Decisions

TATC File No. P-3247-10
MoT File No. 5260-8081

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

International Express Aircharter Ltd., Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Aeronautics Act, R.S.C. 1985, c. A-2, s. 3, 6.6, 7.1(1)(b) and (2.1), 19(1)
Canadian Aviation Regulations, SOR/96-433, s. 723.07(2) (a) (ii)

Suspension of Canadian Aviation Document, Service of Notice, Frivolous and vexatious, Definition: Canadian Aviation Document


Review Determination
Tracy Medve


Decision: July 11, 2006

The matter is referred back to the Minister for reconsideration of its decision to suspend International Air Express Aircharter Ltd.'s air operator certificate and Mr. Chapman's authority to act as Operations Manager.

A review hearing on this matter was held March 28 and 29, and April 18 and 19, 2006 in Vancouver, British Columbia.

BACKGROUND

International Express Aircharter Ltd. (IEL) is a commercial air taxi operation that received its air operator certificate (AOC) on October 10, 1996. The company also operates under the name Regency Express Flight Operations and Sonicblue Airways.

On January 21, 2006, IEL suffered a fatal crash. On January 22, 2006, Transport Canada decided to revoke the authority of the company's Operations Manager, Nikolas Chapman. In conjunction with this act, on the same date, Transport Canada issued a Notice of Suspension (Notice) of the company's AOC pursuant to paragraph 7.1(1)(b) of the Aeronautics Act because they did not employ an Operations Manager.

The suspension took effect at 23:59 PT on January 22, 2006.

A request for a review of the decision to suspend the AOC was received by the Tribunal from IEL on February 22, 2006.

PRELIMINARY MOTIONS

Counsel for IEL, R. Patrick Saul, raised the motion that the Notice should be struck as a nullity for failure to properly serve the Notice in accordance with the provisions of the Aeronautics Act. Based on representations from both counsel, and without taking sworn testimony on the matter, I elected not to declare the Notice a nullity at that point in the hearing and instructed the parties' representatives as follows:

. . . I'm not prepared to declare that the Notice of Suspension at this point is a nullity. However, given my comment about the unusual date sequence of the request for a review hearing in my own files and the TATC file and because the only representations we have about whether service was ever really effected was by way of argument and not by way of evidence, I am accepting testimony on this matter as we proceed and I'll take it into account in making my final determination.

Transcript at 32 (March 28, 2006).

Consequently, the matter of service of the Notice will be dealt with in my determination together with the other issues raised during the hearing.

THE EVIDENCE

Mr. Chapman received approval as Operations Manager of IEL on April 12, 2005 (exhibit A-6). On January 21, 2006, IEL suffered a fatal crash and on January 22, 2006, various Transport Canada officials met to review the IEL file and decide on what, if any, action should be taken with respect to the company. As a result of that meeting, Mr. Chapman's authority to act as Operations Manager was revoked (the revocation). By letter dated January 22, 2006 (exhibit M-5), Transport Canada indicated that the grounds for the revocation were as follows:

Canadian Aviation regulation 723.07(2) (a) (ii) (A) states that the Operations Manager is responsible for "the control of operations and operational standards of all aeroplanes operated";

In view of recent finings [sic] by the Maintenance and Manufacturing personnel it has been deemed that this responsibility has not been fulfilled.

The revocation was to take effect at 23:59 PT on January 22, 2006.

A Notice of Suspension (exhibit M-6) of IEL's AOC was issued simultaneously with the revocation letter alleging that IEL ceased to meet the qualifications necessary for the issuance of a Canadian AOC. The grounds contained in the Notice were as follows:

1) The document holder ceases to meet the qualifications necessary for the issuance of a Canadian Air Operator Certificate.

2) The document holder does not employ an Operations Manager who meets the qualifications required by Canadian Aviation Standard, subparagraph 723.07(2) (a) (i).

The conditions for reinstatement, listed in the appendix to the Notice, were as follows:

1) The document holder must meet all of the qualifications necessary for the issuance of a Canadian Air Operator Certificate.

2) The document holder must meet all the requirements for operating a commercial air service.

3) The document holder shall employ an Operations Manager who meets the qualifications required by Canadian Aviation Standard, subparagraph 723.07(2) (a) (i).

4) An audit must be completed by Transport Canada and all operations found to be satisfactory and in compliance with the Canadian Aviation Regulations.

The suspension was also to take effect at 23:59 PT on January 22, 2006.

Various witnesses were called on behalf of the Minister:

  • Trevor J. Heryet, Regional Manager of Commercial and Business Aviation, Pacific Region, Transport Canada;
  • Joel Schoenberger, acting Regional Manager for Aircraft Maintenance and Manufacturing, Pacific Region, Transport Canada;
  • Joe Camulli, Civil Aviation Inspector, Commercial and Business Aviation, Pacific Region, Transport Canada, and Principal Operations Inspector (POI) for IEL;
  • Brent Wallace, Civil Aviation Safety Inspector, Aircraft Maintenance and Manufacturing, Pacific Region, Transport Canada, and Primary Maintenance Inspector (PMI) for IEL;
  • Mark C. Evans, Regional Superintendent, Fixed-wing, Commercial and Business Aviation, Pacific Region, Transport Canada;
  • Claudio A. Bulfone, Civil Aviation Inspector, Civil Aviation Enforcement, Pacific Region, Transport Canada; and
  • Claudio Rosa, Aviation Enforcement Inspector, Civil Aviation Enforcement, Pacific Region, Transport Canada, who was also briefly called, but it was determined that Mr. Rosa could not provide evidence relevant to this matter and he was released as a witness.

Transport Canada also called George A. Tingle, former person responsible for maintenance (PRM) at IEL and Homayoon Sanai, also a former PRM for IEL. These witnesses were proffered to give evidence as to the involvement of Mr. Chapman in maintenance related issues within IEL.

The applicant's only witness was Mr. Chapman.

Reasons for the Revocation and Suspension

It was Mr. Heryet's testimony that the Minister was not relying solely on the maintenance and manufacturing findings referred to in the revocation letter as the basis for the revocation. Rather they concluded there were "systemic" issues relating to matters of operational control and failure to ensure the operational standards of the aircraft based on grounds apart from the maintenance findings and the accident which occurred on January 21, 2006.

It is important to note that at the time of the revocation and suspension decisions and at the time of the review hearing, the cause of the accident had not been established. The applicant proposed to enter as an exhibit an investigation update prepared by R.J. Waldron & Co. Ltd., retained by Mr. Saul's firm to oversee the investigation of the accident. The report apparently contains preliminary information as to the cause of the accident. It was the Minister's evidence that the accident was not the basis for the decision, but rather the precipitating event which caused them to review the IEL file. I disallowed any evidence pertaining to the cause of the accident on the grounds that it was not relevant for the purposes of establishing whether the Minister had justification for taking the revocation and suspension actions. The purpose of this review hearing is to determine whether the Minister, on a balance of probabilities, has established that the revocation and suspension decisions were justified. At the time they made those decisions, only the fact of the accident was known to the Minister, not the cause.

Mr. Heryet maintained that the Operations Manager's responsibilities for the "operational standards" of the aircraft included ensuring that maintenance of the aircraft was complete prior to the aircraft being dispatched. For this reason, the maintenance findings of January 11, 2006 were referenced as a cause for the revocation.

On several occasions throughout his testimony, Mr. Heryet also indicated that it was in the public interest for the Minister to take action against IEL because the maintenance overruns were a "clear indication of . . . loss of operational control." Despite numerous references to the public interest as the basis for their actions, for reasons unknown, Transport Canada did not elect to take action against IEL on this ground.

Finally, it was also Mr. Heryet's position that because the organizational chart in IEL's Company Operations Manual (COM) indicated that the PRM reported to the Operations Manager, Mr. Chapman had final authority for maintenance within the organization and was the logical person to take action against in this matter. This decision was taken despite the fact that the PRM in the company's Maintenance Control Manual (MCM) organization chart approved by Transport Canada reports directly to the President, not the Operations Manager (exhibit A-5).

