Date:
20130718
Docket:
T-324-12
Citation:
2013 FC 800
Ottawa, Ontario,
July 18, 2013
PRESENT: The
Honourable Mr. Justice O'Keefe
BETWEEN:
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MARINA DISTRICT DEVELOPMENT
COMPANY D.B.A. BORGATA HOTEL CASINO & SPA
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Applicant
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and
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ATTORNEY GENERAL OF CANADA
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
[1]
This
is a judicial review of a decision by the Appeal Panel of the Transportation
Appeal Tribunal of Canada (the panel) dated January 10, 2012, upholding the
Canadian Transportation Agency’s (the Agency) administrative monetary penalty
against the applicant for contravening subsection 57(a) of the Canada
Transportation Act, SC 1996, c 10 (the Act) by operating an air service
without a license.
[2]
The
applicant seeks an order quashing the order of the Appeal Panel, reinstating
the order of the review member of the Transportation Appeal Tribunal (the
member) and its costs on the application. The respondent also seeks costs.
Background
[3]
The
applicant is a hotel casino and spa located in New Jersey. The parties filed an
agreed statement of facts used in the administrative proceedings leading to
this judicial review.
[4]
Between
July 9, 2008 and March 1, 2009, two aircraft owned and operated by the applicant
made ten flights between Atlantic City, New Jersey and Montreal or Toronto. All of these flights had the purpose of conveying Canadian customers of the
applicant either from or to a Canadian point to or from Atlantic City.
The Notice of Violation
[5]
On
April 15, 2009, the Agency issued a notice of violation to the applicant
finding it in violation of subsection 57(a) of the Act for offering the
services described above without a license. A penalty of $25,000 was issued.
[6]
On
May 22, 2009, the applicant filed a request for a review hearing with the
Transportation Appeal Tribunal of Canada.
The Review Decision
[7]
On
February 8 and 9, 2010, a hearing was held before the member. The member
released his reasons on May 31, 2010, determining that the applicant had not
contravened subsection 57(a).
[8]
The
disputed issue between the parties was whether the flights described above
constituted a “publicly available” service, as the term is used in subsection
55(1) of the Act, which provides the definition for the term “air service” used
in subsection 57(a).
[9]
In
addition to the agreed statement of facts, both parties provided affidavit
evidence.
[10]
The
Agency submitted affidavits of three passengers from the flights, an enforcement
officer from within the Agency, a manager from within the Agency and an expert
witness on the Agency’s jurisdiction. The passengers indicated the applicant
had provided them with complimentary flight services for their trips to the
applicant’s casino. The officer described the investigation in the applicant’s
flights and correspondence with the applicant’s general counsel. The manager
described the lack of statutory definition of the term “publicly available”,
and the Agency’s position that a corporate jet used to transport employees for
a specific business purpose is not publicly available. The expert described her
understanding that an American operator that flies to Canada must comply with the Act.
[11]
The
applicant submitted affidavits from the vice-president of the National Business
Aviation Association (NBAA), the president of the Canadian Business Aviation
Association (CBAA) and an expert witness on the mandate of Transport Canada.
[12]
The
vice-president of the NBAA indicated that under American aviation law, an
operator certificate was not needed for transporting guests of a company on an
airplane. The applicant’s vice-president stated complimentary perks to
high-level customers are a key ingredient of the applicant’s marketing strategy
and that the free flights are at the sole discretion of the applicant with no
entitlement to such service, or requirement due to receiving such service,
based on a certain amount spent at the casino. The president of the CBAA
indicated the CBAA had been delegated the authority to grant operator certificates
from Transport Canada and spoke to the requirements of the Canadian Aviation
Regulations, SOR/06-433, but admitted under cross-examination that the CBAA
had no authority to issue licenses as opposed to operator certificates. The
expert witness gave evidence that private businesses using their own aircraft
to pursue business objectives are not commercial operators and does not
constitute a choice available to an individual in the public domain.
[13]
The
member summarized the arguments of the parties.
