MCCROSTIE TRUCKING LTD v NEW ZEALAND TRANSPORT AGENCY [2018] NZHC 2736

MCCROSTIE TRUCKING LTD v NEW ZEALAND TRANSPORT AGENCY [2018] NZHC 2736 [23 October2018]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000701[2018] NZHC 2736BETWEEN MCCROSTIE TRUCKING LIMITEDPlaintiffAND NEW ZEALAND TRANSPORT AGENCYDefendantHearing: 9 October 2018Appearances: Y E Clarisse for PlaintiffK South for DefendantJudgment: 23 October 2018JUDGMENT OF GENDALL JIntroduction[1] The plaintiff, McCrostie Trucking Ltd (the Company), a goods truckingcompany, applies for judicial review of a decision of the defendant, the New ZealandTransport Agency (the NZTA) to revoke its Transport (Goods) Service Licence (theLicence). The Company has also filed an appeal against the decision in the DistrictCourt.[2] In the matter before me the Company applies for a stay of the NZTA's decisionpending determination of the review, pursuant to s 15 of the Judicial Review ProcedureAct 2016 (the Act). On 28 September 2018, I had made an interim order of stay untilI was able to receive and consider full submissions and make a further order. Thatconsideration occurred at the opposed hearing of the stay application that took placebefore me on 9 October 2018.Background[3] The Company was incorporated on 28 September 2004. It carries on businessas a goods transport operator, operating 11 heavy truck and trailer units throughoutNew Zealand. Among other things, it has a contract with Fastway Couriers.[4] On 29 September 2004, Daryl McCrostie (Mr McCrostie) applied for a licenceon behalf of the Company. He and his father (the sole director and shareholder of theCompany at the time) were nominated as being the persons to be in control of theservice to be carried on under the Licence. Because of Mr McCrostie's traffic-relatedoffending at that time, the NZTA was not satisfied that he was a fit and proper personto have control of a transport service. At the time, his name was removed from theapplication. His father was deemed to be in control of the proposed service and theholder of the requisite qualifications. The NZTA then granted the Licence on12 October 2004.[5] In October 2006, Mr McCrostie became the joint holder with his father of 99 ofthe Company's 100 shares. This meant he was now a person in control of theCompany's goods service. However, the NZTA was not advised of this. In June 2008,it seems Mr McCrostie and his father had a falling out. The latter was replaced as soledirector by Mr McCrostie's wife, Dominque Larayne McCrostie (Ms McCrostie).Since that time, Mr and Ms McCrostie have held one share each, with the remaining98 shares still held jointly by Mr McCrostie and his father.[6] Up until 29 September 2018, Mr McCrostie held driver licence classes 2, 3, 4and 5. These licences enabled him to drive any heavy motor vehicle or combinationunit. He has been driving the Company's heavy motor vehicles throughout.Offending[7] Between October 2004 and March 2018, the Company accrued 105 traffic-related offences. These related to the driving or operation of heavy motor vehicles inor in connection with its transport service. Twenty five of these offences related tooperating overloaded and over-dimensional heavy motor vehicles. Thirteen involvedoperating uncertified heavy motor vehicles and vehicles not up to a Certificate ofFitness standard. In addition, there were 38 breaches of the road user charges regimeand 26 speeding offences.[8] The Company also failed 34 Police roadside safety inspections. Faults detectedincluded brake faults, damaged towing connections, insufficient tyre tread, damagedor deteriorating suspension components, and non-functioning and non-complyinglights or indicators.[9] In addition to this offending by the Company, 49 of the Company's drivershave been apprehended for a further 105 safety-related offences while driving heavymotor vehicles in or in connection with the Company's transport service. Theseincluded 57 speeding offences, two offences of carelessly using a heavy motor vehicle,and various offences involving a failure to comply with traffic rules or rules related tologbooks and worktime.[10] Mr McCrostie has himself personally committed more than 80 traffic offencessince he gained his licence in 2000, at least 39 of these while driving heavy motorvehicles (some being counted within the 105 offences noted in the previousparagraph). As a result, he has had seven terms of disqualification from driving andpaid over $18,000 in fines.