Judgments

[1995] 1 F.C. 603

A-184-92

Her Majesty the Queen in Right of the Province of Manitoba (Applicant)

v.

The National Transportation Agency of Canada (Respondent)

Indexed as: Manitoba v. Canada (National Transportation Agency) (C.A.)

Court of Appeal, Isaac C.J., Stone and Desjardins JJ.A.—Winnipeg, November 14; Ottawa, November 22, 1994.

Transportation — Appeal from cease and desist order against operation of unlicensed publicly available air ambulance service — Appellant not receiving formal notice prior to order, but aware of investigation — Although general right to procedural fairness, statutory framework examined to see if right modified — National Transportation Act, s. 35(4) authorizing Agency to make cease and desist order without first affording opportunity to be heard — Contrasted to preceding subsections requiring some sort of hearing — Abrogating need for hearing by necessary implication — Appropriate for court to note statutory provision for review, appeal if power improperly exercised where statute ruling out procedural fairness in certain circumstances.

Air law — Province of Manitoba operating public air ambulance service without licence in violation of National Transportation Act — Licensed air ambulance service caused economic hardship — Cease and desist order made by National Transportation Agency — Act, s. 35(4) authorizing Agency to make order without affording opportunity to be heard.

This was an appeal from a cease and desist order issued by the National Transportation Agency against the operation of a publicly available air ambulance service operated by the Health Services Commission of the Province of Manitoba for which it was not licensed. National Transportation Act, 1987 subsections 35(1), (2) and (3) permit the Agency to ”inquire into, hear and determine" complaints, matters concerning licences or permits, and safety. Under subsection 35(4) it may require a person to do or refrain from doing anything that the person is required to do or prohibited from doing under any Act administered by the Agency. Section 71 prohibits the operation of an unlicensed domestic service, which is defined as an air service that is publicly available for the transportation of passengers or goods. An investigation was commenced as a result of an inquiry by a private air ambulance operator as to whether the appellant’s air ambulance service was licensed by the Agency. Although the Agency did not give the appellant formal notice that it was about to make the cease and desist order, during the course of the investigation the RCMP spoke with representatives of the air ambulance service and the Manitoba Attorney General’s office. The ensuing Executive Report concluded that the carrier was operating an unlicensed publicly available carrier in violation of the Act, and a cease and desist order issued.

The appellant submitted that it was entitled to be heard before the Agency made the cease and desist order. The issue was whether the Agency owed the appellant a duty of procedural fairness in the process which led to the making of the cease and desist order and if so, whether that duty was complied with.

Held, the appeal should be dismissed.

Although there is a general right to procedural fairness, the statutory framework must be examined to see if it modifies this right. Unlike the three previous subsections, requiring some sort of hearing prior to the making of an order, there is no provision in subsection 35(4) for any person affected by an order to be heard. Although it does not expressly abrogate the need for a hearing, it does so by necessary implication. Subsection 35(4) authorized the Agency to make the order without first affording an opportunity to be heard.

The fact was that the appellant had an opportunity to be heard before the order was made when the appellant was made aware that the investigation was underway. Nothing suggests that the appellant was not able to communicate with the Agency about that investigation or that it could not make representations with respect thereto if it cared to do so. Where a statute can rule out procedural fairness in specific circumstances, it is appropriate for a court to note that the same statute provides the possibility of an ex parte order being revisited by the Agency (section 41), revised or rescinded by the Governor in Council (section 64) or appealed to this Court (section 65), if the power to make it was exercised carelessly or oppressively.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

National Transportation Act, 1987, R.S.C., 1985 (3rd Supp.), c. 28, ss. 32, 35(1),(2),(3),(4), 41, 64, 65(1),(3), 67(1) “domestic service”, 71, 72(1),(2), 103(1)(a).

National Transportation Agency General Rules, SOR/88-23, s. 2 “application” (as am. by SOR/91-547, s. 1).

CASES JUDICIALLY CONSIDERED

APPLIED:

Knight v. Indian Head School Division No. 19, [1990] 1 S.C.R. 653; (1990), 69 D.L.R. (4th) 489; [1990] 3 W.W.R. 289; 83 Sask. R. 81; 43 Admin. L.R. 157; 30 C.C.E.L. 237; 90 CLLC 14,010; 106 N.R. 17.

APPEAL from a cease and desist order issued by the National Transportation Agency against the operation of an unlicensed publicly available air ambulance service operated by the Health Services Commission of the Province of Manitoba. Appeal dismissed.

