2. The Respondent is to, on or before 27 February 2004, to do all things necessary on its part to facilitate the granting of an Air Operators' Certificate to the Applicant.

CIVIL AVIATION - Applicant for an Air Operators' certificate ("AOC")- director of Applicant company unacceptable to Respondent because of his own history of breaches of Aviation Legislation - responsibilities of the chief pilot of an aviation company - whether Tribunal could be satisfied all requirements for the issue of an AOC met - form of decision to be made by the Tribunal.

PRACTICE AND PROCEDURE: obligation upon Respondent to adhere to Commonwealth's Model Litigant Policy - Respondent not permitted to add new grounds for decision at hearing - Form of order to be made when insufficient evidence before Tribunal to enable Tribunal to make a substituted decision.

Civil Aviation Act 1988 s28

Civil Aviation Safety Authority v Allan [2001] FCA 1064; 114 FCR 14

Southern Cross Airlines Pty Ltd v McNamara 97 FLR 72

Lea and Anor and Civil Aviation Safety Authority [1999] AATA 1021

Allan trading as Jackeroo Aviation and Civil Aviation Authority [2000] AATA 929

Moores Airspray Pty Ltd v Civil Aviation Safety Authority (AAT 10383, 1995)

Coral Sea Airlines Pty Ltd and Civil Aviation Safety Authority [1999] AATA 329

Re Geoffrey Thompson and Growers Coop Pty Ltd and Export Development Grants Board 7 ALN, N242

Re Moline and Comcare [2003] AATA 827

Re Applicant and Deputy Commissioner of Taxation [1995] AATA 95; 41 ALD 683

By application made the 16th of June 2003, the Applicant Company made application to the Tribunal for a review of a decision by the Respondent dated 6 June 2003, refusing its application for an Air Operators' Certificate ("AOC").

Subsection 28 (1) of the Civil Aviation Act 1988 reads:

"If a person applies to CASA for an AOC, CASA must issue the AOC if, and only if:

(a) CASA is satisfied that the Applicant has complied with, or is capable of complying with, the provisions of this Act, the Regulations and the Civil Aviation Orders, that relate to safety, including provisions about the competence of persons to do anything that would be covered by the AOC; and

(b) CASA is satisfied about the following matters in relation to the Applicant's' organisation:

(i) the organisation is suitable to ensure that the AOC operations can be conducted or carried out safely, having regard to the nature of the AOC operations;

(ii) the organisation's chain of command is appropriate to ensure that the AOC operations can be conducted or carried out safely;

(iii) the organisation has a sufficient number of suitably qualified and competent employees to conduct or carry out the AOC operations safely;

(iv) key personnel in the organisation have appropriate experience in air operations to conduct or carry out the AOC operations safely;

(v) the facilities of the organisation are sufficient to enable the AOC operations to be conducted or carried out safely;

(vi) the organisation has suitable procedures and practices to control the organisation and ensure that the AOC operations can be conducted or carried out safely;

(vii) if CASA requires particulars of licences held by flight crew members of the organisation - the authorisations conferred by the licences are appropriate, having regard to the nature of the AOC operations; and

...whereas subsection 28 (3) reads

"in this section AOC OPERATIONS means the operations covered by the application.

Applicant's organisation means the organisation established, or proposed to be established, by the Applicant to conduct or carry out the operations covered by the application.

Key personal means the people (however they are described) that hold, or carry out the duties of, the following position in the Applicant's organisation:

(a) the chief executive officer;

(b) the head of the flying operations part of the organisation;

(c) the head of the aircraft maintenance part (if any) of the organisation;

(d) the head of the training and checking part (if any) of the organisation."

On 6 June 2003, the Respondent gave written reasons for its decision to refuse to issue the Applicant an AOC. The crux of the Respondent's reasons for decision are set out in the penultimate paragraph which reads:

"I advise that I am therefore refusing to issue you with an AOC, on the grounds that CASA cannot be satisfied in relation to the matters set out in subsections 28(1)(a) and 28(1)(b)(i) of the Act."

In reaching his decision the delegate of the Respondent referred to four specific breaches of the Civil Aviation Act 1988 or Civil Aviation Regulations 1988 and a breach of the Civil Aviation Orders. In its Statement of Facts and Contentions dated 6 November 2003 (and lodged with the Tribunal on 7 November 2003), the Respondent again referred to the four alleged breaches referred to in its reasons for decision and added a fifth matter being an incident of alleged unauthorised maintenance. I permitted that fifth allegation to be agitated before me as it arose out of evidence given in another matter before this Tribunal and the Applicant was in a position to deal with it.

I refused permission to the Respondent to lead evidence in relation to other alleged breaches of the Civil Aviation Act 1988 or Regulations by the Chief Executive Officer of the Applicant, Mr Danny Ryan. In particular, I declined to receive certain evidence from a Mr Forbes, a disgruntled former employee of, and shareholder in, the Applicant Company.

