Supreme Court of Canada
Canadian Transport Commission v. Worldways Airlines Ltd., [1976] 1 S.C.R. 751
Date: 1975-04-22
The Canadian Transport Commission Appellant;
and
Worldways Airlines Ltd. Respondent.
1975: March 24; 1975: April 22.
Present: Laskin C.J. and Martland, Judson, Pigeon, Dickson, Beetz and de Grandpré JJ.
ON APPEAL FROM THE FEDERAL COURT OF APPEAL
Administrative law—Appeals—Judicial review—Aeronautics—Natural justice—Amendment of licences—“Public convenience and necessity”—Aeronautics Act, R.S.C. 1970, c. AS, s. 16 para. (8)—Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28—National Transportation Act, R.S.C. 1970, c. N-17.
Respondent was transferee of two licences authorizing the operation of two commercial air services, domestic charter and international charter. On May 5, 1972, new regulations established new groups for aircraft based on their maximum take-off weight on wheels and the Commission advised Renting, then holder of the two licences, that it was proposed to amend the licences to reflect the new groupings and that the new groupings were intended to cover all the aircraft then operated based on the current charter tariff on file with the Commission. At that time the Kenting aircraft were all within B, C, D and E groupings, however Kenting’s solicitor sought the additional allocation of groups A, F, G and H on the basis that the company intended to use aircraft of that type within the reasonably foreseeable future. The Commission through its Air Transport Committee on April 30, 1973, amended the domestic licence substituting the new groupings (Groups A, B, C, D, E, F, G and H) but providing that Groups A, F, G and H were suspended for a period of one year or until such lesser time as the Licensee provided evidence that it was in a position to provide service in these groups and that failure to provide such evidence within one year would result in the cancellation of the authority. The Air Transport Committee thereafter on November 30, 1973, wrote Kenting re the international licence, proposing to amend it on a like basis but inviting comments from Kenting before so doing. Kenting did not reply to that letter but on December 4, 1973, gave notice to the Air Transport Committee of a proposed transaction between Kenting and a company to be formed (the present respondent), undertaking to advise the Committee of the name of the new company within ten days. On April 18, 1974, Kenting applied for an extension of the one year period of
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suspension and requested a decision on the matter of the transfer and on April 30, 1974, indicated that it was “ready, willing and able” to provide charter commercial air service utilizing group G type aircraft. After further correspondence, on May 30, 1974, the licences held by Kenting were amended cancelling the authority to operate aircraft in Groups A, F, G and H and limiting the licences to Groups B, C, D and E aircraft on the basis of “public convenience and necessity”. On application to review under s. 28 of the Federal Court Act, and on appeal under s. 64(2) of the National Transportation Act, R.S.C. 1970, c. N-17, the Federal Court of Appeal were of the opinion that the 1974 Orders of the Commission limiting the licences should be repealed, basing its judgment on three grounds, first, that the Air Transport Committee erred in not determining that the cancellation was itself required by public convenience and necessity, second, that the Committee erred in not looking at the entire evidence, and third, that the Committee violated a basic principle of natural justice in failing to give notice of the perceived facts and other reasons on which its proposed action would be based.
Held: The appeal should be allowed.
The Court of Appeal did not have the power to substitute its opinion for that of the Committee. The question whether public convenience and necessity requires a certain action is not one of fact. It is the formulation of an opinion. The words of the Orders were those of the statute itself and there was no justification for the suggestion that the Orders were based on other than positive findings.
That there was evidence to support the position of the Commission was apparent from the orders as well as from other circumstances. To reach a different opinion the Federal Court of Appeal apparently relied on statements made before it by counsel for the Commission which statements should not have been given the effect of modifying the Orders under consideration by the Court.
There was no basis for finding lack of proper notice. Kenting had notice not only of the proposed action but of the facts and other reasons forming the basis thereof and failed to provide the necessary evidence that it was in a position to supply its services in all groupings.
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Union Gas Co. of Canada Ltd. v. Sydenham Gas & Petroleum Co. Ltd., [1957] S.C.R. 185; Memorial Gardens Association (Canada) Limited v. Colwood Cemetery Company et al., [1958] S.C.R. 353 referred to.
