Judgments

Decision Information

Decision Content

A-239-74
In the matter of applications by Worldways Air lines Ltd. under section 28 of the Federal Court Act to review and set aside Order No. 1974-A-422 and Order No. 1974-A-423 of the Canadian Transport Commission and appeals by World- ways Airlines Ltd. under section 64(2) of the National Transportation Act from the same Orders
Court of Appeal, Jackett C.J., Pratte and Mahoney JJ.—Ottawa, September 20 and Octo- ber 15,1974.
Judicial review—Appeals—Aeronautics—Domestic and international licences—Issued in 1956 to predecessor of applicant—Licences partially amended in 1974—Cancella- tion of certain services—Opinion of Court that orders should be repealed by Commission—Aeronautics Act, R.S.C. 1952, c. 2, ss. 6(1), 15(1),(3)—Commercial Air Services Regula tions, P.C. 1954-2032—Aeronautics Act, R.S.C. 1970, c. A-3, ss. 9(1), 16(1),(2),(8),(9)—Air Carriers Regulations, SOR/72-145—National Transportation Act, R.S.C. 1970, c. N-17, ss. 24(3), 64(2), 65(4)—Federal Court Act, s. 28.
Licences for the carriage of domestic and international traffic were issued to Kenting Aviation Limited in 1956 by the Air Transport Board under the Aeronautics Act, R.S.C. 1952, c. 2, s. 15(1),(3). The licences were amended in 1974 by the Air Transport Committee, within its power to act on behalf of the Canadian Transport Commission, under the National Transportation Act, R.S.C. 1970, c. N-17, s. 24(3). The amendment cancelled, in part, the groups of service for both licences as a case "where the public convenience and necessity so requires" under section 16(8) of the Aeronau tics Act, R.S.C. 1970, c. A-3. Proceedings to review, and appeal from, these orders were instituted by Worldways Airlines Limited as successor to Kenting Aviation Limited.
Held, it was admitted by the Commission that the basis of the cancellation order was that the licensee, Kenting, had not provided service in the suspended groups, and had not provided evidence that it was ready, willing and able to provide such service, and that there had been no complaints by the public concerning the lack of service, and hence the Committee concluded the groupings were no longer required by the public convenience and necessity. In law, a finding by the stated process was not in conformity with the express terms of section 16(8). When the licences were issued in 1956, the licensing authority was obliged to determine affir matively that the proposed service "is and will be required by the present and future public convenience and necessi ty". The same obligation was imposed on the Air Transport Committee by the present Act. However, the authority to cancel the licences, in whole or part, did not depend upon a simple reversal of that decision, namely a determination that
the service licensed and proposed to be cancelled was no longer required by public convenience and necessity. That is what the Committee did decide. Rather, what it must decide and, in this case did not, was that the cancellation was itself required by public convenience and necessity. The determi nation required to be made under section 16(8) was not the negative finding that present and future public convenience and necessity no longer required the particular licence to subsist, but the positive finding that the public convenience and necessity required the cancellation. The orders were voidable and should be repealed and it should be so certified to the Commission, pursuant to section 64(5) of the Nation al Transportation Act.
In re North Coast Air Services Limited [1972] F.C. 390, applied.
JUDICIAL review and appeal. COUNSEL:
B. Crane for applicant and appellant. G. St. John for respondent.
SOLICITORS:
Gowling & Henderson, Ottawa, for appli cant and appellant.
Legal Services, Canadian Transport Com mission, Ottawa, for respondent.
The following are the reasons for judgment delivered in English by
MAHONEY J.: The orders in respect of which the appeals and applications herein have been brought were both made May 31, 1974 and had the effect of cancelling, in part, Air Transport Board Licences Nos. A.T.B. 793/56(C) and A.T.B. 233 /56(CF). The separate proceedings in respect of each order were joined and the two joined proceedings were heard together on a single record. For convenience, Licence No. A.T.B. 793/56(C) will sometimes be referred to as the "domestic licence" and No. A.T.B. 233/ 56(CF) as the "international licence".
Both licences were issued July 22, 1956 to Kenting Aviation Limited. At the time, the per tinent provisions of the Commercial Air Ser vices Regulations' were:
3. (1) Air carriers are classified as follows:
(a) Domestic Air Carriers:
P.C. 1954-2032 [1955 Consolidated Regulations, p. 28].
Class 4—Charter Air Carriers
Air Carriers who offer public transportation of persons or goods by aircraft from a designated base, at a toll per mile or per hour for the charter of the entire aircraft, or at such other tolls as may be permitted by the Board.
Class 9—International Non-Scheduled Air Carriers
Domestic and foreign air carriers who operate between Canada and any other State, any commercial air service authorized to be performed by domestic air carriers in Classes 2, 3, 4, 5 and 7; such air carriers shall be designated as Classes 9-2, 9-3, 9-4, 9-5 and 9-7 air carriers.