[11] Between 2001 and 2018, Mr McCrostie has been given some 16 warnings bythe NZTA in the interests of public safety. Peter William Stevenson (Mr Stevenson),the delegated decision maker for the NZTA, has deposed that some of those warningshave included concerns that Mr McCrostie's fitness and propriety could have anadverse effect on the Company's Licence. Ms McCrostie disputes this. She considersthat, in essence, the warnings referred only to Mr McCrostie's personal licences.The NZTA's decision[12] On 9 July 2018, the Company's files were referred by the NZTA toMr Stevenson. After reviewing the relevant information, he made a preliminarydetermination that public safety required the Company's Licence to be revoked. Hewas satisfied that the Company was no longer a fit and proper person to be the holderof a Goods Service Licence and that Mr and Ms McCrostie by association were nolonger fit and proper persons to have any position of control or involvement in theoperation of a transport service.[13] In reaching this decision, Mr Stevenson took into account the traffic relatedoffending history of the Company and individual drivers; Mr McCrostie's serioustraffic-related offending history; the warnings Mr McCrostie had been issued; and therepeated operation of substandard and uncertified heavy motor vehicles. Heconsidered that, while historic matters carried less weight, the instances of non-compliance demonstrated a consistent course of conduct and a culture of non-compliance within the Company.[14] On 17 August 2018, Mr Stevenson issued individual notices of proposal to theCompany, Mr McCrostie and Ms McCrostie. They outlined the decision he had cometo about their unfitness, stated that he proposed to revoke the Licence, and gave theman opportunity to make submissions. Mr Stevenson said he had decided not to give awarning or require further remedial action because of previous warnings given toMr McCrostie which were unheeded and the long history of non-compliance.[15] Mr Stevenson also issued Mr McCrostie with a separate notice of proposal torevoke his driver licence classes 2, 3, 4 and 5, and to prohibit him from driving anytransport service vehicle or hold those licence classes for three years.[16] Ms McCrostie then made submissions to Mr Stevenson on behalf of theCompany. She accepted that Mr McCrostie was not a fit and proper person to be incontrol of or a driver in a transport service. However, Ms McCrostie defended theCompany's safety record, emphasising that the breaches had been over a long periodof time and contending that the Company usually had good safety standards. She alsooutlined the various steps the Company had taken to ensure compliance. Shehighlighted the consequences the loss of the Licence would have on the company, itssuppliers, and its employees and their families.[17] On 21 September 2018, Mr Stevenson made a final determination that theCompany and Mr and Ms McCrostie were not fit and proper persons. He issued anotice of decision in respect of each. A few days later, the Company's solicitorcontacted Mr Stevenson requesting a "grace period" but Mr Stevenson refused.SubmissionsThe Company[18] The Company submits that its application for judicial review will be renderednugatory if the stay is not granted. The effect of the revocation of the Licence it saysmeans that all the Company's drivers will be without a job and its customers withouta transport provider. Given the length of time until the appeal or judicial review is tobe heard, it is said the business would likely be impossible to resurrect, even if theCourt found in its favour. This impact is severe.[19] The Company also maintains that it is bona fide in its application for judicialreview. It says that the issues it raises with the decision are seriously arguable. TheCompany will argue that the NZTA took into account irrelevant considerations suchas the traffic-related offending of Mr McCrostie, who it is claimed is no longer drivingfor or involved in the operation of the Company. The Company will also argue thatthe NZTA failed to take into account relevant considerations such as the Company'scompliance scheme and the significant steps it says it has taken towards reducing itsoffending.[20] The Company argues that neither the NZTA nor other road users will beinjuriously affected by a stay of the decision. The main reason the NZTA consideredthe Company to pose a risk to public safety was Mr McCrostie's driving record. TheCompany accepts that Mr McCrostie is not a fit and proper person to continue drivingunder the Licence and has removed him from its driving shifts. The Company likensits case to that of Travlon Coachlines (2005) Ltd v New Zealand Transport Agency.1[21] Finally, the Company submits that the overall balance of convenience hereallows the Court to stay the decision pending review.1 Travlon Coachlines (2005) Ltd v New Zealand Transport Agency [2018] NZHC 558.The NZTA[22] In response, the NZTA submits that its decision as the industry regulator mustbe accorded heavy weight and the Court should be slow to interfere with the statedneed for action.2 The NZTA is required to make decisions in the public interest and toprotect public safety. The NZTA says that there has been no satisfactory proposalmade by the Company to the NZTA to address the matters of concern.