J MAHONEY & SONS LIMITED V NEW ZEALAND TRANSPORT AGENCY HC NAP CIV 2008 441 573

J MAHONEY & SONS LIMITED V NEW ZEALAND TRANSPORT AGENCY HC NAP CIV 2008 441 573 5 September 2008IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV 2008 441 573UNDER the Judicature Amendment Act 1972 IN THE MATTER OF a decision made by Land Transport New Zealand (now known as New Zealand Transport Agency) BETWEEN J MAHONEY & SONS LIMITED Applicant AND NEW ZEALAND TRANSPORT AGENCY Respondent Hearing: 5 September 2008 Counsel: G W Calver for applicant B W Gilmour and R K Blunden for respondent Judgment: 5 September 2008ORAL JUDGMENT OF DOBSON J[1] This is an application under s 8 of the Judicature Amendment Act 1972 for interim orders to suspend the effect of the respondent's notice of revocation of the applicant's goods services licence which will otherwise come into effect at 5.00pm this evening. Contemporaneously with commencement of these judicial review proceedings, the applicant has lodged an appeal in the District Court against that revocation, which appeal is provided for under s 106 of the Land Transport Act 1998. That Act specifies that the lodging of such an appeal does not operate as a stay of the revocation and hence resort to judicial review proceedings. In the judicial review, s 8 explicitly provides for this Court to declare that any licence issued pursuant to statute that has been revoked is to continue in force pending resolution of the judicial review (s 8(1)(c)).[2] A range of approaches has been adopted to the nature of the Court's power to make such orders under s 8. I am inclined to start with the approach as exemplified in the decision of Justice Gendall in International Heliparts NZ Ltd v Director of Civil Aviation [1997] 1 NZLR 230:I do not consider that this is a case where the Court has to express any view as to whether a "prima facie" case has been reached so that a threshold requirement exists (ie that the plaintiff's claim has merit in fact and law), nor do I think that the test used for interlocutory injunctions (outside the Judicature Amendment Act 1972) are necessarily appropriate in this case, ie where does the balance of convenience lie. The test is simply that which is provided under s 8(1) namely whether interim orders are necessary "for the purpose of preserving the position of the applicant".[3] That starting point is obviously subject to a real concern that s 8 should not be used in a case like this if it is positively unjust to do so. That would arise if the public safety concerns motivating the statutory agency are so compelling that an order would be frustrating a very serious and urgent concern to avoid any ongoing risk to public safety. That is, in essence, a primary ground on which this application has been opposed. [4] As to the evidence, Mr Gilmour correctly described it having been put together at lightening speed, and I acknowledge that the pressures of time have enabled me only to read the text of the affidavits, but not thoroughly all the exhibits. The exigencies of time have not enabled that to occur and I am comfortable that I have had my attention drawn to the most material of the matters in the exhibits. [5] As to the situation of the applicant, Mr Mahoney, the alter ego of the applicant, claims that it is the oldest transport business in New Zealand, having been established by his great-grandfather in 1862. The continuous control of the company by successive generations is a matter of obvious pride. The current generation, namely Mr Mahoney, the deponent, is encouraged that both his son and daughter are committing in various ways to carry it on in the future. [6] The applicant company employs some 22 staff and has about 20 trucks on the road at any one time. It is, as is common for such companies, a seven day a week, 24 hour a day operation. The majority of its work appears to involve the carriage of general goods up the east coast of the North Island and between Hawkes Bay and theAuckland region. Mr Mahoney has deposed that a significant new contract has recently been secured and that many customers depend on the timely availability of carrying capacity on an on-going basis, sometimes at short notice. [7] Mr Mahoney acknowledges some financial pressures on the business in recent years. It is clear that he and his family are totally committed financially to the business. There have been problems in retaining good drivers and other staff, but he is confident that the appropriate personnel are now employed. [8] A short affidavit from Mrs Mahoney filed in the District Court appeal confirms the extraordinary hours that Mr Mahoney has worked in recent years. Regularly, she deposes, from 3am until 8pm, or up to 10pm, seven days a week, to a point where she is worried about his health. He has apparently recently cut back his hours somewhat, but is apparently still working very long hours. [9] The applicant's appeal to the District Court is also supported by numerous glowing testimonials to Mr Mahoney's generous commitment to the Hawkes Bay community, and his strong support for local charities. Without being in any way churlish, Mr Gilmour has commented that they do not throw any light on Mr Mahoney's competence to run a transport business, and with one limited exception accepts that the respondent takes no issue with the honesty or integrity of Mr Mahoney. [10] As to the respondent's concerns, since 2004 there has been a range of concerns at the applicant's standard of compliance with safety requirements for its transport licence. These have extended to