[14]
The
Agency argued that the Saskatchewan Court of Appeal previously held that the
fact that passengers must be guests in order to use a flight service does not
mean the service is not publicly available, as the guests are simply a subset
of the public using the service. It is sufficient for a segment of the public
to have access to a service or facility for it to be publicly available. The Agency
distinguished its previous decisions determining that transporting employees or
the owners of aircraft was not a publicly available service.
[15]
The
applicant relied on a legal dictionary’s definition that “available” means open
for all to use and distinguished the case law relied on by the applicant on the
basis that the applicant’s customers had no right to use the service and booking
flights with the applicant was not available to the public.
[16]
Based
upon the language of the Act and the case law, the member determined the
following test to determine whether a service was publicly available:
Any
member of the public who is interested in obtaining the service can, of his own
initiative, contact the service provider to enquire about the availability of
flights and reasonably expect to be able to book a flight. Should the
conditions be to his satisfaction including price and schedule and they meet
certain conditions, if any exist, the service provider is offering an air
service that is publicly available. If any member of the public cannot do so,
the service is not publicly available and section 57 of the CTA [the
Act] does not apply.
[17]
The
member noted the evidence established that the applicant did not publicize or
promote the free flights and that members of the public could not contact the
applicant to enquire about the availability of flights and reasonably expect to
book a flight. He found that the availability of the flight was at the
applicant’s discretion and no member of the public and no customer of the
applicant could have a reasonable expectation to call the applicant and arrange
for a flight. The fact that the applicant’s casino is open to all does not mean
every person who visits the casino has a reasonable expectation of being able
to arrange free flights if that person gambles at a sufficient level.
[18]
The
member found the flights were only open to specific clients at the applicant’s
discretion. There was no evidence the applicant made available to the public or
its customers information regarding the schedule, conditions, pricing or other
details related to the offered flights. In order to contact a service provider
about the availability of the service, one must be aware it exists.
[19]
The
applicant’s customers cannot reasonably expect to book a flight with the
applicant and the fact that the group receiving flights represents one-tenth of
one percent of the applicant’s customers makes it more akin to private than
public.
[20]
Members
of the public or general customers of the applicant, cannot of their own
initiative, contact the applicant and reasonably expect to book a flight. The
member therefore found the applicant was not offering a publicly available air
service and not in contravention of section 57 of the Act.
The Appeal Decision
[21]
The
Agency requested an appeal on June 30, 2010. The panel held a hearing on May
11, 2011 and its reasons for decision are dated January 10, 2012, reversing the
member’s decision.
[22]
After
summarizing the submissions of the parties, the panel first turned to the
standard of review it would apply to the review decision. The panel indicated
it would use a standard of correctness to determine whether the member exceeded
his jurisdiction in creating a legal test for determining whether an air
service is publicly available under the Act, the first ground of appeal. On the
second ground of appeal, whether the member erred in creating a flawed test,
the panel would also apply a correctness standard. On the third ground of
appeal, the member’s application of its test to the facts, the panel determined
a reasonableness standard was appropriate.
[23]
On
the first ground of appeal, the panel found that the member had jurisdiction to
determine the legal test, relying on case law interpreting the Aeronautics
Act, RSC 1985, c A-2. The Agency was not acting in a quasi-judicial
capacity in this case, but rather in an enforcement capacity.
[24]
On
the second ground of appeal, the panel disagreed with the member’s
interpretation of subsection 57(a) of the Act. While the member focused on the
Agency’s role in economic regulation as set out in subsections 5(a), (b) and
(c) of the Act, the panel interpreted the term “publicly available” in the
context of its ordinary meaning. Parliament chose to use an economically
neutral term that was not concerned with payment, unlike the Aeronautics Act’s
distinction between services provided for hire and those not. While an operator
must meet economic requirements in order to get a license from the Agency, the
obligation to do so rests on whether the service is publicly available.
[25]
The
panel determined that it is the nature of the service provided that determines
whether it is publicly available: “How it is made known to the affected public
and whether the initial contact is made by a member of that public is
irrelevant. If the flight is made available to a segment of the public, even at
the initiative of the operator, then it is ‘publicly available’.”
