Helilogging Ltd ((in Receivership) and liquidation) v Civil Aviation Authority of NewZealand

• Jurisdiction: New Zealand
• Judge: Cooke J
• Judgment Date: 13 December 2019
• Neutral Citation: [2019] NZHC 3305
• Court: High Court
• Docket Number: CIV-2014-485-11204
• Date: 13 December 2019

Between

Helilogging Limited (in receivership and liquidation)

First Plaintiff

Mark Wayne Ford (as trustee of the Wessex Trust)

Second Plaintiff

and

Civil Aviation Authority of New Zealand

Defendant

[2019] NZHC 3305

Cooke J

CIV-2014-485-11204

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

Administrative, Tort-refusal of application to engage in helicopter logging activities with a former military helicopter — misfeasance in a public office — deceit — Civil Aviation Act 1990

Counsel:

P J Dale QC, E Telle and L E Steel for Plaintiffs

L J Taylor QC, G M Richards and S F Lomaloma for Defendant

JUDGMENT OF Cooke J

Table of Contents

ESSENCE OF THE PLAINTIFFS' CASE	3
THE ELEMENTS OF THE ALLEGED TORTS	12
Misfeasance in a public office	13
Deceit	19
THE REGULATORY FRAMEWORK	24
The civil aviation system	25
The Westland Wessex	36
The requirements of the Rules	46
The Director's exemption power	53
FACTUAL BACKGROUND	60
Evidentiary issues	61
CAA concerns regarding helicopter safety	66
Development of Mr Ford's proposals	77
Meeting February 2003	83
The Director's May 2003 letter	91
Meeting May 2003	98
The 2004 flight trials	103
CAA assessment	112
Advice to the Director	118
The Director's response	132
The judicial review challenge	152
PLAINTIFFS' FIRST MAIN ALLEGATION: MISFEASANCE SURROUNDING NOVEMBER MEMORANDUM	161
Views in 9 November memorandum	163
Accuracy of Director's affidavit	168
Non-disclosure	172
Decision making integrity	174
Procedural misfeasance	178
Other allegations	181
Conclusion on 2004 allegations	185
THE SEVEN-STAGE PROCESS	188
Further information	189
Assessment and Preliminary decision	197
First involvement of Mr Lewis	201
Plaintiffs' representations	208
Final advice and decision	213
Steps following decision	220
PLAINTIFFS' SECOND ALLEGATION: MISFEASANCE SURROUNDING AUGUST 2005 DECISION	224
Obtaining the advice of Mr Lewis	227
Timing of instructions	231
Mr Lewis' letter of advice	234
The earlier report of 12 January 1999	240
The vibration flight	246
Disclosure that advice was out of date	252
Alterations made to Mr Lewis' 23 July letter	255
Conversation between Director and Irene King	263
Conclusions on misfeasance and deceit	271
OTHER ISSUES RAISED BY PLAINTIFFS' CLAIMS	275
Was the decision reasonably open to the Director?	276
Causation and loss	282
Would judicial review have been successful?	291
Mr Lewis and vicarious liability	299
Limitation	305
CONCLUSION	[308]

1 The plaintiffs in this proceeding are Mr Mark Ford and his company now in receivership and liquidation. I will refer to them collectively as “Helilogging”. On 19 August 2005 the then Director of Civil Aviation, Mr John Jones, made decisions under s 37 of the Civil Aviation Act 1990 (the Act) declining applications made by Helilogging to enable it to engage in helicopter logging activities using a type of former British military helicopter, the Wessex Mk 2, that had been acquired for that purpose. In this proceeding the plaintiffs advance two causes of action associated with this decision. The first is a claim for misfeasance in a public office, and the second is a claim in deceit.

2 The trial took approximately seven weeks. It was initially scheduled to be a little longer, but by an earlier judgment dated 12 July 2019 I ordered that there would be a split trial, and that any issues relating to damages would be dealt with at a later hearing. 1 This was primarily due to the delays in the plaintiffs formulating their case on damages. The present judgment accordingly deals with liability, and what is described as “regulatory causation” as more precisely outlined in my earlier judgment.

ESSENCE OF THE PLAINTIFFS' CASE

3 Without wishing to limit the claims as pleaded, it may assist if I summarise the essence of the plaintiffs' case at the outset.

