Boyle v WorkCover Authority of New South Wales

NCAT Administrative and Equal Opportunity|2014-10-17

Solicitors: Rothwell Lawyers (Applicant) Crown Solicitors Office (Respondent) File Number(s): 1410449

reasons for decision

This is an application for the review of decisions made by WorkCover Authority of New South Wales ("WorkCover") to cancel the security clearance of Mr Gregory Boyle and to cancel the licences of Bronze Wing Ammunition Pty Ltd ("Bronze Wing") to manufacture and to import and export explosives.
The main issues in these proceedings are whether Bronze Wing breached a condition of its licences, whether Bronze Wing is a fit and proper person to hold its licences and whether Mr Boyle is a fit and proper person to hold his security clearance.

Police searches

On 12 February 2014, NSW Police officers executed a search warrant at the Wood Road property. Police found and seized approximately five tonnes of ammunition and 86 kilograms of class 1.3C explosive propellant.
On 13 February 2014, NSW Police officers executed a search warrant at the Barracks Road property. During the search, police officers saw two individuals packaging and unloading pallets of shotgun shells. Those individuals did not hold security clearances.
On 27 February 2014, a delegate for the Commissioner of Police wrote to Bronze Wing advising that its "Purchase / Sell" permit under the Firearms Act 1996 (NSW) had been revoked. The reasons for this decision included that Bronze Wing had stored ammunition at the Barracks Road property in breach of the conditions of the permit and that its employees had performed tasks, without authorisation, relating to possession of the ammunition. In these circumstances, the delegate was satisfied that it would not be in the public interest for Bronze Wing to continue to hold the permit.
On 6 March 2014, the Police charged Mr Casella with offences arising under the Firearms Act 1996, the Explosives Act 2003 and the Explosives Regulation 2013 (NSW).
On 18 March 2014, WorkCover advised Mr Boyle by letter that it had decided to cancel Bronze Wing's licence to manufacture and its licence to import, and to cancel Mr Boyle's security clearance. It relied upon s 21 of the Explosives Act 2003 for the cancellation decisions. It advised: "… based on the information provided by NSW Police, WorkCover is cancelling your Licence to Manufacture, Licence to Import/Export Explosives and your Security Clearance … as a result of being in breach of the General explosive licence and security clearance conditions under the NSW Explosives Act and Regulation."
Bronze Wing and Mr Boyle sought internal review of WorkCover's decisions. Those decisions were affirmed on internal review.
On 27 May 2014, Ms Tracey Rothwell was appointed as a director of Bronze Wing and, on 28 May 2014, Mr Casella resigned as director of Bronze Wing.
Bronze Wing and Mr Boyle applied to this Tribunal on 14 July 2014 for a review of WorkCover's decisions. They sought orders setting aside those decisions and reinstating Mr Boyle's security clearance and Bronze Wing's licences.
The Tribunal granted a stay of WorkCover's decisions on 25 August 2014 on the condition that WorkCover was satisfied that the applicants were operating in compliance with the applicable legislation. It was contemplated that WorkCover would conduct an audit of Bronze Wing to determine whether WorkCover could reach that state of satisfaction.
On 28 August 2014, Mr Casella transferred all of his shares in Bronze Wing to Rothcock Pastoral Company Pty Ltd. Ms Rothwell is the sole shareholder and director of Rothcock Pastoral Company Pty Ltd.
On 1 October 2014, Inspector Brooks and Senior Inspector Howie of WorkCover attended Bronze Wing's manufacturing plant to conduct an audit. Notwithstanding the stay, Bronze Wing was not at this time manufacturing. Following the inspection, WorkCover issued directions to the applicants.
On 2 October 2014, the condition of the stay was lifted until 17 October 2014. On 17 October 2014, WorkCover did not contest the continuation of the unconditional stay until the final hearing of the matter.

RELEVANT LEGISLATION

The Explosives Act 2003 provides, in Part 2, for certain offences relating to explosives and explosive precursors. The terms "explosive" and "explosive precursor" are defined in s 3 of that Act to mean any article or substance prescribed by the regulations as an explosive or explosive precursor (as appropriate) for the purposes of the Act. It is not in dispute that the ammunition manufactured by Bronze Wing was an "explosive" within the meaning of s 3(1) of the Explosives Act 2003.
Section 6(1) of the Explosives Act 2003, which is in Part 2 of that Act, provides: 6 Licences required for handling explosives and explosive precursors (1) A person must not handle an explosive or explosive precursor if: (a) the regulations require the handling to be authorised by a licence under this Act, and (b) the person is not authorised to do so by a licence under this Act. Maximum penalty: (a) in the case of a corporation - 500 penalty units, or (b) in the case of an individual - 250 penalty units or imprisonment for 12 months, or both.
The Explosives Regulation 2013 does require the handling of an explosive or explosive precursor to be authorised by a licence. Clause 17 of that Regulation provides: 17 Activities requiring licences A person handling an explosive or explosive precursor must be authorised to do so by a licence granted by the regulatory authority under the Act.
The "regulatory authority" is defined in s 4 of the Act to be, in this context, WorkCover.
The Explosives Act 2003 also provides that it is an offence for a natural person to handle explosives and explosive precursors in certain situations. Section 6A provides: 6A Security clearance must be held in certain circumstances A natural person must not handle any explosive or explosive precursor if: (a) the regulations require the person to hold a security clearance that is in force when handling the explosive or explosive precursor, and (b) the person does not hold a security clearance to handle the explosive or explosive precursor concerned. Maximum penalty: 250 penalty units.
By s 10A of the Explosives Act 2003, a natural person is required to have a security clearance before he or she is eligible to hold a licence under that Act, and a corporation is required to have at least one responsible person who has been granted a security clearance before it is eligible to hold a licence. WorkCover is empowered to grant licences and security clearances under s 11 of the Explosives Act 2003.
Clause 20 of the Explosives Regulation 2013 extends the authority conferred by a licence to employees of the licence holder and persons supervised by employees in certain situations. It provides: 20 Authority conferred by licence extends to other relevant persons (1) A licence is taken to authorise any person to handle explosives or explosive precursors in the same way as the licence holder is authorised to handle them by the licence, but only if the person: (a) is a natural person, and (b) handles the explosives or explosive precursors in the course of his or her employment by the licence holder or under the immediate supervision of a person employed or engaged by the licence holder to supervise the person, and (c) holds a security clearance that is in force or is acting under the immediate supervision of a person who holds a security clearance that is in force. (2) This clause is subject to any restrictions or further requirements specified in the licence or in this Regulation. (3) In this clause: employment includes an engagement or other arrangement, whether or not constituting a contract of employment.
Clause 22 of the Explosives Regulation 2013 provides for the authority conferred by a licence to manufacture. Clause 22(g), which is of particular relevance to these proceedings, provides: 22 Licence to manufacture A licence to manufacture authorises the licence holder to carry out the following activities: … (g) if premises are specified in the licence - storing the explosives or explosive precursors at the premises.
There is an equivalent provision in relation to a licence to import. Clause 23(2)(c) of the Explosives Regulation 2013 provides: (2) A licence to import also authorises a person to carry out the following activities for the purpose of importing explosives: … (c) if premises are specified in the licence - storing the explosives or explosive precursors at the premises.
WorkCover may cancel a licence or a security clearance under s 21 of the Explosives Act 2003. Section 21 provides as follows: 21 Cancellation of licences and security clearances The regulatory authority may cancel a licence or security clearance: (a) if the holder of the licence or security clearance: (i) is convicted of or found guilty of an offence against this Act or the regulations or a provision of a corresponding Act or regulation of the Commonwealth or of another State or Territory relating to explosives, or (ii) breaches a condition of the licence or security clearance, or (iii) surrenders the licence or security clearance to the regulatory authority, or (iv) supplied information which was (to the holder's knowledge) false or misleading in a material particular in, or in connection with, the application for the licence or security clearance, or (b) if the regulatory authority is of the opinion that the holder is no longer a fit and proper person to hold, or to continue to hold, the licence or security clearance, or (c) for any other reason prescribed by the regulations.
Section 24(1) of the Explosives Act 2003 provides, relevantly, that a person who is aggrieved with a decision under the Explosives Act 2003 relating to a licence or security clearance may apply to this Tribunal for an administrative review of the decision.