[26]
On
the third ground of appeal, the panel found the member erred on his application
of his test. The panel pointed to the applicant’s vice-president’s testimony
that a customer who received the free flight and continued to spend at his
current level would likely continue to receive that complimentary service and
one of the customer’s evidence was that he is regularly offered free flights
whether he initiates contact with the applicant or vice versa. The member’s
finding that the premium clients would not have a reasonable expectation of
booking a complimentary flight was therefore in error. Consequently, the panel
found that the applicant was operating a publicly available service.
[27]
The
panel reduced the penalty to $12,500 given that it was a first offence.
Issues
[28]
The
applicant’s memorandum raises the following issues:
1. What is the
applicable standard of review to apply to:
(i) the
panel’s interpretation of “publicly available” air service under subsection
55(1) of the Act and
(ii) the
application of that interpretation to the facts?
2. Did the panel
adopt an unreasonable interpretation of the meaning “publicly available” air
service under subsection 55(1) of the Act?
3. Did the panel
unreasonably find that the applicant operated a “publicly available” air
service under subsection 55(1) of the Act with respect to the flights at issue
in the notice?
[29]
I
would rephrase the issues as follows:
1. What is the
appropriate standard of review?
2. Did the panel err
in its decision?
Applicant’s Written Submissions
[30]
The
applicant argues the applicable standard of review is reasonableness and that
the panel’s interpretation of subsection 55(1) is unreasonable.
[31]
The
panel articulated no intelligible standard by which flight operators can
determine whether they are providing a publicly available service within the
meaning of the Act. The panel’s interpretation (quoted above) is tautological,
as its definition of publicly available flights are those available to a
segment of the public. How a service is made known and whether the operator
initiates contact, are relevant factors in determining whether the service is
publicly available and it was unreasonable for the panel to exclude these
considerations.
[32]
In
their ordinary sense, the words “publicly available” mean capable of being
used, accessed or obtained by people generally. The panel gave no reason for
preferring one dictionary definition over another or preferring a dictionary
definition over that of the member.
[33]
The
panel’s interpretation does not fall within the range of acceptable outcomes
because it is contrary to the scheme and purpose of the Act. The Agency’s
mandate under Part II of the Act is limited to economic responsibility, while
technical responsibility is allocated to Transport Canada. The member properly
made this distinction.
[34]
The
National Transportation Policy, issued under section 5 of the Act, makes clear
that the Agency’s responsibility for licensing and regulation making is
primarily economic and financial in nature. This is confirmed by the Agency’s
own statement of its mandate, while Transport Canada is the designated
authority responsible for aviation security. Air safety is administered by the
Minister of Transport and the Minister’s department under the Aeronautics
Act.
[35]
The
Agency’s duties include ensuring publicly available air services have
appropriate liability insurance and are financially fit when they start
operations, have a reasonable chance of success and minimizing disruptions in
service. The applicant argues that when an air service is not publicly
available, there is no public policy reason to enforce these requirements.
There are no consumers to protect. This statutory context was elaborated by the
applicant’s expert witness before the member. Expert evidence is properly
admissible to assist a court in understanding statutory language in the context
of a regulated sector.
[36]
The
panel provided no consideration of how its interpretation advances Parliament’s
goal of ensuring that air service meets the criteria described above. This
failure renders its interpretation unreasonable.
[37]
Neither
R v Biller, [1990] FCJ No 1104 (CA), nor Canada (Attorney
General) v Rosin, [1999] SJ No 202 (CA), consider whether an air service is
publicly available under subsection 55(1) and the panel’s reliance on them is
unreasonable. Biller above, is concerned with a statutory definition of
“commercial air service”, which means any use of an aircraft for hire or
reward. This has no application to the Act.
[38]
Rosin above, is
concerned with whether a service is available to the public in a human rights
context. In that context, the definition of services available to the public is
interpreted widely in order to ensure that they are scrutinized for human
rights violations. It was unreasonable for the panel to import this reading
into the Act, which has the purpose of financial and economic regulation of
civil aviation.
[39]
The
panel’s decision is a fundamental shift in what the private business aviation
sector understood as the settled meaning of a publicly available air service.