4 Helilogging wished to engage in heli-logging operations pursuant to which felled logs would be transported as an underslung load by the Wessex Mk 2 helicopter, particularly from more remote locations where road transport was not possible. Helilogging began engaging with the Civil Aviation Authority (the “CAA”) in relation to its proposals to be authorised to do so from late 2002, and received advice from senior officials on what the requirements were. It then engaged in a significant exercise involving major expenditure to meet the requirements, and it made the necessary applications. Following successful flight trials using the Wessex it pressed Mr Jones for his decision. Mr Jones advised, however, that he needed further information before he could make a decision.

5 Judicial review proceedings were commenced by Helilogging in which it sought urgent mandatory orders. By judgment dated 16 December 2004 MacKenzie J did not grant such orders, but rather adjourned the proceedings so that a seven-stage process that Mr Jones had implemented could be followed in order that a decision could be made. 2 That seven-stage process was originally set out in an internal memorandum of Mr Jones dated 19 November 2004 which had been provided to Helilogging.

6 The plaintiffs now allege that Mr Jones had already made up his mind to decline the application at the time of writing the 19 November memorandum, however. They say that his statements that he needed more time, and more information, including statements made in an affidavit he filed in the judicial review proceedings, were false. They rely on an earlier memorandum dated 9 November 2004 authored by Mr Jones that was not revealed at the time. They say that this memorandum demonstrates that Mr Jones had already decided to decline the application for the reasons he there set out. They say that the failure to disclose this memorandum, and the representations in his affidavit and otherwise that he needed more information to make a decision involved misfeasance and the tort of deceit.

7 The claims involve further allegations. The seven-stage process took some time to complete, and ultimately led to the decision of Mr Jones on 19 August 2005 to decline the application. Steps taken shortly before the final decision are also alleged to found claims for misfeasance and deceit. In particular before reaching his final decision Mr Jones and Mr John Fogden, the CAA official providing advice to him on the decision, obtained advice from Mr Bernie Lewis, a well-respected and experienced former test pilot who had had flying experience in the Wessex. By letter dated 23 July 2005 Mr Lewis advised that he had grave doubts about the safety of the Wessex for the tasks suggested by Helilogging. This letter was relied on by Mr Fogden in his advice to Mr Jones, and then by Mr Jones when declining the application. Mr Lewis' advice was not disclosed to Helilogging before the final decision was made.

8 The plaintiffs allege that Mr Lewis' advice was dishonest, and reliance on the advice by Messrs Jones and Fogden was also dishonest. This dishonesty is said to be manifested in a series of ways:

• (a) First, the problems with the Wessex identified in Mr Lewis' letter were all out of date, as they related to the original helicopter of the 1960s rather than the current aircraft. Yet the letter purported to say it related to the current aircraft. The out of date nature of the advice was not only not referred to in it, but was disguised by a hand alteration made to his letter which concealed the fact that he was referring to an obsolete Wessex model.

• (b) Secondly, Mr Lewis failed to mention that he had specifically flown, and approved the Wessex Mk 2 aircraft in New Zealand in a 1999 report to the CAA in order for it to obtain an airworthiness certificate. This earlier approval of the current aircraft by Mr Lewis was dishonestly not disclosed.

• (c) Thirdly, Mr Lewis later claimed that he was involved in an alarming flight in this aircraft shortly after the 1999 approval when it encountered severe vibration when lifting logs. This occasion either never occurred — and Mr Lewis' evidence on this is untrue — or it represented his true reasons for his safety concerns, which he dishonestly did not reveal in 2005 as he knew that its significance could be readily challenged, and any concerns answered.

• (d) Finally, when Helilogging saw Mr Lewis' advice after the Director's decision and Mr Ford contacted him, Mr Lewis further dishonestly misrepresented the true position by stating that his concerns were based on 40 year old fact. This was not true given the more recent events referred to above.

9 The plaintiffs contend that either Messrs Jones and Fogden knew of Mr Lewis' wrongful conduct and effectively participated in it, or that the CAA is vicariously liable for Mr Lewis' conduct.

10 The plaintiffs say that as a consequence of the alleged dishonest conduct, they lost the opportunity to have their application considered on its merits. In opening they accepted that it is possible that a reasonable Director of Civil Aviation might still have declined their application, but they said that a reasonable Director could also have granted it. They accordingly opened their case on the basis they sought damages on a “loss of a chance” basis. They invited the Court to assess the chances of the plaintiffs being granted their application, which would then be the starting point for the damages assessment to be made at the later hearing. In closing the case changed, however, and it was argued that a reasonable director would have been required to grant the application.

11 The key features of the plaintiffs' allegations that I have just summarised were not set out in this way...