Decisions

TATC File No. P-3698-41
MoT File No. EMS-69366

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

Sharp Wings Ltd., Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Canadian Aviation Regulations SOR/96 433, ss 605.86(1)


Review Determination
Stephen Rogers


Decision: July 15, 2011

Citation: Sharp Wings Ltd. v. Canada (Minister of Transport), 2011 TATCE 18 (Review)

Heard at Williams Lake, British Columbia, on December 8, 2010

Held: The Minister of Transport has proven, on a balance of probabilities, that the Applicant, Sharp Wings Ltd., contravened subsection 605.86(1) of the Canadian Aviation Regulations. Consequently, the penalty of $5 000 is upheld. This amount is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within thirty-five (35) days of service of this Determination.

I. BACKGROUND

[1] The Applicant, Sharp Wings Ltd. ("Sharp Wings"), is a private aircraft company based at Williams Lake, British Columbia. On May 6, 2010, the Minister of Transport ("Minister") issued a Notice of Assessment of Monetary Penalty ("Notice") to Sharp Wings for an alleged contravention of subsection 605.86(1) of the Canadian Aviation Regulations ("CARs").

[2] Schedule A of the Notice provides the following:

On or about June 19, 2009 at or near Williams Lake, British Columbia, you Sharp Wings Ltd. permitted a take-off to be conducted in an aircraft bearing registration C-FGFD that was in your legal custody and control, when the aircraft was not maintained in accordance with a maintenance schedule approved by the Minister for the aircraft operator pursuant to subsection 605.86(2) of the Canadian Aviation Regulations (CARs), specifically the vacuum pump installed on C-FGFD was beyond its recommended time before overhaul thereby contravening subsection 605.86(1) of the CARs.

Monetary penalty assessed: $5000.00

[3] On June 4, 2010, Sharp Wings filed a Request for Review of the Minister's decision to the Transportation Appeal Tribunal of Canada.

II. STATUTES AND REGULATIONS

[4] Subsection 605.86(1) of the CARs provides as follows:

605.86 (1) Subject to subsection (3), no person shall conduct a take-off in an aircraft, or permit a take-off to be conducted in an aircraft that is in the person's legal custody and control, unless the aircraft is maintained in accordance with

(a) a maintenance schedule that conforms to the Aircraft Equipment and Maintenance Standards; and

(b) where the aircraft is operated under Subpart 6 of Part IV or under Part VII, or is a large aircraft, a turbine-powered pressurized aircraft or an airship, a maintenance schedule approved by the Minister in respect of the aircraft operator pursuant to subsection (2).

[5] Standard 625, Appendix D - Operator's Approved Maintenance Schedule, subsection (2) of the CARs, states the following:

(2) Pursuant to CAR 605.86(1), an air operator's approved maintenance schedule shall ensure that the maintenance requirements listed in Appendix C are complied with.

[6] Standard 625, Appendix C - Out of Phase Tasks and Equipment Maintenance Requirements, section 7 of the CARs, states the following:

7. Engines

All piston and turbine engines installed in aeroplanes and helicopters operated pursuant to CAR 406, in large aircraft operated pursuant to CAR 604, and in aircraft operated pursuant to Part VII, shall be overhauled at the intervals recommended by the engine manufacturer, or in accordance with an alternative hard time interval or an engine on-condition maintenance program approved in accordance with Appendix D.

III. EVIDENCE

A. Minister of Transport

(1) Stephen Bailey

[7] Stephen Bailey is employed by Transport Canada as a Civil Aviation Safety Inspector with Aircraft Maintenance and Manufacturing, in Prince George, British Columbia. Mr. Bailey stated that he had been assigned as the Principal Maintenance Inspector ("PMI") for Sharp Wings on April 1, 2009. On April 23, 2009, he had an introductory meeting with Grant Schuetze, the Operations Manager for Sharp Wings. During that meeting, he noticed a few anomalies, for example, the Aircraft Status Board had not been maintained since September 2008. He was told by Mr. Schuetze that the Beaver was up for sale and had not been used for quite awhile, that the Cessna 206 had not been used for several years, and the only operational aircraft that they had was a Cessna 182.

[8] After that first visit, Mr. Bailey testified that he phoned Lawrence Ando on April 23, 2009. Mr. Ando was the person responsible for maintenance at Sharp Wings. Mr. Ando said that he had not received any training from Sharp Wings and did not have access to the evaluation sheets, inspection sheets or purchase orders because those documents were in Williams Lake and he was located in Vancouver. Mr. Ando reported that he only travelled to Williams Lake when he was asked to do so by Sharp Wings.

[9] In light of the previous anomalies, plus the fact that Mr. Bailey was concerned regarding some snags that were not repaired, Mr. Bailey recommended to his Superintendent that an emergency inspection be done at Sharp Wings.

