KEELEY v NEW ZEALAND TRANSPORT AGENCY NO 2 [2020] NZHC 2453

KEELEY v NEW ZEALAND TRANSPORT AGENCY NO 2 [2020] NZHC 2453 [18 September 2020]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2019-470-132[2020] NZHC 2453BETWEEN JOSEPH KEELEYPlaintiffAND NEW ZEALAND TRANSPORT AGENCYDefendantHearing: 4 September 2020 with further memoranda on 15 and 16September 2020Appearances: C A Donaldson for the plaintiffN S Wood and O E Battell-Wallace for the defendantDate of judgment: 18 September 2020JUDGMENT NO 2 OF PALMER JThis judgment was delivered by me on Friday 18 September 2020 at 3.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Wynn Williams, ChristchurchChapman Tripp, WellingtonSummary[1] On 16 July 2020, the New Zealand Transport Agency, or Waka Kotahi as it isnow known, revoked the appointments of Mr Joseph Keeley and his company TTPTaupō Ltd (TTP) as a vehicle inspector and inspecting organisation for warrants offitness (WOFs). Mr Keeley and TPP apply for judicial review and seek interim orderspreserving their position until that is heard. I accept their inability to operate thebusiness will likely have a significant economic and financial impact on Mr Keeley,his family and employees. Mr Keeley's failure to spent at least 30 minutes on each ofhis inspections, as envisaged in a condition to which he has been subject, countsagainst his application. But I do not consider there is evidence of an acute publicsafety risk deriving from that. I grant interim orders subject to more restrictiveconditions on the time Mr Keeley spends on inspections until determination of theapplication for judicial review that will be heard on 15 and 16 October 2020.What happened?[2] Under the Land Transport Act 1998, the Land Transport Rule: VehicleStandards Compliance 2002 empowers Waka Kotahi to appoint vehicle inspectors andinspecting organisations to carry out activities including WOF inspection andcertification. Clause 3.2 of the Rule empowers Waka Kotahi to require an inspectoror organisation to undergo an investigation if it is satisfied on reasonable grounds thatthey have failed to comply with the conditions of their appointment. If Waka Kotahiis satisfied of that after investigation, it may require remedial action, or suspend orrevoke an appointment. Before revoking an appointment, Waka Kotahi must notifythe inspector or organisation of the action being considered, the reasons for it, offerthe opportunity for submissions to be made and consider the submissions.Alternatively, under cl 3.3, Waka Kotahi may immediately suspend an appointment ifit has reason to believe an inspector or organisation has failed to comply with acondition of appointment and that presents a significant risk to land transport safety.[3] In the early 1990s, Mr Keeley was appointed as a vehicle inspector for WOFsbut did not use the appointment.12 Around 2005, he reapplied and was appointed1 Affidavit of Joseph Keeley, 31 July 2020 (Keeley), at [3].2 Affidavit of Neil Adams, 31 August 2020 (Adams), exhibit NLA-1 at 47.again. His then-company, HVR Holdings Ltd, held the equivalent appointment as aninspecting organisation until 2011, when it was liquidated. In 2012, Mr Keeleyreapplied for appointment again and began inspecting vehicles for TTP Taupo Ltd(TTP). In 2015, he became a shareholder and director of TTP which held theorganisation appointment. He estimates he has inspected over 70,000 vehicles in the15 years since 2005.Reviews and suspension[4] In 2015, Waka Kotahi conducted three reviews related to Mr Keeley:(a) On 12 October 2015, Waka Kotahi recorded that: the QualityManagement System (QMS) inspection manual was not on site; themost recent vehicle inspector certificate was not displayed; and thecheck sheets needed to be completed accurately.(b) On 19 October 2015, Waka Kotahi recorded: the delegations, staff andtraining records required updating, labels needed to be kept in the WOFlabel book; care needed to be taken to complete check sheets fully; andsteering self-centring checks could not be done on a brake rollermachine.(c) On 23 November 2015, Waka Kotahi found Mr Keeley and TTP to becompliant.[5] In 2019, Waka Kotahi conducted three more reviews. On 5 September 2019,Waka Kotahi told Mr Keeley:3(a) He had to apply for his own organisation appointment because TTP wasappointed before he was a director and had changed ownership. Hedid.3 Adams, exhibit NLA-1 at 48; Keeley at [16](a).(b) The QMS records needed to be updated to identify the personresponsible. Mr Keeley says he took steps to do that.(c) There had been no recent relevant training or internal assessmentavailable or recorded for some time. Mr Keeley undertook a personalassessment.(d) The large number of vehicles inspected was of concern. Mr Keeleyimplemented a booking system to eliminate the high numbers, allowing30 minutes per inspection.(e) Some vehicle faults were not identified during the review, including anunderinflated tyre, and a LW plate's details not matching the vehicle.Mr Keeley made improvements to his processes, including testingtrailer stopping, rotating driveshafts, feeling brake hoses, jacking therear of the cars of different places, checking rear headrests and drivingtrailers around to see if they would stop within 7 metres at 30 km/h.