FEDERAL COURT OF AUSTRALIA

Repacholi Aviation Pty Ltd v Civil Aviation Safety Authority [2010] FCA 994

THE COURT ORDERS THAT:

1.                  The time for the applicants filing an application for leave to appeal against the orders of McKerracher J made on 11 December 2009 (the orders) be extended to 25 January 2010.

2.                  The applicants have leave to appeal against the orders limited in substance to grounds as to the refusal to allow further amendments to the statement of claim to plead misfeasance in public office and the issue of an alleged duty of good faith. 

3.                  Costs reserved.     

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     The applicants by notice of motion dated 20 January 2010 seek orders extending the time within which to seek leave to appeal from the judgment of the primary judge delivered on 11 December 2009 when orders were made striking out the applicants’ amended statement of claim, disallowing the proposed further amended statement of claim and granting leave to file and serve a further amended statement of claim “reflecting these reasons”. 

2                     The effect of the orders was to prohibit the applicants re-pleading causes of action for breach of statutory duty and misfeasance in public office against individual officers of the first respondent other than in circumstances where “additional material comes to light”: Reasons at [167]. 

Background to orders

3                     The applicants moved to further amend their amended statement of claim in terms of a minute of proposed further amended statement of claim.  The amended statement of claim sought relief against the first respondent, Civil Aviation Safety Authority (CASA), and the second respondent, Terry Farquharson.  The proposed further amended statement of claim sought to join a further four individuals as respondents.  Mr Farquharson and the other four proposed respondents were, at relevant times, officers of CASA. 

4                     The applicants had sought to pursue against the respondents and/or the proposed respondents claims in damages in a variety of causes of action.  The applicants contended that CASA had breached the Civil Aviation Act 1988 (Cth) (CAA) and the Civil Aviation Regulations 1988 (CAR) in several ways.  The consequence of those breaches has been, it was argued, that the respondents are liable in damages to the applicants for breach of statutory duty, breach of a duty of care and in the case of the individual or proposed individual respondents, for misfeasance in office. 

5                     CASA and Mr Farquharson moved for orders pursuant to O 20 of the Federal Court Rules (FCR) and s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA) for summary judgment in relation to all or any of the applicants’ claims; alternatively, the striking out of the existing amended statement of claim.  They opposed the proposed amendments as being “so untenable that the proceeding should be dismissed forthwith”.  

6                     Broadly speaking, the applicants pleaded that in exercising its powers and functions CASA had a common law duty of care which required that it comply with the legislative and regulatory scheme so as to ensure its actions did not cause economic harm to entities whose conduct it regulates, including the applicants.  The applicants argued that CASA had breached that duty in consequence of which the applicants sustained actionable loss and damage.

7                     Second, the applicants argued that CASA owed them a statutory duty to exercise its powers only in accordance with the provisions of the civil aviation legislation.  They argued that CASA breached that duty in consequence of which the applicants had sustained recoverable damage. 

8                     Third, it was asserted that there had been misfeasance in office by the present and proposed individual respondents. 

9                     CASA contended that each one of the claims sought to be made by the applicants is dependent upon a determination that particular administrative decisions made under the civil aviation legislation such as granting or refusing to grant or cancelling or suspending a licence, authorisation or certificate was invalid and/or ultra vires.   

10                  The relief sought under s 31A of the FCA and Order 20 FCR was supported by extensive affidavit evidence of several hundred pages.  However, the primary judge concluded that, given the stage of the proceeding the question of what may be inferred from a complex and lengthy history of disputation emanating from the affidavits was unhelpful and inappropriate.  His Honour, therefore, turned to consider the submissions of law made by the respondents.  The primary judge was not prepared to dismiss the proceedings under either s 31A or O 20.  That his Honour declined to do so is evident from paras 84, 90, 93, 107, 140, 151 as well, of course, from the terms of the orders made. 

