Decisions

TATC File No. W-3595-27
MoT File No. 5258-1

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

Independence Air Ambulance Corporation, Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
section 19 of the Transportation Appeal Tribunal of Canada Act, S.C. 2001, c. 29
section 6.71 of the Aeronautics Act, R.S.C., 1985, c. A-2


Review Determination
Patrick T. Dowd


Decision: March 20, 2013

Citation: Independence Air Ambulance Corporation v. Canada (Minister of Transport), 2013 TATCE 5 (Review)

Heard in Winnipeg, Manitoba, on June 21–24, July 26–28, and December 6, 2011

REVIEW DETERMINATION AND REASONS

Held: The Minister of Transport has not proven, on a balance of probabilities, that the public interest, specifically the aviation record of the Applicant or of any Principal of the Applicant, warrants the refusal to issue an Air Operator Certificate to Independence Air Ambulance Corporation. This matter is referred back to the Minister of Transport for reconsideration.

I. BACKGROUND

A. Notice of Refusal and Request for Review

[1] On June 24, 2009, the Minister of Transport (Minister) issued a Notice of Refusal to Issue or Amend a Canadian Aviation Document (NOR), specifically, an Air Operator Certificate (AOC), to the Applicant, Independence Air Ambulance Corporation (IAA), pursuant to section 6.71 of the Aeronautics Act, R.S.C., 1985, c. A‑2 (Act).

[2] The grounds for the Minister's refusal were set out in Appendix A to the NOR, which indicates that there are “Public interest reasons for refusal” under paragraph 6.71(1)(c) of the Act. The details for the grounds were written as follows:

The Minister is of the opinion that the public interest and, in particular, the aviation record of the applicant or any principal of the applicant, as defined in regulations made under paragraph 3(a), warrant the refusal.

[3] A Request for Review was filed by the Applicant with the Transportation Appeal Tribunal of Canada (Tribunal) on June 25, 2009. A Review Hearing on the matter was held in Winnipeg, Manitoba, on June 21–24, July 26–28, and December 6, 2011.

B. Key Issues

[4] The Minister's position is that the refusal is warranted due to public interest. Specifically, the Applicant, or any Principal of the Applicant, as defined in section 103.12 of the Canadian Aviation Regulations, SOR/96‑433 (CARs), and paragraph 6.71(1)(c) of the Act, warrant the refusal.

[5] The Applicant, IAA, a new company, was refused an AOC by the Minister because Jeffrey McIntosh would be a Principal. The Minister has proposed that the aviation record of Canadian Global Air Ambulance Ltd. (CGAA) be attributed to Mr. McIntosh because he was a Principal, part owner, and President of CGAA, in effect, holding Mr. McIntosh vicariously liable for the actions of CGAA. However, I note that Mr. McIntosh has no aviation record, and his professional standing within the aviation community is exemplary.

[6] Both parties agreed that the defunct CGAA was a dysfunctional company. I believe that the Minister was justified in its concerns for safety because of CGAA's record, which includes many adverse findings and Notices of Suspension (NOS).

[7] The issues here are whether this novel use of the Act and the CARs by the Minister is valid, and whether Mr. McIntosh can be held responsible for the aviation record of CGAA. Mr. McIntosh held many positions of control within CGAA. The question is not if he held control, but how he used it.

II. PRELIMINARY MOTION

A. Amendment

[8] An Application to Amend the NOR to Issue or Amend a Canadian Aviation Document was filed by the Minister on February 23, 2011, in order to provide particulars of the aviation record of one of the Principals of the Applicant. The particulars read as follows:

The following are particulars of the Notice:

On or about December 1, 2006 an aircraft Learjet 35A, bearing registration marks C‑GAJS and operated by Canadian Global Air Ambulance (CGAA), of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), had an incident at Pierre‑Elliot‑Trudeau airport in Montréal. The thrust reversers did not work properly. The pilot‑in‑command tried to brake without success and the aircraft completed his landing two hundred meters past the end of the runway. The aircraft was substantially damaged and the runway landing was closed for over 5 hours. (Aviation Enforcement Case File 5504-61972).

On or about December 4 to 8, 2006, TC conducted an inspection in order to review the Quality Assurance Program Activities of the CGAA of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive). A total of six (6) inspections findings were found. CGAA submitted a corrective action plan to address these findings.

On or about December 6, 2006, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with Canadian Aviation Regulations (CAR) 706.07(1) and paid a fine of $4000 (Aviation Enforcement Case File 5504‑62074).

On or about December 6, 2006, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with CAR 573.09(1) and paid a fine of $4000 (Aviation Enforcement Case File 5504-62075).

On or about December 14, 2006, a notice of suspension was issued concerning Air Operator Certificate number 10414 of CGAA, of which of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), because the company had not complied with the general conditions of the certificate as required by the CAR, section 706.07. The notice of suspension did not come into effect because the company met the conditions for terminating the suspension before the suspension came into effect. (Quality assurance program).

On or about December 14, 2006, a notice of suspension was issued concerning Approved Maintenance Organization Certificate number 61-05 of CGAA, which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), because the company had not complied with the general conditions of the certificate as required by the CAR, section 573.09. The notice of suspension did not come into effect because the company met the conditions for terminating the suspension before the suspension was in effect. (Quality assurance program).

On or about December 20, 2006, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with CAR605.88(1) and paid a fine of $3500 (Aviation Enforcement Case File 5504-63018).

On or about December 20, 2006, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with CAR706.02 and paid a fine of $3500 (Aviation Enforcement Case File 5504-63018).

On or about January 18, 2007, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with CAR605.03 (1) and paid a fine of $3500 (Aviation Enforcement Case File port 5504-62237).

On or about January 18, 2007, CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), did not comply with CAR605.94(1) and paid a fine of $3000 (Aviation Enforcement Case File 5504-62237).

On or about March 15, 2007, a notice of suspension was issued concerning Air Operator Certificate number 10414 of CGAA, of which Mr. Jeffrey McIntosh was a principal (operations manager and accountable executive), because the company demonstrated incompetence in that it had not complied with the general conditions of the certificate, and because the Minister was in the opinion that the public interest warranted it, the particulars being listed in the notice of suspension. The suspension came into effect on March 16, 2007. The conditions for termination the suspension were met and the suspension was terminated on March 21, 2007.

On or about May 29 to May 31, 2007, TC conducted an inspection in order to review the Quality Assurance Program Activities of the CGAA, of which Mr. Jeffrey McIntosh was president and shareholder. A total of four (4) inspections findings were found. CGAA submitted a corrective action plan to address these findings.

On or about June 1, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR605.09(1) and paid a fine of $3500 (Aviation Enforcement Case File 5504-64808).

On or about June 19, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR605.03(1) and was assessed a monetary penalty of $5000 (Aviation Enforcement Case File 5504-64060).

On or about June 19, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR605.94(1) and was assessed a monetary penalty of $3750 (Aviation Enforcement Case File 5504-64060).

On or about June 26, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 605.03(1) and paid a fine of $5000 (Aviation Enforcement Case File 5504-64061).

On or about July 19, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 706.02 and paid a fine of $7000 (Aviation Enforcement Case File 5504-64527).

On or about July 23, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 605.09(1) and paid a fine of $3500 (Aviation Enforcement Case File 5504-64808).

On or about August 16, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 706.02 and paid a fine of $2500 (Aviation Enforcement Case File 5504-64808).

On or about September 12, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 706.02 and paid a fine of $2500 (Aviation Enforcement Case File 5504-64808).

On or about September 17 to 20, 2007, TC conducted an inspection in order to review the Quality Assurance Program Activities of the CGAA, of which Mr. Jeffrey McIntosh was president and shareholder. Particular review was conducted to ensure that the conditions for terminating the suspension from the March 2007 notice of suspension were continued to be met. A total of two (2) inspections findings were found and they were equivalent to findings from previous, recent TC inspections conducted in May 31, 2007. CGAA submitted a corrective action plan to address these findings. From these findings, one (1) finding was a repeated finding from a previous inspection conducted in May 2007.

On or about September 18, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR605.09(1) and paid a fine of $3500 (Aviation Enforcement Case File 5504-64808).

On or about October 11, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR706.02 and paid a fine of $2500 (Aviation Enforcement Case File 5504-64808).

On or about November 4 to 9, 2007, TC conducted an inspection in order to review the Quality Assurance Program Activities of the CGAA, of which Mr. Jeffrey McIntosh was president and shareholder. A total of twenty-three (23) inspections findings were found and many concerns related to these findings had already been identified in the previous notice of suspension issued in March 2007. From these findings, many were repeated findings from the previous inspections conducted in December 2006, May 2007 and September 2007.The most significant concern was the effectiveness of the Quality Assurance Program for the Air Operator Certificate and Approved Maintenance Organisation. CGAA submitted a corrective action plan to address these findings.

On or about November 22 and 24, 2007, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, did not comply with CAR 571.03 and was assessed a monetary penalty of $5000 (Aviation Enforcement Case File 5504-65458).

On or about November 30, 2007, a notice of suspension was issued concerning Air Operator Certificate number 10414 of CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, because the company was incompetent, that it had not complied with the general conditions of the certificate, and because the Minister was in the opinion that the public interest warrant it, the particulars being listed in the notice of suspension. Many of the grounds for the suspension were repeated grounds from the previous notice of suspension in issued in 2006 and 2007. Again, the most significant concern was the effectiveness of the Quality Assurance Program. The suspension came into effect on the same day. The conditions for termination of the suspension were only met on April 15, 2008 and the suspension was then terminated.

On or about January 15 2008, a notice of suspension was issued concerning Approved Maintenance Organization Certificate number 61-05 of CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, because the company was incompetent, that it had not complied with the general conditions of the certificate, and because the Minister was in the opinion that the public interest warrant it, the particulars being listed in the notice of suspension. Again, the company did not have an effective Quality Assurance Program. The suspension came into effect on the same day. The conditions for termination of suspension were only met on April 15, 2008 and the suspension was then terminated.

Between November 2006 and December 2007, independent audits were conducted by Nasha Aviation Consultants at the Canadian Global Air Ambulance Ltd. facilities to determine the company compliance with the I [sic] related to AOC and the AMO. The audits revealed serious non‑compliance with the CARs in significant areas of the AOC and AMO.

On or about January 02 to 08, 2008, an independent audit was conducted by Parsonage & Associates Inc at the Canadian Global Air Ambulance Ltd. facility in Toronto to determine the company compliance with the CARs related to AOC and the AMO. An evaluation of the entire maintenance system was also conducted in accordance with CARs 706 and CAR 573. The audit revealed serious non-compliance with the CARs in significant areas of the AOC and AMO. A total of seventeen (17) audit findings were submitted and the many of the concerns related to these findings had already been identified in the previous TC's inspections dated in 2006 and 2007.

On or about June 5 to September 12, 2008, CGAA, of which Mr. Jeffrey McIntosh was president and shareholder, was put under an Enhanced Monitoring Program (EMP). This EMP resulted in 18 findings of which many were repeated findings from previous inspection conducted in 2006 and 2007.

In General between December 2006 until December 2008, the company has experience a high turnover of key personnel (Operation manager, Director of Maintenance Quality Assurance Manager, Accountable Executive and Chief Pilot).

B. Analysis

[9] The Minister cited several grounds in support of this application to amend the NOR, including: that the Tribunal has jurisdiction to make such an order pursuant to Rule 10 of the Transportation Appeal Tribunal of Canada Rules, SOR/93‑346 (TATC Rules); that the Review Hearing had not yet been scheduled; and also that the Applicant would not be prejudiced by the Amendment.

[10] The Applicant responded to the Minister's request by way of submissions dated March 14, 2011. The Applicant submitted that the Minister owed the Applicant written reasons for denying the AOC in the NOR. While the Minister attempted to characterize the proposed Amendment as particularizing the NOR in greater detail, the Applicant submitted that the Minister was attempting to overcome the complete lack of any stated grounds for his decision.

[11] Furthermore, while the Minister suggested that an adjournment could cure any impact on the Applicant, the Applicant submitted that this failed to consider the delays the Minister had already caused. In this instance, delay has prejudiced the Applicant, while further delay compounds this prejudice.

[12] The Applicant further submitted that there was no justification for making this motion at such a late date. Nonetheless, the Applicant consented to the requested Amendment, and sought to have the case reviewed on its merits at the earliest possible opportunity.

[13] Given the Applicant's consent to the Minister's motion, the Minister did not provide the Tribunal with any further submissions on this matter.

[14] On reviewing the submissions of the parties and in consideration of the consent of IAA to the Amendment, I granted the Minister's Application. Please note that any further reference to the Amendment is referred to as the NOR.

III. STATUTES AND REGULATIONS

[15] Paragraph 6.71(1)(c) of the Act states as follows:

6.71 (1) The Minister may refuse to issue or amend a Canadian aviation document on the grounds that

[…]

(c) the Minister is of the opinion that the public interest and, in particular, the aviation record of the applicant or of any principal of the applicant, as defined in regulations made under paragraph (3)(a), warrant the refusal.

[16] Paragraphs 103.12(a), (c), (d), and (e) of the CARs state as follows:

103.12 For the purposes of subsection 6.71(1) and paragraph 7.1(1)(c) of the Act, “principal” means

(a) in respect of an air operator,

(i) any person who is employed or contracted by the air operator on a full- or part-time basis as the operations manager, the chief pilot or the person responsible for the maintenance control system, or any person who occupies an equivalent position,

(ii) any person who exercises control over the air operator as an owner; and

(iii) the accountable executive appointed by the air operator under section 106.02;

[…]

(c) in respect of an approved maintenance organization,

(i) any person who is employed or contracted by the approved maintenance organization on a full- or part-time basis as the person responsible for maintenance,

(ii) any person who exercises control over the approved maintenance organization as an owner; and

(iii) the accountable executive appointed by the approved maintenance organization under section 106.02;

(d) in respect of an approved training organization,

(i) any person who is responsible for the quality control system, or any person who occupies an equivalent position, and

(ii) any person who exercises control over the approved training organization as an owner;

(e) in respect of a flight training unit,

(i) the chief flight instructor,

(ii) any person who is employed or contracted by the flight training unit on a full- or part-time basis as the person responsible for the maintenance control system,

(iii) any person who exercises control over the flight training unit as an owner, and

(iv) the accountable executive appointed by the flight training unit under section 106.02;

IV. EVIDENCE

A. Minister

(1) Inspector Joseph David Gaudry

[17] Inspector Joseph David Gaudry is a Transport Canada (Transport) Civil Aviation Inspector, Enforcement, based in Winnipeg, Manitoba. His evidence related to the various grounds in the NOR and to the counts in exhibits concerning Notices of Assessment of Monetary Penalty (NAMPs).

[18] Ground 1 of the NOR addressed an aircraft overrun on Runway 06R at the Pierre Elliott Trudeau International Airport in Dorval, Québec (on the island of Montréal). The aircraft was heavily damaged and the runway was closed for over five hours. Mr. McIntosh was the Accountable Executive (AE) and the Operations Manager (OM) of CGAA at the time.

[19] The Minister's Observer Initial Report (Exhibit M‑2), as well as the Aviation Investigation Report (Exhibit M‑3) from the Transportation Safety Board of Canada (TSB), relate to this incident. Although Ground 1 cites Aviation Enforcement Case File 5504‑61972, there is no evidence that enforcement actions were taken against CGAA or the flight crew. It should be noted here that the Captain was a Transport approved check pilot (ACP) and had been appointed as a CGAA Training Pilot by the Chief Pilot.

[20] Grounds 3 and 4 of the NOR are NAMPs (Exhibit M‑4 for $4 000, and Exhibit M‑7 for $4 000) that were issued when the findings of a Transport audit conducted from December 4 to 8, 2006, on the Vancouver Maintenance Base, revealed violations of subsections 706.07(1) and 573.09(1) of the CARs. These sanctions were imposed because of the failure of the Person Responsible for Maintenance (PRM) to follow a maintenance evaluation program (quality assurance [QA]) contained in the Maintenance Control Manual (MCM), and for failing to perform required internal audits of the maintenance system.

[21] Exhibits M‑5 and M‑8 are Case Summary Reports that relate to Exhibits M‑4 and M‑7, respectively. Exhibit M‑6 is a receipt for money paid ($8 000) by CGAA. Mr. McIntosh was the AE and the OM at the time. In the Minister's opening address, it was stated that Mr. McIntosh held the position of Maintenance Manager. I believe it should be noted here that Mr. McIntosh never held the position of Maintenance Manager at CGAA. It should also be noted that the President is not a Principal under the CARs.

[22] Grounds 7 and 8 of the NOR connect with Exhibit M‑9, a NAMP for $10 000 for two counts, and Exhibit M‑10, an Aviation Case Report regarding these violations. These exhibits concern a matter of an inadvertent deployment of the drag chute in flight at or near the aircraft's destination of Fort St. John, British Columbia. The pilots inspected the aircraft for damage in accordance with section 605.88 of the CARs, which would have allowed them to fly the aircraft legally to Vancouver, British Columbia. However, they failed to make the required entry in the aircraft journey logbook, and carried two nurses, considered by Transport to no longer be crew, as passengers. These two events constituted Count 1 in the NAMP.

[23] I find that there is confusion in the wording of Count 1 where it states:

…you did conduct a take-off in an aircraft, to wit, a Gates Learjet Corporation, Model 35, bearing Canadian registration marks C-FBFP, that had been subjected to an abnormal occurrence, namely, an inadvertent deployment and jettison of the drag chute in flight, when the aircraft had not been inspected for damage in accordance with Appendix G of the Aircraft Equipment and Maintenance Standards…

However, I note that the Aviation Enforcement Case Report (Exhibit M-10) indicates it was inspected by the crew.

[24] Count 2 of Exhibit M‑9 indicates that Maintenance did not follow the procedures in its MCM required by section 706.08 of the CARs after the aircraft arrived in Vancouver. The Aviation Enforcement Case Report (Exhibit M‑10) repeats information from the NAMP (Exhibit M‑9). CGAA was held vicariously liable. No enforcement action was taken against the crew or any member of Maintenance.

[25] Every ground in the NOR can be subject to misinterpretation by the casual reader; they are constructed very literally. I believe that it is important to note that it is CGAA that was held accountable for violating the CARs, and that CGAA paid the fines, not Mr. McIntosh.

[26] Grounds 9 and 10 of the NOR, referring to a receipt to CGAA for payment (Exhibit M‑11), a NAMP (Exhibit M‑12), and an Aviation Enforcement Case Report (Exhibit M‑13), all deal with the same incident. A CGAA aircraft departed Addis Ababa, Ethiopia, with an unserviceable number one battery. The minimum equipment list (MEL) was silent on this condition, thus invalidating the flight authority, the Certificate of Airworthiness (C of A) for the aircraft. Nevertheless, the crew departed with a patient and two flight nurses for Prague, Czech Republic, with a technical stop in Cairo, Egypt, without making a journey log entry, in violation of subsections 605.03(1) and 605.94(1) of the CARs.

[27] The company Operations Manual requires that the captain notify the on-duty Aircraft Maintenance Engineer (AME) of any defects; if a defect affects the airworthiness of the aircraft, the aircraft shall be removed from service. Mark Bakker, the PRM and Director of Maintenance (DOM), did not remove the aircraft from service, thereby allegedly violating subsection 704.12(2) of the CARs. The aircraft continued on to Manchester, England, with the relief crew, again without a logbook entry. The sanctions amounted to $8 750. CGAA was found vicariously liable. No evidence was presented to show enforcement action against the crew or the PRM. The Captain of this flight was the same Captain who had operated the aircraft in the overrun incident in Dorval.

[28] Mr. McIntosh was the AE and OM. It is noteworthy that Mr. McIntosh was removed from any operational control or responsibility by Transport from this point forward (March 2007).

[29] The next evidence presented by Inspector Gaudry was in relation to grounds 14 and 15 of the NOR. A CGAA aircraft in the vicinity of Keflavik, Iceland, encountered an electrical smell in the cockpit, with the accompanying loss of the pilot's overhead speaker, and a pilot headphone system failure with the number one radio. The NAMP for $8 750 (Exhibit M‑14) and its Aviation Enforcement Case Report (Exhibit M‑15) explain the reasons for the sanctions. The reasons include the failure of the crew to make a logbook entry recording the incident. The NAMP was not issued until some six months after the occurrence.

[30] Ground 16 of the NOR was addressed next. A rough landing in Anadyr, Russia, resulted in the failure of the number one gyro. For the edification of the reader, the properties of a gyro, in this case rigidity in space, is used to present a horizon on the pilot flight instrument, referred to as the artificial horizon. Maintenance was performed by an unauthorized person, the pilot, and the aircraft was subsequently flown with an invalid C of A. Exhibit M‑17 is a NAMP, Exhibits M‑18 and M‑19 are Detection Notice Transmittals relating to this incident.

[31] Grounds 13, 18, 19, 20 and 22 were then addressed, as were the six counts in Exhibit M‑21, which is a NAMP. It is worth noting that it is somewhat difficult to crossreference the grounds with the counts in the Exhibits because of the conflicts in the dates used and the monetary penalties applied.

[32] Exhibit M‑21 contains six counts of violations of the CARs. The first three counts address flights that were conducted with unserviceable equipment. These flights could have been operated legally if the crew had complied with the MEL. The last three counts dealt with maintenance shortcomings as they related to the flights. The PRM at this time was Mr. Bakker. Mr. McIntosh was President, and a minority shareholder.

[33] Exhibit M-22 is the Aviation Enforcement Case Report. This report basically repeats the information contained in Exhibit M‑21. CGAA was held vicariously liable. No enforcement action was taken against the pilots or the PRM, Mr. Bakker.

[34] Exhibit M-23 is a NAMP for $10,000 because of maintenance faults. Exhibit M‑24 is a Detection Notice regarding this NAMP. Mr. Bakker was the PRM. Mr. McIntosh was the President and a minority shareholder.

[35] Exhibit M‑25 is a NAMP for $5 000 for failing to ensure the journey logbook was accurate. Mr. Bakker was the PRM and Mr. McIntosh was the President and a minority shareholder. No enforcement action was taken against Mr. Bakker. Inspector Gaudry addressed Ground 25 of the NOR. A CGAA aircraft was dispatched with its nose-wheel steering computer disconnected. Exhibit M‑26, the Aviation Enforcement Case Report, explains the details. Initially the aircraft had problems with its navigation equipment in Reno, Nevada, which required the attention of an AME. One was dispatched from CGAA. No problem was located by the AME; however, a verification flight was required. After landing from the test flight, the nose‑wheel steering failed. This defect was entered in the journey logbook.

[36] The AME consulted with Learjet, the aircraft manufacturer, and concluded that the antiskid system was inducing voltage into the aircraft's alternating current (AC) electrical system. The AME disconnected a cannon plug that provides inputs to the antiskid computer, but failed to make a logbook entry.

[37] Transport had no knowledge of this event until it was voluntarily reported to a Transport inspector by the new DOM, hired by Mr. McIntosh, to correct the maintenance problems. Transport took enforcement action against CGAA.

[38] On cross-examination, Inspector Gaudry stated he had no personal knowledge of Mr. McIntosh's personal aviation record. He agreed that after March 2007, Mr. McIntosh was not a Principal of the company pursuant to section 103.12 of the CARs. Inspector Gaudry was also asked what the Minister's understanding of ownership is and whether that ownership permitted Mr. McIntosh to control CGAA. Inspector Gaudry stated he did not know.

[39] The Applicant's representative reviewed the enforcement issues starting with the runway excursion in Dorval. The Applicant's representative's understanding was the aircraft landed off the end of the runway, the brakes were applied late, the crew did not apply the emergency brake, and there was a hydraulic failure. Inspector Gaudry did not answer this question immediately, but later he confirmed the Applicant's representative's summary. It could not be determined if enforcement action was taken against the crew. The TSB investigation (Exhibit M‑3) indicates that the crew did not check the hydraulic fluid on the first flight of the day. There was no evidence of a connection between Mr. McIntosh and this accident.