As pointed out by the then President of this Tribunal in Re Applicant and Deputy Commissioner of Taxation [1995] AATA 95; 41 ALD 683 at 688 the principal of trial by ambush has never applied in the Administrative Appeals Tribunal (AAT). The Tribunal has in place Practice Directions, which require legally represented parties to submit well before the hearing Statements of Facts and Contentions in order that each party may know the case it has to meet. Moreover, subsection 28(1) of the Administrative Appeals Tribunal Act 1975 ("AAT Act") specifically provides that if a person makes a decision in respect of which an application may be made to the AAT, then any person entitled to make application to the AAT for review of that decision is entitled to demand from the decision maker reasons in writing for the decision. This provision is clearly designed to provide to the party aggrieved the specific reasons for the decision which can then be challenged in the Tribunal. As the Tribunal pointed out in Re Geoffrey Thompson & Growers Coop Pty Ltd and Export Developments Grant Board 7 ALN, N242 at N244 where grounds other than or in addition to those relied upon at the time of making the decision under review are to be raised by a Respondent notice should be given to an Applicant and the Tribunal well in advance of the hearing.

What the Respondent attempted in these proceedings was to give certain reasons for its decision and then at the hearing to add to and expand on those reasons, thus altering the case the Applicant had every reason to think it was required to meet upon review. This is clearly contrary to the intent both of the AAT Act itself and the Tribunal's Practice Direction. Apart from being a direct subversion of the principles of modern administrative law, it does not fit at all well with the Respondent's ethical responsibilities as an entity of the Commonwealth to act as a model litigant: see re Moline and Comcare [2003] AATA 827 and the directions given by the Attorney General of the Commonwealth.

A major difficulty in the consideration of this matter was that the nominated Chief Executive Officer of the Applicant Company, and indeed its controlling mind, Mr Danny Ryan has not drawn any distinction between himself, his plant hire company that operates under the firm name of Ryan Plant Hire and the Applicant. I am also satisfied from the evidence before me that at all times Mr Ryan has regarded the aircraft owned or leased by him, in particular the Cessna 310 aircraft bearing registration number VH-XMA as being conceptually no different to other items of plant owned by him and available for hire.

I am also satisfied that Mr Ryan at all times hoped to obtain an AOC for Aerolink Air Services Pty Ltd and regarded the availability of aircraft VH-XMA for hire as being necessary to ensure the viability of Aerolink as an ongoing concern.

The first allegations against the Applicant was that its nominated Chief Executive Officer, Mr Ryan undertook a flight from Bankstown to Maroochydore return in aircraft VH-XMA but did not make any entry in the aircraft's' Maintenance Release respecting those flights.

Mr Ryan's evidence was that he undertook the questioned flight in a private capacity as the registered owner of the aircraft. The purpose of the flight was to allow a junior pilot to accumulate flight time as a pilot of a Cessna 310 aircraft.

Mr Ryan conceded that he had failed in his duty, as he had not checked to ensure that the junior pilot to whom he would have delegated the duty of entering the maintenance release records had done so.

The failure to enter the total time in service of the aircraft in the maintenance release was clearly a breach of regulation 43B of the Civil Aviation Regulations 1988. However, Mr Ryan has acknowledged the offence and at document T35 of the documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, the report by an investigator into this and other incidents bears a handwritten note by the coordinator of the investigation that the offence appeared to be isolated, not for commercial gain and not of "real gravity".

The second incident relied upon by the Respondent in its decision of 6 June 2003 was a breach of Civil Aviation Regulations on 22 June 2001 when aircraft VH-XMA undertook a flight when two radio airworthiness directives were not complied with.

The pilot for the aircraft for the impugned flight was a Martin Khoury. At the relevant time he was, although not employed by the Applicant, nominated by the Applicant to be its chief pilot should an AOC be granted. Currently Mr Khoury is a member of the New South Wales police service.

Mr Khoury's recollection of the events surrounding his undertaking the flight on 22 June 2001 is found in a letter dated 9 March 2002 forwarded by him to the Respondent.

Mr Khoury's version states inter alia:

"1.I was rostered in VH-XMA on 22nd June 2001 to conduct a flight to Lismore. A arrived at Crane Air and noticed that Radio AD's were due on the aircraft. I immediately contacted Gary Arnold at Hawker Pacific (now with CASA) in Bankstown on his mobile phone and asked for the details on the required maintenance. I was advised at that time that the maintenance required were ELT related and required battery replacement.

I had known that this maintenance was due (from a previous inspection of the maintenance release) and notified Alison Dudding, who was responsible for managing the Cessna 310 aircraft for Danny Ryan, numerous times via telephone and e-mail of the impending maintenance prior to this date.

I carried a portable ELT (as I always due) in my headset bag as an alternative. It was my understanding at the time that this was an acceptable alternative to the maintenance. At no time did I knowingly prepare to, or fly, and [sic] aircraft that was in need of maintenance at that time. I made every effort to contact relevant people.

2. I conducted the flight without incident and as always flew the aircraft in a manner that is expected from somebody with my experience. The flight was conducted almost entirely in VMS.

