Federal Court of Australia

Wiseway Logistics Pty Ltd v Secretary, Department of Home Affairs [2024] FCA 95

ORDERS

THE COURT ORDERS THAT:

1.    The stay granted pursuant to order 6 made on 7 February 2024 continue until further order subject to the applicant undertaking to the Court that for so long as the stay remains in force the applicant:

(a)    will cease conducting examinations under the Aviation Transport Security Act 2004 (Cth) (Act) and Aviation Transport Security Regulations 2005 (Cth) (Regulations);

(b)    is only to handle cargo from existing customers who are prescribed as “known consignors” under the Regulations;

(c)    will only conduct the handling of cargo in accordance with the security program in force with respect to the applicant; and

(d)    will engage an independent auditor, to be agreed by the respondent (such agreement not to be unreasonably withheld), who will supervise the conduct of the applicant on a daily basis and report weekly to the respondent as to the applicant's compliance with the Act, the Regulations, and this undertaking.

2.    All questions of costs be reserved.

3.    Liberty to apply on 3 days’ notice or such shorter period as a Judge may allow.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

NICHOLAS J:

Background

1    On 7 February 2024 I granted a stay pursuant to s 44A(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) of the following decisions:

(a)    the decision of Nancy Haniotis, a Delegate of the Secretary of the Department of Home Affairs (“the Delegate”), refusing to renew the designation of the applicant as a Regulated Air Cargo Agent (“RACA”) pursuant to reg 4.43E(1)(b) of the Aviation Transport Security Regulations 2005 (Cth) (“ATSR”), notified to the applicant by letter dated 1 November 2023 (“the RACA Decision”); and

(b)    the decision of the Administrative Appeals Tribunal (“the Tribunal”) given on 7 February 2024 from which this appeal is brought (“the Stay Decision”), refusing to stay the RACA Decision.

2    The stay was granted in circumstances of urgency where the applicant’s RACA designation was due to expire at midnight. The matter was fixed for the hearing of any application to extend the stay on 9 February 2024. The stay I granted was expressed to operate until the conclusion of that hearing. On 9 February 2024, I extended the stay until further order on the understanding that it was for the applicant to persuade me that the stay should operate until final determination of this proceeding.

3    On 8 February 2019, the applicant was designated as a RACA under reg 4.43A of the ATSR made under the Aviation Transport Security Act 2004 (Cth) (“ATSA”). This designation had effect for five years. On 15 September 2023, the applicant applied to renew its RACA designation pursuant to reg 4.43D(1) of the ATSR, which the Delegate refused in the RACA Decision. The applicant has applied to the Tribunal for review of the RACA Decision. The matter has been expedited by the Tribunal, but is unlikely to be heard before June of this year. By the Stay Decision, the Tribunal refused to grant a stay under s 41(2) of the AAT Act of the RACA Decision.

4    On 9 February 2024 I heard the applicant’s application to extend the stay I previously granted, until the determination of the applicant’s appeal against the Stay Decision. On that day the stay was extended until further order to allow some additional time to consider the matter.

5    During the hearing the applicant was granted leave to file an Amended Notice of Appeal (“the Notice of Appeal”) by which the applicant appeals from, or alternatively, seeks judicial review of, the Stay Decision. The appeal is purportedly brought under s 44 of the AAT Act. In the alternative, the applicant seeks judicial review under s 39B of the Judiciary Act 1903 (Cth) (“the Judiciary Act”) or, further or alternatively, ss 5 and 6 of Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”).

6    So far as the applicant seeks to appeal from the Stay Decision under s 44 of the AAT Act, the respondent says any such appeal is incompetent because the Stay Decision is not a decision of the Tribunal for the purposes of s 41(1) of the AAT Act: see Director-General of Social Services v Chaney (1980) 47 FLR 80 and various other cases in which that decision has been applied, some of which were referred to by Abraham J in Transcon Holding Pty Ltd v Aged Care Quality and Safety Commission (2020) 81 AAR 500 at [24]. It is accepted by the respondent that at least for the purpose of the present hearing, the applicant’s claim for relief under s 39B of the Judiciary Act and ss 5 and 6 of the ADJR Act are competent, even if the appeal under s 44 of the AAT Act is not.

THE RACA DECISION

7    In the letter dated 1 November 2023 notifying the applicant of the RACA Decision, the Delegate stated that she had given consideration to (inter alia) 40 failures to comply with the RACA Security Program and 11 failures to comply with the Examination Notice.

