Recently, in Polar Aviation Pty Ltd v CASA,  FCAFC 97 (4 July 2012), the Full Court of the Federal Court considered whether CASA owed a duty of care to persons or entities when that authority cancelled or suspended a pilot’s chief pilot and chief flying instructor approval or a company’s AOC.
The matter had about eight incantations. It started in the Western Australia Supreme Court. Then there was an appeal to the WA Supreme Full Court. Then a proceeding in the Federal Court; a couple of interlocutory proceedings in the Federal Court; a strike out application in the Federal Court which was decided in favour of CASA and, finally, in the Full Court of the Federal Court on appeal.
There were initially five causes of action. Four dropped by the wayside, leaving in issue in the Full Court the following – Whether an action would be sustainable in negligence based on a duty of care owed by CASA to persons in the position of the pilot or the company concerned. In considering this matter, readers of this meritorious masthead will have little interest in the procedural machinations indulged in by the parties. Suffice to say that CASA took cover under every conceivable point of law.
Having attended many ‘show cause’ hearings in front of CASA luminaries and tribunal hearings, your correspondent has on many occasions heard representative CASA persons advance the proposition that CASA has a duty of care to protect the public from the actions of my client under the safety regime that they administer. It would appear that what I have heard in the past is wrong. Then again, the legal department of CASA may have used this ambivalent ploy in this Court environment to swing the Court to strike out the claim of the plaintiffs.
At paragraph 10 of the decision, it was said that between 2004 and 2006, CASA came into dispute with the plaintiffs, the pilot and the company. As a result of that dispute CASA suspended the company’s AOC and the pilot’s approval as chief pilot and chief flying instructor. The effect was that the company and the pilot were put out of business. The two of them sued CASA in negligence for damages. They could, of course, have commenced the action against CASA in the Administrative Appeals Tribunal, but that body cannot award damages or award costs against CASA for what CASA allegedly had done to the plaintiffs.
The details of the dispute were not considered by any of the Courts involved because the arguments before the Courts dealt with whether the plaintiffs had any reasonable prospects of success in their claims and whether the plaintiffs could document and plead any further facts that might emerge at trial that could affect those prospects of success. At first instance, at the Federal Court, the judge found that the plaintiffs had no reasonable prospects of succeeding on negligence nor could the plaintiffs advance any further facts that would alter that situation.
The plaintiffs appealed on only one point and that was whether CASA had a duty of care that it owed to persons in the position of the plaintiffs.
It is wise to start from first principles when considering this case. The decision in Donoghue v Stevenson 1932 AC 562 @ 580 is the basis of a negligence claim and the definition of a duty of care:
“The rule that you are to love your neighbour becomes in law that you must not injure your neighbour; and the lawyer’s question, ‘who is my neighbour?’, receives a restricted answer. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing myself to the acts or omissions which are called into question”.
This definition was not alluded to in any part of the judgment appealed against or from the Full Court. Had it been considered, it would be obvious that the plaintiffs certainly were persons so closely and directly affected by CASA’s act in cancelling or suspending approvals and the AOC that they would be so injured and damaged by the acts concerned.
In the judgment the Full Court at paragraph 20 referred to a High Court decision that generally related to the issue before the Court. It was Sutherland Shire Council v Heyman 1985 157 CLR 424 @ 458-9 to the effect: ”It is now well settled that a public authority may be subject to a common law duty of care when it exercises a statutory power or performs a statutory duty.” This seems to provide a legal basis for assuming that the plaintiffs have got over the threshold of a duty of care claim.
The Full Court reviewed the decision of Kenny J of the Federal Court at first instance. At paragraph 63, Kenny J was of the opinion that as the statement of claim was framed at an unsatisfactory level of generality it was fatal because such a general duty of care was inconsistent with the statutory regime and the due exercise by CASA’s powers under the Act. Further, at paragraph 65 it was necessary to examine the particular statutory regime to determine whether it established a relationship between the authority and a class of persons, the degree and nature of control exercised over the risk of harm, the degree of vulnerability of those who depend on the proper exercise of the power and the consistency of the of the duty of care with the scope and purpose of the relevant statute. Finally, whether there was a distinct class of persons who might be so affected distinct from the public at large. Ultimately Kenny J decided that CASA was not subject to a duty of care because such a duty would be inconsistent with the proper and effective discharge of CASA’s statutory responsibilities. The plaintiffs lost at first instance.
The Full Court took a slightly different tack. At paragraph 85, the Full Court was of the opinion that Kenny J did not hold that a duty of care in the exercise of CASA’S statutory powers was absolutely precluded and that such a duty existed in the statutory regime. At paragraph 87 the three judges agreed that on the material as pleaded, such a duty did not exist as it was inconsistent with the other decided cases. In effect again, the plaintiffs lost.