(f) More care was required with interior seat belt webbing inspections.Mr Keeley says he started inspecting seatbelts more closely.(g) A vehicle emissions test was not completed. Mr Keeley responded atthe time that it was completed.[6] On 20 November 2019, Waka Kotahi recorded that:4(a) The previous concerns had not yet been addressed. Mr Keeley engageda consultant to rewrite the QMS manual as requested, to makerecommendations for further improvements, and to provide onsitetraining on 13 December 2019.(b) Multiple inspection fails had not been entered into Waka Kotahi'ssystem.4 Adams, exhibit NLA-1 at 48-49; Keeley, at [16](b).(c) Multiple checksheets had omissions.(d) Multiple processes needed improvement. For example, Mr Keeley wasto jack up cars from the chassis or spring eye, not the rear axle.Mr Keeley disagreed with this method.(e) Data entry continued to be an issue.[7] On 3 December 2019, Waka Kotahi recorded:5(a) There had been some improvements but more were required.Mr Keeley advised he was continuing to make improvements and waswilling to do what was required.(b) The QMS manual had still not been updated. Mr Keeley's consultantwas still doing that.(c) The data entry and checksheet completion continued to requireimprovement. More care needed to be taken when filling outchecksheets.(d) Damage to a seatbelt was not recorded as a reason for rejection.Mr Keeley considered it was safe and compliant but Waka Kotahi toldhim he needed to fail it. Mr Keeley says the driver had it inspected byanother inspector who passed it.(e) Emission tests needed to be carried out to requirements.[8] On 17 December 2019, Waka Kotahi immediately suspended Mr Keeley'sappointment as an inspector under cls 2.1(1), 2.1(2) and 3.3(1). On 19 December2019, Waka Kotahi advised Mr Keeley it was considering revoking his appointmentas a vehicle inspector on the basis of the same factual matters as his suspension.6 On20 December 2019, Waka Kotahi sent Mr Keeley a letter entitled "notice of immediate5 Adams, exhibit NLA-1 at 49-50; Keeley, at [16](c).6 Keeley, exhibits F and G.suspension of the TTP Taupo's appointment as an inspection organisation", though thetext of the letter bore no relation to that. It also sent him three notices of proposal, torevoke his appointment, to revoke TTP's appointment and to decline his applicationfor an inspecting organisation appointment.[9] From late December 2019 to February 2020, Mr Keeley arranged for theconsultant to conduct onsite training, finish updating the manual and provide adviceabout compliance with Waka Kotahi requirements.7Interim relief and surveillance[10] On 19 December 2020, Mr Keeley appealed his suspension to the DistrictCourt under s 106 of the Act. But the section is explicit that an appeal does not excusea person from complying with the decision appealed from. So Mr Keeley also broughtthese judicial review proceedings in the High Court and applied for interim relief.[11] On 20 December 2019, Brewer J granted interim relief without notice, topreserve Mr Keeley's position pending determination of an on notice application forinterim relief or until Mr Keeley's appeal and application for judicial review had beendetermined.8 Brewer J considered there was force in Mr Keeley's submission that thereasons given by Waka Kotahi for suspension "arguably do not demonstrate that theplaintiff 'presents a significant risk to land transport safety'".9 Brewer J was satisfiedthe interim relief would not compromise public safety.10 The interim relief prohibitedWaka Kotahi "from taking any further action that is or would be consequential on thedecision to suspend the plaintiff's appointment as a Vehicle Inspector".11 Later on 20December 2019, in light of the letter apparently about suspension of TTP, Brewer Jalso granted interim relief on a without notice basis in favour of TTP.12[12] On 29 January 2020, the parties filed a joint memorandum of counsel agreeingthe interim relief ordered be varied and continued and the proceeding be adjourned.7 Affidavit of Joseph Keeley, dated 21 February 2020 (Keeley February), at [51]-[55].8 Keeley v New Zealand Transport Agency [2019] NZHC 3464.9 At [11].10 At [12].11 At [14](a).12 Keeley v New Zealand Transport Agency (No 2) [2019] NZHC 3496.This was on the basis that it was "almost inevitable" that the suspension decision, andthe challenge to it, would be overtaken by Waka Kotahi's consideration of revocation.The parties agreed that no suspension of TTP had been made and that the interimorders regarding TTP should be rescinded. They also sought for the interim relief tobe subject to the additional condition that "Mr Keeley must ensure that he allow atleast 30 minutes for each warrant of fitness inspection that he carries out". (WakaKotahi had originally sought at least 45 minutes for each inspection but had agreed toMr Keeley's proposal of 30 minutes.) On 7 February 2020, Peters J made ordersaccordingly.13[13] On 18 June 2020, Waka Kotahi's lawyers wrote to Mr Keeley's lawyerssuggesting that he had apparently breached the terms of the interim relief orders.14Waka Kotahi's analysis of the information filed in its system by Mr Keeley was that,from 28 April to 14 May 2020, Mr Keeley was consistently carrying out WOFinspections for initial inspections in less than 30 minutes.15 Its surveillance ofMr Keeley's premises on three days in May 2020 confirmed that most vehiclesarriving for an initial inspection were inspected in under 30 minutes.16 Waka Kotahialso had specific concerns about individual inspections.