992) 108 ALR 322 as an example of the Tribunal's broad interpretation of the power granted to the Tribunal under s43(1) of the Administrative Appeals Tribunal Act 1975 (Cth). That section empowers the Tribunal to exercise all the powers and discretions conferred upon the original decision maker provided it does so for the purpose of reviewing a decision.
Although the decision under review was CASA's decision to cancel Avtex's AOC under s30DI, Senior Member Fice said there was clearly an association between the power which could have been exercised under s28BA(3) of the Act and the decision under review. Therefore, in exercising all the powers and discretions conferred upon the original decision-maker for the purposes of reviewing the cancellation decision, as an alternative to finding a serious and imminent risk to air safety, the Tribunal should also examine whether conditions of Avtex's AOC were breached and whether those breaches, if found, should result in a cancellation decision.
The evidence disclosed that the operations of both Skymaster and Avtex were unsafe and that Avtex had committed numerous breaches of the conditions of its AOC. Therefore, CASA's decision to cancel Avtex's AOC could be affirmed based on either of the two relevant sections of the Act, despite the original decision being based on s30DI of the Act alone.
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