REASONS OF THE COURT(Given by Gilbert J)Table of contentsIntroduction The appeal Notice by CAA to support the judgment on other grounds Regulatory framework Chronology Westland Wessex series of helicopters Fatal accident in New Zealand involving a Westland Wessex Mk 5 CAA review of safety issues concerning ex-military helicopters Helilogging purchases two Westland Wessex Mk 2 helicopters Steps by Helilogging prior to filing exemption petition Petition for exemption 9 November 2004 memorandum Judicial review proceedings Implementation of seven-stage processStep 1 — briefing from technical advisers Step 2 — request for further information Step 3 — updated advice from technical advisers Step 4 — consideration of advice and preliminary decision Step 5 — preliminary decision provided to Helilogging Step 6 — consideration of Helilogging’s comments Step 7 — final decision 2005 – 2014 The pleaded claimsDeceit The CAA Mr Lewis Mr Fogden Misfeasance in public office High Court judgment Grounds of appeal Ground 1 — 1999 Lewis report Ground 2 — recklessness in respect of the 2005 Lewis letter Ground 3 — the vibration flight Ground 4 — safety as the primary ground for refusal Ground 5 — the effect of the director’s conduct Ground 6 — findings contrary to the weight of evidence Ground 7 — pleadings Ground 8 — counsel’s concession Ground 9 — alteration to Mr Lewis’ 23 July 2005 letter Ground 10 — the evidence of Irene King Ground 11 — whether the decision was reasonably open tothe director Summary Result Introduction In July 2004, the appellants (collectively referred to as Helilogging) petitioned the director of Civil Aviation (the director) for an exemption from the Civil Aviation Rules to enable them to use an ex-military Westland Wessex Mk 2 type helicopter for heli-logging operations in remote areas of the central North Island. The Westland Wessex series of helicopters were manufactured in the United Kingdom between 1958 and 1970 and were designed for use by the British armed forces. In a written decision issued on 19 August 2005, the then director, John Jones, declined to grant the necessary exemption. Nine years later, in September 2014, Helilogging commenced the present proceedings against the Civil Aviation Authority of New Zealand (the CAA) claiming damages for alleged deceit and misfeasance in public office. In its sixth amended statement 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 and various spare parts). Unspecified exemplary or punitive damages were also claimed. In addition, the second appellant, Mr Ford sought $100,000 in general damages for stress, anxiety and inconvenience caused to him by “the CAA’s wrongful declinature and/or fraud by concealment”. In July 2019, the High Court directed a split trial on liability due to delays by Helilogging in formulating its damages claim. The liability trial was also to deal with what the regulatory outcome would have been, or could have been, but for the wrongdoing. Following a trial of some seven weeks duration, the claims were dismissed by Cooke J in a comprehensive judgment delivered on 13 December 2019. As to the misfeasance claim, the Judge concluded that “at no stage did Mr Jones or other officials act knowingly beyond their functions or powers, or recklessly indifferent to this”. Indeed, the Judge observed that Helilogging did not advance their case on the basis that the director had done so. In terms of the deceit claim, the Judge found that “at no point did [the director or other CAA officials] make untrue representations to [Helilogging]”. While strictly not necessary in view of these key factual findings, the Judge identified difficulties with Helilogging’s case on causation and loss. In particular, the Judge considered much of Helilogging’s evidence had been directed to the wrong question — what would have occurred if the alleged wrongdoing had been exposed? Instead, the relevant enquiry should have been to examine what would have occurred if there had been no wrongdoing. The Judge said this should be considered with reference to the objective test of whether a reasonable director would have granted the exemption but for the wrongdoing. A related issue concerned the appropriate methodology for assessing loss. The Judge identified three possible approaches. The first was whether Helilogging could prove on the balance of probabilities that the exemption would have been granted (an “all or nothing” approach). The second was to assess the loss on a loss of a chance basis. The third possibility was to assess the loss “more directly caused by the wrongdoing”. In respect of the deceit claim, the loss would be confined to that directly caused by any reliance on the director’s allegedly fraudulent representations. The Judge also commented briefly on the issues of vicarious liability and limitation. The Judge did not consider the CAA could be vicariously liable for any wrongdoing on the part of Charles (“Bernie”) Lewis, an independent aviation consultant whose advice, which was heavily criticised by Helilogging, was relied on by the director to support one of his reasons for declining the exemption. The Judge pointed out that the authorities relied on by Helilogging concerned the vicarious liability of a principal for the conduct of a person acting as its agent. But Mr Lewis was not acting as an agent of the CAA, rather as an independent expert. Finally, the Judge noted that the proceedings were commenced well outside the normal six-year limitation period and the claims were therefore time-barred unless the alleged fraud was not reasonably discoverable more than six years before the proceedings were issued. The Judge went no further, considering it would be artificial to do so given his finding there was no fraud and therefore nothing to discover.The appeal Helilogging now appeals. There is no complaint that the Judge made any error of law. Rather, Helilogging seeks to persuade this Court to interfere with the Judge’s key factual findings on the liability issues. In their agreed statement of issues, counsel formulate the principal questions on appeal in very broad terms, namely whether the High Court was correct to find that Helilogging had not proved:(a) Fraudulent acts or omissions sufficient to establish misfeasance by the director and/or John Fogden (Mr Fogden was employed by the CAA as the manager of rotary wing and agricultural operations. He provided a detailed report to the director dated 9 August 2005 recommending that Helilogging’s application be declined).(b) Fraudulent misrepresentations and reliance on such representations sufficient to establish the tort of deceit. The appeal grounds are mostly directed to these factual issues. Helilogging abandoned a further ground, ground 12, which challenged the Judge’s finding that the 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 to the issues of causation and loss. In particular, Helilogging contends the Judge erred by 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 in the approval process by material information being withheld. Helilogging claims that if this information had been disclosed, this would have resulted in: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 material information and the political and public pressure which the Director was facing at the time, which would have required then an assessment on a loss of a chance basis of the appellants’ prospects of succeeding.Notice by CAA to support the judgment on other grounds 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 director of the CAA, acting reasonably, would not have granted the exemptions sought by Helilogging.(b) Helilogging’s causes of action are time-barred by s 4 of the Limitation Act 1950 (then applicable). To the extent that s 28 of the Limitation Act applies (postponement in a case of fraud), the pleaded causes of action were discovered, or, with reasonable diligence could have been discovered, more than six years prior to the proceedings being issued in 2014.(c) The CAA is not vicariously liable for the pleaded deceit or misfeasance by the director or Mr Fogden.(d) Helilogging’s claim for a loss of a chance is not available because third party actions are not at issue. The other approaches to causation and loss discussed in the High Court judgment are correct.Regulatory framework 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 and divisions of responsibility within the New Zealand civil aviation system in order to promote aviation safety and ensure compliance with New Zealand’s obligations under international aviation agreements, including the Convention on International Civil Aviation signed on behalf of the Government of New Zealand in Chicago on 7 December 1944 (the Chicago Convention). The Chicago Convention introduced a framework for civil aviation including standards and recommended practices to guide the regulation of civil aviation in member states. In broad terms, it provides for a comprehensive and integrated system where responsibilities are devolved to certified entities such as designers, manufacturers and operators to ensure the safe operation of international and domestic civil aviation. The Act confers power on the responsible minister to promulgate rules to implement New Zealand’s obligations under the Chicago Convention. These rules, known as the Civil Aviation Rules (the Rules), include rules prescribing general operating and flight requirements for the operation of civil aircraft. References in this judgment to specific rules are to those in force at the relevant time. Subject to limited exceptions, the Rules prohibit any person from operating an aircraft unless it has a current airworthiness certificate and it is in an airworthy condition. Airworthiness certificates are governed by pt 21 of the Rules. At the relevant time, these were issued in three categories — standard, restricted and special. The special category comprised two subcategories — special experimental and special flight permit. Aircraft issued with airworthiness certificates in the standard and restricted categories could be used for air transport operations, meaning operations for the carriage of persons or goods by air for hire or reward. By contrast, aircraft issued with an airworthiness certificate in the special (special experimental or special flight permit) category could not be used for hire or reward operations. An applicant for an airworthiness certificate in the standard or restricted categories required a “type certificate” for an aircraft manufactured in New Zealand or a “type acceptance certificate” for an aircraft imported into New Zealand. An applicant for a type acceptance certificate was required to provide various information to the director, including evidence that the type design had been approved by the relevant overseas “State of Design” having jurisdiction over the entity responsible for the type design:21.43 Data requirements(a) An applicant for the grant of a type acceptance certificate for an aircraft type must provide the Director with—(1) evidence that the type design has been approved by an ICAO contracting state by the issue of a type certificate or an equivalent document; ...(Footnote added.) We pause here to note that military helicopters are largely regulated under a different regime. As an ex-military helicopter, the Westland Wessex Mk 2 did not have 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 type acceptance requirement in connection with its application for an airworthiness certificate in the restricted category. If granted, this would enable it to conduct commercial heli logging operations for hire or reward. Helilogging later sought, in the alternative, an exemption from the hire or reward restriction applicable to all airworthiness certificates issued in the special experimental category:91.105 Special category airworthiness certificates — Operating limitations1. Except as provided in paragraph (b), no person may operate an aircraft that has a special category airworthiness certificate for the carriage of persons or goods for hire or reward.2. Paragraph (a) does not apply to a person operating an aircraft for the carriage of persons for hire or reward where the person being carried is—(1) the holder of a flight instructor rating issued under Part 61; and(2) giving conversion instruction to the operator.... The director has the power under the Act to grant exemptions from any requirement in the Rules. However, this power can only be exercised in specified circumstances and then only where the director is satisfied the risk to safety will not be significantly increased by granting the exemption. The director’s exemption power is 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 such conditions as he or she considers appropriate, exempt any person, aircraft, aeronautical product, aerodrome or aviation related service from any specified requirement in any rule made under section 28 or section 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 and that further compliance is unnecessary; or(b) The action taken or provision made in respect of the matter to which the requirement relates is as effective or more effective than actual compliance with the requirement; or(c) The prescribed requirements are clearly unreasonable or inappropriate in the particular case; or(d) Events have occurred that make the prescribed requirements unnecessary or inappropriate in the particular case,—and that the risk to safety will not be significantly increased by the granting of the exemption....Chronology A reasonable grasp of the sequence of events is necessary in order to understand Helilogging’s claims and to set the context for consideration of the grounds of its appeal. Because Helilogging seeks to persuade this Court to reject the factual findings made in the High Court and find that the director and Messrs Fogden and Lewis were all dishonest and deceitful in carrying out their professional obligations, it is necessary to examine the evidence in some detail.  Three contextual matters are worth noting at this stage. First, under s 37 of the Act, the director was ultimately responsible for the exemption decision. The decision whether to grant such an exemption was his alone. Thus, it was the director, Mr Jones, who held the public office and was responsible for exercising the relevant power (not the CAA). Secondly, the director was not empowered to grant an 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) had differing views on whether Helilogging’s exemption petition should be granted and, if so, on what basis. Thirdly, at the time the exemption petition was filed, the CAA was engaged in the process of undertaking a comprehensive review of the Rules relating to special category aircraft, including the use of ex military helicopters for external load carrying purposes such as heli logging. The review was prompted by an unacceptably high accident rate, including fatal accidents, involving these types of aircraft. The Rules review had not been completed at the time the director was required to make his decision on Helilogging’s exemption petition. The director’s decision was therefore of interest to other operators in the industry and would set an important precedent. A further point to note is that by the time the trial commenced, 14 years had passed since the date of the decision. This lengthy delay posed inevitable problems for both parties. Some of the key participants had died and others were being asked to 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 91 at the time of the trial. He was accused of dishonestly failing to disclose a report he had written on 12 January 1999 concerning flight trials he carried out in a Wessex Mk 5. Mr Jones was also elderly by the time of the trial and he had suffered a head injury in 2017 that affected his memory. As a result, he was simply unable to provide any useful evidence at the trial. Fortunately, however, an almost complete contemporaneous documentary record of relevant events remained. The following chronological summary is drawn from this record.Westland Wessex series of helicopters 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 and first flew in 1958. The Mk 2, the subject of these proceedings, was a high performance development 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 in 1961. A number of variants of the Mk 2 were subsequently produced. We mention four. The Mk 4 was used by the Queen’s Flight of the RAF to transport members of the Royal Family. The Mk 5 was a specialised version of the Mk 2 designed for the Royal Navy for deploying troops from the decks of ships. The Mk 52 was a military transport version of the Mk 2 used by the Iraqi Air Force. The Mk 60 was the only civil variant. It was certified by the United Kingdom Air Registration Board for public air transport and was primarily used by Bristow Helicopters Ltd (Bristow) for passenger transport to North Sea oil rigs. However, several of these Mk 60 aircraft were involved in fatal crashes, including one that crashed in the North Sea in August 1981 causing 13 fatalities. The United Kingdom Civil Aviation Authority (UK CAA) withdrew type certificate status for these aircraft in 1990. It appears that the original equipment manufacturer, GKN Westland, asked for the type certificate to be cancelled because only a handful of these aircraft remained, 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 Only one Westland Wessex helicopter has operated in New Zealand, a Mk 5 manufactured in 1964. It was operated by Metro Air Ltd (Metro Air), a company owned and directed by Bruce O’Malley. This was the same helicopter referred to at  above in which Mr Lewis conducted flight trials in December 1998 and January 1999. This helicopter was later issued with an airworthiness certificate in the special experimental category. It crashed in February 2001 shortly after lifting a log from the ground during heli-logging operations in Motueka, instantly killing the pilot who was the sole occupant. The subsequent CAA aircraft accident report released in June 2002 concluded that the accident was caused by the stoppage of the number two engine, 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 was destroyed in the accident. At the time of this fatal accident, Mr O’Malley was under investigation for breaching the hire or reward prohibition on aircraft operating with airworthiness certificates issued under the special experimental category. Charges were subsequently laid and guilty pleas were entered in July 2002.CAA review of safety issues concerning ex-military helicopters The crash of the Wessex Mk 5 was the latest in a series of accidents (including fatal accidents) in New Zealand involving ex-military helicopters. There had been seven deaths between 1998 and 2004. This spate of accidents raised concerns within the CAA over the certification, operational use and oversight of this category of aircraft. Investigations into the supply of parts and components for these aircraft further highlighted the need to review the overall operation of ex-military helicopters. Accordingly, in June 2001, Mr Lanham, general manager of the general aviation group at the CAA, initiated a comprehensive review of ex-military helicopter operations. The review was led by Jeremy Remacha, manager of the aircraft certification unit. In the context of this review, Mr Remacha was asked to report specifically on airworthiness issues with the Wessex Mk 2 and Mk 5 helicopters. This was because Mr O’Malley had applied on 24 September 2001 for airworthiness certificates in the special experimental category for his two Mk 2 Wessex helicopters (the two helicopters subsequently purchased by Helilogging in 2002 and the subject of these proceedings). The director notified Mr O’Malley on 18 December 2001 that his applications would not proceed further until the accident report into the fatal crash of the Wessex Mk 5 was completed. Further, he advised that the CAA was currently conducting a review into the certification processes and operation of foreign ex military aircraft in New Zealand and he said the history of the Wessex Mk 2 would be reviewed in this context and would be relevant to his consideration of the applications. In his 22 May 2002 report entitled “Helicopter Airworthiness: Westland Wessex Mk 2 and Mk 5 Series”, Mr Remacha made the following pertinent observations:(a) The Wessex is a large and complex aircraft designed over 44 years previously. It was not designed for a specific single role involving high frequency external load operations (such as heli-logging).