APPEAL from a judgment of the Federal Court of Appeal setting aside orders of the Air Transport Committee. Appeal allowed.
S. Froomkin, for the appellant.
B.A. Crane, for the respondent.
The judgment of the Court was delivered by
DE GRANDPRÉ J.—The appeal, authorized by special leave, raises various questions around the “public convenience and necessity” test prescribed by s. 16, para. 8 of the Aeronautics Act, R.S.C. 1970, c. A-3, whereby the following power is given to the Canadian Transport Commission:
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.
The respondent is the transferee of two licences previously held by Kenting Aircraft Limited authorizing the operation of two commercial air services on a charter basis for domestic and international uses. The Air Carrier Regulations prior to the dates relevant to the present appeal did not restrict the licensee to any special type of aircraft. However, on May 5, 1972, new regulations established new groups for aircraft based on their maximum authorized take‑off weight on wheels and on September 8, 1972, a letter was addressed by the Commission to Kenting, the second paragraph of which read:
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
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your charter tariff and the new groups to which they belong.
The table mentioned in this quotation was duly completed and executed by the company. As it indicated that at the time Kenting owned only five types of aircraft belonging to the new groupings known as B, C, D and E, Kenting’s solicitor, on October 6, 1972, made representations in a lengthy letter to the effect that Kenting should nevertheless receive “the additional allocation of groups A, F, G and H” because, although Kenting did not at the time own aircraft belonging to these groups, it intended to use aircraft of that type “within the reasonable foreseeable future”. No further representations were made before the Commission which, through its Air Transport Committee, issued, on Apil 30, 1973, its order A‑371 dealing with the domestic licence:
IN THE MATTER OF the operations of a commercial air service by Kenting Aircraft Limited and of the provisions of Section 4 of the Air Carrier Regulations, as amended—Licence No. A.T.B. 793/56(C)
File No. 2-K31-8A
WHEREAS by Licence No. A.T.B. 793/56(C) Kenting Aircraft Limited is authorized to operate the commercial air services set out therein using Groups A and B aircraft (old grouping), from a base at Toronto, Ontario.
WHEREAS by registered letter dated September 8th, 1972, the Licensee was advised that the Air Transport Committee proposed to amend the said Licence pursuant to the provisions of Section 4 of the Air Carrier Regulations, as amended, regarding the new grouping of aircraft based on the aircraft’s maximum authorized take-off weight on wheels;
WHEREAS by the said letter the Licensee was also requested to provide certain particulars regarding the type of aircraft in use and either owned or leased by the Licensee and was invited to make representations with respect to the proposed amendment to the said Licence; and
WHEREAS the Committee, having noted that the Licensee filed representations by letter dated October 6, 1972 in this respect and having considered the representations and all matters relevant to the proposed amendment, finds that the public convenience and necessity
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requires the changing of the grouping of aircraft as described in the said Licence to Groups A, B, C, D, E, F, G, and H (new grouping) in pursuance of the provisions of Section 4 of the Air Carrier Regulations, as amended; the Groups A, F, G and H authority to be concurrently suspended for a period of one year or until such time as the Licensee provides evidence that it is ready, willing and able to provide service in these suspended groups, whichever is the lesser. If the Licensee fails to provide the above evidence within the period of one year from the date of this Order, the authority with respect to the suspended groups will be deleted from the Licence without further reference to the Licensee.
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 aircraft (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 provide 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.
It should be noted that at that time Kenting still did not own nor lease any aircraft belonging to the new groupings A, F, G and H.
The domestic licence having thus been amended, the Air Transport Committee of the appellant Commission turned its attention to the international services of Kenting and on November 30, 1973, wrote that company as follows:
As you are aware, Section 4 of the Air Carrier Regulations, 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.
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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.
It should be noted that the domestic and international operations were under the same roof and carried out with the same aircraft. No reply was ever made as such to that letter of November 30, 1973.
However, on December 4, 1973, notice was given by Kenting’s solicitor to the Air Transport Committee of a proposed transaction between Renting and a company to be formed (which eventually became the present respondent). The last paragraph of that letter of December 4 reads:
The purchasing company is now in the process of being incorporated and we will advise 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.
