HELILOGGING LIMITED (in receivership and liquidation) v CIVIL AVIATION AUTHORITY OF NEW ZEALAND [2019] NZHC 3305

HELILOGGING LIMITED (in receivership and liquidation) v CIVIL AVIATION AUTHORITY OF NEWZEALAND [2019] NZHC 3305 [13 December 2019]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2014-485-11204[2019] NZHC 3305BETWEEN HELILOGGING LIMITED (in receivershipand liquidation)First PlaintiffMARK WAYNE FORD (as trustee of theWESSEX TRUST)Second PlaintiffAND CIVIL AVIATION AUTHORITY OF NEWZEALANDDefendantHearing: 13 – 15 August 201823 – 27 September 201930 September – 4 October 20197 – 11 October 201914 – 18 October 201921 – 25 October 201929 – 30 October 20194 – 5 November 2019Counsel: P J Dale QC, E Telle and L E Steel for PlaintiffsL J Taylor QC, G M Richards and S F Lomaloma for DefendantDate: 13 December 2019JUDGMENT OF COOKE JTable of ContentsESSENCE 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 SURROUNDINGNOVEMBER 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 2005DECISION [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letter of advice [234]The earlier report of 12 January 1999 [240]The vibration flight [246]Disclosure that advice was out of date [252]Alterations made to Mr Lewis' 23 July letter [255]Conversation between Director and Irene King [263]Conclusions on misfeasance and deceit [271]OTHER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 inreceivership and liquidation. I will refer to them collectively as "Helilogging". On19 August 2005 the then Director of Civil Aviation, Mr John Jones, made decisionsunder s 37 of the Civil Aviation Act 1990 (the Act) declining applications made byHelilogging to enable it to engage in helicopter logging activities using a type offormer British military helicopter, the Wessex Mk 2, that had been acquired for thatpurpose. In this proceeding the plaintiffs advance two causes of action associated withthis decision. The first is a claim for misfeasance in a public office, and the second isa claim in deceit.[2] The trial took approximately seven weeks. It was initially scheduled to be alittle longer, but by an earlier judgment dated 12 July 2019 I ordered that there wouldbe a split trial, and that any issues relating to damages would be dealt with at a laterhearing.1 This was primarily due to the delays in the plaintiffs formulating their caseon damages. The present judgment accordingly deals with liability, and what isdescribed 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 theessence of the plaintiffs' case at the outset.[4] Helilogging wished to engage in heli-logging operations pursuant to whichfelled 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 relationto its proposals to be authorised to do so from late 2002, and received advice fromsenior officials on what the requirements were. It then engaged in a significantexercise involving major expenditure to meet the requirements, and it made thenecessary applications. Following successful flight trials using the Wessex it pressedMr Jones for his decision. Mr Jones advised, however, that he needed furtherinformation before he could make a decision.1 Helilogging Ltd v Civil Aviation Authority of New Zealand [2019] NZHC 1641.[5] Judicial review proceedings were commenced by Helilogging in which itsought urgent mandatory orders. By judgment dated 16 December 2004 MacKenzieJ did not grant such orders, but rather adjourned the proceedings so that a seven-stageprocess that Mr Jones had implemented could be followed in order that a decisioncould be made.2 That seven-stage process was originally set out in an internalmemorandum of Mr Jones dated 19 November 2004 which had been provided toHelilogging.[6] The plaintiffs now allege that Mr Jones had already made up his mind todecline 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 authoredby Mr Jones that was not revealed at the time. They say that this memorandumdemonstrates that Mr Jones had already decided to decline the application for thereasons he there set out. They say that the failure to disclose this memorandum, andthe representations in his affidavit and otherwise that he needed more information tomake a decision involved misfeasance and the tort of deceit.[7] The claims involve further allegations. The seven-stage process took sometime to complete, and ultimately led to the decision of Mr Jones on 19 August 2005 todecline the application. Steps taken shortly before the final decision are also allegedto found claims for misfeasance and deceit. In particular before reaching his finaldecision Mr Jones and Mr John Fogden, the CAA official providing advice to him onthe decision, obtained advice from Mr Bernie Lewis, a well-respected and experiencedformer test pilot who had had flying experience in the Wessex. By letter dated 23 July2005 Mr Lewis advised that he had grave doubts about the safety of the Wessex forthe tasks suggested by Helilogging. This letter was relied on by Mr Fogden in hisadvice 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.2 Helilogging Ltd v Civil Aviation Authority of New Zealand CIV-2004-485-2558, 16 December2004 [Judicial review decision].[8] The plaintiffs allege that Mr Lewis' advice was dishonest, and reliance on theadvice by Messrs Jones and Fogden was also dishonest. This dishonesty is said to bemanifested in a series of ways:(a) First, the problems with the Wessex identified in Mr Lewis' letter wereall out of date, as they related to the original helicopter of the 1960srather than the current aircraft. Yet the letter purported to say it relatedto the current aircraft. The out of date nature of the advice was not onlynot referred to in it, but was disguised by a hand alteration made to hisletter which concealed the fact that he was referring to an obsoleteWessex 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 reportto the CAA in order for it to obtain an airworthiness certificate. Thisearlier approval of the current aircraft by Mr Lewis was dishonestly notdisclosed.(c) Thirdly, Mr Lewis later claimed that he was involved in an alarmingflight in this aircraft shortly after the 1999 approval when itencountered severe vibration when lifting logs. This occasion eithernever occurred — and Mr Lewis' evidence on this is untrue — or itrepresented his true reasons for his safety concerns, which hedishonestly did not reveal in 2005 as he knew that its significance couldbe readily challenged, and any concerns answered.(d) Finally, when Helilogging saw Mr Lewis' advice after the Director'sdecision and Mr Ford contacted him, Mr Lewis further dishonestlymisrepresented the true position by stating that his concerns were basedon 40 year old fact. This was not true given the more recent eventsreferred 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 vicariouslyliable for Mr Lewis' conduct.[10] The plaintiffs say that as a consequence of the alleged dishonest conduct, theylost the opportunity to have their application considered on its merits. In opening theyaccepted that it is possible that a reasonable Director of Civil Aviation might still havedeclined their application, but they said that a reasonable Director could also havegranted 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 plaintiffsbeing granted their application, which would then be the starting point for the damagesassessment to be made at the later hearing. In closing the case changed, however, andit was argued that a reasonable director would have been required to grant theapplication.[11] The key features of the plaintiffs' allegations that I have just summarised werenot set out in this way in the plaintiffs' pleadings, or in the opening. After exchangeswith Mr Dale QC during his opening, and in a ruling dated 26 September 2019, I notonly dealt with applications to amend the pleadings and to allow the plaintiffs to callsupplementary witnesses, but I sought to record the essence of the plaintiffs' case as Iunderstood it at that stage, and Mr Dale subsequently confirmed I had accuratelycaptured the position. That summary is similar to the summary I have just provided.I did that so that there was greater clarity in relation to the claims that were beingadvanced. I note at that stage the plaintiffs had accepted that a reasonable directorcould have decided to decline the application.THE ELEMENTS OF THE ALLEGED TORTS[12] The plaintiffs allege that the defendant is liable for the torts of misfeasance ina public office, and/or deceit. In addressing the elements of those causes of action Ideal first with misfeasance in a public office notwithstanding that it is the secondpleaded cause of action. That is because it seems to me to be the more obviouslyrelevant tort. Indeed there is an issue whether the tort of deceit is appropriately appliedto public law decision-making. I will address this below.Misfeasance in a public office[13] There is no dispute between the parties on the elements of the tort ofmisfeasance in a public office. In Currie v Clayton the Court of Appeal summarisedthem in the following way:3[40] The elements of the tort of misfeasance in public office can besummarised thus:(1) Standing: The plaintiff must have standing to sue.(2) Public office: The defendant must be a public officer.(3) Unlawful conduct: The defendant must have acted or omittedto act in purported exercise of her public office unlawfullyeither:(a) intentionally, that is actually knowing her actions oromission to act were beyond the limits of her publicoffice; or(b) with reckless indifference as to whether she was actingor omitting to act outside those limits.(4) Intention: The defendant must have so acted or omitted to acteither:(a) with malice towards the plaintiff, that is, with intentionto harm the plaintiff; or(b) knowing her conduct was likely to harm the plaintiff, orpeople in the general position of the plaintiff; or(c) with reckless indifference as to whether the plaintiffwould be harmed. Subjective recklessness, not objectiverecklessness, is required.(Note: (a) is what is often called "targeted malice"; (b) and (c)are often called "non-targeted malice".)(5) Resulting loss: The plaintiff must actually have suffered lossand the defendant's actions must have caused the plaintiff'sclaimed loss.[14] In the present case the plaintiffs do not allege targeted malice — that is theydo not allege that Mr Jones abused his powers in order to cause harm to the plaintiffs.Mr Dale emphasised that establishing an improper motive was not required to establishliability, and that liability could arise even if Mr Jones was motivated by aviation3 Currie v Clayton [2014] NZCA 511, [2015] 2 NZLR 195 (footnotes omitted).safety. Rather the plaintiffs allege that the Mr Jones (and Mr Fogden) acted knowinglybeyond their powers appreciating that this would cause harm to the plaintiff, orrecklessly indifferent to this. This is a legitimate way of advancing the tort.[15] The reckless indifference alternative still requires a finding of lack of honesty,however. In Minister of Fisheries v Pranfield Holdings Ltd the Court of Appeal held:4[118] In our view the formulation of the test for recklessness in Garrettrequires more than simply uncertainty on the part of a public official as to thelegal position, coupled with a failure to make enquiry. And the Court approved of an observation of Lord Hobhouse that the requirement thatthe defendant acted without honest belief in the lawfulness of the conduct bestconveyed the required state of mind.5 Moreover, as Blanchard J said for the Court ofAppeal in relation to alleged misfeasance against a former Director of Civil Aviation:6[63] The question is not whether the Director's actions were justified as amatter of public law, but whether he was knowingly or recklessly actingbeyond his powers. [16] Whilst the elements of the tort are not in dispute, the way in which the plaintiffsallege the tort has been committed here involves an allegation of some subtlety. Inopening it was not alleged that the decision to decline the application was knowinglybeyond the Director's powers. Indeed Mr Dale accepted that a reasonable Directorcould have declined the plaintiffs' application. It was nevertheless contended that thetort was committed. That is because of the alleged bad faith surrounding the decisionthat might otherwise have been lawfully made as summarised in paragraphs [6]–[10]above.[17] That allegation amounts to what might be described as procedural misfeasance.The ultimate decision itself is not alleged to be beyond the powers or functions of thedecision-maker, but it is alleged that there was dishonest abuse of public powers in theprocesses surrounding that decision. I accept that it is theoretically possible to committhe tort even when the ultimate decision is lawfully open to the decision-maker.Ancillary or procedural powers are still public powers exercised by public bodies. If4 Minister of Fisheries v Pranfield Holdings Ltd [2008] NZCA 216, [2008] 3 NZLR 649.5 At [120].6 Oceania Aviation Ltd v Director of Civil Aviation CA 163/00, 13 March 2001.a body exercises such ancillary or procedural functions or powers with targeted malice,or knowing that (or recklessly indifferent to whether) the actions or omissions arebeyond the limits of their powers or functions, knowing that it is likely to harm theplaintiff or people in the position of the plaintiff, the elements of the tort could still besatisfied. As Blanchard J observed for the Court of Appeal in Garrett v Attorney-General "the purpose behind the imposition of this form of tortious liability is toprevent the deliberate injuring of members of the public by deliberate disregard ofofficial duty".7 Misfeasance in the exercise of procedural powers could fall within thisconcept. But it may become a more difficult forensic exercise to establish the tortwhen the ultimate decision is reasonably open to the decision-maker, and difficultissues may emerge in terms of the loss caused by the wrongdoing.[18] I also accept Mr Taylor QC's submission in relation to satisfying the burden ofproof. The relevant standard remains proving the elements on the balance ofprobabilities, but the application of that standard requires cogent evidence to establishthe dishonesty, or bad faith which is at the heart of the tort.8 This is also so in relationto the tort of deceit which I turn to next.Deceit[19] There is also no dispute between the parties as to the elements required to besatisfied for the tort of deceit. They were set out by the Court of Appeal in AmaltalCorporation Ltd v Maruha Corporation.9 The relevant elements are:10(a) the defendant has made a false representation, knowing it to be untrue,or being reckless as to whether it is true;(b) the defendant intended that the plaintiff should act in reliance on it;(c) the plaintiff does in fact rely on it; and(d) the plaintiff suffers loss as a result.7 Garrett v Attorney-General [1997] 2 NZLR 332 (CA) at 350.8 See Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.9 Amaltal Corporation Ltd v Maruha Corp [2007] 1 NZLR 608 (CA) at [46].10 As summarised in A v Attorney-General [2018] NZHC 986, [2018] 3 NZLR 439 at [22].[20] Given the essential nature of the plaintiffs' case as summarised in paragraphs[4]–[10] above, the main false representations alleged here would be those made bythe Director that he was considering the applications on their merits when heintroduced the procedure in November 2004, and that what Mr Lewis had advised in2005 represented genuine safety concerns on which his decision was based.11 Bothare alleged to have been representations made to the plaintiffs because they were setout in materials provided to the plaintiffs at the time. There is also the further allegedmisrepresentation made directly by Mr Lewis to the plaintiffs referred to at [8](d)above, and there are other variations pleaded in the sixth amended statement of claim.[21] Whilst there is agreement about the elements of the tort, there is a dispute as towhether the tort of deceit can be applied to an exercise of public powers. There isauthority that the tort of deceit is a commercial tort which is not available in the publiclaw arena.12 In A v Attorney-General Ellis J concluded, however that such a limitationcould not be gleaned from the case law, or be regarded as settled law.13[22] It seems to me that the respective elements of the tort of misfeasance and ofdeceit significantly overlap in a case such as the present one. It may prove to be adistraction to introduce, and then seek to apply a clear commercial/public divide,which may be illusory in some cases. If a plaintiff is able to demonstrate that theelements of the tort of deceit are established, it would be surprising that a defendantwere able to avoid liability simply because the defendant was exercising publicfunctions. If anything such a status may enhance rather than eliminate wrongdoing.Equally it may be possible to apply, and if necessary extend, the tort of misfeasance toaddress such alleged conduct. Both torts are candidates for where such wrongdoingcan be properly housed. As I say the torts seem to me to overlap.[23] Apart from making those observations I take this issue no further. For thereasons I address in greater detail below, I do not think it is necessary to decide thispoint in order to determine the present case.11 More detailed allegations are set out in the sixth amended statement of claim dated 26 September2019.12 Clayton v Currie [2012] NZHC 1475 at [73] per Osborne AJ; and Clayton v Currie [2018] NZHC1898 at [145]–[153] per Churchman J.13 A v Attorney-General, above n 10, at [28].THE REGULATORY FRAMEWORK[24] Before addressing the relevant facts, and the allegations made by the plaintiffs,it is appropriate to explain the regulatory background to the decisions required of theDirector in connection with the applications made by Helilogging.The civil aviation system[25] New Zealand is a party to the 1944 Convention on International Civil Aviation(the Chicago Convention).14 The International Civil Aviation Organisation (ICAO)was established under the Chicago Convention. The Chicago Convention introducedan overall international framework for civil aviation to be implemented by States.There are a number of articles in the Convention itself, as well as standards andrecommended practices in the Annexes to it which are overseen by ICAO and are tobe implemented by, or which are to guide the regulation of civil aviation in each of theStates.[26] The Chicago Convention deals with particular topics that affect civil aviationin its various Annexes. When interpreting and applying New Zealand's domesticlegislation within those areas, it is appropriate to take into account what is set out inthe Annexes. There are two leading authorities on the approach:(a) In New Zealand Air Line Pilots' Assoc Inc v Attorney-General the Courtof Appeal dealt with arguments concerning the interpretation ofdomestic legislation in light of the provisions of Annex 13 of theChicago Convention.15 Annex 13 deals with the responsibility of Statesto conduct independent investigations into significant aviationaccidents and incidents, with the reports of the investigation bodies thenavailable as part of the overall system.16 The particular issue addressedin that case concerned the use of cockpit voice recorders, but thedecision generally explains the relevance of the international materials14 Convention on International Civil Aviation 15 UNTS 295 (open for signature 7 December 1944,entered into force 4 April 1947).15 New Zealand Air Line Pilots' Association Inc v Attorney-General [1997] 3 NZLR 269 (CA).16 In New Zealand this function is performed by the Transport Accident Investigation Commissionestablished under the Transport Accident Investigation Commission Act 1990.to the interpretation and application of the Act, and the Civil AviationRules (the Rules) made under the Act.(b) More recently in Wellington International Airport Ltd v New ZealandAir Line Pilots' Assoc Inc the Supreme Court dealt with theinterpretation and application of provisions in the Rules in light of theprovisions of Annex 14 of the Convention relating to runway end safetyareas. The issue arose because of proposals to extend Wellingtonairport, and involved a successful challenge to the decision of theDirector of Civil Aviation under the Rules in that connection.17 Againthe judgment addressed how the international standards andrecommended practices affect the interpretation of the Rules.[27] The present case involves a decision by the Director under s 37 to issue anexemption from a requirement of the Rules. The content of those Rules is similarlyunderstood by reference to an Annex to the Chicago Convention, in this case Annex8, which deals with the airworthiness of aircraft. There is no interpretation issue ofthe kind that arose in either of the above authorities, but the overall system for civilaviation regulation internationally, and therefore domestically, remains relevant to theapplication of s 37. I will explain this in greater detail below.[28] I note that, as emphasised by the Court of Appeal in New Zealand Air LinePilots' Assoc Inc, there is a degree of latitude exercised by States in the implementationof the provisions of the Chicago Convention as well as the standards andrecommended practices.18 That is reflected in the terms of Annex 8 which contemplateStates having their own "national codes of airworthiness containing the extent of detailnecessary for the certification of individual aircraft".1917 Wellington International Airport Ltd v New Zealand Air Line Pilots' Assoc Inc [2017] NZSC 199,[2018] 1 NZLR 780.18 See New Zealand Air Line Pilots' Assoc Inc, above n 15, at 278 and 284-285 per Keith J.19 David McClean (ed) Shawcross and Beaumont Air Law (Issue 168, 4th ed, NexisNexis, London,2019) at [43].[29] A key philosophy of the overall system is that it involves an integrated systemof devolved responsibilities.20 Under the system various entities involved in civilaviation are charged with undertaking specific responsibilities, and it is throughobservance of those responsibilities by each of those entities that the overall system ofcivil aviation operates both effectively, and safely. This generally involves each ofthose entities being certified by a domestic civil aviation authority to engage in therelevant activities in question. In the present context the case involves an intention tooperate a particular helicopter in a particular way within New Zealand.[30] Under the civil aviation system there will generally be a particular entity thathas designed an aircraft intended for civil aviation use. This entity will be a certifieddesigner, with the relevant authority within that State being responsible forcertification of the designer. The Wessex Mk 2 aircraft in issue in this case wasoriginally manufactured by Westland Helicopters Ltd in the United Kingdom formilitary use, but was later certified for civilian use. Often aircraft are designed and/ormanufactured by more than one entity. For example, the entity that manufactured theengine for the aircraft may be different from that which designed/manufactured theaircraft itself. Each entity will have been certified to perform its function. Sometimesthe entities who design, and the entities who manufacture, will be different, and theState of design may be different from the State of manufacture. Under cl 1.4 of Annex8 of the Chicago Convention the State of design issues a "Type Certificate" in relationto aircraft of a particular type once it has met appropriate airworthiness requirements.[31] The system also flows through to where an aircraft is actually operated. Thecertified designer/manufacturer will retain responsibility for ongoing safety, overseenby their domestic authority. Each operator of a civil aviation aircraft will need to becertified as an approved operator of that aircraft in the State of operation. Thatcertification will be granted by the relevant authority in that State. In the present casethe proposed State of operation was New Zealand, the relevant proposed operator wasthe plaintiffs, and the relevant authority certifying the operator was the CAA under theAct and Rules.20 For a detailed description of the international regime see Shawcross and Beaumont Air Law, ibid,div II "Administration of Civil Aviation".[32] This integrated and devolved system extends further down the system. Theonly persons who may fly the duly certified aircraft are pilots who are duly certifiedto fly them, and the only persons who may be responsible for maintenance will againbe persons duly certified to undertake the maintenance on those particular aircraft(referred to as Licensed Aircraft Maintenance Engineers or LAME) using certifiedparts from certified suppliers.[33] An important part of this system is that each of the entities performingfunctions are required to do so in accordance with prescribed standards. Standardsand recommended practices are set out in the Annexes, and are amended over time byprocesses managed by ICAO. New Zealand's implementation of the standards andrecommended practices can sometimes be found in the Act, but are more commonlyfound in the Rules which are promulgated by the Minister under Part 3 of the Act. Itis then the participants themselves that have the responsibility for adhering to the Rulesas certified entities, although the Rules contemplate various levels of oversight ofthese responsibilities by the CAA.