(b) The civil variant Wessex Mk 60 had been involved in several significant accidents causing multiple fatalities. There were unresolved airworthiness issues regarding its safety. Civil operation of the Mk 60 likely ceased in the United Kingdom in the early 1980s (soon after the North Sea crash in 1981 which had resulted in 13 fatalities).(c) Airworthiness support by Westland Helicopters, the original equipment manufacturer, was withdrawn for the Mk 60 aircraft in 1990 and it did not intend to provide such support for the Wessex type in the future.(d) The UK CAA, the original certifying authority, subsequently rescinded the type certificate status for the Wessex Mk 60. Unresolved safety issues arising from the North Sea accident would require resolution before type support could be reinstated. This was unlikely given the significant time that had passed since that accident occurred in 1981.(e) The UK CAA no longer collected data on the Wessex types and records appeared to have ceased in 1993.(f) Military variants (all but the Mk 60) continued to be used in limited military operations but there was only one major such operator, the United Kingdom Ministry of Defence (UK MoD). At the time of the report, it was still operating three Mk 2 aircraft in Cyprus with support from GKN Aerospace (GKN) as the post-design support authority. However, the UK MoD had declared 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 Wessex helicopters, only serviced these engines for customers who purchased directly from them. Engines on the civil market purchased ex-military were not supported.(h) The Wessex Gnome engine was no longer supported for new spares delivery and, given the notified withdrawal of the Wessex from service by the UK MoD, very few, if any, spares were available from Rolls Royce.(i) Maintenance manuals for the Gnome engine were effectively sealed in the 1980s and no service bulletins addressing airworthiness issues had been produced since 1987. Mr Remacha also noted difficulties the CAA would face as the administering airworthiness authority given the lack of relevant data on these aircraft and the lack of appropriate in-house expertise:The only remaining Wessex aircraft are operated solely in the military environment which affords many mechanisms to provide an adequate level of safety. These include considerable numbers of highly trained and currently experienced maintenance and flight personnel, access to authentic and approved parts, available tooling and equipment, extensive corporate knowledge on the operation and maintenance of the type, and a strictly controlled maintenance and operating environment. This infrastructure cannot be easily replicated for small or unique operations due to the extensive costs involved.Furthermore as there is no equivalent civil type still in service or supported by a civil airworthiness authority there is at best an “arm’s length” and distant support structure for any operator or any airworthiness authority administering its ICAO State of Registry responsibilities.As access to the necessary design data, service history and other relevant information to ensure proper continued airworthiness for the type can be undertaken, the administering airworthiness authority (in this case the NZ CAA) would need to ensure it possesses the necessary knowledge and skills to adequately evaluate such matters as specially tailored maintenance programmes 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 and other foreign certifying authorities to provide the support.This does not exist in this case.(Footnote added.) Mr Remacha concluded his report with a list of recommendations for the authorisation of initial operations of the Wessex Mk 2 and suggested further requirements for the authorisation of external load or agricultural purposes. Following completion of this review, the director wrote to Mr O’Malley on 27 May 2002 advising that his applications on behalf of Wessex Air for airworthiness certificates for the two Wessex Mk 2 helicopters could proceed under the special experimental category. However, this would be subject to the standard certification requirements in the Rules. Further, the airworthiness certificates would be subject to 11 conditions, including that the aircraft could not be used for the carriage of persons or goods for hire or reward and could not be used for external load operations. In a separate draft report dated 8 August 2002, Mr Remacha summarised the key issues and made preliminary recommendations to enable the CAA to brief the 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 Zealand over the last decade has raised a number of key issues surrounding the level of safety for particularly external load operations. A number of key issues have arisen which indicate current level of safety is inadequate and both short term and long-term action is required to address the situation. As more and more operators in the industry are keen to continue sourcing ex-military aircraft for external lifting operations, particularly heli-logging, the CAA must ensure that it formulates a plan to address the immediate safety issues in a rational and logical approach, whilst making strategic plans to address the wider regulatory issues raised by this type of operation with these aircraft. Mr Remacha noted that the accident rate for ex-military helicopters was unacceptably high in comparison to other helicopters. Fatality rates per 1,000 reported flight hours were more than 10 times higher than those for all other helicopters registered 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 were currently using the aircraft well outside their original design limits with repetitive lifting operations occurring as much as 2,000 per cent more often than envisaged in the original design and certification. Other problems identified by Mr Remacha included lack of a review of technical and airworthiness oversight, lack of support of the original equipment manufacturer, lack of training, difficulties with parts traceability, lack of data and inadequate maintenance programmes. Mr Remacha made a number of initial recommendations including placing limitations on external load and agricultural operations on airworthiness certificates for all special category helicopters until the level of safety for the intended operation had been assessed as adequate for the purpose. Messrs Remacha and Fogden gave a presentation at the AIA annual conference in September 2002. This presentation summarised the CAA’s current strategies and future directions to address the unacceptably high accident rate involving ex-military helicopters. These included developing guidance and advisory material for heli logging operations, reviewing airworthiness certification in the restricted and special categories to include specific purposes, and investigating regulation and certification of commercial external lifting operations. Following the conference, the CAA provided a further update to the industry in the September/October 2002 edition of CAA News. This highlighted the significant differences identified by Mr Remacha between military and civilian use of military aircraft. Military aircraft operate in a highly controlled environment with extensive standard operating procedures, training and proficiency, all of which are constantly reviewed. 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 not necessarily any further formal training. There was also no specific evaluation of maintenance programmes to meet the aircraft’s intended use. The lack of direct technical and airworthiness support from the original equipment manufacturer was also identified as an issue. Various actions the CAA intended to take to raise the safety levels of ex military helicopters were set out. These included introducing requirements that all restricted and special category aircraft have an approved maintenance programme with any variation to be approved, design changes must use approved data, and all special category helicopters would have limitations imposed on external load and agricultural operations until the level of safety could be assessed as being adequate for the intended purpose. The CAA signalled its intention to consult with the industry on several initiatives including the certification of commercial external lifting operations and the development of guidance and advisory material for such operations.Helilogging purchases two Westland Wessex Mk 2 helicopters Mark Ford, the second appellant, is the sole director of Helilogging Ltd (now in receivership and liquidation). The company was incorporated in July 1999 to undertake heli-logging operations. Mr Ford and his brother were early pioneers of heli-logging operations in New Zealand, commencing in 1983. Mr Ford is also the sole trustee of the Wessex Trust which was established to hold the intellectual property associated with the operation. In early December 2002, the finance company that had financed Mr O’Malley’s purchase of the two Wessex Mk 2 helicopters approached Mr Ford to see whether he would be interested in buying them. Only one of these aircraft had a New Zealand airworthiness certificate. This was issued on 28 May 2002 in the special experimental category and was subject to 11 conditions as mentioned above. Mr Ford said he considered this to be “a very good opportunity” to upgrade the helicopter he was then using for heli -logging operations, a less powerful single engine Westland Scout. Mr Ford said he “was confident [he] would not infringe the hire and reward restriction, because [he] owned [the] sawmill and ... the lifted logs were owned by [him]” under contracts he was entering into with the forest owners. Mr Ford quickly agreed to purchase these two Mk 2 helicopters together with spare parts and an unregistered Mk 60 helicopter which could also be used for parts. The agreed purchase price was $2.86 million. Helilogging’s solicitor provided instructions to the bank for the issue of a bank cheque for this amount on 13 December 2002.Steps by Helilogging prior to filing exemption petition On 19 December 2002, Paul Muller, who had maintained Helilogging’s Westland Scout helicopters for many years, made preliminary enquiries with the CAA about the steps that might be required for the Wessex Mk 2 helicopters to meet the airworthiness and maintenance safety standards to enable the external load prohibition to be lifted and the aircraft to be used for heli logging. Mr Remacha advised Mr Muller that Helilogging would need to request a meeting with the CAA, provide operational details and an approved maintenance programme. On 21 January 2003, Mr Ford wrote to Mr Remacha attaching a proposal for a “limited Lifting Trial”. The stated purpose was “to determine the suitability of Westland 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 to 300 lifts. Mr Ford said the data collected would be “used to primarily decide acceptability of the helicopter within the role but [would] also be used to determine the operational and airworthiness issues”. On 10 February 2003, Messrs Ford, Muller and Maurice Gordon (a consultant aircraft engineer engaged by Mr Muller on behalf of Helilogging) met with Messrs Lanham, Remacha, Fogden and Graeme Pearson (another CAA employee in the General Aviation team) to discuss the likely steps required to remove the current prohibition on Westland Wessex helicopters being used for heli-logging. A “whole concept” approach was discussed which would involve an overall review of maintenance, flight operations and airworthiness. To this end, four main requirements were identified: manufacturer support; a maintenance programme tailored to the intended operation; airworthiness flight testing; and the establishment of a detailed operating manual covering all intended operational practices and specifications. The CAA representatives present at this meeting all said it was made clear to Mr Ford that the CAA’s role was to assess, not to lead, any proposal and that no guarantee of a successful outcome could be given. Matters were left on the basis that Helilogging would submit a proposal in due course. A few days later, as promised at the meeting, Mr Remacha sent Mr Gordon a 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 in the United Kingdom he had dealt with in preparing his report. Mr Gordon subsequently approached GKN to assist with flight test analysis for the proposed heli-logging operations and preparation of maintenance documentation. On 22 April 2003, Mr Gordon wrote to Mr Remacha advising that GKN had estimated the likely cost for the analysis and maintenance documentation to be 114,285. In addition, flight test costs were estimated to be $85,000 and a surety was required to cover test equipment. Mr Gordon advised that Mr Ford was in the process of arranging finance to cover these costs but before doing so required “confidence that on satisfactory completion of the test and analysis” the CAA would “remove the current prohibition for logging” and would “permit commercial use of Westland Wessex Helicopters for logging operations”. The director did not give any such assurance, but he indicated that the approach being taken by Helilogging was appropriate. He wrote to Mr Ford on 7 May 2003 drawing attention to the relevant rules and identifying specific issues that would require consideration. As to the restriction on external load operations, the director stated:As this aircraft is not type certificated and only eligible for a special category airworthiness certificate, the responsibility belongs to the applicant to satisfy the Director that the level of safety is adequate for the purposes for which the aircraft is to be used. With respect to the declared proposed use for external heavy lift logging operations, this involves two key elements namely;Airworthiness Considerations: This involves detailed assessment of the aircraft to address airframe structural, maintenance and parts supply considerations and will ultimately result in a maintenance programme (approved by CAA) appropriate to the type and frequency (utilisation) of the proposed activity.Your current approach to GKN Westland is very appropriate in working towards meeting this requirement.Operational Considerations: In the current absence of civil aviation certification requirements for Part 133 external load operations and given two fatal accidents (including one with a Westland Wessex Mk2) we will also require [the CAA] to be assured that operational aspects are addressed appropriately for the proposed operation. These will include but are not limited to:Crew requirements (number of crew)Crew trainingOperational proceduresThese issues need not be addressed right now but will need to be considered and discussed with CAA as part of the removal of any external load operation limitations. In that respect, your draft outline operations manual dated 7 May 2003 is appropriate and suitable for further development.