TRIBUNAL'S FUNCTION ON REVIEW

The applicants submitted that they had applied to this Tribunal for review (which they described as an "appeal") on the following bases: 1. The respondent had no proper basis for making the decisions; 2. The respondent failed to specifically identify the explosive category; 3. The respondent failed to exercise its discretion independently in an appropriate and proper manner; 4. The penalty imposed by the respondent was disproportionate to any alleged breach by Mr Boyle and Bronze Wing.
The applicant's submissions reflect a misconception that a review of a decision in the Tribunal is an appeal or something akin to an appeal. The Tribunal's function is to review the respondent's decision and to decide what the correct and preferable decision is having regard to the material then before it (Administrative Decisions Review Act 1997 (NSW), s 63(1)). It is therefore not necessary to identify errors or alleged errors made by the decision-maker, as the applicants have done. As Walker SM said in Stevens v WorkCover Authority of New South Wales [2014] NSWCATAD 202 at [16], another review of a decision made under the Explosives Act 2003: Hearings in this tribunal are de novo, in the sense that the tribunal is to consider the matter from the start, which includes taking into account new evidence that is brought before it. It is well established that the tribunal is not restricted to considering the material that was before the respondent at the time it made its decision, but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs [1979] AATA 179; (1979) 46 FLR 409.
As indicated above, the applicants also identified the "penalty" imposed by the respondent as being "disproportionate to any alleged breach". This reflects a misunderstanding of the nature of the licensing regime under the Explosives Act 2003. The decision to cancel a security clearance or licence is not a "penalty" but rather a decision made in the public interest. It is the exercise of a disciplinary power which has as its object protection of the public: Director General, Transport NSW v AIC [2011] NSWADTAP 65 at [17]. Because the purpose of the power of cancellation is protective rather than punitive, the Tribunal is not entitled to take into account any hardship caused by the cancellation of the applicants' licences when determining what is the correct and preferable decision: Lal v Director-General, Department of Transport [2001] NSWADT 74 at [47]; McMicking v Commissioner of Police, NSW Police Force [2014] NSWCATOD 95 at [108].

DECISION

There are three decisions of WorkCover the subject of review, being the decisions to cancel: 1. Bronze Wing's licence to manufacture; 2. Bronze Wing's licence to import/export explosives; and 3. Mr Boyle's security clearance.

Cancellation of Bronze Wing's licences

The respondent contends that the correct and preferable decision is to affirm the cancellation of Bronze Wing's licences on one or both of the following bases: 1. Bronze Wing breached a condition of the licence (Explosives Act 2003, s 21(a)(ii)), 2. the Tribunal is of the opinion that Bronze Wing is no longer a "fit and proper person" to hold, or to continue to hold, the licences (Explosives Act 2003, s 21(b)).

Breach of a condition

The respondent submitted that cl 20(1) of the Explosives Regulation 2013 imposes a "condition" on Bronze Wing's licence, within the meaning of s 21(a)(ii) of the Explosives Act 2003. The respondent provided very little explanation for why it had adopted that position.
The term "condition" is not defined in the Explosives Act 2003. Subsection 14(1) of that Act provides that licences may be granted unconditionally or subject to conditions. Subsection 14(3) provides that a licence is also subject to such conditions as are prescribed by the regulations.
Clause 20(1) of the Explosives Regulation 2013 does not use the term "condition". This term is used elsewhere in the regulation. For example, cl 18(2) provides that it is a condition of a licence granted to a natural person that the licence holder holds a security clearance that is in force and cl 19(2) provides that it is a condition of a licence granted to a corporation that there is at least one responsible person for the corporation. The omission of the word "condition" from cl 20(1) is a factor suggesting that the clause was not intended to impose a condition. However, that is not conclusive of the question of whether cl 20(1) in fact imposes a condition.
Clause 20(1) is concerned with the authority conferred by a licence. It provides that, if certain criteria are met, the licence "is taken to authorise any person to handle explosives or explosive precursors in the same way as the licence holder is authorised to handle them". It extends what would otherwise be the authority conferred by the licence, in that it authorises persons other than the licence holder to handle explosives and explosive precursors. It is not, in my view, a "condition" as that term is used in s 21(a)(ii) of the Explosives Act 2003. It does not directly impose any obligations on the licence holder.
The respondent also submitted that cl 22(g) of the Explosives Regulation 2013 imposes a "condition". Clause 22 provides that "[a] licence to manufacture authorises the licence holder to carry out the following activities" and then lists certain activities. The activity authorised by paragraph (g) of cl 22 is "if premises are specified in the licence - storing the explosives or explosive precursors at the premises."
For similar reasons to those given above, cl 22(g) is not and does not impose a condition. It is rather a provision defining the extent of the authority conferred by the licence. It authorises storage at premises specified in the licence, where premises are specified in the licence.
Whilst the respondent did not contend that Bronze Wing's licence should be cancelled because it breached any other condition, the Tribunal notes the respondent's position that Bronze Wing's licences are subject to conditions contained in the document entitled "General explosive licence and security clearance conditions under the NSW Explosives Act and Regulation - September 2013". None of those conditions stipulates that a licence holder must comply with the Explosives Act 2003 or the Explosives Regulation 2013.
For these reasons, the Tribunal is not persuaded that either of Bronze Wing's licences should be cancelled under s 21(a)(ii) of the Explosives Act 2003.

No longer fit and proper person

The other basis upon which the respondent said that the Tribunal should affirm its decision to cancel Bronze Wing's licences is that Bronze Wing is no longer a fit and proper person to hold either licence. The respondent relied upon the following contentions in support of its cancellation decisions: 1. Bronze Wing has acted dishonestly, without regard to the law and recklessly by storing large amount of explosives in places which were not authorised by its licence, and such conduct was dangerous; 2. Bronze Wing acted with disregard to the law and recklessly over a long period of time by having multiple people handle explosives without security clearances and without being supervised by someone with a security clearance; 3. Mr Boyle, Bronze Wing's nominated responsible person for its licences, was aware of this conduct and chose not to inform WorkCover of it; 4. Ms Rothwell did not address these matters in her evidence, has not acknowledged the company's past breaches and has not given evidence capable of satisfying the Tribunal that such conduct will not be repeated by Bronze Wing; 5. the Tribunal cannot be confident that the breaches will not be repeated by Bronze Wing in light of evidence from Mr Boyle and Ms Rothwell indicating that they do not have proper familiarity with the explosives legislation.
The applicants submitted that it was the responsible person, and not the directors and shareholders of Bronze Wing, who was the relevant person to consider in any determination as to whether Bronze Wing is a fit and proper person to hold a licence. They also submitted, with some apparent inconsistency, that any consideration of Bronze Wing as a fit and proper person to hold a licence must consider the current directorship of Bronze Wing, rather than the character or conduct of its former director, Mr Casella. They said that there was no evidence to indicate that Ms Rothwell, the current director, was not a fit and proper person.
The applicants said that matters which were important in determining whether a person is fit and proper include the risk to the community, the ability to act in accordance with the "required guidelines" and the person's propensity to reoffend (relying upon cases concerning licences issued under the Firearms Act 1996). For reasons which are set out later in this decision, they submitted that all those factors indicated that Bronze Wing was a fit and proper person to hold its licences.
It is important not to approach the consideration of a person's fitness and propriety as if it could be determined solely by reference to whether a person satisfies certain criteria which are not set out in the legislation. As the High Court observed in Hughes and Vale Pty Ltd v New South Wales (No. 2) (1955) 93 CLR 127 at 156, it would be "unwise to attempt any definition of the matters which may legitimately be inquired into" when determining fitness and propriety. The expression "takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities" (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, Toohey and Gaudron JJ at 380).
The cases relied upon by the applicants acknowledge that the Tribunal's discretion in determining whether a person is fit and proper is a broad one (see, for example, Lane v Commissioner of Police, NSW Police Force [2013] NSWADT 85 at [7]; Nakad v Commissioner of Police NSW Police Force [2013] NSWADT 169 at [29]). There is nothing in those cases which suggests that fitness and propriety should be determined by reference only, or primarily, to the three matters selected by the applicants. That is not to say that those matters are not of relevance, but that the applicants' fitness and propriety to hold a licence or security clearance under the explosives legislation is to be considered from a broader perspective.