standards of maintenance of its vehicles and the mode of monitoring the need for maintenance, and also monitoring the number of hours worked by its drivers. All drivers of such vehicles are obliged to maintain logbooks, and by law cannot work in excess of specified hours without specified periods of rest. [11] One statistical indicator of maintenance standards is the percentage of times in which the vehicles failed to obtain a certificate of fitness when first presented to the testing authority for six monthly renewals. According to one of the affidavits inresponse for the respondent, the failure rate on this measurement was some 64 percent in 2004, rising to 93 percent in 2006, and is currently at 85 percent. [12] There are also serious concerns that the company has been complicit, and possibly even encouraged, drivers to drive for longer hours than the law permits, to inadequately maintain their logbooks, and to pay them for hours work that did not tally with the logbooks. Of particular concern to the respondent is the recent case of one driver employed by the applicant who, as a result of an audit in March 2008 by the respondent, was charged with exceeding work hours. That driver has completed an affidavit in support of the respondent's opposition which contends that Mr Mahoney was at the least aware of logbook omissions and implicitly that he was happy to pay all the hours to drivers who broke the law. Other criticisms of the company, including pressure to drive a vehicle considered by the deponent to be unsafe, are also referred to. [13] For the applicant, Mr Calver signals a challenge to the credibility of this deponent's evidence. In the space of a few days earlier this week, the employee has had the charges against him dropped, at around the time that he volunteered a statement to the respondent, the content of which has now made its way into the affidavit. [14] The differences between the parties are perhaps exemplified by the contrasting reactions to a meeting that Mr Guy, the Manager, Commercial Licensing for the Southern Region of the respondent, who has had responsibility for the assessment of the applicant, held with Mr Mahoney earlier this year. This was after detailed concerns had been identified and there had been correspondence between counsel for the applicant and the respondent. Mr Mahoney's impression of that meeting is that, after it ended on amicable terms, all the concerns had been allayed and that steps he had in train would be sufficient to ensure the continuation of the licence. In stark contrast, Mr Guy deposes to being utterly perplexed and even alarmed that Mr Mahoney did not appreciate the nature and extent of the deficiencies, or the nature of his responsibilities.[15] That has developed into a personal focus on Mr Mahoney in that one of the conditions the Respondent stipulated on 3 June 2008 in a formal notice of intention to revoke the licence was that Mr Mahoney "ceases all involvement in service no later than 3 July 2008". There were numerous other conditions imposed before continuation of the licence would be assured, and the applicant takes the view that it is substantially complying with the rest of those. The respondent continues to have concerns that the standards expected are not being met. [16] As to the recent history, the respondent draws attention to four accidents involving vehicles of the applicant company in the 12 months to January 2008. Predictably, that is a sign of concern to the regulatory authority. For the applicant, Mr Calver submits that none of those accidents is attributable to deficiency in maintenance of the vehicles, all of them having been identified as resulting from driver error. [17] One of the causes of action in the judicial review is a conventional "wrap up" one, contending that the decision to revoke is unreasonable in the administrative law sense. I accept Mr Gilmour's suggestion that, on a preliminary assessment, the applicant would be unlikely to make out the standard required. I say no more about that, except to observe that this is, of course, an entirely different standard from that which will apply in the District Court appeal the applicant wishes to pursue, where it is entitled to a rehearing de novo, inviting the District Court to substitute its own view for that of the respondent, rather than being confined to the arid exercise as to whether the original decision was lawful or beyond the reasonable options open to the respondent in the administrative law sense. [18] The remaining grounds for judicial review raise deficiencies of process. Although, after the event, they cannot be entirely cured, the opportunity to appeal by way of rehearing must alleviate the seriousness of any deficiencies that might be made out. [19] The practical position for any litigant in the applicant's position is that such a right of appeal is of far greater utility than the fallback position of judicial review. Turning to the test for an interim order, Mr Gilmour has argued that the applicantcannot establish the necessity for an order, to enable it to preserve the status quo. He argues that a viable alternative is for the applicant to accept the present revocation, and to immediately make an application for a fresh transport licence. Once the requirements reasonably identified by the respondent are met, then a new licence could issue. Mr Gilmour suggests that if matters were pursued urgently, that may keep the applicant out of business for possibly no more than a week. [20] The difficulty from the applicant's perspective in pursuing such