(Footnote added.) Concerning the separate prohibition on the use of special category aircraft for hire 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 reward activity and the prohibition applies to use of this aircraft in this manner.To address this rule prohibition, you may apply ... for an exemption against this requirement. The CAA will consider this application in conjunction with the supporting evidence provided. Mr Gordon met with GKN personnel in Cowes in the United Kingdom on 21 May 2003 including Phil Grainger, technical director, and Larry Gladdis, engineer in charge, Wessex. Mr Remacha and Geoff Connor, team leader continuing airworthiness at the CAA, were also able to attend this meeting because they happened to be in Europe on other business at the time. Mr Gordon described Helilogging’s proposed operations and Mr Remacha outlined the New Zealand regulatory system. GKN agreed to provide a proposal and quote on receipt of a formal request from Helilogging. A proposal for testing the Wessex helicopters was subsequently submitted by GKN to Helilogging on 22 September 2003. Mr Gordon wrote to Mr Lanham on 29 September 2003 advising that a proposal had been received from GKN for the 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 final issues with GKN. Mr Gordon requested a meeting with CAA personnel to “work through the issues of exemption petition”. This communication gave rise to some concerns within the CAA. Brian Fearnley, who had taken over from Mr Remacha following his secondment to Air New Zealand, sent an internal email on 15 October 2003 to Messrs Lanham and Fogden, copied to Mr Remacha, raising various issues including the need for Rolls 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 possible that 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”. Mr Gordon appears to have recognised that no assurance could be given that an exemption from the hire or reward prohibition would be forthcoming. He sent an email to Mr Lanham, copied to Mr Ford, on 22 October 2003, the day before the meeting with the CAA, saying:John[,] finally finished the draft of petition for exemption and flight trial proposal. 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 being aware of the others, [sic] direction and thoughts. The purpose of the meeting tomorrow is to bring CAA up to date with the recent events, I have not reported back on my visit to the UK and meetings with [GKN] and Air and Ground support [regarding supply of parts]. ... On 29 October 2003, Mr Gordon sent an email to Ian Smith, a lawyer acting for one of Mr Ford’s financiers. Mr Gordon sent a copy of this email to Mr Ford and Mr Lanham. Mr Gordon noted that the CAA had indicated at the 23 October 2003 meeting that it was happy with the general direction being taken by Helilogging regarding the testing programme. Mr Gordon set out the steps envisaged over the next four months with a view to submitting all data to the CAA in support of an application for an exemption from the Rules. Mr Gordon invited Mr Smith to contact Mr Lanham directly should he wish to do so. Mr Lanham forwarded this email to Messrs Fearnley, Fogden and Remacha expressing 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 pertinent maintenance, inspection and operating schedule; perhaps we need to get across somehow this is experimental and the outcome of the ‘trial’ will initially determine if heli-logging is safe and viable with this machine. We can deal with the broader safety issues once we have the facts, Mr Ford deals with the viability issues, and perhaps GKN can give the financier the likelihood of the machine’s capabilities. Mr Lanham subsequently spoke with Mr Smith and explained that although the CAA was pleased with the professional approach being taken, there were a number of obstacles to overcome. 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 concerned Mr O’Malley might buy them. On 3 November 2003, Mr Ford wrote to GKN advising that its proposal was generally acceptable subject to clarification of various points prior to formal agreement. One of these was to address the prospect of failure. Mr Ford asked “[w]hat mechanism is available for adjusting costs should the unfortunate happen and the program fail at an early stage”. Final agreement was reached over the next few months culminating in Helilogging placing a conditional order with GKN in January 2004. On 17 March 2004, Helilogging applied for permission to conduct a 95-hour flight test programme. This proposal was styled “Westland Wessex Flight Trial Directive Logging Operations” and sought permission for five hours of flying within the confines of an airfield and 90 hours in a forest environment lifting logs. The stated purpose was to test the suitability of the Wessex to perform lifting operations and to establish operational and airworthiness procedures to ensure safe operation. David Gill, team leader of registration and airworthiness at the CAA, responded to Mr Ford advising that a special flight permit would be issued for development 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 out any logging operations”. Mr Gordon unsuccessfully attempted to persuade Mr Lanham to allow 30 hours of training in the forest. In his email to Mr Ford on 5 May 2004, Mr Gordon said his telephone conversations with Mr Lanham were non-productive. He described the CAA’s reaction to the request as being “incredulous”, and said the CAA thought Helilogging was “pulling the wool over their eyes” and “pulling a fast one”. Mr Ford wrote to Mr Lanham on 7 May 2004 explaining why in-forest training carrying logs was needed. Mr Lanham responded that same day confirming CAA’s position:I regret if there has been any misunderstanding and I emphasise that there has been no change in thinking or ‘policy’ with respect to your long term goals. We also appreciate the considerable investment you have made, we commend the professional approach you are taking and we wish you every success in the outcomes. However, as we agreed, this project was/is always going to be a steady progress through to the end of carefully planned and approved stages, with no guarantee necessarily of technical, operational or financial viability at the end of it. In June and July 2004, the CAA issued test pilot approval certificates for two pilots for the Wessex flight trials and a special experimental airworthiness certificate to enable these to be undertaken. Due to flight trials not being completed by the expiry date of 21 July 2004, a further one-month special experimental category airworthiness certificate was requested by Helilogging and granted by the CAA. A third airworthiness certificate was later issued at Helilogging’s request because the flight trials had still not been completed by 21 August 2004. The flight trials were eventually completed at the end of August 2004.Petition for exemption On 26 July 2004, prior to completion of the flight trials, Mr Ford petitioned for an exemption from the type certificate requirement to enable the helicopters to be used for commercial operations with an airworthiness certificate issued in the restricted category. We note this was not the type of exemption envisaged by the director in his letter to Mr Ford on 7 May 2003 (referred to at  above), which discussed the prospect of an exemption from the existing prohibition on external load operations and an exemption from the hire or reward prohibition associated with airworthiness certificates in the special experimental category. On 25 August 2004, Mr Ford advised Mr Lanham that Helilogging expected to complete the flight trials that week and he requested a three-hour meeting with the CAA, preferably on 7 or 8 September 2004 when Mr Gladdis from GKN would be available to attend. Mr Ford included with his letter a draft agenda listing four items for discussion: presentation of flight trial findings and supporting documents; GKN’s ongoing support; removal of cargo hook prohibition for the Helilogging operated Wessex; and exemption from type certificate requirement in the restricted category under the rules. The meeting was held on 7 September 2004 and was attended by Messrs Lanham, Fogden, Gill and John Bushell for the CAA. Messrs Ford, Gordon and test pilot Cranleigh Lee attended for Helilogging and Mr Gladdis from GKN. The witnesses who gave evidence about this meeting differed in their recollections of it. For his part, Mr Ford said he recalled asking Mr Gill towards the end of the meeting why the CAA would not immediately remove the prohibition to allow the Wessex to be used for heli-logging and was told that this would contravene the hire or reward restriction (for airworthiness certificates issued in the special experimental category). Mr Ford said that if he had been informed at the outset of this being a problem, he would not have taken all the steps he had. He said he threatened court action because he did not agree with the CAA’s interpretation of the hire or reward restriction. Mr Gill said he did not recall this being discussed but it was consistent with his view that commercial activities for hire or reward were not permitted under the special experimental category. Following this meeting, on 13 September 2004, Mr Ford sent Mr Gill the Wessex operations manual, maintenance programme and amendments to the airworthiness report. Mr Ford wrote to Mr Lanham confirming he had done this and asking when it would be convenient to discuss the way forward. Mr Lanham replied that the aircraft certification and rotary wing unit of the CAA had been given the material and would assess it and brief the director as soon as possible. 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 would fit within the regulatory options available if it were to be granted. Mr Gill’s subsequent report to the director is dated 21 September 2004 and records the background to Helilogging’s exemption application:The CAA has always had the view that transporting logs, and hence adding to their value, must be a hire or reward operation. Mr O’Malley was in the process of being prosecuted for this very action using his Experimental Category Wessex before it crashed fatally. Unfortunately the principle was not tested in court because Mr O’Malley pleaded guilty. After the fatal crash a restriction prohibiting use of the hook was placed on all further applications for airworthiness certificates for any Wessex helicopters, until it could be shown that such operations were safe.After discussions and encouragement from the CAA [Helilogging] contracted the original manufacturer, GKN Westland, to do a technical survey on the effects of logging operations on the Wessex helicopter. This involved sending out a technician to instrument the helicopter and conduct a series of flight tests. The results were then analysed back in England. Westland have produced detailed reports covering the testing and analysis. As a result of the analysis Westland have produced a completely new “Green Book” specific to the intended high-frequency lifting operations, which is the list of all parts with fixed replacement lives.The CAA stated to [Helilogging] that three aspects of any Wessex logging operation 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 of conditions need to be imposed to call up the complete operating system that has 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 continued manufacturer engineering backup, in case of any problems. This would maintain a similar level of support as would be expected of a type certificated civil helicopter.In my personal view the CAA should never have started the process of allowing a non-certificated aircraft to be used for commercial operations. However now the CAA has allowed the trials and investigations to go so far and [Helilogging] has committed a substantial sum of money, it would be very difficult to refuse the application except on purely technical grounds. Mr Gill discussed two regulatory options. The first was to grant an exemption from the prohibition in r 91.105(a) of the Rules on hire or reward operations using aircraft with a special experimental category airworthiness certificate. Mr Gill explained why he strongly opposed this option:Discussion – Option 1Option 1 would be setting a huge precedent that aircraft which have not met any recognised standards can be used for hire or reward operations. New Zealand is a signatory to the [Chicago Convention] which requires every aircraft issued with an airworthiness certificate to have met a comprehensive code of airworthiness equivalent to ICAO Annex 8. All countries do have a means to allow aircraft to fly that cannot meet this requirement, which varies from country to country. However they all impose limitations on those aircraft, which ALWAYS prohibits commercial operations.Part 115 has been proposed to provide an avenue to let such aircraft be used for passenger carrying, where the attraction of the ride is flying in that particular aircraft. The Wessex does not fit into this category at all and is being used solely because it is cheap to purchase and operate. The argument in this case appears to be that standards can be relaxed for remote-area logging, because the risk is lower. (Presumably this means the third-party risk, and the pilots are prepared to accept the higher risk for themselves.) This argument would undermine the basic integrity of the Rules, and those operators who pay the cost to purchase eligible aircraft with their attendant airworthiness support provided under the umbrella of a type certificate. If we are going to use an exemption to create a special category of operation just to suit one applicant, this would create an expectation from other applicants that such a route outside the Rules might be available to them. (For example I do not see what grounds we could then use to prevent the Mil-8 from operating similarly on the New Zealand register.)In 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 this would be calling into question the whole need for type certification. Any other grounds would effectively not be an exemption, but would be de facto rule making.(Footnote added.) In Mr Gill’s view, the only potentially viable option was to allow the Wessex Mk 2 to obtain type acceptance in the restricted category by granting an exemption to the type certificate requirement in r 21.43(a)(1) of the Rules. Mr Gill explained that this option would allow the Wessex to operate within the basic rules (for hire or reward) 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 in ex military Restricted category Iroquois helicopters, when at the time the CAA did not have a good understanding of the [Federal Aviation Administration of the United States of America (FAA)] Rule. We now know that the requirements for issue of a Restricted Category [type certificate] under [the Federal Aviation Regulations r 21.25] are fairly basic, provided it meets the rule “Is of a type that has been manufactured in accordance with the requirements of and accepted for use by, an Armed Force of the United States 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 authority was still the manufacturer. A copy of the Airworthiness Report for the Wessex helicopter was provided to the CAA. This also shows that the Wessex was subject to a very recent detailed review, including instrumented tests, because it 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 of logging operations. They have stated that underslung logging is not much different from military underslung loads. The fundamental difference is the frequency, and this is what has driven the huge reduction in lives, primarily for the tail-rotor drive system.Westland have produced a document called the Airworthiness Report, which defines the basis of airworthiness approval for logging operations. This would be an ideal document to call up as the basis of Restricted category type acceptance in New Zealand, and to call up any restrictions imposed.Granting type acceptance under the equivalent of the [United States] system for ex military aircraft as proposed would not be setting any dangerous precedent, for a number of reasons. One the type acceptance is totally dependent on manufacturer support, which would be difficult to achieve for any unsuitable aircraft. Any aircraft with likely civil applications would probably already have a civil approval. (The Wessex is slightly unusual in that Westland were able to cancel the civil type because there was only ever one operator, Bristow Helicopters.) There are also very few other British types which would come into this category. (The Westland Gazelle is one that comes to mind.) Mr Lanham updated Mr Ford on 4 October 2004 as to the remaining steps anticipated before the director would make his decision on the application. The first step was to complete the overall technical review of the aircraft’s certification and flight trials, the flight operations procedures and the maintenance programme. Mr Lanham said he hoped recommendations to the director could be formulated that week. The next step was to seek the director’s decision — “overall approval or otherwise” — which would require consideration of whether to grant acceptance of the aircraft in the restricted category with an exemption from the type certification requirement, or to grant an exemption to the prohibition on operations for hire or reward in the special category. Mr Ford was notified later that day that the proposed maintenance programme had been approved. Mr Lanham provided his written recommendation to the director on 11 October 2004. Mr Lanham identified three pathways available to the director to give relief to Helilogging in approving the aircraft for use for hire or reward. The first was to accept the aircraft into the restricted category and grant an exemption from the type certification. Contrary to Mr Gill’s view, Mr Lanham counselled against this pathway:The [Helilogging] proposal is one of an increasing number that cannot be addressed within the current Rules structure because such operations were not contemplated when the Rules were written. It should be noted that [pt 21 of the Rules] is on the 2004-05 Ministry of Transport Rules programme and that it will be re-worked extensively over the next two years. It is not possible to be certain of the outcome, although it is hoped that most of the concepts outlined above will find their way into the final form of the Rule. Until that is known it would be wise to take no action that would conflict with, inhibit or distort the final Rule.Accordingly, it is considered that option 1 would set an undesirable precedent and place the CAA at risk in the long term. The two categories of Standard and Restricted are limited to type certificated aircraft and to accept an ex military helicopter into even the latter would open the door to almost any aircraft that could demonstrate a similar standard to the [Helilogging] proposal. It would be a Trojan horse. The second pathway was to maintain the aircraft in the special category for private operations only but with the prohibition on external loads removed. Mr Lanham was also firmly opposed to this option given the commercial nature of Helilogging’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 private operations only would invite various subterfuges including the ‘private logs’ device that [the] CAA has already held to be contrary to the Rules and which has resulted in prosecution action. 