Decision In relation to Q98/627 in the name of RICHARD FREDERICK LEA, the Tribunal affirms the decision under review. In relation to Q98/628 in the name of KERRY THERESE HOGAN in her capacity as a Director of Wedgetails Pty Ltd, the Tribunal sets aside the decision under review and remits the matter to the respondent with a direction that the approval sought by her application be granted subject to the condition that RICHARD FREDERICK LEA have no role whatsoever in the operation of any business or flying operation conducted under the auspices of that approval other than that of employed Pilot.

AVIATION - cancellation of Chief Pilot's license - cancellation of operator's approval - hot air balloon operation - damaged balloon repaired by unauthorised person - serious disregard by applicant Lea of obligations as licensed Chief Pilot - his application for reinstatement of that license refused - decision affirmed - applicant Hogan's application for approval as operator granted.

24 December 1999 Deputy President DP Breen, Presidential Member

1. There are two decisions for review by this Tribunal, namely the decision dated 24 June 1998 to cancel the approval for Richard Frederick Lea to act as the Chief Pilot for Wedgetails Pty Ltd, trading as Dreamtime Balloons (Q98/627) and the decision dated 30 June 1998 to cancel the Air Operator Certificate for Kerry Therese Hogan in her capacity as a Director of Wedgetails Pty Ltd (Q98/628).

2. At the commencement of the hearing on 13 July 1998 clarification was sought be me as to file numbered D98/7. Mr Lawford, Solicitor for the applicant, confirmed that the original application, D98/7, had been superseded by the two subsequent applications. However, as the "T" Documents from that file were to be used in the present applications, D98/7 was kept alive for the duration of the hearing. The respondent tendered Supplementary "T" Documents for the present applications.

3. The hearing of this matter was held in Alice Springs on 13 July to and including 17 July 1998. The applicant was represented by Mr R Lawford, Solicitor and the respondent by Mr L Holcombe, in-house Counsel for the Authority. The entire five days allowed for the hearing were occupied by the presentation of evidence and the conduct of views detailed in paragraph 7 of these Reasons. The Tribunal under Section 39 of the Administrative Appeals Tribunal Act 1975 is obliged to "ensure that either party to a proceeding before the Tribunal is given a reasonable opportunity to present his case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents."

4. In point of practice, of course, the right to make submissions in either party to a proceeding before the Tribunal is not limited to submissions in relation to tendered documents. It extends to cover oral testimony as well.

5. Thus it was necessary, though in other circumstances I could have given a decision there and then, to further adjourn the matter part-heard and to require the parties to exercise their right to make submissions by doing so in writing.

6. Written submissions were received from Mr Holcombe on 14 August 1998 and from Mr Lawford on 21 August 1998. Mr Holcombe by then had left the service of the Authority and the right in the respondent to make written submissions to those in reply to Mr Lawford was exercised by a Mr A Collins, the submissions being received on 7 October 1998.

7. The parties tendered numerous documents, 40 in all, which became exhibits before the Tribunal. Mr Holcome suggested that a view of a balloon operation might be in order to enable the Tribunal to see first hand how the balloons operated. That suggestion was accepted by all parties and occurred at 5.30 am on 14 July 1998. The respondent had arranged for an inspection of a balloon operation conducted by Mr Sanby. An inspection was then conducted of the premises of Mr Lea and those of Mr Sanby.

8. In addition to the oral evidence of the applicants, oral evidence was taken from:

9. Mr Lawford indicated his acceptance of the description of the background to the matter advanced in Mr Holcombe's primary submissions lodged on behalf of the respondent. The background to Q98/627, the matter in which Mr Richard Lea is the applicant, is presented in the following terms:

"0n 24 June 1998, Mr Nicholas LeRay-Meyer, Acting Regional Manager, West Region of the Civil Aviation Safety Authority refused to appoint Mr Richard Lea as Chief Pilot of Wedgetails Pty Ltd.

The review of that decision was conducted by the Tribunal between 13 -17 July 1998.