4. The Board may establish groups of air carriers within any or all of the Classes of Air Carriers set out in section 3 on the basis of the loads or weights of aircraft to be employed by air carriers in each group so established, or on such other basis as in the opinion of the Board may be required and may allocate or re-allocate any air carrier to such group as the Board may deem appropriate.
5. (1) Commercial air services shall be classified in classes corresponding to the services operated by air carri ers classified under section 3, and where the Board has established groups of air carriers within all or any of the classes of air carriers in pursuance of section 4, such commercial air services shall be established in the groups corresponding to the services operated by the air carriers so grouped.
7. (1) No air carrier shall operate a commercial air ser vice in any class for which it is not authorized; ...
(2) No air carrier shall operate a commercial air service in any group for which it is not authorized if the Board has established such groups; ... .
Pursuant to the authority given it by section 4 of the Commercial Air Services Regulations, the Air Transport Board had established groups 2 as follows:
1. THAT for the purposes of this General Order, disposable load means gross weight of the aircraft minus operational weight empty.
2 A.T.B. General Order 6/52, 50R/52-280.
2. THAT Class 4 Charter air carriers be and the same are hereby divided into three groups as follows:
2.1 Group A:—Class 4 air carriers who operate one or more aircraft each of which has a disposable load in excess of 6,000 pounds.
2.2 Group B:—Class 4 air carriers who operate one or more aircraft each of which has a disposable load in excess of 1,100 pounds but not greater than 6,000 pounds.
2.3 Group C:—Class 4 air carriers who operate one or more aircraft each of which has a disposable load not greater than 1,100 pounds.
The domestic licence issued to Kenting herein authorized Kenting Aviation Limited to operate a Class 4, Groups A and B service within Canada from a base at Toronto. The internation al licence authorized the operation of a Class 9-4 service from a base at Toronto and con tained the following provision, not contained in the domestic licence:
7. The licensee is restricted to the operation of aircraft having a maximum authorized take-off weight on wheels in excess of 2,500 pounds.
Thus, initially Kenting Aviation Limited was licensed to operate a domestic charter service with aircraft having a disposable load in excess of 1,100 pounds and an international charter service with aircraft having a maximum author ized take-off weight in excess of 2,500 pounds.
On March 22, 1963 General Order No. 36/63 revoked General Order No. 6/52 and substituted the following groups for Class 4 Charter air carriers:
Group A:—Class 4 air carriers who operate one or more aircraft each of which has a maximum authorized take-off weight on wheels in excess of 18,000 pounds.
Group B:— ... in excess of 2,500 pounds but not greater than 18,000 pounds.
Group C:— ... not greater than 2,500 pounds.
This Order appears not to have been published in the Canada Gazette.
On August 6, 1965 new Commercial Air Ser vices Regulations' were adopted. The revoked sections 3, 4 and 5 were re-enacted without change and section 7 was re-enacted as section
3 SOR/65-369.
12 but not otherwise changed. These new regu lations appear not to have had any material effect on either licence in any relevant particular.
On June 11, 1969, the Commercial Air Ser vices Regulations were extensively amended 4 . General Order 36/63 was not rescinded but the new Regulations provided:
4A. The groups for commercial air services based on the weight of the aircraft used in the operation of the service are as follows:
(a) Group AA, being commercial air services operated with fixed or rotating wing aircraft having a maximum authorized take-off weight on wheels in excess of 35,000 pounds;
(b) Group A, being commercial air services operated with fixed or rotating wing aircraft having a maximum author ized take-off weight on wheels in excess of 18,000 pounds but not greater than 35,000 pounds;
(c) Group B, being commercial air services operated with fixed wing aircraft having a maximum authorized take-off weight on wheels in excess of 2,500 pounds but not greater than 18,000 pounds;
(e) Group C, being commercial air services operated with fixed wing aircraft having a maximum authorized take-off weight on wheels not greater than 2,500 pounds; and
Paragraphs (d) and () established Groups BRW and CRW, being rotating wing aircraft in the 3,500 to 18,000 pound range and under 3,500 pounds respectively.
There is nothing in the material before us indicating any specific amendment to the licences ensuing upon either General Order 36/63 or SOR/69-265; however, it would appear, from later events that the domestic licence was now regarded as covering Groups AA and C as well as the Groups A and B expressed to be covered in it. The international licence contained the express provision that coincidentally excluded Group C but it, too, appears to have been regarded as covering Group AA as well as Groups A and B.