COUNSEL:

W. Glenn McFetridge and Marjorie A. Webb for applicant.

Richard Makuch for respondent.

SOLICITORS:

Deputy Attorney General for the Province of Manitoba, Winnipeg, for applicant.

National Transportation Agency Legal Services Directorate, Hull, Québec for respondent.

The following are the reasons for judgment rendered in English by

Stone J.A.: By its order No. 1991-A-562 of December 6, 1991, the respondent (the Agency) required the appellant[1] “to immediately cease and desist operating a publicly available air ambulance service for which it is not licensed.”[2] That service was operated under the name of “Lifeflight” from a base in Winnipeg.

The only issue is whether the Agency owed the appellant a duty of procedural fairness in the process which led to the making of the cease and desist order and, if so, whether that duty was complied with.

This issue must be decided against both the factual background and the statutory framework under which the order was made. In October 1991, Mr. Dave Sawatsky contacted the Agency to inquire whether the appellant’s air ambulance service had been licensed by the Agency. The Agency decided to investigate the matter on its own motion.[3] That investigation ended with the submission to the Chairman and members of an executive report of November 25, 1991. This report and entries recorded in notes kept by the Agency’s Field Investigations Directorate indicated that the investigation was directed both to Mr. Sawatsky’s inquiry and to the possible laying of charges against the appellant for violation of the National Transportation Act, 1987, R.S.C., 1985 (3rd Supp.), c. 28 (the Act).

By December 5, 1991 the Executive Report had reached the hands of the Agency’s members. At the outset, the report indicates its legislative reference as “subsections 35(4), 71(1) and 71(2)” of the Act. It also indicates that as a result of the investigation it “has ascertained that the carrier has been and continues to operate in violation of the National Transportation Act, 1987.” The following additional statements in this report are germane to the present proceeding:

The Agency has previously determined that “Air Ambulance Services” are “publicly available” and as such require a license under subsections 72(1) for operations in Southern Canada and under 72(2) of the NTA, 1987, for operations within, to or from the designated area.

The Province of Manitoba, Health Services Commission, has for the past several years operated an air ambulance service throughout the Province of Manitoba including within the designated area. This service is known as Lifeflight. It utilizes a Group C aircraft from a base at Winnipeg, Manitoba. The service is for the transfer of patients requiring ambulance services because of illness, injury or incapacity. This service is not licensed under the National Transportation Act (1987), nor has any application for a license been received.

An investigation, into Lifeflight, was instigated by the Field Investigations Directorate of the National Transportation Agency as a result of a complaint received from Mr. David Sawatsky, of Thompson, Manitoba, who is the owner/operator of Northern Air Rescue Inc., a licensed carrier. At the time of his original complaint, Mr. Sawatsky was quite upset, since he had just received a Cease and Desist Order from the Manitoba Government in regards to his licensed air ambulance service. As a result of this Order, Health and Welfare Canada was refusing to use Northern Air Rescue’s services and Mr. Sawatsky was facing the prospect of losing his business.

The investigation revealed that Lifeflight does indeed operate a publicly available air ambulance service within the Province of Manitoba for which it is not licensed, and that … one of its principal clients is the Federal Department of National Health and Welfare, which is being charged $3.60 per mile, for the carriage of Federal hospital patients.

As a result of this investigation, the matter was referred to the RCMP for prosecution. The case is currently with the Department of Justice, and charges are expected to be laid shortly. In the course of the investigation, it is understood the R.C.M.P. spoke with representatives of Lifeflight and the Manitoba Attorney General’s office to establish their point of view. The R.C.M.P. was not dissuaded from laying charges as a result of these conversations.

Lifeflight is continuing to operate as an unlicensed, publicly-available carrier. This is creating economic hardship for the only licensed air ambulance service in the area viz., Northern Air Rescue. It is considered that this situation could be corrected by the issuance of a Cease and Desist Order by the Agency.

