Rotor Maxx Support Ltd. v. Canada (Transport)

Rotor Maxx Support Ltd. v. Canada (Transport)
Court (s) Database
Federal Court Decisions
Date
2018-01-29
Neutral citation
2018 FC 97
File numbers
T-444-15
Decision Content
Date: 20180129
Docket: T-444-15
Citation: 2018 FC 97
Ottawa, Ontario, January 29, 2018
PRESENT: The Honourable Madam Justice McVeigh
BETWEEN:
ROTOR MAXX SUPPORT LTD.
Applicant
and
MINISTER OF TRANSPORT
Respondent
JUDGMENT AND REASONS
I. Introduction
[1] In October 2012, Transport Canada determined that Rotor Maxx Support Ltd. (the Applicant, or Rotor Maxx) was not properly recertifying undocumented parts according to Canadian Aviation Regulations, SOR/96-433 [CAR] standards. The two tried working together but Transport Canada refused to consider contrary evidence, Rotor Maxx refused to provide a list of recertified parts, and both were confused over what procedure applied. In 2014, Transport Canada notified Rotor Maxx about its intent to issue a Civil Aviation Safety Alert (CASA) against Rotor Maxx, but without telling them about all the parts at issue. On February 24, 2015, following a review and comment period, Transport Canada notified Rotor Maxx it still intended to issue the CASA and did so.
[2] I judicially reviewed the Minister’s decision to issue the CASA for procedural fairness and reasonableness. Because a decision that does not disclose the information relied upon is a decision that lacks procedural fairness, and because an unintelligible decision without justification or transparency is not a reasonable decision, I will grant this application and quash the Minister’s decision to issue a CASA for the reasons that follow.
[3] As this is a highly technical and specialized area, I have included the following for reference:
A glossary of Acronyms - Appendix A
A timeline of events - Appendix B
A list of individuals and their respective professional capacities - Appendix C
Standard 571 Appendix H of the Canadian Aviation Regulations “Process to Evaluate Undocumented Aircraft Parts” - Appendix D (and its related flow chart, Appendix E)
Policy letter titled “Maintenance and Manufacturing Policy Letter 36” [MPL 36] issued on February 2, 2006 by Transport Canada to interpret proposed amendments to the CAR Standard 571 Appendix H process and the flow chart - Appendix F
Canadian Aviation Regulation 571.13 “Installation of Parts, General” – Appendix G
Civil Aviation Safety Alert regarding aircraft components and parts supplied by Rotor Maxx Support Ltd. dated January 15, 2015 – Appendix H
Section 9 of the Staff Instruction Civil Aviation Document Development Procedures effective date June 16, 2014 –Appendix I
Rotor Maxx’s AMO certificate dated December 22, 2014 – Appendix J
Other relevant sections of Canadian Aviation Regulations – Appendix K
II. Background
[4] Rotor Maxx is a certified Transport Canada Approved Maintenance Organization (AMO) pursuant to CAR 573.02. In addition, Rotor Maxx holds specialized ratings for components, turbine engines, as well as non-destructive testing (NDT). Rotor Maxx specializes in the maintenance and repair of Sikorsky helicopters which have been out of production since 1980.
[5] As with other out-of-production aircraft manufacturers, the original equipment manufacturer (OEM) of Sikorsky helicopter parts cannot supply all maintenance parts on a regular basis. Although special orders for OEM replacement parts can be requested, some replacement parts take up to two years to receive.
[6] Parliament sought to fix this delay by legislatively implementing a process to recertify undocumented parts that meet type design (type design is a requirement of aircraft parts). Parts that can be traced back to the OEM are considered “documented parts.” Parts that cannot be traced back to the OEM are considered “undocumented parts.” While some undocumented parts are unauthorized third party products that do not meet type design, many others are genuine parts simply lacking the history or proper OEM documentation. The process for AMOs to evaluate and recertify undocumented parts is found in CAR Standard 571 Appendix H and possibly in MPL 36.
[7] The proper application of the Appendix H process formed the core dispute between the parties. Namely, Transport Canada had concerns that Rotor Maxx did not meet Appendix H requirements. Rotor Maxx, however, claims that they met and in some cases exceeded Appendix H requirements.