[40] The Applicant's representative referred to Exhibits M‑4 and M‑7, NAMPs for failing to do an initial QA audit. Inspector Gaudry stated that he did not know who the QA Manager was, or who he reported to. Later, witnesses confirmed the QA Manager reported to the PRM, as required by the CARs.

[41] The drag chute incident was then addressed (Grounds 7 and 8; Exhibits M‑9 and M‑10). Inspector Gaudry agreed this incident was the pilot's fault, and that the impact was on the company because the pilot failed to do the proper paperwork. Inspector Gaudry had no knowledge of Mr. McIntosh's personal involvement in this incident other than his positions within the company as OM and AE.

[42] The incident in Ethiopia (Grounds 9 and 10; Exhibits M‑11 to M‑13), where the crew departed with the number one battery unserviceable, was discussed. The details were reviewed earlier. Inspector Gaudry was asked if he knew the whereabouts of Mr. McIntosh at the time – he did not. Inspector Gaudry allowed that this was the pilot's decision. CGAA was held vicariously liable. Inspector Gaudry confirmed none of the records he looked at indicated any direct involvement by Mr. McIntosh.

[43] The incident in Iceland, as described in the Aviation Enforcement Case Report (Exhibit M‑15), was reviewed by the Applicant's representative. He asked Inspector Gaudry why he used the word “strong” when he described a “strong smell of smoke in the cockpit” in giving his testimony, as opposed to the report, which stated that “the crew experienced smoke in the cockpit”. Inspector Gaudry responded that he assumed this because the crew had briefed the passengers in the event of ditching (landing in water). The Applicant's representative reminded Inspector Gaudry that someone's livelihood was at stake and he did not want to see any embellishment. CGAA was held vicariously liable for the pilot's actions and the consequence to CGAA was further fines. Inspector Gaudry was not aware of any evidence showing Mr. McIntosh's involvement in this incident.

[44] The gyro incident in Anadyr, Russia (Ground 16), was raised next by the Applicant's representative. One of the issues was the switching of the cannon plugs by the crew. The Applicant's representative raised the possibility of this being elementary maintenance, which a crew could perform after receiving training. An example of this would be the switching of rack‑mounted equipment. Inspector Gaudry responded that cannon plugs do not qualify as rack‑mounted equipment or online changeable objects. The Applicant's representative asked if the cannon plugs were quick disconnects. Inspector Gaudry responded one would have to talk to an AME to determine that. He explained that one of the cannon plugs should have been tied off so it could not be swapped. Inspector Gaudry had no knowledge of Mr. McIntosh's personal involvement in this incident because he was not aware of the internal operations of the company.

[45] Inspector Gaudry confirmed that the first three counts in Exhibit M‑21, the NAMP for six counts, were covered by the MEL, meaning the pilots could have proceeded legally if they had followed the MEL procedures. CGAA was held vicariously liable for the actions of the pilots in three of the counts, as well as the other three counts that resulted from them regarding the maintenance control systems for the aircraft not being conducted in accordance with the MCM. Inspector Gaudry was asked if he could think of any conceivable reasons why the pilots would do this. His response was that it would be to CGAA's benefit to keep the aircraft flying and get it back home for maintenance. The Applicant's representative pointed out they could do this legally anyway, and it did not make any sense to do this. Inspector Gaudry confirmed this.

[46] The next incident involved CGAA operating an aircraft when there was an overdue service and conditions check (NAMP, Exhibit M‑23). There was no direct connection with Mr. McIntosh in this incident, other than Inspector Gaudry stating that Mr. McIntosh, as President, controlled the “purse strings”. Inspector Gaudry agreed this was an assumption by the Minister, and that it was the responsibility of the PRM. The Applicant's representative made reference to the nose-wheel steering incident and asked if the pilot involved was sanctioned. Inspector Gaudry did not know. He was asked if CGAA requested a Tribunal review. Again, Inspector Gaudry did not know.

[47] Finally, the Applicant's representative attempted to raise the issue of an informal conference, regarding Exhibit M‑23, between Transport and CGAA, but because of the privilege of confidentiality attached to this meeting, his attempt was challenged successfully by the Minister. Under redirect, Inspector Gaudry confirmed the statement by the Minister that if a person pays the fine, or serves the suspension, that person is admitting responsibility for the offences.

[48] I am not convinced by this argument. CGAA could have elected to pay the fine or serve a penalty as a matter of convenience or economics. In any event, it was not Mr. McIntosh who committed the offences in Exhibit M‑23, it was CGAA, and in most cases, CGAA was deemed vicariously liable for the actions of its employees. No evidence was presented showing any activity by Mr. McIntosh that led to CGAA being held liable.

(2) Inspector Michael Donald Smith

[49] Inspector Michael Donald Smith, a Civil Aviation Safety Inspector, was involved with CGAA and had intimate knowledge of its operations by virtue of being the Primary Maintenance Inspector (PMI) and the alternate PMI from late 2006 to early 2008.

[50] Inspector Smith's evidence, for the most part, shows CGAA's dismal maintenance record. He believes all parties, himself included, accepted CGAA as a deeply troubled organization. For the sake of expediency and brevity, I only highlight Mr. McIntosh's involvement in the issues and any relevant points put forward by Inspector Smith. All of his evidence has been considered in making my Determination.

[51] Inspector Smith stated that, in his position, the PRM was his main liaison. He added that a PRM may have a QA Manager who guides him, but ultimately, he is responsible for matters of maintenance.

[52] Inspector Smith was asked about the AE's involvement in maintenance matters. He responded that the AE provides both the human and financial resources necessary to implement the PRM's plans.

[53] Exhibit M‑31 is a copy of the Inspection Report for the audit completed in December 2006 by Transport, forwarded to Mr. McIntosh. Exhibits M‑34 and M‑35 are letters to the attention of Mr. McIntosh, both dated January 31, 2007, advising Mr. McIntosh that the NOS for CGAA's AOC and AMO respectively, issued to CGAA on December 14, 2006, had been lifted as the conditions had been met.

[54] One of the conditions was the retention of an outside consultant to help CGAA with its QA program. Nasha Aviation Consultants (Nasha) was hired and reported considerable progress (Exhibit M‑36). Inspector Smith introduced a risk management assessment report (Exhibit M‑37), dated March 14, 2007. The risk assessment team recommended the cancellation of CGAA's AOC. This recommendation was overruled.

[55] On March 15, 2007, an NOS of CGAA's AOC was issued (Exhibit M‑38). This notice was lifted six days later, on March 21, 2007 (see letter, Exhibit M‑39), because CGAA met the conditions of the notice. Mr. McIntosh was the recipient of this letter.

[56] It was assumed by the Minister that these exhibits would indicate Mr. McIntosh's knowledge and primary responsibility for these CGAA problems because of his position. However, I note that it could just as easily be assumed that Mr. McIntosh's efforts were responsible for the short periods between the issuance of an NOS and its cancellation.

[57] Inspector Smith stated that his point of contact with CGAA was the PRM and sometimes Mr. McIntosh. He recalled a few telephone calls with Mr. McIntosh where he was trying to figure out what Transport wanted in order to terminate the suspensions. He also had onsite conversations with Mr. McIntosh.

[58] Inspector Smith said that, based on his involvement and conversations with CGAA employees, he would definitely say that Mr. McIntosh was exercising control in a hands‑on approach the majority of the time.Inspector Smith quoted an email from himself to Steven MacNab and Thomas Bennett of Transport (Exhibit M‑43), wherein Inspector Smith stated that “Mr. McIntosh is still directly involved with maintenance (The PRM, QA)”. It should be noted that Mr. MacNab was the Regional Manager at Transport for Aircraft Maintenance and Manufacturing, Prairie and Northern Region at the time, and is now deceased. Mr. Bennett testified at the Review Hearing and his testimony will be summarized later in the Determination.

[59] An excerpt from an email from Mr. MacNab to Catherine Fletcher (Regional Director at Transport Civil Aviation, Prairie and Northern Region, see Exhibit M‑100) was entered into the record by Inspector Smith (Exhibit M‑44). The excerpt reads as follows: “We need to verify that factually within the corporate structure the control required by CAR 106 is in fact vested in Mr. McIntosh; and [d]etermine whether the control required by regulation was in fact vested in Mr. [Steven] Bannatyne [AE from December 2007 to January 2008, see Exhibit M‑1] and Mr. [Steve] Milligan during their periods of appointment”. The rest of the email is Mr. MacNab's opinion that “…Mr. McIntosh has been the apparent executive manager of Canadian Global throughout its existence. …it is a fair consideration that the record of Canadian Global is part of the record of Mr. McIntosh as a principal.” Inspector Smith agreed with Mr. MacNab's perception.

[60] Exhibit M‑45 is a record of Inspector Smith's perception of comments made by Zubin Dastoor of Nasha. Under cross‑examination by the Applicant's representative, Inspector Smith stated it was the PRM who would be responsible for QA if there was no QA Manager appointed. After January 2007, Nasha fulfilled this role.

[61] Inspector Smith gave a list of the CGAA PRMs he dealt with. Raffaele Pucci was the first in 2006, followed by Mark Oloresisimo from the middle of 2006 until January 8, 2007. Mr. Bakker then assumed the role until he was fired in 2007. Inspector Smith was shown the National Aviation Company Information System (NACIS) printout for CGAA (Exhibit M‑1), which differed slightly from his testimony. He said this list is from a Transport database that is known to be inaccurate.

[62] The Applicant's representative asked Inspector Smith about Transport's interviews of PRMs. Inspector Smith described the elements of the process that the PRM candidate would have to pass. Inspector Smith stated that the Minister has no responsibility for the on‑the‑job performance of the candidate.

[63] The Applicant's representative attempted to introduce a letter from Calvin Winter, the Acting Superintendent Operations, Commercial & Business Aviation (Exhibit A‑1) that contradicted Inspector Smith's assertion, and some of the grounds in the Minister's NOR that CGAA had no regulatory presence prior to Inspector Smith's inspection in December 2006. The letter, dated August 4, 2004, informed CGAA of an upcoming audit. The Minister objected to Inspector Smith testifying to this letter because he had no knowledge of it. The exhibit was entered for information purposes until a later witness could testify to it.

[64] In his earlier evidence, Inspector Smith testified that he sensed some risk indicators, which he reported to his superiors, but not to Mr. McIntosh. There was nothing he saw that pointed to Mr. McIntosh at the time, only to the PRM.

[65] The Nasha audit was then addressed by the Applicant's representative. Inspector Smith confirmed that the audit report was received by Transport. The report gave CGAA 60 days from November 21, 2006, in which to respond (see Exhibit A‑2). Transport visited CGAA over December 4 to 8, 2006, and performed an inspection, resulting in CGAA being given only until January 2007 to submit a corrective action plan.

[66] Inspector Smith, in his letter to Mr. McIntosh regarding his inspection (Exhibit M‑31), thanked CGAA for its cooperation. He stated that Mr. McIntosh was not on site and did nothing to interfere with the inspection.

[67] At this point, there was an objection to the Applicant's representative's questions regarding Transport's findings and actions. The Minister claimed these matters should have been brought before the Tribunal at the relevant time, within 30 days of them happening, and could not now be revisited.

[68] The Minister stated it would be an error in law if I allowed the Applicant's representative to continue his line of questioning, which would create grounds for an appeal. The Applicant's representative argued that matters that Transport has decided on should not prejudice those who were not parties to it. I allowed the Applicant's representative to continue in the spirit of the Tribunal and to help me make a connection between Mr. McIntosh and CGAA's record.

[69] The Applicant's representative asked Inspector Smith if he found any fault with Mr. McIntosh because he did not respond to the Nasha audit. He responded that he did not find any fault with Mr. McIntosh but with the system employed.

[70] The Applicant's representative introduced a Transport Telephone or Visit Record by Inspector Smith, the first page of which starts on December 5, 2006 (Exhibit A‑3). Inspector Smith was referred to an asterisked item on page two that said, “Subsequent review indicates – not immediate threat”. Inspector Smith expanded on this and explained that the threat referred to safety. Inspector Smith was referred to the top of page three of the document and asked to read the first item: “Phone call from Zubin Nasha consulting @ the request of Mr. McIntosh”. He explained that Maintenance and Manufacturing Staff Instructions, MSI 28, was a relatively new set of instructions that applied the 30 days to the NOS.

[71] Inspector Smith was then asked if he had any evidence that CGAA Maintenance lacked adequate financial resources during the period Mr. McIntosh was the AE. Inspector Smith responded negatively.

[72] The Applicant's representative continued to review the chain of exhibits and enforcement actions. In each instance, Inspector Smith could not connect Mr. McIntosh directly to the events that concerned Transport. Conversely, he did reveal Mr. McIntosh's efforts to placate Transport and to pursue solutions that would satisfy Transport inspectors.

[73] In redirect, Inspector Smith was referred to the NACIS CGAA key personnel list (Exhibit M‑1) and asked to read Mr. McIntosh's positions with CGAA. He identified Mr. McIntosh's roles as AE, OM, President, and Owner.

[74] The Applicant's representative had Inspector Smith read into the record sections 106.02, 106.03, 573.03, and 705.03of the CARs. These regulations describe the appointment, duties, and responsibilities of the AE and the certificate holder. The Minister focused on subsection 705.03(1) and paragraph 705.03(2)(d) of the CARs as they relate to the OM.

705.03 (1) The operations manager shall manage the activities of the air operator in accordance with the company operations manual established under section 705.134.

(2) The operations manager appointed under paragraph 700.09(1)(a) shall, where a finding resulting from a quality assurance program established under section 706.07 or a safety management system referred to in section 705.151 is reported to them,

[…]

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

[75] The Minister discussed and emphasized paragraph 705.03(1)(d) of the CARs to show that the OM can pass on his responsibility to the AE by notifying the AE of any system deficiencies.

[76] It would appear logical that if the OM or any other principal failed to notify the AE, no responsibility would pass to him. Inspector Smith stated that CGAA was given multiple opportunities to grow and progress between December 2006 and September 2007.

(3) Inspector Robert Arthur Streber

[77] Inspector Robert Arthur Streber's present position is the Superintendent of Winnipeg Operations. Between 2006 and November 2007, he was an inspector with the Winnipeg office in Aircraft Maintenance and Manufacturing. From November 2007 until the demise of CGAA, he was the principal inspector of CGAA.

[78] Inspector Streber's evidence was similar to Inspector Smith's in that he elaborated on CGAA's record through exhibits and enforcement actions. As stated before, all parties acknowledged CGAA's unsatisfactory record. As before, Inspector Streber's testimony and evidence have been filtered to relate to Mr. McIntosh's involvement.

[79] In a CGAA Compliance Report prepared by Inspector Streber (Exhibit M‑46), Craig Hoffman, Chief Pilot, is discussed. Mr. McIntosh made Transport aware of his problems with the Chief Pilot. He became aware of these issues late in 2006, but did not act. The document stated that Mr. McIntosh was able to communicate with the pilots regarding snags and defect reporting.

[80] Defect reporting started to happen at CGAA following Mr. McIntosh's communication with pilots. Exhibit M‑46, the CGAA Compliance Report, states that Mr. McIntosh resigned as AE.

[81] Exhibit M‑51 is a letter from Mr. McIntosh to Mr. MacNab, outlining the plans to resurrect CGAA. Exhibit M‑52 is a rebuttal letter from Mr. MacNab.

[82] As Inspector Smith did, Inspector Streber supported Mr. MacNab's statements in Exhibit M‑44. Mr. MacNab stated that, because of the positions held by Mr. McIntosh within CGAA, it is a fair consideration that CGAA's record is Mr. McIntosh's record.

[83] Further comments from Mr. MacNab's January 11, 2008 email (Exhibit M‑44) expressed concerns about the statement of Patrick Parsonage (hired by Mr. McIntosh to correct problems at CGAA at the time) that notwithstanding the appointment of Mr. Milligan as AE, it seemed that executive management was still being exercised by Mr. McIntosh. Mr. MacNab chose to interpret this as meaning Mr. McIntosh's successor was not exercising his control as AE, and that Mr. McIntosh had been the apparent executive manager of CGAA throughout its existence.

[84] Transport placed CGAA under an enhanced monitoring program in June 2008 (see Exhibit M‑75). Part of the requirement of this program was to have CGAA report to the team of Transport Inspectors. Many such reports were from CGAA crew scheduling. These reports were related to schedules, itineraries, and daily status reports – Exhibits M‑57 through M‑69. It is important to note that these are not conclusive indications of the actual flight times, or of days off, completed by each pilot, but merely scheduling tools.

[85] Exhibit M‑70 is Inspector Streber's response to an email from a second inspector about a short visit to CGAA and comments made to him by a third party over the telephone. Exhibit M‑71 contains a finding form of maintenance problems.

[86] CGAA voluntarily submitted a report via email (Exhibit M‑72) regarding an incident wherein a nurse forgot a piece of medical equipment. The aircraft returned and picked up the item and continued. Inspector Streber categorized the importance of this event as high.

[87] No evidence was provided to show Mr. McIntosh was personally involved in the incidents described in Exhibits M‑70, M‑71, and M‑72.

[88] Exhibit M‑74 is a list of administrative concerns referred to in Inspector Streber's midway report for the enhanced monitoring program. Inspector Streber stated that the two pilot proficiency check (PPC) failures were due to a lack of knowledge of manuals and procedures. The PPCs were terminated by Inspector Streber before the pilots demonstrated their aircraft handling abilities in the simulator.

[89] Under cross‑examination by the Applicant's representative, Inspector Streber was referred to Exhibits M‑46 and M‑48. Exhibit M‑46, the CGAA Compliance Report, addressed an unapproved modification on a CGAA aircraft. Inspector Streber did not know who owned the aircraft previously.

[90] The next event addressed in Exhibit M‑46 was the landing of a CGAA aircraft on a drag strip by mistake in Aruba. There was no investigation by Transport, and Inspector Streber had no knowledge of the pilot involved.

[91] Exhibit M‑48, the report of the November 2007 inspection attached to a letter from Mr. MacNab to the AE at CGAA, was examined by the Applicant's representative and Inspector Streber. Inspector Streber read into the record the comments on page one. These comments confirmed that prior to November 2007, CGAA had no effective QA. Inspector Streber was then referred to the various findings in the exhibit and was asked if these were a result of line personnel failing to perform their required functions. Inspector Streber agreed. He was unable to testify to Mr. McIntosh's involvement in these events.

[92] Inspector Streber confirmed that throughout 2007, Mr. Bakker was the PRM and primarily responsible for the Maintenance department, QA, and all of the findings in the November 2007 inspection report. The AE and the PRM would have been informed of the inspection report. Mr. McIntosh was not the AE at the time.

[93] Inspector Streber expressed his opinion that Mr. Bakker was not fulfilling his duties as indicated in the report. He also agreed there were significant changes in CGAA due to Mr. Parsonage's work.

[94] Inspector Streber agreed that Mr. McIntosh's removal as the AE in March 2007 did not improve CGAA's situation. Under redirect, Inspector Streber addressed the Transport interview process. He said that the process is to ensure the candidate is able to perform his duties. Transport cannot determine if the candidate will actually fulfill his duties.

(4) Jeffrey Michael Durand

[95] Jeffrey Michael Durand is presently a Transport Civil Aviation Enforcement Inspector who previously worked for CGAA as a pilot and a ground school instructor.

[96] On one of his trips to Dubai, United Arab Emirates, in May 2007, he experienced a fuselage fuel pump failure. He talked to Mr. McIntosh who asked him if he was comfortable in proceeding with the next leg of the flight to India, which he could do legally. He was not comfortable and proceeded to the hotel. No pressure was put on the crew, as suggested earlier by the Minister. It was reasonable to use Mr. McIntosh as a resource due to his experience. I do not believe that this indicates operational control; rather, this indicates to me that there was no pressure placed on any pilot to continue with an unserviceability even if he could.

[97] Mr. Durand then addressed his tenure as a ground school instructor with CGAA. He contacted Transport and was given their requirements. He was shown to a computer with information on the CGAA training manuals as well as supplementary information. Mr. Durand testified that he had to develop around two‑thirds of the ground school training material himself.

[98] On cross‑examination, Mr. Durand confirmed Mr. McIntosh's support for his ground school efforts and Mr. McIntosh's familiarity with the Lear 35 aircraft.

(5) Inspector Paul Robert Risk

[99] Inspector Paul Robert Risk is a Transport Air Carrier Inspector with Commercial and Business Aviation who was on the November 2007 audit team. He was involved in the flight operations side of the audit.

[100] Inspector Risk reviewed the flight schedules and explained scheduling rules. He stated that the schedule indicated pilots were being scheduled for more than 14 days. The audit also determined that some flight manuals were not up-to-date.

[101] Exhibit M‑49, the NOS for CGAA's AOC, stated that CGAA did not employ an AE and an OM who ensured the requirements of the CARs were met. Inspector Risk remarked that Mr. McIntosh was only there on the first day of the audit meeting to orient the Transport team with respect to CGAA's operations.

[102] The Applicant's representative referred to the November 2007 Inspection Report (Exhibit M‑48) in order to ask Inspector Risk about the noted flight schedules. Inspector Risk confirmed that he used the schedules to determine a pilot's time on and off, and that he used logbooks to compare actual flight times. He was asked if he checked to see if the pilots were off on a day they were scheduled to fly. Inspector Risk could not recall doing this.

[103] The Applicant's representative was interrupted by the Minister who again raised the issue that CGAA had an opportunity earlier to challenge these findings before the Tribunal. The Applicant's representative was allowed to continue.

[104] The Applicant's representative returned to the AOC NOS (Exhibit M‑49), in particular, Count 1, and the word “ensures” as it applied to the AE. Count 1 indicates that CGAA “does not employ an accountable executive required by Canadian Aviation Regulation 106.02 (CAR 106.02) who ensures operations or activities authorized under the certificate meet the requirements of the Canadian Aviation Regulations (CARs) as required by CAR 106.02(a)”. Inspector Risk confirmed he had spoken with the AE at the time, Mr. Bannatyne, and was satisfied that Mr. Bannatyne had a respectable understanding of what was going on at CGAA. He was aware they had had some staffing problems and he thought Mr. Dastoor (Nasha) was on schedule in addressing some of the problems.

[105] Inspector Risk also stated that Mr. Bannatyne understood that corrective action had begun and he believed sincerely that there was a process to follow for compliance.

[106] Exhibit A‑6 is Inspector Risk's notes of the November 2007 inspection. The notes under “09:15 ‑ 09:40” were referred to by the Applicant's representative. These notes concerned an interview with the Company Aviation Safety Officer (CASO), Tom Kissock, by Inspector Risk and reveal the difficulties Mr. McIntosh had in controlling the Chief Pilot. Mr. Kissock was fully supportive of Mr. McIntosh.

[107] Again, the Minister objected to allowing the Applicant's representative to discuss the counts against CGAA on the basis that CGAA had an opportunity earlier to dispute them. However, it is my opinion that it is just as evident that Transport had the opportunity to make Mr. McIntosh a party to their findings, yet did not. In the interest of procedural fairness and natural justice, the Applicant's representative was allowed to continue. I was again warned by the Minister that they would appeal my actions as a matter of law. I note that counsel were in no way disrespectful, but were merely fulfilling their mandate. I will pursue this issue again in my Determination.

(6) David Gerard White

[108] David Gerard White is the Associate Director of Operations for Transport in Winnipeg. Prior to this, he was the Safety Management Systems Coordinator. Inspector White's connection with CGAA is his involvement in one inspection in November 2007 (Exhibit M‑48).

[109] As before, the majority of Inspector White's testimony was similar to previous witnesses' in that it was a list of CGAA's wrongdoings. Inspector White stated that Mr. McIntosh took part in discussions and he considered him to be an important part of CGAA. He named Mr. Bakker as PRM, but stated that Mr. Bakker's resources had to have come from someone else. He offered his opinion that Maintenance did not have sufficient resources due to a shortage of staff. Inspector White then cited portions of section 706 of the CARs.

[110] Inspector White related a conversation with Mr. Dastoor where he asked Mr. Dastoor why he did not go through the whole audit and identify all the issues with CGAA. He responded that CGAA did not have enough people to address all the issues.