The statutory obligations imposed on a Chief Pilot of a charter balloon operator are set out in Civil Aviation Order 82.7. The relevant provision of Appendix 2 to that Order is set out below:

1.3 A person will not be approved as a Chief Pilot unless:

(a) in the opinion of the Authority, he or she has maintained a satisfactory record in the conduct or management of flying operations; and

(b) before being approved as a Chief Pilot, the person has:

(i) been assessed, by a CAA examiner, as suitable to carry out the responsibilities of a Chief Pilot; and

(ii) passed an oral examination conducted by such an examiner covering the regulatory requirements for the safe conduct of aerial work operations and charter operations.

The responsibilities of a Chief Pilot are set out in section 3 of that Order. Amongst the principal responsibilities is to ensure that the operator's flying operations are conducted in compliance with the Act, the Regulations and the Civil Aviation Orders (section 3.1).

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 (page 3 of R18).

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. If the Chief Pilot does not uphold that responsibility quickly and consistently, then the Authority is duty bound to act to prevent further increases or even the maintenance of the higher risk. Furthermore, if an incident of itself is significant or a pattern of inappropriate behaviour emerges, the Authority must re-examine the suitability of the organisational controls or the key personnel to satisfy the public expectation.

When making decisions about the continuing suitability of organisations to hold AOCs or individuals to hold key appointments, I believe that it is fundamental that we are dealing in each case with a privilege, rather than any notion of a right. Any exercise of that privilege must be in a manner which is lawful and in the context of the paramouncy of public safety."

10. The background in the matter the subject of Q98/628 in which Ms Kerry Hogan is the applicant, is presented in these terms:

"On 30 June 1998, Mr Nicholas LeRay-Meyer, Acting Regional Manager, West Region of the Civil Aviation Safety Authority, cancelled the Air Operator Certificate (AOC) held by Wedgetails Pty Ltd.

The review of that decision was conducted by the Tribunal between 13 - 17 July 1998.

Following the resignation of Mr Richard Lea, Miss Hogan is now the sole director of Wedgetails Pty Ltd.

An AOC is issued subject to a number of conditions. Those conditions are statutory conditions contained in sections 28BD to 28BI of the Civil Aviation Act or may be specified in the AOC of a particular air operator.

Section 28BA sets out the immediate consequences if an operator breaches certain statutory conditions. As an example, if an operator breaches a condition imposed by section 28BC, a condition which imposes an obligation to comply with the civil aviation laws, the AOC does not authorise that flight, nor any others whilst the breach continues. In contrast, if an operator breaches the condition set out in section 28BI, the obligation to comply with the Civil Aviation (Carriers' Liability) Act 1959, the AOC continues to authorise the flights. It is, however, a ground upon which CASA may suspend or cancel the AOC.

A statutory decision maker makes decisions from within a certain framework. In relation to the civil aviation laws that framework obviously includes the Act, Regulations, Orders and certain Directions. However, that framework also includes the strong considerations of government policy, international conventions and of the recommendations and decisions of the various Inquiries Courts and Tribunals.

During the course of the hearing, reference was made to the 'duty' of CASA officers to act in circumstances such as those presented to the Tribunal in this case. That duty to act flows from a number of sources. In order to provide the Tribunal with an adequate background from which it may make a decision I have set out a number of those sources.

Subsequent to the fatal Monarch accident, the House of Representatives Standing Committee on Transport Communications and Infrastructure produced the 1995 Plane Safe Inquiry into Aviation Safety and general Aviation Sectors. In that Report, the Committee made the following comments in the context of charter operators and financial pressures:

5.19 The general aviation sector is characterised by strong competition which could exert downward pressure on profits. The need to defend investment without skimping on safety is reduced by the small amount of money needed to commence a business.

5.20 In short, these are the preconditions for avoiding essential maintenance which endangers safety. The anecdotal evidence supports this conclusion. So does the behaviour of pilots who break the rules.

5.21 One also has to take into consideration the conclusion of Library studies that the number of charter accidents increased over time in the last 14 years.

Additionally, in the Report of the Commission of Inquiry into the relations between CAA and Seaview, the conclusion of Commissioner James Henry Staunton AO CBE QC was:

The Commission finds that the public was entitled to expect significantly higher standards from both Seaview Air and the CAA. The recommendations seek to address some of the specific problems that were evidence to the Commission.

In respect of the CAA the Commission identified a number of systemic problems, that need to be addressed.

The Authority suffers from an institutional timidity in respect of enforcement action. The problem was acknowledged by CASA. The Commission is not urging prosecution of every breach. Nonetheless, it was plain that the CAA was not responding to clear breaches.

