Decisions

CAT File No. Q-1416-09
MoT File No. NAX 5258-1-4511

CIVIL AVIATION TRIBUNAL

BETWEEN:

Aviation Québec Labrador Ltée, Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Aeronautics Act, R.S.C. 1985, ch. a-2, s. 5.9(1), (2), 6.6, 6.8 and 7.1(1)
Interpretation Act, s. 35, 43(b), (c) and 44(g)

Conditions for Issuance, Repeal of the Former System, Operating Certificate


Review Determination
Suzanne Jobin


Decision: May 23, 1997

TRANSLATION

After considering the arguments of the parties and all applicable law, the Tribunal upholds the Minister's decision to cancel the Applicant's operating certificate.

The Review Hearing on the above matter was held April 11, 1997, at 10:00 hours, at the Federal Court of Canada, in Quebec City, Quebec.

BACKGROUND

On December 12, 1996, Transport Canada notified the Applicant, Aviation Québec Labrador Ltée, that it no longer met the conditions for issuance of the operating certificate held by the carrier. The Notice of Cancellation reads, in part, as follows:

Pursuant to paragraph 7.1(1)(b) of the Aeronautics Act, the Minister of Transport has decided to cancel your above indicated operating certificate in full for the following reason:

The operating certificate no longer meets the conditions of issuance. The Air Regulations and Air Navigation Orders were repealed October 10, 1996.

In accordance with section 7.1 of the Aeronautics Act, Aviation Québec Labrador Ltée appealed this decision to the Civil Aviation Tribunal. A Notice of Hearing was served on the parties concerned, setting April 11, 1997, as the date of the Review Hearing.

THE LAW

Subsection 7.1(1) of the Aeronautics Act states as follows:

7.1 (1) Where the Minister decides

(a) to suspend, cancel or refuse to renew a Canadian aviation document on medical grounds,

(b) to suspend or cancel a Canadian aviation document on the grounds that the holder of the document is incompetent or the holder or any aircraft, airport or other facility in respect of which the document was issued ceases to have the qualifications necessary for the issuance of the document or to meet or comply with the conditions subject to which the document was issued, or

(c) to suspend or cancel a Canadian aviation document because the Minister is of the opinion that the public interest and, in particular, the record in relation to aviation of the holder of the Canadian aviation document or of any principal of the holder, as defined in regulations made under subsection 6.71(2), warrant it,

the Minister shall, by personal service or by registered mail sent to the holder or to the owner or operator of the aircraft, airport or facility, as the case may be, at the latest known address of the holder, owner or operator, notify the holder, owner or operator of the Minister's decision.

Section 6.6 of the Aeronautics Act stipulates as follows:

6.6 In sections 6.7 to 7.2, "Canadian aviation document" includes any privilege accorded by a Canadian aviation document.

Section 6.8 states that:

6.8 In addition to any ground of suspension, cancellation or refusal of renewal referred to in sections 6.9 to 7.1, the Minister may suspend, cancel or refuse to renew a Canadian aviation document in such circumstances and on such grounds as the Governor in Council may by regulation prescribe.

The general provisions concerning the enactments found in subsections 5.9(1) and (2) of the Act stipulate as follows:

5.9 (1) The Governor in Council may make regulations exempting, on such terms and conditions as may be specified in the regulations, any person, aircraft, aerodrome, facility or service from the application of any regulation or order made under this Part.

(2) The Minister may, on such terms and conditions as the Minister deems necessary, exempt any person, aircraft, aerodrome, facility or service from the application of any regulation or order made under this Part if in the opinion of the Minister the exemption is in the public interest and is not likely to affect aviation safety.

Paragraph 44(g) of the Interpretation Act states that:

44. Where an enactment, in this section called the "former enactment", is repealed and another enactment, in this section called the "new enactment", is substituted therefor,

(...)

(g) all regulations made under the repealed enactment remain in force and are deemed to have been made under the new enactment, in so far as they are not inconsistent with the new enactment, until they are repealed or others made in their stead;

Paragraphs 43(b) and (c) of the same Act state that:

43. Where an enactment is repealed in whole or in part, the repeal does not

(...)

(b) affect the previous operation of the enactment so repealed or anything duly done or suffered thereunder,

(c) affect any right, privilege, obligation or liability acquired, accrued, accruing or incurred under the enactment so repealed,

The Act defines the terms "enactment" and "regulation" as follows:

"enactment" means an Act or regulation or any portion of an Act or regulation;

"regulation" includes an order, regulation, rule, rule of court, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution, or other instrument issued, made or established

(...)