[111] Inspector White brought forward a high-frequency (HF) radio problem that occurred in the United Kingdom, and an ice detector light out of Houston, Texas (Count 2 of Exhibit M‑21 and Exhibit M‑48), which were both events covered by the MEL. Inspector White stated that Mr. Bakker said that he did not get involved in unserviceability issues in other locales on a day‑to‑day basis; he dealt with the aircraft when they were back in Toronto. There was a pattern of aircraft showing up in Toronto with snags, then being sent somewhere else without rectification. Inspector White testified that this CGAA culture was discussed with Mr. Bakker, Mr. McIntosh, and Mr. Dastoor. Inspector White stated that Mr. McIntosh attended all the meetings.

[112] Previous testimony stated Mr. McIntosh only attended one meeting. Inspector White was returning to events that happened four years ago, and cannot be faulted for small errors.

[113] The Minister reviewed the NOS for CGAA's AOC in November 2007 (Exhibit M‑49), particularly ground four, with Inspector White. Inspector White found that CGAA was not providing the resources necessary for Maintenance to maintain compliance with section 706 of the CARs. Later, Inspector White indicated that this issue had to go to management; it had to go to Mr. McIntosh.

[114] Inspector White described an event in Winnipeg, where Mr. McIntosh spoke to the crew about a perceived altimetry problem (see Count 3 in Exhibit M‑21, and Ground 22 of the NOR). Transport did not seem to recognize the difference between the altimetry in a reduced vertical separation minimum (RVSM) aircraft and a non-RSVM aircraft.

[115] Inspector White discussed ground seven in the NOS for CGAA's AOC (Exhibit M‑49). He said an aircraft in Winnipeg with open defects was reviewed by Mr. McIntosh then dispatched to Toronto. When Inspector White asked Mr. Bakker why he tolerated this, he replied, referring to Mr. McIntosh, “Well, he's the President”. Inspector White used this incident as reinforcement of his opinion that CGAA had an unbreakable culture that Mr. Bakker could do nothing about.

[116] When asked about Mr. McIntosh's involvement in the inspection, Inspector White responded that his prime contact during the inspection was Mr. Bakker; Mr. McIntosh arrived on the second day. Inspector White said that Mr. Bakker kept Mr. McIntosh informed. Inspector White felt it was very evident that Mr. Bakker worked for Mr. McIntosh. Inspector White further testified that he talked to either Mr. Dastoor or Mr. Bakker, who reported to Mr. McIntosh even in Mr. McIntosh's absence.

[117] The Applicant's representative commenced his cross‑examination of Inspector White by pointing out an error in Inspector Smith's testimony under direct examination that CGAA was under an enhanced monitoring program during his inspection in 2007.

[118] The November 2007 Inspection Report (Exhibit M‑48), was again brought to Inspector White's attention by the Applicant's representative. The Applicant's representative suggested that in many cases the findings involved shop personnel or pilots not following required processes and documentation. Inspector White agreed in certain cases. The Applicant's representative asked who was responsible for the Maintenance employees. The response was that it was the DOM or the PRM.

[119] The balance of Inspector White's testimony under cross-examination consisted of a reluctant agreement with the Applicant's representative that the DOM, or the PRM, had the primary responsibility in maintenance matters with the caveat that CGAA also bore responsibilities in that regard. Inspector White referred a few times to the “size, scope, and complexity” of CGAA to defend Mr. Bakker.

[120] I note that there was no direct evidence to indicate Mr. McIntosh's involvement in any of these events. When Inspector White was asked whether it was “Transport Canada's impression that he [Mr. McIntosh] was able to control the company through his percentage of ownership”, he responded affirmatively.

(7) Thomas Alan Bennett

[121] Thomas Alan Bennett was a Superintendent of Aircraft Maintenance and Manufacturing in Winnipeg from 2006 until 2008. Mr. Bennett explained his connection with CGAA. He was in charge of scheduling audits for Transport and he signed and reviewed the audit report prepared by his inspectors in May 2007(see Exhibit M‑40). Mr. McIntosh was the President and a minority shareholder of CGAA at that time.

[122] Mr. Bennett was asked about an email dated March 25, 2008 (Exhibit M‑76). This email elaborated the serious problems with the PRM, Mr. Bakker (as was noted by Mr. Parsonage in his audit of CGAA) and includes the comment “past PRM and past AME altered maintenance records and destroyed some…they tried to ‘sabotage the company'... [ellipses in original]”, from an unnamed “ex‑CGAA PRM and AMEs”.

[123] Mr. Bennett read into the record his comment from Exhibit M‑76 that the AE over time should have been picking up on these significant issues and that all the blame cannot fall on past employees.

[124] Exhibit M‑77 is a Contact Record of a meeting between CGAA (including Mr. McIntosh) and Transport (including Mr. Bennett) addressing urgent safety and regulatory concerns, on March 2, 2007, authorized by Mr. MacNab. Mr. McIntosh was the AE and OM at the time. Mr. Bennett stated that they picked three events to discuss: the Dorval overrun incident (Exhibits M‑2 and M‑3), the Aruba landing incident (Exhibit M‑46), and the battery incident in Ethiopia (Exhibits M‑11 to M‑13).

[125] In this meeting, Mr. McIntosh shared with Transport the efforts that CGAA had made to get on track. Mr. Bennett stated that Transport did not make a decision on whether CGAA had gotten on track at that time, and was trying to give CGAA as much leeway as possible. Transport gave CGAA four days, including the weekend, to come up with a plan.

[126] Mr. Bennett was referred to the letter from Mr. MacNab (Exhibit M‑44) and read into the record, as two previous witnesses had done, Mr. MacNab's thoughts regarding the suggestion that Mr. McIntosh should be reappointed as the AE. Mr. MacNab wanted verification of whether the control required by section 106 of the CARs, concerning AEs, was actually vested in Mr. McIntosh, not in his successor AEs. Furthermore, Mr. MacNab thought that Mr. McIntosh had been the apparent Executive Manager throughout CGAA's existence, and that it was fair consideration to think of the record of CGAA as part of the record of Mr. McIntosh.Mr. Bennett concurred with Mr. MacNab's statements and expressed his opinion that Mr. McIntosh was always in control of CGAA.

[127] Under cross‑examination, the Applicant's representative questioned Mr. Bennett on Exhibits M‑76, M‑77, and M‑48.With respect to Exhibit M‑77, Mr. Bennett confirmed that Mr. McIntosh was the AE and OM at that time. The Applicant's representative pointed out that the meeting took place on a Friday, and Mr. McIntosh was given until Tuesday, March 6, 2007, to respond.

[128] Mr. Bennett was asked if he was aware that on January 31, 2007, the two NOS for CGAA's AOC and Aviation Maintenance Organization (AMO) (Exhibits M‑49 and M‑50) were terminated before they came into effect, a day or two over a month before the March 2, 2007 meeting. The NOS were terminated on the condition that CGAA provide an effective QA program.

[129] Mr. Bennett was again directed towards Exhibit M‑77. He stated that previous promises had not been kept by CGAA; he was then asked what promises he was referring to. He quoted Inspector Ken Graham's comments: “TC [Transport] has serious concerns; previous Global promises have not been kept”. When asked again, he stated he interpreted these comments to be related to CGAA's corrective action plans.

[130] Mr. Bennett was asked if he agreed with a statement by a previous witness, which was that a QA program takes time. Mr. Bennett agreed because a QA program is a continuous exercise.

[131] Mr. Bennett was asked if Transport rejected the substantial corrective action plan that was put forward by CGAA at the March 2, 2007 meeting. Mr. Bennett responded that they had not. When it was mentioned to him that CGAA submitted another plan within the four days allotted, Mr. Bennett could not remember if it was accepted or rejected. The Applicant's representative commented that it was obvious that it was rejected because Transport had issued another NOS.

[132] The Applicant's representative moved on to Exhibit M‑76, an email from Mr. Bennett to Mr. MacNab, which was a meeting summary prepared by Mr. Bennett. In this summary, Mr. Bennett referred to phone calls from former CGAA PRMs and AMEs.

[133] Mr. Bennett stated that one of the phone calls was from CGAA, which was self‑reporting that a former employee did not reconnect the nose‑wheel steering system. Mr. Bennett stated that Mr. Parsonage had phoned asking how he could deal with former employees phoning in to report on what Maintenance had left uncompleted. The Applicant's representative pointed out that it was Mr. Don McAdam, the PRM, who had reported the information to Transport, not Mr. Parsonage, and Mr. Bennett agreed. Other phone calls from CGAA's AMEs were made to Inspectors Smith and Streber.

[134] Concerning the point in Exhibit M‑76 that the AE should be asking about the lack of QA Evaluations seen by him, the Applicant's representative proposed that the AE receiving good reports would be the same result as the AE receiving no reports: he simply would not know. After a rephrasing of the question, Mr. Bennett agreed.

[135] Mr. Bennett was asked by the Applicant's representative to comment on Mr. MacNab's opinion stated in Mr. MacNab's letter (Exhibit M‑44), about the nature of Mr. McIntosh's ownership. He was asked if it was Transport's impression that Mr. McIntosh was able to control CGAA through his percentage of ownership. Mr. Bennett responded affirmatively.

(8) Inspector Terrence Ronald Davis

[136] Inspector Terrence Ronald Davis holds the position of Superintendent of Certification with Transport. He and his staff are responsible for processing new air carrier applications. He was involved with CGAA through his position as an ACP for Transport. He has an association with Mr. McIntosh dating back to 2003 when CGAA first started.

[137] Inspector Davis stated he was concerned regarding IAA's application for an AOC due to CGAA's poor record and because Mr. McIntosh was listed as an IAA Principal. He also stated that there was an unusual turnover in key personnel at CGAA, which was a sign of risk. The only constant factor throughout the whole series of inspections, suspensions, and changes of managementwas Mr. McIntosh.

[138] Inspector Davis was made aware of CGAA's enforcement record by Jim Welwood of Transport Enforcement. There were 20 cases against CGAA and nine against the pilots of CGAA. Inspector Davis stated that he issued the NOR because of the Applicant's record. I note, however, that the Applicant has no aviation record.

[139] Inspector Davis was involved in the risk assessment exercise on IAA, which was based on CGAA's record. It should be noted that it was CGAA's record and not IAA's or Mr. McIntosh's record. It should also be noted that in IAA's application, Mr. McIntosh was listed as the President, and that a President is not a Principal under the CARs. Inspector Davis noted in a telephone conversation with Mr. McIntosh that Mr. McIntosh stated he may be the OM for IAA.

[140] Inspector Davis, in reference to CGAA's application to the Canadian Transportation Agency (CTA) (Exhibit M‑80), noted a company called JeffCo that was owned by Mr. McIntosh and which held shares in CGAA. JeffCo was not named as a party by Transport and exercised no control over CGAA. To Transport, this raised the issue of ownership and the question of whether shares in JeffCo would make Mr. McIntosh an owner of CGAA.

[141] Another issue addressed was the failure of two new pilots on their PPCs during Inspector Davis's inspection of CGAA's Flight Crew Training Program (Exhibit M‑81). The reason these pilots failed their PPCs was because of a lack of technical knowledge. As a result of these two failures, Inspector Davis concluded that CGAA did not have an acceptable training program. These two pilots had just completed an initial training program in Dallas, Texas. It is not clear to me if Inspector Davis was referring to the training received at Flight Safety or to the CGAA ground school. Mr. McIntosh was President and his company, JeffCo, was a minority shareholder at this time. No evidence was presented to show Mr. McIntosh's responsibility other than his presence.

[142] The risk assessment process for IAA was examined by the Applicant's representative. The risk assessment concerned the possibility of future events occurring based on certain assumptions regarding Mr. McIntosh's actions in CGAA. I believe that the risk assessment is of little probative value and will not be considered or addressed until my Determination.

[143] Inspector Davis allowed that Mr. McIntosh was a very competent pilot. In response to the Applicant's representative's question, Inspector Davis accurately and professionally reviewed what RVSM means. Simply put, it allows aircraft with the proper altimetry to operate above 29 000 feet with a vertical separation of 1 000 feet instead of 2 000 feet. Non‑RVSM aircraft cannot operate in this airspace. Inspector Davis stated that Mr. McIntosh had no personal aviation record.

[144] Under redirect, there were a few questions related to risk assessments. It was asked whether Transport performed assessments on companies that were doing well. The answer was negative. I am somewhat concerned by this question and answer. IAA is a new company; CGAA's record is being imposed on IAA through the unproven allegations against Mr. McIntosh. I am not sure if this imputed record is sustainable, and will examine this further in the Determination.

(9) Inspector Francis Harry Hilton

[145] From 2004 until 2009, Inspector Francis Harry Hilton was the acting Regional Operations Manager for the Prairie and Northern Region. This position involved acting for the Regional Director, Civil Aviation. As such, he was involved in the CGAA compliance issues.

[146] Inspector Hilton's testimony was similar to that of previous witnesses – a rundown of CGAA's record. His information came from reports and conversations with Transport inspectors. When Inspector Hilton was asked his opinion of Mr. McIntosh's involvement with CGAA, he answered that Mr. McIntosh was the one constant element throughout CGAA's history.

[147] Under cross‑examination, Inspector Hilton said his information came from various documents and his one encounter with Mr. McIntosh at a meeting in Winnipeg.

B. Applicant

(1) Robert Winston Clarke

[148] Robert Winston Clarke is a former Royal Canadian Air Force (RCAF) pilot and a retired Air Canada pilot. He has a wide and varied background in aviation, both from an operational and an administrative point of view. As Mr. Clarke was involved in hiring new Air Canada pilots, he came into contact with Mr. McIntosh because Air Canada wanted to hire CGAA pilots. A few days later he travelled with Mr. McIntosh and Mr. McAdam to Winnipeg for a meeting between CGAA and Transport. Mr. McAdam had got Mr. Clarke involved in CGAA. Mr. Clarke was at the meeting because he was the proposed OM.

[149] Mr. Clarke stated the meeting was very hostile towards CGAA, which surprised him. He had had many cordial encounters with Transport in Toronto. He stated he was shocked by this. Mr. Clarke was taken aside by three Transport inspectors and given what he referred to as the “Jeff McIntosh briefing”. The inspectors related the drag strip incident in Aruba (Exhibit M‑46), the battery incident in Ethiopia (Exhibits M‑11 to M‑13), and another incident to Mr. McIntosh during that “briefing”. Mr. Clarke was subsequently approved as OM.

[150] Mr. Clarke was asked to recall the events surrounding the two CGAA pilots who failed their PPCs. He voiced his opinion that Inspector Davis acted unprofessionally because it was Inspector Davis who had elected to perform the PPCs. In Mr. Clarke's opinion, Inspector Davis' actions of asking the pilots technical questions and not completing the PPC rides was his way of sending CGAA a message. Mr. Clarke's opinion was based on his extensive experience in conducting PPCs.

[151] Mr. Clarke explained that Mr. Durand was called in to conduct a training course at CGAA due to the pressure CGAA was under; CGAA did not want a second recurrence of PPC failures. Mr. Clarke further explained that Mr. Durand only prepared the presentation of the materials. All of the information on training was contained within the CGAA Training Manual and was not rewritten by Mr. Durand.

[152] When asked about the evidence Transport submitted at the Hearing on the pilots' schedules, Mr. Clarke responded that a schedule is a dynamic thing in the aviation community. If a pilot works on a day off, that pilot receives a day off in lieu. Mr. Clarke was asked if he was aware of any pilots not receiving the required rest time. He responded in the negative.

[153] Mr. Clarke was asked if Mr. McIntosh interfered with his department or his pilots. He replied that he was not aware of any such interference. He was asked if Mr. McIntosh ever told or encouraged pilots to break the rules and compromise safety. Mr. Clarke responded that while he was the OM, that did not occur.

[154] Mr. Clarke was asked who he normally dealt with during his time with CGAA. He responded that on a daily basis, even more than once a day, he contacted Mark Rzepka, the new shareholder. He was then asked if Mr. Rzepka was his primary contact, rather than Mr. McIntosh. His reply was “absolutely”.

[155] Mr. Clarke stated that Mr. McIntosh's attitude toward safety and compliance was “just like any other pilot, number one”, and that he would have had no concerns had Mr. McIntosh been the AE. He would have also had no concerns had Mr. McIntosh been the OM or the Chief Pilot. Mr. Clarke stated that from the time the AOC was reinstated until CGAA was shut down, CGAA operated safely.

[156] When Mr. Clarke was asked about the comment in the Risk Assessment Report for IAA (Exhibit M‑79) regarding the Lear 35 being an aging aircraft, he responded, “Well, it is an aging aircraft, there's no doubt about that, and it's, the technology is, I consider was between a T33, which I was very familiar with, and the DC9. That's really where it sits, but those same airplanes today are still flying. Maintenance is the key to an older airplane”.

[157] Under cross-examination, Mr. Clarke confirmed his and Mr. McIntosh's attendance at a March 2008 meeting with Transport officials. He is not sure of Mr. McIntosh's position with CGAA at the time, but he assumes he was President. Mr. Clarke was asked about an exemption concerning his nomination as CGAA's OM, in a letter from Mr. McIntosh to Inspector Graham, dated March 20, 2008 (Exhibit M‑84). He had no awareness of this matter. The Applicant's representative stated that although Mr. Clarke was not the author or recipient of this letter, he would consent to it being admitted as an exhibit.

[158] Mr. Clarke stated he is unaware of CGAA's history, but he understands there was a maintenance problem. He was asked to justify his statement, under direct examination, concerning the safe operation of CGAA as it related to maintenance. Mr. Clarke explained he knew the new PRM, Mr. McAdam, and trusted him.

[159] Mr. Clarke was asked about Mr. McIntosh's involvement with CGAA during his period as OM. Mr. Clarke explained that Mr. McIntosh was a resource as a pilot and training officer. Mr. Clarke was asked why Mr. McIntosh was at the meeting mentioned earlier. He was unable to answer the question, but did state it was his impression that Transport wanted Mr. McIntosh “out of there”.

(2) Don Lewis McAdam

[160] Don Lewis McAdam has been with Air Canada for 36 years and is experienced in both the administrative and maintenance aspects of an air carrier. He was contacted by CGAA in October 2007 for assistance in locating part-time employees. Mr. McAdam submitted 15 names of individuals for consideration. Mr. McAdam was asked if he wanted to speak with Mr. McIntosh, who was then President. This resulted in a job offer for Mr. McAdam from Mr. McIntosh.

[161] Mr. McAdam accepted and joined CGAA on or about November 15, 2007. His role was to assist Mr. Bakker, the PRM at the time, in locating personnel, and in general maintenance matters. His impression of CGAA was that the aircraft were in “pretty good shape”.

[162] He was contacted by Mr. McIntosh to help set up Latitude Aeromedical Works (LAW), a Hamilton, Ontario‑based company. He accepted.

[163] Mr. McAdam was asked about his observations of CGAA Maintenance. He listed a catalogue of problems in Maintenance administration. He noted there was a laissez-faire attitude and work would not begin until 10:15 a.m., although start time was 9:00 a.m.

[164] Mr. McAdam had no knowledge of Mr. Bakker's technical abilities, but he stated that administratively, he was weak. Mr. Bakker's technical records were behind and his management skills were “very, very poor, very poor”.

[165] Mr. McAdam approached Mr. Bakker concerning a recent Transport inspection, and suggested Mr. Bakker concentrate on his out‑of‑date paperwork while he did the work required on the outside. Mr. McAdam also wanted to get more people to help. Mr. McAdam said that Mr. Bakker had a “chip on both shoulders”.

[166] Mr. McAdam was asked to comment on Inspector White's testimony regarding the Maintenance department not being given enough resources. Mr. McAdam's observation was that there were five maintenance people; there were enough people there to do the work. In addition, there was a stores person who was not being used correctly. He was not shipping the parts out, as well as returning the parts to the vendor. As an example, there was an engine which had been there two or three weeks and was not ready to be shipped, costing money every day.

[167] There was a records clerk who had not been trained on the computer aircraft maintenance system (CAMS) – she said that Mr. Bakker handled that. When Mr. McAdam approached Mr. Bakker, Mr. Bakker responded that he had no time available to train her. However, according to Mr. McAdam, the required staff were available; they were not being used and there was no direction.

[168] Shortly after Mr. McAdam started working at CGAA, the AOC and the AMO were suspended. Mr. Milligan, the AE at the time, and Mr. McAdam met every morning. Mr. McAdam observed that Mr. Milligan was approaching his “boiling point”. One morning, Mr. Milligan advised Mr. McAdam that he was going to fire Mr. Bakker. Mr. McAdam was offered and accepted the position of PRM to reorganize and restructure the Maintenance department.

[169] Mr. McAdam discovered that the Maintenance technical records were located “all over the place” in three rooms in boxes. Mr. McAdam proceeded to list the steps he took to get the AMO and AOC back. He consulted with Mr. Parsonage, an outside contractor, for advice on how to proceed.

[170] Because the aircraft were not flying and no work could be done on them, Mr. McAdam decided, with the help of one AME, to do a baseline audit of the technical records. They then completed a baseline audit on all the aircraft, starting with the manufacturing date. Before this happened, the QA Manager, Mike Hogan, objected to this process and quit because he wanted to do the work at home and was not allowed to do so. When asked about the state of QA under Mr. Hogan, Mr. McAdam said that he did not think there was any.

[171] Mr. McAdam referred to Mr. Hogan, Mr. Bakker, and Christopher Bileski (an AME) and said they were not doing their jobs as they were paid to. He noted that Mr. Bileski and Mr. Bakker had outdated tool boxes. He said that today's mechanics are technicians and have updated equipment. The neglected maintenance manuals were also updated. There was a concern about the state of these manuals and care was taken to ensure their accuracy.

[172] Mr. McAdam also contacted a company called Parts Base and was told that CGAA had paid for the use of its parts ordering system for a year, and had never used it.

[173] The nose-wheel steering issue in Reno was discussed (Ground 25; Exhibits M‑25 and M‑26). Mr. Hogan contacted Mr. McAdam and advised him he had disconnected the restrictions for the nose-wheel steering and had not entered this into the aircraft logbook. In an effort to work with Transport, Mr. McAdam voluntarily reported this incident. Instead of accepting this situation as a sign of CGAA's willingness to keep Transport informed, Transport took enforcement action. Transport took no action against Mr. Hogan, as AME, for his negligence; CGAA was held responsible.

[174] When asked if Mr. McIntosh ever interfered with him or his department, Mr. McAdam responded emphatically, “No, no, never, not once, never, never, never”. He stated he talked to Mr. McIntosh on technical matters because of Mr. McIntosh's knowledge of the Lear aircraft. When asked about the enhanced monitoring program, Mr. McAdam replied that it was a learning experience for everyone, including the Transport inspectors involved. No one, including himself, had ever done one before.

[175] Mr. McAdam commented that his relationship with Inspectors Streber and Rob Fields was very good towards the end of CGAA, and he considered them to be highly professional. When asked if he considered CGAA a safe operation, Mr. McAdam responded emphatically in the affirmative. For example, under his guidance, pre‑departure checks (PDCs) were instituted. When these checks revealed unserviceabilities on the aircraft, they were repaired before departure.

[176] When Mr. McAdam was asked about Mr. McIntosh's attitude towards safety and compliance, he replied there was never any question of Mr. McIntosh's commitment to safety and compliance; it was not even a discussion point in their conversations. Safety was number one for Mr. McIntosh at CGAA, and still is where Mr. McIntosh is today. Mr. McAdam is employed by LAW, where Mr. McIntosh is the President. He has no concerns with Mr. McIntosh occupying any Principal position with an air operator.

[177] Under cross-examination, Mr. McAdam stood firm on the evidence he provided under direct examination. He reaffirmed that he did not work for or report to Mr. McIntosh at CGAA, and that he only used him as a technical resource.

[178] Mr. McAdam expressed his opinion that financial decisions were made by Richard Andison, the primary owner of CGAA. He stated he was not involved at that level of CGAA and never participated in company politics.

(3) Patrick Wayne Parsonage

[179] Patrick Wayne Parsonage began his testimony by summarizing his training, qualifications, and experience. Mr. Parsonage has an extensive and distinguished career in aviation, particularly in the area of maintenance. He began in the RCAF then returned to civilian life where he obtained an AME licence and practical knowledge and skills in the maintenance requirements of small and heavy jet aircraft. He has managerial experience and hands‑on experience with older as well as more sophisticated aircraft.