[14] In response, on 8 July 2020, Mr Keeley's lawyers said the condition "onlyrequires that Mr Keeley allows 30 minutes for each inspection, not that each inspectiontakes at least 30 minutes".17 Regarding the more significant specific concerns, theysaid: one vehicle which did not appear to enter the inspection premises at all was a re-check; the four trailers for which brake tests were apparently not completed were notbraked so did not need testing; Mr Keeley had already driven a neighbour's vehicleon which a steering test was apparently not completed; and he disagreed that oneinspection only took 11 minutes but did not respond to the suggestion that a sticker onthe rear window should have resulted in rejection.13 Keeley v New Zealand Transport Agency HC Auckland CIV-2019-470-132, 7 February 202014 Keeley, exhibit I.15 At [16].16 At [21].17 Keeley, exhibit J, at [6].Revocation and proceedings[15] On 16 July 2020, Mr Neil Adams at Waka Kotahi issued notices revokingMr Keeley's appointment as a vehicle inspector and TTP's appointment as aninspecting organisation under cl 3.2(2). Mr Adams' evidence is that he was satisfiedMr Keeley and TTP had failed to comply with conditions of their appointment andfailed to carry out inspection and certification activities competently and diligently asrequired.18 Mr Adams was concerned by the high number of inspections taking lessthan 30 minutes, despite Mr Keeley and TTP being on notice of the concern and thecondition for interim orders. The expert evidence of Mr Scott Thacker of Waka Kotahiis that a competent vehicle inspector takes, on average, 45 minutes to an hour tocomplete the required steps to inspect and certify a light motor vehicle for its WOF.19He considers a competent inspector could not routinely do so competently anddiligently in less than 30 minutes.20 He acknowledges that trailer inspections wouldtake less time.21 Mr Thacker's evidence is that, during November and December 2019reviews, the fastest time he observed Mr Keeley complete an inspection was 33minutes and that inspection was non-compliant.22[16] On 22 July 2020, I continued the interim orders prohibiting Waka Kotahi fromtaking any further action consequential on its revocations of the appointments ofMr Keeley as a vehicle inspector and TTP as an inspecting organisation, until anyapplication for interim orders made by 31 July 2020 was determined.23 That continuedto be subject to the condition that "Mr Keeley must ensure that he allows at least 30minutes for each warrant of fitness inspection that he carries out".[17] Mr Keeley's evidence is that he, his children, TPP and its other two employeeswill suffer irreparable harm if the interim orders are not continued because they willhave to shut up shop and will not have any cashflow to meet commercial leasepayments and will lose their customer base.24 He believes there is no risk to public18 Adams at [4.1].19 Affidavit of Scott Thacker, 14 August 2020, at [140].20 At [142].21 At [144].22 At [143].23 Keeley v New Zealand Transport Agency [2020] NZHC 1768 at [12].24 Keeley at [46]-[55].safety in him continuing his business because he is experienced and qualified, he hasmade improvements to practices and procedures, and the November and December2019 reviews only allege technical non-compliance and do not represent an acute riskto public safety.25 At the hearing, his lawyer said Mr Keeley and TPP are willing towork co-operatively with Waka Kotahi to address the concerns raised and he has nowimplemented a system where inspections are booked 45 minutes apart.[18] On 4 September 2020, I heard the application for interim orders. I continuedthe interim interim orders until determination of the application for interim orders inthis judgment. At the hearing, I directed the Registry to establish when a substantivehearing could be set down and the parties to indicate their preferences as to that. TheRegistry advises that a substantive judicial review hearing could be set down for 15and 16 October 2020, in the Rotorua High Court.