8    Under reg 4.46 of the ATSR, the RACA Security Program is described as a security program provided to the RACA by the Secretary. Distinct from the RACA Security Program, an Examination Notice is described in reg 4.41J as a written notice made by the Secretary “that sets out requirements in relation to how cargo that is to be loaded onto an aircraft must be examined by a RACA or cargo examining aircraft operator”.

9    The Delegate states in the letter that she also had regard to 22 instances of non-compliance reported by Aviation Security inspectors between 22 May and 20 June 2023. The Delegate noted that such instances of non-compliance were systemic, and not confined to any single operating site.

10    The Delegate refused to renew the applicant’s RACA designation, with the effect that from 9 February 2024, the applicant would not be authorised to handle, examine or clear air cargo. The Delegate reached that decision, according to her letter, because:

On balance, I have formed a view from the relevant information available, that Wiseway have not adequately demonstrated the capability and maturity to meet, maintain and make a meaningful contribution to the safeguarding of aviation. I find that recurring breaches by Wiseway poses an unacceptable risk to aviation security.

THE STAY DECISION

11    The application to stay the RACA Decision was argued before the Tribunal on 30 January 2024 and, as I have stated, the Stay Decision was given on 7 February 2024. In the Tribunal’s reasons (“TR”), after referring to the relevant statutory provisions, the Tribunal referred to the RACA Security Program issued in respect of the applicant on 8 February 2019 (that also being the date of the relevant RACA designation) which was followed by an Enhanced Air Cargo Examination Notice issued to the applicant on 27 February 2019 which set out the requirements for examining cargo to be loaded onto aircrafts at facilities covered by the applicant’s RACA designation. New Examination Notices were issued to the applicant on at least seven later occasions.

12    Having referred to the applicant’s application to renew its RACA designation lodged on 15 September 2023, and the Delegate’s decision refusing to grant the renewal, the Tribunal turned to consider matters relevant to the stay of the RACA Decision sought by the applicant under s 41(2) of the AAT Act.

13    At TR [18] – [29] the Tribunal referred to the relevant regulations including regs 4.43E and 4.43D of the ATSR. The Tribunal also referred to regulations concerned with the issue of Examination Notices imposing requirements concerning the loading of cargo onto aircraft. At TR [22], the Tribunal referred to reg 4.42 which states that a person is a RACA if, amongst other requirements, they carry on a business that includes the examination, in accordance with an Examination Notice, of cargo to be carried on a prescribed aircraft.

14    At TR [31], the Tribunal referred to the distinction between perishable cargo (which requires temperature controlled handling facilities) and general cargo. Non-homogenous cargo, which is also referred to at TR [32], is cargo that must be unpacked from pallets and individually screened before it is repacked. At TR [35], the Tribunal noted that Cargo from “known consignors” does not have to be examined.

15    At TR [36]-[38], the Tribunal considered the applicant’s submission that reg 4.43F of the ATSR has the effect that the applicant’s RACA designation continues until the Tribunal finally determines the review application. This submission was rejected by the Tribunal. The Tribunal gave no weight in its reasoning to reg 4.43F as it considered that this regulation did not apply in circumstances where the Secretary had made the RACA Decision prior to the time that the applicant’s RACA designation was due to expire. I will say more about that shortly in the context of the applicant’s first ground of review.

16    The Tribunal also referred to a submission made by the applicant to the effect that non-compliance with requirements contained in an Examination Notice was not relevant to the issue of whether a RACA designation should be renewed or revoked. The submission, as noted by the Tribunal, was that a freight forwarder may hold a RACA designation but not an Examination Notice. It was submitted that a freight forwarder could, for example, receive and handle air cargo cleared by approved “known consignors” without having to screen the cargo in accordance with an Examination Notice. This submission was rejected by the Tribunal because, according to the Tribunal, it ignored reg 4.42. The Tribunal said at TR [40]-[41]:

40.    I do not accept the Applicant’s submission. It ignores Regulation 4.42 (set out above). The examination of cargo in accordance with an examination notice given to the person is the business of a RACA. The matters that are relevant to a decision whether to renew a RACA designation include the contents of the application for renewal, any inspections undertaken under Regulation 4.43D(4)(b) and ‘any other information the Secretary considers relevant’ under Regulation 4.43E(2)(c).

41.    The Applicant’s history of non-compliance with examination requirements and the ATSA and ATSR generally are relevant to determining both the present application and the merits of the decision under review in the substantive proceedings.

