HELILOGGING v CIVIL AVIATION AUTHORITY [2021] NZCA 21

HELILOGGING v CIVIL AVIATION AUTHORITY [2021] NZCA 21 [25 February 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA45/2020[2021] NZCA 21BETWEEN HELILOGGING LIMITED(IN RECEIVERSHIP AND LIQUIDATION)First AppellantAND MARK WAYNE FORD AS TRUSTEE OFTHE WESSEX TRUSTSecond AppellantAND CIVIL AVIATION AUTHORITY OF NEWZEALANDRespondentHearing:Furthersubmissions:21–23 September 202030 September 2020Court: Miller, Gilbert and Goddard JJCounsel: P J Dale QC and A J Steel for First and Second AppellantsL J Taylor QC, G M Richards, S F Lomaloma and A B Darrochfor RespondentJudgment: 25 February 2021 at 12 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The appellants are to pay costs to the respondent for a complex appeal ona band B basis and usual disbursements. We certify for second counsel.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)Table of contentsIntroduction [1]The appeal [7]Notice by CAA to support the judgment on other grounds [9]Regulatory framework [10]Chronology [18]Westland Wessex series of helicopters [22]Fatal accident in New Zealand involving a Westland Wessex Mk 5 [25]CAA review of safety issues concerning ex-military helicopters [27]Helilogging purchases two Westland Wessex Mk 2 helicopters [37]Steps by Helilogging prior to filing exemption petition [40]Petition for exemption [62]9 November 2004 memorandum [75]Judicial review proceedings [83]Implementation of seven-stage processStep 1 — briefing from technical advisers [88]Step 2 — request for further information [90]Step 3 — updated advice from technical advisers [103]Step 4 — consideration of advice and preliminary decision [108]Step 5 — preliminary decision provided to Helilogging [109]Step 6 — consideration of Helilogging's comments [110]Step 7 — final decision [125]2005–2014 [135]The pleaded claimsDeceit [160]The CAA [161]Mr Lewis [165]Mr Fogden [166]Misfeasance in public office [167]High Court judgment [171]Grounds of appeal [174]Ground 1 — 1999 Lewis report [177]Ground 2 — recklessness in respect of the 2005 Lewis letter [205]Ground 3 — the vibration flight [218]Ground 4 — safety as the primary ground for refusal [233]Ground 5 — the effect of the director's conduct [237]Ground 6 — findings contrary to the weight of evidence [239]Ground 7 — pleadings [246]Ground 8 — counsel's concession [249]Ground 9 — alteration to Mr Lewis' 23 July 2005 letter [252]Ground 10 — the evidence of Irene King [258]Ground 11 — whether the decision was reasonably open tothe director [266]Summary [269]Result [277]Introduction[1] In July 2004, the appellants (collectively referred to as Helilogging) petitionedthe director of Civil Aviation (the director) for an exemption from the Civil AviationRules to enable them to use an ex-military Westland Wessex Mk 2 type helicopter forheli-logging operations in remote areas of the central North Island. The WestlandWessex series of helicopters were manufactured in the United Kingdom between 1958and 1970 and were designed for use by the British armed forces. In a written decisionissued on 19 August 2005, the then director, John Jones, declined to grantthe necessary exemption.[2] Nine years later, in September 2014, Helilogging commenced the presentproceedings against the Civil Aviation Authority of New Zealand (the CAA) claimingdamages for alleged deceit and misfeasance in public office. In its sixth amendedstatement of claim Helilogging claimed 10 years' lost profits of approximately$56 million or, alternatively, $5.2 million for wasted expenditure (including$2.86 million for the purchase in December 2002 of two Wessex Mk 2 helicopters andvarious spare parts). Unspecified exemplary or punitive damages were also claimed.In addition, the second appellant, Mr Ford sought $100,000 in general damages forstress, anxiety and inconvenience caused to him by "the CAA's wrongful declinatureand/or fraud by concealment".[3] In July 2019, the High Court directed a split trial on liability due to delays byHelilogging in formulating its damages claim.1 The liability trial was also to deal withwhat the regulatory outcome would have been, or could have been, but forthe wrongdoing.2 Following a trial of some seven weeks duration, the claims weredismissed by Cooke J in a comprehensive judgment delivered on 13 December 2019.3As to the misfeasance claim, the Judge concluded that "at no stage did Mr Jones orother officials act knowingly beyond their functions or powers, or recklesslyindifferent to this".4 Indeed, the Judge observed that Helilogging did not advance their1 Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand [2019] NZHC 1641.2 At [32].3 Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand [2019] NZHC 3305[High Court judgment].4 At [271].case on the basis that the director had done so.5 In terms of the deceit claim, the Judgefound that "at no point did [the director or other CAA officials] make untruerepresentations to [Helilogging]".6[4] While strictly not necessary in view of these key factual findings, the Judgeidentified difficulties with Helilogging's case on causation and loss.7 In particular,the Judge considered much of Helilogging's evidence had been directed to the wrongquestion — what would have occurred if the alleged wrongdoing had been exposed?Instead, the relevant enquiry should have been to examine what would have occurredif there had been no wrongdoing. The Judge said this should be considered withreference to the objective test of whether a reasonable director would have grantedthe exemption but for the wrongdoing.8 A related issue concerned the appropriatemethodology for assessing loss. The Judge identified three possible approaches.The first was whether Helilogging could prove on the balance of probabilities thatthe exemption would have been granted (an "all or nothing" approach). The secondwas to assess the loss on a loss of a chance basis. The third possibility was to assessthe loss "more directly caused by the wrongdoing".9 In respect of the deceit claim,the loss would be confined to that directly caused by any reliance on the director'sallegedly fraudulent representations.10[5] The Judge also commented briefly on the issues of vicarious liability andlimitation. The Judge did not consider the CAA could be vicariously liable for anywrongdoing on the part of Charles ("Bernie") Lewis, an independent aviationconsultant whose advice, which was heavily criticised by Helilogging, was relied onby the director to support one of his reasons for declining the exemption. The Judgepointed out that the authorities relied on by Helilogging concerned the vicariousliability of a principal for the conduct of a person acting as its agent. But Mr Lewiswas not acting as an agent of the CAA, rather as an independent expert.115 At [284].6 At [271].7 At [282].8 At [287].9 At [288].10 At [289].11 At [303].[6] Finally, the Judge noted that the proceedings were commenced well outsidethe normal six-year limitation period and the claims were therefore time-barred unlessthe alleged fraud was not reasonably discoverable more than six years beforethe proceedings were issued. The Judge went no further, considering it would beartificial to do so given his finding there was no fraud and therefore nothing todiscover.12The appeal[7] Helilogging now appeals. There is no complaint that the Judge made any errorof law. Rather, Helilogging seeks to persuade this Court to interfere with the Judge'skey factual findings on the liability issues. In their agreed statement of issues, counselformulate the principal questions on appeal in very broad terms, namely whetherthe High Court was correct to find that Helilogging had not proved:(a) Fraudulent acts or omissions sufficient to establish misfeasance bythe director and/or John Fogden (Mr Fogden was employed bythe CAA as the manager of rotary wing and agricultural operations.He provided a detailed report to the director dated 9 August 2005recommending that Helilogging's application be declined).(b) Fraudulent misrepresentations and reliance on such representationssufficient to establish the tort of deceit.[8] The appeal grounds are mostly directed to these factual issues. Heliloggingabandoned a further ground, ground 12, which challenged the Judge's finding thatthe CAA was not vicariously liable for any dishonesty on the part of Mr Lewis.This was an appropriate concession. The other appeal grounds are directed tothe issues of causation and loss. In particular, Helilogging contends the Judge erredby focusing on whether a reasonable director could have granted the exemption.This is said to be an error because Helilogging's case was that they were misled inthe approval process by material information being withheld. Helilogging claims thatif this information had been disclosed, this would have resulted in:12 At [307].25.1 An application for judicial review, with good prospects for success.25.2 The possibility that the Director would be removed from the decision-making process, both because of the withholding of materialinformation and the political and public pressure which the Directorwas facing at the time, which would have required then an assessmenton a loss of a chance basis of the appellants' prospects of succeeding.Notice by CAA to support the judgment on other grounds[9] The CAA has given notice to support the judgment on four further grounds:(a) Contrary to the Judge's finding, it is more likely than not that a directorof the CAA, acting reasonably, would not have granted the exemptionssought by Helilogging.(b) Helilogging's causes of action are time-barred by s 4 of the LimitationAct 1950 (then applicable). To the extent that s 28 of the LimitationAct applies (postponement in a case of fraud), the pleaded causes ofaction were discovered, or, with reasonable diligence could have beendiscovered, more than six years prior to the proceedings being issuedin 2014.(c) The CAA is not vicariously liable for the pleaded deceit or misfeasanceby the director or Mr Fogden.(d) Helilogging's claim for a loss of a chance is not available because thirdparty actions are not at issue. The other approaches to causation andloss discussed in the High Court judgment are correct.Regulatory framework[10] It is helpful to commence by summarising the relevant regulatory framework.The Civil Aviation Act 1990 (the Act) was enacted to establish rules of operation anddivisions of responsibility within the New Zealand civil aviation system in order topromote aviation safety and ensure compliance with New Zealand's obligations underinternational aviation agreements, including the Convention on International CivilAviation signed on behalf of the Government of New Zealand in Chicago on7 December 1944 (the Chicago Convention).13 The Chicago Convention introduceda framework for civil aviation including standards and recommended practices toguide the regulation of civil aviation in member states. In broad terms, it provides fora comprehensive and integrated system where responsibilities are devolved to certifiedentities such as designers, manufacturers and operators to ensure the safe operation ofinternational and domestic civil aviation.[11] The Act confers power on the responsible minister to promulgate rules toimplement New Zealand's obligations under the Chicago Convention.14 These rules,known as the Civil Aviation Rules (the Rules), include rules prescribing generaloperating and flight requirements for the operation of civil aircraft.15 References inthis judgment to specific rules are to those in force at the relevant time. Subject tolimited exceptions, the Rules prohibit any person from operating an aircraft unless ithas a current airworthiness certificate and it is in an airworthy condition.16[12] Airworthiness certificates are governed by pt 21 of the Rules. At the relevanttime, these were issued in three categories — standard, restricted and special.17The special category comprised two subcategories — special experimental and specialflight permit.[13] Aircraft issued with airworthiness certificates in the standard and restrictedcategories could be used for air transport operations, meaning operations forthe carriage of persons or goods by air for hire or reward.18 By contrast, aircraft issuedwith an airworthiness certificate in the special (special experimental or special flightpermit) category could not be used for hire or reward operations.19[14] An applicant for an airworthiness certificate in the standard or restrictedcategories required a "type certificate" for an aircraft manufactured in New Zealand13 Convention on International Civil Aviation 15 UNTS 295 (opened for signature 7 December 1944,entered into force 4 April 1947) [the Chicago Convention].14 Civil Aviation Act 1990, s 28(1)(a) [the Rules].15 Civil Aviation Rules, r 91.1(a).16 Rule 91.101(a).17 Rule 21.173.18 Rule 1.1.19 Rule 91.105(a).or a "type acceptance certificate" for an aircraft imported into New Zealand.20An applicant for a type acceptance certificate was required to provide variousinformation to the director, including evidence that the type design had been approvedby the relevant overseas "State of Design" having jurisdiction over the entityresponsible for the type design:21.43 Data requirements(a) An applicant for the grant of a type acceptance certificate foran aircraft type must provide the Director with—(1) evidence that the type design has been approved by an ICAOcontracting state by the issue of a type certificate or an equivalentdocument; 21(Footnote added.)[15] We pause here to note that military helicopters are largely regulated undera different regime. As an ex-military helicopter, the Westland Wessex Mk 2 did nothave a type certificate (or equivalent document) and was not eligible for one.Helilogging's petition, submitted on 26 July 2004, sought an exemption from the typeacceptance requirement in connection with its application for an airworthinesscertificate in the restricted category. If granted, this would enable it to conductcommercial heli-logging operations for hire or reward.[16] Helilogging later sought, in the alternative, an exemption from the hire orreward restriction applicable to all airworthiness certificates issued in the specialexperimental category:91.105 Special category airworthiness certificates — Operatinglimitations1. 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.2. Paragraph (a) does not apply to a person operating an aircraft forthe carriage of persons for hire or reward where the person beingcarried is—20 Rule 21.191.21 ICAO denotes International Civil Aviation Organisation, a United Nations agency funded by 193national governments to support their diplomacy and cooperation in air transport as signatorystates to the Chicago Convention.(1) the holder of a flight instructor rating issued under Part 61;and(2) giving conversion instruction to the operator.[17] The director has the power under the Act to grant exemptions from anyrequirement in the Rules. However, this power can only be exercised in specifiedcircumstances and then only where the director is satisfied the risk to safety will notbe significantly increased by granting the exemption. The director's exemption poweris contained in s 37 of the Act. At the time, this section relevantly read: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 in any rule made under section 28 orsection 29 or section 30 of this Act.(2) Before granting an exemption under subsection (1) of this section,the Director shall be satisfied in the circumstances of each case that—(a) The requirement has been substantially complied with andthat further 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 bythe granting of the exemption.Chronology[18] A reasonable grasp of the sequence of events is necessary in order tounderstand Helilogging's claims and to set the context for consideration of the groundsof its appeal. Because Helilogging seeks to persuade this Court to reject the factualfindings made in the High Court and find that the director and Messrs Fogden andLewis were all dishonest and deceitful in carrying out their professional obligations,it is necessary to examine the evidence in some detail. 22[19] Three contextual matters are worth noting at this stage. First, under s 37 ofthe Act, the director was ultimately responsible for the exemption decision.The decision whether to grant such an exemption was his alone. Thus, it wasthe director, Mr Jones, who held the public office and was responsible for exercisingthe relevant power (not the CAA). Secondly, the director was not empowered to grantan exemption unless satisfied of the matters set out in s 37(2). As will be seen,the director's key technical advisors (Messrs John Lanham, Fogden and Gill) haddiffering views on whether Helilogging's exemption petition should be granted and, ifso, on what basis. Thirdly, at the time the exemption petition was filed, the CAA wasengaged in the process of undertaking a comprehensive review of the Rules relatingto special category aircraft, including the use of ex-military helicopters for externalload carrying purposes such as heli-logging. The review was prompted by anunacceptably high accident rate, including fatal accidents, involving these types ofaircraft. The Rules review had not been completed at the time the director wasrequired to make his decision on Helilogging's exemption petition. The director'sdecision was therefore of interest to other operators in the industry and would set animportant precedent.[20] A further point to note is that by the time the trial commenced, 14 years hadpassed since the date of the decision. This lengthy delay posed inevitable problemsfor both parties. Some of the key participants had died and others were being askedto recall specific details of events that took place many years earlier. For example,Mr Lewis, whose advice was a central focus of Helilogging's complaints, was aged 91at the time of the trial. He was accused of dishonestly failing to disclose a report hehad written on 12 January 1999 concerning flight trials he carried out ina Wessex Mk 5. Mr Jones was also elderly by the time of the trial and he had suffereda head injury in 2017 that affected his memory. As a result, he was simply unable toprovide any useful evidence at the trial.22 Although it was conceded at the hearing of the appeal that the CAA could not be vicariously liablefor any dishonesty on the part of Mr Lewis, dishonesty and recklessness in connection with hisengagement and 2005 letter remain key features of Helilogging's case.[21] Fortunately, however, an almost complete contemporaneous documentaryrecord of relevant events remained. The following chronological summary is drawnfrom this record.Westland Wessex series of helicopters[22] The Mk 1 Westland Wessex helicopter was designed for the Royal Navy,primarily to carry out anti-submarine operations. It was a single-engine helicopter andfirst flew in 1958. The Mk 2, the subject of these proceedings, was a high performancedevelopment of the Mk 1. It was designed as a troop carrier for the Royal Air Force(RAF) and was powered by two Rolls Royce turbine Gnome engines. It first flew in1961.[23] A number of variants of the Mk 2 were subsequently produced. We mentionfour. The Mk 4 was used by the Queen's Flight of the RAF to transport members ofthe Royal Family. The Mk 5 was a specialised version of the Mk 2 designed forthe Royal Navy for deploying troops from the decks of ships. The Mk 52 wasa military transport version of the Mk 2 used by the Iraqi Air Force.[24] The Mk 60 was the only civil variant. It was certified by the United KingdomAir Registration Board for public air transport and was primarily used by BristowHelicopters Ltd (Bristow) for passenger transport to North Sea oil rigs. However,several of these Mk 60 aircraft were involved in fatal crashes, including one thatcrashed in the North Sea in August 1981 causing 13 fatalities. The United KingdomCivil Aviation Authority (UK CAA) withdrew type certificate status for these aircraftin 1990. It appears that the original equipment manufacturer, GKN Westland, askedfor the type certificate to be cancelled because only a handful of these aircraftremained, they had not flown for many years and their parts history was unclear.The company therefore saw no value in continuing to support the aircraft type.Fatal accident in New Zealand involving a Westland Wessex Mk 5[25] Only one Westland Wessex helicopter has operated in New Zealand, a Mk 5manufactured in 1964. It was operated by Metro Air Ltd (Metro Air), a companyowned and directed by Bruce O'Malley. This was the same helicopter referred to at[20] above in which Mr Lewis conducted flight trials in December 1998 and January1999. This helicopter was later issued with an airworthiness certificate in the specialexperimental category. It crashed in February 2001 shortly after lifting a log fromthe ground during heli-logging operations in Motueka, instantly killing the pilot whowas the sole occupant. The subsequent CAA aircraft accident report released inJune 2002 concluded that the accident was caused by the stoppage of the number twoengine, which likely occurred some time prior to the log being lifted off the ground.The cause of the engine stoppage could not be determined because the aircraft wasdestroyed in the accident.[26] At the time of this fatal accident, Mr O'Malley was under investigation forbreaching the hire or reward prohibition on aircraft operating with airworthinesscertificates issued under the special experimental category. Charges weresubsequently laid and guilty pleas were entered in July 2002.CAA review of safety issues concerning ex-military helicopters[27] The crash of the Wessex Mk 5 was the latest in a series of accidents (includingfatal accidents) in New Zealand involving ex-military helicopters. There had beenseven deaths between 1998 and 2004. This spate of accidents raised concerns withinthe CAA over the certification, operational use and oversight of this category ofaircraft. Investigations into the supply of parts and components for these aircraftfurther highlighted the need to review the overall operation of ex-military helicopters.Accordingly, in June 2001, Mr Lanham, general manager of the general aviation groupat the CAA, initiated a comprehensive review of ex-military helicopter operations.The review was led by Jeremy Remacha, manager of the aircraft certification unit.[28] In the context of this review, Mr Remacha was asked to report specifically onairworthiness issues with the Wessex Mk 2 and Mk 5 helicopters. This was becauseMr O'Malley had applied on 24 September 2001 for airworthiness certificates inthe special experimental category for his two Mk 2 Wessex helicopters (the twohelicopters subsequently purchased by Helilogging in 2002 and the subject of theseproceedings). The director notified Mr O'Malley on 18 December 2001 that hisapplications would not proceed further until the accident report into the fatal crash ofthe Wessex Mk 5 was completed. Further, he advised that the CAA was currentlyconducting a review into the certification processes and operation of foreignex-military aircraft in New Zealand and he said the history of the Wessex Mk 2 wouldbe reviewed in this context and would be relevant to his consideration ofthe applications.[29] In his 22 May 2002 report entitled "Helicopter Airworthiness: WestlandWessex Mk 2 and Mk 5 Series", Mr Remacha made the following pertinentobservations:(a) The Wessex is a large and complex aircraft designed over 44 yearspreviously. It was not designed for a specific single role involving highfrequency external load operations (such as heli-logging).(b) The civil variant Wessex Mk 60 had been involved in severalsignificant accidents causing multiple fatalities. There wereunresolved airworthiness issues regarding its safety. Civil operation ofthe Mk 60 likely ceased in the United Kingdom in the early 1980s(soon after the North Sea crash in 1981 which had resulted in13 fatalities).(c) Airworthiness support by Westland Helicopters, the original equipmentmanufacturer, was withdrawn for the Mk 60 aircraft in 1990 and it didnot intend to provide such support for the Wessex type in the future.(d) The UK CAA, the original certifying authority, subsequently rescindedthe type certificate status for the Wessex Mk 60. Unresolved safetyissues arising from the North Sea accident would require resolutionbefore type support could be reinstated. This was unlikely giventhe significant time that had passed since that accident occurred in1981.(e) The UK CAA no longer collected data on the Wessex types and recordsappeared to have ceased in 1993.(f) Military variants (all but the Mk 60) continued to be used in limitedmilitary operations but there was only one major such operator, the UnitedKingdom Ministry of Defence (UK MoD). At the time of the report, it wasstill operating three Mk 2 aircraft in Cyprus with support from GKN Aerospace(GKN) as the post-design support authority. However, the UK MoD haddeclared the type obsolete and set a final out-of-service date of 31 March 2003.No Wessex Mk 5 aircraft were still in service with the UK MoD.(g) Rolls Royce, the manufacturer of the Gnome engine used in the Wessexhelicopters, only serviced these engines for customers who purchased directlyfrom them. Engines on the civil market purchased ex-military were notsupported.(h) The Wessex Gnome engine was no longer supported for new sparesdelivery and, given the notified withdrawal of the Wessex from service bythe UK MoD, very few, if any, spares were available from Rolls Royce.(i) Maintenance manuals for the Gnome engine were effectively sealed inthe 1980s and no service bulletins addressing airworthiness issues had beenproduced since 1987.[30] Mr Remacha also noted difficulties the CAA would face as the administeringairworthiness authority given the lack of relevant data on these aircraft and the lack ofappropriate in-house expertise:The only remaining Wessex aircraft are operated solely in the militaryenvironment which affords many mechanisms to provide an adequate level ofsafety. These include considerable numbers of highly trained and currentlyexperienced maintenance and flight personnel, access to authentic andapproved parts, available tooling and equipment, extensive corporateknowledge on the operation and maintenance of the type, and a strictlycontrolled maintenance and operating environment. This infrastructurecannot be easily replicated for small or unique operations due to the extensivecosts involved.Furthermore as there is no equivalent civil type still in service or supported bya civil airworthiness authority there is at best an "arm's length" and distantsupport structure for any operator or any airworthiness authority administeringits ICAO State of Registry responsibilities.As access to the necessary design data, service history and other relevantinformation to ensure proper continued airworthiness for the type can beundertaken, the administering airworthiness authority (in this case theNZ CAA) would need to ensure it possesses the necessary knowledge andskills to adequately evaluate such matters as specially tailored maintenanceprogrammes and assessment of design change approvals etc. In many cases,CAA staff possess limited specific knowledge to make these assessments,because the system of civil certification relies heavily on access to OEMs andother foreign certifying authorities to provide the support.23This does not exist in this case.