Decisions

CAT File No. O-1999-41
MoT File No. PAP5504-040653

CIVIL AVIATION TRIBUNAL

BETWEEN:

Minister of Transport, Applicant

- and -

Chartright Air Inc., Respondent

LEGISLATION:
Aeronautics Act. R.S., c.33 (1st Supp), s. 7.7
Canadian Aviation Regulations, SOR/99-158, s. 700.05(1)(a), (b)

Leasing, Demonstration, Flight authority, Certificate of airworthiness, Aircraft registered in foreign country


Review Determination
Samuel J. Birenbaum


Decision: October 6, 2000

I find that this aircraft was not flown for demonstration purposes, and thus does not enjoy the exemption of Part II of the Canada Transportation Act, as stated in paragraph 3(1)(j) of the Air Transportation Regulations. It was flown for commercial purposes without a certificate of airworthiness. Therefore, I find that Chartright Air Inc. contravened subsection 700.05(1) of the Canadian Aviation Regulations.

I would normally consider the sanction of $2,000 to be inadequate under these circumstances because of the unnecessary risks to the passengers and others; however, the owners attempted to comply substantially with Canadian regulations in their legitimate efforts to certify this aircraft. Thus, I allow the penalty of $2,000 to stand. This amount, made payable to the Receiver General for Canada, must be received by the Civil Aviation Tribunal within 15 days of service of this determination.

A Review Hearing on the above matter was held Thursday, August 24, 2000 at 10:00 hours, at the Federal Court of Canada in Toronto, Ontario.

BACKGROUND

It is alleged that on or about November 27, 1999, Chartright Air Inc. (Chartright) operated an aircraft registered VP-CRA on a commercial air service from Toronto to Timmins, Ontario, and from Timmins to Toronto, Ontario, when the aircraft did not meet the criteria specified in paragraph 700.05(1)(a) or (b) of the Canadian Aviation Regulations (CARs).

Mr. O. William Binder, the case presenting officer for the Minister stated in his opening remarks that Chartright used aircraft VP-CRA for a commercial flight. The aircraft was registered in the Cayman Islands, and it did not possess a Canadian type certificate, flight authority, or certificate of airworthiness. Mr. Clark, representing the president of Chartright in his opening remarks stated that the facts were not in dispute, but the allegations would be refuted.

Mr. Binder called his first witness, Inspector Shimmin who was duly sworn. Mr. Shimmin is a class I instructor holding an airline transport pilot (ATP) licence, worked as a director of operations and a chief pilot and currently is employed by Transport Canada Enforcement. He stated that he sent a letter of violation to Chartright and in reply was informed through the solicitor, or representative, Mr. Clark, that the flight in question was a demonstration flight.

Mr. Binder produced Exhibit M-l, the air operator certificate for Chartright, identifying Chartright as a commercial air service which, Mr. Shimmin states, involves the use of an aircraft for hire or reward, that is, for payment or other benefit. Exhibit M-2 is an invoice under the letterhead of Chartright Air Inc. to Partner Jet for the services of aircraft CRA, totalling $7,864.50. Mr. Shimmin identified Exhibit M-3, a certificate from the Acting Secretary of the Department of Transport, stating that during the period from November 1, 1999 to December 15, 1999, no certificate of registration was issued for aircraft VP-CRA, nor was there a type certificate, flight permit, or certificate of airworthiness for this aircraft issued in Canada.

Exhibit M-4 is a letter from the International Civil Aviation Organization (ICAO) enclosing a list of its member countries, indicating that the Cayman Islands is not a contracting state of ICAO. On cross-examination, Mr. Shimmin stated that Transport Canada has the authority to permit the use of charter aircraft for commercial air services, providing there is a valid air operator certificate, and technical competency. He further stated that he started a file on this matter, after being informed by Mr. David Bland, and that a letter of allegation was sent on December 9, 1999 from Transport Canada. He identified Exhibit D-l, a letter he received from Mr. Clark, dated January 12, 2000, in response to the letter of allegation, indicating that the flight in question using the aircraft VP-CRA, was not a "commercial air service" operation, but was "aircraft demonstration services" pursuant to paragraph 3(1)(j) of the Air Transportation Regulations.

The next witness called was Mr. Lee Heitman who operates Partner Jet. He testified that on November 27, 1999 he arranged to replace an aircraft which was unserviceable with an aircraft leased from Chartright. He agreed to the usual rates of $3,300 per hour, and other charges as specified in M-2. He was unaware that a foreign aircraft was to be used, but when he learned about this, he became concerned because of different standards, rules, and insurance. He discussed the matter with Mr. Bob Buchan, who was equally concerned. Mr. Heitman further stated that if this were a demonstration flight, he would not have paid leasing charges. In fact, at this time, he was not interested in purchasing this aircraft.