11                  Although the reasons do not state it expressly, the parties, ultimately, were agreed that the orders by the primary judge were made pursuant to O 11 r 16 of the FCR.  Order 11 r 16 provides:

16        Embarrassment

Where a pleading:

(a)        discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b)        has a tendency to cause prejudice, embarrassment or delay in the proceeding; or

(c)        is otherwise an abuse of the process of the Court;

the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out.

The proposed appeal

12                  The draft notice of appeal contained the following grounds:

1.         The learned trial judge erred;

            a)         in holding that the applicants had no reasonable prospect of successfully prosecuting their claims for breach of statutory duty.

            b)         in dismissing the applicants' claims for breach of statutory duty.

            c)         in holding that the applicants had no reasonable prospect of successfully prosecuting their claims for misfeasance in public office.

            d)         in dismissing the applicant's claims for misfeasance in public office.

2.         The learned trial judge erred in holding (if he did so hold) that the Civil Aviation Safety Authority did not owe to the applicants a duty to exercise its statutory duties and functions in a proper manner and in good faith, and not arbitrarily, capriciously or vexatiously.

3.         The learned trial judge erred

            a)         in holding (if he did so hold) that the allegations in paragraph 25 of the Further Amended Statement of Claim were not capable of supporting a claim of misfeasance in public office;

            b)         alternatively, in holding (if he did so hold) that, with the provision of appropriate particulars after discovery, the said allegations would not be capable of supporting a claim for misfeasance in public office.

4.         The learned trial judge erred in refusing to allow the minute of the proposed further amended statement of claim and to permit amendment of the statement of claim in accordance with that minute.

5.         The learned trial judge erred in holding;

            a)         the applicants were not persons to whom the Civil Aviation Safety Authority and its Officers owed a statutory duty to exercise their powers under the Civil Aviation Act 1988, (and the Regulations and Orders made thereunder) in accordance with the restrictions and limitations contained in that Act, and those Regulations and^-Orders.^­

            b)         the applicants had no right to claim damages arising from the exercise of the administrative powers of the Civil Aviation Safety Authority and its officers because of the existence of a statutory right of review of such exercise

            c)         the Civil Aviation Act 1988 and the Regulations and Orders made in thereunder did not confer upon the applicants or either of them rights the breach of which by the Civil Aviation Safety Authority or its officers could give rise to a cause of action for breach of statutory duty.

6.         The learned trial judge erred, having regard to the evidence before him, in holding that there was no reasonable prospect that the evidence to be led by the applicants pursuant to the allegations in the Further Amended Statement of Claim (or alternatively pursuant to the allegations in the minute of the proposed further amended statement of claim) would establish:

            a)         a breach by the Civil Aviation Authority or its Officers of a duty of good faith owed to the Applicants.

            b)         that the Officers of CASA named as proposed defendants in the proceeding or one or more of them and CASA was guilty of misfeasance in public office.

7.         The learned trial judges reasons are inadequate and insufficient in that they do not adequately and sufficiently inform the parties of the legal and^-factual^-basis for the determinations contained in thereasons for judgement.

Legal principles

13                  The general principles governing the determination of an application for an extension of time in which to seek leave to appeal from an interlocutory order were set out by Lindgren J in Sharman License Holdings Ltd v Universal Music Australia Pty Ltd [2005] FCA 802 at [20]:

·        There must be a satisfactory explanation for the delay beyond the seven-day time limit fixed by O 52 r 10(2)(b) of the Federal Court Rules.

·        The application for leave to appeal must have such prospects of success as not to render the extending of time an exercise in futility.

·        Since an applicant for extension of time within which to appeal as of right must show ‘special reasons’ (O 52 r 15(2)), nothing less should be required of an applicant for an extension of time within which to apply for leave to appeal.

Leave to appeal

14                  The considerations ordinarily applied in determining whether to grant leave to appeal are whether in all the circumstances the decision in question is attended with sufficient doubt as to warrant it being reconsidered by a Full Court and whether substantial injustice would result if leave were refused supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397; Hogan v Australian Crime Commission (2009) 177 FCR 205 at [35] and [64].