Meaning of "fit and proper" and application to corporate licensee

The term "fit and proper" is commonly used in legislation and has frequently been considered by appellate courts. In Hughes and Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 at 156-157, a joint majority of the High Court (Dixon CJ, McTiernan and Webb JJ) observed of the expression "fit and proper": "The expression 'fit and proper' is of course familiar enough as traditional words when used with reference to offices and perhaps vocation. But their very purpose is to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty, knowledge and ability ... When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances."
This Tribunal, and the Administrative Decisions Tribunal before it, has often had occasion to consider the meaning of the term "fit and proper person" in the context of reviewing various licensing decisions. In Haining v Commissioner of Police, NSW Police Service [1999] NSWADT 6 at [41], O'Connor DCJ observed that "[w]hether a person is 'fit and proper' to hold a licence in a regulated industry will be affected by general considerations relating to the character of the person, special considerations that take account of the nature of the industry in issue and the public policy objectives leading the legislature to regulate the industry."
The "nature of the industry in issue" and the "public policy objectives leading the legislature to regulate the industry" are relevant in this case. As Montgomery JM observed of the Explosives Act 2003 in Cosgrove v Chief Executive Officer, WorkCover New South Wales [2007] NSWADT 13 at [53]: "The Act recognises the particularly high risks associated with explosives and the potential for the misuse of explosives. It is intended to address the particular public safety issues related to explosives and explosive precursors and concern about the safe-keeping of dangerous goods."
A person's fitness and propriety to hold a licence under the Explosives Act 2003 is to be considered in light of the legislature's purpose of minimising the high risks associated with explosives and explosive precursors, and addressing related public safety issues, through a licensing regime.
Another issue raised by the cancellation of Bronze Wing's licences is how a person's fitness and propriety is to be assessed when the person in question is a corporation. This was an issue which arose in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 ("ABT v Bond"), after the Australian Broadcasting Tribunal revoked the licences of corporate licensees associated with Mr Bond as well as revoking Mr Bond's licence. It did so pursuant to a provision which allowed the Tribunal to revoke a licence if "satisfied that the licensee … is no longer a fit and proper person to hold the licence". The Tribunal found that Mr Bond himself was not a fit and proper person to be a licensee. It then found that, by reason of Mr Bond's capacity to control the composition of boards of directors of the licensee companies, and his position as a key executive within the corporate structure, Mr. Bond's unfitness compelled the conclusion that the companies were not fit and proper persons to hold their licences.
Mr Bond and the licensee companies sought review of the Australian Broadcasting Tribunal's decisions in the Federal Court. A Full Federal Court allowed the applications in part and set aside the Tribunal's holdings in relation to Mr Bond and the corporate licensees (Bond v Australian Broadcasting Tribunal (1989) 89 ALR 185). The Tribunal appealed to the High Court.
Mason CJ (with whom Brennan and Deane JJ agreed) considered the extent to which the character or conduct of a director having a degree of control over a company may be taken into account for the purposes of assessing the fitness and propriety of the company and said (at 349): "The degree of an individual's capacity for control may not be so great as to warrant an inference that his character should be identified automatically with that of the licensee; in that event it would be necessary to look to the character and performance of the directors and the management. In another case, where the capacity of the individual for control of the licensee is great, the inference may be justified without examining the character and performance of the directors and the management of the licensee."
Toohey and Gaudron JJ made some general comments about the meaning of the expression "fit and proper person" (at 380), before turning to the application of that expression in the circumstances of the case: "The expression 'fit and proper person', standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of 'fit and proper' cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question."
Their Honours then considered the approach to be taken to the fitness and propriety of a corporate entity (at 382-383): "When the question is whether, having regard to its character or reputation, a company is fit and proper, the answer may be given by reference to the conduct, character or reputation of the persons by and through whom it acts or who are otherwise relevantly associated with it. The identity of the persons relevant to the character and reputation of a company will necessarily vary according to the circumstances of the company under consideration. At one extreme, if a person regularly exercises control in all important matters affecting the company's activities, then, ordinarily, the question will be sufficiently answered by reference to that person. At the other extreme, if no person is in a position of control or if one person, although in a position to exercise control, regularly delegates that control to others, then it will ordinarily be necessary to have regard to the persons who manage the company's affairs and activities. The question whether it is sufficient to have regard to one person or necessary to have regard to others when determining whether a company is fit and proper is one that depends on the circumstances of the company and not on any legal requirement imported by the expression 'fit and proper'. It follows that, in appropriate circumstances, the question of the fitness and propriety of a company to hold a commercial licence under the Broadcasting Act may be determined by reference to the conduct, character or reputation of a single person associated with it."
The respondent also relied upon a decision of the Court of Appeal of the Australian Capital Territory in Creaser v Savannah Associates Ltd [2003] ACTCA 26. That case involved an application for judicial review of refusals to grant a corporate applicant permits required for the purpose of importing, keeping and selling fireworks. The ACT Court of Appeal referred to ABT v Bond and observed at [19]: "Where the context of the 'fit and proper person' test is an application to import a substantial quantity of explosive material, it seems to us that the process of enquiry suggested by the High Court in Australian Broadcasting Tribunal v Bond would require the decision maker to be satisfied that the person or persons in effective control of the company was or were fit and proper, in the sense of being an appropriate person or persons to have control of such material."
There is nothing in the Court's decision to indicate that the dangerous goods legislation considered in that case included a requirement that a corporate licensee have a "responsible person" or equivalent.
The conduct, character and reputation of Ms Rothwell, as manager and effective owner of Bronze Wing, and the conduct, character and reputation of Mr Boyle, as the responsible person for Bronze Wing, are both relevant to the question of whether Bronze Wing is a fit and proper person to hold its licences.
The peculiar characteristics of the explosives legislation in New South Wales mean that a responsible person for a company exercises "effective control" in relation to the company's licensed activities. A responsible person for a corporation must be a natural person who is concerned in the management of the corporation and who has satisfied the corporation that he or she has the relevant knowledge, experience and qualifications to supervise the activities authorised by the licence (Explosives Regulation 2013, cl 19(4)(b) and (d)). A company may have more than one responsible person but Bronze Wing only has one (being Mr Boyle). Although the company may nominate an additional or a substitute person as a responsible person, Bronze Wing has not done so (Explosives Regulation 2013, cl 19(6)). WorkCover may decline to accept a nomination if not satisfied that the nominee has the relevant knowledge, experience and qualifications to carry out the activities authorised by the licence (Explosives Regulation 2013, cl 19(8)). The requirements that the responsible person is concerned in the corporation's management and has the relevant, knowledge, experience and qualifications to supervise licensed activities, indicate that the character and conduct of the responsible person is relevant to a company's fitness and propriety to hold a licence under the explosives legislation.
To the extent that Mr Boyle implicitly or explicitly authorised conduct of Bronze Wing prior to Mr Casella's resignation as a director of the company, that conduct is relevant to Bronze Wing's present fitness and propriety. Conduct of Bronze Wing of which Mr Boyle was not aware at the time may also be relevant in some circumstances, such as where it may be concluded that Mr Boyle or Ms Rothwell are now sanctioning or defending the conduct. For these reasons, it is relevant to consider the respondent's allegations that Bronze Wing stored ammunition unlawfully and that it had people handle explosives unlawfully in and prior to February 2014, notwithstanding that the sole director and sole shareholder at that time, Mr Casella, is no longer a director or shareholder of the company.

Storing ammunition at place not authorised by licence

The respondent submitted that Bronze Wing acted contrary to cl 22(g) of the Explosives Regulation 2013 by storing ammunition otherwise than at premises authorised by its licences. It said that Bronze Wing did this by storing ammunition at the Barracks Road property, by storing it in shipping containers at the Doug McWilliams Road property (which were not included in the security plan Bronze Wing provided to WorkCover), and by storing ammunition and propellant at the Wood Road property.

Alleged storage at Barracks Road property

The evidence before the Tribunal was that, on a number of occasions in 2013 and 2014, after Bronze Wing had received invoices for the purchase of ammunition, Bronze Wing arranged for it to be transported to and packaged at the Barracks Road property by employees of Casella Management. The respondent submitted that, in effect, Bronze Wing expanded its operation into the Barracks Road property, which it illegally used to store and pack the explosives it manufactured. It said that the repeated "breaches" of cl 22(g) of the Explosives Regulation 2013, which occurred when Bronze Wing stored and packed ammunition at the Barracks Road property, indicated that it was not a fit and proper person to hold a licence.
Mr Boyle gave evidence that, in 2013 and 2014, finished product was regularly despatched from the Doug McWilliams Road property to the Barracks Road property after it had been sold. He said that the process was that Bronze Wing's accountant, Ms Shedrina, contacted an employee of Casella Management once she had received an invoice from a customer. The employee then came to the Doug McWilliams Road property to pick up the finished product and transport it by truck to the Barracks Road property. Mr Boyle acknowledged that he authorised the despatch from the Doug McWilliams Road property.
Mr Boyle also gave evidence that pallets of ammunition were sometimes held at the Barracks Road property for a number of days before they were picked up for delivery to the customer. He said he thought Barracks Road was secure because it had a separate PIN requirement for security, independent locks and security devices on doors. He said that a Mr Turner, who was an employee of Casella Management and not an employee of Bronze Wing and who did not have a security clearance, was transporting the ammunition.
The respondent adduced evidence which it said supported its contention that Bronze Wing stored ammunition at the Barracks Road property because it had insufficient space at the Doug McWilliams Road property.
The Assistant State Inspector - Explosives, of WorkCover, Inspector William Brooks, gave evidence of a conversation he had with Mr Boyle on 1 October 2014 in which he says that Mr Boyle told him that the shot shells stored at Barracks Road were "the overflow from the manufacturing" because "we just didn't have enough room."
Senior Inspector Susan Howie of WorkCover also gave evidence of a conversation she had with Mr Boyle on 1 October 2014 in which Mr Boyle told her that production of ammunition by Bronze Wing had increased by early 2014 and the shipping container on the Doug McWilliams Road property, in which Bronze Wing held ammunition, was no longer large enough to hold the amount of finished product being produced. She also reported him as saying that 30 days' worth of excess stock (being finished product - shot shells) was held at Barracks Road and that storage at the Barracks Road property was not a "one off".
Sergeant Brett Ryan gave evidence that, on 12 February 2014, whilst executing a search warrant at the Wood Road property, he had a conversation with Mr Casella during which Mr Casella pointed to pallets of 12-gauge shotgun ammunition inside a shed and said: "We're making pallet racking and we have an overflow so we put it here and locked it up in the shed for safe keeping." Mr Casella told Sergeant Ryan that the ammunition came from the Doug McWilliams Road property.
Mr Casella acknowledged whilst under cross examination that Bronze Wing was running out of space at the Doug McWilliams Road property "to a degree" and also gave affidavit evidence that it had become evident that those premises were "inadequate for the near future". He said that ammunition was stored at the Barracks Road property in a cool room within a shed and that pallets of ammunition were taken to the shed to be wrapped and prepared for transportation. He said the pallets might be there for a day whilst being packaged. Mr Casella also gave evidence that, in 2013, ammunition was regularly packaged at the Barracks Road property by him or any of about five other people employed by or associated with Casella Management, all of whom had a firearms licence. In 2014, an employee of Casella Management, Mr Manchinelli, did the packaging for 10 to 14 days before the police search of the Barracks Road property.
Mr Boyle told the Tribunal that Bronze Wing used shipping containers at the Doug McWilliams property for storage because Bronze Wing had run out of storage room inside the factory premises. Mr Boyle also said that Bronze Wing had stored consumables at the Barracks Road site in 2013 because there was insufficient room at the Doug McWilliams Road property.
Both Mr Boyle and Mr Casella denied having said that there was an "overflow" of production at the Doug McWilliams Road property.
The respondent tendered a DVD recording the conversation between Sergeant Ryan and Mr Casella in the Wood Road shed. On the DVD, Mr Casella can be clearly heard telling Sergeant Ryan "we have an overflow" as Sergeant Ryan reported. I accept Inspector Brooks's evidence that Mr Boyle also told him in October 2014 that there was an "overflow from the manufacturing". This is consistent with Mr Boyle's evidence that Bronze Wing had insufficient room to store ammunition and consumables inside the factory premises at the Doug McWilliams Road property. His denial that he used the word "overflow" appears to have been made in order to support his claim that ammunition which had been sold was not stored at the Barracks Road property but was in transit. Inspector Brooks has no reason to invent the word "overflow", it is consistent with the language used by Mr Casella and it is consistent with Mr Boyle's evidence concerning the lack of space at the factory premises.
The applicants' position was that the Barracks Road property was not a storage facility but a transit facility, and it was a secured site in accordance with the "Australian Standards." They said that the "unchallenged evidence" of Mr Casella and Mr Boyle was that Bronze Wing's ammunition was stored at the licensed premises and not at the Barracks Road property. They also submitted that, once the ammunition was sold and left the Doug McWilliams Road property, it was in transit and Bronze Wing had no further responsibility for it.
The only place where Bronze Wing was entitled to store ammunition in accordance with its manufacturing licence was the Doug McWilliams Road property (Explosives Regulation 2013, cl 22(g)). This was also the only place where Bronze Wing was entitled to store ammunition in accordance with its import/export licence (Explosives Regulation 2013, cl 23(2)(c)). It was an offence for Bronze Wing to handle explosives unless authorised to do so by a licence under the Explosives Act 2003 (Explosives Act 2003, s 6(1); Explosives Regulation 2013, cl 17). "Handling" explosives includes storing ammunition (Explosives Act 2003, s 3(1)).
The evidence establishes that, as the respondent submitted, Mr Boyle and Mr Casella were aware of and sanctioned the practice of packaging ammunition at the Barracks Road property and leaving it there until it could be delivered to a customer. This occurred regularly in 2013 as well as in early 2014 and the ammunition was sometimes there for a number of days. I accept the respondent's position that this occurred due to shortage of space at the Doug McWilliams Road property.
The applicants' argument that Bronze Wing was not storing the ammunition because it had been sold is not persuasive. If that were so, a licence holder would have no responsibility for the handling of ammunition after an invoice had been received from a customer in relation to it and, possibly, the ammunition had been allocated to the customer. This cannot have been the intention of the legislature. The applicants did not point to any particular provision of the Explosives Act 2003 which they said should be interpreted so as to apply only in respect of ammunition which had not been sold. Whilst the basis for the applicants' submission was not entirely clear, it appeared to be that it was implicit in the legislation as a whole that a licence holder's obligations only extended to explosives or explosive precursors owned by the licence holder. Such an interpretation of the Explosives Act 2003 would not be consistent with the clear purpose of the legislation to ensure the safe handling of explosives and explosive precursors.
Nor am I persuaded that Bronze Wing had no responsibility for the ammunition because it was "in transit." The ammunition had not been packaged and was not ready for shipping to the customer. It is arguable that once the ammunition was collected by a Casella Management employee from the Doug McWilliams Road property, it was being handled and stored by Casella Management. However, Bronze Wing may only act through employees and contractors or agents. It therefore needs to be considered whether Casella Management was storing the ammunition on behalf of Bronze Wing and/or at its direction.
The evidence indicates that there was a high degree of cooperation between the companies in which Mr Casella had an interest, and that Casella Management and Casella Wines often acted, at Mr Casella's direction, in Bronze Wing's interests.
Mr Casella gave evidence that he arranged for Casella Management to provide Bronze Wing with the initial capital to obtain its licence to manufacture. It also appears from Mr Casella's evidence that Bronze Wing used the Barracks Road property (which belonged to Casella Management) for its own purposes. He refers, in his affidavit, to "the expansion of BW's sales and the use of Barracks Road as the packaging and transportation warehouse centre for BW's product". Mr Casella also referred to preparing the Barracks Road property to take over from Doug McWilliams Road as the new manufacturing plant. This again suggests that Bronze Wing could use the Barracks Road property as it wished.
Mr Boyle gave evidence that the Barracks Road property was used by Bronze Wing for the storage of components, merchandise and packaging, although he denied that it was used for the storage of Bronze Wing's ammunition. This indicates that, at least in Mr Boyle's view, it was Bronze Wing which was storing those goods at the Barracks Road property and not Casella Management. It is difficult to see the basis for a distinction in relation to the explosives which were present at the Barracks Road property.
Mr Boyle and Mr Casella both knew that ammunition, which had been sold by Bronze Wing, was kept at the Barracks Road property, sometimes for a day or more. They both authorised this arrangement. In these circumstances, I am satisfied that Bronze Wing stored the ammunition at the Barracks Road property, notwithstanding that Casella Management owned that property and that employees of Casella Management handled the explosives at that property.
The applicants relied upon cl 48(2)(a) of the Explosives Regulation 2013, which provides that a person who holds a licence or a permit under the Firearms Act 1996 (other than a firearms collector licence) that authorises the person to possess or use a firearm is not required to be authorised by a licence in order to possess, use, store or transport ammunition. They submitted that the firearms licence they said Mr Manchinelli held "authorised him to possess ammunition at Barracks Road while the ammunition was conveyed and/or stored in its supply and delivery to BW customers".
The respondent said in reply that "cl 48(2) of the Explosives Regulations is of no assistance: … In short, there is no evidence that Bronze Wing (or any other relevant person) had a relevant licence and/or permit under the Firearms Act for the purpose of cl 48(2)".
Mr Manchinelli gave evidence that he held a firearms licence and provided the Tribunal with a copy of that licence. However, Mr Manchinelli's firearms licence does not affect the application of cl 48(2) of the Explosives Regulation 2013 to Bronze Wing. While Mr Manchinelli's firearms licence may have authorised him to handle the ammunition (an issue which the Tribunal does not need to determine), it did not authorise Bronze Wing to use Mr Manchinelli to store ammunition offsite for the purposes of its manufacturing or import/export activities. Further, the evidence establishes that six other people handled the explosives at the Barracks Road property to the knowledge of Mr Casella and their firearms licences are not in evidence.
There was evidence that Bronze Wing held a permit under the Firearms Act 1996. It appears from the submissions that the respondent regarded this as Mr Boyle's permit.
Mr Boyle and Bronze Wing's accountant, Ms Shedrina, gave evidence that Bronze Wing was the holder of a licence to purchase and sell ammunition issued under the Firearms Act 1996. The copy of the firearms permit annexed to both Ms Shedrina's and Mr Boyle's affidavit, Permit No 410546973, is addressed to Bronze Wing at the Doug McWilliams Road property and states that its date of issue is 27 August 2011 and its expiry date is 27 August 2016. However, it specifies that the permit holder is Mr Boyle. It also states that it "is subject to the terms set out in the Notice of Authority and Conditions".
The respondent provided a copy of the permit which also contains the Notice of Authority and Conditions. These are also addressed to Bronze Wing. The Notice states: "This permit authorises the permit holder to possess, purchase and sell ammunition at the premises specified on the permit." It states that those authorised premises are the Doug McWilliams Road property and that the authorised persons are Gregory Charles Boyle, Permit Holder.
Mr Boyle gave evidence that he does not hold a personal firearms licence.
Sergeant Ryan gave evidence that, on 28 February 2014, he received notification of the revocation of the Bronze Wing firearms ammunition permit number 410546973. The revocation notice annexed to his affidavit and addressed to Bronze Wing states that "[t]he Ammunition Purchase and Sell Permit authorises you to possess, purchase and sell ammunition at the premises specified on the Permit. The premises specified on your permit is, 94 Doug McWilliams Rd, Yenda NSW 2681". The "you" referred to can only be, in the context, Bronze Wing.
I am satisfied that Bronze Wing held Ammunition Purchase and Sell Permit number 410546973 from 27 August 2011 until its revocation on 28 February 2014. There is no evidence as to why the "permit holder" is described on the permit as Gregory Charles Boyle, but the permit is addressed to Bronze Wing and the evidence of Mr Boyle, Ms Shedrina and Sergeant Ryan, and the revocation notice, all indicate that the holder was in fact Bronze Wing.
The permit held by Bronze Wing does not, however, authorise it to possess or use a firearm. Rather, it authorises Bronze Wing to possess, purchase and sell ammunition at the Doug McWilliams Road property. In these circumstances, cl 48(2)(a) of the Explosives Regulation 2013 does not assist Bronze Wing.
For the above reasons, I find that Bronze Wing stored ammunition at the Barracks Road property after it had been sold, and that this was not authorised by its licences. Bronze Wing was thereby handling the ammunition in contravention of s 6(1) of the Explosives Act 2003. Storage of ammunition in shipping containers
The respondent said that Bronze Wing stored a large amount of ammunition in shipping containers at the Doug McWilliams property in breach of cl 22(g) of the Explosives Regulation 2003, in circumstances where the shipping containers were not identified in Bronze Wing's security plan. The respondent submitted that such storage also breached cl 84 of the Explosives Regulation 2003, which provides that explosives must be kept in a "secure magazine". The respondent said that by using the Barracks Road property and the shipping container for storage repeatedly over a period of two years, Bronze Wing has repeatedly disregarded and acted in contravention of laws ensuring public safety (see Tannous v Commissioner of Police [2011] NSWADT 116 at [37], a review under the firearms legislation).
Inspector Brooks gave evidence that, on a visit to the Doug McWilliams Road property on 1 October 2014 to inspect the site, he observed six steel shipping containers in the compound yard, three of which had a Class 1 "Explosives" diamond shaped sign. He said that Mr Boyle told him that the containers marked with a diamond are "used to hold the finished or manufactured product ready to ship out".
The applicants did not dispute that there were shipping containers on the Doug McWilliams Road property or that they were used to store ammunition from the time production commenced at the Doug McWilliams Road property. Nor did they dispute that the shipping containers were not identified in the security plan submitted by Bronze Wing to WorkCover when Bronze Wing applied for its licences.
Mr Boyle gave evidence that the "finished product" was stored in a shipping container because there was not enough room inside the factory grounds, and that it sometimes remained there for a number of days. Neither Mr Boyle nor Mr Casella informed WorkCover that Bronze Wing was storing ammunition in shipping containers. Mr Boyle said he did not think that notifying WorkCover was necessary.
The applicants submitted that, prior to granting Bronze Wing's licence, WorkCover inspected the licensed premises with two of the shipping containers in place and that, in granting the licence, approved the facility and the site plans with the shipping containers in situ. It was reasonable, they said, for Mr Boyle to believe an extra container could be added without advising WorkCover. They also said that an inspector inspected the shipping containers at the licensed premises, and that the evidence of Inspector Brooks was that the breaches identified by him were minor and not warranting the cancellation of a licence. In those circumstances, the applicants contended, it was disingenuous of the respondent to now rely upon what it previously accepted to be a minor breach not warranting cancellation of a licence or security clearance.
Bronze Wing's storage of ammunition in shipping containers on the Doug McWilliams Road property was not sanctioned by its security plan. Storage of the ammunition in shipping containers meant that correct "details of the facilities, systems and procedures in place for the safe and secure handling of the explosives or explosive precursors concerned" had not been submitted to WorkCover in that plan (Explosives Regulation 2003, cl 35(1), (2)(a)). This is not, in my view, a "breach" of cl 22(g) of the Explosives Regulation 2003. However, it is a breach of Bronze Wing's obligation under cl 70 of the Explosives Regulation 2003 to ensure that the requirements of, and procedures specified in, its security plan are observed, and that all activities under the licence are undertaken in accordance with the security plan.
Mr Boyle's apparent belief that he did not need to advise WorkCover when using or adding a shipping container for the purposes of storing ammunition is not, in my view, reasonable. Mr Boyle was responsible for preparing and submitting the security plan, and ensuring that Bronze Wing acted in accordance with it. The circumstance that a WorkCover inspector visited the premises with a shipping container "in situ" does not assist Bronze Wing. There is no evidence that the inspector was informed that the shipping container would be used to store ammunition.
There was insufficient evidence about the alleged differences between the characteristics of a "secure magazine" (as defined in cl 84(2) of the Explosives Regulation 2003) and the characteristics of the shipping container in question for me to make a finding about whether Bronze Wing failed to comply with its obligation under cl 84(1)(a) to ensure that explosives are kept in a secure magazine. Inspector Brooks's evidence indicates that a shipping container may not be a secure magazine. However, given the lack of detailed evidence about this, I have not taken this alleged breach into account in coming to my decision. Alleged storage of explosives at Wood Road property
The respondent said that Bronze Wing has, on at least one occasion, used the Wood Road property to store large quantities of ammunition. Mr Casella gave evidence that he moved five pallets of ammunition from the Barracks Road property to the Wood Road property prior to 12 February 2014, when they were found there by police. Boxes of propellant were also found at the Wood Road property during the search, one of which Sergeant Ryan said had a Bronze Wing marking on it. In the respondent's submission, by this conduct, Bronze Wing was acting in contravention of the "condition" in cl 22(g) of the Explosives Regulation 2003.
The applicants submitted that neither the ammunition nor the propellant at the Wood Road property was the property of Bronze Wing. They also said that, because the ammunition was class 1.4C, and was stored in a secured shed in accordance with the definition of "secure premises" under the Australian Standards, it was lawful.
There was a dispute between the parties as to whether the propellant found at Wood Road belonged to Bronze Wing. Mr Boyle gave evidence that the stamping on the outside of the packaging was different from the stamping on the outside of the packaging of Bronze Wing ammunition. He also gave evidence that he had performed a monthly reconciliation of propellant for Bronze Wing from the time it received its manufacturing licence and the quantities balanced. Mr Casella told the Tribunal that, when he saw the propellant at the Wood Road property, he had no idea where it had come from. Sergeant Ryan gave affidavit evidence that, as the boxes of propellant were being removed by police from Wood Road, he saw that one of the boxes had "ATT Bronze Wing" written in black on white paper stuck to one of the boxes. He said in cross examination, however, that he could not say who owned the propellant. Mr Casella said in cross examination that he did not see a sticker when he moved the boxes of propellant and he also said that the police had confirmed that it was not Bronze Wing's powder.
Whilst Sergeant Ryan's evidence indicates that the boxes were likely to have been Bronze Wing's, the presence of a sticker on one box is not conclusive. Taking the evidence as a whole, I am not satisfied that the propellant belonged to Bronze Wing. Even if it did, there is no evidence that anyone other than Mr Casella knew about the storage of the propellant at the Wood Road property.
The parties agreed that the ammunition found by police at the Wood Road property belonged to Bronze Wing. Mr Casella's evidence was that the ammunition remained there for several days. Bronze Wing was therefore storing ammunition at a place other than that authorised by its licences, and was handling the ammunition in contravention of s 6(1) of the Explosives Act 2003.

