TATC File No. W-3441-15
MoT File No. SAP 5504-63846 P/B
TRANSPORTATION APPEAL TRIBUNAL OF CANADA
Grande Prairie Airport Commission, Applicant
- and -
Minister of Transport, Respondent
Transportation Appeal Tribunal of Canada Act, 2001, c. 29, para. 19(1)(a)
Decision: July 2, 2009
Citation: Grande Prairie Airport Commission v. Canada (Minister of Transport), 2009 TATCE 20
Decided on the basis of written submissions
Held: I find that the Tribunal did not become seized of this matter for reasons that are frivolous or vexatious within the meaning of paragraph 19(1)(a) of the Transportation Appeal Tribunal of Canada Act. Therefore the application for costs is denied.
RULING ON MOTION FOR COSTS
 In April 2007, Transport Canada undertook an audit of the Grande Prairie Airport and issued a number of findings, identifying aspects of airside infrastructure that did not comply with the most recent edition of the Aerodrome Standards and Recommended Practices (TP 312E, 4th edition, March 1993, revised March 2005). Three of the audit findings ultimately resulted in a notice of assessment of monetary penalty (notice) being issued against the Grande Prairie Airport Commission (GPAC) on November 7, 2007. The notice alleged that GPAC had contravened subparagraph 302.07(1)(a)(ii) of the Canadian Aviation Regulations (CARs), in that it had failed to comply, in respect of a part of the airport, namely runway 07/25 that had been improved, with the standards set out in TP 312E as they read on the date that the said runway was returned to service. The findings included AS5‑2, "improperly spaced threshold lights", AS6‑1, "failure to install intersection holding point sign", and AS6‑2, "failed to move runway exit sign to correct tangency position".
 After the audit, GPAC had submitted corrective action plans (CAPs) to Transport Canada to address the audit findings. GPAC's understanding was that there was no legal requirement to upgrade the infrastructure in issue. Accordingly, the CAPs contemplated upgrading it only with government funding through the Airport Capital Assistance Program (ACAP). The CAPs were rejected by Transport Canada, in one case indicating that a long‑term action plan could not be delayed until after December 31, 2009; in the other two cases, with no reason at all. GPAC resubmitted CAPS. Transport Canada again rejected them, and referred the findings for an enforcement investigation, ultimately resulting in the issuance of the notice.
 All three audit findings related to aspects of the Grande Prairie Airport infrastructure that existed before the 4th edition of TP 312E took effect, that is, before 1993. GPAC took the position that it was only required to upgrade such infrastructure to the standards contained in the 4th edition when it improved or replaced the infrastructure. Accordingly, it requested a review of the notice by the Tribunal to challenge the alleged contravention.
 The review hearing took place in Grande Prairie, Alberta, on November 18‑20, 2008, and was scheduled to reconvene in Winnipeg, Manitoba, on April 8 and 9, 2009. The day before the hearing was to reconvene, the Minister withdrew the notice. The Tribunal registrar then advised the parties that the file was closed. On April 15, 2009, counsel for GPAC filed the motion for costs.
II. MOTION FOR COSTS
 Counsel for GPAC submits that an order for costs and reimbursement of expenses is warranted in this matter because the Tribunal became seized of the matter for the following reasons:
(a) the departure, without prior notice or adequate explanation, of Transport Canada inspectors from the long standing practice of permitting airport operators to submit CAPs aimed at improving or replacing infrastructure which are conditional upon the airport operator receiving funding pursuant to the ACAP program;
(b)the departure, without prior notice or explanation, of Transport Canada inspectors from the long standing practice of interpreting paragraph 302.07(1)(a) of the CARs and the "application" provision contained in the 4th edition of TP 312E as permitting airport operators to retain airside infrastructure built to standards contained in earlier editions of said standards publication until such infrastructure is improved or replaced;
(c) Transport Canada's refusal to grant GPAC's request for an authoritative interpretation of paragraph 302.07(1)(a) of the CARs and the "application" provisions contained in the 4th edition of TP 312E in relation to airside infrastructure built to standards contained in earlier editions of TP 312E, combined with its decision not to permit the Tribunal to rule on this issue.
 Paragraph 302.07(1)(a) of the CARs states the following:
302.07 (1) The operator of an airport shall
(i) subject to subparagraph (ii), with the standards set out in the aerodrome standards and recommended practices publications, as they read on the date on which the airport certificate was issued,
(ii) in respect of any part or facility of the airport that has been replaced or improved, with the standards set out in the aerodrome standards and recommended practices publications, as they read on the date on which the part or facility was returned to service, and
(iii) with any conditions specified in the airport certificate by the Minister pursuant to subsection 302.03(3);
. . .