3. The maintenance for VH-XMA was authorised by Danny Ryan at a later date prior to the aircraft flying again."

Mr Ryan in his statement says that the required checks were performed as soon as it was noticed that they were required, which was discovered by the Applicant and not brought to its attention by CASA. Mr Khoury repeated in cross-examination that he had contacted Ms Dudding as the person to contact at Aerolink in order to have the maintenance carried out.

Cross-examined on this point, Mr Ryan responded by stating that at the time Mr Khoury had been nominated by him as the Applicant's proposed chief pilot and that he had relied upon the chief pilot together with Ms Dudding to ensure that the maintenance would have been done.

The aircraft in question was never owned by Aerolink Air Services Pty Ltd but the holder of the certificate of registration for the aircraft was at all times Mr Ryan. As such it seems to me, he cannot impose duties upon Mr Khoury, who on one version of events was not employed by the Applicant at all at this time. Mr Ryan must accept responsibility for the failure by his employee Ms Dudding and accept the responsibility, for the required maintenance lay with him and him alone. That is not to say that he was directly, as opposed to vicariously, responsible for the omission. That having been said, it was still Mr Khoury's decision to continue with the flight although he has explained his reasons for this. Exhibit R15 seeks to rebut Mr Khoury's explanation but that is not a matter that needs determination in these proceedings although my estimation of Mr Khoury is that he was an honest witness.

There was evidence from Mr Khoury and Mr Crane, Chief Executive Officer of Crane Air that the aircraft VH-XMA "owned" by Mr Ryan was well maintained. In addition if, as was inferred, Mr Ryan had deliberately ignored requests from either Mr Khoury or Ms Dudding to have the required maintenance carried out, this could risk a pilot refusing to fly and the loss of a charter. Mr Ryan is in the business of hiring plant and equipment and did not strike me as the sort of person who is "pennywise but pound foolish". I accept his explanation that those to whom he delegated duties did not bring the required maintenance requirements to his attention.

The third breach alleged in the Statement of Reasons is that unauthorised flights were undertaken by VH-XMA in the period March to June 2001.

Mr Ryan's evidence was that following the resignation of the Applicant's then chief pilot in or about June 2000 and the loss of its AOC, the company reverted to being a charter broker.

The flights in question were undertaken by VH-XMA which is owned by Mr Ryan and hired to other AOC operators eg Crane Air Pty Ltd.

Exhibit A7 is the statement of Rodney Michael Crane, the managing director of Crane Air Pty Ltd. In that statement he said that in January 2001 he telephoned an officer of the Respondent, Bruce Graham (aka Bruce Graham-Smith) and asked if he, Graham had any objections to Crane Air operating Danny Ryan's aircraft and that Graham had replied that he did not.

When called by the Respondent Mr Graham did not recall this conversation. Given the evidence of Messrs Crane and Ryan and the impression I formed of Mr Graham when giving evidence, I have no hesitation in accepting the evidence of Mr Crane on this point.

Civil Aviation Orders Part 82 section 82.0 at Clause 3.3 states:

"Each certificate authorising charter or regular public transport operations is subject to the condition that its holder ("the AOC holder") must not, without prior written approval of CASA, enter into an arrangement with a person who's application for a certificate is still pending ("the other person") under which the AOC holder agrees:

(a) to use, in operation covered by the AOC holder's certificate any aircraft proposed to be covered by the certificate sought; or

(b) to use, in connection with any operation covered by the AOC holder's certificate, any person proposed to be employed or engaged by the other person in connection with any operation proposed to be covered by the certificate sought; or

(c) to conduct any operation, or any part of an operation, proposed to be covered by the certificate sought."

As with Mr Ryan, Mr Graham seemed not to understand the difference between a firm and a company and the individuals who are the officers of and shareholders in a company. Not withstanding this, Mr Graham is quite correct in his letter of 18 December 2002 that Aerolink Air Services Pty Ltd is a separate legal entity from Ryan Plant Hire. I do not accept however, his statement that he believed the reference to Ryan Plant Hire Equipment did not refer to aircraft owned by Danny Ryan. He had been dealing with Mr Ryan for some time and the very reference to Ryan Plant Hire should have put him on notice.

Mr Crane also gave evidence that a CASA Flight Operations Inspector responsible for Crane Air, a Mr De Marco had informed him that he had no problems with the cross-hiring agreement with Danny Ryan. Mr Crane was not cross-examined on this point and Mr De Marco was not called to give evidence. I therefore accept Mr Crane's evidence on this point.

Again, I do not understand Mr Graham's evidence where he states that had he known that aircraft were to be hired from Danny Ryan, as opposed to Ryan Plant Hire, he would have informed Crane Air of the borrowing provisions. As stated above Mr Ryan is a separate legal person from Aerolink Air Services Pty Ltd and it was Aerolink that was applying for the AOC, not Mr Ryan.

So far as flights conducted in March and June 2001 are concerned two of those flights were conducted by Crane Air under its AOC and piloted by a Nicola Cassino, a pilot for the New South Wales State Forests. These facts were known to the Respondent and in a report by an investigator, S Bennetts, dated 15 August 2001 the conclusion drawn is that there was no sufficient evidence to support action for a breach of ss27 (2) of the Civil Aviation Act 1988.