[10] The emergency inspection took place from June 23 to 25, 2009. Mr. Bailey wrote three Detection Notices against Sharp Wings. The first Detection Notice concerned the fact that the inspection packages used by Sharp Wings were 30 years out of date, and that in approximately a dozen inspections, the inspection packages that they were using were for a Cessna 150 and a Cessna 172 and not for the Cessna 182 which was being inspected. The second Detection Notice concerned the engine on-condition program. In his inspection of the Cessna 182 engine on-condition records, Mr. Bailey noticed that at least five entries were either inaccurate or falsified. Mr. Bailey showed the records at that time to David Chapin, the Aircraft Maintenance Engineer ("AME"), whose signature was on these entries. Mr. Chapin said that he did not recognize them.

[11] On June 25, 2009, a run-up was done on the Cessna 182. Mr. Bailey, John Stewart, the Editor Inspector, and Gideon Schuetze, the owner of Sharp Wings, were on board. Mr. Bailey noticed that the maximum r.p.m. was between 2 300 and 2 400 which seemed to be inconsistent with the 2 520 r.p.m. recorded in the five entries mentioned earlier.

[12] The third Detection Notice (Exhibit M-1), which is the basis of the alleged contravention, concerned a violation of subsection 605.86(1) of the CARs, specifically the vacuum pump installed on aircraft C-FGFD was beyond its recommended time before overhaul.

[13] Mr. Bailey stated, in his testimony, that during his inspection, a search of the Canadian Civil Aircraft Register confirmed that the Cessna 182G, registration marks C-FGFD, is an aircraft owned by Sharp Wings (Exhibit M-10). Sharp Wings had a Maintenance Schedule Approval P-0764 which approves an engine on-condition program as per the CARs and Airworthiness Notice ("AN"), Series B, AN B041 (Exhibit M-3b). Mr. Bailey specified that AN B041 states that "[f]or the purpose of this program, all components necessary to run the engine (for example, a magneto or carburetor, but not a vacuum pump or prop governor) may be included in the on-condition program". In other words, the vacuum pump and the prop governor have to be overhauled according to the manufacturer's requirements.

[14] Mr. Bailey verified the Transport Canada aviation database, "Continuing Airworthiness Web Information System", and found out that the aircraft engine was a Teledyne Continental 0-470-R, Serial No. 130425AR (Exhibit M-11). He further testified that according to the Teledyne Continental Aircraft Engine Service Information Letter, revised March 28, 2003, the Time Between Engine Overhaul ("TBO") for the engine O-470-R and its components and accessories were 1 500 hours or 12 years, whichever comes first (Exhibit M-8). Mr. Bailey said that according to another manufacturer, Woodward Governor Company ("Woodward"), in their Service Bulletin, TBO S/B-33580-M, Revision 12, February 28, 2007, the TBO was 500 hours (Exhibit M-9).

[15] On cross-examination by Grant Schuetze, Mr. Bailey explained why he thought the entries were falsified. Mr. Bailey explained once more that when he did the run-up the maximum r.p.m. was between 2 300 and 2 400 which seemed to be inconsistent with the 2 520 r.p.m. recorded in the five entries in the log book. Mr. Bailey pointed out that in order to get a 2 520 r.p.m., the manifold pressure should have been more than 20 inches, but in the log book the manifold pressure was only 20 inches.

[16] Gideon Schuetze also cross-examined Mr. Bailey. He asked Mr. Bailey if he had looked at the vacuum gauge when doing the run-up and Mr. Bailey said no, as the purpose of the run-up was to check the r.p.m.

(2) Claudio Rosa

[17] Claudio Rosa has been a Transport Canada Civil Aviation Safety Inspector, Aviation Enforcement Branch, since 2002. He has held an AME Licence since 1987. Following an investigation of allegations brought forward in the Detection Notice, Mr. Rosa stated that he found approximately 600 alleged violations committed by Sharp Wings but he decided to recommend charging Sharp Wings for only one violation as it would have been too expensive for Sharp Wings otherwise. 

[18] Mr. Rosa pointed out that he asked Gideon Schuetze about the model of the vacuum pump Mr. Schuetze had in his aircraft. Mr. Rosa received a facsimile from him clarifying that it was a Garwin model G455RX. Mr. Rosa determined that the company which manufactured that pump was not in business anymore and that Otech Engineering was now the contact point. A representative from Otech Engineering told Mr. Rosa that there was no TBO prescribed for that pump.

[19] Mr. Rosa testified that Sharp Wings was operating the aircraft engine on an on-condition maintenance program covered by AN B041. He explained that companies can apply for this program in order to run their engines on condition, meaning that if they meet the conditions of AN B041, the engines do not have the regular time before overhaul as recommended by the manufacturer. Mr. Rosa added that this program was not a "carte blanche" as there were conditions attached to it; for example, certain components were excluded. In instances where there is no time prescribed by the manufacturer, the TBO for the engine prevails, which means that either the time prescribed by Woodward (500 hours) or the time given by Teledyne (1 500 hours, or 12 years) is applicable.

