Carlon v Roads and Maritime Services [2018] NSWCATOD 140 | Case summary

The regulatory framework

Accreditation of bus operators is currently regulated by the Act and the Passenger Transport (General) Regulation 2017 (NSW) (Regulations). The purpose of accreditation, pursuant to s 7(2) of the Act, is to attest: (a) that the accredited person is (or, in the case of an accredited corporation, the designated directors and managers of the corporation are) considered to be of good repute and in all other respects fit and proper to be responsible for the operation of a public passenger service, and (b) that the accredited person has demonstrated the capacity to meet the government's standards of: (i) financial viability, and (ii) safety of passengers and the public, and (iii) vehicle maintenance, to the degree and in the manner required in respect of services of the kind specified in the accreditation. (3) Standards for the purposes of subsection (2) (b): (a) may be prescribed by the regulations, or (b) to the extent that they are not so prescribed, may be determined and published by TfNSW and made available to interested persons.
The Reviewable Decision was made under Part 2 of the Act, which survived the repeal of Part 3 and Division 2 of Part 5 of the Act by section 179 of the Passenger Transport Act 2014 (NSW).
Accreditation of bus service operators is dealt with under Part 2, Division 1 of the Act. Section 9B of the Act provides: (1) An accreditation is subject to: (a) the conditions prescribed by the regulations, and (b) such additional conditions as RMS, having regard to the purpose of accreditation, may from time to time impose on the accreditation. (2) Conditions in force under subsection (1) (b) may be varied (whether by amendment, addition, revocation or suspension of one or more conditions) by RMS from time to time by notice served on the accredited person. (2A) Without limiting subsection (1) (a), the regulations may prescribe conditions of accreditation relating to the reporting of occurrences of a specified kind to RMS. (3) An accredited service operator who contravenes or fails to comply with a condition of the operator's accreditation is guilty of an offence. Maximum penalty: 500 penalty units. (4) A variation of conditions imposed on an accreditation by RMS under subsection (1) (b) is, for the purposes of Division 3 of Part 5 (Administrative reviews by Civil and Administrative Tribunal), a variation of the accreditation.
The Regulations commenced on 1 September 2017. Prior to 1 September 2017, actions between the Applicants and the Respondent were governed by the Passenger Transport Regulation 2007 (NSW) (Repealed Regulations). Pursuant to regulation 240 of the Regulations: Any act, matter or thing that had effect under the Passenger Transport Regulation 2007 immediately before the repeal of that Regulation is taken to have effect under this Regulation.
In 2005 the Respondent imposed additional conditions on accreditations of bus services, known as the BOAS. Key elements of the BOAS include: 1. A requirement to apply for reaccreditation and renew accreditations every three years; 2. A requirement that only licensed Motor Vehicle Repair Industry Authority (MVRIA) repairers perform safety critical work on buses (brakes, suspension, steering); 3. Annual Self Assessment Reports (ASAR); 4. Independent audits; 5. A comprehensive Audit Tool; 6. Safety Management System (SMS) and Drug and Alcohol programs.
The Regulations were intended to reproduce and replace the requirements previously in place so there would be "no changes for operators, drivers or the community": Bus Operator Accreditation Package 2015, version RMS 14.438, Roads and Maritime Services.
