$300,000 or more down the drain? A cost analysis of two worthless CAA prosecutions

14 October 2019 / by the GAA team / Costs, GA in general, Governance, Legal, News, Overview

Legal costs off the scale,  great injustice done

Two prosecutions, in both of which the CAA failed to achieve a criminal conviction, have cost hundreds of thousands of dollars, we can reveal.

We have already reported the more-than-two-year ordeal of a pilot relentlessly pursued by the authority, all the way to a failed CAA appeal.

But soon after we posted that report, we learned about another CAA prosecution with similar circumstances. Once again, the presiding Judge had considered the impact on the pilot’s career, the mitigating steps taken by the pilot, and the nature and severity of the offending.

As in the other case, the Judge considered that the Court’s ultimate discretion should be exercised to grant the application for a discharge without conviction.

Yet again, the CAA failed to gain a conviction – plus all the bad things that a criminal record inflicts on the victim.

Put aside, for a moment, the huge emotional and financial damage suffered by these two pilots. In pursuing them for more than two years, the actions approved by the CAA’s Director incurred considerable legal costs that were entirely unproductive. Adopting a Just Culture process based on education and mentoring could have avoided all that personal pain, as well as a very significant private and public waste of money.

When we heard about this second debacle, the GAA submitted an OIA request to discover the costs charged to the CAA by the Crown Prosecutor, as well as associated legal costs and expenses.

We also wanted to know the costs incurred by the CAA’s own Regulatory Investigation Unit in investigating these cases and the hourly rate used in calculating those costs. With respect to that, the CAA’s OIA officer stated:

“We have decided to refuse your request for information which relates to the hourly rate used in calculating the costs and information which makes it possible to identify the income of individuals employed by the CAA.  We rely on section 18(a) of the Act, as by virtue of section 9(2)(a), withholding this information is necessary to protect the privacy of natural persons, including that of deceased natural persons and this interest is not outweighed by other considerations which render it desirable, in the public interest, to make this information available.”

In light of this peculiar refusal (how can you calculate any RIU employee’s income without knowing how many staff were involved, while assuming that they were all paid the same? And that, in any case, was clearly not the intention of the request), a calculation of RIU costs could reasonably be made using the standard CAA charge-out rate of $284/hour, minus the GST. The CAA provided us with its legal costs. If we add our estimated costs for CAA personnel time (RIU) to the figures supplied by the CAA, the breakdown is:

Case 1  
Crown Prosecutor costs $40,571.20
RIU costs 553 hours @ $241.40/hour (ex- GST) $133,494.20
Sub-total 1 $ 174,065.40

Case 1 Appeal  
Crown Prosecutor costs $9954.58

Case 1 total costs $184,019.98

Case 2  
Crown Prosecutor costs $26,163.30
RIU costs 454 hours @ $241.40/hour (ex- GST) $109,595.60

Case 2 total costs $135,758.90

Total estimated CAA costs* $319,778.88

*These expenses are assumed to be exclusive of GST.  Costs apart from the RUI estimates were provided by the CAA.

In electing to pursue these two incidents as prosecutions, rather than considering the other options, the reputation of the CAA has sunk even lower in the eyes of general aviators. It may well have squandered $300,000 – perhaps more – for nothing other than giving the RIU and the lawyers a great deal of wholly wasteful “work”.

But even the legal cost information provided by the CAA is suspect.

Examination of the hours spent and the total charges gives us an hourly rate (assumed to exclude GST) of $140 for Junior, $145 for Intermediate and $232 for Senior legal expenses. But the 2016 NZ Law Society ex-GST charge-out rates stated an average of $206.33 for the lowest level of Junior work, more than $300 an hour for Intermediate and around $360 for Senior work. The figures we are currently working with may have led us to under-estimate the actual cost.

And who ultimately pays for this appalling folly? Take a guess…

There appears to be no accountability within the CAA for running up costs such as these – and then, to add further insult, every three years the authority brazenly seeks further increases in fees, levies and charges from the GA community.

Keith Ingram: Mariners “are paying the cost of failed prosecutions” (just like aviators?)

We have also received a copy of an editorial written by Keith Ingram, editor of the Professional Skipper magazine. Keith talks about Maritime NZ actions tested in Court and subsequently tossed out, and the sometimes terrible toll they have taken on people in his industry.

The ill-advised actions of the Director of Maritime NZ and the Director of the Civil Aviation Authority are mirror images and present a troubling display of the shocking incompetence of both these Crown entities, which fall under the umbrella of the Ministry of Transport and a succession of disinterested ministers who have been asleep at the wheel.

The Ministry of Transport is carrying out its own inquiry into the CAA, but we think that our marine colleagues should consider making a call for a similar inquiry into Maritime NZ. When you read Keith’s editorial, you may be surprised by the similarities between enforcement actions that these two entities have adopted. You can view or download it here 

Footnote at 12 November: The CAA has partly clarified its figures, which were initially provided in a confusing way. We have revised the legal costs accordingly. However, the authority still refuses to provide accurate RIU costs, although these are funded through levy income. In our opinion, those who have contributed to these levies have a right to know where, and how, their money is being spent. In the absence of this information, our RIU estimates remain in place.