[23] The NZTA submits that a detailed assessment of the Company's case beforethe District Court and in the judicial review is not possible at this point. Nonetheless,the NZTA submits that it can revoke a licence if the individual or company is not a fitand proper person under s 30C of the Land Transport Act 1998 (LTA). The NZTAargues that there is no need for harm to have already occurred and the bar is not set ata very high level.[24] The NZTA acknowledges here that the consequences of the revocation couldbe severe for the Company. However, it says the overall interests of justice justify therevocation because of public safety concerns. The NZTA contends that any privatedetriment that may occur to the Company does not outweigh that.LawThe Land Transport Act regime[25] The LTA provides the regulatory framework governing transport services. Itspurpose is to promote safe road user behaviour and vehicle safety, and to provide asystem of rules to govern road use and licencing.3 The Company requires a Transport(Goods) Service Licence (TSL) to carry out its business. These licences are grantedby the NZTA, on application, to natural persons or companies if it is satisfied that theapplicant is a fit and proper person and that any person who is to have, or is likely tohave, control of the transport service is a fit and proper person.42 Director of Civil Aviation v Air National Corporation Ltd [2011] NZCA 3 at [35].3 Land Transport Act 1998, preamble.4 Land Transport Act 1998, s 30L.[26] The holder of a TSL has an obligation to ensure that every vehicle to be usedin the service is maintained in a fit and proper condition.5 It also has a duty to detectand eliminate traffic-related offending committed by employed drivers in the interestsof public safety,6 and to ensure that all its activities are carried out by it, and itsemployees, safely and in accordance with the relevant prescribed safety standards andpractices.[27] Section 30S(1) of the LTA provides that the NZTA may revoke a TSL ifsatisfied that either the holder of the licence, any person who has control of thetransport service, or any driver is not a fit and proper person.[28] In Cheyenne Haulers Ltd v New Zealand Transport Agency, Keane Jsummarised the transport service licencing regime as follows:7the intent of Parliament is clear. A transport service licence is a privilegenot a right. The safety of the public is always an issue. The corollary is thatlicensees must continue to earn their privilege. If they infringe sufficientlyseriously or persistently and in either of those ways compromise public safety,their licences can be revoked.[29] There is a right to appeal a decision to revoke a licence to the District Court,as the Company has done. However, s 106(3) of the LTA expressly provides that therevocation remains in effect pending this appeal.Interim relief[30] Alternatively, a revocation decision can be challenged by judicial review. Thisbrings with it the ability of the Court to make interim orders to preserve the applicant'sposition pursuant to ss 15 and 16 of the Act.[31] The Company has to prove that an interim order deeming its revoked Licenceto continue in force until its appeal or judicial review is determined is necessary topreserve its position as a matter of justice.85 Land Transport Act 1998, s 30A.6 Land Transport Act 1998, s 4(3) and (5).7 Cheyenne Haulers Ltd v New Zealand Transport Agency HC Auckland CIV-2011-404-2456,12 May 2011 at [41].8 Cheyenne Haulers Ltd v New Zealand Transport Agency, above n 7, at [65].[32] The Court of Appeal noted in Director of Civil Aviation v Air NationalCorporation Ltd that interim relief should not ordinarily be given to preserve anapplicant's right to a judicial review of the decision.9 Such relief does not sit well withthe fact that the District Court is prohibited from granting a stay pending an appeal ofthe decision to it. At the very least, the Court considered that the prohibition in theLTA is a relevant consideration to the exercise of the discretion to grant interim relief.[33] In Foreman Automotive Ltd v New Zealand Transport Agency, Katz J set outthe approach to granting interim relief:10First, the Court must consider whether the statutory threshold is met (thatorders are necessary to preserve the position of a party). Secondly, the Courthas a wide discretion as to whether the grant of relief is appropriate. Theexercise of that discretion will usually involve considering all thecircumstances of the case. In this case the key considerations are the strengthof the judicial review claims, the particular statutory context, and the publicand private repercussions of granting relief.