The third flight namely that undertaken on 22 June 2001 was undertaken by Crane Air (trading as Aurora Aviation) under its AOC. The pilot Martin Khoury worked for Crane Air on a casual basis. Martin Khoury had also been nominated by the Applicant as its proposed chief pilot on 24 January 2000. As at 22 June 2001 he was employed as a casual pilot by Crane Air and the consideration by the Respondent of the Applicant's application for an AOC had been suspended (see fax dated 17 July 2001 contained in Exhibit A2).

Technically, as at 22 June 2001, the Applicant's application for an AOC was still "pending" however, any breach of clause 3.3 of section 82.0 of the Civil Aviation Orders was by Crane Air. It does not seem consistent with the intent of the orders that a person such as Mr Khoury should have his ability to earn his livelihood as a pilot suspended by the fact that the Applicant had nominated him as its chief pilot elect. As Mr Ryan points out Exhibit A4 at the time Mr Khoury was "unemployed" by the Applicant.

There is no evidence whatsoever that at any time Crane Air entered into any arrangements with the Applicant. Any arrangements were between Crane Air and Danny Ryan either personally or trading as Ryan Plant Hire. The question of the Applicant Company being a "party" to this arrangement does not arise.

The Respondent also alleged that the flights in question were in fact conducted by either the Applicant or Mr Ryan. The reply to this is that the Applicant acts as a charter broker, that is to say it holds itself out to the public as a company who can arrange the charter hire of aircraft.

Evidence of company business practice was given by Ms Tanya Miles, currently employed by the Applicant as its office manager.

Ms Miles conceded in cross-examination that if the charter is for five or less passengers, then if Mr Ryan's aircraft VH-XMA is available, then that aircraft is used. If the aircraft is not available or passengers exceed five, then other arrangements are made and other aircraft are used.

Whereas Ms Miles stated that invoices for charters are only given to customers by the charter company and that she forwards an account for the hire of the aircraft to that company, Exhibit R16 produced from subpoenaed material evidences that the Applicant has invoiced customers direct. See also Exhibit A4 paragraph 78, which reads:

"Martin Khoury and Nicco Cassino were included as pilots in the Crane Air Operations Manual. The flights were conducted by Crane Air but invoiced by Aerolink as the charter broker of the flights."

Further evidence regarding the Applicant's operations were sought to be adduced from a covert operation directed against the Applicant by the Respondent in respect of a flight from Bankstown to Moruya on 28 February 2003.

The evidence is that as part of an operation deliberately targeting the Applicant, an employee of the Respondent, a Ms Eckardt, on 26 February 2003, made a telephone call to the Applicant using a number given in a Yellow Pages advertisement. She requested a private charter from Bankstown to Moruya on Friday, 28 February 2003.

At or about 1630 hours on Wednesday, 26 February 2003, Ms Eckardt received a telephone call from a person identifying herself as "Tanya" from Aerolink. She quoted a price for the charter and told her the registration of the aircraft was VH-XMA, the name of the pilot a Mathew Hinley and that departure from Bankstown would be 1130 hours and to be there 20 minutes prior.

Ms Eckardt was told upon inquiry that Aerolink did not have facilities for credit card payment and a receipt would be sent to her by Monday from "Joe" in accounts.

Ms Miles disputes this evidence. She says that she said to Ms Eckardt words to the effect, "Don't worry about payment on the day, we will arrange for an invoice to be sent to you after the flight".

On Friday, 28 February 2003, Ms Eckardt together with a Ms Mitchell, also an employee of the Respondent, boarded VH-XMA for the flight to Moruya. Prior to boarding, both passengers were informed by the pilot that "the boss Danny will be coming for the trip because he doesn't do much flying these days".

Much was made by the Respondent of the fact that Mr Ryan was aboard the aircraft. Mr Ryan stated that he wished to fly the aircraft on the return leg Moruya to Bankstown and as owner of the aircraft felt quite free to place himself aboard the aircraft.

I found Mr Ryan's attitude to this rather peremptory. The aircraft, having been chartered by Ms Eckardt, he has acted in total disregard of her rights as charterer and imposed himself on the flight on the basis that as owner of the aircraft, he has some form of entitlement, leaving it to the charterer to object to his presence.

Prior to the flight commencing, Ms Eckardt wished to pay for the flight and receive a receipt. Mr Ryan arranged for Ms Miles to type up a receipt and it was handed to Ms Eckardt. That receipt on Aerolink letterhead is reproduced at T61 page 194.

Ms Eckardt at document T61 page193 says:

"My telephone account shows I received a message at my messagebank at 4.07pm. The message was from Tanya of Aerolink Air Services who said words to the affect:

'I need to get your mailing address basically so the company we do business with Airtex can send you an invoice, receipt for the flight because the one we issued was only an interim receipt because we had to do it urgently.'

On Monday 3 March 2003 I received another similar message from Tanya."

