Decisions

TATC File No. P-3405-10
MoT File No. 5015-6711-17/5260-7911

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

High Terrain Helicopters Ltd., Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Aeronautics Act, R.S.C. 1985, c. A-2, s. 7.1(1)(b)
Canadian Aviation Regulations, SOR/96-433, ss. 703.07, 706.07, 703.08, 703.09

Operator certificate, Issuance or Amendment of Air Operator, Notice of suspension


Review Determination
Faye H. Smith


Decision: October 17, 2007

Citation: High Terrain Helicopters Ltd. v. Canada (Minister of Transport), 2007 TATCE 26 (review)

Heard at Vancouver, British Columbia, on October 10 and 11, 2007

Held: The Minister of Transport's decision to suspend the air operator certificate of High Terrain Helicopters Ltd. is confirmed.

I. BACKGROUND

[1] The applicant High Terrain Helicopters Ltd. (HTHL) is the holder of air operator certificate (AOC) no. 7911.

[2] On August 21, 2007, the Minister of Transport issued a notice of suspension of the above AOC with the effective date of suspension being September 20, 2007. On August 29, 2007, Steve Benwell, President of HTHL, requested a review of the Minister's decision and a review hearing was scheduled for October 10 and 11, 2007.

[3] At the commencement of the review hearing, the Chairperson was advised that the above notice of suspension was replaced by a subsequent notice dated September 17, 2007, wherein the effective date of suspension was now October 17, 2007 at 11:59 p.m. local time.

[4] The grounds contained in the notice of suspension read as follows:

Grounds for the Minister's decision:

  • The holder has ceased to meet the qualifications necessary for the issuance of the document or to fulfill the conditions subject to which the document was issued. [Aeronautics Act 7.1(1)(b)]

Details of the Minister's Grounds for Suspension

1. High Terrain Helicopters Ltd. has not established and maintained a quality assurance program that effectively ensures the maintenance control system and all of the included maintenance schedules continue to be effective and comply with the requirements of Canadian Aviation Regulation (CAR) 706.07, as documented during the recent Transport Canada (TC) Audit conducted July 16‑19,  2007.

2.   High Terrain Helicopters Ltd. has not ensured that the Person Responsible for Maintenance (PRM) performed the duties referred to in CAR 706.07(2) and 706.07(3) as required by CAR 706.03(1)(d). This ground was documented during the recent TC Audit conducted July 16‑19, 2007.

Note: Grounds 1 – 2 above are also demonstrated by the TC Audit of January 12, 2000 that resulted in 13 findings in 6 audit areas; by the TC Inspection of Feb. 27, 2003 that resulted in 9 findings in 6 audit areas and by the TC Audit of Oct. 20‑22, 2003 that resulted in 16 findings in 11 audit areas. The Audit of July 16‑19, 2007 resulted in 22 findings in 11 audit areas – 5 areas repeated from 2 previous dates, 3 areas repeated from all 4 previous dates.

3. High Terrain Helicopters Ltd. has not ensured that the Operations Manager has performed the duties referred to in CAR 703.07(2)(b)(i).

Ground 3 above is demonstrated by the TC Operations Audit of March 25, 2003 that resulted in 7 findings in 5 audit areas; by the TC Operations Audit of May 2, 2005 that resulted in 13 findings in 7 audit areas and by the TC Operations Audit of Jan. 29, 2007 which resulted in 9 findings in 7 audit areas, 7 of which were repetitions of findings from previous audits, and by the ramp inspection of aircraft C‑GYGK of July 17, 2007 which resulted in 2 findings in 2 inspection areas, both of which were repeated from previous audits.

Conditions for Terminating the Suspension

1. High Terrain Helicopters Ltd. must implement an effective quality assurance program that meets the requirements of Canadian Aviation Regulation (CAR) 706.07(1). In particular, as a minimum the company must do the following:

1.1 Revise company audit checklists to include all activities covered by the Maintenance Control Manual (MCM);

1.2 Provide enough details in the revised audit checklists described in item 1.1 above to ensure the effectiveness of the checklists;

1.3 Conduct a full internal audit using person(s) not responsible for carrying out the task or activity being audited as required by CAR 706.07(5);

1.4 Record each occurrence of compliance or non‑compliance with the MCM found during audits as required by CAR 706.07(3)(c);

1.5 Develop an effective and acceptable Corrective Action Plan (CAP) for each of the non‑conformance findings of the internal audit and the July 2007 Transport Canada audit and submit the CAPs to Transport Canada for review and approval;

1.6 Document the above actions as required by CAR 706.07(3)(g); and

1.7 High Terrain Helicopters Ltd. must meet the above conditions in a manner acceptable to Transport Canada and must provide acceptable written records of having accomplished the above conditions to the Kelowna Transport Canada office on or before October 17, 2007.