[8] Extensive discussions took place between Rotor Maxx and Transport Canada from February 2011 to March 2015. The following summary lists some of the most important interactions but is by no means an exhaustive reproduction of the record. A detailed timeline of events can be found under Appendix B.
[9] On March 3, 2011, Rotor Maxx submitted a Maintenance Policy Manual (MPM) to the Minister of Transport for approval. A MPM outlines an AMO’s procedures and limitations and must be approved by a Minister’s delegate. Rotor Maxx’s 2011 MPM included a new procedure under section 9.4 which outlined an added privilege for the company. Section 9.4 allowed Rotor Maxx to recertify undocumented aeronautical parts pursuant to the CAR Standard 571 Appendix H process. The Minister’s delegate (Michael Godsell) approved Rotor Maxx’s new privilege.
[10] A year later, Chris Fry resigned from his position as Rotor Maxx’s Quality Assurance Manager. Chris Fry then advised Transport Canada about concerns he had regarding the process Rotor Maxx used to recertify undocumented parts. This led Michael Godsell and a colleague to conduct a Process Inspection (PI) at Rotor Maxx’s facilities from November 7-8, 2012. During this early stage of the inspection, it became apparent that Rotor Maxx and Transport Canada had different opinions about how to recertify undocumented parts pursuant to the Appendix H process.
[11] Transport Canada issued a PI Finding against Rotor Maxx on February 12, 2013, questioning the recertification of three impugned parts (an engine bolt, a Garlock seal, and a bearing). Although the PI Finding is dated February 12, 2012, that is a typo for obvious chronological reasons. The PI Finding stated these parts did not have sufficient records to verify that they conformed to type design. Transport Canada requested Rotor Maxx address their parts recertification by completing a Corrective Action Plan (CAP) by March 18, 2013.
[12] Rotor Maxx issued a response to Transport Canada disputing the PI Finding. In their letter to Transport Canada, they argued that the three impugned parts are each categorized by aircraft and engine manufacturers as non-critical parts. They go on to argue that they conducted material and dimensional analysis and comparison with a known authentic part (KAP) according to the Minister’s Maintenance and Manufacturing Policy Letter #36, dated February 2, 2006 (MPL 36). Rotor Maxx concluded by stating that, as a precautionary measure, they suspended parts recertification in November pending a review. Rotor Maxx requested that Transport Canada withdraw its PI Finding.
[13] On April 26, 2013, Michael Godsell replied to Rotor Maxx on behalf of Transport Canada, refusing to withdraw the PI Finding. In his reasons, Michael Godsell described how a failure by any of the three impugned parts could cause a catastrophic failure and was therefore a critical part pursuant to MPL 36. The parts also needed a material certification from the OEM which was missing. Michael Godsell again requested a CAP (which was by this point overdue) and corrective action for any other non-conforming components which Rotor Maxx could identify. He concluded by suggesting that Rotor Maxx should consider further suspension of its parts recertification program.
[14] Over the next several weeks, Transport Canada personnel exchanged multiple emails questioning their position and that of Rotor Maxx. On May 14, 2013, Keith Labrecque (Regional Manager, Transport Canada Civil Aviation, Standards Coordination) exchanged messages with John Nehera (Associate Director Operations for Transport Canada’s Pacific Region) explaining that an exemption to the CAR 571 Appendix H process exists for AMOs “with an avionics, instrument or component rating to recertify parts, within the scope of their approval, if they have the necessary instructions for continued airworthiness to maintain the aeronautical products.” It is undisputed that at all relevant times, Rotor Maxx had the appropriate instrument and component ratings and did not go outside the scope of their approval.
[15] On May 17, 2013, Jeff Phipps (Chief, Operational Airworthiness, Standards Branch, Transport Canada Civil Aviation) wrote to Keith Labrecque clarifying that the criticality of a part was not part of the recertification process. Specifically, he wrote that “[o]nce a part has been evaluated and tested and certified we don’t have any regulatory requirements to identify the criticality of the part.” In a further email that same day, Jeff Phipps wrote to John Nehera and Keith Labrecque and copied Michael Godsell, Mitchell Holme (Superintendent, Transport Canada Civil Aviation Safety Inspector, Airworthiness), and John Glavind (Program Manager, Transport Canada, Operational Airworthiness). In this message Jeff Phipps describes how “CAR 571 generically refers to ICAs [Instructions for Continued Airworthiness].” No mention of certification from the OEM is made. He concludes his email by saying that although MPL 36 and the undocumented parts recertification process needs updating, Transport Canada lacks the resources or ability to do so.