[180] Mr. Parsonage accepted a position with Transport as an Airworthiness Inspector. In this position, he completed numerous audits using Transport's documents. He was a member of Transport's national audit team. Outside of his Transport credentials, he has held the position of DOM and has owned an AMO corporation. He also has college and university training in human factors, management, and aviation operations. He presently holds the position of Minister's Delegate Maintenance, meaning that he can act in the place of Transport.

[181] Mr. Parsonage's first contact with CGAA, around the beginning of December 2007, was with Mr. McIntosh who was seeking assistance in resolving issues raised in the November 2007 inspection and subsequent audit findings. As a result, a contract was written between Mr. Parsonage and Mr. McIntosh, the President at the time. The contract was ultimately rescinded by the AE. Mr. Parsonage was again contacted in late December 2007 by Mr. McIntosh who was requesting Mr. Parsonage come in and assist with the situation at CGAA.

[182] Mr. Parsonage's testimony commented that the Maintenance department's aircraft technical records were not up‑to‑date and were stored in three rooms; Transport‑approved action plans were thrown on a desk and ignored; aircraft parts were all over the facility and the paper work regarding these very expensive articles was nonexistent. Furthermore, training records and other records were missing. Mr. Parsonage discovered altered records and records that had been removed by Mr. Bakker and Mr. Hogan.

[183] Mr. Parsonage summarized his audit findings with the following words: “The maintenance management team that was in place were absolutely incompetent and dysfunctional”. Mr. Parsonage stated that the operating cost of a Lear 35 at CGAA was 30 per cent higher than at other operators. In a conversation with the Chief Pilot, Mr. Parsonage was told that there were periods when pilots could only reach Dispatch in Winnipeg, which was also unable to reach Maintenance, although there was a requirement for an on‑duty person to be available. There was a complete disconnect in communications between Flight Operations and Maintenance.

[184] Mr. McIntosh personally absorbed the initial cost of the audit, and CGAA paid the balance. Mr. Parsonage had less than kind words concerning the manner in which Transport conducted their audit. He pointed out there were five findings by Transport on “tombstone” data on maintenance release tags because the reverse sides had not been completed. (To note, I believe the reference to “tombstone” is due to the shape of the maintenance release tag.) Mr. Parsonage stated there is no requirement or regulation that demands this. The use of these tags was discontinued and they were replaced in 1985, but CGAA was allowed to use their surplus tags. Also, some of the findings in the November 2007 inspection could not be answered because of the way they had been written.

[185] The enhanced monitoring program of CGAA was the next topic addressed by Mr. Parsonage. This program was very new when it was applied to CGAA. The Transport Prairie and Northern Region employees were not aware of this program until Mr. Parsonage informed them of it. This program was for a ninety-day period, at the end of which CGAA was supposed to come out with a clean bill of health. The application of the enhanced monitoring program was described as follows by Mr. Parsonage:

The enhanced monitoring process that they [CGAA] actually went through was a series of essentially some pretty nitpicky and in some cases absolutely out to lunch audit findings, that had absolutely no relation whatsoever to the regulations in some cases and in other cases were so trivial that you'd wonder exactly where the inspector's head was at. They were not airworthiness items of any stroke of the imagination. They were not related to defects on the aircraft. Most of them were related to pure paperwork issues, and in some cases paperwork issues that were make up the rule as you go. It can't be related to any standard that I know of in my whole time in aviation.

[186] Mr. Parsonage then discussed Mr. McIntosh's behaviour. Mr. Parsonage was asked if, during his audit and contact with Mr. McIntosh, Mr. McIntosh promoted breaking the rules, cutting corners, or compromising safety. Mr. Parsonage responded that he saw no factual evidence, nor heard anything from the personnel he interviewed, that that was the case. He did not personally observe Mr. McIntosh giving any such instructions. Mr. McIntosh's comment to Mr. Parsonage was that CGAA had to ensure everything was done right.

[187] Mr. Parsonage was asked why he made the statement to Transport that Mr. McIntosh should be the AE. Mr. Parsonage explained his impression of Transport's views on AEs, which is that the AE's only responsibility is to “throw money at the company and provide resources”. He further commented that this works if you have a management team “on the other side” that effectively knows what it is doing. An AE ensures that the company operates within the regulatory environment. Transport believes an AE should not press the people it has appointed to do things right; an AE should just stand away and feed the company the resources. Mr. Parsonage believes that this viewpoint is absolutely wrong.

[188] At this point, the Minister objected to Mr. Parsonage giving opinions on whether Transport's policies are “good or wrong” on the grounds that Mr. Parsonage was not qualified as an expert witness; and that a hearing is not a good forum to challenge any Transport policy. I note that the Minister is quite right in that the Tribunal cannot change or challenge the policies of Transport. But without question, if the Tribunal knows or senses that a policy is being imposed inequitably, or in a manner that denies natural justice or procedural fairness, the Tribunal has an overwhelming duty to ensure this does not continue to happen. The Tribunal decides what evidence it hears on this point, not the Minister. As such, the Applicant's representative was allowed to continue.

[189] The Minister stated that if I allowed Mr. Parsonage to continue giving opinions on Transport's policies, he would present rebuttal witnesses to clearly establish Transport's policies. It should be noted that the Minister did provide rebuttal witnesses, but not on the topic of Transport's policies.

[190] Mr. Parsonage stated that Mr. McIntosh should have been the AE after March 2007. He was the most qualified candidate due to his aviation knowledge, experience, and abilities. Under a short cross‑examination, Mr. Parsonage was asked why senior management was not aware of the situation with Maintenance. He replied that management knew something was wrong, which is why he was called in to CGAA in the first place.

(4) Jeffrey Alan McIntosh

[191] Jeffrey Alan McIntosh's career path in aviation followed the normal progression of licences, from a private pilot licence to an airline transport licence. He has accumulated approximately 13 000 hours of flying time, over 9 000 of which are on Lear 20 and 30 aircraft. He attended the Mount Royal College aviation course, and upon graduating was awarded the Pacific Western and Air Canada awards for outstanding performance. He continued his education with the University of Saskatchewan in business law. He has taken the Transport‑accredited ACP course and also Transport's audit procedures course. He has also taken several courses in air ambulance operation.

[192] Under his leadership, CGAA received many achievement awards, including the International Travel Insurance Journal Air Ambulance of the Year Award twice. Mr. McIntosh was awarded the Ernst and Young Entrepreneur of the Year award for the Prairies, and was also given a special citation in honour of being an industry innovator; he was inducted into the Entrepreneur of the Year Institute in Palm Springs; he was nominated for an honorary colonel's position in the Canadian Armed Forces. He has occupied many managerial positions, including the position of Chief Pilot with SkyService Aviation.

[193] Mr. McIntosh is currently President of LAW, which owns Latitude Air Ambulance. Mr. McIntosh holds no operational position, other than acting as a pilot for the air ambulance division. Mr. McIntosh has no personal aviation record, no accidents, no past enforcement actions, and no ongoing investigations.

[194] Mr. McIntosh described CGAA's history. CGAA was started in 2003 and he was invited by Mr. Andison, the majority shareholder, to invest in CGAA. Mr. Andison already owned a Lear 35 aircraft. In the same year, the international air ambulance operation of Keewatin Air was purchased by CGAA. CGAA operated for approximately one year under Keewatin's AOC until CGAA received its own.

[195] Over the years, CGAA's fleet of Lear aircraft grew to four and its bases expanded to Vancouver and Toronto; Vancouver was the main Maintenance base until it was later moved to Toronto. By 2006, CGAA had a worldwide reputation for its operations, and the financial return was significant. At the end of 2006, CGAA started to have regulatory difficulties concerning its QA program. This resulted in a suspension of its AOC, which was lifted in January 2007.

[196] Regulatory enforcement continued into 2007 with NOS, follow‑up audits, and inspections, and finally in November 2007, the NOS that resulted in the shutdown of CGAA. The shutdown cost CGAA approximately $1 000 000 in December 2007 alone, as well as a loss of employment for approximately 190 full and part‑time employees across Canada.

[197] Following the shutdown, CGAA underwent corporate and personnel changes in an effort to reorganize and recover the business. A consultant, Mr. Parsonage, was retained to assist in this endeavour. The business opportunities were still present, but because of the shutdown, loss of employees, and the global economic problems of 2008, one of the key investors withdrew his support. Mr. Andison, the majority stockholder, also removed his support, resulting in CGAA's final shutdown.

[198] Mr. McIntosh's interest in CGAA was discussed. When CGAA commenced operations, a company owned by Mr. McIntosh purchased 25 per cent of the shares of CGAA. Mr. Milligan purchased shares in October 2004, reducing Mr. McIntosh's company holdings to 16.6 per cent. After the 2007 AOC suspension, Mr. Milligan decided to withdraw his support, and for a short period of time in February 2008, Mr. McIntosh's company, which had purchased Mr. Milligan's shares, held 51.7 per cent of CGAA shares. However, under the CGAA Unanimous Shareholders' Agreement, either the consent of Mr. Andison's company or a two‑thirds majority of the shareholders was required to control corporate activities.

[199] The incident where a CGAA aircraft inadvertently landed on a drag racing track in Aruba (see M‑46) was discussed. Mr. McIntosh contacted Transport through the Principal Operations Inspector (POI) for CGAA concerning this incident. He was advised that Transport did not want to get involved. The local authorities fined the pilot $550 US.

[200] Transport took no enforcement action, nor did it express any interest until March 2007, around ten months after the incident. At that time, Mr. McIntosh, in spite of Transport's disinterest, directed his Chief Pilot, Mr. Hoffman, to ensure all CGAA pilots underwent traffic collision avoidance system (TCAS) and terrain avoidance warning system (TAWS) training.

[201] Mr. McIntosh was asked to review CGAA's management history in 2006, in terms of the Chief Pilot and PRM positions, as well as any concerns he may have had as the AE. The first Chief Pilot, Greg Warren, was asked to resign because of the friction between him and the line pilots. Mr. Warren's successor left CGAA to join WestJet after less than a year. The next Chief Pilot was Mr. Hoffman, recruited from Calm Air, where he had held executive positions. It was Mr. McIntosh's hope that Mr. Hoffman would replace him as OM. CGAA's POI approved Mr. Hoffman for the position of Chief Pilot and allowed him to do work outside of his CGAA duties.

[202] Mr. Hoffman was not effective in the position. He spent too little time in the office. He did not follow Mr. McIntosh's instructions regarding refresher training following the Aruba incident. He hired inexperienced pilots and placed them in inappropriate positions, such as training, when they had virtually no experience on Lear aircraft.

[203] One such example was Zander Otte. He was hired as a direct entry captain without any jet experience. Within a short period of time, Mr. Otte was performing training and check pilot roles despite Mr. McIntosh's objections. Mr. Otte was the pilot involved in the Dorval runway overrun (Ground 1; Exhibits M‑2 and M‑3), and in the Ethiopia battery incident (Grounds 9 and 10; Exhibits M‑11 to M‑13) for which CGAA was held responsible and assessed a monetary penalty.

[204] Mr. McIntosh became concerned with the manner in which Mr. Hoffman was running his department. On further observation, he discovered that Mr. Hoffman was allowing brand new co‑pilots to taxi the aircraft from the right seat. When approached about this, Mr. Hoffman resisted Mr. McIntosh's instruction to disallow First Officers (F/Os) to taxi aircraft.

[205] Subsequently, Mr. McIntosh forwarded to Mr. Hoffman an email with an amendment to the Learjet 35/36's Standard Operating Procedures (SOP) Manual attached, and copied CGAA's aviation safety officer, Mr. Kissock (Exhibit A‑15). He encountered some resistance from Mr. Kissock, but he was persistent. In spite of Mr. McIntosh's directions, it took nearly a month to implement this change. Mr. Hoffman left on short notice after this event and the battery incident in Ethiopia.

[206] When the incident in Ethiopia occurred, Mr. McIntosh was at a course with SimuFlite in Dallas, Texas. He contacted Mr. Hoffman and directed him to fire Mr. Otte. Human Resources and Mr. Kissock dissuaded him from firing Mr. Otte. Mr. Kissock had to “hold Mr. Hoffman by the hand” to get him to go to Toronto to hold a pilot meeting on January 22, 2007. Almost a year had passed since the last meeting. Mr. Hoffman had indicated on January 10, 2007 that he was leaving CGAA in March. At the meeting, a Toronto-based pilot was approved for the Chief Pilot position, but because of health issues, only lasted a few months.

[207] Mr. McIntosh solicited people involved in the aviation industry for the position of Chief Pilot and Lindsay Cadenhead responded. Mr. Cadenhead was an Inspector with Transport in Oshawa at the time. He remained with CGAA from the time he was hired until Transport's actions shut it down at the end of November 2007. In the subsequent rebuilding period in 2008, Jerry Pusic was approved as Chief Pilot and remained in the position of Chief Pilot until the demise of CGAA.

[208] PRMs were then discussed. There were three PRMs prior to Mr. Bakker. The first two, Gordon David Barker and Mr. Pucci, left for economic and lifestyle reasons; the third, Mr. Oloresisimo, left due to the pressure of having two aircraft incidents and a Transport audit within his three‑month tenure. It was during the period of Mr. Oloresisimo as PRM that Nasha was retained to perform an audit and assist the third PRM. This third PRM left on very short notice and took one of the mechanics with him. Mr. McIntosh had a very high opinion of these three PRMs.

[209] Mr. Bakker was approved by the Transport Prairie and Northern Region office in Winnipeg, and shortly afterwards Maintenance operations were moved to Toronto. In March 2007, Mr. McIntosh removed himself from the positions of AE and OM because this appeared to be what Transport wanted.

[210] What occurred over the course of a year with Mr. Bakker as PRM, was an increase in expenses and in the downtime of aircraft. Mr. McIntosh, now without any operational power, approached the new AE, Mr. Bannatyne, with his concerns. Mr. Bannatyne's reaction was that Mr. McIntosh was overreacting. As President, Mr. McIntosh felt CGAA owed him the information needed to solve the downslide of CGAA.

[211] A quarter of a million dollars was spent on human relations and maintenance consultants to assist the Maintenance department. Mr. Bakker would not communicate with Mr. McIntosh regarding his needs and necessities. Nothing was getting done. Mr. Clarke and Mr. McAdam were retained at this time to help save CGAA. As well, at this point, Mr. Andison and another shareholder decided Mr. Bakker should be fired. Mr. Milligan, now the AE, carried this out.

[212] Because of the rapid expansion of major airlines in Canada, CGAA was losing many of its pilots. Mr. Clarke, who was involved in hiring Air Canada pilots, tried to give Mr. McIntosh an indication of the pilots Air Canada would be hiring from CGAA. This is how the contact was made with Mr. Clarke. Through Mr. Clarke, Mr. McAdam, a former Air Canada Maintenance Manager, passed on approximately ten names of individuals who would be interested in CGAA. The names were given to CGAA's Human Resources and passed on to Mr. Bakker. Mr. Bakker did not follow up on any of these individuals.

[213] Both Mr. Clarke and Mr. McAdam joined CGAA to assist in its reconstruction. Mr. McAdam and Mr. Parsonage had an opportunity to observe Mr. Bakker before he was fired. In their previous testimonies, they were very critical of Mr. Bakker.

[214] Mr. McIntosh stated that he tried to get the best people available in the industry to work with CGAA, but he could not. He was asked if CGAA had undergone any audits prior to the December 2006 Transport audit. Mr. McIntosh replied that when CGAA received an AOC in 2004, an audit was completed. The Applicant's representative showed Mr. McIntosh the audit report from Transport addressed to Mr. McIntosh as OM, dated August 30, 2004 (Exhibit A‑1). This audit gave CGAA a clean bill of health and contradicts the evidence given by the Minister that no initial audit had been completed, as required by the CARs.

[215] Mr. McIntosh stated that his relationship with CGAA's POI was very good. The Applicant's representative asked Mr. McIntosh if, prior to December 2006, any of the Chief Pilots, PRMs, or DOMs indicated there were serious issues with CGAA. Mr. McIntosh responded that they had not. The Applicant's representative asked if anyone from Transport indicated there were such problems. Again, the response was that no one had.

[216] The Applicant's representative then addressed the 31 grounds listed in the NOR. Ground 1, the overrun in Dorval (Exhibits M‑2 and M‑3), was brought forward. Mr. McIntosh reviewed the details of the flight and noted Mr. Otte was the Captain during that incident. He was also the Captain during the battery incident in Ethiopia (Grounds 9 and 10; Exhibits M‑11 to M‑13).

[217] Mr. McIntosh reviewed the tapes for the incident in Dorval, which indicated that the captain had selected reverse many times then applied normal braking; both of these functions were unavailable because the aircraft had suffered a hydraulic failure. The Captain had emergency braking available, but did not apply it. He did not follow CGAA's SOPs. A runway excursion into the grass occurred and the aircraft sustained relatively minor damage. The Pierre Elliot Trudeau International Airport Authority was adamant about removing the aircraft from the grass. Substantial airframe damage was inflicted on the aircraft by the airport removal team. Two‑thirds of the damage was caused by this removal.

[218] Mr. McIntosh further commented on the hiring of the inexperienced Mr. Otte by Mr. Hogan and his promotion to training captain. As a training captain, Mr. Otte was not following procedures.

[219] The TSB report (Exhibit M‑3) indicated the aircraft was not equipped with a low hydraulic pressure light. Mr. McIntosh provided photographic evidence (Exhibit A‑17) that this was not the case. The aircraft was equipped with a low hydraulic pressure light and it was located right in front of the captain.

[220] CGAA pilots had received simulator training to prepare for this type of situation. This training is completed every 12 months. I asked Mr. McIntosh if Mr. Otte had received hydraulic failure training. He had, and it was contained in his SimuFlite record.

[221] There was an impact on CGAA revenue because of this accident. CGAA's response was to suspend the pilot and co‑pilot involved in the incident and to conduct meetings to deal with potential internal backlash. A team was assembled to do this, which travelled to Vancouver and Toronto to hold meetings with CGAA employees concerning this incident. This was the extent of Mr. McIntosh's involvement in the incident.

[222] Grounds 7 and 8 of the NOR were reviewed, as well as Exhibit M‑9, the NAMP concerning the inadvertent drag chute deployment in Fort Saint John, British Columbia. The facts of this incident were discussed earlier in testimony. To review, I note that the pilots inspected the aircraft, found it serviceable and under Maintenance's direction, flew it to Vancouver. Neither the pilots, nor Maintenance, followed the obligation to make the proper logbook entries. I note that this was a paperwork issue, and safety was not at risk.

[223] To Mr. McIntosh, this indicated a lack of knowledge on the part of the PRM at the time, Mr. Oloresisimo. In response to this situation, the consultant, Mr. Dastoor, was hired by Mr. McIntosh to assist the PRM. Mr. McIntosh had no personal involvement in this incident.

[224] Grounds 9 and 10 of the NOR were then reviewed, along with Exhibit M‑12, the NAMP for the battery issue in Ethiopia. Mr. McIntosh was not personally involved in this incident. At the time, he was at a course, away from CGAA's operations. Shortly after this incident, Mr. McIntosh removed himself as AE and OM.

[225] Count 1 of the NAMP at Exhibit M‑21 refers to an incident where an aircraft was dispatched with an unserviceable ice detector light in Houston, Texas, and was therefore not operated in accordance with the MEL. Again this was a paperwork issue and not a threat to flight safety. This event occurred after Mr. McIntosh had been removed from his former positions. There was no involvement by Mr. McIntosh in this incident.

[226] Ground 16 of the NOR regards an unserviceable gyro light in Anadyr, Russia. Mr. McIntosh was involved in this incident because of his presence in the Operations Centre. He suggested to the Operations people that an aviation company in Denver, Colorado be contacted due to his lack of faith in the Toronto‑based CGAA Maintenance, and that Transport's permission should be sought to return the aircraft from Anadyr to Anchorage, Alaska. The weather was favourable for this operation. The pilot of the aircraft and the Denver company would meet in Alaska to repair the aircraft.

[227] Maintenance did not follow his suggestions, but instead had the pilots switch the cannon plugs. This apparently corrected the problem and the aircraft continued. This was the extent of Mr. McIntosh's involvement.

[228] Ground 18 was the HF radio problem in the United Kingdom (Count 2 of Exhibit M‑21 and Exhibit M‑48). This was a flight that could have continued legally if the MEL procedures had been followed. According to Mr. McIntosh, this was a paperwork issue which could have been avoided by the crew. The Captain of the flight was Mr. Hoffman, the former Chief Pilot, who was doing contract work with CGAA. Mr. Hoffman simply ignored the defect reporting procedures. The pilots were trained on MEL procedures shortly before this incident, under Mr. McIntosh's direction.

[229] Grounds 19 and 20, and Counts 4 and 5 of Exhibit M‑21 were also raised. Mr. McIntosh was not involved in these events and had no knowledge of them.

[230] Count 3 of Exhibit M‑21 was then examined. This addressed the F/O's altimeter issue in Winnipeg. Mr. McIntosh was contacted by the Operations Centre and was used as a resource in determining that the aircraft was non‑RVSM and that the altimeter was within limits. This was necessary because the Operations Centre had been unable to contact Toronto Maintenance.

[231] No logbook entry was required for this incident. This issue and others in the logbook were paperwork issues and did not compromise flight safety. The pilot told Mr. McIntosh that there was a burnt out landing light indicator. Mr. McIntosh tested the light and found it was serviceable. The pilot of the aircraft had also been lodging recurring complaints about a furnishing defect involving the F/O's armrest, the instrument lights being dim, and the windshield being dirty. He left the decision on how to proceed to the pilot and suggested the pilot contact the PRM, Mr. Bakker. The PRM and the Chief Pilot were contacted later by Mr. McIntosh to “close the loop”, as indicated in Exhibit A‑18, a summary of the event written by Mr. McIntosh.

[232] In my opinion, Mr. McIntosh was not aware of any logbook entries. His involvement was reasonable under the circumstances, and using a highly experienced Lear pilot as a resource was just common sense. Again, these were paperwork issues and no threat to safety was involved. I am unconvinced Mr. McIntosh made any attempt to influence Maintenance or the pilots. Mr. McIntosh also stated he had no knowledge of Ground 23.

[233] The Applicant's representative brought Mr. McIntosh's attention to Ground 25 of the NOR (the NAMP in Exhibit M‑25), which concerns the disconnection of a cannon plug controlling the nose‑wheel steering. Mr. Hogan, a former AME employed by CGAA, and QA Manager at the time, reported he had disconnected this cannon plug and had not entered it into the aircraft logbook. This was voluntarily reported to Transport. Transport's reaction was to take enforcement action against CGAA, not the AME responsible.

[234] Mr. McIntosh was asked if he could explain the pilots' attitudes toward their reluctance to make logbook entries. Mr. McIntosh responded that it was caused by weak Chief Pilots who did not enforce discipline and had little interaction with the pilots. In addition, the Captains were getting younger. They were either pilots who wanted to get home or pilots who were charging CGAA phenomenal expenses, with no control by the Chief Pilot. One pilot, on whom CGAA had spent $30 000 in training, left after a month. Mr. McIntosh stated that the pilots just did not care.

[235] In March 2007, when Mr. McIntosh was still the OM, he solicited suggestions from CGAA's PMI on what steps he should take to satisfy Transport. He was told to baseline all aircraft to ensure they were clear of all defects. He contacted Inspector Smith at home over the weekend informing him of the actions he had taken.

[236] At that time, a CGAA pilot departed Prague, Czech Republic, for Dubai, United Arab Emirates, with an unserviceable radio magnetic indicator (RMI), but without following MEL procedures, which would have let him continue legally. The pilot was asked why he did not follow defect reporting procedures. In his written report (Exhibit A‑19) the pilot wrote: “I think we might be getting a little over paranoid over maintenance issues”. This was the mindset of the pilots involved even after a discussion about this topic the night before.