The amended statement of claim

15                  The first applicant, Repacholi Aviation Pty Ltd, was the holder of an Air Operators Certificate (AOC), which until 2002 included charter operations, and conducted a commercial flight operations business in Western Australia.  The second applicant, Mr Repacholi, is and was the holder of a commercial pilots licence and prior to March 2002 was approved by CASA to be the chief pilot of Repacholi Aviation.  CASA, who at relevant times was the statutory authority established under s 8 of the CAA.  Its functions included regulating air and flight operations in the Australian Territory as well as issue certificates, licences, registrations and permits under the CAA including AOCs and approving appointments of chief pilots.  The applicants pleaded that CASA was under a duty of care to them in exercising its statutory powers and perform its statutory duties pursuant to the CAA.   

16                  The second respondent was at all material times the Regional Manager, Western Region, General Aviation Operations Group of CASA based at Jandakot Airport in Western Australia. 

17                  It is convenient to set out paras 5-12 inclusive of the amended statement of claim which are, in short compass, as follows:

5.         By notice dated 5 March 2002, CASA suspended the pilot licences held by Gerald pursuant to Civil Aviation Regulation ("CAR') 268(1) pending investigation.

6.         By notice dated 19 June 2002 CASA cancelled the pilot licences (including commercial pilots licence) held by Gerald pursuant to CAR 268.

7.         The purported cancellation of Gerald's pilots licence was unlawful as no investigation had been carried out as required by CAR 268(2).

8.         On 4 February 2004 CASA refused to appoint or consider the appointment of Gerald as Chief Pilot of Repacholi Aviation.

9.         On 29 October 2004 CASA issued a Notice of Suspension of the Class 1 and Class 2 medical certificates held by Gerald.

10.       There were no grounds or no reasonable grounds for the suspension of the medical certificates.

11.       Further, despite reappointment in early 2007 of Gerald as Chief Pilot of Repacholi Aviation, CASA has refused and failed to reinstate "Charter Operations" on the AOC of Repacholi Aviation.

12.       By reason of the matters aforesaid, CASA by its servants and agents and Farquharson has:

            (a)        failed to comply with the statutory regime constituted by inter alia the CA Act and CARs in canceling the pilot licences held by Gerald;

            (b)        specifically intended to injure Gerald and/or Repacholi Aviation by the purported exercise of its powers or alternatively CASA knew by its servants or agents and Farquaharson knew that it and they did not have the power in the circumstances then existing to:

                        (i)         cancel the pilot licences held by Gerald;

                        (ii)        refuse to consider appointing Gerald as Chief Pilot after 10 February 2004;

                        (iii)       issue a Notice of Suspension of the Class 1 and Class 2 Medical Certificates held by Gerald; and

                        (iv)       refuse or fail to adequately consider in early 2007 the application by Repacholi Aviation to reinstate "Charter Operations" on its AOC.

            (c)        Alternatively CASA by its servants or agents and Farquaharson were reckless in the purported exercise of their powers, alternatively refusing to exercise their powers in circumstances where the defendants knew or ought to have known that the acts (and omissions) would injure the plaintiffs or one of them.

            (d)        The defendants were negligent in the purported exercise of their powers and duties pursuant to the CA Act and the CARs.

Proposed further amended statement of claim

18                  In the proposed further amended statement of claim, undated but comprising 54 paragraphs, the applicants sought to add the following four new respondents:  Mr Ogilvie who was in March 2002 the General Manager - General Aviation Operations of CASA; Mr Frew who in June 2002 was the Acting General Manager - General Aviation Operations of CASA; Mr Marcolin who in February 2004 was the Acting General Manager - General Aviation Operations of CASA; and Mr Putland who in October 2004 was the Principal Medical Officer of CASA. 

19                  The proposed pleading sets out the elements of the tort of misfeasance as against Mr Farquharson and the four other proposed respondents.