When shown Exhibit M-5, a letter from Kinross to Mr. Heitman dated April 28, 2000 and signed by Mr. Robert Buchan, the chairman of Kinross, he agreed with the facts that aircraft C-GTOR was unserviceable, and a subcharter was arranged with Chartright to complete this trip. Kinross felt at all times that the charter flight was not intended to be a demonstration.

On cross-examination Mr. Heitman stated that he obtained two new aircraft since the events in question, and has several employees who were previously employed by Chartright. He identified his letter dated December 3, 1999 to Mr. Shimmin, confirming that the aircraft obtained from Chartright was a leasing arrangement. The letter included some errors in times. Three or four times per year, similar charters were obtained in this matter. He further stated that he contacted Chartright on May 29th by phone to discuss the matter of chartering a foreign registered aircraft.

The next witness was Mr. Jim Brandt, a pilot who worked as chief pilot for Partner Jet. He confirmed the need to subcharter an aircraft when the usual aircraft was unserviceable. He confirmed that this has happened several times previously. He stated that neither Kinross nor Chartright was involved in purchasing this aircraft, and did not consider it a demonstration flight. On cross-examination he confirmed that he was concerned about a foreign registered aircraft but did not discuss this with his customer. He was informed that his customer had to be billed directly, not through his company, but was not told why. He was surprised by the Cayman registration as this was not a normal occurrence. He stated that he left the employment of Partner Jet in February 2000. On redirect, Mr. Brandt confirmed that it was much more common to obtain subleases from Chartright than for him to lease his aircraft to Chartright.

The next witness was Lee Cole. She stated that she has been working on contract, supplying aircraft maintenance service and corporate travel, for 16 years. She has worked for both Chartright and Partner Jet and in November 1999 was working for Chartright between 18:00 and 08:00 hours as a night dispatcher. She confirmed the leasing of aircraft VP-CRA on November 27, 1999 for a flight from Toronto to Timmins, and then back to Toronto. She confirmed that the aircraft was registered in the Cayman Islands and was hired out at a commercial rate for a commercial purpose. She was instructed not to lease the aircraft twice to the same customer, and to enter demo flight on the strip sheets given to the pilots. She was unaware that this was the wrong thing to do until informed of it by another pilot.

On cross-examination she confirmed that she often worked with Mr. Jim Brandt, had no other duties, and was very busy on the phones for Chartright. She confirmed that there were no other aircraft available at the time, and that this aircraft could only be used for the flight if it were a demonstration flight. The flight was charged at the charter rate and that there were no other planes used for demonstration only purposes. She made out the strip sheets provided to the pilots and provided the strips to Mr. Brandt, the pilot; Mr. John Craig, the co-pilot; and Mr. McKay, the daytime dispatcher for the company.

She identified Exhibit D-3 that contains handwritten pilot's notes on the side but was sent on November 27, 1999 to the crew, indicating the particulars of the flight. Next introduced was Exhibit D-4, the flight manifest of Partner Jet, headed "Flight Confirmation & Details", indicating the nature of the flight, and the names of the six passengers to be taken on board. This exhibit indicates aircraft registration C-GTOR and was sent to the chief pilot on November 27th.

Exhibit D-5 contains the log of aircraft VP-CRA for November 27, 1999 on its flight from Toronto to Timmins. Exhibit D-6 is the return trip from Timmins to Toronto. It indicated that Partner Jet was told that this was a demonstration flight. This ended the evidentiary part of the Minister's presentation.

Mr. William F. Clark introduced his witness, Mr. Nigel Argent, president and chief executive officer of Chartright. He stated that he has been involved in corporate aircraft management and charter services for seven years, and one year ago, operated ten aircraft, today only nine. In addition, he buys and sells aircraft for profit, and stated that the aircraft VP-CRA was purchased in June 1999 by another executive in Europe but could not be registered in Canada, only in England. In order to secure Canadian registration he attempted to perform the necessary modifications but found that it would take at least nine months to obtain the necessary parts. The aircraft was insured and flown to the same standards as all the other aircraft in his fleet, and was used to fly executives of his company during the registration process, and then offered for sale in November 1999. The modifications were completed by January 5, 2000 in Montréal and it performed 15 to 20 trips, mostly for owners of the company, but also for demonstration purposes.

