IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20151211

Docket: S-105434

Registry:
Vancouver

Between:

Workers’
Compensation Board of British Columbia

Plaintiff

And:

Flanagan
Enterprises (Nevada) Inc., Bill Dause, Attorney General of Canada, and Gary
Wendell Johnson

Defendants

And:

Ian
Flanagan, Pacific Skydivers Ltd., Flanagan Enterprises (Nevada) Inc., Bill
Dause, Attorney General of Canada, Ashe Aircraft Enterprises Ltd., dba Rocky
Mountain Aircraft Ltd., Hamilton Sundstrand Corporation, Pratt & Whitney
Canada Corp., ABC Corporation and Gary Wendell Johnson

Third
Parties

Before: The Honourable Mr. Justice
Grauer

Reasons for Judgment

INTRODUCTION

[1]            
The plaintiff applies under Rule 7-1(13) of the Supreme Court
Civil Rules for the production of further documents by the defendant Attorney
General of Canada (“Canada”).  It is brought in the context of a claim for
damages for serious personal injuries suffered in an aircraft accident that
occurred on August 3, 2008.

[2]            
Canada resists the application on the twin grounds of relevance and
proportionality.  In order to assess these parameters, it is necessary to
review the background of this litigation in some detail.

BACKGROUND

[3]            
The accident occurred in the course of a skydiving expedition.  The left
engine of a twin-engine Beech aircraft (the “aircraft”) failed as it was
climbing through approximately 3900 feet above sea level.  It is alleged that,
amongst other things, this failure resulted from corrosion and wear that had
not been detected because the left engine had been operated significantly in
excess of the recommended time before overhaul.

[4]            
The pilot, it is alleged, incorrectly identified the right engine as the
failed engine, and shut it down, leaving the aircraft entirely without power. 
As a result of the resulting crash, the plaintiff claims that its insured
sustained significant and serious personal injuries.

[5]            
Canada is sued as the representative of the federal Ministry of
Transport (“Transport Canada”), which is responsible for the regulation and
enforcement of aviation safety regulations and standards in Canada.

[6]            
The aircraft was used for skydiving operations in Canada over the years
2003 to 2008.  It was registered in the United States, and was operated in
Canada pursuant to a Free Trade Agreement – Foreign Air Operator Certificate
issued by Transport Canada.  In accordance with the NAFTA implementation
process agreed upon by Canada, the United States of America and the United
Mexican States, the civilian aviation authority of the state of an aircraft’s
registry is responsible for the regulatory oversight of that aircraft,
including maintenance and inspection requirements.  Accordingly, the United
States Federal Aviation Administration (“FAA”) was responsible for the
regulatory oversight of the aircraft involved here.  That aircraft was
therefore obliged to comply with FAA requirements, which in this case are set
out in the Part 91 of the US Federal Aviation Regulations (“FARS”).

[7]            
In August 2000, Transport Canada inspected a different twin-engine
Beech aircraft of the same type operated by the same parties, and, it is
alleged, concluded that its engines had been operated well beyond what
Transport Canada understood to be the applicable overhaul interval under Part 91
of the FARS.  Transport Canada advised the FAA of its concerns, and the FAA
then suspended that aircraft’s operating certificate, leading Transport Canada
to suspend the Canadian certificate.  The FAA reinstated the certificate after
carrying out an inspection in May 2001.  In accordance with the NAFTA
implementation process, Transport Canada accepted this as approval from the
civil aviation authority of the state of the aircraft’s registration, and
issued a new Free Trade Agreement – Foreign Air Operator Certificate.

[8]            
An issue in the case is what overhaul requirements were in fact imposed
by Part 91 of the FARS; it is not disputed that whatever they were, the
operators of the aircraft were obliged to follow them.

[9]            
The case initially advanced by the plaintiff was that those Part 91
overhaul requirements obliged the operators, in accordance with the recommendations
of the manufacturer, to conduct inspections and overhauls at specific intervals
that had been significantly exceeded at the time of the accident, just as they
had been in the case of the previous aircraft.  The allegations made against
the operators included a failure to inspect and overhaul the engines in
accordance with the applicable requirements.

[10]        
In this context, the plaintiff alleged against Canada that Transport
Canada had breached its duty of care by, among other things, failing to ensure
that the aircraft had been properly maintained, or had been subject to
appropriate oversight by the FAA, or that its operators were complying with the
applicable requirements, given their history of failing to do so.

[11]        
Then, in January 2015, shortly before this matter was scheduled to
proceed to trial, Canada sought leave to amend further its Amended Response to
Civil Claim by putting forward an interpretation and application of Part 91
of the FARS that was significantly different from that previously advanced.  In
essence, Canada took the position that the FARS did not in fact require
overhaul and inspection in accordance with the manufacturer’s recommendations.

[12]        
In Oral Reasons for Judgment delivered January 26, 2015, I allowed
the amendments and adjourned the trial.  Although the amendments did not alter
Canada’s primary defence that it was the FAA, not Transport Canada, that was
responsible for the regulatory oversight of the aircraft including maintenance
and inspection requirements, I noted that “the proposed amendments
fundamentally alter the strategic foundation on which the plaintiff has
legitimately built its case”.