(Footnote added.)[31] Mr Remacha concluded his report with a list of recommendations forthe authorisation of initial operations of the Wessex Mk 2 and suggested furtherrequirements for the authorisation of external load or agricultural purposes.[32] Following completion of this review, the director wrote to Mr O'Malley on27 May 2002 advising that his applications on behalf of Wessex Air for airworthinesscertificates for the two Wessex Mk 2 helicopters could proceed under the specialexperimental category. However, this would be subject to the standard certificationrequirements in the Rules. Further, the airworthiness certificates would be subject to11 conditions, including that the aircraft could not be used for the carriage of personsor goods for hire or reward and could not be used for external load operations.[33] In a separate draft report dated 8 August 2002, Mr Remacha summarisedthe key issues and made preliminary recommendations to enable the CAA to briefthe industry at the forthcoming Aviation Industry Association (AIA) conference.By way of overview, Mr Remacha wrote: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 ina rational and logical approach, whilst making strategic plans to addressthe wider regulatory issues raised by this type of operation with these aircraft.23 OEM denotes original equipment manufacturer.[34] Mr Remacha noted that the accident rate for ex-military helicopters wasunacceptably high in comparison to other helicopters. Fatality rates per 1,000 reportedflight hours were more than 10 times higher than those for all other helicoptersregistered in New Zealand. In the six-month period from January to June 2001 alone,there had been three major accidents causing five fatalities. Civilian operators werecurrently using the aircraft well outside their original design limits with repetitivelifting operations occurring as much as 2,000 per cent more often than envisaged inthe original design and certification. Other problems identified by Mr Remachaincluded lack of a review of technical and airworthiness oversight, lack of support ofthe original equipment manufacturer, lack of training, difficulties with partstraceability, lack of data and inadequate maintenance programmes. Mr Remacha madea number of initial recommendations including placing limitations on external loadand agricultural operations on airworthiness certificates for all special categoryhelicopters until the level of safety for the intended operation had been assessed asadequate for the purpose.[35] Messrs Remacha and Fogden gave a presentation at the AIA annual conferencein September 2002. This presentation summarised the CAA's current strategies andfuture directions to address the unacceptably high accident rate involving ex-militaryhelicopters. These included developing guidance and advisory material forheli-logging operations, reviewing airworthiness certification in the restricted andspecial categories to include specific purposes, and investigating regulation andcertification of commercial external lifting operations.[36] Following the conference, the CAA provided a further update to the industryin the September/October 2002 edition of CAA News. This highlighted the significantdifferences identified by Mr Remacha between military and civilian use of militaryaircraft. Military aircraft operate in a highly controlled environment with extensivestandard operating procedures, training and proficiency, all of which are constantlyreviewed. Further, military aircraft are almost never flown with just a single crew.By contrast, in the civil system helicopter pilots receive a type-rating but notnecessarily any further formal training. There was also no specific evaluation ofmaintenance programmes to meet the aircraft's intended use. The lack of directtechnical and airworthiness support from the original equipment manufacturer wasalso identified as an issue. Various actions the CAA intended to take to raise the safetylevels of ex-military helicopters were set out. These included introducingrequirements that all restricted and special category aircraft have an approvedmaintenance programme with any variation to be approved, design changes must useapproved data, and all special category helicopters would have limitations imposed onexternal load and agricultural operations until the level of safety could be assessed asbeing adequate for the intended purpose. The CAA signalled its intention to consultwith the industry on several initiatives including the certification of commercialexternal lifting operations and the development of guidance and advisory material forsuch operations.Helilogging purchases two Westland Wessex Mk 2 helicopters[37] Mark Ford, the second appellant, is the sole director of Helilogging Ltd (nowin receivership and liquidation). The company was incorporated in July 1999 toundertake heli-logging operations. Mr Ford and his brother were early pioneers ofheli-logging operations in New Zealand, commencing in 1983. Mr Ford is alsothe sole trustee of the Wessex Trust which was established to hold the intellectualproperty associated with the operation.[38] In early December 2002, the finance company that had financedMr O'Malley's purchase of the two Wessex Mk 2 helicopters approached Mr Ford tosee whether he would be interested in buying them. Only one of these aircraft hada New Zealand airworthiness certificate. This was issued on 28 May 2002 inthe special experimental category and was subject to 11 conditions as mentionedabove.24[39] Mr Ford said he considered this to be "a very good opportunity" to upgradethe helicopter he was then using for heli-logging operations, a less powerful singleengine Westland Scout. Mr Ford said he "was confident [he] would not infringethe hire and reward restriction, because [he] owned [the] sawmill and the lifted logswere owned by [him]" under contracts he was entering into with the forest owners.24 This airworthiness certificate was issued following the director's letter to Mr O'Malley dated27 May 2002, referred to at [32] above.Mr Ford quickly agreed to purchase these two Mk 2 helicopters together with spareparts and an unregistered Mk 60 helicopter which could also be used for parts.The agreed purchase price was $2.86 million. Helilogging's solicitor providedinstructions to the bank for the issue of a bank cheque for this amount on 13 December2002.Steps by Helilogging prior to filing exemption petition[40] On 19 December 2002, Paul Muller, who had maintained Helilogging'sWestland Scout helicopters for many years, made preliminary enquiries with the CAAabout the steps that might be required for the Wessex Mk 2 helicopters to meetthe airworthiness and maintenance safety standards to enable the external loadprohibition to be lifted and the aircraft to be used for heli-logging. Mr Remachaadvised Mr Muller that Helilogging would need to request a meeting with the CAA,provide operational details and an approved maintenance programme.[41] On 21 January 2003, Mr Ford wrote to Mr Remacha attaching a proposal fora "limited Lifting Trial". The stated purpose was "to determine the suitability ofWestland Wessex helicopters for the role of lifting logs from forests in New Zealand".The proposed trial was to be conducted over a two to three-month period with up to300 lifts. Mr Ford said the data collected would be "used to primarily decideacceptability of the helicopter within the role but [would] also be used to determinethe operational and airworthiness issues".[42] On 10 February 2003, Messrs Ford, Muller and Maurice Gordon (a consultantaircraft engineer engaged by Mr Muller on behalf of Helilogging) met withMessrs Lanham, Remacha, Fogden and Graeme Pearson (another CAA employee inthe General Aviation team) to discuss the likely steps required to remove the currentprohibition on Westland Wessex helicopters being used for heli-logging. A "wholeconcept" approach was discussed which would involve an overall review ofmaintenance, flight operations and airworthiness. To this end, four main requirementswere identified: manufacturer support; a maintenance programme tailored tothe intended operation; airworthiness flight testing; and the establishment of a detailedoperating manual covering all intended operational practices and specifications.The CAA representatives present at this meeting all said it was made clear to Mr Fordthat the CAA's role was to assess, not to lead, any proposal and that no guarantee ofa successful outcome could be given. Matters were left on the basis that Heliloggingwould submit a proposal in due course.[43] A few days later, as promised at the meeting, Mr Remacha sent Mr Gordona copy of his airworthiness report on the Wessex Mk 2 and Mk 5 dated 22 May 2002.He also provided contact details for the relevant Westland personnel inthe United Kingdom he had dealt with in preparing his report.[44] Mr Gordon subsequently approached GKN to assist with flight test analysis forthe proposed heli-logging operations and preparation of maintenance documentation.On 22 April 2003, Mr Gordon wrote to Mr Remacha advising that GKN had estimatedthe likely cost for the analysis and maintenance documentation to be £114,285. Inaddition, flight test costs were estimated to be $85,000 and a surety was required tocover test equipment. Mr Gordon advised that Mr Ford was in the process of arrangingfinance to cover these costs but before doing so required "confidence that onsatisfactory completion of the test and analysis" the CAA would "remove the currentprohibition for logging" and would "permit commercial use of Westland WessexHelicopters for logging operations".[45] The director did not give any such assurance, but he indicated that the approachbeing taken by Helilogging was appropriate. He wrote to Mr Ford on 7 May 2003drawing attention to the relevant rules and identifying specific issues that wouldrequire consideration.[46] As to the restriction on external load operations, the director stated:As this aircraft is not type certificated and only eligible for a special categoryairworthiness certificate, the responsibility belongs to the applicant to satisfythe Director that the level of safety is adequate for the purposes for whichthe aircraft is to be used. With respect to the declared proposed use forexternal heavy lift logging operations, this involves two key elements namely;Airworthiness Considerations: This involves detailed assessment ofthe aircraft to address airframe structural, maintenance and parts supplyconsiderations and will ultimately result in a maintenance programme(approved by CAA) appropriate to the type and frequency (utilisation) ofthe proposed activity.Your current approach to GKN Westland is very appropriate in workingtowards meeting this requirement.Operational Considerations: In the current absence of civil aviationcertification requirements for Part 133 external load operations and given twofatal accidents (including one with a Westland Wessex Mk2)25 we will alsorequire [the CAA] to be assured that operational aspects are addressedappropriately for the proposed operation. These will include but are notlimited to:• Crew requirements (number of crew)• Crew training• Operational proceduresThese issues need not be addressed right now but will need to be consideredand discussed with CAA as part of the removal of any external load operationlimitations. In that respect, your draft outline operations manual dated7 May 2003 is appropriate and suitable for further development.(Footnote added.)[47] Concerning the separate prohibition on the use of special category aircraft forhire or reward operations, the director set out the relevant rule and stated:The type of operation that you contemplate is regarded as a hire and rewardactivity and the prohibition applies to use of this aircraft in this manner.To address this rule prohibition, you may apply for an exemption againstthis requirement. The CAA will consider this application in conjunction withthe supporting evidence provided.[48] Mr Gordon met with GKN personnel in Cowes in the United Kingdom on21 May 2003 including Phil Grainger, technical director, and Larry Gladdis,engineer-in-charge, Wessex. Mr Remacha and Geoff Connor, team leader continuingairworthiness at the CAA, were also able to attend this meeting because they happenedto be in Europe on other business at the time. Mr Gordon described Helilogging'sproposed operations and Mr Remacha outlined the New Zealand regulatory system.GKN agreed to provide a proposal and quote on receipt of a formal request fromHelilogging.25 This was an error. The aircraft that crashed in February 2001 was a Westland Wessex Mk 5.[49] A proposal for testing the Wessex helicopters was subsequently submitted byGKN to Helilogging on 22 September 2003. Mr Gordon wrote to Mr Lanham on29 September 2003 advising that a proposal had been received from GKN forthe design, conduct and analysis of a test programme. He described this as being"not an inexpensive proposal" and advised that Mr Ford was working through finalissues with GKN. Mr Gordon requested a meeting with CAA personnel to"work through the issues of exemption petition".[50] This communication gave rise to some concerns within the CAA.Brian Fearnley, who had taken over from Mr Remacha following his secondment toAir New Zealand, sent an internal email on 15 October 2003 to Messrs Lanham andFogden, copied to Mr Remacha, raising various issues including the need forRolls Royce to be involved in any testing. Mr Fearnley also suggested they should"point out there are significant risks for the applicant" and it was "entirely possiblethat after they invested a significant amount of money it turns out not to be a 'flyer'".Mr Lanham responded to the group agreeing with Mr Fearnley's comments but saying"[a]ll this has been conveyed to Messrs Ford and Gordon on their first visit to us. We now proceed on a 'without prejudice' basis".[51] Mr Gordon appears to have recognised that no assurance could be given thatan exemption from the hire or reward prohibition would be forthcoming. He sentan email to Mr Lanham, copied to Mr Ford, on 22 October 2003, the day beforethe meeting with the CAA, saying:John[,] finally finished the draft of petition for exemption and flight trialproposal. Firstly may I say we are not trying to put the horse before the cart[sic] by talking exemptions at this point, rather it is a matter of all parties beingaware of the others, [sic] direction and thoughts. The purpose of the meetingtomorrow is to bring CAA up to date with the recent events, I have not reportedback on my visit to the UK and meetings with [GKN] and Air and Groundsupport [regarding supply of parts]. [52] On 29 October 2003, Mr Gordon sent an email to Ian Smith, a lawyer actingfor one of Mr Ford's financiers. Mr Gordon sent a copy of this email to Mr Ford andMr Lanham. Mr Gordon noted that the CAA had indicated at the 23 October 2003meeting that it was happy with the general direction being taken by Heliloggingregarding the testing programme. Mr Gordon set out the steps envisaged over the nextfour months with a view to submitting all data to the CAA in support of an applicationfor an exemption from the Rules. Mr Gordon invited Mr Smith to contact Mr Lanhamdirectly should he wish to do so.[53] Mr Lanham forwarded this email to Messrs Fearnley, Fogden and Remachaexpressing concern about it — "the lawyers may expect more than we are prepare[d]to give". Mr Fearnley replied:Yes I agree. Whilst the purpose of the exercise is to develop a pertinentmaintenance, inspection and operating schedule; perhaps we need to getacross somehow this is experimental and the outcome of the 'trial' willinitially determine if heli-logging is safe and viable with this machine. We candeal with the broader safety issues once we have the facts, Mr Ford deals withthe viability issues, and perhaps GKN can give the financier the likelihood ofthe machine's capabilities.[54] Mr Lanham subsequently spoke with Mr Smith and explained that althoughthe CAA was pleased with the professional approach being taken, there were a numberof obstacles to overcome.[55] The following day, Mr Ford purchased five more Wessex helicopters(ex-Cyprus machines) for £200,000 and various spare parts for a further £25,000.Mr Ford said he thought he should move quickly because he was concernedMr O'Malley might buy them.[56] On 3 November 2003, Mr Ford wrote to GKN advising that its proposal wasgenerally acceptable subject to clarification of various points prior to formalagreement. One of these was to address the prospect of failure. Mr Ford asked "[w]hatmechanism is available for adjusting costs should the unfortunate happen andthe program fail at an early stage". Final agreement was reached over the next fewmonths culminating in Helilogging placing a conditional order with GKN inJanuary 2004.[57] On 17 March 2004, Helilogging applied for permission to conduct a 95-hourflight test programme. This proposal was styled "Westland Wessex Flight TrialDirective Logging Operations" and sought permission for five hours of flying withinthe confines of an airfield and 90 hours in a forest environment lifting logs. The statedpurpose was to test the suitability of the Wessex to perform lifting operations and toestablish operational and airworthiness procedures to ensure safe operation.[58] David Gill, team leader of registration and airworthiness at the CAA,responded to Mr Ford advising that a special flight permit would be issued fordevelopment and currency flying subject to conditions. However, he advised it was"clearly not appropriate to pre-judge the current program and permit you to carry outany logging operations".[59] Mr Gordon unsuccessfully attempted to persuade Mr Lanham to allow30 hours of training in the forest. In his email to Mr Ford on 5 May 2004, Mr Gordonsaid his telephone conversations with Mr Lanham were non-productive. He describedthe CAA's reaction to the request as being "incredulous", and said the CAA thoughtHelilogging was "pulling the wool over their eyes" and "pulling a fast one".[60] Mr Ford wrote to Mr Lanham on 7 May 2004 explaining why in-forest trainingcarrying logs was needed. Mr Lanham responded that same day confirming CAA'sposition:I regret if there has been any misunderstanding and I emphasise that there hasbeen no change in thinking or 'policy' with respect to your long term goals.We also appreciate the considerable investment you have made, we commendthe professional approach you are taking and we wish you every success inthe outcomes. However, as we agreed, this project was/is always going to bea steady progress through to the end of carefully planned and approved stages,with no guarantee necessarily of technical, operational or financial viability atthe end of it.[61] In June and July 2004, the CAA issued test pilot approval certificates for twopilots for the Wessex flight trials and a special experimental airworthiness certificateto enable these to be undertaken. Due to flight trials not being completed by the expirydate of 21 July 2004, a further one-month special experimental category airworthinesscertificate was requested by Helilogging and granted by the CAA. A thirdairworthiness certificate was later issued at Helilogging's request because the flighttrials had still not been completed by 21 August 2004. The flight trials were eventuallycompleted at the end of August 2004.Petition for exemption[62] On 26 July 2004, prior to completion of the flight trials, Mr Ford petitioned foran exemption from the type certificate requirement to enable the helicopters to be usedfor commercial operations with an airworthiness certificate issued in the restrictedcategory. We note this was not the type of exemption envisaged by the director in hisletter to Mr Ford on 7 May 2003 (referred to at [46] above), which discussedthe prospect of an exemption from the existing prohibition on external load operationsand an exemption from the hire or reward prohibition associated with airworthinesscertificates in the special experimental category.[63] On 25 August 2004, Mr Ford advised Mr Lanham that Helilogging expectedto complete the flight trials that week and he requested a three-hour meeting withthe CAA, preferably on 7 or 8 September 2004 when Mr Gladdis from GKN wouldbe available to attend. Mr Ford included with his letter a draft agenda listing fouritems for discussion: presentation of flight trial findings and supporting documents;GKN's ongoing support; removal of cargo hook prohibition for the Heliloggingoperated Wessex; and exemption from type certificate requirement in the restrictedcategory under the rules. The meeting was held on 7 September 2004 and was attendedby Messrs Lanham, Fogden, Gill and John Bushell for the CAA. Messrs Ford, Gordonand test pilot Cranleigh Lee attended for Helilogging and Mr Gladdis from GKN.[64] The witnesses who gave evidence about this meeting differed in theirrecollections of it. For his part, Mr Ford said he recalled asking Mr Gill towardsthe end of the meeting why the CAA would not immediately remove the prohibitionto allow the Wessex to be used for heli-logging and was told that this would contravenethe hire or reward restriction (for airworthiness certificates issued in the specialexperimental category). Mr Ford said that if he had been informed at the outset ofthis being a problem, he would not have taken all the steps he had. He said hethreatened court action because he did not agree with the CAA's interpretation ofthe hire or reward restriction. Mr Gill said he did not recall this being discussed but itwas consistent with his view that commercial activities for hire or reward were notpermitted under the special experimental category.[65] Following this meeting, on 13 September 2004, Mr Ford sent Mr Gillthe Wessex operations manual, maintenance programme and amendments tothe airworthiness report. Mr Ford wrote to Mr Lanham confirming he had done thisand asking when it would be convenient to discuss the way forward. Mr Lanhamreplied that the aircraft certification and rotary wing unit of the CAA had been giventhe material and would assess it and brief the director as soon as possible.[66] Mr Lanham attended a meeting to brief the director on 16 September 2004.He also requested Mr Gill to prepare a report on how Helilogging's application wouldfit within the regulatory options available if it were to be granted. Mr Gill's subsequentreport to the director is dated 21 September 2004 and records the background toHelilogging's exemption application:The CAA has always had the view that transporting logs, and hence adding totheir value, must be a hire or reward operation. Mr O'Malley was inthe process of being prosecuted for this very action using his ExperimentalCategory Wessex before it crashed fatally. Unfortunately the principle wasnot tested in court because Mr O'Malley pleaded guilty. After the fatal crasha restriction prohibiting use of the hook was placed on all further applicationsfor airworthiness certificates for any Wessex helicopters, until it could beshown that such operations were safe.After discussions and encouragement from the CAA [Helilogging] contractedthe original manufacturer, GKN Westland, to do a technical survey onthe effects of logging operations on the Wessex helicopter. This involvedsending out a technician to instrument the helicopter and conduct a series offlight tests. The results were then analysed back in England. Westland haveproduced detailed reports covering the testing and analysis. As a result ofthe analysis Westland have produced a completely new "Green Book" specificto the intended high-frequency lifting operations, which is the list of all partswith fixed replacement lives.The CAA stated to [Helilogging] that three aspects of any Wessex loggingoperation had to be satisfied: Maintenance; Operations and Airworthiness.The applicant has satisfied quite stringent criteria on all three of these aspects.Irrespective of whichever route is chosen for the exemption, the same type ofconditions need to be imposed to call up the complete operating system thathas been developed by [Helilogging] as a condition of continued operation.This is to ensure those conditions are maintained for the life of the helicopter.The critical aspect from the airworthiness point of view is continuedmanufacturer engineering backup, in case of any problems. This wouldmaintain a similar level of support as would be expected of a type certificatedcivil helicopter.In my personal view the CAA should never have started the process ofallowing a non-certificated aircraft to be used for commercial operations.However now the CAA has allowed the trials and investigations to go so farand [Helilogging] has committed a substantial sum of money, it would be verydifficult to refuse the application except on purely technical grounds.[67] Mr Gill discussed two regulatory options. The first was to grant an exemptionfrom the prohibition in r 91.105(a) of the Rules on hire or reward operations usingaircraft with a special experimental category airworthiness certificate. Mr Gillexplained why he strongly opposed this option:Discussion – Option 1Option 1 would be setting a huge precedent that aircraft which have not metany recognised standards can be used for hire or reward operations.New Zealand is a signatory to the [Chicago Convention] which requires everyaircraft issued with an airworthiness certificate to have met a comprehensivecode of airworthiness equivalent to ICAO Annex 8.26 All countries do havea means to allow aircraft to fly that cannot meet this requirement, which variesfrom country to country. However they all impose limitations on thoseaircraft, which ALWAYS prohibits commercial operations.Part 115 has been proposed to provide an avenue to let such aircraft be usedfor passenger carrying, where the attraction of the ride is flying in thatparticular aircraft. The Wessex does not fit into this category at all and is beingused solely because it is cheap to purchase and operate. The argument in thiscase appears to be that standards can be relaxed for remote-area logging,because the risk is lower. (Presumably this means the third-party risk, andthe pilots are prepared to accept the higher risk for themselves.)This argument would undermine the basic integrity of the Rules, and thoseoperators who pay the cost to purchase eligible aircraft with their attendantairworthiness support provided under the umbrella of a type certificate. If weare going to use an exemption to create a special category of operation just tosuit one applicant, this would create an expectation from other applicants thatsuch a route outside the Rules might be available to them. (For example I donot see what grounds we could then use to prevent the Mil-8 from operatingsimilarly on the New Zealand register.)27In fact I find it difficult to see on what grounds 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 factorule-making.