[20] Gideon Schuetze cross-examined Mr. Rosa and asked how he came up with a TBO of 1 500 hours. Mr. Rosa explained to Mr. Schuetze that he used the number of 1 500 hours provided by Teledyne (Exhibit M-8). Mr. Rosa also mentioned that the aircraft did approximately 2 500 hours between 2001 and 2009, which amounted to 1 000 hours more than permitted and approximetely 600 flights.

B. Applicant

(1) Gideon Schuetze

[21] Gideon Schuetze testified that he has a vast experience in flying and that he has never had any trouble with a vacuum pump. Mr. Schuetze added that Sharp Wings was always very cautious, which is not the case with the newer air operators around. Mr. Schuetze pointed out that he should not be the only one responsible for the contravention. Finally, he said that the ongoing deregulations in the aviation industry make it very difficult for small operators to run a business.

[22] The Minister's representative cross-examined Mr. Schuetze. He asked Mr. Schuetze if he was an AME. Mr. Schuetze stated that he was not, and that he signed a piece of paper which made him accountable for anything that happens in his business.

(2) Grant Schuetze

[23] Grant Schuetze testified that he could not understand why other officials from Transport Canada had not been able in the past to find that the overhaul of the vacuum pump was needed.

[24] The Minister's representative cross-examined Mr. Schuetze. He asked Mr. Schuetze if he knew who was responsible for the maintenance in July 2004, the time at which the 1 500 hours would have elapsed and the overhaul would have been needed. Mr. Schuetze could not recall precisely.

IV. ARGUMENTS

A. Minister of Transport

[25] The Minister has proven that the aircraft Cessna 182, C-FGFD, was in the custody and control of the Applicant, Sharp Wings, and that Gideon Schuetz was the owner of the Company.

[26] The Minister has also shown that Sharp Wings was on an on-condition maintenance program approved by the Minister and that this program excludes vacuum pumps.

[27] The Minister has demonstrated that the TBO for the vacuum pump was 1 500 hours as recommended by the engine manufacturer and that the aircraft exceeded these hours by an extreme margin as noted in the Journey Log books (Exhibit M-12).

[28] The Minister has also established that he has been very lenient in charging the Applicant with only one count of subsection 605.86(1) of the CARs.

[29] Finally, the Minister's representative noted that the Minister is responsible for the safety of the entire aviation industry, not only for operators, but also for the public at large.

B. Applicant

[30] The Applicant did not present any closing arguments.

V. ANALYSIS

[31] The Minister gave detailed evidence of the contravention of subsection 605.86(1) of the CARs.

[32] In effect, an aircraft should not be in operation "unless the aircraft is maintained in accordance with:

(a) a maintenance schedule that conforms to the Aircraft Equipment and Maintenance Standards; and

(b) where the aircraft is operated under Subpart 6 of Part IV or under Part VII, or is a large aircraft, a turbine-powered pressurized aircraft or an airship, a maintenance schedule approved by the Minister in respect of the aircraft operator pursuant to subsection (2).

[33] In addition, according to section 625, Appendix D(2) of the CARs, the air operator is responsible to look after the maintenance requirements listed in section 625, Appendix C, section 7 of the CARs. It states that:

All piston and turbine engines installed in aeroplanes and helicopters operated pursuant to CAR 406, in large aircraft operated pursuant to CAR 604, and in aircraft operated pursuant to Part VII, shall be overhauled at the intervals recommended by the engine manufacturer, or in accordance with an alternative hard time interval or an engine on-condition maintenance program approved in accordance with Appendix D.

[34] It is obvious to the Member that Sharp Wings did not look after the maintenance requirements even though the air operator is responsible for its aircraft.

[35] The two witnesses for the Minister gave similar testimony. They proved that the aircraft was registered with Sharp Wings and that Gideon Schuetze is the owner of the Company.

[36] The Minister's witnesses also proved that the aircraft was on an on-condition maintenance program. They explained the substance of the on-condition maintenance program and its exclusions, namely the vacuum pump and the propeller. They also demonstrated that the TBO for the parts excluded was either 500 hours recommended by Woodward or 1 500 hours by Teledyne (Exhibits M-8 and M-9).

[37] The Applicant did not have anything to say to explain his inaction on this matter. The fact that other companies might have also contravened the CARs and were not as prudent as Sharp Wings does not exonerate the Company. Neither does the fact that many inspectors failed to notice that the vacuum pump should have been overhauled before the alleged contravention was filed.

[38] The Member is of the view that it is the responsibility of the registered owner of an aircraft to adhere to the Act and the CARs which govern the aviation industry in Canada, and that the necessary maintenance be properly done on an aircraft as required.

[39] On the basis of the evidence submitted by the Minister, the Member finds that the contravention against Sharp Wings is well supported. 

VI. DETERMINATION

[40] The Minister of Transport has proven, on a balance of probabilities, that the Applicant, Sharp Wings Ltd., contravened subsection 605.86(1) of the CARs. Consequently, the penalty of $5 000 is upheld.