 Paragraph 19(1)(a) of the Transportation Appeal Tribunal of Canada Act (TATC Act) provides as follows:
19(1) The Tribunal may award any costs, and may require the reimbursement of any expenses incurred in connection with a hearing, that it considers reasonable if
(a) it is seized of the matter for reasons that are frivolous or vexatious;
. . .
 I have reviewed the applicant's submission on this application, the Minister's and applicant's replies, the transcript of the hearing of this matter, and the documents and case law submitted.
A. Tribunal Jurisdiction
 The Minister contends that the letter of April 7, 2009 by the Tribunal registrar, stating that this file was now closed and that the notice has been withdrawn by the Minister, removes the legislated authority of the member who conducted the hearing to award costs.
 In support of this submission, the Minister cites a number of criminal cases. However, I find each of them to be distinguishable from this case. Further, the federal legislative framework providing for the adjudication of alleged contraventions under the CARs was designed as an administrative and not as a prosecutorial process, governed by the principles of fairness and natural justice. Criminal law principles do not apply. In Canada v. Yukon (Whitehorse International Airport), 2006 FC 1326, the Federal Court found that a tribunal appeal panel erred by applying criminal law principles to an administrative law issue.
 I agree with the Minister that paragraph 19(1)(a) of the TATC Act does not give the Tribunal jurisdiction to award any costs or expenses for the reason that the Minister withdrew the notice.
 However, paragraph 19(1)(a) of the TATC Act does give the Tribunal the authority to award reasonable costs, and reimbursement of expenses associated with a hearing, if the Tribunal becomes seized of a matter for reasons that are frivolous or vexatious. The intent of the provision is to discourage the Minister from commencing proceedings for such reasons. Permitting the Minister to avoid the legislated consequences of its frivolous or vexatious actions simply by withdrawing its notice, after a hearing had been held, would undermine the purpose of paragraph 19(1)(a), and would not be fair to an applicant. In my view, the statement of the Tribunal registrar, made on the same day that the Minister withdrew the notice, and without consideration of the possibility of an application for costs and expenses does not remove the jurisdiction of the Tribunal member to decide this application.
B. Frivolous or Vexatious
 The Minister has submitted two judicial review decisions where applications for costs were denied, one involving an Environmental Appeal Board decision, and the other, a B.C. Utilities Commission decision. I do not find those cases applicable in deciding whether a cost award is warranted, pursuant to the TATC Act.
 Croll v. Brown  BCCA 522, submitted by the Minister, is of some assistance in assessing whether a matter is frivolous or vexatious, although not completely authoritative as it concerns civil proceedings. At paragraph 37, the Court quoted seven criteria to determine whether a matter is vexatious in civil proceedings, including the following which may be relevant to this matter:
 . . .
. . .
(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
. . .
(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
. . . .
 In Butterfield v. Canada (Minister of Transport), 2004, TATC file no. P‑2933‑02 (appeal), referred to by the applicant in its submissions, the panel provides specific guidance as to the application of paragraph 19(1)(a) of the TATC Act:
Under paragraph 19(a) the Tribunal may award costs if it becomes seized of a matter that is frivolous or vexatious . . . this section does not contemplate an indemnification of a successful party but rather the penalization of a party for the institution of a matter for an improper purpose . . .
. . . The term "costs" is used but the section really acts to dissuade a party from inappropriate behavior. It is the amount that will discourage improper behavior that has to be decided rather than the sum that would indemnify the other party.
. . . [W]e are presently of the view that it is only the Minister's conduct that could trigger an award under paragraph (a). This type of clause may be found in various rules of civil procedure in courts where most often suits are brought between two civil parties. However, here it is always the Minister who institutes the matters by way of Notice under one of the sections of the Aeronautics Act. A document holder then has a statutory right to request a hearing in response . . .
. . .
The Tribunal functions under the guidance of fairness and natural justice . . . . [W]e see the award of costs as a tool to be utilized in only exceptional circumstances.
 In International Express Aircharter Ltd. v. Canada (Minister of Transport), 2006, TATC file no. P-3247-10 (review), the member referred to the definitions of frivolous and vexatious in Black's Law Dictionary, and commented as follows:
It seems clear that paragraph 19(1)(a) should operate only in the rarest of circumstances, where there was serious or egregious action, perhaps even malice on the part of the Minister's officials. The question here is whether there was any ill intent on the part of Transport Canada in taking the action it did . . .
Although I have determined that the Minister's decisions to revoke and suspend should be referred back to the Minister for reconsideration, I cannot conclude that the Minister's representatives acted with malice or spite. I do not believe the actions of the Minister lacked any merit nor do I believe they were intending to embarrass or annoy the applicant or Mr. Chapman.