[34] There are detailed requirements and procedures for making and amending theRules by the Minister of Transport under Part 3. This involves industry consultation,and such amendments normally take a long period of time.[35] One of the features of this overall regime is that the CAA as regulator underthe Act does not police compliance in an exhaustive way. To some extent the systemis designed to be self-regulating, or self-checking, with the certified entities havingoversight and checking responsibilities within the system. That is why it can bedescribed as an integrated system of devolved responsibilities. Even a pilot of anindividual aircraft, for example, can be thought of as having responsibilities for thecontinuing operation of the safety system. Realistically, given the detail involved in asafe civil aviation system, that is the only way the system can be effective. The CAAcould not police everything by itself — responsibilities need to be devolved. And it isintegrated as the basic structure, and the general content of the requirements, all derivefrom the Chicago Convention and the standards and recommendations developedunder it through ICAO. Given the international dimension of civil aviation, everyoneis singing from the same hymn book, or at least their own translation of it.The Westland Wessex[36] The Westland Wessex series helicopters were produced in the United Kingdombetween 1958 and 1970. The original Wessex Mark 1 was developed for the RoyalNavy to perform anti-submarine duties. The first Wessex Mk 2 flew in January 1961.The Wessex Mk 5 was developed for the Royal Airforce. The only essential differencebetween the Mk 2 and the Mk 5 was that the Mk 2 was used by the military, and theMk 5 the air force. They were essentially the same aircraft. There is also evidence ofa small number of Wessex used by the Iraqi Airforce, and flown by Mr Bernie Lewisin that connection. They were called the Wessex Mk 52.[37] It is apparent that the Wessex was a well-respected helicopter. There isevidence of some problems particularly with the initial version, but those who flew itappear universally to admire it. Indeed it obtained reputation by being used for theQueen's Flight, meaning that it was used for transporting the Royal Family on anyoccasion when such helicopter transport was required.[38] Westland also produced a civil variant of the military aircraft called the Wessex60. It was designed to carry 10 passengers for air transport standards. It was issuedwith what was effectively a type certificate under the civil aviation system by the UKAir Registration Board in September 1965. It accordingly became part of the civilaviation system I have described. The aircraft was manufactured and delivered to asole operator, Bristol Helicopters. The Westland Wessex 60 was used for passengertransport for North Sea oil rigs.[39] There was, however, a significant accident in the North Sea involving 13fatalities in 1981. Later in 1990 the United Kingdom Civil Aviation Authority(UKCAA) withdrew the type certification. A letter dated 15 October 1999 from Mr DW Blackwell, Head of Aircraft Certification section of the UKCCA to Mr P Gill of theCAA advised as follows:21I confirm that the Wessex 60 no longer has a status of a type certified product.21 Mr Grainger of GKN (formerly Westland Helicopters) suggested that this letter was misleading insuggesting there was a connection between the 1981 accident and the 1990 decision, and in thesuggestion that the accident was not investigated.The status was withdrawn at the request of Westland Helicopters Ltd (WHL),the type design organisation at the time.A Wessex 60 suffered a fatal accident in the North Sea in August 1981 which,because of decisions by the operator to discontinue operating the type andWHL to discontinue support was never fully investigated for cause. Thewreckage was not recovered from the sea.This uninvestigated element of the type's continued airworthiness recordwould come back on the table where any re-instatement of support proposed.It is difficult to see how any investigation would be meaningful consideringthe time that has passed.With no cause identified and therefore no solution possible it is doubtful thetype certificate status would ever be restored.[40] Two of the Wessex helicopters were registered for operation in New Zealandprior to the plaintiffs' application. A company called Metro Air Ltd of Christchurchoperated by a Mr O'Malley imported a Wessex Mk 5 in 1998. In 1999 it also importeda Westland Wessex 60.[41] The first of these helicopters was inspected by CAA and issued anairworthiness certificate on 18 January 1999 after flight tests were conducted. Theflight test pilot, and the certifier, was Mr Lewis. His report of the flight inspectionsrecommended certification in the Restricted category, but it was ultimately registeredin the Special category given that there was no type certificate for this aircraft. I willexplain these categories in greater detail below.[42] Metro Air then used this aircraft for helilogging. Such use was controversialgiven that aircraft within the Special category were not to be used for "hire or reward".Mr O'Malley was subsequently prosecuted for using the aircraft in that way. Again Iwill explain this issue in greater detail below.[43] In any event on 12 February 2001 this aircraft was involved in an accidentwhich totally destroyed the aircraft, including because of a subsequent fire. The pilotwas killed. The accident was not investigated by the Transport Accident InvestigationCommission under the procedures contemplated by Annex 13 of the ChicagoConvention, but the CAA conducted its own investigation.22 The CAA investigation22 TAIC does not conduct all accident investigations, but only those that give rise to significant safetyissues – see s 13(1) of the Transport Accident Investigation Commission Act 1990.report identified that the aircraft was operating on only one of its two engines prior tothe crash. It could not be established why that was the case, and accordingly theinitiating cause of the accident was not established. The manufacturer responsible forthe engine, Rolls Royce, conducted its own investigation which was also inconclusive.The CAA investigation nevertheless found that the pilot was primarily focused on loglifting activity, and probably did not detect that the second engine was not operative,that the helicopter rpm could not be sustained with a single engine given the weight ofthe log, and that the pilot most likely attempted to lower the nose and descend in anunsuccessful attempt to increase the rpm when he crashed. The findings were,however, inconclusive.[44] Following the accident the Director of Civil Aviation, Mr Jones, introduced alimitation on the use that could be made of the Wessex, in particular by imposing acondition which prevented the external hook fitted to the aircraft being used forcarrying loads. This had the effect of preventing the Wessex from being used forhelilogging.[45] Metro Air also attempted to register the other Wessex 60 aircraft it had acquiredunder a Standard category, but this was declined by the CAA. Metro Air also importedtwo further ex-military Wessex aircraft, but they were also not certified.The requirements of the Rules[46] Under the Rules there are detailed requirements before an aircraft can beoperated for civil aviation.23 In particular Part 21 of the Rules deals with thecertification of products and parts, which includes the certification of the aircraft. Atthe relevant time there were three relevant categories of certification referred to incl 21.173:(a) Standard category aircraft.(b) Restricted category aircraft.23 Except as otherwise indicated, this section describes the Rules as they stood in 2004–2005.(c) Special category aircraft.[47] Under cl 21.191(2) any Standard or Restricted category airworthinesscertificates were required to conform with the type acceptance requirements set outearlier in the Rules. For example under cl 21.43(a) an applicant had to provide theDirector with:(1) Evidence that the type design has been approved by an ICAOcontracting state by the issue of a Type Certificate or an equivalentdocument;[48] So both Standard and Restricted category aircraft were required to be issuedwith a type certificate under the international framework described above. Thedifference between Standard and Restricted categories is not material in the presentcase. Restricted category was appropriate when there is some restriction on theoperations of a particular aircraft, for example because it has been modified for adifferent use from its original design.[49] Clause 21.173 identified a third category, being the "Special categoryairworthiness certificate" which involved either an experimental certificate or a specialflight permit. The special flight permit under cl 21.195 appeared to only contemplatea particular flight being authorised. Notwithstanding its name, an experimentalcertificate under cl 21.193 could be issued for other than experimental reasons,provided the standards in cl 21.193(c) were met, which broadly involved the aircraftbeing subject to flight evaluation and that it met certain safety standards.[50] There were, however, prescribed operating limitations on an aircraft obtainingcertification in the Special category. Clause 91.105 provided:91.105 Special category airworthiness certificates – Operatinglimitations(a) Except as provided in paragraph (b), no person may operate an aircraftthat has a special category airworthiness certificate for the carriage ofpersons or goods for hire or reward.(b) Paragraph (a) does not apply to a person operating an aircraft for thecarriage of persons for hire or reward where the person being carriedis-(1) the holder of a flight instructor rating issued under Part 61; and(2) giving conversion instruction to the operator.(c) Except in the case of take-off and landing, no person may operate anaircraft that has a special category airworthiness certificate over acongested area of a city or town unless the aircraft has been authorisedto do so by the Director in writing.(d) A person operating an aircraft that has a special categoryairworthiness certificate must advise each person carried in theaircraft of the category of airworthiness certificate held.[51] In addition, and as identified above, following the Wessex accident under theoperation by Metro Air the Director of Civil Aviation had decided to impose alimitation on the airworthiness certificates. Under cl 21.173(b) the Director wasempowered to prescribe operating conditions and limitations on any airworthinesscertificates.[52] There were other former military aircraft in New Zealand undertakinghelilogging. A number of former US military helicopters known as the UH-1 Iroquoiswere so used. They operated in the Restricted category. The reason for this was alittle unusual. The Federal Aviation Authority of the United States of America (theFAA) had issued the equivalent of a type certificate for this aircraft. Earlier assessmentby the CAA had held that these aircraft did not meet the type certificate requirements,but they were later seen by CAA as meeting them. In addition a company called HeliHarvest Limited used Russian built Mi-8mtv-1 and Mi-17 helicopters for suchhelilogging activities. Again this proceeded on the basis that the helicopters were typecertified. In addition there were other operators using non-ex-military helicopters forsuch activities. Such helicopters are type certified and usually more expensive thanex-military helicopters.The Director's exemption power[53] The detailed requirements of the Rules described above prevented the plaintiffsfrom operating the Wessex for helilogging activities. The limitation on external loadlifting was implemented by a discretionary decision, and accordingly could beaddressed by the discretion exercised by the Director on the issuing of the certificate.But the other requirements of the Rules identified above would prevent the proposedactivity.[54] There was, however, a power in the Act that enabled the Director to grant anexemption from the requirement of the Rules. At the relevant time s 37 provided:37 Exemption power of Director(1) The Director may, if he or she considers it appropriate and upon suchconditions as he or she considers appropriate, exempt any person,aircraft, aeronautical product, aerodrome, or aviation related servicefrom any specified requirement under section 28 or section 29 orsection 30 of this Act.(2) Before granting an exemption under subsection (1), the Director shallbe satisfied in the circumstances of each case that—(a) the requirement has been substantially complied with and thatfurther compliance is unnecessary; or(b) the action taken or provision made in respect of the matter towhich the requirement relates is as effective or more effectivethan actual compliance with the requirement; or(c) the prescribed requirements are clearly unreasonable orinappropriate in the particular case; or(d) events have occurred that make the prescribed requirementsunnecessary or inappropriate in the particular case,—and that the risk to safety will not be significantly increased by thegranting of the exemption.(3) The number and nature of exemptions granted under subsection (1)shall be notified as soon as practicable in the Gazette.(4) Nothing in this section shall apply in any case where any rulespecifically provides that no exemptions are to be granted.[55] There were three steps in the grant of an exemption under this section:(a) First one of the pre-requisites set out in s 37(2)(a)-(d) needed to besatisfied. Each of the matters set out in paragraphs (a) through to (d)are alternatives, but one of them must exist to the Director'ssatisfaction.(b) Secondly the Director must be satisfied that the risk to safety will notbe significantly increased by the granting of the exemption inaccordance with the concluding words of s 37(2).(c) The Director then has a discretion under s 37(1) to grant an exemptionif he or she thinks that appropriate, and on such conditions he or sheconsiders appropriate.[56] At the time of the events of this case, a specific Rule existed in relation to s 37exemption applications — Rule 11.503. The additional procedural matters it outlineddo not appear material.24[57] There are two relevant interpretation issues worthy of note. The first is thatthe ability to issue an exemption subject to conditions under s 37(1) seems to me tohave enabled the Director to impose conditions in order that he or she can be satisfiedof the matters set out in s 37(2). In particular, if a Director is not satisfied that theexemption without conditions would not significantly increase risk, but would be sosatisfied if the exemption was granted subject to conditions, it seems to me that thepre-requisites in s 37(2) could be satisfied by imposing the conditions.[58] Secondly it is apparent that the Director ultimately exercised a discretionarypower under s 37(1). It is plain that an applicant for an exemption is not entitled to anexemption simply because the s 37(2) requirements are satisfied. In Land TransportSafety Authority v Casey the Court of Appeal held that to be so in relation to a verysimilarly worded provision set out in s 166 of the Land Transport Act 1998 dealingwith land transport issues.25 The exemption power in relation to civil aviation isexercised in a different context, however, given the very elaborate Rules regulatingcivil aviation. But it is undoubtedly correct that the Director exercises a discretion andcannot be compelled to grant an exemption simply because the s 37(2) pre-requisiteshave been satisfied.[59] This sets the scene for the issues that were central to the present case. Theplaintiffs acquired Wessex helicopters from Metro Air, and then went about seeking tohave them certified under the Rules to enable helilogging activities. That necessarilyincluded applications to the Director that the exemption power under s 37 be24 One of the plaintiffs' expert witnesses, Mr Stevens, raised an issue about a publicationrequirement, but I do not regard it as material to this case. I also note the Director's s 37 powercould be delegated – s 23A.25 Land Transport Safety Authority v Casey CA 14401, 26 February 2002, especially at [32].exercised. The applications were for exemptions to the Rules preventing entry intothe Restricted category (particularly the need for type certification) or alternativelyinto the Special category (particularly the limitation on hire or reward). Thediscretionary limitation on load lifting also needed to be lifted. The allegations ofmisfeasance and deceit arise in connection with the manner in which the Director andcertain advisers dealt with these applications.FACTUAL BACKGROUND[60] In order to address the plaintiffs' claims I must first examine the backgroundto the Director's actions surrounding the judicial review proceedings in November andDecember 2004, and his ultimate decision in August 2005.Evidentiary issues[61] Before addressing the facts, and making factual findings, it is appropriate torecord some initial matters concerning the evidence.[62] First, the events in question occurred between 2002 and 2005, approximately15 years ago. Whilst it was clear that the witnesses recalled some of those events, itseems to me that it is particularly important to assess oral evidence in light of thedocumentary record, and to give the documentary record significance in makingfactual findings.26[63] Secondly, some of the relevant witnesses have since died. This includesMr Jim Barclay who was the plaintiffs' aviation consultant who dealt with theapplication in 2005, and the plaintiffs' solicitor at the time, Mr Graham Takarangi.Given his advanced years, there were also concerns about the availability of Mr Lewis,who was a central witness, for a trial this year. In those circumstances I heard hisevidence over three days in August 2018. At that stage he was 90 years of age. I amadvised that he is still with us.[64] I also record that Mr Jones was able to give some evidence, but for reasons thatdo not need to be elaborated on in this judgment, but which are outlined in reports26 See Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) at [15]–[22].admitted by consent from his general practitioner and a consultant, he hadconsiderable difficulty in recalling the events. He read his brief of evidence, and wascross-examined for more than half a day, but counsel then agreed that his cross-examination should be abandoned. The reality was that his evidence had little or noprobative value given his inability to recall events. I set out the basis upon which Iwould assess his evidence, and more information of the circumstances in a minutedated 30 October 2019.[65] Finally it is appropriate to record that the plaintiffs called a large number ofwitnesses that dealt with many of the issues that were relevant to the underlyingapplications made by the plaintiffs at the time in an extensive way. There wereobjections to some of this evidence, including on the ground of relevance, which Ihave recorded in rulings and minutes. Much of the evidence that was called by theplaintiffs was only of marginal relevance, but for the reasons I explained in my rulingsand minutes it was not inadmissible on that ground.CAA concerns regarding helicopter safety[66] Former military helicopters had been in use in New Zealand for heli-loggingactivities from about 2001. The former Soviet helicopter, the Mi-8/Mi-17 had been inoperation as a type-certified aircraft, with the State of Moldova (formerly part of theSoviet Union) as the national authority. In addition the former US military helicopter,the Iroquois UH-1 (known as the "Huey") was also in use. It was type certified by theFAA notwithstanding the aircraft was no longer supported by the manufacturer, BellHelicopters.[67] In the period leading up to the plaintiffs' first approach to the CAA in relationto obtaining its exemptions, the CAA had a growing concern relating to the safetystandards involved in the operation of ex-military helicopters in New Zealand. Tworeports from Mr Jeremy Remacha, the Manager of the Aircraft Certification Unit ofthe CAA are significant in that respect.[68] On 27 June 2001 Mr John Lanham, the General Manager at General Aviationhad commissioned a review into the operation of ex-military helicopters by the CAA.The following year, by memorandum dated 8 August 2002 Mr Remacha providedMr Jones with a report in response to the review. It stated in its overview:The application of ex-military helicopters to a variety of roles in New Zealandover the last decade has raised a number of key issues surrounding the levelof safety for particularly external load operations. A number of key issueshave arisen which indicate current level of safety is inadequate and both shortterm and long-term action is required to address the situation. As more andmore operators in the industry are keen to continue sourcing ex-militaryaircraft for external lifting operations, particularly heli-logging, the CAA mustensure that it formulates a plan to address the immediate safety issues in arational and logical approach, whilst making strategic plans to address thewider regulatory issues raised by this type of operation with these aircraft.[69] The report made a number of recommendations designed to increase safety.They included a recommendation that any future importation of new ex-militaryhelicopters would require type acceptance certification, and that all Special categoryhelicopters would have limitations placed on the type certificates for external load andagricultural operations until the level of safety of the intended operation had beenassessed as adequate.[70] In an earlier report of 22 May 2002 Mr Remacha specifically addressed theWestland Wessex. That report was prepared because of the applications that had beenmade by Metro Air, together with the consequences of the Wessex accident describedabove. This was a detailed analysis of the issues relating to this aircraft. This reportsaid:The current level of [the original equipment manufacturer] and continuedairworthiness support from the State of Design for either the Wessex Mk 2 orMk 5 series ex-military helicopters does not provide sufficient confidence thatthe level of safety is adequate for anything other than a general purposeoperation conducted under CAR 91 to a basic military maintenanceprogramme. Any approvals or airworthiness certificates issued shouldtherefore limit the operation appropriately.[71] The report then went on to recommend a series of steps that would be requiredto be taken before the Westland Wessex could obtain authority beyond this basic abilityto operate. This report ultimately led to a decision of the Director, set out in his letterto Mr O'Malley of 27 May 2002, that the Special category registration would besubject to conditions, including the condition that the helicopter could not be used forexternal load operations.[72] In September 2002 the views of the CAA arising from the 8 Augustmemorandum concerning ex-military helicopters were presented to the AviationIndustry Association conference. The presentation was then reported in a publicationentitled "CAA News" for September and October 2002. It occupied the cover pagearticle for that edition with an article entitled "Lifting the safety record – ex-militaryhelicopters". This set out the essence of Mr Remacha's report. This included thestatement that:All special category helicopters will have limitations imposed on external loadand agricultural operations until the level of safety is assessed as adequate forthe intended purpose.[73] And then in respect of future imports that:• Imports of new types must meet the type acceptance certification.• Type certificates must address maintenance and continued airworthiness.[74] The publication also referred to a review of Restricted and Specialairworthiness categories under Part 21 of the Rules.[75] Some witnesses called by the defendant denied what was stated inMr Remacha's reports, and this publication, was CAA policy. It appears thatMr Remacha's August report may not have gone through formal policy approvalchannels within the CAA. But the advice given to the industry nevertheless reflectedCAA policy that had been effectively approved by senior managers, and provided tothe Director himself.27[76] The plaintiffs contend that this publication by itself gave them reason to believethe Westland Wessex could now be operated for helilogging. I do not accept this. Thereport, and the publication, were not directed to the topic of any required s 37exemption, and the matter of hire and reward in particular. But I accept that theplaintiffs could reasonably believe that permission might be a possibility if theincreased standard of safety generally described was demonstrated to CAA'ssatisfaction. In other words, a potential pathway for approval was identified.27 There is also some evidence that the 8 August 2002 memorandum was only a draft, but as itssubstance was presented at the Conference, and in the CAA News, nothing would appear to turnon that.Development of Mr Ford's proposals[77] Mr Ford explained his personal background in evidence. He had been inspiredby his grandfather who had worked in the logging industry, and he wanted to be apioneer like him. He began his early working life in the logging industry, but was alsoa pilot, and later developed proposals for helilogging. He acquired helicopters, andalso made innovations to assist that activity, including the development of a portablesaw mill, and alternative log carrying techniques.