[40]
The
member formulated a reasonable test, an objective reasonable expectations
standard. As the operator exercises an absolute discretion, the public cannot
reasonably expect to access or avail themselves of the flight.
[41]
On
the factual findings, the panel unreasonably interfered with the member’s
factual findings. It showed no deference, as it relied on a single statement
from the applicant’s vice-president’s affidavit, taken out of context and a
gloss on the affidavit of the customer. This selective reading of the evidence
was unreasonable.
Respondent’s Written Submissions
[42]
The
respondent agrees that reasonableness is the standard of review for the panel’s
decision, although it argues that correctness is the standard of review for
questions of law.
[43]
On
the standard of review the panel applied to the member’s decision, there is no
statutory limitation on the panel’s ability to review the findings and it may
substitute its decision for the decision appealed against. The panel properly
determined that the findings of fact made by the member are entitled to
deference, but that questions of law were to be reviewed on a correctness
standard.
[44]
The
respondent argues the panel correctly rejected the member’s test for “publicly
available” as losing sight of the ordinary meaning of the words and placing too
great an emphasis on the Agency’s regulatory function in economic matters. The
panel noted there is jurisprudence formulating a definition of “publicly
available” and that the member had no basis for elaborating on that test. The
segment of the public that the air service was available to was a small
restrictive group, but that does not mean that the air service ceased to be
offered to the public.
[45]
The
panel properly relied on the precedents of Biller above and Rosin above.
The panel’s adoption of the common law test is not inconsistent with the Agency’s
past rulings interpreting the meaning of the phrase “publicly available”.
[46]
The
broad definition of “publicly available” ensures that the enumerated exemptions
for particular air services in section 56 of the Act and section 3 of the Air
Transportation Regulations, are not deprived of meaning. Even a small
segment of the public are entitled to the protections of Part II of the Act. The
public remains the public, no matter how small the segment of the public may be
that participates in the offered air service.
[47]
The
Appeal Panel was correct to disregard the applicant’s expert witness. Experts
must not be permitted to usurp the function of the trier of fact. This witness’
evidence was on the ultimate issue of this judicial review, the question of
statutory interpretation. Legislative intent cannot be discerned after the fact
by a current or past bureaucrat. This evidence should be given no weight.
[48]
The
Agency has a practice of issuing advance rulings on matters, including whether
a licence is required for a given service. The applicant did not avail itself
of this service and therefore the applicant’s expectations regarding the law on
this point were unreasonable.
Analysis and Decision
[49]
Issue
1
What is
the appropriate standard of review?
Where previous
jurisprudence has determined the standard of review applicable to a particular
issue before the court, the reviewing court may adopt that standard (see Dunsmuir
v New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 at paragraph 57).
[50]
In
defining “publicly available”, the panel was interpreting the Act, its home
statute. Such interpretations are subject to deference from reviewing courts
and should be reviewed on a reasonableness standard (see Alberta
(Information and Privacy Commissioner) v Alberta Teachers' Association,
2011 SCC 61, [2011] 3 S.C.R. 654 at paragraph 39). Given the Supreme Court’s
comments in that decision at paragraph 39 regarding the rarity of questions of
true jurisdiction, I do not consider the statutory interpretation question at
issue to be in that category. Factual findings other than the issue of
statutory interpretation are, of course, also subject to a reasonableness
standard.
[51]
In
reviewing the panel’s decision on the standard of reasonableness, the Court
should not intervene unless the panel came to a conclusion that is not
transparent, justifiable and intelligible and within the range of acceptable
outcomes based on the evidence before it (see Dunsmuir above, at
paragraph 4). As the Supreme Court held in Canada (Citizenship and
Immigration) v Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, it is not up to
a reviewing court to substitute its own view of a preferable outcome, nor is it
the function of the reviewing court to reweigh the evidence (at paragraph 59).
[52]
Issue
2
Did the panel
err in its decision?
The parties
appear to be in agreement that the central issue in this judicial review is the
interpretation of subsection 57(a) of the Act. The panel’s reasons on this
point are contained in ten paragraphs of its decision (at paragraphs 54 to 63).