That strong action, whether prosecution or suspension or both, should be taken against those who deliberately or repeatedly flout the rules, or compromise safety.

Part of the problem is the policy of 'graduated response". It is susceptible to misunderstanding. At best, it restates a truism, namely that the punishment must fit the crime. At worst, it is misleading, and inappropriately deflects officers from the application of more serious penalties or sanctions in favour of something less severe, such as counselling.

Although the Authority asserted that, consistent with the policy of graduated response, prosecution or suspension may be taken at once, if the circumstances warrant, it was plain that many officers in the field did not so regard the enforcement options.

The Commission believes that the term 'graduated response' has outlived its usefulness and should be abandoned. A fresh 'enforcement policy' to make it clear to officers that it is not necessary to first counsel operators before prosecution or suspension (or both) if the circumstances warrant, should be introduced.

The Commission repeatedly observed situations in which the operator was asked for information or assurances, that were then accepted without either investigation or follow up. That was the approach even when the operator had a clear motive to conceal or misrepresent the truth. Such an absence of scepticism fosters in operators contempt for the regulatory authority.

The Authority, through training and instruction of its officers, place greater emphasis on thorough investigation. Information must be checked for its veracity and accuracy. Assurances should be followed up.

The approach of the CAA to information uncovered through surveillance was examined. The CAA received considerable intelligence concerning Seaview Air in the latter part of 1993. Ramp checks were then undertaken. They revealed multiple deficiencies. Those deficiencies were then treated as the problem. They were individual transgressions, more or less serious, depending on one's view. However, they were not the problem. They were symptoms of the problem. The whole story about the operation was hardly likely to be uncovered by one ramp check.

The transgressions ought to have been examined in the context of intelligence that had been received concerning Seaview Air. The unsatisfactory ramp checks were, in fact, confirmation of the existence of a larger and more ominous picture. Further inquiries were not made. The larger picture was ignored.

That the Authority emphasise to its officers that evidence of non-compliance must be examined to determine whether a transgression may be a symptom of a larger problem."

11. In Mr Lea's matter, Mr Holcombe's written submissions under the heading "Issues" adequately, indeed comprehensively, identifies the issues as they were raised by the evidence.

"The person who made the decision to not approve Mr Lea as the Chief Pilot of Wedgetails, Mr Nick LeRay-Meyer, Regional Manager West Region of CASA, did not give evidence to the Tribunal as the factual basis of his evidence was not in dispute and the Tribunal had accepted that he had approached his duty in an independent and objective manner. There was nothing additional that he could provide to the Tribunal that had not already been put before the Tribunal by other witnesses and in the written submissions.

Mr LeRay-Meyer is a senior administrator in CASA who has spent a life time in the aviation industry both as a fighter pilot in the RAAF and in the civil aviation industry. He objectively and independently assessed Mr Lea's application for approval as Chief Pilot and refused to give that approval.

Mr Lea contended that it was the custom of the local ballooning industry to wait for the next annual 100 hourly inspection to certify that maintenance had been carried out in the preceding time period. No corroboration of his statements was presented to the Tribunal. Ms Hogan stated that her knowledge was obtained from Mr Lea (lines 10 - 15 page 350). Mr Jeeves presented verbal evidence to the contrary (pages 405 and 406) and also corroborative evidence to the contrary (R31). As a matter of plain commonsense, if maintenance is carried out on a balloon it is a simple and expedient matter to certify in the log book at that time. After all, the repairs have to be mapped in the log book anyhow to enable the operator to keep track of the state of their balloon.

Mr Lea stated on a number of occasions that CASA had known about illicit practices amongst balloon operators and had done nothing about it. The respondent led evidence of an independent audit conducted as a result of Mr Lea's complaints in 1995. That independent audit had found no evidence of the alleged illicit practices. Mr MacKerras explained to the Tribunal the processes CASA went through to ensure that those allegations were investigated in a transparent and objective manner (pages 227 and 228). In addition an Australian Federal Police investigation was requested by CASA as a result of bribery allegations brought against CASA by Mr Lea. Following a preliminary investigation the AFP found no grounds upon which to base any investigation (R19). Mr Lea himself has not brought any evidence which substantiates his claims.