4 SOR/69-265.
On May 5, 1972 the Canadian Transport Commission made new regulations, entitled the Air Carrier Regulations 5 , which, inter alia, rescinded General Order 36/63 and provided:
3. (1) The following classes of commercial air services are established for the purposes of these Regulations:
(d) Class 4: Charter commercial air service, being a ser vice that is operated wholly within Canada and that offers public transportation, on reasonable demand, of persons or goods from the base specified in the licence issued for that commercial air service or the base declared by the Committee to be the protected base for that commercial air service at a toll per mile or per hour for the charter of an entire aircraft, or at such other tolls as may be allowed by the Committee, and includes recreational flying;
(k) Class 9-4: International Charter commercial air ser vice, being a service that is operated by an air carrier using
a) Group A, B or C aircraft, or
b) subject to obtaining a permit as required by Part IV, Group D, E, F, G or H aircraft,
from the base specified in the licence issued for that commercial air service and that offers public transporta tion, on reasonable demand of persons or goods between places in Canada and places in any other country, at a toll per mile or per hour for the charter of the entire aircraft, or at such other tolls as may be allowed by the Committee;
(2) An air carrier licensed to operate a commercial air service of a class established by subsection (1) is allocated the same class as that commercial air service.
4. (1) Each class of commercial air service established by subsection 3(1) is divided, on the basis of the weight of the aircraft authorized to be operated, into the following groups:
(a) commercial air services operated with fixed wing aircraft,
(i) Group A, having a maximum authorized take-off weight on wheels not greater than 4,300 pounds,
(ii) Group B, having a maximum authorized take-off weight on wheels greater than 4,300 pounds but not greater than 7,000 pounds,
(iii) Group C, having a maximum authorized take-off weight on wheels greater than 7,000 pounds but not greater than 18,000 pounds,
3 SOR/72-145.
(iv) Group D, having a maximum authorized take-off weight on wheels greater than 18,000 pounds but not greater than 35,000 pounds,
(v) Group E, having a maximum authorized take-off weight on wheels greater than 35,000 pounds but not greater than 75,000 pounds,
(vi) Group F, having a maximum authorized take-off weight on wheels greater than 75,000 pounds but not greater than 150,000 pounds,
(vii) Group G, having a maximum ) authorized take-off weight on wheels greater than 150,000 pounds but not greater than 350,000 pounds, and
(viii) Group H, having a maximum authorized take-off weight on wheels greater than 350,000 pounds, and
(2) An air carrier licensed to operate a commercial air service of a group referred to in subsection (1) is allocated to the same group as that commercial air service.
By a series of amendments both licences had been duly endorsed to substitute Kenting Air craft Ltd. (hereinafter called "Kenting") as lic ensee. On September 8, 1972 the secretary of the Air Transport Committee of the Canadian Transport Commission wrote to Kenting Air craft Ltd., in respect of the domestic licence only, as follows:
As you are aware, Section 4 of the Air Carrier Regula tions, dated May 5, 1972 Registration No. SOR/72-145, establishes new groups for aircraft based on their maximum authorized take-off weight on wheels for commercial air service operations.
It is now proposed to amend all Class 4 charter licences to reflect the new grouping(s). The new grouping(s) to be authorized by the above licence is (are) intended to cover all the aircraft now operated under its authority, based on your current charter tariff on file with the Canadian Transport Commission. On the reverse of this letter there is a table showing the aircraft types listed in your charter tariff and the new groups to which they belong.
You are required to indicate in the third column on the reverse of this letter by an "O" if you own an aircraft of the type shown, and by the letter "L" if all aircraft shown are leased. The duplicate of this letter must be signed by an authorized signing officer of the licensee and returned to this Committee not later than October 9, 1972 and concur rently, you may make representation with respect to this proposal.
The following reply, dated October 6, 1972, was made on behalf of Kenting, by Edwin T. Nobbs, Q.C. It was accompanied by the return of the duplicate letter showing that Kenting owned or
had under lease aircraft in Groups B, C, D and E.
We act as solicitors for Kenting Aviation Ltd. (hereinafter referred to as "Kenting Aviation").
We are enclosing herewith a copy of your letter of Sep- tember 8th to Kenting Aviation duly completed and execu ted by the Company.
Pursuant to the last paragraph of your said letter, we wish to make the following representations on behalf of Kenting Aviation, namely:
I —Proposed Groupings
It would appear that the Air Transport Committee pro poses to allot Groups B, C, D and E to Kenting Aviation under the new groupings of aircraft established by the Air Carrier Regulations. Kenting Aviation submits that it is entitled to be allotted Groups A, B, C, D, E, F, G and H, and in support thereof, states as follows:
1. Kenting Aviation is not at the present time restricted in regard to the type or size of aircraft which it may operate. The said authority includes aircraft in the new Groups A, B, C, D, E, F, G and H.
2. On September 24th, 1971, Kenting Aviation received a letter from the Air Transport Committee wherein the Com pany was allocated Groups A, B, C, D, E, F, G and H under the proposed new groupings of aircraft.