Mr Cowley is the chief pilot for Airtex Air Services Pty Ltd trading as Airtex Aviation. His evidence was that the pilot Mathew Hinley was employed by Airtex and the flight had been approved as a flight by Airtex operations manager.

In evidence to the Tribunal Mr Crowley stated that if required aircraft are cross-hired from other operators. He also stated that the CASA Flight Operations Inspector for Airtex at the time of the Moruya flight informed him that she did not have any problems with the cross-hiring arrangement between Airtex and Danny Ryan or Ryan Plant Hire and this statement was not challenged in cross-examination.

Exhibit A17 is the statement of the pilot of the Moruya flight, Mathew Hinley. He states that from about June 2002, he was employed by Airtex as a pilot on a casual basis. He also stated:

"...Although many of the charter flights that I flew as a pilot-in-command for Airtex were brokered by Aerolink and used aircraft owned by Danny Ryan, the charters at an operational level were always conducted by Airtex. This is why it was necessary for me to undertake the check flight on 18 October 2002 with Rod Cowley before the charter to Adelaide from 21-23 October 2002."

At T62 page 196 in the record of an interview between Mr Hinley and a CASA investigator, Robert Paice the following questions and answers occur:

"Q - Who is the operator of the aircraft?

A - Airtex Aviation

Q - What class of operation were you conducting?

A - This was a charter flight.

Q - What category of licence do you have?

A - I have an ATPL and my ARN is 507737."

Document T64, page 230 is the passenger manifest for the flight to Moruya on 28 February. It bears the letterhead of Airtex Aviation, which to my mind confirms the evidence of Mr Hinley, that the flight was conducted by Airtex at the operational level.

What is quite apparent given the evidence of both Ms Eckardt and Ms Miles, Mr Hinley and Mr Ryan, is that Ms Eckardt in her insistence on 28 February 2003 in paying for the charter before the flight commenced, acted as an agent provocateur and had she been content to wait for either an account or even a receipt, one would have been forwarded to her by Airtex Aviation.

The whole exercise of 28 February 2003 was designed to obtain evidence that the Applicant Company was acting not as a charter broker but as a charterer using its aircraft.

The factual situation is to my mind and I so find that Mr Ryan is concerned to make money out of the assets in his hands, namely aircraft. As he said in his statement:

"The delays in Aerolink's AOC application have cost Aerolink in the vicinity of $2,000,000 and is rising. Aircraft which would have been used under Aerolink's AOC have been little used. One Bandeirante has been sold, one was leased to Air Fiji and the other Bandeirante has not been flying at all and is in Aerolink's hangar. The two aircraft's, the Cessna 310's have been going out on private hire as we have been forced to act as a charter broker. Any work that came our way we had to give to other operators and received a minimal commission..."

I doubt that the delays referred to have cost Aerolink Air Services Pty Ltd in the vicinity of $2 million as alleged. As Mr Ryan stated in evidence he owns the aircraft covered by the requested AOC in these proceedings and Aerolink did not own any aircraft. No doubt if an AOC were granted Mr Ryan would hire his aircraft to Aerolink thus the refusal of the AOC to the Applicant has had a direct financial consequence to Mr Ryan as well as resulting in the Applicant Company failing to make any profit.

The method adopted by Mr Ryan to utilise his aircraft has been to hold out Aerolink as a company from which aircraft can be chartered. No doubt any prospective charterer is in reality uninterested in the dealings engaged in by Aerolink, all that is apparent to them that Aerolink has offered to charter to them an aircraft (and pilot) for a sum of money which offer they either accept or reject.

In Southern Cross Airlines Pty Ltd and ANOR v McNamara 97 FLR 72 at p80 Bollen J said regarding categories of air service operations:

"...It seems to me important for a Court to have a look at the reality of the situation and not just simply the way a party seeks to dress the operation up."

Applying that test, it is clear that at all relevant times, the Applicant Company held itself out to the public as a company which had aircraft and pilots available for charter. The reality was that it was no more than a "front" company through which Mr Ryan was able to organise for other companies with an AOC to charter his aircraft.

At no time was Mr Ryan or Ryan Plant Hire the Applicant for an AOC. Paragraph 3.3 of section 82.0 of the Civil Aviation Orders Part 82 can therefore have no application to this Applicant, nor to those companies that hired aircraft from Mr Ryan.

Ms Miles evidence was to the effect that billing is normally by way of cross- invoicing. The company carrying out the charter should bill the charterer and Ryan Plant Hire invoices that company for the hire of the aircraft. As stated above, this does not always happen but to me the end result is the same, namely Mr Ryan uses Aerolink Air Services Pty Ltd as a means by which he obtains monies for the hire of his aircraft the actual operations of the charter being conducted by a company with an AOC.

Given that Mr Ryan has plants sitting idle as a result of the failure of the Applicant to obtain an AOC, this seems to me to be no more than sound commercial practice.