By a telex dated April 18, 1974, Kenting’s solicitor applied for an extension of the period of suspension mentioned in the Order of April 30, 1973, and requested a decision in regard to the transfer mentioned in the letter of December 4, 1973.
The application for an extension was turned down and Kenting’s solicitor was so advised by a telex dated April 24, 1974. The following day, Kenting, through its solicitor, requested advice as to the current status of its application relative to the transfer and followed this with a long telex dated April 30, 1974, underlining in particular the fact that Kenting and the company “are ready, willing and able, as of today, to provide charter commercial air services utilizing group G type aircraft”.
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In May 1974, the Air Transport Committee wrote two letters to Kenting’s solicitor. The first one dated May 2nd reads:
I am instructed to advise you that your telex of April 30, 1974, is under consideration by the Committee
It has been noted, however, that in your letter of December 4, 1973 you undertook to advise the Committee ‘within the next 10 days’ as to the name of the purchasing company. As we do not appear to have received this information, you are requested to provide evidence that such a company is in existence, its name and the date of its incorporation.
and the second one, May 16, is in the following terms:
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.
It is only on May 23 that the requested information was supplied by Kenting through its solicitor.
On May 31, 1974, the licences held by Kenting were amended. Order A-422 dealing with the domestic licence reads:
IN THE MATTER of the operation of a commercial air service by Kenting Aircraft Ltd. and of the provisions of Section 4 of the Air Carrier Regulations, as amended—Licence No. A.T.B. 793/56(C).
File No. 2-K136-1A.
WHEREAS by Order No. 1973-A-371 dated April 30, 1973:
‘(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 aircraft (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 provide service in these suspended groups, whichever is the lesser;
(c) Failure by the Licensee to comply with (b) above within one year of the date of this Order will result in the immediate cancellation of the authority without further notice.’
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WHEREAS by telex dated April 18th, 1974 the Licensee applied for an amendment of Order No. 1973-A-371, extending the period of suspension of Groups A, F, G and H of the said Licence until September 30th, 1974, which application was denied;
WHEREAS by telex dated April 30th, 1974, the Licensee made further representations to the Committee;
WHEREAS the Committee has considered the representations 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.
Order A-423 dealing with the international services is in the following terms:
IN THE MATTER OF the operation of a commercial air service by Renting Aircraft Ltd. and of the provisions of Section 4 of the Air Carrier Regulations, as amended—Licence No. A.T.B. 233/56(CF).
File No. 2-K-136-2A
WHEREAS by Licence No. A.T.B. 233/56(CF) Renting Aircraft Ltd. is authorized to operate the commercial air service set out therein at a base at Toronto, Ontario.
WHEREAS by registered letter dated November 30, 1973 the Licensee was advised that the Air Transport Committee proposed to amend the said Licence pursuant to the provisions of Section 4 of the Air Carrier Regulations, as amended, to correspond to the new groups authorized by the Licensee’s Class 4 Charter licence from the same base;
WHEREAS by the said letter, the Licensee was invited to make representations with respect to the proposed amendment to the said Licence;
WHEREAS the Licensee did not file any representations in response to the said letter;
WHEREAS by Licence No. A.T.B. 793/56(C), the Class 4 and Class 7 Licence of Renting Aircraft Ltd. at Toronto, Ontario, as amended by Order No. 1974-A-422, the Licensee is authorized to operate Groups B, C, D and E aircraft;
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WHEREAS the Committee has considered all matters relevant 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.
On the same date, namely May 31, 1974, by Order A-424, the transfer from Kenting to the respondent was approved (in the words of the Order ‘not disallowed’).
Worldways appealed Orders 422 and 423 to the Federal Court of Appeal submitting that under s. 28 of the Federal Court Act, as well as under s. 64(2) of the National Transportation Act, R.S.C 1970, c. N-17, these two Orders should be reviewed and set aside. Of course, this result could only be achieved if the Commission, through its Air Transport Committee, had committed an error of law, had exceeded its jurisdiction, had made a finding of fact in a perverse or capricious manner or had failed to observe a principle of natural justice. The Federal Court of Appeal agreed with the submissions of Worldways and came to the conclusion that the Orders were voidable and should be repealed.
