2003-06-16

LET-AT-A-138-2003

Eric Norman, Joanne Neubauer, and the Council of Canadians with Disabilities	WestJet
Air Transport Association of Canada	Gander International Airport Authority Inc.
	Her Majesty the Queen in Right of Canada (Minister of National Revenue)

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Re:

Application by Eric Norman, Joanne Neubauer and the Council of Canadians with Disabilities against Air Canada, its operating division Air Canada Tango, Jazz Air Inc., WestJet, Her Majesty the Queen in Right of Canada (Minister of National Revenue), the Gander International Airport Authority and the Air Transport Association of Canada regarding the cost of air travel for persons with disabilities who require additional seating due to their disabilities

On April 1, 2003, the Ontario Superior Court of Justice issued an order, under the Companies' Creditors Arrangement Act (CCAA), staying all proceedings as against, amongst others, Air Canada and its operating division, Air Canada Tango (Tango), and Jazz Air Inc. doing business as Air Canada Jazz (Jazz) (hereinafter referred to as the CCAA Order). The purpose of the CCAA Order is to implement the protection sought by the carriers' under that Act to facilitate its operational, commercial, financial and corporate restructuring and, as such, it may be renewed on a month to month basis pending completion of this restructuring. The implications of the CCAA Order for the Canadian Transportation Agency (the Agency) is that it is unable, at this time, to continue with the processing of the application of Eric Norman, Joanne Neubauer and the Council of Canadians with Disabilities (collectively referred to as the CCD application) as against the respondents Air Canada, Tango and Jazz (collectively referred to as the Air Canada respondents).

This is further to a Notice of Motion dated April 7, 2003 filed by WestJet with the Agency in the CCD application, requesting that the Agency stay its proceedings as against WestJet.

Pleadings

By Decision No. LET-AT-A-93-2003 dated April 16, 2003, the Agency issued directions to the parties to the CCD application for the filing of pleadings on this motion: WestJet was required to file its submissions in support of its motion on or before April 30; the applicants, Eric Norman, Joanne Neubauer and the Council of Canadians with Disabilities (collectively referred to as the applicants) as well as the remaining respondents to the CCD application, Her Majesty the Queen in Right of Canada (Minister of National Revenue), the Gander International Airport Authority, the Air Transport Association of Canada (collectively referred to as the remaining respondents) were required to file their answers to this motion request by May 9, 2003; and WestJet was provided until May 14, 2003 to file its reply.

By letter dated April 23, 2003, the applicants submitted interrogatories to WestJet and requested that WestJet answer the interrogatories by April 30, 2003. On April 30, 2003, WestJet filed its written argument in support of the motion for a stay as against WestJet. On that same date, WestJet also filed its answers to interrogatories wherein it objected to answering the fifth interrogatory on the basis of relevance and confidentiality concerns and requested that it be permitted to file the remaining answers by May 14, 2003. In response, by letter dated May 1, 2003, the applicants withdrew the fifth interrogatory and requested that WestJet be required to answer the remaining interrogatories on or before May 7^th so as to permit the applicants an opportunity to review the answers prior to filing their reply to the motion on May 9^th. By Decision No. LET-AT-A-105-2003 dated May 7, 2003, the Agency provided that WestJet was to answer the applicants' interrogatories on or before May 14, 2003 and granted an extension of time for the filing of the answers to the motion to May 16, 2003 and for the filing of WestJet's reply to May 21, 2003.

WestJet filed its answers to the interrogatories on May 8, 2003. The Agency received the answer of Her Majesty the Queen in Right of Canada (Minister of National Revenue) on May 12, 2003; the answer of the applicants on May 16 along with supporting material on May 22, 2003; the answer of the Gander International Airport Authority on May 16, 2003; and the answer of the Air Transport Association of Canada on May 20, 2003, which was subsequently amended on May 29, 2003. The Agency received the reply of WestJet on May 21, 2003.

Argument

1. WestJet's submissions in support of its motion

WestJet's motion requesting that the Agency stay or adjourn its proceeding in the CCD application as against WestJet arises directly from the stay of the proceedings as against Air Canada, Tango and Jazz. WestJet argues that the Agency should exercise its discretion, either under section 26 of the Canada Transportation Act (the CTA) to stay the proceeding or under section 34 of the National Transportation Agency General Rules (the General Rules) to adjourn the proceeding, pending the lifting of the Ontario Superior Court of Justice's Order. In its original Notice of Motion, WestJet also requested that the Agency dismiss the application, but it did not pursue this request for relief by filing submissions in support.