2. High Terrain Helicopters Ltd. must appoint a Person Responsible for Maintenance (PRM) in accordance with CAR 706.03(1)(a) that can and will perform the duties required by CAR 706.03(1)(d).

3. High Terrain Helicopters Ltd. must nominate an Operations Manager who can be approved in accordance with CAR 703.07(2)(b) who can and will perform the duties required by CAR 703.07(2)(b)(i).

II. LAW

[5] Section 703.07 of the Canadian Aviation Regulations, SOR/96-433 (CARs), reads as follows:

Issuance or Amendment of Air Operator Certificate

703.07 (1) Subject to Section 6.71 of the Act, the Minister shall, on receipt of an application submitted in the form and manner required by the Commercial Air Service Standards, issue or amend an air operator certificate where the applicant demonstrates to the Minister the ability to

(a) maintain an adequate organizational structure;

(b) maintain an operational control system;

(c) meet training program requirements;

(d) comply with maintenance requirements;

(e) meet the Commercial Air Service Standards for the operation; and

(f) conduct the operation safely.

(2) For the purposes of subsection (1), an applicant shall have

(a) a management organization capable of exercising operational control;

(b) managerial personnel who have been approved by the Minister in accordance with the Commercial Air Service Standards, are employed on a full-time basis and perform the functions related to the following positions, namely,

(i) operations manager,

[6] Section 706.07 of the CARs reads as follows:

Quality Assurance Program

706.07 (1) An air operator shall, in order to ensure that its maintenance control system and all of the included maintenance schedules continue to be effective and to comply with these Regulations, establish and maintain a quality assurance program that

(a) is under the sole control of the person responsible for the maintenance control system appointed under paragraph 706.03(1)(a); and

(b) meets the requirements of section 726.07 of Standard 726 - Air Operator Maintenance of the Commercial Air Service Standards.

(2) The person responsible for the maintenance control system shall distribute the records relating to the findings resulting from the quality assurance program to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the maintenance control manual (MCM).

(3) The person responsible for the maintenance control system shall establish an audit system in respect of the quality assurance program that consists of the following:

(a) an initial audit within 12 months after the date on which the air operator certificate is issued;

(b) subsequent audits conducted at intervals set out in the MCM;

(c) a record of each occurrence of compliance or non-compliance with the MCM found during an audit referred to in paragraph (a) or (b);

(d) checklists of all activities controlled by the MCM and the maintenance schedules;

(e) procedures for ensuring that each finding of an audit is communicated to them and, if management functions have been assigned to another person under subsection 705.03(3) or (4), to that person;

(f) follow-up procedures for ensuring that corrective actions are effective; and

(g) a system for recording the findings of initial and periodic audits, corrective actions and follow-ups.

(4) The records required under paragraph (3)(g) shall be retained for the greater of

(a) two audit cycles; and

(b) two years.

(5) The duties related to the quality assurance program that involve specific tasks or activities within an air operator's activities shall be fulfilled by persons who are not responsible for carrying out those tasks or activities.

[7] Section 723.07(2)(a) of the Commercial Air Service Standards reads as follows:

723.07 Issuance or Amendment of Air Operator Certificate

(2) Qualifications and Responsibilities of Operational Personnel

(a) Operations Manager

(i) Qualifications

(A) hold or have held the appropriate licence and ratings which a pilot-in-command is required to hold for one of the aeroplanes operated; or have acquired not less than 2 years related supervisory experience with an air operator of a commercial air service whose flight operations are similar in size and scope;

(B) demonstrate knowledge to the Minister with respect to the content of the Company Operations Manual, the Air Operator Certificate and Operations Specifications, the provisions of the regulations and standards necessary to carry out the duties and responsibilities to ensure safety; and

(C) has attended a Company Aviation Safety Officer (CASO) course or attends such a course within 12 months of assuming the position of Operations Manager.

(ii) Responsibilities

The Operations Manager is responsible for safe flight operations. In particular the responsibilities of the position include:

(A) control of operations and operational standards of all aeroplanes operated;

(B) the identification of operations coordination functions which impact on operational control (eg. maintenance, crew scheduling, load control, equipment scheduling);

(C) supervision, organization, function and manning of the following:

(I) flight operations;

(II) cabin safety;

(III) crew scheduling and rostering;

(IV) training programs; and

(V) flight safety;

(D) the contents of the air operator's Company Operations Manual;

(E) the supervision of and the production and amendment of the Company Operations Manual;

(F) liaison with the regulatory authority on all matters concerning flight operations, including any variations to the air operator's Air Operator Certificate;

(G) liaison with any external agencies which may affect air operator operations;

(H) ensuring that the air operator's operations are conducted in accordance with current regulations, standards and air operator policy;

(I) ensuring that crew scheduling complies with flight and duty time regulations;

(J) ensuring that all crew members are kept informed of any changes to the regulations and standards;

(K) the receipt and actioning of any aeronautical information affecting the safety of flight;

(L) the dissemination of aeroplane safety information, both internal and external;

(M) qualifications of flight crew member; and

(N) maintenance of a current operations library.