July 15, 2011

Stephen Rogers

Member


Appeal decision
Herbert Lee, Richard F. Willems, J. Richard W. Hall


Decision: March 29, 2012

Citation: Sharp Wings Ltd. v. Canada (Minister of Transport), 2012 TATCE 13 (Appeal)

Heard in Kamloops, British Columbia, on October 20, 2011

Held: The Appeal is dismissed. The Appeal Panel finds that the Appellant, Sharp Wings Ltd. contravened subsection 605.86(1) of the Canadian Aviation Regulations. However, the penalty of $5 000 is reduced to $500 due to mitigating factors.

The total amount of $500 is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within thirty-five (35) days of service of this Decision.

I. BACKGROUND

[1] On May 6, 2010, the Minister of Transport ("Minister") issued a Notice of Assessment of Monetary Penalty ("Notice") to the Appellant, Sharp Wings Ltd., for an alleged contravention of subsection 605.86(1) of the Canadian Aviation Regulations, SOR/96-433 ("CARs"). The Notice alleges that the Appellant permitted a take-off to be conducted when the aircraft was not maintained in accordance with a maintenance schedule approved by the Minister, as the wet vacuum pump installed on the aircraft was beyond its recommended engine time before overhaul ("TBO"). The Appellant was assessed a $5 000 penalty.

[2] The Appellant's Representative filed a Request for Review of this assessment to the Transportation Appeal Tribunal of Canada ("Tribunal") and a Review Hearing was held on December 8, 2010. At the end of the Review Hearing, the Appellant's Representative requested to make closing arguments but was denied this opportunity.

[3] In a Review Determination dated July 15, 2011, the Review Member held that the Minister had proven the occurrence of the contravention on a balance of probabilities. The Appellant filed a Request for Appeal on August 2, 2011. Along with his Request for Appeal, the Appellant's Representative provided the Tribunal with an addendum in which he offered responses to several paragraphs of the Review Member's Determination.

II. REVIEW DETERMINATION

[4] In the Review Determination, the Review Member found that the Minister had proven that the aircraft in question was part of an on-condition maintenance program and that the wet vacuum pump was excluded from this program. He also determined that the Minister had proven that the TBO for the excluded parts was either 500 hours or 1 500 hours and that the journey log book showed that the Appellant had greatly surpassed these hours. The Review Member found that it is the responsibility of the registered owner of an aircraft to adhere to the Aeronautics Act, R.S.C., 1985, c. A-2 ("Act") and the CARs and to ensure that the necessary maintenance be properly done on an aircraft as required. Accordingly, the Review Member upheld the $5 000 penalty.

III. GROUNDS FOR APPEAL

[5] The Appellant filed a Notice of Appeal by letter on August 2, 2011, which reads as follows:

This is to appeal the decision of Stephen Rogers, member on the grounds that the alleged violation did not in any way jeopardize any persons or the public, as all systems on the aircraft were operational and functioning as required.

With all due respect to persons involved in the decision to pursue charge of violation and uphold the penalty assessed: Sharp Wings Ltd. operated single engine fixed wing aircraft for over forty-four years, in V.F.R. conditions. From a V.F.R. standpoint, if there was a component or engine failure during flight, one would have a much better chance of survival than if in IFR conditions. The two Stephens, Bailey and Rogers made decisions in this case with the IFR mentality, in my opinion, since they both operate/operated aircraft in that manner. During my hours VFR (42,600+) I have experienced a few occasions of dry air pump failures with no resulting catastrophe. The Garwin wet pump in Cessna 182 FGFD functioned as required during period of aircraft operation, and has no T.B.O. prescribed.

Because the maintenance program was deemed to be using outdated inspection forms, then the argument of the vacuum pump requiring overhaul at engine Time of overhaul would not be valid. Since it is a "wet pump" with no prescribed TBO, such as "dry pump" of 500 hrs it should be on condition as well as the engine.

Several references are made by Mr. Rogers to indicate me as being "owner" of Sharp Wings Ltd. p. 4 (11), p. 5 (18), p. 5 (22), p. 6 (25), p. 7 (35) which is an absolutely false statement. The false statements could indicate others were made that are not true.

My signature to accept responsibility for the operation of the business as accountable executive would thus not be valid as I am NOT an owner or executive of the company Sharp Wings Ltd.

The penalty decided upon by Mr. Rosa was made without adequate information as to the financial status of Sharp Wings Ltd. His comment "would have been too expensive…otherwise", indicates concern for the welfare of the company. Actually, any penalty at all would have been too expensive, due to the present economy. Mr. Bailey's actions have effectively put Sharp Wings Ltd. out of business and thus prevents me from providing service to the medical needs of the Bella Coola residents who wish to see doctors and dentists in Williams Lake.

My attempts to rectify the situation with Mr. Bailey prior to the charge of a violation were met with a total lack of cooperation, which extended to similar attitude of other persons in the T.C. employ.

This indicated to me a cooperative effort to put the company out of business. Therefore the O.C. was voluntarily surrendered.

P. 7 (37) I disagree with Mr. Rogers statement that none of the responsibility lies with others who did not detect the alleged contravention sooner, if there was one to be noticed. Everything we do or say does have a "butterfly effect" on others and the world. I feel like a pawn in this case.