(Footnote added.)[68] In Mr Gill's view, the only potentially viable option was to allow the WessexMk 2 to obtain type acceptance in the restricted category by granting an exemption tothe type certificate requirement in r 21.43(a)(1) of the Rules. Mr Gill explained that26 This is a reference to Annex 8 of the Chicago Convention.27 Mil-8 is a reference to a type of military helicopter originally designed in the Soviet Union andcurrently produced in Russia.this option would allow the Wessex to operate within the basic rules (for hire orreward) by requiring the helicopter to meet a defined standard of airworthiness.In discussing this option, Mr Gill noted the following:The CAA has already set the precedent to some extent by allowing inex-military Restricted category Iroquois helicopters, when at the timethe CAA did not have a good understanding of the [Federal AviationAdministration of the United States of America (FAA)] Rule. We now knowthat the requirements for issue of a Restricted Category [type certificate] under[the Federal Aviation Regulations r 21.25] are fairly basic, provided it meetsthe rule "Is of a type that has been manufactured in accordance withthe requirements of and accepted for use by, an Armed Force of the UnitedStates and has later been modified for a special purpose." In my view the Westland Wessex is in a completely different league.Under the British system in military service the airworthiness design authoritywas still the manufacturer. A copy of the Airworthiness Report for the Wessexhelicopter was provided to the CAA. This also shows that the Wessex wassubject to a very recent detailed review, including instrumented tests, becauseit was discovered that the RAF had accidentally been operating overweight.Therefore the Wessex was retired from RAF service in very good condition.Subsequently Westland have conducted a detailed evaluation of the effect oflogging operations. They have stated that underslung logging is not muchdifferent from military underslung loads. The fundamental difference isthe frequency, and this is what has driven the huge reduction in lives, primarilyfor the tail-rotor drive system.Westland have produced a document called the Airworthiness Report, whichdefines the basis of airworthiness approval for logging operations. This wouldbe an ideal document to call up as the basis of Restricted category typeacceptance in New Zealand, and to call up any restrictions imposed.Granting type acceptance under the equivalent of the [United States] systemfor ex-military aircraft as proposed would not be setting any dangerousprecedent, for a number of reasons. One the type acceptance is totallydependent on manufacturer support, which would be difficult to achieve forany unsuitable aircraft. Any aircraft with likely civil applications wouldprobably already have a civil approval. (The Wessex is slightly unusual inthat Westland were able to cancel the civil type because there was only everone operator, Bristow Helicopters.) There are also very few other British typeswhich would come into this category. (The Westland Gazelle is one thatcomes to mind.)[69] Mr Lanham updated Mr Ford on 4 October 2004 as to the remaining stepsanticipated before the director would make his decision on the application. The firststep was to complete the overall technical review of the aircraft's certification andflight trials, the flight operations procedures and the maintenance programme.Mr Lanham said he hoped recommendations to the director could be formulated thatweek. The next step was to seek the director's decision — "overall approval orotherwise" — which would require consideration of whether to grant acceptance ofthe aircraft in the restricted category with an exemption from the type certificationrequirement, or to grant an exemption to the prohibition on operations for hire orreward in the special category. Mr Ford was notified later that day that the proposedmaintenance programme had been approved.[70] Mr Lanham provided his written recommendation to the director on11 October 2004. Mr Lanham identified three pathways available to the director togive relief to Helilogging in approving the aircraft for use for hire or reward. The firstwas to accept the aircraft into the restricted category and grant an exemption fromthe type certification. Contrary to Mr Gill's view, Mr Lanham counselled againstthis pathway:The [Helilogging] proposal is one of an increasing number that cannot beaddressed within the current Rules structure because such operations were notcontemplated when the Rules were written. It should be noted that [pt 21 ofthe Rules] is on the 2004-05 Ministry of Transport Rules programme and thatit will be re-worked extensively over the next two years. It is not possible tobe certain of the outcome, although it is hoped that most of the conceptsoutlined above will find their way into the final form of the Rule. Until thatis known it would be wise to take no action that would conflict with, inhibitor distort the final Rule.Accordingly, it is considered that option 1 would set an undesirable precedentand place the CAA at risk in the long term. The two categories of Standardand Restricted are limited to type certificated aircraft and to acceptan ex-military helicopter into even the latter would open the door to almostany aircraft that could demonstrate a similar standard to the [Helilogging]proposal. It would be a Trojan horse.[71] The second pathway was to maintain the aircraft in the special category forprivate operations only but with the prohibition on external loads removed.Mr Lanham was also firmly opposed to this option given the commercial nature ofHelilogging's proposed operations:Option 2 is not sensible or practical. The specific purpose of the [Helilogging]proposal is to carry out commercial logging. To limit the aircraft to privateoperations only would invite various subterfuges including the 'private logs'device that [the] CAA has already held to be contrary to the Rules and whichhas resulted in prosecution action.[72] Mr Lanham considered that the third option was the only one practicable.This was to retain the aircraft in the special category, with the prohibition on externalloads removed and to grant an exemption from the prohibition on use for hire or rewardoperations. Constraints on the use of the aircraft would be required. Mr Lanhamdescribed this as a "kick for touch" option until completion of the review of the Rulesby the CAA. Mr Lanham concluded his report as follows: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 and with the following constraints on the useof the aircraft:• The aircraft be approved for New Zealand domestic operations only;• The aircraft be approved for remote area logging operations only;• No operations over congested areas; and• Overall approval of the operations should be reviewed at the completionof the re-write of [pt 21 of the Rules].[73] The director met with Messrs Lanham, Gill and Fogden, on 13 October 2004to discuss the matter. Mr Lanham advised Mr Ford the following day that the directorrequired more information before making his decision.[74] Mr Gill provided a further memorandum to the director on 14 October 2004repeating his view that if the Wessex was to be permitted to carry out hire or rewardoperations, then it should be placed in the restricted category, even though it was notstrictly eligible under that category. However, if this was permitted, he recommendedadditional requirements to increase the safety of the operation, including by requiringinstruments and other equipment to be fitted to the aircraft (including a flight datarecorder) in accordance with the requirements in pt 135 of the Rules. Mr Gillexplained the justification for this:There is no question that logging operations are inherently dangerous.This has been shown here in New Zealand in the case of the Iroquois andSH-3A accidents, 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[New Zealand] is poor, although the small sample size makes any statisticsmeaningless.In the [New Zealand] Wessex accident, the complete reason for the loss ofpower in [the] No.2 engine could not be determined. It has also been reportedthat the civil Wessex was withdrawn from service "after three unexplainedfatal accidents". The CAA is seeking ways to increase the safety of the Wessexhelicopter to be able to operate in the Restricted Category, and one means ofdoing this would be to increase the equipment requirements on board, forexample to be equivalent to that required for Air Transport operations. [A flight data recorder] would greatly increase the safety of the operation byproviding full data in the event of any accident or incident. It could also belinked to an on-board load measuring system to provide an effective time-in-service recorder and a measure of the lifting operations and their frequency.(Needed for compliance with the mandatory component replacement timesschedule.)9 November 2004 memorandum[75] By this time, Mr Ford was placing considerable pressure on the director fora decision, including by approaching the Minister of Transport, the New Zealand FirstParty and the media. The director attended a civil aviation conference in Hong Kongfrom 30 October 2004 until 8 November 2004. On 9 November 2004, the day afterhe returned from overseas, the director contacted Mr Ford in response to his manymessages and advised that he could expect a decision by 15 November 2004.[76] That same day, 9 November 2004, the director sent a memorandum toMessrs Lanham, Gill, Fogden, Connor, Tim Allen (general manager of airlines atthe CAA) and Leslie MacIntosh (chief legal counsel) stating "[a]t this stage I have notbeen convinced that it would be safe to grant the Exemption". The director then setout his reasons. The memorandum took the form of a draft decision and was sent tohis key advisers for their consideration and comment. Mr Gill provided his commentson 15 November 2004. Ms MacIntosh also responded suggesting numerousamendments shown in a marked-up version.[77] We pause here to note that Helilogging's first dishonesty allegation in its deceitcause of action is that the CAA "[d]ishonestly represented that it was considering[Helilogging's] applications on their merits when it was not, including by dishonestlywithholding material information from [Helilogging], and in particular thatthe Director had already determined by 9 or 15 November 2004 at the latest that[Helilogging's] applications had or would be declined".[78] The director advised Mr Ford on 16 November 2004 that he was not yet ina position to give his decision. The director said he would advise Mr Ford of hisdecision (presumably in draft) and give him the opportunity to comment on it or makefurther submissions "before it is made".[79] On 19 November 2004, the director sent a detailed nine-page memorandum toMr Lanham, copied to Mr Allen, identifying his concerns. The director noted thatthere were two distinct safety regulatory issues that prohibit the operation of WestlandWessex helicopters in hire or reward logging operations in New Zealand —the prohibition on external load operations and the prohibition on the use of aircraftwith special experimental category airworthiness certificates for hire or rewardoperations. The director made it clear that he intended to deal with each of these issuespersonally, with appropriate technical advice.[80] The director noted that Mr Remacha's report of 22 May 2002 raised a numberof issues relating to the use of ex-military aircraft that needed to be debated andaddressed at a policy level and he emphasised the need for this work to be progressedwith urgency. He said the failure to progress this policy work had made his decisionwith respect to Helilogging's applications "especially difficult". The director set outthe additional advice he required and outlined the seven-stage process he intended tofollow to reach his final decision on each of Helilogging's requests:Process to Deal with Helilogging Ltd's Requests1. Limitation on External Load Operationsa) Written report and briefing from technical advisors on issues set out inMr Remacha's 22 May 2002 memo taking account of information subsequentto the date of that report.b) Letter to Helilogging Ltd requesting more information, in particular a copyof the contractual arrangements with GKN.c) Written advice from technical advisor following a review of the additionalinformation.d) Consideration of advice and preliminary decision by Director.e) Preliminary decision provided to Helilogging Ltd for comment.f) Receipt of comments and consideration by the Director with technicaladvice as needed.g) Final decision.2. Operation of Westland Wessex for Hire or Rewarda) Written recommendation report as described above to be prepared.b) Letter to Helilogging Ltd requesting more information, if required inthe drafting of the paper. The copy of the contractual arrangements with GKNreferred to above will be relevant.c) Written recommendation report presented to the Director.d) Consideration of report and preliminary decision by the Director.e) Preliminary decision provided to Helilogging Ltd for comment.f) Receipt of comments and consideration by the Director with technicaladvice as needed.g) Final decision.[81] The director concluded his memorandum by giving the following directions:You will have noted Helilogging is now applying pressure on my decisionmaking process through the media, please put this pressure to one side as it ismost important the decision is made properly and fairly.In interests of fairness to the operator, priority must be given to progress theseissues expeditiously. If at any stage matters become delayed please let meknow immediately. If there are any resource limitations please also bring thisto my attention as soon as possible.[82] Ms MacIntosh said she recalled advising the director on the seven-stageprocess. She said she considered the director's power to grant an exemption to one ofthe Rules under the Act was very unusual and limited by the legislation. In heropinion, the director needed to adopt a structured process to gather the relevantinformation in order to make a proper decision. She also considered that Heliloggingshould be given an opportunity to comment throughout the process.Judicial review proceedings[83] On 25 November 2004, Helilogging issued proceedings in the High Court atWellington seeking an order by way of permanent mandatory injunction directingthe CAA or the director as applicable to issue a certificate of airworthiness and allexemptions or other approvals as may be required to enable Helilogging toimmediately commence use of the Wessex helicopter for commercial loggingoperations throughout New Zealand. Indemnity costs were also sought. Heliloggingalso filed an interlocutory application seeking an interim mandatory injunction tothe same effect. Timothy Castle, then counsel for Helilogging, said he fullyrecognised that the prospects of success in securing relief by way of interim mandatoryinjunction were limited. However, his thinking behind the application was thatthe prevailing uncertainty for Helilogging needed to be brought to a head in a "robustway". He said he hoped the application would cause the director "to focus squarelyand immediately" on the exemption applications and "what impediments there wereprecluding the exemptions being granted".[84] The application for interim relief was to be heard on 1 December 2004.However, Heath J adjourned the application until 9 December 2004. In his oraljudgment, the Judge stated he "was concerned with the notion that the Court was beingasked to direct a certificate to be issued on terms which impinged on public safetyissues; a decision, in the context of civil aviation, which is reposed in the Director tomake".28 The Judge granted leave for Helilogging to amend its statement of claim toseek an order in the nature of mandamus to compel the defendants to make a specifieddecision.[85] Helilogging's statement of claim was subsequently amended to seek:(a) an order by way of permanent mandatory injunction directing the CAAor the director, as applicable, to issue to Helilogging a certificate ofairworthiness and all applicable exemptions and other approvals asmay be necessary to enable Helilogging to immediately commencecommercial heli-logging; or(b) an order by way of interim mandatory injunction directing the CAA orthe director to forthwith give formal notice to Helilogging of all andany information, requirements or other action lawfully required bythem of and from Helilogging before all necessary aviation documents,28 Helilogging Ltd v Civil Aviation Authority of New Zealand HC Wellington CIV-2004-485-2558,1 December 2004 at [7].approvals, exemptions and authorities may be issued to enableHelilogging to immediately commence its business operations; or(c) in the alternative, an order, interim or permanent, compelling by wayof direction the director in particular or, as necessary, both the CAAand the director to determine and decide Helilogging's applications forairworthiness certification together with all exemptions sought and allapplicable approvals to enable commencement of the heli-loggingbusiness using the Westland Wessex.[86] Detailed affidavits in opposition from the director and Messrs Lanham, Fogdenand Gill were filed on 7 and 10 December 2004. These attached the various technicalreports provided to the director and his most recent memorandum dated 19 November2004 in which he detailed the further advice he required and the seven-stagedecision-making process he intended to follow.[87] The interim application was heard by Mackenzie J on 16 December 2004.The Judge gave an oral judgment that day declining to make the orders sought.29 As tothe first order, the Judge said that Helilogging was effectively asking the Court to makethe exemption decision and the Court could not do this.30 As to the second and thirdorders, the Judge observed that Helilogging was asking the Court to give directions tothe director as to the way in which, including the steps he should take, andthe timeframe within which he should consider the application.31 The Judge said itwas clear the Court could not give any such direction. These were matters forthe director, who was required to have specific regard to the safety issues in exercisinghis exemption power under s 37 of the Act.32 The Judge declined to express any finalview on whether intervention in the decision-making process by way of mandamus orinterim mandatory injunction was possible as a matter of law. The Judge leftthe question open for reconsideration, if necessary, if the matter needed to return to29 Helilogging Ltd v Civil Aviation Authority of New Zealand HC Wellington CIV-2004-485-2558,16 December 2004.30 At [6].31 At [9].32 At [10].the Court.33 The Judge therefore adjourned the proceeding on the basis that it couldbe brought on at short notice, if necessary:[14] Accordingly, I consider that the best course is to adjournthis proceeding on the basis that it may be brought on on 14 days' notice, ifnecessary. That leave should be reserved to both parties, so that the plaintiffmay apply if it considers that progress is not being made in an appropriateway, or the defendants may apply if it is contended that the continuedexistence of the proceedings is impeding the decision-making process.In leaving the proceedings open in that way, I am not to be seen as encouragingeither party to return to this Court unnecessarily. That could becounter-productive and could divert the resources from the consideration ofthe important issues which underlie these proceedings.Implementation of seven-stage processStep 1 — briefing from technical advisers[88] On 25 November 2004, the director appointed Mr Fogden to managethe Helilogging application process and report directly to him. It will be recalled thatMr Fogden was the manager of rotary wing and agricultural operations at the CAA.[89] On 23 December 2004, Mr Fogden provided a detailed 14-page report tothe director responding to his information requests. This report was prepared inconsultation with Mr Gill. Mr Fogden noted that since Mr Remacha's report inMay 2002, there had been two more fatal accidents involving ex-military helicoptersin New Zealand, these occurring on 31 January 2003 and 22 April 2004. He statedthat no ex-military helicopters were currently involved in heli-logging operations inNew Zealand, existing operators (other than Helilogging) having opted to use onlycivilian standard type certificated aircraft for this work in accordance with the existingRules. Mr Fogden listed eight categories of additional information that should besought from Helilogging before considering further whether an exemption should begranted, including:1. Details of the ongoing relationship between Helilogging and GKN,including a copy of the contract setting out precisely what airworthiness33 At [13].support will be provided, for what duration and what quality controlshave been put in place to monitor performance of the ongoing support.2. Clarification of the basis upon which GKN is involved withHelilogging. Mr Fogden noted that some of the documentationsubmitted by Helilogging indicated that GKN is approaching issuesrelating to the Wessex as a type acceptance or certification processwhereby New Zealand would somehow become the responsibleregulatory authority dealing with the Wessex. He said it would behelpful to have information from Helilogging about what it has advisedGKN about the process it is undertaking.3. Details of the state of the component parts claimed to have beenpurchased for use on the Wessex helicopters including documentaryhistory, storage conditions and the ongoing certification and control ofthese components.4. Confirmation from GKN that they had taken into account the effect ofrepeated-cycle-heavy-lift operations on the Rolls Royce Gnomeengine, for which there appeared to be no manufacturer support, andthat the engine is suitable for the proposed role.Step 2 — request for further information[90] The director wrote to Mr Ford on 24 December 2004 enclosing a copy ofMr Fogden's report and detailing the further information he required. He concludedby stating:I need to make it clear to you that the entry of the Wessex into the civil aviationsystem in this country, on any basis other than under a Special ExperimentalAirworthiness Certificate, raises a number of extremely complex technicaland safety issues. Provision by you of the information requested below doesnot mean that safety considerations do not need to be carefully weighed by mewhen I make my decision. Provision of the information will not mean thatyou have necessarily resolved all safety issues surrounding the Wessex.Ultimately, I need to be satisfied that the risk to safety will not be significantlyincreased by the granting of the exemptions sought in the circumstances ofeach particular case. The exemption you have sought from Rule 21.43 is asignificant departure from the existing safety regulatory regime whichprecludes the operation of helicopters such as the Wessex other than on aSpecial Category Airworthiness Certificate.I will make the decisions in relation to your applications as quickly as I can.[91] On 18 January 2005, Helilogging's solicitor, Graham Takarangi, wrote tothe director advising that Helilogging was currently addressing the informationrequests. In the meantime, Mr Takarangi said he was instructed to petition forthe removal of the prohibition on external load operations on the current airworthinesscertificate for the Wessex Mk 2 helicopter that had been involved in the flight trials.This condition had been imposed by Mr Remacha (following the Wessex Mk 5 crashin February 2001) in the exercise of his delegated authority under s 7(3) of the Act toimpose conditions on the issue of airworthiness certificates. The director declinedHelilogging's application to remove this condition on 20 January 2005. Mr Takarangireplied on 3 February 2005 asking the director to reconsider this decision.[92] By this time, Helilogging had engaged Jim Barclay of Alaeda Systems Ltd(Alaeda), a consultant aviation engineer and former employee of the CAA, to assistwith the exemption application process.34 Mr Barclay sent a draft report to the CAAon 8 March 2005 providing an initial response to the director's information request of24 December 2004 and a draft amended petition seeking an exemption from the typecertification requirement in r 21.43 to allow restricted category certification forthe Westland Wessex Mk 2 helicopter. Mr Barclay stated that GKN would providecontinuing airworthiness support for the aircraft and a contract would be executedwhen CAA approvals for external load operation were "imminent". He said thatthe engine manufacturer (Rolls Royce) also offered such agreements and "this [would]be pursued at the same time".[93] On 10 March 2005, the director wrote to Mr Takarangi saying he wouldrespond as soon as his technical advisers had considered Mr Barclay's draft report.The director also confirmed his earlier decision declining the application made on34 Mr Barclay was one of the key participants who had died by the time of the High Court trial in2019.20 January 2005 (and repeated on 3 February 2005) to remove the external loadcondition on the existing special category airworthiness certificate that had beenissued. The director declined this application because Helilogging had not suppliedany further technical information to support it.[94] On 4 April 2005, Mr Lanham wrote to the director and Ms MacIntosh updatingthem on the rule development policy work being undertaken on pt 21 concerningspecial category aircraft. Mr Lanham said this was particularly relevant tothe Helilogging issue. He attached the most recent iteration of the Project ScopeStatement (dated 23 March 2005) and added: under the proposed re-write of Part 21, aircraft such as ex-militaryhelicopters and antique aircraft might become eligible for the SpecialRestricted – PNC [production non-type certificated] or Special Limited – PNCsub-categories. In such a manner, they might then be permitted to carry outcommercial operations under controlled certification standards, rigorousoperating requirements and under tightly controlled operating limitations,either under [pt 133] or [pt 115].[95] Mr Lanham noted that the project involved a comprehensive review ofthe special airworthiness certificate category in pt 21 with the objective of introducingnew subcategories to accommodate the diverse range and uses of aircraft that currentlyexist within that category. Mr Lanham observed that the issue of standard or restrictedairworthiness certificates requires aircraft to have a type certificate issued by a civilianauthority in accordance with ICAO Annex 8 requirements. New Zealand aircraft thatrequire an airworthiness certificate for operation but lack a suitable type certificate areplaced in the special category. Mr Lanham said this had resulted in the specialcategory becoming "a dumping ground" for a wide range of aircraft that do not qualifyfor standard or restricted airworthiness certificates. Rule changes were considerednecessary because it was not possible to address satisfactorily the various certification,continuing airworthiness, maintenance and operational requirements of such a diversegroup of aircraft under a single category of airworthiness certificate.