Breach of statutory duty

20                  Analysis by the primary judge of whether a breach of statutory duty as pleaded was maintainable as a matter of law proceeded on the view that the proposed actions for breach of statutory duty would have the effect of indirectly raising the correctness of an administrative decision and that no action for breach of statutory duty would lie as the decision was one more suitable for judicial review.  His Honour concluded that breaches which constitute an exercise of powers in a way that was either contrary to the views of the party affected by the decision or contrary to the merits or the interests of the applicants could never, taken alone, constitute a breach of statutory duty to grant a private cause of action in damages citing Murdesk Investments Pty Ltd v Roads Corporation [2005] VSC 39 at [20].  The primary judge then concluded that no private right for damages arose from the exercise of administrative powers when there is a statutory right of review of such exercise.  His Honour concluded that he was unable to accept that there was a valid basis established for a claim in damages for breach of statutory duty as there was no indicia in the statutory regime that such a claim should lie.

21                  The proposed further amended statement of claim alleges at para 4 the following duties:

4.         CASA and the officers of CASA owe, and at all material times owed, to Gerald and Repacholi Aviation:

            (a)        a common law duty to exercise CASA’s statutory powers and to perform its statutory duties and functions with reasonable care having regard both to the purpose of those duties and functions and to the interests of those affected by such exercise and performance;

            (b)        a statutory duty to exercise its statutory powers and to perform its statutory duties and functions in accordance with the provisions of the legislation governing such exercise and performance;

            (c)        a duty to exercise CASA’s statutory duties and functions in a proper manner and in good faith and not arbitrarily, capriciously or vexatiously (“the duty of good faith”);

            (d)        a duty, in exercising CASA’s statutory powers and functions to accord Butson and Polar Aviation procedural fairness. 

22                  It appears that the duty alleged at para 4(b) is the only ‘statutory duty’.  Certainly that is the view on which the primary judge proceeded (Reasons para [153]).  This duty is alleged to have been owed by CASA and its five officers named in the proposed pleading to each of the applicants.  The duty is alleged to have been breached variously at paras 14, 19, 28(a), 45 and 50.

23                  Further, discrete allegations of statutory duty are pleaded against CASA at para 34.  There does not appear to be any plea of breach of this alleged duty.  Another alleged statutory duty owed by CASA is found at para 39.  At para 40 there is it seems, a plea that this statutory duty was breached.

24                  The parties provided the Court with a full set of their respective written submissions which had been before the primary judge.  Senior counsel for the applicants made the following submissions which were those previously made to the primary judge:   

(1)        It is necessary for a person to be able to sue for breach of statutory duty, that it first be established that the person belongs to a class for whose protection the relevant statutory provision was enacted.

(2)        Parliament has given to CASA very wide and coercive powers which may be used to inhibit and control the actions of air operators, pilots and others concerned with aerial transport throughout Australia. Those controls may impact directly on the business and livelihood of individuals and corporations. In this context when Parliament provides as, for example, it does in s.28 of the Civil Aviation Act, that CASA must grant an air operator's certificate "if and only if …..", it is creating an obligation on CASA to behave in a certain way towards a certain class of persons. If CASA does not comply with the obligation and thereby damages the business of an air operator, it must be seen as the intention of the legislature to confer a right of action on the person injured by the failure of CASA to comply with its statutory obligation. 

(3)        Civil Aviation Regulation 268(2), by providing that the suspension of a licence ceases upon completion of the investigation required by s 268(3) or at the expiration of 28 days from the date of suspension whichever is the earlier, directly affects the rights of the pilot concerned. The obligation to conduct an investigation "forthwith", although directed to questions of air safety, is also a matter directed to the interests of pilots whose licences may be suspended.  Similarly, under section 28BC of the Civil Aviation Act 1988 CASA may not impose or vary a condition of an AOC except to ensure compliance with the provisions of the Act, the regulations and Civil Aviation Orders relating to safety. 