 As the Minister has pointed out, in Drader v. Canada (Minister of Transport), 2007 TATCE 7 (review), TATC file no P‑3203‑33, the member declined to make an order for costs as he found that there was nothing malicious or which would constitute bad faith on the part of the Minister. There were simply errors in judgment, which in his view did not bring the conduct of the Minister within the scope of frivolous or vexatious as contemplated by paragraph 19(1)(a) of the TATC Act.
 The applicant has referred to Filippone v. Canada (Minister of Transport), 2008 TATCE 31 (review), TATC file no. P‑3318‑02. In that case, costs were also denied as the member found that the decision by the Minister to assert his legal right against the applicant did not constitute a frivolous or vexatious process.
 Black's Law Dictionary, (8th edition, 2004), defines frivolous as "lacking a legal basis or legal merit; not serious; not reasonably purposeful"; vexatious as "(of conduct) without reasonable or probable cause or excuse; harassing, annoying"; and vexatious suit as "a lawsuit instituted maliciously and without good cause".
 The history of this matter is lengthy. GPAC had for many years operated under the understanding that the airport infrastructure that existed when it took responsibility for the airport only had to be upgraded to 4th edition standards when the infrastructure was improved or replaced. Otherwise, the infrastructure was required only to meet 3rd edition standards. This understanding was reinforced by Transport Canada on more than one occasion. For example, in 1999, Transport Canada had advised GPAC that since the runway exit signs were in accordance with the 3rd edition of TP 312E (August 1984), they were acceptable. The 2007 audit indicated that the airport had been audited according to the standards of the 4th as well as the 3rd editions of TP 312E.
 Further, in 2003, GPAC had submitted CAPs indicating that upgrades or replacements would be made only with the assistance of ACAP funding. Transport Canada accepted those CAPs in 2003. However, in 2007, the auditor found those same types of CAPs to be unacceptable.
 The Grande Prairie Airport was certified in 1988. The "application" section of the 4th edition of TP 312E (1993) states:
. . . Airports which were certified in accordance with the Standards and Recommended Practices contained in previous editions of this manual may, except where otherwise specified, maintain the airport in accordance with the specifications applicable at the time of certification.
In 1988, the applicable standards were the 3rd edition (1984) standards.
 Under cross‑examination, the audit manager stated his view that all airside infrastructure had to be upgraded to 4th edition standards when the airport certificate was transferred to the City of Grande Prairie in 1997. This appears to contradict the wording of the "application" section of TP 312E.
 GPAC had numerous telephone discussions with the audit manager in June and July 2007, and again on August 30, 2007 with his superintendent, wherein it expressed its view that it was in compliance with the applicable standards. On August 30, 2007, the Minister's representatives from aerodrome safety declined to discuss the matter further and advised GPAC that the matter had been referred to the Enforcement Branch.
 The enforcement investigator initially told GPAC that he was investigating its failure to submit CAPs. GPAC advised the investigator that it did not fail to submit CAPs. It considered the items still open for discussion, and found it difficult to accept that enforcement action had been commenced without notice that methods accepted in the past were no longer acceptable. GPAC also advised the investigator that it believed it was in compliance and that it thought the parties should go back to the table for further discussion to find an acceptable solution. The investigator's response, in part, was that Transport Canada had found non‑compliance with three items, had advised GPAC, and had given 30 days for GPAC to offer further CAPs. However, the same CAPs were submitted, again rejected, and GPAC had refused to supply any further CAPs. He also advised GPAC that an operator must comply with the conditions set forth on its operator certificate, and that the certificate is predicated on the fact that the operator shall comply with the airport standards.
 GPAC advised the investigator that it considered this a matter of interpretation and requested a meeting. A subsequent email from the investigator invited further input from GPAC, but as the applicant notes, it did not respond to either the interpretation issue or the request for a meeting.
 GPAC at that time did not believe that the runway project in 2004 was in any way related to what was being investigated. However, without further input from GPAC, the notice was issued, alleging that, once runway 07/25 had been improved in 2004, GPAC was legally required to upgrade the associated runway threshold lights and signage to the 4th edition of TP 312E (1993) standards.
 At some point in the investigation, the investigator had advised GPAC that he did not have the authority to question audit findings or any further details regarding the interpretation of the 3rd or 4th edition. He deferred to the audit manager as an expert in aerodrome safety standards.
 The investigator testified that at the end of his investigation, he had come to the conclusion that the provision that applied was the "replaced or improved" section. He gave consideration to the idea that if a runway has 4th edition markings and is upgraded to the 4th edition standards, then the signage and lights that go with it should have been included in that upgrade.
 The audit manager's view was that the runway improvement merely reinforced the fact that, at that point, GPAC had operated the airport for a number of years and had a major project, so at that point it clearly had to be in compliance with the 4th edition standards.