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 external loads removed and to grant an exemption from the prohibition on use for hire or reward operations. Constraints on the use of the aircraft would be required. Mr Lanham described this as a “kick for touch” option until completion of the review of the Rules by the CAA. Mr Lanham concluded his report as follows:There are no aircraft certification, flight operations and/or maintenance concerns which would prevent or inhibit CAA approval of the Helilogging proposal.The aircraft should be retained in the Special category, with the prohibition on external loads removed, with an Exemption granted from the prohibition on use for hire or reward operations and with the following constraints on the use of 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; andOverall approval of the operations should be reviewed at the completion of the re-write of [pt 21 of the Rules]. The director met with Messrs Lanham, Gill and Fogden, on 13 October 2004 to discuss the matter. Mr Lanham advised Mr Ford the following day that the director required more information before making his decision. Mr Gill provided a further memorandum to the director on 14 October 2004 repeating his view that if the Wessex was to be permitted to carry out hire or reward operations, then it should be placed in the restricted category, even though it was not strictly eligible under that category. However, if this was permitted, he recommended additional requirements to increase the safety of the operation, including by requiring instruments and other equipment to be fitted to the aircraft (including a flight data recorder) in accordance with the requirements in pt 135 of the Rules. Mr Gill explained 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 and SH 3A accidents, and overseas in several studies. The only Westland Wessex operating in New Zealand crashed fatally while logging, after only a few months in service. Therefore the safety history of the Wessex in [New Zealand] is poor, although the small sample size makes any statistics meaningless.In the [New Zealand] Wessex accident, the complete reason for the loss of power in [the] No.2 engine could not be determined. It has also been reported that the civil Wessex was withdrawn from service “after three unexplained fatal accidents”. The CAA is seeking ways to increase the safety of the Wessex helicopter to be able to operate in the Restricted Category, and one means of doing this would be to increase the equipment requirements on board, for example to be equivalent to that required for Air Transport operations. ......[A flight data recorder] would greatly increase the safety of the operation by providing full data in the event of any accident or incident. It could also be linked 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 times schedule.)9 November 2004 memorandum By this time, Mr Ford was placing considerable pressure on the director for a decision, including by approaching the Minister of Transport, the New Zealand First Party and the media. The director attended a civil aviation conference in Hong Kong from 30 October 2004 until 8 November 2004. On 9 November 2004, the day after he returned from overseas, the director contacted Mr Ford in response to his many messages and advised that he could expect a decision by 15 November 2004. That same day, 9 November 2004, the director sent a memorandum to Messrs Lanham, Gill, Fogden, Connor, Tim Allen (general manager of airlines at the CAA) and Leslie MacIntosh (chief legal counsel) stating “[a]t this stage I have not been convinced that it would be safe to grant the Exemption”. The director then set out his reasons. The memorandum took the form of a draft decision and was sent to his key advisers for their consideration and comment. Mr Gill provided his comments on 15 November 2004. Ms MacIntosh also responded suggesting numerous amendments shown in a marked-up version. We pause here to note that Helilogging’s first dishonesty allegation in its deceit cause 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 dishonestly withholding material information from [Helilogging], and in particular that the Director had already determined by 9 or 15 November 2004 at the latest that [Helilogging’s] applications had or would be declined”. The director advised Mr Ford on 16 November 2004 that he was not yet in a position to give his decision. The director said he would advise Mr Ford of his decision (presumably in draft) and give him the opportunity to comment on it or make further submissions “before it is made”. On 19 November 2004, the director sent a detailed nine-page memorandum to Mr Lanham, copied to Mr Allen, identifying his concerns. The director noted that there were two distinct safety regulatory issues that prohibit the operation of Westland Wessex helicopters in hire or reward logging operations in New Zealand — the prohibition on external load operations and the prohibition on the use of aircraft with special experimental category airworthiness certificates for hire or reward operations. The director made it clear that he intended to deal with each of these issues personally, with appropriate technical advice. The director noted that Mr Remacha’s report of 22 May 2002 raised a number of issues relating to the use of ex-military aircraft that needed to be debated and addressed at a policy level and he emphasised the need for this work to be progressed with urgency. He said the failure to progress this policy work had made his decision with respect to Helilogging’s applications “especially difficult”. The director set out the additional advice he required and outlined the seven-stage process he intended to follow 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 in Mr Remacha’s 22 May 2002 memo taking account of information subsequent to the date of that report.b) Letter to Helilogging Ltd requesting more information, in particular a copy of the contractual arrangements with GKN.c) Written advice from technical advisor following a review of the additional information.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 technical advice 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 in the drafting of the paper. The copy of the contractual arrangements with GKN referred 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 technical advice as needed.g) Final decision. The director concluded his memorandum by giving the following directions:You will have noted Helilogging is now applying pressure on my decision making process through the media, please put this pressure to one side as it is most important the decision is made properly and fairly.In interests of fairness to the operator, priority must be given to progress these issues expeditiously. If at any stage matters become delayed please let me know immediately. If there are any resource limitations please also bring this to my attention as soon as possible. Ms MacIntosh said she recalled advising the director on the seven-stage process. She said she considered the director’s power to grant an exemption to one of the Rules under the Act was very unusual and limited by the legislation. In her opinion, the director needed to adopt a structured process to gather the relevant information in order to make a proper decision. She also considered that Helilogging should be given an opportunity to comment throughout the process.Judicial review proceedings On 25 November 2004, Helilogging issued proceedings in the High Court at Wellington seeking an order by way of permanent mandatory injunction directing the CAA or the director as applicable to issue a certificate of airworthiness and all exemptions or other approvals as may be required to enable Helilogging to immediately commence use of the Wessex helicopter for commercial logging operations throughout New Zealand. Indemnity costs were also sought. Helilogging also filed an interlocutory application seeking an interim mandatory injunction to the same effect. Timothy Castle, then counsel for Helilogging, said he fully recognised that the prospects of success in securing relief by way of interim mandatory injunction were limited. However, his thinking behind the application was that the prevailing uncertainty for Helilogging needed to be brought to a head in a “robust way”. He said he hoped the application would cause the director “to focus squarely and immediately” on the exemption applications and “what impediments there were precluding the exemptions being granted”. 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 oral judgment, the Judge stated he “was concerned with the notion that the Court was being asked to direct a certificate to be issued on terms which impinged on public safety issues; a decision, in the context of civil aviation, which is reposed in the Director to make”. The Judge granted leave for Helilogging to amend its statement of claim to seek an order in the nature of mandamus to compel the defendants to make a specified decision. Helilogging’s statement of claim was subsequently amended to seek:(a) an order by way of permanent mandatory injunction directing the CAA or the director, as applicable, to issue to Helilogging a certificate of airworthiness and all applicable exemptions and other approvals as may be necessary to enable Helilogging to immediately commence commercial heli logging; or(b) an order by way of interim mandatory injunction directing the CAA or the director to forthwith give formal notice to Helilogging of all and any information, requirements or other action lawfully required by them of and from Helilogging before all necessary aviation documents, approvals, exemptions and authorities may be issued to enable Helilogging to immediately commence its business operations; or(c) in the alternative, an order, interim or permanent, compelling by way of direction the director in particular or, as necessary, both the CAA and the director to determine and decide Helilogging’s applications for airworthiness certification together with all exemptions sought and all applicable approvals to enable commencement of the heli-logging business using the Westland Wessex. Detailed affidavits in opposition from the director and Messrs Lanham, Fogden and Gill were filed on 7 and 10 December 2004. These attached the various technical reports provided to the director and his most recent memorandum dated 19 November 2004 in which he detailed the further advice he required and the seven-stage decision making process he intended to follow. 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. As to the first order, the Judge said that Helilogging was effectively asking the Court to make the exemption decision and the Court could not do this. As to the second and third orders, the Judge observed that Helilogging was asking the Court to give directions to the director as to the way in which, including the steps he should take, and the timeframe within which he should consider the application. The Judge said it was clear the Court could not give any such direction. These were matters for the director, who was required to have specific regard to the safety issues in exercising his exemption power under s 37 of the Act. The Judge declined to express any final view on whether intervention in the decision making process by way of mandamus or interim mandatory injunction was possible as a matter of law. The Judge left the question open for reconsideration, if necessary, if the matter needed to return to the Court. The Judge therefore adjourned the proceeding on the basis that it could be brought on at short notice, if necessary: Accordingly, I consider that the best course is to adjourn this proceeding on the basis that it may be brought on on 14 days’ notice, if necessary. That leave should be reserved to both parties, so that the plaintiff may apply if it considers that progress is not being made in an appropriate way, or the defendants may apply if it is contended that the continued existence of the proceedings is impeding the decision-making process. In leaving the proceedings open in that way, I am not to be seen as encouraging either party to return to this Court unnecessarily. That could be counter productive and could divert the resources from the consideration of the important issues which underlie these proceedings.Implementation of seven-stage processStep 1 — briefing from technical advisers On 25 November 2004, the director appointed Mr Fogden to manage the Helilogging application process and report directly to him. It will be recalled that Mr Fogden was the manager of rotary wing and agricultural operations at the CAA. On 23 December 2004, Mr Fogden provided a detailed 14-page report to the director responding to his information requests. This report was prepared in consultation with Mr Gill. Mr Fogden noted that since Mr Remacha’s report in May 2002, there had been two more fatal accidents involving ex-military helicopters in New Zealand, these occurring on 31 January 2003 and 22 April 2004. He stated that no ex-military helicopters were currently involved in heli-logging operations in New Zealand, existing operators (other than Helilogging) having opted to use only civilian standard type certificated aircraft for this work in accordance with the existing Rules. Mr Fogden listed eight categories of additional information that should be sought from Helilogging before considering further whether an exemption should be granted, including:1. Details of the ongoing relationship between Helilogging and GKN, including a copy of the contract setting out precisely what airworthiness support will be provided, for what duration and what quality controls have been put in place to monitor performance of the ongoing support.2. Clarification of the basis upon which GKN is involved with Helilogging. Mr Fogden noted that some of the documentation submitted by Helilogging indicated that GKN is approaching issues relating to the Wessex as a type acceptance or certification process whereby New Zealand would somehow become the responsible regulatory authority dealing with the Wessex. He said it would be helpful to have information from Helilogging about what it has advised GKN about the process it is undertaking.3. Details of the state of the component parts claimed to have been purchased for use on the Wessex helicopters including documentary history, storage conditions and the ongoing certification and control of these components.4. Confirmation from GKN that they had taken into account the effect of repeated-cycle-heavy-lift operations on the Rolls Royce Gnome engine, for which there appeared to be no manufacturer support, and that the engine is suitable for the proposed role.Step 2 — request for further information The director wrote to Mr Ford on 24 December 2004 enclosing a copy of Mr Fogden’s report and detailing the further information he required. He concluded by stating:I need to make it clear to you that the entry of the Wessex into the civil aviation system in this country, on any basis other than under a Special Experimental Airworthiness Certificate, raises a number of extremely complex technical and safety issues. Provision by you of the information requested below does not mean that safety considerations do not need to be carefully weighed by me when I make my decision. Provision of the information will not mean that you have necessarily resolved all safety issues surrounding the Wessex....Ultimately, I need to be satisfied that the risk to safety will not be significantly increased by the granting of the exemptions sought in the circumstances of each particular case. The exemption you have sought from Rule 21.43 is a significant departure from the existing safety regulatory regime which precludes the operation of helicopters such as the Wessex other than on a Special Category Airworthiness Certificate.I will make the decisions in relation to your applications as quickly as I can. On 18 January 2005, Helilogging’s solicitor, Graham Takarangi, wrote to the director advising that Helilogging was currently addressing the information requests. In the meantime, Mr Takarangi said he was instructed to petition for the removal of the prohibition on external load operations on the current airworthiness certificate 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 crash in February 2001) in the exercise of his delegated authority under s 7(3) of the Act to impose conditions on the issue of airworthiness certificates. The director declined Helilogging’s application to remove this condition on 20 January 2005. Mr Takarangi replied on 3 February 2005 asking the director to reconsider this decision. By this time, Helilogging had engaged Jim Barclay of Alaeda Systems Ltd (Alaeda), a consultant aviation engineer and former employee of the CAA, to assist with the exemption application process. Mr Barclay sent a draft report to the CAA on 8 March 2005 providing an initial response to the director’s information request of 24 December 2004 and a draft amended petition seeking an exemption from the type certification requirement in r 21.43 to allow restricted category certification for the Westland Wessex Mk 2 helicopter. Mr Barclay stated that GKN would provide continuing airworthiness support for the aircraft and a contract would be executed when CAA approvals for external load operation were “imminent”. He said that the engine manufacturer (Rolls Royce) also offered such agreements and “this [would] be pursued at the same time”. On 10 March 2005, the director wrote to Mr Takarangi saying he would respond as soon as his technical advisers had considered Mr Barclay’s draft report. The director also confirmed his earlier decision declining the application made on 20 January 2005 (and repeated on 3 February 2005) to remove the external load condition on the existing special category airworthiness certificate that had been issued. The director declined this application because Helilogging had not supplied any further technical information to support it. On 4 April 2005, Mr Lanham wrote to the director and Ms MacIntosh updating them on