[19] Mr Wood, for Waka Kotahi, submits the judicial review should be set down forthose dates given the importance of having the proceeding promptly determined andthe likelihood the earliest District Court hearing time for an appeal will be manymonths away. He submits the parties have already generated substantial evidence andlittle more is required. Ms Donaldson, for Mr Keeley and TPP, submits the judicialreview hearing should not proceed on those dates because it would be moreappropriate to hear the more cost-effective District Court appeal first and the furtherevidence they want to file cannot be ready in time.Relevant law of interim orders[20] Under s 15 of the Judicial Review Procedure Act 2016, the court may makeinterim orders "if, in its opinion, it is necessary to do so to preserve the position of theapplicant". The Court has a wide discretion to consider all the circumstances of thecase in deciding whether to grant interim relief.26 Making interim orders involvesconsidering the seriousness of the question to be argued and the strength of theapplicant's case, the balance of convenience between the parties and the overall justiceof the case.25 At [60].26 Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.[21] There have been a number of applications for interim orders in judicial reviewsof Waka Kotahi decisions to revoke vehicle inspection appointments. In at least sixdecisions, the High Court has granted interim relief because the effect of the appointeelosing their business was considered more significant than any public safety risks.27In several of those cases, the public safety risks appear to have been greater than thosehere.28[22] In another case, Foreman Automotive Ltd v New Zealand Transport Agency,interim orders were not granted.29 There, Katz J considered interim relief is likely tobe "exceptional" where there are separate statutory appeal rights precluding a stay ofa decision and observed that too ready a resort to interim relief has the potential toundermine the statutory regime which is underpinned by important public safetyconsiderations.30 She relied on the Court of Appeal decision in Director of CivilAviation v Air National Corporate Ltd in relation to a similar provision in the CivilAviation Act 1990.31Submissions[23] Ms Donaldson, for Mr Keeley and TPP, submits they have a strong, seriouslyarguable case for judicial review because Waka Kotahi failed to sufficiently considerMr Keeley's explanations, took into account irrelevant personal traffic history and itsdecisions are disproportionate and unreasonable. She submits the public safety risk isdirectly and effectively addressed by the robust and reliable changes Mr Keeley andTPP have already made to their policies and procedures, and their willingness to takeon any recommendations by Waka Kotahi. She submits the safety concerns here aretechnical, not acute, are not as great as in other cases in which interim orders were27 Pohoikura Waitoa Logging Ltd v New Zealand Transport Agency HC Gisborne CIV-2010-416-277, 19 November 2010; Moffatt v New Zealand Transport Agency HC Dunedin CIV-2011-412-679, 28 October 2011; Travlon Coachlines (2005) Limited v NZTA [2018] NZHC 558, [2018]NZAR 483; Boss Transport Limited v New Zealand Transport Agency [2019] NZHC 522;Longville v New Zealand Transport Agency [2019] NZHC 1445; Stan Semenoff Logging Ltd vNew Zealand Transport Agency [2019] NZHC 1133.28 Travlon Coachlines (2005) Limited v NZTA; Boss Transport Limited v New Zealand TransportAgency; Pohoikura Waitoa Logging Ltd v New Zealand Transport Agency; Stan Semenoff LoggingLtd v New Zealand Transport Agency.29 Foreman Automotive Ltd v New Zealand Transport Agency [2013] NZHC 1167, [2014] NZAR260.30 At [19]-[20].31 Director of Civil Aviation v Air National Corporate Ltd [2011] NZCA 3, at [30].granted, and there has already been seven months since Waka Kotahi proposed torevoke the appointments. She submits trailer inspections and remaining open forlonger than usual hours are reasons why more inspections may be completed in a daythan Waka Kotahi calculates. Ms Donaldson submits that, whether the appeal orjudicial review occurs first, TTP will have to cease operating, with obvious andsignificant consequences for the business, its employees and Mr Keeley personally, ifinterim orders are not granted. If interim orders are not granted, she submits thejudicial review will be rendered nugatory.[24] Mr Wood, for Waka Kotahi, submits interim orders will only be given inexceptional circumstances as it would undermine the statutory regime that does notprovide for a stay pending appeal. He submits the merits of each of the grounds ofjudicial review are weak and can be ventilated at the appeal in any case. He submitsMr Keeley's non-compliance with the condition and the public interest ensuringcompetent and safe vehicle inspections favour refusing interim relief. He notes thatWaka Kotahi is a highly specialised statutory body and its staff have considerableexpertise and experience in vehicle safety, deserving of deference. He submits interimrelief is not necessary to preserve the position of Mr Keeley and TPP if it will be aconsiderable time until the substantive judicial review is heard and determined. Hesuggests there may be some ability to stop operating for a period without the situationbeing irretrievable.Should I grant interim orders?