 In light of the wording of paragraph 302.07(1)(a) of the CARs, I do not find the audit manager's and the investigator's interpretations so unreasonable as to find them frivolous or obviously wrong.
 As noted above in paragraph , the appeal panel in Butterfield stated that paragraph 19(1)(a) of the TATC Act does not contemplate indemnification of a successful party but rather the penalization of a party for the institution of a matter for an "improper purpose".
 The audit manager had numerous telephone conversations with GPAC between the time the audit findings were made and the referral of the issue to enforcement, but did not accept the applicant's view of the matter. He was of the view that a specific date for addressing the deficiencies was necessary, which is certainly a departure from the practice of the past. However, he gave GPAC two opportunities to revise its CAPs. Given that the parties were not in agreement as to the validity of the CAPs or their interpretations as to which standards applied, the audit manager referred the matter to the Enforcement Branch.
 Up to that point, I see no evidence of bad faith on the part of the audit manager. His belief that infrastructure ought to be brought up to current standards, in light of his interpretation of the applicable standards, is in my opinion evidence of a legitimate concern for aviation safety and regulatory compliance. His views were indeed a departure from past practice, but on the other hand, one might expect that as time passes, the expectations that airports would bring their infrastructure up to current standards would increase. Further, the audit manager had given GPAC time to come up with specific, alternate plans to address the deficiencies which he had identified. GPAC chose not to do so, believing it was under no legal requirement to do so.
 The aspect of the audit manager's conduct which I find troubling, and which is some evidence of bad faith, is the fact that he gave false information to the investigator as to when GPAC brought up the interpretation issue. He also advised the investigator that because GPAC brought up the issue so late in the process, the argument had no merit. There is no explanation for this.
 There are three matters of concern with the enforcement investigation of this matter. The first is that the investigator failed to respond to GPAC's requests for a meeting between the parties to find an acceptable solution to the issues. The second is that he failed to respond to the interpretation issue or obtain an authoritative legal opinion as to the applicable standards. The third is that the investigator failed to advise GPAC, prior to the issuance of the notice, that he had reached the conclusion that the provision that applied was the "replaced or improved" provision. GPAC was therefore not given any real opportunity to respond to the allegations in the notice prior to its issuance. These shortcomings in the investigation demonstrate a lack of a good faith desire to fully and openly discuss or attempt to settle the matter without resorting to the issuance of a notice, and a failure to consider all the relevant information.
 However, it does not necessarily follow that the notice was issued for an improper purpose. The investigator testified that in reaching his conclusion, he gave consideration to the fact that if the runway was upgraded to 4th edition standards with 4th edition markings, then the signage and lights should also be upgraded so that you do not have two different standards with the runway. From an operational and safety point of view, this is a reasonable perspective.
 The final aspect of the Minister's conduct that is troubling is the allegation that after enforcement officials issued a written invitation to GPAC to request an informal meeting to discuss the merits of the charges contained in the notice, an official later verbally told GPAC that the interpretation issue affecting the merits could not be discussed at such a meeting. At best, this again shows a lack of good faith and the desire to fully explore and settle this matter. At worst, it connotes dishonesty in the Minister's written communication to the applicant.
 The Minister's continued reluctance to address the interpretation issue in this matter is puzzling. The last opportunity for GPAC to be heard fully and fairly on the interpretation issue was at the Tribunal. This opportunity was removed by the Minister's withdrawal of the notice. However, paragraph 19(1)(a) of the TATC Act does not contemplate an award being made for the reason that a notice is withdrawn.
 In view of the case authorities that I have referred to, my opinion is that in order to warrant an award under paragraph 19(1)(a) of the TATC Act, the notice in this matter must, at the outset, have been seen to have had no legal merit, or must have been instituted for an improper purpose. Having carefully considered the evidence and the submissions of the parties, I conclude that, in spite of the deficiencies in the Minister's conduct of this case, I am unable to find that the notice in this matter met either of those criteria. I therefore find I am unable to grant the applicant's motion. I have not come to this decision easily.
 Having operated many years under the understanding that its existing airport infrastructure was only required to meet 3rd edition standards, and that funding CAPs were sufficient in order to respond to audit findings, GPAC has, understandably, expressed considerable frustration at the regulatory uncertainty under which it is being required to operate. In fairness to GPAC, Transport Canada needs to clarify its interpretation of paragraph 302.07(1)(a) of the CARs, the applicability of the standards, and the related documentation, giving due consideration to the ability of the airport to fund upgrades to infrastructure.
 I am unable to find that the Tribunal became seized of this matter for reasons that are frivolous or vexatious within the meaning of paragraph 19(1)(a) of the TATC Act. Therefore, the application for costs is denied.
July 2, 2009
Sandra K. Lloyd
- Date modified: