Decisions

CAT File No. C-1021-02
MoT File No. RAP 6504-P160678-025768

CIVIL AVIATION TRIBUNAL

BETWEEN:

Harry Edward Joseph Shermet, Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Aeronautics Act, S.C., c. A-2, s. 6.9

Aircraft Marking and Registration Regulations


Review Determination
Gordon R. Mitchell


Decision: January 26, 1996

I find that the Applicant, Mr. Harry Edward Joseph Shermet, did contravene subsection 17(2) of the Air Regulations Series II No. 2.

I confirm the Minister's decision to assess a three-day suspension which shall begin on the fifteenth day following the service of this determination.

A Review Hearing on the above matter was held Wednesday, January 10, 1996 at 10:00 hours at the Environment Canada Building, in the city of Winnipeg, Manitoba.

Mr. Pratt, for the Respondent, moved to amend the Notice of Suspension by changing "Air Navigation Order Series II No. 2 Paragraph 17 (2)" to "Air Regulations Series II No. 2 Paragraph 17 (2)." No objection to the amendment was made by the Applicant. The application was granted and the amendment made accordingly.

The Notice of Suspension reads as follows:

Pursuant to section 6.9 of the Aeronautics Act, the Minister of Transport has decided to suspend the above indicated Canadian aviation document on the grounds that you have contravened the following provision(s):

Air Regulations Series II No. 2 Paragraph 17 (2) in that between April 15 and September 4, 1994, you operated a Cessna 310 aircraft, Canadian Registration C-FBTY for a total of 84 recorded flights when the aircraft was not registered in Canada by reason of the fact the lease agreement with Knee Lake Air Services was cancelled effective April 12, 1994 thereby causing the Certificate of Registration to expire.

THE LAW

Subsection 17(2) of the Air Regulations Series II, No.2 reads as follows:

(2) Except as otherwise authorized pursuant to subsection (3) or (4) or 36(3), no person shall operate an aircraft in Canada unless it is registered in Canada, in a contracting state or in a foreign state that has an agreement in force with Canada that allows an aircraft that is registered in that foreign state to be operated in Canada.

OVERVIEW

It is alleged that the Cessna 310, C-FBTY owned by Shermet Aviation Services Inc. was operated without a Certificate of Registration from April 15, 1994 to September 4, 1994. The Certificate of Registration was cancelled effective April 12, 1994, as the lease agreement with Knee Lake Air Services was terminated on this date.

There are 84 flights recorded during this time period.

EVIDENCE

The Minister's first witness, Inspector MacCulloch, was called, and he put forward the following exhibits:

M-l: A copy of the Certificate of Registration for Cessna 310, Registration C-FBTY that shows Knee Lake Air Service Inc. as the owner at the time.

M-2: A copy of the lease agreement between Shermet Aviation Services Inc. and Knee Lake Air Service Inc. for the period October 30, 1993 to April 30, 1994. The aircraft shown on this lease is Cessna 310, C-FBTY, and the lease was signed November 5, 1993 by Shirlee Shermet as lessor.

M-3: A copy of a registered letter from G.O. Langen, Regional Manager, Aviation Licensing to Knee Lake Air Service Inc. advising that the lease agreement with Shermet Aviation Service Inc. would terminate October 30, 1993 and reminding that, unless the lease was renewed or extended before the expiration date, the Certificate of Registration would become invalid on that date.

M-4: A copy of a letter dated April 12, 1994 from Knee Lake Air Service Inc. to Transport Canada advising that Cessna 310, C-FBTY was no longer leased to Knee Lake Air Service Inc. The letter was signed on behalf of Knee Lake Air Service Inc. by Phil C. Reid.

A copy of this letter and a notice advising what steps were necessary to register the aircraft again were mailed by Transport Canada to Harry Shermet, Box 21453, Steinbach, Manitoba, R0A 2T3.

The notice is dated April 19, 1994, and a handwritten note at the bottom indicates that Mr. Shermet was in the Transport Canada office on November 10, 1994 to register the aircraft again.

M-5: Four pages shown as Certified True Copies of pages from the Journey Log of C-FBTY. Mr. Shermet attended at Transport Canada on November 10, 1994 with the log so that the copies could be made. The Journey Log shows 73 recorded flights for the period starting April 24, 1994 to September 4, 1994. The aircraft did not have a valid Certificate of Registration during this period.

M-6: A Certificate from the Department of Transport, Ottawa along with a copy of the last Certificate of Registration that had been issued for C-FBTY, dated June 28, 1993. Shirley Wight, Secretary, Department of Transport attests in this Certificate that no subsequent Certificate of Registration has been issued on behalf of the Minister of Transport for the Cessna 310, C-FBTY prior to April 25, 1995.

M-7: Copy of four pages, two being a billing to Knee Lake Air Service Inc. for flights made by Shermet Aviation with Cessna 310, C-FBTY between June 7, 1994 and June 25, 1994. The two other pages are copies of the Log book for C-FBTY.

Inspector MacCulloch, in cross-examination, was questioned by Mr. Hall regarding the form sent to Mr. Shermet (2nd page of Exhibit M-4). He was asked if the form was the only advice to Shermet Aviation and whether it had been sent by registered mail. Mr. MacCulloch said that it was and that he believed it had been registered. Mr. Hall asked the Inspector if he had an opportunity when dealing with this file to determine who was the owner of Shermet Aviation. Inspector MacCulloch indicated that he was not positive who the owner was.

Mr. Hall questioned as to who was the second person shown in column 3 (see Exhibit M-5 July 28, 1994 entry). Inspector MacCulloch stated that the person shown, Inspector Dave Bein, was an Air Carrier Inspector and that he was there in that capacity as a check-pilot.

Mr. Hall asked Inspector MacCulloch if he had contacted Phil Reid regarding the reason for terminating the lease with Shermet Aviation and the method used in the termination. Inspector MacCulloch said he had. The reason given by Phil Reid was that in April they were trying to contact Mr. Shermet but were not able to do so, and because of past experience they decided to cancel the lease. Inspector MacCulloch said he had no idea what method was used for the termination.

In cross-examination, Inspector Pratt asked Inspector MacCulloch to verify that Mr. Shermet, as operations manager, chief pilot and principal of the company, would have knowledge of lease arrangements as they applied here. Inspector MacCulloch's answer was affirmative.

David Parkes of Aviation Licensing was the next witness. Inspector Pratt asked if his records indicated Mr. Shermet's position in Shermet Aviation. He said that in the original Bill of Sale for the aircraft his records show Harry Shermet's signature as General Manager for Shermet Aviation.

Mr. Hall questioned Inspector Parkes extensively regarding aircraft leasing, registration and reregistration after lease termination.

In redirect Inspector Pratt questioned Inspector Parkes as to why the letter of January 10, 1995 requesting information was sent to Harry Shermet. Inspector Parkes stated that the other party in the lease had instructed them to contact Harry Shermet in their letter of April 12, 1994 and that in the next letter they had followed the same format.

Mr. Hall called his witness, Harry Shermet, and asked what relation he had with Shermet Aviation. He stated that he was an employee, that his mother owned Shermet Aviation and that Shirlee Shermet was the president. He stated further that he advised the president regarding use of equipment and that he was not paid for this.

Mr. Hall asked Mr. Shermet if he had ever been an officer of Shermet Aviation such as president or secretary, or had he ever been a director or share holder of the company. Mr. Shermet's answer was no.

When questioned, Mr. Shermet stated that he had signed a document on behalf of the company when C-FBTY was purchased, as he was authorized to do so at the time. He stated that since that time he has not signed any other documents on behalf of Shermet Aviation.

Mr. Hall asked Mr. Shermet what his duties were with Knee Lake Air Service Inc. He stated that he was operations manager and chief pilot and that he had been hired by Allan Reid, the president of Knee Lake Air Service Inc. He stated further that Phil Reid, Allan Reid's son, had signed the letter written to Transport Canada (Exhibit M-4) and that Phil Reid had no authority whatsoever.

Mr. Hall questioned Mr. Shermet about his knowledge of the lease (Exhibit M-2). Mr. Shermet's answer was that he had directed the secretary of Knee Lake Air Service Inc. to arrange another lease if that were their wish.

Mr. Hall asked Mr. Shermet if he had made any inquiries of anyone at Knee Lake Air Service Inc. concerning the nature of the lease. Mr. Shermet answered: "None other than to ensure it was renewed."

Mr. Hall asked Mr. Shermet, as chief pilot and operations manager of Knee Lake Air Service Inc., would he normally have occasion to view the documentation with regard to communication with Transport Canada in that capacity. Mr. Shermet answered: "I usually tried to do it on that personally."

Inspector Pratt in cross-examination asked Mr. Shermet if his position with Knee Lake Air Service Inc. would make him aware of the leases that applied to Shermet Aviation aircraft. Mr. Shermet stated that he had been aware of the first lease but was not aware that it had not been renewed.

Inspector Pratt asked Mr. Shermet if his duties as operation manager would include being aware of leases. Mr. Shermet answered that it was his responsibility, he was sure, that the aircraft were operated in accordance with all regulations.

CONCLUSION

In Mr. Hall's final argument he referred to the terminated lease and the cancelled Certificate of Registration as it applied at the time of the check-ride. He said: "Even Transport Canada flew the aircraft after the Certificate of Registration was not valid."

It must be pointed out that Inspector Rein was not there to fly the aircraft himself. The Inspector's purpose was to conduct a check-ride during which he could observe and monitor Harry Shermet's current ability to perform his duties as pilot-in-command of the aircraft.

When Inspector Rein perused the aircraft documents, there would be no reason for him to believe that the Certificate of Registration was invalid.

Mr. Shermet, as operations manager and chief pilot for Knee Lake Air Service Inc., claimed he was not aware that the Certificate of Registration was no longer valid.

Mr. Shermet stated that he normally tried to view aircraft documentation with regard to any necessary communication with Transport Canada.

At least two letters were sent to what was established as the correct address at Steinbach, Manitoba for both Shermet Aviation Services Inc. and the home address of the president. Both use the same postal address. Mr. Shermet claims that he had not seen the letters and that he had phoned Shirlee Shermet as late as the morning of the hearing and claims they were not received.

My concern is that much of the evidence put forward conflicts with good management practices purported by Mr. Harry Shermet.

DETERMINATION

I confirm the Minister's decision to assess a three-day suspension.

Gordon R. Mitchell
Member
Civil Aviation Tribunal


Appeal decision
Arthur H. Lindop, Faye H. Smith, Philip D. Jardim


Decision: October 1, 1996

The Appeal is denied. The document holder did contravene subsection 17(2) of the Air Regulations, Series II, No. 2. The three-day suspension is confirmed and shall begin on the fifteenth day following service of this determination.

By agreement, this appeal proceeded by written submissions.

BACKGROUND

This appeal resulted from a determination made by Mr. Gordon Mitchell following a Review Hearing on January 10, 1996. Mr. Shermet was alleged to have contravened subsection 17(2) of Air Regulations, Series II, No. 2 in that between April 15 and September 4, 1994, he operated a Cessna 310 aircraft, Canadian Registration C-FBTY for a total of 84 recorded flights when the aircraft was not registered in Canada by reason of the fact the lease agreement with Knee Lake Air Services was cancelled effective April 12, 1994 thereby causing the Certificate of Registration to expire.

Mr. Mitchell found that Mr. Shermet did contravene Air Regulation, Series II, No. 2 subsection 17(2) and confirmed the three-day suspension of his commercial pilot licence as assessed by the Minister.

On February 19, 1996, counsel for Mr. Shermet filed a request for appeal of Mr. Mitchell's Review Determination. A Notice of Appeal together with a Stay of Suspension dated February 20, 1996 were issued by the Tribunal Registry. On March 19, 1996, the Tribunal advised that the parties had agreed to proceed by way of written submissions.

GROUNDS FOR APPEAL

The Appellant specified the following grounds of appeal:

1. There was no evidence placed on the record to verify that the purported termination of the lease agreement by Knee Lake Air Services in respect of the aircraft in question was a valid termination of the lease agreement pursuant to the provisions of that lease agreement;

2. There was no evidence placed on the record to verify that the owner of the aircraft, Shermet Aviation Services Inc. actually received any notice whatsoever or that the owner had any knowledge whatsoever at any relevant time that the lease was purported to be terminated by the leasee [sic]; there was uncontradicted evidence placed on the record that the owner of the aircraft did not receive any such notice and did not have any such knowledge whatsoever;

3. There was no evidence placed on the record that the accused was ever advised by any person whatsoever, being the owner of the aircraft, the leassee [sic] of the aircraft, or Transport Canada that the lease, during the relevant time periods, was purported to be terminated; on the contrary, there was evidence placed on the record that the accused did not receive any such advise;

4. There was substantial evidence placed on the record that, notwithstanding the purported termination of the lease, all persons concerned, including the lessee, a Transport Canada Inspector and the owner of the aircraft treated the lease as if it were a valid and subsisting lease during all relevant time periods;

5. There was no evidence on the record to establish that the accused had any knowledge whatsoever, or that the accused should have been put on awares, at any relevant time period, that the lease was anything other than a valid and subsisting lease, and that the registration of the aircraft was anything other than valid and subsisting;

6. In finding that the complaint of the Minister should be sustained, the Tribunal gave no reason for totally rejecting the uncontradicted evidence placed on the record, except to simply state, 'My concern is that much of the evidence put forward conflicts with good management practices as purported by Mr. Harry Shermet.' The Tribunal gave no detailed explanation of the portions of the evidence that it rejected or the reasons for rejecting the evidence placed before it, nor did it give any description of the evidence that it accepted and the reasons for accepting those portions.

7. Consequently, the Tribunal committed an error of law by making a determination that was inconsistent with the evidence adduced, or that was unsupported by any evidence whatsoever, or that was based on factors irrelevant to the matters in issue.

THE FACTS

A Certificate of Registration for Cessna 310, C-FBTY was issued in the name of Knee Lake Air Service Inc. as owner on June 28, 1993.

Exhibit M-2 is a copy of a Lease Agreement entered into between Shermet Aviation Services Inc. as Lessor and Knee Lake Air Service Inc. as Lessee respecting aircraft C-FBTY providing for a term of lease from October 30, 1993 to April 30, 1994. This lease agreement was duly executed by Mrs. Shirlee Shermet on behalf of the Lessor and by a Mr. Reid on behalf of the Lessee.

A letter dated April 12, 1996, filed as Exhibit M-4, which was signed by Phil C. Reid on behalf of the Lessee Knee Lake Air Service Inc. addressed to Transport Canada advised that aircraft C-FBTY is no longer leased to Knee Lake Air Service Inc. effective immediately.

Additionally, filed as Exhibit M-3 is a form letter dated April 19, 1994 from Transport Canada advising of notice received by it of the purchase of aircraft C-FBTY by Mr. Shermet and advising of required steps to re-register the aircraft together with a copy of Exhibit M-4 was sent to Harry Shermet, (Shermet Aviation Services Ltd.).

Essentially, it was the position of the Minister of Transport that the letter of April 12, 1994 from Knee Lake Air Service Inc. advising it of the termination of the lease agreement set out in Exhibit M-2 was its good and sufficient notification to treat the lease agreement as cancelled and that, as specified in the Regulations, the Certificate of Registration expired on the termination of the lease.

Subsection 32(1) of Air Regulations, Series II, No. 2 states:

32. (1) Subject to the Leased Aircraft Registration Regulations, where the legal custody and control of a Canadian aircraft changes, the registration of the aircraft expires.

Consequently, it was alleged on behalf of the Minister that the 84 flights made between April 15, 1993 and September 4, 1994 were in contravention of subsection 17(2) of the Air Regulations, Series II, No. 2 which reads as follows:

(2) Except as otherwise authorized pursuant to subsection (3) or (4) or 36(3), no person shall operate an aircraft in Canada unless it is registered in Canada, in a contracting state or in a foreign state that has an agreement in force with Canada that allows an aircraft that is registered in that foreign state to be operated in Canada.

THE ISSUES

THE LEASE AGREEMENT and NOTICE OF TERMINATION

Exhibit M-2 is a copy of a duly executed lease agreement entered into between Shermet Aviation Services Inc. and Knee Lake Air Service Inc. respecting aircraft registration C-FBTY providing for a term of lease from October 30, 1993 to April 30, 1994.

The Tribunal does not have before it any evidence of any letter or notice as between the lessor and lessee indicating the details of the termination of the lease agreement nor do we have any evidence of the actual date that such termination took place. Knowledge of these matters rests with the parties to the lease agreement.

The evidence before the Tribunal consists of Exhibit M-4, a copy of a letter dated April 12, 1994 signed by Phil C. Reid on behalf of Knee Lake Air Service Inc. which purported to inform Transport Canada that the Cessna 310 – C-FBTY is no longer leased to Knee Lake Air Service Inc. effective immediately. This letter further directs future correspondence to Mr. Harry Shermet of Shermet Aviation Services Ltd. etc. In the absence of any evidence to the contrary we must presume that the aforementioned notification to the Department of Transport was a valid one.

Moreover, perusal of Exhibit M-2 reveals that the term of the lease agreement was October 30, 1993 to April 30, 1994, and hence the lease agreement would have terminated in its normal course on April 30, 1994 in any event. Additionally, it was the evidence of Mr. Shermet at page 70 of the record transcript that he had personally given instructions for the preparation of the lease agreement. While acknowledging his obligation to do so, Mr. Shermet indicated that he failed to do a follow up to ascertain the term or length of the lease.

CONCLUSION

The requirements of subsections 17(2) and 32(1) of Air Regulations, Series II, No. 2 are straightforward. We are satisfied that the Minister of Transport has made out its case on a balance of probabilities that, as indicated in the log book marked as Exhibit M-5, Mr. Harry Shermet operated aircraft C-FBTY for a total of 84 recorded flights at a time when the certificate of registration was not in force by reason of the notification of termination of the lease agreement found at Exhibit M-4 filed at the review proceedings.

Once the party alleging contravention has proved the constituent elements of a strict liability offence on a balance of probabilities, the onus then shifts to the alleged offender to prove on a balance of probabilities that he exercised all due diligence to avoid commission of the offence. This assertion respecting a defence to strict liability offences was set out in the case of R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299, and is also codified in section 8.5 of the Aeronautics Act.

We are of the view that Mr. Shermet has failed to satisfy the Tribunal that he exercised all due diligence to comply with the regulations. By his own admission at page 70 of the transcript, he personally gave instruction for the preparation of the lease when he was Chief Pilot and Operations Manager at Knee Lake Air Services. He failed to inform himself as to whether his instruction was followed or even to verify the term of the lease. We are of the view that Mr. Shermet knew or ought to have known the term of the lease. We are also of the view that he knew or ought to have known that the lease was terminated following the efforts made by the Lessee and also by the Department of Transport as part of its follow up to the notification by the Lessor filed as Exhibit M-3 at the review.

The subject aircraft which was operated for many months following the termination of the lease was owned by a company which was owned by Mr. Shermet's mother, and of which Mr. Harry Shermet was an employee. Moreover, the transcript at page 49 discloses that the original bill of sale for C-FBTY was signed by Harry Shermet as General Manager.

The appeal panel finds that the Tribunal Member judged the credibility of the witnesses, and we see no reason to interfere with his observations and conclusions in this regard. Further, this panel does not accept the explanations proffered by Mr. Shermet that he was as removed in his knowledge of the day to day business dealings of Shermet Aviation Services Ltd. as he claims. Moreover, we are of the view that lax business practices could not operate to absolve Mr. Shermet from his obligations as Operator of C-FBTY to verify the aircraft documents in any event.

DETERMINATION

The Appeal is denied. The document holder did contravene subsection 17(2) of the Air Regulations, Series II, No. 2. The three-day suspension is confirmed.

Reasons for Appeal Determination by:

Faye Smith, Chairperson

Concurred:

Philip Jardim, Member
Arthur Lindop, Member