THE FACTS

Aviation Québec Labrador Ltée is a Canadian air carrier. On December 12, 1996, the Minister of Transport notified the Applicant of the cancellation of its operating certificate dated January 4, 1996. According to this notice, the document no longer met the conditions of issuance, the Air Regulations and Air Navigation Orders having been repealed October 10, 1996.

Before sending this document, Transport Canada issued the Applicant a new operating certificate consistent with the new aviation regulations. This action taken by Transport Canada was intended to ensure the continuity of the company's air operations.

However, the new operating certificate issued altered the terms of the previous certificate. The requirements and conditions pertaining to the implementation of certain operations specifications were modified. These modifications affected the conditions regarding take-off and IFR operations without a second officer.

The facts are not in dispute.

ARGUMENTS

The Applicant challenges the validity of the cancellation of the operations specifications previously issued by the Minister of Transport, claiming that these specifications and the privileges conferred should be deemed comparable to a Canadian aviation document, and can therefore be cancelled only if there exists one of the grounds stipulated in the Act. The Applicant maintains that the privileges granted in the operating certificate issued January 4, 1996, were granted pursuant to the provisions of the Act. These provisions allowed the Minister to exercise his discretionary authority and place himself outside the regulatory framework, in those circumstances he deemed relevant. The Applicant argues that the Minister cannot delegate the powers vested in him. It points out that decisions of the Minister taken pursuant to a provision of the Act must not be altered by the repeal of an enactment and the coming into force of a new enactment.

The Applicant's representative argues that, in any event, the privileges conferred since 1991 constitute vested rights and therefore cannot be taken away or even replaced. Finally, he points out that Transport Canada failed to show that the Minister's action was dictated by considerations related to safety or the public interest.

The Applicant is asking the Tribunal to overrule the Minister's decision and restore the previous conditions. It considers that upholding the Minister's decision could have a negative economic impact on small air carriers.

For its part, Transport Canada argues that the Minister's action is warranted by the coming into force of the Canadian Aviation Regulations. The repeal of the former system and its substitution render the conditions issued under it obsolete. Even though the new conditions or standards established by the new system impose more stringent obligations than those under the former system, they must be met.

The Respondent claims that provisions of the Aeronautics Act give the Minister discretionary powers to cancel an operating certificate when it no longer meets the conditions of its issuance. In this context, Transport Canada maintains that the cancellation of the operating certificate and the issuance of a new one were necessary because of the new regulations and standards of application. The Minister was obliged to take every necessary precaution to ensure, in the public interest, that the new standards of conduct and safety are uniformly applied.

The Minister's representative argues that the operating certificate issued under the new regulatory system contains the same operations specifications as the previous document. The only changes pertain to the means of implementing these specifications. These conditions or privileges were granted pursuant to the provisions of the Air Carriers Using Small Aeroplanes Order, which was expressly repealed with the coming into force of the Canadian Aviation Regulations and the Commercial Air Services Standards. The Minister is therefore asking that his decision be upheld.

DISCUSSION

The processes of repealing the former regulatory system and adopting a new system and its coming into force are not challenged by the parties. They acknowledge that these modifications were made in accordance with the applicable rules and statutory provisions.

The Applicant disputes the legality of the Minister's actions in exercising the powers vested in him by the Aeronautics Act. The Tribunal must determine whether the statutory provisions in force grant the Minister the power to cancel a Canadian aviation document in the circumstances described.

The coming into force of the new system modifies the conditions for the issuance or granting of Canadian aviation documents. On October 10, 1996, the conditions stipulated in the document in question ceased to be valid, having been repealed and replaced. On that date, the former system ceased to apply and the new system came into effect.

There was, then, no legislative gap between the repeal of the former system and the coming into force of the new one. In this context, and in view of the foregoing, it is the opinion of the Tribunal that, as of October 10, 1996, the Minister had the authority to cancel the operating certificate pursuant to paragraph 7.1(1)(b) of the Act.

Moreover, the continuing effect of the operating certificate and operations specifications were subject to compliance with the Aeronautics Act, the Air Regulations, and the Air Navigation Orders. The wording of the operating certificate of January 4, 1996, is explicit in this regard.