[16] In reply, Michael Godsell again suggests that Rotor Maxx ignored the significance of parts criticality despite Jeff Phipps’s acknowledgment that criticality is not a regulatory requirement. To this, John Nehera adds that they “don’t have a problem dealing with the examples that [Rotor Maxx] has recertified.” He goes on to say that “[w]e’ll ask for their data and they’ll not have sufficient data or analysis to confirm conformity. I was just getting background on the ICAs referenced in the MPL. I’ll be arguing that they’re inadequate when they try to use them.”
[17] After a May 22, 2013 meeting with representatives from Rotor Maxx, John Nehera wrote that the process in “Appendix H is worded in general terms to include a range of processes for evaluation. It is not perscriptive [sic].” His notes also reflect an acknowledgment from Rotor Maxx that the documents submitted for the three impugned parts were incomplete. Rotor Maxx would therefore “submit a CAP to Mike Godsell with supporting documentation and an enhanced process for certifying undocumented parts.” On May 29, 2013, Rotor Maxx submitted its first CAP.
[18] Rotor Maxx’s first CAP was rejected by Michael Godsell on behalf of Transport Canada on June 20, 2013. The reasons for rejecting the CAP were because it “failed to identify all the additional examples of recertified undocumented parts” and “failed to adequately address the causal factors to the finding.” Michael Godsell concludes by demanding Rotor Maxx to cease all parts recertification and submit a revised CAP. The revised CAP needed details about all the recertified parts Rotor Maxx had processed, including traceability information about which aircraft these parts may have been installed on.
[19] Numerous further emails were exchanged resulting in a second CAP submission and independent analysis of the three impugned parts by R.J. Waldron & Company (1987) Ltd (Waldron). The subsequent report provided by Waldron included destructive material analysis of the impugned bolts (three bolts were destroyed out of the batch which were impugned) and concluded the bolts were authentic after comparing them to an OEM drawing. Waldron re-evaluated the impugned Garlock seal pursuant to Rotor Maxx’s newest recertification worksheet and found it was compliant. The impugned bearing was also re-evaluated and found to meet the requirements of the OEM drawing.
[20] The second CAP was rejected on July 22, 2013, for the same reasons as the first CAP rejection. Transport Canada again demanded a list identifying all additional undocumented parts Rotor Maxx had recertified. Although Transport Canada acknowledged receipt of the Waldron report and said that it was currently under review, they advised the report would not affect the reasons for the CAP rejection. The rejection notice demanded Rotor Maxx remove any reference to the recertification of undocumented parts in its MPM and cease recertification until further notice.
[21] Following the second CAP rejection and its ensuing correspondence, Rotor Maxx hired DTI Training Consortium, International (DTI). DTI had worked with Transport Canada on several occasions in the past and was hired to act as a trusted independent third party in the resolution of their CAP.
[22] After several more internal emails, Mitchell Holme acknowledges that “[t]he physical list would not normally be required as part of a CAP, it would have to be available at our request.” In response Michael Godsell acknowledges that “[t]he CAP now is almost irrelevant.” Mitchell Holme shared this position with Rotor Maxx in an August 23, 2013 email to Matthew MacWilliam (Rotor Maxx’s new Quality Assurance Manager) stating that “Transport is requesting that the ‘list’ be submitted now, asap but before CAP, as it is not directly related to the CAP.”
[23] On September 12, 2013, Rotor Maxx submitted a third CAP. Once again there was significant discussion within Transport Canada and with Rotor Maxx personnel. By the end of October 2013, a Notice of Suspension (NOS) against Rotor Maxx was drafted and circulated within Transport Canada. On November 8, 2013, Transport Canada notified Rotor Maxx that its third CAP was rejected due in part to Rotor Maxx’s failure to submit a list of recertified parts.
[24] Over the following weeks, Mark Trainor (Program Manager, Approved Organization Standards, Operational Airworthiness) emphasized on several occasions that an NOS would be inappropriate. On November 22, 2013, he stated that “[t]he [NOS] was not supported by the documented findings” and on January 22, 2014, warned that he “cannot see where the company has broken a specific regulation… the process and certification of the parts followed the current Appendix H and regulatory requirements.”