[34] Her Honour went on to say that:11Parliament has therefore set where the balance should be struck in "ordinary"cases. Public safety is paramount unless and until the Agency is shown to bewrong. It was to avoid undermining this statutory regime that the Court ofAppeal in Air National urged caution in cases such as this. This is a significantfactor against the granting of interim relief in this case.[35] Katz J noted too that considerations of public safety will generally prevail overprivate detriment.12Discussion[36] I begin by considering as best I can the strength of the Company's judicialreview claim. On a preliminary analysis, I consider that the Company has an arguablecase. There will be an issue as to whether the NZTA's failure to discuss with theCompany that it intended to revoke its Licence, or give it an opportunity to come upwith a plan to address safety concerns may have been a breach of natural justice.9 Director of Civil Aviation v Air National Corporation Ltd, above n 2, at [30].10 Foreman Automotive Ltd v New Zealand Transport Agency [2013] NZHC 1167 at [24].11 At [53].12 Foreman Automotive Ltd v New Zealand Transport Agency, above n 10, at [58].[37] There is also a possible argument that the NZTA failed to take into account arelevant consideration, being the steps that the Company claimed it had taken toimprove their performance. The Company will also argue that the NZTA took intoaccount an irrelevant consideration, being Mr McCrostie's driving record, as it willcontend he had been stepped down from a driving role. However, I do not considerthis argument to be particularly strong because Mr McCrostie has remained in controlof the Company, as I discuss below.[38] In all, I find that, on a brief analysis of the arguments, while it cannot be saidthat the Company has no chance of success, it is certainly not guaranteed to succeed.[39] I accept that the revocation of the Company's Licence will cause hardship tothe Company and it is possible that it may struggle to later resurrect its business if itsjudicial review application does succeed. I note, too, what is claimed that itsemployees may have some trouble finding alternate employment. Nonetheless, thishardship is common to appeals of this type. It is not sufficient on its own for interimrelief to be granted. The overarching factor is the risk to public safety.13[40] I note too, as suggested by Mr Stevenson in his evidence, that there are actionsthe Company could take to help maintain its position despite the Licence revocation.For example, it could temporarily pass its work and assets under some appropriatearrangement to a properly licensed surrogate TSL holder in order to retain its staff andcurrent contracts.[41] The key factor which points against the grant of interim relief here is thepotential risk to public safety by allowing the Company to continue to operate. TheCompany submits that there is now limited danger to public safety given that it saysMr McCrostie is no longer driving for and is not in control of the Company. It pointsout that, despite its record, the Company has had no accidents or crashes for over13 years. Nonetheless, I find the Company's compliance and safety record isconcerning and Mr McCrostie's particularly so. Moreover, it is appropriate for me todefer to the NZTA's specialist expertise in this area. As noted by the Court of Appeal,13 Foreman Automotive Ltd v NZTA, above n 10, at [58].I should be slow to interfere with the industry regulator's assessment of the need foraction to protect public safety.14[42] The Company maintains, however, that I should take a position similar to thattaken by Nation J in Travlon. The plaintiff in that case ran a commercial passengerservice. Its licence was revoked by the NZTA due to safety concerns. These concernslargely centred on the roadworthiness of the vehicles used. The mechanic employedby Travlon was not properly maintaining the roadworthiness of the vehicles, leadingto a number of crashes.[43] The plaintiff, Travlon sought interim relief after the revocation. In determiningto grant that relief, Nation J was influenced by the fact that the mechanic, who waseffectively the main cause of the safety issue, was no longer working for Travlon. Hehad been replaced with someone who was said to be a very competent mechanic. Inaddition, Travlon had sought assistance to improve its practices. Nation J alsoconsidered that Travlon had some seriously arguable issues in its judicial review andnoted that the revocation would have very serious consequences.