Facts

On May 17 2007 a Canadian registered Beech BE-55 aircraft took off from Oshawa Airport bound for Wilmington, Delaware. Approximately 45 minutes after departure, the pilot reported a rough running left engine and requested a diversion to the Chautauqua County Airport in Dunkirk, New York. The aircraft crashed while attempting a single-engine landing. The pilot and two passengers suffered fatal injuries.

The families of the deceased commenced legal proceedings to recover losses relating to the passing of their relatives as well as the value of the aircraft.(1)

The National Transportation Safety Board (along with representatives of the Canadian Transportation Safety Board) conducted a teardown of the left engine (TCM IO-470L) in Alabama, approximately three months later. The board found that there was a left engine failure just before the crash, whereby a counterweight (designed to dampen vibration produced by the engine) separated at one of its attachment points, which caused the loose end to strike the crankcase repeatedly, ultimately leading to a breach in the crankcase. Some of the evidence suggested that this process had been going on for some time and allegedly could have been detected earlier when the aircraft was serviced.

In 2003 the aircraft was involved in a gear-up landing, which required the disassembly of both engines. The repair work was undertaken in Canada by Aviation Technical Consultants (ATC) in accordance with the maintenance manuals published by the engine's manufacturer, Teledyne Continental Motors (TCM).

One of the allegations in the legal proceedings was that ATC had improperly installed the counterweights when carrying out the repairs on the aircraft in 2003. In its defence, ATC alleged that it relied upon the service bulletins and overhaul manual published by TCM. In the legal proceedings, ATC claimed contribution from TCM for any damages awarded against it.

The plaintiff also alleged that the defendant, Corporate Aircraft Restorations Inc (CAR) and its employees, were also to blame for the engine failure, as they had conducted the regular maintenance of the aircraft before the accident.

In the legal proceedings, TCM brought a motion to resolve two issues on a summary judgment basis:

  • whether the 1994 US federal legislation General Aviation Revitalisation Act (GARA) statute barred all claims against TCM; and
  • whether US law more generally applied to this action.

On the issue of whether GARA applied to the dispute, TCM led expert testimony by Ann Thornton Field, an experienced US aviation lawyer. Field testified that, according to US law, if the engine in question (which was originally purchased in 1968) was not in TCM's possession and TCM had not supplied any new parts or components to the engine for more than 18 years, the action against TCM was statute barred. Her expert report stated:

"GARA's eighteen-year statute of repose begins to run on the date the general aviation aircraft or component is delivered to its first purchaser. If more than eighteen years elapse between the date of delivery and the date of the accident, the claim is barred unless one of the exceptions to GARA applies."

It was common ground that the exceptions did not apply to this case.

Field also opined that, on her reading of GARA, the finality of the long-tail liability assumed by aircraft manufacturers would apply regardless of which jurisdiction their aircraft ended up in.

ATC also produced an expert on this point. An equally experienced US aviation lawyer, Christopher Barth, testified that, in the absence of clear statutory language to the contrary, US legislation is presumed to apply only within the territorial limits of the United States. Barth argued that since GARA was passed to regulate US domestic litigation, it has no force in disputes outside of that jurisdiction.

Decision

Justice Morgan found that both experts were right. Field was correct in stating that aircraft manufacturers can avail themselves of the protections afforded by GARA regardless of where their products are deployed. However, Barth was also correct in stating that the protections of GARA apply only to disputes litigated in the United States.

On this point, Morgan referred to the US case of Blazevska v Raytheon Aircraft Co,(2) where the court held that:

"Congress has no power to tell courts of foreign countries whether they could entertain a suit against an American defendant. It would be up to any foreign court to determine whether it wanted to apply GARA to litigation occurring within its borders."

Morgan then considered the matter from the perspective of conflict of law rules in Canada, which have been determined to be "national rather than international in character". He ruled that the decision of whether Canadian courts choose to apply US law to a particular dispute is a matter for Canadian courts:

"[J]ust as a Court in Canada can decide to apply New York contract law or Michigan tort law in the appropriate case notwithstanding that those bodies of American law are silent on extra-territoriality."

In short, Morgan accepted the proposition that "judges always apply domestic rules of law, but sometimes create these in accordance with foreign law".

Having determined this approach, Morgan embarked on a choice of law analysis, referring primarily to the seminal case of Tolofsen v Jensen; Lucas v Gagnon.(3)

In Tolofsen the Supreme Court of Canada adopted a lex loci delicti rule for choice of law actions founded in tort. This rule stands for the proposition that the law of the place where the wrong occurred is the substantive law (which includes limitation periods) that governs the adjudication of tort actions – unless this result would cause an injustice "beyond ordinary differences between the laws of the forums".

It was therefore the court's role on the motion to decide which law to apply. Morgan noted that the "crux of the claims… against [TCM] is not negligence". In support of this, he noted that the engine left TCM's control 39 years before the accident and had operated since without difficulty.

He also noted that the basis of the claim against TCM was for alleged negligent misrepresentations about how to properly service the engine in its service bulletins and overhaul manuals.

Morgan then turned to Air Canada v McDonnell Douglas Corp,(4) where the Supreme Court of Canada held that an obligation to warn exists at the place where the warning would be effective.

In applying these principles to the matter at hand, Morgan found that:

"The same thing applies to ATC's reliance on the repair bulletins and overhaul manuals in re-installing the crankshaft and counterweight after the 2003 engine inspection. The reception and reliance took place in Ontario. To the extent that the materials disseminated by [TCM] contained negligent misrepresentations, the place of these misrepresentations, and thus the law applicable to them, was Ontario."

Having drawn this conclusion, the court held that since the failure to warn had occurred in Ontario, the substantive law of Ontario would govern the claim. Therefore, GARA had no application to the resolution of this dispute. Morgan ordered that the action was to proceed with all of the allegations made against TCM intact. TCM was ordered to pay each of ATC and CAR (the responding parties on the motion) C$24,000 in costs for the motion.

For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800) or email (cmartins@lexcanada.com). The Bersenas Jacobsen Chouest Thomson Blackburn website can be accessed at www.lexcanada.com.

Endnotes

(1) Thorne v Hudson, 2016 ONSC 5507.

(2) 522 F3d 948 (9th Circuit, 2008).

(3) [1994] 2 SCR 1022.

(4) [1989] 1 SCR 1554.

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