3. Kenting Aviation has operated substantial charter com mercial air services from its base at Toronto since 1956.
In particular, the operation of "large" aircraft has formed an intregal [sic] part of the charter operations of Kenting Aviation since their inception.
4. In 1961, Kenting Aviation acquired Douglas DC-4 type aircraft and has operated these type of aircraft since that time.
5. Kenting Aviation has been studying the acquisition of aircraft larger than the Douglas DC-4 for the past several years. During the past twenty months these studies have been intensified. A special task force headed by the General Manager of Kenting Aviation has devoted substantial time and money relating to large aircraft projects.
As an example of such studies, at the time Kenting tendered to continue to provide services to the Federal Government under the Ice Reconnaissance Contract, (November, 1971), Kenting Aviation proposed to operate Lockheed Electra type aircraft. In conjunction with such operation, Kenting Aviation also had planned to operate Lockheed Electra type aircraft in its general charter service.
Kenting Aviation acquired options to purchase Lockheed Electra aircraft in conjunction with this project. Due to the fact that Kenting Aviation was unsuccessful in its bid to continue to provide the said Ice Reconnaissance services, Kenting Aviation was forced to delay the institution of the Lockheed Electra general charter services. However, Kent- ing Aviation does intend to provide general charter services using Lockheed Electra or similar type aircraft within the reasonable foreseeable future.
Kenting Aviation has also been studying the use of Lock- heed Hercules 130 type aircraft and this study is in its final stages. At the present time, the said study indicates a requirement for Kenting Aviation's contemplated use of such aircraft.
6. Kenting Aviation is a large and diversified commercial air service Company with substantial assets allocated and avail able for the expansion of its existing "large" aircraft charter operations. The development of Kenting Aviation has at all times been prefaced upon its authority to operate "large" aircraft, particularly during the past 20 months.
7. In addition to the preservation of the "large" aircraft groupings, Kenting Aviation also wishes to preserve the A grouping. Although Kenting Aviation neither owns nor leases Group A aircraft at the present time, Kenting Avia tion has operated such aircraft in the past.
Kenting Aviation intends to acquire a Cessna ;180 type aircraft (Group A) within the next two months.
8. It is submitted that having regard to the facts set out above:
(a) It would be improper and inequitable to now alter the groupings allocated pursuant to paragraph 2 above.
(b) Kenting Aviation is one of the initial charter commer cial air services in Canada to operate four engine aircraft.
(c) The present and future development of Kenting Avia tion relates directly to its authority to operate aircraft in Groups F, G and H.
(d) In denying Kenting Aviation the right to operate Groups F, G and H aircraft, the Air Transport Committee would be arbitrarily reducing the existing authorities of Kenting Aviation causing irreparable damage to Kenting Aviation without providing any corresponding benefit to the public. Indeed, the public will be deprived of commer cial air services which are now at their disposal.
The amendment of the licence of Kenting Aviation in regard to the groupings proposed by the Air Transport Committee would clearly be contrary to the public interest and would not be required by the public convenience and necessity. On the other hand, the additional allocation of Groups A, F, G and H aircraft to such licence would clearly be in the public interest and is required by the public convenience and necessity.
II—Ownership of Group C Aircraft
III —Ownership or Lease of Groups A, F, G and H Aircraft
Kenting Aviation neither owns nor leases Groups A, F, G and H type aircraft at the present time.
As stated above, it would be in the public interest to allocate the A, F, G and H groupings to Kenting Aviation.
Due to the fact that under its existing authority, Kenting Aviation is not required to own or lease a Group A type
aircraft, and for the additional reasons set out in Part I above, it is submitted that Kenting Aviation should not be required to own or lease Group A type aircraft in order to maintain its A grouping.
In addition to the above, it is submitted that Kenting Aviation should not be required to own or lease aircraft of Groups F, G and H in order to maintain its allocation of the said groupings for the following reasons:
(a) Kenting Aviation is not required to own or lease Groups F, G and H type aircraft under its existing authority.
(b) Due to the nature of the market for aircraft of the size of Groups F, G and H, together with the cost of such aircraft, it would not be economically sound to establish artificial time perimeters [sic] within which Kenting Avia tion would have to acquire such aircraft. On the other hand, the fact that Kenting Aviation has been a partici pant in the "large" aircraft charter market for over fifteen years, and is basing its development upon such market is clear from the evidence set out in Part I above.
In regard to the method of acquiring aircraft of Groups F, G and H, Kenting Aviation repeats its submission set out in Part II above and requests that it be permitted to lease such aircraft at the relevant time should the circumstances so dictate.
If you should require any further or additional informa tion in regard to any of the above representations, please do not hesitate to contact me.
Yours very truly,
ETN:lgr Edwin T. Nobbs, Q.C. End.