[25] In a January 31, 2014, email to Mitchell Holme, Frédéric Bellemare (Civil Aviation Safety Inspector, Standards) emphasizes that “all AMOs that have appendix H approval should be treated equally, and should be sent a similar letter” cancelling their recertification process. The comments by Frédéric Bellemare echoed comments made earlier by Mark Trainor to Jeff Phipps on January 24, 2014, which stated that “if we tell a company in Pacific region that they cannot use this process we must tell all others the same thing.”
[26] Despite the foregoing discussion, on April 4, 2014, Michael Godsell again advocated for Transport Canada to issue an NOS to Rotor Maxx and demand a list of all undocumented parts they recertified. John Nehera informed Michael Godsell on April 11, 2014, that since Transport Canada’s Enforcement division did not support an NOS issuance, they would not proceed.
[27] Several weeks of demands and discussions ensued. During a July 23, 2014 teleconference, Transport Canada acknowledged that they had no records for the basis of a Suspected Unapproved Part Report investigation, and they would instead issue a CASA against Rotor Maxx. Rotor Maxx was informed of the potential CASA against them on September 11, 2014.
[28] In the meantime, Michael Godsell was sent a box including approximately 15 Work Orders and 340 tasks. Of these, Michael Godsell conducted an “informal review” of seven tasks and concluded that these additional parts were deficient. On September 5, 2014, Michael Godsell informed Jeff Phipps of his informal review and his intention to review the remainder of the tasks. However, Michael Godsell did not conduct any further reviews.
[29] On September 24, 2014, Jeff Phipps confirmed to Michael Godsell that design data was required for recertifying parts and that ICA information could not be used. He suggests that Rotor Maxx should have sent all parts back to the OEM for recertification. A draft CASA was sent to Rotor Maxx for comments on November 19, 2014.
[30] On November 24, 2014, Michael Godsell wrote to Rotor Maxx to inform them that their new Appendix H process was “an excellent template for performing and documenting the recertification of undocumented parts” but could not be accepted as it did not include the MPL 36 process. He added that all aeronautical parts (not just critical parts) required some engineering design data and that ICAs are only for maintenance on an assembly or complete product.
[31] Rotor Maxx provided comments to John Nehera on November 26, 2014, arguing the draft CASA was factually inaccurate, did not reflect a breach of any CAR, and improperly interpreted the Appendix H process. John Nehera informed Rotor Maxx on February 24, 2015, that Transport Canada’s intended to issue the CASA on March 17 2015, almost two and a half years after the initial PI was conducted.
[32] Rotor Maxx filed for judicial review of the Minister’s decision to issue the CASA on March 24, 2015.
III. Issues
[33] Rotor Maxx raises the following issues on judicial review:
Whether the Minister acted without authority and contravened the purpose, object, and scheme of the Aeronautics Act by issuing the CASA when Enforcement had refused to prosecute Rotor Maxx for a contravention of the regulations and when Rotor Maxx had never been found by an independent impartial tribunal to have contravened any regulation?
Whether the Minister abrogated, abridged, and infringed Rotor Maxx’s right to a fair hearing in contravention of section 2(e) of the Canadian Bill of Rights and the rules of natural justice and procedural fairness by issuing the CASA without affording Rotor Maxx the opportunity to make full answer and defence to the allegations against it?
Whether the Minister misinterpreted the recertification procedures as set out in CAR 571, Appendix H and thereby wrongly concluded that Rotor Maxx had breached the regulations when recertifying undocumented aeronautical parts?
Did the Minister act without authority in issuing the CASA?
Whether the Minister abused authority by refusing to allow Rotor Maxx to recertify undocumented parts using its own standard procedure as permitted by the Minister’s exemption?
Did the Minister act contrary to the principles of natural justice by issuing the CASA without providing an opportunity for full answer and defence?
Whether the Minister based the decision to issue the CASA on erroneous findings of fact made in an arbitrary and capricious manner and without regard to the facts before him by concluding that Rotor Maxx’s recertified parts had created a critical safety issue?
