Hi Rubber,
Let's have a closer look at CAO 20.18 Section 10:
10.1 says if it is IFR RPT or Charter,
everything fitted needs to be working. If it isn't you must not fly with it in the aircraft unless it is in the MEL (which is required for RPT ops anyway) or the equipment is a passenger convenience item and is not going to affect the airworthiness of the aircraft. If you do have that item as a permitted unserviceability on a MEL, you may placard it instead of removing it completely which saves you grounding an aircraft and removing equipment or instruments because some non-essential item has become unserviceable. (CAR 207 mentioned in 10.1 basically says you shall not operate an aircraft without fitting the instruments and equipment which CASA specifies for that class of operation).
10.1A says if it is a private or aerial work flight all
required instruments and
required equipment must be serviceable but makes no mention of the instruments and equipment which are not required. The non-essential instruments do not have to be removed if they are unserviceble but if required equipment is unserviceable, you are grounded.
10.2 then goes on to say if you are going to fly with something unserviceable you need to placard it or remove it. That means for RPT aircraft, the item must be in the MEL and for private/aerial work the item must be a non-required item.
So, in a nutshell:
RPT and Charter aircraft are grounded unless the unserviceable item is in the MEL and the item is placarded or removed. Alternatively the item can be unserviceable if it is a passenger convenience item and doesn't affect airworthiness. (CAO 20.18 10.1). Private and Aerial Work aircraft are only grounded if the unserviceable item is a required item. (CAO 20.18 10.1A). However, if any aircraft is going to then fly with something unserviceable, it must be placarded or removed from the aircraft (CAO 20.18 10.2).
My 2c worth
Cheers,
Rich