Mr Lea has admitted to breaching Civil Aviation Regulation:

* 41 - Maintenance schedule and maintenance instructions (line 5 page 147)

* 42ZC - Maintenance on Australian aircraft in Australian Territory (line 13 page 150)

* 42ZE - Certification of completion of maintenance on aircraft in Australian Territory (line 1 page 152)

* 282 - Offences in relation to licenses, certificates and authorities (line 8 page 153)

One of the other laws that the Respondent considers Mr Lea has broken is Civil Aviation Regulation 283 - false statements. The Respondent's view is based on:

* the incident involving the log book record of the first flight of balloon VH-CNR and the subsequent amendment of the log book. Exhibit R23 provides the supportive evidence (page 245). Page 5 of Exhibit R5 also relates to this issue. (As an aid in assessing that exhibit, Exhibit R37 was provided to the Tribunal); and

* the mis-statements by Mr Lea to Mr Jeeves about the extent of repairs to the balloon (pages 432 - 436).

Mr Lea does not satisfy the statutory requirements for a Chief Pilot. Those requirements on a person seeking to be a Chief Pilot go far beyond experience as a pilot or indeed a regard to safety. The statutory requirements extend to a suitable record in the conduct or management of air operations and that the applicant is suitable as a Chief Pilot. At the time Mr Lea applied for the Chief Pilot licence he had 25 - 30 hours experience as a Chief Pilot (line 28 at page 123). Soon after he commenced work as a Chief Pilot he knowingly broke the law and continued to do so. He did not seek advice from CASA nor did he make any attempt to remedy his breaches. His record as a Chief Pilot in the conduct or management of air operations is very poor.

He has a demonstrated history of non-compliance with the civil aviation laws. In his words, he was motivated by commercial concerns but the continuing breaches when there were alternatives available to him indicate more than simple commercial expediency. The flights continued through December 1997. Flights were conducted on 3, 7, 20, 22 and 23 December 1997. It was open to Mr Lea and Wedgetails to arrange for the maintenance to be properly completed between 3 and 7 December 1997. That would have resulted in only one illegal flight. Instead, he deliberately chose to continue to break the law.

Mr Lea (on page 65 line 3 and again on p 275 line 2) states that the flight of 3 December 1997 was conducted because of commercial motivation. The financial data provided in response to the summons (p 3 of T24) indicates that Wedgetails was in a reasonable financial position at the time and any financial pressure was alleviated further after that flight. The next flight was not conducted until the 7 December 1997 followed by flights on the 20, 22 and 23 December. The commercial motivation to break the law may be a reason for the flight of 3 December 1997 but it becomes less of a credible reason for the other flights. In addition, those later flights were not conducted under the same sense of urgency or obligation associated with the first.

During the hearing Mr Lea himself conceded that his actions (lines 1 and 30-35 of page 264) were not consistent with the responsibilities of a Chief Pilot. CASA has not acted capriciously nor hastily against Mr Lea. He was given an initial Chief Pilot approval despite serious misgivings by Mr MacKerras. On a number of occasions after Mr Lea had been given his Chief Pilot approval CASA became aware of minor breaches which it did not pursue.

Mr Lea's actions as a Chief Pilot were thoughtless and careless. CASA cannot gamble with public safety. Mr Lea has argued that he has a regard to safety and that may well be the case. However, Parliament has enacted the Civil Aviation Act to ensure, as much as possible, the safety of the public and each of those provisions are present to achieve that intention. A breach of a certification requirement may, in itself, appear to be a minor issue but placed in the context of the other laws and the framework of aviation safety issues it is far from simply a minor or technical breach of the law. Such a breach may have significant consequences or can itself be evidence of shortcomings in an organisation or in the work of a Chief Pilot.

CASA could not continue to condone Mr Lea as Chief Pilot. His actions and attitudes made his continuation as Chief Pilot untenable. CASA was therefore obliged to refuse to approve his appointment as Chief Pilot of Wedgetails Pty Ltd."

12. In Ms Hogan's application under the heading "Issues", three paragraphs containing conditions are presented. I reproduce the first two as they appear in the written submissions and record that the third and last paragraph under this sub-heading constitutes an argument that "there are no facts or circumstances set out by the appellants at this hearing that could reasonably be used to vary that decision".