[34] I would reframe the issues much as Transport Canada did:
Did the Minister breach Rotor Maxx’s right to procedural fairness in issuing the CASA?
Was the Minister’s decision to issue the CASA reasonable?
IV. Standard of Review
[35] The parties agree, as do I, that the applicable standard of review of the Minister's decision to issue a CASA is reasonableness. The CASA was introduced on October 1, 2010, as a non-mandatory and discretionary means of alerting the public about situations that the Minister finds satisfy the four criteria in the Staff Instruction. Thus, it involves the Minister applying expertise in civil air safety to interpret the required criteria in the Staff Instruction. Such decisions are afforded deference and are reviewed for reasonableness (Dunsmuir v New Brunswick, 2008 SCC 9).
[36] Issues of procedural fairness are reviewed on the correctness standard (Canada (Citizenship and Immigration) v Khosa, 2009 SCC 12).
V. Conclusions
[37] The Court appreciates the Respondent counsels’ concise and relevant arguments as well as the fact they conceded the difficulties in their arguments. Despite their advocacy, I will grant this application for the reasons that follow.
[38] The breach of procedural fairness is determinative of this review, but the decision was also unreasonable. This decision did not exhibit justification, transparency, and intelligibility within the decision making process and was not within the range of possible, acceptable outcomes, defensible in fact and law.
VI. The Statutory Scheme
[39] Both parties agree, as do I, that the object of the Aeronautics Act, RSC 1985, c A-2 [Aeronautics Act] is civil air safety. The Minister bears a heavy responsibility to the public to ensure their safety. This is not a responsibility that was taken lightly on these facts by either party.
[40] Rotor Maxx is an AMO, and filed an AMO certificate dated December 22, 2014, that supersedes a certificate dated July 29, 2010. This AMO certificate was approved pursuant to CAR 573.02 for aircraft, components, engines, and NDT (attached as Appendix J).
[41] The legislation that empowers the steps taken by Transport Canada is extensive but, for ease of reference, I have only included the material directly related to these facts. The legislation is attached in appendices, in the logical order.
VII. Objection Ruling
[42] During the hearing, Transport Canada objected to a document Rotor Maxx wanted filed (a photo on the last page of Certified Tribunal Record [CTR] Volume 8) as it was not in the CTR when the cross examination took place. I will grant the objection and disregard that document.
VIII. Analysis
A. Did the Minister breach Rotor Maxx’s right to procedural fairness in issuing the CASA?
(1) Procedural Fairness-Factors
[43] A CASA is an informational bulletin sent to all industry members providing immediate updates on critical safety issues, aeronautic recommendations, and alerts. The authority to issue a CASA is found under the heading “Civil Aviation Safety Alerts” of the Transport Canada Staff Instruction, SI QUA-003, at section 9.
[44] The Minister’s position is that because CASAs are issued for urgent aviation safety issues, the amount of procedural fairness attracted by a decision to issue a CASA is minimal. The Minister submits that the low procedural fairness is also due to the fact CASAs are alerts notifying the public of a concern and possible problem, but are not entered on an aviation record. Transport Canada says they met their procedural fairness obligations by letting Rotor Maxx review the CASA before issuing it.
[45] In Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 at paragraph 22 [Baker], Justice L’Heureux-Dubé, on behalf of the Supreme Court of Canada (SCC), affirmed a duty of procedural fairness in the making of administrative decisions. Specifically, administrative decisions must be made “using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context.” She added that the amount of procedural fairness owed depends on the context, and so the amount may not be the same in every case. Accordingly, I must consider all the circumstances leading to the decision in this case to determine the extent and content of the Minister’s duty of procedural fairness.
[46] According to Baker at paragraphs 23-26, factors to consider when assessing the minimum degree of participatory rights required include:
the nature of the decision being made and process followed in making the decision;
the nature of the statutory scheme and the terms of the statute pursuant to which the body operates;
the importance of the decision to the individuals affected;
the legitimate expectations of the person(s) affected by the decision;
the agency or administrator's choice of procedure.
[47] Nature of the decision- Before Transport Canada may issue a CASA, the decision must satisfy the four criteria set out in the Staff Instruction. The criteria include whether the issue is a critical safety matter and whether the information needs urgent dissemination.