It appears to me that there is some difference in how various T.C. inspectors approach the operators for audits. Example of note: at the time we were attempting to satisfy Mr. Bailey, a Cessna 180 on wheels belonging to [name omitted] at Bluff Lake crashed on a mtn due to fuel starvation while doing a fire patrol for BCFS. They replaced this aircraft with a Cessna 185 on floats and were operational within a few days. This new-different a/c was placed on line without mandatory physical inspection by T.C. "I know the aircraft, therefore I don't need to inspect it", were the words I heard, as being said.

My questions:

Did pilot [name omitted] undergo a check-out in new a/c?

Did pilot [name omitted] have adequate time to act as chief pilot on new a/c on floats?

Did operator [name omitted] have authorization by ATC to operate new a/c?

Was operator sanctioned for violation re fuel requirements?

Was [name omitted] penalized for contravention of fuel requirements?

Was mtce firm sanctioned for faulty mtce?

How often did [name omitted] push the envelope of fuel management?

Why did he not land at nearby airport Kleena Kleene when he realized there was a problem?

Sharp Wings Ltd. was not cooperated with when endeavoured to put another aircraft on line to replace the one with the alleged infraction, yet the other operator [name omitted ] crashed & destroyed an aircraft yet received royal treatment to expedite continued operation. I think that is pertinent information and does have a bearing on a decision in this case. The engine failure due to fuel starvation, because of pilot error is not a safe operation in my book.

In Summary:

As soon as we were notified of allegations of infraction, which was an unintentional oversight by numerous professionals in the industry, we ceased operation of the aircraft in question. After attempting unsuccessfully to replace the Cessna 182 with another aircraft the company voluntarily surrendered the operating certificate and put the aircraft up for sale.

The maintenance schedule was approved by T.C. when it should not have been due to supposedly outdated (30 yr old ) mtce program. This error was a causitory factor in the alleged contravention. If the "approved" mtce schedule was invalid then the support for claim of contravention is also invalid. There was no intentional violation of any regulations at any time and safety to the public was not jeopardized in any way.

IV. ISSUES

[6] The issues to be determined in this Appeal Decision are as follows:

  1. What is the appropriate standard of review?
  2. Was the Review Hearing process fatally flawed?
  3. Is the Appellant's addendum admissible?
  4. Was the wet vacuum pump required to be overhauled as alleged by the Minister?
  5. Was the sanction reasonable?

V. ARGUMENTS

A. Appellant

(1) Safety is Not at Issue

[7] The Appellant submits that the alleged violation in this case did not jeopardize anyone's safety, since all systems on the aircraft were operational.

[8] The Appellant expresses his concern that the Review Member's Determination was made in the context of experience with flying in Instrument Flight Rules ("IFR") conditions, as opposed to experience with Visual Flight Rules ("VFR") conditions. The distinction between the two is that for an IFR operation, the wet vacuum pump is a crucial component – this is not the case in VFR. For example, he submits that if engine failure was to occur during flight, a person would have a better chance of survival in VFR conditions. Nonetheless, this issue did not occur and the wet vacuum pump used in the Cessna 182G functioned as required during its operation.

(2) Wet Vacuum Pumps Have No Prescribed TBO

[9] The Appellant submits that since the wet vacuum pump has no prescribed TBO, it should be included in the on-condition program. The Appellant submits that correspondence with a Cessna representative confirmed his belief that there is no life limit on the wet vacuum pump so long as it is monitored. The Appellant submits that the lack of TBO for the wet vacuum pump means that the component would run on-condition and be monitored. Furthermore, he notes that it is known in the aviation industry that wet vacuum pumps are operated on-condition.

(3) Sanction

[10] The Appellant contends that the sanction given to Sharp Wings Ltd. was made without adequate information as to its financial status, despite the Minister's submission that the Company was only charged with one offence because it would have been too expensive otherwise. According to the Appellant, "any penalty at all would have been too expensive, due to the present economy." He also contends that the fine sanctioned against the Company has effectively put Sharp Wings Ltd. out of business.

[11] What is more, Sharp Wings Ltd. took immediate action upon being notified of the infraction and ceased operating the Cessna 182G. The Appellant submits that the Minister ought to share responsibility for approving the maintenance schedule that was supposedly out of date, since this was a causative factor in the alleged contravention. Furthermore, if the approved maintenance schedule is invalid, then so too is the basis for the claim of the CARs contravention in this case.

B. Minister

(1) Review Hearing Not Fatally Flawed

[12] The Minister submits that the Appellant's Representative had the opportunity to explain his position thoroughly through both his cross-examination and his own testimony during the Review Hearing. Although the Minister agrees that a procedural defect occurred in the Review Hearing, he contends that the Appeal Panel is in a position to remedy this defect by allowing both parties to make full submissions and full opening and closing statements.