The Minister's allegation of systemic and operational control problems in the company led the Minister's representative to attempt to call evidence on a number of events intended to demonstrate that Mr. Chapman had lost operational control. This resulted in several objections throughout the hearing raised by Mr. Saul as to the scope of testimony and what factors the Minister could rely on to establish that the revocation and suspension actions were justified. Mr. Saul's argument was that due to the way the revocation letter was drafted the only relevant evidence was with respect to the maintenance and manufacturing findings on January 11, 2006. However, due to the inclusion in the revocation letter of a reference to responsibilities for "control of operations and operational standards of all aeroplanes operated", I determined that it was in the interests of fairness to permit a somewhat broader investigation of the facts to ensure that I had a clear picture of the Minister's position for the action it took against Mr. Chapman and IEL. Consequently, the Minister's witnesses gave evidence on events other than the findings of maintenance and manufacturing referred to in the revocation letter.

For ease of reference, each of the main points raised by the Minister in support of the revocation will be addressed in chronological order.

Fine and Enhanced Monitoring Program

The first incident relied upon by the Minister to evidence systemic problems at IEL arose in 2004. IEL's flying school was used by Ducks Unlimited Canada to perform radio tracking of birds for which they required the installation of an external antenna on the aircraft. The flying school aircraft (a Cessna 172) was used for this purpose. Although the Minister led no specific evidence regarding the regulation which was alleged to have been violated, the nature of the violation apparently involved the flying school conducting commercial operations, which they were not licensed to do.

None of the Minister's witnesses had first-hand knowledge of the matter but there were various witnesses who, from reviewing the IEL file, testified that in June 2004, IEL was initially fined in excess of $79 000 on the basis of 49 charges. Each of the charges related to a take-off or landing of the aircraft when used for the bird tracking activity.

Mr. Heryet's testimony relative to the fine was that it was imposed because the company was flying commercial flights "without qualified crews as well as some maintenance issues with the aircraft that were conducting those flights". Mr. Camulli indicated he had no personal knowledge of the incident [even though he had been the POI for approximately four years at the time of this hearing and must have been the POI at the time of the incident in question]. He did say he thought there were some "irregularities and confusion in how the company was operating between their flight school and their AOC 703 operation with regards to aerial work and a 172 actually going on a wildlife patrol". He further said "I believe that they were using a flight instructor who wasn't trained properly for aerial work, and to carry passengers and external antennas on an aircraft. Normally there would be certain training requirements for an instructor to fly on the CARs 703 regulations which is different than . . . a flight instructor from the flight school".

At the time of the incident leading up to the fine, the president of IEL, Ranjit Gill, was also the Operations Manager. Mr. Chapman did not become the Operations Manager until sometime in 2005, although he was employed by the company at the time of this incident and did give evidence as to his knowledge of this matter. His testimony confirmed that some IEL flight school pilots had agreed to do bird surveillance flights for Ducks Unlimited Canada and that they had not advised the chief flight instructor of their plan to do these flights. The pilots in question installed the required antenna on the aircraft and conducted the flights over a period of some months. He also confirmed that the fine was calculated on the basis of the total number of take-offs and landings performed over the period during which these flights were conducted.

Mr. Chapman's evidence established that IEL was successful in having the amount of the fine reduced to $40,000. None of Transport Canada's witnesses were directly involved in the imposition of the fine or the negotiations to reduce the fine.

Following the settlement of the fine, Mr. Heryet testified that because "operational control of the company was questioned", the Regional Director of Civil Aviation put the company under an enhanced monitoring program (EMP). The Regional Director was not called as a witness nor did Mr. Heryet elaborate on the nature of the Minister's concerns. The effect of the EMP was to subject the company to greater than usual scrutiny in terms of ramp inspections and more contact with the POI and the PMI. Testimony from Transport Canada witnesses confirmed that the EMP came to an end on January 10, 2006 (exhibits M-13 and A-1).

Even though the Minister proffered this testimony as evidence of the alleged systemic problems at IEL, it cannot be considered as relevant to the revocation action taken against Mr. Chapman as he was not the Operations Manager at the time.

Ramp Check Findings

The second incident relied upon by the Minister as justification for the revocation occurred on September 13, 2005. Mr. Heryet provided evidence that when Mr. Chapman became IEL's Operations Manager, he personally conducted the interview to ensure that Mr. Chapman fully understood his duties and responsibilities. Mr. Heryet also presented documentary samples of Mr. Chapman's interest and efforts in developing a safety management system (SMS) for IEL, even though as a 703 operator, it was not a regulatory requirement to do so. Although Mr. Heryet acknowledged that Mr. Chapman's efforts with regard to the SMS development were positive, he also testified that a subsequent infraction by Mr. Chapman on September 13, 2005 led him to question whether Mr. Chapman was "walking the talk".

The incident in question arose from a ramp inspection by Inspector Evans. It was Mr. Evans' evidence that during a ramp inspection of an unrelated company, he had the opportunity to observe Mr. Chapman in the course of conducting a training flight with a junior IEL pilot. Mr. Evans had looked at the training aircraft on the ground prior to the flight and noticed unsecured items on board. While attending to his other duties, Mr. Evans observed Mr. Chapman taxi and take off a short time after arriving at the aircraft. This left Mr. Evans suspicious about whether Mr. Chapman had done a proper walk around or taken the time to secure the loose items on board. Consequently, on the aircraft's return, Mr. Evans made a point of looking into Mr. Chapman's aircraft again which confirmed that the items had not been secured.

Although there was conflicting evidence regarding the nature of the unsecured items (which for the purposes of this hearing is not relevant), Mr. Chapman did not deny that this event had occurred nor did he dispute that he should have secured the items in the aircraft and acknowledged that he had set a poor example as a training captain.

Mr. Evans reported the incident by way of a ramp inspection report (exhibit M-9) together with a detection notice, both of which were forwarded to Mr. Heryet. Following receipt of the ramp inspection report, the company prepared and submitted a safety analysis/investigation form as well as a collaborative corrective action plan form (CAP) (exhibit A-3) to Transport Canada containing both short and long-term corrective plans. These forms were part of the company's developing SMS program. The short-term plan involved a reprimand of Mr. Chapman and an individual meeting with IEL's chief pilot to reinforce the importance of securing all cargo in the aircraft. Mr. Heryet testified that he thought this was a reasonable plan.

The long-term part of the plan involved removing Mr. Chapman from active duty as a training captain with reinstatement to occur only after a comprehensive review of the company's flight training standards. It also provided for company ramp checks to occur not less than four times per month and required a training session with the pilots to reinforce the importance of securing all cargo. That training took place on October 22, 2005. While acknowledging that a 703 air operator is not currently required by the regulations to have an SMS, Mr. Heryet said he was not as convinced that this was a reasonable long-term plan because it did not "reflect . . . effective SMS".

It was Mr. Heryet's testimony that he had concerns with Mr. Chapman being in the Operations Manager's position while providing a poor example to pilots being trained for IEL operations. However, after speaking to Mr. Chapman about the incident, it was Mr. Heryet's testimony as follows:

When I discussed it with Nikolas, it was my decision: Okay, I'll take you at our word. We'll move forward on this. There will be no further action on there, which he really appreciated. But it really stuck a flag up there. This is a fairly simple thing to do, and that is to make sure that cargo is tied down before you go out. Especially if you're training a new pilot that is very easily influenced. So to me it wasn't an effective safety management system. Again, it points to the operational control.

Transcript at 137 (March 28, 2006).

Mr. Camulli's testimony was that Mr. Chapman was embarrassed about this incident and apologized. Mr. Camulli testified that Mr. Chapman was concerned "to the point where he thought that he himself should resign as . . . operations manager. . . . I felt that it wouldn't be to the company's benefit at that time. I thought he'd learned a good lesson and so he himself had reconsidered". Mr. Camulli confirmed in cross-examination that he thought Mr. Chapman was very competent at his job. Mr. Camulli also confirmed that he thought the CAP, developed by the company in response to this issue, was appropriate.