17    The Tribunal then went on to consider the factors set out in Scott v Australian Securities and Investments Commission (2009) 51 AAR 114 relevant to the granting of a stay. The Tribunal noted the respondent contended the nature and history of the applicant’s contraventions of its obligations as a RACA militated against the conclusion that the application for review of the RACA Decision had reasonable prospects of success. The Tribunal noted that the respondent pointed to many breaches and their occurrence through different stages of supply chain, and the applicant’s repeated failure to take remedial steps designed to prevent further breaches occurring.

18    At TR [45], the Tribunal summarised the applicant’s case as to its reasonable prospects of success challenging the RACA Decision as follows:

(a)    past non-compliance prior to 1 November 2023 was “not as serious or extensive as the Respondent contends” and had been addressed with appropriate measures; and

(b)    once the respondent had received notice of the applicant’s application for review of the RACA Decision on 13 November 2023, the respondent had treated it ‘unfairly’ and acted in a manner consistent with the weakness of its case (including through an aborted attempts to revoke the RACA designation and Examination Notice).

19    With respect to paragraph (1)(b) above, the Tribunal referred at TR [49] to evidence given by the solicitor for the applicant, that on the same day the respondent received notice of the application for review of the RACA Decision, the respondent informed the applicant that it would receive a Notice of Revocation of its RACA designation the following day which would take effect on 15 November 2023. Notice of that proposed revocation was withdrawn by letter dated 4 December 2023. The Tribunal also referred to steps taken by the respondent to revoke the applicant’s Examination Notice by letter dated 14 November 2023. That decision was set aside by a consent order made in this Court the next day.

20    The Tribunal also noted the applicant contested a number of the non-compliance findings made by the respondent alleged to have occurred after the RACA Decision was made. While the respondent withdrew some 81 offences alleged during that period, it described other alleged non-compliances as being more serious than originally assessed.

21    The Tribunal stated that it was not its role to decide, in respect of this application, whether the non-compliance alleged against the respondent was as serious or as extensive as the respondent contended, or whether the remediation steps taken by the respondent were effective. The Tribunal said that it was “sufficient to find that the Applicant vigorously disputes those matters, based on the evidence it has provided”, which included lay and expert evidence.

22    The Tribunal then referred to certain evidence given by Mr Andrew Christie, an independent expert engaged by the applicant, including his acknowledgement there had been a significant number of non-compliances over the five years prior to the RACA Decision, which the applicant had attempted to address. It was Mr Christie’s opinion that a higher level of proactive identification and rectification was required from the applicant.

23    The Tribunal referred in TR [55] to various steps taken by the applicant to ensure compliance with its obligations as a RACA since it was notified of the RACA Decision on 1 November 2023. These steps included the hiring of Mr Christie, to conduct audits and reviews for the purpose of ensuring compliance, and of Mr Mark Shields who agreed to provide advice to the applicant in relation to compliance matters. The Tribunal also noted that the applicant did not have a dedicated compliance manager at the time of the hearing, but that it was informed by Mr Ken Tong (Chief Operating Officer of the applicant) that the recruitment process was expected to be completed within a month, and that Mr Shields was assisting with this process.

24    The Tribunal noted that given the five year history of non-compliance, and even if the relevant contraventions were not as serious as the respondent contended, the Tribunal could not say whether or not the various steps that the applicant proposed to take would be, or could be assumed to be, effective.

25    The Tribunal then considered the consequences for the applicant in the event that the stay was not granted. The Tribunal said at TR [63]-[68]:

63.    The Respondent contended that the Applicant had not established that the cessation of its RACA designation will end its business. It will only end the operation of business units within the company. In any event, the consequence for the business is significantly outweighed by the next factor, the public interest.

64.    Mr Tong addressed the commercial consequences for the Applicant in his first statement in detail. He said that conducting security screening and handling cargo is crucial to two of the Applicant’s largest divisions, air export general and air export perishables. The loss of RACA designation would seriously adversely impact the Applicant’s ability to handle general export cargo and [make it] impossible for the Applicant to handle perishable export cargo. He focused on the impact on perishable cargo handled from December to February. I give less weight to his evidence because two thirds of that period has passed. However, I accept that those two divisions will be seriously affected if a stay is not granted and customers may be permanently lost. The fixed costs of the Applicant means that employees may lose their jobs.

65.    On the other hand, if the stay were granted and there was a catastrophic incident arising from the Applicant’s non-compliance, that would likely destroy the Applicant’s business and the reputations of the directors of the Applicant, its managers, and staff with respect to air cargo.