Clause 16 of the Regulations provided for vehicle maintenance: 16 VEHICLE MAINTENANCE (1) The operator of a relevant service must have, and adhere to, a public passenger vehicle maintenance plan that: (a) is consistent with the maintenance standards of the manufacturer of the vehicles used to provide the service, and (b) specifies the steps taken to ensure that the vehicles are roadworthy, and (c) specifies the way in which the vehicles are maintained, and (d) specifies the way in which any defects are to be recorded and rectified, and (e) is capable of being audited. (2) The operator of a relevant service must not carry out maintenance on, or repairs to, a vehicle used to provide the service, and must not permit any other person to do so, unless the person carrying out the maintenance or repairs is licensed under the Motor Dealers and Repairers Act 2013 to carry out the work concerned. (3) Subclause (2) applies even if the person who is to carry out the work concerned is exempted under the Motor Dealers and Repairers Act 2013 from the operation of all or any of the provisions of that Act. (4) However, for the purposes of subclause (2), "maintenance" and "repairs" do not include the following: (a) adding approved oils or other fluids to engines, transmissions, differentials, power steering reservoirs, windscreen washer reservoirs, master cylinders, radiators or batteries, (b) changing engine, transmission and differential oils, (c) changing engine oil filters and fuel filters, (d) carrying out general lubrication, (e) changing spark plugs, (f) changing wheels and tyres, (g) changing light bulbs, (h) replacing seats and floor coverings, (i) replacing external rear vision mirrors.
The audit provisions were reproduced at Regulation 90 of the Regulations: 90 AUDIT (1) RMS may require an operator of a bus service, at regular intervals or at any particular time, to undertake (at the operator's expense) an audit of such of the operator's records and bus operations as RMS may specify. (2) An operator of whom a requirement is made under subclause (1): (a) must cause the audit to be carried out in accordance with RMS's requirements, and (b) must submit the audit to RMS within the period, or by the date, specified by RMS. Maximum penalty: 5 penalty units. (3) RMS may require any one or more of the audits under this clause to be carried out by an auditor, or by an auditor from a class, approved by RMS.
The discretion to suspend a licence or authority must be exercised, keeping in mind the activities, which the person is authorised to undertake, and the objectives of regulating those activities: Hughes and Vale Pty Ltd v State of New South Wales [1955] HCA 28; (1955) 93 CLR 127 at 156 and Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321. In this matter, the activity in which the Applicant was engaged was operating a public passenger service. The objectives of the Act in regulating public passenger transport are set out in section 4(e) of the Act, namely: "to encourage public passenger services that meet the reasonable expectations of the community for safe, reliable and efficient passenger transport services."

Consideration

In making its decision concerning the Applicant's accreditation suspension, the Tribunal needs to be satisfied that the Applicant has demonstrated the capacity to meet the government's standards of safety of passengers and the public and of vehicle maintenance, as required by the Applicant's accreditation. These conclusions need to be drawn in the light of the objectives set out under the Act of regulating public passenger services to ensure they are safe, reliable and efficient: JBC v Director-General Department of Transport [2014] NSWCATOD 82.
The purposes of accreditation, pursuant to s 7(2)(b)(ii) and (iii) of the Act, include demonstrated capacity to meet the required standards of safety of passengers and the public, and vehicle maintenance. The suspension of the Applicant's accreditation was based, according to the Reviewable Decision, on the following: The breaches and concerns identified in the Notices are matters that are the same, or similar, to previous Notices issued to you by Roads and Maritime. Despite this, you continue to service your bus outside the scheme rules and contrary to clause 16(4) of the Passenger Transport (General) Regulation 2017. The service requirements listed in the 'Hino Service' checklists provided by you show you have been servicing and maintaining safety critical components, up to and including work on brakes, steering and suspension, while not being licensed to do so in accordance with clause 16(2) of the Passenger Transport (General) Regulation 2017. This is above and beyond those exemptions listed under clause 16(4) of the Passenger Transport (General) Regulation 2017. The fact that you retain a belief that you may service the vehicle contrary to legislation and the scheme's requirements demonstrates an ongoing disregard as a bus operator, and presents an unacceptable safety risk for all involved.
The Notices referred to in the Reviewable Decision included the DIN issued by the Respondent on 17 July 2017, following the audit of 17 May 2017. The Applicant submitted that there were significant inconsistencies between the audit requirements, audit findings, and allegations contained within the DIN. It is not the Tribunal's role, however, to deal with any procedural fairness issues arising from the Respondent's audit process, but to determine the correct and preferable decision on the material available.