One issue that was not canvassed in the case was an administrative law issue that is espoused in an undergraduate law textbook to the effect:
“The revocation of occupational licences was once regarded as an administrative act which could be effected without any form of prior hearing. This is no longer so… The holder has an interest which will be seriously affected by cancellation whether that right is characterized as a property right (Banks v Transport Regulation Board 1968 119 CLR 222 @ 232) a proprietary right (Fagan v National Coursing Assn of SA 1974 8 SASR 546 @ 562) or as a privilege or liberty. At the minimum he has a ”legitimate expectation” of the licence remaining effective for its stated period. The case will be even stronger where revocation can only be effected if misconduct of some kind is established.” Two other cases are quoted in support. On a slightly different common law concept, Amman Aviation v Commonwealth of Australia is also relevant for the “legitimate expectation” idea is raised.
The two cases of high authority Sutherland Shire Council v Heyman and Donoghue v Stevenson seemed to give a basis for a duty of care in a general sense. However, the counsel for CASA was able to convince both Kenny J and the Full Court that the alleged duty of care in the present case was general in nature and ran directly counter to the statutory obligations of CASA. A duty to take reasonable care to exercise statutory powers having regard to the interests of persons regulated would necessarily impinge on the statutory duty to exercise the powers by reference to statutory considerations. In some way this was a form of fetter on the prime responsibility of CASA, safety for the public at large.
What was not submitted to the court nor decided by the court was whether there was available to CASA, in its contemplation of the breach alleged, another method or a less damaging method by which the powers under the statutory regime could be exercised effectively that would not so injure and damage the plaintiffs financially and give rise to a claim pursuant to duty of care and a negligence claim by the plaintiffs.
But did the judgment canvas all the potentials? The counsel for CASA was very careful not to submit and elaborate as to how the powers by reference to the statutory considerations would be applied in this particular case. To determine that we have to look at what it was that the plaintiffs did or did not do. What was the act or omission that brought into play the regulatory safety regime?
It has been said earlier in this article that the plaintiffs were in dispute with CASA between 2004 and 2006. What was the nature of the dispute? The plaintiffs did not specify the tensions between the parties in his statement of claim and, in the end, this deficiency told in Court. However, with respect, I would suggest that Kenny J at first instance went too far when she found that there were no facts which might emerge at trial that could affect those prospects and the Full Court did not become aware of this overreaching in Kenny J judgment.
As we do not know just what it was that caused the draconian cancellation or suspension of an occupational licence or approval, is it possible that CASA, when put in the witness box, may not have been able to justify their side of the dispute? Of course, it is possible that CASA may have been wrong in its stance on a safety issue.
Experience tells one that one is not right all of the time, whomever you are. In about 1978, your writer was an F27 Captain with Trans Australia Airlines in the Melbourne crew room. I met with a friend, Bill Parry, who was then a DC9 captain undergoing validation to be a check captain on the 9. He was in the company of David Croucher, the Fleet Captain DC9s. They took up with a CAA type specialist pilot who was going to fly with Bill and David and give Bill the CAA seal of approval to be a standards officer with TAA. I went off flying and returned about one hour or so later into the same crew room. Bill Parry entered the crew room in a state of some distress. Clearly, the check flight had gone badly. Here is his explanation of the matter.
They went down from Tullamarine to Avalon and carried out some instrument procedures during a quiet period at the field. They then went up to 25,000 feet to do some upper air work. David was in the left seat and Bill in the right with the CAA chap in the jump seat. The procedures called for three stalls; one clean; one in the take off configuration; one in the landing configuration. The first two went uneventfully. The problem arose on the third stall in the landing configuration, which was gear down, approach EPR and 25 flap. The operations manual was specific. The stall demonstration was only to go as far as the stick shaker and NO FURTHER. The pilot was to commence recovery as soon as the stick shaker operated. The CAA pilot who had about 10 hours total DC9 experience as opposed to David who had about 4,500 command DC9s and Bill with about 1500 hours command DC9s decided that Bill had to demonstrate a complete stall and recovery in the landing configuration. Readers will know that in a swept wing jet with flaps and gear extended the stall is quite vicious and to be avoided at all costs. The loss of a RAAF Boeing 707 confirms this need to avoid unusual stalls. However, a dispute, note that word, arose between the CAA dude and the two experienced TAA pilots. The ultimatum was given: no complete stall, no check captain rating. Here was a decisive safety issue. From the CAA point of view Bill had to demonstrate a satisfactory safety standard to the CAA pilot for his check captaincy. From the TAA pilot’s point of view what was being proposed was in breach of SOPs and quite a dangerous, or should I say unsafe, procedure. After much soul searching, the two pilots acquiesced, capitulated and commenced the stall after the stick shaker operated. The stall was rapid, a wing dropped and the DC9 entered a spin to the right. After one and half turns from 25,000 feet the aircraft came out at 5,000 feet and flew like a crab. The right wing had been badly overstressed and rivets were standing up on the wing. The aircraft was carefully flown to Tullamarine and after landing and an inspection the engineers assessed it as about $1 ½ million to fix.