On April 30, 1973 the Air Transport Commit tee made Order No. 1973-A-371 with respect to the domestic licence only. The operative provi sions were:
IT IS ORDERED THAT:
a) Licence No. A.T.B. 793/56(C) is hereby amended by deleting therefrom Groups A and B aircraft (old grouping) and substituting therefor Groups A,B,C,D,E,F,G and H air craft (new grouping);
b) Groups A,F,G and H of the said Licence are suspended for a period of one year or until such time as the Licensee provides evidence that it is ready, willing and able to pro vide service in these suspended groups, whichever is the lesser.
c) Failure by the Licensee to comply with b) above within one year from the date of this Order will result in the immediate cancellation of the authority without further notice.
This Order shall form part of Licence No. A.T.B. 793/56(C) and shall remain attached thereto.
On November 20, 1973, Kenting entered into an agreement with Roy T. Moore to sell its
commercial air service business to a company to be incorporated. Notice of this agreement was sent to the Commission under cover of a letter dated December 4, 1973, reading as follows:
Pursuant to Section 20(1) of the Air Carrier Regulations and the Guidelines issued by the Air Transport Committee we are enclosing herewith six copies of a Notice of the above proposed transaction.
We have only enclosed one copy of each of the schedules and financial documentation. If you should require addition al copies, please do not hesitate to contact me.
The purchasing company is now in the process of being incorporated and we will advice [sic] you within the next 10 days as to the name of the said company. The details of incorporation have already been set out in the Application together with the undertaking to file copies of the actual incorporation documents with you.
On November 30, 1973 the Commission wrote Kenting raising, for the first time, the new groupings in respect of the international licence, as follows:
As you are aware, Section 4 of the Air Carrier Regula tions, dated May 5, 1972, Registration No. SOR/72-145, established new groups for aircraft based on their maximum authorized take-off weight on wheels for commercial air service operations. By this time your Class 4 Charter licence(s) has been or is in the process of being amended to reflect the new groupings.
It is now proposed to amend your complementary Class 9-4 International Charter licence to correspond to the new groupings authorized by your Class 4 Charter licence from the same base. However, before doing so, the Committee would appreciate your comments on this proposal. You are requested to reply on or before January 7, 1974.
No reply was made to this letter.
On April 18, 1974 Kenting's solicitor, by telex, requested a six month extension of the period of suspension of Groups A,F,G and H in respect of the domestic licence in view of the fact that the Air Transport Committee had not yet rendered a decision of the application for approval of the proposed sale to Moore's com pany. This request was refused. On April 30, Mr. Nobbs, signed as "solicitor for Kenting Aircraft Limited and Roy T. Moore" dispatched
the following telex to the Commission 6 :
PURSUANT TO ORDER 1973-A-371 GROUPS A F G AND H OF LICENCE 79 3 / 5 6(C) WERE SUSPENDED UNTIL APRIL 30/74 OR UNTIL LICENCES PROVIDED ATC WITH EVIDENCE IT WAS READY, READY AND WILLING TO PROVIDE SERVICES IN THESE SUSPEND ED GROUPS. ATC ADVISED BY KENTING AIRCRAFT LIMITED (KENTING) IN ITS LETTER OF OCT 6/72 THAT IT INTENDED TO OPERATE LARGER MORE SOPHISTICATED TYPE AIRCRAFT THAN ITS CURRENT DC4 TYPE AIRCRAFT. DURING DEC /73 KENTING AND A COMPANY TO BE INCORPORATED IN WHICH KENTING AND ROY T MOORE WOULD EACH HAVE A SHARE INTEREST (THE COMPANY) SERVED NOTICE UPON THE ATC THAT RENTING INTENDED TO SELL ITS TORONTO BASE ASSETS AND TRANSFER ITS TORONTO CHARTER LICENCES TO THE COMPANY ON APRIL 30/74. IN THE NOTICE RENTING AND THE COMPANY ALSO ADVISED THE ATC THAT THE COMPANY `PROPOSES TO MODERN IZE AND UP DATE THE HEAVY AIRCRAFT DIVISION'.
DUE TO THE FACT THAT NEITHER RENTING NOR THE COM PANY HAD RECEIVED ANY ADVICE FRM THE ATC IN REGARD TO ITS NOTICE, ON APRIL 18/74 RENTING APPLIED BY TLX TO ATC FOR AN EXTENSION OF THE SUSPENDED OF THE ABOVE REFERRED TO GROUPINGS. ON APRIL 24 THE ATC DENIED THIS REQUEST WITHOUT GIVING ANY REASON FOR THE SAME ALTHOUGH THE ATC AWARE OF ALL OF THE ABOVE CIRCUMSTANCES.