This report left three options with the Agency. The first was that the Agency “determine that the service being offered by Lifeflight is a `publicly available’ service requiring a licence and issue a Cease and Desist Order;” the second was to require the appellant to “show cause why a cease and desist Order should not issue,” action which the report went on to describe as “more cautious and would be the preferred approach if staff had not already undertaken an investigation;” the third was to determine that no license was required. The Agency’s staff recommended the first option. That option was adopted on December 5, 1991.[4]

The formal order here under review was issued December 6, 1991. Among its recitals are the following:

AND WHEREAS the National Transportation Agency (hereinafter the Agency) has determined that air ambulance services which are publicly available require a licence under subsection 72(1) of the National Transportation Act, 1987, R.S.C., 1985, c. 28 (3rd Supp.), for operations in Southern Canada and under subsection 72(2) of the National Transportation Act, 1987, for operations within, to or from the designated area;

AND WHEREAS the Agency was advised that Lifeflight was operating an air ambulance service without a licence;

AND WHEREAS the Agency has investigated the matter and has confirmed that Lifeflight does in fact operate a publicly available air ambulance service for which it is not licensed;

AND WHEREAS the investigation was referred to the Royal Canadian Mounted Police;

AND WHEREAS Lifeflight is continuing to operate an unlicensed, publicly available air ambulance service, which is creating economic hardship for the only licensed air ambulance service in the area which is Northern Air Rescue Inc.;

It thus appears the Agency’s investigation did reveal the operation by the appellant of its Lifeflight air ambulance service, that this service was publicly available and that the appellant held no federal licence to operate it. On this basis, the operation of the service was seen to contravene section 71 of the Act.

There is no dispute between the parties that the power of the Agency to make a cease and desist order is conferred by section 35 of the Act when read in the light of the prohibitions in section 71 and of the definition of “domestic service” in subsection 67(1) of the Act. These various provisions read as follows:

35. (1) The Agency may inquire into, hear and determine a complaint concerning any act, matter or thing prohibited, sanctioned or required to be done under any Act of Parliament that is administered in whole or in part by the Agency.

(2) The Agency may, on complaint or of its own motion, inquire into, hear and determine any matter concerning a licence or permit issued by the Agency under this Act or the suspension or cancellation of any such licence or permit.

(3) The Agency may, on complaint or of its own motion, inquire into, hear and determine any matter concerning safety under any Act of Parliament that is administered in whole or in part by the Agency.

(4) The Agency may require a person to do or refrain from doing any act, matter or thing that the person is or may be required to do or is prohibited from doing under any Act of Parliament that is administered in whole or in part by the Agency.

…

67. (1) In this Part,

…

“domestic service” means an air service that is publicly available for the transportation of passengers or goods, or both, between points in Canada, from and to the same point in Canada or between Canada and a point outside Canada that is not in the territory of another country;

…

71. (1) A person shall not operate a domestic service unless, in respect of that service, the person

(a) holds a domestic licence;

(b) holds a Canadian aviation document; and

(c) has prescribed liability insurance coverage.

(2) A person shall not operate a domestic service using fixed wing aircraft between points or to or from any point in the designated area unless, in respect of that service, the person

(a) holds a domestic licence issued under subsection 72(2) in respect of the points or point;

(b) holds a Canadian aviation document; and

(c) has prescribed liability insurance coverage.

By virtue of paragraph 103(1)(a) of the Act, a person who “wilfully contravenes section 71 … is guilty of an indictable offence or an offence punishable on summary conviction.”

Authority to issue a licence for the operation of a “domestic service” is conferred by subsections 72(1) and (2) of the Act. They read:

72. (1) On application to the Agency in respect of a domestic service, other than a domestic service referred to in subsection (2), and on payment of the appropriate fee, the Agency shall issue a domestic licence to the applicant if the applicant establishes in the application to the satisfaction of the Agency that the applicant

(a) is a Canadian;

(b) holds a Canadian aviation document in respect of the service to be provided under the licence; and

(c) has prescribed liability insurance coverage or evidence of such insurability in respect of the service to be provided under the licence.

(2) On application to the Agency and on payment of the appropriate fee, the Agency shall issue a domestic licence to the applicant that permits the applicant to operate a domestic service using fixed wing aircraft between points or to or from any point in the designated area if

(a) the applicant establishes in the application to the satisfaction of the Agency that the applicant

(i) is a Canadian,

(ii) holds a Canadian aviation document in respect of the service to be provided under the licence, and

(iii) has prescribed liability insurance coverage or evidence of such insurability in respect of the service to be provided under the licence; and

(b) where an objection is made by an interested community, person or entity against the issuance of the licence, the Agency is satisfied that the issuance would not lead to a significant decrease of instability in the level of domestic service provided between points or to or from any point in the designated area.