(2) The Appellant's Addendum is Not Admissible

[13] The Minister submits that the addendum submitted to the Tribunal as part of the Appeal documents is inadmissible rebuttal evidence. The Minister contends that this evidence should have been introduced at the Review Hearing. Accordingly, the Minister contends that the contents of this addendum should not be considered or given any weight by the Tribunal.

(3) Wet Vacuum Pump Not Included in On-Condition Program

[14] According to Airworthiness Notice No. B041 ("Airworthiness Notice", Exhibit M-3b), the Cessna 182G in question is part of an on-condition program. However, the Airworthiness Notice specifically states that "all components necessary to run the engine (e.g. a magneto or carburetor, but not a vacuum pump or prop governor) may be included in the on-condition program [italics added]…" Since the wet vacuum pump cannot be run on-condition, it must have a life limit. Accordingly, the Minister submits that the wet vacuum pump should have been overhauled in accordance with the manufacturer's requirements, pursuant to the Airworthiness Notice.

[15] Moreover, Sharp Wings Ltd. has created a Maintenance Schedule (Exhibit M-5) that has been approved by the Minister, which holds that the aircraft shall be inspected and maintained in accordance with the Cessna 182G Service Manual ("Cessna Manual", Exhibit M-6). The general provisions of this Maintenance Schedule note that "[n]othing in this document shall be construed as exempting the operator from responsibility for compliance with all applicable component life limits, Airworthiness Limitations, or other mandatory requirements."

[16] While the Cessna Manual (Exhibit M-6) itself does not touch on the TBO for a wet vacuum pump, it refers the user to the Teledyne Continental Airline Service Information Letter ("Teledyne Letter", Exhibit M-8) for time limits on engine replacement time. The Minister submits that the Teledyne Letter is an applicable component life limit.

(4) Determining the TBO of the Wet Vacuum Pump

[17] The Teledyne Letter (Exhibit M-8) states that "engine mounted components and accessories require overhaul at the same hourly and calendar intervals as the engine, unless otherwise specified by the component or accessory manufacturer." The engine in the Cessna 182G is an O-470-R (see Exhibit M-8). The TBO noted in the Teledyne Letter for this engine is 1 500 hours or 12 years. Consequently, the Minister submits that because the wet vacuum pump is an accessory within the meaning of the Teledyne letter, the TBO for the wet vacuum pump is also 1 500 hours or 12 years.

[18] Based on the calculated TBO, the Minister submits that the Appellant exceeded the wet vacuum pump's TBO by more than 1 000 hours.

(5) Review Member's Determination was Reasonable

[19] The Review Member determined that the aircraft in question was part of an on-condition maintenance program, that the wet vacuum pump was excluded from this program and that the TBO for the excluded parts was exceeded by the wet vacuum pump. The Minister submits that the Review Member's decision was based on findings of fact and credibility that should not be reversed by the Appeal Panel.

(6) Rebuttal to the Appellant's Arguments

[20] Contrary to the Appellant's submissions, the Minister contends that there are safety implications of having a functioning wet vacuum pump when flying in VFR. Nonetheless, the Minister submits that whether the aircraft was flown in VFR or IFR is irrelevant to the contravention at issue. Similarly, despite the Appellant's discussion with regard to the difference between a wet vacuum pump versus a dry vacuum pump, the Minister submits that regardless, the vacuum pump in question needed to be overhauled after 1 500 hours.

[21] Furthermore, while the Appellant alleges that the Minister is attempting to override the Cessna Manual (Exhibit M-6), the Minister submits that it is simply establishing a link in the silence of the Cessna Manual with regard to the wet vacuum pump. Indeed, the Minister is not overriding the Cessna Manual, but instead is complementing it.

(7) Conclusion and Sanction

[22] The Minister submits that it has proven the contravention in this instance and notes also that it was lenient in not pursuing other contraventions against the Appellant. Moreover, the Review Member took any mitigating circumstances that exist into account in reaching his determination on the issue at hand. As such, the Minister submits that there are no grounds in this instance to justify a reversal of the Review Member's Determination.

VI. ANALYSIS

A. Issue 1 What is the Appropriate Standard of Review?

[23] Before reviewing a Review Determination, the Appeal Panel must determine the standard of review upon which to examine the Determination. The Supreme Court held in Dunsmuir v. New Brunswick, 2008 SCC 9, at paragraph 57, that a standard of review analysis need not be repeated if the question has been previously determined.

[24] In Billings Family Enterprises Ltd. v. Canada (Minister of Transport), 2008 FC 17, the Federal Court considered the standard of review for Tribunal decisions. The Federal Court determined that the Appeal Panel owes deference to the Tribunal Member when conducting a review of questions of fact and credibility. Where issues of law are concerned, however, no deference is due to the Review Member and the Appeal Panel may make its own findings.

[25] Issues of procedural fairness are questions of mixed fact and law that ought to be considered on a standard of correctness. As such, the Appeal Panel will use a standard of correctness when determining whether the Tribunal process was fatally flawed in this instance due to a breach of procedural fairness.

[26] The other questions in this case concern issues of fact that require deference to the Review Member. As such, so long as a decision is within a range of reasonable outcomes based on the evidence before the decision-maker, a reviewing body should not interfere.