It was not disputed that John Carlon conducted his own services of the Applicant's vehicle, and that he was not a licensed mechanic pursuant to the Motor Dealer and Repairers Act 2013. The issue was whether, in doing so, the Applicant failed to comply with its requirements under the Act and Regulations.
In January 2003 the Respondent approved the Applicant's request to change their regular bus maintenance schedule to the HINO Motor Sales Australia Manufacturers Standards (HINO standards). The Respondent submitted that the Applicant had not complied with the HINO standards. The Applicant submitted that John Carlon's completion of the HINO service checklist tasks as described in the HINO service checklist sheets (included in the section 58 documents and the Application) fulfilled HINO standards for a regular bus maintenance schedule in compliance with Clause 16(1)(a) of the Regulations.
The HINO Motor Sales Australia Pty Ltd Warranty and Service Book (HINO Service Book) was provided to the Tribunal after the hearing, pursuant to the Tribunal's directions, and the parties were invited to file any additional submissions which were relevant to that document. On review, the HINO service checklist sheets referred to at hearing are essentially the same as the checklists contained in the HINO Service Book, but the HINO Service Book includes additional information providing context, elaboration and explanation of the items listed in those checklists. The additional information includes the Service Warranty Basic and the recommended vehicle maintenance charts.
The Applicant submitted that the warranty requirements expressed in the HINO service book constituted a private contract that had no wider legislative force. The evidence demonstrates, however, that the warranty and service requirements contained in the HINO service book are the manufacturer's standards which the Applicant sought to have applied in January 2003, and which the Respondent accepted. The signatures in the HINO service book demonstrate that John Carlon started doing the servicing of the vehicle himself from 1 May 2004.
The HINO service checklist sheets completed by the Applicant included 68 items involving checking, inspecting, testing, cleaning, lubricating and replacing various parts of the vehicle. The recommended vehicle maintenance chart in the HINO service book contained 82 tasks and included the type of maintenance required for each item at each inspection up to 200,000km, and specified that the schedule of servicing described in the recommended vehicle maintenance chart was to continue in the same manner after 200,000km. Where, for instance, the item in the service checklist was "check and secure mirrors & brackets", the recommended vehicle maintenance chart specified that the operation required was "inspect and correct or replace as necessary", every inspection or 10,000km. The checklist item "adjust tappet clearance" specified in the recommended vehicle maintenance chart that the operation required was "check and adjust as necessary", every second inspection or 20,000km. The requirements for each of the items in the HINO service checklist therefore go beyond their brief descriptions in that document.
I accept the Respondent's submissions that the maintenance standards of the manufacturer of the vehicles used to provide the service - the HINO standards - are the service and maintenance standards expressed in the HINO Service Book and HINO Driver's Handbook, incorporating the HINO service checklists, the Service Warranty Basic, the recommended vehicle maintenance charts and their explanations and requirements contained in those documents. The HINO standards require that inspection, servicing and maintenance must be done by a qualified person at 3000km and then every 10,000km after 10,000km, and specifically distinguish between the maintenance tasks which can be done by the owner, and those which must be completed, inspected and checked by an authorised and qualified person.
On the evidence available to the Tribunal, the Applicant has not complied with the manufacturer's recommendations for maintenance and servicing of the vehicle on the basis that he completed all of the relevant HINO service checklist tasks himself from 1 May 2004. This demonstrates a repeated failure to comply with the requirements of Clause 16(1)(a) of the Regulations.
In the ASARs from 2007 to 2015, the Applicant checked "yes" to the question "Is/are your bus maintenance and repairs carried out by a Motor Vehicle Repair Industry Authority (MVRIA) licensed mechanic". The independent audit of 2015 identified that although some maintenance and repairs were done by a licensed mechanic, R Noble, a person other than an MVRIA qualified person had "carried out any maintenance or repairs on any buses outside the allowable maintenance an operator can perform". The audit confirmed that work was conducted on the safety critical components of brakes, steering and suspension by John Carlon: Owner John Carlon conducts service activities in the areas such as brake, steering, suspension, but he is not an MVRIA qualified person.
