All I read into it is that CASA has deemed it not a 'cost sharing flight' so it falls under this clause further down which makes in not a 'passenger transport operation'. Where did they claim it was an 'air transport operation'?
(e) if the registered operator of an aircraft is an individual—an operation of the aircraft:
(i) that involves the carriage of that individual; and
(ii) involves the carriage of other passengers; and
(iii) for which no payment or reward is made or given in relation to the carriage of the other passengers or cargo.