[53]
The
panel interpreted the decisions in Biller and Rosin above, to mean that
“a service available only to a segment of the public is ‘publicly available’”
(at paragraph 59) and found that the member had no basis for elaborating on
that formulation. With respect, it was clear why the member needed to elaborate
a more fine-grained definition: he needed a standard by which he could evaluate
whether the applicant’s customers did indeed constitute a “segment of the
public”.
[54]
I
agree with the applicant that this test, also articulated by the panel in
paragraph 62, borders on tautological: it provides no insight into what a
“segment of the public” is. It merely establishes that a service need not be
available to the universal public. The member’s test provided a helpful tool
for analyzing whether a given group of air service users are indeed a segment
of the public.
[55]
While
the panel may have been able to review the member’s decision on a correctness
standard (although I will not rule on that standard of review issue as it was
not argued by the applicant), its review is still required to meet the
requirements from Dunsmuir above, of intelligibility, justification and
transparency and being within the range of acceptable outcomes.
[56]
Although
the panel provided cogent reasons for the negative element of its decision,
rejecting the member’s test (at paragraphs 56 to 58), the same cannot be said
for the positive element, the legal test the panel substituted in the place of
the member’s. The test is unintelligible, as it is a near-tautology. The
panel’s decision to use this vague test is also not properly justified, as
there is no explanation of why a less clearly defined test is preferable to a
more clearly defined test such as that provided by the member, or an analysis
of why such ambiguity is preferable or required by the statute. The panel
simply repeated the holding from case law interpreting different statutes without
any further insight.
[57]
The
panel was confronted with a need to resolve a question of law relating to its
home statute and in response offered little. The panel’s decision is
unreasonable and should be set aside. Given my decision on that issue, I need
not address the factual findings as the panel must apply its redetermined test
to the facts anew regardless.
[58]
The
applicant urges me to restore the member’s decision, presumably giving the
member’s statutory interpretation the approval of this Court. Given the Supreme
Court’s comments in Alberta Teachers’ above, regarding the
expertise of tribunals in interpreting their home statutes, I do not believe it
would be appropriate at this stage for this Court to articulate a test on the
application of subsection 57(a) on this judicial review.
[59]
It
is important for a reviewing court to have the benefit of the tribunal’s views
on interpreting its home statute (see Alberta Teachers’ above, at
paragraph 25). In this case, the panel’s interpretation was sufficiently
unintelligible that this Court has been denied the opportunity to consider such
views. I appreciate that this is the third round of litigation between the
parties and redetermination followed by a potential subsequent judicial review
may entail a fourth and fifth round with all the associated costs. Yet I cannot
let this concern trump the proper relationship between courts and specialized
tribunals.
[60]
The
judicial review is therefore granted, the appeal is quashed and the matter is
returned to the Transportation Appeal Tribunal of Canada for redetermination.
[61]
The
applicant shall have its costs of the application.
JUDGMENT
THIS
COURT’S JUDGMENT is that the application for judicial review is
allowed and the matter is referred back to the Transportation Appeal Tribunal
of Canada for redetermination and the applicant shall have its costs of the
application.
“John A. O’Keefe”
ANNEX
Relevant
Statutory Provisions
Canada Transportation Act, SC 1996, c 10
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55.
(1) In this Part,
…
“air
service” means a service, provided by means of an aircraft, that is publicly
available for the transportation of passengers or goods, or both;
57. No
person shall operate an air service unless, in respect of that service, the
person
(a)
holds a licence issued under this Part;
(b)
holds a Canadian aviation document; and
(c)
has the prescribed liability insurance coverage.
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55.
(1) Les définitions qui suivent s’appliquent à la présente partie.
…
«
service aérien » Service offert, par aéronef, au public pour le transport des
passagers, des marchandises, ou des deux.
57.
L’exploitation d’un service aérien est subordonnée à la détention, pour
celui-ci, de la licence prévue par la présente partie, d’un document
d’aviation canadien et de la police d’assurance responsabilité réglementaire.
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