66.    Mr Tong also claims that there is a limited capacity for other freight forwarders to handle perishable cargo for the Applicant, which requires particular temperature controlled handling facilities, sufficient space, expertise, and equipment to handle. Such facilities are not available at airport terminals. The Applicant has such facilities in Melbourne and Sydney. It has invested $3 million in the facilities. His evidence was based on inquiries he had made of other freight forwarders who handle perishable cargo. Mr Tong claimed that there was insufficient capacity to handle the 80 to 100 tons of perishable cargo the Applicant handled each day during the busy period, from December to February.

67.    As far as taking into account an alleged adverse impact on the market for RACA services in the substantive proceeding or in relation to this application, I am not satisfied that Mr Tong’s anecdotal evidence is sufficient to make a finding, even if it is a relevant consideration, which I doubt. The ATSA and ATSR are concerned with aviation transport security and protection from unlawful interference.

68.    Not granting a stay will have a serious impact on the Applicant’s business, however that impact can be minimised by ensuring that a hearing can be held and the substantive matter determined as soon as possible.

26    The Tribunal then went on to consider various submissions made by the parties in relation to the public interest, including the respondent’s submission that non-compliance by the applicant could result in the destruction of passenger carrying aircraft, with widespread consequences including to Australia’s economy. The Tribunal acknowledged there had been no catastrophic incident arising from the applicant’s non-compliance, and the respondent had not revoked the RACA designation. Although these considerations reduced the weight attributed to the public interest consideration, the Tribunal was still of the view that risk had not been minimised to a sufficient degree and the public interest still weighed significantly against the granting of a stay.

27    The Tribunal then went on to accept the respondent’s submission to the effect that the regulatory burden imposed on the respondent, if it were to continue exercising its regulatory functions in respect of the applicant during the period of any stay, would cause significant difficulty and would continue at the expense of taxpayers. The Tribunal also rejected the applicant's submission that its application for review would be rendered nugatory if the stay were not granted because it would lose its business as a RACA and its clients, stating that there were other aspects of the applicant’s business which could continue if the stay was refused.

GROUNDS OF REVIEW

28    The following five grounds of review are relied on in support of the application for judicial review of the Stay Decision:

1.    The Tribunal erred in law (at [38]) in its construction of the ATSR in finding that no weight was required to be given to reg 4.43 in determining whether to grant the stay sought by the Applicant.

2.    The Tribunal applied the wrong legal test at [80] for when a right of review will be rendered nugatory in the absence of a stay of the decision under review.

3.    The Tribunal erred in law at [65], [69] and [72]-[74] in reasoning that there is a catastrophic risk of loss of life and destruction of property, and adverse consequences to Australia's economy, if the stay were granted, in circumstances where there was no probative evidence before the Tribunal of such a risk.

4.    The Tribunal erred in law, and/or exceeded its jurisdiction, at [40], [60], [65], [69] and [72]-[74] in reasoning that the public interest weighs significantly against a stay because:

a.    a risk of loss of life and destruction of property would arise from breaches of the regulatory regime by the Applicant;

b.    the Applicant had not complied in full with the regulatory regime over the past five years; and

c.    the applicant had not satisfied the Tribunal that any risk of loss of life and destruction of property had been minimised to a degree that was acceptable to the Tribunal,

    having refused or failed to consider whether any such risks could be appropriately managed by the Respondent amending or revoking the examination notice issued to the Applicant.

5.    The Tribunal erred in law at [65], [69] and [72]-[74] in reasoning that the public interest weighs significantly against a stay because:

c. [sic]    a risk of loss of life and destruction of property would arise from certain breaches of the regulatory regime by the Applicant;

d. [sic]    the Applicant had not complied in full with the regulatory regime over the past five years: and

e. [sic]    the applicant had not satisfied the Tribunal that any risk of loss of life and destruction of property had been minimised to a degree that was acceptable to the Tribunal,

when there was no finding by the primary decision maker or the Tribunal that a risk of loss of life or destruction of property could arise from the breaches of the regulatory regime committed, or any such breaches to be committed in the future, by the Applicant.

EVIDENCE

29    Evidence filed by the applicant shows that the applicant is a freight forwarder with warehouses in Sydney, Melbourne, Brisbane, Adelaide and Perth with approximately 250 employees. It is engaged in both import and export, with most of the export business involving carriage of cargo by air. The export business consists of general cargo and perishables. The applicant’s business is described in greater detail in the affidavit made by Mr Tong. Mr Tong also describes, in his affidavit, the effects that a refusal to stay the RACA Decision will have on the applicant’s business and clients.