the rule development policy work being undertaken on pt 21 concerning special category aircraft. Mr Lanham said this was particularly relevant to the Helilogging issue. He attached the most recent iteration of the Project Scope Statement (dated 23 March 2005) and added:... under the proposed re-write of Part 21, aircraft such as ex-military helicopters and antique aircraft might become eligible for the Special Restricted – PNC [production non-type certificated] or Special Limited – PNC sub-categories. In such a manner, they might then be permitted to carry out commercial operations under controlled certification standards, rigorous operating requirements and under tightly controlled operating limitations, either under [pt 133] or [pt 115]. Mr Lanham noted that the project involved a comprehensive review of the special airworthiness certificate category in pt 21 with the objective of introducing new subcategories to accommodate the diverse range and uses of aircraft that currently exist within that category. Mr Lanham observed that the issue of standard or restricted airworthiness certificates requires aircraft to have a type certificate issued by a civilian authority in accordance with ICAO Annex 8 requirements. New Zealand aircraft that require an airworthiness certificate for operation but lack a suitable type certificate are placed in the special category. Mr Lanham said this had resulted in the special category becoming “a dumping ground” for a wide range of aircraft that do not qualify for standard or restricted airworthiness certificates. Rule changes were considered necessary because it was not possible to address satisfactorily the various certification, continuing airworthiness, maintenance and operational requirements of such a diverse group of aircraft under a single category of airworthiness certificate. Mr Lanham also noted that the prohibition on hire or reward operations using special category aircraft had resulted in some operators disguising commercial operations as private operations with consequent safety implications. The prohibition also prevented the legitimate development of new commercial aviation activities with some types of special category aircraft. He noted that the CAA currently had limited ability to place restrictions on the ways in which special category aircraft may be used to prevent inappropriate or unsafe uses. Mr Lanham also observed that surveillance and regulatory control of special operations would be very difficult for the CAA to perform effectively unless adequate resources were available. In particular, resources would be required to monitor continuing airworthiness and to prepare airworthiness directives for a wide range of complex aircraft. On 4 April 2005, Helilogging supplied an updated version (still in draft form) of Mr Barclay’s report dated 31 March 2005. The director was asked to brief the Transport and Industrial Relations Committee on Helilogging’s proposal on 7 April 2005. The Select Committee hearing was prompted by Mr Ford’s complaints to Peter Brown, a Member of Parliament from the New Zealand First Party. Messrs Fogden, Gill, Sid Wellik (in-house CAA solicitor) and Ms MacIntosh also attended this hearing as did Mr Ford, his wife and Mr Barclay. The director commenced his presentation by pointing out that he was obliged to exercise his statutory functions independently from the CAA and the Minister of Transport. For that reason, he said he could not be influenced by the Select Committee regarding his decision-making on any particular matter. The director then spoke to a powerpoint presentation outlining the issues and the process being followed to determine Helilogging’s application. The director’s speaking notes accompanying the last of the 12 slides summarised the situation regarding Helilogging’s exemption application:1 – We have advised the Applicant that the NZ CAA will not be the international regulatory agency for the Westland Wessex aircraft.The NZ CAA simply does not have the resources or past expert knowledge of the particular aircraft to undertake such a role.The Applicant has ignored our position and they have advised us that the CAA would be the regulatory authority for the Westland Wessex.2 – I have asked for details of the relationship between the Applicant and the manufacturer (GKN). I have already stated why I would like that type of information, which is to understand how the manufacturer will provide ongoing support to the Applicant. I have been advised that there is no current contract between the parties.3 – With a 90% reduction in the life of the components of the aircraft, spare parts are an important consideration. I have asked for information including the state of the components, their document history, and their storage conditions. I have been advised by the Applicant that “normal maintenance practices are being followed”.3 - I have asked for confirmation from the aircraft’s manufacturer that it has taken into account the effect of “repeated cycle heavy lifting” operations on the Rolls Royce engine. This was not taken into account in the Applicant’s Flight Trials. The Applicant has advised me that Rolls Royce provided a letter to [the] CAA in April 2002. However, that was before the Applicant undertook its 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 no requirement under Civil Aviation [pt 133 of the Rules], and they would advise me closer to the time operations took place.My technical advisers will be providing me with a written report on the Applicant’s “amended draft” report. However, even on the face of their response, they have not been forthcoming in providing me with the information I have sought.I have provided the Applicant with internal reports, which show the basis of my safety concerns. On 14 April 2005, a further updated version of Mr Barclay’s draft report was sent to the CAA. Mr Barclay insisted that the “reality is a type acceptance process is taking place”, that this was “the appropriate pathway for this helicopter” and the “CAA will be the regulatory authority for the Westland Wessex, for what will be a non ICAO Annex 8 airworthiness certificate”. He said that although the CAA “will be the regulatory authority, GKN Westland will be responsible for most aspects of oversight of the Wessex design and continuing airworthiness”. Mr Barclay stated that an “extensive range of components is held by [Helilogging]” and “[n]ormal maintenance 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 engine life” and he was “surprised that this question has been asked”. On 28 April 2005, Mr Takarangi advised the CAA that the director and his technical advisers should proceed on the basis of this third version of Mr Barclay’s draft report.Step 3 – updated advice from technical advisers On 19 April 2005, Mr Gill provided a memorandum to Mr Fogden noting that ex-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 under the current Rules are simply ineligible”. He recommended that Helilogging’s application be considered from both a technical and policy perspective:POLICY IMPLICATIONS[New Zealand] is a signatory to the ICAO convention and as such requires all aircraft in New Zealand to have an airworthiness certificate, which is issued based on showing compliance with a detailed and comprehensive code of airworthiness. 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 better policy in this area, which will hopefully be developed under the Part 21 Project currently under way. Certainly the implications on the commercial environment of allowing in old ex-military aircraft needs to be considered. Clearly this will lower standards, when the CAA should be aiming to improve these. The Wessex is only being used because of its low cost and no other reason. Allowing the Wessex to compete against fully type certificated, and thus far more expensive, machines may force all operators to turn to similar types 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 use of an ex-military Westland Wessex helicopter. These include:1. Questionable safety record in civil operations which may have contributed to 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 lift operations shows the helicopter was simply not designed for this type of operation.3. The lack of parts traceability for ex-military surplus stock bought as bulk lots.4. The whole difference in operating and maintenance philosophies between civil and military operators can mean one transposed into the other does not work well.(Witness the UH-1 and Wessex accident history in [New Zealand].)(Footnote added.) Mr Fogden completed his assessment and provided his report to the director on 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 will be the regulatory authority for the Westland Wessex, for what will be a non ICAO Annex 8 airworthiness certificate”. Mr Fogden described this assumption as “completely flawed” because the CAA “simply does not have the experience or data to support such a role”. He observed that any National Airworthiness Authority (NAA) issuing a type certificate will have been fully involved in the whole type certification process, including structural and flight testing, will hold a complete set of technical data, and will have had a specialist responsible for following the type’s airworthiness history for the life of the aircraft. Mr Fogden noted that the CAA had none of this information nor did it have any expertise relating to the Wessex. The CAA had advised Helilogging that it would not undertake this role, which was outside its statutory mandate, but Helilogging had ignored the CAA’s position on this. As to the issue of parts, Mr Fogden reported Helilogging’s response “that the parts have been obtained from two reputable sources with appropriate documentation” and that “normal maintenance and storage practices are being followed”. Mr Fogden said he considered this response “seriously underestimates the significance of the question to [the director’s] statutory obligation to be satisfied that the risk to aviation safety will not be significantly increased by the granting of the exemption”. Mr Fogden considered that the response did not adequately address the safety issues raised concerning the traceability of ex-military components. Concerning engine support, Mr Fogden reported that Helilogging referred to a letter from Rolls Royce in 2002, prior to the lifting trials undertaken between June and August 2004. There were only implied assurances from Helilogging that the engine manufacturer had taken into account the effect of repeated cycle heavy lift operations on its engine installation in the Wessex Mk 2. Mr Fogden noted that the fatal crash of the only other operational Wessex — a Mk 5 — in New Zealand while heli-logging was attributed to an undetermined engine failure. Mr Fogden did not consider this safety issue had been adequately addressed. We note in passing that Helilogging did not provide the CAA with a letter it had obtained from Rolls Royce dated 3 March 2005. Rolls Royce stated in this letter that no significant technical assistance could be offered without a contractual arrangement and, in any event, support for the Wessex operation was limited “both in terms of spares support and publication support as the last formal operation of the Wessex ceased with withdrawal of the aircraft from UK MoD operation”. Mr Fogden concluded by stating that only two of the eight information requests made to Helilogging on 24 December 2004 had “been answered in a manner that is useful to [the director’s] section 37 decision-making”. Mr Fogden considered that in the absence of the requested information and given the lack of oversight of the Wessex by a recognised NAA, the director could not be confident that the risk to safety would not be significantly increased by granting the exemption. He therefore recommended that the preliminary decision should be to decline the petition for non-fulfilment of the s 37 criteria.Step 4 — consideration of advice and preliminary decision After meeting with Mr Fogden to discuss the matter, the director made his preliminary decision declining the exemption applications on 13 May 2005.Step 5 — preliminary decision provided to Helilogging The director advised Mr Ford of his preliminary decision that same day and attached a copy of Mr Fogden’s report. The director invited Mr Ford to respond with any comments within 20 working days.Step 6 — consideration of Helilogging’s comments On 20 June 2005, Helilogging submitted its final report from Mr Barclay. This report consolidated the information contained in the three earlier draft reports and addressed “the bigger picture of restricted category, special category and their relationship with the notion of hire or reward”. Mr Barclay first addressed the hire or reward issue saying this was “central to how the Wessex is handled”. He acknowledged this was a contentious issue, but he suggested interim action be taken to immediately lift the external load prohibition on the current special category airworthiness certificate. Mr Barclay argued this was justified on the basis that “own trees, own helicopter, own sawmill” was “obviously not hire or reward”. Mr Barclay explained the benefit of his proposed interim action as follows:This would allow time for the boundary between hire or reward and other operations to be properly determined, and also allow the simultaneous preparation of a Section 37 exemption to allow the issue of a restricted type acceptance certificate for the ex-RAF Wessex HC Mk 2 helicopter. A revised draft petition for exemption from the type certification requirement in r 21.43 of the Rules was included as appendix 5 to the final report. Mr Barclay turned to the question of whether the CAA should assume the role of NAA for the purposes of type certification of the Wessex, and offered four alternative 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 airworthiness approvals are based on a satisfactory military service history, rather than conformance to an airworthiness design code.4. The CAA issues a section 23 delegation to the aircraft manufacturer. Mr Barclay summarised Helilogging’s position as follows:SUMMARYCAA have encouraged [Helilogging] to satisfy the various and quite detailed technical requests in respect of Wessex RHL [repetitive heavy lifting] operations. [Helilogging] have responded to this, including the submission of two petitions, and the expenditure of a considerable amount of money, on the basis that there was a procedural pathway through a section 37 exemption to permit RHL operations of their ex-RAF Wessex HC Mk 2 helicopters.Thus if an exemption is required, whatever form it takes, has to overcome the question of regulatory authority.In our view that procedural pathway already exists, and an exemption is not required, as the use of [Helilogging’s] helicopter to move [Helilogging’s] own trees should not be classified [as] hire or reward. Thus special category airworthiness 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 at a late stage is inconsistent with the ongoing consideration of their exemption application. If the exemption process cannot overcome the regulatory authority issue, then the exemption applications should have been immediately rejected. They weren’t, and instead [the] CAA has required [Helilogging] to address secondary and consequential issues such as QRC cards, nominating a Chief Pilot etc.This report, despite its size and extent, may not in itself provide all of the information necessary to issue an aviation document. However it does:Show the ex-RAF Wessex helicopter will meet the safety tests of section 15 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, should an exemption be required.Show there is no basis to refuse the approval of the ex-RAF Wessex HC Mk 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 2 helicopters. Regarding support from GKN, Mr Barclay advised that “a contract will be executed 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 with appropriate 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 months of RHL operations. This will provide adequate time to determine the actual ‘exchange rate’.” Mr Barclay said that Rolls Royce product support could be obtained for the 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”. Appendix 2 was headed “General Information”. Under a subheading “Company Support”, Mr Barclay stated that Helilogging “will be drawing on the expertise of both [Messrs] Gordon, and Lewis”. Mr Barclay explained that Mr Lewis “was involved in the original test flying of the Gnome powered Wessex helicopter, and also had line flying experience with the aircraft on Bristow’s North Sea operation”. We interpolate here to note that this was a reference to the same Mr Lewis we introduced at  above. It will be recalled that Helilogging strongly criticises a letter subsequently prepared by Mr Lewis in July 2005 and relied on by the director as one of the reasons for his final decision declining the exemption petition. One of the allegations made by Helilogging in its deceit claim against the CAA is that Mr Lewis dishonestly failed to disclose various matters, including his experience with the Wessex Mk 5 in 1998 and 1999 (for Mr O’Malley). As noted, although the contention that the CAA is vicariously liable for Mr Lewis’ allegedly dishonest conduct was abandoned at the hearing of this appeal, the underlying allegations of dishonesty by Mr Lewis remain an important part of Helilogging’s case. It is therefore helpful at this point to set out Mr Lewis’ relevant experience and explain how he came to be involved, both as an adviser to the CAA on Helilogging’s exemption application and as someone Helilogging anticipated would provide ongoing technical support for its operations if an exemption were to be granted. Before doing so, we make the obvious point that, at least in 2005, Helilogging, their independent aviation consultant, Mr Barclay, and the CAA all regarded Mr Lewis as a well qualified expert able to provide relevant assistance. Mr Lewis is a Fellow of the Royal Aeronautical Society in London and a past member of the International Society of Air Safety Investigators and the New Zealand AIA. His long and distinguished aviation career stretches back to 1948 and includes