[96] Mr Lanham also noted that the prohibition on hire or reward operations usingspecial category aircraft had resulted in some operators disguising commercialoperations as private operations with consequent safety implications. The prohibitionalso prevented the legitimate development of new commercial aviation activities withsome types of special category aircraft. He noted that the CAA currently had limitedability to place restrictions on the ways in which special category aircraft may be usedto prevent inappropriate or unsafe uses.[97] Mr Lanham also observed that surveillance and regulatory control of specialoperations would be very difficult for the CAA to perform effectively unless adequateresources were available. In particular, resources would be required to monitorcontinuing airworthiness and to prepare airworthiness directives for a wide range ofcomplex aircraft.[98] On 4 April 2005, Helilogging supplied an updated version (still in draft form)of Mr Barclay's report dated 31 March 2005.[99] The director was asked to brief the Transport and Industrial RelationsCommittee on Helilogging's proposal on 7 April 2005. The Select Committee hearingwas prompted by Mr Ford's complaints to Peter Brown, a Member of Parliament fromthe New Zealand First Party. Messrs Fogden, Gill, Sid Wellik (in-house CAAsolicitor) and Ms MacIntosh also attended this hearing as did Mr Ford, his wife andMr Barclay. The director commenced his presentation by pointing out that he wasobliged to exercise his statutory functions independently from the CAA andthe Minister of Transport. For that reason, he said he could not be influenced bythe Select Committee regarding his decision-making on any particular matter.The director then spoke to a powerpoint presentation outlining the issues andthe process being followed to determine Helilogging's application.[100] The director's speaking notes accompanying the last of the 12 slidessummarised the situation regarding Helilogging's exemption application:1 – We have advised the Applicant that the NZ CAA will not bethe international regulatory agency for the Westland Wessex aircraft.• The NZ CAA simply does not have the resources or past expertknowledge of the particular aircraft to undertake such a role.• The Applicant has ignored our position and they have advised us thatthe CAA would be the regulatory authority for the Westland Wessex.2 – I have asked for details of the relationship between the Applicant andthe manufacturer (GKN). I have already stated why I would like that type ofinformation, which is to understand how the manufacturer will provideongoing support to the Applicant. I have been advised that there is no currentcontract between the parties.3 – With a 90% reduction in the life of the components of the aircraft, spareparts are an important consideration. I have asked for information includingthe state of the components, their document history, and their storageconditions. I have been advised by the Applicant that "normal maintenancepractices are being followed".3 - I have asked for confirmation from the aircraft's manufacturer that it hastaken into account the effect of "repeated cycle heavy lifting" operations onthe Rolls Royce engine. This was not taken into account in the Applicant'sFlight Trials. The Applicant has advised me that Rolls Royce provided a letterto [the] CAA in April 2002. However, that was before the Applicant undertookits Flight Trials. I require more up-to-date information.4 – I have also asked for other information because this is an unusual case,and I am being asked to exercise my exemption power. For example,I requested information about the Chief Pilot. I was advised there is norequirement under Civil Aviation [pt 133 of the Rules], and they would adviseme closer to the time operations took place.My technical advisers will be providing me with a written report onthe Applicant's "amended draft" report. However, even on the face of theirresponse, they have not been forthcoming in providing me withthe information I have sought.I have provided the Applicant with internal reports, which show the basis ofmy safety concerns.[101] On 14 April 2005, a further updated version of Mr Barclay's draft report wassent to the CAA. Mr Barclay insisted that the "reality is a type acceptance process istaking place", that this was "the appropriate pathway for this helicopter" and the "CAAwill be the regulatory authority for the Westland Wessex, for what will be a nonICAO-Annex 8 airworthiness certificate". He said that although the CAA "will bethe regulatory authority, GKN Westland will be responsible for most aspectsof oversight of the Wessex design and continuing airworthiness". Mr Barclay statedthat an "extensive range of components is held by [Helilogging]" and "[n]ormalmaintenance and storage practices are being followed for these components".Regarding the request by the director for further information from Rolls Royce,Mr Barclay referred to Rolls Royce's earlier letter to Mr Remacha on 10 April 2002.He said that "repetitive lifting operations do not have a significant impact on enginelife" and he was "surprised that this question has been asked".[102] On 28 April 2005, Mr Takarangi advised the CAA that the director and histechnical advisers should proceed on the basis of this third version of Mr Barclay'sdraft report.Step 3 – updated advice from technical advisers[103] On 19 April 2005, Mr Gill provided a memorandum to Mr Fogden noting thatex-military helicopters in the restricted category "have a very poor safety record" and"the CAA finds itself having to review the use of these helicopters, which underthe current Rules are simply ineligible". He recommended that Helilogging'sapplication be considered from both a technical and policy perspective:POLICY IMPLICATIONS[New Zealand] is a signatory to the ICAO convention and as such requires allaircraft in New Zealand to have an airworthiness certificate, which is issuedbased on showing compliance with a detailed and comprehensive code ofairworthiness. We do allow dispensations against this in the Special Category,but this should be seen as a privilege and not a right. The CAA needs betterpolicy in this area, which will hopefully be developed under the Part 21 Projectcurrently under way.35 Certainly the implications on the commercialenvironment of allowing in old ex-military aircraft needs to be considered.Clearly this will lower standards, when the CAA should be aiming to improvethese. The Wessex is only being used because of its low cost and no otherreason. Allowing the Wessex to compete against fully type certificated, andthus far more expensive, machines may force all operators to turn to similartypes to remain competitive. Is this what the CAA wants for [New Zealand]industry?SAFETY IMPLICATIONSThe CAA has fully documented the specific safety concerns it has with the useof an ex-military Westland Wessex helicopter. These include:1. Questionable safety record in civil operations which may have contributedto the withdrawal of the civil type design at the request of the manufacturer.2. The fact that component times have reduced up to 90% in repetitive liftoperations shows the helicopter was simply not designed for this type ofoperation.3. The lack of parts traceability for ex-military surplus stock bought as bulklots.35 The "Part 21 Project" is a reference to the review of pt 21 of the Rules that the CAA wasundertaking at the time.4. The whole difference in operating and maintenance philosophies betweencivil and military operators can mean one transposed into the other does notwork well.(Witness the UH-1 and Wessex accident history in [New Zealand].)36(Footnote added.)[104] Mr Fogden completed his assessment and provided his report to the directoron 10 May 2005. Mr Fogden noted that despite the CAA's advice to the contrary,Helilogging's proposal continued to be advanced on the basis that the "CAA willbe the regulatory authority for the Westland Wessex, for what will be a nonICAO Annex 8 airworthiness certificate". Mr Fogden described this assumption as"completely flawed" because the CAA "simply does not have the experience or datato support such a role". He observed that any National Airworthiness Authority(NAA) issuing a type certificate will have been fully involved in the whole typecertification process, including structural and flight testing, will hold a complete setof technical data, and will have had a specialist responsible for following the type'sairworthiness history for the life of the aircraft. Mr Fogden noted that the CAA hadnone of this information nor did it have any expertise relating to the Wessex. The CAAhad advised Helilogging that it would not undertake this role, which was outside itsstatutory mandate, but Helilogging had ignored the CAA's position on this.[105] As to the issue of parts, Mr Fogden reported Helilogging's response "thatthe parts have been obtained from two reputable sources with appropriatedocumentation" and that "normal maintenance and storage practices are beingfollowed". Mr Fogden said he considered this response "seriously underestimatesthe significance of the question to [the director's] statutory obligation to be satisfiedthat the risk to aviation safety will not be significantly increased by the granting ofthe exemption". Mr Fogden considered that the response did not adequately addressthe safety issues raised concerning the traceability of ex-military components.[106] Concerning engine support, Mr Fogden reported that Helilogging referred to aletter from Rolls Royce in 2002, prior to the lifting trials undertaken between June andAugust 2004. There were only implied assurances from Helilogging that the engine36 UH-1 refers to the Bell Iroquois helicopter.manufacturer had taken into account the effect of repeated cycle heavy lift operationson its engine installation in the Wessex Mk 2. Mr Fogden noted that the fatal crash ofthe only other operational Wessex — a Mk 5 — in New Zealand while heli-loggingwas attributed to an undetermined engine failure. Mr Fogden did not consider thissafety issue had been adequately addressed. We note in passing that Helilogging didnot provide the CAA with a letter it had obtained from Rolls Royce dated3 March 2005. Rolls Royce stated in this letter that no significant technical assistancecould be offered without a contractual arrangement and, in any event, support forthe Wessex operation was limited "both in terms of spares support and publicationsupport as the last formal operation of the Wessex ceased with withdrawal ofthe aircraft from UK MoD operation".[107] Mr Fogden concluded by stating that only two of the eight information requestsmade to Helilogging on 24 December 2004 had "been answered in a manner that isuseful to [the director's] section 37 decision-making". Mr Fogden considered that inthe absence of the requested information and given the lack of oversight of the Wessexby a recognised NAA, the director could not be confident that the risk to safety wouldnot be significantly increased by granting the exemption. He therefore recommendedthat the preliminary decision should be to decline the petition for non-fulfilment ofthe s 37 criteria.Step 4 — consideration of advice and preliminary decision[108] After meeting with Mr Fogden to discuss the matter, the director made hispreliminary decision declining the exemption applications on 13 May 2005.Step 5 — preliminary decision provided to Helilogging[109] The director advised Mr Ford of his preliminary decision that same day andattached a copy of Mr Fogden's report. The director invited Mr Ford to respond withany comments within 20 working days.Step 6 — consideration of Helilogging's comments[110] On 20 June 2005, Helilogging submitted its final report from Mr Barclay.This report consolidated the information contained in the three earlier draft reports andaddressed "the bigger picture of restricted category, special category and theirrelationship with the notion of hire or reward".[111] Mr Barclay first addressed the hire or reward issue saying this was "central tohow the Wessex is handled". He acknowledged this was a contentious issue, but hesuggested interim action be taken to immediately lift the external load prohibition onthe current special category airworthiness certificate. Mr Barclay argued this wasjustified on the basis that "own trees, own helicopter, own sawmill" was "obviouslynot hire or reward". Mr Barclay explained the benefit of his proposed interim actionas follows:This would allow time for the boundary between hire or reward and otheroperations to be properly determined, and also allow the simultaneouspreparation of a Section 37 exemption to allow the issue of a restricted typeacceptance certificate for the ex-RAF Wessex HC Mk 2 helicopter.[112] A revised draft petition for exemption from the type certification requirementin r 21.43 of the Rules was included as appendix 5 to the final report.[113] Mr Barclay turned to the question of whether the CAA should assume the roleof NAA for the purposes of type certification of the Wessex, and offered fouralternative responses:1. It was not notified to the applicant at the appropriate time.2. The CAA does not have the authority to decline jurisdiction.3. It is not needed for a non-ICAO Annex 8 aircraft whose airworthinessapprovals are based on a satisfactory military service history, ratherthan conformance to an airworthiness design code.4. The CAA issues a section 23 delegation to the aircraft manufacturer.[114] Mr Barclay summarised Helilogging's position as follows:SUMMARYCAA have encouraged [Helilogging] to satisfy the various and quite detailedtechnical requests in respect of Wessex RHL [repetitive heavy lifting]operations. [Helilogging] have responded to this, including the submission oftwo petitions, and the expenditure of a considerable amount of money, onthe basis that there was a procedural pathway through a section 37 exemptionto permit RHL operations of their ex-RAF Wessex HC Mk 2 helicopters.Thus if an exemption is required, whatever form it takes, has to overcomethe question of regulatory authority.In our view that procedural pathway already exists, and an exemption is notrequired, as the use of [Helilogging's] helicopter to move [Helilogging's] owntrees should not be classified [as] hire or reward. Thus special categoryairworthiness is sufficient.If an exemption is required, then the key issue is that of regulatory authority.This was not advised to [Helilogging] at the outset, and its introduction ata late stage is inconsistent with the ongoing consideration of their exemptionapplication. If the exemption process cannot overcome the regulatoryauthority issue, then the exemption applications should have beenimmediately rejected. They weren't, and instead [the] CAA has required[Helilogging] to address secondary and consequential issues such as QRCcards, nominating a Chief Pilot etc.This report, despite its size and extent, may not in itself provide all ofthe information necessary to issue an aviation document. However it does:• Show the ex-RAF Wessex helicopter will meet the safety tests of section15 and section 37 etc.• May not need any exemption for logging of own trees with own helicopter.• Answer the questions of the Director's letter of 24 December 2004, shouldan exemption be required.• Show there is no basis to refuse the approval of the ex-RAF Wessex HCMk 2 in RHL and other external load operations.There is no basis to make a decision other than one that is favourable to[Helilogging's] request for RHL approval of their Wessex HC Mk 2helicopters.[115] Regarding support from GKN, Mr Barclay advised that "a contract will beexecuted when CAA indicate an RHL approval is likely". Mr Barclay said that"[n]ormal maintenance and storage practices are being followed for [the Wessex's]components" and "parts have been obtained from two reputable sources withappropriate documentation". He said the engines in the first aircraft were"approximately half-life". Based on Mr Gordon's estimate, "using a conservative'exchange rate' the first affected engine item will not occur during the first 6 monthsof RHL operations. This will provide adequate time to determine the actual 'exchangerate'."[116] Mr Barclay said that Rolls Royce product support could be obtained forthe Gnome engine but given the "large derate of the engine, and the 26 spare engines,this should not be a pre-requisite for RHL operations".[117] Appendix 2 was headed "General Information". Under a subheading"Company Support", Mr Barclay stated that Helilogging "will be drawing onthe expertise of both [Messrs] Gordon, and Lewis". Mr Barclay explained thatMr Lewis "was involved in the original test flying of the Gnome powered Wessexhelicopter, and also had line flying experience with the aircraft on Bristow's North Seaoperation".[118] We interpolate here to note that this was a reference to the same Mr Lewis weintroduced at [5] above. It will be recalled that Helilogging strongly criticises a lettersubsequently prepared by Mr Lewis in July 2005 and relied on by the director as oneof the reasons for his final decision declining the exemption petition. One ofthe allegations made by Helilogging in its deceit claim against the CAA is thatMr Lewis dishonestly failed to disclose various matters, including his experience withthe Wessex Mk 5 in 1998 and 1999 (for Mr O'Malley). As noted, althoughthe contention that the CAA is vicariously liable for Mr Lewis' allegedly dishonestconduct was abandoned at the hearing of this appeal, the underlying allegations ofdishonesty by Mr Lewis remain an important part of Helilogging's case. It is thereforehelpful at this point to set out Mr Lewis' relevant experience and explain how he cameto be involved, both as an adviser to the CAA on Helilogging's exemption applicationand as someone Helilogging anticipated would provide ongoing technical support forits operations if an exemption were to be granted. Before doing so, we makethe obvious point that, at least in 2005, Helilogging, their independent aviationconsultant, Mr Barclay, and the CAA all regarded Mr Lewis as a well-qualified expertable to provide relevant assistance.[119] Mr Lewis is a Fellow of the Royal Aeronautical Society in London and a pastmember of the International Society of Air Safety Investigators and the New ZealandAIA. His long and distinguished aviation career stretches back to 1948 and includesexperience with Westland Wessex helicopters. Mr Lewis joined the RAF in 1950where he became a test pilot, which included test flying helicopters. He was workingfor the RAF in this role at the time the Wessex Mk 1 was developed. In 1963, heresigned from the RAF and joined Rolls Royce Engines Ltd as an engine test pilot.It was during this time that he flew Wessex Mk 2, Mk 52, and Mk 60 helicopters.In 1965, he undertook conversion training on a Mk 2 at Westland Helicopters.This was preparatory to assisting the Iraqi Air Force to resolve problems they wereexperiencing with their Wessex Mk 52 helicopters which Mr Lewis understood werethe same as the Mk 2. Mr Lewis later travelled to Brunei to test the Iraqi Air Force'sWessex Mk 2 helicopters. These helicopters were labelled Wessex Mk 53 butMr Lewis said there was no separate type rating for them and they were the same inall operational respects as the Mk 2. Mr Lewis was appointed by the British Board ofTrade as a type rating examiner and board of trade examiner on aeroplanes andhelicopters. In this capacity he worked for several years with the British AirRegistration Board on the development of the Wessex Mk 60 for civil use.Between 1963 and 1971, he also worked as an independent check and training officerfor Bristow in the North Sea and Persian Gulf and gained line flying experience withthe Wessex Mk 60 on Bristow's North Sea operation.[120] In 1980, following his return to New Zealand in 1971, Mr Lewis joinedthe civil aviation division of the Ministry of Transport as a helicopter general aviationinspector. His primary task was to establish and maintain operational standardsthroughout New Zealand. He was appointed a flight test examiner for commercial andprivate pilots' licences, as well as instructors' and instrument ratings for civil aviation.In 1983, he was appointed superintendent of flight operations in Auckland.He resigned from the Civil Aviation Division in 1987 to take up various private sectorindustry roles including as the chief flying instructor for helicopters at FlightlineAviation Ltd located at Ardmore Airport. During 1992–1996, Mr Lewis providedconsultancy services to the CAA.[121] In late 1998, Mr O'Malley approached Mr Lewis to provide type-conversiontraining for himself and his pilot, Grant Ward, on the Wessex Mk 5 (the aircraft thatsubsequently crashed). Mr Lewis carried out two 90-minute flights in this aircraftwith Mr O'Malley on 22 December 1998. The following day, he carried out fourfurther flights, three with Mr O'Malley and one with Mr Ward. He then provideda flight evaluation report to the CAA on 12 January 1999 recommending thatthe aircraft be issued with a restricted category airworthiness certificate. Mr Lewisundertook four further flights with Mr Ward in this aircraft in February 1999.[122] In 2003, Mr Lewis received the Individual Award of the Aviation IndustryAssociation in recognition of his outstanding contribution to the advancement ofaviation.[123] We turn now to explain how Mr Lewis became involved with Helilogging'sexemption application. In early 2005, he was engaged by Mr Fogden to assist the CAAon its review of the Rules relating to agricultural aircraft overloading, specifically inaerial topdressing operations. While working on this project, Mr Fogden asked himwhether he had experience with Wessex helicopters. On learning he did, Mr Fogdenbriefed Mr Lewis on Helilogging's proposal and gave him a copy of Mr Barclay's finalreport to review.[124] Mr Lewis called in to see Mr Barclay on 19 May 2005. The two knew eachother, having worked together at the CAA many years earlier. Mr Barclay reported onthis visit in an email he sent that evening to Messrs Takarangi and Ford and othersinvolved in the project:Bernie Lewis popped in to see me today (he lives in Whangarei), and Qwilton[Biel] was able to come around also.Bernie is in [his] mid 70's, and we overlapped in the "CAA" many years ago.He is [a] very experienced and respected helicopter (test) pilot and wasinvolved in the early Wessex development work, including time with[Rolls Royce] on the Gnome engine development! He was also allowed to dosome freelance flying with Bristow's in the Wessex.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 had 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 havea solid benchmark for the report.I showed Bernie some of the key documents we have, and gave him copies to take away, so no doubt he will contact me in due course with his thoughts.I included the CAA view on hire and reward, and asked him to think back tohis CAA days of how venison recovery etc was handled. Bernie was originallya school teacher, so he is a reasonable thinker.Will fax you the [Federal Aviation Authority] documents I have oncompensation or hire (hire and reward).Attached is [the] email to David Gill I mentioned, note how I wordedregulatory oversight. David is straight up and down so should be a usefulmeeting. The latter reference was to a meeting Mr Barclay had arranged with Mr Gill to be heldon 24 May 2005. In his email to Mr Gill confirming this meeting, Mr Barclay set outthe issues for discussion:What CAA are looking for in respect of regulatory oversight, and link to[the] GKN contractComponents; both pulling into civil system and use on helicopter.Engine suitability; [including] various [New Zealand/Australian aviationdocuments].Step 7 — final decision[125] Mr Fogden asked Mr Gill to consider two regulatory issues arising out ofMr Barclay's final report. Mr Gill provided a report dated 25 July 2005 in which hedisagreed with Mr Barclay's contention that a restricted category airworthinesscertificate could be issued to ex-military aircraft. Mr Gill believed this was not correctstating "there are no precedents at all to support this contention". Mr Gill consideredthat the provision relied on by Mr Barclay related to aircraft originally eligible as civilaircraft, subsequently used for military service and then returned to civil use. He saidthere was "nothing to indicate aircraft not formerly type certificated to civil designstandards could ever get anything other than Restricted — Private Operations Only,which was the equivalent of the Special Category Experimental under the newPart 21".[126] Mr Gill then addressed Mr Barclay's argument that there was precedent forthe CAA to take on the role of the regulatory authority under the agricultural overloadprovisions of appendix B of pt 137 of the Rules. Mr Gill did not consider this to bea comparable situation and added that these provisions did not involve the CAA takingover the manufacturer's responsibility to provide continuing airworthiness support forthe aircraft. He explained that the appendix B provision was "the same as has beenspecified in the FAA Rule CAR 8 for many years, and most [United Statesmanufacturers] will have designed their agricultural aircraft around this Rule".Those manufacturers not supporting the rule might be able to invalidate a warranty,but they would not be absolved from "investigating defects and rectifying any designproblems".[127] On 20 July 2005, the director met with Messrs Fogden and Lewis. Mr Lewiswas in Wellington that day, working on the CAA's agricultural overload project.He was asked for his view on the suitability of the Wessex Mk 2 for heli-loggingoperations. Following this meeting, Mr Lewis sent a letter to the director on 23 July2005. This is the letter Helilogging criticises as containing outdated information andas fraudulently concealing his 12 January 1999 report to the CAA (on behalf ofMr O'Malley) regarding the Wessex Mk 5.[128] Mr Lewis commenced by summarising his background experience withWessex helicopters, starting in 1959 with the Mk 1. He went on to outline hisexperience flying the twin engine versions — "the Mk 52 with the Iraqi Air Force inBaghdad and the Wessex 60 (civilian version), with [Bristow] Helicopters inthe North Sea and long-lining two ton oil pipes in Scotland for the same company".He said that a "large range of tasks were carried out" and he "considered that it wasthe best helicopter that [he] had flown at that stage". However, he expressed "doubtsof a successful outcome" for "the type of operation envisaged by [Helilogging]".His reasons can be summarised as follows:(a) The helicopter has 13 fuel tanks but none with a fuel drain that can bechecked on a pre-flight inspection. The RAF, the Royal Navy andBristow employed fuel management practices to mitigate this problem,but Mr Lewis said he could not see that happening in the back countryof New Zealand. He said he feared that "without frequent maintenanceinspections and pre-flight tank drains, that condensation and othercontaminants are going to get into the fuel systems". Mr Lewissuggested that this "could have contributed to the [Mk 5 accident inFebruary 2001]".