III. INTRODUCTION

[8] In his opening statement, the Minister's representative gave an overview of the hierarchy of the relevant legislation leading up to the notice of suspension issued under section 7.1(1)(b) of the Aeronautics Act, R.S.C. 1985, c. A-2, as amended by R.S., c. A‑3. He began with an overview of section 703.07(1) of the CARs, regarding the issuance by the Minister of an AOC where the applicant demonstrates stated abilities and has personnel as required by subsections (1) and (2). Section 703.08 of the CARs provides the contents of an AOC and section 703.09 provides its general conditions and specifically provides in paragraph (g) that "the air operator shall maintain its aircraft in accordance with the requirements of Subpart 6". Section 706.07 of the CARs contains specific regulations regarding the quality assurance program – an air operator must verify performance and correct deficiencies before they become safety issues.

[9] The Minister's representative then addressed ground 2 in the notice of suspension outlining the requirements for the maintenance control system as set out in sections 706.07(2) and (3) of the CARs. Ground 3 in the notice relates to air operations. Section 703.07(2)(b) states that the certificate holder must have an operations manager. The qualifications and responsibilities of the operations manager are found at section 723.07 of the Commercial Air Service Standards.

IV. EVIDENCE

A. Minister of Transport

[10] The Minister's first witness Bruce Boechler has been with Transport Canada since September 1996, and is currently civil aviation safety inspector at Kelowna, British Columbia. He does regulatory oversight of air operations and approved maintenance organizations (AMOs) and initial certification.

[11] Mr. Boechler was the audit manager for the 2007 audit of HTHL. The audit convening authority was Guy Phinney and the other team members were Gerald Stanhope and Scott McNab. This team of inspectors went to Nelson, British Columbia, for a three-day audit commencing with an entry meeting with Mr. Benwell. There were daily briefings and the audit concluded with an exit meeting on July 19th at which time the team presented a summary of their findings. Mr. Benwell was the president and accountable executive as well as the person responsible for maintenance (PRM) at HTHL at this time.

[12] Mr. Boechler testified that there were 22 audit findings that showed that the quality assurance system was not fully functioning and advised of the possibility of a notice of suspension. It was necessary that the quality assurance system within air operations address aspects of the maintenance control manual (MCM) and set up a pro-active system to address faults. The company operations would perform an internal audit and if they identified non‑conformances, they would develop and implement a corrective action plan for those areas, and follow up on it.

[13] Following the audit of July 16 to 19, 2007, a report was prepared for review and a copy of this report was sent to HTHL with a letter dated August 10, 2007 signed by Mr. Boechler. A copy of this letter and report were filed as exhibit M-1 at this review hearing.

[14] The introduction to the report stated that the audit encompassed all aircraft maintenance activities that could affect the safe operation of the company and aircraft. The depth of the audit encompassed the following areas:

Air Operations - Maintenance Elements

AOC-02 Maintenance Control Manual
AOC-03 Person Responsible for Maintenance
AOC-04 Evaluation Program
AOC-05 Technical / Regulatory Publications
AOC-06 Technical Records
AOC-07 Weight & Balance
AOC-08 Maintenance Development Program
AOC-09 Reliability Monitoring Programs
AOC-10 Sample Aircraft for Conformance
AOC-11 Maintenance Planning
AOC-12 Defect Recording, Rectification, Deferral, and Control Procedures
AOC-13 Airworthiness Directive, Service Bulletin
AOC-17 Technical Dispatch Procedures
AOC-18 Flight Authorities – Test / Ferry
AOC-19 Maintenance Arrangements
AOC-20 Training Program
AOC-21 Personnel Records
AOC-23 Elementary Work, Servicing
AOC-25 Servicing – Fuelling, De-fuelling & Lubrication, Oxygen
AOC-26 Control of Parts, Parts Pooling
AOC-27 Service Difficulty Reporting SDR

[15] Mr. Boechler discussed the audit findings set out in exhibit M-1.

[16] AOC-04-01 – non‑conformance with section 706.07(1) of the CARs as the last internal audit did not ensure that the company's maintenance control system was in regulatory compliance. These findings are discussed in detail below.

[17] AOC-02-01 – non‑conformance with section 726.08(1) of the CARs as the MCM did not meet requirements. There were nine examples of non-compliance regarding contents of the MCM. Mr. Boechler stated that the review of the MCM should be part of the internal audit done by the company.