[78] He initially used Hughes helicopters, and then subsequently other types forhelilogging. This included a Westland Scout helicopter which he acquired fromMr O'Malley of Metro Air in about 1998. It was smaller than the Wessex. Heexplained that no issue was raised by the CAA in relation to these activities. I note,however that there was a fatal accident in the Scout while it was being used forhelilogging.[79] From about November 2002, after seeing the article in the CAA News referredto above, Mr Ford made efforts to acquire the Wessex helicopters operated byMr O'Malley. This was after the Wessex accident, and the prosecution ofMr O'Malley, and there was accordingly a potential opportunity to acquire the aircraftgiven that Mr O'Malley's endeavours were proving unsuccessful.[80] Initial contact was made on his behalf with the CAA in December 2002 afterwhich Mr Ford agreed to acquire two Westland Wessex helicopters that wereoriginally owned by Mr O'Malley, and a Wessex 60 which was not registered. He alsopurchased some spare parts.[81] By letter dated 21 January 2003 to Mr Remacha of CAA, Mr Ford advised thathe had purchased the aircraft and asked for a meeting to discuss a proposal for ahelilogging trial. At about this time he involved Mr Maurice Gordon, a well-respectedaircraft engineer in the project. He also involved Mr Ronald Potts who was an aircraftengineer certified to maintain the Wessex.[82] After further exchanges in correspondence a meeting was arranged with theCAA in February 2003.Meeting February 2003[83] On 10 February 2003 Messrs Ford and Gordon and one other representative(Mr Paul Miller) met with CAA representatives (Messrs Lanham, Remacha, Fogdenand Pearson). The purpose of the meeting was for the plaintiffs to obtain advice as towhat would be necessary for them to be authorised to conduct helilogging activitiesusing the Wessex.[84] I broadly accept that at that meeting the CAA representatives outlined therequirements for obtaining such permission. Mr Lanham and Mr Remacha were bothcalled as witnesses for the plaintiffs notwithstanding that they were former senior CAAemployees. Mr Gordon also gave evidence. Mr Fogden was called by the defendant.Mr Lanham referred to the plaintiffs providing a "whole concept" proposal that wouldinvolve CAA approving:(a) the aircraft's airworthiness;(b) a maintenance programme; and(c) an operations programme.[85] The CAA personnel particularly emphasised at the meeting the need for designauthority support as part of such approvals. The plaintiffs referred to theirunderstanding that this was a reference to the support of the originaldesigner/manufacturer, which was now GKN in the United Kingdom.[86] I accept that the plaintiffs reasonably believed that if they satisfied the CAA onthe three broad categories identified above that permission to operate the Wessex forhelilogging would be forthcoming in the Special category. The plaintiffs wereprovided with a copy of Mr Remacha's report into the Wessex of May 2002, and atthe meeting Mr Remacha went through the recommendations in it. So it wasunderstood that there were many detailed issues to address. But all the issues inrelation to the Wessex identified in Mr Remacha's report are legitimately seen assubsumed within the three broad topics identified at the meeting.[87] There were no guarantees that permission would be granted, however. Behindeach of the three categories of requirement there were a series of detailed issues, andthe plaintiffs could not guarantee success in obtaining the CAA's approval in thosethree areas. It was also expressly pointed out that the CAA would not lead theproposal, and would simply assess what the plaintiffs put to the CAA. I note that theneed for a s 37 exemption was not specifically discussed at the meeting.[88] But I do not accept that it was expressly stated, or even implicit, that if theplaintiffs satisfied CAA on the three matters the CAA had outlined, it might still notgrant approval. That would be inconsistent with the purpose of the meeting, whichwas to obtain the CAA's advice on what was required, and the response of the CAArepresentatives which was intended to explain what the requirements were. Iaccordingly accept the evidence of Messrs Ford and Gordon that they were encouragedby this meeting, and they went about committing time and resources to meet therequirements of these three areas in light of that encouragement.[89] Mr Ford said that he completed the purchase of the Wessex aircraft only afterthis meeting. There does not appear to have been a formal contract, but the agreementto purchase seems to me to have been formed at the end of the previous year, althoughpotentially not completed until after this meeting.[90] I will deal with the consequences of this advice, and the reasonableexpectations of the plaintiffs in more detail below. Ultimately a legitimate complaintarising from any breach of legitimate expectation does not mean the plaintiffs are ableto succeed in their actions in tort which they advance. But it provides relevantbackground to the events as they unfolded.The Director's May 2003 letter[91] Following the meeting the plaintiffs made progress, including by contactingGKN, and Air and Ground Aviation Ltd (AGA), a company that now owned remainingWessex helicopters and parts in the United Kingdom.[92] By email to Mr Remacha dated 22 April 2003 Mr Gordon advised that GKNhad indicated a cost of £114,285 for the analysis and maintenance document work,and there were flight test costs of approximately $85,000. Mr Gordon stated that MrFord required confidence that "on satisfactory completion of the test and analysis"CAA would remove the current prohibition on logging, and that it would then permitcommercial use of the Westland Wessex helicopters for logging operations. He askedCAA to provide that confirmation.[93] CAA addressed that request at an internal meeting involving not only MessrsRemacha and Lanham, but Mr Jones, Mr Fogden and the CAA chief legal counselMs MacIntosh. After debating the issues at the meeting it was decided thatMr Remacha would draft a letter for Mr Jones' consideration to be sent in response.[94] By letter dated 7 May 2003 Mr Jones wrote to Mr Ford. He referred toMr Gordon's email and stated that the request had been reviewed and " CAA hasidentified the following issues". The letter then identified the current conditionpreventing external load operations. It advised that given the Wessex was not a typecertified aircraft it could only be considered in the Special category. It said to removethe external load restriction would involve "two key elements". First was anassessment of the aircraft's airworthiness, with the letter stating that "your currentapproach to GKN Westland is very appropriate in working towards meeting thisrequirement". The second involved operational considerations, with the letteradvising that the draft operations manual was "appropriate and suitable for furtherdevelopment".[95] The letter then addressed the restriction on hire and reward involved in theSpecial category. It advised that the CAA's view was that such helilogging activitiesdid involve hire and reward and that:To address this rule prohibition, you may apply to the CAA under CAR 11.503for an exemption against this requirement. The CAA will consider thisapplication in conjunction with the supporting evidence provided.[96] The Director and the CAA later contended that this letter stated that there wereno assurances. Equally the plaintiffs later contended that it provided such assurances.The letter expressly does neither, and in that respect it is unfortunately ambiguous. Ifthe CAA wanted to tell the plaintiffs that there were no assurances, and that even if thematters it had outlined were met to its satisfaction it may not grant approval, then thisshould have been stated in this letter. After all that was what Mr Gordon's lettersought. Equally, given that the letter did not actually provide the express assurancethat was sought, it was apparent to the plaintiffs that the CAA were not prepared togive any such express assurances. From the plaintiffs' point of view that necessarilymeant there was a risk.[97] But given the background described above it would be fair to say that the letterprovided further encouragement to the plaintiffs. More specifically the plaintiffs couldreasonably expect that if they met the prerequisites for gaining approval that had beenexplained by the CAA approval would be forthcoming. They could not be sure,however, that they would meet CAA's requirements. In the letter the Director advisedthey were on-track to doing so, however. The final reference to CAR 11.503 is areference to s 37 (to which CAR 11.503 cross-referenced) but there was no suggestionthat this would involve any additional unarticulated requirements — rather it wasraised as a means to "address this rule prohibition". I do not think that couldreasonably be understood to suggest that there were potentially additionalrequirements that had not been explained.Meeting May 2003[98] A further meeting was then held at GKN's premises at Cowes on the Isle ofWight in the United Kingdom on 21 May 2003. GKN was represented by MessrsGladdis and Grainger and other Wessex specialists. The plaintiffs were representedby Mr Gordon. The CAA also attended through Mr Remacha and Mr Geoff Connor.Mr Remacha explained that he was in Europe for another purpose, and took theopportunity to attend the meeting.[99] Mr Remacha generally accepted the evidence of Mr Grainger and Mr Gordonin relation to this meeting, although he did not accept Mr Gordon's evidence that theimpression was given as a consequence of the discussions that his 22 May 2002 reportwas "no longer quite so relevant". I agree that the issues in the report remainedrelevant. The key feature of the meeting was, however, that GKN were supportive,was prepared to back the plaintiffs' proposals. This had been one of the keyrequirements mentioned at the February 2003 meeting.[100] This was Mr Remacha's last real involvement in this issue. He was secondedfrom CAA to Air New Zealand in July 2003 and left the CAA for the private sector inSeptember 2003. He now resides in Zurich working in the private sector and returnedto New Zealand to give evidence.[101] One of the points of discussion at this meeting was the programme to engagein test flight trials in New Zealand, and GKN agreed to oversee those trials so that theairworthiness of the Wessex could be established to CAA's satisfaction.[102] I note, however, as Mr Grainger explained when he gave evidence, that GKNhad no expertise in relation to the engines used in the Wessex and the concept of"engine lifing" — which refers to when components of the engine must be replacedgiven their usage. When the Wessex was being used for activities for which it was notexpressly designed — ie repetitive heavy lifting operations — the "lifing" ofcomponents of the engine could significantly change. GKN's stance was that theplaintiffs would need to liaise directly with the engine manufacturer, Rolls Royce.GKN were nevertheless experts on the "lifing" of the non-engine components of theWessex, and this was a matter that would be expressly addressed during the anticipatedflight trials.The 2004 flight trials[103] Between June 2003 and June 2004 the plaintiffs progressed their plans,including by dealing with the flight trials. This took longer than the plaintiffs wereexpecting. In part that was due to delays at GKN.[104] Mr Ford explained that during the period leading up to the trials he purchaseda further five Wessex aircraft and spare parts from AGA for a total of £225,000. AGAhad obtained much of the residual Westland Wessex fleet in the UK. Mr Ian Dodds ofAGA gave evidence and explained the steps he had taken in the UK, in conjunctionwith GKN and the UKCAA to maintain the viability of the Wessex for active use,particularly as a civil aircraft.[105] A draft petition for exemption from the hire and reward limitation for Specialcategory registration had been submitted by the plaintiffs in October 2003. Thefollowing year a petition was lodged seeking an exemption from the type certificationrequirement in the Restricted category. Both petitions were treated as alive when theDirector of Civil Aviation was asked to make decisions in 2005. I accept that it wasthe CAA that raised with the plaintiffs the possibility of using the Restricted categoryas an alternative to the Special category during this period.[106] Ultimately the flight trials took place in June 2004 under GKN's supervision.Representatives of GKN and the CAA were present during part of the trials. They canbe described as a success. A document described as the "green book" was producedas a consequence. This involved a detailed assessment of the airworthiness of theaircraft for its helilogging operations, and formed the basis for maintenance andoperational procedures.[107] Some issues emerged during the flight trials. Both of the main pilots gaveevidence. The pilots reported some vibration during the early flights, but this appearsto have been addressed by further flying experience. On one occasion the helicopterwould not start, but this issue was remedied. Initially GKN had intended for a frameto be attached to the aircraft for lifting purposes, and that never occurred, probablybecause of delays at the GKN end. But these issues did not prevent the flight trialsbeing successful.[108] During the process of seeking approval for conducting the flight trials,including by letter to the CAA dated 7 May 2004 Mr Ford sought further hours oftrials. In Mr Lanham's email response the same day the CAA declined the additionalhours involved. When doing so Mr Lanham explicitly addressed, for the first time,the question whether there would be approval following the processes the plaintiffswere going through. He stated:I regret if there has been any misunderstanding and I emphasise that there hasbeen no change in thinking or little 'policy' with respect to your long termgoals. We also appreciate the considerable investment you have made, wecommend the professional approach you are taking and we wish you everysuccess in the outcomes. However, as we agreed, this project was/is alwaysgoing to be a steady process through to the end of carefully planned andapproved stages, with no guarantee necessarily of technical, operational orfinancial viability at the end of it.[109] As I have already said, however, the plaintiffs could readily accept this point.The plaintiffs could not guarantee that they would meet CAA's requirements in eachof the three areas CAA had outlined. But what the plaintiffs could reasonably expectwas that the CAA had told them what the requirements were, and that if they met thoserequirements to CAA's satisfaction, approval would be forthcoming. Mr Lanham'semail is consistent with that understanding.[110] The trials themselves were completed by August 2004. From the plaintiffs'perspective, however, the delays in progressing its applications were placing it underfinancial pressure. On 26 July 2004 the formal petition for exemption from Rule 21.43was filed. This was an application for registration in the Restricted category. In 2003an application had been sent in relation to Rule 91.105(a), the restriction on carriageof persons or goods for hire or reward, in relation to the Special category.28 Soon afterpresenting the results of the trials and making the application Mr Ford beganpressurising the Director to grant his applications. When this was not immediatelyforthcoming he also communicated with the Minister of Transport, and began mediacontact. He also sought the assistance of the New Zealand First Party. All of thisprovided the backdrop to the circumstances that presented themselves to the Directorin the following months.[111] It is appropriate to record that the following year Mr Ford was charged with anoffence of using the aircraft during the flight trials for "hire and reward" activities.Whilst the plaintiffs had been given approval to conduct the trials under the Specialcategory, and the restriction on external loads had been lifted for that purpose, therewas no exemption from prohibition against hire and reward. Mr Ford had arrangedcontracts to lift logs in association with the trials. The prosecution was unsuccessful,however, with the District Court concluding that the purpose of these activities wasnot "hire or reward" but testing the aircraft under the trials, which had beenauthorised.29 That approach was upheld by the High Court on appeal.3028 It was technically only a draft when sent, but nothing turns on that.29 Civil Aviation Authority v Heli Logging Ltd DC New Plymouth CRI-2005-043-2361, 12 April2006 at [42] and [47].30 Civil Aviation Authority v Heli Logging Ltd HC New Plymouth CRI-2005-043-2361,19 September 2006 at [91]–[93].CAA assessment[112] Following the trials there was a further meeting with CAA on 7 September2004. Messrs Ford and Gordon were accompanied by Mr Gladdis from GKN andMr Lee, one of the test pilots. CAA were represented by Messrs Lanham, Fogden andGill. Messrs Ford and Gordon both gave evidence that at this meeting there appearedto be a change of attitude by the CAA representatives and that they were now morenegative towards the proposal. I accept that such an impression may have been given.As I explain below Messrs Gill and Fogden both had reservations, and Mr Lanhamleft the meeting early. Mr Gordon also referred to a passing comment that Mr StephenDouglas of the CAA had made to him outside the meeting in which Mr Douglasindicated that he was not agreeable to the plaintiffs' application, and that there was noprecedent for granting it. This is also consistent with the evidence of a slightly earlierinternal CAA meeting on 30 August involving Mr Jones, Mr Lanham, the chief legalcounsel Ms MacIntosh and others where the applications were raised. Mr Jones isrecorded as saying at that meeting that he was "not comfortable with the idea of anexemption given the history of the aircraft operating in New Zealand".[113] I accept that at this point the plaintiffs became aware for the first time that therewas a real prospect that their applications might be declined notwithstanding thesuccess of the trials and the apparent CAA approval of the maintenance and operationsprocedures.[114] Mr Ford gave evidence of an exchange that he had with Mr Gill at the end ofthe meeting on 7 September. Mr Ford asked why CAA did not lift the restriction onexternal lifting to allow the plaintiffs to commence helilogging straight away. Thereply was that to do so would be an offence as this would involve hire and rewardactivities. Mr Ford said he was shocked by the reply, and that this was the first timethis issue was raised and that he would not have sought to meet the three criteria hadhe been told this. This is clearly not correct as the Director's letter of 7 May 2003 hadexpressly made the point that the proposed activities were hire and reward activities.That was the very reason for an exemption petition in relation to the Special category.[115] Following the meeting, by letter dated 9 September Mr Ford wrote to theAssociate Minister of Transport, the Hon Harry Duynhoven. Mr Ford indicated thatthe CAA had advised him that it could not grant the application, and he asked forMr Duynhoven's assistance. From this point Mr Ford engaged in an active campaigninvolving politicians and the media directed to obtaining a positive decision fromMr Jones.[116] Prior to receiving the formal advice on the application in September andOctober Mr Jones had had limited involvement in dealing with the plaintiffs'proposals, however. The preceding year he had met with his advisers in April inconnection with the request from Mr Gordon that the CAA provided an assurance inconnection with the proposal, and this had led to the letter of 7 May 2003 provided byhim in response. The applications were then raised with him again for the first timeat the 30 August 2004 meeting.[117] It was not until 16 September 2004 that he directly became involved again indetail. On that day he met with Messrs Lanham, Fogden and Gill and Ms MacIntoshto discuss the applications. The Director's affidavit in the 2004 proceedings recordsthat he indicated at this meeting that he had safety concerns, including because of thepoor safety record of ex-military helicopters.Advice to the Director[118] Following evaluation of the material supplied to the CAA by the plaintiffs,formal advice was then provided to the Director in the form of memoranda from therelevant CAA staff. In essence that advice was that he should grant one or other of theapplications.[119] In memoranda dated 21 September 2004 and 11 October 2004 Mr Gill, theteam leader of the Aircraft Certification Unit advised that the Unit was satisfied withthe level of airworthiness demonstrated, and he recommended approval in theRestricted category. In a report from Mr Fogden to Mr Lanham dated 11 OctoberMr Fogden addressed the three areas under which the proposal was being assessed. Interms of airworthiness he confirmed that the Aircraft Certification Unit was "satisfiedwith the level of airworthiness demonstrated by the Wessex". In terms of themaintenance programme he advised that there were "no outstanding issues", and interms of the operations manual he advised that "Heli-logging Ltd has produced amanual over and above the [requirements]".[120] By memorandum dated 11 October 2004 to Mr Jones, Mr Lanham then madethe formal recommendations for a decision. He assessed the history of theapplications, and the three areas under which they were to be assessed in light of thosereports. He advised:There are no aircraft certification, flight operations and/or maintenanceconcerns which would prevent or inhibit CAA approval of the Heliloggingproposal.The aircraft should be retained in the Special category, with the prohibition onexternal loads removed, with an Exemption granted from the prohibition onuse for hire or reward operations [121] He then outlined the conditions that he suggested should be granted on thatexemption, one of which involved a review of the approval when the proposedamendments to the Rules then in train was completed.[122] On the basis of this advice I accept that the CAA had assessed the plaintiffs'application in accordance with the three areas originally outlined to the plaintiffs inthe February 2003 meeting, and had met what had been outlined to CAA's satisfaction.On that basis the recommendation to Mr Jones was to approve the application.[123] The recommendations were not without complications, however. First, bothMr Gill and Mr Fogden explained when they gave evidence that their memoranda didnot reflect their view that the application should be granted, but were confined to themore technical issues that they each had been asked to assess. I accept their evidencethat they were not being asked for their opinion on whether granting these applicationswas a good idea. A reservation was expressly referred to in Mr Gill's memorandumto the Director of 21 September 2004, however, where he stated:In my personal view the CAA should never have started the process ofallowing a non-certified aircraft to be used for commercial operations.However now the CAA has allowed the trials and investigations to go so farand the applicant has committed a substantial sum of money, it would be verydifficult to refuse the application except on purely technical grounds.[124] I accept Mr Gill's evidence that he did not think the granting of the applicationswas a good idea. Mr Fogden later recommended that the applications not be granted.By contrast both Messrs Lanham and Remacha were in favour.[125] Secondly there was a significant difference of view between Mr Lanham andMr Gill in relation to the category that should be used to grant the application if it wasto be granted. In the 21 September 2004 memorandum Mr Gill advised that it shouldbe approved in the Restricted category. This was because he was of the view thatallowing non-type certified aircraft to obtain approval for commercial operation in theSpecial category would create a precedent which would undermine the basis ofapproving aircraft operations within New Zealand. As he put in his memorandum inrelation to the requirements of s 37:In fact I find it difficult to see on what ground an exemption could be given,other than that the requirements were unreasonable. As stated above thiswould be calling into question the whole need for type certification. Any othergrounds would effectively not be an exemption, but would be de facto rule-making.