You are required under the Land Transport Act 1998 ("the Act") to hold and maintain a Transport Service Licence ("TSL"). If you lose your TSL, you cannot lawfully operate.
Fit and Proper Test
The NZTA can revoke your TSL if it is satisfied that the following are not 'fit and proper people':
1 the holder of the TSL; or
2 any other person having control of the service; or,
3 any other person who has an involvement in the operation of the service
So what does "fit and proper" mean, and who is caught by the rest of the test?
Fit and Proper Person Test
In examining your licence, NZTA will work through a number of criteria to decide if the person passes the fit and proper person test. The Act allows for NZTA to consider any matter that it thinks appropriate and place whatever weight it chooses on them. However, for guidance, the Act also suggests the following factors should be considered by NTZA, and in practice they routinely are:
Criminal history, including charges not yet convicted of: The more serious the offence, the more weight that will be put on it. Particular note will be placed on offences of dishonesty, alcohol abuse, drugs, sex or violence. Also be aware that unproven offences (i.e. charges that may be being defended) can also be relevant.
Any other transport offending, particularly ones of safety or RUC, including infringements: NZTA keeps a database of all offences. Speeding tickets that are mounting up could become a problem. Likewise, RUC and logbook offences are taken particularly seriously.
A further issue to be aware of under this factor is that for vehicles registered in your name, offences where the driver is not spoken to (i.e. speed camera offences) will be attributed to your name. If tickets are received, it is vital that you make a declaration with the Police to change the recipient. It will be very hard down the track to try and argue that it was not you driving.
Who is "any other person"?
Any history of serious behavioural problems: this can include anything from a propensity to drive too fast, to more orthodox issues such as mental health or drug and alcohol problems.
Any complaints made about the person relating to the transport service: the common situation here is passengers or road users making a complaint to NZTA. In some cases you may not even know about a set of complaints building up. Whilst these may only be attributable to the company itself (as the driver wasn’t stopped etc), they will still be relevant in the overall picture.
Any history of failing to pay fines from transport related offences: NZTA will be provided with fines payment records from the Police and Ministry of Justice.
Any Criminal activity conducted in the course of the transport business: this factor means that an offence will be more serious if it occurred "on the job", from dishonesty to drink driving.
The purpose of the net being cast so wide is to avoid situations where the TSL is held by, for instance, an operator's wife (who has a squeaky clean record), but who has nothing to do with the business. The rule therefore focuses on all of those actually involved in controlling the service, and on those who have "an involvement in the operation of the service".
This does not mean that every single employee will be caught by the test and must pass it. However, NZTA will use the Act quite widely when examining who is captured by the test, so it would pay to err on the side of caution if you are concerned about an employee's background, and think they might be at a level where they have some control over the service.
What the NZTA doesn’t take into account
There are two factors which will probably be thought to be quite relevant by the TSL holder, but which the NZTA will put little if any weight on.
The first is economic circumstances. The NZTA will not let its decision be influenced by these. They are not in the test in the Act and it would defeat the public safety purpose of the Act if sympathetic decisions were allowed to be made.
The second is your Operator Rating System (ORS) score. The ORS system was created by a different part of NZTA to those who make the licensing decisions, and the decision makers for your TSL view the ORS as unhelpful in the much wider decision that they need to make. The ORS only operates on limited data and is a mathematical algorithm.
Warnings prior to revocation
However, all is not lost. NZTA is obliged to give you warning before it revokes your license. In doing that, often they will first engage with an operator and attempt what they call "cooperative compliance". You will be identified and audited (mechanically and systems wise), and provided with tasks to get back up to scratch. That might include for example removing someone from having control of the service, initiating a better in-house or external maintenance programme, or getting your COF pass rates back to a good level.
What happens when you lose your TSL?
If NZTA ultimately revokes your licence, you will need to appeal to the District Court. Once the appeal is filed, the Court has no ability to grant interim relief – (give you back your licence until your appeal is heard). It may take six months or more to have your appeal heard in court and that can spell the end of many businesses.
The District Court appeal is a rehearing, which means they start the examination under the Act's guidance afresh. The purpose of the Act is public safety and the Courts have stated that this is paramount. The Court (and NZTA) view the holding of a TSL as a privilege that must be maintained in accordance with the Act. Further, the Courts have also approved the view that neither economic factors nor the ORS need to be given much weight.
In the 12 months from 1 July 2011 to 1 July 2012, 29 TSL's were revoked and only 4 have appealed - all unsuccessfully.
The overall message is, do not lose your TSL. If your operation is struggling with compliance and you are coming to the attention of NZTA, you should look favourably upon the opportunity to engage cooperatively with them.