"The person who made the decision to cancel Wedgetails AOC, Mr Nick LeRay-Meyer, Regional Manager West Region of CASA, did not give evidence to the Tribunal as the factual basis of his evidence was not in dispute and the Tribunal had accepted that he had approached his duty in an independent and objective manner. There was nothing additional that he could provide to the Tribunal that had not already been put before the Tribunal by other witnesses and in the written submissions.

In making his decision to cancel Wedgetails' AOC, Mr LeRay-Meyer was provided with no supported facts and circumstances from Ms Hogan which would enable him to reasonably form an opinion that he could have confidence in either Mr Lea or Ms Hogan that there had been any long term change in their ability and attitude to uphold the regulatory requirements no matter the commercial incentives. Therefore, not being satisfied, as clearly set out in the Civil Aviation Act, he had no option but to cancel."

13. Under the heading "Ms Hogan's past record as a director of a holder of an AOC", Mr Holcombe goes on to substantially record the thrust of the respondent's argument as to why her application should fail. That section of the submission is as follows:

"Wedgetails Pty Ltd breached a number of laws relating to maintenance. The people who were directors at the time (including Ms Hogan) admitted to many of those breaches.

At the time of the events which formed the basis for CASA cancelling the AOC of Wedgetails Pty Ltd, Mr Richard Lea and Ms Kerry Hogan were the two directors of that company.

Exhibit A38 contains a record dated 14 May 1998 which evidences the resignation of Mr Lea as a director of Wedgetails. I note that as of 13 August 1998 Mr Lea is still listed as a director of Wedgetails Pty Ltd and no document requesting a change in details has been listed by the ASC.

Under well established principles the Tribunal may take into account facts which have arisen up to the time of the decision of the Tribunal. In this case it is evident that Mr Lea is no longer a director of Wedgetails and Ms Hogan is now the sole director of Wedgetails Pty Ltd.

Ms Hogan has not demonstrated that she has the capability to conduct air operations with a reasonable degree of care and diligence. She has been knowingly involved in previous blatant and continued breaches of the law (page 347 of transcript) and did nothing to prevent those breaches nor did she initiate any remedial action (page 351 of transcript).

Wedgetails Pty Ltd breached section 41E of the Civil Aviation (Carriers' Liability) Act 1959 (Carriers' Liability Act) when it carried passengers commercially without a certificate given to them under subsection 41C(7) of that Act. As a result of the breaches of the Carriers' Liability Act and the Civil Aviation Act and regulations, passengers were not covered by insurance when they were carried on balloon VH-CNR in December 1997. Some 58 passengers were carried during that time. Ms Hogan knew of the responsibility imposed on charter operators yet did not ensure that Wedgetails had insurance prior to it commencing operations.

Ms Hogan has demonstrated that she cannot comply with, or simply does not understand, the condition imposed by section 28BE of the Civil Aviation Act. When asked questions on the obligations imposed on a director by that section, (p 352) Ms Hogan answered that she considers that she acted properly when she, in full knowledge of the circumstances, did not prevent the other director of the time, Mr Lea from repeatedly breaking the law. This attitude is scarcely the attitude of a responsible director of an air operator."

14. I am satisfied that the extracts which I have reproduced so far from the respondent's submission present an adequate picture of what was canvassed in evidence and all the issues between the parties as to what was to be paid regard in determining an outcome to the matters.

15. I do not propose to go into extracts of the evidence. The evidence was, of course, recorded by Auscript and has been transcribed in full.

16. The evidence establishes beyond question that Mr Lea committed a substantial breach of the Civil Aviation Regulations by having his balloon repaired by an unauthorised person and then flying it. Issues were raised in cross-examination of Mr MacKerras of the Civil Aviation Safety Authority that others had committed the same offence and not been dealt with by the Authority in a manner similar to that meted out to Mr Lea. Mr MacKerras in fact admitted that was so but argued that Mr Lea had formerly been counselled against such activity and had been put on notice that conduct of the highest standard in respect of observance of regulations was expected of all, and, a fortiori, a licensed Chief Pilot. Hence, as opposed to steps taken in other matters involving other persons, a decision was made to cancel Mr Lea's Chief Pilot Approval. His pilot licenses were not affected and were not cancelled or suspended by separate action.