[237] Mr. McIntosh was asked if he promoted this culture of non‑compliance, and he responded “never”. He was also asked if he had ever personally grounded aircraft for maintenance away from base and he responded “absolutely.”

[238] The Applicant's representative turned to inspections, audits and NOS at CGAA. It was noted that Ground 28 refers to the Nasha audit in 2006 (Exhibit A‑2). Mr. McIntosh indicated that he signed the contract with Mr. Dastoor of Nasha, and that the audit was coordinated between the then PRM, Mr. Oloresisimo, and Nasha. It was further noted that Counts 2 to 6 of Exhibit M‑21 were based on Transport's inspection over December 4–8, 2006, and referred to in the reporting letter from Transport relating to the inspection (Exhibit M‑31). Exhibits M‑4 and M‑7 are NAMP for the AOC and AMO, respectively, which arose from the December 2006 Transport inspection. The NOS for CGAA's AOC and AMO following that inspection are Exhibits M‑32 and M‑33, respectively.

[239] Mr. McIntosh stated that before the Nasha audit and Transport inspection, he was unaware of any QA problems. Communications were maintained with Maintenance through weekly management meetings, and every day at 9:00 a.m. via teleconference. Mr. McIntosh visited Vancouver once a month. Any maintenance concerns were dealt with. As a result of Mr. McIntosh's efforts following the Transport inspection, the Notices of Suspension (Exhibits M‑32 and M‑33) were lifted before they came into effect.

[240] A series of emails between CGAA and Transport were introduced (Exhibit A‑20). These emails concerned the corrective action plans of Mr. Dastoor and reports to be delivered to Transport. A five‑step program was suggested by Mr. Dastoor in order to introduce a QA program at CGAA.

[241] Mr. McIntosh was feeling comfortable with the progress made by Mr. Dastoor, and felt that Transport would be satisfied. Transport, through Inspector Graham, contacted Mr. McIntosh advising him that Transport had some serious concerns regarding CGAA, and requested a meeting. A meeting was held the following day on March 2, 2007.

[242] Mr. McIntosh attended the meeting with two other CGAA employees. He was again advised of the serious concerns and of CGAA not keeping its promises; this is when the Aruba incident (see Exhibit M‑46) was raised, as well as the Dorval overrun (Ground 1; Exhibits M‑2 and M‑3), and the Ethiopian battery incident (Grounds 9 and 10; Exhibits M‑11 to M‑13). Mr. McIntosh offered to submit a plan by the following Tuesday, March 6, 2007. Transport agreed but rejected his plan. Transport would not advise Mr. McIntosh of their requirements for a plan. This is when the incident with the RMI that could have been covered by the MEL occurred (see Exhibit A‑19), which I note was a paperwork issue and, again, no threat to safety. Mr. McIntosh voluntarily reported this incident to Mr. MacNab and Inspector Graham on the Monday after his conversation with Inspector Smith. This led to the next NOS for CGAA's AOC in March 2007 (Exhibit M‑38).

[243] Ground 11, which refers to the NOS of CGAA's AOC in March 2007 (Exhibit M‑38), was then discussed. Mr. McIntosh was asked what happened to him in order to meet the conditions for the reinstatement. His response was the following: “I removed myself as Operations Manager and Accountable Executive”. He retained the position of President. This was a business position and there was a requirement to have some communication with the Operations and the Maintenance groups; such as communication regarding the position and status of the aircraft, in order to meet commitments. He stated that a business cannot be run in a vacuum.

[244] Mr. McIntosh was asked if he was still maintaining contact with Transport at that time. Mr. McIntosh said several documents and letters from Transport were sent directly to the President. He directed this mail and if a document required his signature, he would sign and return it to Transport. He stated that he was curious as to why Transport would send him correspondence when it did not want him involved.

[245] Ground 12 of the NOR relates to the Transport inspection conducted over May 29 to 31, 2007. Exhibit M‑40 is a letter dated July 28, 2007, from Inspector Bennett to the attention of Mr. McIntosh. The letter asked Mr. McIntosh to submit an action plan following the findings of the inspection. Mr. McIntosh was not involved in the corrected action plan submitted. Additionally, he had no personal involvement in the defective maintenance records of an aircraft (Ground 17 of the NOR, and the NAMP in Exhibit M‑23). He did not cause or condone these deficiencies.

[246] The Applicant's representative stated that Inspector Smith's evidence indicated that he was encouraged by the May 2007 inspection, and asked Mr. McIntosh if Inspector Smith had indicated this to him before. Mr. McIntosh recalled a letter dated June 11 wherein Inspector Smith stated CGAA was making significant progress and that the Inspector was considering reducing the weekly reports required from Nasha to once a month.

[247] Mr. McIntosh was not involved in Ground 21, referred to in Exhibit M‑42, a Transport inspection over September 17 to 20, 2007. Ground 24 is the November 4‑9, 2007 inspection, referred to in Exhibit M‑48. This led to both the AOC and AMO Notices of Suspension in Exhibits M‑49 and M‑50, related to Grounds 26 and 27 in the NOR.

[248] Inspector White stated in testimony that CGAA was not providing the DOM with sufficient resources to do a proper job. Mr. McIntosh was asked to comment. He said that with the assistance of CGAA's Human Resources, personnel ads were placed in the major Toronto newspapers for people interested in maintenance.

[249] Mr. McAdam and Mr. Clarke provided names of those who may be interested. Some interviews were conducted. Mr. McIntosh further commented that this was the Maintenance Manager's responsibility. The PRM was asked what he needed. Both the Medical and the Maintenance departments got what they asked for. The tooling was the best; as well, the assets and facilities were there. CGAA never skimped on maintenance costs.

[250] Mr. McIntosh was concerned about Maintenance management some six months before Mr. Bakker was fired. He regrets that CGAA did not take this step sooner. In order to facilitate maintenance overseas, maintenance facilities abroad were used. CGAA paid to have them approved by Transport. When these facilities could not be used, CGAA dispatched its own personnel.

[251] The Nasha audit, Transport inspection, and the Notices of Suspension above all referred to QA. Mr. McIntosh was asked at the Hearing to comment on the money spent on consultants. His response was that CGAA was spending tens of thousands of dollars on consultants to fix the QA problems. Transport seemed satisfied. Nasha came up with a five-step implementation plan and a five-phase audit approach and an annual audit plan.

[252] Mr. McIntosh was asked if Mr. Dastoor ever indicated to him that QA was not being implemented adequately, or if Mr. Bakker ever indicated the “complete failure” of the maintenance department. The responses to both were negative.

[253] Friction developed between Mr. Milligan and Mr. McIntosh because Mr. Milliganwanted to move the operation to Kitchener, Ontario. Mr. McIntosh wanted to bring Mr. Parsonage into the operation, but this was vetoed by Mr. Milligan and Mr. Andison. Mr. McIntosh advised these two that promises were made to Transport and that their decision should be passed to Transport by the AE at the time, Mr. Bannatyne. Mr. MacNab's reaction was to accuse CGAA of misleading Transport.

[254] Mr. Parsonage was eventually hired and paid for by Mr. McIntosh, and spent two days in Toronto carrying out an investigation. Mr. Hogan walked away from CGAA after creating a scene with Mr. Parsonage. Afterwards, Mr. Parsonage made the following comment to Mr. McIntosh: “that's why you are where you are”. Mr. Parsonage saw many problematic issues that Transport had missed in their inspections because Transport had not looked in the right places. Upon his return, Mr. Parsonage had a conversation with Mr. MacNab and told him that Transport had done the wrong thing by pushing Mr. McIntosh out because he was the only one at CGAA who understood the business and should be returned to the AE position. Mr. McIntosh felt there was too much animosity from Transport towards him.

[255] Mr. McIntosh was asked about Transport's witness, Mr. Durand. Mr. McIntosh stated that the training manuals were largely the result of Inspector Davis' efforts, and that Mr. Durand did not rewrite the CGAA manuals. They were set and approved by Transport. Mr. McIntosh stated Mr. Durand put together a very good classroom presentation and that he, Mr. McIntosh, provided a large quantity of CGAA materials to him. Mr. Durand did not recreate CGAA's training program.

[256] While sitting in the operating environment, Mr. McIntosh overheard a conversation about Mr. Durand having a fuel pump problem transiting in Dubai. It was a problem that was covered by the MEL and the flight could proceed legally. Mr. McIntosh called Mr. Durand and asked him if he was comfortable proceeding on the flight. Mr. Durand said he was not and the crew proceeded to the hotel. No pressure was placed on the pilots. That was the extent of Mr. McIntosh's involvement with this incident.

[257] Ground 31 of the NOR indicates a high turnover of personnel. Mr. McIntosh responded that the departments of Finance, Medical, and Sales and Marketing at CGAA were stable. The high turnover of pilots was due to a known shortage of pilots because major airlines had increased their hiring. To alleviate this shortage, Mr. McIntosh approached Citizenship and Immigration Canada with a proposal that CGAA hire pilots from abroad. The proposal was approved, provided that the pilots would be deported should they seek other employment in Canada. Mr. McIntosh noted that 70 per cent of the pilots CGAA lost went to major airlines.

[258] Exhibit M‑72 is a flight crew report concerning a piece of medical equipment that had been left behind. The aircraft returned and retrieved it. Mr. McIntosh said these things happen; someone in the medical department had just forgotten. No regulations were violated. Mr. McIntosh had no personal involvement in the incident.

[259] Exhibits M‑57 to M‑69 are operational itineraries that were submitted to Transport, which stemmed from allegations that CGAA pilots were violating crew rest requirements. Mr. McIntosh described Inspector Risk's activities while researching the aircrew schedules. Mr. McIntosh stated that Inspector Risk was frustrated by his lack of knowledge about crew scheduling procedures. Mr. McIntosh further stated that neither he, nor any CGAA pilots were deprived of their rest periods. A schedule changes the day it is issued in a dynamic environment. If pilots flew on their days off, they were given another day off in lieu. All CGAA operations were in accordance with the CARs. Mr. McIntosh cited an incident where he shut down his operations because of the requirements for crew duty times and stated that CGAA abided by the requirements of crew duty days and rest days.

[260] Mr. McIntosh was confronted with the Minister's argument that CGAA did not bring any of the enforcement actions indicated in the NOR to the Tribunal; therefore Mr. McIntosh is associated with that guilt. In rebuttal, Mr. McIntosh stated that after the November 2007 NOS for CGAA's AOC (Exhibit M‑49), he contacted the Tribunal and filed for a review. He was forced to retract the request by Mr. Andison and the new shareholder, Mr. Rzepka.

[261] An email from Mr. Rzepka (Exhibit A‑22) confirms Mr. McIntosh's statement. Mr. McIntosh was asked what impact CGAA's failure had on him. He responded that financially it cost him half a million dollars, and that his reputation was tainted as a result of Transport's actions.

[262] Mr. McIntosh was asked how he felt about the comment in the Transport Risk Assessment Report (Exhibit M‑79) that the Lear 35 is an aging aircraft. He responded that it is a fantastic piece of flying equipment that is still in use in the industry because of its utilization rate and few operational restrictions. It was not a hazard, as it was described in the report.

[263] Mr. McIntosh was referred back to the Risk Assessment Report, pages 7 and 8 (Exhibit M‑79), which stated that Mr. McIntosh does not provide complete training. He rejected this assumption completely. Page 9 assumes Mr. McIntosh skimped on maintenance money. Mr. McIntosh denied this, stating that the medical insurance industry requires a very high standard of reliability.

[264] On pages 10 and 11 of the Risk Assessment Report, Mr. McIntosh was accused of directing pilots to fly unserviceable aircraft; he was asked if he would ever do that. Mr. McIntosh said he would not. Mr. McIntosh was then asked why he was seeking to have Transport's decision to refuse to issue IAA an AOC reversed when he is back in business with Latitude.

[265] Mr. McIntosh replied that it is a matter of personal integrity. He loves the air ambulance industry and he wants to be involved in it in operational control. He believes he is a benefit to the industry and wants to be further involved.

[266] The Minister mainly used the cross-examination of Mr. McIntosh to introduce Exhibits M‑86 to M‑114. These exhibits contain either Mr. McIntosh's name, or his signature, and relate to the structure and documentation of CGAA. It was the Minister's intention to use these exhibits later in the Arguments phase. It should be noted that Mr. McIntosh was signing on behalf of CGAA, and not for himself personally.

[267] The Minister brought forward the drag strip incident in Aruba (Exhibit M‑46), as well as the reluctance of the Chief Pilot, Mr. Hoffman, to implement the remedial training instructions, and asked Mr. McIntosh why he did not take more action. Mr. McIntosh replied that the passage of time, along with Transport's lack of interest, and his desire to support his Chief Pilot resulted in him not pressuring Mr. Hoffman. He stated he became more aggressive that summer in dealing with Mr. Hoffman's behaviour after Mr. Hoffman started to hire inexperienced pilots and failed to keep Mr. McIntosh informed.

[268] Mr. McIntosh was asked why, after being removed as AE, he continued to interact with employees and still attempted to stay informed even though he could not make decisions. He was asked what types of decisions he had been talking about when he had referred to decisions earlier in testimony. Mr. McIntosh replied that he had a business to run and was responsible for all aspects of that business, as well as to deliver to the customer, and to perform to the expectations of the shareholders. He was asked to elaborate further. He replied that there were purchasing and marketing decisions to be made; that knowledge of the availability of aircraft was integral to meeting customers' needs; and that he needed the information to do these things.

[269] Mr. McIntosh was asked if he was satisfied with Mr. Cadenhead's performance as Chief Pilot. He replied that he overall was satisfied. Mr. Cadenhead was approved by Transport and Mr. McIntosh believes he made an effort. Mr. McIntosh was asked why he brought Mr. Hoffman back as a pilot. He responded that it was due to Mr. Hoffman's skills as a pilot, not his managerial ability.

[270] Mr. McIntosh was asked about his actions in filing for a Tribunal review. He responded that he went to the Tribunal in January 2008 to request a review of the suspensions of the AOC and AMO from November 2007, as well as some other violations.

[271] Referring to the high turnover rate of CGAA pilots, Mr. McIntosh was asked if he had a contract with pilots to stay for a certain period of time, such that should the pilots leave, they would have to reimburse CGAA for the training costs incurred. Mr. McIntosh replied that they had such a condition in their contracts. CGAA enforced it once, but because of the rapid turnover of CGAA pilots, they found the legal costs and the difficulties in locating the pilots prohibitive.

[272] Mr. McIntosh's prior statement where he expressed his concerns over the condition of CGAA was revisited. He was asked why, as President and a shareholder, he did nothing about it. He replied that he did express concerns to the shareholders, but because he held no operational control, he could not make decisions. Ultimately, decisions were made by whoever controlled CGAA. The Shareholders' Agreement indicates how this was accomplished.

[273] I find the question of how control over CGAA was exercised puzzling. Transport forced the removal of Mr. McIntosh as an operational decision‑maker, and throughout the Review Hearing, the Minister equated involvement with control, saying that as President and a minority shareholder, Mr. McIntosh controlled CGAA. In his question above, however, the Minister appears critical of Mr. McIntosh for not having stepped in.

[274] Mr. McIntosh was asked to read into the record a part of Nasha's audit statement, section AMO‑08, (Exhibit A‑2), which refers to the QA system not being implemented. The Minister referred to previous Minister's exhibits to show the depth of Mr. McIntosh's involvement in CGAA.

[275] In redirect, Mr. McIntosh discussed the Tribunal applications for review. Mr. McIntosh could not recall the details. He touched on the drag chute incident and stated that there were two other incidents.

[276] He was then asked to view Exhibit M‑94, a letter from CGAA, signed by Mr. McIntosh and dated January 10, 2007, to reinstate its AOC and AMO, which included section AMO‑08 and CGAA's response to the findings there. The response was prepared by the PRM, Mr. Oloresisimo, with assistance from Nasha. Mr. McIntosh was asked if he believed now, and at the time of the 2007 audit, the response was supposed to satisfy the findings in the inspections and audits. Mr. McIntosh responded affirmatively.

[277] Mr. McIntosh addressed a number of documents shown to him by the Minister in cross‑examination. These documents contained different titles for Mr. McIntosh – President, Executive Vice‑President, and AE. Mr. McIntosh held all of these titles at different points while CGAA was under suspension. He was asked to explain this fluidity. He responded that it was actually Transport that acknowledged him as the AE and that the fluidity in his positions was a result of the fluid situation at CGAA. He was still waiting for the results of Mr. Parsonage's audit findings to determine how to proceed.

[278] Exhibit M‑95 is a report to Transport in March 2007 following a meeting between Transport and CGAA, wherein the topics of pilot retention, as well as recruitment strategies presented to Citizenship and Immigration Canada were raised. Mr. McIntosh was then referred to a letter signed by Mr. McIntosh while he was President of CGAA, which was sent to Ms. Fletcher, Regional Director of Transport for the region (Exhibit M‑100). This letter was composed by Mr. Cadenhead, who had become familiar with the concept of a safety management system (SMS) while he was an inspector with Transport. The letter was intended to show CGAA was being proactive in this area.

[279] In a subsequent meeting, Ms. Fletcher was upset by this letter and stated CGAA would be dealt with as is, and that Transport did not want to see CGAA adjust anything. Mr. McIntosh stated this was another letter that should not have been sent to Transport. This letter also contained a voluntary report of unserviceabilities caused by a hard landing of a CGAA aircraft.

C. Minister's Rebuttal Witnesses

(1) Mark Bakker

[280] Mark Bakker was the PRM of CGAA, stationed in Toronto, from January 12, 2007, until December 13, 2007. CGAA had been in existence since 2003 when Mr. Bakker assumed this position (see Exhibit M‑1). Mr. Bakker is still employed in the aviation industry.

[281] While working with CGAA he was required to be on duty “24/7”; he stated he was on the phone most of the night dealing with aircraft problems. Mr. Bakker said he did not have enough personnel; there was only him and two other AMEs to take care of five aircraft. He requested more assistance from Mr. McIntosh, but only received a stores person. Mr. Bakker testified that Mr. McIntosh would agree that additional resources were needed, but nothing would come about. In response to the Minister's question concerning the lack of resources, Mr. Bakker responded that CGAA “was a mess, five years of a mess to clean up... And, you know, tech logs were five years behind on every aircraft. Paperwork was missing here and there… the maintenance just wasn't up to snuff on them”. I note that this was an exaggeration by Mr. Bakker, there were three years of records when he started.

[282] Unserviceabilities on aircraft in Europe required a determination of a Transport‑approved AMO on location, or a dispatching of CGAA AMEs. Mr. Bakker stated this was a very tiring exercise.

[283] The Applicant's representative objected to the Minister's question regarding a statement by Mr. McIntosh and the term “grounded”. The Minister revealed that he was missing transcripts. Both the Applicant's representative and I were in possession of the transcripts. After a short break to discuss the Minister's lack of transcripts, the questioning of Mr. Bakker resumed.

[284] Mr. Bakker explained the communication chain. Dispatch would inform him of problems with aircraft and he would contact the pilots to discuss maintenance issues. He referred to the dead battery issue that occurred in Ethiopia (Grounds 9 and 10; Exhibits M‑11 to M‑13). After attempting to locate a resource to charge the battery, he received a call from the aircraft, in flight, complaining of a lack of a number one stall vane. This particular service worked from the battery that had become unserviceable. Mr. Bakker did not know who had authorized the flight, but stated that when he grounds an aircraft, it is grounded.

[285] Mr. Bakker then discussed the gyro failure in Anadyr, Russia (Ground 16), as well as other similar incidents where that same aircraft flew after he had grounded it, without his consent. He said subsequent unserviceabilities on the aircraft were the result of the hard landing in Anadyr. Mr. Bakker remarked that dealing with situations like this is stressful.

[286] Mr. Bakker stated that CGAA was not set up correctly and there was a lack of communication. He testified that he had no control as a PRM and, because another individual, Martin Headland, had been brought in and was supposed to be the DOM (PRM), but could not, he felt like a puppet.

[287] Mr. Bakker described a very difficult audit by Transport conducted in October 2007, after which he was complimented by the Transport inspectors who had performed the audit.

[288] In reference to the Winnipeg altimeter situation (Ground 22; Exhibit M‑21), Mr. Bakker testified that he was specifically told by Mr. McIntosh that there were no logbook entries. The aircraft completed two more legs and after the final landing in Toronto, it was discovered by Mr. Bileski that logbook entries had been made. This was reported to Mr. Bakker; however, it was Mr. McIntosh who discussed the snag with the crew, not Mr. Bakker. Mr. Bakker confirmed to the Minister that only an AME can answer to a snag.

[289] Under cross-examination by the Applicant's representative, Mr. Bakker was asked if he has ever lied to Transport. He replied: “Not to my knowledge, no”. Mr. Bakker was asked who Inspector Streber was. He responded: “He was our PMI”. Mr. Bakker was then asked what a D Check is in layman's terms. He responded: “It's basically you rip the airplane apart, inspect and put it back together”. Mr. Bakker confirmed this check was not contained in CGAA's maintenance policy manual.

[290] The Applicant's representative introduced a series of emails between Mr. Bakker and Inspector Streber (Exhibit A‑23). Mr. Bakker was asked to read into the record an email he had sent to Inspector Streber on July 27, 2007, starting with “Hi Rob”. The email is written as follows:

Hope all is well with you, quick question. I was going through our MPM doing the revisions and I noticed on page 14 5.1 that when the amendment was c/o [carried out] that our scope of work was dropped from D Checks/ 36 month checks to B checks/ and 6 month checks. This should not have been done and here at the present time we are carrying out a 12 mth check on one of our aircraft and have all the appropriate tooling to do so and the manpower but now I was wondering how can I sign this aircraft out. Is there anything that we can do? I will need to have this manual amended back to the original as soon as possible because Canadian Global will be carrying out all of their own maintenance in house in the near future. If you could get back to me asap on this matter it would be much appreciated. I have also attached the old page 14 and the new page 14 to this email to show you what I mean.

[291] Mr. Bakker was asked about his comment in the email chain that CGAA had all the appropriate tools and “manpower” to perform D checks. He agreed that he said that, but stated that he did not have the personnel required to implement Mr. McIntosh's plan to do all of the maintenance in‑house. I would think, from this comment, Mr. Bakker admitted to having everything he needed to accomplish his maintenance responsibilities at that time.

[292] Mr. Bakker was asked about his comment that he was short of staff. Mr. Bakker stated that CGAA “farmed out” the majority of its maintenance to at least four external contractors.

[293] The altimetry issue in Winnipeg (Ground 22; Exhibit M‑21) was revisited. Mr. Bakker was referred to an email from Mr. McIntosh to Mr. Cadenhead, copied to Mr. Bakker regarding this issue (Exhibit A‑18). Mr. Bakker confirmed that he received the email. Mr. Bakker was reminded of his testimony wherein he stated the Maintenance department had a lack of resources. He was asked what efforts he took to hire additional engineers. The question was not answered. Mr. Bakker said that the “so‑called quality assurance guy [Mr. Dastoor]” told Mr. McIntosh to hire more people. Mr. Bakker said that Mr. Dastoor was hired to appease Transport. Mr. Bakker said Mr. Dastoor reported to him.

[294] Mr. Bakker was asked if CGAA advertised for engineers. He responded affirmatively. He stated that they received résumés and interviewed some of the applicants but did not hire any because the candidates were not suitable. He could not remember if Mr. McIntosh sent the résumés to him.

[295] Mr. Bakker was shown an email chain regarding potential maintenance employees, including emails between Mr. McIntosh and himself (Exhibit A‑24). He could only remember four out of the 15 emails. An email from Mr. McIntosh sent to Mr. Bakker on September 18, 2007, requesting the name of a qualified Lear engineer was discussed and reads as follows: “Mark: you mentioned several months ago you knew of a Lear rated AME in Winnipeg. What's his name? Jeff”.

[296] A second email, sent by Mr. McIntosh to Mr. Bakker on October 21, 2007, again requested the name of the engineer from Mr. Bakker, and prompted him for a response. From Mr. Bakker's comments, it appears the AME in question was not hired. Mr. Bakker explained that he would only have been a contractor who would have worked on aircraft problems encountered in Winnipeg.