This conclusion, if I read correctly the reasons for judgment delivered by Mahoney J., speaking for the Court, is based on three grounds:
(1) in law, the Air Transport Committee erred in not determining that the cancellation was “itself required by public convenience and necessity”;
(2) the Committee erred in not looking at the entire evidence;
(3) the Committee violated a basic principle of natural justice in giving to Kenting a simple
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notice of its proposed action but no notice of the “perceived facts and other reasons on which the proposed action will be based”.
With respect, I cannot share the view of the Federal Court of Appeal and I would set aside its conclusion.
This Court has had occasion to determine in many cases the principles to be applied in a matter of this type. It will be sufficient here to refer to Union Gas Co. of Canada Ltd. v. Sydenham Gas & Petroleum Co. Ltd. where we find, in the reasons of Kerwin C.J., at p. 188:
The Court of Appeal apparently considered that it had power to substitute its opinion for that of the Board, treating the question of public convenience and necessity as a question of fact. I am unable to agree with that view.
The same thought was expressed by Rand J. (p. 190):
What the Court did was to exercise an administrative jurisdiction and to substitute its judgment on the application for that of the Board. In this I think it exceeded its powers. We were referred to no precise or material issue in the appeal on any question of fact or law on which the Court was asked to or did make a finding or a ruling. It was argued, and it seems to have been the view of the Court, that the determination of public convenience and necessity was itself a question of fact, but with that I am unable to agree: it is not an objective existence to be ascertained; the determination is the formulation of an opinion, in this case, the opinion of the Board and of the Board only. In the notice of appeal references to certain findings were made, but what the present respondent sought and obtained was a judgment on the entire controversy. That remedy was, in my opinion, misconceived and the judgment likewise.
In Memorial Gardens Association (Canada) Limited v. Colwood Cemetery Company et al. Abbott J., speaking for the majority of the Court, had this to say at p. 357:
As this Court held in the Union Gas case (supra), the question whether public convenience and necessity requires a certain action is not one of fact. It is predominantly the formulation of an opinion. Facts must, of
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course, be established to justify a decision by the Commission but that decision is one which cannot be made without a substantial exercise of administrative discretion. In delegating this administrative discretion to the Commission the Legislature has delegated to that body the responsibility of deciding, in the public interest, the need and desirability of additional cemetery facilities, and in reaching that decision the degree of need and of desirability is left to the discretion of the Commission.
In the case at bar, the words of the Orders are those of the statute itself and I cannot find any justification for the suggestion that the Orders are based on negative findings and not on positive ones.
That there was evidence to support the opinion of the Commission is apparent from the Orders themselves, as well as from the circumstances summarized above. To reach a different opinion, the Federal Court of Appeal relied in particular on a number of assertions that were apparently made before it by counsel for the Commission. In my view, statements by counsel in their arguments before a Court, even when they act on behalf of an administrative tribunal, cannot be given the effect of modifying the Orders under consideration by the Court.
As to the third ground, namely the lack of proper notice, I fail to appreciate its basis. The documents exchanged between the parties make it clear that under its new regulations prescribing new groupings, the Commission would look at the situation then prevailing to determine what type of operations would be authorized. Following this study, the licensee had more than a year to present the facts that would permit the Commission to reassess the situation and it failed to do so within the prescribed period. In my view, Kenting had complete notice not only of the proposed action but of the facts and other reasons forming the basis thereof and it failed to provide the Commission with the necessary evidence that it was ready, able and willing to supply its services in all groupings.
For these reasons, I cannot find that the Orders of the appellant Commission should be set aside. The appeal should be allowed with costs through-
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out; these costs should not include disbursements nor fees in connection with the appeal case which was not prepared in accordance with the rules of this Court.
Appeal allowed with costs.
Solicitor for the appellant: Deputy Attorney General of Canada, Ottawa.
Solicitors for the respondent: Gowling & Henderson, Ottawa.
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