So far as safety is concerned, there is no evidence that Mr Ryan's aircraft were grounded, indeed the evidence from the Applicant's witnesses was to the effect that his aircraft were well maintained. As the Applicant's Counsel pointed out in submissions, there could have been no doubt as to the safety of Mr Ryan's aircraft as the Respondent was quite content to permit two of its employees to fly as passengers in one his aircraft.

ALLEGED UNAUTHORISED MAINTENANCE BETWEEN 23 AND 30 OCTOBER 2003

On 1 November 2002, CASA inspectors Messrs Simpson and Arnold inspected aircraft VH-XMA at Bankstown Airport. The aileron and rudder trim control systems of the aircraft were inspected and found to be outside the limitations specified in the aircraft's service manual.

As a result of this inspection, Mr Ryan, the owner of the aircraft was instructed to endorse the aircraft's Maintenance Release with these defects and he did so.

On 30 October 2003, Mr Condon, a Licensed Aircraft Maintenance Engineer, then employed by Cessna Pacific, was given the task of inspecting the aileron and rudder turn tabs on VH-XMA a Cessna 310 aircraft. Using a pressure gauge to ensure that a one pound pressure was applied and dial indicator which read in thousands of an inch, he tested the aileron and rudder trim tabs for variation and found that they were within the manufacturers limits.

Mr Condon pointed out that the Cessna 310 maintenance manual requires the test to be carried out using one pound of force and the measurement of play is in one thousands of an inch, so a dial indicator is used which measures in one thousands of an inch. A pressure gauge is used to obtain an exact application of force. He also stated that before performing the test, the primary flight control rudder and aileron have to be put in the neutral position. This is done by operating a "dial" in the cockpit of the aircraft.

Upon completing his test Mr Condon contacted Mr Simpson who arrived and carried out his own measurements using a steel ruler. He agreed with Mr Condon that the measurements were within manufacturer's specifications.

In evidence, Mr Condon agreed that to simply "wiggle" the aileron and rudder would not be an accurate measurement of force. Asked to inspect the turn tab system by Mr Simpson, he did not observe grease over it.

Evidence was given by Mr Simpson that he had inspected VH-XMA on 21 October 2003. Again he did not apply force by means of a spring gauge so as to accurately measure the force applied but used "light finger pressure". He measured the play by using a steel ruler calibrated in 64th of an inch. Neither on this occasion nor on 1 November 2002 did he or his fellow inspecting officer enter the cabin of VH-XMA.

Attached to Mr Simpson's witness statement as an annexure F is a copy of a Maintenance Release for VH-XMA. Whereas Mr Ryan has endorsed the Maintenance Release to show that the aileron and rudder trim tabs had excessive movement he has added the words "entered in error". Cross-examined regarding this entry Mr Ryan stated that following the visit by the CASA inspectors he spoke to other licensed aircraft maintenance engineers who had a "look at the movement that was in the turn tabs and said that is not excessive".

So far as any difference in the degree of movement in the aileron and rudder trim tabs between 23 October 2003 and 30 October 2003 is concerned I am not satisfied that there has been any wrong doing by Mr Ryan. The measurements carried out by the CASA inspectors were subject to variation and not in accordance with the aircraft manufacturer's requirements. The requirement is that one pound of force be applied and if the resulting measurements are in thousands of an inch it requires little variation in pressure to obtain differing results. The degree of force applied by the inspectors was speculative and the measuring device steel ruler not as accurate as the dial gauge used by Mr Condon. There is no sufficient evidence to make any finding that any other form of unauthorised maintenance was carried out.

If, as alleged by the CASA inspectors, the aileron and rudder trim tabs had excessive movement, then this would in my view prima facie constitute a major defect in the aircraft. As such it was incumbent upon Mr Ryan to endorse the aircraft's maintenance release to the effect that it was unairworthy and to have the defect remedied (see sub regulation 47 (1) of the Civil Aviation Regulations). Instead, he took advice from other licensed aircraft maintenance engineers who did not themselves carry out accurate tests and endorsed the entry in the Maintenance Release as having been made in error. This demonstrates an attitude that Mr Ryan will, on occasions, not strictly adhere to directions or requirements in Civil Aviation Legislation.

Other allegations of improper maintenance allegedly carried out by Mr Ryan were adduced from a Mr Gary Forbes. Mr Forbes is a former shareholder in, and employee of, the Applicant. Currently he is in dispute with the company regarding entitlements and is the defendant in a Magistrates Court prosecution alleging that he obtained money by defrauding the Applicant. The various allegations have been denied by Mr Ryan and I do not regard Mr Forbes as a witness of credit. His allegations were not corroborated and I reject his evidence.

A further matter that does concern me is a direct clash of evidence between Mr Ryan and Mr Hinley as to whom flew aircraft VH-XMA from Moruya to Bankstown on 28 February 2003. Mr Ryan stated in cross-examination that although he had gone on the flight with the intention of piloting the aircraft back to Bankstown, he did not do so because of the chance of instrument meteorological conditions occurring. Mr Hinley in his evidence stated that Mr Ryan did fly the aircraft from Moruya to Bankstown.