17. I do not see any quality of persuasion in this argument. The Authority has its responsibilities under the legislation and the regulations which are its charter to administer. I am concerned with this case, not others. It would scarcely be a defence in a criminal court to raise an issue that the Police chose to prosecute Individual A but in perceived similar circumstances chose not to prosecute Individual B.

18. I indicated at the end of the evidentiary phase that, subject to submissions to be later received, my reactive view of the evidence was that the decision in respect of Mr Lea was correct. Having read the written submissions of the parties and re-considered and re-read - given that the wait for the submissions exceeded 4 months - the evidence, I remain of the same view.

19. The decision in Q98/627 is therefore affirmed.

20. As to Ms Hogan's application, the respondent's submissions as to the proper outcome are presented under the heading "Ms Hogan's experience in air operations".

"Ms Hogan has stated that she is 'brand new to running both a business and especially running a company and a company which has an air operator's certificate' (line 10 page 291). Further on, at line 17, she agreed with the Deputy President when he 'characterised her role as a 'girl Friday'.

Ms Hogan has very little experience in the management of air operations (p 290-291 transcript). She has spent around 200 hours in a support capacity providing breakfasts, driving the coaches and meeting the balloon at the end of the flight. She has never been involved in the management of the flights and her aviation experience is confined to a few hours as a trainee glider pilot.

This is not a person who CASA considers can fulfil her duties as a director of the holder of an AOC in an appropriate manner.

Ms Hogan did not have an involvement in the balloon records, maintenance records, did not have any systems in place for checking or scheduling maintenance (pages 345 - 346) and was (and is) not involved in the actual management of air operations. This places her in stark contrast with Mrs Marion Moore in the analogous case of Moores Airspray Pty Ltd v Civil Aviation Safety Authority Q95/454 AAT No. 10383.

3. These convictions involved breaches of sensible requirements that, in the interests of safety, records such as maintenance releases be properly kept. Early in these reasons, I mentioned that Mr Jim Moore's wife, Mrs Marion Moore, was a co-director of Moores Airspray Pty Ltd. She is also its Office Manager. She is, as I have said, the Office Manager of Moores Airspray. I consider her to be a reliable repository of confidence that the company has the capability of complying with the record-keeping aspect of compliance with Regulations relating to safety. She said in evidence that since the investigation which led to the convictions on 7 March 1995 she has taken sole and full responsibility for keeping all of the company's records. She is well placed to do this. She works long hours in the company's office which forms part of the hangar which is its flying base. I found her to be an honest witness and assessed her to be a very competent person. She ensures that the maintenance releases are being accurately kept as to flight times, she ensures that they are completed each day in respect of that day, she ensures that the pilots employed by the company fill out their log books each week. She has systems of cross-checking the maintenance release entries with those in the log books thereby authenticating the accuracy of each.

54. Flight times and other maintenance release entries, duty time records and other records she said are all now accurate. She takes personal responsibility in that regard. She said that she could not identify any aspects of the applicant company's record-keeping that could be further improved.

In that case, evidence was led from 7 other witnesses who testified as to the competence and capacity of the Moores Airspray operation. No independent witnesses gave such evidence in this case.

Another clear distinguishing point is that Moores Airspray Pty Ltd had a well established operation having had an AOC first granted in 1988 and re-issued 6 times up until the time of the hearing. In contrast, Wedgetails were given an AOC on 10 October 1997 and operated for between 25 and 30 hours commercial flight time in total (page 345 and line 28 page 123).

Ms Hogan has not given any evidence to the Tribunal to indicate that she can carry out the activities covered by the Wedgetails' AOC with a reasonable degree of care and diligence. The evidence before the Tribunal is that her past history is one of knowing non-compliance with the law. Apart from her stated good intentions there is no evidence before the Tribunal that the future conduct by Ms Hogan will comply with her statutory responsibilities."

21. The respondent's submissions then deal with the request that I made for advice on whether an air operator's certificate could be reinstated with a condition requiring the operator to report on their financial position to CASA on a three-monthly basis. The advice that the respondent's submission presents seems to me to be balanced and practical. I record it:

During a Directions Hearing on 30 July 1998 Deputy President Breen requested advice on whether an AOC could be reinstated with a condition that the holder of the AOC provide a report on their financial position to CASA on a three monthly basis.

The financial position of an applicant for an AOC is a relevant consideration under subsection 28(2). In addition it is also a consideration when CASA is considering imposing or varying a condition on an AOC (subsection 28BC(3)).