experience with Westland Wessex helicopters. Mr Lewis joined the RAF in 1950 where he became a test pilot, which included test flying helicopters. He was working for the RAF in this role at the time the Wessex Mk 1 was developed. In 1963, he resigned 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 were experiencing with their Wessex Mk 52 helicopters which Mr Lewis understood were the same as the Mk 2. Mr Lewis later travelled to Brunei to test the Iraqi Air Force’s Wessex Mk 2 helicopters. These helicopters were labelled Wessex Mk 53 but Mr Lewis said there was no separate type rating for them and they were the same in all operational respects as the Mk 2. Mr Lewis was appointed by the British Board of Trade as a type rating examiner and board of trade examiner on aeroplanes and helicopters. In this capacity he worked for several years with the British Air Registration 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 officer for Bristow in the North Sea and Persian Gulf and gained line flying experience with the Wessex Mk 60 on Bristow’s North Sea operation. In 1980, following his return to New Zealand in 1971, Mr Lewis joined the civil aviation division of the Ministry of Transport as a helicopter general aviation inspector. His primary task was to establish and maintain operational standards throughout New Zealand. He was appointed a flight test examiner for commercial and private 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 sector industry roles including as the chief flying instructor for helicopters at Flightline Aviation Ltd located at Ardmore Airport. During 1992–1996, Mr Lewis provided consultancy services to the CAA. In late 1998, Mr O’Malley approached Mr Lewis to provide type-conversion training for himself and his pilot, Grant Ward, on the Wessex Mk 5 (the aircraft that subsequently crashed). Mr Lewis carried out two 90-minute flights in this aircraft with Mr O’Malley on 22 December 1998. The following day, he carried out four further flights, three with Mr O’Malley and one with Mr Ward. He then provided a flight evaluation report to the CAA on 12 January 1999 recommending that the aircraft be issued with a restricted category airworthiness certificate. Mr Lewis undertook four further flights with Mr Ward in this aircraft in February 1999. In 2003, Mr Lewis received the Individual Award of the Aviation Industry Association in recognition of his outstanding contribution to the advancement of aviation. We turn now to explain how Mr Lewis became involved with Helilogging’s exemption application. In early 2005, he was engaged by Mr Fogden to assist the CAA on its review of the Rules relating to agricultural aircraft overloading, specifically in aerial topdressing operations. While working on this project, Mr Fogden asked him whether he had experience with Wessex helicopters. On learning he did, Mr Fogden briefed Mr Lewis on Helilogging’s proposal and gave him a copy of Mr Barclay’s final report to review. Mr Lewis called in to see Mr Barclay on 19 May 2005. The two knew each other, having worked together at the CAA many years earlier. Mr Barclay reported on this visit in an email he sent that evening to Messrs Takarangi and Ford and others involved 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 was involved in the early Wessex development work, including time with [Rolls Royce] on the Gnome engine development! He was also allowed to do some freelance flying with Bristow’s in the Wessex.His medical has lapsed, but he is still passionate about the Wessex. He still does the odd bit of expert advice, which may be why CAA had sent him a copy of my latest report. He described it as superb, which if he told them that, may mean they don’t contact him again... However it does mean we now have a 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 to his CAA days of how venison recovery etc was handled. Bernie was originally a school teacher, so he is a reasonable thinker.Will fax you the [Federal Aviation Authority] documents I have on compensation or hire (hire and reward).Attached is [the] email to David Gill I mentioned, note how I worded regulatory oversight. David is straight up and down so should be a useful meeting. ...The latter reference was to a meeting Mr Barclay had arranged with Mr Gill to be held on 24 May 2005. In his email to Mr Gill confirming this meeting, Mr Barclay set out the 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 aviation documents].Step 7 — final decision Mr Fogden asked Mr Gill to consider two regulatory issues arising out of Mr Barclay’s final report. Mr Gill provided a report dated 25 July 2005 in which he disagreed with Mr Barclay’s contention that a restricted category airworthiness certificate could be issued to ex-military aircraft. Mr Gill believed this was not correct stating “there are no precedents at all to support this contention”. Mr Gill considered that the provision relied on by Mr Barclay related to aircraft originally eligible as civil aircraft, subsequently used for military service and then returned to civil use. He said there was “nothing to indicate aircraft not formerly type certificated to civil design standards could ever get anything other than Restricted — Private Operations Only, which was the equivalent of the Special Category Experimental under the new Part 21”. Mr Gill then addressed Mr Barclay’s argument that there was precedent for the CAA to take on the role of the regulatory authority under the agricultural overload provisions of appendix B of pt 137 of the Rules. Mr Gill did not consider this to be a comparable situation and added that these provisions did not involve the CAA taking over the manufacturer’s responsibility to provide continuing airworthiness support for the aircraft. He explained that the appendix B provision was “the same as has been specified in the FAA Rule CAR 8 for many years, and most [United States manufacturers] 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 design problems”. On 20 July 2005, the director met with Messrs Fogden and Lewis. Mr Lewis was 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-logging operations. Following this meeting, Mr Lewis sent a letter to the director on 23 July 2005. This is the letter Helilogging criticises as containing outdated information and as fraudulently concealing his 12 January 1999 report to the CAA (on behalf of Mr O’Malley) regarding the Wessex Mk 5. Mr Lewis commenced by summarising his background experience with Wessex helicopters, starting in 1959 with the Mk 1. He went on to outline his experience flying the twin engine versions — “the Mk 52 with the Iraqi Air Force in Baghdad and the Wessex 60 (civilian version), with [Bristow] Helicopters in the 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 was the best helicopter that [he] had flown at that stage”. However, he expressed “doubts of 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 be checked on a pre-flight inspection. The RAF, the Royal Navy and Bristow employed fuel management practices to mitigate this problem, but Mr Lewis said he could not see that happening in the back country of New Zealand. He said he feared that “without frequent maintenance inspections and pre flight tank drains, that condensation and other contaminants are going to get into the fuel systems”. Mr Lewis suggested that this “could have contributed to the [Mk 5 accident in February 2001]”.(b) The aircraft was “very prone to ground resonance”.(c) The Gnome engine is “very delicate and complicated” having a row of variable inlet guide vanes in front of a 10-stage axial compressor. The first four sets of stator blades are also variable, all moving in accordance with compressor rpm. Mr Lewis said that if any unusual variation or slowness of movement occurs, the engine will invariably stall. He suggested this was another possible explanation for the Mk 5 crash in 2001.(d) The fuel computer control system was the heart of the engine. He said the computer receives various signals, the loss of any one of which can cause immediate problems, some of which he had personally experienced. Mr Lewis also said the Wessex had no manual throttle reversion. He referred to starting problems caused by low battery voltages and cold ambient conditions: “I seem to remember that starting was impossible below about 20 volts”. He added that while the civilian Mk 60 was fitted with a voltmeter, there was no such instrument in the Mk 2.(e) The Iraqi Air Force fleet all had problems associated either with the engines or the computer. He said he flew all these aircraft and grounded the entire squadron. He said he did not know whether the problems were resolved because he had to leave the country.(f) Mr Lewis noted that Helikopter Services, in Norway, had replaced the Gnome engines in their helicopters (albeit not the Wessex) with another type of engine because of dissatisfaction with the Gnome and its computer system.(g) Mr Lewis commented on Mr Barclay’s reference to approximately 100 40-foot containers of spare parts. He noted that Mr Barclay had named those spares he considered to be important but made no mention of fuel computers. Mr Lewis reiterated that these are the heart of the Gnome engine and, without them, the engines would not start. Even if there were spares, he raised questions — “how have they been stored? Do they have a shelf life? Would you trust the very first generation fuel computers that could be forty years old?” He answered this latter question by saying “[o]n very demanding logging operations, I would not”. He added that this might also have been a contributing factor in the 2001 Mk 5 accident. Mr Lewis concluded by saying:I always enjoyed flying the Wessex, but as you can see, I have grave doubts about its viability for the tasks as suggested by [Helilogging]. Two handwritten changes were made to this letter following its receipt by the CAA. The first was the reference in the third paragraph to the “Mk 52”, which Mr Lewis flew with the Iraqi Air Force. This was changed to “Mk 2” by striking through the “5” with a diagonal line. The second was in the concluding paragraph quoted 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 make the second of these changes. Mr Lewis said he did not recall requesting or authorising the first change but regarded it as immaterial because he considered the Mk 52 was the name of the Mk 2 model supplied to the Iraqi Air Force. He said he always understood these aircraft were the same. Mr Fogden prepared his final report in which he recommended that the exemption petitions be declined. He sent this report to the director on 9 August 2005. The director advised Helilogging of his final decision declining the exemption petitions on 19 August 2005. The director attached a copy of Mr Fogden’s 48-page final report, which included a copy of Mr Lewis’ letter. The director also attached a five-page file note summarising his deliberations. The director stated he did not consider that any of the conditions in s 37(2) of the Act had been met. Addressing each of these jurisdictional conditions in turn, the director concluded:(a) The requirements of the Rules had not been substantially complied with by Helilogging.(b) The action proposed was not as effective as actual compliance with the Rules.(c) The prescribed requirements could not be considered clearly unreasonable or inappropriate in the particular case.(d) There had been no events that made the prescribed requirements unnecessary or inappropriate in the particular case. The director further stated he was not satisfied that granting either exemption to permit the proposed use of the Westland Wessex helicopter for heli logging would not 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 and I advise that I am not satisfied that in the circumstances of the Westland Wessex helicopter being used as proposed by [Helilogging] that the risk to safety 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 report of Mr Fogden dated 9 August 2005. I have carefully considered his recommendation and agree with the conclusion on page 46 of his report. In particular, I note the New Zealand accident experience to date with ex military helicopters; the operational experience of Wessex aircraft demonstrated in the information received from Mr Bernie Lewis. Finally, the director said that he did not consider it would be appropriate to grant either alternative exemption in any event because of the significant precedential implications. The director said he agreed with the policy issues raised in Mr Fogden’s report:In addition to the reason outlined above, I also consider it inappropriate to grant an exemption because of the significant precedential implications of such an exemption. In fact, I am of the view that, if granted, the exemption proposed 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 particular concern to me is the international standing of the New Zealand civil aviation system with respect to our ICAO obligations relating to airworthiness and in bilateral technical arrangements with other ICAO contracting states.2005–2014 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, including Messrs Gordon and Takarangi, to discuss the decision, the Fogden and Lewis reports underpinning it, and future options. These included a possible claim for compensation. The next day, Mr Barclay wrote to Mr Lewis stating that his 2005 letter, which had 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 to the helicopter and its engines since Mr Lewis’ “era” while others were said to be the result of unfounded assumptions. Mr Barclay concluded his email by saying:I have a lot of respect for your knowledge, and experience; however much has changed since that time. I do encourage you to review your letter in the light of my comments. Mr Lewis replied by return:Thanks Jim.I take on board what you have said. As I said before, your report was very good. It still is.Regards,Bernie. On 15 September 2005, Mr Takarangi attempted to file in the District Court at Lower 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 of appeal from an exemption decision under s 37 of the Act. On 16 September 2005, Helilogging filed a notice of discontinuance of the judicial review proceedings it had commenced in late 2004. On 14 December 2005, Mr Ford sent an email to Mr Lewis following a telephone discussion the previous day. He also sent a copy of a letter from Brian Taylor, a helicopter pilot approved by the CAA to fly a Wessex Mk 5, with his comments 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 Lewis had changed the word “viability” in the report to “safety” and claimed the director had placed “great weight” on this. Mr Ford asked Mr Lewis to retract his 2005 letter based on Mr Taylor’s letter, the support of GKN and the CAA’s approval of the proposed maintenance programme for RHL operations. Mr Lewis responded that day saying he was not prepared to retract his letter to the 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 print and we can only read half a page.However, I spent a lot of time thinking about what you said yesterday and have decided that:1. CAA are determined that they do not want ex-military helicopters operating on commercial operations here because of their past record and2. They insist that your operations are not Private, but Commercial.Because of that, I do not believe that for one moment they would accept my retraction, which would ... have to be based on hearsay. What I said in my letter was fact, but I admit it was 40 year old fact and I would agree that things could 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’ve had a number of bad experiences with them. I don’t know how yours have been stored or if they have an expiry date.Talking to Peter O’Brien last week and to other people in, or around the industry, it would appear that you have a very good case.Jim Barclay has put up a very good and compelling case for your operation and I think that you should continue with it.Mark, I’m very sorry, but I feel that I cannot withdraw what I wrote to the Director.Regards,Bernie Lewis We note that Helilogging claims Mr Lewis acted dishonestly by not mentioning in this email the flights he had conducted with Mr O’Malley and his pilot on the Wessex Mk 5 in late 1998 and early 1999 — the sixth amended statement of claim alleges Mr Lewis dishonestly “[r]epresented to [Helilogging] by email that his experience with the Wessex was based on ‘forty year old fact’, thereby omitting to mention his experience with the Wessex Mk 5 in 1998 and 1999”. Mr Barclay followed up by email to Mr Lewis on 9 January 2006 suggesting repercussions if he did not withdraw his letter:Happy new year.You will recall I sent you an email last year pointing out some of the shortcomings of your letter, and that you were contacted by others later in the 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 your liability, for its use (or misuse).I say misuse because it could be argued that [the] CAA should have sought other advice when there was clear conflict between your letter and our report.Your letter will receive some scrutiny this year, at some fairly high level forums.The attached is an estimate of what would happen if it does...I am available to discuss at any time.Rgds Mr Barclay attached to this email a six-page document he had prepared to illustrate 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 aspects of helicopters, and at different stages of your career - a line pilot, test pilot and regulator.We would expect then you to have a good grasp of the big picture for the helicopter aspects of aviation.We are puzzled then by your letter of 23 July 2005 to the Director of Civil Aviation; which appears to be out of step with the reputation you have earned in your long career in aviation.We wish to clarify certain aspects of that letter.... Mr Barclay’s question scenario went on to explore the circumstances of Mr Lewis’ engagement with the CAA in respect of Helilogging’s application before addressing, paragraph by paragraph, the allegedly incorrect technical information and opinions 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 three or four decades ago, to then state the aircraft is unsafe for the tasks as proposed by [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 100,000 flying hours statistic and been recently re-qualified for this the logging role by the manufacturer (after extensive flight trials).How do you reconcile your letter with this. In the meantime, on 22 December 2005, Mr Castle, counsel for Helilogging, advised Mr Ford, through his instructing solicitor, Mr Takarangi, that he considered the director’s decision to be vulnerable to challenge on judicial review. He identified the key issue as being the risk to aviation safety criterion in s 37(2) of the Act and recommended that “[a]ll efforts ... must focus on securing overwhelming international expertise which can demonstrate both as to process and substance the findings reached by the Director on the aviation safety issue were wrong”. However, no steps were taken by Helilogging to challenge the decision by way of judicial review, apparently because of a lack of funding. 