Packaging and transport by individuals without a security clearance

Another matter on which the respondent relied for its submission that Bronze Wing is not a fit and proper person to hold a licence was its allegation that Bronze Wing authorised individuals without a security clearance, who were not supervised by a person with a security clearance, to transport and package explosives. To reiterate, cl 20 of the Explosives Regulation 2003 extends the authority conveyed by a licence to a natural person who handles explosives in the course of his or her employment with a licence holder, or under the supervision of a person employed or engaged by the licence holder, and either holds a security clearance or acts under the supervision of the holder of a security clearance. Bronze Wing "breached" cl 20(1), in the respondent's submission, by authorising Casella Management's employee, Mr Manchinelli, to pack ammunition belonging to Bronze Wing at the Barracks Road property, and to transport it there, without a security clearance and without being supervised by someone with a security clearance. It also breached cl 20(1), according to the respondent, when on numerous occasions in 2013 and 2014 Mr Casella and at least five other men also packed and transported ammunition without a security clearance or the required supervision.
There was no dispute that the ammunition was handled and transported by Mr Manchinelli, Mr John Veit and other employees of Casella Management on a regular basis in 2013 and 2014 and that, at the time, those persons did not hold a security clearance and were not supervised by a person holding a security clearance. Mr Casella and Mr Boyle were aware of this practice and authorised or sanctioned it.
The applicants submitted that, in the circumstances, there was no requirement for the workers at the Barracks Road property to be supervised or to have a security clearance when handling ammunition which had been sold by Bronze Wing. They said that Bronze Wing was not responsible for the ammunition because it had been sold and was in transit. The ammunition at Barracks Road property was, in their submission, under the control of Casella Management. Mr Manchinelli and Mr Veit were employees of Casella Management and not under Bronze Wing's control or supervision.
The applicants also said that the packaging of the ammunition was authorised under the firearms legislation. The applicants' position was that Mr Manchinelli was authorised by his firearms licence to possess, use, store and transport the ammunition pursuant to cl 48 of the Explosives Regulation 2013. Casella Management was also authorised to handle the ammunition pursuant to s 65 of the Firearms Act 1996 as the Barracks Road property was a warehouse within s 65(4) and the goods were being conveyed or stored in the ordinary course of Casella Management's duties in the business of a carrier or warehouse operator.
As for transporting the ammunition, the applicants contended that no licence is required to transport 1.4s category explosives according to the "Australian Code for Transport of Explosives by Road and Rail."
As already noted, it was an offence for Bronze Wing to handle explosives unless authorised to do so by its licence in circumstances where the regulations required the handling to be authorised by a licence (Explosives Act 2003, s 6(1); Explosives Regulation 2013, cl 17). The circumstance that the ammunition was sold did not affect Bronze Wing's obligation to comply with the explosives legislation in relation to that ammunition.
The evidence establishes that, when employees of Casella Management handled ammunition sold by Bronze Wing, they were doing so on behalf of Bronze Wing. Mr Manchinelli, an employee of Casella Management, gave evidence that he was requested to attend the Barracks Road property in 2014 to package ammunition in accordance with orders placed by Bronze Wing customers. Mr Boyle was aware of this. It can be inferred that the completion of this task assisted Bronze Wing to fulfil its contractual obligations to customers.
The applicants' argument that both Casella Management and Mr Manchinelli were authorised to handle the ammunition under the firearms legislation, even if accepted, does not affect the question of whether Bronze Wing acted in contravention of s 6(1) of the Explosives Act 2003 when authorising them to handle ammunition on its behalf. Clause 48(2) of the Explosives Regulation 2013 does not provide Bronze Wing with an exception from the requirement to be authorised by a licence in order to possess, use, store or transport ammunition, for reasons given above.
It follows that, when Bronze Wing authorised Casella Management employees and others to package ammunition for the purposes of its manufacturing operations, it acted in contravention of s 6(1) of the Explosives Act 2003.
The applicants' argument that the Casella Management workers were not required to be authorised by a licence in order to transport ammunition, because no licence is required to transport 1.4s category explosives under the "Australian Code for Transport of Explosives by Road and Rail," is misconceived. Bronze Wing commits an offence if it handles an explosive other than in accordance with its licence, in circumstances where the regulations require the handling to be authorised by a licence (Explosives Act 2003, s 6(1); Explosives Regulation 2013, cl 17). "Handling" includes "conveying" which in turn includes carrying, loading, unloading and transferring (Explosives Act 2003, s 3(1)). There are certain exceptions from the requirement to be licensed when transporting explosives, including the transport of explosives by police officers and the transport of explosives by private road (Explosives Regulation 2013, cl 45 and 50). It was not submitted that these exceptions applied. When, with the authorisation of Bronze Wing, Casella Management employees loaded ammunition on to a truck at the Doug McWilliams Road property, conveyed the explosives to the Barracks Road property, and unloaded the ammunition at that property, Bronze Wing acted in contravention of s 6(1) of the Explosives Act 2003. The provisions of the "Australian Code for Transport of Explosives by Road and Rail" do not affect this conclusion.