[126] He did not see that as being such difficulty with the Restricted category becauseit could be identified as arising from the particular circumstances relating to theWessex which could be regarded as being a better standard aircraft than others thathad obtained type certification (particularly the Iroquois aircraft).[127] Mr Lanham had the opposite view. In his memorandum to the Director of11 October he recommended the issue of the certificate in the Special category forvery similar reasons. He advised:Accordingly, it is considered that [the option of approving in the Restrictedcategory] would set an undesirable precedent and place the CAA at risk in thelong term. The two categories of Standard and Restricted are limited to typecertified aircraft and to accept an ex-military helicopter into even the latterwould open the door to almost any aircraft that could demonstrate a similarstandard to the Helilogging proposal. It will be a Trojan horse.[128] Although they had come to different conclusions, the reasons Messrs Lanhamand Gill advanced were very similar. Both were identifying a significant issue. Theexemption applications were directed to fundamental aspects of the Rules applicableto each category. It was fundamental to the Restricted category that an aircraft be typecertified — that was a key mechanism by which coordinated international aviationregulation was managed. The only exception from the requirement for typecertification was the Special category, which existed only for special aircraft such asexperimental aircraft. The prohibition on hire or reward activities existed to preventaircraft in this category being used for commercial operations. That was the subjectof the exemption application in the Special category. So the applications went to anessential feature of the Rules overall, and effectively the same underlying point.[129] As Mr Gill had advised, granting such an exemption to the Rules could be seenas precedent setting, and more consistent with a change to the Rules than adiscretionary departure for special circumstances. Accordingly such a change couldbe seen to be more appropriately dealt with by Rule amendment, notwithstanding thatthat was a much longer process involving industry consultation. There was a reviewof the Rules in train at the time. Indeed Mr Lanham's recommendation to grant theapplication proceeded on the basis that the position would need to be reviewed afterthe rule amendment process had been completed.[130] Having said that, this did not mean that the application could not be grantedfor one or other category if the requirements of s 37 were met. If the applicationdemonstrated equivalence to meeting those standards, and there was no decrease insafety, it was open to the Director to grant the approvals. The Wessex applicationcould have been treated as a special case, with equivalent or better safety standardsthan other existing helilogging applications using type certified aircraft, such as thoseusing the Iroquois aircraft. When CAA had advised the industry of the relevant policyat the September 2002 AIA conference it had been explained that all new importswould need to be type certified. So the implications of granting the Wessex applicationwere limited as it had already been imported and certified.[131] On 30 September Mr Lanham rang Mr Gordon to say that the aircraftcertification, operations manual and maintenance programme would be signed off bythe end of the week, and he also said that Mr Gill had commented that the test reportswere probably to the very highest standard he had seen. He said the Director wouldnow make a decision. He warned, however, that there was a view that the grant of anexemption might cause a precedent, and that some in the CAA were concerned aboutthat.The Director's response[132] When Mr Jones subsequently received the memoranda providing formaladvice to him, particularly Mr Lanham's 11 October memorandum, it is clear that hewas not in agreement. His 2004 affidavit in the judicial review proceedings recordsthat he met with Messrs Lanham, Gill and Fogden on 13 October and followingdiscussions with them decided that further work was required before he could make adecision. Mr Lanham advised Mr Ford of this by email.[133] Mr Gill explained that he had attended that meeting in the expectation that itwould deal with the debate about which category would be used to approve theapplication, but at the meeting Mr Jones raised a third option — that the applicationbe declined. Mr Gill said that this was the first occasion he was aware that theapplication might be declined.[134] The following day Mr Gill provided Mr Jones with a further report indicatingthat if the application was to be granted it needed to be placed in the Restrictedcategory. He advised that conditions could be imposed to increase the safety of theoperation. He observed:There is no question that logging operations are inherently dangerous. Thishas been shown here in New Zealand in the case of the Iroquois and SH-3Aaccidents, and overseas in several studies. The only Westland Wessexoperating in New Zealand crashed fatally while logging, after only a fewmonths in service. Therefore the safety history of the Wessex in NZ is poor,although the small sample size makes any statistics meaningless.[135] At this stage Mr Jones went overseas to the Directors General of Civil Aviationconference in Hong Kong between 30 October and 8 November 2004. The Director's2004 affidavit records that at that conference he had discussions with officials fromthe United States National Transportation Safety Board — the body responsible foraircraft accident investigation in the United States — in relation to safety concernsregarding ex-military aircraft.[136] While he was away Mr Ford was pressing the CAA, and specifically Mr Jones,for a decision. Mr Ford explained he was becoming financially stretched. EventuallyMr Jones rang Mr Ford from Hong Kong and advised him that he would have adecision for him by Monday 15 November, a few days after his intended return toNew Zealand. I note Mr Ford's evidence that he purchased another three Wessexhelicopters and spare parts from AGA in November 2004.[137] Mr Jones then turned to the matter on his return to New Zealand. There is noevidence of any further work done by CAA officials in the meantime beyond theadditional memorandum for Mr Gill dated 14 October. But it is apparent that Mr Jonesdid not believe that the application should be granted on the basis of the advice he hadbeen given.[138] At that stage he drafted a memorandum dated 9 November. The listedrecipients were Messrs Lanham, Fogden, Gill, Ms MacIntosh and two other seniorCAA managers. That memorandum began:I have considered carefully the possibility of an Exemption to allow theWessex helicopter to undertake logging operations. At this stage I have notbeen convinced that it would be safe to grant the Exemption. My reasons arelisted below:[139] Then after setting out 18 reasons, and the two options for the grant of theexemption, the memo then stated:Both these are Exemptions to the Safety Rules and I am not prepared to acceptthe responsibility nor do I feel it would be wise.Mr Ford has undertaken a significant amount of work to show these aircraftare safe. However, I am not prepared to allow this precedent of ex-militaryaircraft to continue being added to the New Zealand register for Hire andReward operations.It is my recommendation that no additional "Ex-Military" helicopters beadded to the New Zealand register unless for only private use on the "SpecialExperimental" category and not available for logging operations. Also aprohibition of logging operations should be placed on all existing "Restricted"category UH1 aircraft.[140] This memorandum was not sent to the intended recipients, however. RatherMr Jones sent it in draft form to Ms MacIntosh as chief legal counsel for advice. Thereis a further marked-up version of this memorandum also bearing the 9 November date.Ms MacIntosh accepted when she gave evidence that she would have made themarked-up changes and comments in this version.31[141] Ms MacIntosh made a number of significant proposed alterations to the draftmemorandum. For example she re-formulated it around s 37 of the Act. She alsoadded in references to Mr Remacha's 8 August 2002 memorandum concerning ex-military aircraft. She changed the proposed conclusion so that it now read:I have not considered whether the grounds specified in 37(2)(a) to (d) exist inthis particular case. I am of the view that it would be very difficult for theseto apply. However, regardless of whether they do, I am of the view the risk tosafety would be significantly increased if the Wessex operated in the type ofoperations proposed by Helilogging Ltd. I cannot exercise my discretion andgrant an exemption.[142] It is also apparent that a version of the draft memorandum was provided toMr Gill. In an email from Mr Gill to Mr Jones of Monday 15 November he providedcomments on one of the versions. It is apparent that the version that he providedcomments on is a version following the changes made following Ms MacIntosh'sinput. For example he asked for a paragraph that had been inserted in her marked-upversion to be deleted, and commented that the reason for the deletion was "asdiscussed". This suggests that he discussed the matter with Mr Jones.[143] There are no further versions of the draft memorandum available. But it isapparent that the Mr Jones did not feel in a position to send the memorandum with thedecision it recorded, including because of the responses he was getting on the draftwhich involved significant proposed changes and comments. He had, however, toldMr Ford that he would make a decision by Monday 15 November. By email datedTuesday 16 November he emailed Mr Ford to say that he was not in a position to makea decision. He also advised Mr Ford that he would be given the opportunity tocomment on his decision or make further submissions before it was made.[144] On the same day he also emailed Mr Kris Faafoi, who at that stage was areporter with the TVNZ Close Up television programme.32 As part of Mr Ford'sendeavours to get a positive decision, that programme was creating a story on31 She gave evidence by video link from Canada, although she now lives in Geneva.32 Now the Hon Kris Faafoi, a Minister of the Crown.Mr Ford's case, and Mr Faafoi had contacted Mr Jones for comment. In the emailMr Jones said:I have not yet completed my consideration of the exemption petition, thematerial submitted by Mr Ford and information from technical specialists.Accordingly, I have not made a decision regarding Helilogging's application.It would be inappropriate for me to discuss the applications before I have hada chance to fully consider the significant safety issues raised by the operationof ex-military helicopters in hire or reward helilogging activities inNew Zealand. These issues include the past history of ex-military helicoptersinvolved in operations in New Zealand. Over the past six years, 40% of theNew Zealand fleet has been destroyed in accidents, and there have been sevenfatalities involved in those accidents.[145] Mr Jones also sent an email to all CAA staff given the media publicity thematter was generating. Mr Jones said that all communication with the media and theindustry should be directed to him and that:I have not yet made a decision on the application and am carefully consideringthe safety issues involved. It is important that my decision is not compromisedby comments or statements, even if unintentionally made, by staff on thesubject.[146] Mr Jones nevertheless decided not to accept Mr Lanham's recommendation toapprove the application, and that further steps were required in order to deal with it.By memorandum dated 19 November to Mr Lanham he set out the shortcomings withthe information provided as he saw it, and the process to address these issues. It isapparent that some of the content of that memorandum, although not much, can befound in the original draft 9 November memorandum and the comments upon it. Iconclude that the 19 November memorandum was the finalised version of a documentMr Jones started drafting on 9 November. But it was now much longer, and it includeda chronology of CAA's previous dealings with the plaintiffs.[147] A further substantial change from the 9 November draft is that Mr Jones nowreferred to Mr Remacha's 22 May 2002 memorandum concerning the Wessex aircraftwhich he had sent to Mr O'Malley a little over two years earlier. The memorandumdrew heavily on this earlier analysis by Mr Remacha. Mr Jones stated:Concerns have been raised about the use of ex-military aircraft and I am notprepared to consider exercising my exemption power until I am properlyadvised directly by CAA technical staff of the risks and the action taken tomitigate those risks.I require a comprehensive recommendation report, in accordance with CAApolicy and procedures relating to the processing of exemption petitions. Thereport must cover the grounds upon which I could exercise my power. I expectthe report to include a detailed chronology of CAA's dealings with theWestland helicopters, reference to the previous CAA work on WestlandWessex helicopters and ex-military helicopters and an analysis on howHelilogging Ltd addresses the safety concerns and risks identified in thosedocuments.[148] Mr Jones advised he had decided that a process would now be followed foraddressing the exemption applications. By way of summary this involved thefollowing steps which came to be known as the seven-stage process:(a) obtaining a more detailed report from CAA staff on the issues;(b) requesting Helilogging to provide more information (including thecontractual arrangement with GKN);(c) obtaining CAA advice on the new information;(d) consideration of the advice and the formulation of a preliminarydecision by the Director;(e) provision of the preliminary decision to Helilogging for comment;(f) consideration of comments from Helilogging on the preliminarydecision with technical advice as needed; and(g) making a final decision.[149] The memorandum concluded:You will have noted Helilogging is now applying pressure on my decision-making process through the media, please put this pressure to one side as it ismost important the decision is made properly and fairly.In the interests of fairness to the operator, priority must be given to progressthese issues expeditiously. If at any stage matters become delayed please letme know immediately. If there are any resource limitations please also bringthis to my addition as soon as possible.[150] By memorandum in response dated 21 November 2004 Mr Lanhamacknowledged receipt of the memorandum, noting he was currently appearing for theCAA at a significant Coroner's inquest, but stating that an immediate response wasappropriate given the implied criticisms of his actions.[151] By memorandum dated 25 November 2004 Mr Jones responded to himindicating that his paper was not intended to be a personal criticism. He said, however,that Mr Fogden would manage the Helilogging matter from now on and report directlyto him on this issue. Although there was some reference to this being partly motivatedby the constraints on Mr Lanham's time arising from the inquest, it is plain thatMr Jones did not agree with Mr Lanham's advice. Moving Mr Lanham off dealingwith the application was primarily because of this factor. Indeed to the limited extentthat Mr Jones was able to give evidence of probative value before me he effectivelyconfirmed that he did not have confidence in Mr Lanham, but had considerableconfidence in Mr Fogden.The judicial review challenge[152] At this stage the plaintiffs decided that given the delays and their previousinteraction with the CAA they would take legal advice in relation to a proposedchallenge to the Director's stance. The plaintiffs' solicitor, Mr Takarangi, wasinstructed, and Mr Timothy Castle was instructed as counsel.[153] I note Mr Ford's evidence that during a consultation with Mr Castle, Mr Castlerang Mr Jones, and that Mr Jones told Mr Castle that he should tell Mr Ford that hewas not going to get the exemption "that easy". Mr Castle did not recall thatconversation when he gave evidence. Assuming something of that kind was said I donot think there is any significance in it. On any view of it an exemption decision unders 37 was not an easy exercise.[154] Proceedings were commenced on 25 November 2004.33 This included anapplication for an interim mandatory injunction directing that a certificate ofairworthiness and applicable exemptions necessary to enable the plaintiffs toimmediately commence helilogging be issued. After initial procedural hearings theapplication for interim relief was given a substantive hearing on 16 December. Severaldocuments, including affidavits, were filed by both sides leading up to this hearing.That included a detailed affidavit from Mr Jones sworn 10 December 2004.[155] Mr Jones' affidavit provided a description of the regulatory regime, and alsoaddressed the advice he had received from his officials, and it exhibited that advice.That included the 19 November memorandum referred to above. It did not includeany version of the draft 9 November memorandum.[156] Mr Jones explained in his affidavit that he had become increasingly concernedabout the operation of ex-military aircraft in the civil aviation system, including hisconcerns in relation to the Westland Wessex. He gave detailed background of whathad happened in relation to the plaintiffs' applications, and he described thememoranda he had provided from Mr Lanham recommending the grant of theexemption. He said:109. After reading Mr Lanham's report, I was not satisfied that the safetyissues relating to the operation of the Westland Wessex helicopter on hire orreward operations had been fully considered. However, due to other CAAwork commitments, I was unable to formulate my concerns in writingimmediately. At that time, I was required to attend the Directors General ofCivil Aviation (DGCA) conference in Hong Kong from 30 October until8 November 2004.[157] He also explained the different recommendations he had been given about theappropriate category for granting the exemption application. He then said:116. I was unable to give Mark Ford my decision by 15 November becauseonce I had time to fully consider and review the information presented by mytechnical staff, I realised that the issues involved in assessing that materialwere not as straightforward as I had originally thought. In fact, I determinedthat I had not yet been provided with an appropriate assessment of theplaintiffs' proposal in the context of Mr Remacha's May 2002 report and Ibelieved it would be unreasonable and a breach of my statutory obligations33 In closing the plaintiffs argued that this was not a judicial review proceeding. I do not see that thejurisdictional categorisation matters, but in any event the proceeding were in the nature of judicialreview. What was sought was a remedy in relation to a statutory power of decision.for me to make any decision without fully considering the matters raised inthat report and being provided with a thorough and comprehensive review ofthe concerns enumerated in the report.[158] He then explained the process for the decision-making set out in his19 November memorandum. He concluded:151. Safety considerations require that my decision be made with thebenefit of all the information and proper advice. I have told my staff to givethis matter priority. My staff and I are engaged in the process of identifyingthe proper nature and scope of the decision and preparing (with the assistanceof the Plaintiff) the information required for that decision properly to be made.However, I will only be in a position to make that decision when I have all therelevant information required for me properly to exercise my statutorydiscretion.[159] The matter was argued before MacKenzie J on 16 December, and he gave anoral judgment that day.34 In the judgment MacKenzie J recorded Mr Castle'sconcession that the plaintiffs did not press for a mandatory order granting theexemption, noting that the concession was rightly made. MacKenzie J also declinedthe application for order in the nature of mandamus. He then considered whether tomake procedural orders in relation to the decision and held:[11] I do not consider that the Court should impose directions as to processunless that is clearly necessary in the facts of the particular case. I am notsatisfied that that stage has been reached in this case. The Court would expectthat the Director will do his best to action the matter with priority andexpeditiously, as he has indicated he proposes. It is to be hoped that histimetable can be met. However, I am not prepared to make an order whichwill impose that timetable on the Director. [160] MacKenzie J recognised, however, that the plaintiffs' ability to come back tothe Court to apply for an order to compel a decision should be preserved. Accordinglyhe determined that the appropriate course was to adjourn the plaintiffs' application toallow the seven-stage process set out in the Director's 19 November memorandum tobe completed.3534 Judicial review decision, above n 2.35 At [12].PLAINTIFFS' FIRST MAIN ALLEGATION: MISFEASANCESURROUNDING NOVEMBER MEMORANDUM[161] The plaintiffs' first key allegation is that the Director engaged in misfeasanceand deceit because he dishonestly concealed that he had made a decision to declinethe plaintiffs' application as evidenced by the 9 November memorandum. He did notdisclose that he had done so, and did not disclose the memorandum. Rather hedishonestly represented to the plaintiffs and the High Court that he had not yet madeup his mind, that he had an open mind, and that a procedure needed to be followed inorder for him to make a decision.[162] For a number of related reasons I conclude that the plaintiffs' claims in thisrespect fail on the facts.Views in 9 November memorandum[163] First I find that Mr Jones had not made a decision to decline the plaintiffs'application as evidenced by the 9 November memorandum. I accept Ms MacIntosh'sevidence that the document was only a draft.36 In particular:(a) The document is not signed as with other memoranda Mr Jones sent(including the 19 November memorandum). Two of the namedrecipients who gave evidence, Mr Lanham and Mr Fogden, did notrecall receiving it, but Mr Lanham did recall receiving the19 November memorandum.(b) Both Ms MacIntosh and Mr Gill made detailed comments, deletionsand suggestions on the memorandum. It is unlikely that they would bemaking detailed changes, or suggested amendments, to a memorandumthat had already been finalised and sent recording a decision that hadbeen made.36 She did not actually recall that it was a draft, but explained that that was her view now looking atit in light of the circumstances. As previously indicated, Mr Jones was not able to give any relevantevidence of probative value.(c) In a contemporaneous document created by Ms MacIntosh setting outthe chronology of the events for the purposes of drafting Mr Jones'affidavit for the judicial review proceedings, she described Mr Gill'semailed comments on the memorandum on 15 November as"comments on draft memo to [Mr Lanham]".(d) The apparent decision made in the 9 November decision is inconsistentwith the decision actually made as recorded in the 19 Novembermemorandum. The 19 November memorandum was undoubtedly sent,and the decision recorded in that memorandum was acted on. There isno reference in the 19 November memorandum to the 9 Novembermemorandum or the apparent decision it recorded. This confirms thatthe earlier memorandum, or a version of, was not sent, and the intendeddecisions recorded in it were not made and then reversed.[164] The 9 November document described what the Director proposed to decide,but was provided in draft form to the Director's principle legal adviser, the CAA'schief legal counsel, Ms MacIntosh for advice. Comments on that proposal wereprovided by Ms MacIntosh. They were also provided by Mr Gill and possibly othersas well. No final decision was made at this stage. The only actual decision made byMr Jones was that outlined in the final 19 November memorandum. He decided notto accept Mr Lanham's recommendation, but rather introduce the seven-stage process.[165] I accept that the draft 9 November memorandum evidences views that wereadverse to the application expressed in conclusory language. That is also true ofMs MacIntosh's revision of it. But it is equally apparent that Mr Jones received adviceon his views from both Ms MacIntosh and Mr Gill that suggested significant changesto what he had drafted. In that process Mr Remacha's detailed memorandum of22 May 2002 concerning the Wessex — which was not mentioned in Mr Lanham'sadvice to Mr Jones (or in any of the underlying memoranda on which it was based) —was identified as a source of relevant considerations. Mr Remacha's memorandumset out a number of issues that needed to be addressed before either of the exemptionscould be properly assessed. Mr Jones decided against immediately declining theapplication, but instead proceed in the way set out in the 19 November memorandum.I do not regard that as inappropriate.