30    The applicant also tendered two reports of Mr Christie. Mr Christie’s reports address (inter alia) the applicant’s failure to comply with the Examination Notice and RACA Security Program. Mr Christie outlines steps that have been, or were proposed to be taken, by the applicant to mitigate the risk of non-compliance. As I have stated above with reference to the Stay Decision, his first report acknowledges that “there have been a significant number of non-compliances over the last five years” that he believes the applicant is attempting to address. However, in his opinion, the applicant needs to be more proactive in identifying non-compliance within its organisation and addressing compliance issues more generally. He said at para 99 of this report:

Looking at the identified non-compliance I also assessed the risk. In many of the identified non-compliance, the risk, in my opinion, appears low. A staff member having their identification in their pocket, although a non-compliance in the RACA Security Plan is not the same level of non-compliance as not screening cargo or screening cargo as homogenous when it is clearly not.

He goes on to provide a list of recommendations aimed at improving compliance by the applicant. In his second report Mr Christie responds to a statement of Michele Pearce dated 22 January 2024 relied upon by the respondent including in relation to non-compliance issues raised by Ms Pearce in respect of incidents alleged to have occurred in November 2023. The respondent also relied upon an additional report of Ms Pearce dated 29 January 2024, and the transcript of the hearing before the Tribunal of the stay application.

31    Also in evidence is a statement of findings on material questions of fact and reasons dated 15 December 2023, in relation to the RACA Decision. The applicant objected to the tender of this document by the respondent on the basis that it is not a document signed by the Delegate, but by a different departmental officer. I admitted the document provisionally. I accept that the document is relevant and I admit it, but only as a summary of the various departmental records it refers to which were apparently included in an attached electronic file. The summary of those records is relevant as a record of the respondent’s case before the Tribunal.

THE PARTIES’ SUBMISSIONS

32    As I explain above, the case before me concerns whether the stay I previously granted of the RACA Decision and Stay Decision should be extended, pending the conclusion of this Court’s review of the Stay Decision. The applicant submitted that the application for judicial review of the Stay Decision has reasonable prospects of success. That submission was developed by reference to the grounds of appeal and what were said to be clear errors of law made by the Tribunal. The respondent submitted that there was no prima facie case for the final relief sought.

33    The applicant referred me to the statement of Thawley J in Minister for Home Affairs v Zadeh [2018] FCA 1452 who, in dealing with an application for a stay under s 44A(2)(a) of the AAT Act, said at [23]:

Whether or not a stay should be ordered depends upon whether the Court considers it appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal. Considerations relevant to the exercise of the Court’s discretion, which are not confined, include:

(1)    As a general rule the successful party is entitled to the benefit of the judgment which is presumed to be correct.

(2)    The applicant bears an onus to demonstrate a proper basis for a stay.

(3)    Although speculation as to the prospects of success is generally unnecessary, a stay will not be granted in the absence of arguable grounds of appeal or where the appeal is not bona fide.

(4)    On the other hand, if it appears that the prospect of success is strong, this may in the circumstances of the particular case be a relevant factor to consider in exercise of the discretion and may interact with considerations of balance of convenience; if the prospect of the appeal succeeding is particularly strong then the appellant may have to show less in terms of balance of convenience.

(5)    All other things being equal, a stay will generally be granted if, but for a stay, the appeal would be rendered nugatory if the appeal is successful.

(6)    Considerations such as the balance of convenience and the competing rights of the parties and the effect of granting or not granting the stay on non-parties are to be weighed in the balance.

34    Senior Counsel for the applicant, Mr Brennan SC, relied in particular on point (5) above, and submitted that in the present case the evidence showed that the application for review of the RACA Decision would be rendered nugatory in the event that the stay that was sought was not granted. As to what constitutes “nugatory” for this purpose, he referred to the judgment of the Western Australia Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2023] WASCA 96 (Beech and Vaughan JJA) (“Sino Iron”) in which their Honours, when considering the principles governing the grant of a stay pending the determination of appeal, observed that the Court will consider whether the right of appeal will be rendered nugatory if a stay is not granted. Their Honours said at [46]:

It is accepted that there are the following three overlapping categories of case where a right of appeal may be rendered nugatory in the absence of a stay:

(1)    Where a stay is necessary to preserve the subject matter or integrity of the litigation (that, ordinarily, being the right of appeal itself rather than the maintenance of the status quo existing prior to the judgment or order the subject of the appeal).

(2)    Where refusal of a stay could create practical difficulties in the relief available to the appellate court in the event of a successful appeal.

(3)    Where there is a real risk that it will not be possible for a successful appellant to be restored substantially to the appellant's former position if the judgment against the appellant is executed.