In summary, WestJet argues that in view of the volume of domestic air traffic carried by Air Canada and Jazz, they are "necessary parties for the determination of the issues raised in the application". WestJet asserts that it would be "difficult, or impossible, and in any event contrary to the public interest, to decide the issues raised in this Application without the evidence and submissions of Air Canada on what is fair and reasonable compensation for any resources, facilities or services domestic carriers may be required to provide as an imposed public duty", which principle WestJet asserts arises from the national transportation policy contained in paragraph 5(f) of the CTA. Furthermore, WestJet asserts that "it would be harsh, oppressive and unfair to impose upon WestJet the costs of responding to this application which is of general interest to the aviation industry" particularly in view of the current financial pressures on the aviation industry.

WestJet provided case law to support the appropriateness of a stay with respect to proceedings against third parties in the context of corporate reorganizations and submitted that, in its view, the balance of convenience is "overwhelmingly in favour of granting the Stay" and "[t]o impose a Stay would not impose an injustice on the Applicants" - it would simply result in the postponement of the advancement of this claim.

2. Applicants' answer

The applicants refer to the Agency's statutory deadline of 120 days to render a decision, as set out in section 29 of the CTA, and noted the fact that, in this case, the statutory deadline has passed and the parties have not given their consent to an extension of the deadline. The applicants argue that if a stay were granted, the Agency would not be able to fulfill its statutory mandate of providing the applicants with an expeditious decision. Finally, the applicants note that, in the past, the Agency has recognized statutory time constraints as a reason for not granting a stay requested by the respondent.

While the applicants acknowledge the Agency's jurisdiction to either stay or adjourn its own proceedings, the applicants submit that a stay was the appropriate mechanism for the Agency to indefinitely postpone the proceeding. The applicants argue, however, that the Agency should not grant a stay in this case as WestJet has failed to meet the strict three-part test, which it submits is applicable to all requests for stays: that there is a serious issue to be tried, that the motion applicant would suffer irreparable harm if the stay is not granted and that the balance of convenience lies in favour of the motion applicant. Rather, the applicants submit that, in view of the fact that they could have filed a separate application under section 172 of the CTA against WestJet and that the undueness analysis will necessarily be different as between respondents as a result of the focus on the respondents' individual abilities (financial and otherwise) to accommodate persons with disabilities, the Air Canada respondents are not necessary to the Agency's consideration of the application as against WestJet.

The applicants submit that the first part of the test, the serious issue to be tried, "makes the most sense" in cases where a stay is sought pending an appeal. Furthermore, the applicants assert that only the applicants stand to suffer irreparable harm by the granting of the stay as certain persons with disabilities will continue to not have access to accessible air transportation for so long as the Agency's determination of the issue is postponed. Finally, the applicants argue that the balance of convenience lies in favour of the applicants, in that it would be an injustice to persons with disabilities to postpone the consideration of their right to the application of the principle of "one person, one fare" to WestJet but it could not be said to be an injustice to WestJet to require it to proceed in the absence of the other carrier respondents. The applicants note that WestJet has made claims of oppressive financial cost in requiring it to continue in the absence of the Air Canada respondents without demonstrating that costs will cause irreparable harm. In this regard, the applicants note that WestJet is a profitable air carrier.

The applicants submit that the Agency should consider that WestJet provides no discount for additional seating required as a result of a disability and, thus, in their view, has taken no steps to remedy the obstacles its fares impose to persons with disabilities, despite the decision of the Agency's predecessor, the National Transportation Agency, in the application of Maureen Buchholz against Air Canada (National Transportation Agency Decision No. 532-A-1993) and the representations made by Air Transport Association of Canada before and after WestJet began operating that all of its members offered a voluntary 50 percent reduction for attendant fares.

CCD submits that, if the Agency were to grant a stay, conditions should be imposed on that stay as follows:

- the stay should apply to all respondents, not just WestJet;

- at a minimum, WestJet should be required to provide a 50 percent discount for seats required to accommodate a disability pending the Agency's determination of the issue; and,

- the stay should not be tied to Air Canada's CCAA Order, which could be indefinite.

3. WestJet's reply

With respect to the implications of the statutory deadline on the motion request, WestJet submits that the Agency has determined, in past decisions, that it can not always render a decision within 120 days, as is the case with this application, and it is "the undoubted right of the Agency to control its own process as set out in s.25 of the CTA". Furthermore, WestJet asserts that a stay will serve to further and not hinder the expeditious determination of the issue before the Agency which is the extent of the accommodation of disabilities consistent with the national transportation policy and the circumstances both of the individuals affected and of the aviation industry.

WestJet argues that the three-part test for stay raised by the applicants is not applicable in this case, given that the stay is requested in the context of a financial reorganization; WestJet asserts that cases involving a financial reorganization present special circumstances and, in such cases, the exercise of the Agency's power to grant a stay should be governed by factors different from those referred to in the traditional three-part stay test. Specifically, WestJet argues that it is not necessary to show irreparable harm.