It is clear that the Agency did not give the appellant any formal notice that it was about to make the cease and desist order. There can be no doubt, however, the appellant was informed that the Agency’s investigation was underway. This is indicated in the notes which were kept by its Field Investigations Directorate. These contain an entry of December 3, 1991 with respect to a telephonic communication by Mr. Caldwell, the Agency’s Field Investigations Officer, with Constable Lafrenière of the RCMP in Winnipeg. That entry reads:

He advised that Sgt. Dick Gratton advised Ms Lynn ROMEO, Manitoba Attorney General’s Department on the 30 Oct. 91 that we were investigating “Lifeflight”.

According to the same notes, this information was furnished in response to a request of Mr. Bruce Murray, the Agency’s Program Coordinator in Hull, Quebec, for information with respect to whether “Manitoba Health Services were advised of complaint.”

The position of the appellant on the issue before us is that it was entitled to an opportunity to be heard before the Agency made the cease and desist order. In support is cited the decision of the Supreme Court of Canada in Knight v. Indian Head School Division No. 19, [1990] 1 S.C.R. 653, in which it was decided by a majority that there is a general right of procedural fairness depending on the presence of the three factors therein identified and discussed.

I am of the view that subsection 35(4) of the Act authorized the Agency to make the order in question without first affording an opportunity to be heard. Subsections 35(1), (2) and (3) all speak in terms of a “hearing” of some kind. Such is not the case with subsection 35(4). Counsel contends that this subsection merely allows the Agency to take the action which it has determined upon under subsections (1), (2) or (3) and, accordingly, that there was no need to repeat the requirement for a hearing. In my view, nothing in the language of subsection (4) suggests that its operation was intended to be so limited. That it was intended to stand alone is indicated by other language in the previous three subsections, requiring some sort of hearing prior to the making of an order, i.e. in the case of a complaint with respect to an act that is prohibited by a federal statute, or of a matter concerning a licence or permit that was issued by the Agency including the suspension or cancellation thereof, or of a matter concerning safety.

In Knight, supra, at pages 677-678, L’Heureux-Dubé J. stated:

Having come to the conclusion that there exists a general right to procedural fairness, the statutory framework must be examined in order to see if it modifies this right (Wiseman v. Borneman, [1969] 3 All E.R. 275, at p. 277, per Lord Reid). However, as was pointed out by Dickson J. in Kane v. Board of Governors of the University of British Columbia, supra, at p. 1113: “To abrogate the rules of natural justice, express language or necessary implication must be found in the statutory instrument.” Thus, the provisions of The Education Act must be quite clear to lead us to the conclusion that the respondent’s general right to procedural fairness has been restricted.

When the language of subsection 35(4) is contrasted with that of the previous three subsections, it can be seen that unlike that which is provided for in those subsections, no provision is made for any person affected by an order to be afforded an opportunity to be heard. In my view, therefore, although subsection 35(4) does not expressly abrogate the need for a hearing, it does so by necessary implication The words of Sopinka J., dissenting in Knight, supra, at page 692, are appropriate to the present situation: “where the statute intended to create a right to be heard or to make representations, it was careful to say so.”

Even if the statute could be construed as entitling the appellant to an opportunity to be heard before the order was made, it seems to me that this opportunity was in fact afforded on October 30, 1991, some five weeks before the Agency finally took action. According to the record the appellant was then made aware that the Agency’s investigation into the Lifeflight service was underway. Nothing in the record suggests that the appellant was somehow not able to communicate with the Agency about that investigation or that it could not make representations with respect thereto if it cared to do so.

Finally, it is noted that by section 41 the Agency is itself empowered to “review, rescind or vary any decision or order made by it” in the circumstances therein described. Then section 64 provides for review of an Agency order “at any time” by the Governor in Council, in whom is vested power to “vary or rescind” it. Under subsection 65(1), an appeal lies from the Agency to this Court, with leave, on a “question of law or a question of jurisdiction” and, by subsection 65(3), such an appeal is required to be heard “as speedily as practicable.” It is not to suggest that these possibilities of review or appeal argue against the existence of procedural fairness. That they should not is made clear by the majority in Knight, supra, at page 680. But if on construction a statute can be seen to rule out procedural fairness in specific circumstances it is not inappropriate for a court to take note that the same statute provides the possibility of an order made ex parte being revisited by the Agency, revised or rescinded by the Governor in Council or appealed to this Court in the event, inter alia, that the power to make it was, for example, exercised carelessly or oppressively.

In the result, I would dismiss this appeal.

Isaac C.J.: I agree.

Desjardins J.A.: I concur.

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