The Applicant claims that the privileges and conditions attached to the operating certificate were granted by the Minister pursuant to provisions of the Aeronautics Act and should not be altered by the repeal of the enactments. On this point, we consider the arguments of the Minister's representative to be well-founded. It is true that the Act authorizes the Minister to issue, in certain circumstances, an exemption to the enactments. In the present case, the Air Carriers Using Small Aeroplanes Order established the requirements and the conditions and restrictions that applied to any authorizations granted. This Order has been repealed and replaced.

In practice, in the new operating certificate, Transport Canada respects the authorization granted by the Minister pursuant to the Act. In fact, according to the operations specifications issued, the Applicant retains the privilege of IFR operation of certain types of aircraft with no second officer, and that of taking off when visibility is less than that normally required. Only the conditions governing the exercise of these privileges have been modified. The new enactment does not repeal the Minister's powers under the Aeronautics Act; he retains the same prerogatives.

Finally, there is the issue of the existence of vested rights claimed by the Applicant. The principle of the respect of vested rights is given force of law in the federal Interpretation Act. This Act stipulates that the repeal of a legislative text does not adversely affect the rights or benefits acquired under a former system, unless the text calls for such an interpretation.

The principle that vested rights are not affected is merely a presumption of the legislator's intent, and can therefore be explicitly or implicitly set aside. Mr. Justice Dickson, in Gustavson Drilling (1964) Ltd v. Minister of National Revenue[1] states that the presumption that vested rights are not affected only applies where the legislation is ambiguous and reasonably susceptible of two constructions. He notes, moreover, that most statutes in some way or other interfere with or encroach upon antecedent rights.

In the present case, one might ask oneself whether the conditions established in the operations specifications constitute privileges that can be interpreted as vested rights, or whether the vested rights pertain only to the operations specifications, which also appear in the new certificate. Here, the Tribunal believes that the adoption of the provisions of the new regulatory text does not at all modify in principle the exemptions which continue to be granted under the Act and the new system, only the procedures for applying them have been modified.

Even if the conditions set out in the operations specifications constitute privileges that can be interpreted as vested rights, case law and doctrine teach us that the rules for recognition of the principle of vested rights are variable. In the present case, the recognition of vested rights would have the effect of exempting the Applicant from the application of certain provisions of the Canadian Aviation Regulations; it would allow the survival of the former system and foster diversity in the application of the rules of law to air carriers. Such a determination would encourage the application of two legal systems: one for carriers granted privileges before the new system came into effect; the other for carriers required to comply with the provisions of the Canadian Aviation Regulations.

The disparities between carriers could lead to injustices in terms of competitive advantages. The diversity that would result from the recognition of vested rights could lead to major drawbacks and injustices. In this context, it can be assumed that the legislator did not intend to tolerate this diversity.

One of the objectives of the new system is to standardize the applicable rules; recognition of the principle of vested rights would be counter to this objective. It would be surprising, at the very least, had the legislator intended to perpetuate a situation he also wished to correct.

DETERMINATION

After considering the arguments of the parties and all applicable law, the Tribunal upholds the Minister's decision to cancel the Applicant's Operating Certificate.

Suzanne Jobin
Member
Civil Aviation Tribunal


[1] Gustavson Drilling (1964) Ltd. v. Minister of National Revenue [1977] 1 S.C.R. 271


Appeal decision
Carole Anne Soucy, Faye H. Smith, Michel G. Boulianne


Decision: February 11, 1998

TRANSLATION

The Appeal Panel finds that there are no grounds for allowing the appeal, and that the Member's first instance ruling must be upheld and the Appellant's operating certificate cancelled.

The Appeal Hearing on the above matter was held October 9, 1997, at 10:00 hours before the designated members of the Tribunal, at the Federal Court of Canada, in Quebec City, Quebec.

OVERVIEW

The Appellant, Aviation Québec Labrador Ltée, pursuant to paragraph 7.1(1)(b) of the Aeronautics Act, appealed the determination rendered May 23, 1997, by Member Suzanne Jobin following the application for a review made by the same Appellant.

The Applicant's Operating Certificate had been completely cancelled by the Minister of Transport pursuant to paragraph 7.1(1)(b) of the Aeronautics Act, as the said certificate no longer met the conditions of issuance, the Air Regulations and Air Navigation Orders having been repealed October 10, 1996.

THE FACTS

The Appellant does not dispute the facts set out in the determination which is being appealed. In short, in its request for appeal of June 30, 1997, its position is that it is an air carrier which held an Operating Certificate bearing, among other things, two operating specifications:

  1. The first authorized IFR operation with no co-pilot (specification CAP + 500).
  2. The second authorized take-off when the reported visibility is equal to or greater than RVR 1,200 feet, regardless of the ceiling, with EMBRAER 110-type aircraft not in the transport category (specification RVR 1,200 feet).