Alternatively, WestJet argues that, if the three-part test were applicable, it leads to the conclusion that a stay is appropriate in this case. WestJet argues that it is not possible to apply the first part of the test in the way it is normally applied in stay applications, but that, to the extent that it may apply, there are serious issues which should be examined by the Agency which the Agency will not be able to consider fully and adequately if the stay is not granted in the absence of the participation of the largest carrier in the market.

With respect to the second part of the test, WestJet argues that, when a stay is sought by a third party in proceedings affected by a financial reorganization, it is not necessary to show irreparable harm. Alternatively, WestJet submits that it will suffer irreparable harm if it were required to carry the burden of a proceeding which, given the real nature of the matter in issue, should not fall upon it alone. WestJet also asserts that there will be harm to the Agency's determination process if the proceeding is allowed to continue without the participation of the Air Canada respondents as the Agency will be unable to undertake the "deep and extensive review of the aviation industry" necessary to determine the real issue; namely, the extent of the accommodation of disabilities consistent with the CTA policy and the circumstances of both the individuals affected and the aviation industry. Furthermore, WestJet asserts that to undertake an inquiry such as this when the Air Canada respondents, with 70 percent of the market share, are not present and when the aviation industry in general may be on the verge of major changes in the way the business of commercial aviation is carried out, would risk the prospect of a different inquiry at a different time which would have unfortunate consequences for the public, the respondents and the applicants. Finally, WestJet argues that the balance of convenience lies in its favour as a multiplicity of inquiries should be discouraged particularly as with this case where the delay occasioned by the stay is relatively short compared to the speed with which the issue has progressed to date.

West Jet objects to the applicants' request that, if a stay were granted by the Agency, it be made conditional and argues that WestJet has addressed problems faced by persons with disabilities and has expended upwards of a million dollars in doing so.

4. Position of the remaining respondents

All of the remaining respondents filed answers indicating that they take no position with respect to WestJet's motion. However, ATAC subsequently clarified its position and indicates that it supports WestJet's motion for a stay and that the stay be extended to all respondents.

Agency determination

The Agency agrees with the applicants' submissions regarding the nature of the investigation that the Agency undertakes pursuant to section 172 of the CTA and the fact that the undueness analysis is made on a case-by-case basis which is, by nature, an examination of a variety of factors, some of which will be specific to the individual respondent. However, the undueness analysis may also involve a consideration of broader factors from the perspective of both the community of persons with disabilities and the industry. Further, it is clear from the carrier respondents' submissions to date that the carrier respondents intend to raise these broader factors in support of their position that an industry perspective is necessary for the Agency to properly consider this issue and any potential corrective measures.

As such, the Agency's investigation in this application will be aided by having the benefit of undertaking concurrent reviews of WestJet and the Air Canada respondents in view of their different markets, services and financial positions. In fact, the Agency, by Decision No. LET-AT-A-46-2003 dated February 27, 2003, announced its intention to concurrently pursue its investigations into five applications involving some aspects of the cost of air travel for persons with disabilities who require additional seating due to their disabilities, including air fares, airport improvement fees and air travellers security charges. In light of the similar issues raised in these cases in the context of the domestic air transportation industry and to avoid a multiplicity of proceedings, the Agency determined in Decision No. LET-AT-A-46-2003 that it would process these applications at the same time.

While the Agency is concerned about the fact that it now appears that it will take more time for the Agency to complete these investigations and issue its decisions on the merits of the applications, the benefit to be gained by the Agency in pursuing these investigations concurrently is sufficiently important to the Agency's investigation to outweigh any concerns arising from the postponement of this process.

Furthermore, while the Agency notes the parties' submissions with respect to the availability of a stay and the test to be applied in the granting of a stay, the Agency is of the opinion that, in these particular circumstances, the granting of an adjournment is the appropriate mechanism to use to hold the application in abeyance.

Accordingly, the Agency is of the opinion that this is an appropriate case for the exercise of its jurisdiction under section 34 of the General Rules and, therefore, it hereby adjourns the CCD application in its entirety pending a resolution of the Air Canada restructuring process and the lifting of the CCAA Order.

With respect to the applicants' request that conditions be attached to the stay, the Agency will consider this request in the context of the adjournment granted.

The effect of the adjournment of this proceeding, by its nature, is to hold the application in abeyance in its entirety and this answers the applicants' first request. The applicants' second request relates to extraordinary relief available on stay applications to preserve the status quo pending the return of the matter before the decision-maker for its final determination on the merits and CCD has filed case law with the Agency to support the availability of this relief. However, the Agency is of the view that the order sought does not, in fact, represent the status quo for WestJet, as demonstrated by WestJet's answers to the applicants' interrogatories. As such, the Agency finds that the requested relief goes to the merits of the application before it and is, thus, not available in this context. Finally, the nature of the adjournment granted and the Agency's reasons for doing so make it apparent that the adjournment is, in fact, tied to the Air Canada respondents' reorganization and the CCAA Order.