[297] The Applicant's representative stated he would be recalling Mr. McIntosh to the stand to identify the documents. This elicited an objection from the Minister. The Applicant's representative closed the argument by citing a case, Browne v. Dunn (1893) 6 R. 67, H.L., contained in two texts on Canadian evidence, which confirmed that this is allowed. Mr. Bakker confirmed the stores person he hired was a friend and neighbor. He also confirmed Mr. McAdam was hired to be a resource for him. As well, Mr. Bakker identified a human resource person hired to help find additional maintenance personnel.

[298] Mr. Bakker was asked if he recalled a teleconference he had with Mr. McIntosh, and the human resources person. Mr. Bakker recalled the teleconference, but could not recall what was said, although he thought it was about “manpower” issues. Mr. Bakker confirmed that contract workers were brought in to help with inspections.

[299] When the subject of CGAA's high maintenance costs was raised, Mr. Bakker's response was that in the beginning, the aircraft were not in good shape. Mr. Bakker was asked about his earlier testimony regarding the lack of resources with respect to his ability to carry out his duties. He was then able to recall the teleconference with human resources and the resulting hiring of two people. One left after six months and the other was not endorsed on the Lear. Mr. Bakker stated that he was so busy he did not have time for interviews.

(2) Christopher Bileski

[300] Christopher Bileski is presently the PRM for an aviation company called Fox Flight. Prior to obtaining this position, he worked for a series of aircraft operators in maintenance. He was employed by CGAA from early fall 2006 until December 2007 as an AME. He maintained Lear aircraft, which totalled five towards the end of CGAA. Mr. Bileski testified that because of the nature of the operation, his working hours were “pretty much 24/7”, with considerable night work. In the summer of 2007, there were more maintenance personnel, which allowed for more time off.

[301] Mr. Bileski explained that with the exception of elementary maintenance, AMEs are required to clear an aircraft logbook of any snags entered. He was asked how much staff worked in Maintenance. He said that the best time was the summer of 2007, when there were three AMEs plus Mr. Bakker and only line maintenance was required. At the end of the summer, one AME left and was not replaced.

[302] Mr. Bileski stated that, at that time, Mr. Headland advised them they were going to start heavier maintenance on the aircraft. Mr. Bileski stated this did not happen because of a lack of personnel. Since one of the AMEs had left, he was required to work 70 to 75 hours a week and this affected his performance as an AME. He stated that Mr. Bakker was too busy dealing with line maintenance to deal with Transport issues.

[303] Mr. Bileski's reasons for resigning were the pay and the hours. He quit on the day of a meeting pertaining to the financial consequences of his actions with respect to a pressurization problem in Russia. He also stated that at the meeting Mr. McIntosh said, “it's your guys' job to convince the pilots” to fly. Mr. Bileski said he resigned because he felt he could not do his job and comply with regulations. Mr. Bileski's resignation lasted for a week, then he returned for higher remuneration.

[304] Under cross-examination by the Applicant's representative, Mr. Bileski informed the Tribunal that a 12‑month D check takes about two to three people working for four or five days to complete, and is borderline between line maintenance and heavy maintenance. It should be noted here that this statement is the complete opposite of Mr. Bakker's testimony wherein he stated, “One person can do a 12‑month inspection. It's a glorified DI [daily inspection]”.

[305] Under redirect examination, Mr. Bileski was asked why he returned to CGAA after his resignation. He responded that it was because Mr. Bakker needed the help and he had an agreement with Mr. Bakker wherein he would not be involved with Transport or operational issues.

D. Applicant's Rebuttal Witness

(1) Jeffrey Alan McIntosh

[306] Mr. McIntosh was referred to the chain of emails presented to Mr. Bakker regarding people seeking employment with CGAA (Exhibit A‑24). Mr. McIntosh said that when he received an email from a job seeker, he would forward it to the department head. The Minister objected strongly to the admission of these emails on the grounds they should have been dealt with earlier. Mr. McIntosh was allowed to submit these emails as exhibits.

[307] The Winnipeg altimetry issue (Ground 22; Exhibit M‑21) was raised again because of the evidence given by the Minister's rebuttal witnesses. Mr. McIntosh said he never saw the logbook, nor did he ever tell Mr. Bakker there was nothing in the logs.

[308] The teleconference between Mr. McIntosh, Mr. Bakker, and the human resources person was revisited. Referring to notes from the human resources person, Mr. McIntosh indicated that the teleconference occurred on September 12, 2007. From his memory, Mr. McIntosh stated that, during this conversation, Mr. Bakker said that he was short of people. Mr. McIntosh told Mr. Bakker to start hiring, and that he would support his efforts. Mr. McIntosh indicated this is recorded in the minutes of the teleconference.

[309] Mr. McIntosh testified that he forwarded the résumés he received to Mr. Bakker. He denied that he made the statement that it was the AME's job to convince the pilots to fly the aircraft, as was stated by Mr. Bileski. Under cross-examination, the Minister recounted the names in Exhibit A‑24 and asked Mr. McIntosh if he hired them. The response to each name was negative.

V. ARGUMENTS

A. Minister

[310] The Minister submits that he must establish the record of CGAA, who is accountable for this record, and determine if the public interest warrants the refusal to issue the AOC to IAA.

(1) Establishing the Record

[311] The Minister submits that the 31 grounds in the NOR have been established, and that it is not the Tribunal's role to consider the factual validity of each violation referred to in the NOR, as each could have been challenged by CGAA, but was not. Inspector Gaudry's testimony describes the multiple violations by CGAA and the enforcement actions taken by Transport, which resulted in CGAA's record, and the grounds for denying an AOC to IAA.

[312] The Minister cited the testimonies of Transport inspectors regarding the multiple CARs violations that were found during their inspections, as well as under the enhanced monitoring program. The Nasha audit and the audit carried out by Mr. Parsonage were introduced into evidence as confirming CGAA's non-compliant nature.

[313] Numerous exhibits were cited to support the testimonies provided by the Minister's witnesses. For example, the risk assessment concerning the high turnover of key personnel was used to determine CGAA's health and stability.

[314] The Minister also cited Mr. McIntosh's testimony with regard to the disorder and failure of the QA program at CGAA. As well, Mr. Parsonage was cited for stating that there was not really any system of QA at CGAA.

[315] The Minister submitted that both parties were in agreement that CGAA had not followed the CARs.

(2) Proving Accountability

[316] The Minister then addressed the second element of this case, which is determining who is accountable for CGAA's aviation record. The Minister cited paragraph 6.71(1)(c) of the Act to determine who bears the accountability for CGAA's aviation record:

6.71(1) The Minister may refuse to issue or amend a Canadian Aviation Document on the grounds that

(c) the Minister is of the opinion that the public interest and, in particular, the aviation record of the applicant or of any principal of the applicant, as defined in regulations made under paragraph (3)(a), warrant the refusal. [Emphasis added]

[317] To define the term “Principal”, the Minister referred to subparagraphs 103.12(a)(i) to (iii) of the CARs, which state as follows:

103.12 For the purposes of subsection 6.71(1) and paragraph 7.1(1)(c) of the Act, “principal” means

(a) in respect of an air operator,

(i) any person who is employed or contracted by the air operator on a full- or part-time basis as the operations manager, the chief pilot or the person responsible for the maintenance control system, or any person who occupies an equivalent position,

(ii) any person who exercises control over the air operator as an owner; and

(iii) the accountable executive appointed by the air operator under section 106.02;

[318] The Minister submits that Mr. McIntosh, as the AE and OM, was clearly responsible for CGAA's aviation record between December 2006 and March 2007.

[319] The Minister cites paragraph 106.02(1)(a) and subsection 106.02(2) of the CARs as proof of Mr. McIntosh's responsibility:

106.02(1) The applicant for, or the holder of, a certificate referred to in section 106.01 shall

(a) appoint an individual as accountable executive to be responsible for operations or activities authorized under the certificate and accountable on their behalf for meeting the requirements of these Regulations;

[…]

(2) No person shall be appointed under subsection (1) unless they have control of the financial and human resources that are necessary for the activities and operations authorized under the certificate.

[320] The Minister next referred to accountability, as defined under section 106.03 of the CARs. This section of the CARs reads as follows:

106.03 The responsibility and accountability of the accountable executive appointed under subsection 106.02(1) are not affected by the existence of

(a) a person responsible for the maintenance control system appointed under paragraph 406.19(1)(a) or 706.03(1)(a);

(b) a person responsible for maintenance appointed under paragraph 573.03(1)(a);

(c) an operations manager referred to in section 702.07, 703.07, 704.07 or 705.07; or

(d) a maintenance manager referred to in section 702.07, 703.07, 704.07 or 705.07.

[321] The Minister submitted that Mr. McIntosh, as OM and AE, bears the responsibility for CGAA, and that the record of CGAA can be directly attributed to his actions. The Minister notes that the purpose of an AE is to hold someone accountable for ensuring that a company meets the requirements of the CARs.

[322] During the four-month period from December 2006 to March 2007, when Mr. McIntosh was the AE, CGAA was substantially non‑compliant. The Minister notes that section 106.03 of the CARs states that the responsibilities of an AE are not affected by the presence of other Principals.

[323] The Minister submits that it is irrelevant whether Mr. McIntosh was aware of or had any personal involvement in the CARs violations; as AE, he is nonetheless responsible for the infractions.

[324] The Minister further submits that there is sufficient evidence to justify the Minister's refusal to issue an AOC to IAA, due to Mr. McIntosh's negligence in the roles of OM and AE while at CGAA.

[325] The Minister submits that from March 2007 to October 2008, Mr. McIntosh exercised “de facto” control over CGAA as the AE and OM, therefore CGAA's record is attributable to Mr. McIntosh. Furthermore, the Minister submits that the emails from Mr. MacNab are credible because of the existence of other evidence supporting them.

[326] The Minister submits that Mr. McIntosh's evidence regarding his lack of control over CGAA is not credible because he testified to being involved in the operation of the company in two instances: the Winnipeg altimeter issue; and the fuselage fuel pump incident. Moreover, the Minister submitted an email copied to Mr. McIntosh regarding a flight crew occurrence (Exhibit M‑72) as evidence that he was still involved in the operation of CGAA in June 2008, when he had no official position in the company.

[327] The Minister made reference to a conversation between Mr. McIntosh and Mr. Durand regarding the fuselage fuel pump problem as proof of Mr. McIntosh's involvement in CGAA's day‑to‑day operations. Further demonstrating Mr. McIntosh's involvement with CGAA, Mr. Durand testified that he was contacted by Mr. McIntosh to assist in a ground school project for CGAA.

[328] Inspector White's testimony was also referred to as confirmation of Mr. McIntosh's involvement with CGAA. Inspector White stated that Mr. McIntosh took part in a meeting where the findings of the November 2007 inspection were discussed, and that Mr. McIntosh participated in forming a corrective action plan in response to the findings. Inspector White said that Mr. McIntosh was directly involved in discussions concerning finding AOC‑19‑01 of the inspection report, which related to maintenance arrangements.

[329] Inspector White also cited an incident he believed Mr. Bakker could do nothing to prevent, in which an aircraft was flown with an open snag under Mr. McIntosh's advice, thus confirming that Mr. McIntosh had direct involvement in all decisions having a direct impact on CGAA.

[330] The witness that followed, Mr. Hilton, also confirmed Mr. McIntosh's involvement in CGAA's day-to-day operations.

[331] The Minister then referred to the testimony of his two rebuttal witnesses, Mr. Bakker and Mr. Bileski. Mr. Bakker stated he had no control over the Maintenance department in spite of being PRM, while Mr. Bileski testified that he heard Mr. McIntosh state at a meeting that it was “the Maintenance department's job to convince the pilots to fly”. The Minister alleges that all the evidence submitted supports the statement of Mr. Bileski.

[332] The Minister submitted CGAA's Company Organization Chart (Exhibit M‑86) as evidence of the President's control over Maintenance and Operations, and suggested that this indicates that Mr. McIntosh still had control of CGAA while he was President, even though the AE was above the President in the CGAA hierarchy.

[333] The Minister noted that Mr. McIntosh signed almost all of the letters of appointment, and that he was the primary respondent concerning the notices of suspension. This was interpreted by Transport as meaning that the AE was simply a figurehead during the time that Mr. McIntosh was neither AE nor OM.

[334] The Minister alleges that Mr. McIntosh fell under the definition of Principal because of his ownership in CGAA. The Minister further alleges that because Mr. McIntosh had “de facto” control over CGAA, he must be considered a Principal because he occupied an equivalent position to OM, Chief Pilot, or PRM.

(3) Public Interest

[335] The Minister then considered the issue of public interest. The Minister suggested that CGAA's aviation record can be attributed to Mr. McIntosh, and that this record – as well as Mr. McIntosh's failures as OM and AE – indicates that he is incapable of holding a position of Principal in IAA.

[336] The Minister argues that Mr. McIntosh's failure in his duties with CGAA would cause mistrust on the part of the Minister, should Mr. McIntosh hold the office of President or Principal in a new company, and cited 2431‑9154 Québec Inc. v. Canada (Minister of Transport), 2007 TATCE 23 (Review), 2008 TATCE 18 (Appeal), TATC File No. Q‑3364‑09, to support this argument.

[337] The Minister submits that Mr. McIntosh's managerial style and disregard for regulatory compliance created a culture of non-compliance within CGAA, which in turn led to CGAA's aviation record. The Minister suggests that the Dorval overrun incident is proof that this culture existed prior to Transport's discovery of it.

[338] The Minister submits that the continually poor QA at CGAA is a further indication of Mr. McIntosh's management style.

[339] Mr. Parsonage testified that there were two years of technical records missing, and that the records were in this state when Mr. Bakker took over the PRM position. The Minister stated that CGAA did not live up to the conditions of issue under its AOC.

[340] The Minister cited several cases where public interest and safety were considered. The Minister proposed that because there is no precedent on a similar matter, that issuing an AOC to IAA would encourage others to form companies, ignore the safety‑related regulations, then shut down and restart new companies when the burden of their non-compliance became unsustainable. The Minister contends that this would cause a universal lack of confidence in Canadian aviation.

[341] The Minister proposes that the standard of reasonability for the Minister's decision is not the number of accidents, nor any negligence that has occurred. The Minister must be allowed, in the interest of public safety, to refuse to issue an AOC. The Minister submits that he must be able to act preventatively in order to ensure public safety.

B. Applicant

(1) No Aviation Record

[342] The Applicant's representative submits that neither the Applicant nor Mr. McIntosh has an aviation record. Mr. McIntosh's resume shows extensive managerial experience in large, sophisticated operations with no issues.

[343] The Applicant takes issue with the Minister's statement that he does not trust Mr. McIntosh as a President or Principal of a company, and notes that such a statement is essentially an attempt at blacklisting Mr. McIntosh from being President of a new company, something which is not contemplated or authorized by the Act.

[344] While the original NOR only used the wording of the Act, 19 months later the Minister applied to the Tribunal for an Amendment to the NOR, which contained 31 grounds to justify the NOR. The Applicant submits that the Minister used inflammatory statements throughout these grounds, and failed to demonstrate even one incident in which Mr. McIntosh displayed a disregard for either regulatory compliance or aviation safety.

[345] The Applicant submits that the Minister's case relies on the Tribunal finding Mr. McIntosh personally responsible for the failures of others and incorporating those failures into Mr. McIntosh's personal aviation record. The Applicant submits that there is no legal or common‑sense justification for doing this.

[346] The Applicant considered the case law discussed by the Minister, and distinguished the cases submitted by the Minister from the situation at hand because they dealt with individuals who were personally involved in and responsible for each of their company's infractions. The Applicant submits that, in this case, the Minister was quick to blame Mr. McIntosh on the basis of indirect responsibility, while consistently excusing and ignoring those who were directly responsible for CGAA's dismal aviation record. The Applicant suggests that the Minister must apply his standards equally, and to do otherwise is to engage in discrimination.

[347] The Applicant submits that while the Minister's case consisted almost entirely of producing evidence of CGAA's operations and failings, he then took the position that the Applicant and Mr. McIntosh were not entitled to question CGAA's aviation record.

(2) Accountability

[348] The Applicant then considered the definition of Principal, as per the CARs, and suggested that Mr. McIntosh could be considered a Principal of CGAA as: a) OM from CGAA's inception until March 2007; and b) AE from mid-2005 until March 2007, when he resigned from these positions.

[349] However, Mr. McIntosh was never a Principal through ownership of CGAA. Mr. McIntosh held a minority ownership of CGAA. CGAA was governed by a Unanimous Shareholders' Agreement that required the approval of either Mr. Andison or two‑thirds of the shareholders in order to make decisions.

[350] In order to hold Mr. McIntosh accountable as a Principal of CGAA after March 2007, when so many of CGAA's troubles occurred, the Minister argues he was a “de facto” AE. The Minister contends that his continued involvement in CGAA's operations – be it good or bad – was sufficient to make him a Principal. The Applicant submits that, by this logic, it would then follow that anyone who had any involvement in CGAA's operations would be a Principal and would consequently assume CGAA's record, thereby disqualifying such a person from holding an approved position in any Canadian air operation.

[351] The Applicant submits that all pilots and AMEs are routinely involved in operational decisions. Furthermore, correspondence is routinely directed to all executives of a company, and employees will interact to find out what is going on in other departments. This is not unusual or sinister.

[352] The Applicant cites the Tribunal Determination Air Mikisew v. (Canada) Minister of Transport, 2009 TATCE 21 (Review), TATC File No. W‑3351‑41, which states the following at paragraph [30]:

As a manager, one cannot be watching over employees 24 hours a day. Once they have been trained, and management is satisfied that they understand their function at the company, they must be trusted to do their job. It would be impossible to operate an air service without that trust in employees, due to the fact that they could, on any given day, be spread out, in this company's case, over western Canada.

[353] The Minister, however, is attempting to propose that a Principal, or someone simply involved in the operations of a company, should be held to a standard of absolute liability for all operational faults, without the defence of due diligence. The Applicant submits that this is highly unreasonable and notes that it is hardly justifiable for an individual of a company to face far harsher accountability than the company itself.

[354] The Applicant submits that paragraph 106.02(1)(a) of the CARs only contemplates accountability as being on behalf of the document holder; however, the Minister's case hinges on personal accountability. The Applicant pointed out that the CARs sections that outline the responsibilities and accountabilities of the OM (Standard 724.07(2)(a)), Chief Pilot (Standard 724.07(2)(b)) and PRM (section 573.04) conflict with the section of the CARs that places the entire responsibility of the whole operation on the AE (paragraph 106.02(1)(a)). The Applicant submits that it is inconsistent to hold Mr. McIntosh accountable as “de facto” AE for actions committed by other CGAA Principals who held direct responsibility. The Applicant notes that there are no authorities to support the Minister's theory of absolute vicarious liability, regardless of any personal control or involvement Mr. McIntosh may have had with CGAA.

(3) No Direct Involvement or Interference

[355] The Minister questioned Mr. McIntosh on why, after removing himself as AE, he kept interacting with his employees. The Applicant notes that Mr. McIntosh was still in the process of attempting to run a business, and that he was responsible for all aspects of the business.

[356] However, this does not prove that Mr. McIntosh was directly involved with every issue or problem at CGAA. Indeed, several of the Minister's witnesses noted that they had no direct information that would link Mr. McIntosh to the problems at CGAA.

[357] Inspector Risk was the only Transport Inspector who dealt with Mr. Bannatyne, who was CGAA's AE from March to December 2007. Inspector Risk provided evidence that Mr. Bannatyne knew about the problems at CGAA, and that Mr. Bannatyne believed Mr. Dastoor was on schedule to address them. Inspector Risk interviewed Mr. Kissock, the Safety Officer, who informed him that the individuals who held the Chief Pilot position prior to Mr. Cadenhead were delinquent in their duties, which led to some issues with defect reporting. Mr. Kissock noted that he was unaware of any pressure being put on pilots by Mr. McIntosh, and stated that if he, Mr. Kissock, ever became aware of any such pressure, he had the authority to go directly to the CEO with his concerns.

[358] The Applicant then highlighted Inspector White's testimony on cross-examination, where he conceded that many of the serious deficiencies in maintenance at CGAA were Mr. Bakker's responsibility as PRM. He noted that there were no aspects under this area of responsibility that were done well.

[359] The Applicant next examined other testimony which suggested that Mr. McIntosh had limited interaction with CGAA staff. For instance, Mr. Clarke testified that Mr. McIntosh did not interfere with the pilots, while Mr. McAdam stated that he did not report to Mr. McIntosh, but that he had contact with him for the purpose of being a resource as needed. Mr. McAdam confirmed that Mr. McIntosh never interfered in his work, and that both CGAA and Mr. McIntosh were safe.

[360] The Applicant submits that the Minister's witnesses confirmed that Mr. McIntosh had no direct involvement in all but the three incidents cited below. Consequently, the Minister is left with only these three occasions to try to justify his position:

(a) When Mr. McIntosh spoke with Mr. Durand in May 2007, concerning an unserviceable fuel pump;

(b)  When Mr. McIntosh spoke to a CGAA pilot in Winnipeg concerning altimeters; and

(c) Mr. Bileski's claims regarding statements Mr. McIntosh made at a meeting in November 2007.

[361] In addressing (a), the Applicant notes that Mr. Durand was asked if he was comfortable continuing with the flight with the pump repair deferred, and he stated that he was not. As such, he did not continue with the flight, and according to the Applicant, the repairs were done “then and there”. The Applicant suggests that the evidence of both Mr. McIntosh and Mr. Durand is consistent, and that there was no suggestion of any pressure.

[362] With regard to (b), the Applicant contends that Mr. McIntosh clarified the limits of a non‑RVSM altimeter to the pilots. The Minister is suggesting that Mr. McIntosh interfered and put pressure on the pilots to continue. However, the Applicant notes that Mr. McIntosh sent an email to both the Chief Pilot and the PRM (Mr. Bakker) (Exhibit A‑18), advising them of what had happened, and confirming that he did not put pressure on the pilots to continue.

[363] Responding to (c), the Applicant points out that Mr. Bakker was at the same meeting and did not confirm that the statement that it was Maintenance's job to convince the pilots to fly was made by Mr. McIntosh. Indeed, the Minister failed to even ask Mr. Bakker if such a statement was made in order to corroborate Mr. Bileski's version of events. The Applicant cited a leading Canadian text on evidence, Sopinka, Lederman, & Bryant, The Law of Evidence in Canada, 3rd ed. (Canada: LexisNexis Canada, 2009), on page 377, where it is stated that:

In civil cases, an unfavourable inference can be drawn when, in the absence of an explanation, a party litigant… fails to call a witness who would have knowledge of the facts and would be assumed to be willing to assist that party. In the same vein, an adverse inference may be drawn against a party who does not call a material witness over whom he or she has exclusive control and does not explain it away. Such failure amounts to an implied admission that the evidence of the absent witness would be contrary to the party's case, or at least would not support it.

[364] In applying this rule, the Applicant submits that because the Minister did not question Mr. Bakker (who attended the same meeting as Mr. Bileski) concerning the meeting, an unfavourable inference can be drawn that Mr. Bakker's testimony would not have supported Mr. Bileski's evidence on this point. The Applicant notes that this is a good reason to prefer Mr. McIntosh's version of the events.

[365] In considering the issue of pressuring pilots, Mr. Kissock, Mr. McAdam, and Mr. Clark all testified to the existence of Mr. McIntosh's non-interference policy. However, Mr. McIntosh, as OM and AE, would break this policy if a risk to safety was involved, as he did for instance, in the case of the co-pilot being allowed to taxi the aircraft.

(4) Maintenance Department

[366] The Maintenance department was examined in three different time periods: a) prior to January 2007; b) when Mr. Bakker was PRM, from January to December 2007; and c) in 2008, after Mr. Bakker was fired. The Applicant notes that prior to January 2007, CGAA learned through the Nasha audit and the December 2006 Transport inspection that CGAA had not yet performed an initial or QA audit. Inspector Smith testified that CGAA did not have a clue as to what their problems were.