Mr. Chapman testified that he took this infraction very seriously. Using the company's SMS program, it was established that Mr. Chapman's duties as Operations Manager were so demanding that it was not advisable for him to continue to do pilot training. Together with the chief pilot, he developed the CAP which was presented to Mr. Heryet, who in turn indicated at the time that it was more than adequate. No enforcement or other action was taken against either Mr. Chapman or the company for this incident and the matter was never raised with him again.

Maintenance Findings

Mr. Wallace, IEL's PMI, had released IEL from the EMP by issuing a letter to that effect on January 10, 2006 (exhibit A-1). The following day, he went to IEL's maintenance facility to conduct a mini-audit of the maintenance control system. The purpose of this audit was to ensure that the company was well prepared for a larger audit scheduled for the end of January. In reviewing the maintenance forecasts, it came to Mr. Wallace's attention that there was an overdue inspection on a Cessna Caravan as well as numerous out-of-phase inspections which were overdue on other aircraft.

After completing an inspection of the forecasts for all of IEL's fleet, Mr. Wallace issued a detection notice against the Cessna Caravan C-GRXZ (exhibit M-16) because non-destructive test inspections were overdue by 255.7 hours. Mr. Wallace testified that aircraft technical records showed an entry on September 18, 2005, indicating an "extension of 30 days" to these inspections. However, he considered this an improper entry because it did not contain sufficient detail and because it purported to grant a calendar extension to a time controlled inspection interval. The required inspection was completed by IEL on January 11, 2006, and the aircraft returned to service.

Letters of notification against five other aircraft were also issued by Mr. Wallace on January 12, 2006 (exhibit A-12) as follows:

C-FZUT – 500 and 1 000-hour inspections overdue by 16.9 hours – tolerances not recorded in aircraft technical log.

C-FLGW – 4 000 and 1 000-hour inspections overdue by 7.7 hours – tolerances not recorded in aircraft technical log.

C-GYYK – 500, 1 000, 2 000 and 4 000-hour inspections overdue by 5.5 hours – tolerances not recorded in aircraft technical log.

C-GDJR – 500 and 1 000-hour inspections overdue by 7.2 hours – tolerances not recorded in aircraft technical log.

C-GROJ – 500, 1 000, 2 000 and 4 000-hour inspections overdue by 6.5 hours – tolerances not recorded in aircraft technical log.

Following receipt of the letters of notification and the detection notice by Mr. Sanai, IEL's PRM, a meeting occurred on January 13, 2006, at the request of IEL, which was attended by Gordon Swanson, District Superintendent, Maintenance and Manufacturing, and Messrs. Wallace, Sanai, Gill and Chapman to discuss Mr. Wallace's findings and to present IEL's proposed CAP. Mr. Wallace testified that the IEL representatives were advised that if IEL incorporated the proposed CAP in written form and submitted it to Transport Canada, it would receive approval.

On January 17, 2006, Transport Canada received responses to the letters of notification (exhibit A-12) indicating that IEL had taken the following actions:

C-FZUT – The deficiencies were recorded, inspections completed and the aircraft returned to service.

C-FLGW – The deficiencies were recorded and inspections extended in accordance with the Regency Express MCM.

C-GYYK – The deficiencies were recorded and the inspections extended in accordance with the Regency Express MCM.

C-GDJR – The deficiencies were recorded, inspections completed and the aircraft returned to service.

C-GROJ – The deficiencies were recorded and inspections extended in accordance with the Regency Express MCM.

On February 9, 2006, Mr. Sanai prepared a written submission containing the company's CAP (exhibit M-7).

Although there was no evidence that the proposal to invoke the tolerances as indicated in the CAP was an issue in January 2006, the tolerances were raised as a problem by Mr. Wallace during his testimony at the Tribunal hearing. Mr. Wallace indicated that the tolerances were not correctly invoked as they were done after the aircraft had overrun the time limits for the inspections in question. However, it was also Mr. Wallace's testimony that at the January 13, 2006 meeting, IEL did advise that all aircraft with overdue inspections had been grounded and not flown until the inspections had either been complied with or tolerances invoked. Furthermore, in their responses to the letters of notification, the company did advise that they had invoked the tolerances which meant that Transport Canada was aware as of January 17, 2006 that this was the proposed plan of action. Consequently, it appears that the method of invoking the tolerances only became an issue after that time, but there was no evidence it was ever raised as an issue with IEL.

In addition to the corrective action to be taken by IEL against each aircraft, the CAP also proposed that Mr. Chapman enter into an agreement to accept limited quality assurance duties in an attempt to respond to Mr. Wallace's contention that an effective quality assurance program would have averted the inspection overruns. With Mr. Wallace's input, a form of written agreement (exhibit M-7) for this change was completed, which permitted Mr. Sanai to retain responsibility for the quality assurance system while allowing Mr. Chapman to perform some of the quality assurance duties.

There was no evidence that Transport Canada took any other action relative to the maintenance findings prior to the accident other than whatever follow-up Transport Canada Enforcement decided was appropriate with respect to the detection notices.

Mr. Wallace testified that at the January 22, 2006 Transport Canada meeting, he was asked to issue detection notices in relation to the five aircraft against which he had only previously issued letters of notification. He complied with this request on January 23, 2006. He testified that it was and continues to be his belief that the overdue inspections were not an immediate threat to aviation safety.

On March 6, 2006, in preparation for a regulatory audit, Mr. Chapman made a request to Mr. Wallace for a formal confirmation that the company's CAP was acceptable. By e-mail response on March 6, 2006, Mr. Wallace confirmed that the proposed CAP matched that described during the January 13, 2006 meeting and indicated that a formal response would be appropriate (exhibit A-15). On March 10, 2006, the CAP was officially accepted by Transport Canada (exhibit A-16).

Other Evidence of Systemic Problems

a. Flap Wear Issue

Mr. Camulli gave evidence that in December 2005, he went to IEL for the purpose of monitoring a check ride. Prior to commencement of the ride, Mr. Camulli asked the training captain whether there were any deficiencies on the aircraft. The indication from the logbook was that there was only an inoperative heater. During pre-flight preparations, the ride candidate pilot lowered the flaps on the aircraft to be used for the ride. Mr. Camulli noticed that the flap had been rubbing up against the faring and worn through the metal. The other flap was also inspected and showed similar wearing. IEL's chief pilot, Chris Dickson, called maintenance at that point and the check ride was cancelled. It was Mr. Camulli's testimony that this incident led him to question the pilot training program. However, he confirmed that he did not do a write-up about this incident even though he testified to being "shocked" by what he saw and indicated that he thought it was evidence of systemic problems. Furthermore, he provided notes that showed that defect reporting had been covered by Mr. Chapman during a monitored ground school (exhibit M-11) which would suggest that the IEL pilots were aware of the correct method for recording defects.

Mr. Camulli was not in attendance at the Transport Canada meeting on January 22, 2006, and the Minister provided no evidence that the group was made aware of this incident at the time they made the revocation decision. Consequently, this evidence is not relevant for the purposes of determining the revocation and suspension matters.

b. Other Issues

Mr. Bulfone testified that he had attended the January 22, 2006 Transport Canada meeting for the purpose of providing the group with the enforcement record of IEL. For the purposes of the review hearing, Mr. Bulfone restricted his testimony to the following matters:

1. Several years ago, an IEL Islander landed at Bellingham Airport with an inoperative airspeed indicator. The Federal Aviation Administration referred the matter to Transport Canada and a sanction was paid by the company. Although the date of this incident was not firmly established, indications were that it occurred in 2004, well prior to Mr. Chapman's appointment as Operations Manager.

2. The Ducks Unlimited Canada flights discussed above which also occurred prior to Mr. Chapman's approval to act as Operations Manager.

3. A ramp inspection at Kamloops, estimated to have occurred in 2004 and conducted by Mr. Bulfone, revealed an unsecured load which resulted in a sanction against an IEL pilot. Once again, there was no evidence that Mr. Chapman was the Operations Manager at this time.

There was no other evidence that these additional incidents were specifically relied upon by the Transport Canada group in support of their revocation decision. Given that all three incidents occurred prior to Mr. Chapman's approval as Operations Manager, they cannot be considered relevant for the purposes of this determination.