B. Issue 2 Was the Review Hearing Process Fatally Flawed?

[27] It is clear that an error occurred at the Review Hearing level of the Tribunal process. While the Review Member allowed the Minister to make closing arguments, he did not provide the Appellant the opportunity to do the same. The Appeal Panel is of the view that a breach of procedural fairness occurred in this instance. The subsequent decision to be made by the Appeal Panel is to determine whether this error is deemed to be fatal to the Review Hearing.

[28] The Federal Court considered a similar issue in Schmidt v. Canada (Attorney General), 2011 FC 356. In determining whether an administrative appeal may cure a procedural lapse in a subordinate adjudication, the Federal Court cited the British Columbia Court of Appeal on its recent decision Taiga Works Wilderness Equipment Ltd. v. British Columbia (Director of Employment Standards), 2010 BCCA 97.

[29] In Taiga, the Court of Appeal provided a review of case law in determining that an appellate tribunal may indeed cure a breach of natural justice or procedural fairness under certain circumstances. From there, the Court turned to an examination of when such breaches may be said to have been properly cured. The Court found that the initial and appellate proceedings should be examined to determine whether the procedure as a whole satisfied the requirement of fairness. The Court also cited de Smith and Jowell's Judicial Review of Administrative Action, 5th ed. (London: Sweet & Maxwell, 1995) to provide factors for consideration in determining whether a breach has been cured. Such factors include:

a) The gravity of the error committed at first instance;

b) The likelihood that the prejudicial effects of the error might also have permeated the rehearing;

c) The seriousness of the consequence for the individual;

d) The width of the powers of the appellate body; and

e) Whether the appellate decision is reached only on the basis of the material before the original decision-maker or by way of a hearing de novo.

[30] The Court noted in Taiga that the concern underlying these factors seems to be whether the subsequent review process provides the affected party a full and independent consideration of the case without being contaminated by the breach that occurred in the previous hearing.

[31] The Appeal Panel will now turn its mind to the suggested factors to the facts of the case at hand in order to determine whether the breach in this instance was fatal to the Tribunal process. The Appeal Panel notes that the Appellant provided very thorough grounds for appeal which included much written argument. Moreover, the Appellant had the opportunity to provide evidence and testimony before the Tribunal. While the importance of closing arguments should not be underestimated, the Appeal Panel notes that closing arguments provide the parties the opportunity to summarize their previous arguments and evidence, rather than to bring new argument or evidence into the proceeding.

[32] Furthermore, the Appeal Panel did its best to ensure that any prejudicial effect that occurred due to the error at the Review Hearing did not permeate the appeal process. Rather, the Appeal Panel made a concerted effort to ensure that the Appellant had every opportunity to be heard and to thoroughly present its case.

[33] The next consideration to be undertaken by the Appeal Panel is the seriousness of the consequence for the Appellant. As noted above, closing arguments provide the parties the chance to summarize their arguments and stress their most salient arguments. Notably, however, closing arguments do not provide the parties the opportunity to give new evidence or new arguments. While it is clear that an unfortunate error occurred in this instance, the Appeal Panel does not believe that this error had a serious consequence for the Appellant.

[34] Having dealt with the first three factors for consideration, the Appeal Panel will now consider the width of its powers. The Tribunal's powers on appeal are noted in paragraph 7.2(3)(b) of the Act. These powers include dismissing the appeal, or allowing the appeal and substituting the Appeal Panel's own decision. The Appeal Panel has wide and unconstrained powers in this instance and is in no way bound by the Review Determination.

[35] The final consideration for the Appeal Panel is weighing whether the appellate decision is done by a hearing de novo or reached on the basis of the material before the original decision maker. The Appeal Panel's Decision is made on the basis of the material before the Review Member. As such, the hearing before the Appeal Panel is not de novo.

[36] While the final consideration suggests that the breach of procedural fairness may be fatal in this instance, this factor must be weighed against the previous four factors which point to a conclusion that the breach in the Review Hearing could likely be remedied on Appeal. In other words, when examining the Review Hearing and the Appeal Hearing in combination, the Appeal Panel is satisfied that the process provided the procedural fairness and natural justice required of a Tribunal hearing.

[37] The Tribunal is dedicated to providing the parties before it with a fair and impartial hearing. Procedural fairness plays a vital role in the functioning of the Tribunal. However, errors may occur from time to time and the Tribunal must then consider if its process has been fatally flawed. While it is clear that a breach occurred in this instance, when considering the Tribunal process as a whole, the Appeal Panel is satisfied that the Appellant had adequate opportunity to make his concerns and arguments heard. Accordingly, the Appeal Panel finds that the breach of procedural fairness in this instance was not fatal to the proceedings.

C. Issue 3 Is the Appellant's addendum admissible?

[38] The Minister submits that the Appellant's addendum is inadmissible rebuttal evidence which should have been introduced at the Review Hearing and that its contents should not be considered or given any weight. The Appellant has made no argument with regard to the admissibility of the addendum.