[25] It is not clear to me that the case for judicial review here is particularly strong.There may be some strength in the ground that Waka Kotahi failed to take into accountrelevant considerations of changes made after December 2019 and the related groundthat it did not give Mr Keeley the chance to take remedial action. But that has notbeen fully argued before me and is difficult to assess. Ms Donaldson submits thestrongest ground is that Waka Kotahi's response was disproportionate andunreasonable. But serious safety concerns warrant a robust response under the Act.And there is evidence Waka Kotahi held concerns about safety and there was a basisfor it to do so.[26] In terms of the balance of convenience, I accept that inability to operate hisbusiness will likely have a significant economic and financial impact on Mr Keeley,his family and his employees. Against that, I must weigh the public safety risks.[27] Mr Keeley has been apparently unwilling to honour the purpose of thecondition of interim orders so far that he ensure he allows at least 30 minutes for eachinspection he carries out. Waka Kotahi's evidence strongly suggests he has not spent30 minutes on each inspection, as does his response to that concern. That countsagainst his application for further interim orders. But the validity of Waka Kotahi'sexpert evidence that a competent inspector could not competently and diligentlyinspect a vehicle in less than 30 minutes is disputed.32 And it is difficult to identifyacute public safety consequences of those inspections. Waka Kotahi identified specificsafety concerns in its 18 June 2020 letter. Mr Keeley provided responses to the moresignificant concerns. Whether those responses adequately meet the concerns as far asthe legal test for revocation is concerned will be considered at the substantive hearing.But for now, I consider he has provided sufficient explanation that I do not considerthere is an acute public safety risk. Waka Kotahi did not argue there was.[28] Waka Kotahi did rely on the submission that interim orders would underminethe statutory regime. I accept that is relevant to my decision about whether or not togrant interim orders. It does not determine my decision, which must also take intoaccount other relevant considerations. But it is also relevant to the conditions of anyorders, including questions of timing.[29] The final relevant factor is how long interim orders would be in place. One ofthe most important characteristics of judicial review is that it is supposed to be prompt.These proceedings were filed in December 2019. There has been plenty of time forthe applicant to gather their evidence. I do not consider the existence of a parallelappeal in the District Court, which may not occur for several months, affects thedesirability of the judicial review occurring now. The applicants are taking advantageof the possibility of interim orders by applying for judicial review, when they are notavailable for a District Court appeal as a matter of legislative intent. They cannot32 Keeley February, at [49]-[50].cherry pick the advantages for them of judicial review without accepting theconcomitant pace involved in a judicial review. I set down the substantive applicationfor judicial review to be heard in the Rotorua High Court on 15 and 16 October 2020.I make timetabling orders below.[30] On the basis of the balance of convenience, and the overall justice of the case,I do not consider there is sufficient evidence of safety risks to warrant the impact onMr Keeley's and others' livelihood that the lack of interim orders would cause, if thetime to the substantive judicial review hearing is relatively short and if there are stricterconditions on the interim orders. I make interim orders subject to new conditions thatreflect Mr Keeley's approach to the previous conditions and the practice he says hehas now adopted.Result[31] Under s 15 of the Judicial Review Procedure Act 2016, I grant interim ordersprohibiting Waka Kotahi from taking any further action consequential upon itsrevocations of the appointments of Mr Keeley as a vehicle inspector and TTP TaupōLtd as an inspecting organisation, subject to the conditions that:(a) Mr Keeley must allow at least 45 minutes for each initial warrant offitness vehicle inspection and must not start a new inspection less than45 minutes after a previous inspection started.(b) Waka Kotahi has leave to apply to the Court for the interim order to bevaried or rescinded on the basis of evidence that Mr Keeley breachesthat condition or on the basis of any other material change incircumstances.(c) The interim order will expire on determination of the application forjudicial review by the High Court unless otherwise continued.[32] I direct:(a) By 5 pm Monday 5 October 2020, Mr Keeley and TTP will file andserve any reply evidence, their written submissions and a commonbundle.(b) By 5 pm Monday 12 October 2020, Waka Kotahi will file and serveits written submissions.(c) At 10 am Thursday 15 October 2020, the application for judicialreview will be heard in the Rotorua High Court for up to one and a halfdays.[33] Both parties have enjoyed a measure of success in relation to this application.Costs will lie where they fall.Palmer J