[166] Neither was anything hidden. The original draft was intended to be sent to anumber of persons, but after consulting with Ms MacIntosh and Mr Gill, Mr Jonesdecided not to send it in this form, or to send it to all these people. In his 19 Novembermemorandum to Mr Lanham, Mr Jones recorded that before he could grant theapplication he had to be satisfied that the risk to safety would not be significantlyincreased. He then recorded that Mr Remacha's memorandum covered "a number ofsafety concerns" which he listed, to which he added the lack of oversight of GKN,lifing of and traceability of components and parts, and that he was "not confident thecompany is able to comply with the manufacturers restrictions". He also identifiedthe more general concerns about the use of ex-military helicopters, including that theaccident record was "atrocious", before saying he was "not prepared to considerexercising the exemption power" until properly advised. This memorandum wasprovided to the plaintiffs on 30 November. That did not hide views adverse to theplaintiffs, but rather set them out in a clear way.[167] I also conclude that Mr Jones was of the view that it would be necessary togive the plaintiffs an opportunity to make submissions on any proposed decision todecline the applications. He advised Mr Ford of this on 16 November before hefinalised the process in the memorandum of 19 November. Those two steps —obtaining further information, and the provision of a preliminary decision allowing theplaintiffs to comment — were key components of the seven-stage process he decidedto implement. I accept that these were proper steps to take before making a decision.Accuracy of Director's affidavit[168] Given the above conclusions, I conclude that neither Mr Jones' 10 Decemberaffidavit, nor the content of the 19 November memorandum can be found to bedishonest.[169] The affidavit stated that Mr Jones was not satisfied that the safety issues heidentified in relation to the Wessex had been fully considered in Mr Lanham's advice(at paragraph 109). He said that neither Mr Lanham's or Mr Gill's recommendations"appeared to have appropriately considered the issues of safety that would ariseassuming the plaintiffs' proposal be implemented" (at paragraph 111). He said that heconsidered the issues were not as straightforward as he originally thought when he hadinformed Mr Ford of when he would make a decision, and that he had not beenprovided an appropriate assessment in the context of Mr Remacha's May 2002 report(at paragraph 116). He said he thought it would be unreasonable and in breach of hisstatutory obligations to reach a decision without addressing the issues in that reportand without receiving a thorough and comprehensive review (at paragraph 116). Iaccept that these were honestly expressed views that he properly informed the Courtof his approach.[170] He did not say in the affidavit that he was against granting the applications.But it was clear that he had decided he could not properly grant them on the basis ofwhat he had before him. He did not say whether he thought the plaintiffs were likelyto be able to address all the concerns he raised. But reading Mr Jones' 19 Novembermemorandum and his affidavit together it would have been apparent that the plaintiffshad much work to do to persuade him. I cannot see anything in his affidavit that canproperly be described as inaccurate or misleading.[171] Moreover the plaintiffs' case is that Mr Jones misled both them, and the Court,in both his affidavit and the 19 November memorandum. Yet Ms MacIntosh wasclosely involved in the Director's views evidenced by the 9 November draft, and sheformed a chronology of events that a CAA solicitor, Mr Wellik then used to formulatethe affidavit for Mr Jones. The chronology did not include the 9 November draft. Itis not, and could not be suggested that either Ms MacIntosh or Mr Wellik were actingdishonestly. But Ms MacIntosh and Mr Gill at least knew the Director's thinking inhis 9 November draft, and Ms MacIntosh was involved in the formulation of theaffidavit.Non-disclosure[172] The plaintiffs also contend that the 9 November memorandum was improperlywithheld from them at the time as there was an arrangement for discovery thatencompassed this memorandum. For a number of reasons I do not accept thatcontention. In particular:(a) Whilst the plaintiffs' barrister, Mr Castle gave evidence that he believedhe had agreed with Ms MacIntosh that the plaintiffs would be providedwith informal discovery, Ms MacIntosh gave evidence she did not thinkthat was the case. I accept Mr Castle's recollection that followingdiscussions with Ms MacIntosh relevant information would beprovided. But I do not accept from that that there was an arrangementto provide the equivalent to discovery. There was no discovery orderor contemporaneous documents showing that was the arrangement.37Rather there are letters from the plaintiffs' solicitors asking for specificinformation, which was then provided. This is more consistent with aprocess of providing relevant material in the affidavits, with additionalmaterial on request. Neither was there time in these proceedings toengage in a discovery exercise — the claim was filed on 25 Novemberand was heard on 16 December, with judgment delivered orally thatday.(b) The 9 November memorandum would not normally have beendiscovered as a consequence of an arrangement to provide relevantdocuments precisely because it was a draft, and was superseded by the19 November memorandum (which was duly provided).(c) In any event the draft 9 November memorandum seems to me to havebeen subject to legal professional privilege. It was formulated byMr Jones and provided to Ms MacIntosh for her advice. Ms MacIntoshduly provided advice in the marked-up version, which included (forexample) effective advice that any such memorandum needed to bereformulated around s 37 of the Act. It may be less clear that Mr Gill's37 There is one email where Mr Gill forwards his comments on the 9 November draft for the purposeof discovery, but this does not satisfy me that there was such an arrangement in the context of theother evidence.comments on the memorandum are privileged, but the originalmemorandum and Ms MacIntosh's comments on it would have been.[173] I accordingly do not accept that the failure to disclose the 9 Novembermemorandum was inconsistent with an arrangement made with the plaintiffs, or anyrequirement, or that it evidences dishonesty.Decision making integrity[174] The plaintiffs' more general point appears to be that the 9 Novembermemorandum evidences that the Director was firmly against the grant of anexemption, and his failure to say so openly was improper. This is an unrealisticassessment of statutory decision-making processes of this kind.[175] A person or body charged with a decision-making function is entitled to formviews during a decision-making process, even very strong views, without thisinvolving impropriety. They must remain faithful to the decision-making functionwhich includes considering submissions with an open mind.38 But it would be difficultto engage in a decision-making process without forming opinions along the way.Formulating and then assessing or re-assessing views, particularly with the input ofothers, is simply part of a deliberative process. That is particularly true of decisionsby a statutory officer such as the Director of Civil Aviation. The Director is appointedto this role with the expectation that he will have knowledge and experience of thecivil aviation sector. It can be expected that he or she will have views, and is entitledto bring them to bear when exercising his statutory decision-making functions.Against that background, to take a snapshot of the Director's thinking, which isessentially what the draft 9 November memorandum does, and then argue that thisrepresented his only true views, with any subsequent views part of a dishonestconcealment of the truth is unrealistic.[176] An unfortunate potential side effect of the greater sophistication of judicialreview, and structured statutory decision making, is that there is a greater risk of steps38 See the principles summarised in Waikato Tainui Te Kauhanganui Inc v Hamilton City Council[2010] NZRMA 285 (HC) at [48]–[52].being taken by bodies subject to potential judicial review challenges to prevent suchchallenge rather than to enhance good decision-making. Procedural steps, such asconsultation, are sometimes seen to have been followed simply to deflect a judicialreview challenge. It is important that bodies who engage in those processes resistadopting an adversarial stance, and that they approach such steps in good faith. HereI do not accept that Mr Jones introduced the seven-stage process in bad faith. His viewthat further information was required to address the complex issues was genuine, aswas his view that the seven-stage process (which included submissions by theplaintiffs) was an appropriate procedure.[177] Moreover the process which Mr Jones introduced in the 19 Novembermemorandum involved him making a preliminary decision, and providing theplaintiffs the opportunity to make submissions upon it before a final decision. Duringthe seven-stage process, by letter dated 13 May 2005 Mr Jones wrote to Mr Fordenclosing a 10 May 2005 report from Mr Fogden recommending the applications bedeclined. Mr Jones advised that under s 37 of the Act he had decided to make apreliminary decision to decline the applications and that the reasons were in this report.He gave the plaintiffs the opportunity to provide further submissions. The chronologycould have been faster, but the delay is primarily attributable to the plaintiffs — theresponses to a letter of 24 December 2004 setting out CAA's information requestswere delayed. In any event the plaintiffs knew by 13 May 2005 that the Director'sopinion was that the application should be declined. So it is not clear to me whatsignificance there is in the suggestion that he earlier held that view on 9 November2004.Procedural misfeasance[178] The plaintiffs do not, and could not contend that the Director did not believehe had the power to decline the applications (ie that he knowingly, or recklessly, actedbeyond his s 37 power). Their attack is on the honesty of the processes and proceduressurrounding the decision. As I have already held, it is possible to conceive of asuccessful claim for misfeasance based on the exercise of ancillary or proceduralpowers in bad faith either with targeted malice, or with knowledge or recklessindifference to whether the decision maker is authorised to so exercise those powers.[179] Here there was no statutory requirement for a submission/consultation process.To say the Director engaged in misfeasance by introducing one would require a findingthat Mr Jones knew he did not have, or was recklessly indifferent to whether he had,power to introduce the seven-stage process. It is difficult to conceive how that couldbe established. Mr Jones' view on 9 November was based on the information he hadthen been provided at that time. It would not be an abuse of power for him to providethe plaintiffs a properly formulated preliminary decision and invite submissions uponit. Neither could it be an abuse to ask for further information as part of the process offormulating the preliminary decision, or to state that he needed that information tosatisfy him of certain matters before he could grant the application in accordance withthe statute. That is essentially what Mr Jones did. Even if I were to accept that hisview was the application should be declined on 9 November, I do not accept that theintroduction of the seven-stage process was knowingly beyond the powers of theDirector. I accept he would be obliged to consider further submissions on hispreliminary decision in good faith, but it would not be misfeasance to give theplaintiffs a further opportunity to address his concerns before those views wereformally reflected in a statutory decision.[180] In his oral closing Mr Dale contended that a reasonable director would havebeen required to grant the exemption application. To the extent that submissionencompasses an allegation that Mr Jones knew he was obliged to grant the exemptionapplication, or that it was beyond his powers not to grant it (or that he was recklesslyindifferent to this) I do not accept it. He clearly believed the application should not begranted at that stage. There is no basis to say that he was knowingly acting beyondhis powers (or recklessly indifferent to this) by not granting the application. Forreasons I will outline in greater detail below, in my view it was open for a reasonabledirector to decline the application in August 2005.39 As at November 2004 there werealso a number of categories of information that a reasonable director could properlyhave asked to be provided before the application could be granted. Many of thosewere later set out by the CAA by letter dated 24 December 2004. To take one example,at that stage the Director had no confirmation that the plaintiffs had put in place thenecessary ongoing support from the engine manufacturer, Rolls Royce, including the39 See [277] below.appropriate assessment of the "lifing" of components that was appropriate when theWessex was being used for logging operations.Other allegations[181] There are two other matters that the plaintiffs rely on at this stage.[182] First, the plaintiffs say that Mr Lanham was improperly removed from thedecision-making process, and that other CAA staff were told not to consult with himabout it. It is clear that this did occur, and I find that the reason for it was that Mr Jonesdisagreed with Mr Lanham's advice. But I do not accept that to remove him from theprocess was improper. It was open to the Director to choose the personnel that hewished to receive advice from, and to exclude those whose advice he disagreed with.There can be advantage in receiving contestable views, and different opinions, butthere is no impropriety in not doing so. I conclude that there was no dishonesty, orimpropriety, in Mr Jones deciding to rely on the advice of Mr Fogden and notMr Lanham.[183] Secondly, the plaintiffs raise a particular matter in connection with the CloseUp television programme that was televised on 17 November. In it the reporter,Mr Faafoi, now a Minister of the Crown, is reported as saying that Mr Jones hadadvised him that a decision had not been made because he had received newinformation. When the Hon Kris Faafoi gave evidence he said he could not now recallMr Jones saying this so many years later, but that if he said this in the programme thatthis would have been the truth.[184] I conclude that it is likely Mr Jones did make a comment along these lines toMr Faafoi. But I do not accept such a comment is evidence of dishonesty. TheDirector had been receiving or identifying further information continuously during theprocess. For example the May 2002 Remacha report had not been referred to inMr Lanham's advice to him or the underlying memoranda. It had been two years sincethe Director had sent this report to Mr O'Malley, so I doubt Mr Jones would haveremembered all of its contents. He had also received advice from Ms MacIntosh andMr Gill, and had received a comment from a representative of the NationalTransportation Safety Board in Hong Kong at the conference. It can be argued thatthis material was not "new information". But whether any point can be made aboutthat depends on the precise words used, which neither Mr Faafoi or Mr Jones can nowremember. The point reduces to a matter of semantics. The defendant also argues thatthe new information may also have been a reference to information CAA had receivedabout a change of GKN ownership or the quality of parts held by the plaintiffs, and Iaccept that this is possible. The key point is that there is nothing before me to provideany proper basis for finding that an oral comment made some 15 years ago to a reporterwho cannot now recall it shows dishonesty.Conclusion on 2004 allegations[185] For these reasons I do not accept that the elements required to establishmisfeasance at this time are established. In particular there was no dishonesty, oraction by the Director in bad faith. More specifically the Director did not act withtargeted malice towards the plaintiffs, and neither did he take steps knowing that hewas acting beyond his powers, or recklessly indifferent to whether he was doing so.[186] For similar reasons the action in deceit based on the events at this time fails.The short point is that there was no dishonest misrepresentation made by thedefendant. I find there were no misrepresentations at all. The plaintiffs rely onmisrepresentations in the 19 November memorandum and the Director's affidavit, butI conclude that there were no misrepresentations in those documents, or otherwise.[187] In reaching these conclusions I am conscious that the other key elements of theplaintiffs' claims are still to be addressed, and that the key elements of the plaintiffs'claims involve inter-related matters. It will accordingly be appropriate to review allthose matters before reaching final conclusions on the plaintiffs' claims. I do thatfurther below.THE SEVEN-STAGE PROCESS[188] In late 2004 and 2005 the seven-stage process was then followed. This led tothe Director's decision on 19 August 2005.Further information[189] On 23 December 2004 Mr Fogden provided the Director with a 15 page report.This drew on Mr Remacha's earlier report, but also detailed what further informationwas needed to properly assess the application. It provided no recommendation on thedecision to be made by the Director.[190] By letter dated 24 December 2004 Mr Jones then wrote to Mr Ford. In thatletter Mr Jones sought confirmation that the plaintiffs were seeking to progress bothexemption applications — relating to the Special category as well as the Restrictedcategory. He then set out eight requests for information arising from Mr Fogden'sreport which were broadly:(a) Identification of the exact relationship between the plaintiffs and GKN(including a copy of any contract, and the duration of support).(b) Clarification of how Helilogging had described GKN's role to GKNitself in order for CAA to understand the role GKN was agreeing to.(c) Details about the state of the spare parts held by the plaintiffs, includingtheir certification and storage conditions.(d) Confirmation that GKN had taken into account repeated cycle heavylifting impacts on the Rolls Royce engine, that GKN had confirmed thesuitability of the engine, and that there was ongoing Rolls Roycesupport for the engine.(e) The provision of revised "Quick Reference Cards", which were neededas part of operational requirements.(f) Clarification on which exemption petitions were being persued, andwhat other regulatory requirements were the subject of the application.(g) Identification of the aircraft the applications were made in respect of(ie whether it was for more than a single helicopter).(h) Clarification on who was performing the role of chief pilot, as CAAunderstood that Mr Cranleigh Lee was no longer holding that position.[191] In January 2005 the plaintiffs then retained the services of Mr Jim Barclay andhis company, Aaleda Systems Ltd. Mr Barclay was a well-known aviation consultant,and former CAA employee. He became tasked with dealing with the requests forinformation, and did so by providing a report to CAA. The first version of his reportwas not provided until 8 March 2005, however. Mr Barclay also said when it wasprovided that this was a draft report that would be updated after discussions with theCAA.[192] In the meantime the plaintiffs pressured the CAA to allow the plaintiffs to gohelilogging. In particular their solicitor wrote a number of letters requesting that theexternal load prohibition be removed. These were declined by the CAA. The plaintiffsalso sought political assistance, including by seeking an inquiry by the TransportIndustrial Relations Select Committee.[193] By letter dated 15 March the Director responded to the first Barclay reportinquiring whether the report encompassed all the information that was to be providedin response to the December 2004 request. Mr Jones advised:I note from Aaleda Systems draft report that it appears that HeliloggingLimited is under the impression that the New Zealand CAA will be theinternational regulatory authority for the ex-military Westland Wessex. Thisis not the case, and the CAA has at no stage advised Helilogging Limited thatthe CAA would be willing to accept such responsibility.Finally, I need to reiterate that there can be no guarantee that HeliloggingLimited's application for commercial heli-logging will be approved.As has been previously stated to Helilogging Limited, there is also present ageneral policy issue regarding both safety concerns and the legal and policyapplications for the commercial use of aircraft that have not been shown tomeet a comprehensive code of airworthiness.If Helilogging Limited satisfies me with respect to all technicalconsiderations, I must still consider the broader policy issue of whether ex-military helicopters should be operated for purposes other than those for whichthe aircraft was designed, especially when such operations placed high levelof stress on the aircraft.[194] On 4 April 2005 CAA sent Mr Ford a letter revoking a certificate held by himto enable him to operate an agricultural aircraft. The reason for this was the absenceof a response on the identity of the chief pilot. This action has been included withinthe plaintiffs' complaints, although I do not understand that the plaintiffs were actuallyengaged in any agricultural aviation activities at the time.[195] Also at around this time the Select Committee agreed to, and duly conductedan inquiry into the matter. At the trial I indicated to the parties that I did not think itappropriate for this Court to make any inquiries into the matters that were canvassedduring the inquiry by the Select Committee, and as a consequence the parties did notlead evidence directed to that issue. I accept that the Court can refer to the SelectCommittee inquiry as part of the background to the Director's decisions. It is relevantto the context in which the parties were interacting with each other. But the Courtshould not inquire into what was said by the parties in that inquiry, and any criticismsof it. In the same way statements that were made in Parliament are also protected byParliamentary privilege and I do not address them, although they remain part of therelevant background.[196] On 4 April 2005 Mr Barclay sent the CAA a revised report in support of theapplication. That report was soon superseded by a third version dated 14 April.Assessment and Preliminary decision[197] The information provided by Mr Barclay in his reports was then assessed byMr Fogden and Mr Gill. On 10 May 2005 Mr Fogden completed a report to theDirector recommending a preliminary decision declining the applications.[198] The report raised a number of issues, including observations that the plaintiffshad not provided sufficient information in accordance with the requests made on24 December 2004. In particular Mr Fogden advised:(a) There was no contract with GKN, and there appeared to be anassumption in the contractual proposals that the CAA would assume therole of National Airworthiness Authority (NAA). Mr Fogden's reportsaid that the CAA did not have the capability to act as the NAA for anoverseas aircraft such as the Wessex.(b) The plaintiffs' responses did not adequately address the safety issuesconcerning the traceability of ex-military components, and that theresponse "seriously underestimates the significance of the question toyour statutory obligation to be satisfied that the risk to aviation safetywould not be significantly increased".(c) That there appeared to be no manufacturers support from Rolls Royce,with the response referring to a letter that the CAA itself had receivedfrom Rolls Royce in 2002. This did not adequately respond to the issue.Mr Fogden noted that the Wessex fatal crash in New Zealand whilsthelilogging was attributed to an undetermined engine failure.(d) Mr Fogden advised that the plaintiffs had not adequately answeredother questions, although they had clarified that priority should begiven to the application for the Restricted category.[199] In light of the answers Mr Fogden advised that the pre-requisites for grantingan exemption under s 37 were not met as the Director could not be satisfied that therisk to safety would not be significantly increased by granting the exemption. Heaccordingly recommended that the preliminary decision should be that it be declined.