Testimony of Messrs. Tingle and Sanai

Mr. Tingle testified that he was the PRM of IEL from the summer of 2001 until November 2005. During that time, he said he felt indirect pressure from Messrs. Chapman and Gill to keep the aircraft flying. However, he also said that had he insisted that the aircraft had to be brought in for maintenance, that decision would be honoured. He did not provide any evidence that it was Mr. Chapman who was responsible for the maintenance inspection overruns discovered on January 11, 2006.

Mr. Sanai became the PRM in November 2005. He also provided evidence of feeling pressured on occasion by Mr. Chapman, but when pressed to explain what he meant by pressured he said that "well, ideally we would have liked more time with some of the inspections on the aircraft, but because of the nature of the operation we had -- they wanted the aircraft earlier than sometimes we could deliver".

And in cross–examination, the following exchange took place:

Q Would you agree with me that there is in those type [sic] of operations continually a constant stress between operations who need to fly the airplane and maintenance who need to maintain the airplane?

A Absolutely. It's the nature of the work.

Transcript at 472 (April 18, 2006).

There was nothing in the evidence provided by either of these witnesses to enlighten the Tribunal as to whether Mr. Chapman was responsible for making decisions relative to the scheduling and completion of maintenance inspections. The only other evidence they provided was in connection with the circumstances surrounding written statements provided by both in the course of Transport Canada's investigation of the maintenance overrun issue. I therefore have to consider their testimony as lacking any relevance for the purposes of this hearing.

SERVICE OF THE NOTICE OF SUSPENSION

Evidence regarding service of the revocation and suspension letters was provided by Messrs. Heryet, Schoenberger and Chapman.

Mr. Heryet testified that on January 22, 2006, he had various telephone conversations with Messrs. Chapman and Gill and that he had discussed with them the option of IEL voluntarily surrendering its AOC. When Mr. Chapman called to advise that the company had decided not to take this option, it was Mr. Heryet's evidence that he advised Mr. Chapman that the AOC would be suspended and that at about 20:30, he faxed the revocation letter to a number he received from Mr. Chapman. Mr. Schoenberger corroborated this sequence of events. Mr. Heryet testified that Mr. Chapman was on the telephone while the revocation letter and suspension notice were faxed to him and that Mr. Heryet read the letter to him before transmitting it. Mr. Schoenberger did not recall Mr. Heryet reading the letter to Mr. Chapman prior to faxing it.

The Notice was to take effect at 23:59 on January 22, 2006. On the morning of January 23, 2006, it was Mr. Heryet's testimony that a package containing the revocation letter and suspension notice was sent by registered mail to IEL's office at 303 - 5360 Airport Road and that he was not sure who had signed for it at that address. He did not produce a copy of a registered service card or provide any physical evidence that the revocation or the Notice were ever personally served on Mr. Chapman or IEL.

Mr. Heryet confirmed that he was relying on the fax and verbal confirmation from Messrs. Gill and Chapman that they received the fax as proof of service having occurred. There was a definite disagreement in the evidence on this issue. It was Mr. Heryet's evidence that Mr. Chapman knew of the revocation and the reasons for the revocation on the night of January 22, 2006. Mr. Chapman's testimony was that he was not aware until the next day that this was the case, that he saw the faxed revocation letter only on the morning of January 23, 2006, and that he did not see a "hard copy" registered letter.

DISCUSSION ON THE ISSUE OF SERVICE

The requirements for service are clearly spelled out in subsections 7.1(1) and (2.1) of the Aeronautics Act as follows:

7.1(1) If the Minister decides to suspend . . . a Canadian aviation document on the grounds that

. . .

(b) the holder . . . in respect of which the document was issued ceases to meet the qualifications necessary for the issuance of the document . . . .

the Minister shall, by personal service or by registered or certified mail sent to the holder . . . at the latest known address, notify that person of the Minister's decision.

. . .

(2.1) The Minister's decision to suspend or cancel a Canadian aviation document takes effect on the date of receipt of the notice under subsection (1) by the person on whom it is served or to whom it is sent, unless the notice indicates that the decision is to take effect on a later date.

As I indicated in my initial treatment of this issue when it was raised by Mr. Saul as a preliminary motion, I wanted to take evidence relative to the service of the revocation letter and Notice and not rely merely on the representations of counsel. Having done that, it is clear that there is no evidence that the Minister met the service requirements in this case. There was no registered mail service card or affidavit of service presented and no clear indication of who, if anyone, from IEL may have received the revocation letter or the Notice. There was also no evidence to dispute the fact that the revocation and suspension were to take effect on January 22, 2006, prior to proper service as required by subsection 7.1(2.1).

The issue to be determined here is whether the failure of the Minister to properly serve the revocation letter and suspension notice should render invalid the actions of the Minister contained in those documents.

There is Tribunal precedent which supports a conclusion that the failure to properly serve the applicant should result in the invalidation of the revocation letter and suspension notice. In Aéro-Club de Richelieu v. Canada (Minister of Transport), [1991], review determination, CAT File No. Q-0243-10, the member Jobin says:

Where an enactment confers such extraordinary power as those conferred by the Aeronautics Act, it is imperative that those exercising these powers comply strictly with the provisions of the enabling legislation.

... In this case the failure to comply with the legislative provisions invalidates the notice of suspension of the operating certificate dated 31 January 1991.

However, the Federal Court of Appeal has also provided a ruling which is instructional regarding the relevant considerations on this issue. In the Society Promoting Environmental Conservation v. Canada, [2003] F.C.J. No. 861 case, the Federal Court of Appeal reviewed Supreme Court of Canada jurisprudence on this issue. It concluded as follows:

If...the provision is obligatory, the consequences of non-compliance must be determined by reference to the circumstances of the case, including the factors described in (4) below.

...

4) The factors to be considered in determining whether non-compliance with an obligatory statutory provision invalidates administrative action include the following:

(i) The importance of the provision, both as regards the overall purposes of the statutory scheme and the purposes served by the imposition of the procedural duty. A high degree of importance in either respect indicates a legislative intent that administrative action taken in breach of the procedural provision may be set aside.

(ii) The seriousness of the breach of the statutory duty: a technical violation is an indicator that the court should not intervene, while a public authority that flouts the statutory requirement can expect judicial intervention.

(iii) The impact of the impugned administrative action on the rights of individuals: the more important the individual rights affected and the more serious the effect on them, the more likely it is that a reviewing court will set aside administrative action taken in breach of a statutory procedural provision.

(iv) Conversely, the more serious the public inconvenience and injustice likely to be caused by invalidating the resulting administrative action, including the frustration of the purposes of the legislation, public expense and hardship to third parties, the less likely it is that a court will conclude that legislative intent is best implemented by a declaration of invalidity.

(v) The nature of the administrative process of which the statutory provision is part: the meticulous protection of procedural rights is likely to be regarded as more important when they are integral to a process of a broadly adjudicative nature than when they are part of an essentially political process culminating in an order of general application. Courts have traditionally tended to exercise less strict procedural surveillance over the process (including public consultation) whereby ministers determine broad polycentric public policy questions.

Applying the above principles to this case it can be established as follows:

(i) The requirement for personal service is obligatory as subsection 7.1(1) states: ... "the Minister shall, by personal service or by registered or certified mail sent to the holder ...at the latest known address, notify that person of the Minister's decision."

(ii) The purpose of the service provision of section 7.1 is to ensure that the applicant has notice of the Minister's action. In this case it is clear that the applicant did receive the Notice by facsimile either on the night of January 22 or the morning of January 23, 2006. It was also confirmed by Mr. Chapman that he had verbal confirmation from Mr. Heryet on January 22nd that IEL's AOC was going to be suspended. The applicant was able to make a request for a review hearing and had adequate time to prepare for the hearing. The purpose of subsection 7.1(2.1) is to ensure that the suspension does not take effect before the document holder has proper notice. In this case the suspension was to be effective at midnight on January 22nd, after receipt by IEL of verbal, and perhaps faxed notification.