In December 1996, the Canadian Minister of Transport issued the Appellant a new Operating Certificate, omitting the operating specifications CAP + 500 and RVR 1,200 feet. The Ministry of Transport had therefore cancelled Operating Certificate No. 5791, and Member Suzanne Jobin's determination upheld this cancellation.

GROUNDS FOR THE APPEAL

The Appellant, in its Notice of Appeal of June 30, 1997, raised primarily the following points in support of its appeal:

Firstly, the Member erred in law in the following three respects:

  1. by confusing the powers conferred on the Minister by the Aeronautics Act with regulatory requirements;
  2. by incorrectly interpreting the case law with regard to vested rights;
  3. by attributing regulatory value to standards that are unpublished and not integrated by reference.

Secondly, the Member erred in her interpretation of the facts:

  1. by confusing the privileges granted by a Canadian aviation document with application procedures;
  2. by failing to take into account the cancellation of the operating specification for the RVR 1,200 feet.

APPELLANT'S ARGUMENT

At the Appeal Hearing, Brian Jenner, representing the Appellant, developed specifically the following points:

The effect of section 6.6 of the Aeronautics Act is to include privileges granted or accorded in Canadian aviation documents.

Secondly, the operating specifications are specific to Aviation Québec Labrador Ltée and are not a general authorization granted to the industry, but rather to certain operators, specifically in certain circumstances. In accordance with the amended regulations, the Minister must now produce a document known as an Operating Certificate, and this document is a regulation which imposes certain conduct on the Minister.

The Appellant acknowledges this right of the Minister, but denies that this authorizes the Minister to remove prior authorizations without the reasons specified in sections 6.7 to 7.2 of the Aeronautics Act.

The Minister's discretionary power is therefore well entrenched, as the legislator intended.

Pursuant to paragraph 7.1(1)(b) of the Aeronautics Act, in the Appellant's view, when cancelling a document and the privileges it contains for the aforementioned reasons, the Minister must do so for specific reasons, which was not the case here.

Even in invoking subsection 7.1(2) of the Act, which raises the notion of the public interest, the Minister has the duty to state in what way this public interest is affected.

The document holder is entitled to know why its privileges are being withdrawn, and the Minister was obliged to show in what respect the document holder no longer met the conditions of issuance or of maintenance of validity. This is a matter of vested rights which cannot be taken away through an arbitrary decision of the Minister, as the Minister has raised no argument about safety or the public interest.

The Appellant therefore maintains that the absence of any argument renders the decision arbitrary.

RESPONDENT'S ARGUMENTS

The regulatory regime which has been repealed (the Air Regulations, the Air Regulations series and Air Navigation Orders) ceases to have effect, and at the same time another regulatory regime takes effect in order to avoid a legislative void between the old and new regimes.

On September 27, 1996, the Ministry sent Aviation Québec Labrador Ltée a letter accompanied by a new certificate to avoid a disruption of commercial flight operations and to ensure that the Operating Certificates held by the carrier were in compliance with the new regulatory regime applicable. Paragraph 44(g) of the Interpretation Act stipulates that "all regulations made under the repealed enactment remain in force and are deemed to have been made under the new enactment, in so far as they are not inconsistent with the new enactment, until they are repealed or others made in their stead" (underlining added).

The rule of interpretation provides for the survival of the regulatory provisions applicable under the old regulatory regime; however, the holder of an Operating Certificate must comply with the new regulatory provision, since it is inconsistent with the former regulatory provisions. The Appellant's operating specifications could be kept with it, but under the new regulations, had to comply with the new requirements established by the Minister.

The Appellant had to produce certain documents in order to comply with the new regulatory provisions, which it did. This notice of cancellation, applicable to all air carriers, made it possible to avoid a situation likely to cause confusion regarding the Operating Certificate held by air carriers, and was not at all of a punitive nature.

The issuance of a new Operating Certificate resulted, after a certain period of time, in the cancellation of the old one to ensure that only one remained valid. The Minister of Transport was justified in applying the CARs by issuing new Operating Certificates that met the new safety standards and in taking this action, as these standards of conduct emanated from Cabinet or the Governor-in-Council.

The Minister was responsible for implementing and enforcing the regulations which set out more stringent standards of conduct with regard to safety, and it must therefore ensure that the Operating Certificates in circulation meet the applicable regulatory provisions. The Minister was therefore justified and acted reasonably in cancelling the Operating Certificate issued under a regulatory regime which was no longer in effect.