(4)        Evidence would be led at trial that Fred Hampton had, some few months prior to his nomination as Chief Pilot of Repacholi Aviation held appointment as Chief Pilot of a company carrying out charter operations. 

(5)        Section 28BC(2) of the Civil Aviation Act 1988 is a provision specifically enacted for the benefit of air operators who may be affected by the exercise of CASA's powers; that, in the circumstances, the variation of the conditions of the AOC was contrary to the provisions of s 28BC(2)(a); and that Repacholi Aviation is a member of a class for the benefit of which that sub-section was enacted. 

(6)        The terms of Repacholi Aviation's AOC were altered only by reason of Gerald's resignation as Chief Pilot and, on his re-appointment as Chief Pilot, there was no legitimate ground for refusing to reinstate charter operations on Repacholi Aviation's AOC. A duty to reinstate charter operations in Repacholi Aviation's AOC arose from the combined effect of s 28 and s 28BC(2) of the Civil Aviation Act 1988. Both of those sections contain provisions specifically enacted for the benefit of air operators. 

(7)        The power to suspend the medical certificates of a pilot exists only where there has been failure to comply with a valid direction authorised by Civil Aviation Regulation 67.230(1)(e). CASA owed a statutory duty not to purport to suspend a medical certificate in circumstances where the prerequisites for suspension have not been satisfied. 

(8)        The general provisions in the Act controlling the powers of CASA and inhibiting CASA's capacity to interfere with the certificates and authorisations of pilots are provisions specifically enacted for the benefit of a class to which the second applicant belongs. 

25                  The respondents made the following submissions which were also before the primary judge:

(1)        The Civil Aviation Act 1988 (Cth) (the Act) establishes a statutory scheme for maintaining, enhancing and promoting the safety of civil aviation.  The functions of CASA described in the long title to the Act concern “in particular” “the safety of civil aviation”.  Then s 3A describes the main object of the Act as being:

... to establish a regulatory framework for maintaining, enhancing and promoting the safety of civil aviation, with particular emphasis on preventing aviation accidents and incidents.

(2)        Section 9(1) of the Act confers on CASA the function:

...  of conducting the safety regulation of the following, in accordance with this Act and the regulations:

(a) civil air operations in Australian territory....

(3)        Section 9(1)(c)-(h) provides some of the means for the performance of that function.  Relevantly s 9(1)(c) provides for the issue of certificates, licences, registrations and permits.  The scheme of the Act enables CASA to issue various authorisations under the Act and regulations to enable persons to engage in certain aviation activities: s 9(1)(e).  The authorisations include, for example, various kinds of pilot licences issued under Part V of the Civil Aviation Regulations 1988 (CAR) and various kinds of Air Operator's Certificates (AOCs) issued under Part III Div 2 of the Act.

(4)        The central object of enhancing and promoting the safety of civil aviation is again reflected in ss 9(2), 9(3)(a) and 9(3)(e).  Section 9A(1) then provides that, in exercising its powers and performing its functions, CASA:

… must regard the safety of air navigation as the most importantconsideration.

(5)        Under CAR 5.09 CASA must issue a flight crew licence to an applicant, if and only, if the applicant meets the prescribed criteria, including that the person “is a fit and proper person to hold the licence”.  In determining whether an applicant meets that criterion, CASA must only take into account matters that relate to air safety (CAR 5.09(3)).

(6)        Under s 27(1) of the Act, CASA may issue AOCs.  By virtue of ss 27(2) and (9), an AOC is required for an aircraft to fly or operate for prescribed commercial purposes.  An air operator engaged in commercial air operations (as prescribed by CAR 206) must have an AOC.  An AOC may be issued only to a natural person or to a body having legal personality (s 27(2B)). An AOC is not transferable (s 27(8)).

(7)        The term of an AOC is as determined by CASA (s 27(7)).  Read with s 9A, the considerations that will inform the determination by CASA of the appropriate term of any AOC must be safety considerations.  Accordingly the power to determine the term of an AOC is exercisable from time to time as the circumstances that call for the exercise of the power arise: s 33(1) Acts Interpretation Act 1901.  