(b) The aircraft was "very prone to ground resonance".(c) The Gnome engine is "very delicate and complicated" having a row ofvariable inlet guide vanes in front of a 10-stage axial compressor.The first four sets of stator blades are also variable, all moving inaccordance with compressor rpm. Mr Lewis said that if any unusualvariation or slowness of movement occurs, the engine will invariablystall. He suggested this was another possible explanation for the Mk 5crash in 2001.(d) The fuel computer control system was the heart of the engine. He saidthe computer receives various signals, the loss of any one of which cancause immediate problems, some of which he had personallyexperienced. Mr Lewis also said the Wessex had no manual throttlereversion. He referred to starting problems caused by low batteryvoltages and cold ambient conditions: "I seem to remember thatstarting was impossible below about 20 volts". He added that whilethe civilian Mk 60 was fitted with a voltmeter, there was no suchinstrument in the Mk 2.(e) The Iraqi Air Force fleet all had problems associated either withthe engines or the computer. He said he flew all these aircraft andgrounded the entire squadron. He said he did not know whetherthe problems were resolved because he had to leave the country.(f) Mr Lewis noted that Helikopter Services, in Norway, had replacedthe Gnome engines in their helicopters (albeit not the Wessex) withanother type of engine because of dissatisfaction with the Gnome andits computer system.(g) Mr Lewis commented on Mr Barclay's reference to approximately 10040-foot containers of spare parts. He noted that Mr Barclay had namedthose spares he considered to be important but made no mention of fuelcomputers. Mr Lewis reiterated that these are the heart of the Gnomeengine and, without them, the engines would not start. Even if therewere spares, he raised questions — "how have they been stored?Do they have a shelf life? Would you trust the very first generation fuelcomputers that could be forty years old?" He answered this latterquestion by saying "[o]n very demanding logging operations, I wouldnot". He added that this might also have been a contributing factor inthe 2001 Mk 5 accident.[129] Mr Lewis concluded by saying:I always enjoyed flying the Wessex, but as you can see, I have grave doubtsabout its viability for the tasks as suggested by [Helilogging].[130] Two handwritten changes were made to this letter following its receipt bythe CAA. The first was the reference in the third paragraph to the "Mk 52", whichMr Lewis flew with the Iraqi Air Force. This was changed to "Mk 2" by strikingthrough the "5" with a diagonal line. The second was in the concluding paragraphquoted above. The word "viability" was crossed out and replaced with the word"safety". Mr Lewis said he rang the director on 25 July 2005 and asked him to makethe second of these changes. Mr Lewis said he did not recall requesting or authorisingthe first change but regarded it as immaterial because he considered the Mk 52 wasthe name of the Mk 2 model supplied to the Iraqi Air Force. He said he alwaysunderstood these aircraft were the same.[131] Mr Fogden prepared his final report in which he recommended thatthe exemption petitions be declined. He sent this report to the director on 9 August2005.[132] The director advised Helilogging of his final decision declining the exemptionpetitions on 19 August 2005. The director attached a copy of Mr Fogden's 48-pagefinal report, which included a copy of Mr Lewis' letter. The director also attacheda five-page file note summarising his deliberations. The director stated he did notconsider that any of the conditions in s 37(2) of the Act had been met. Addressing eachof these jurisdictional conditions in turn, the director concluded:(a) The requirements of the Rules had not been substantially complied withby Helilogging.(b) The action proposed was not as effective as actual compliance withthe Rules.(c) The prescribed requirements could not be considered clearlyunreasonable or inappropriate in the particular case.(d) There had been no events that made the prescribed requirementsunnecessary or inappropriate in the particular case.[133] The director further stated he was not satisfied that granting either exemptionto permit the proposed use of the Westland Wessex helicopter for heli-logging wouldnot significantly increase the risk to safety, as required by s 37(2) of the Act.I have considered fully the material and information you have provided andI advise that I am not satisfied that in the circumstances of the WestlandWessex helicopter being used as proposed by [Helilogging] that the risk tosafety will not be significantly increased by my granting [of]the exemption[s].I have made this assessment on the basis of the information set out in the reportof Mr Fogden dated 9 August 2005. I have carefully considered hisrecommendation and agree with the conclusion on page 46 of his report.In particular, I note the New Zealand accident experience to date withex-military helicopters; the operational experience of Wessex aircraftdemonstrated in the information received from Mr Bernie Lewis.[134] Finally, the director said that he did not consider it would be appropriate togrant either alternative exemption in any event because of the significant precedentialimplications. The director said he agreed with the policy issues raised in Mr Fogden'sreport:In addition to the reason outlined above, I also consider it inappropriate togrant an exemption because of the significant precedential implications ofsuch an exemption. In fact, I am of the view that, if granted, the exemptionproposed would have serious consequences for the integrity of the [Rules]relating to aircraft certification.I agree with the policy issues raised in Mr Fogden's report. Of particularconcern to me is the international standing of the New Zealand civil aviationsystem with respect to our ICAO obligations relating to airworthiness and inbilateral technical arrangements with other ICAO contracting states.2005–2014[135] On 23 August 2005, four days after receiving the director's decision,Mr Barclay chaired a five-hour meeting with Mr Ford and seven others, includingMessrs Gordon and Takarangi, to discuss the decision, the Fogden and Lewis reportsunderpinning it, and future options. These included a possible claim for compensation.[136] The next day, Mr Barclay wrote to Mr Lewis stating that his 2005 letter, whichhad been relied on by the director in declining Helilogging's application, contained"a number of significant errors". Some were said to be technical errors (for example,fuel drains and fuel control computer systems) that overlooked changes tothe helicopter and its engines since Mr Lewis' "era" while others were said to bethe result of unfounded assumptions. Mr Barclay concluded his email by saying:I have a lot of respect for your knowledge, and experience; however much haschanged since that time. I do encourage you to review your letter in the lightof my comments.[137] Mr Lewis replied by return:Thanks Jim.I take on board what you have said. As I said before, your report was verygood. It still is.Regards,Bernie.[138] On 15 September 2005, Mr Takarangi attempted to file in the District Court atLower Hutt a notice of appeal by Helilogging against the director's decision.However, the notice of appeal was not accepted for filing because there is no right ofappeal from an exemption decision under s 37 of the Act.[139] On 16 September 2005, Helilogging filed a notice of discontinuance ofthe judicial review proceedings it had commenced in late 2004.[140] On 14 December 2005, Mr Ford sent an email to Mr Lewis followinga telephone discussion the previous day. He also sent a copy of a letter fromBrian Taylor, a helicopter pilot approved by the CAA to fly a Wessex Mk 5, with hiscomments on Mr Lewis' 23 July 2005 letter to the director. Mr Ford said Mr Taylor"was horrified at the contents" of this letter. Further, Mr Ford noted that Mr Lewishad changed the word "viability" in the report to "safety" and claimed the director hadplaced "great weight" on this. Mr Ford asked Mr Lewis to retract his 2005 letter basedon Mr Taylor's letter, the support of GKN and the CAA's approval of the proposedmaintenance programme for RHL operations.[141] Mr Lewis responded that day saying he was not prepared to retract his letter tothe director and expressing doubt it would make any difference if he did:G'day Mark,We have been unable to properly read Brian Taylor's letter as it is in large printand we can only read half a page.However, I spent a lot of time thinking about what you said yesterday andhave decided that:1. CAA are determined that they do not want ex-military helicoptersoperating on commercial operations here because of their past recordand2. 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 have to be based on hearsay. What I said in myletter was fact, but I admit it was 40 year old fact and I would agree that thingscould have changed. I couldn't read what [Mr Taylor] said about fuel drains,but I don't like the lack of them. I cannot remember any [United Kingdom]machine 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 aroundthe industry, 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 that you should continue with it.Mark, I'm very sorry, but I feel that I cannot withdraw what I wrote tothe Director.Regards,Bernie Lewis[142] We note that Helilogging claims Mr Lewis acted dishonestly by not mentioningin this email the flights he had conducted with Mr O'Malley and his pilot onthe Wessex Mk 5 in late 1998 and early 1999 — the sixth amended statement of claimalleges Mr Lewis dishonestly "[r]epresented to [Helilogging] by email that hisexperience with the Wessex was based on 'forty year old fact', thereby omitting tomention his experience with the Wessex Mk 5 in 1998 and 1999".[143] Mr Barclay followed up by email to Mr Lewis on 9 January 2006 suggestingrepercussions if he did not withdraw his letter:Happy new year.You will recall I sent you an email last year pointing out some ofthe shortcomings of your letter, and that you were contacted by others later inthe year suggesting you withdraw your letter.I probably fall into that camp also.The damaging effect of your letter is immense, and you should consider yourliability, for its use (or misuse).I say misuse because it could be argued that [the] CAA should have soughtother advice when there was clear conflict between your letter and our report.Your letter will receive some scrutiny this year, at some fairly high levelforums.The attached is an estimate of what would happen if it doesI am available to discuss at any time.Rgds[144] Mr Barclay attached to this email a six-page document he had prepared toillustrate the type of scrutiny Mr Lewis could expect in relation to his 2005 letter.This commenced:B LEWIS - QUESTION SCENARIOMr Lewis, we understand you have considerable experience in many aspectsof helicopters, and at different stages of your career - a line pilot, test pilot andregulator.We would expect then you to have a good grasp of the big picture forthe helicopter aspects of aviation.We are puzzled then by your letter of 23 July 2005 to the Director of CivilAviation; which appears to be out of step with the reputation you have earnedin your long career in aviation.We wish to clarify certain aspects of that letter.[145] Mr Barclay's question scenario went on to explore the circumstances ofMr Lewis' engagement with the CAA in respect of Helilogging's application beforeaddressing, paragraph by paragraph, the allegedly incorrect technical information andopinions expressed in his 2005 letter. The question scenario ended:FinallyMuch of your letter has now been shown to be incorrect or irrelevant.There seems to be a huge leap from the information of your "era", some threeor four decades ago, to then state the aircraft is unsafe for the tasks as proposedby [Helilogging].This leap is even more surprising when the Wessex helicopters (purchased by[Helilogging]) when in RAF service had a 25 year 2 accidents per 100,000flying hours statistic and been recently re-qualified for this the logging role bythe manufacturer (after extensive flight trials).How do you reconcile your letter with this.[146] In the meantime, on 22 December 2005, Mr Castle, counsel for Helilogging,advised Mr Ford, through his instructing solicitor, Mr Takarangi, that he consideredthe director's decision to be vulnerable to challenge on judicial review. He identifiedthe key issue as being the risk to aviation safety criterion in s 37(2) of the Act andrecommended that "[a]ll efforts must focus on securing overwhelming internationalexpertise which can demonstrate both as to process and substance the findings reachedby the Director on the aviation safety issue were wrong".[147] However, no steps were taken by Helilogging to challenge the decision by wayof judicial review, apparently because of a lack of funding.[148] On 3 March 2006, the director issued a general prohibition pursuant to s 21(2)of the Act prohibiting the operational use of New Zealand aircraft registered withspecial category airworthiness certificates on external load operations. Heliloggingfiled an appeal against the prohibition order but discontinued the appeal on19 September 2006.[149] Mr Ford sent a 16-page letter to the director on 21 July 2006 proposing thatthe parties attempt a resolution of all outstanding issues to avoid further litigation.We quote extracts from this letter because it reflects Mr Ford's perspective at the timeand helps explain why he felt aggrieved by the process and the outcome:CONCLUSIONSIt is regrettable that the very good and co-operative relationship that existedbetween CAA and [Helilogging] has deteriorated since November 2004. It isclear that the core issue that has led to this situation is that CAA has undergonea change of policy in respect of ex-Military helicopters since that time.[Helilogging] accepts that your concern is genuinely based; in fact,[Helilogging] support your initiatives to improve safety in all classes ofhelicopters. The reason the Wessex project was started was due to[Helilogging's] wish to improve the safety of their own operation.When [Helilogging] approached you in February 2003, without anyprompting from CAA, they advised you that they considered their operationcould be made safer and they volunteered to ground the [Westland] Scouthelicopters pending replacement with the Wessex. CAA supportedthe initiative and was very co-operative right through to the point at whichyour technical Department heads recommended that you grant the exemptionsapplied for.We do not believe that you can deny responsibility for the situation that hasarisen. Your letter of 7 May 2003 clearly spelt out what was required of[Helilogging] and they have met all of those stringent and costly requirements.We believe that your acceptance that the major requirements of Airworthiness,operations and maintenance, which has cost [Helilogging] in excess of $1.5mto achieve, should not be overridden by subsequent issues unless they have amajor impact and cannot be mitigated.It is regrettable that [Helilogging] were not given the opportunity to commenton some of these additional issues as they understood they would be able todo. We believe that had this opportunity been afforded them, a solution toyour additional concerns could have been found. In our above submissions,we have pointed out that the additional issues you raised and upon which youdecided to decline the application, when isolated from the voluminoussubmissions and information you had to consider, are very few in number.We have also submitted that your concerns can be dealt with.[150] Mr Ford then set out what he understood to be the director's concerns and howthese could be addressed:1. The NAA issueWe think there was misunderstanding and fault on both sides becauseeach made incorrect assumptions. The regulations provide fora solution to this and we believe we have shown a way of resolution.In the circumstances, we consider it would be fair and reasonable, andwould not constitute any risk to safety, if the Minister [of Transport]was asked to approve delegation of the NAA responsibility tothe manufacturer whom it cannot be denied are a highly responsibleorganisation who will not jeopardise their reputation by not properlyperforming this responsibility.2. The Bernie Lewis evidenceThis evidence was the position 40 years ago. Mr Lewis made thisclear. The equipment and procedures that caused him genuineconcern have been dealt with in the intervening years.The manufacturer and other expert witnesses can support this.The Lewis evidence is not a reason for decline and as you advised thatyou "placed great reliance" on this evidence, the removal ofthis concern must be of "great comfort" to you.3. Ex-military helicopter accident rateThis was not expressed as a concern until your final decision, despiteCAA being fully aware of this previously. If this was a real andgenuine concern, [Helilogging] should not have been encouraged toproceed with meeting your stated requirements back in early 2003.As most logging is carried out by ex-military helicopters, it is notsurprising that the accident rate is disproportionate to standardcategory aircraft. However, analysis of individual accidents does notreveal that the ex-military origins were the cause of the accidents.The aircraft involved in the accidents were not designed forthe purpose and were not operating manufacturer-sanctioned externalload attachments as would be the case with the Wessex.[Helilogging] has complied with your policy in respect of ex-militaryhelicopters by obtaining manufacturer's support, conducting trials andobtaining CAA approved maintenance and operational procedures.The ex-military accident rate is not applicable to the situationthe Wessex is now in and is not a reason to override the major issueof the airworthiness, operations and maintenance approvals you havegiven.Finally we do not consider you have properly assessed risk byinternationally accepted procedures or properly consideredthe international accident statistics.4. Policy Issues[Helilogging] has complied with your policy as it existed at the time.It is therefore unreasonable to retrospectively apply new policy that,by your own admission, is still under development. We submit thatprovision should be made for any party in transition acting in goodfaith under current policy.[151] Mr Ford then set out an eight-point proposal. This included Heliloggingwithdrawing its objection to the prohibition on special category helicopters carryingexternal loads. Indeed, Helilogging would support the director's initiative in thisrespect. To overcome the special category prohibition on external load operations,the Wessex would be certified in the restricted category with conditions to limit theiroperation. Helilogging would agree to limit the number of Wessex helicoptersdeployed in New Zealand to a number acceptable to the CAA. The drawbridge wouldbe raised for any other ex-military helicopters pending completion of the regulatoryreview:7. CAA give urgency to writing new regulations to deal with ex-militaryhelicopters in the future. In the meantime CAA could placea moratorium on any additional ex-military aircraft enteringthe country pending establishment of the new regulations.Operators would then know that if they chose to invest in suchaircraft, they will be subject to the new regulations. This wouldalleviate your concerns about additional aircraft entering[New Zealand] service under the same regulatory procedure asthe Wessex, prior to having new rules in place.[152] Mr Ford listed the effects of his eight-point proposal as being:1. Litigation ceases.2. CAA can implement new policy in relation to ex-military helicopterswithout unfair treatment of [Helilogging] caught up in the transition.3. [Helilogging] will consider the outcome to a difficult process to be afair resolution.4. A fair and pragmatic solution will enhance future industry relationsand cooperation.[153] Nothing came of these proposals. The director gave notice of his retirement inSeptember 2006 with effect from November 2006. Helilogging Ltd was placed intoreceivership and liquidation on 5 and 6 October 2006. However, we note that on15 March 2007 Mr Ford reached agreement with the receivers and Helilogging'sfinanciers to enable the pursuit of proceedings for judicial review of the director'sdecision.[154] Following the appointment of Steve Douglas as director in June 2007, Mr Fordwrote to him on 11 July 2007 seeking to "reactivate" one of his earlier applications:My company and myself applied earlier to CAA for approval to usethe ex-RAF Wessex helicopter in two different external load roles:1. a restricted category exemption; that would permit "hire or reward"operation, or2. a non-"hire or reward" operation, that would permit "own logs, ownhelicopter, own sawmill" operation.I wish to reactivate the latter application for Wessex helicopter ZK-HBE.[155] Mr Douglas responded on 17 August 2007 saying he was not aware of anytechnical information in Mr Ford's letter that was not available at the time ofthe original decision in August 2005. In those circumstances, he said he did notconsider there was any proper basis to reconsider the decision. However, Mr Douglasconcluded by saying:If you do have any new technical information that you think should beconsidered as part of a fresh application for the exemptions, or for any otherapplication that you wish to make, then I would invite you to forward that tome.[156] Mr Ford did not take up this invitation.[157] About two weeks later, on 3 September 2007, the receivers purported toterminate the March 2007 agreement (allowing judicial review proceedings to becommenced) due to alleged breaches by Mr Ford. A settlement of the ensuing disputewas eventually reached in June 2008. This settlement acknowledged that Mr andMrs Ford could proceed with judicial review proceedings at their own cost.However, no such proceedings were ever issued.[158] We mention for completeness that throughout this period, Mr Ford pursuedother avenues for redress, including by ventilating his grievances to variousgovernment ministers, other parliamentarians, the Auditor-General and the Office ofthe Ombudsmen, all to no avail. The last of these initiatives concluded with a letterfrom the Ombudsman on 20 February 2012 declining to investigate Mr Ford'scomplaints because of the time that had passed since the decisions were made(the most recent being Mr Douglas' decision to decline reconsideration dated17 August 2007).[159] This brings us to the last event in the chronology we need to mention. Mrs Fordsaid she recalled discussing the matter with her husband in April 2012. Some ofthe relevant documents were spread out on the kitchen table. She said that as she wasreading Mr Lewis' 2005 letter, she noticed the handwritten correction striking throughthe number "5" in "Mk 52". Mrs Ford said she drew this correction to her husband'sattention. Mr Ford said "[t]his is what instigated the current proceedings" (two anda half years later, in September 2014).The pleaded claimsDeceit[160] The deceit cause of action against the CAA in the sixth amended statement ofclaim alleges dishonesty by "the CAA" and Messrs Lewis and Fogden.The allegations relate to two time periods, the first being in November 2004 andthe second in 2005.The CAA[161] Six allegations of dishonesty were pleaded against the CAA relating to eventsthat had occurred in November 2004. The CAA was said to have:(a) Dishonestly represented that it was considering the plaintiffs'applications on their merits when it was not, including by dishonestlywithholding material information from the plaintiffs, and in particularthat the Director had already determined by 9 or 15 November 2004at the latest that the plaintiffs' applications had or would be declined.(b) Failed to advise the High Court of the existence of the 9 and15 November 2004 memoranda37 and that the Director had alreadydecided to decline the plaintiffs' applications.(c) Dishonestly relied upon safety and other alleged concerns but whichto the Director's knowledge had been addressed by:(i) The flight trials.37 This first limb was abandoned at the hearing of this appeal on the basis that these memorandawere legally privileged and therefore did not need to be disclosed.(ii) The Aaleda reports.(iii) The CAA's dealings with GKN.(iv) The exchanges between the plaintiffs' representatives andthe CAA's representatives in 2003/2004.(v) The 1999 Lewis report in which Mr Lewis had recommendedthe issue of a restricted category airworthiness certificate.(d) Removed Mr Lanham from the decision making process because hewas likely to support the granting of the plaintiffs' applications.(e) Dishonestly sought to find further reasons to decline the plaintiffs'applications and so that any legal challenge that was mounted tothe Director's determination would be unsuccessful.(f) Dishonestly withheld from the plaintiffs the 1999 Lewis report.(Footnote added.)[162] The deceit allegations directly against the CAA in the subsequent period allrelate to Mr Lewis:(a) [The CAA subsequently] engaged Mr Lewis as an expert because hewould provide a report casting doubt upon the safety of the WessexMK2 helicopter, even though [it] knew that Mr Lewis had providedthe 1999 Lewis report.(b) Fraudulently and/or without any or any honest belief in the accuracyor truth of the altered Lewis letter provided a copy to the plaintiffswith the intention that the plaintiffs would:(i) Believe that the alterations were genuine;(ii) Believe that the CAA had a reputable expert confirming thatthere were in fact safety issues in respect of the Wessex MK 2helicopter;(iii) Not pursue the legal remedies that were available to them byway of judicial review or otherwise.(c) Dishonestly withheld concerns expressed by Mr Lewis aboutthe safety of the Wessex MK2 and in particular because of vibrationissues which occurred in a flight in 1999, so that the plaintiffs andtheir experts were denied the opportunity of addressing thoseconcerns.[163] An alternative pleading alleging recklessness by the CAA followed:Alternatively the CAA acted recklessly and was indifferent as to whetherthe contents of the Lewis [letter] were true and in particular by:(a) Failing to make any or any proper investigation into Mr Lewis'qualifications to give an opinion on the safety of the Wessex MK2.(b) Failing to enquire as to why Mr Lewis elected to change the word"viability" to "safety" in his [letter].(c) Failing to make any or adequate enquiries into the history ofthe CAA's dealings with the Wessex, and in spite of an express requestby the Director to do so by memorandum dated 19 November 2004(d) Failing to take into account the CAA's discussions with GKN and inparticular between Mr Remacha of the CAA and Philip Grainger fromGKN in or about May 2003.