In October 2018 the NZ Transport Agency (NZTA) announced that it was undertaking an extensive review of its 850 open compliance files. This announcement came with the message that the NZTA would be toughening up its compliance regime and would no longer be prioritising education over enforcement.
As so often happens, the pendulum has now swung to the opposite extreme. The NZTA has been taking what, in our view, is an all too zealous approach to enforcement and has made a number of attempts to revoke transport service licenses and permits to date. “Attempt” is the key word here – several of the examples below demonstrate that when the NZTA go too far, the Courts have been willing to pull them back to a more reasonable position.
Having assisted a number of transport companies to work through adverse NZTA decisions and proposals, we can speak to several key themes which have emerged.
First, there are some cases where the NZTA’s approach has been so direct that the only option for a company to survive is to seek immediate relief from the Court. In two recent cases we have assisted with, the NZTA served revocation decisions on large transport service providers in the week prior to Christmas, with the effect being that the company would have to ‘shut up shop’, cease operating and make employees redundant. In one case, the revocation was to come into effect two weeks following the notice; in the second there was no grace period and the decision came into effect only hours later. Immediate revocation might be seen as gratuitous, particularly where there had been a preceding period of months during which the proposal to revoke was being considered.
Both companies had no choice but to seek immediate relief from the High Court. In both cases relief was granted and the companies were permitted to continue operating pending a full review by the Court of the NZTA decisions. In one case, the Judge commented on the potentially strong argument that the NZTA’s response to the safety concerns was unreasonable and disproportionate – the use of a sledgehammer to crack a nut as it has sometimes been described. The companies in question were responsible enough to continue operating until the NZTA decisions could be properly reviewed and the Court granted each the right of doing so under certain conditions.
Second, whether or not litigation proves necessary, cooperation and engagement with the NZTA remains key. You may disagree with its decisions, proposals or reasoning, but as the industry regulator the NZTA is not going away. The more cohesive your relationship with the NZTA, the more likely any concerns will be dealt with in a collaborative, rather than a combative way.
In both of the cases described above, a key factor in getting positive results from the Court were the steps taken by these operators to responsibly engage with the points raised by the NZTA, to make changes where necessary, and to have ongoing dialogue with the NZTA’s staff. Personalities may clash, and not everyone will get along, but that should not prevent a good faith effort to deal with any safety or compliance concerns raised by the NZTA.
In several other cases we have assisted with, a cooperative approach with the NZTA has avoided the need for litigation or resulted in proceedings being discontinued. Compromise and improvement by the companies in question and constructive discussion with the NZTA led to an outcome both parties were happy with.
Third, and really at the intersection of the first two points, although a cooperative approach is worthwhile, it is critical to ensure that your legal position is properly considered and suitably protected. Thus if a cooperative approach does not yield the results you hope, you will have preserved the ability to have NZTA decisions independently challenged before the Courts. The looming possibility of Court proceedings also plays an important role in the negotiation process. There is nothing like the prospect of Court oversight to help persuade a regulator to take a more reasonable position.
A cautious and considered approach is also warranted at an earlier stage of the process, including when you may be subject to an audit or other similar oversight by the NZTA. As a preventative measure it is important to address and take seriously any recommendations or issues raised during an audit. Regulators can sometimes be a “wolf in sheep’s clothing”, outwardly seeking collaboration in making improvements to your operation, but then using a failure to implement those recommendations against you in subsequent adverse decisions.
To address the question posed by the title of this article, often the answer will be both. If you are facing the possibility of an adverse decision by the NZTA, in some cases there will be no choice but to litigate (or at least preserve your ability to do so). Whether your matter ends up before the Court or not, a cooperative but cautious approach to your dealings with the NZTA will often yield positive results. Taking advice, even at an early stage, will ensure that any cooperation does not come back to bite you later.
If you have been served with a notice, recently undergone an audit, or are just concerned about your susceptibility to enforcement action by the NZTA, please contact Joshua Shaw
or Courtney Donaldson
– we are more than willing to help and well equipped to do so.