(iii) In assessing the seriousness of the breach it is important to remember that Mr. Chapman and by extension, IEL, did have notice of the Minister's decision to suspend IEL's AOC on January 22nd and consequently the breach in this case could be considered "technical". By extension the effective date of the suspension occurring prior to receipt of proper notification could also be considered a technical breach.

(iv) The powers exercised by the Minister pursuant to the suspension provisions can obviously significantly impact corporate and individual rights. If the Minister is permitted to exercise these significant powers by merely faxing a notice without establishing proof that it was successfully received by the appropriate party, then what is to prevent the Minister from taking the position that a telephone call, e-mail or word of mouth would suffice?

(v) On the other hand the inconvenience and expense caused by invalidating the Minister's decision could be considerable. The hearing in this case took four days with many witnesses. Rendering the Notice invalid as a result of failure to serve properly would be a considerable inconvenience and expense.

(vi) Protection of procedural rights is an important duty both for Transport Canada and for this Tribunal. The Aeronautics Act is very clear about what is required for service. The requirements for service are not onerous or unusual. The Minister is exercising significant powers and it is incumbent upon the Minister to follow the rules, just as the Minister expects air operators to follow the rules in order to exercise the privileges extended by an AOC.

DETERMINATION ON THE ISSUE OF SERVICE

On balance, I must conclude that the Minister's failure to meet the service requirements specified in the Aeronautics Act should not render the revocation or suspension invalid. The evidence was clear that Mr. Chapman and IEL had notice of the revocation and suspension which meets the purpose of the service provisions. IEL had decided to discontinue flight operations for at least January 22nd and 23rd to ensure that the pilots were in a frame of mind to safely perform future flight duties. Consequently, the effective date of the suspension could not be said to have an adverse effect on the company. There could also be considerable inconvenience and expense arising from a decision of invalidation. Presumably, the Minister could cure the service issue which would presumably result in the request by the applicant for another review hearing on the same facts. This would not be a desirable result.

DISCUSSION AND DETERMINATION ON OTHER ISSUES

Having determined that the revocation letter and suspension notice are not invalid, it is necessary to consider the merit of the applicant's other submissions that the actions taken by the Minister, with respect to Mr. Chapman and IEL, were not justified.

Jurisdiction of the Tribunal to Review the Revocation of Mr. Chapman's Operations Manager's Authority

There was discussion during the hearing regarding the ability of the Tribunal to review the revocation decision by the Minister. Whether such a review falls within the jurisdiction of the Tribunal would depend on whether or not the letter of approval of Mr. Chapman as the Operations Manager constitutes a Canadian aviation document (CAD). In order to establish whether this is the case, it is important to look at the definition of a CAD in the Aeronautics Act:

3. (1) In this Act,

. . .

"Canadian aviation document" means . . . any licence, permit, accreditation, certificate or other document issued by the Minister under Part I to or with respect to any person . . . .

. . .

6.6 In sections 6.7 to 7.21, "Canadian aviation document" includes any privilege accorded by a Canadian aviation document.

In Canada (Attorney General) v. Cooper, [1995] F.C.J. No. 1653, T-985-95, Gibson J. had this to say about CADs:

¶ 5 . . . "Canadian aviation document" is very broadly defined by the Act. It includes not only any of the specified documents but also any "other document" issued by the Minister under Part I of the Aeronautics Act. . . .

I conclude that the language contained in subsection 3(1) and section 6.6 of the Act is sufficiently broad to include a document in the form of a letter that contains the Minister's delegation of authority to each Applicant to act as a DFTE [Designated Flight Training Examiner].

. . .

¶ 10 Within the terms of section 6.6 of the Act, the letters accorded a privilege that is an exceptional advantage or right, the exceptional advantage or right being the advantage or right to conduct flight tests, to issue private and commercial pilot licences and multi-engine ratings and to set and collect fees therefore.

The Federal Court of Canada also dealt with the issue of what constitutes a CAD in Canada (Minister of Transport) v. Beingessner, [1996] F.C.J. No 787, T-590-95. Rothstein J. says:

¶ 5 In my opinion, the Minister's argument ignores section 6.6 and the effect of a decision to fail a pilot on a PPC. If, as the Minister argues, Air Canada is prohibited by law from assigning the respondents to fly A-320 aircraft because they failed their PPCs, the respondents, by operation of law, lost the privilege accorded them by the A-320 endorsement on their licences which permitted them to fly A-320 aircraft. Suspension is not defined in the Aeronautics Act. However, the definition of suspension in the Shorter Oxford English Dictionary, 3rd ed., includes "the action of debarring or state of being debarred, for a time, from a function or privilege". The loss of the privilege to fly A-320 aircraft constitutes a suspension of a Canadian aviation document reviewable by the Tribunal.

. . .

¶ 12 At the commencement of this judicial review, I asked counsel the reason for this dispute. Counsel for the respondent indicated that the respondents were concerned that if the failure of the PPC was not considered a suspension of a Canadian aviation document, pilots would have no recourse from such decisions. While the normal course is to conduct a re-test as soon as possible, and this is provided for in the current pilots' collective agreement with Air Canada, there is no statutory obligation on a carrier to conduct a re-test.

¶ 13 Counsel for the Minister expressed the concern that there are innumerable PPCs being conducted on an ongoing basis dealing with many detailed and sometimes minor matters and that it was never envisaged that such matters could become the subject by review by the Tribunal. It seems that the Minister is concerned with the proliferation of applications for reviews when the alternative of taking another PPC is, for the most part, the most effective recourse for pilots. Whether a decision to fail a pilot on a PPC should be reviewable by the Tribunal is a matter of policy. It is not to be decided by this Court. The role of the Court is to interpret the applicable legislation and regulations. If the Minister wishes to restrict such reviews, it is open to Parliament or the Governor in Council to make appropriate legislative or regulatory changes to achieve that objective.

The Minister's decision to revoke Mr. Chapman's authority barred him from the function of being the Operations Manager. Being the Operations Manager is an "exceptional advantage or right" in that the designation is a prerequisite to a company being granted an operating authority. Based on the foregoing, the letter approving Mr. Chapman as the Operations Manager clearly falls within the meaning of a CAD.

Consequently, I find that the Tribunal has the jurisdiction to review the matter of Mr. Chapman's revocation, in addition to reviewing the Notice of Suspension of IEL's AOC.

Permitted Scope of the Evidence

It is a requirement of the Aeronautics Act at subparagraph 7.1(2)(a)(ii) that the Minister indicate in any notice of its decision to suspend "the qualifications necessary for the issuance of the document that the Minister believes the holder of the document . . . ceases to have . . . ."

The Notice in this case was relatively clear in that it states that "[t]he document holder does not employ an Operations Manager who meets the qualifications required by Canadian Aviation Standard, subparagraph 723.07(2)(a)(i)".

However, the revocation letter to Mr. Chapman was not as straightforward. It indicated that the recent findings by Aircraft Maintenance and Manufacturing personnel led the Minister to deem that his responsibilities for the "control of operations and operational standards of all aeroplanes operated", as required by clause 723.07(2)(a)(ii)(A) of the Commercial Air Service Standards (CASS), had not been fulfilled.

It was Mr. Villemure's contention that "it's not the Tribunal's job to second-guess the Minister's decision. The Tribunal's job is to evaluate whether or not the grounds that were alleged are supported by evidence."

I agree with the latter part of his statement, but had difficulty understanding how the Tribunal is expected to do this job when it is really not clear what is being alleged. The construction of the revocation letter could very easily lead Mr. Chapman to believe that the only allegation in support of the revocation was the maintenance overruns, whereas the Minister took the position that it was not only the maintenance and manufacturing findings that led to the revocation decision. Due to the confusing nature of the revocation letter, I elected to err on the side of permitting a broader scope of evidence from the Minister as to the reasons for taking revocation action against Mr. Chapman. However, after hearing all the evidence presented by the Minister and studying the revocation letter, I find that the only basis on which Mr. Chapman's revocation can be reviewed is as against the maintenance overrun findings of January 11, 2006, as this conclusion best meets the requirements of subparagraph 7.1(2)(a)(ii) of the Act.