The reason that the financial position has been made a relevant consideration is the inference that may be drawn between a company which is hard pressed for money and the issue that safety and compliance with the law may well be.

In the case of Wedgetails, that relationship was strongly evident. However, in the case of other operators that inference is commonly rebutted. Many operators without a strong cash flow comply with the law and safety requirements, and in fact that may be one reason they do not have a strong cash flow. On the other hand, well off operators may breach the law.

The flight of 3 December 1997 by Wedgetails illustrates the paradigm example of why such an inference may be made.

CASA is concerned with the financial position of AOC holders but only so far as it may reflect on the ability and intentions of the operator to comply with the law.

A condition which imposes an obligation on the holder of an AOC to report their financial position on a three monthly basis would not provide CASA with useful information. In relation to Wedgetails, that company has been motivated by commercial expediency to break the law but has also knowingly broken the law in the absence of that commercial motivation.

Such a condition would be onerous on the holder of an AOC and would not be useful to CASA.

With Wedgetails, it was put forward that the financial position was the principal reason they breached the law. Mr Lea (line 3 on page 65 and again at line 2 page 275) stated that the flight of 3 December 1997 was conducted because of commercial motivation. The financial data provided in response to the summons (page 3 of T24) indicates that Wedgetails was in a reasonable financial position at the time and any financial pressure was alleviated further after that flight. The next flight was not conducted until the 7 December 1997 followed by flights on 20, 22 and 23 December. The commercial motivation to break the law may be a reason for the flight of 3 December 1997 but it becomes less of a credible reason for the other flights. In addition, those later flights were not conducted under the same sense of urgency or obligation associated with the first."

22. I also propose to record the major part of Mr Lawford's submission on behalf of his client, Ms Hogan.

1. Whether Ms Hogan has the capability to conduct air operations involving balloon charter flights with a reasonable degree of care and diligence; and

2. Whether Wedgetails Pty Ltd has a satisfactory financial position, given the proposed scale of operations.

3. The extent to which the situation concerning the Civil Aviation (Carriers' Liability) Act 1959 reflects adversely on Ms Hogan.

As to whether Ms Hogan has the capability to conduct air operations involving balloon charter flights with a reasonable degree of care and diligence, nothing should be made of her agreeing that, in terms of the day to day activities, she is correctly described as a girl Friday. She was referring to the daily activities. From the very next line in the transcript, line 20 at page 291, she goes on to detail her work in obtaining the insurance required under the Civil Aviation (Carriers' Liability) Act 1959. That is a far cry from girl Friday activities.

Indeed, running through the whole of the evidence she gave are indications that she was involved in the in-depth decisions needed to get the ballooning operation off the ground.

Ms Hogan gave very detailed evidence of the steps she took to get the venture under way. She sought the advice of professionals at every step. That advice was not always first class, but that, and the subsequent debacles over companies, trusts, and balloon ownership should not reflect adversely on her. You indicated that that was your view at page 308, line 10 of the transcript, and again at line 35.

One aspect of the hearing, not part of the record of proceedings, to which I wish to refer is the informal discussion in chambers. Ms Hogan felt she was being put down by some of the comments/references in the formal hearing, and asked to be heard in chambers. During the period in chambers, she made some very strong statements that she should not be treated or regarded as a girl Friday, that she had had an active management role in the preparation of the venture, that she was not a puppet or lackey of Mr Lea. I submit that you should have regard to those statements when assessing Ms Hogan's character and ability.

The record she has established in setting up the venture, and in pursuing the insurance matter, indicate she did apply a reasonable standard of care and diligence in her management of the company.

The episode of the burn hole repair, we submit, was a situation where, despite following what she thought was established procedure, the company and she were put into an unexpected adverse situation. She took steps to correct the situation. Those steps were insufficient to deflect the weight of CASA descending on them. However, she is probably one of the most knowledgable balloon operators in Australia now, in terms of regulatory requirements of balloon repairs, and is unlikely to repeat the past mistakes.

The financial figures provided by CASA in its submission serve only to indicate that CASA is not in touch with the real world of aviation.