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 with special category airworthiness certificates on external load operations. Helilogging filed an appeal against the prohibition order but discontinued the appeal on 19 September 2006. Mr Ford sent a 16-page letter to the director on 21 July 2006 proposing that the 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 time and helps explain why he felt aggrieved by the process and the outcome:CONCLUSIONSIt is regrettable that the very good and co-operative relationship that existed between CAA and [Helilogging] has deteriorated since November 2004. It is clear that the core issue that has led to this situation is that CAA has undergone a 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 of helicopters. 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 any prompting from CAA, they advised you that they considered their operation could be made safer and they volunteered to ground the [Westland] Scout helicopters pending replacement with the Wessex. CAA supported the initiative and was very co operative right through to the point at which your technical Department heads recommended that you grant the exemptions applied for.We do not believe that you can deny responsibility for the situation that has arisen. 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 $1.5m to achieve, should not be overridden by subsequent issues unless they have a major impact and cannot be mitigated.It is regrettable that [Helilogging] were not given the opportunity to comment on some of these additional issues as they understood they would be able to do. We believe that had this opportunity been afforded them, a solution to your additional concerns could have been found. In our above submissions, we have pointed out that the additional issues you raised and upon which you decided to decline the application, when isolated from the voluminous submissions and information you had to consider, are very few in number. We have also submitted that your concerns can be dealt with. Mr Ford then set out what he understood to be the director’s concerns and how these could be addressed:1. The NAA issueWe think there was misunderstanding and fault on both sides because each made incorrect assumptions. The regulations provide for a solution to this and we believe we have shown a way of resolution.In the circumstances, we consider it would be fair and reasonable, and would not constitute any risk to safety, if the Minister [of Transport] was asked to approve delegation of the NAA responsibility to the manufacturer whom it cannot be denied are a highly responsible organisation who will not jeopardise their reputation by not properly performing this responsibility.2. The Bernie Lewis evidenceThis evidence was the position 40 years ago. Mr Lewis made this clear. The equipment and procedures that caused him genuine concern 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 that you “placed great reliance” on this evidence, the removal of this concern must be of “great comfort” to you.3. Ex-military helicopter accident rateThis was not expressed as a concern until your final decision, despite CAA being fully aware of this previously. If this was a real and genuine concern, [Helilogging] should not have been encouraged to proceed with meeting your stated requirements back in early 2003. As most logging is carried out by ex-military helicopters, it is not surprising that the accident rate is disproportionate to standard category aircraft. However, analysis of individual accidents does not reveal that the ex-military origins were the cause of the accidents. The aircraft involved in the accidents were not designed for the purpose and were not operating manufacturer-sanctioned external load attachments as would be the case with the Wessex.[Helilogging] has complied with your policy in respect of ex-military helicopters by obtaining manufacturer's support, conducting trials and obtaining CAA approved maintenance and operational procedures. The ex military accident rate is not applicable to the situation the Wessex is now in and is not a reason to override the major issue of the airworthiness, operations and maintenance approvals you have given.Finally we do not consider you have properly assessed risk by internationally accepted procedures or properly considered the 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 that provision should be made for any party in transition acting in good faith under current policy. Mr Ford then set out an eight-point proposal. This included Helilogging withdrawing its objection to the prohibition on special category helicopters carrying external loads. Indeed, Helilogging would support the director’s initiative in this respect. To overcome the special category prohibition on external load operations, the Wessex would be certified in the restricted category with conditions to limit their operation. Helilogging would agree to limit the number of Wessex helicopters deployed in New Zealand to a number acceptable to the CAA. The drawbridge would be raised for any other ex-military helicopters pending completion of the regulatory review:7. CAA give urgency to writing new regulations to deal with ex-military helicopters in the future. In the meantime CAA could place a moratorium on any additional ex-military aircraft entering the country pending establishment of the new regulations. Operators would then know that if they chose to invest in such aircraft, they will be subject to the new regulations. This would alleviate your concerns about additional aircraft entering [New Zealand] service under the same regulatory procedure as the Wessex, prior to having new rules in place. 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 helicopters without unfair treatment of [Helilogging] caught up in the transition.3. [Helilogging] will consider the outcome to a difficult process to be a fair resolution.4. A fair and pragmatic solution will enhance future industry relations and cooperation. Nothing came of these proposals. The director gave notice of his retirement in September 2006 with effect from November 2006. Helilogging Ltd was placed into receivership and liquidation on 5 and 6 October 2006. However, we note that on 15 March 2007 Mr Ford reached agreement with the receivers and Helilogging’s financiers to enable the pursuit of proceedings for judicial review of the director’s decision. Following the appointment of Steve Douglas as director in June 2007, Mr Ford wrote 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 use the 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, own helicopter, own sawmill” operation.I wish to reactivate the latter application for Wessex helicopter ZK-HBE. Mr Douglas responded on 17 August 2007 saying he was not aware of any technical information in Mr Ford’s letter that was not available at the time of the original decision in August 2005. In those circumstances, he said he did not consider there was any proper basis to reconsider the decision. However, Mr Douglas concluded by saying:If you do have any new technical information that you think should be considered as part of a fresh application for the exemptions, or for any other application that you wish to make, then I would invite you to forward that to me. Mr Ford did not take up this invitation. About two weeks later, on 3 September 2007, the receivers purported to terminate the March 2007 agreement (allowing judicial review proceedings to be commenced) due to alleged breaches by Mr Ford. A settlement of the ensuing dispute was eventually reached in June 2008. This settlement acknowledged that Mr and Mrs Ford could proceed with judicial review proceedings at their own cost. However, no such proceedings were ever issued. We mention for completeness that throughout this period, Mr Ford pursued other avenues for redress, including by ventilating his grievances to various government ministers, other parliamentarians, the Auditor-General and the Office of the Ombudsmen, all to no avail. The last of these initiatives concluded with a letter from the Ombudsman on 20 February 2012 declining to investigate Mr Ford’s complaints because of the time that had passed since the decisions were made (the most recent being Mr Douglas’ decision to decline reconsideration dated 17 August 2007). This brings us to the last event in the chronology we need to mention. Mrs Ford said she recalled discussing the matter with her husband in April 2012. Some of the relevant documents were spread out on the kitchen table. She said that as she was reading Mr Lewis’ 2005 letter, she noticed the handwritten correction striking through the number “5” in “Mk 52”. Mrs Ford said she drew this correction to her husband’s attention. Mr Ford said “[t]his is what instigated the current proceedings” (two and a half years later, in September 2014).The pleaded claimsDeceit The deceit cause of action against the CAA in the sixth amended statement of claim alleges dishonesty by “the CAA” and Messrs Lewis and Fogden. The allegations relate to two time periods, the first being in November 2004 and the second in 2005.The CAA Six allegations of dishonesty were pleaded against the CAA relating to events that 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 dishonestly withholding material information from the plaintiffs, and in particular that the Director had already determined by 9 or 15 November 2004 at the latest that the plaintiffs’ applications had or would be declined.(b) Failed to advise the High Court of the existence of the 9 and 15 November 2004 memoranda and that the Director had already decided to decline the plaintiffs’ applications.(c) Dishonestly relied upon safety and other alleged concerns but which to the Director’s knowledge had been addressed by:(i) The flight trials.(ii) The Aaleda reports.(iii) The CAA’s dealings with GKN.(iv) The exchanges between the plaintiffs’ representatives and the CAA’s representatives in 2003/2004.(v) The 1999 Lewis report in which Mr Lewis had recommended the issue of a restricted category airworthiness certificate.(d) Removed Mr Lanham from the decision making process because he was 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 to the Director’s determination would be unsuccessful.(f) Dishonestly withheld from the plaintiffs the 1999 Lewis report.(Footnote added.) The deceit allegations directly against the CAA in the subsequent period all relate to Mr Lewis:(a) [The CAA subsequently] engaged Mr Lewis as an expert because he would provide a report casting doubt upon the safety of the Wessex MK2 helicopter, even though [it] knew that Mr Lewis had provided the 1999 Lewis report.(b) Fraudulently and/or without any or any honest belief in the accuracy or truth of the altered Lewis letter provided a copy to the plaintiffs with the intention that the plaintiffs would:(i) Believe that the alterations were genuine;(ii) Believe that the CAA had a reputable expert confirming that there were in fact safety issues in respect of the Wessex MK 2 helicopter;(iii) Not pursue the legal remedies that were available to them by way of judicial review or otherwise.(c) Dishonestly withheld concerns expressed by Mr Lewis about the safety of the Wessex MK2 and in particular because of vibration issues which occurred in a flight in 1999, so that the plaintiffs and their experts were denied the opportunity of addressing those concerns. An alternative pleading alleging recklessness by the CAA followed:Alternatively the CAA acted recklessly and was indifferent as to whether the 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 of the CAA’s dealings with the Wessex, and in spite of an express request by the Director to do so by memorandum dated 19 November 2004 ...(d) Failing to take into account the CAA’s discussions with GKN and in particular between Mr Remacha of the CAA and Philip Grainger from GKN in or about May 2003.(e) Failure to take into account the CAA’s knowledge of Air and Ground Aviation Limited support, including discussions between Mr Remacha of the CAA and Air and Ground Aviation representatives in or about May 2003. Finally, it was alleged:In addition, the CAA acted fraudulently and/or without any honest belief in the accuracy or truth of its letter of 19 August 2005 by stating that the plaintiffs’ exemption applications were declined because the Director:(a) Was not satisfied that the risks to aviation safety would not be significantly increased by granting an exemption; and(b) Considered it inappropriate to grant an exemption for safety policy reasons;when in fact the CAA was aware that Mr Lewis had in the 1999 Lewis report confirmed that the Wessex was safe and recommended the issue of a restricted category airworthiness certificate.Mr Lewis Four allegations of dishonesty were pleaded against Mr Lewis, who was said to have:(a) Failed to disclose the existence of his 1999 report.(b) Represented to the plaintiffs by email that his experience with the Wessex was based on “forty year old fact”, thereby omitting to mention his experience with the Wessex MK 5 in 1998 and 1999.(c) Failed to disclose his alleged concerns about vibration issues with the Wessex in either of his report[s] or in any communications with the plaintiffs.(d) Concealed from the plaintiffs’ expert Mr Barclay in May 2005 that he was already engaged by the CAA as an expert.Mr Fogden In relation to Mr Fogden, Helilogging pleaded:134. Mr Fogden fraudulently and/or without any honest belief in the accuracy or truth of his [letter] dated 9 August 2005, at page 34 referred to the statement in Mr Lewis’ report that the Wessex did not have fuel drains that could be checked by a pilot during the pre-flight inspection and which Mr Fogden said was “a fundamental safety system” and where Mr Fogden was aware that the Wessex had fuel drains that could be inspected during a pre-flight inspection. [The particulars provided references to fuel drains at pp 8 and 28 of the operations manual which Mr Fogden had approved].Misfeasance in public office The misfeasance claim was advanced on the basis that the director owed a duty to Helilogging in making his decision and breached this duty in various ways: failing to disclose the 9 and 15 November 2004 memoranda; determining prior to the completion of the seven-stage process to decline the applications; breaching the seven-stage process by engaging Mr Lewis and not making his letter available to Helilogging prior to making his final decision; failing to disclose the existence of the 1999 Lewis report; and failing to disclose the concerns expressed by Mr Lewis about vibration issues with the Wessex Mk 2, thereby denying Helilogging the opportunity of addressing those concerns. Helilogging also alleged that the director was aware:(e) The Lewis letter had been altered in material respects at the instigation of 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 in respect of the alteration of the word “viability” to “safety”. Helilogging pleaded that in declining the exemption with knowledge of these facts, the director committed an actionable misfeasance in public office in that he acted intentionally, knowing that his acts were beyond the limits of his office. Alternatively, Helilogging pleaded that the director was recklessly indifferent to the consequences of relying upon Mr Lewis’ letter by: failing to make adequate enquiries as to his suitability as an expert; failing to make adequate enquiry as to his experience with the Wessex Mk 2; failing to make proper enquiry into the history of the CAA’s consideration of the Wessex for heli-logging in particular, in respect of its previous dealings with Metro Air; failing to make enquiry as to the reasons why Mr Lewis changed the word “viability” to “safety” in his letter; failing to give Helilogging an opportunity to address Mr Lewis’ concerns; relying upon Mr Lewis’ advice that his experience with the Wessex helicopter dated back 40 years; and failing to disclose Mr Lewis’ engagement at the earliest opportunity. Helilogging pleaded that the director and Mr Lewis were both actuated by malice and the CAA was vicariously liable for their acts. As already noted, Helilogging abandoned at the appeal hearing its contention that the CAA was vicariously liable for Mr Lewis’ acts.High Court judgment The Judge commenced by setting out the elements of the alleged torts, as to which there was no dispute between the parties. In terms of misfeasance in public office, the Judge quoted the elements of the tort as set out in this Court’s decision in Currie v Clayton. There are four key elements which can be broadly summarised as follows:1. Public office — the defendant must be a public officer.2. Unlawful conduct — the defendant must have acted unlawfully in the purported exercise of the public office (knowingly beyond the limits of the office or with reckless indifference as to this).3. Intention — in so acting, the defendant must have intended to cause harm to the plaintiff (malice), or known the conduct was likely to harm the plaintiff or been recklessly indifferent as to this (non-targeted malice).4. Loss — the defendant’s actions must have caused the plaintiff loss. As to deceit, the Judge referred to this Court’s judgment in Amaltal Corp Ltd v Maruha Corp and distilled the following elements:1. The defendant made a false representation knowing