[367] In November 2006, Inspector Smith also commented that one cannot expect a quality assurance program to happen overnight. As a result of the inspection in 2006 and the NOS that followed this inspection, Mr. McIntosh employed Mr. Dastoor full‑time on QA. It was clear in January 2007 that both Transport and CGAA expected CGAA's QA deficiencies would be cured through Mr. Dastoor's efforts, and that CGAA was on the right path.

[368] It was around this time that Mr. Bakker was interviewed and approved as PRM. Once again, a Transport inspection in November 2007 resulted in an inspection report that caused the suspensions of CGAA's AOC and AMO. Inspector White agreed on cross-examination that each deficiency was Mr. Bakker's responsibility and that not one area under the PRM was being done well. Mr. Bakker blamed all his failings on management and a lack of resources, and Transport accepted this.

[369] Although Transport approved a five‑step plan for Mr. Dastoor to implement, the testimony of Inspector White confirms that most of the plan was never implemented.

[370] Referring to the end of 2006, when the lack of QA was discovered, the Applicant submits that the Minister concededthat management—particularly Mr. McIntosh—would not have been aware of these problems. In March 2007, Transport removed Mr. McIntosh from the positions of OM and AE with no evidence that he had caused or condoned the underlying problems. The Applicant submits that when Transport found overwhelming evidence in December 2007 that Mr. Bakker was doing nothing right, he should have been removed.

[371] The Applicant submits that the Minister's witness, Inspector White, conceded on cross‑examination that he did not investigate CGAA's and Mr. Bakker's efforts to achieve sufficient staffing. This is illustrated by the following exchange between the Applicant's representative and Inspector White on pages 653 and 654 of the transcript:

Q[uestion] Okay, so it's [a] fair comment then that your snapshot really didn't look into the efforts that were or weren't being made, in fact, to provide staffing and the efforts that Mr. Bakker did or did not take to try and achieve sufficient staffing, is that correct?

A[nswer] My snapshot in time looked at the facts, which was the work not being done. That would be correct, that I wasn't looking at staffing records or things for the company.

[372] The Applicant notes that other witnesses expressed their concerns with Mr. Bakker. For example, Mr. McAdam testified that while he was unable to comment on Mr. Bakker's mechanical skills, his management skills were very poor.

[373] Mr. McAdam also testified that there were five mechanics, a stores person who was not being utilised correctly, and an untrained technical records clerk, working in the Maintenance department. As such, there were enough people there to do the work that needed to be done.

[374] Moreover, the Applicant notes Mr. Parsonage's testimony: “[t]he Maintenance management team that was in place were absolutely incompetent and dysfunctional”. He further commented that CGAA's maintenance costs were 30 per cent higher than that of other operators in the same category. According to Mr. Parsonage, CGAA was properly resourced, and the problem resulted from Maintenance management because “these guys didn't know how to do anything”.

[375] The Applicant argued that even if Mr. Bakker's incompetence required more people, he made no effort to hire them.

[376] The Applicant reviewed Mr. McIntosh's efforts to provide more Maintenance personnel. CGAA advertised in newspapers and several résumés were forwarded to Mr. Bakker. However, Mr. Bakker claimed that he was too busy working on the floor to do interviews.

[377] In his testimony, Inspector White gave his opinion that a PRM should “stop the bus” when things get out of control. However, he expressed concern that in spite of a new PRM and a new QA manager, it seemed that the same issues were recurring. He could not say that all the responsibility rested with the new PRM, but acknowledged that some of the responsibility rested with him.

[378] After Mr. Bakker was no longer working at CGAA, Mr. McAdam took his place. The Applicant notes that CGAA functioned differently under Mr. McAdam. Indeed, Mr. McAdam was able to find and hire people, and to train them. The Applicant suggests that Mr. McAdam had no issue with resources and managed to get the job done. The Applicant notes that the problems lay with Mr. Bakker, who failed in doing his job, but chose instead to blame Mr. McIntosh.

(5) Witness Credibility

[379] The Applicant submits that it is clear that the Minister's representatives are biased against Mr. McIntosh, even in the face of clear evidence that he played no personal role in the incidents cited. The Applicant contends that an institutional blindness exists in this instance that has Mr. McIntosh as its target.

[380] The Applicant submits that Mr. Clarke and Mr. McAdam are veterans in the airline industry, and also submits that Mr. Parsonage's outstanding résumé qualifies him to evaluate CGAA, and enables him to see where problems lie within the company.

[381] However, the Applicant submits that Mr. Bakker and Mr. Bileski are former disgruntled employees. The Applicant contends that Mr. Bakker's evidence was vague on important details and exaggerated when it came to making himself look good.

(6) Risk Assessments

[382] The Applicant argues that the risk assessment process lacked procedural fairness. The Applicant submits that the Tribunal is empowered to determine whether the tools used by the Minister to make his decision are appropriate. The Applicant contends that there was no direct evidence in this case to support the risk assessor's statements.

[383] The Applicant submits that while section 6.71 of the Act allows the Minister to refuse to issue an AOC based on the aviation record of the applicant and the Principal, it does not allow the Minister to refuse to issue an AOC based on assumed scenarios (as in the risk assessment) that have no basis in fact.

(7) Findings Requested

[384] The Applicant submits that the Minister's decision cannot be sustained and must be sent back for reconsideration. Furthermore, the Applicant requests that the Tribunal make a number of findings in the Review Determination, including that:

a) the Minister has not proven that the denial of an AOC is justifiable on a balance of probabilities;

b) the aviation record of a company cannot be assigned to a Principal in the absence of proof that the Principal was at fault;

c) there is no basis in law for the Minister to create “de facto” Principals;

d) there is nothing in CGAA's aviation record to indicate that Mr. McIntosh caused, permitted or condoned regulatory non-compliance;

e) Mr. McIntosh's aviation record is clear;

f) in the case of inconsistent evidence, the Member prefers the evidence of Mr. McIntosh based on the Member's assessment of credibility;

g) the Minister's finding that CGAA and Mr. McIntosh failed to provide adequate resources for Maintenance is not supported by evidence;

h) the risk assessment process is not a suitable or reliable tool in sections 6.71 or 7.1 of the Act; and

i) the Minister has displayed a bias against Mr. McIntosh that is not supported by the evidence.

C. Minister's Final Written Argument

[385] The Minister submits that he did not deprive Mr. McIntosh of his livelihood by denying the Applicant an AOC. Rather, the evidence on the record shows that Mr. McIntosh is currently employed in the air ambulance industry. The Minister alleges that the Applicant is attempting to mislead the Tribunal by stating that Mr. McIntosh's employment or livelihood is at stake.

[386] The Minister notes that as AE and/or President of CGAA, Mr. McIntosh placed the blame for CGAA's problems on the OMs, Chief Pilots or PRMs. This is inconsistent with his evidence that he wanted to have the opportunity to be responsible and welcomes the opportunity to be accountable.

[387] While the Applicant argues that Mr. McIntosh was never a Principal of CGAA through ownership control, the Minister clarifies that the control exercised by Mr. McIntosh was that of operational control over aviation operations, and not ownership control. The Minister notes that the Act is only concerned with operational control. In this instance, all the evidence points to the fact that Mr. McIntosh was directly involved with the operations of CGAA, even when he held no official position within CGAA.

[388] The Minister submits that there is no evidence before the Member to support the belief that safety will be paramount in the new company since there were so many problems with CGAA. Moreover, the Minister notes that no matter how many people occupied the OM position, the situation never improved throughout CGAA's existence. The only constant in CGAA was Mr. McIntosh.

[389] In considering the risk assessment process, the Minister contends that the decision to refuse to issue an AOC to the Applicant was based on the aviation record of CGAA as stated, and that the risk assessment was simply done to see if there was a possibility of issuing an AOC in spite of the aviation record.

[390] The Minister submits that he took all necessary steps to review Mr. McIntosh's background, his involvement in a previous airline company, and the way the company was operated. The Minister then evaluated all these factors and determined that it was reasonable to refuse to issue an AOC to the Applicant because he knew that Mr. McIntosh intended to be involved in the operations of IAA. The Minister submits that his decision not to issue an AOC to the Applicant is reasonable, and that the evidence presented at the Review Hearing has clearly established that it would not be in the public interest to issue an AOC to the Applicant.

D. Applicant's Letter of Response

[391] The Applicant's representative then responded to the Minister's statement that Mr. McIntosh was misleading the Tribunal when he stated that his employment or livelihood is at stake in this instance.

[392] The Applicant notes that Mr. McIntosh currently holds the position of President of LAW, a non-certificate holder, which promotes the business of Latitude Air Ambulance. He holds no operational control, other than as a pilot, over Latitude Air Ambulance. The Applicant submits that Mr. McIntosh was denied the opportunity to operate or to hold shares in this company, and that Inspector Davis was adamant that if Mr. McIntosh was directly involved, Latitude Air Ambulance would not be licensed.

[393] The Applicant submits that Transport is depriving Mr. McIntosh of the opportunity to earn a livelihood in his chosen occupation, and that it is unacceptable for the Minister to allege that Mr. McIntosh was misleading the Tribunal on this fundamental issue.

VI. ANALYSIS

A. Knowing the Case to Meet

[394] I will first address two issues that were troublesome to me during this Review Hearing. The first issue is the length of time that was allowed to lapse before giving Mr. McIntosh grounds and reasons for the decision to deny IAA an AOC. Paragraphs 6.71(1)(c) and (2)(c) of the Act state:

6.71 (1) The Minister may refuse to issue or amend a Canadian aviation document on the grounds that

[…]

(c) the Minister is of the opinion that the public interest and, in particular, the aviation record of the applicant or of any principal of the applicant, as defined in regulations made under paragraph (3)(a), warrant the refusal.

(2) The Minister shall, by personal service or by registered or certified mail sent to their latest known address, notify the applicant… of a decision made under subsection (1). The notice shall be in a form prescribed by regulation… and, in addition to any other information that may be prescribed, shall indicate, as the case requires,

[…]

(c) the reasons for the Minister's opinion referred to in paragraph (1)(c); [Emphasis added]

[395] The second issue is the Minister's attempt to prevent Mr. McIntosh from addressing the 31 grounds for which the Minister is trying to hold him accountable. The Minister's argument is that any defence against these counts is moot because CGAA's offences should have been addressed before the Tribunal at the time of the enforcement actions.

[396] The portion of Transport Canada's Aeronautical Information Manual, TP 14371 (TC AIM), relating to the Tribunal is very clear. In section 6.2 of Licensing, Registration and Airworthiness on page 389, it is indicated that:

Where the Minister decides to refuse to issue or amend a Canadian aviation document, he must notify the applicant of his decision, the grounds for the decision and the specific reasons those grounds apply. [Emphasis added]

[397] In this case, the Minister failed to provide the required notification within a reasonable timeframe. Although the Tribunal allowed the Minister to amend the initial NOR, it is nonetheless unreasonable that the Applicant – and in particular, Mr. McIntosh – was kept waiting for 19 months before knowing the case he had to meet. Transport's obligation to inform an applicant of the reasons for its decision exists at the time of issuance, not 19 months later.

B. CGAA's Record

[398] Moreover, the Minister insisted that Mr. McIntosh could not defend the use of CGAA's aviation record against him because CGAA did not dispute these enforcement actions before the Tribunal. The Minister submitted that the Tribunal could not vary the record established against CGAA at this stage, and cited two Tribunal Determinations in support of this approach: Spur Aviation Ltd. v. Canada (Minister of Transport), 1997 CAT File Nos. W‑1282‑20, W‑1283‑09, W‑1284‑09 (Review); and Nexjet Aviation Inc. v. Canada (Minister of Transport), 2006 TATC File No. O‑3248‑09 (Review).

[399] I have no intention of varying the record of CGAA. However, the Minister did not make Mr. McIntosh a party to any of his enforcement and licensing actions against CGAA. As such, the burden is on the Minister to demonstrate why Mr. McIntosh should be held responsible for the enforcement and licensing actions taken against CGAA.

C. Accountability

(1) Grounds

[400] Mr. McIntosh was the AE and OM of CGAA during the period in which the first 11 grounds involving CGAA occurred, including:

The Dorval runway overrun incident (December 1, 2006) in which a pilot attempted to brake without success and the aircraft completed its landing 200 meters past the end of the runway.

An inspection with regard to the QA program, which resulted in six negative findings.

A violation of subsection 706.07(1) of the CARs resulting in a fine of $4 000 for failing to establish and maintain an appropriate QA program.

A violation of subsection 573.09(1) of the CARs for failing to establish and maintain an adequate QA program, which resulted in a fine of $4 000.

Two Notices of Suspension were issued to CGAA on December 14, 2006. The suspension of the AOC was for non-compliance with the general conditions of the certificate pursuant to section 706.07 of the CARs, which states that 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; the suspension of the AMO was because CGAA had not complied with the general conditions of the certificate pursuant to section 573.09 of the CARs. However, it should be noted that CGAA met the conditions for terminating the suspensions prior to the suspensions coming into effect.

CGAA violated subsection 605.88(1) of the CARs for having conducted a take-off in an aircraft that had been subjected to any abnormal occurrence without having inspected the aircraft for damage. CGAA paid a fine of $3 500 for this violation.

CGAA did not comply with section 706.02 of the CARs, which prohibits operating an aircraft unless it is maintained in accordance with a maintenance control system. CGAA paid a fine of $3 500 for this violation.

CGAA did not comply with subsection 605.03(1) of the CARs, which prohibits operating an aircraft without an appropriate flight authority or operating the aircraft not in accordance with the conditions of the flight authority. As a result of this violation, CGAA paid a fine of $3 500.

CGAA failed to comply with subsection 605.94(1) of the CARs, which is concerned with proper recording in the journey logbook. CGAA paid a fine of $3 000 for this violation.

Finally, on or about March 15, 2007, an NOS was issued to CGAA for failing to comply with the general conditions of its AOC, and because the Minister was of the opinion that the public interest warranted it. The suspension came into effect on March 16, 2007; however, the conditions for the termination of the suspension were met and the suspension was terminated on March 21, 2007.

D. Assigning Accountability to Mr. McIntosh

(1) Direct Responsibility

[401] I am not satisfied that the violations that occurred during Mr. McIntosh's time as AE and OM are sufficient to justify denying an AOC to IAA. First of all, the vast majority of these incidents did not directly involve and/or were not directly attributable to Mr. McIntosh. This is distinguishable from the Tribunal jurisprudence presented by the Minister. Secondly, it must be acknowledged that Mr. McIntosh resigned as AE and OM at CGAA at the request of Transport. While Transport hoped that this would fix the problems at CGAA, witness testimony demonstrates that this was not the case, and the violations not only continued, but worsened.

[402] The occurrence of the first 11 grounds in and of themselves does not prove, on a balance of probabilities, that Mr. McIntosh – or any company of which he is Principal – is a risk to public safety, as alleged by the Minister.

[403] One of the terms of the NOS issued to CGAA on March 15, 2007, was the replacement of the AE and OM of CGAA. In order to comply with the NOS, Mr. McIntosh resigned from these positions. Since Mr. McIntosh resigned as AE and OM on Transport's demand, it seems unfair to attempt to hold him accountable for the remainder of the 31 grounds brought against CGAA after he had resigned from these positions.

[404] The Tribunal jurisprudence cited by the Minister in support of his arguments is easily distinguished from the case at hand. Indeed, in both Spur Aviation Ltd. and Nexjet Aviation Inc., the AOC holder and the Principal had dismal aviation records. In this Review Hearing, neither the Applicant nor Mr. McIntosh holds any aviation record. The Principals cited in the Minister's cases were openly contemptuous of the CARs and put public safety at risk. This has not been proven of Mr. McIntosh, and it is clearly unreasonable to assume that IAA, having never operated, is a risk to public safety.

[405] The Minister also cited the case of 2431‑9154 Québec Inc. in which each of the Applicants and the Principal were involved in a single person operation. This is clearly distinguishable from a company of the “size, scope and complexity” of CGAA, as noted in Inspector White's testimony.

[406] Indeed, as was noted in Air Mikisew:

As a manager, one cannot be watching over employees 24 hours a day. Once they have been trained, and management is satisfied that they understand their function at the company, they must be trusted to do their job. It would be impossible to operate an air service without that trust in employees, due to the fact that they could, on any given day, be spread out, in this company's case, over western Canada.

[407] Once Transport approves a candidate for a Principal position, it accepts no responsibility for this individual's job performance. Once approval by Transport is obtained, a confidence in the individual is created and the employer places trust in this person. A bond of trust is created between Transport, the employer, and the employee.

[408] Unfortunately, it seems that Mr. McIntosh's trust in some of the employees of CGAA was misplaced. To make matters worse, Mr. McIntosh worked from a different location and was unable to monitor the daily operation of CGAA's Maintenance department; he had no choice but to trust his PRM to do his job with the necessary care and attention.

[409] There is no solid evidence that Mr. McIntosh directed, controlled, or otherwise committed any of the violations relied upon by Transport to deny an AOC to IAA. At best, the Minister has demonstrated Mr. McIntosh's employment with CGAA, as well as his minor involvement in situations that resulted in CARs breaches.

[410] I have already addressed the 11 grounds that I believe could potentially be attributed to Mr. McIntosh in his roles as AE and OM, and have noted that he was not directly involved in the vast majority of these incidents. I do not think Mr. McIntosh should be held directly responsible for the transgressions of other CGAA employees.

(2) Indirect Responsibility

[411] After his removal as AE and OM in March 2007, Transport maintains that Mr. McIntosh acted as a “de facto” AE because of his continued involvement in CGAA. However, there is no reference to a “de facto” AE in the Act. Mr. McIntosh was not the AE when most of the grounds relied on by the Minister occurred, as he was essentially forced to resign from this position. As such, it would be both counter‑intuitive and unfair to place the responsibility for these grounds directly on Mr. McIntosh when another AE was in place at that time.

[412] The Minister also alleges that Mr. McIntosh was Principal by virtue of his position as President of the company. However, a President is not listed as a principal in the CARs and the Minister has not convinced me that his role as President is equivalent to that of the AE and/or the OM. Furthermore, I am concerned that Transport's argument seems to suggest a company's record could be attributable to each and every high-ranking individual within the company. I do not believe this is the intention of the Act.

[413] The Minister also suggests that Mr. McIntosh should be held accountable for CGAA's record as an owner. However, the evidence before me shows that Mr. McIntosh had little-to-no control over CGAA as a minority shareholder. Indeed, the Unanimous Shareholders' Agreement attests to the fact that as a minority shareholder he could not control CGAA as a controlling owner and he could not override the Unanimous Shareholders' Agreement.

[414] Indeed, it seems that the Minister is attempting to hold Mr. McIntosh responsible for incidents that were far beyond his control. For example, I am unclear as to why Transport would try to connect Mr. McIntosh with the Dorval overrun incident (Ground 1 of the NOR). In that case, there was no evidence that enforcement action was taken against the crew or CGAA. Moreover, the pilot in this instance ignored or overlooked obvious warnings from the aircraft that he had a problem. It is interesting to note that this pilot was brought into CGAA as a direct entry captain by the Chief Pilot over Mr. McIntosh's objections. What is more, this pilot was appointed by Transport as a line check pilot. As such, the incident could have occurred while the pilot was acting on the Minister's behalf. If this were the case, it would be equally as unreasonable to hold the Minister responsible for the pilot's actions as it is to attempt to hold Mr. McIntosh responsible in the case at hand.

[415] Pursuant to section 8.4 of the Act, vicarious liability can be imposed on an operator of an aircraft for the actions of its employees. In this vein, CGAA was held vicariously liable for the CARs violations on behalf of its employees, as noted in many of the grounds before the Tribunal. However, Mr. McIntosh was not directly involved with most of these violations. It is an illogical leap to then conclude that Mr. McIntosh should be held accountable for the actions of the company that was itself held vicariously liable for these violations. In essence, such an approach results in holding Mr. McIntosh directly responsible for any mistakes made by his colleagues, who also attract responsibility pursuant to the Act.

[416] Furthermore, specific responsibilities have been assigned to specific individuals and Principals in the CARs. For example, the CARs place the sole burden for QA on the PRM. Why would the CARs assign this specific responsibility to the PRM if in the end, any or all of the AE, the President, and minority shareholders could be liable for a PRM who refused to fulfill his obligations? It appears in this instance that many of the employees of CGAA who violated the CARs were not held accountable by Transport. Rather, Transport held CGAA vicariously liable, and is now attempting to hold Mr. McIntosh responsible by association.

[417] I also wish to comment on the communications originating from Mr. MacNab. The Minister requested that I accept these emails and assign them weight because they are corroborated by other evidence. Mr. MacNab proposed that CGAA's aviation record could also be Mr. McIntosh's, since he held so many positions within CGAA. However, the wording of Mr. MacNab's correspondence (including such words as “consideration”, “evaluation”, and “verify”) suggests only a possibility of responsibility. The Minister has failed to provide adequate evidence to back up this theory.

[418] I am not convinced by the Minister's arguments that CGAA's record can be reasonably attributed to Mr. McIntosh. This is especially so after March 2007, when Mr. McIntosh was essentially forced to resign as AE and OM. The Minister has not proven, on a balance of probabilities, that Mr. McIntosh should be held responsible for this record as “de facto”AE, minority shareholder, or otherwise.

(3) Public Interest and Safety

[419] In denying a Canadian aviation document based on public interest and public safety, it is incumbent on the Minister to provide clear evidence of the occurrence of serious events that can be directly linked to either the Applicant or a Principal of the Applicant. There is no sufficient proof in this case that either Mr. McIntosh or the Applicant acted in any manner that would have compromised public safety.

[420] In fact, I find that much of the evidence before the Tribunal demonstrates that Mr. McIntosh acted with due diligence during his time at CGAA. For example, once Mr. McIntosh became aware of regulatory non-compliance in the Maintenance department, he took immediate action: he hired an auditor, Mr. Dastoor, and when he failed, he hired another at his own expense. He also developed and submitted many corrective actions plans. He made great efforts to find help for his PRM, Mr. Bakker, who never managed to hire the employees he needed to get the job done well. Indeed, much of the evidence before me points to dedication and diligence on the part of Mr. McIntosh with regard to his responsibilities towards CGAA.

[421] Consequently, I find that the Minister has failed to demonstrate, on a balance of probabilities, that it is in the public interest to deny the Applicant an AOC.

(4) Purpose of Paragraph 6.71(1)(c) of the Act

[422] Furthermore, the Tribunal wishes to note its concern with Transport's use of section 6.71 of the Act as a preventative measure on a company and an individual with no aviation record. This section is clearly intended to assign accountability to those who have a problematic aviation record. CGAA has such a record; however, neither Mr. McIntosh nor IAA has any record to speak of.

(5) Livelihood

[423] The next issue I wish to address is the Minister's denial that Mr. McIntosh's livelihood is being affected by denying IAA an AOC because he has employment. I agree with the Applicant that Mr. McIntosh's livelihood is indeed being affected. The Minister's decision in this case essentially prevents Mr. McIntosh from advancing in his chosen profession; for example, he cannot take part in the operational control of an air carrier, nor can he hold a supervisory position as a check captain. Furthermore, Mr. McIntosh's professional reputation has been affected by Transport's actions and accusations in this case. As noted in Bancarz v. Canada (Minister of Transport) 2005 TATC File No. W‑3058‑27 (Review):

To establish incompetence or public interest concerns, it is not enough for the Minister to make allegations or statements without adequate proof where the consequence is to terminate someone's career with an action that is tantamount to cancelling a licence.

(6) Credibility

[424] Mr. Bakker's testimony was also raised. He stated that when he started with CGAA, there were five years of mess to deal with. However, this statement places the reliability of Mr. Bakker's testimony in doubt, as there were not five years of mess, as the company had not been in existence that long. Rather, there were three years of mess to address. For this reason, I am inclined to give Mr. Bakker's testimony less weight.

[425] On the other hand, I found Mr. McIntosh's evidence to be clear and consistent. His evidence was corroborated by Transport witnesses who stated that Mr. McIntosh was sincere in his efforts to establish a compliant organization and that in March 2007, he was sincerely trying to fix things at CGAA.