The 2015 independent audit findings resulted in a non-compliance report and the issue of a DIN to the Applicant on 30 November 2015. In correspondence, the Respondent identified that there was no evidence that the Applicant's annual major servicing was being done by a licensed person. The Applicant arranged for a licensed mechanic who had previously carried out maintenance on the vehicle, R Noble, to check and service the vehicle in January 2016, following which the Respondent was satisfied that the deficiency was resolved.
A similar issue was subsequently identified in the 2017 independent audit which is the subject of the Reviewable Decision: Operator services a contracted school bus service in a rural town with 1 bus. Operator performs his own services which, he states do not involve safety critical components, all safety critical repairs and maintenance is done by licensed repairer.. not able to verify. - all records copied
Clause 16(2) of the Regulations prohibits the Applicant, as the operator, from carrying out "maintenance on, or repairs to, a vehicle used to provide the service", or allowing a non-licensed person to do so. The Tribunal has to therefore determine whether the specific actions completed by John Carlon in servicing the vehicle were "maintenance" or "repairs" within the meaning of the Regulations.
John Carlon completed the HINO service checklist for each service he did on the vehicle for the purpose of the Applicant's ongoing accreditation. The Applicant sought to characterise each of the tasks undertaken by John Carlon as excluded from the definition of "maintenance and repairs", but this submission is absurd in the context of the finding that he had done each of the vehicle's regular services since 2004 according to the HINO service checklist records. It is clear that the manufacturer's standards require regular servicing, which includes maintenance and repairs beyond those tasks excluded by virtue of cl 16(4).
The Applicant submitted that 'checking' and 'inspecting' tasks listed in the HINO service checklists did not amount to 'maintenance' or repairs' for the purposes of cl 16(2) of the Regulations, because they were 'precursors' to the tasks listed as exclusions at cl 16(4). Further, the Applicant submitted that the exclusions at cl 16(4) were not exhaustive and should be read in conjunction with cl 16(1)(a). At hearing, there were eleven tasks identified in the HINO service checklists which were not limited to 'checking' or 'inspecting' and did not obviously fall within the exclusions expressed at cl 16(4). Those tasks required the person inspecting, checking or testing the item to decide whether and to what extent replacements or adjustments were necessary, and to make those replacements or adjustments. The limited evidence provided by the Applicant with respect to those tasks supports the Tribunal finding that John Carlon decided, in relation to each of the eleven tasks, whether and to what extent any action beyond 'checking' or 'inspecting' was necessary.
The exclusions listed at cl 16(4) specifically do not involve any decision to be made regarding whether and to what extent the listed tasks are required for the maintenance and repair of a vehicle, because the Act and Regulations require that such decisions are made by suitably qualified persons. The tasks identified at cl 16(4) do not involve the exercise of judgment, and do not involve the repair or maintenance of safety critical components of brakes, suspension, or steering. The prohibition against an owner conducting their own maintenance and repairs at cl 16(2) of the Regulations is thereby intended to exclude an unqualified person deciding what repairs or maintenance need to be undertaken on a vehicle, and to exclude an unqualified person from maintaining and repairing safety critical components of a vehicle, to ensure the objects of the Act and specifically, accreditation of public passenger services.
In comparing the HINO service checklist tasks against the exclusions provided at cl 16(4), the context of the manufacturer's standards should be considered because the HINO service checklist items do not completely describe each of the tasks required for the recommended vehicle maintenance services. For instance, where a task in the HINO service checklist is described as "Check gauges & instruments for operation", when the context is considered, the task actually requires a 'qualified person' to check gauges and instruments for operation by inspecting them every 10,000km, and correcting or replacing them when necessary. A qualified person, according to the HINO service book, includes HINO, one of its authorised dealers, or a person approved in writing by HINO. Such a qualified person was required, it is inferred, because those qualifications would allow the person checking the gauges and instruments for operation to decide whether or not they needed to be corrected or repaired, and to then do the corrections or repairs to a requisite standard. The Applicant's sometime mechanic R Noble was a qualified person, but John Carlon was not.
