Aviation Legal Developments 2013 BEN MARTIN JAYNE HEATLEY MICHAEL SHEEDY RAAA 2013 ANNUAL CONVENTION PALMER COOLUM RESORT 11 OCTOBER 2013
Overview Aviation Legal Developments The unintelligible definitions of Charter and RPT a real quandary for operators and CASA Are you sure you own it? Benefits and traps for title in aircraft and components arising from the new security register
The Unintelligible Definitions of Charter and RPT: a real quandary for operators and CASA
Current Classifications Civil Aviation Act 1988, s27 Civil Aviation Regulations CAR 206: Aerial Work Charter o o Open charter Closed charter RPT
New Air Transport Categories Civil Aviation Safety Regulations 1998: Part 121 Australian Air Transport Operations Large Aeroplanes Part 133 Australian Air Transport Operations Rotorcraft Part 135 Australian Air Transport Operations Small Aeroplanes
CAR 206...(b) charter purposes, being purposes of the following kinds: (i) the carriage of passengers or cargo for hire or reward to or from any place, other than carriage in accordance with fixed schedules to and from fixed terminals...; (Open charter) (ii) the carriage, in accordance with fixed schedules to and from fixed terminals, of passengers or cargo or passengers and cargo in circumstances in which the accommodation in the aircraft is not available for use by persons generally; (Closed charter) (c) the purpose of transporting persons generally, or transporting cargo for persons generally, for hire or reward in accordance with fixed schedules to and from fixed terminals over specific routes with or without intermediate stopping places between terminals... (RPT)
Meaning of Closed Charter accommodation in the aircraft is not available for use by persons generally Sale of all seats to one party (such as church group or mining com pany) Sale to unrelated travel agent Tourism flights e.g. Bill Peach Tours CASA Regulatory Policy CEO PN007 2009: concerned by sham arrangements class of persons must be determined by some characteristic
Civil Aviation Safety Authority v Caper Pty Ltd [2012] FCA 1213 Facts: Caper (Direct Air) conducted tourist flights between Darwin and Bathurst Island Direct Air holds an AOC for aerial work and charter (not RPT) Tiwi Tours (AAT Kings) offered 1 day tours to Bathurst Island and chartered aircraft from Direct Air. Flights depart Darwin each weekday at 8am, return at 5:15pm Tour costs include flight, guided tour, museum entry and smoking ceremony
Civil Aviation Safety Authority v Caper Pty Ltd Facts: AAT Kings / Direct Air unrelated (not a sham ) Flights did not necessarily take place at daily time listed on brochure Tours booked through AAT Kings or travel agent AAT Kings advertised (not Direct Air) Tours open to all Only tour attendees could fly on aircraft
Civil Aviation Safety Authority v Caper Pty Ltd Court found that flights were: on fixed schedule to and from fixed terminals open to public generally: o o AAT offered seats to the general public, not a class of the public safety reason Therefore, not closed (or open) charters, but RPT flights
Effects on Industry Issue for operators of scheduled charters such as air tours Created confusion over classification of operations which have long been operated safely as charter flights Practical problem not all operations can comply with RPT standards
Solution Proposed by CASA... Charter operators may apply to CASA at any time for an RPT authorisation to be included on their AOC. CASA recognises, however, that some operators may not currently be able to meet all RPT requirements. In appropriate cases, therefore, CASA may consider exempting an RPT operator from complying with some otherwise applicable requirements, and approving deviations from certain other requirements, where that option is available. Such exemptions and authorisations would invariably be subject to certain conditions necessary to ensure an acceptable level of safety is maintained. In light of the implications of the Caper decision for some charter operators, CASA will consider applications for authorisation to conduct RPT operations, subject to approvals and/or exemptions of the kind mentioned above, where the aircraft involved have a seating capacity of not more than 9 seats and a Maximum Take off weight (MTOW) of not more than 8,618 kg...
Need for Certainty In view of the serious consequences, CASA needs to immediately work with industry on a solution RPT Lite exemption should extend to aircraft with more than 9 seats Air tours such as Bill Peach Journeys have been safely operated for years and should be allowed to continue A failure to act will have a significant impact on tourism without any real safety consequence
Are you sure you own it? Benefits and traps for title in aircraft and components arising from the new security register
Summary The Personal Property Securities Act 2009 ( PPSA ) The Cape Town Convention Maiden Civil Case
The Personal Property Securities Act 2009 ( PPSA ) Airframes, engines and all aircraft components of any size and value can all be registered on PPSR Airframes and engines can be registered and searched by serial number
The Cape Town Convention International system for registration and priority of security interests in certain aircraft equipment (airframes, engines and helicopters) The International Register an electronic registration system for perfection and priority of international interests Expected to become part of domestic law in Australia by 2014
PPSA Security Interests If you give possession of property you own to someone else, you are likely to have a security interest. An interest in personal property created by: Mortgage or charge over property Retention of title Certain leases Hire purchase agreements Goods on consignment
Personal Property Securities Act Security interests must be registered on PPSR to ensure priority Serious consequences for failure to register If an owner fails to register, it could lose its property
Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852 3 Caterpillar construction vehicles Purchased by QES, funded by cash deposits and finance from Esanda and Westpac Maiden took possession of all 3 Caterpillars and used for construction work in the NT QES invoiced Maiden periodically for amounts that corresponded with amounts owed to the financiers Maiden seeks short term finance from Fast Financial Solutions. Parties enter into a General Security Agreement purporting to grant a security interest in all Maiden s assets Caterpillars were among the items listed as assets Maiden defaults Fast appoints receivers
Queensland Excavation Services Title to C1, C2 and C3 Informal lease Maiden (in receivership) possession but no title, Secured Loan FAST FINANCIAL Perfected security interests in C1, C2 and C3 on the PPSR
Issues: Who is the true owner of the Caterpillars: o QES? o Maiden? If QES is the true owner, which security interest is superior: o QES? o Fast?
Court Found: QES the true owner of 2 of the 3 caterpillar vehicles but did not register a security interest on PPSR (interest is therefore unperfected ) Fast Financial registered security interest over all 3 vehicles on PPSR Fast Financial s perfected security interests are superior to QES s unperfected interest Maiden s receivers entitled to possession of 3 Caterpillars to satisfy the debt owed to Fast Financial
Court Found: The competing security interests must be resolved according to the PPSA If an interest is not perfected, it is vulnerable, even though rooted in title QES s security interest was vulnerable not only because it was not perfected by registration, but also because there was no security agreement evidenced in writing Decision: Fast Financial Solutions registered rights took priority over QES ownership of the Caterpillars PPSR trumps nemo dat rule
Maiden Case: Lessons to be Learnt Owners of goods (including aircraft, engines and aircraft parts) who lease or hire them out for 3 months or more must: 1. Have a written agreement recording the arrangement 2. Register their interest on the PPSR Failure may result in loss of property
Applying Maiden Civil Case AIRCRAFT OWNER (Has title) No registered security interest Lease AIRCRAFT OPERATOR Payments to A that correspond with A s finance to ABC bank MAINTENANCE ORGANISATION Loans engine and parts to company B No registration on PPSR FINANCIER Takes security interest over all Company B assets including aircraft Registers interest on PPSR
Questions?
Contact Speakers: Ben Martin T: +61 2 9230 9435 E: Ben.Martin@nortonwhite.com Jayne Heatley T: +61 2 9230 9422 E: Jayne.Heatley@nortonwhite.com Michael Sheedy T: +61 2 9230 9409 E: Michael.Sheedy@nortonwhite.com Level 4, 66 Hunter Street Sydney, New South Wales 2000 Australia www.nortonwhite.com