The figure of $24,000 was the figure for insurance if VH-CNR was to be used. That balloon had a capacity of 18 people. It has been stolen, and Wedgetails Pty Ltd was proposing, as one option, to use the Cameron 160 with a capacity of 8 passengers. The figure for insurance for Third Party and Passenger liability (inclusive of mandatory coverage under the Carriers' Liability Act) is quoted by Rural and General Insurance Ltd as $6,500 plus Stamp Duty. See the attached facsimile.

Mr Lea and Ms Hogan have never paid themselves wages, so the figure of $1,000/week is not relevant.

As outlined to the Tribunal by Ms Hogan, there are a number of options for financing the venture, including equity finance, or giving a share in the venture to Mr Hodges and/or Mr Fraser, in which case they would provide their own balloons.

The figure of 60% of revenue for use of the Cameron 160 was only one possible means of getting the use of a balloon. On my instructions, balloons are available for hire at $150/hour.

With reference to the comments by CASA on conditions likely to be experienced by balloon operations in Alice Springs, Ms Hogan has instructed me that reference to Mr Lea's log books will indicate that ballooning can and does occur most days of the year in Alice Springs.

Lastly, on the CASA financial model, Ms Hogan indicated Wedgetails Pty Ltd may buy the Cameron 160 balloon, and the asking price is $15,000.

The Tribunal heard some indication of the equity finance available during the evidence given by Mr Drysdale. At page 316, line 10, he indicated he was prepared to put $15,000 into Wedgetails Pty Ltd, in addition to sub-contracting to provide the ground transport.

Looking at the situation which developed regarding the Civil Aviation (Carriers' Liability) Act 1959 insurance requirements, Ms Hogan detailed the steps she took to get the insurance cover (transcript Page 291, line 22 onwards). The steps she took were at least equal to those that any director, acting with a reasonable standard of care and diligence, could be expected to take in the circumstances. She engaged a professional broker to arrange the required insurance and to advise CASA. The broker failed in his duty, and as soon as Ms Hogan became aware of this, she took steps to correct the deficiency.

Ms Hogan has made mistakes. She has also tried to do things correctly by seeking professional assistance and following established procedures. She is much more informed now than at the commencement of this matter."

23. The respondent submits that, were Ms Hogan's application for an air operator's certificate to be successful, Mr Lea would "remain the dominant person". However, I accept Ms Hogan's rejection of the notion behind my question to her that she was "a Girl Friday".

24. The evidence suggests that her experience at the time of the events which led to the applications for review was limited in terms of management matters.

25. I am mindful of the obligations of a decision-maker. They are accurately described in excerpts from the respondent's submissions which I have included above. I accept the respondent's argument that Ms Hogan did not come in to this matter with background quality experience of the kind achieved by the wife of the applicant in the Moores' Airspray case, a case which I myself heard in Innisfail over a period of 6 days in 1995.

26. However, I find favour with Mr Lawford's argument to the effect that her involvement in these proceedings would enable her to learn a great deal as to what her responsibility will be if her application is granted and as to what will be required of her in operating under the certificate. Her involvement in these proceedings would have absolutely brought home to her the power of the Authority to act in the event of failure to meet her responsibilities and the requirements upon her. I would think also that the outcome of Mr Lea's application for review to this Tribunal would be informative as to the chances of success in pursuing remedy from this Tribunal when reckless disregard of the Regulations has been displayed.

27. Ms Hogan impressed me as being an honest, intelligent and essentially a responsible person. She also demonstrated to me a capacity for self-sufficiency and self-reliance. For these reasons I am persuaded that she is entitled to the essential trust inherent in the issue of any license or authority under Aviation legislation to any individual. The Authority has ample power to deal with breaches of its charter and she, like any other individual, will pay the obvious price for any breach of the trust reposed in her in the grant of the authority which she seeks.

28. In Ms Hogan's case, Q98/628, I set aside the decision under review and remit the matter to the respondent with a direction that the approval sought by her application be granted subject to a condition that Richard Lea have no role whatsoever in the operation of any business or other flying operation conducted under the auspices of that approval beyond that of employed Pilot.

29. At the commencement of these Reasons in paragraph 2, reference was made to file D98/7 which was kept alive for the duration of the hearing as the "T" Documents from that file were used in these present applications. As that file was superseded by Q98/627, file numbered D98/7 will now be closed.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member

Counsel for the Respondent Mr L Holcombe, Departmental Counsel