[18] AOC-04-02 non‑conformance with section 30 of the MCM. Mr. Boechler then referred to the matrix. Appendix D of the 6 Month Review / Audit Form of HTHL, for April 19, 2007 at the Nelson base, lists 22 items under section 2 – Maintenance Control System. The first five items pertain to the MCM. Item 1 is the description of the organization in the MCM. Mr. Boechler noted that "yes" is checked in all of the first five items which indicate that the company found no problem with these same matters on their review.

[19] AOC-06-01 non‑conformance with section 571.10(1) of the CARs. Examples cited note that maintenance releases have been entered into the technical record including maintenance performed with respect to a multi-part airworthiness directive (AD) but do not identify the part of the AD complied with.

[20] The maintenance control system is defined within the MCM. The operator is responsible to ensure that the maintenance release is done correctly. Section 40 of the MCM includes technical records references. The certificate of compliance is signed by Mr. Benwell and approved by Gordon Marshall for the Minister of Transport on March 12, 2004. The operator's role is defined in the MCM. Thus the MCM states that the maintenance control system will comply with requirements found in section 571.10 of the CARs.

[21] Mr. Boechler advised that the position of maintenance manager, the director of maintenance in fact, is the PRM, and that person is Mr. Benwell.

[22] AOC-06-02 non‑conformance with section 605.96(1) of the CARs - schedule II, columns I, II, and III. These are the requirements set out within the CARs for completing technical records which in this case did not include the number of operating cycles since the date of manufacture. The air operator is responsible for making or ensuring that the entries in the technical records are made.

[23] AOC-11-02 – non‑conformance with section 36 of the MCM. The aircraft status record / computer tracking sheet, maintained by the maintenance manager did not include all applicable scheduled inspections and out‑of‑phase maintenance tasks. The finding form lists nine such missing tasks. These inspection requirements are to be done by the company which must ensure that they are accomplished. These items fail to be on a tracking list.

[24] Appendix D of the 6 Month Review / Audit Form of HTHL, for April 19, 2007 at the Nelson base, indicates at item 38 that the status board is updated weekly. The status board equals the tracking system. However, Mr. Boechler noted that the non‑conformance finding in AOC‑11‑02 occurred within six months of the maintenance planning just mentioned in AOC‑04‑02.

[25] AOC-11-03 non‑conformance with section 625.86(6) of the Aircraft Equipment and Maintenance Standard, which states that maintenance schedules shall take into account the inspection requirements associated with modifications to the aircraft. Four such modifications were noted where the general conditions of appendix K, specifically paragraph 4 as underlined, were not met.

[26] AOC-11-04 non‑conformance with section 32 of the MCM. Notably scheduled inspections regarding aircraft C-GVIN and C-GGSZ were not in accordance with the maintenance schedule for that type as approved by Transport Canada. The maintenance schedule is agreed to between Transport Canada and the operator, but the operations inspections are not in accordance with the maintenance schedule.

[27] AOC-11-05 non‑conformance with sections 32 and 36 of the MCM. Examples cited relate to the Eurocopter and Bell 206 aircraft and are followed by the maintenance schedule. Mr. Boechler stated that the inspections as set out are not listed in the appropriate maintenance schedule.

[28] AOC-04-02 Mr. Boechler advised the Tribunal that the non-conformances as evidenced at the Nelson base for April 15, 2006 and April 19 and 20, 2007 should have been corrected. It was Mr. Boechler's belief that the life was two years and the function is critical where the part is identified as a time life part. The company should have made notes and put corrective action in place.

[29] Guy Phinney testified that there was a post‑audit meeting with Joel Schoenberger, the acting regional manager for maintenance and manufacturing, and the team. The conclusion was that the quality assurance was inefficient and the PRM was not carrying out duties. He decided to send out a notice of suspension within 30 days. He stated that for ground number 1, AOC-04-01 contained sufficient examples of quality assurance inefficiencies, and for ground number 2, AOC-03-01 contained ample examples that the PRM was not performing the duties. Moreover, the audit and inspection matrix found at exhibit M-2 shows recurring areas for both of these grounds.

[30] Gerald Stanhope has been a civil aviation safety inspector of aircraft maintenance and manufacturing for nine years with Transport Canada. He has been 25 years in maintenance for fixed wing and rotary wing aircraft and an aircraft maintenance engineer (AME) for 21 years. He has held quality assurance management and PRM positions. He testified that the PRM is the person responsible and appointed by the certificate holder and includes the quality assurance program element of the quality assurance system.