[13]        
In the result, the claim against Canada has evolved.  It is now alleged,
essentially, that Transport Canada was negligent in failing to determine the
applicable requirements under Part 91 of FARS, and, based on the knowledge
it obtained through its experience with the operators in relation to the other
aircraft in 2000-2001, in allowing them to continue their NAFTA operations in
Canada when it knew or ought to have known that the American regulations were
not capable of providing a level of safety equivalent to that provided by the
Canadian regulations, the supposed existence of which equivalence was the whole
basis of the NAFTA implementation protocol.

[14]        
In this context, the plaintiff seeks an order requiring Canada to list
and produce the following documents:

(a)  Documents related to Transport Canada’s current understanding of
overhaul requirements for Part 91 operators, including:

(i)   emails, letters, staff
instructions, and other documents advising Transport Canada inspectors that
overhauls of turbine engines are not mandatory on American aircraft operating
in Canada pursuant to NAFTA certificates; and,

(ii)  emails, memos, and other documents
regarding concerns raised by Transport Canada employees about the safety
implications of maintenance requirements for NAFTA and Part 91 operators.

(b)  Documents
related to document CAN1-000612 “Terms of Reference for the Risk Assessment on
Transport Canada’s Role in the Administration of Specialty Air Services under
the North American Free Trade Agreement”, including:

(i)   emails, letters, or other
documents underlying the creation of the terms of reference;

(ii)  documents arising out of
meetings about the risk assessment, including agendas, presentations, notes,
issue papers, etc.;

(iii) emails, letters, or other
communications between team members about the risk assessment;

(iv) draft and final written
reports arising out of the risk assessment;

(v)  copies of documents used for
the presentation to the Director General;

(vi) all documents produced as a
result of the risk assessment, including emails, proposals, letters draft
amendments, and recommendations.

DISCUSSION

[15]        
The scope of document discovery under subrules 7-1(11) through (13)
is wider than under subrule 7-1(1), but remains subject to the objective
of proportionality: Przybysz v Crowe, 2011 BCSC 731; and Kaladjian
v Jose, 2012 BCSC 357.  Fundamental to the delineation of that scope
is the question of relevance: see, for instance, Cominco Ltd v Westinghouse
Canada Limited (1979), 11 BCLR 142 (CA), which includes a helpful
discussion concerning post-accident events.

[16]        
Canada takes the primary position that the application is misconceived,
because whatever the FAA regulations in fact required, it was not Transport
Canada’s job to enforce them.  Regulatory oversight was, by law, the
responsibility of the FAA, not Transport Canada.  Accordingly, argues Canada,
its understanding is irrelevant, and what the plaintiff seeks intrudes into the
policy realm, not the operational realm for which Canada can be held liable.

[17]        
I am not able to accept this position in its entirety.  First, Canada
advances a position concerning its responsibility under law that remains to be
determined at trial.  Consequently, at this stage, those defences do not necessarily
eliminate the potential for liability based on what Transport Canada ought to
have understood to be the safety implications relevant to this particular
aircraft.  In this regard, I note that Canada has consented to the amendments
that raise these issues.  I therefore turn to consider relevance.

[18]        
In the present case, the key to the allegations that support the request
for production of these documents is the proposition that Transport Canada
ought to have known about the content and application of the Part 91
regulations, and the implications for safety, in the period before the accident. 
The plaintiff proposes to test this proposition with reference to what
Transport Canada learned and developed afterwards.

[19]        
The first group of documents requested relate first to documents
forwarded to Transport Canada transmitting advice that overhauls were not
mandatory, and second to documents regarding concerns about safety implications
raised by Transport Canada employees.  These are under the heading of documents
related to Transport Canada’s “current understanding” of the overhaul
requirements.

[20]        
It is my understanding that all documents coming within these parameters
that originated prior to the accident have been produced, as have documents,
reports and investigations arising as a result of the accident.

[21]        
Transport Canada’s “current understanding” is not directly relevant, in
the sense that the correct interpretation of Part 91 of the FARS, and of
how it applied in the context of this lawsuit, is a matter for determination by
the court at trial.  What is relevant is what Transport Canada did in the time
preceding the accident, and what it ought to have done.

[22]        
In my view, the types of documents described, originating after the
accident in the ordinary course of Transport Canada’s operations, are not
relevant.  This is not a case of typical “post-accident conduct” as that term
is usually used in cases such as Cominco (where it was “post-fire
conduct”).  Here, the proposed scope of discovery covers information, concerns
and advice communicated to or raised within Transport Canada after the accident
but without reference to it – in other words, matters arising post-accident that
would form the basis for Transport Canada’s current knowledge.  In my view,
this cannot assist us in exploring what basis existed before the accident for
the state of knowledge Transport Canada then had.  The exception would be such
information, concerns and advice relating specifically to what had occurred in
relation to these operators, and it is my understanding that these have already
been produced.  If they have not been produced, they should be.