a course is, first, that there is no guarantee that, whatever changes it makes, it would secure a new licence in time to resurrect its existing business. At a personal level, it is predictable that the exclusion of Mr Mahoney, at least from any position in which he could influence the management of the company by others, would be insisted upon. A fundamental plank of the applicant's appeal to the District Court will be that that insistence on his exclusion is unreasonable. There is, therefore, a practical and quite narrow sense in which acceding to the course suggested by Mr Gilmour would render an appeal nugatory: thus far Mr Mahoney has refused to accept the requirement that he be excluded, but if he now conceded that point, and was to make arrangements for others to assume control, it is practically unlikely that he could ever pursue the appeal, and if successful reinstate the prior management arrangements. [21] As to the other adverse impacts of revocation, I accept Mr Calver's submission that for a business of this type, even one week out of the market would be seriously harmful to its customer base, and a very significant financial drain. Such companies live by their cash flow, and cannot expect loyalty from their customers to persist through any break in the availability of their carrying services. On a personal level, the company would either have to elect to retain its staff through a period of completely unproductive waiting, or let them go, which would practically be its death knell. There are also the interests of the shareholders of the company and its financiers and bankers. I accept what Mr Calver says that this is not a company that could treat water even for a matter of weeks, and its goodwill would evaporate virtually overnight. [22] I am accordingly persuaded that there is the necessity for an interim order under s 8, but before exercising my discretion to make it, need to weigh against thatthe extent of the risk to the public from permitting this company to continue in operation pending its appeal. [23] My preliminary assessment from reading the affidavits quickly completed for the respondent leads me to have considerable respect for the concerns they have identified. Notwithstanding substantial differences in view about the extent to which the plaintiff has improved its procedures, I am prepared to give it the benefit of the doubt that all of its ongoing contact with the respondent has produced sufficient changes which are hopefully going to continue, to reduce the risk both to its own drivers and to the public more generally, to a level that is manageable. I express that view solely for the purposes of this application and it should not have any bearing on either the way matters are argued in the appeal, or should the judicial review ever be substantively determined, in that context either. [24] I have discussed with counsel the form of the District Court hearing when such an appeal is by way of rehearing. Initially, Mr Gilmour was inclined to suggest that the respondent could only defend its decision on the state of the evidence available to it at the time the decision was made, and although that may be the starting position, it seems inevitable that in this particular appeal, the applicant's case is bound to traverse the extent of the improvements it has made not only until the time of the decision appealed, but up to the time of the District Court hearing. Once the applicant's case in the District Court is cast in that way, it will be entirely appropriate for the respondent to supplement the justification for its original decision by any observations it has about the standard of the conduct of the appellant, right up to the hearing of the appeal. [25] Accordingly, the applicant, in obtaining an interim order under s 8, effectively gets a stay of execution, but should not take from it any encouragement that improvements thus far are necessarily sufficient. [26] I accordingly order suspension of the revocation of the applicant's licence that would otherwise have taken effect from 5.00pm this afternoon. That is to occur on the following terms:a) The applicant is to pursue its appeal in the District Court with all reasonable haste. If in the preparation of its case or acceptance of the earliest available dates, the respondent considers there is any unreasonable delay, then that will be a ground for revisiting the order I now make. b) I stay further steps in the judicial review proceedings. My provisional view is that the appeal is most likely to resolve any viable complaints raised by the present judicial review, and that is certainly the more productive forum for the arguments the applicant wishes to pursue. [27] I am most grateful to all counsel for marshaling helpfully succinct arguments in a short time frame. There will be no order as to costs on the present application. [28] After conferring with counsel on the appropriate terms of the present interim order, I direct that it be reflected as follows: a) The coming into force of the notice of revocation of Goods Service Licence No. 10441 served by the respondent on the applicant will be suspended until further order of the Court. b) Pending the determination of the District Court appeal against the said revocation no further steps based on information known or actions or inactions to date will be taken by the respondent to revoke the applicant's Goods Service Licence without further order of the Court.Dobson JSolicitors: Willis Toomey Robinson, Napier for applicant Bannister & von Dadelszen, Hastings for respondent