Risk to the community

The applicants said that there was no risk to the community, as category 1.4S ammunition does not present a significant hazard. Presumably what they meant by there being no risk to the community is either that Bronze Wing's past conduct did not present a risk to the community, or that if Bronze Wing were permitted to continue to manufacture, this would not present a risk to the community. The ammunition was, in their submission, stored securely and transported safely. To support their submission that "the explosive effects [of category 1.4S ammunition] are low", they relied upon a statement of Peter Ballard, which was not in evidence, and to which I have not had regard.
The legislature has determined that category 1.4S ammunition presents a sufficient hazard to be regulated under the Explosives Act 2003. Whilst there are exceptions to some of the handling requirements for ammunition where a person has certain licences under the Firearms Act 1996 (Explosives Regulation 2013, cl 48), these exceptions are carefully crafted and do not negate the legislature's intention to regulate the handling of ammunition generally.
The applicants' submission that "the risk in relation to 1.4s explosive is so low that there are no formal licences required for its transportation," which relies upon provisions of the Australian Code for the Transport of Explosives by Road and Rail ("Code"), misses the point. Even if the Code makes provision as they allege, a licence holder's duty to ensure that employees and others comply with the Code, does not mean that the licence holder must not also comply with more stringent requirements of the licence if they exist. In this case, Bronze Wing was required to ensure that an employee or contractor handling its ammunition had a security clearance or was supervised by a person with a security clearance. It is no answer to say that the Code does not require a person transporting the goods to have a licence.
The submission that category 1.4S ammunition does not present a significant hazard, and that this was relevant to the applicants' fitness and propriety, was consistent with the attitude displayed by Mr Boyle and Mr Casella during the proceedings that their assessment that the activities they conducted were safe could, at least in some circumstances, justify non-compliance with legislative requirements or provide an alternative to them. The submission is, in effect, that the applicants are fit and proper persons to have licences and security clearances authorising them to handle ammunition, but that non-compliance with the licence or security clearance is, or was, "safe" because the risk in relation to class 1.4s ammunition is extremely low. To some degree, the assumptions underlying the submission undermine the applicants' case that they are fit and proper persons to hold authorities under the explosives legislation.
Sergeant Ryan gave evidence, which I accept, that Mr Casella told him that the WorkCover requirements regarding the storage of the factory's ammunition was "as long as it's safe" and that Mr Casella was unaware whether there were any conditions on the "permit" but he doubted it because "it's 1.4 now, it's just common freight". This indicates that Mr Casella's conduct was largely governed by his own perceptions of what was safe, without checking what the legislative requirements in respect of the handling of ammunition were. Mr Casella acknowledged under cross examination that he was unaware of the Explosives Act 2003 and the Explosive Regulations 2013.
Mr Casella gave evidence that he moved pallets of ammunition from the Barracks Road property to the Wood Road property because he considered this to be the "safest option" and also considered that the Wood Road property was "compliant for the storage of ammunition". Mr Casella explained that by "compliant" he meant the Wood Road Property was alarmed, locked and entirely made of steel. Apparently he did not investigate whether this option was compliant with Bronze Wing's licence or with the explosives legislation, or whether there was another option which would be consistent with Bronze Wing's legal obligations. Mr Casella was concerned to emphasize that the shed on the Wood Road property, where Bronze Wing ammunition was unlawfully stored, was safe and that it was locked. This was inconsistent with the evidence, which I accept, that police officers gained access to the shed by climbing under the roller doors, and that there were numerous sources of ignition in the shed. Significantly, it shows that Mr Casella's conduct was based upon his own perceptions of safety, rather than upon a concern to comply with legislative requirements.
To a much lesser degree, Mr Boyle's conduct was also governed by his perceptions of what was safe, rather than a concern to comply with legislative requirements. Mr Boyle gave affidavit evidence that the containers at the Doug McWilliams Road property complied with the provisions of "the Act" in relation to storage and said under cross examination that he thought it was safe to store finished products of prime shells in a shipping container for a number of days. In cross examination, he identified the Act he was referring to as being the Firearms Act 1996, but he could not identify the provision. He said he was referring to the requirements to have the container locked and secured within a secure fence line. In relation to the ammunition stored at Barracks Road, Mr Boyle said that, while it was a matter for Casella Management, he knew "that the Barracks Road had the appropriate facilities and security arrangements to be able to store that finished product". He showed little understanding of the need to comply with the security plan he had submitted pursuant to the Explosives Act 2003 or with other requirements of that legislation.
The expert witness called by the applicants, Mr Boné, also emphasised the need for "safety", with no clear way of determining what this was, and displayed little understanding of the explosives legislation or the need to comply with it. His opinion was that "using Barracks Road as transit storage was the most appropriate and safest course of conduct". Under cross examination, Mr Boné had difficulty in identifying any legislative or other requirements of transit storage or defining what he meant by the goods having to be somewhere "safe and secure". He disagreed with the proposition that the Explosives Act 2003 and Explosives Regulation 2013 require a person to have a licence to store explosives at a particular location when this was for transit purposes. Acknowledging that the Barracks Road site was not subject to any licence under the Explosives Act 2003, he explained that "they were waiting for zoning approval".
Mr Boné also expressed the view in an affidavit that "there was no problem with temporary storage" of ammunition at Wood Road as the "site was secure and safe until the pallet racking was fixed or the product was picked up for delivery". Nor was there a problem, in Mr Boné's opinion, with the propellant being stored there because it was in a locked cage and "safe and secure". He disagreed with the proposition put to him in cross examination that, not being the subject of any licence under the Explosives Act 2003 and not being the subject of any safety management plan, the Wood Road property was not compliant with the Explosives Regulations 2013. He said it qualified as a transit storage area.
Mr Boné said that there were occasions when it was not only permissible not to comply with the Explosives Act 2003, but recommended. These appeared to be when, in Mr Boné's opinion, it would be safer not to do so.
Finally, in Mr Boné's view, the cartridges manufactured by Bronze Wing do not present a significant hazard. He observed that the "lead shot is not dangerous".
Inspector Brooks disputed that "lead shot is not dangerous" and also expressed the view that "1.4S shot shells are an explosive and are dangerous goods for transport, regardless of their classification".
The respondent submitted that Mr Boné's evidence should be rejected or given little weight because he is not properly qualified to give expert evidence concerning issues arising under the explosives legislation, he has minimal or no knowledge of the explosives legislation and the requirements under that legislation, he was often argumentative and non-responsive in the witness box suggesting he was, in fact, an advocate for the appellants. The applicants maintained that Mr Boné's evidence should be accepted given that he is a dangerous goods consultant and qualified to assess risk to the community.
For the reasons given by the respondent, I give Mr Boné's evidence very little weight. He showed almost no understanding of the explosives legislation in the witness box and no or very little understanding of his paramount duty to assist the Tribunal impartially.
I accept Inspector Brooks's evidence concerning the danger of lead shot and of 1.4S shot shells.
The perception that there is no or little "risk to the community" in Bronze Wing's past conduct, which was conveyed by the applicants' witnesses and put to the Tribunal in the applicants' submissions, is problematic, even if there is a lower risk to the community in the handling of ammunition than that posed by the handling of some other explosives. This is because the perception can be used to justify the applicants acting other than in accordance with the explosives legislation, and failing to take steps to ensure that WorkCover is aware of matters which may pose a risk to safety, such as storing explosives in shipping containers or packaging explosives off-site.
For reasons given above, I am not satisfied that there was, as the applicants submit, very little risk to the community or to employees and contractors of Bronze Wing and Casella Management in the applicants' handling of ammunition contrary to legislative requirements. The fact that the Barracks Road property was the subject of a planning permit and a licence application to manufacture ammunition, on which the applicants relied, is not determinative.

Acting in accordance with the rules and regulations

The applicants' submission that they acted in accordance with the rules and regulations cannot be accepted in light of my findings above. They also said that, if there has been a breach, it was inadvertent. They said that the evidence was that Mr Boyle and Bronze Wing acted on the honest belief that the ammunition was in transit and once it left the licensed premises was adequately covered by s 65 of the Firearms Act 1996.
The respondent submitted that the breaches could not have been inadvertent given their nature, the repetition of the contravening conduct and the length of time during which the breaches occurred. It also said that it could not be accepted that the applicants held an honest belief that they were authorised under the explosives legislation to store and pack ammunition at the Barracks Road property, when the licence to manufacture specified the Doug McWilliams Road property as the only place for storage.
It is difficult to accept that, at the time of the breaches referred to above, Mr Casella had an honest belief that the ammunition "was adequately covered by s 65 of the Firearms Act 1996" once it left the licensed premises. Mr Casella admitted that he knew nothing about the explosives legislation and appeared to know very little about the firearms legislation. He relied on his Queensland shooters licence to justify storing ammunition at the Wood Road property, his firearms licence under the Firearms Act 1996 having been revoked many years prior to the events of 2014. As indicated above, Mr Casella's conduct was largely driven by what he perceived to be safe and not by any understanding of legislative requirements.
Mr Boyle maintained the position that, once the ammunition had been sold, it was no longer Bronze Wing's responsibility. This belief may have been honestly held. Mr Boyle may also have honestly held the belief that there was no need to inform WorkCover about storing ammunition in shipping containers, or to amend the security plan to reflect this. However, if Mr Boyle honestly held these beliefs, this indicates an unfitness on his part to hold a security clearance and is also indicative that Bronze Wing is unfit to hold a licence whilst Mr Boyle is its responsible person under s 10A(2) of the Explosives Act 2003. As indicated above, fitness involves honesty, knowledge and ability. Mr Boyle clearly did not have the requisite knowledge of the explosives legislation, and took no steps to ensure that his interpretation of the legislation was correct. It would have been a simple step to contact WorkCover to check whether it was acceptable to store explosives in a shipping container and to package explosives at the Barracks Road property.
Mr Boyle gave evidence that he made an enquiry of WorkCover by email in February 2013 about whether there is a requirement for a transport operator to "have a DG licence when transporting class 1.4S (ammunition cartridges) by road" and WorkCover confirmed there was not. However, there is no evidence that Mr Boyle made any enquiries of WorkCover concerning the conduct of Bronze Wing and persons acting on its behalf in transporting ammunition and packaging it offsite. Mr Boyle's evidence that he did not believe it was necessary for an employee of Casella Management to hold a security clearance when transporting ammunition to the Barracks Road property does not take account of the context of the email exchange (an enquiry about a transport operator). Nor does Mr Boyle explain how the email contributed to his belief that packaging and storage of ammunition at the Barracks Road property were lawful (if it did).
Ms Shedrina gave evidence of having sent an email to WorkCover on 27 February 2014 concerning storage requirements on a "secondary site" and of WorkCover's reply which referred to cl 48 of the Explosives Regulation 2013. However, this is not relevant to Bronze Wing's conduct prior to that date.
Bronze Wing's breaches of the Explosives Act 2003 occurred over a significant period of time. A large number of individuals handled ammunition at the Barracks Road property with Bronze Wing's authority, without security clearances and without being supervised by a person with a security clearance. Ammunition was stored and handled by Bronze Wing other than in accordance with its licence. Even if Bronze Wing did not deliberately contravene the explosives legislation, Bronze Wing was reckless as to its compliance with that legislation. It did not take reasonable steps to ensure that its conduct was compliant.