[200] On 13 May 2005 Mr Jones wrote to the plaintiffs with his preliminary decisiondeclining the exemption applications. He enclosed Mr Fogden's report. Mr Jonesstated in his letter:In exercising my discretion under section 37 of the Civil Aviation Act 1990, Ihave decided that my preliminary decision is to decline your exemptionapplications. My preliminary decision constitutes Stage 4 of my decision-making process. The reasons for my preliminary decision are set out in theattached report.However, I wish to emphasis one technical matter. I have stated to you earlierthat the NZ CAA will not be the "regulating authority'" for the ex-militaryWestland Wessex. For the avoidance of any doubt, I advise you that by theterm "regulating authority" I mean the National Airworthiness Authority(NAA), as referred to in Mr Fogden's report.I also advise that the CAA is currently developing its policy regarding theoperation of ex-military and non-Type Certified rotary wing aircraft.With regard to my decision-making process, I stated to you earlier that I wouldprovide my preliminary decision regarding your exemption applications foryour comment. The provision of my preliminary decision to you for yourcomment constitutes Stage 5 of my seven-stage decision-making process.First involvement of Mr Lewis[201] It was at approximately this stage of the process that CAA first involvedMr Lewis in the decision making process.[202] Mr Lewis was operating as an aviation consultant, and was a very experiencedtest pilot. He had worked for the Royal Airforce in the United Kingdom and hadattended the Empire Test Pilot School. He was, however, a New Zealander.[203] At that stage Mr Lewis was assisting the CAA with work on a review of theRules concerning the overloading of agricultural aircraft. Whilst he was present doingthat work Mr Fogden had asked him whether he had experience with a Wessex, andMr Lewis said that he had. At that stage Mr Fogden gave Mr Lewis a copy of theAaleda report and asked him for his comments. He was not instructed in any formalway to provide advice on the report or the plaintiffs' application, but in my view arequest that he look at Mr Barclay's report still meant that he was engaged by the CAAon the applications.[204] It is apparent that Mr Lewis and Mr Barclay met on 19 May 2005. There is adispute as to whether Mr Lewis was invited to a meeting by Mr Barclay or not. Theminutes of a later meeting of the plaintiffs' representatives of 23 August 2005 recordthat it was Mr Barclay that contacted Mr Lewis. The plaintiffs complain that Mr Lewisattended the meeting with Mr Barclay without revealing that he had been instructedfor the CAA. They do so without being able to call Mr Barclay as a witness. I amsatisfied that Mr Barclay was aware that the CAA had contacted Mr Lewis in relationto the applications as Mr Lewis had a copy of Mr Barclay's report. That is evidencedby Mr Barclay's email to the plaintiffs' representatives that day about the meetingwhich stated about Mr Lewis:His medical has lapsed, but he is still passionate about the Wessex. He stilldoes the odd bit of expert advice, which may be why CAA has sent him a copyof my latest report. He described it as superb, which if he told them that, maymean they don't contact him again However it does mean we now have asolid benchmark for the report.[205] Mr Lewis accepted he had described Mr Barclay's report in these terms.Having been asked by the CAA to review the report, it is surprising that Mr Lewiswould attend a meeting with Mr Barclay and then say to him that his report was superb.It is hardly surprising that Mr Barclay saw Mr Lewis as a potential ally. It would alsoappear that Mr Barclay gave him some key documents, and I accept it was at leastimplicit that the plaintiffs might be wanting his assistance.[206] Mr Fogden explained that he had not been given any notice of Mr Lewis'meeting with Mr Barclay. Mr Lewis contacted Mr Fogden after his meeting withMr Barclay to tell him it had happened. Mr Fogden advised him that if he were furtherapproached by the plaintiffs Mr Lewis should tell Mr Barclay that he could not assistbecause of a conflict of interest arising from consultation for CAA.[207] I also note that Mr Quilton Beale was also at the meeting between Mr Barclayand Mr Lewis. He emailed the plaintiffs after the meeting reporting that Mr Lewishad suggested that water contamination may have been the cause of the fatal accidentinvolving Mr O'Malley's Wessex. That appears to be a reference to the fuel drainissue subsequently raised in Mr Lewis' July 2005 report. So Mr Lewis had openlyraised at least one of his concerns at this time.Plaintiffs' representations[208] In response to the preliminary decision the plaintiffs sought meetings with theCAA. The first meeting was between Messrs Barclay and Fogden on 16 May. Mr Gillwas supposed to attend but could not attend, and given it was focused on airworthinessissues not much was achieved in the meeting. It was agreed that a meeting attendedby the Director would be appropriate.[209] A meeting with the Director was then scheduled on 13 June to enable theplaintiffs to make a presentation to the Director and other CAA representatives. Atthat meeting Mr Barclay made a powerpoint presentation. This formed part of theplaintiffs submissions on the preliminary decision. During the course of thatpresentation, Mr Lewis was identified as a person who was an adviser to the plaintiffs.That took Mr Fogden by surprise. He had told Mr Lewis that he should say he wasconflicted. But I do not believe Mr Lewis had contacted Mr Barclay to say that, andgiven that Mr Lewis had met with Mr Barclay and described Mr Barclay's support assuperb it is perhaps not surprising that Mr Lewis was mentioned by the plaintiffs.[210] After the meeting a further version of Mr Barclay's report was provided to theCAA on 20 June 2005. In that report Mr Barclay stated:[The company] will be drawing on the expertise of both M Gordon, andB Lewis. B Lewis was involved in the original test flying of the Gnomepowered Wessex helicopter, and also had line flying experience with theaircraft Bristow's North Sea Operations.[211] Mr Fogden then contacted Mr Lewis and asked if he supported the plaintiffs'application, and Mr Lewis advised that he did not. This ultimately led to a meetingbetween Messrs Lewis, Fogden and the Director to obtain Mr Lewis' advice. Thatmeeting occurred on 20 July. There are no notes of the meeting, but it would appearthat following it Mr Jones asked Mr Lewis to provide his advice in writing, which iswhat led to Mr Lewis' letter of 23 July.[212] The plaintiffs also, at this time, sought a more confined application to have theexternal load lifting restriction lifted to allow the Wessex to be used for heliloggingactivities. This was on the basis that doing so in relation to logs over which it obtainedownership did not involve inconsistency with the limitation on the use of the helicopterunder its Special categorisation for hire or reward. A legal opinion was supplied insupport of that argument from the plaintiffs' solicitor, Mr Takarangi. That morelimited application was declined by letter from the Director dated 29 June 2005.Although it is not directly in issue in this proceeding, in my view any commercialarrangements for helilogging would be inconsistent with this "hire or reward"limitation in the Rules even if legal title passed to the plaintiffs before the logs werecarried by helicopter. Obtaining such title would simply be part of the commercialarrangements which were not permitted by the hire or reward limitation.40Final advice and decision[213] The submissions made by the plaintiffs on the preliminary decision were thenassessed. By report dated 9 August 2005 Mr Fogden then advised Mr Jones that theapplications should be declined.[214] The report involved a detailed analysis addressing a number of matters,including the plaintiffs' submissions. It advised that whilst s 37(2)(b) of the Act couldbe satisfied if the application was granted subject to conditions, the Director could notbe satisfied that the risk to safety would not be significantly increased under theproviso in s 37(2). Mr Fogden further advised that even if the Director could be sosatisfied, there were reasons why granting the application would not be appropriateunder s 37(1) including the precedent effect that would be created.[215] In terms of the proposed conditions allowing s 37(2)(b) to be satisfied, one wasthat an ICAO State accepted responsibility as the NAA. This would apply if anexemption to the Restricted category was being considered. In terms of the safety risk,Mr Fogden identified the New Zealand accident record and Mr Lewis' advice as twoindependent reasons why the requirement in the proviso in s 37(2) could not besatisfied.[216] On 19 August 2005 the Director accepted Mr Fogden's recommendations anddeclined the applications. The reasons for doing so are recorded in a file note of19 August and a letter to Helilogging of the same date. His reasons were broader thanthose in Mr Fogden's advice. He concluded that none of the s 37(2)(a)–(d) pre-requisites had been met, the safety risk proviso in s 37(2) had not been satisfied, andthat he regarded the grant of an exemption as inappropriate under s 37(1). His file noterecords the following conclusions:40 This approach is consistent with Transport Minister v Keith Hay Ltd [1974] 1 NZLR 103 (SC) andGill v Laird [1940] NZLR 540 (SC) – both decisions emphasise the contextual significance of thehire or reward question.Serious concern exists with this operation. The following are some reasonsdetailing my concerns:-• The aircraft is not in compliance with ICAO responsibilities in termsof compliance with the comprehensive code of airworthiness, or inhaving the oversight of a NAA.• No firm contract exists between GKN Westland and Heli-logging Ltd.• No manufacturers' support is provided for the engine or gearbox. Thisbeing specifically declined by GKN Westland.• As detailed above much of the information requested on 24 December2005 has not been provided.• The aircraft is ex-military with very limited civil history.• The Westland Wessex is not used anywhere else in the world on civiloperations of any kind. The New Zealand CAA cannot undertake thecomplete oversight including the NAA responsibilities.• Some doubt exists over the airworthiness of the type as the last fatalUK accident investigation was not completed. Subsequently themanufacturer elected to withdraw the type certificate.• Mr Bernie Lewis comments about his "grave doubts about its safetyfor the tasks as suggested by Heli-logging".[217] His file note then recorded that:As a result of the above information I am unable to be satisfied that the risk toaviation safety will not be increased. In addition other normal certified aircraftare available to Heli-logging. This is what other logging operators are using.[218] In Mr Jones' letter to Helilogging Mr Jones also stated that he agreed with thepolicy concerns raised by Mr Fogden. His letter stated:In addition to the reason outlined above, I also consider it inappropriate togrant an exemption because of the significant precedent implications of suchan exemption. In fact, I am of the view that, if granted, the exemptionproposed would have serious consequences for the integrity of the CivilAviation Rules relating to aircraft certification.[219] The letter to Helilogging included a copy of Mr Fogden's report, which in turnappended Mr Lewis' advice.Steps following decision[220] The plaintiffs considered taking further steps after the decision was made, andadvice was taken by Mr Castle and Mr Philip Grace in that respect. Ultimately,however, the plaintiffs' principal funder, Mr Terrence Haydon, decided later thatmonth that because the application had been declined for safety reasons the Court wasnot likely to reverse the decision based on safety, and even if required to reconsiderthe decision the Director was not likely to change its mind. So he declined to providefurther funding.[221] The plaintiffs nevertheless made further attempts to persuade Mr Jones tochange his mind including by letter dated 21 July 2006 which was rejected byMr Jones' letter of 22 August 2006. Correspondence was sent to the Chair of the CAABoard, and politicians were again approached. These initiatives were not successful.Mr Ford's company went into receivership and liquidation in October 2006.[222] It is significant to note that during the period of consideration of the plaintiffs'application, work continued within CAA on a review of the Rules. During the courseof this review, in or around March 2006 Mr Jones made a decision on Mr Gill's adviceto prohibit any helicopter issued with a Special category airworthiness certificate forbeing used for helicopter external load operations. There were eight helicopters onthe register affected by this action, including the Westland Scout aircraft operated bythe plaintiffs.[223] When the review of the Rules was finalised in 2009 sub-categories of theSpecial category were introduced. Furthermore Part 115 was introduced into the Rulesby a decision of the Minister on 11 October 2011. This allowed Special categoryaircraft to be used for hire and reward activities, but only when the activity was withinthe category of "adventure aviation".41 In substance the final Rules as amended bythe Minister did not encompass permitting activities of the kind contemplated by theplaintiffs' application.41 The categories of adventure aviation were: Special category aircraft – warbirds; microlight aircraftoperations; parachuting; gliding; paragliding; hang gliding; and hot air ballooning.PLAINTIFFS' SECOND ALLEGATION: MISFEASANCE SURROUNDINGAUGUST 2005 DECISION[224] The plaintiffs' second main allegation is that the defendant is liable inmisfeasance, and deceit, in connection with the decision made by Mr Jones in August2005. That allegation encompasses an allegation that from the period from November2004 through to December 2005 the defendant, or more specifically Messrs Jones,Fogden and Lewis acted dishonestly in the steps taken leading to the ultimate decision,and this involved the commission of the torts of misfeasance and deceit for which thedefendant is liable.[225] For the reasons explained below I conclude that the plaintiffs' claims fail onthe facts. In particular I find that there is no basis to say that either Mr Jones orMr Fogden acted dishonestly at any point. Mr Lewis' opinions and conduct can becriticised, but again I am not satisfied there is a basis to conclude that he acteddishonestly. Neither were any misrepresentations made.[226] In order to properly address the plaintiffs' allegations it is appropriate toconsider a number of distinct aspects of the case.Obtaining the advice of Mr Lewis[227] The plaintiffs contend that Messrs Fogden and Jones acted inappropriately, anddishonestly, in seeking the advice from Mr Lewis late in the decision-making process,and contend that he was only instructed in order to provide them with ammunition todefeat any challenge to Mr Jones' decision.[228] I accept that the plaintiffs can legitimately criticise the steps taken by thedefendant to obtain advice from Mr Lewis at that stage, and I also accept that theprocess followed in this respect was procedurally unfair. In November 2004 Mr Joneshad decided upon a process that would be followed. This included the formulation ofa preliminary decision upon which the plaintiffs could make submissions. For theDirector to seek the advice of an external consultant after that step, and then rely onhis views to the effect that the application should not be granted without giving theplaintiffs opportunity to make submissions on his views was procedurally unfair, andnot consistent with the process the Director had implemented.42 Furthermore theapparent flaws in Mr Lewis' advice which I address below could have been revealedhad the plaintiffs been given that opportunity.[229] But I do not accept that this evidences dishonesty. Mr Lewis' opinions wererelevant, formulated in written advice, and the manner in which it was taken intoaccount by Mr Fogden was set out in his written advice to Mr Jones, and then Mr Jonesrecorded how he had taken that advice into account in his final decision. That writtenmaterial was provided to the plaintiffs when the decision was made. The proceduralunfairness that had been engaged in was openly revealed to the plaintiffs.[230] More generally I do not accept that either Mr Jones or Mr Fogden acteddishonestly in seeking advice from Mr Lewis. I accept that they only asked him toformulate his advice in writing after becoming aware he had views that were adverseto the application. But after becoming aware that Mr Lewis held those views as arespected expert, there is no dishonesty in asking that he record them formally so thatthey could be relied upon in the decision-making process. For the reasons addressedbelow, Messrs Jones and Fogden had no reason to doubt the integrity or reliability ofwhat Mr Lewis was saying, and I accept that Mr Lewis' views were honestly held byhim notwithstanding the deficiencies in the advice that I will address.Timing of instructions[231] In his closing submissions Mr Dale emphasised an issue arising from thetiming of Mr Lewis' instructions. In an affidavit sworn in these proceedings on21 October 2014 Mr Fogden said that Mr Lewis was first engaged by the CAA shortlyafter the powerpoint presentation on 13 June after Mr Lewis advised Mr Fogden thathe was not supportive of the plaintiffs' proposals. In an affidavit sworn 21 October2014 Mr Lewis gave evidence to similar effect. In affidavits then filed for theplaintiffs they disputed the truth of this, and pointed to records in Mr Lewis' diary thathe had been retained at an earlier time. In a second affidavit dated 27 March 201542 It is well established that affected parties should be given the opportunity to respond to newadverse material when the circumstances have already warranted giving them a right to be heard.Compare this case with Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA) andFraser v State Services Commission [1984] 1 NZLR 116 (CA) at 122.Mr Fogden accepted that he had involved Mr Lewis at an earlier stage, in or about4 May 2005. Likewise in an affidavit sworn 31 March 2015 Mr Lewis also confirmedthis.43[232] The plaintiffs say that this involves dishonesty. They say that Mr Lewis hadbeen retained at the earlier point in time, and prior to Mr Lewis' meeting withMr Barclay referred to earlier in this judgment, and they were only forced to correctthe position in their subsequent affidavits because the plaintiffs had pointed out thedishonesty involved in their earlier affidavits.[233] I do not accept these allegations. When Messrs Fogden and Lewis swore theiraffidavits in 2014/2015 they were seeking to remember the precise chronology ofevents of matters that had occurred more than nine years previously. At this stageMr Lewis was 86 years old. Moreover I see no significance in the timing of CAA'sengagement of Mr Lewis. Mr Lewis met with Mr Barclay on 19 May and it isapparent that he took a copy of the report that Mr Barclay had provided to CAA to thatmeeting. Mr Barclay would have understood that Mr Lewis must have been assistingthe CAA on this issue at that point.Mr Lewis' letter of advice[234] The plaintiffs are highly critical of Mr Lewis' advice in his letter of 23 July2005, and I accept that legitimate criticisms can be made. Three key concerns that heraised with the use of the Wessex for heli-logging were:(a) the absence of fuel drains that could be inspected by the pilot;44(b) the reliability of the computer control system for the engines, and theengines themselves;45 and43 This affidavit also corrected the date of the vibration flight referred to below (1998/1999 ratherthan 2001) and it exhibited the 12 January 1999 report that had not previously been disclosed tothe plaintiffs.44 This is a drain that allows the pilot or other person to check, and drain off, contamination in thefuel supply, particularly arising from condensation.45 The throttle for each of the engines that powered the Wessex was computer controlled. There wasa problem with the computers freezing the throttle at a particular rpm, and also malfunctioning sothat it swiftly increased or decreased the rpm.(c) the susceptibility of the Wessex to ground resonance.46[235] Mr Lewis' views on all three points can be criticised. First it is apparent thatthe Wessex aircraft had fuel drains, including fuel drains that could be inspected bythe pilot. Mr Lewis' opinion in that respect was based on out of date information.Secondly the problem with the computer control system for the engines wasrecognised in the 1950s and 1960s, and new generation computers were introduced todeal with the issue. Mr Grainger of GKN gave evidence that there remained someresidual issues, but the issues that Mr Lewis was emphasising had largely beenresolved. So again his opinion was out of date. Finally, any issue about groundresonance was not related to the use of the helicopter for helilogging, and would applywhenever the aircraft was landing or taking off, whether it was being used to carrylogs or not.[236] But I do not accept that these factors demonstrate that Mr Lewis' advice wasdishonest. Mr Lewis' experience with the Wessex had been in the 1950s and 1960s.His more recent experience was more limited. The problems Mr Lewis identified hadbeen real ones. Mr Grainger accepted that there had been a problem with the fueldrains at the early stages of the aircraft's life. The evidence is also clear that thecomputer control system for the engines had been recognised as a significant problemat that stage. I accept that Mr Lewis' opinions were honestly held, and that he hadgenuine concerns about the aircrafts' use for helilogging activities. Whilst he thoughtit was a very good aircraft, it seems to me that his concerns were that without thedetailed support that military operations and maintenance procedures provided — suchas the environment he had found in the Iraqi Air Force where he had been obliged toground the whole Wessex fleet — there was risk. It seems to me that he thought thatrisk may become apparent with a smaller operator without such support using whatwas now an old aircraft in remote areas for helilogging activities.[237] If Messrs Fogden and Jones knew that Mr Lewis' advice was flawed, but theynevertheless relied upon it, then a basis to conclude they acted dishonestly could exist.But I do not accept that. The criticism that they should have asked him more questions,46 Ground resonance is a phenomena occurring when helicopter lands (or takes off) in certaincircumstances when severe vibration can occur, even to the point that the aircraft breaks apart.and if they had that would have revealed that his experience was all out of date, doesnot demonstrate dishonesty, or that they were recklessly indifferent to whether theywere acting with their powers.[238] The plaintiffs say that given Mr Fogden's report of 11 October 2004, he musthave been aware that the Wessex did in fact have fuel drains, and that Mr Lewis' advicewas wrong as that was one of the matters the report confirmed. But I acceptMr Fogden's evidence that he had not recalled what was said about fuel drains in his2004 report when receiving Mr Lewis' advice in 2005. Accordingly I reject thesuggestion that Messrs Fogden and Jones dishonestly adopted a report that they knewwas flawed.[239] Finally it is relevant that Mr Jones' decision did not turn on Mr Lewis' advice.Mr Dale described it as pivotal, and the "decisive knockout blow". But it was onlyone of eight factors listed in Mr Jones' 19 August file note. Mr Fogden put greaterweight on it in his advice to Mr Jones, but it is plain from the other materials, includingthe preliminary decision, that the application would have been declined irrespectiveof Mr Lewis' opinion.The earlier report of 12 January 1999[240] One of the plaintiffs' central criticisms of Mr Lewis' report, and of the honestyof his opinions, is his failure to make any reference to a report he had provided sixyears earlier to enable one of the Wessex then operated by Mr O'Malley to receive anairworthiness certificate. The plaintiffs also say that the CAA could not realisticallyhave forgotten about this earlier report. It is said that this report was dishonestlywithheld from the plaintiffs, and dishonestly not referred to in the decision-makingprocess.[241] The report was dated 12 January 1999. Following undertaking flight trialsappropriate in order to grant an airworthiness certificate, Mr Lewis not only approvedthe grant of the airworthiness certificate, but was complimentary about the aircraft.He advised:6.5 The Wessex (single and twin engine variance) is a well provenhelicopter it has operated successfully around the world in a service andcivilian capacity. It has operated with the Queen's Flight in excess of 30 yearsand has proven reliability.[242] Mr Lewis was not able to explain why he had not referred to his 1999 report inhis 2005 report when he gave evidence, although he indicated that he was asked towrite his 2005 report as a matter of urgency, and that the 1999 report was prepared fora different purpose and was not directly relevant to the new advice he was giving.