(Citation omitted)

Reliance was placed on the third of those propositions which was said to be directly applicable in this case.

35    It was submitted that the Tribunal’s own findings, at TR [64], established that the application for review of the RACA Decision would be rendered nugatory if a stay was not granted. Mr Brennan SC accepted that the applicant’s business would not be wholly destroyed if the stay was not granted, but submitted that the Tribunal had accepted that the refusal of a stay would have permanent and serious effects on the applicant’s business. He drew attention to the Tribunal’s acceptance that two divisions of the applicant’s business would be seriously affected such that customers may be permanently lost, and employees made redundant.

36    Mr Brennan SC submitted that the Tribunal approached the question of the stay on the basis that the review of the RACA Decision would be rendered nugatory if, and only if, it was rendered pointless (e.g., if it resulted in the destruction of the applicant’s business) such that there would no longer be someone to prosecute the application for review of the RACA Decision. In that respect, he said, the Tribunal set the bar too high. He submitted that, had the Tribunal applied the correct test, it would have asked whether there was real risk that it would not be possible for the applicant to be restored substantially to its former position.

37    Mr Emmett SC, Senior Counsel for the respondent, submitted that the Tribunal had applied the correct test, and had indicated that it “plainly understood” that there would be harm to the applicant’s business. According to Mr Emmett SC, there was no reason to think that the Tribunal had failed to take this harm into account. Rather, this harm was taken into account and was outweighed by other matters that the Tribunal considered, namely, the potential for “catastrophic harm” to the public.

38     It was submitted by Mr Brennan SC that the Tribunal did not make any finding that the conduct of the applicant posed any risk to aviation safety, and that nothing in the Tribunal’s reasons, or the material before it, was capable of supporting a finding that any of the applicant’s admitted breaches of the RACA Security Program could give rise to such a risk. At the same time, he accepted that there were a large number of breaches in the integrity and operation of the security fence separating secure cargo from non-secure cargo in accordance with the RACA Security Program with which the applicant was obliged to comply. Reference was also made to the applicant’s staff not wearing aviation security cards, which Mr Brennan SC submitted was “not something that is capable rationally of supporting a conclusion that there’s a risk of a bomb being put on a plane”.

39    Mr Emmett SC submitted that such matters were “obviously capable of giving rise to a risk”. Broadly, the respondent’s case in this respect was that it was perfectly rational for the Tribunal to proceed as if it was not safe for the applicant to operate until it had demonstrated reform, in light of its history. Whether the applicant has demonstrated such reform is a matter that the respondent contends should be addressed at the hearing of the review of the RACA Decision.

40    Mr Brennan SC also submitted that ground 4 raises questions of both procedural fairness and irrationality and what was said to be the possible failure to take into account a mandatory relevant consideration. There is nothing in the grounds of review directed to any denial of procedural fairness. Further, the only ground directed to any alleged irrationality is ground 5. In this regard, the applicant contended that the Stay Decision was legally unreasonable in finding that the public interest weighs significantly against the stay in circumstances where there was no finding that the applicant’s breaches of the regulatory regime gave rise to any risk of life or destruction of property.

Consideration

Prima face case

41    The first question that arises is whether the applicant has demonstrated any arguable grounds for review of the Stay Decision. I will consider each of the proposed grounds in turn.

Ground 1

42    Regulation 4.43F of ATSR provides:

4.43F    Designation continues until decision on renewal application

    If:

(a)    a RACA makes an application for renewal of the RACA’s designation as a RACA under regulation 4.43D; and

(b)    the Secretary has not made a decision on the application before the RACA’s designation is due to cease to be in force;

the RACA’s designation is taken to continue until:

(c)    if the Secretary renews the RACA’s designation as a RACA—the day specified in the notice under subregulation 4.43E(3) as the day on which the renewed designation commences; or

(d)    if the Secretary refuses to renew the RACA’s designation as a RACA—the day the Secretary makes the decision to refuse the application.

43    The Tribunal considered that this regulation was irrelevant to the question whether there should be a stay of the RACA Decision. The applicant maintains its submission to the Tribunal was that reg 4.43F disclosed a legislative intention that the RACA designation should remain in place until the decision-maker either renewed or refused to renew the designation. Mr Brennan SC submitted that the regulation was relevant to the Tribunal’s exercise of discretion to grant or withhold a stay because the Tribunal, which the applicant described as being in the position of “primary decision-maker once an application [for review] is made”, had not yet determined whether to renew the RACA designation.