(e) Failure to take into account the CAA's knowledge of Air and GroundAviation Limited support, including discussions betweenMr Remacha of the CAA and Air and Ground Aviation representativesin or about May 2003.[164] Finally, it was alleged:In addition, the CAA acted fraudulently and/or without any honest belief inthe accuracy or truth of its letter of 19 August 2005 by stating thatthe plaintiffs' exemption applications were declined because the Director:(a) Was not satisfied that the risks to aviation safety would not besignificantly increased by granting an exemption; and(b) Considered it inappropriate to grant an exemption for safetypolicy reasons;when in fact the CAA was aware that Mr Lewis had in the 1999 Lewis reportconfirmed that the Wessex was safe and recommended the issue of a restrictedcategory airworthiness certificate.Mr Lewis[165] Four allegations of dishonesty were pleaded against Mr Lewis, who was saidto have:(a) Failed to disclose the existence of his 1999 report.(b) Represented to the plaintiffs by email that his experience withthe Wessex was based on "forty year old fact", thereby omitting tomention his experience with the Wessex MK 5 in 1998 and 1999.(c) Failed to disclose his alleged concerns about vibration issues withthe Wessex in either of his report[s] or in any communications withthe plaintiffs.(d) Concealed from the plaintiffs' expert Mr Barclay in May 2005 that hewas already engaged by the CAA as an expert.Mr Fogden[166] In relation to Mr Fogden, Helilogging pleaded:134. Mr Fogden fraudulently and/or without any honest belief inthe accuracy or truth of his [letter] dated 9 August 2005, at page 34referred to the statement in Mr Lewis' report that the Wessex did nothave fuel drains that could be checked by a pilot during the pre-flightinspection and which Mr Fogden said was "a fundamental safetysystem" and where Mr Fogden was aware that the Wessex had fueldrains that could be inspected during a pre-flight inspection.[The particulars provided references to fuel drains at pp 8 and 28 ofthe operations manual which Mr Fogden had approved].Misfeasance in public office[167] The misfeasance claim was advanced on the basis that the director owed a dutyto Helilogging in making his decision and breached this duty in various ways: failingto disclose the 9 and 15 November 2004 memoranda; determining prior tothe completion of the seven-stage process to decline the applications; breachingthe seven-stage process by engaging Mr Lewis and not making his letter available toHelilogging prior to making his final decision; failing to disclose the existence ofthe 1999 Lewis report; and failing to disclose the concerns expressed by Mr Lewisabout vibration issues with the Wessex Mk 2, thereby denying Heliloggingthe opportunity of addressing those concerns. Helilogging also alleged thatthe director was aware:(e) The Lewis letter had been altered in material respects at the instigationof the CAA or the CAA's agents by both altering the word "viability"to "safety" and deleting the number 5 before the description MK 52;(f) A copy of the unaltered letter was withheld from the plaintiffs, save inrespect of the alteration of the word "viability" to "safety".[168] Helilogging pleaded that in declining the exemption with knowledge of thesefacts, the director committed an actionable misfeasance in public office in that he actedintentionally, knowing that his acts were beyond the limits of his office.[169] Alternatively, Helilogging pleaded that the director was recklessly indifferentto the consequences of relying upon Mr Lewis' letter by: failing to make adequateenquiries as to his suitability as an expert; failing to make adequate enquiry as to hisexperience with the Wessex Mk 2; failing to make proper enquiry into the history ofthe CAA's consideration of the Wessex for heli-logging in particular, in respect of itsprevious dealings with Metro Air; failing to make enquiry as to the reasons whyMr Lewis changed the word "viability" to "safety" in his letter; failing to giveHelilogging an opportunity to address Mr Lewis' concerns; relying upon Mr Lewis'advice that his experience with the Wessex helicopter dated back 40 years; and failingto disclose Mr Lewis' engagement at the earliest opportunity.[170] Helilogging pleaded that the director and Mr Lewis were both actuated bymalice and the CAA was vicariously liable for their acts. As already noted,Helilogging abandoned at the appeal hearing its contention that the CAA wasvicariously liable for Mr Lewis' acts.High Court judgment[171] The Judge commenced by setting out the elements of the alleged torts, as towhich there was no dispute between the parties.38 In terms of misfeasance in publicoffice, the Judge quoted the elements of the tort as set out in this Court's decision inCurrie v Clayton.39 There are four key elements which can be broadly summarised asfollows:1. Public office — the defendant must be a public officer.2. Unlawful conduct — the defendant must have acted unlawfully inthe purported exercise of the public office (knowingly beyond the limitsof the office or with reckless indifference as to this).3. Intention — in so acting, the defendant must have intended to causeharm to the plaintiff (malice), or known the conduct was likely to harm38 High Court judgment, above n 3, at [13] and [19].39 Currie v Clayton [2014] NZCA 511, [2015] 2 NZLR 195 at [40].the plaintiff or been recklessly indifferent as to this (non-targetedmalice).4. Loss — the defendant's actions must have caused the plaintiff loss.[172] As to deceit, the Judge referred to this Court's judgment in Amaltal Corp Ltdv Maruha Corp and distilled the following elements:401. The defendant made a false representation knowing it to be untrue orbeing recklessly indifferent as to whether it was true.2. The defendant intended that the plaintiff would act in reliance on it.3. The plaintiff did in fact rely on it.4. The plaintiff suffered loss as a result of relying on the falserepresentation.[173] After addressing in detail each of the specific allegations made by Helilogging,the Judge summarised his overall findings as follows:[271] My findings above are relevant to both the claims in misfeasance ina public office, and deceit. In terms of misfeasance, I find that at no stage didMr Jones or other officials act knowingly beyond their functions or powers,or recklessly indifferent to this. In terms of deceit, I conclude that at no pointdid they make untrue representations to the plaintiffs.[272] In assessing each of the matters relied upon by the plaintiffs toestablish their claims, I have also stood back and considered the allegations asa whole. The allegations are factually interrelated, and the plaintiffs say thatthe cumulative effect of the evidence they rely upon demonstrates thatMr Jones had made up his mind not to grant the exemption applications by9 November 2004, and the steps taken from that time dishonestly concealedhis true views, and involved a process that was never genuine, but simplyfollowed in order to avoid criticism or challenge to the Director's decision.[273] I do not accept these allegations. As a matter of fact I conclude thatthe relevant CAA personnel, and Mr Jones and Mr Fogden in particular, actedhonestly throughout. I also reach that conclusion in relation to Mr Lewis.I accept the draft 9 November 2004 memorandum indicated strong viewsadverse to the plaintiffs, and that Mr Jones revealed the strength of those views40 High Court judgment, above n 3, at [19]; citing Amaltal Corp Ltd v Maruha Corp [2007] NZLR608 (CA) at [46].again in his conversation with Ms King in 2005. But I do not accept that thisdemonstrates he acted improperly. He had strong views precisely because hebelieved that granting the exemption application was not appropriate giventhe relevant statutory considerations under s 37. His decision to followa process before the statutory decision was made was not improper.[274] For these reasons the plaintiffs' claims fail on the facts.Grounds of appeal[174] The grounds of appeal were assembled under the following headings:(a) Ground 1 — the 1999 Lewis report.(b) Ground 2 — recklessness in respect of the 2005 Lewis letter.(c) Ground 3 — the vibration flight.(d) Ground 4 — safety as the primary ground for refusal.(e) Ground 5 — the effect of the director's conduct.(f) Ground 6 — findings contrary to the weight of evidence.(g) Ground 7 — pleadings.(h) Ground 8 — counsel's concession.(i) Ground 9 — alteration to Mr Lewis' 23 July 2005 letter.(j) Ground 10 — the evidence of Irene King.(k) Ground 11 — whether the decision was reasonably open to the director.(l) Ground 12 — dishonesty (this ground was directed to the issue ofwhether the CAA was vicariously liable for any dishonesty on the partof Mr Lewis. As noted, this ground was abandoned at the hearing).[175] In his written submissions, Mr Dale QC, for Helilogging, advised thatthe primary grounds of appeal concern the non-disclosure of Mr Lewis' 1999 report(ground 1), the "vibration flight" (ground 3) — a flight we have yet to detail as noreference was made to it until after this proceeding commenced — and breach ofthe seven-stage process (covered by grounds 2–4 and 6). Mr Dale said these groundsare particularly important because of the reliance by the director and Mr Fogden onMr Lewis' 23 July 2005 letter. Mr Dale argues that the director must have been awarethat he would not have been able to defend a decision to decline the exemptionapplication without this letter. He submits there is no credible explanation forthe disclosure breaches and judgment against the CAA in both deceit and misfeasanceshould have followed.[176] Mr Dale explained the essential thesis of Helilogging's claims in these terms:[T]he Director, in spite of he and the CAA having encouraged the applicationsin 2002-2003, changed his mind in the period between August and November2004, recognised he lacked the grounds to decline, and so set about lookingfor reasons to do so. In furtherance of this strategy he removed Mr Lanhamfrom the project [because he had recommended the applications be granted],offered the seven stage process for the exchange of information but which hebreached, engaged Mr Lewis either without any regard to his expertise andrelevant experience, or alternatively knew that the Lewis [letter] wasmisleading. The result was the appellants were deprived of material that theysay was plainly relevant to the decision of whether or not to judicially review.The appellants' case is that but for the CAA's conduct they would havepursued an application for judicial review in either November/December2004, or post August 2005. In respect of the former the appellants' case wouldhave been that the Director had already determined the fate of the appellants'applications but would not have been able to rely upon the Lewis [letter].In respect of the latter the Director's untrue statements about the safety ofthe Wessex operated both to deprive the appellants of funding for judicialreview, and that the decision not to pursue available legal remedies was madeon the basis of incomplete information. The appellants say therefore that the fraudulent conduct of the respondentmeant that the appellants suffered the loss of a chance to proceed by way ofjudicial review and which would have succeeded, either because the Directorwould no longer have valid grounds to refuse and/or the decision would havebeen taken away from [the director]. (Footnotes omitted.)Ground 1 — the 1999 Lewis report[177] Mr Lewis sent a report to the CAA on 12 January 1999 at Mr O'Malley'srequest recommending that a restricted category airworthiness certificate be issued forhis Wessex Mk 5 helicopter. This report followed Mr Lewis' participation in groundrunning and six test flights in late 1998, none of which involved carrying an externalload.[178] Mr Lewis set out in his report the three tests he conducted:(a) Initial ground running and hovering to check engine and airframecontrol systems and to establish correct rotor tracking and balancing.(b) A handling assessment throughout the speed range and up to an altitudeof 2000 feet.(c) Performance and handling tests in accordance with the specified flighttest schedule.[179] Mr Lewis found no abnormalities on engine starting and ground running.He reported that in the hover, engine parameters were mid-range, vibration was normaland blade tracking was good. He noted the presence of lateral vibration when air speedwas increased to 100 knots and during "run-on landings" on the grass airfield.Mr Lewis said this could be due to "some sticktion" in the main rotor blade dampers.He observed that the aircraft had not flown for nearly two years and suggestedthe dampers should free up with more use. He noted that the port engine showed"excessively high PTIT" (power turbine inlet temperature) when checked againstaltitude and ambient temperature but said the PTIT gauge "in the higher range ispossibly faulty". He said the engine compressors may need to be washed which mayreduce the PTIT. After making these specific observations about the particular WessexMk 5 helicopter, Mr Lewis stated:The Wessex (single and twin engine variance) is a well proven helicopter thathas operated successfully around the world in a service and civilian capacity.It has operated with the Queen's Flight in excess of thirty years and has provenreliability.RecommendationIt is recommended that a Restricted Category Certificate of Airworthiness beissued for the Westland Wessex [Mk] 5.[180] In his covering email, Mr Lewis commented "[f]or an old aircraft, I was veryimpressed with it and thoroughly enjoyed my flights".[181] An airworthiness certificate in the special experimental category was issuedfor this helicopter on 18 January 1999. This was the helicopter that subsequentlycrashed in Motueka in February 2001 while carrying out heli-logging operations,instantly killing the pilot.[182] As noted, Helilogging claimed that Mr Lewis dishonestly failed to disclosethe existence of his 1999 report in his 23 July 2005 letter. The Judge accepted that"it would have been much better, and more complete" for Mr Lewis to have referredto his earlier advice.41 However, the Judge considered that the reports were providedfor different purposes and there was no inconsistency between them. Mr Lewis' 1999report stated that the particular aircraft he flew (a Wessex Mk 5) was airworthy.His July 2005 letter did not suggest that Wessex aircraft were not airworthy, only thathe did not consider it safe to use the Wessex for heli-logging. In both reports Mr Lewisstated that the Wessex aircraft had a good reputation. The Judge concluded:[244] The 2005 advice relates specifically to the type of operation proposed.Mr Lewis could have recorded that he had duly approved the airworthiness ofa Wessex helicopter in New Zealand in 1999 without it affecting his [2005]advice in any way.[183] Helilogging challenges these findings contending that Mr Lewis was aware atthe time he wrote his 1999 report that the aircraft was going to be used for heli-logging.However, Mr Lewis made no mention of this in his report. In his brief of evidence, hesaid he was not aware of this. Mr Lewis was cross-examined on this topic butmaintained he could not recall it being discussed:Q. Both Mr Ward and Mr Potts are going to say, in evidence, that duringthe period that – when you were there, there was lots of discussionabout using the Wessex for helilogging. Do you recall that?41 At [243].A. No.Q. Might that have occurred?A. I'm sorry?Q. Might that have occurred?A. It probably could have occurred. I was not really aware of it at all.Q. In fact Mr Ward is going to say that you were present when they wentthrough the process of fitting the saddle which is a harness and hookused for helilogging, do you remember that?A. No.Q. Might that have occurred?A. Not that I'm aware of. I don't know what the saddle is.Q. And there was also a man named Mr Clark who worked for Mr Potts,he was there too?A. I wouldn't know.Q. Is it possible that because of the lapse of time you've forgotten aboutthese issues?A. No, I don't recollect any saddle. I don't recollect a Mr Clark. I don'tknow what the saddle is.[184] Mr Dale describes Mr Lewis' answers as "concessions". We do not view themthat way.[185] The only "Mr Ward" to give evidence was David Ward, an aeronauticalengineer who was contacted by Messrs Ford and Gordon to provide Wessex andGnome engineering training courses (not Grant Ward, the pilot with whom Mr Lewisconducted some of the flight trials and who was later killed in an accident while flyinganother type of ex-military helicopter). David Ward said he discussed with Mr Lewisthe differences between the various Wessex aircraft. However, contrary to the premiseof the question put in cross-examination to Mr Lewis, Mr Ward did not say in hisevidence that he discussed with Mr Lewis that the helicopter was to be used forheli-logging:Q. Do you know a man named Bernie Lewis?A. I met him once.Q. And when was that?A. When I was doing the training for Metro Air down in Christchurch.Q. Now you have discussed in your witness statement the differencesbetween a Mark 2 in 2004 and a Mark 52 back in the [1960s].When you were speaking to Mr Lewis in 1998 did you have anydiscussions with him about the differences between these varioushelicopters?A. Yes, we came – as part of the training course we were required to bringthe engines out of – they were put into – inhibited to stop them goingrusty, and as part of the training course the engineer had to bring themout of suspension and that involved [g]round running the engines.When Mr O'Malley was told about this, that's when he arranged forMr Lewis to come down and I met him. We sat in the cockpit togetherfor a good hour while we ran through the differences that were inthe aircraft that we were, to the, sorry, the aircraft we were workingon as opposed to the aircraft that he'd flown in the 1960s.Q. Okay, and did Mr Lewis have anything to say about that issue, canyou remember?A. He was quite impressed.[186] Ronald Potts — the other person who counsel said would give evidence thatMr Lewis knew the Mk 5 would be used for heli-logging — is an aircraft engineerwho was contracted by Metro Air to maintain the Wessex Mk 5. He was responsiblefor certifying the proper maintenance of that aircraft at the time it crashed in 2001.Mr Potts stated in his prepared brief of evidence that Mr Lewis carried out"helilogging pilot and accreditation flights for pilots wanting to become accredited tofly the [Mk 5]". Mr Dale said Mr Potts was "unshaken in cross examination".However, Mr Potts agreed in cross-examination there was no such thing as heliloggingpilot accreditation:Q. Now in your evidence you talk about Mr Lewis doing accreditationflights for pilots for, and you describe it in your evidence ashelilogging accreditation flights. Do you recall that in your evidence?A. Yeah, but that may be misunderstood. He was giving straight flightaccreditation for the helicopter, yeah.Q. And when you're doing that you are certifying that the pilot has doneX number of hours in a certain type of helicopter and hasn't managedto crash it in the process and therefore can be given a type, aconversion certificate for that, is that right?A. Correct.Q. And it's got nothing to do with as you put it in your evidencehelilogging pilot accreditation has it?A. No because there's no such thing.[187] Notably, Mr Potts did not say he discussed with Mr Lewis that the helicopterwas intended to be used for heli-logging.[188] For the following reasons, we entirely agree with the Judge's rejection ofHelilogging's allegation that Mr Lewis dishonestly omitted reference to hisJanuary 1999 report in his July 2005 letter.[189] First, the claim that Mr Lewis would act dishonestly and with malice towardsHelilogging is implausible. No reason why he might do so has been suggested.Mr Lewis had had a long and distinguished career and been recognised by his peersfor his outstanding service to the aviation industry. The contemporary correspondencediscloses Mr Lewis showed no animus towards Helilogging or its advisers. On thecontrary, he was very complimentary of Mr Barclay's report and was consistentlyenthusiastic about Wessex helicopters generally.[190] Secondly, there was no direct evidence that Mr Lewis knew at the time he wrotehis January 1999 report that Mr O'Malley intended to use the Wessex Mk 5 helicopterfor heli-logging. He made no mention of this in his report. Mr Lewis said he wasunaware of this and did not recall it being discussed with him. Neither Mr Ward norMr Potts said otherwise.[191] Thirdly, as the Judge said, Mr Lewis' 1999 report was not written forthe purpose of approving the use of the helicopter for heli-logging and the CAA didnot authorise this. The purpose of the report was simply to confirm whether thatparticular aircraft was airworthy and it was relied on by the CAA in issuing a specialexperimental category airworthiness certificate for it.[192] Fourthly, given both reports were addressed to the CAA, Mr Lewis cannot havebeen attempting to conceal anything from it. In any event, as Mr Dale pointed out, itappears that the CAA was already aware in early 1999, prior to Mr Lewis' report, thatMr O'Malley wanted to use the Wessex Mk 5 for heli-logging, which the CAAconsidered would be in breach of the hire or reward restriction. An entry in the CAAdatabase relating to this helicopter records the following non-compliance issuealongside the date 4 January 1999:Enf: NC. Information given that Messrs Ward, O'Malley & McIlroy are aboutto commence log lifting operations for DOC using a Wessex [Mk 5] helicopter.This helicopter is only in the experimental category and not to be used for hireor reward.[193] In any event, none of this advances Helilogging's case given its recentconcession, contrary to its pleaded claim, that the CAA is not vicariously liable forany dishonesty on the part of Mr Lewis.[194] Helilogging also claimed that "the CAA dishonestly withheld" the 1999Lewis report. The Judge rejected this claim, finding that the report was not identifiedat the time Helilogging's proposal was being considered due to the CAA not havingan integrated document retention system.42 Helilogging does not challenge the findingthere was no deliberate non-disclosure of the 1999 report by the CAA. However,Mr Dale submits the Judge omitted to deal with the "reckless indifference" claim,referring to Helilogging's plea that the CAA acted recklessly and was indifferent as towhether the contents of the 2005 Lewis letter were true. Relevantly, the supportingparticulars alleged that the CAA failed to make any adequate enquiries into the historyof the CAA's dealings with "the Westland helicopters" in spite of an express requestby the director to do so in his memorandum dated 19 November 2004. Mr Dalesubmits there was no credible explanation from the CAA as to why the 1999 reportwas not disclosed despite this request, nor was there any detailed evidence to supportthe Judge's conclusion that the explanation lay in the lack of an integrated documentretention system.[195] Mr Fogden was responsible for coordinating the information sought bythe director as part of the seven-step process detailed in the director's memorandumof 19 November 2004. Mr Fogden said he was not aware of the existence of Mr Lewis'1999 report until 2019. He explained that this report was stamped as having been42 At [245].received by the Safety Certification Group, the group within the CAA later known asthe Aircraft Certification Unit (ACU). The 1999 report would therefore have beenincluded in the ACU files for that particular helicopter. Mr Fogden said he was notpart of the ACU group. He recalled that at the time Helilogging's applications werebeing considered, the CAA's filing systems were a mix of hard copy and electronicand there was also some separation between the filing systems for different parts ofthe CAA. He said this made it difficult to find documents filed in different parts ofthe organisation.[196] This evidence supports the Judge's finding that the 1999 report was not broughtto attention or considered in the course of determining Helilogging's applications.Indeed, there was no evidence to contradict that finding.[197] The claim that "the CAA" was "recklessly indifferent" to whetherthe contents of Mr Lewis' 2005 letter were true by failing to make any adequateenquiries into the history of the CAA's dealings with the Wessex despite the director'srequest on 19 November 2004 faced formidable obstacles and we reject it forthe following reasons.[198] First, there is no logical connection between the director's request on19 November 2004 for updated information concerning the history of the CAA'sdealings with "the Westland helicopters" and the CAA's appraisal of Mr Lewis'subsequent letter dated 23 July 2005. The director's information request was answeredby Mr Fogden in his report on 23 December 2004. The prospect of Mr Lewis'engagement had not even arisen at that stage. It follows that any shortcomings insearching for relevant information about this history cannot evidence recklessindifference to the truth of the contents of Mr Lewis' later letter.[199] Secondly, Mr Fogden was asked in cross-examination to explain why he didnot locate the 1999 Lewis report in response to the director's information request.Mr Fogden's answer, which was consistent with his evidence-in-chief, appears to usto be entirely plausible and it was not challenged:Q. And so I wonder if you could help us then on how it could be thatwhen there's a Coroner's inquiry the report pops up, someone finds itand when you are charged with this task it doesn't. Can you help usthere?A. I would suggest that the report, the 1999 report, may have been filedunder either the [Metro Air Mk 5] CAA file for that aircraftregistration or under the Metro Air file. Now by the time I waslooking at the records, [Metro Air Mk 5] was destroyed and I didn'tconsider looking [at] the [Metro Air Mk 5] records for a letter I wasn'teven aware of the existence of, and I could say I think perhapsthe same thing for Metro Air. If I was aware of the existence ofthe letter I would have had something to go looking for but not beingaware of the existence of the letter and not having it in the files I'dlooked at, I didn't know what I wasn't looking for.Q. Okay [Mr Dale then moved to a different topic].[200] Thirdly, as we will demonstrate, Mr Fogden was not the only senior CAAoperative who did not locate the 1999 Lewis report or consider that such a report wouldbe relevant to Helilogging's exemption application.[201] Mr Remacha made no mention of the 1999 Lewis report in his comprehensiveairworthiness report dated 22 May 2002 which included a brief section reviewingthe history of the Wessex Mk 5 certification and operations in New Zealand.Mr Remacha was involved in the early discussions with Messrs Ford and Gordonregarding Helilogging's intended endeavours using the Wessex Mk 2 helicopters andhe sent a copy of his report to Mr Gordon. It was not suggested Mr Remacha wasremiss in failing to locate or refer to Mr Lewis' 1999 report for the purposes of hisMay 2002 report or subsequently.