AS A RESULT OF ATC DENIAL OF THE ABOVE REQUEST RENTING TLX ATC ON APRIL 25 REQUESTING ADVICE AS TO THE STATUS OF NOTICE TO ATC AND REQUESTING REPLY BY TLX. ATC HAS NOT REPLIED TO SUCH REQUEST ALTHOUGH IT IS FULLY AWARE OF ALL OF THE ABOVE FACTS AND IN PARTICU LAR THE RENTING PROPOSALS AND TIMING FOR SUCH PRO POSALS. THE COMPANY HEREBY ADVISES THE ATC THAT:
1) THE COMPANY HAS BEEN CARRYING ON NEGOTIATIONS WITH UNITED AIRLINES SINCE THE FILING OF THE NOTICE WITH A VIEW TO PURCHASING A DC8 TYPE AIRCRAFT TO MODERNIZE AND UP DATE THE HEAVY AIRCRAFT DIVISION. THE COMPANY HAS BEEN READY, WILLING AND ABLE TO PURCHASE A DC8 AIRCRAFT FROM UNITED AIRLINES FOR SOME TIME, HOWEVER IT REFRAINED FROM SO DOING PENDING NOTICE FROM THE ATC IN REGARD TO THE NOTICE REFERRED TO ABOVE. AS STATED PREVIOUSLY NO NOTICE OR ADVICE HAS BEEN FORTHCOMING FROM THE ATC NOTWITHSTANDING THE REQUESTS OUTLINED ABOVE.
2) THE COMPANY HAS PURCHASED A DC8 AIRCRAFT FROM UNITED AIRLINES SERIAL NO 45260 EFFECTIVE APRIL 29/74 AND HAS LEGAL TITLE TO SUCH AIRCRAFT.
3) THE. PURCHASE OF THE SAID DC8 AIRCRAFT COMPLIES WITH ALL OF THE REQUESTMENTS OF THE ATC IN REGARD TO AIR CRAFT OWNERSHIP AND EQUITY.
6 Deletions, gibberish and corrected errors appearing in the originals have been omitted from this and other telexes quoted. Other mistakes are quoted as they appear.
4) ONGOING MAINTENANCE, CREW TRAINING AND SPARES AXX FOR THE AIRCRAFT HAVE BEEN ARRANGED.
5) THE COMPANY HAS ARRANGED FOR THE NECESSARY PERSON NEL TO OPERATE THE SAID DC8 AIRCRAFT.
6) THE COMPANY IS READY, WILLING AND ABLE TO OBTAIN THE NECESSARY OPERATING CERTIFICATE FROM MOT AND FILE NECESSARY TARIFFS WITH ATC UPON THE. SUSPENSION OF GROUP G AIRCRAFT UNDER LICENCE 793/56(C) BEING VACATED.
7) ARRANGEMENTS HAVE BEEN MADE FOR THE NECESSARY GROUND FACILITIES IN REGARD TO THE SAID DC8 AIRCRAFT.
8) THE COMPANY HAS THE FINANCIAL RESOURCES TO FINANCE THE PURCHASE OF SAID DC8 AIRCRAFT AND TO SUPPORT THE OPERATION OF SUCH AIRCRAFT TOGETHER WITH THE OTHER KENTING SERVICES.
9) THE COMPANY IS READY, WILLING AND ABLE TO COMPLETE THE TRANSACTION AS DESCRIBED IN THE ABOVE NOTICE TODAY.
KENTING IS READY, WILLING AND ABLE TO COMPLETE THE SAID TRANSACTION AS DESCRIBED IN THE ABOVE NOTICE TODAY.
AS A RESULT OF THE ABOVE FACTS KENTING AND THE COMPANY ARE READY, WILLING AND ABLE, AS OF TODAY, TO PROVIDE CHARTER COMMERCIAL AIR SERVICES UTILIZING GROUP G TYPE AIRCRAFT.
PLEASE ADVISE AS TO DOCUMENTATION REQUIRED AND WILL FORWARD SAME AS SOON AS POSTAL SITUATION ALLOWS. THIS ADVICE FORWARDED TO YOU BY TLX IN LIEU OF POST BECAUSE OF TIME FACTOR AND CONTINUED POSTAL DEPOSIT FREEZE IN TORONTO.
On May 16, 1974, a letter was sent on behalf of the Air Transport Committee to Mr. Nobbs reading as follows:
In reference to your letter of December 4,- 1973, the Committee requests information regarding the existence of the new Company, its name and the date of incorporation.