He identified Exhibit D-7 dated January 20, 1988 from the Canada Gazette Part II, Air Transportation Regulations paragraph 3(1)(j) indicating the exclusion of aircraft demonstration services from the application of Part II of the Canada Transportation Act. He testified that his practice was to charge for demonstration flights, but to deduct it from the purchase price if a sale were made. He stated that he informed his dispatcher, Lee Cole, that the plane was available only for demonstration purposes and that any existing customer can have a maximum of only one demonstration. He said that there were five such demonstration flights flown by this aircraft. Under cross-examination he was advised that the charge against his company was laid under the CARs, not under Part II of the Canada Transportation Act. He confirmed that Chartright is a charter company and that the aircraft did not have an operating certificate, and did not comply with Canadian commercial standards. He agreed that the definition of demonstration was to show the aircraft to a possible purchaser.

CLOSING ARGUMENTS

Mr. Binder for the Minister stated that all elements of the charge have been proven; that M-1 and the subsequent invoice M-2 confirm the use of this aircraft for commercial purposes and that there was never an intent by the customer to purchase this aircraft.

Mr. Clark concluded that there was a conflict of law between technical and economic regulations under the Canada Transportation Act. The commercial operator must comply with both technical and economic requirements, but under the 1988 amendment contained in D-7, an exemption to regulations was provided for purposes of aircraft demonstration services. This is in conflict with paragraphs 4(1)(a)(b)(c) and (d) of the Air Transportation Regulations indicating that the definition of demonstration services was not explained. Throughout the use of aircraft VP-CRA there was no threat to safety, and every effort was being made by the owner to comply with Canadian regulations by modifying the aircraft in the required manner. Mr. Binder rose to remind the Tribunal that the company was operating under the Aeronautics Act. On speaking to sanction, Mr. Binder stated that the appropriate guidelines were applied, which indicated a penalty of $2,000 to a commercial operator. He stated that there could be no mitigation and there could be problems with safety in using an aircraft without a certificate of airworthiness, and in this instance, there were no emergency escape lights present. The need to protect the public required strong sanction in order to satisfy the demands for safety, and he recommended an increase in the penalty. Mr. Clark replied that this is an area of confusion for the industry, and the clarification to them of these issues would greatly assist in their compliance.

CONCLUSION

Both parties agree that on November 27, 1999 Chartright operated a flight between Toronto and Timmins, Ontario and return, utilizing a Hawker Siddley HS-125 model #700 aircraft, registration VP-CRA, at the request of Partner Jet Inc. Chartright received revenue from Partner Jet Inc. for that operation. This would not represent a breach of Air Transportation Regulations if the aircraft and its operator were appropriately certified. In this instance, the evidence clearly indicates that the commercial operator was in possession of the required operating certificates but that the aircraft VP-CRA, a foreign aircraft registered in the Cayman Islands, did not possess the required certificate of airworthiness. Although use of an aircraft under these circumstances for aircraft demonstration services is permitted under Part II of the Canada Transportation Act, as stated in paragraph 3(1)(j) of the Air Transportation Regulations, it remains to decide if the flight of this aircraft on November 27, 1999 could be defined as a demonstration service. Mr. Robert Buchan, the chairman of Kinross who leased the aircraft from Partner Jet, and Mr. Lee Heitman, the president of Partner Jet, both testified that there was no intent to demonstrate the characteristics of this aircraft to a potential purchaser, and that, indeed, those who leased the aircraft on this day did not intend to purchase it at any time, and paid the leasing charge. I do not feel that the Canada Transportation Act excludes the request for payment of some sort when an aircraft is demonstrated, since the cost of such a demonstration could be extensive if no sale is made. The Respondent cannot expect to obtain relief from the requirements of these regulations by the simple subterfuge of pretending to demonstrate an aircraft when the purposes are transportation in nature.

The need for the Minister to ensure that all aircraft, used by commercial operators holding an air operator certificate, meet the standards of safety required within Canadian airspace, demand that these aircraft be certified by Canadian authority, and be in compliance with ICAO standards. This is fundamental to the safety of aviation, and I regard any transgression seriously.

I find that this aircraft was not flown for demonstration purposes, and thus does not enjoy the exemption of Part II of the Canada Transportation Act, as stated in paragraph 3(1)(j) of the Air Transportation Regulations. It was flown for commercial purposes without a certificate of airworthiness. Therefore, I find that Chartright Air Inc. contravened subsection 700.05(1) of the Canadian Aviation Regulations.

I would normally consider the sanction of $2,000 to be inadequate under these circumstances because of the unnecessary risks to the passengers and others; however, the owners attempted to comply substantially with Canadian regulations in their legitimate efforts to certify this aircraft. Thus, I allow the penalty of $2,000 to stand.

S. Birenbaum, M.D. C.C.F.P.
Member
Civil Aviation Tribunal