[31] Mr. Stanhope was a team member on the July 2007 audit. He testified as to the Minister's exhibit M-1 regarding AOC-03-01 non‑conformance with section 10 of the helicopter MCM. He indicated that there were five examples cited showing that the maintenance manager was not fulfilling duties. Although they were randomly selected and the number quoted was limited to five, there were many more. These are identified as non‑conformances and are the responsibility of the PRM.

[32] Mr. Stanhope was the audit manager on the October 2003 audit. The auditor found similar non‑conformance issues regarding the PRM.

[33] AOC-03-01 (October 20-22, 2003) non‑conformance with section 706.03(1) of the CARs and sections 21, 30, 32 and 39 of the MCM. The audit finding form was filed as exhibit M‑3. The maintenance control program would have identified these overruns and that should have included corrective actions plans. Failure to develop corrective action plans so to avoid it in future is a loss of maintenance control in the areas of maintenance planning and the tasks to be accomplished. It goes against safety. These are required tasks in the area of maintenance. Defect control is an element of maintenance control and must be entered into the log so that the aircrew sees it and no flight is carried out. The final reference in this audit's findings is service difficulty reports which were not submitted as required by chapter 591 of the Airworthiness Manual which affects flight safety. Within HTHL, it is the PRM who is responsible for the service difficulty reports.

[34] Mr. Stanhope recalled that they did not issue a notice of suspension at that time, but issued a finding with the audit report and gave HTHL the opportunity to correct it. They did not take further action. The corrective action plan taken by HTHL is set out on the corrective action form filed as exhibit M‑4. This indicates the short-term action to resolve short‑term items and the long‑term action which is a full review to avoid recurrence in the future.

[35] Where the PRM is not fulfilling responsibilities then safety is compromised. It is important for the aircraft to be maintained according to aircraft maintenance requirements to ensure safe operation.

[36] Joel Schoenberger gave evidence as to the standards concerning the quality assurance program and Transport Canada's actions regarding a failed quality assurance program. He explained the maintenance and manufacturing staff instruction MSI 28 which details the process. This document was filed as exhibit M‑5. Mr. Schoenberger reviewed the procedural guidelines taken by Transport Canada in the circumstances of the case, specifically section 3(b) which reads as follows:

3. Procedural Guidelines

(b) Non-Immediate Threat: Where the QAP [quality assurance program] has not been fully maintained and non-conformance findings indicate that the QAP is not fully effective, but where no immediate safely issues were detected, a NoS [notice of suspension] is appropriate with a 30 day effective date. Lack of a maintained and effective QAP in accordance with the applicant CAR reference, would be cited as grounds for suspension. Failure to make sufficient progress in correcting QAP deficiencies within 30 days will result in the suspension coming into effect.

[37] Mr. Schoenberger, who signed the notice of suspension which is the subject of this review, is acting regional manager of maintenance and manufacturing.

[38] Stephen Creagh has been a civil aviation inspector for Transport Canada since January 2000 and has 15 years of experience as a helicopter pilot both in domestic and international operations. Mr. Creagh conducted the audit of HTHL in 2003, the results of which are documented and marked as exhibit M-6. The witness discussed the 14 pages of audit findings, noting the deficiencies and finally stating that all of the matters were within the purview of Mr. Benwell.

[39] Oliver Betz has been with Transport Canada for 5.5 years and is experienced in flying both helicopters and fixed wing aircraft. He conducted the audit of company operations for 2005. The 13-page audit findings were documented and filed as exhibit M‑7. Mr. Betz discussed the findings related to the weight and balance reports which were in error by 60, 95 and 32 pounds in their calculations. He stated that these matters were the responsibility of the maintenance manager and operations manager and the latter was responsible for some discrepancies relating to flight and duty times for three examples cited. He also indicated discrepancies in flight training records as well.

[40] Exhibit M-8 is a bundle of correspondence and a notice of suspension relating to the audit of 2005. It also contains the individual corrective action taken by the company and the letter of approval of the chief pilot and operations manager, dated June 29, 2005. Mr. Betz also explained exhibit M‑9 which contains 15 pages of results and correspondence concerning a ramp inspection in July 2007 and which includes corrective action plans respecting weight and balance and pilot proficiency check (PPC) discrepancies.

[41] Shona Hirota conducted an audit of HTHL's flight operations and the audit results together with correspondence relating to this audit of January 2007 were filed as exhibit M‑10. It contains 16 pages including the covering letter dated February 14, 2007 requesting corrective action within 30 days of the date of the letter. There were nine audit findings citing examples of non-compliance with the CARs and approved company manuals. It was noted that seven of the nine audit findings were either identical or similar to previous findings.

[42] Mark Evans has been a civil aviation pilot since 1976, and has been employed with Transport Canada for l0.5 years. He has been regional superintendent for 7.5 years and on June 1, 2007, he was acting regional manager.