[202] Mr Gill, the team leader of registration and airworthiness in the airworthinessunit of the CAA at the relevant time, was closely involved in assessing and advisingon Helilogging's exemption application. Helilogging does not contend that Mr Gillwas dishonest, motivated by malice or that he ought to have tracked down Mr Lewis'1999 report. It will be recalled that Mr Barclay described Mr Gill at the time as being"straight up and down".43 Mr Gill said he was not aware of this report. Although hewould have been aware that such a report would have existed to support the issue ofan airworthiness certificate, he did not consider it would be relevant to Helilogging's43 See Mr Barclay's email to Messrs Takarangi, Ford and others sent on 19 May 2005 and quoted at[124] above.exemption application. Further, he explained that a report of this nature, specific toa particular helicopter, would not normally be shared with other members of his unit:Our Unit is responsible for processing and issuing airworthiness certificates.It is a small unit and we share information. But often applications are dealtwith by one person. For example, the application filed in relation tothe [Metro Air Mk 5] was handled for CAA by my brother, Peter Gill.He approved the Special Experimental Category Airworthiness Certificate forthis helicopter. The report provided by Mr Bernie Lewis dated 12 January1999 was addressed to Peter for this reason. This report was requestedtogether with a report from a maintenance engineer as part of the standardrequirements for this Certificate related to this one helicopter. It was notintended that the reports provided would then be circulated more widelywithin our Unit or more widely. The reports were not intended or used wherewe were considering other aircraft or the type of aircraft more generally.The reports remained in the airworthiness certification file for the particularaircraft.This is illustrated by the fact that I was not aware of the report from Mr Lewisin relation to [the Metro Air Mk 5] during my work on the Heliloggingapplications in the period 2004 and 2005. This was not unusual. The reportwas not relevant to my work at the time. Mr Lewis' report was provided forthe limited purpose of processing the Special Experimental CategoryCertificate for [the Metro Air Mk 5]. The report was held in the file forthis helicopter and was not available on any wider basis. It was not intendedor treated as a general report on the suitability or quality of the Wessex moregenerally.[203] Ms MacIntosh, chief legal counsel for the CAA at the relevant time, could notrecall seeing the 1999 Lewis report. Her cross-examination on this topic was asfollows:Q. And are you aware now, well I think you are aware, that Mr Lewishad prepared a report in 1999 on the same, on the [Mk 5] aircrafthadn't he?A. I, I don't recall, I don't, I don't remember discussing that at all.Q. Do you remember arranging for a copy of that report to be providedto the coroner following the 2001 crash?A. No I don't, I don't recall.Q. Can you assist His Honour in explaining how the [1999] reportappears in 2001 for the Coroner, appears in 2015 when discovery inthis proceeding is given but doesn't appear in 2005 when Mr Lewis isgiving advice to the director? Can you account for that?A. No, I have no idea.[204] Fourthly, we consider Helilogging has significantly overplayed the importanceof Mr Lewis' 1999 report. We share Mr Gill's assessment that this report, which wasprepared for a limited purpose, was not relevant to Helilogging's exemptionapplication. Helilogging's contrary contention is premised on the 1999 report havingbeen prepared by Mr Lewis in the knowledge that the Wessex Mk 5 helicopter wouldbe used for heli-logging. We have already explained why we do not accept thatcontention.Ground 2 — recklessness in respect of the 2005 Lewis letter[205] The sixth amended statement of claim alleges that the CAA acted recklesslyand was indifferent as to whether the contents of the 2005 Lewis letter were true.We have set out the five pleaded particulars at [163] above. Only the first of these isrelevant to this ground of appeal — failing to make any or any proper investigationinto Mr Lewis' qualifications to give an opinion on the safety of the Wessex Mk 2.[206] Ground 2 of the notice of appeal reads:8. The Judge failed to adequately address the appellants' submission attrial that Messrs Jones and Fogden were reckless in respect ofthe engagement of Mr Lewis in failing to ask:8.1 When he last flew a Wessex MK2 or equivalent.8.2 What the reasons were for his concerns about [the] safety ofthe Wessex.[207] Mr Dale submits that "all of the ensuing problems could have been avoided ifthe Director or someone from the CAA had asked Mr Lewis [these] two simplequestions". This is presumably because Mr Lewis' lack of relevant current knowledgeand expertise would have been identified and he would not have been engaged bythe CAA in consideration Helilogging's exemption applications. Mr Dale says noCAA witness gave any explanation for not asking these questions and he saysthe Judge did not deal with this point in any detail in the High Court judgment.[208] We have described the genesis of Mr Lewis' involvement with Helilogging'sexemption application. He had been engaged to assist the CAA on the agriculturaloverload project. Knowing of Mr Lewis' experience and technical background,including as a test pilot, Mr Fogden asked Mr Lewis whether he could assist inreviewing Mr Barclay's report. Mr Lewis agreed to do so. Mr Fogden recalled thatduring this initial discussion Mr Lewis gave a "brief resumé of his experience as aWessex pilot and test pilot". Notwithstanding that this discussion took place 14 yearsearlier in 2005, Mr Dale pressed Mr Fogden during the hearing to be more preciseabout the detail of the conversation:Q. So can you be more precise? Did he tell you when, for example, helast flew a Wessex?A. I may not have asked that question.Q. That wasn't my question. Did he tell you when he last flew a Wessex?A. I don't recall him telling me that, no.Q. Well, wouldn't that have been the most obvious question in the worldto ask?A. In hindsight it may have been one of the questions I could have asked.Q. Well, isn't it the most obvious question to ask?A. Well, my interest was primarily in was he able to assess Mr Barclay'sreport and the technical aspects of that, and Mr Lewis' response to thatwas yes, he would have a look at it for me.Q. So are you saying in this initial discussion there was no reference byeither of you to when he last flew a Wessex?A. I don't recall if there was or not. I don't believe there was.Q. And you're telling His Honour that at no stage did it occur to you toask? Is that your evidence?A. You're asking about that particular meeting? No.[209] Mr Dale then asked Mr Fogden whether he ever asked Mr Lewis when he lastflew a Wessex. Mr Fogden said Mr Lewis told him during this meeting or shortlyafterwards that he had also conducted type conversion training for two pilots onthe Wessex. Mr Fogden could not recall whether this information was volunteered orprovided in response to a question he asked.Q. Did you ever ask Mr Lewis when he last flew a Wessex?A. It came into the conversation that he had flown the Wessex inthe South Island when it was owned by Metro Air and he had trainedsome pilots on that. Whether that was one of my first questions atthe first meeting to him or whether that came out shortly afterwardsbut I was aware that he had flown the Wessex earlier during trainingfor type conversion training for two pilots.Q. So when do you think that discussion took place?A. I can't be sure. Either during this meeting or shortly afterwards.Q. And did he say that in response to something you asked him?A. I can't recall exactly how the conversation went. He may havevolunteered that information or I may have asked him. I can't be sure.[210] Mr Lewis was also cross-examined on this topic:Q. In that first meeting did Mr Fogden ask you about the extent of yourexperience with Wessex helicopters?A. I guess he did.Q. Do you recall what your answer was?A. I told him, I've told him that it's a lot of the development work,acceptance work for the Royal Navy on the Wessex [Mk 1] and thenI flew the Wessex [Mk 2] with, oh, [Mk 52] with the Iraqis and withBristow Helicopters with the Wessex [Mk 60].Q. So that's what you would describe as 40 year old experience?A. Yes.[211] Mr Dale also drew our attention to the following exchange (61 pages later inthe transcript):Q. You see, you were asked to give independent expert evidence forthe CAA, weren't you, correct?A. Yes.Q. Well did anybody ask you the kind of questions that I've asked youabout your experience and expertise? [The earlier questioningcovered Mr Lewis' lack of familiarity with modifications that hadbeen made to the Wessex helicopters since the 1960s such as to thecomputers and by the addition of fuel drains and a voltmeter.]A. I'm sorry, say again?Q. Did anybody ask you the kind of questions that I'm asking you aboutyour experience and expertise?A. I don't think so, no.[212] Mr Lewis' 2005 letter can be criticised for its reference to some negativefeatures of the Wessex aircraft with which he was familiar but without researchingwhether these features had been modified subsequently. However, that is not the issuehere. This ground of appeal is directed to whether the CAA was reckless in engagingMr Lewis in the first place.[213] Mr Lewis told Mr Fogden about his experience with the Wessex helicoptersduring his time with the RAF, the Iraqi Air Force and with Bristow in the North Sea.This was his primary experience and it is confirmed in his 2005 letter. However,the evidence shows that he also told Mr Fogden that he had conducted flightconversion training with Metro Air on the Wessex Mk 5 in December 1998.[214] At the time Mr Lewis provided his 2005 letter, the only Wessex in the sameseries that had operated commercially in New Zealand was Mr O'Malley's Mk 5(which crashed in February 2001). Mr Lewis provided flight conversion training andflight trials on that aircraft in 1998. Because these types of Wessex aircraft hadprimarily been operated overseas by the military and by Bristow in the North Sea, itmay well be that Mr Lewis had greater flight experience with these helicopters thananyone else in New Zealand at the time. The criticism that his experience related tothe 1960s needs to be considered in the context of the age of these aircraft which weremanufactured between 1958 and 1970. We note that Mr O'Malley's Mk 5 wasmanufactured in 1964 and Helilogging's Mk 2 helicopters in 1965.[215] Mr Barclay also considered that Mr Lewis had relevant expertise in this contextand listed him in a June 2005 presentation to the director and Mr Fogden as beingan adviser supporting Helilogging's application. It may be recalled that in his emailto Messrs Takarangi, Ford and others on 19 May 2005, Mr Barclay emphasisedMr Lewis' general standing and particular experience with Wessex helicopters.For ease of reference, we repeat the relevant extract:[Mr Lewis] is [a] very experienced and respected helicopter (test) pilot andwas involved in the early Wessex development work, including time with[Rolls Royce] on the Gnome engine development! He was also allowed to dosome freelance flying with Bristow's in the Wessex.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 had 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 havea solid benchmark for the report.[216] We can well understand why Mr Fogden considered Mr Lewis would be ableto provide an independent expert opinion on whether this type of aircraft would besuitable for heli-logging. We are not at all persuaded the CAA was reckless inengaging him.[217] The second limb of this appeal ground is that the CAA was reckless "in respectof the engagement of Mr Lewis" in failing to ask what his concerns were aboutthe safety of the Wessex. This limb does not marry with any allegation in the statementof claim. In any event, Mr Lewis plainly understood he was being asked to advise onthe suitability of the aircraft for heli-logging and to report any concerns.Ground 3 — the vibration flight[218] In its sixth amended statement of claim, Helilogging alleged that the CAAdishonestly withheld concerns expressed by Mr Lewis about the safety of the WessexMk 2, in particular because of vibration issues that occurred in a flight in 1999, withthe result that Helilogging and its experts were denied the opportunity of addressingthose concerns. Helilogging also claimed that Mr Lewis failed to disclose to the CAAhis alleged concerns about vibration issues, either in his 2005 letter or in his othercommunications with them. In other words, Helilogging's claim is that Mr Lewis toldthe CAA about the vibration flight but did not mention it in his letter. Further, forwhatever reason, the CAA did not refer to this as a reason for declining the exemptionapplication despite its obvious relevance to the safety issue. This is a curious andcounterintuitive claim, which the Judge described as "somewhat complicated" and"convoluted".44[219] Before addressing this claim and the evidence relevant to it, we first need todescribe the so-called "vibration flight" and explain how and when it emerged asa feature in this case.44 High Court judgment, above n 3, at [249] and [250].[220] After these proceedings were filed in 2014, the CAA applied for summaryjudgment, contending that the claims were time barred. For completeness, we notethat Associate Judge Osborne granted the application and entered summary judgmentfor the CAA on 13 October 2015.45 This Court subsequently overturned this judgmentfinding that the factual contest could only be resolved at trial, particularly in view offresh evidence adduced on appeal by Helilogging, including the evidence ofMr Potts.46 The Supreme Court declined to give leave for a further appeal.47[221] Mr Lewis provided two affidavits in support of the summary judgmentapplication. His 1999 report was attached to the second of these affidavits. In the firstaffidavit, dated 21 October 2014, Mr Lewis answered a criticism in Helilogging'sstatement of claim that he did not have any experience flying the Wessex Mk 2.In the course of setting out his experience, Mr Lewis referred to the type conversiontraining he had conducted in the Wessex Mk 5 with Mr O'Malley and Grant Ward.He then referred, for the first time in the present context, to an incident that has sincebeen labelled the "vibration flight". This flight took place on 25 February 1999 andwas described by Mr Lewis in his first affidavit as follows:At the end of that time I flew with Mr Ward from Christchurch to Wellington.We stopped on the way in the Marlborough Sounds because Mr Ward wantedto complete two pieces of work. He was carrying logs on a long line.The work only took about [half] an hour but I was very concerned because ofthe excessive vibration which was caused by this load. The vibration was verysevere, more than I have ever felt in an aircraft before or since.[222] In his subsequent brief of evidence for the present proceedings, dated 9 August2018, Mr Lewis said he was not sure if they were indeed carrying logs and said it mayhave been a small timber hut. He added that the load was being carried usinga 200-foot strop:In preparing this affidavit I have considered this further. I have a strongrecollection of us lifting a small timber tramping or hunting hut somewhere inthe Marlborough Sounds and carrying it for what I think was aroundfive minutes before dropping it off somewhere else in the MarlboroughSounds. I do not know why we were carrying out this job.45 Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand [2015] NZHC 2503.46 Heli-Logging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand [2017] NZCA 196.47 Civil Aviation Authority of New Zealand v Helilogging Ltd (in rec and liq) [2017] NZSC 132.I cannot now be completely sure that we did lift any logs on a long line duringthis trip and it may be that we only lifted the hut on a long line.[223] However, Mr Lewis maintained he clearly recalled the excessive vibrationexperienced while carrying this external load:I do still have a clear recollection of the excessive vibration as a result ofcarrying this external load and reiterate that this vibration was very severe andmore than I have ever felt in an aircraft. It only occurred when it was liftingthe external load.[224] Mr Dale cross-examined Mr Lewis extensively on whether he told Mr Fogdenor the director about this vibration flight and why no mention was made of it in his2005 letter:Q. And so did you also tell [Mr Fogden] about the vibration flight thatyou say occurred?A. I don't think so.Q. Well, I take it, for a start, you don't remember specifically?A. No I don't.Q. So you are just guessing as to whether you told him or not?A. Yeah probably.Q. Probably guessing?A. Probably guessing or probably, I don't know.[225] Mr Dale suggested that the vibration flight would have been an obvious thingto raise with Mr Fogden. Mr Lewis responded to this proposition, which wasrepeatedly put, "I don't really know", "I can't really remember", "I really can'tremember, I'm sorry". Mr Lewis was pressed further:Q. And the issue was the safety of the Wessex. So are you tellingHis Honour that in all of those meetings, not once did it occur to youto mention to them that you had been in a flight that you describe asfrightening?A. I don't think I did.Q. And you don't think that it's a little odd that you wouldn't mentionsomething as important as that?A. I – it's very hard to say. I could well have done, I could well havedone, but I'm not sure.[226] Mr Lewis was also questioned whether he mentioned the vibration flight tothe director:Q. Did you tell [the director] about the vibration flight?A. I could have done. I can't remember, I'm sorry.Q. Again, if [the director] is asking you about what you know aboutthe Wessex isn't it the obvious thing to tell him?A. Probably, I may have told him. I can't remember.Following further questions and similarly inconclusive answers, Mr Dale asked:Q. So can we leave this part of the case on the basis that perhaps youdidn't mention the vibration flight? Didn't mention to either[the director] or [Mr] Fogden the vibration flight?A. Could be. I don't know.Q. And indeed, when you sat down to write your [2005 letter] you didn'tmention the vibration flight, did you?A. No, I didn't. I don't know why either.[227] Mr Dale then suggested that Mr Lewis was lying about the vibration flight andit was simply a fabrication. He suggested this explained why Mr Lewis did notmention this incident to Mr Barclay:Q. Well I suggest to you one reason is it's not true? You didn't havea vibration flight and you didn't have those concerns?A. Oh yes I did, I can assure you.[228] Despite these questions and answers, Mr Dale submits that Mr Lewis madea "critical admission where he expressly acknowledged that he thought he had toldMr Fogden about the vibration flight in a conversation with Mr Fogden afterthe [June 2005] PowerPoint presentation". This is a reference to the presentationgiven by Mr Barclay to the director and Mr Fogden at the CAA's offices on13 June 2005 in which it was claimed that Mr Lewis was supporting Helilogging'sapplication. Mr Fogden spoke to Mr Lewis after this presentation because he wassurprised to discover that Mr Lewis was advising Helilogging. The followingexchange in Mr Lewis' cross-examination about this telephone discussion is relied onas being the "critical admission":Q. Do you tell him about the vibration flight?A. I would imagine so Q. Tell him you think about the vibration flight?A. Yes.[229] However, Mr Fogden was quite clear that he was not told about the vibrationflight and he maintained that position in cross-examination:Q. So according to your testimony Mr [Fogden] when you andthe director ask [Mr Lewis] about his concerns [he] does not tell youabout the flight, the vibration flight here and he does not tell you thathe's prepared a report on the Wessex [Mk 5] in 1999. Is that yourevidence?A. That's correct, he didn't.[230] As can be seen, Helilogging advanced two alternative theories incross-examination of Mr Lewis. One theory was that Mr Lewis did not tell Mr Fogden,the director or Mr Barclay about the vibration flight because it was an untruthfulfabrication. The Judge rejected that allegation:48First, [Helilogging] contend[s] that this flight may never have occurred andthat Mr Lewis made this up to bolster his safety concerns. I do not accept this.I accept Mr Lewis' evidence that he did experience this event inMr O'Malley's Wessex helicopter, and that it concerned him at the time, butthat he made no formal report about the incident.[231] This finding, which is well-justified on the evidence, is not challenged onappeal. The claim that the CAA was vicariously liable for any dishonesty by Mr Lewishas fallen away. Hence, the focus in this ground of appeal is on the alternative theorythat Mr Lewis told Mr Fogden about the vibration flight, but this safety concern wasnot referred to in the decision or otherwise conveyed to Helilogging. The Judge foundit was unlikely Mr Lewis raised the vibration issue in oral discussions with Mr Fogden48 High Court judgment, above n 3, at [247].or the director. The Judge noted that it was not referred to in Mr Lewis' written adviceand he found that it played no role in the director's final decision.49[232] We agree with this assessment of the evidence. It is clear from Mr Lewis'evidence that he had no actual recollection of telling Mr Fogden or the director aboutthe vibration flight. This is unsurprising. Mr Lewis was being asked to recallunrecorded conversations that took place more than 14 years earlier. DespiteMr Lewis' so-called critical admission — that he "would imagine" he had toldMr Fogden about the vibration flight — we agree with the Judge it is unlikelyMr Lewis did mention the vibration flight to Mr Fogden or the director. That isthe most likely explanation for why this issue was not referred to in Mr Lewis' 2005letter and neither Mr Fogden nor the director had any recollection of it beingmentioned.Ground 4 — safety as the primary ground for refusal[233] This ground of appeal is that the Judge erred in concluding that safety was notthe principal ground on which the director based his decision.50 The relevantparagraph of the judgment, set out below, appears at the end of a section rejectingHelilogging's claim that Mr Lewis' advice was dishonest and Mr Fogden andthe director both dishonestly adopted the letter knowing it was flawed.Having rejected these claims, the Judge added:[239] Finally it is relevant that [the director's] decision did not turn onMr Lewis' advice. Mr Dale described it as pivotal, and the "decisive knockoutblow". But it was only one of eight factors listed in [the director's] 19 Augustfile note [attached to the final decision]. Mr Fogden put greater weight on itin his advice to [the director], but it is plain from the other materials, includingthe preliminary decision, that the application would have been declinedirrespective of Mr Lewis' opinion.[234] Mr Dale says this misses the point. He submits the director's reliance onthe 2005 letter is a question of fact and he rhetorically asks, "why obtain it and referto it in detail if it was not needed?". We readily accept that the director relied onMr Lewis' advice. This is not controversial and is plain on the face of the decision.49 At [250].50 At [239].However, the point the Judge was making was that the advice was not pivotal, asHelilogging contended, because it is clear from the contemporaneous record thatthe application would have been declined for other reasons, irrespective of Mr Lewis'advice. That appears to us to be quite plainly correct.[235] Mr Dale then postulates two counterfactuals. The first is that if the directorhad declined Helilogging's exemption applications without Mr Lewis' 2005 letter,Helilogging might have successfully pursued judicial review. Another counterfactualis said to be that if the "misconduct" was discovered at the time but post-refusal,the director would have been removed from the process. However, these are causationtheses to support the loss of chance claim and are premised on assumed prior findingsof dishonesty or misfeasance in connection with Mr Lewis' 2005 letter.Having rejected Helilogging's appeal against the Judge's findings that there was nosuch dishonesty or misfeasance, this submission need not be considered. In any case,the alleged errors of fact and opinion in Mr Lewis' 2005 letter were manifest andimmediately apparent to Mr Barclay. He drew the alleged errors to Mr Ford's attentionat the meeting on 23 August 2005 and Mr Castle advised on 22 December 2005 thatthere were good grounds to challenge the director's decision by way of judicial review.[236] Next, Mr Dale says the Judge's finding is also challenged on another level,namely it is doubtful Mr Fogden or the director would have felt confident to declinethe exemption application without Mr Lewis' 2005 letter. Mr Dale acknowledges thatthis point was not expressly put to Mr Fogden at the hearing, but he says the inferenceis obvious. This submission also goes to causation, not breach. Absent breach(dishonesty or recklessness by Mr Fogden or the director in connection with Mr Lewis'letter), the question of causation is not reached.Ground 5 — the effect of the director's conduct[237] This ground of appeal is that the Judge erred in failing to place any or anysufficient weight on the effect of the dishonest statements about the safety ofthe Wessex Mk 2 on the availability of funding for Helilogging to pursue judicialreview. It is said that the Judge erred in his determination of whether:(a) The dishonest conduct caused Helilogging not to pursue an applicationfor judicial review.(b) But for the CAA's conduct, an application for judicial review wouldhave been pursued and whether there was a chance the applicationwould have succeeded.(c) Damages should be calculated on the basis of a loss of a chance.[238] This ground is also directed to questions of causation and loss predicated on"dishonest statements about the safety of the Wessex Mk 2". Having rejectedHelilogging's appeal against the Judge's findings there was no such dishonesty,this ground need not be addressed.Ground 6 — findings contrary to the weight of evidence[239] This is a general appeal ground asserting that the Judge's findings that the CAAwas not liable for misfeasance or in deceit were contrary to the weight of the evidence.[240] We have already addressed the specific points raised on appeal as to the allegeddeceit and recklessness in respect of Mr Lewis' letter and explained why we agree withthe Judge's factual findings rejecting those allegations.[241] Mr Dale focused his submissions under this ground of appeal on the director's9 November 2004 memorandum.