44    The submission recorded in TR [36] was that the effect of reg 4.43F was that the applicant’s RACA designation continues until the Tribunal finally determines the review application. As the Tribunal correctly observed, if that were the effect of the regulation, then the stay application would be unnecessary. The Tribunal held that the regulation did not apply. However, it may well be that the Tribunal misunderstood the submission that was put to it by Mr Brennan SC. His oral submissions to the Tribunal included the following (transcript p 57):

MR BRENNAN: And so we say once an application is made to the tribunal, the final decision is going to be made by the tribunal. And so we’ve got a regulatory regime which says if you applied renewal you continue, has then a whole series of other powers to regulate you while you continue. We say as a matter of law in that context, you’d conclude readily the stay would be granted.

45    While the submission could have been put more clearly, Mr Brennan SC does seem to be suggesting that reg 4.43F reflects a legislative intention that a RACA designation continue until such time as the application for renewal has been finally determined, leaving it to the Secretary to exercise other more specific powers (e.g., the revocation power) in the meantime in the event that any such continuation might not be appropriate. If on examination that was the submission that Mr Brennan SC put to the Tribunal, then it is difficult to see why it would be open to the Tribunal to simply dismiss it as irrelevant.

Ground 2

46    This ground raises the question whether the Tribunal misdirected itself in determining whether the application for review of the RACA decision would be rendered nugatory if a stay was not granted. The applicant’s submissions on this point relied on Sino Iron, to which I have previously referred. It is not apparent whether the applicant referred to that decision in its submissions to the Tribunal.

47    In any event, I am not persuaded that any arguable error of law was made by the Tribunal in considering the applicant’s submission that the application for review of the RACA Decision would be rendered nugatory if the application for a stay was refused. At TR [64], the Tribunal referred to Mr Tong’s evidence that the RACA designation would seriously impact the applicant’s ability to handle general export cargo, and make it impossible for it to handle perishable export cargo. The Tribunal accepted that those two divisions of the business would be seriously affected if a stay was not granted, that customers may be permanently lost, and that employees of the applicant may lose their jobs.

48    It is apparent that the Tribunal has given consideration not just to the question of whether the application for review would be rendered nugatory, in the sense that it would become a pointless or futile exercise, but that it also considered whether the applicant may suffer substantial and permanent loss of business or customers.

Ground 3

49    By ground 3, the applicant contends that the Tribunal made an error of law in reasoning that, if a stay was granted, there would be a catastrophic risk of loss of life and destruction of property, and adverse consequences to Australia’s economy, in circumstances where there was no probative evidence before the Tribunal to indicate that there was any such risk.

50    The very existence of the regulatory regime assumes that there is a risk that aircraft may be brought down by detonation of unauthorised explosive devices, and that lives and aircraft may therefore be lost. It is for that reason the regulatory regime targets the illegal consignment of unauthorised explosives in air cargo and imposes strict requirements for the securing and screening of air cargo. This is a natural conclusion, but it is also bolstered by Ms Pearce’s evidence about the purposes of the regulatory regime.

51    There was evidence before the Tribunal that the applicant had, over a number of years, breached its RACA Security Program and Examination Notice. Ms Pearce’s statements provided details of various breaches including some that were said to have occurred quite recently. One of these, which occurred on 7 November 2023, involved a failure to properly examine and clear cargo. A similar incident occurred on 9 November 2023. Both involved an employee leaving the screen at which they were required to monitor cargo as it moved through the x-ray machine. There are other parts of Ms Pearce’s statement that support the conclusion that failure by the applicant to comply with its regulatory obligations created a situation in which cargo cleared by the applicant for loading onto aircraft had not been properly screened for explosives. Ms Pearce’s statement also identifies instances of non-compliance with the applicant’s RACA Security Program, relating to failures in access control. In her statement, Ms Pearce explains that access controls are put in place for the purposes of preventing and detecting unauthorised interference or tampering. It follows logically that unauthorised access to cargo could result in the very situation which the legislation is intended to prevent, i.e., a bomb being loaded onto an aircraft.

52    The Tribunal said at TR [59]:

The Applicant’s five year history of non-compliance, even if it is not as serious as the Respondent contends cannot be somehow offset by the measures that have been recently implemented or are planned to be implemented. Whether they will be effective cannot be determined. It cannot be assumed.

That statement is to be read in conjunction with TR [73] in which the Tribunal states that, even though the evidence shows the applicant has proposed measures to ensure compliance in the future, that was not sufficient to satisfy the Tribunal that the risk was minimised to a degree that it considered acceptable. It is apparent that the Tribunal considered that, based on the applicant’s poor compliance history, there was an unacceptable risk that loss of life might eventuate were the applicant to be granted a stay and explosives were allowed onto an aircraft due to inadequate screening or security measures.