[43] Mr. Evans wrote a note to file on June 1, 2007, which was entered as exhibit M‑11. This note indicates that HTHL has not responded to the audit findings in a timely way as the request for corrective action had May 31st as the deadline. Mr. Evans indicated that the time frame for corrective action plans is usually 30 days and in this case the passage of time since the audit was over four months.

B. High Terrain Helicopters Ltd.

[44] On behalf of the applicant, Gordon Marshall was called as an expert witness. The Minister's representative objected to Mr. Marshall giving evidence in this capacity. While he did not question Mr. Marshall's qualifications to give expert testimony, he did feel that there was a conflict of interest in that Mr. Marshall, who retired from Transport Canada in July 2007, was now hired by the applicant as a consultant.

[45] Mr. Marshall has been a commercial helicopter pilot since 1970 and is also an AME. He has worked as an airworthiness inspector and is well versed in the Engineering and Inspection Manual, the Air Navigation Orders and the CARs. He indicated that during the last 10 years with Transport Canada, he had worked on many audits relating to aircraft and manufacturers. He stated that he had retired from Transport Canada in July 2007 and now works as a consultant from his home in Kelowna, British Columbia.

[46] Given the nature of the issues before me, I determined that I was interested in hearing from Mr. Marshall as an expert, and I found that he was qualified to give testimony relevant to the matters of audit findings and maintenance inspections. As for the possibility of conflict of interest, I acknowledged that all of our expertise comes either from government or industry and that such considerations would not in my view challenge the qualification of the witness, but rather would go to the weight that could be given to the testimony.

[47] Mr. Marshall testified as to the frequency of audits, the fact that they are conducted once a year rather than within a 12‑month time frame. Additionally, Mr. Marshall stated that overruns were a normal occurrence. They were allowed by percentages and aircraft inspections routinely have tolerances of 10 percent or 10 hours on a 100‑hour inspection.

[48] AOC-12-01 These were similar to findings we have reviewed and it would be difficult to state if it is a defect. It is unlikely that a pilot could detect the ignitor cable and it is possible that an AME might replace it to prevent an occurrence.

[49] AOC-27-01 Failure to report the ignitor cable to Transport Canada. It is unlikely that this would be a service difficulty report. Mr. Marshall was unsure whether a thermo valve was one either. If a service difficulty report was required to be sent to Transport Canada, it could be done either by the air operator or the AMO but both do not have to do it.

[50] AOC-04-02 – The allegation was that the procedure in the MCM was not followed. It would appear that the annotations were on the check list but not in the right form. Regarding the issue of the straps that were due, it was Mr. Marshall's view that one is not expected to fill out a non‑conformance to that point.

[51] AOC-06-01 Responsibility rests with the AME who made the entry as the air operator does not have the ability to perform a maintenance release.

[52] The applicant's representative then produced section 726.02 of the Commercial Air Service Standards in regard to AOC-06-02 by stating that the entries in technical logs are not made by the air operator but the AME. He added that at the end of the day, the air operator must ensure that they are done.

[53] AOC-06-04 and AOC-06-05 relate to the requirements in the signing of maintenance releases. Mr. Marshall stated that where the AME failed to have the statement in the log, this is the job of the AMO and is here being blamed on the air operator.

[54] AOC-07-01 The weight and balance report is the responsibility of the AME who must sign the maintenance release. However, Mr. Marshall stated that the air operator would have to ensure that there was one. Moreover, the PRM must see that the job is done, not how the job is done. He made the same conclusion regarding AOC-10-01 and AOC-10-02 that the AME and AMO should do this task.

[55] AOC-11-01 to AOC-11-05 were in Mr. Marshall's opinion open to interpretation and that some of the items, notably the HTHL rotor straps, remain a matter of disagreement within the industry as to whether it is 1 200 hours or 24 months.

V. ARGUMENTS

A. Minister of Transport

[56] The company had a quality assurance program and they had check sheets indicating they were without fault; however, the Minister's audit had 22 findings dealing with these same issues. Questions have been posed as to the Minister's standards and there is a lopsided difference between Transport Canada's standards and those of HTHL. Mr. Schoenberger's MSI 28 speaks to Transport Canada policy regarding inefficient quality assurance programs and the procedure which is followed in the circumstances.

[57] In answer to the question of whether the notice was well founded, each ground of the notice refers to the quality assurance program under section 706.07 of the CARs and with ensuring the continuance of that quality assurance program. Grounds 2 and 3 are not met and thus the operator fails to meet conditions of issue. It was the evidence of Mr. Stanhope that we all strive to be safe and that the regulations regarding quality assurance programs are developed over time and without a functioning program, an air operator will not be as safe as it should be. The Minister's decision to suspend was reasonable.