During the explanation by Bill, who clearly had been badly shaken, I overheard the Flight Manager Training and Development discussing on the telephone the events with some unknown listener in CAA. The language was blue and to the point. The CAA dude had vanished and the Manager was letting the powers that be in CAA know in no uncertain terms that no Examiner of Airmen would fly in the cockpit of TAA aircraft unless they had that Manager’s express written permission, which would not be lightly given. The upshot was that when I became a B727 captain and allowed a CASA acquaintance to travel supernumerary in the cockpit, I was matted and told of the edict on CAA personnel travelling in a TAA cockpit, due to the DC9 spin. No one knows what happened to the CAA type specialist dude. Perhaps he is a resident FOI at Kunnanurra in WA. Who knows? Who cares?
Clearly, here was a safety issue that arose from an over-zealous examiner of airmen. Did the same thing happen to Polar Aviation Pty Ltd? Was the cancellation of the chief pilot and chief flying instructor approval and the AOC because the pilot concerned did not buckle under pressure? The penalty was applied and the Court was of the opinion that no facts could arise which could affect the prospects of success on a common law claim against CASA. From the above it was necessary to determine in a court whether there could arise facts similar to the DC9 incident that would constitute a duty of care imposed on CASA to foresee that its act of cancellation would injure and cause damage to the plaintiffs.
On the other hand, there may have been some element of safety that needed upholding by CASA, we do not know. All pilots learn from experience and receive training to develop skills relative to the task. Some months ago, Tiger Airlines were grounded because some pilots in marginal weather were descending below the minimum for the Avalon ILS and getting in to land safely. No incidents or accidents occurred except that the pilots concerned were operating the airliners to lower minima. This irked CASA no end and the airline was grounded at great cost ostensibly for “safety reasons”. Clearly CASA has a rigid view on adherence to minima on the ILS. They fail to realize that, internationally, pilots in Europe train to fly to a minimum altitude or decision height of 50 feet above the ground hand held on analog raw data. I flew in Europe for nine months as a captain and had to train to that standard so that the F27 got to the destination. The German F/Os were all capable of this standard of safety. The strict adherence to a 300 foot minimum in Australia is unique to Australia. It is not unsafe to fly when trained to a lower height.
If we go so far as to assume that the dispute between the plaintiffs and CASA was valid from CASA’s point of view and that the plaintiffs had contravened a safety standard. The operator and the pilot who held the chief pilot and chief flying instructor must have been quite qualified and hardly a green horn.
Assuming further, that there was an alternate method of carrying out the offending breach function, it would be in keeping with the spirit of the legislation that CASA operates under to ensure that the pilot and operator conform. The pilot and the operator could have been required to undertake some form of training with an instruction school for a period of hours and be tested to ensure ability and the pilot and the operator could then continue their business.
It was not to be. The plaintiff will have to seek leave to appeal to the High Court to have his matter addressed.
Advice to Operators to Mitigate Risk
I would suggest that whatever irks CASA will result in a complaint by telephone from an FOI or an AWI to the pilot concerned, seeking to bring the victim to book. My advice is to not speak to a CASA person on the telephone but rather in person, should the infraction be serious. Your response should be to calmly determine exactly what the problem is: write down the salient points of their complaint. It may be appropriate to tape their conversation for transcription later. Then you should separate yourself from them so that you can commit to writing in a sensible form exactly what they are on about.
Take that written summary of their complaint to the most senior CASA person available and read it to him to get him to precisely confirm the problem. Then you should seek to have him sign your version of what has been complained about.
It may be appropriate for you to consider just what the complaint is about. Remember it may be possible that your pilot or your organization has breached a safety procedure. On the other hand, CASA may be going off half-cocked. Both sides are, of course, errantly human. You should quickly and dispassionately assess your position from a safety point of view and if you are in any doubt ring your solicitor and ask him if he can give you some advice on what to do or what to say.
Whatever you do, do not castigate or question your pilots or your operating personnel or your staff in the presence of the CASA until the full facts of the matter are dispassionately established.
The notes of what has been said by CASA can be seen as a contemporaneous note in Court. The details of the notes will be the substance of the factual pleading in a Statement of Claim should you suffer a cancellation or suspension of licence or AOC. In that way you will not find yourself in the position of Polar Aviation Pty Ltd in having only a general pleading of a duty of care and no specific facts to claim against CASA.
Watch this space …