IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20130620

Docket: S080464

Registry:
Vancouver

Between:

Ranjit Singh Gill

Plaintiff

And

Attorney General
of Canada in Right of the Minister of Transport,

Trevor J. Heryet
and David J. Nowzek

Defendants

Before:
The Honourable Mr. Justice Greyell

Mid Trial Oral Ruling

[1]            
THE COURT: As these are oral reasons, I reserve the right to edit
them should a transcript be ordered.

[2]            
These are my reasons regarding an objection raised by counsel for the
plaintiff to a series of questions asked by counsel for the defendants that related
to certain historical incidents involving the plaintiff’s operations.

[3]            
As the determination of the plaintiff’s objection must be resolved
within the context of the issues raised in the pleadings of this case, it is
necessary to provide some background to those issues.

[4]            
The plaintiff has brought this action under an assignment from the
trustee in bankruptcy for International Express Air Charter Ltd. (“IEA”).

[5]            
IEA was placed into bankruptcy following the suspension of its air
operator certificate by Transport Canada on January 22, 2006. The suspension
followed the crash of an airplane owned and operated by the plaintiff on
Vancouver Island on January 21, 2006, during the course of a scheduled
passenger flight from Tofino to the Vancouver International Airport. There were
serious injuries and several fatalities arising from that crash.

[6]            
At the time of the suspension, the cause of the accident was unknown but
was being investigated by the Canadian Transportation Safety Board.

[7]            
IEA’s main business was flying scheduled and unscheduled flights on
behalf of various couriers and other clients between Vancouver International
Airport and various cities and towns throughout British Columbia and Alaska. It
also operated a flying school at the Boundary Bay Airport.

[8]            
As a result of the suspension, it is the plaintiff’s claim that IEA was
unable to fly its planes and conduct its business, which quickly collapsed. As
a result, IEA was placed into bankruptcy.

[9]            
The Aeronautics Act, R.S.C. 1985, c. A-2 [Act] provides in
ss. 7(1) and 7.1(1) that Transport Canada can suspend an air operator
certificate on a number of grounds, which are enumerated under those provisions.

[10]        
In the notice of suspension issued January 22, Transport Canada
specified the ground for suspension as follows:

[IEA] [c]eased to meet the
qualifications necessary for the issuance of its [air operator certificate].

[11]        
This notice followed a decision taken by Transport Canada on the same
day, January 22, 2006, to revoke the authority of IEA’s operations manager, Mr.
Nikolas Chapman. Mr. Chapman occupied the position of operations manager, which
is a required position for aircraft companies to maintain under the Canadian
Aviation Regulations, specifically paragraph 703.07(2)(b).

[12]        
The notice of suspension relating to Mr. Chapman reads:

The Minister of Transport has
decided to revoke the operations manager’s authority, Nikolas Chapman, for the
following reason:  Canadian aviation regulation 723.07(2)(a)(2)(A) states that
the operations manager is responsible for "a control of operations and
operational standards of all airplanes operated."

In view of recent findings by
the maintenance and manufacturing personnel, it has been determined that this
responsibility has not been fulfilled.

[13]        
The notice provided that Mr. Chapman may re-qualify by demonstrating to
the Minister his knowledge to carry out the duties and responsibilities of this
position.

[14]        
The notice of suspension issued to IEA on the same date reads:

Pursuant to paragraph 7.1(1)(b)
of the Aeronautics Act, Minister of Transport has decided to suspend air
operator certificate number 8081 for the following reason:

The document holder ceases to meet the qualifications
necessary for the issuance of a Canadian air operator certificate.

This suspension will come into effect January 22, 2006, at
23:59 hours Pacific time. When you meet all of the conditions for
reinstatement, it is important to coordinate with this office requesting a
formal letter rescinding the notice of suspension.

In accordance with Transport Canada policy, should this
document still be in suspension after April 24, 2006, a notice of cancellation
may be issued.

[15]        
That letter was accompanied by a document addressed to IEA entitled
"Notice of Suspension Air Operator Certificate." The grounds for
suspension were noted to be twofold. First:

The document holder ceases to
meet the qualifications necessary for the issuance of a Canadian air operator
certificate;

[16]        
Second, IEA did not employ an operations manager who met the
qualifications required by the Canadian aviation standard pursuant to
subparagraph 723.07(2)(a)(i).