The Applicant submitted that there are tasks that an operator can and should perform based on the manufacturer's recommendations. Of the 82 tasks listed for scheduled recommended vehicle maintenance, 26 tasks in the HINO service book were identified for the owner of the vehicle to do, in addition to the recommended vehicle maintenance: • Check head & park lamps, indicators, fog & reversing lamps; • Check wiper/washer operation arc & blade condition; • Check clearance & auxiliary or driving lights; • Check coolant level; • Inspect all fuel lines & power steering hoses for chafing & leaks & check fluid level of power steering reservoir; • Adjust clutch free travel & check hydraulic fluid levels & leaks; • Check gear box oil level & top up report any leaks; • Inspect & lubricate universals & drive shafts; • Check differential/s oil level/s & top up as required - report any leaks • Tighten all U bolts & spring bands; • Adjust all service breaks. Record lining thickness remaining - all wheels. Check hydraulic fluid & for leaks where applicable; • Check air system for leaks & hoses for chafing or wear; • Inflate tyres to correct pressures (incl. spare) Note: pressure before inflation; • Inspect all tyres & rims for signs of abnormal wear & damage - report rotate tyres if required; • Drain air tanks & note excess water, oil or contaminants; • Where applicable check park brake operation; • Retention all wheel retaining nuts; • Check reversing buzzer; • Top up battery electrolyte; • Clean & lubricate battery terminals and check for corrosion; • Secure all body/equipment mounting & U bolts; • Inspect operation of safety door system if applicable & report faults; • Top up hydraulic reservoirs; • Inspect trailer air & electrical lines & couplings; • Check all passenger seats & seat belts.
Whilst the Applicant is correct that there are tasks which the manufacturer's standards recommend the owner perform, these tasks are specifically limited to the operation of "checking" in the HINO service book, and are in addition to a qualified person doing those same tasks in accordance with the scheduled recommended vehicle maintenance operations. The manufacturer's recommendations for owners to perform certain checks and basic upkeep of their vehicles do not override or replace the Regulations requiring maintenance and repairs to be done by authorised and qualified persons.
The Respondent submitted that, whilst owners are able to do certain work, because these vehicles are being used as public passenger vehicles for school students in particular, it was imperative that they be checked as required and maintained as required by authorised persons, who are able to certify that the vehicles have complied with a certain level of safety, and accordingly unqualified persons should not be able to make determinations about what items need replacing, tensioning or adjusting. I accept that submission.
On the basis of the evidence available to the Tribunal, I find that the Applicant did, in fact, conduct maintenance and repairs on the vehicle used to provide the bus service, contrary to cl 16(2) of the Regulations. The Applicant's non-compliance with cl 16(1)(a) and 16(2) of the Regulations results in safety critical components of the subject bus service being compromised.
I also accept the Respondent's evidence that the Applicant deliberately contravened cl 16(1)(a) and 16(2) of the Regulations for considerable time, despite the Respondent's warnings.
The Reviewable Decision suspended the Applicant's accreditation "until you are able to supply evidence confirming the identified deficiencies and concerns have been resolved". The Applicant submitted that the Respondent failed to sufficiently identify what was required for the suspension to be lifted. I reject that submission on the basis that the evidence demonstrates the Respondent informed the Applicant that proof of compliance with cl 16(1)(a) and 16(2) involved the provision of a vehicle maintenance plan and vehicle servicing done by a qualified person.
In the circumstances, the correct and preferable decision is for the Tribunal to affirm the Respondent's Reviewable decision which suspended the Applicant's accreditation.

Carlon v Roads and Maritime Services

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