(7) Reconsideration

[426] I have no jurisdiction over the Minister's reconsideration panel. However, with the knowledge of the holdings of the Federal Court in Bancarz v. Minister of Transport,2007 FC 451,and in consideration of the evidence provided by Mr. Clarke with regard to the unfortunate relationship between Mr. McIntosh and the Transport officials in the Winnipeg region, I would recommend that the reconsideration panel be chosen independently from the Winnipeg region. It is also my hope that Mr. McIntosh be allowed representation before the reconsideration panel.

VII. DETERMINATION

[427] The Minister of Transport has not proven, on a balance of probabilities, that the public interest, specifically the aviation record of the Applicant or of any Principal of the Applicant, warrants the refusal to issue an Air Operator Certificate to Independence Air Ambulance Corporation. This matter is referred back to the Minister of Transport for reconsideration.

March 20, 2013

P. Terry Dowd

Member


Interlocutory Decision
Patrick T. Dowd


Decision: November 20, 2013

Citation: Independence Air Ambulance Corporation v. Canada (Minister of Transport), 2013 TATCE 35 (Ruling)

RULING ON APPLICANT'S REQUEST FOR COSTS

Held: I find that the Tribunal became seized of this matter for reasons that are frivolous and vexatious within the meaning of paragraph 19(1)(a) of the Transportation Appeal Tribunal of Canada Act. As such, the Applicant's Request for Costs is granted.

A payment of costs totalling $54 200 is due to the Applicant within thirty-five (35) days of service of this Ruling.

I. BACKGROUND

[1] On June 24, 2009, the Minister of Transport (Minister) issued a Notice of Refusal (NOR) to the Applicant, Independence Air Ambulance Corporation (IAA), denying it an Air Operator Certificate (AOC) because of the aviation record of the Applicant, but more specifically due to the aviation record of Jeffrey Alan McIntosh, who was described as a principal at IAA.

[2] On June 25, 2009, the Applicant requested a review of the Minister's decision with the Transportation Appeal Tribunal of Canada (Tribunal). The Review Hearing was scheduled to occur from December 7 to 10, 2010. However, on November 26, 2010, the Minister requested an adjournment of the Review Hearing for the Minister to fulfill its ongoing disclosure obligation, and the adjournment was granted.

[3] It appears that the period of the adjournment was used by the Minister to prepare an Application to Amend the NOR, which was presented to the Tribunal on February 23, 2011. In the amended NOR, the Minister cited 31 incidents, enforcement actions, and problems in general, which occurred during the existence of Canadian Global Air Ambulance Ltd. (CGAA). The Minister proposed that these events could be attributed to Mr. McIntosh. To accomplish this, the Minister's officials relied on their interpretation of paragraph 6.71(c) of the Aeronautics Act, R.S.C., 1985, c. A‑2 (Act), as well as section 103.12 of the Canadian Aviation Regulations, SOR/97‑433 (CARs).

[4] In the Review Determination, I found that the Minister had not proven that the record of CGAA was attributable to Mr. McIntosh. As such, I sent the Minister's decision to deny an AOC to IAA back to the Minister for reconsideration.

[5] Following the Review Determination, the Applicant requested, on June 25, 2013, that an order be made against the Minister for costs, as well as a reimbursement of expenses for a number of reasons relating to the Minister's conduct, which were elaborated in his written submissions described below.

II. STATUTES AND REGULATIONS

[6] Subsection 19(1) of the Transportation Appeal Tribunal of Canada Act, S.C. 2001, c. 29 (Tribunal Act), reads 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;

(b) a party that files a request for a review or an appeal and does not appear at the hearing does not establish that there was sufficient reason to justify their absence; or

(c) a party that is granted an adjournment of the hearing requested the adjournment without adequate notice to the Tribunal.

[7] Subsection 6.71(1) of the Act reads as follows:

6.71. (1) The Minister may refuse to issue or amend a Canadian aviation document on the grounds that

(a) the applicant is incompetent;

(b) the applicant or any aircraft, aerodrome, airport or other facility in respect of which the application is made does not meet the qualifications or fulfil the conditions necessary for the issuance or amendment of the document; or

(c) the Minister is of the opinion that the public interest and, in particular, the aviation record of the applicant or of any principal of the applicant, as defined in regulations made under paragraph (3)(a), warrant the refusal.

[8] Paragraphs 103.12(a) to (d) of the CARs read as follows:

103.12. For the purposes of subsection 6.71(1) and paragraph 7.1(1)(c) of the Act, “principal” means

(a) in respect of an air operator,

(i) any person who is employed or contracted by the air operator on a full- or part-time basis as the operations manager, the chief pilot or the person responsible for the maintenance control system, or any person who occupies an equivalent position,

(ii) any person who exercises control over the air operator as an owner; and

(iii) the accountable executive appointed by the air operator under section 106.02;

(b) in respect of a private operator,

(i) any person who is employed or contracted by the private operator on a full- or part-time basis as the operations manager, the chief pilot or the person responsible for the maintenance control system, or any person who occupies an equivalent position, and

(ii) any person who exercises control over the private operator as an owner;

(c) in respect of an approved maintenance organization,

(i) any person who is employed or contracted by the approved maintenance organization on a full- or part-time basis as the person responsible for maintenance,

(ii) any person who exercises control over the approved maintenance organization as an owner; and

(iii) the accountable executive appointed by the approved maintenance organization under section 106.02;

(d) in respect of an approved training organization,

(i) any person who is responsible for the quality control system, or any person who occupies an equivalent position, and

(ii) any person who exercises control over the approved training organization as an owner;

III. ARGUMENTS

A. Applicant

[9] The Applicant's Representative submits that by giving the Tribunal jurisdiction to award costs, Parliament must have intended that the Tribunal would exercise this authority. The Applicant's Representative submits that costs in this instance are appropriate under paragraphs 19(1)(a) and (c) of the Tribunal Act. The Applicant's Representative submits that costs are not the indemnification of a successful party, but are rather intended to penalize a party for the institution of a matter for an improper purpose.

[10] The Applicant's Representative submits that there are a number of factors in this instance, which indicate that the Minister's conduct may be considered frivolous or vexatious, including the following:

  1. Serious or egregious conduct, perhaps even malice on the part of the Minister's officials;
  2. The actions of the Minister lacked merit and were intended to embarrass or annoy the Applicant;
  3. The Minister's interpretation is so unreasonable as to be frivolous or vexatious;
  4. The Minister's notice had no legal merit or was instituted for an improper purpose, such as the harassment or oppression of the Applicant;
  5. It is obvious that the action of denying the Applicant an AOC cannot succeed;
  6. The whole history of the matter needs to be examined, not simply whether there was originally a good cause of action;
  7. There are insufficient grounds for action; as such the charge is futile.

[11] However, the Applicant's Representative acknowledges that there are factors that may overcome a situation that is otherwise considered frivolous or vexatious, including simple errors of judgment; that the charge deals with a substantive issue; and/or if the Minister's interpretation is reasonable from an operational or safety perspective.

[12] The Applicant's Representative notes that, prior to the Review Hearing, the Minister provided the Applicant with disclosure which included 22 binders of documents, as well as electronic documents comprising 74.6 megabytes (mb) of data on a compact disc (CD). The Applicant's Representative states that “determining what was relevant was like trying to fish a gold coin from a barrel of mud”.

[13] Furthermore, the Applicant's Representative notes that the original NOR provided no grounds for refusal, and that the 31 grounds for refusal listed on the amended NOR were not found by the Review Member to be attributable to Mr. McIntosh. In fact, the Applicant's Representative notes that “both the Applicant and Mr. McIntosh personally have clean records”.

[14] The Applicant's Representative argues that the Minister was institutionally blind to the evidence before him that Mr. McIntosh was trying to operate CGAA safely, and alleges that there was a bias against Mr. McIntosh in this case that spread across Transport Canada. Moreover, the Applicant's Representative submits that there were many actions taken by the Minister in a frivolous and vexatious manner in this case, including the following:

  1. Requesting an adjournment the week before the case was set to be heard, and rather than using the adjournment to provide additional disclosure, making a motion to alter the case by rewriting the NOR to include 31 grounds for the refusal. This demonstrates a lack of candor, created inordinate delays, and caused prejudice to the Applicant;
  2. Objecting to the Applicant's questioning of CGAA's record, even when it was directed at Mr. McIntosh. This attempt to prevent the Applicant from defending himself is contrary to the principles of Canadian justice, and is clearly frivolous and vexatious;
  3. Embellishing evidence on the part of the Minister's witnesses and Representatives. For example, Inspector Davis refers to “numerous” incidents of Mr. McIntosh interfering with pilots, which he acknowledged to be an exaggeration on cross‑examination. Similarly, Inspector Gaudry spoke in his testimony about an incident involving a “strong” smell of smoke in the cockpit, which he later conceded was an embellishment;
  4. The Minister's Representative making inflammatory comments during the Review Hearing and in his written submissions, including the following: “Jeff McIntosh's negligence toward his responsibility as both Operations Manager and Accountable Executive of Canadian Global Air Ambulance”; the description of Mr. McIntosh as being “a person who might get a document to start an aviation company and have a big accident and problems repeating again and we don't want that. We're lucky nobody died”; as well as the Minister's suggestion that “the standard for the responsibility of the Minister's decision should not be the number of casualties caused by a negligent air operator”;
  5. Criticizing Mr. McIntosh for not interfering in the operations of CGAA after he was removed as Accountable Executive of the company;
  6. Assigning CGAA administrative penalties when it self-reported the safety failures of its staff, while those directly involved in the incidents were ignored;
  7. Undertaking a biased risk assessment that was designed to justify an adverse outcome for the Applicant;
  8. Suspending CGAA's AOC following the November 2007 audit on the basis that CGAA did not provide adequate resources for maintenance, while not asking management about the issue;
  9. Suggesting that the Minister's actions in this case did not affect Mr. McIntosh's livelihood because he was still working in the industry; and
  10. Approaching this issue with an attitude of malice, spite, harassment, and oppression towards Mr. McIntosh, as evidenced by Robert Winston Clarke's testimony.

[15] The Applicant's Representative argues that the unreasonableness and lack of logic or fairness in the Minister's arguments preclude a finding that this was simply an error of judgment. The Minister's theory regarding guilt through association is not a serious issue to be tried, and is not a policy that the Minister has advanced before or since. Such a policy would effectively disqualify anyone in the industry who held a management position in an air carrier that had a safety or enforcement record.

[16] The Applicant's Representative submits that while individually these incidents may not establish malice or spite, when considered together, they create a clear pattern of acting without reasonable grounds or legal merit. This behaviour undoubtedly rose to the level of harassing and oppressing Mr. McIntosh.

[17] The Applicant's Representative argues that this is an exceptional case where costs are necessary to deter the Minister from such actions in the future. The Applicant's Representative submits that the Minister's 2012 budget was close to $1.8 billion. As such, a nominal awarding of costs and expenses would not have any effect of deterrence on the Minister.

[18] In quantifying costs, the Applicant's Representative cited total costs of $108 485.97, including legal fees, preparation fees, and travel expenses. Furthermore, the Applicant's Representative suggests that the Applicant had to dedicate over 64 days to prepare for and participate in the Review Hearing process. The Applicant's Representative argues that Mr. McIntosh will never get full compensation for his financial losses or for the damage incurred to his reputation.

B. Minister

[19] The Minister submits that the factual circumstances leading to the issuance of the NOR are important in this case, including the chronology of events prior to the NOR's issuance. The Minister notes that CGAA started its operations in 2003 and had a history of contraventions and multiple findings during audits and Program Validation Inspections (PVIs). CGAA was a poorly managed company, and this fact was admitted by the Applicant's Representative as well as Mr. McIntosh himself.

[20] The Minister submits that CGAA went bankrupt in October 2008. Six months later, Mr. McIntosh attempted to obtain a new AOC under a new company name, IAA. The Minister submits that his officials acted prudently in determining that the denial of an AOC to IAA was a reasonable course of action.

[21] Moreover, while the Applicant alleges that the Minister did not prove the 31 grounds contained in the NOR, the Minister submits that this is a wrong interpretation of the Review Determination. Rather, the Review Member found that for the first eleven grounds of the amended NOR, the aviation record of CGAA was proven, as was the fact that Mr. McIntosh was the Accountable Executive and Operations Manager at that time. Indeed, it was only the link between the incidents described in the aviation record of CGAA and Mr. McIntosh's responsibility that the Review Member determined were not proven. The Review Determination is clear that the first eleven counts were proven but were not enough to justify denying the Applicant's request for an AOC. For the last twenty grounds, the Review Member found that there was not enough evidence to prove that Mr. McIntosh had major involvement in these incidents.

[22] The Minister submits that there were many relevant and substantive questions raised in this case that were not necessarily directed towards Mr. McIntosh himself, but were of general significance, including the following: who the principal is for the purposes of paragraph 6.71(1)(c); whether a principal could be accountable for the actions of a company; whether a principal could be accountable for the actions of a company even though he did not have an official position in the company; and if a person could be considered a principal if they have great influence in the company, even if they do not hold any official position in the company.

[23] The Minister submits that his actions were not frivolous and vexatious in this case, and that costs should not be awarded pursuant to section 19 of the Tribunal Act. The Minister submits that the term “frivolous and vexatious” has been defined by other reviewing bodies to apply when a party brings an action to determine an issue that has already been determined, or when a party brings an action which cannot succeed. The British Columbia case of Croll v. Brown, 2002 BCCA 522 (Croll) lists relevant criteria for determining if a matter is frivolous or vexatious, including the following:

  1. The action is being brought to determine an issue which had already been determined;
  2. It is obvious that the action cannot succeed, or that no reasonable person can reasonably expect to obtain relief;
  3. An action is brought for an improper purpose, including the harassment and oppression of other parties;
  4. That a reviewing body must examine the whole history of the matter and not just whether there was originally a good cause of action;
  5. The failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings;
  6. The respondent's conduct in persistently making unsuccessful appeals of judicial decisions.

[24] The Minister submits that given the criteria listed in Croll, it is clear that the term “frivolous and vexatious” is limited to situations where there is an egregious abuse of the legal process, and where a litigant attempts to use a reviewing body to create havoc and annoyance rather than to resolve a legal dispute.

[25] The Minister argues that it is not frivolous and vexatious to exercise a legislative duty. As such, no costs should be awarded against the Minister when he is acting within his mandate and no special circumstances justify an awarding of costs.

[26] The Minister submits that the Tribunal determined in Kipke v. Canada (Minister of Transport), 2013 TATCE 13, TATC file no.:C‑3449‑33 (Appeal) (Kipke), that the matter in Kipke could not be considered frivolous or vexatious because it was an area of law that had been previously unsettled. Similarly, the questions before the Review Member in this case had not previously been determined. Moreover, the Minister and his officials acted in good faith, and the measures taken were a result of the facts of the case before them.

C. Applicant's Reply

[27] While the Minister suggests that the Tribunal had to consider the question of who is a principal in a company, the Applicant submits that this is defined in the CARs. The Minister is not entitled to replace the definition in the CARs with his own definition, although this is what he sought to do in the case at hand. According to the Applicant, “these are not ‘very relevant and substantial questions to ask'; they are a blatant over-stepping of jurisdiction”.

[28] Indeed, section 8.4 of the Act determines when vicarious liability can be imposed, in that an aircraft owner or operator may be liable for the actions of others in respect of the aircraft. However, it does not make a principal liable for an air carrier's transgressions, nor that of its employees. The Review Member described such a proposition as “an illogical leap” and “both counter-intuitive and unfair”.

[29] While the Minister argued that the notion of frivolous and vexatious is limited to situations where a litigant is using a reviewing body to create havoc and annoyance through the legal process, the Applicant submits that the Minister is confusing jurisprudence related to vexatious litigants with the context and intent of frivolous and vexatious pursuant to paragraph 19(1)(a) of the Tribunal Act.

[30] Furthermore, the Applicant submits that Transport Canada has publicly stated on its website that there is no personal liability associated with the position of an Accountable Executive, and that “although CAR 106.02(1)(a) stipulates that the Accountable Executive is accountable on behalf of the certificate holder for meeting the requirements of the regulations … the certificate holder is ultimately responsible …” Moreover, Transport Canada has also publicly stated on its website that “the Aeronautics Act does not assign any personal liability to the Accountable Executive for the actions of others”, and that “if an Accountable Executive is not performing his or her duties satisfactorily, this may be grounds for suspension of one or more of the organization's certificates”.

[31] The Tribunal has determined that costs with respect to Tribunal hearings should be used to dissuade any future inappropriate behaviour. In this case, the Minister's actions defy the following: the law; the facts of the case; reason and logic; as well as belie the Minister's commitments to the industry on the point in question.

[32] Accordingly, the Applicant requests that an order of costs be granted to ensure that this decision is meaningful for both Mr. McIntosh and the Minister.

IV. DISCUSSION AND ANALYSIS

[33] I have reviewed my Determination, the parties' submissions, and the case law submitted by the parties. I am mindful that my decision must be reasonable and objective, and may be guided by Tribunal jurisprudence.

A. Tribunal Jurisdiction Regarding Costs

[34] Under section 19 of the Tribunal Act, the Tribunal may award any costs, and may require the reimbursement of any reasonable expenses incurred in connection with a hearing if the Tribunal is seized of the matter for reasons that are frivolous or vexatious.

[35] Tribunal jurisprudence to date concerning costs demonstrates a reluctance to use section 19 of the Tribunal Act. Indeed, Members have used expressions such as “exceptional,” “rarest of circumstances”, and “errors in judgement” to describe when an awarding of costs and/or expenses might be appropriate. While individually these decisions are understandable, collectively they have the effect of giving the impression that the Tribunal will never apply this section of the Tribunal Act. However, I do not believe that section 19 of the Tribunal Act was meant to be ineffective.

B. Whether Costs Are Appropriate

[36] The Applicant in this case is seeking costs under paragraphs 19(1)(a) and (c) of the Act, which contemplate an awarding of costs if the Tribunal is seized of a matter for reasons that are frivolous and vexatious, and if a party that is granted an adjournment of the hearing requested the adjournment without adequate notice to the Tribunal, respectively.

[37] The basis for the Minister's actions in this case was a novel interpretation of paragraph 6.71(1)(c) of the Act and section 103.12 of the CARs. However, I believe that a simple review of paragraph 6.71(1)(c) of the Act, using the plain language rule of statutory interpretation, defeats the Minister's interpretation of this section in the case at hand. As such, I do not believe that there was a reasonable cause of action in this instance; rather, I believe that the Minister's action lacked legal merit. This is not a case of a simple error in judgment on the part of the Minister; rather, it appears to be an attempted manipulation of the Act. Indeed, neither IAA nor Mr. McIntosh has an aviation history of enforcement actions. Consequently, it is puzzling to me that the Minister has categorized Mr. McIntosh as a threat to public safety and has argued that granting an application to IAA would be contrary to public interest.

[38] It is also interesting to note that the Minister has already determined and publicly stated that the Accountable Executive will not be held personally liable for the conduct of the company (see, for example, Transport Canada's description of the AE on its website under Safety Management Systems). I find it improbable that the two counsel for the Minister and his nine witnesses, most of whom held very senior positions within Transport Canada, would be unaware of this publicly-stated policy. Not only was the amended NOR an egregious breach of the Minister's policy, but using these grounds to justify a denial of an AOC is without merit and could not possibly succeed.

[39] The Ontario Court of Appeal held in Foy v. Foy, 26 O.R. (2d) 220 (Foy), that a case is frivolous if it has no reasonable chance of succeeding or would lead to no possible good, and is vexatious if it would bring hardship on the opposite party to defend something which cannot succeed, or which has already been determined. I am of the opinion that the Tribunal was seized of this matter for reasons that were frivolous or vexatious, as I find that the conduct of the Minister in this instance can be described in the manner found in Foy.

[40] Mr. Clarke's testimony is important in describing the Minister's conduct in this instance. In particular, Mr. Clarke credibly described the unprofessional and subjective conduct of the Minister's officials during a March 2008 meeting. Mr. Clarke's evidence on the tone and atmosphere of this meeting, as well as the fact that he was taken aside by Transport Canada personnel for the purpose of negatively discussing Mr. McIntosh, convinces me there was vexatious conduct on the part of some of the Minister's officials present at the meeting.

[41] The Minister's officials overreached in their use of section 103.12 of the CARs. In the Minister's novel interpretation and application of the CARs, the Minister attempted to convince me that a very minor ownership in CGAA, as well as Mr. McIntosh's mere presence, could be used as de facto proof of Mr. McIntosh's position as a principal in the company. This, in turn, was done so that the Minister could arbitrarily attribute CGAA's record to Mr. McIntosh.

[42] Furthermore, I believe that some of the 31 counts the Minister attempted to use to justify the denial of an AOC to IAA were completely unreasonable. For instance, the accident described in Count 1 was caused by a pilot who had not been hired, trained, or checked as a captain by Mr. McIntosh. Furthermore, Mr. McIntosh objected to this pilot being hired by the Chief Pilot as a direct entry captain. Most importantly, however, there was no evidence presented to show that any enforcement action was taken against CGAA. Consequently, it is clearly frivolous to attempt to use this non-existent record against Mr. McIntosh, who had no immediate connection to this accident.

[43] While I could continue dissecting the grounds the Minister's officials used to deny an AOC to IAA, to do so would not be productive. Suffice it to say that the Minister's attempt to transfer blame for many of these instances onto Mr. McIntosh was an illogical leap and suggests these decisions were made with little objective basis. Based on my previous interactions with Transport Canada, I hold the Minister's officials and their legal representatives in the highest possible regard; I can only assume their actions in this instance were very atypical.

C. Amount of Costs

[44] Mr. McIntosh's career has been put on hold for approximately three years. This period of time can never be returned to him. He has been deprived of time and money in order to defend himself against a legal action that, from an objective standpoint, never should have been started. As well, his reputation and credibility have been tarnished within the aviation community. Consequently, I believe an awarding of costs is appropriate under paragraph 19(1)(a) of the Tribunal Act.

[45] The next issue to be determined is the specific amount of costs that is appropriate in this instance. The Tribunal held in Drader v. Canada (Minister of Transport), 2007 TATCE 7, TATC file no.: P-3203-33 (Review) (Drader), that paragraph 19(1)(a) does not contemplate the indemnification of a successful party; rather, it contemplates the penalization of a party for the institution of a matter for an improper purpose. As such, Drader found that the tariff pursuant to the Federal Courts Rules, SOR/98‑106, would not be helpful in determining costs owing at the Tribunal.

[46] When costs are required to reflect inappropriate behaviour in the Federal Court, they may be determined on a substantial indemnity basis. Indeed, as stated in Canadian Generic Pharmaceutical Assn. v. Canada (Minister of Health), 2011 FC 1345, an awarding of substantial indemnity costs may be ordered in the Federal Court when there has been “reprehensible, scandalous or outrageous conduct”. One such example of this occurred in Air Canada v. Toronto Port Authority, 2010 FC 1335, where Hughes J. awarded 50 per cent of the costs claimed.

[47] In order to award costs, the Tribunal Act requires a finding that the Tribunal was seized with a matter for reasons that are frivolous or vexatious. I have determined that this has been demonstrated in this instance, and also that the conduct of some of the Minister's officials reached the level of being frivolous and vexatious. However, it is important to note that I am not making a finding that the conduct of any party in this instance reached the level of being reprehensible, scandalous, or outrageous. Nevertheless, I believe that awarding costs on a substantial indemnity basis is appropriate in this case, as the Tribunal was seized with this matter for reasons that are frivolous and vexatious.

[48] As I have determined that the threshold for costs pursuant to paragraph 19(1)(a) has been met, I have calculated the resulting costs on a substantial indemnity basis. The Applicant has stated that his expenses to date total $108 485.97. I am awarding the Applicant approximately 50 per cent of this sum, for a total of $54 200.

V. RULING

[49] I find that the Tribunal became seized of this matter for reasons that are frivolous and vexatious within the meaning of paragraph 19(1)(a) of the Transportation Appeal Tribunal of Canada Act. As such, the Applicant's Request for Costs is granted.

November 20, 2013

Patrick T. Dowd

Member