[17]        
IEA appealed the notice of suspension to the Transportation Appeal Tribunal
(“Tribunal”), a statutory tribunal established under the Act.

[18]        
Following the hearing of the appeal, which commenced in late March, the Tribunal
issued reasons on July 11, 2006 and made a number of findings. Significantly,
it concluded that the Minister had not established that Mr. Chapman had failed
to meet his responsibilities for operational standards of the aircraft on the
basis of the maintenance findings arising from a spot audit on January 11,
2006, which had revealed that six of IEA’s aircraft were overdue on maintenance
inspections. The Tribunal found there was nothing to indicate that maintenance
was the normal responsibility of the operations manager. Nor did the evidence
establish that Mr. Chapman was aware of the overdue inspections. In any event,
the IEA had persons designated to replace Mr. Chapman should he not be able to
act as operations manager. It further found the suspension of IEA’s air
operator certificate for failing to employ an operations manager who met the
requisite qualifications to be unsupported. The Tribunal noted that the issues
arising from that maintenance inspection were being addressed by IEA through a
corrective action program in place, which had been approved by Transport Canada.
The Tribunal also held that Transport Canada had failed to grant IEA some prior
notice and opportunity to respond to the alleged non-compliance before the
letter of suspension was issued.

[19]        
The Tribunal followed one of two options open to it under s. 7.1 of the Act
and referred the matter back to the Minister for reconsideration. The Minister
did not appeal the decision as he was entitled to do under s. 7.2(1) of the Act.

[20]        
On February 11, 2008, Transport Canada issued the decision of a
reconsideration panel, which accepted the findings of the Tribunal.

[21]        
I pause at this stage to note the cause of the crash on Vancouver Island
determined by the Transportation Safety Board was found to be the result of a
malfunctioning defect in a compressor turbine blade, a fault not attributable
to IEA.

[22]        
I turn to the pleadings. The plaintiff’s claim is framed in negligence
and malfeasance in public office arising from the issuance of the notice of
suspension. The plaintiff claims damages arising therefrom.

[23]        
The defendants in their Response have set out a number of asserted facts,
including an assertion that from approximately August 2004 to January 10, 2006,
IEA was subject to enhanced monitoring by Transport Canada. The enhanced
monitoring was undertaken by Transport Canada as a result of issues that had
been identified by Transport Canada officials on routine audits and inspections
of IEA, including findings that IEA was dispatching aircraft on flights without
having scheduled maintenance to be performed as required by the maintenance
schedules and manufacturer’s instructions to maintain aircraft worthiness.

[24]        
The questions posed by counsel for the defendants in cross-examination address
this topic, and it is that topic to which objection is taken by counsel for the
plaintiff.

[25]        
In defence to the plaintiff’s claims, the defendants have alleged that
the plaintiff fails to disclose a reasonable cause of action against any or all
of the defendants, that none of the defendants owed a private law duty of care
to the plaintiff, that the claim fails to disclose any proximate relationship
between the plaintiff and the defendants, that the decision to issue the notice
of suspension was a discretionary decision made in good faith by the defendants
and made for the public good, and not for an improper or unlawful purpose, that
the defendants’ system of monitoring and enforcement of IEA’s compliance with
the regulations was a matter of policy, the bona fide exercise of which
was within the discretion of the defendants, and that the defendants’ actions
were at all times authorized by law and carried out in good faith, without
negligence, malice or intent to injure.

[26]        
It is within the context of these pleadings that the Court must decide
the objection raised by the plaintiff.

[27]        
Counsel for the plaintiff, Mr. Saul, relies on the decision of Danyluk
v. Ainsworth Technologies Inc., 2001 SCC 44 for the proposition that the
issue as to the cause of the suspension of IEA’s air operator certificate is res
judicata, as that issue and the legality of Transport Canada’s suspension
of the Certificate was determined by the Tribunal, rendering the issue before
this Court res judicata.