THE ISSUES

Did the Appellant establish, firstly, that the Member erred in fact in her assessment of the evidence? The documents submitted at the first hearing, namely, Exhibits M-1, M-2 and M-3, and the notice issued pursuant to paragraph 7.1(1)(b) of the Act, are those which the Member consulted and which led her to conclude that the new Operating Certificate contained conditions inconsistent with the terms of the previous certificate, given the amendments of October 10, 1996.

Her analysis is not inconsistent with the documents produced at the hearing, and her comments are not at all unreasonable. As the Respondent's representative pointed out, the facts are not in dispute, and no new facts have been presented at this hearing. We are therefore left to consider the error of law, as the facts which served as evidence can reasonably lead us to the determination rendered by the Member.

As for the error of law, it is important to consider especially the three points raised by the Appellant. With regard to the first, the Member did not err in law in noting that the Minister had seen to the implementation of the requirements stipulated in the applicable regulatory regime, through section 900.01 of the CARs and section 1 of the Order expressly stipulating the repeal of the applicable legislative provisions concerning air safety. The Member acknowledged that the new legislation changed the regulatory regime. It is quite obvious that any legislative amendment affects the rights conferred under the regime that has been abolished, and one must assume that the issuance of permits is not a guarantee, a renunciation of the adoption in future of new legislation which may affect the existence or conditions of issuance of these permits. The new regulations amend the conditions of exercising privileges, but not necessarily their existence. The principle of the absence of a guarantee is noted in Northern and Central Gas Corporation.[1]

Finally, the notion of vested rights may seem the legal point most likely to provide some valid basis to the Appellant's submission. The very principle of the respect of vested rights is entrenched in the federal Interpretation Act. The notion of vested rights concerns mainly rights, privileges, obligations or responsibilities vested, created or incurred under the regime of the legislation thus repealed. One must guard against giving section 35 of the Interpretation Act, R.S., c. I-23, a scope it does not have.

The purpose of section 35 is to protect the rights that existed before the repeal for the purposes of responsibility or operation. Thus, a right created pursuant to the repealed legislation is not extinguished by reason of this repeal, just as a responsibility created pursuant to a repealed legislation does not necessarily disappear with the adoption of new regulations amending it.

In Gustavson,[2] the Honourable Mr. Justice Pigeon dissented only with regard to the non-application of the text called into question by the Appellant, not the notion of vested rights.

Finally, the last point raised by the Respondent at the Appeal Hearing concerned the uniqueness of the Appellant's situation. As the Respondent pointed out, the Appellant's legal situation was not exclusive to it, although the conditions of application were special in each instance. In effect, any air carrier could be granted special conditions for exercising its privileges. Were the Appellant's position accepted, it would allow for a diversity in the application of the rules of law among air carriers that would be apt to create confusion which could prove disastrous. The non-retroactivity of a law is different from the respect of vested rights, as the Member made clear in her determination.

In support of its submissions regarding vested rights, the Appellant filed a decision of the Supreme Court of Canada. In D.R. Jones and J.A. Maheux v. Herman E. Gamache,[3] the Court ruled on the recognition of permanent vested rights. While the argument developed by the Supreme Court is very interesting, it is important to note here that it concerned a declaration of nullity of the regulations adopted pursuant to the Canada Shipping Act. The purpose of these regulations was to establish classes of pilots having unequal rights within a pilotage district. The existence of the pilot licence itself is different from the requirements of the permit. According to this decision, the intent to undermine vested rights must be clearly expressed; the same is true of provisions which permit the making of regulations. Furthermore, the only regulations provided for concerned the conduct of pilots only, not their classification.

There is a difference between the two cases since, in the present case, the Minister reorganized, rather than cancelled, rights and amended the requirements.

DETERMINATION

The Appeal Panel therefore finds that there are no grounds for allowing the appeal, and that the Member's first instance ruling must be upheld and the Appellant's Operating Certificate cancelled.

Reasons for Appeal Determination:

Michel Boulianne, Member

Concurred:

Faye Smith, Chairperson
Carole Anne Soucy, Member


[1] Northern and Central Gas Corporation v. Attorney General of Canada [1971] F.C. 149.

[2] Gustavson Drilling (1964) Ltd. v. M.N.R. [1971] 1 S.C.R. 271.

[3] D.R. Jones and J.A. Maheux v. Herman E. Gamache [1969] S.C.R. 119.