MR requirements from the CAR's
From CAR133
Subject to regulation 317 and regulation 21.197 of CASR, the pilot in command of an Australian aircraft must not commence a flight if each of the following requirements is not satisfied: (a) the aircraft has a nationality mark and a registration mark painted on, or affixed to, it in accordance with Part 45 of CASR;
(c) the flight is not in contravention of any condition that:
(i) is set out or referred to in the maintenance release or in any other document approved for use as an alternative to the maintenance release for the purposes of regulation 49, or subregulation 43 (10); or
(ii) is applicable to the maintenance release by virtue of a direction given under regulation 44;
(d) any maintenance that is required to be carried out before the commencement of the flight, or that will be required to be carried out before the expiration of the flight, to comply with any requirement or condition imposed under these regulations with respect to the aircraft has been certified, in accordance with regulation 42ZE or 42ZN, to have been completed;
AND (from CAR49)
Permissible unserviceabilities to be endorsed on maintenance releases
(1) This regulation applies to each of the following persons in relation to an aircraft in respect of which a maintenance release is in force:
(a) the holder of the certificate of registration for the aircraft;
(b) the operator of the aircraft;
(c) a flight crew member of the aircraft;
(d) a person who is permitted by regulation 42ZC or 42ZD to carry out maintenance on the aircraft.
(2) If:
(a) an aircraft in respect of which a maintenance release is in force has developed a defect, or has suffered damage, that is a permissible unserviceability; and
(b) there is a likelihood that the aircraft will be flown before the permissible unserviceability is rectified;
a person mentioned in subregulation (1), who becomes aware of the defect or damage, must endorse the maintenance release, or other document approved for use as an alternative to the maintenance release for the purposes of this regulation, in the manner set out in subregulation (3).
Penalty: 25 penalty units.
(3) For subregulation (2), the maintenance release or other document must be signed by the person mentioned in subregulation (1), and must:
(a) set out each permissible unserviceability that exists with respect to the aircraft; and
(b) set out the conditions (if any) with respect to the use of the aircraft with those permissible unserviceabilities set out in any direction given under regulation 37 in relation to those permissible unserviceabilities as are not set out in any operations manual issued with respect to the aircraft or in Part 20 of the Civil Aviation Orders; and
(c) state that the maintenance release has effect subject to those conditions, whether set out in the maintenance release or the other document or otherwise.
Thus, if you endorse a maintenance release with a minor (MEL acceptable or otherwise minor) defect and indicate that there are no conditions imposed by this defect the aircraft may be flown.
CAR 50 covers major defects which should ground the aircraft, however the law surrounding the MR is that you must provide an endorsement to notify the registered operator and any pilots likely to fly the aircraft. The PIC then makes a decision as to whether the to fly with the defect, get LAME advice or not fly. Different pilots may make different decisions (EG: blown landing light may be a no go for a pilot doing night flights but acceptable to one intending a daylight only flight).
Either way unless the MR is actually endorsed with "not to be flown" (a condition) or similar it is NOT grounded. The only exception to this (under CAR 133D above) is if maintenance is required under legislation (Eg: AD's)