[28]        
In particular, I make reference to those portions of Danyluk relied
on by Mr. Saul at paras. 24, 25 and 35, discussing the doctrine of issue
estoppel:

24 Issue estoppel was more particularly defined by
Middleton J.A. of the Ontario Court of Appeal in McIntosh v. Parent, [1924] 4
D.L.R. 420, at p. 422:

When a question is litigated, the
judgment of the Court is a final determination as between the parties and their
privies. Any right, question, or fact distinctly put in issue and directly
determined by a Court of competent jurisdiction as a ground of recovery, or as
an answer to a claim set up, cannot be re-tried in a subsequent suit between
the same parties or their privies, though for a different cause of action. The
right, question, or fact, once determined, must, as between them, be taken to
be conclusively established so long as the judgment remains. [Emphasis added.]

This statement was adopted by Laskin J. (later C.J.), dissenting
in Angle, supra, at pp. 267-68. This description of the issues subject to
estoppel ("[a]ny right, question or fact distinctly put in issue and
directly determined") is more stringent than the formulation in some of
the older cases for cause of action estoppel (e.g., "all matters which
were, or might properly have been, brought into litigation", Farwell,
supra, at p. 558). Dickson J. (later C.J.), speaking for the majority in Angle,
supra, at p. 255, subscribed to the more stringent definition for the purpose
of issue estoppel. "It will not suffice" he said, "if the
question arose collaterally or incidentally in the earlier proceedings or is
one which must be inferred by argument from the judgment." The question
out of which the estoppel is said to arise must have been "fundamental to
the decision arrived at" in the earlier proceeding. In other words, as
discussed below, the estoppel extends to the material facts and the conclusions
of law or of mixed fact and law ("the questions") that [page477] were
necessarily (even if not explicitly) determined in the earlier proceedings.

25 The preconditions to the operation of issue
estoppel were set out by Dickson J. in Angle, supra, at p. 254:

(1) that the same question has been
decided;

(2) that the judicial decision
which is said to create the estoppel was final; and,

(3) that the parties to the
judicial decision or their privies were the same persons as the parties to the
proceedings in which the estoppel is raised or their privies.

35 A common element of the preconditions to issue
estoppel set out by Dickson J. in Angle, supra, is the fundamental requirement
that the decision in the prior proceeding be a judicial decision. According to
the authorities (see e.g., G. Spencer Bower, A. K. Turner and K. R. Handley,
The Doctrine [page482] of Res Judicata (3rd ed. 1996), paras. 18-20), there are
three elements that may be taken into account. First is to examine the nature
of the administrative authority issuing the decision. Is it an institution that
is capable of receiving and exercising adjudicative authority? Secondly, as a
matter of law, is the particular decision one that was required to be made in a
judicial manner? Thirdly, as a mixed question of law and fact, was the decision
made in a judicial manner? These are distinct requirements:

It is of no avail to prove that the alleged res judicata was
a decision, or that it was pronounced according to judicial principles, unless
it emanated from such a tribunal in the exercise of its adjudicative functions;
nor is it sufficient that it was pronounced by such a tribunal unless it was a
judicial decision on the merits. It is important, therefore, at the outset to
have a proper understanding of what constitutes a judicial tribunal and a
judicial decision for present purposes.

(Spencer Bower, Turner and
Handley, supra, para. 20)

[29]        
I accept those principles. I do not intend to revisit the decision of
the Transportation Appeal Tribunal. Transport Canada chose to issue a
reconsideration decision, which accepted the appeal tribunal’s decision. Transport
Canada chose not to appeal the decision that was issued.

[30]        
Having said that, in my view, there may very well be broader issues at
stake between the parties. Given the scope of the issues as raised in the
pleadings, I intend to permit the line of questioning and to ultimately
consider the relevance of that evidence in the context of the broader scope of
the issues raised in this lawsuit, which focused as stated on the issues of
negligence and misfeasance in public office.

[31]        
The claim of misfeasance in public office involves considerations of
whether there has been conduct that has been specifically intended to injure
the plaintiff or conduct knowingly taken outside a public officers lawful
authority taken with the knowledge that such conduct will harm the plaintiff: Odhavji
Estate v. Woodhouse, 2003 SCC 69 at paras. 22 – 23, 28.

[32]        
Further, the history of IEA’s maintenance record may well be of
relevance to the claim for damages.

[33]        
Accordingly I permit the line of questioning embarked upon by counsel
for the defendants.

“Greyell
J.”