By letter dated May 23, Mr. Nobbs replied that the company, Worldways Airlines Ltd. (herein called "Worldways") had been incorporated April 25, 1974 under the laws of Alberta. On May 28 he sent the following telex to the Committee:
RE: KENTING AIRCRAFT LTD
SALE TO MOORE
TORONTO CHARTER SERVICES
AS YOU ARE AWARE NOTICE OF THE PROPOSED TRANSACTION REFERRED TO ABOVE WAS FILED WITH COMMITTEE ON DEC 4/73. DOCUMENTATION ATTACHED TO NOTICE CONFIRMING CLOSING DATE OF APRIL 30/74. DUE TO THE FACT APPLI CANTS WERE UNABLE TO OBTAIN ANY ADVISE AS TO STATUS OF NOTICE PRIOR TO APRIL 30, IN SPITE OF REPEATED REQUESTS,
PARTIES AGREED TO EXTEND CLOSING DATE TO MAY 31. CLOS ING DATE OF MAY 31 CRITICAL TO PARTIES. NOTICE HAS BEEN WITH THE COMMITTEE FOR ALMOST SIX MONTHS. DURING MAY FURTHER REQUESTS MADE TO COMMITTEE RE DECISION RELAT ING TO NOTICE WITHOUT REPLY. IMPERATIVE THAT PARTIES RECEIVE DECISION OF COMMITTEE ON OR BEFORE MAY 31. PLEASE ADVISE BY TLX.
On May 31, Mr. Nobbs was advised by telex of the substance of three orders made that day by the Air Transport Committee. All were dated May 31, 1974.
1. Order Noe 1974-A-422 provided, with respect to the domestic licence, after reciting Order No. 1973-A-371 and the refusal to extend the period of suspension to September 30, 1974, as follows:
WHEREAS by telex dated April 30th, 1974, the Licensee made further representations to the Committee;
WHEREAS the Committee has considered the representa tions of the Licensee and finds that the public convenience and necessity requires amendment of Licence No. A.T.B. 793/56(C) by cancelling authority to operate Groups A, F, G, and H aircraft under the said Licence.
IT IS ORDERED THAT:
Licence No. A.T.B. 793/56(C) is hereby amended by cancelling authority to operate Groups A, F, G and H aircraft under the said Licence.
This Order shall form part of Licence No. A.T.B. 793/ 56(C) and shall remain attached thereto.
2. Order No. 1974-A-423 provided, with respect to the international licence, after recit ing the letter of November 30, 1973 and the invitation to make representations and the fact that none were made, as follows:
WHEREAS by Licence No. A.T.B. 793/56(C), the Class 4 and Class 7 Licence of Kenting Aircraft Ltd. at Toronto, Ontario, as amended by Order No. 1974-A-422, the Licen see is authorized to operate Groups B, C, D and E aircraft;
WHEREAS the Committee has considered all matters rele vant to the proposed amendment, and finds that the public convenience and necessity requires amendment of Licence No. A.T.B. 233/56(CF) by cancelling Condition No. 7 and substituting therefor the following:
The Licensee is restricted in its operation to Groups B, C, D and E aircraft.
IT IS ORDERED THAT:
Condition No. 7 of Licence No. A.T.B. 233/56(CF) is hereby cancelled and the following substituted therefor:
The Licensee is restricted in its operation to Groups B, C, D and E aircraft.
This Order shall form part of Licence No. A.T.B. 233/ 56(CF) and shall remain attached thereto.
(It is convenient to note here that the Class 7 authorization, which had been added to the domestic licence by endorsement dated Septem- ber 27, 1968, was not embraced in the transac tion with Worldways and hence is not the sub ject of these proceedings.)
3. Order No. 1974-A-424, ordered that:
The Transfer from Kenting Aircraft Ltd. to Worldways Airlines Ltd. of the Class 4 Charter commercial air services under Licence No. A.T.B. 793/56(C) as amended by Order No. 1974-A-422 and the Class 9-4 International Charter commercial air services under Licence No. A.T.B. 233/ 56(CF) as amended by Order No. 1974-A-423 is not disal lowed. This Order shall form part of Licences Nos. A.T.B. 793/56(C) and A.T.B. 233/56(CF) and shall remain attached thereto.
A new document of Licence will issue to Kenting Aircraft Ltd. regarding the Class 7 Specialty—Aerial Photography and Survey—Aerial Control—commercial air service from a base at Toronto, Ontario, using Groups B, C, D and E aircraft.
These proceedings are in respect of the first two of these orders, the cancellation of the Groups A, F, G and H authorization from both the domestic and international licences.
When the licences were issued in 1956, the material provisions of the Aeronautics Act 7 were:
6. (1) In this Part,
(c) "Board" means the Air Transport Board;
15. (1) Subject to the approval of the Minister, the Board may issue to any person applying therefor a licence to operate a commercial air service.
(3) The Board shall not issue any such licence unless it is satisfied that the proposed commercial air service is and will be required by the present and future public convenience and necessity.
The present authority of the Air Transport Committee of the Canadian Transport Commis sion to issue and cancel such licences is found
R.S.C. 1952, c. 2.
in Part II of the Aeronautics Acts. By its Gener al Order 1967-1, the Commission assigned to the Air Transport Committee all of the Commis sion's functions under the Aeronautics Act. By virtue of section 24 of the National Transporta tion Act 9 and General Order 1967-1, the Air Transport Committee has all the powers and duties of the Commission under the Aeronautics Act and the Committee's orders have the same effect as if made by the Commission.