[44] Nation J concluded that Travlon had met the threshold for obtaining interimrelief, albeit with conditions. He prevented the revocation from coming into force fora number of months to enable Travlon to carry out its high season period of work.Nation J imposed various conditions about the safety procedures for Travlon to followover that period.[45] The Company in the present case submits that, like Travlon, it has removed thekey safety concern, being Mr McCrostie. In addition, it argues that Travlon was giventime to come up with a plan to address its safety issues, whereas it claims it was not.The NZTA in response, however, maintains that the Company has not made anysignificant effort to make alternative arrangements.[46] I do not accept that the removal of Mr McCrostie as a driver completelyremoves safety concerns in this case, although it is a step in the right direction. Therehave also been infringements by other drivers in the Company and there is little14 The Director of Civil Aviation v Air National Corporation Ltd, above n 2, at [35].evidence that the Company has taken its obligations to comply with its LTA obligationsseriously. Therefore, the Company still poses a significant risk to public safety.[47] Moreover, I consider that Mr McCrostie does remain as a person who could beseen as being in control of the Company. Although the Company claims thatMs McCrostie is the only person in control of the Company, in my view, there mustbe serious doubt over this. Section 2 of the LTA defines control, in relation to atransport service, as: direct or indirect control of the management of the whole or part of thetransport service by a shareholding or the holding of any position (howeverdescribed) in the management of the whole or part of the transport service thatgives the person a significant influence on the operation of the whole or partof the service (whether or not other persons are also involved)[48] While he is not a named director of the Company, Mr McCrostie jointly holds98 per cent of the shares, and 1 per cent on his own. Additionally, he is in charge ofoverseeing the maintenance of the fleet and has handled public relations.Ms McCrostie deposed that she has always been in control. She says thatMr McCrostie carries out her instructions and reports back to her for any decisionmaking. I accept that Ms McCrostie may make many decisions for the Company. Iconsider it highly unlikely, however, that in all the circumstances here Mr McCrostiehas never had a say in the decision making and direction of the Company. He has beenthe figure in control on the ground and, in the past, has been the public face of thebusiness. He is the one with the experience in the industry. Therefore, even thoughhe may no longer be a driver, he is still in control of the Company and the safety riskremains.[49] I note also that in Travlon15 Nation J only granted a stay on the revocationdecision for two months, to cover the company's peak season. The stay sought by theCompany here is until the judicial review proceeding is heard, which will likely be atleast, if not more than, four months away.[50] Previous cases make it clear that interim relief of this nature will only be givenin exceptional circumstances. Parliament's prohibition on interim relief pending a15 Travlon Coachlines (2005) Ltd v New Zealand Transport Agency, above n 1.District Court appeal shows that the NZTA's decisions are to be given great respect bythe courts.[51] I do not consider that the hardship the Company faces as a result of therevocation of its Licence and its chances of success in its judicial review are sufficientto outweigh the risk its continued operation poses to public safety. Therefore, interimrelief is not appropriate.Conclusion[52] I find that the Company has not done sufficient here to establish that an interimorder deeming its revoked Licence to continue in force until its judicial review isdetermined is necessary to preserve its position as a matter of justice. While theCompany may well suffer hardship as a result and has an arguable case for its judicialreview, in my view, in all the circumstances here, this does not outweigh the risk topublic safety, which the statutory scheme requires to be prioritised.[53] I therefore decline to order the interim relief sought by the Company. TheCompany's stay application is dismissed. My interim order noted at [2] above stayingthe earlier decision to revoke the Licence is rescinded. That earlier Licence revocationdecision will now come into effect.[54] Costs are reserved and may be the subject of memoranda filed in the absenceof agreement....................................................Gendall JSolicitors:Pitt & Moore, NelsonRaymond Donnelly & Co, Christchurch