[48] In this case, Transport Canada’s application of the Staff Instruction came after investigations, communications with Rotor Maxx, and at times the use of the MPL 36 guidelines to interpret the Appendix H recertification process. The Staff Instruction itself says that the CASA consultation process is discretionary, and amendments are allowable after its publication. This illustrates that the process of deciding to issue a CASA does not resemble the judicial process, and places Rotor Maxx’s procedural fairness participatory rights on the lower end of the spectrum.
[49] The second factor is the nature of the legislative scheme. The regulatory scheme is very complex and important to public safety. As a component of this scheme, the CASA plays an important role in the Minister’s execution of the duty to ensure public safety. This important safety role places the participatory rights at the lower end of the procedural fairness spectrum.
[50] Once the decision to issue a CASA is made and the document is published, amendments may occur. However, the Aeronautics Act and its accompanying regulations do not allow a right of appeal and only judicial review is possible. The procedural fairness obligations on the Minister are higher due to this feature.
[51] The third factor is the importance of the decision to issue the CASA to the individuals affected. While Transport Canada pointed out that a CASA is not entered on an AMO’s record, an adverse entry on an aviation record is not the only way to affect the reputation of an AMO. One must remember that CASAs are issued in the aviation industry where safety is of the utmost importance. And alerts to the public about critical safety issues may cause huge financial consequences to the AMO it is issued against. Such an alert may also be injurious to commercial reputation because it impacts the perceived integrity and professionalism of the AMO. On the other hand, airworthiness is of extreme importance to the Canadian public. The safety aspect tempers the procedural fairness which was raised higher on the spectrum due to the serious effect it may have on those it is issued against.
[52] The legitimate expectation factor is very dependent on the particular facts of a case. On these facts, Rotor Maxx had worked with and continued to cooperate and work with Transport Canada to meet all the requirements as they moved towards an acceptable CAP. Rotor Maxx was just finalizing the fourth CAP before the CASA was issued. The Minister chose to exercise the discretion afforded under the Staff Instruction, and provided the draft CASA to Rotor Maxx for their review and comments prior to its issuance.
[53] In the highly regulated aeronautics industry, there is a legitimate expectation that Transport Canada can explain with clear and intelligible reasoning how any CASA they issue satisfies the Staff Instruction criteria. In addition, there is a legitimate expectation that the Minister consider the relevant comments brought forward.
[54] In this case, this puts the participatory rights level higher on the spectrum, though I could envision other urgent critical safety fact situations that would rest lower on the spectrum.
[55] Choice of Procedure - The Minister chose to establish the CASA and its related criteria in the Staff Instruction. The Staff Instruction (see below) is clear that if all the CASA criteria are not met then Transport Canada is to consider another option:
9.2(3) If it does not meet the criteria in paragraph (1), then it should be considered as another type of document, such as an Airworthiness Directive or Advisory Circular.
[56] The Staff Instruction criteria and its sequence of steps are important because they help ensure the Minister satisfies the duty of procedural fairness. In this case, Transport Canada reversed the steps in the Staff Instruction by first considering another type of document; in particular, an NOS. And it was only when Rotor Maxx did not meet the criteria for the NOS sanctions that Transport Canada considered a CASA (see above paragraphs 26 & 27) but never thereafter considered an Airworthiness Directive or Advisory Circular. The requirement to consider other options attracts a higher level of procedural fairness as the instruction is specific: all the criteria must be met, otherwise other options must be considered. The exercise of ensuring the criteria are met would have enabled Transport Canada to explain how Rotor Maxx met the criteria— and if they did not meet the criteria, then Transport Canada had a positive directive to consider other options. According to Baker, deference is given to the Minister’s choice of procedure, but the steps taken must satisfy the duty of procedural fairness which is higher on spectrum due to the Staff Instruction criteria.
[57] When all of these factors are balanced, the participatory rights begin on the lower end of the scale as the urgency and critical safety factors are of great weight. Cumulatively, however, the particular facts of this case then raise the content and extent of procedural fairness to a higher level that would include: notification to Rotor Maxx about all the parts tested; the reasons Transport Canada felt that all the criteria for a CASA were met; an opportunity to respond; and a transparent procedure to recertify parts. In other words, procedural fairness required the absence of a moving target of what was needed to have an approvable CAP, an explanation about how the criteria for a CASA were met, and an explanation about the other options available if the criteria were not met.
