I am no expert in aviation law, but I don't believe he was charged under a breach of the regulations (CARs/CASRs/CAOs/AIP etc).
I believe that in order to find the "Operate aircraft in manner reckless as to endanger xxxx" penalties one would have to look into the Civil Aviation Act.
Of course, the court then may refer to the regs to determine whether the aircraft was operated recklessly (in this case they noted he was flying well below the 500 foot limit from the regs), but may also consider any other factors that may be relevant (such as how deliberate it was, and how unsafe it was).
He was not simply charged with low flying, which if he was would be an "administrative" penalty imposed by CASA not the courts.
I'm guessing that the way these things work is that CASA determines whether to take a case to the DPP, and then the DPP decides whether to prosecute (based on evidence provided by CASA). In the case of death or injury, the police may also be involved.
To draw a parallel to the road system:
- get caught speeding => cop a speeding fine from the road authority.
- hurt someone while speeding => charged by the DPP for reckless driving.
In the case of Forky's experience, it's probably not an unusual tactic for an authority to threaten the maximum penalty in order to encourage cooperation, even if they had no intention of imposing it (nor any likelihood that it would be successful in court). That certainly happens in every episode of "Law and Order"
But if someone gets killed or seriously injured, I think you'd have to have a watertight case that you weren't negligent in order to escape some sort of criminal conviction.
Maybe someone with more knowledge can shed more light on how these things work.