[58] The Minister further submitted that section 703.07(2) of the CARs sets out the conditions subject to which the document is issued and that an operations manual is required for an AOC. Messrs. Creagh and Betz and Ms. Hirota show that the company's operations manager has failed to meet his responsibilities. Mr. Betz stated that 2005 and 2007 show repeat audit findings and these came under the operations manager. Repeat audit findings show that the company has been dilatory in its long‑term corrective action plans. In 2007 it took four and one half months for the corrective action plan despite the assistance from Transport Canada. The matters related to cabin safety, ramp inspections, other inspections, flight safety, contents of the operations manual, amendments, ensuring compliance, flight duty, qualifications of flight crew and maintenance library. There were a total of 100 incidents related to the findings of the audits.

[59] Section 703.07(2)(b)(i) regarding conditions required for maintaining the AOC indicates that the company must have an operations manager who can and will perform the duties of the operations manager. In reply to the submissions made by the applicant's representative, the Minister highlighted the fact that in less than one month the check revealed a pilot without a proper PPC as well as weight and balance issues. At the same time, there was a memorandum from the company stating that everything was fine when it was not, and this is further evidence of non‑compliance. The Minister's representative concluded that they do not want to shut the company down, all they want is a new operations manager.

B. High Terrain Helicopters Ltd.

[60] There is no regulatory requirement to remove an aircraft type from the AOC or the MCM when the operator ceases to have an aircraft of that type in its fleet (findings FO‑3‑2 and FO‑2‑1 of January 30, 2007; AOC‑02‑01 (2 and 3) of July 16, 2007).

[61] There is no regulatory requirement for listing normally certified aircraft registrations on the AOC and consequently not removing a registration from the AOC cannot be used as grounds for action against the document (finding FO-3-1 of May 3, 2005).

[62] Because the company MCM was approved by Transport Canada, any shortcomings in it can be categorized as officially induced errors that cannot be used as substantiation for suspension of the AOC (findings AOC‑02‑01, AOC‑11‑02, AOC-11-03, AOC-11-05 of July 16, 2007).

[63] The findings AOC‑06‑01, AOC‑06‑02, AOC‑06‑03, AOC‑06‑04, AOC‑06‑05, AOC‑07‑01, AOC‑11‑01, AOC‑11‑02, AOC‑11‑04 of July 16, 2007 are inappropriate in as much as they are not related to AOC responsibilities but rather to AMO responsibilities.

[64] Minor administrative and procedural findings such as those raised by the audit of July 16, 2007 do not represent a level of risk that could justify such dramatic action as the issuance of a notice of suspension.

[65] The July 16, 2007 cumulative finding AOC‑04‑01, purporting to confirm that HTHL has not established and maintained a quality assurance program that effectively ensures compliance, is based on individual findings that are unfounded or inappropriate and therefore do not substantiate detailed ground no. 1.

[66] The July 16, 2007 cumulative finding AOC‑03‑01, purporting to confirm that the maintenance manager is not fulfilling his maintenance control system responsibilities, is based on individual findings that are unfounded or inappropriate and therefore do not substantiate detailed ground no. 2.

[67] The July 17, 2007 finding FO-12-01 is baseless while finding FO-08-01 was the direct responsibility of the chief pilot rather than the operations manager. Moreover, it was considered by enforcement officials to be too minor to warrant punitive action and therefore these findings do not substantiate detailed ground no. 3.

[68] The January 30, 2007 findings FO-03-02, FO-02-01 and FO-12-01 are baseless while FO‑03‑01 is a minor administrative issue and therefore these findings do not substantiate detailed ground no. 3.

VI. DISCUSSION

[69] It is the applicant's position that the Minister's decision to suspend the AOC is drastic in the circumstances given the minor nature of the deficiencies in the audit findings. Additionally, the applicant's representative urged that the Minister's witnesses were defending their manufacturing staff instruction and their heavy handed methods to obtain compliance by threatening the livelihood of the company's personnel.

[70] I refer to the case of Air Nunavut Ltd., [2001] 1 F.C. 138, wherein the Federal Court referring to Baker v. Canada (Minister of Citizenship and Immigration), [1999] 174 D.L.R. (4th) 193, stated:

[51] … the Supreme Court of Canada discussed the factors recognized in jurisprudence as relevant to determining what is required by the common law duty of procedural fairness in a given set of circumstances, inter alia, the nature of the decision being made and the process followed in making it, the nature of the statutory scheme, the importance of a decision to the individuals affected and the legitimate expectations of the person challenging the decision.

[71] The Federal Court applied these factors to the Air Nunavut Ltd. matter as follows:

[54] A second factor is the nature of the statutory scheme. The Act confers on the Minister a discretional power to impose a suspension of a Canadian aviation document when a holder no longer complies with conditions subject to which the document was originally issued. The exercise of this statutory discretion is dictated by concerns such as public safety.