[58] Rotor Maxx made a number of arguments related to alleged procedural unfairness that fit into the reasonableness analysis. For that reason, I will only deal with the arguments in this section that clearly fit into the issue of procedural fairness.
(2) Additional Parts - Without Opportunity to Respond
[59] Rotor Maxx alleged that Transport Canada acted procedurally unfair in the course of this matter. For instance, Rotor Maxx had only been told that Transport Canada had identified three (3) parts as being at issue, but would later learn the decision to issue the CASA was based on an additional 17 parts under review from the additional tasks reviewed in the work orders. It was only during the examinations for the injunction motion that Rotor Maxx found out that Transport Canada had considered and made their decision on these additional undisclosed parts. Prior to this, Rotor Maxx had made three CAP submissions, hired DT1 Training Consortium to assist them, and was preparing a fourth CAP submission. But since Rotor Maxx was unaware about additional parts at issue, they had no opportunity to address Transport Canada’s concerns, nor provide submissions other than on the three parts they thought were at issue.
[60] I note that I use the figure of 17 additional parts as that is the most consistent number used by the parties, although it may have been 7 or 10 additional parts. The fact is, whether the amount is 7, 17, or somewhere in between, it was a significant amount more than the three parts Rotor Maxx knew were at issue regarding critical parts, destructive testing, and type design. The exact number does not impact this analysis.
[61] Transport Canada submits that they repeatedly went above and beyond any duty of procedural fairness owed. Although Rotor Maxx was not informed of the 17 additional parts reviewed by Michael Godsell, Transport Canada argues Rotor Maxx had no procedural right to know every piece of evidence. Transport Canada’s position is that Rotor Maxx repeatedly failed to address the Minister’s concerns, was provided notice that they intended to issue a CASA, and were even provided an opportunity to comment on a draft CASA prior to its issue. A CASA, by its very nature, is not an enforcement document and is not an adverse entry on a CAD holder’s aviation record. As a result, the Minister says that only a low duty of procedural fairness is owed and the failure to inform Rotor Maxx of the additional parts being considered does not breach procedural fairness. After a review of the years of correspondence in letter and email form, as well as the minutes of meetings, it is hard not to be struck that something was unfair. But of course the unfairness I see in this case is something very particular to these facts and not something that can or should be applied in universal or widespread fashion to the industry or issuance of CASAs.
[62] Part of the unfairness is that Rotor Maxx was never made aware of the additional parts under review. Instead, all of the discussions between the various Transport Canada employees, Rotor Maxx individuals, their legal counsel, as well as the numerous CAP submissions and consultant work revolved around the findings related to three parts. For instance, the parties discussed how recertification should take place in regards to those three parts, and how to apply the legislation in force at the time to those three parts in particular.
[63] Rotor Maxx went above and beyond the Minister’s own requirements to prove the authenticity of those three parts. For example, they hired Waldron to prove that each of the three impugned parts met the proof of conformance, which involved destructive testing amongst other proof of conformity and safety testing. Michael Godsell admitted he did not look at the proof of conformance as it would take some time to review, and advised Rotor Maxx that the proof of conformance did not prove anything.
[64] Rotor Maxx submitted a detailed report to Transport Canada about the bolts, bearing, and seal. And Rotor Maxx’s evidence was that they would have provided the same analysis for the 17 additional parts but was not provided with the opportunity to do so before the decision was made to issue the CASA.
[65] Transport Canada’s review of the additional parts was cursory and only looking for engineering drawings. Nevertheless, Transport Canada also concluded in this informal review that Rotor Maxx had a “systemic issue” within its parts recertification program and was non-compliant. It is evident from the injunction hearing evidence that the Minister used the cursory review of the additional undisclosed parts to move the process to the issuance of the CASA.
[66] Disclosure is a basic tenant of procedural fairness. Generally, the obligation on a decision maker is to disclose information prior to making a decision. As the SCC explained in May v Ferndale Institution, 2005 SCC 82 at paragraph 92:
In the administrative context, the duty of procedural fairness generally requires that the decision-maker discloses the information he or she relied upon. The requirement is that the individual must know the case he or she has to meet. If the decision-maker fails to provide sufficient information, his or her decision is void for lack of jurisdiction.