The Minister had the opportunity to set out in greater detail in the revocation letter, all the grounds taken into consideration in determining that Mr. Chapman's authority should be revoked. For unknown reasons, the Minister elected not to provide these details and cannot remedy the oversight by having provided a multitude of information in the course of disclosure. The Minister also had the option of taking action against IEL on the basis of their aviation record. This would have allowed a broader look at the history of the company. Once again, for reasons that did not become clear during the hearing, the Minister elected not to take this course of action. Having made the revocation decision, it was incumbent upon the Minister to make clear the grounds for his decision and the only clearly stated ground was the reference to the findings by Aircraft Maintenance and Manufacturing.

Burden of Proof

The purpose of the Tribunal is to provide an independent review process for anyone who has been given notice of an administrative or enforcement action taken by the Minister of Transport under various federal transportation acts. Mr. Villemure continuously referred to the revocation and suspension actions in this case as "administrative" as opposed to "enforcement". He submitted:

There seems to be this confusion around this hearing that we're in the enforcement world. We're not. We took an administrative decision. We had grounds, we alleged grounds to support it, we then disclosed all of the evidence that we had to the document holder. So they knew, they knew everything before coming here.

I've been coming across these things in the transcript. We say: But the purpose of the notice is to give the applicant an opportunity to know what's being alleged against him. The purpose of the notice is to specify the grounds for why they're suspended. That's the only thing section 7.1 requests for us to do.

. . . This is not an enforcement case. The Minister has no obligation to prove whatsoever allegations against anybody. The Minister is here to explain his position that led him to suspend the operator certificate for Sonic Blue and to substantiate the grounds that were alleged, that were specified in the notice of suspension. That's the only thing we have to do. . . .

Transcript at 428-429 (April 18, 2006).

These comments from the Minister's representative arose in connection with comments I made during the hearing with respect to the way the letter of revocation was worded. More specifically, what I said was:

. . . [T]he purpose of the notice is to give the applicant an opportunity to know what's being alleged against him or her or the company. So if that's what you're relying on, recent findings by maintenance and manufacturing, that's fairly narrow. Even though you started out saying it's control of operations and operational control, you then limited it fairly significantly by saying it's in view of recent findings by maintenance and manufacturing.

So we, in fairness, we have to say: Well, how would Mr. Chapman know by this letter that you weren't talking about something that happened in 2004? . . .

Transcript at 70-71 (March 28, 2006).

In the reference Canada (Civil Aviation Tribunal) [1995] 1 F.C. 43; [1994] F.C.J. No. 1301, T-1869-93, pursuant to section 18.3 of the Federal Court Act, Noël J. said:

. . . The Minister has the burden of establishing any ground of suspension or the commission of an infraction before the Tribunal, except a suspension based on medical grounds, in which case the document holder bears the burden of establishing that the ministerial decision was wrong . . . .

The Minister is obligated to establish, on the balance of probabilities, the existence of each essential element of an alleged offence. In this case, he must demonstrate that the maintenance and manufacturing findings of January 11, 2006, are evidence of Mr. Chapman's failed responsibilities for the "control of operations and operational standards of all aeroplanes operated". The Minister must also establish that IEL did not meet the qualifications necessary to hold their AOC because IEL did not employ "an Operations Manager who meets the qualifications required by Canadian Aviation Standard, subparagraph 723.07(2)(a)(i)".

Mr. Villemure raised the distinction between "administrative" and "enforcement" actions so frequently that I was compelled to search for some basis in the regulations for the distinction. Section 103.07 of the CARs entitled Administrative Grounds for Suspension, Cancellation or Refusal to Renew is instructive here as it states as follows:

In addition to the grounds referred to in Sections 6.9 to 7.1 of the Act, the Minister may suspend, cancel or refuse to renew a Canadian aviation document where

(a) the Canadian aviation document has been voluntarily surrendered to the Minister by its holder;

(b) the Canadian aviation document has been mutilated, altered, or rendered illegible;

(c) the aircraft in respect of which the Canadian aviation document was issued has been destroyed or withdrawn from use; or

(d) the commercial air service, other service or undertaking in respect of which the Canadian aviation document was issued has been discontinued.

Suspension in such circumstances is clearly administrative because it is not based on a qualitative assessment of the performance of the document holder. In the current case, Transport Canada made a judgment call which led to the issuance of the revocation letter and the Notice which is entirely different from the type of "administrative" action contemplated by section 103.07 of the CARs. Consequently, I can find no basis for the Minister's position that their burden is somehow diminished in this instance. It is true that the Tribunal's power in this case is limited to either upholding the Minister's decision to revoke and suspend or referring the matter back to the Minister for reconsideration (with an option to stay the suspension in the interim). However, I fail to see how a limitation on the Tribunal's options for disposition diminishes the Minister's obligations to show justification for the actions they took.

Revocation of Mr. Chapman's Authority

Having decided the preliminary issues above, the key issue for this hearing is to determine whether the maintenance overruns found on January 11, 2006 are an appropriate basis for the revocation. To arrive at an answer, it is important to establish whether Mr. Chapman had responsibility for maintenance overruns in his capacity as Operations Manager.

It was Mr. Heryet's contention that Mr. Chapman was responsible for the maintenance overruns for two primary reasons. First, the requirement in clause 723.07(2)(a)(ii)(A) of the CASS for the Operations Manager to be responsible for "operational standards of all aeroplanes operated" meant he was ultimately responsible for aircraft maintenance and second, the COM organization chart which showed the PRM reporting directly to the Operations Manager.

With respect to the first ground, it was apparent from the testimony of other witnesses for the Minister that some of the Transport Canada officials had trouble making the connection between the maintenance findings and Mr. Chapman's revocation.

Mr. Schoenberger indicated that he did not make the connection on the night of January 22, 2006, when he saw the draft revocation letter and testified:

. . . I commented that the PRM would have been responsible for maintenance and that while there was operational issues, that most of the recent issues had been maintenance. And he said -- he pulled out the CARs, showed me 723.07(2)(a)(ii)(A) showing that the ops manager had responsibility for the operational control of the aircraft and the safety of the aircraft. He pulled out the COM as we call it, the commercial operator's manual, and showed me that the PRM reported to the ops manager who reported to the president

Transcript at 246 (March 29, 2006).

Mr. Schoenberger also confirmed that there is a requirement for maintenance responsibilities to be assigned in writing in the MCM because "we ensure they have the proper background and training to do that".

Mr. Wallace also expressed difficulty in making the connection as evidenced by his e-mail to Mr. Heryet on January 24, 2006 (exhibit A-4) as follows:

. . . I am having difficulty making connection between the Operations Manager and any issues found by Aircraft Maintenance & Manufacturing personnel. Control over all aspects of maintenance and airworthiness of the company's aircraft is clearly held by the Person Responsible for Maintenance who is responsible directly to the President. The Operations Manager does not enter into the equation and therefore I really need help understanding how or why he is associated with the AOC suspension . . . .

The response on this issue came from Bruce R. Hutchings, Regional Superintendent, Certification, Commercial and Business Aviation, and was as follows: "The PRM in this company is responsible to the Operations Manager who is the top of the food chain as dictated in their Operations Manual so we cut out the middle man and went as high as we could".

Mr. Wallace's reply was:

We have a serious contradiction between the Operations and Maintenance Control Manuals. The MCM clearly has the PRM reporting directly to the President . . . both on the organization chart and in the description of responsibilities. I suspect the confusion may be due in part to 723.07(2) not defining the responsibilities of the PRM while it does so for the Operations Manager and Chief Pilot. Therefore you would be justified in assuming that the PRM has no relevant responsibilities.

This is going to make meeting the conditions for re-instatement quite interesting as, according to the MCM, the Operations Manager clearly has no control over the PRM, aircraft airworthiness or maintenance control system.

Mr. Heryet did not establish a regulatory reference to support the contention that responsibility for "operational standards" was tantamount to being responsible for maintenance as evidenced by the following exchange in cross-examination:

Q But is there a Transport document which confirms that or is that simply your belief?