[55] A third factor is the importance of the decision to the individuals affected. The greater the impact, the more stringent procedural protection is required. In the present case, the Minister has to balance the severe financial effect the suspension of the Canadian aviation document has on the applicant, with the promotion of aviation safety.

[72] Looking to the process followed by the Minister's officials in arriving at the decision to suspend the AOC, it is instructive to review the evidence of Mr. Schoenberger who testified as to the standards concerning the quality assurance program and Transport Canada's procedures regarding a failed quality assurance program. He explained the maintenance and manufacturing staff instruction MSI 28 which details the process. Section 3(b) specifies the procedure taken by Transport Canada in this matter which was classified as a non-immediate threat:

3. Procedural Guidelines

(b) Non-Immediate Threat: Where the QAP [quality assurance program] has not been fully maintained and non-conformance findings indicate that the QAP is not fully effective, but where no immediate safely issues were detected, a NoS [notice of suspension] is appropriate with a 30 day effective date. Lack of a maintained and effective QAP in accordance with the applicant CAR reference, would be cited as grounds for suspension. Failure to make sufficient progress in correcting QAP deficiencies within 30 days will result in the suspension coming into effect.

[73] The 2007 audit concluded with an exit meeting on July 19th at which time the team presented their findings. A month later, on August 21st, a notice of suspension was issued which was to take effect on September 20, 2007. The replacement notice of suspension, the subject of this review, is dated September 17, 2007 and the effective date of suspension is October 17, 2007, which is 30 days after the date of the notice.

[74] That is to say that the suspension had not taken place at the time of the review hearing on October 10 and 11, 2007. This has provided the applicant the opportunity to have the Minister's decision reviewed prior to the effective date of the suspension. Moreover, the 30‑day delay affords further opportunity to the applicant to comply with the conditions for terminating the suspension, if the applicant elects to do so.

[75] In summary, there has been a total of 90 days from the date of the debriefing of the 2007 audit and October 17th, being the date on which the notice of suspension is to take effect. Accordingly, on these facts, I find no fault with the process employed by the Minister's officials in the application of its procedural guidelines.

[76] As to the reasonableness of the grounds giving rise to the Minister's decision to suspend the AOC, the applicant's representative submitted that minor administrative and procedural findings such as those raised in the July 2007 audit did not present a level of risk that would justify such dramatic action. He stated that there is a lack of regulatory requirement for many of the items and further that no enforcement action had been taken on any of these matters. As well, he urged that the expert witness, Mr. Marshall, had shown that 90 percent of the findings had been discounted or refuted altogether.

[77] The Minister's evidence documented a thorough and chronological summary of its oversight of HTHL, the most recent oversight being the 2007 audit convened by Mr. Phinney. The three‑day audit by the manager and team produced the audit report marked as exhibit M‑1. The 22 audit findings as discussed in detail by Mr. Boechler and other witnesses demonstrate that the quality assurance system was not fully functioning and required corrective action. It was evident throughout that the standards employed by HTHL were vastly different from those of Transport Canada. The Minister submitted that section 703.07(2) of the CARs sets out the conditions subject to which the AOC is issued and the qualifications and responsibilities of the operations manager. The evidence of Messrs. Creagh and Betz and Ms. Hirota indicates that the company operations manager had failed to meet his responsibilities. Mr. Betz stated that there were repeat findings for 2005 and 2007 and that these came under the operations manager.

[78] I do not agree with the suggestion of the applicant's representative that deficiencies disclosed in the July 2007 audit were minor administrative or procedural in nature. I am satisfied that the conclusions reached at the post‑audit meeting were reasonable, namely that the quality assurance was inefficient, that the PRM was not carrying out his duties, and that the company operations manager failed to meet his responsibilities. I am further satisfied that the decision to issue a notice of suspension within 30 days was appropriate as the company no longer met the conditions of issue of the AOC.

[79] Moreover, exhibit M‑11, which has been documented as a note to file written by Mr. Evans, indicates that the company had not responded to the audit findings by the deadline of May 31st. It was the evidence of Mr. Evans that the time frame for corrective action plans is usually 30 days and in this case four months had elapsed since the audit was conducted. This was reinforced by the audit and inspection matrix found at exhibit M‑2 which highlights the recurring areas for the first two grounds.

VII. DETERMINATION

[80] I confirm the Minister's decision to suspend HTHL's AOC no. 7911 for the three grounds set out in the notice of suspension. If conditions for terminating the suspension are not met, the suspension is to go into effect on October 17, 2007 at 11:59 p.m. local time as stated in the notice.

October 17, 2007

Faye Smith
Chairperson