[23]        
The second group of documents relate to document CAN1-000612, “Terms of
Reference for the Risk Assessment on Transport Canada’s Role in the
Administration of Specialty Air Services under the North American Free Trade
Agreement” (the “Terms of Reference”).

[24]        
The Terms of Reference were created by Transport Canada in June 2013
and were disclosed by Canada in its seventh amended list of documents.  It
relates to a risk assessment convened by Transport Canada’s Director of the
Standards Division of Civil Aviation (“Director, Standards”).  By way of
background, the document refers to the ratification of NAFTA in 1994, and the
development of NAFTA standards and procedures culminating in the Canadian
Aviation Regulations (“CARs”) promulgated in 1996.  It notes that in order to
facilitate a Canada’s commitments to NAFTA, an exemption was necessary for
American and Mexican NAFTA operators from provisions of the CARs, and that, at
the time, “the determination of an equivalent level of safety, shared by all
parties, was a determining factor for issuance of the exemption”.

[25]        
The document goes on to observe that:

[t]oday, with approximately 15
years of experience with NAFTA specialty air service operations [which
encompass skydiving], a number of significant differences have been identified
(RDIMS 5874254).  They point to a divergence in ‘equivalent level of safety’
and the need for an in-depth review of NAFTA standards and procedures,
associated CARs and Transport Canada’s approach to the spirit of National
Treatment, as specified in Article 1202 of the NAFTA, when regulating domestic,
versus foreign operators.

[26]        
The document then identifies particular issues of divergence, some of
which are similar to what the plaintiff alleges existed in this case in the
years 2000-2008.  The document proceeds to set out terms of reference for a risk
assessment team to consider the NAFTA standards and procedures and associated
CARs, with a view to identifying risks, and strategies for mitigating any
risks.

[27]        
The process of this risk assessment is ongoing.  It will ultimately
result in recommendations that will be considered by the Director, Standards,
whose decision would ultimately be “briefed upward within Transport Canada for
recommended action”.

[28]        
In opposing the application, Transport Canada’s Acting Director,
Standards deposes:

Transport Canada routinely engages in the risk assessment
process when an issue is anticipated or forecast to potentially have a high
impact on health, safety, the environment or public security.  The purpose of a
risk assessment is to eat effectively identify potential risks in complex
systems and determine possible options for mitigation measures for those risks
of significant concern.

In order to ensure that the risk
assessment process considers all options and does not result in a
pre-determined outcome, Transport Canada employees who are assigned to conduct
the risk assessment must engage in a full and frank discussion of all the
issues raised by the terms of reference because they are tasked with developing
policy in a neutral and unbiased manner.  Drafts of the risk assessment
generally reflect these discussions and, in my experience, these drafts
continue to evolve and change throughout the risk assessment process, as the
issues are more fully examined and new information arises.  During the risk
assessment process, various options are identified and considered and these
options are evaluators rather than objective.

[29]        
With respect to the Terms of Reference, the plaintiff seeks, first,
“emails, letters, or other documents underlying the creation of the terms of
reference”.  Bearing in mind the issue of what Transport Canada ought to have
known during the relevant time, I am satisfied that such documents would be
relevant within the wider scope of Rule 7-1(11).  Canada has asserted no
proper basis for limiting that scope in this instance, and indeed I understand
that Canada has produced or agreed to produce these documents since this
application was brought.

[30]        
I am not so satisfied, however, with respect to the remaining documents
sought by the plaintiff, which consist of the ongoing records of the working
group arising out of its meetings, communications between team members, draft
and final written reports, and “all documents produced as a result of the risk
assessment, including emails, proposals, letters, draft amendments, and
recommendations”.

[31]        
In my view, once the documentation underlying the creation of the terms
of reference and the risk assessment team have been produced, the relationship
between these further documents, arising out of the operation of the team, and
the issues in the action is so tenuous that their production cannot be
justified on any balance of relevance and proportionality, particularly given
the policy-driven nature of the process.

[32]        
The identification of issues of divergence for discussion is relevant,
as is the process that led to their identification.  Ongoing exploration of
those issues for future policy development does not, however, relate to what
Transport Canada ought to have known before 2008.  The only potential exception,
in my view, would be the risk assessment team’s final written report, when it
becomes available.  Contextually, it is important to understand that Canada’s
document production to date is vast and includes, for instance, documentation
arising out of NAFTA Specialty Air Services Flight Operations Working Group
Meetings and associated emails, memoranda, etc., concerning safety issues, all
leading up to the Terms of Reference.  As noted, “Specialty Air Services”
include skydiving operations such as that in issue in this case.

[33]        
As the Court of Appeal noted in the Cominco case, reasonableness
is required of all parties in complex litigation such as this.  Canada’s
production has met that standard; the plaintiff’s present request exceeds it.

[34]        
In the result, with the one exception to which I believe Canada has
already attended, the application is dismissed.

“GRAUER, J.”