[243] I accept that it would have been much better, and more complete, for Mr Lewisto refer to his earlier advice. But I also accept that the opinions were provided fordifferent purposes. The 1999 advice was provided to say that the particular aircraftMr Lewis flew was airworthy. The July 2005 advice did not say the Wessex aircraftwas not an airworthy aircraft. That was clearly not Mr Lewis' view. As he said theWessex had a good general reputation and had been used for the Queen's Flight. ButMr Lewis' 2005 opinion was despite its qualities it was not safe to use it for heliloggingactivities. As he said in his 2005 advice:I have flown the twin engine versions, the MK 52 with the Iraq Air force inBaghdad and the Wessex 60 (civilian version), with Bristow Helicopters in theNorth Sea and long-lining two tone oil pipes in Scotland for the samecompany. A large range of tasks were carried out over a large geographicalarea of operations. I considered that it was the best helicopter that I had flownat that stage. However, for the type of operation envisaged by Heli-logging Ihave doubts of a successful outcome for the following reasons.I always enjoyed flying the Wessex, but as you can see, I have grave doubtsabout its safety for the tasks as suggested by Heli-logging.[244] The 2005 advice relates specifically to the type of operation proposed.47Mr Lewis could have recorded that he had duly approved the airworthiness of aWessex helicopter in New Zealand in 1999 without it affecting his 2015 advice in anyway.47 The plaintiffs rely on answers Mr Lewis gave to questions that I asked him to counter thatsuggestion, but I do not view those answers as inconsistent with the point that the two lettersaddressed different issues.[245] I also do not accept there was any dishonesty in CAA's failure itself to identifythe earlier 1999 report. It had not been identified in the processes surrounding theconsideration of the plaintiffs' proposal. It can be argued that it should have been, butthe fact is that it was not. There was evidence that the CAA's filing system was notintegrated, and I accept that Mr Lewis' report would have been placed on the filerelating to the particular aircraft for which he was giving approval. That aircraft waslater involved in the accident which destroyed the aircraft and killed the pilot, and thereport was subsequently provided to the Coroner. But it was not revealed in thedecision-making process for the plaintiffs' applications because of a lack of anintegrated document retention system.The vibration flight[246] The so-called vibration flight was also an issue emphasised by the plaintiffs.In an affidavit sworn in these proceedings dated 31 March 2015 Mr Lewis revealed,for the first time, that after approving the airworthiness certificate for Mr O'Malley'sWessex in early 1999 he was involved in a further flight in that aircraft during whichhe encountered severe vibration whilst it was engaged in load lifting. In that affidavithe referred to this being when the aircraft was lifting logs but he said in evidencebefore me that he believed he had misremembered this, and that what was being liftedwas a shepherd's hut on a 200 foot strop.[247] The plaintiffs say that this further illustrates dishonesty. First, they contendthat this flight may never have occurred and that Mr Lewis made this up to bolster hissafety concerns. I do not accept this. I accept Mr Lewis' evidence that he didexperience this event in Mr O'Malley's Wessex helicopter, and that it concerned himat the time, but that he made no formal report about the incident. When he gaveevidence he explained that he was now of the view that this vibration may havecontributed to the subsequent accident in that aircraft that killed the pilot.[248] This incident was not referred to in Mr Lewis' July 2005 advice. He was notable to explain in evidence why he had not done so, although he raised the possibilitythat he raised it orally with Messrs Fogden and Jones. That is unlikely. But in anyevent it was not referred to in Mr Lewis' written advice, and played no role in thedecision Mr Jones made.[249] The plaintiffs make a somewhat complicated alternative allegation in thisrespect. They allege that this vibration flight was the real reason for Mr Lewis' safetyconcerns in relation to the Wessex, and that the reasons he spelled out in his July 2005letter were not the true reasons (ie the letter was dishonest). The plaintiffs say thatMr Lewis did not reveal his true reasons for concern because he knew that if he didthe plaintiffs would have been able to easily answer those concerns.48[250] I do not accept that this convoluted allegation has any substance. If MessrsLewis, Fogden and Jones were looking for reasons to justify declining the applicationthen this vibration flight would have been referred to. I also do not accept the vibrationflight could have been easily answered as an issue if Mr Lewis said he believed thevibration arose because of log lifting operations. I conclude that Mr Lewis did notmention this matter in his July letter because he was unsure what had caused the severevibration, and he considered that the most likely cause was an operational matterconcerning the configuration of the load and/or the length of the strop. It did notqualify as a sufficiently clear matter to be raised as a general concern related to usingthe Wessex for helilogging operations, at least not one that could have been conciselyoutlined. He also may not have been forthcoming about the event because he thoughtit may have been associated with the subsequent accident, and he may have felt someresponsibility for not reporting it at the time. But I see no substance in the plaintiffs'allegation that this was his real concern, and he did not record it because he knew itcould be answered. It was not recorded in his advice because it was not a point thatcould be well made about the Wessex in this advice. As I have already held, theconcerns expressed in his 23 July letter duly recorded his genuine concerns about theuse of the aircraft for this type of activity.[251] Neither do I accept the plaintiffs' allegations that Messrs Fogden and Jonesknew about the vibration flight, and that this was the real reason for Mr Lewis'concerns, and that they joined with him in concealing it.48 Other variations of the allegation were put forward by the plaintiffs in closing, but I do not acceptthat they amount to evidence of dishonesty, and I focus on the main allegation.Disclosure that advice was out of date[252] The plaintiffs make a further allegation centering on an email sent by Mr Lewisto Mr Ford after the decision was made. After the plaintiffs had seen the adviceprovided by Mr Lewis, Mr Ford made contact with Mr Lewis. Mr Ford firsttelephoned and spoke to him, and followed up by email dated 14 December. Mr Fordsaid in the email that he did not see how Mr Lewis could say that the Wessex wasunsafe, and he asked him to retract his advice. Mr Ford also provided writtencomments from Mr Brian Taylor, a very experienced Wessex pilot, responding to thesuggested shortcomings with the Wessex. By email the same day Mr Lewis replied.He said: I spent a lot of time thinking about what you said yesterday and havedecided that:1. CAA are determined that they do not want ex-military helicoptersoperating on commercial operations here because of their pastrecord and2. They insist that your operations are not Private, but Commercial.Because of that, I do not believe that for one moment they would accept myretraction, which would be have to be based on hearsay [sic]. What I said inmy letter was fact, but I admit it was 40 year old fact and I would agree thatthings could have changed. I couldn't read what Brian [Taylor] said aboutfuel drains, but I don't like the lack of them. I cannot remember any UKmachine ever having them! I also have some doubts about computers, as I'vehad a number of bad experiences with them. I don't know how yours havebeen stored, or if they have an expiry date.Talking to Peter O'Brien last week and to other people in, or around theindustry, it would appear that you have a very good case.Jim Barclay has put up a very good and compelling case for your operationand I think you should continue with it.Mark, I am very sorry, but I feel that I cannot withdrawal what I wrote to theDirector.[253] The plaintiffs make a further complex allegation in relation to this email. Theysay it amounted to a further fraudulent misrepresentation. They say that it was nottrue that Mr Lewis' opinions were based on 40 year old fact at all. Rather the reasonsfor his concern were actually the 1999 vibration flight. Accordingly, this emailcontained further false misrepresentations.[254] For the reasons I have already canvassed in relation to the vibration flight I donot accept this. The vibration flight was not the real reason for Mr Lewis' concerns.His concerns were those set out in his letter. What this further email from Mr Lewisdid acknowledge, however, was that his views could be out of date because they arosefrom experience from 40 years ago. That was an honest acknowledgement, fairlymade.Alterations made to Mr Lewis' 23 July letter[255] Two alterations were made to Mr Lewis' letter after it was sent to the Director.The plaintiffs say these alterations further evidence dishonesty.[256] First, the version of the letter initially received by the Director ended:I always enjoyed flying the Wessex, but as you can see, I have grave doubtsabout its viability for the tasks suggested by Helilogging.[257] An alteration was made in handwriting to this concluding paragraph, however.The word "viability" was crossed out and replaced with the word "safety". I acceptMr Lewis' evidence, however, that he phoned Mr Jones and asked that this alterationbe made after he reflected on the advice he had sent, and decided he needed toemphasise safety. He confirmed the change he wished to make in a letter to Mr Jonesof 2 August 2005. There was no dishonesty in this process, and neither was Mr Lewisasked to make that change by Mr Jones or anybody else. It was a change transparentlymade without any dishonest concealment.[258] The second change was more subtle. Mr Lewis began the third paragraph ofhis letter describing his personal experience:I have flown the twin engine versions, the Mk 52 with the Iraq Airforce inBaghdad and the Wessex 60 (civilian version) [259] Somebody at the CAA made an alteration to this sentence by blocking out the5 by hand so that the sentence appeared to refer to the "Mk 2". The change was notobvious to the plaintiffs. It was only in April 2012 that Mrs Ford first noticed it whenshe looked more closely at the letter when it was on her kitchen table.[260] It is clear that this change was made by someone at CAA. There are versionsof this letter held by CAA without the change. This issue was also internally discussed.In a version of the letter which Mr Wellik discussed with an unidentified technicaladviser of the CAA Mr Wellik has put a line through the 5 on his version while makingnotes. He indicated, however, that he would not have made the alteration to theoriginal letter itself. None of the witnesses who were questioned accepted that theyhad made the alteration.[261] There is no dispute that it was inappropriate for it to be made. I do not accept,however, there was a dishonest attempt to mislead anybody by the alteration. Theevidence established that the Wessex aircraft at the time was used by different militaryservices with a different number assigned, but the aircraft itself was the same. TheWessex Mark 2 was used by the Airforce, and the Wessex Mark 5 was used by theNavy. When the same aircraft was used in Iraq, it was given the number 52. But theywere all the same aircraft. So nothing turned on the number. The fact that the number52 had been used for the Wessex used in Iraq was not well known. I conclude that theperson who made this change was simply seeking to avoid any confusion arising fromthe use of the number 52 rather than 2 or 5.[262] The plaintiffs sought to argue that this alteration disguised the fact thatMr Lewis was referring to the obsolete aircraft used in the 1960s rather than theMark 2 aircraft as it existed at the time of the application in 2004/05. I do not acceptthis. It is clear from the letter that Mr Lewis was referring to the aircraft that he flewwith the Iraq Airforce in Baghdad, and in the context of this letter and Britain's historicassociation with Iraq, it was clearly referring to events of some time ago. Deleting the5 did not suggest that this experience was recent. The number assigned to the aircrafthad no association with the age of Mr Lewis' experience. So I conclude it was aninappropriate change to the letter without any fraudulent intent, and with nosignificance in terms of the information conveyed to the reader.Conversation between Director and Irene King[263] There is one final matter focussed on by the plaintiffs. At the time of theHelilogging decision Ms Irene King was the Acting Chief Executive of the AviationIndustry Association (the AIA). The AIA began assisting Helilogging, particularlyduring 2005, in relation to its exemption application. Ms King and Mr Jones werefriends and there was also a close professional relationship between the AIA and theDirector. Mr Jones had been a former president of the AIA.[264] Ms King gave evidence of a conversation between her and Mr Jones in theperiod June–August 2005 in his office. She raised the AIA's concerns with the waythat the application made by Helilogging had been handled. She described Mr Jones'reaction when she did so was that there was a "visible change in his appearance" andthat she had never seen him react in such a fashion before. She said:Mr Jones said in response to my question that there was no way that thoseaircraft were ever going to fly in New Zealand so I should stop wasting histime. This may not be the exact words but it was to that effect.[265] She also gave evidence that Mr Jones said that any documents sought underthe Official Information Act would not be provided as they would be subject tocommercial confidentiality or privilege. She accepted in cross-examination, however,that this related to documents relating to the issue of hire and reward, and that they didnot relate to the plaintiffs' application.[266] It was suggested to Ms King in cross-examination that she was not telling thetruth about this conversation concerning the plaintiffs' application. I reject that. Iaccept that she remembered this conversation because it was unusual and out ofcharacter for Mr Jones to react in the way that he did. When she gave evidence shewas very careful to distinguish between what she could remember, and what shethought was likely to have happened. Ms King did not report this matter to theplaintiffs, or more broadly than the AIA President. But I conclude that was becauseof the nature of the relationship between the AIA and the Director. To have directaccess to the Director would have been very valuable for both parties, and informationexchanged in that context would have been treated with some sensitivity. To report itmore broadly it may have caused damage to the relationship. I accept the honesty ofher evidence.[267] I am less certain about the accuracy of Ms King's recollection. WhilstMs King remembers the nature of Mr Jones' behaviour, she could not recall his actualwords.49 It is some time ago. She was unsure of the timing of the conversation, butindicated the period of June–August 2005 because it was inclement weather outside.Wellingtonians will recognise that that does not greatly limit the timeframe. Moreovera re-remembering of the event focussing on the emotional impact of the occasion mayhave distorted some of the detail.[268] I nevertheless accept that a comment was made in forthright terms to the effectthat the plaintiffs' application was not going to be granted. I conclude that thisconversation occurred after the preliminary decision was released in May 2005. MrJones' intention to decline the application was accordingly already disclosed. I acceptthat Mr Jones answered emotionally when queried by Ms King. This is likely to havereflected the severe pressure that he was under. By this stage there had been HighCourt proceedings, a Close Up television programme, an inquiry by the SelectCommittee, matters had been raised in Parliament, and there was a degree ofMinisterial pressure. Now Mr Jones' personal friend, Ms King, acting on behalf of theAIA was questioning his approach, and he reacted. That provides the context to thekind of strong comment I find that he made.[269] As I have already concluded there is no misconduct in Mr Jones having views,even very strong views, in the decision-making process. He was obliged to actprofessionally, and with an open mind, when making a statutory decision. But I amnot prepared to conclude that a comment of this kind evidences dishonesty, or a lackof integrity. It does not mean that Mr Jones would not have reconsidered his stronglyexpressed views if the plaintiffs had come back with compelling responses to thepreliminary decision.[270] In many respects this is the plaintiffs' best evidence, especially when it iscoupled with the views Mr Jones held as evidenced by the draft 9 November 2004memorandum. It suggests the Director was strongly opposed to the exemptionapplication. But by itself this does not demonstrate misfeasance, or deceit. Neither49 Research indicates that memory for the gist of conversations can be good, there can be notablefailures to remember verbatim content. See Michael P Toglia, J. Don Read, David F. Ross andR.C L Lindsay (eds) The Handbook of Eyewitness Psychology: Volume 1 Memory for Events(Lawrence Elbaum Ass 2007) at p.11. See also footnote 26 above.does it evidence that Mr Jones was dishonest in saying that the decision-makingprocess he imposed was required before the statutory decision could properly be made.Conclusions on misfeasance and deceit[271] My findings above are relevant to both the claims in misfeasance in a publicoffice, and deceit. In terms of misfeasance, I find that at no stage did Mr Jones orother officials act knowingly beyond their functions or powers, or recklesslyindifferent to this. In terms of deceit, I conclude that at no point did they make untruerepresentations to the plaintiffs.[272] In assessing each of the matters relied upon by the plaintiffs to establish theirclaims, I have also stood back and considered the allegations as a whole. Theallegations are factually interrelated, and the plaintiffs say that the cumulative effectof the evidence they rely upon demonstrates that Mr Jones had made up his mind notto grant the exemption applications by 9 November 2004, and the steps taken fromthat time dishonestly concealed his true views, and involved a process that was nevergenuine, but simply followed in order to avoid criticism or challenge to the Director'sdecision.[273] I do not accept these allegations. As a matter of fact I conclude that the relevantCAA personnel, and Mr Jones and Mr Fogden in particular, acted honestly throughout.I also reach that conclusion in relation to Mr Lewis. I accept the draft 9 November2004 memorandum indicated strong views adverse to the plaintiffs, and that Mr Jonesrevealed the strength of those views again in his conversation with Ms King in 2005.But I do not accept that this demonstrates he acted improperly. He had strong viewsprecisely because he believed that granting the exemption application was notappropriate given the relevant statutory considerations under s 37. His decision tofollow a process before the statutory decision was made was not improper.[274] For these reasons the plaintiffs' claims fail on the facts.OTHER ISSUES RAISED BY PLAINTIFFS' CLAIMS[275] Given that the plaintiffs' claims fail on the facts, it is strictly unnecessary toaddress the further issues that have been argued. But it would be appropriate to addresssome of those issues, at least in summary form.Was the decision reasonably open to the Director?[276] Significant evidence was led at trial going to the merits, or otherwise, of theDirector's s 37 decision. As indicated, in opening the plaintiffs accepted that adecision to decline was open to a reasonable Director. In closing, however, Mr Dalewithdrew that concession and contended that a reasonable Director would have beencompelled to grant the exemption application. He argued that this was a consequenceof the evidence that had emerged at trial.[277] I accept that it was open to a reasonable Director to decline the plaintiffs'applications. This was the view of Messrs Jones, Fogden and Gill at the time. Expertevidence was also called from two existing senior CAA employees Richard Hughesand Shaun Johnson to the effect that the applications were rightly declined. I concludethat a decision to decline was reasonable for the following reasons:(a) The application to use a Special category aircraft for commercialactivities, or to allow a non-type certified aircraft to obtain a Restrictedcategorisation, involved an exemption from fundamental aspects of theRules. What was being permitted was essentially a new category ofcommercial operation involving ex-military aircraft. Such changescould be seen to be more appropriately dealt with by way of a Rulechange made by the Minister of Transport rather than the application ofs 37. A Rule change would allow the precedent setting aspects of theapplication to be addressed with input from wider participants,including the industry, with appropriate Rules then formulated. Thediscretion under s 37(1) could have been exercised to decline theexemption application on this basis.(b) The accident history in relation to ex-military aircraft, including theWessex, could by itself have been a reason to conclude that the s 37(2)prerequisites were not met. The UKCAA had advised that any requestto re-establish support for the Wessex would need to address theunknown causes of the North Sea accident involving multiple deaths.In New Zealand the only Wessex used for helilogging had also crashed,with the cause of the accident not identified. The accident history ofex-military aircraft was generally poor. By themselves such matterswere sufficient to allow a reasonable Director to say that s 37(2) wasnot satisfied and/or that allowing ex-military helicopters to operatecommercially was simply not a good idea from a generic safety policyperspective under s 37(1).(c) Notwithstanding the CAA's requests the plaintiffs had not confirmedan arrangement for support of the engine from Rolls Royce, or that the"lifing" of components for the proposed repetitive heavy load liftingoperations had been established. The assessment of the lifingcomponents would not have been straightforward as detailed recordswere not available from the military.50 Rolls Royce had advised theplaintiffs that the New Zealand CAA would need to approve of anyassessment it made of the lifing of key components.51 This had notoccurred. Rolls Royce approval and support could legitimately havebeen treated as a necessary pre-requisite for approving the operation.(d) No NAA had been identified notwithstanding the point had beenrepeatedly raised by CAA. This is the authority which would overseethe functions undertaken by GKN and Rolls Royce. The New ZealandCAA did not have the technical ability to perform this function as it hadno expertise in the Wessex helicopter. The plaintiffs did not provideany information that the UKCAA would be prepared to perform thisrole, or that it had even been approached. On that basis an important50 Exchange rates converting the hours of use in military operations into cycles for each of thecomponents were not readily available.51 This letter, dated 3 March 2005 to Mr Gordon was not disclosed by the plaintiffs to the CAA atthe time. An earlier letter from Rolls Royce to Mr Remacha of 20 April 2002 raised similar issues.feature of the integrated safety system was absent, and a reasonableDirector could conclude that s 37(2) was not satisfied.(e) Whilst the plaintiffs had obtained a large number of spare parts, andmany of them appear to have been properly certified in accordance withthe requirements, not all of them were. Despite requests by the CAA,the plaintiffs had not confirmed the position in detail. Confirmation ofa clear and unquestioned supply of duly certified spare parts could havebeen treated as a pre-requisite that had not been satisfied by theplaintiffs.[278] I am less convinced that other factors, at least by themselves, would havemeant that a reasonable Director could have declined the application. For example,the requirement for a duly signed contract with GKN had a "catch 22" aspect, as theplaintiffs may not have been able to commit to signing up a contract without knowingthat they were being granted the exemption application. That is also true with respectto other matters, such as the identity of the chief pilot. It seems to me that this kind ofmatter could have been appropriately addressed by the exemption application beinggranted on conditions — for example a condition that a contract between the plaintiffsand GKN, on terms and conditions agreeable to the Director, be entered beforeoperations could start.