(8)        Section 28 of the Act is to be read with the provisions relating to the issue of AOCs (in particular, s 27).  Under that provision, if a person applies 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 to 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. (emphasis added)

(9)        Each AOC is subject to the condition that the AOC holder must “continue to satisfy CASA in relation to the matters specified in s 28 of the Act”: Civil Aviation Orders (CAOs)s 82.0.4.4.

(10)      The numerous references to “safety” in the provisions of the Act, CARs and CAOs emphasise that the role of CASA in issuing AOCs or making regulatory decisions is one in which considerations of the safety of those affected by air operations are paramount.

(11)      An AOC has effect subject to a number of statutory conditions as referred to in s 28BA(1). These include “any conditions specified in the regulations or Civil Aviation Orders” (s 28BA(l)(b)).  By reason of s 82.1 of the CAOs, the holder of an AOC authorising charter or aerial work operations is required to establish a position of Chief Pilot and appoint a person to that position.  An AOC holder must comply with the provisions of Appendix 1 to s 82.0 (CAO 82.0.5.1).  Under that Appendix, before a person is appointed as a Chief Pilot by an air operator, the appointment must be approved in writing by CASA “after application in writing by the operator”.

(12)      Under s 28BB, CASA may vary the conditions of an AOC “at any time”: s 28BB(1) and (2).  Pursuant to s 28BA(3) CASA may, by written notice given to the AOC holder, suspend or cancel an AOC if a condition of that AOC is breached.

(13)      Pursuant to CAR 269(1) CASA may, by notice in writing, vary, suspend or cancel a licence, certificate or authority issued under the civil aviation legislation where CASA is satisfied that one or more of the prescribed grounds exists.  Those grounds include that the holder of the licence, certificate or authority has failed “in his or her duty with respect to any matter affecting the safe navigation or operation of an aircraft” (CAR 269(1)(c)) or that the holder “is not a fit and proper person” to hold the licence, certificate or authority (CAR 269(1)(d)).  Before taking action under CAR 269(1), CASA must issue a notice allowing the holder of the relevant licence, certificate or authority time within which to “show cause” why the regulatory action foreshadowed should not be taken (CAR 269(3)).

(14)      As at 2002, the CARs contained reg 268 which empowered CASA, by notice in writing served on the holder of a licence, certificate or authority, to suspend that licence, certificate or authority where CASA had reason to believe that facts or circumstances existed that would justify regulatory action and where “there may be a serious risk to air safety if the licence, certificate or authority were not suspended”.  In issuing such a suspension notice, CASA was not required to first issue a “show cause” notice of the kind required by CAR 269(3).

(15)      Amongst a wide range of regulatory decisions, a decision to cancel, suspend or vary an AOC (or a condition of an AOC) or to cancel, suspend or vary a licence is reviewable, on its merits, upon application to the Administrative Appeals Tribunal (AAT).  Each such decision is a “reviewable decision” (s 31(2)).

(16)      The AAT conducts any review of a reviewable decision as full merits review. Upon review of a reviewable decision the AAT stands in the shoes of the decision-maker to make “the correct or preferable” administrative decision upon the evidence before the Tribunal.  The hearing procedure in the AAT accords applicants an opportunity to give evidence and present argument and is subject to the more general principles of procedural fairness.

(17)      The AAT also has power pursuant to s 41 of the Administrative Appeals Tribunal Act 1975 (AAT Act)to stay the operation of a reviewable CASA decision or otherwise make a positive order in favour of an applicant. 

26                  I am satisfied, contrary to the applicant’s submission, that there was full argument before the primary judge on the question of whether a statutory duty was owed to the applicants giving rise to an actionable claim for damages.  This is demonstrated by the detailed written submissions which were before him. 