A It's my belief and very common with all my staff and my colleagues across the country, is the understanding the operations manager is ultimately responsible for the operations of the company.

Transcript at 155-156 (March 28, 2006).

Furthermore, when pressed on the matter of whether the organization chart in the COM proved that the Operations Manager had responsibility for maintenance, he had this to say:

Q Even where the organizational chart, as in this case, that is, the standard form published by Transport, shows a double chain of command, that is to say, maintenance manager and operations manager responding separately to the president, even in that case, it's your view it's the operations manager has responsibility for maintenance?

A Yes . . . .

Q It doesn't matter what the organization structure shows, at the end of the day the language of the statute, control over operations and operational standards, that imports responsibility for maintenance to the operations manager? That's your view?

A That's my view . . . .

Transcript at 157 (March 28, 2006).

In the absence of any regulatory confirmation or Tribunal precedent establishing the meaning of "operational standards", we are left to determine what it means through the process of statutory interpretation. In this activity, we are guided by the following principles found in Verdun v. Toronto-Dominion Bank, [1996] 3 S.C.R. 550 at ¶ 6:

. . . the courts must consider and take into account all relevant and admissible indicators of legislative meaning . . . An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just. [emphasis omitted.]

The technical dispatch requirements of subsection 706.06(1) of the CARs require the air operator to include in the maintenance control system, procedures to ensure that aircraft are not operated unless they are (a) airworthy and (c) maintained in accordance with the MCM. This is clearly where the legislative scheme intended the responsibility to lie for adhering to maintenance inspection intervals.

The purpose of the technical dispatch procedures is to ensure that only aircraft conforming to applicable airworthiness, operational and corporate requirements are dispatched into service. Section 726.08 of the CASS requires the MCM to contain (m) a detailed description of procedures for ensuring maintenance tasks required by the maintenance schedule, airworthiness directives or defects are completed within the time constraints specified in section 605 of the CARs as well as (q) technical dispatch procedures.

In light of the regulatory structure pointing to the PRM as having responsibility for timely completion of maintenance tasks, what evidence exists to support the contention that Mr. Chapman was responsible instead?

Mr. Chapman testified that he had no idea he was responsible for ensuring that maintenance inspection intervals were not breached. It was never established by the evidence that Mr. Chapman was aware that the aircraft had overdue inspections. His responsibility for maintenance was never raised with him during his interview with Mr. Heryet when he applied to be the Operations Manager. There is nothing to indicate that this is the normal responsibility of the Operations Manager from the Transport Canada study guide provided to candidates (exhibit A-19). Neither was there any evidence that Mr. Chapman was contacted by Mr. Wallace when the maintenance overruns were discovered. Furthermore, when Mr. Chapman assumed the quality assurance duties, he signed a specific agreement for that purpose.

In the face of this evidence or lack thereof, it is difficult to understand how the Minister arrived at the conclusion that responsibility for "operational standards" includes responsibility for the technical dispatch of the aircraft in the presence of such clear directives that the responsibility lies with the PRM. And even if one were to adopt the theory that because the PRM reported to the Operations Manager in the COM, how can it be ignored that this was inconsistent with what was contained in the MCM? The MCM is a document which requires approval by the Minister, just as does the COM, and there is no indication that one has a higher status than the other. The two documents are meant to work together to ensure that all facets of a commercial aviation enterprise are properly controlled.

On the basis of the foregoing, I find that the Minister has not established that Mr. Chapman failed to meet his responsibilities for the "operational standards" of the aircraft on the basis of the maintenance findings of January 11, 2006 because it cannot be established that Mr. Chapman was responsible for those findings. Consequently, I also find that the Minister's reasons for suspending IEL's AOC on the ground that they do not "employ an Operations Manager who meets the qualifications required by Canadian Aviation Standard, subparagraph 723.07(2)(a)(i)" are unsupported.

The Effective Date of the Notice of Suspension

The evidence, which is not in dispute on this point, confirms that the Notice was to take effect coincidentally with the revocation of Mr. Chapman's authority. The issue is whether Transport Canada had an obligation to give IEL advanced notice of the suspension and an opportunity to, at least, react to the impending suspension.

There is no specific regulatory requirement which states whether or not Transport Canada is required to give advanced notice of a suspension. Paragraph 703.09(i) of the CARs provides that the air operator shall notify the Minister within 10 working days after any change in its managerial personnel and this condition is also contained in the company's ACO. However, this provision does not serve to clarify the Minister's obligations in circumstances where they are responsible for making the "change" in the managerial personnel due to a revocation. What we can conclude from this, as well as the note contained in the CASS at the end of subsection 723.07(2) dealing with the Qualifications and Responsibilities of Operational Personnel which says:

Note:

In his or her absence, all responsibilities for operational duties shall be delegated to another individual qualified in accordance with the Canadian Aviation Regulations except that the knowledge requirements detailed under Operations Manager qualifications may be demonstrated to the air operator rather than the minister.

is that the Regulations contemplate the continuation of an air operator's operation in the absence of the Operations Manager for some period of time. We can also confirm that the Regulations neither prohibit nor require an immediate suspension of an AOC in the absence of an Operations Manager.

Given the lack of regulatory clarity, it is useful to turn to the Transport Canada Air Operator Certification Manual (TP 4711E) which at section 7.1 sets out the Procedures to Follow Prior to Suspension or Cancellation of an AOC. It establishes a number of steps to be taken leading up to the issuance of a Notice as follows:

Step 1: Observed Deficiencies During Inspection

. . .

Step 2: Report of Findings

. . .

Step 3: Letter to Air Operator

Where it is determined that the problem can be resolved internally . . . a letter signed by the appropriate Director should be sent to the air operator containing the following:

a. details of the observed deficiency(ies);

b. date, time and place of the observations;

c. details of the corrective action which must be undertaken; and d. specific period of time within which the air operator has an opportunity to respond.

Step 4: Non-Conformity

If the air operator has not taken corrective action, proceed to step number 6.

Step 5: Conformity

If the air operator has satisfied the appropriate Director, Manager or Chief that he/she has complied with the requirements, no further action is required other than to advise (by letter) of the acceptance of the corrective action.

Step 6: Non-Conformity – Further Communications

Where the appropriate Director, Manager or Chief is of the opinion that the air operator may still comply, he or she should do one of the following:

a. send out a second letter which is stronger in tone and provides for a shorter conformity period; or b. arrange a meeting with the air operator

. . .

Step 8: Non-Conformity – Issuance of Notice by Appropriate Director, Manager or Chief. . . .

3. Steps to Consider in the Issuance of a Notice

. . .

d. Effective Date of Notice

i. As there are no statutory requirements with respect to the effective date of a suspension or cancellation imposed pursuant to . . . paragraph 7.1(1)(b) . . . of the Act, care must be exercised in determining when the Notice is to take effect.

ii. Where the grounds for the suspension do not immediately reduce flight safety (i.e. poor record keeping) then a delay in the effective date may be acceptable. However, where the grounds for the suspension involve serious aviation safety defects, a delay in the effective date creates an unacceptable risk (in that an accident could occur prior to the effective date of the suspension).

It seems fairly clear from the procedures contained in this Transport Canada manual that unless there is some kind of immediate threat to aviation safety, a delay in the effective date may be appropriate – and this is AFTER Transport Canada has taken steps to notify the air operator of the "findings" and provided an opportunity for rectification of the applicable defect.

In the case at hand, this procedure clearly was not followed. The revocation took place effective January 22, 2006, and the suspension also took place at the same time. Further, the basis for the suspension was that IEL no longer employed a qualified Operations Manager. Can this be considered an immediate threat to aviation safety? Probably not, particularly in light of the regulatory contemplation of continued operations in the absence of an Operations Manager.

Finally, we need to look at whether there is any precedent to give guidance. Mr. Saul provided two cases on the issue of whether the suspension of an AOC without being given the opportunity to respond was fair or met the requirements of natural justice. The Minister's representative presented no contravening cases nor did he comment on the cases tabled by Mr. Saul.