It was put to Mr Ryan in cross-examination that he had not entered the flight from Moruya to Bankstown in his logbook and he replied he had not done so because he had not undertaken the flight as pilot. Given the evidence of Mr Hinley and the evidence that Mr Ryan's reasons for being present aboard the chartered aircraft was with the intention of flying it back, I accept Mr Hinley's evidence that Mr Ryan was the pilot on the Moruya-Bankstown flight and conclude that Mr Ryan denied that in cross-examination to cover the fact the flight was not entered in his logbook.

The real objection to the issue of an AOC to the Applicant by the Respondent is that the Chief Executive Officer of the Applicant Company, Mr Ryan, does not have the ability and competence to properly conduct and supervise the air operations of the company.

Mr Crawford is a Flying Operations Inspector for CASA stationed at Bankstown. He was in January 2003 appointed as the Project Manager to oversee and supervise the assessment of the AOC application made by the Applicant. I note as Mr Crawford pointed out in his evidence two years had elapsed since the application had been made.

Of particular relevance to my decision in this matter is Mr Crawford's evidence that the consideration of an AOC application involves three parts, namely:

i.

the document phase,

ii.

the inspection phase, which involves inspection of the facilities and other matters, and

iii.

the appropriate certifications which need to be made prior to the issue of the AOC.

Not all the required documentation was immediately forthcoming from the Applicant, in particular the nomination of the chief pilot. However, Mr Crawford has managed to establish a working relationship with the other shareholder in the Applicant Company, Mr Garside, who is an experienced commercial pilot and my understanding of Mr Crawford's evidence is that steps were proceeding towards the issue of the AOC when he ceased to consider the matter. The reason he ceased consideration was that he formed the belief that he could not recommend the issuing of an AOC whilst Mr Ryan remained CEO of the company.

The reason Mr Crawford advanced for not proceeding further with his consideration of the Applicant's application for an AOC conforms with the Respondent's ostensible reasons for refusing the AOC, which reasons commence at document T2 page 3 and are dated 6 June 2003. At page 8 of the statement of reasons, the decision-maker states:

"Further, in light of your dominant position in the company and the compliance history outlined above it appears that your organisation is not suitable to ensure that the AOC operations can be conducted or carried out safely, having regard to the nature of the AOC operations, in that you, as the Chief Executive Officer, and Aerolink have consistently breached provisions of the Act and Regulations."

There is no evidence whatsoever before me that Aerolink has in any way breached provisions of the Act and Regulations.

Apart from the CEO, the other main consideration for Mr Crawford in the granting of an AOC is the nominated chief pilot.

Evidence was also given by Mr Bruce Graham, a CASA officer, who has had dealings with Mr Ryan and in the assessment of the suitability of persons nominated to be the chief pilot of the Applicant. I found Mr Graham a truculent witness and I accept that there have been personal clashes between him and Mr Ryan. The only other witness of note was Mr Garside whom I found to be a credible witness and who, with his experience in aviation will be of material assistance to the Applicant.

During his evidence Mr Garside demonstrated the important duties of the chief pilot. He said that although he had a technical role in the company and was a director it was not his place to interfere in the chief pilots operations and responsibilities. This to me again demonstrates that the responsibility for the safe operations of the company devolves upon the integrity and efficiency of the chief pilot. Compare Mr Crawford's last statement in evidence in answer to counsel for the Respondent "he (the chief pilot) sets the safety tone for the operation".

A matter that was extensively agitated by the Respondent in these proceedings was that to grant to the Applicant an AOC, the Tribunal, standing in the shoes of the decision-maker, had to be satisfied of all the qualifications as set forth in paragraphs (a) and (b) of ss28 (1). Given the evidence of Mr Crawford in these proceedings, it is clear that all the requirements necessary for the Applicant to meet before the issue of an AOC have not been considered by the Respondent nor has evidence been put before me sufficient for me to properly make that determination.

In Civil Aviation Safety Authority v Allan [2001] FCA 1064; 114 FCR 14 Moore J pointed out that the powers of this Tribunal upon review are limited to those set forth in ss 43 (1) of the Administrative Appeals Tribunal Act 1975. Included in those powers is the ability of the Tribunal to remit a matter to the decision-maker for reconsideration with or without directions.

The real gravamen of the Respondents dispute with the Applicant regarding the issue of an AOC is that it does not regard Mr Ryan as a suitable CEO as he has himself consistently breached provisions of the Civil Aviation Act and Civil Aviation Regulations.

In its reasons for decision, the Respondent has set out four instances of alleged wrongdoing by Mr Ryan. The first of these has been admitted by Mr Ryan and it is to my mind no more than an oversight on his part, albeit demonstrating a lack of care. As pointed out by a senior officer of the Respondent, it was not of real gravity. There is no reason to believe that it is the type of neglect that would flow through and affect Mr Ryan's attitude to safety as CEO of the Applicant Company.