Ground 4

53    Ground 4 was developed in oral submissions as a complaint that the Tribunal’s decision was irrational. The contention is that it was irrational for the Tribunal to reason as it did without considering whether risks arising from the applicant’s breaches of the regulatory regime could be more appropriately managed by the respondent amending or revoking the Examination Notice issued to the applicant.

54    It is by no means clear what submission was put to the Tribunal in relation to the potential amendment or revocation of the Examination Notice. The Tribunal stated at TR [60]:

A suggestion that a decision could be made that enabled the Applicant to retain the ability to accept cargo from known consignors without being a designated RACA is not possible through the Applicant’s current applications.

It is not suggested that the applicant offered to confine its activities to the loading of cargo of known consignors. Had any such offer been made, it may have required the Tribunal to consider whether a stay might be granted on the condition that the applicant limit its activities accordingly. However, TR [60] seems to be directed to a different suggestion, i.e., that the applicant would be permitted to accept cargo from known consignors without retaining its RACA designation. This says nothing about any suggestion by the applicant that, as an alternative to the revocation of its RACA designation, its Examination Notice be revoked. In the argument before me the point was not developed in any meaningful way.

Ground 5

55    Ground 5 is premised on there being no finding by the Tribunal that a risk of loss of life or destruction of property could arise from breaches of the regulatory regime that had been committed, or that may be committed in the future, by the applicant. In my opinion, there is a fundamental difficulty with this ground because the Tribunal explicitly stated at TR [69] that the applicant had been deficient in adhering to its regulatory obligations, and that the loss of life and destruction of property that may arise from a breach by the applicant of its regulatory obligations would be catastrophic. The fact that there was no catastrophic incident arising from those breaches is a matter noted by the Tribunal at TR [72], and the Tribunal weighed this finding against the cautious approach demanded by the regulatory regime in [73]. It does not follow that the applicant’s breaches did not, or could not, create or increase the risk of a catastrophic loss occurring.

56    I do not regard the applicant’s case as strong. However, ground 1 is, in my opinion, reasonably arguable and, for that reason, I reject Mr Emmett SC’s submission that the applicant has not demonstrated any reasonably arguable, or prima facie, case for the final relief sought.

Balance of Convenience

57    So far as the balance of convenience is concerned, it is apparent that without the benefit of a continuation of the stay now sought, the applicant will suffer substantial damage to its business most likely of a permanent kind. That weighs in favour of the stay. On the other hand, this is a matter in which the public interest must be given substantial weight. The evidence indicates that the applicant has failed to comply with its regulatory obligations in a number of significant respects over a period of years.

58    Although the respondent resisted the continuation the stay, it submitted, in the alternative, that if the stay was continued, it should be on terms that, in addition to the applicant giving the usual undertaking as to damages (which it has done), the applicant should further undertake to the Court that for so long as the stay remains in force the applicant:

(a)    will cease conducting examinations under the ATSA and ATSR;

(b)    is only to handle cargo from existing customers who are prescribed as “known consignors” under the ATSR;

(c)    will only conduct the handling of cargo in accordance with the RACA Security Program in force with respect to the applicant; and

(d)    will engage an independent auditor, to be agreed by the respondent (such agreement not to be unreasonably withheld), who will supervise the conduct of the applicant on a daily basis and report weekly to the respondent as to the applicant's compliance with the ATSA, the ATSR and this undertaking.

59    The effect of these undertakings would be that the applicant could not examine cargo, and could only handle cargo from known consignors. This would deal with the various complaints made in Ms Pearce’s reports concerning deficiencies in screening. Otherwise, the undertakings will require the applicant to comply with its RACA Security Program and to ensure that an independent auditor monitors its activities for the purpose of ensuring compliance and providing regular reports to the respondent while the stay remains in force. In my opinion, the conditions for the extension of the stay proposed by the respondent achieve the appropriate balance between the competing interests of the parties and the public interest in ensuring that the applicant, if it is to continue to act as a RACA pending the final determination of this proceeding, will do so in a manner consistent with its regulatory obligations.

DISPOSITION

60    In the result, the stay granted by order 6 made on 7 February 2024 is extended until further order upon the condition that the applicant gives to the Court the various undertakings to which I have referred. I will reserve all questions of costs. Each party has liberty to apply on 3 days’ notice or such shorter period as a Judge may allow.

Associate:

Dated:    16 February 2024