27                  It was common ground, as noted by the primary judge, that for a claimant to succeed in an action for breach of statutory duty, he or she must establish that he or she was a member of the class of individuals that the statute was intended to protect and that the injury was of a kind which was the object of a statute to prevent.  

28                  His Honour, with the benefit of these detailed submissions concluded at [32]-[33] of his Reasons that the statutory scheme focuses on the safety of civil aviation and that there was no doubt that this was the most important consideration under the CAA. It was implicit in his Honour’s conclusions that he rejected the applicants’ submission that the provisions of the CAA relied upon by them were for the benefit of air operators.  Rather, his Honour concluded that they were included for the benefit of the public at large with the safety of air navigation as the most important objective of the legislation.  This is consistent with the approach of the High Court in Onus v Alcoa of Australia Ltd [1982] 149 CLR 27 at 33 per Gibbs CJ; at 48-49 per Aickin J; at 59 per Wilson J; and at 68 per Brennan J. 

29                  I am not persuaded that it is arguable that the primary judge fell into error by, in effect, prohibiting any further attempt to re-plead the allegation of statutory duty.  In my view the conclusions to which his Honour came are correct.  I do not regard this aspect of the proposed appeal as having any prospects of success.  I would not extend time to the applicants in this respect. 

30                  Later at Reasons [162] his Honour concluded that there is “no indicia in the statutory regime that such a claim should lie” in circumstances where his Honour had earlier, at [42] observed that many decisions taken by CASA in relation to an Act are reviewable on their merits to the Administrative Appeals Tribunal.  This formed the basis of the reliance by the primary judge upon the authorities set out particularly at Reasons [160]-[161].  

31                  A proposed ground of appeal, at para 7, complains that the primary judge gave inadequate and insufficient reasons in that they do not specifically inform the parties of the legal and factual basis for his Honour’s determinations.  However, no submissions were put, either written or oral, to develop this challenge. 

Misfeasance in public office

32                  The applicants point to the formulation of an action for the tort of misfeasance in public office set out in the judgment of the majority of the High Court in Northern Territory v Mengel (1995) 185 CLR 307 as being (a) an act beyond power; (b) by a public officer; and (c) with the necessary mental element namely:

(i)         intending to cause the plaintiff harm; or

(ii)        which the officer knows is beyond power which involves a foreseeable risk of harm to plaintiff; or

(iii)       where the officer’s actions was reckless indifference as to the existence of power or as to its potential to harm the plaintiff;

(iv)       causing loss or injury to the plaintiff.

33                  As it was put on behalf of the applicants, the essence of the tort as encapsulated by Brennan J (as his Honour then was) in that case is an exercise of power otherwise than in an honest attempt to perform the relevant duty.  In Mengel, Brennan J explained what was meant by an action that was “beyond power” as being an act that is “invalid, either because there is no power to be exercised or because the purported exercise of the powers miscarried by reason of some matter which warrants judicial review in setting aside of the administrative action”.

34                  The primary judge declined to allow the proposed further amended statement of claim in relation to alleged misfeasance on the basis that the mental element of the tort was inadequately pleaded.  His Honour treated these allegations in a rolled-up fashion with the allegation of breach of a duty of good faith.  I will do likewise.  The primary judge at [167] described the allegations of misconduct by individual CASA officers as “totally speculative” and as “allegations without foundation” there being no factual basis pleaded for them.  These conclusions appear to be referrable to the content of the proposed pleading rather than upon any affidavit evidence.  As I said earlier, his Honour regarded any resort to the affidavit evidence as “unhelpful and inappropriate”.  Further his Honour described as “frank concessions made in the course of argument by senior counsel for the applicants” that the applicants “have no material at present on which they can properly bring a claim against officers of CASA for acting in bad faith or, alternatively, acting recklessly”.  His Honour then implicitly criticised the applicants for not seeking pre-action discovery which it was said would have facilitated not only expedition but potential elimination of claims without which such discovery cannot properly be made.  This was described as the proper course for the applicants in these proceedings to have pursued in order to allow them, if granted, to obtain sufficient information to decide whether to commence proceedings and, if so, against whom.