[279] I also conclude, however, that a reasonable Director could have granted one orother exemption application. Mr Lanham advised Mr Jones that he could do so withthe input from Messrs Gill and Fogden in 2004. A former Deputy Director,Mr Maxwell Stevens gave evidence that the exemption should have been granted, andMr Remacha also gave evidence that he would have given a recommendation toapprove it had he still been employed by CAA. In relation to the matters I havehighlighted above, there were potential answers to these points that meant that areasonable Director could have granted the application. In particular:(a) The fact that the application involved departure from significant rules,and was potentially precedent setting would not, by itself, mean it couldnot be granted. Section 37 still applied in such circumstances. Areasonable Director could also have concluded that it would be unfairto the plaintiffs not to allow the exemption after the encouragement theplaintiffs had received during 2003–2004 to progress the application inknowledge of these features. The Director could also have concludedthat the exemption did not create a precedent given the very detailedrequirements the plaintiffs had met, such as the flight trials with GKNsupport, and the fact that the CAA policy disclosed at the September2002 AIA conference was that all new imports would need to be typecertified.52(b) Whilst the accident history of ex-military helicopters was very poor,and there were unresolved accidents involving the Wessex, thematerials the plaintiffs had put together in terms of airworthiness,operational procedures, the maintenance programme, and Mr Barclay'sreport more generally were regarded as very high quality. As Mr Gilladvised, the Wessex was in a different league from other ex-militaryaircraft. Approving an operation with thorough materials of the kindprovided could have allowed a reasonable Director to be satisfied thats 37(2)(b) was met — namely that the action taken was "as effective ormore effective than actual compliance with the requirement".(c) Whilst the support of Rolls Royce, and their confirmation of the lifingof components would have been necessary, this could have beenaddressed by way of conditions requiring both the entry of a contractsatisfactory to the Director, and that the lifing of components also beestablished to the Director's satisfaction under such arrangements.Rolls Royce did not suggest that this was not possible. In addition lifingcould have been achieved in the manner suggested by Mr Barclay andMr Gordon — by more heavily discounting the remaining life of keycomponents adopting a precautionary approach.52 See [72]–[76] above. The Wessex was an exception as it had already been imported and certifiedfor operation.(d) The NAA matter could reasonably have been treated as not being a pre-requisite for the grant of approval. The requirement for such anAuthority did not exist in the Special category, and the Director couldreasonably conclude that the overall systems put in place by theplaintiffs, with the support of GKN and Rolls Royce, were sufficient inthemselves to demonstrate an equivalent level of safety, and a greaterlevel of safety than other type certified aircraft currently in operation inNew Zealand.(e) Whilst some of the plaintiffs' spare parts were not certified, it is clearthat a number were. An audit could have been required as a conditionof approval. In any event as a certified operator the plaintiffs couldonly use certified spare parts, installed and maintained by a certifiedLAME, in accordance with the operational and maintenanceprogrammes that had duly been signed off.[280] Accordingly I conclude both that a reasonable Director could have granted theapplication, and that a reasonable Director could also have declined it. These findingsare not inconsistent. Section 37 is a power that requires the Director to exercisejudgment, and then a discretion. Reasonable Directors could reach differentconclusions. This is not only because of the discretionary nature of s 37(1), but alsobecause different judgments could be formed by different persons when making theassessments required under s 37(2).[281] The main significance of this conclusion is its impact on the difficult questionof causation and loss.Causation and loss[282] The trial dealt with what was identified in my ruling separating liability fromquantum as "regulatory causation".53 What was alive for determination at this trialwas what would have occurred from a regulatory perspective but for the allegedwrongdoing.53 Helilogging Ltd v Civil Aviation Authority of New Zealand, above n 1.[283] There are complexities with the plaintiffs' case in this respect. Thesecomplexities do not mean that the case will have failed on this basis, but there aredifficult issues.[284] The plaintiffs did not advance their case on the basis that Mr Jones actedknowingly beyond his s 37 power, or recklessly indifferent to this. That approachbecame less clear in closing given Mr Dale's argument that a reasonable Directorwould have been obliged to grant the exemption given the evidence at trial. To theextent this included an argument that Mr Jones knowingly/recklessly acted beyond hispower by declining the application I reject the argument. The evidence does notsupport it. For example, the plaintiffs' case is that the 9 November 2004 memorandumevidenced Mr Jones' true thinking. But there is nothing in that memorandumsuggesting that Mr Jones thought that he would be (or may be) acting beyond hispowers in declining the application.[285] It was this feature of the plaintiffs' case that led me to characterise it during theplaintiffs' opening as a claim for procedural misfeasance.54 It was also this featurethat led the plaintiffs to advance their case on a "loss of a chance" basis.[286] In advancing the case on a loss of a chance basis, the plaintiffs called verydetailed evidence as to what would have occurred had the defendant's allegedwrongdoing been discovered at the time. I received evidence from counsel who actedfor the plaintiffs in 2004, Mr Castle, as to the judicial challenges he would haveadvised to be advanced if the 9 November 2004 memorandum had been revealed. Ialso heard evidence from the Rt Hon Winston Peters, the Deputy Prime Minister, as tothe political avenues that would have been pursued to assist the plaintiffs in this event.Some of the evidence and argument pursued by the plaintiffs on this counterfactualapproach also became complicated. For example it was argued that not only would ajudicial review challenge have been successful in 2004 or 2005 if the true position hadbeen known, but that Mr Jones would have been disqualified from reconsidering theplaintiffs' applications because of the discovery that he had not been acting in goodfaith.54 See paras [17] and [178] above.[287] Much of this evidence seems to me to be directed to the wrong question. Inassessing causation for the purpose of assessing loss the relevant inquiry is what wouldhave occurred if there had been no wrongdoing, rather than what would have occurredif the wrongdoing had been exposed. In addition it seems to me the inquiry should bemade by reference to whether a reasonable Director would have (or could have)granted the application but for this wrongdoing, rather than what Mr Jones himselfwould have done. I do not think it would have been appropriate to include Mr Jones,and the views he personally had, within the counterfactual. The wrongdoer's personalviews are properly excluded. Rather the question should be considered objectively –what a reasonable Director would likely have done.[288] A related question concerns the appropriate method for quantifying orassessing the plaintiffs' loss. There appear to be three possible approaches:(a) The first approach is to consider whether the plaintiffs could establishthat it was more likely than not that the s 37 exemption would havebeen granted, with the full loss to be awarded on that basis only if thatwas established (the "all or nothing" approach).(b) An alternative is to conclude that when a discretionary power couldhave been exercised either way the indeterminate feature relevant toassessing damages on a loss of a chance basis exists (the "lost chance"approach).55(c) A further alternative would have been to identify the loss more directlycaused by the wrongdoing. That would be the loss incurred by theplaintiffs arising from being required to undertake the furtherprocedural steps from November 2004 following the Director'simproper imposition of them, or his misrepresentations about the trueposition. Those could be said to have been limited to the additionalcosts or losses incurred by the plaintiffs over this period of time, rather55 See Strack v Grey [2019] NZCA 432 at [46]–[53]; and Forest Holdings Ltd v Mangatu Blocks Inc[2019] NZHC 2258. See also Lock v Australian Securities and Investments Commission [2016]FCA 31, (2016) 334 ALR 250 at [138] per Gleeson J.than a loss assessed on the basis of the chance of the exemption beinggranted (a "wasted expenditure" approach).[289] This last alternative also arises in relation to the tort of deceit. The first allegeddeceit would have been the representation by the Director in November/December2004 that he retained an open mind. But the only loss directly caused by any relianceon this representation may well have been limited to the further costs incurred by theplaintiffs in seeking to satisfy the Director on the issues he had outlined.[290] Equally any misrepresentation in August 2005 that Mr Lewis' views, (andindeed the Director's decision) were the true reasons why the plaintiffs had beendeclined could only be said to have caused loss if steps were taken in reliance as aconsequence. That is also so in relation to any misfeasance related to the integrity ofMr Lewis' views. It could be argued that the plaintiffs did not challenge the decisionsby way of judicial review because of a belief in those matters. But unless the plaintiffscould demonstrate on the balance of probabilities that they could have overturned thedecision through judicial review and that the application would have been granted —conclusions I do not necessarily accept for the reasons I address further below — thenno loss of that kind would have been caused.Would judicial review have been successful?[291] The complexities in relation to causation and loss are reflected in the argumentsdirected to the potential judicial review challenges to Mr Jones' decisions. For thereasons already outlined, had the plaintiffs succeeded in establishing liability formisfeasance it would not have been necessary for the plaintiffs to have alsodemonstrated that they could have overturned Mr Jones' decisions by way of judicialreview. The question would more simply have been what would have happened withtheir applications if there had been no wrongdoing. It is potentially more relevant ifthe claim in deceit had succeeded, although if there had been any such deceit thedecisions themselves could have been overturned for fraud. In any event, forcompleteness, I address some of the matters the plaintiffs raised on this issue.[292] Had Mr Jones declined the exemption application on the basis set out in his9 November 2004 memorandum (or revealed he had so declined it) I accept that theplaintiffs would likely have succeeded with a claim for judicial review on two relatedgrounds:(a) First on the basis that the decision was made in breach of the plaintiffs'legitimate expectations arising from the earlier express and impliedrepresentations earlier made in 2003–2004.56 Given the statutorycontext of this decision, however, there is no prospect of the plaintiffsestablishing a legitimate expectation of a substantive outcome.57 Allthat the plaintiffs could have obtained was an order that Mr Jonesreconsider the application after giving the plaintiffs an opportunity tobe heard before the earlier representations were departed from. Giventhat was essentially what the plaintiffs were given in the seven-stageprocess, I conclude that the plaintiffs would have been in materially thesame position.(b) Second the plaintiffs could have succeeded on the basis that the policyconcerning ex-military helicopters announced at the AIA conference inSeptember 2002 was not considered and/or applied. That included thepolicy that all new imports would need to be type certified, whichwould have been particularly relevant to any precedent considerations.This involved a failure to consider a mandatory relevant consideration.Again, however, all that the plaintiffs could have obtained was an orderrequiring reconsideration by Mr Jones, and the plaintiffs would havebeen in materially the same position.[293] I do not accept that any other potential grounds of judicial review at that timewould have succeeded. I do not accept the plaintiffs' argument that there was anirrelevant consideration — namely that a precedent would be set which wouldencourage the incumbents to lower existing standards. That seems to me to be arelevant consideration under s 37.56 See Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598, [2014] 2 NZLR 137.57 See Green v Racing Integrity Unit Ltd [2014] NZCA 133, [2014] NZAR 623 at [40].[294] As I have indicated, however, if liability was established for conduct inNovember/December 2004 it may not be necessary to ask what Mr Jones would havedone on a Court ordered reconsideration. In those circumstances the relevant inquirywould more likely have been what a reasonable Director would have done. On thatapproach a different outcome was possible as a reasonable Director could have grantedone of the applications for the reasons I have outlined.[295] I also accept the plaintiffs could have successfully challenged Mr Jones' 2005decision on two grounds:(a) First on the basis of procedural unfairness. Mr Jones relied onMr Lewis' report without disclosing and allowing submissions on it.58As I have held, that was inconsistent with the seven-stage process.Such a judicial review would likely have identified the significantissues arising from Mr Lewis' advice. But again that could only haveresulted in an order directing Mr Jones to reconsider his decision inlight of the submissions made by the plaintiffs on Mr Lewis' advice. Ialso conclude that Mr Jones would have declined the applicationirrespective of Mr Lewis' advice. So the plaintiffs would haveultimately been placed in the same position.(b) Second, whilst Mr Fodgen's advice to Mr Jones referred to the policyset out to the September 2002 AIA conference, it did not refer to thepart of the policy providing that all new imports of ex-military aircraftwould need to be type certified. That part of the policy might haveanswered the concern that granting the application would create aprecedent.59 This again involved a failure to consider a mandatoryrelevant consideration. But this was only one consideration and for thereasons already addressed I conclude that the ultimate outcome wouldhave been no different.58 See [228] above.59 The Westland Wessex was an exception because it had already been imported and certified foroperation in New Zealand.[296] I do not consider that there were grounds of judicial review that would havesucceeded at this time.60 Again, however, the position would be different if liabilitywere established for the conduct through to August/December 2005, and the relevantinquiry is what a reasonable Director would have done. On that basis one of theapplications could have been granted.[297] I accordingly conclude that the decision made in August 2005 was vulnerableto successful challenge by way of judicial review. If a decision had earlier been madeby Mr Jones on 9 November it would also have been vulnerable to such a challenge.The ultimate decision by Mr Jones would still likely to have been the same in eithercase if he had been directed to reconsider it, but a reasonable Director could havereached a different decision.[298] Apart from identifying these complexities, and difficulties with the plaintiffs'case on the questions of causation and loss, I take the issues no further. It would bedifficult to express the chances of success if the applications were considered by areasonable Director in percentage terms. That is particularly so when what is involvedis a discretionary power, and alternative approaches are reasonably open. It isultimately artificial to attempt to reach such conclusions without findings of fact whichestablish the torts of misfeasance or deceit that would allow a clearer analysis ofcausation, and the loss flowing from those findings.Mr Lewis and vicarious liability[299] The plaintiffs advance their case on the basis the defendant was vicariouslyliable for Mr Lewis' conduct. There are difficulties with this approach even if I hadfound that Mr Lewis acted dishonestly.[300] First, in relation to misfeasance, I do not accept that Mr Lewis could himselfhave been liable for this tort. That is because he was not exercising a public office.Rather he was acting as a private consultant providing his opinion to the Director ofCivil Aviation within his area of expertise. In Commissioner of Inland Revenue v60 The claim for breach of legitimate expectation would not have been available because the plaintiffswere given the right to be heard in the seven-stage process.Chesterfields Preschools Ltd the Court of Appeal addressed whether the tort ofmisfeasance in a public office could be alleged against a lawyer acting for theCommissioner of Inland Revenue.61 The Court adopted the approach of the NewSouth Wales Court of Appeal in Leerdam v Noori,62 and held that the legal practitionerwas acting in a private capacity and did not thereby hold a public office or exerciseany statutory power.63 That reasoning applies here, and for that reason I conclude thatMr Lewis was not exercising a public office, and would not have been liable formisfeasance.[301] In relation to deceit there needs to be a representation by the defendantintending that the plaintiff rely on it, and that the plaintiff does in fact rely on it.64 HereMr Lewis' advice was given to the CAA, not to the plaintiffs. The plaintiffs respondto this point by arguing that Mr Lewis' advice was subsequently given to the plaintiffs,but that argument seems to me to be artificial. So Mr Lewis would not have beenliable in deceit. I accept that Mr Lewis' subsequent email of 14 December 2005 inwhich he said his views were based on 40 year old fact was a representation made tothe plaintiffs which might have formed the basis of liability if it had been false and theplaintiffs relied upon it.[302] In closing I put to Mr Taylor that it seemed to me that when a private individualdishonestly induced a public body to make an adverse decision against a prospectiveplaintiff tortious liability should arise. I drew an analogy with private individualsinducing prosecutions where such liability can arise.65 Mr Taylor's answer to thispoint was to say that such liability could exist for the tort of injurious falsehood.66 Iaccept that that is a potential answer to any suggested gap.6761 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR679.62 Leerdam v Noori [2009] NSWCA 90, (2009) 255 ALR 553.63 Commissioner of Inland Revenue v Chesterfields Preschools Ltd, above n 61, at [77]–[82].64 See [19] above.65 See, for example, Commercial Union Assurance Co of New Zealand Ltd v Lamont [1989] 3 NZLR187 (CA).66 See Stephen Todd (ed) Todd on Torts (8th ed, Thomson Reuters, Wellington, 2019) at [15.3].67 If the plaintiffs had established the elements of injurious falsehood, but not deceit, I would haveexpected an application to amend the pleadings.[303] In any event, even if Mr Lewis did commit a tort, I do not accept that thedefendant would have been vicariously liable for it. I accept the defendant couldbecome liable if it, or one of its officers, participated in the tortious wrongdoing andbecome principally liable. But if Mr Jones and Mr Fogden were unaware of dishonestyby Mr Lewis, I do not accept that the defendant would have been liable for Mr Lewis'tortious actions on vicarious liability principles. In advancing their case for vicariousliability the plaintiffs relied on cases where a person is acting as an agent for theprincipal, including Dollars and Sense Finance Ltd v Nathan68 and FM CustodiansLtd v R.69 But Mr Lewis was not acting as the agent of the CAA. He was asked forhis advice as an independent expert. I accept the defendant's general proposition thatthere is no vicarious liability for the actions of independent contractors in the absenceof an agency relationship.70[304] Finally on the question of vicarious liability, I record that the defendant arguedthat if Messrs Jones or Fogden had acted dishonestly the defendant may not bevicariously liable on the basis that if they did so they were acting outside the scope oftheir employment.71 That is a difficult point, and on the face of it not a particularlyattractive one for the defendant to rely upon. But in the absence of factual findingrelevant to such an assessment I do no more than note the point.Limitation[305] These proceedings were commenced in 2014 more than six years after thecauses of action arose.[306] To address this point the plaintiffs relied on s 28 of the Limitation Act 1950contending that the limitation period was postponed because a cause of action for fraudwas not known or able to be discovered with reasonable diligence. The relevant testfor that inquiry is set out by the Supreme Court in Murray v Morel & Co Ltd,72 andthe Court of Appeal in Amaltal Corporation Ltd v Maruha Corporation.7368 Dollars & Sense Finance Ltd v Nathan [2008] NZSC 20, [2008] 2 NZLR 557.69 FM Custodians Ltd v R [2019] NZHC 1128.70 See Cashfield Houses Ltd v David & Heather Sinclair Ltd [1995] 1 NZLR 452 (HC).71 See Stephen Todd, above n 66, at [22.5.04].72 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.73 Amaltal Corporation Ltd v Maruha Corp, above n 9, at [150]–[161].[307] Given that I have concluded that there was no fraud, then there is no relevantinquiry to make under s 28. I make the somewhat obvious point that the plaintiffsneither discovered, nor were able to discover any fraudulent conduct given that noneexisted. Neither was there anything on the face of the events at the time that wouldhave put the plaintiffs on notice of fraud. But any further analysis on this questionbecomes artificial given my findings on the facts.CONCLUSION[308] For the above reasons the plaintiffs' claims fail.[309] I do not accept that the plaintiffs have established any relevant dishonesty, orconduct in bad faith. In particular they have not established that Mr Jones actedknowingly beyond his functions or powers, or recklessly indifferent to this, or thatMr Fogden and/or Mr Lewis acted such that the tort of misfeasance could beestablished. Furthermore there was no untrue representation by any of them that couldfound a claim in deceit.[310] I also conclude that there may have been difficulties in upholding the plaintiffs'claimed loss if misfeasance or deceit as alleged had been established. This is becauseof the point initially accepted by the plaintiffs in opening, and then found by me whenthat concession was withdrawn, that the ultimate decision made by the Director not togrant the exemption applications was open to a reasonable Director. I also concludethat a reasonable Director could have granted one of the exemption applications, andit may be that damages could still be awarded based on the application being granted,including on a loss of a chance basis. An alternative would be to allow only theadditional costs incurred by the plaintiffs from November 2004 when the alleged tortswere committed. In the absence of factual findings in relation to misfeasance or deceit,it is not realistic to take that analysis any further.[311] I also find that there would have been no basis to find the defendant wasvicariously liable for any tort committed by Mr Lewis. Otherwise I do not reachconclusions of the issues that were raised during the proceedings.[312] I generally accept that the plaintiffs were unfairly treated. The plaintiffscommitted substantial resources to the project on an understanding of the requirementsoutlined to them by CAA from early 2003. By the time CAA advised that therequirements were actually more extensive the plaintiffs were financially committed.Declining the applications ultimately led to the first plaintiff's demise. The treatmentof the plaintiffs was far from ideal. But that does not mean the defendant is liable intort.[313] The plaintiffs' have advanced a comprehensive case. A large number ofwitnesses were called to address wide ranging factual issues, and a number matters ofexpert evidence. They key questions, however, centre on the honesty of the decision-makers at the time — namely Mr Jones and Mr Fogden, and those advising them —Mr Lewis and (as it transpired as the evidence emerged) Ms MacIntosh and Mr Gill.I conclude that all acted honestly.[314] The plaintiffs' claims are dismissed. If the parties are unable to agree uponcosts I invite memoranda. I set no precise timetable for doing so, but any claim forcosts that is filed and served should be responded to by a memorandum filed andserved within 20 working days.Cooke JSolicitors:Neilsons Lawyers Ltd, Auckland for plaintiffsDarroch Forrest Lawyers, Wellington for defendant