[39] The Appeal Panel notes that the addendum provided by the Appellant contains a mixture of argument and evidence, with the majority of the information contained therein being argument. The Appeal Panel feels that to exclude the entire document would be to unfairly limit the Appellant's opportunity to provide argument. This is especially so where the Appellant's opportunity to be heard was erroneously limited in the Review Hearing stage of the Tribunal process. As such, the Appeal Panel believes that the appropriate course of action is to accept the addendum submitted as part of the Request for Appeal into evidence and use its discretion when assigning weight to the contents of the addendum.

D. Issue 4 – Was the Wet Vacuum Pump Required to be Overhauled as Alleged by the Minister?

[40] The Appellant has placed much emphasis on the alleged safety benefits of a wet vacuum pump versus a dry vacuum pump. However, the Appeal Panel is not prepared to make a determination on this issue and notes that making such a determination is beyond the scope of the appeal at hand. Rather, the integral issue is determining the TBO of the wet pump in the Cessna 182G.

[41] The Appellant submits that the lack of indication with regard to the TBO of a wet vacuum pump indicates that the pump runs on-condition. However, as noted by the Minister, the Airworthiness Notice (Exhibit M-3b), which is part of the Maintenance Schedule (Exhibit M-5) created by the Appellant and agreed to by the Minister, explicitly excludes the wet vacuum pump from the on-condition program. That the wet vacuum pump would run on-condition is clearly not something that is a common understanding between the parties. As such, the Appeal Panel believes it is reasonable to rely on the documentary evidence which unequivocally excludes wet vacuum pumps from running on-condition.

[42] Since the wet vacuum pump does not run on-condition pursuant to the Maintenance Schedule, one must then determine the applicable TBO. The Minister has linked together a series of documentation that points to a TBO of 1 500 hours for the wet vacuum pump. The evidence before the Tribunal shows that the Cessna 182G greatly exceeded this time frame.

[43] In a strict liability offence like the one at hand, the Minister's task is to prove that the Appellant committed the offence. Although it is clear that the Appellant did not intend to contravene the CARs, intention is not a factor in determining whether the contravention of a strict liability offence occurred, but rather may be considered in determining the appropriate sanction.

[44] The Review Member's finding that the Appellant committed the offence at hand is supported by evidence and is reasonable. As such, the Appeal Panel will not interfere with the Review Member's finding in this regard.

E. Issue 5 – Was the Sanction Reasonable?

[45] Even though intention cannot be considered with regard to determining the commission of the offence, it should be considered as a mitigating factor with regard to sanction. The Appeal Panel is satisfied that there are several mitigating factors in this instance to consider that were not fully explored by the Review Member in his Determination.

[46] As noted by the Appellant, the contravention of the CARs in this instance was completely unintentional and had gone unnoticed by numerous industry professionals. What is more, the Appellant responded to the alleged breach of the CARs swiftly and attempted to replace the aircraft. When it was unable to do so, the Appellant attempted to sell the aircraft and voluntarily surrendered its Air Operator Certificate. These events have resulted in the Appellant being put effectively out of business. The Appeal Panel considers this set of circumstances to be a mitigating factor which was not fully considered by the Review Member.

[47] Another mitigating factor to be considered in this case includes the ambiguity with regard to the wet vacuum pump's TBO. While the Minister has provided a TBO that is reasonable based on the documentation before the Tribunal, the TBO was only determined after much investigation and a series of logical deductions. While the Appeal Panel does not wish to understate the Appellant's responsibility to be aware of the required maintenance of its aircraft, the breach in this instance was not apparent. Rather, it is one which the Minister went to great lengths to prove and was an issue that had long gone unnoticed by not only Sharp Wings but also by Transport Canada.

[48] Moreover, the Appellant noted that Sharp Wings Ltd.'s Maintenance Schedule (Exhibit M-5) was approved by Transport Canada despite the fact that it was allegedly 30 years old. The Appellant contends that this error was a causal factor in the alleged contravention. The Appeal Panel agrees that this issue ought to be considered as a mitigating factor in the case at hand.

[49] The Review Member failed to consider the above mitigating factors in determining the penalty in this instance. Instead, the Member determined that the Minister had already shown leniency in only charging the Appellant on one ground. While the Appeal Panel recognizes this to be true, it notes nonetheless that all mitigating circumstances specific to the facts at hand should be considered when determining sanction.

[50] While the Appeal Panel does not disagree with the Review Member's finding that the contravention occurred, it believes nonetheless that this is a case where mitigating factors require a reduction in penalty.

VII. DECISION

[51] The Appeal is dismissed. The Appeal Panel finds that the Appellant, Sharp Wings Ltd. contravened subsection 605.86(1) of the Canadian Aviation Regulations. However, the penalty of $5 000 is reduced to $500 due to mitigating factors.

March 29, 2012

Reasons for the Appeal Decision: J. Richard W. Hall, Chairperson

Concurred by: Herbert Lee, Member

Richard F. Willems, Member