35                  It is common ground that the concession, if it be such, made by senior counsel for the applicants before the primary judge emerged from the following exchange:

His Honour:      ….while you’re pausing there, your pleading as amended now does raise --- I’m assuming it raises, because it needs to raise allegations of bad faith and recklessness.

Mr Nash:          Yes.

His Honour:      But I don't see material facts to support those, unless you're saying 20 that the material fact is a complete absence of an investigation.

Mr Nash:          Well, in relation to that, your Honour, it is the complete absence of - going to this one first, the complete absence of investigation and we have to take the package as a whole.  In a sense, your Honour, the allegations at the end saying this was misfeasance in office that it was done with certain intent, etcetera, is derived in part by inference from the pattern.  We hope and we believe that after discovery we will be in a much better position to give proper factual foundation, by way of particulars.  There is a real difficulty, your Honour, in pleading the state of another man’s mind, unless you can get hold of his diary.

36                  It seems to me, at least arguably, that what was said by senior counsel for the applicants did not extend to the concession as characterised by the primary judge.  Furthermore, it seems to me, at least arguably, that the allegations in the proposed further amended statement of claim embraced not only the bare elements of the cause of action but also other facts from which the allegation of the necessary mental element may be sourced.  The combination in the proposed pleading of allegations that the several notices relevantly were unlawful as no statutory investigation had been carried out as required and in the case of the medical certificates that they were issued when there were no grounds or no reasonable grounds for the suspension of those certificates arguably constitute such additional material facts.   

37                  Further particulars to support these allegations may well become available upon discovery. 

38                  The question on a strike-out application is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action; rather, the question is whether it would be open to the applicant upon the pleadings to prove the facts at the trial which would constitute a cause of action: Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 414 per Beaumont J citing Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 631.  The power to strike out a pleading must be exercised sparingly and only where there is a manifestly untenable case: Turner v Kinian Pty Ltd [1992] FCA 625.  It must be plain and obvious that the impugned portions of a statement of claim are unarguable before they will be struck out: Murex Diagnostics Australia Pty Limited v Chiron Corporation (1995) 55 FCR 194 or they must be hopeless and bound to fail: Orchard v Comrie (1998) 80 IR 76.  

39                  It is of concern that the applicants have had considerable difficulty pleading its causes of action.  The proposed further amended statement of claim is the seventh iteration.  However this does not appear to have played a part in the reasons of the primary judge in making the orders.  Indeed his Honour’s reasons for judgment at [167] contemplated that there might be amendments in the future to re-introduce some of their original or other claims if material emerged to sustain them.   

40                  I am satisfied that there are arguable merits in this aspect of the proposed appeal with reasonable prospects of success.  The failure to file the notice of appeal timeously was adequately explained in the affidavit of Mr Edward Maitland, the applicants’ solicitor, sworn on 20 January 2010.  The reasons given, in my opinion, constitute “special reasons” for extending time.  

41                  I am also satisfied that the orders of the primary judge, so far as they concern the proposed amendments in relation to misfeasance, are attended with sufficient doubt to warrant reconsideration by a Full Court and second that the applicants would suffer a substantial injustice if leave were refused supposing the decision to be wrong.  It was said by the respondents that no substantial injustice would arise as the primary judge left it open to the applicants to re-plead a claim in negligence against CASA and can thereby recover any loss or damage if successful.  This is no answer to depriving the applicants of bringing proceedings for misfeasance in effect against officers of CASA as they wish to do.

42                  For these reasons I would grant leave to the applicants to extend the time for filing the application for leave to appeal and would also grant leave to appeal limited in substance to grounds as to the refusal to allow further amendment of the applicants’ statement of claim to plead misfeasance in public office as well as the issue of the alleged duty of good faith.  I would reserve the question of costs.   

Associate:

Dated:         10 September 2010