Character, reputation and conduct of Ms Rothwell

As both parties acknowledged, the question of whether Bronze Wing is a "fit and proper person" to hold its licences must be assessed having regard to the change in management of the company. The change in ownership is also relevant, because it confers a power to appoint directors. As stated earlier in these reasons, Ms Rothwell has been the company's sole director since from 28 May 2014, and Rothcock Pastoral Company Pty Ltd, a company Ms Rothwell controls, has been its sole shareholder since 28 August 2014. Ms Rothwell's character, reputation and conduct are clearly relevant to whether Bronze Wing is now a fit and proper person.
Ms Rothwell gave evidence in the proceedings. She also acted as solicitor for the applicants and took an active role instructing counsel throughout the hearing. It may be inferred that, as the sole director of Bronze Wing, and as the sole director and shareholder of Rothcock Pastoral Company Pty Ltd which is the sole shareholder of Bronze Wing, Ms Rothwell authorised the position Bronze Wing took in the proceedings. The Tribunal may also infer that the submissions made on behalf of Bronze Wing were authorised by Ms Rothwell.
Ms Rothwell attested to being a legal practitioner within the meaning of the Legal Profession Act 2004 (Vic), and having been admitted to practice in 1989. She said she had to disclose any matter that may affect the renewal of her practising certificate each year, and had not been required to do so as no such circumstances had existed. She also said that she is the sole director and shareholder of Rothwell Lawyers Pty Ltd.
Ms Rothwell gave evidence as to the professional associations to which she belongs and the groups to which she gives presentations. She also gave evidence of her involvement in charity work and fund-raising activities, including starting her own charity.
Ms Rothwell stated that she caused her company Rothcock Pastoral Company Pty Ltd to purchase Mr Casella's shares in Bronze Wing for $100 on the basis that she would re-establish the business with the view of either selling it or finding new investors or to operate it with the key personnel Mr Casella had put together.
Ms Rothwell volunteered the information that she had been convicted of offences under s 49(1)(b) of the Road Safety Act 1986 (Vic) around 14 and 16 years ago. She explained in cross examination that her offences were for driving with excessive levels of alcohol. I do not give much weight to these offences given the amount of time which has passed since they were committed and the lack of connection between the offence and her duties as a director of Bronze Wing.
Ms Rothwell's charity work is commendable and, as a solicitor, she is required to meet high ethical standards. There is no evidence that she has not done so. On the evidence before the Tribunal, there is nothing about Ms Rothwell's character or reputation which would detract from Bronze Wing's fitness or propriety to hold a licence.
Ms Rothwell's conduct, in terms of the position she took in these proceedings, is considered below.

Character, reputation and conduct of Mr Boyle

As indicated earlier in these reasons, Mr Boyle's conduct, reputation and character are relevant to the fitness and propriety of Bronze Wing, as he is the responsible person for Bronze Wing pursuant to s 10A(2) of the Explosives Act 2003.
Mr Boyle's character and reputation have not been impugned. However, the respondent submits that his conduct as the responsible person for Bronze Wing was unsatisfactory.
Mr Boyle knew about and authorised the handling of explosives at the Barracks Road property (including the packaging of explosives by unsupervised individuals without security clearances) in 2013 and 2014 and the storage of explosives in shipping containers at the Doug McWilliams Road property from the commencement of Bronze Wing's manufacturing licence. Mr Boyle did not inform WorkCover of either matter.
Mr Boyle gave evidence that he had no knowledge of the explosives stored at the Wood Road property. This is consistent with Mr Casella's evidence that he did not inform Mr Boyle that he had moved ammunition there, or that he had found propellant there. I am not persuaded that Mr Boyle knew that explosives were stored there or that Mr Casella had moved ammunition there from the Barracks Road property.
Mr Boyle's past conduct includes the authorisation of Bronze Wing's breaches of the requirements of the explosives legislation over a significant period of time. Such conduct tends to suggest that Bronze Wing is not a fit and proper person to hold a licence whilst Mr Boyle is its only responsible person.

Propensity to reoffend

The final matter put by the applicants was that there was no propensity to reoffend, in that Mr Boyle had diligently corrected all minor matters raised by Inspector Brooks in his report and there is no suggestion that Ms Rothwell or Mr Boyle would continue to knowingly breach any rule of regulation attached to the Bronze Wing licences.
The respondent said in reply that Ms Rothwell had not acknowledged any of the company's past breaches and that Ms Rothwell and Mr Boyle did not have proper familiarity with the explosives legislation, meaning that the Tribunal could not be satisfied that breaches by the company will not be repeated.
The evidence that Mr Boyle has taken steps to remedy issues identified by Inspector Brooks in the audit conducted in October 2014 is encouraging, and supports the applicants' submissions about their fitness and propriety. However, this is not conclusive of whether there is a propensity to reoffend. Mr Boyle's past conduct, and his evidence under cross examination, indicated that he does not have a good understanding of the requirements of the explosives legislation, and that he does not take proper steps to check with the regulator whether conduct which might breach that legislation (such as packaging explosives off-site) does in fact breach it. Notwithstanding Ms Rothwell's claim to be "reasonably familiar" with the requirements for storage of ammunition, Ms Rothwell did not demonstrate a good understanding of the explosives legislation when being cross examined. The primary submissions made on behalf of both applicants were that conduct which breached that legislation was in fact compliant with it.
In these circumstances, I cannot be satisfied that the applicants have no propensity to reoffend.

Balancing of factors relevant to Bronze Wing's fitness and propriety

Bronze Wing breached requirements of the explosives legislation relating to storage of ammunition, and the requirement that ammunition is handled only by someone with a security clearance or someone supervised by such a person, over a significant period of time. Mr Boyle knew about and authorised these breaches. Both Mr Boyle and Ms Rothwell, Bronze Wing's director, defended such conduct in these proceedings, maintaining the position that Bronze Wing had not contravened the explosives legislation. They submitted that Bronze Wing's conduct was "safe" in circumstances where I have found that it was not. Neither acknowledged the company's past mistakes. For these reasons, I find that Bronze Wing is no longer a fit and proper person to hold a licence under the Explosives Act 2003.
The correct and preferable decision is therefore to affirm the respondent's decision to cancel those licences pursuant to s 21(b) of the Explosives Act 2003.

Mr Boyle's security clearance

The respondent contends that the correct and preferable decision is to affirm its decision to cancel Mr Boyle's security clearance under s 21(b) of the Explosives Act 2003, on the basis that the Tribunal is of the opinion that Mr Boyle is no longer a fit and proper person to hold, or to continue to hold, the security clearance.
The respondent said that Mr Boyle was not a fit and proper person given the events which occurred in February 2014, the conduct of Bronze Wing for which he is the responsible person, Bronze Wing's disregard for the law whilst he was the responsible person, his knowledge and sanctioning of the unauthorised storage of explosives and the unauthorised handling of Bronze Wing's ammunition, his failure to take steps to alert WorkCover to this and his lack of proper familiarity with the explosives legislation.
For the reasons given by the respondent, and based upon the evidence discussed in relation to Bronze Wing, I am satisfied that Mr Boyle is no longer a fit and proper person to hold a security clearance under the Explosives Act 2003.
The correct and preferable decision is accordingly to affirm the respondent's decision to cancel Mr Boyle's security clearance pursuant to s 21(b) of the Explosives Act 2003. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 07 May 2015 - Paragraph 65 - replaced 'Dough McWilliams Road property' with 'Barracks Road property'. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 May 2015

Explosives Regulation 2013(NSW)

Under the Explosives Act 2003(NSW)

(Administrative Decisions Review Act 1997(NSW)

Legal Profession Act 2004(Vic)

At a glance

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Judgment (22 paragraphs)

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Legislation Cited (8)

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Cited By (9)