The other instances referred to in the document dated 6 June 2003 have not been shown to be breaches by Mr Ryan of any Act or Regulations. To my mind the arrangements made for the hire of Mr Ryan's aircraft were legitimate and I find that the parties did have the Respondent's consent to use Mr Ryan's aircraft. There is no evidence that Mr Ryan, as opposed to those to whom he delegated the task, allowed an aircraft to fly when RAD Directives were not complied with.

I am not satisfied that there was any unauthorised maintenance by Mr Ryan on aircraft VH-XMA in the period between 21 October 2003 and 30 October 2003. The evidence relied upon by the Respondent in this regard is totally unsatisfactory.

I also reject the claims of other unauthorised maintenance made through the evidence of Mr Forbes for the reasons outlined when dealing with Forbes evidence.

More disturbing however is my finding that Mr Ryan took it upon himself to "override" the apparent maintenance defect entered by him following direction by CASA inspectors into the Maintenance Release for aircraft VH-XMA on 1 November 2002.

I also find that contrary to his evidence to the Tribunal, Mr Ryan did fly VH-XMA from Moruya to Bankstown on 28 November 2003.

As stated above, the Respondent's real objection to the granting of an AOC to the Applicant is the position Mr Ryan would hold in the company. The Respondent has pointed to breaches by Mr Ryan, which it says indicate that the company would not be capable of complying with the provisions of the Civil Aviation Act, Regulations and Civil Aviation Orders that relate to safety.

My overall impression of Mr Ryan is that he is a man, who in his business dealings wants to get things done and is at times impatient and resentful of what he regards as unhelpful restrictions upon his ability to operate his business. It is also apparent that he has had personality clashes with CASA staff in particular Mr Graham.

As pointed out by Mr Crawford, whereas the CEO sets the "tone" of the company so far as safety is concerned, the operations are in the hands of the chief pilot. This was corroborated by Mr Garside.

Whereas Mr Ryan personally has failings, there is no evidence that these would so seriously impact upon the Applicant Company as to render its operations unsafe. Moreover, if an experienced and competent chief pilot were appointed, any perceived problems would be obviated. It is clear from other cases before this Tribunal, see for example Allan trading as Jackeroo Aviation and Civil Aviation Safety Authority [2000] AATA 929, Moores Airspray Pty Ltd and Civil Aviation Safety Authority (unreported AAT decision no 10383) and Coral Sea Airlines Pty and Civil Aviation Safety Authority [1999] AATA 329 the primary responsibility for the safe operation of any AOC holder is regarded by the Respondent as being that of the chief pilot.

In Re Lea and Anor and Civil Aviation Safety Authority [1999] AATA 1021 the Tribunal stated:

"Mr MacKerras provided a statement to the Tribunal which sets out the role of the Chief Pilot and the manner in which CASA expects it to be performed. It is not sufficient that the Chief Pilot achieves literal compliance - guaranteeing the safety outcomes requires giving effect to the intention as well as the letter of the law. The leadership of the chief Pilot must be positive and enhance the public interest. Clearly, the influence of the Chief Pilot is immediate and pervasive - our expectation is that chief Pilots will engender a healthy regard for the aviation law and nurture a sound understanding of the intended safety outcomes. When there is an increased risk of the safety outcomes being compromised by poor performance of individuals within an aviation organisation, the Chief Pilot is most often the person best placed to correct the situation..."

Mr Garside pointed out in his evidence that at the time of the company held an AOC Mr Ryan was concerned with the financial side of the company and the day to day running was the responsibility of Mr Forbes. It seems uncontrovertible that the reason the company lost its AOC was its inability to attract and retain a chief pilot acceptable to the Respondent at a time when there was a large demand for experienced pilots in the general aviation industry. Were the company to obtain an AOC now, there is no reason to believe that Mr Ryan would seek to impose himself in the day to day operations of the company, and in particular to override safety measures. I believe that a lot of the difficulties the Applicant Company has faced is purely because of personality clashes between Mr Ryan and various CASA officers.

I find the objection to the issuing of an AOC based on the Respondent's assessment of Mr Ryan is misconceived. The ultimate responsibility for safety will be with the chief pilot and the Respondent is responsible for approving that person.

I intend to set aside the decision under review. Given the decision of Moore J in CASA v Allan [supra] and the matters alluded to by Mr Crawford in his evidence, I believe the decision of the Tribunal should be based on the decision by Deputy President Breen in Re Moores Airspray [supra], see particularly paragraph 7 of the learned Deputy President's decision.

As I am not in a position to make a final decision at this time, I will make the following directions, namely:

This matter is adjourned to Monday, 1 March 2004 at 9.30AM.

The Respondent is, on or before the 27 February 2004, to do all things necessary on its part to facilitate the granting of an AOC to the Applicant.

Liberty to apply.

I certify that the 104 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed: (B. Sinclair) .....................................................................................

Associate

Date/s of Hearing 24, 25, 26, 27, 28 November 2003 and 1 December 2003

Date of Decision 24 December 2003

Counsel for the Applicant M A Robinson

Solicitor for the Applicant Staunton and Thompson

Counsel for the Respondent Mr I Harvey

Solicitor for the Respondent A Anastasi, Civil Aviation Safety Authority