[67] Of course there are times where urgency may require a departure from the general rule. But on the facts of this case, the actions of the Minister illustrate the general rule still applied. For instance, a lengthy consultation period took place after the informal review of the additional parts. Despite this passage of time, the additional parts remained undisclosed.
[68] At this hearing, binders full of correspondence and reports were provided, but as a result of the nondisclosure, the information was limited to the three parts. Once Rotor Maxx was finally told at the cross examinations of the testing of the additional 17 parts, they then provided evidence that each of those parts met the standards. Given the facts of this case, I find that the additional undisclosed parts were important, and disclosure was necessary so that Rotor Maxx could answer the case against them.
[69] Transport Canada also failed to disclose some of its conclusions. For instance, in making the decision to issue the CASA, Michael Godsell concluded the bolt, bearing, and seal were critical but did not say why. In fact he came to this conclusion despite contacting Sikorsky and GE who said these were not critical parts. Michael Godsell attests in his cross examination that he relied on info from Richard Manning (a Transport Canada employee with technical Sikorsky training) before swearing his affidavit about the criticality of the parts, but no record exists of their conversation. Although Michael Godsell also relied on a Google search for his affidavit, he admits he did the Google search after swearing his affidavit. The Minister began drafting a CASA on July 23, 2014, assuming Rotor Maxx would fail to provide the demanded documents by the deadline. But throughout the consultation process, Michael Godsell never informed Rotor Maxx of his inquiries with Sikorsky, his inquiries with General Electric, the results of his Google search, his discussions with Transport Canada colleagues, or of the 17 other parts he reviewed. Even Michael Godsell’s own colleague, John Glavind, disagreed with his interpretation of the Appendix H process (which was also not communicated to Rotor Maxx). It is unknown why Michael Godsell felt all engine, transmission, flight control, and drive train parts are critical as he did so without making reference to where it states this in the Appendix H process. This lacks transparency.
[70] Although Transport Canada says they went above and beyond the duty of procedural fairness by allowing Rotor Maxx to review and comment on the draft CASA, a review and comment is meaningless if the party does not know the case against themselves. I do not agree that all the procedural fairness needed in this case was to show Rotor Maxx the draft CASA. On the facts of this case, the content of the duty of fairness included notifying Rotor Maxx about the additional parts at issue as well as other information obtained and used so they could know the case against themselves.
(3) Moving Target
[71] By way of background, on February 2, 2006, Transport Canada issued MPL 36 to assist AMOs interpret proposed amendments to the Appendix H. However, the proposed amendments never came into force.
[72] Confusion within Transport Canada regarding whether Rotor Maxx was to follow the MPL 36 is sprinkled throughout these facts. Specifically, the confusion relates to the fact that, although MPL 36 came into effect immediately upon its release, the MPL 36 policy itself is in regards to proposed amendments to the Appendix H regulatory process that never came into force. The result is the limitation cannot run because the crystalizing event of legislative amendments coming into force has still not occurred.
[73] As a result of this confusion, Transport Canada’s underlying decisions which led to the CASA are sometimes based on reasoning that the MPL 36 is valid and sometimes that it is invalid. For instance, on June 15, 2011, when Michael Godsell approved Rotor Maxx’s MPM, he did so without requiring the MPL 36 process. Later, Michael Godsell stated he followed the MPL 36 policy in his November 2012 PI of Rotor Maxx’s facility. Similarly, in an email dated April 11, 2013, Jeff Phipps stated the MPL 36 is valid.
[74] Yet on January 22, 2014, Mark Trainor said an NOS is legally unsupportable because Rotor Maxx had not broken a single regulation, a conclusion that indicates MPL 36 is valid. In accordance with this, a report dated April 30, 2014 by Enforcement Manager, Toke Adams explains the Notice of Proposed Amendments was “not yet promulgated at the time of the alleged contravention. The MPL was still in effect; however, it was not enabled through CAR 571” (emphasis added). More confusion within Transport Canada of what the target was that Rotor Maxx had to meet.
[75] In this case, Transport Canada used the MPL 36 process in their inspection of Rotor Maxx even though the limitation period had not started (as the regulations had not been promulgated). The difference between the MPL 36 process and the Appendix H process is apparent