The first is Wapiti Aviation Ltd. v. Canada (Minister of Transport), [1986] F.C.J. No. 324, T-1121-86. This case involved the suspension of Wapiti's AOC on the grounds that Transport Canada found irregularities during several intensive inspections during December 10 to 13, 1984, for a period following April 1, 1985, and April 7 to 14, 1986. On April 17, 1986, the suspension was sent to Wapiti by telexed letter from the defendant, Donald A. Davidson, advising of the alleged irregularities and the decision to suspend effective 23:59 on April 17, 1986. Jerome A.C.J. had the following comments to make:

It is now well established that even where the responsibility is administrative in nature, there is a duty to act fairly to those who may be prejudicially affected. Furthermore, such a duty exists even where those to be dealt with enjoy limited rights . . . How much more so should such a duty exist in respect to this Plaintiff, where the impact of suspension almost certainly will deprive it of the right to carry on a commercial aviation service which it has operated under Federal licenses for some fifteen years. I, of course, impute no ill motives to the inspectors, nor do I diminish the importance of their work in the interest of the safety of the travelling public. But do those interests justify the failure to observe that basic standard of fairness enjoyed in the cases to which I have just referred? Surely not, particularly since these infractions were discovered during inspections performed from April 7th to 14th whereas the telex advising the Plaintiff of the suspension was not sent until April 17th, three days later. Why could that period not have been extended a further two or three days to provide the Plaintiff an opportunity to refute, respond or prove conformation.

Jerome A.C.J. also had this to say:

. . . [I]t is not for me to attempt to set out in any detail what is required to meet the test, but surely as a minimum, it must include some opportunity for the licencee to react, either in writing or in person, before the drop of the guillotine.

Having failed to provide this Plaintiff with such an opportunity, the Defendants were in breach of their duty to treat the Plaintiff fairly and accordingly, the decision to suspend is set aside.

In Air Nunavut Ltd. v. Canada (Minister of Transport), [2000] F.C.J. No. 1115, T-882-99 (Tremblay-Lamer J.), the Minister of Transport suspended Air Nunavut's AOC pursuant to paragraph 7.1(1)(b) of the Aeronautics Act on the ground that Air Nunavut did not employ a chief pilot on a full-time basis, and therefore no longer complied with the conditions of the AOC. Air Nunavut was given no prior notice of the suspension, nor were they given an opportunity to respond to any concern the Minister may have had. There were other issues addressed by the court with respect to matters of service of the initial and a second notice, but the key issue for the purpose of this matter was whether the principles of fairness and natural justice required the Minister to provide Air Nunavut with prior notice and an opportunity to respond before issuing the notice of suspension.

Tremblay-Lamer J. confirmed at paragraph 51 that ". . . the existence of the duty to act fairly is flexible, variable and depends on a variety of circumstances". There are a number of "factors . . . relevant to determining what is required by the common law duty of procedural fairness in a given set of circumstances. . . ." It is the third factor which is germane to this case as follows:

¶ 55 A third factor is the importance of the decision to the individuals affected. The greater the impact, the more stringent procedural protection is required. In the present case, the Minister has to balance the severe financial effect the suspension of the Canadian aviation document has on the Applicant, with the promotion of aviation safety.

¶ 56 Although it is true that the Act does not require prior notice before the issuance of the Suspension Notice, it is trite law that there exists a general common law duty to act fairly on every public authority making an administrative decision which is not legislative in nature and which affects the rights, privileges or interests of individuals. Cognizant that the holding of a Certificate is not a right, I am of the view nevertheless, that a temporary suspension will adversely affect the business of the document holder as well as inconvenience passengers booked to travel with Air Nunavut.

¶ 57 Therefore, considering that there was no immediate threat to aviation safety . . . and given the potential negative impact on the Applicant's livelihood, I am of the view that a minimal duty of fairness was required before suspending the certificate.

¶ 58 I believe that procedural fairness requires that the Minister afford the Applicant, Air Nunavut, some form of notice and opportunity to respond before the notice becomes operative. In fact, providing the Applicant with notice of a forthcoming suspension, in writing or in person, Air Nunavut would have the opportunity to react, thus satisfying both the Minister's concerns for air safety, as well as the Applicant's concerns with respect to its operations.

The court concluded by quashing the decision of the Minister to suspend Air Nunavut's AOC.

These cases appear to be clearly on point with the circumstances of this case. IEL received the Notice which took effect immediately and concurrently with the revocation. The effect of the suspension was to prevent IEL from operating its commercial air service. According to the Wapiti and Air Nunavut cases, the failure to grant IEL some prior notice and opportunity to respond clearly did not meet the Minister's requirements to exercise its authority of suspension in a manner which was fair or naturally just.

DETERMINATION ON THE ISSUES RAISED BY THE APPLICANT

I am referring the matter back to the Minister for reconsideration. In the absence of any evidence to indicate an immediate threat to aviation safety, Mr. Chapman's authority to act as Operations Manager as well as IEL's AOC should be reinstated.

DISCUSSION ON COSTS

Mr. Saul made a submission that the applicant be awarded costs in this matter.

Subsection 19(1) of the Transportation Appeal Tribunal of Canada Act stipulates:

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.

The power of the Tribunal to award costs arose in connection with the enactment of the Transportation Appeal Tribunal of Canada Act on June 30, 2003. Being a relatively recent power, there are no previous Tribunal decisions to provide guidance on this issue. Therefore, assuming that Mr. Saul is seeking costs on the basis of paragraph 19(1)(a), it is helpful to look at the meaning of the words "frivolous" and "vexatious" to determine whether the allegation is sustainable in this case.

It was Mr. Saul's position that the applicant was entitled to costs because of the "extraordinary way that Mr. Heryet . . . behaved without regard to the operations, but particularly without regard to Mr. Chapman." He indicated, and the evidence showed, that Mr. Chapman was a very qualified pilot with a lengthy resumé of accomplishments. He had only eight months prior to the revocation and suspension been approved by Transport Canada as Operations Manager. Then, without any consultation with Mr. Chapman, his authority to act as Operations Manager was revoked. Further, IEL's operating authority was immediately revoked without having the opportunity to propose an alternate candidate as Operations Manager contrary to Transport Canada's own policy and contrary to the requirements for procedural fairness.

Mr. Villemure's position with respect to costs was that the Tribunal was not seized of this matter by virtue of the Minister, but rather by virtue of the request for a review hearing by the applicant. This does not seem a supportable argument for it would suggest that there would never be any basis on which a document holder could successfully recover costs against the Minister, except at an appeal level hearing, as a review hearing would always be at the request of the document holder. Mr. Villemure did not make any other specific submissions with regard to the matters raised by Mr. Saul on this issue.

The question for the Tribunal is whether the revocation and suspension actions taken by the Minister were "frivolous or vexatious". Black's Law Dictionary (8th ed., edited by Bryan A. Garner, St. Paul, Minn.: Thomson/West, 2004) defines "frivolous" as "lacking a legal basis or legal merit; not serious; not reasonably purposeful". It defines "vexatious" as "without reasonable or probable cause or excuse; harassing; annoying" and "vexatious suit" as "a lawsuit instituted maliciously and without good cause".

It seems clear that paragraph 19(1)(a) should operate only in the rarest of circumstances, where there was serious or egregious action, perhaps even malice on the part of the Minister's officials. The question here is whether there was any ill intent on the part of Transport Canada in taking the action it did against Mr. Chapman and IEL.

Although I have determined that the Minister's decisions to revoke and suspend should be referred back to the Minister for reconsideration, I cannot conclude that the Minister's representatives acted with malice or spite. I do not believe the actions of the Minister lacked any merit nor do I believe they were intending to embarrass or annoy the applicant or Mr. Chapman.

DETERMINATION ON COSTS

Having determined that the Tribunal was not seized of this matter for reasons that were frivolous or vexatious, I therefore have determined that the applicant is not entitled to costs in this matter.

July 11, 2006

Tracy Medve
Member
Transportation Appeal Tribunal of Canada