The pertinent provisions of the Aeronautics Act are:
9. (1) In this Part
"Commission" means the Canadian Transport Commission;
16. (1) The Commission may issue to any person apply ing therefor a licence to operate a commercial air service in the form of licence applied for or in any other form.
(3) The Commission shall not issue any such licence unless it is satisfied that the proposed commercial air ser vice is and will be required by the present and future public convenience and necessity.
(8) The Commission may suspend, cancel or amend any licence or any part thereof where, in the opinion of the Commission, the public convenience and necessity so requires.
(9) Where in the opinion of the Commission, an air carrier has violated any of the conditions attached to his licence the Commission may cancel or suspend the licence.
The Committee did not purport to act under section 16(9); the cancellations were effected under authority of section 16(8).
Order 1974-A-422 recites that the Committee found that "the public convenience and necessi ty requires" the cancellation of the Groups A, F, G and H authority from the domestic licence. Order 1974-A-423 recites a finding to the same effect. Counsel for the Commission acknowl edged that the basis of that finding was that the licensee, Kenting, had not provided service in the suspended groups, had not provided evi-
8 R.S.C. 1970, c. A-3.
9 R.S.C. 1970, c. N-17.
dence that it was ready, willing and able to provide such service and that there had been no complaints by the public concerning the lack of service and, hence, the Committee concluded the groupings were no longer required by the public convenience and necessity and ordered the cancellation. Leaving aside the question of whether the Committee could properly find that there was no evidence that the licensee was ready, willing and able to provide such service, at least in respect of Group G, I am of the opinion that, in law, a finding by the stated process is not in conformity with the express terms of section 16(8).
When the licences were issued in 1956, the licensing authority was obliged to determine affirmatively that the proposed service "is and will be required by the present and future public convenience and necessity". The same obliga tion is imposed on the Air Transport Committee by the present Act. However, the authority to cancel the licences, in whole or part, does not depend upon a simple reversal of that decision, namely a determination that the service licensed and proposed to be cancelled is no longer required by public convenience and necessity. That is what the Committee did decide. Rather, what it must decide and, in this case did not, is, that the cancellation is itself required by public convenience and necessity. The determination required to be made under section 16(8) is not the negative finding that present and future public convenience and necessity no longer require the particular licence to subsist but the positive finding that the public convenience and necessity require the cancellation. 10
10 For example, the licensing authority may have decided, at an earlier date and in the absence of competition, that a proposed commercial air service operating out of a particu lar base is required by the present (at that date) and future public convenience and necessity. Having reached that con clusion, the authority issued a licence permitting the use of a number of groups of aircraft in such service. Later, the licensee either has not provided, or has abandoned provision of, the service with aircraft in one or more of the authorized groups. Another applicant comes forward ready, willing and able to provide the class of service with aircraft of the particular group or groups but only if it can have an effec tive monopoly for such service from such base. In that event, the authority could very well form the affirmative opinion that the cancellation of the original licence as to service with the aircraft the second applicant proposed to
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Counsel for the Commission asserted that the Air Transport Committee had the right to ignore the evidence before it with respect to the Group G service proposed to be provided inasmuch as the demand for such evidence had been directed to Kenting while the evidence had been pro vided by or on behalf of Worldways. The adop tion of such a technical position by the Commit tee in these circumstances cannot be sustained. The evidence was supplied by Mr. Nobbs who, to the Committee's knowledge, was then repre senting both Kenting and Worldways. The Com mittee had under active consideration the application for approval of the transfer of the licensed services from Kenting to Worldways and, in fact, dealt with that application at the same time as it cancelled the licences to provide service with Group G aircraft.
For these reasons, it is my opinion that Orders Nos. 1974-A-422 and 423 are voidable and should be repealed and I would so certify to the Commission pursuant to section 64(5) of the National Transportation Act. If, as and when the Committee again considers the partial can cellation of these licences it will no doubt bear in mind the nature of the finding of public convenience and necessity prerequisite to such cancellation. It will also bear in mind that the licensee is entitled not only to notice of the proposed action but to notice of the perceived facts and other reasons on which the proposed action will be based so that the licensee is put in the position to make out its case, if any, in answer to such facts and reasons.
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use is required by public convenience and necessity.
In the event the licensing authority considers that there may be circumstances where the public convenience and necessi ty require cancellation of a licence, in whole or in part, the authority ought, to comply with the requirements of natural justice, to give the licensee notice of the circumstances as it sees them and of the action it contemplates in consequence thereof and afford the licensee a fair opportunity to con tradict or correct any perceived circumstances detrimental to its position. The principles were fully enunciated by the majority of this Court in In re North Coast Air Services Limited [1972] F.C. 390.
JACKETr C.J.: I concur.
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PRATTE J.: I concur.
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