[242] As noted, Helilogging pleaded that the CAA dishonestly represented inNovember 2004 that it was still considering Helilogging's applications on their meritswhen it was not. In particular the CAA was said to have dishonestly withheld thatthe director had already determined, by 9 or 15 November 2004 at the latest, thatthe applications had been, or would be, declined. The Judge rejected this claim,finding that the document was only a draft. In support of this conclusion, the Judgeobserved that the document was not signed and some of the addressees (all CAApersonnel) did not recall receiving it. The Judge found that after consulting withMs MacIntosh and Mr Gill, the director decided not to circulate the memorandum inthis form. Further, Ms MacIntosh and Mr Gill both made detailed comments onthe draft. It is unlikely they would have done so if this was a memorandum recordinga decision already made. The Judge's conclusion was also supported bya contemporaneous document prepared by Ms MacIntosh which described Mr Gill'scomments on the memorandum as "comments on draft memo". Helilogging's claimthat a final decision was made on 9 November 2004 was therefore inconsistent withthe director's subsequent memorandum dated 19 November 2004 sent toMessrs Lanham and Allen setting out the further information he required andthe seven-stage process he intended to follow.51[243] The Judge continued:[166] Neither was anything hidden. The original draft was intended to besent to a number of persons, but after consulting with Ms MacIntosh andMr Gill, [the director] decided not to send it in this form, or to send it to allthese people. In his 19 November memorandum to Mr Lanham, [the director]recorded that before he could grant the application he had to be satisfied thatthe risk to safety would not be significantly increased. He then recorded thatMr Remacha's memorandum covered "a number of safety concerns" whichhe listed, to which he added the lack of oversight of GKN, lifing of andtraceability of components and parts, and that he was "not confidentthe company is able to comply with the manufacturers restrictions". He alsoidentified the more general concerns about the use of ex-military helicopters,including that the accident record was "atrocious", before saying he was "notprepared to consider exercising the exemption power" until properly advised.This memorandum was provided to the plaintiffs on 30 November. That didnot hide views adverse to the plaintiffs, but rather set them out in a clear way.[167] I also conclude that [the director] was of the view that it would benecessary to give the plaintiffs an opportunity to make submissions on anyproposed decision to decline the applications. He advised Mr Ford of this on16 November before he finalised the process in the memorandum of19 November. Those two steps — obtaining further information, andthe provision of a preliminary decision allowing the plaintiffs to comment —were key components of the seven-stage process he decided to implement.I accept that these were proper steps to take before making a decision.[244] Mr Dale submits that the last three paragraphs of the director's 9 November2004 memorandum demonstrate a final determination had been made. Theseparagraphs read:Both these are exemptions to the Safety Rules and I am not prepared to acceptthe responsibility nor do I feel it would be wise.51 At [163]–[166].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 be addedto 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.[245] We are not persuaded there is any error in the Judge's analysis of this issue.At the time this memorandum was prepared, the director was under considerablepressure to make a decision on Helilogging's exemption applications. However, heresisted that pressure and identified in consultation with Ms MacIntosh and Mr Gillthe further information needed to enable him to make a final decision. It is clear thatthe director had formed an adverse view of Helilogging's applications by 9 November2004, perhaps a strong view, but that does not mean that he had closed his mind.This is consistent with the opening paragraph of the memorandum in which he stated"[a]t this stage I have not been convinced that it would be safe to grant the Exemption".Further, any contrary conclusion would require us to accept that everything that wasdone after 19 November 2004 — the entire seven-stage process which was set in placeby the director prior to the commencement of the judicial review proceedings — wasnothing more than a pointless charade. Like the Judge, we reject that proposition.Ground 7 — pleadings[246] The Judge started by setting out the essence of Helilogging's case.52Helilogging accepts the accuracy of this summary. The Judge then commented thatthe key features of Helilogging's allegations as described were not set out in that wayin the pleadings or in opening:[11] The key features of the plaintiff's allegations that I have justsummarised were not set out in this way in the plaintiff's pleadings, or inthe opening. After exchanges with Mr Dale QC during his opening, and ina ruling dated 26 September 2019, I not only dealt with applications to amendthe pleadings and to allow the plaintiffs to call supplementary witnesses, butI sought to record the essence of the plaintiffs' case as I understood it at thatstage, and Mr Dale subsequently confirmed I had accurately capturedthe 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 were52 At [3]–[10].being advanced. I note at that stage the plaintiffs had accepted thata reasonable director could have decided to decline the application.[247] This ground of appeal responds to this comment:The Judge erred in concluding at [11] that the appellants departed from theirpleaded case. The issues to which the Judge referred arose only out ofexchanges with the Judge in respect of motive, which was not required to beeither pleaded or proved.[248] As Mr Dale says in his submissions, nothing turns on this. In any event, leavewas granted to amend the pleadings. The sixth amended statement of claim is dated26 September 2019 and was filed at the end of the first week of the trial. No pleadingpoint was taken by the CAA. There is no complaint that the Judge failed to addressthe substance of Helilogging's case.Ground 8 — counsel's concession[249] This is a related ground, corresponding to the last sentence of [11] of theHigh Court judgment quoted above. Helilogging contends the Judge "erred in placingany reliance upon the concession that a reasonable director could have decided todecline the application, which was in any event withdrawn in the course of argument".[250] The Judge understood that the concession was subsequently withdrawn:[276] Significant evidence was led at trial going to the merits, or otherwise,of the Director's s 37 decision. As indicated, in opening the plaintiffs acceptedthat a decision to decline was open to a reasonable Director. In closing,however, Mr Dale withdrew that concession and contended that a reasonableDirector would have been compelled to grant the exemption application.He argued that this was a consequence of the evidence that had emerged attrial.[251] The Judge then set out his reasons for finding that it was open to a reasonabledirector to decline (or alternatively grant) the applications.53 The Judge placed noreliance on the withdrawn concession. We note that Mr Dale did not address anywritten submissions to this ground of appeal. We are satisfied the Judge did not err ascontended under this ground.53 At [277]–[280].Ground 9 — alteration to Mr Lewis' 23 July 2005 letter[252] As we have seen, two changes were made to Mr Lewis' letter following itsreceipt by the CAA. One was the clearly evident change by striking out the word"viability" and writing alongside the word "safety". The Judge accepted Mr Lewis'evidence that he requested this alteration after reflecting on the advice he had sent.54As the Judge said, this change was made transparently and without any dishonestconcealment. Mr Lewis confirmed his wish to make that amendment in a letter hewrote to the director on 2 August 2005.[253] The second, more subtle change — from "Mk 52" to "Mk 2" — appears inthe first line of the second main paragraph on the first page of Mr Lewis' letter andcan be seen in the version of the letter Mr Ford received, copied below. That there hasbeen an alteration is reasonably obvious to a careful reader. Further, if one looksclosely, it is apparent the numeral struck through was a "5":[254] Mr Wellik put a line through the "5" on his version of Mr Lewis' letter andmade other notes while discussing it with an unidentified technical adviser.However, he said he would not have made the alteration to the original letter and noneof the other witnesses accepted doing so. Mr Lewis did not recall requesting orauthorising the alteration, although he regarded it as inconsequential because healways understood the Mk 2 was the same as the Mk 52.[255] The Judge agreed the alteration should not have been made but he rejectedthe contention this was a dishonest attempt to mislead anyone:[261] There is no dispute that it was inappropriate for it to be made. I donot accept, however, there was a dishonest attempt to mislead anybody by54 At [257].the alteration. The evidence established that the Wessex aircraft at the timewas used by different military services with a different number assigned, butthe aircraft itself was the same. The Wessex Mark 2 was used by the [RAF],and the Wessex Mark 5 was used by the Navy. When the same aircraft wasused in Iraq, it was given the number 52. But they were all the same aircraft.So nothing turned on the number. The fact that the number 52 had been usedfor the Wessex used in Iraq was not well known. I conclude that the personwho 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 thanthe Mark 2 aircraft as it existed at the time of the application in 2004/05. I donot accept this. It is clear from the letter that Mr Lewis was referring tothe aircraft that he flew with the Iraq Airforce in Baghdad, and in the contextof this letter and Britain's historic association with Iraq, it was clearly referringto events of some time ago. Deleting the 5 did not suggest that this experiencewas recent. The number assigned to the aircraft had no association withthe age of Mr Lewis' experience. So I conclude it was an inappropriate changeto the letter without any fraudulent intent, and with no significance in termsof the information conveyed to the reader.[256] Ground 9 of the appeal is a complaint that the Judge erred in finding thatthe change to the letter was to avoid confusion. This is said to be because there wasno satisfactory evidence to support that finding; the alteration made a fundamentaldifference to its meaning, in particular that it was directed to a "current version" ofthe Wessex rather than a 1960s version; and there was no evidence of any attempt toobtain Mr Lewis' approval for this alteration. Mr Dale did not develop any argumentin his submissions relating to this appeal ground other than to say that this was anunexplained difficulty for the CAA.[257] It is plain from Mr Lewis' letter that he was referring to his experience withthe twin engine versions of the Wessex — with the Iraqi Air Force in Baghdad andwith Bristow in the North Sea. Although the helicopter Mr Lewis flew with the IraqiAir Force was labelled a Mk 52, it was the same as the Mk 2. This change to the letterwas inconsequential. It would be obvious to anyone reading the letter that Mr Lewiswas referring to his historical experience. Mr Barclay understood that. Following hismeeting with Messrs Gordon, Ford, Takarangi, Biel and others on 23 August 2005 todiscuss the director's decision and the attached reports including Mr Lewis' letter,Mr Barclay wrote to Mr Lewis the following day noting technical errors "reflectingthe changes that have taken place in the helicopter/engine since your 'era'". The factMr Lewis was referring to his experience from the 1960s was therefore not "disguised"as Helilogging contended in the High Court. We see no error in the Judge's reasoning.Ground 10 — evidence of Irene King[258] Irene King was called as a witness by Helilogging. She was the chair ofthe Air Transport Division of the AIA in 2002 and was appointed chief executive inApril 2005. Qwilton Biel was the chairman of the helicopter division at that time andhe and his father were both active in the heli-logging industry.55 Ms King stated thatin 2004/2005 the AIA was in favour of the use of ex-military helicopters provided allsafety and statutory requirements were met. She said she was aware of Helilogging'sexemption application because Mr Ford had complained to the AIA about difficultiesobtaining a decision from the CAA. In cross-examination, Ms King said shefrequently liaised with Mr Biel about this.[259] Ms King had known the director, Mr Jones, since about 1986 when she joinedAir New Zealand. At that time, Mr Jones was the general manager of Mount CookAirlines (owned by Air New Zealand). Ms King recalled discussing Helilogging'sapplication with him in 2005. She could not recall the date but believed it wassomewhere around June or July 2005 because she recollected looking out the windowof Mr Jones' Wellington office and commenting on the inclement weatherconditions.56 In her prepared brief of evidence, Ms King described her exchange withMr Jones as follows:22. The reason for the discussion was because of industry concerns aboutthe way [Helilogging's] application appeared to be treated. I pointedout to Mr Jones that the process "did not feel right". Because of thoseconcerns I said "some people within your own organisation weresaying the applications were good to go yet you are sayingthe opposite. What is the situation here?". Mr Jones' reaction to myquestion was quite remarkable, and such that I have the clearestrecollection of it to this day.23. Mr Jones' jaw locked and there was a visible change in his appearance.As I have said I had known Mr Jones for many years at that stage andI had never seen him react in such a fashion before. I rememberthinking at the time that Mr Jones must have been under some kind ofpressure from somebody, although I should add that not once did55 Mr Biel later became Ms King's partner.56 The Judge observed at [267] that this is not a reliable indicator of the timeframe because inclementweather conditions in Wellington are not confined to winter months.I ever consider he might have been bribed. I knew Mr Jones wasindependently wealthy, had always displayed integrity in my dealingswith him and had been very transparent when we had dealt with othervery demanding situations such as the issues around the standard formedical fitness of Pilots in New Zealand.24. Nevertheless his reaction made me think that there was somethingvery unusual about the way [Helilogging's] application was beinghandled.25. Mr Jones said in response to my question that there was no way thatthose aircraft were ever going to fly in New Zealand so I should stopwasting his time. Those may not be the exact words but it was to thateffect.26. I pointed out that all of the documents would be discoverable and wewould be able to challenge the internal decision making process,starting with the Official Information Act [1982]. Mr Jones responded"you will never get anywhere. You will never see it. It will be subjectto commercial confidentiality or privileged". I said to Mr Jones thatis not right, and we went on to have a discussion about getting accessto the documents.[260] Ms King clarified in cross-examination that the discussion about commerciallyconfidential or privileged documents related to internal documents on the meaning of"hire or reward" operations in r 91.105 of the Rules.[261] The Judge found that this conversation occurred after the preliminary decisionwas released in May 2005. While having reservations about the accuracy of Ms King'srecollection, the Judge accepted she recalled Mr Jones' demeanour at this meeting.The Judge also accepted her evidence that Mr Jones commented in forthright terms tothe effect the application was not going to be granted. However, the Judge said thisdid not mean Mr Jones would not have been prepared to reconsider his stronglyexpressed views if compelling new information was provided in response to hispreliminary decision:[267] I am less certain about the accuracy of Ms King's recollection.Whilst Ms King remembers the nature of Mr Jones' behaviour, she could notrecall his actual words. It is some time ago. She was unsure of the timing ofthe conversation, but indicated the period of June–August 2005 because it wasinclement weather outside. Wellingtonians will recognise that that does notgreatly limit the timeframe. Moreover a re-remembering of the eventfocussing on the emotional impact of the occasion may have distorted someof the detail.[268] I nevertheless accept that a comment was made in forthright terms tothe effect that the plaintiffs' application was not going to be granted.I conclude that this conversation occurred after the preliminary decision wasreleased in May 2005. Mr Jones' intention to decline the application wasaccordingly already disclosed. I accept that Mr Jones answered emotionallywhen queried by Ms King. This is likely to have reflected the severe pressurethat he was under. By this stage there had been High Court proceedings,a Close Up television programme, an inquiry by the Select Committee,matters had been raised in Parliament, and there was a degree of Ministerialpressure. Now Mr Jones' personal friend, Ms King, acting on behalf ofthe AIA was questioning his approach, and he reacted. That providesthe context to the kind of strong comment I find that he made.[269] As I have already concluded there is no misconduct in Mr Joneshaving views, even very strong views, in the decision-making process.He was obliged to act professionally, and with an open mind, when makinga statutory decision. But I am not prepared to conclude that a comment ofthis kind evidences dishonesty, or a lack of integrity. It does not mean thatMr Jones would not have reconsidered his strongly expressed views ifthe plaintiffs had come back with compelling responses to the preliminarydecision.(Footnote omitted.)[262] Helilogging says the Judge erred (at [267] quoted above) in expressing doubtsabout the accuracy of Ms King's recollection. Helilogging claims this was notsupported by the evidence. However, it is plain from reading the entirety of herevidence that Ms King could not recall many of the details of the meeting. She madeno contemporaneous report of the meeting. Given the discussion took place 14 yearsbefore Ms King prepared her brief of evidence, it is not surprising she was unsureabout some of the details.[263] Nevertheless, Mr Dale submits that Ms King's allegation about Mr Jones"hiding relevant documents goes to the heart of the case". He says Ms King's evidence"was not about hire or reward issues and nothing to do with legal privilege".However, this is contrary to the evidence Ms King volunteered in cross-examinationthat the discussion was in the context of hire and reward:Q. In any event, you are aware, according to your evidence, that Mr Jonesclearly isn't engaged in a genuine process because he's decided notonly that he will never agree to the exemption but he will hide relevantdocuments. That's what you're suggesting in this evidence, isn't it?A. I'm aware that Mr Jones had a really firm reaction to my question.Q. And you went on to discuss documents that you would want to inspectin respect of the decision-making process and he said "You'll neversee them because they'll be commercially confidential or privileged",right?A. That was in the context of hire and reward.Q. Well, it's all in the same conversation, isn't it?A. Yes, because we covered a number of issues that day and that'sthe way the conversations used to go with [Mr] Jones. We wouldcover a wide range of issues.[264] Counsel agree it is likely that this discussion occurred on or about 10 August2005, after Mr Fogden's final report and shortly before the director's final decision onHelilogging's application was released on 19 August 2005. This is because on12 August 2005 Ms King sent an email to Mr Barclay copied to Mr Biel stating "I hada brief discussion about this with JJ a couple of nights ago. I have been trying toencourage a more transparent process for developing legal opinions". The otheremails sent in this period make no reference to any concerns by the AIA aboutthe process being followed in respect of Helilogging's application.[265] We do not consider there is anything in this ground of appeal.Ground 11 — whether the decision was reasonably open to the director[266] In its notice of appeal, Helilogging complains that the Judge erred in focusingon whether a reasonable director could grant or decline the exemption applications.This is said to be because Helilogging was materially misled in the approval processby the withholding of material information. If this information had been disclosed,this would have resulted in an application for judicial review with good prospects forsuccess and the possibility the director would have been removed fromthe decision-making process. Helilogging submits that the Judge's finding thatthe exemption application could have been granted is of assistance because, ifthis Court concludes that the causes of action are made out, then Helilogging hasa claim for lost chance of achieving a successful outcome.5757 At [279].[267] This ground is solely concerned with issues of causation and loss. Because wehave rejected Helilogging's appeal against the Judge's liability findings, we need notconsider it further.[268] In view of our rejection of the grounds of Helilogging's appeal, we do not needto address the issues raised by the CAA in its notice to support the judgment on othergrounds.Summary[269] We are satisfied the Judge was correct to dismiss the deceit claim.The evidence came nowhere near establishing any dishonesty on the part ofthe director, Mr Fogden or Mr Lewis. On the contrary, we consider the evidence as awhole shows that these three men acted conscientiously throughout and in accordancewith what they genuinely believed were their professional obligations.[270] The manifest safety issues arising out of the use of ex-military helicopters forheli-logging purposes were well-known because of the poor accident record and highfatality rate. The safety concerns were widely publicised within the industry, includingby the CAA, and had to be addressed with care in considering any exemptionapplication such as that pursued by Helilogging.[271] Helilogging may have felt encouraged that the professional approach it adoptedwould ultimately lead to some form of exemption from the Rules being granted topermit the use of its Wessex Mk 2 helicopters for heli-logging purposes.However, despite expressly seeking an assurance that an exemption would be grantedon completion of the process, no such assurance was given by the director or anyoneelse at the CAA. Helilogging and its advisers ought to have appreciated it was notproper or reasonable to expect such an assurance.[272] The application for exemption from the type acceptance requirement to enablean airworthiness certificate to be issued in the restricted category always faced majordifficulties. The director advised Mr Ford in his letter dated 7 May 2003 thatthe aircraft was only eligible for a special category airworthiness certificate.Mr Lanham was strongly opposed, for good reasons, to the grant of an exemption fromthe type acceptance requirement for a restricted category airworthiness certificate.Mr Fogden shared this view. Although Mr Gill suggested that such an exemptioncould be granted, he considered the CAA should never have embarked on the processof allowing a non-certificated aircraft to be used for commercial operations.Given that none of his technical advisers favoured granting this exemption, it wouldhave been a bold decision for the director to grant it. This is particularly so in view ofthe difficulties inherent in the CAA taking on the role of NAA for Westland Wessexhelicopters (first signalled by Mr Remacha in his May 2002 report), the lack of claritysurrounding the basis of GKN's involvement and ongoing support, the uncertaintyconcerning the support available from Rolls Royce, and the absence of informationshowing traceability of the spares. Even Mr Barclay, in his final report prior tothe decision being made, acknowledged that he had not provided "all ofthe information necessary to issue an aviation document". Mr Ford himself did notseek to "reactivate" this exemption application at the time he engaged with the newdirector, Mr Douglas, in July 2007. In all the circumstances, it is difficult to see howthe director could properly have granted an exemption from the type acceptancerequirement.[273] The alternative application for an exemption from the hire or reward restrictionon aircraft issued with special experimental airworthiness certificates faced many ofthe same difficulties. Mr Gill was strongly opposed to it, saying "I find it difficult tosee on what grounds an exemption could be given" and suggesting it "would bede facto rule-making". While Mr Lanham considered such an exemption could begranted, he recommended this be done on a "kick for touch" basis and reviewed oncethe rules revision had been completed. Like Mr Gill, Mr Fogden was strongly opposedto this exemption being granted. The same unresolved safety issues summarised abovemeant that granting such an exemption would be seriously problematic. The directorhad no jurisdiction to grant an exemption unless satisfied one or more of the statutorycriteria in s 37(2) had been made out. In view of the technical advice he received, itis not easy to see how the director would have been able to justify grantingthis exemption.[274] In any event, we consider the misfeasance claim was misdirected. As noted,the appropriate defendant is the public officer appointed to discharge the relevantpublic duty. In this case, that was Mr Jones. He was required to make the decision,not the CAA. While it is not necessary for us to decide the point, we doubt the CAAcould be held vicariously liable for any misfeasance on the part of the director givenhe was required to act independently in making his decision.[275] Finally, all but two of the matters relied on to found the deceit claim andpostpone the commencement of the limitation period were either discovered or werereasonably discoverable more than six years prior to the commencement ofthe proceedings. The exceptions were the 1999 Lewis report and the so-calledvibration flight. Neither of these was known to the director and they had no bearingon his decision. The nine-year delay in issuing the proceedings would therefore havebeen fatal to the claim in any event.[276] The appeal must accordingly be dismissed.Result[277] The appeal is dismissed.[278] The appellants are to pay costs to the respondent for a complex appeal ona band B basis and usual disbursements. We certify for second counsel.Solicitors:Sandi Anderson & Partners, Auckland for First and Second AppellantsDarroch Forrest Lawyers, Wellington for Respondent