it to be untrue or being 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 false representation. After addressing in detail each of the specific allegations made by Helilogging, the Judge summarised his overall findings as follows: My findings above are relevant to both the claims in misfeasance in a public office, and deceit. In terms of misfeasance, I find that at no stage did Mr 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 point did they make untrue representations to the plaintiffs. In assessing each of the matters relied upon by the plaintiffs to establish their claims, I have also stood back and considered the allegations as a whole. The allegations are factually interrelated, and the plaintiffs say that the cumulative effect of the evidence they rely upon demonstrates that Mr Jones had made up his mind not to grant the exemption applications by 9 November 2004, and the steps taken from that time dishonestly concealed his true views, and involved a process that was never genuine, but simply followed in order to avoid criticism or challenge to the Director’s decision. I do not accept these allegations. As a matter of fact I conclude that the relevant CAA personnel, and Mr Jones and Mr Fogden in particular, acted honestly throughout. I also reach that conclusion in relation to Mr Lewis. I accept the draft 9 November 2004 memorandum indicated strong views adverse to the plaintiffs, and that Mr Jones revealed the strength of those views again in his conversation with Ms King in 2005. But I do not accept that this demonstrates he acted improperly. He had strong views precisely because he believed that granting the exemption application was not appropriate given the relevant statutory considerations under s 37. His decision to follow a process before the statutory decision was made was not improper. For these reasons the plaintiffs’ claims fail on the facts.Grounds of appeal 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 of whether the CAA was vicariously liable for any dishonesty on the part of Mr Lewis. As noted, this ground was abandoned at the hearing). In his written submissions, Mr Dale QC, for Helilogging, advised that the 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 no reference was made to it until after this proceeding commenced — and breach of the seven-stage process (covered by grounds 2–4 and 6). Mr Dale said these grounds are particularly important because of the reliance by the director and Mr Fogden on Mr Lewis’ 23 July 2005 letter. Mr Dale argues that the director must have been aware that he would not have been able to defend a decision to decline the exemption application without this letter. He submits there is no credible explanation for the disclosure breaches and judgment against the CAA in both deceit and misfeasance should have followed. 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 applications in 2002-2003, changed his mind in the period between August and November 2004, recognised he lacked the grounds to decline, and so set about looking for reasons to do so. In furtherance of this strategy he removed Mr Lanham from the project [because he had recommended the applications be granted], offered the seven stage process for the exchange of information but which he breached, engaged Mr Lewis either without any regard to his expertise and relevant experience, or alternatively knew that the Lewis [letter] was misleading. The result was the appellants were deprived of material that they say 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 have pursued an application for judicial review in either November/December 2004, or post August 2005. In respect of the former the appellants’ case would have 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 of the Wessex operated both to deprive the appellants of funding for judicial review, and that the decision not to pursue available legal remedies was made on the basis of incomplete information. ...The appellants say therefore that the fraudulent conduct of the respondent meant that the appellants suffered the loss of a chance to proceed by way of judicial review and which would have succeeded, either because the Director would no longer have valid grounds to refuse and/or the decision would have been taken away from [the director]. ...(Footnotes omitted.)Ground 1 — the 1999 Lewis report Mr Lewis sent a report to the CAA on 12 January 1999 at Mr O’Malley’s request recommending that a restricted category airworthiness certificate be issued for his Wessex Mk 5 helicopter. This report followed Mr Lewis’ participation in ground running and six test flights in late 1998, none of which involved carrying an external load. Mr Lewis set out in his report the three tests he conducted:(a) Initial ground running and hovering to check engine and airframe control systems and to establish correct rotor tracking and balancing.(b) A handling assessment throughout the speed range and up to an altitude of 2000 feet.(c) Performance and handling tests in accordance with the specified flight test schedule. Mr Lewis found no abnormalities on engine starting and ground running. He reported that in the hover, engine parameters were mid-range, vibration was normal and blade tracking was good. He noted the presence of lateral vibration when air speed was 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 suggested the dampers should free up with more use. He noted that the port engine showed “excessively high PTIT” (power turbine inlet temperature) when checked against altitude and ambient temperature but said the PTIT gauge “in the higher range is possibly faulty”. He said the engine compressors may need to be washed which may reduce the PTIT. After making these specific observations about the particular Wessex Mk 5 helicopter, Mr Lewis stated:The Wessex (single and twin engine variance) is a well proven helicopter that has 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 proven reliability.RecommendationIt is recommended that a Restricted Category Certificate of Airworthiness be issued for the Westland Wessex [Mk] 5. In his covering email, Mr Lewis commented “[f]or an old aircraft, I was very impressed with it and thoroughly enjoyed my flights”. An airworthiness certificate in the special experimental category was issued for this helicopter on 18 January 1999. This was the helicopter that subsequently crashed in Motueka in February 2001 while carrying out heli-logging operations, instantly killing the pilot. As noted, Helilogging claimed that Mr Lewis dishonestly failed to disclose the 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 referred to his earlier advice. However, the Judge considered that the reports were provided for different purposes and there was no inconsistency between them. Mr Lewis’ 1999 report 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 that he did not consider it safe to use the Wessex for heli-logging. In both reports Mr Lewis stated that the Wessex aircraft had a good reputation. The Judge concluded: The 2005 advice relates specifically to the type of operation proposed. Mr Lewis could have recorded that he had duly approved the airworthiness of a Wessex helicopter in New Zealand in 1999 without it affecting his  advice in any way. Helilogging challenges these findings contending that Mr Lewis was aware at the 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, he said he was not aware of this. Mr Lewis was cross-examined on this topic but maintained he could not recall it being discussed:Q. Both Mr Ward and Mr Potts are going to say, in evidence, that during the period that – when you were there, there was lots of discussion about using the Wessex for helilogging. Do you recall that?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 went through the process of fitting the saddle which is a harness and hook used 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 about these issues?A. No, I don’t recollect any saddle. I don’t recollect a Mr Clark. I don’t know what the saddle is. Mr Dale describes Mr Lewis’ answers as “concessions”. We do not view them that way. The only “Mr Ward” to give evidence was David Ward, an aeronautical engineer who was contacted by Messrs Ford and Gordon to provide Wessex and Gnome engineering training courses (not Grant Ward, the pilot with whom Mr Lewis conducted some of the flight trials and who was later killed in an accident while flying another type of ex-military helicopter). David Ward said he discussed with Mr Lewis the differences between the various Wessex aircraft. However, contrary to the premise of the question put in cross-examination to Mr Lewis, Mr Ward did not say in his evidence that he discussed with Mr Lewis that the helicopter was to be used for heli 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 differences between 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 any discussions with him about the differences between these various helicopters?A. Yes, we came – as part of the training course we were required to bring the engines out of – they were put into – inhibited to stop them going rusty, and as part of the training course the engineer had to bring them out of suspension and that involved [g]round running the engines. When Mr O’Malley was told about this, that’s when he arranged for Mr Lewis to come down and I met him. We sat in the cockpit together for a good hour while we ran through the differences that were in the aircraft that we were, to the, sorry, the aircraft we were working on 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, can you remember?A. He was quite impressed. Ronald Potts — the other person who counsel said would give evidence that Mr Lewis knew the Mk 5 would be used for heli-logging — is an aircraft engineer who was contracted by Metro Air to maintain the Wessex Mk 5. He was responsible for 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 to fly 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 helilogging pilot accreditation:Q. Now in your evidence you talk about Mr Lewis doing accreditation flights for pilots for, and you describe it in your evidence as helilogging accreditation flights. Do you recall that in your evidence?A. Yeah, but that may be misunderstood. He was giving straight flight accreditation for the helicopter, yeah.Q. And when you’re doing that you are certifying that the pilot has done X number of hours in a certain type of helicopter and hasn’t managed to crash it in the process and therefore can be given a type, a conversion certificate for that, is that right?A. Correct.Q. And it’s got nothing to do with as you put it in your evidence helilogging pilot accreditation has it?A. No because there’s no such thing. Notably, Mr Potts did not say he discussed with Mr Lewis that the helicopter was intended to be used for heli-logging. For the following reasons, we entirely agree with the Judge’s rejection of Helilogging’s allegation that Mr Lewis dishonestly omitted reference to his January 1999 report in his July 2005 letter. First, the claim that Mr Lewis would act dishonestly and with malice towards Helilogging 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 peers for his outstanding service to the aviation industry. The contemporary correspondence discloses Mr Lewis showed no animus towards Helilogging or its advisers. On the contrary, he was very complimentary of Mr Barclay’s report and was consistently enthusiastic about Wessex helicopters generally. Secondly, there was no direct evidence that Mr Lewis knew at the time he wrote his January 1999 report that Mr O’Malley intended to use the Wessex Mk 5 helicopter for heli logging. He made no mention of this in his report. Mr Lewis said he was unaware of this and did not recall it being discussed with him. Neither Mr Ward nor Mr Potts said otherwise. Thirdly, as the Judge said, Mr Lewis’ 1999 report was not written for the purpose of approving the use of the helicopter for heli-logging and the CAA did not authorise this. The purpose of the report was simply to confirm whether that particular aircraft was airworthy and it was relied on by the CAA in issuing a special experimental category airworthiness certificate for it. Fourthly, given both reports were addressed to the CAA, Mr Lewis cannot have been attempting to conceal anything from it. In any event, as Mr Dale pointed out, it appears that the CAA was already aware in early 1999, prior to Mr Lewis’ report, that Mr O’Malley wanted to use the Wessex Mk 5 for heli-logging, which the CAA considered would be in breach of the hire or reward restriction. An entry in the CAA database relating to this helicopter records the following non-compliance issue alongside the date 4 January 1999:Enf: NC. Information given that Messrs Ward, O’Malley & McIlroy are about to 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 hire or reward. In any event, none of this advances Helilogging’s case given its recent concession, contrary to its pleaded claim, that the CAA is not vicariously liable for any dishonesty on the part of Mr Lewis. Helilogging also claimed that “the CAA ... dishonestly withheld” the 1999 Lewis report. The Judge rejected this claim, finding that the report was not identified at the time Helilogging’s proposal was being considered due to the CAA not having an integrated document retention system. Helilogging does not challenge the finding there 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 to whether the contents of the 2005 Lewis letter were true. Relevantly, the supporting particulars alleged that the CAA failed to make any adequate enquiries into the history of the CAA’s dealings with “the Westland helicopters” in spite of an express request by the director to do so in his memorandum dated 19 November 2004. Mr Dale submits there was no credible explanation from the CAA as to why the 1999 report was not disclosed despite this request, nor was there any detailed evidence to support the Judge’s conclusion that the explanation lay in the lack of an integrated document retention system. Mr Fogden was responsible for coordinating the information sought by the director as part of the seven-step process detailed in the director’s memorandum of 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 been received by the Safety Certification Group, the group within the CAA later known as the Aircraft Certification Unit (ACU). The 1999 report would therefore have been included in the ACU files for that particular helicopter. Mr Fogden said he was not part of the ACU group. He recalled that at the time Helilogging’s applications were being considered, the CAA’s filing systems were a mix of hard copy and electronic and there was also some separation between the filing systems for different parts of the CAA. He said this made it difficult to find documents filed in different parts of the organisation. This evidence supports the Judge’s finding that the 1999 report was not brought to attention or considered in the course of determining Helilogging’s applications. Indeed, there was no evidence to contradict that finding. The claim that “the CAA” was “recklessly ... indifferent” to whether the contents of Mr Lewis’ 2005 letter were true by failing to make any adequate enquiries into the history of the CAA’s dealings with the Wessex despite the director’s request on 19 November 2004 faced formidable obstacles and we reject it for the following reasons. First, there is no logical connection between the director’s request on 19 November 2004 for updated information concerning the history of the CAA’s dealings with “the Westland helicopters” and the CAA’s appraisal of Mr Lewis’ subsequent letter dated 23 July 2005. The director’s information request was answered by 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 in searching for relevant information about this history cannot evidence reckless indifference to the truth of the contents of Mr Lewis’ later letter. Secondly, Mr Fogden was asked in cross-examination to explain why he did not 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 us to be entirely plausible and it was not challenged:Q. And so I wonder if you could help us then on how it could be that when there’s a Coroner’s inquiry the report pops up, someone finds it and when you are charged with this task it doesn’t. Can you help us there?A. I would suggest that the report, the 1999 report, may have been filed under either the [Metro Air Mk 5] CAA file for that aircraft registration or under the Metro Air file. Now by the time I was looking at the records, [Metro Air Mk 5] was destroyed and I didn’t consider looking [at] the [Metro Air Mk 5] records for a letter I wasn’t even aware of the existence of, and I could say I think perhaps the same thing for Metro Air. If I was aware of the existence of the letter I would have had something to go looking for but not being aware of the existence of the letter and not having it in the files I’d looked at, I didn’t know what I wasn’t looking for.Q. Okay [Mr Dale then moved to a different topic]. Thirdly, as we will demonstrate, Mr Fogden was not the only senior CAA operative who did not locate the 1999 Lewis report or consider that such a report would be relevant to Helilogging’s exemption application. Mr Remacha made no mention of the 1999 Lewis report in his comprehensive airworthiness report dated 22 May 2002 which included a brief section reviewing the history of the Wessex Mk 5 certification and operations in New Zealand. Mr Remacha was involved in the early discussions with Messrs Ford and Gordon regarding Helilogging’s intended endeavours using the Wessex Mk 2 helicopters and he sent a copy of his report to Mr Gordon. It was not suggested Mr Remacha was remiss in failing to locate or refer to Mr Lewis’ 1999 report for the purposes of his May 2002 report or subsequently. Mr Gill, the team leader of registration and airworthiness in the airworthiness unit of the CAA at the relevant time, was closely involved in assessing and advising on Helilogging’s exemption application. Helilogging does not contend that Mr Gill was 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”. Mr Gill said he was not aware of this report. Although he would have been aware that such a report would have existed to support the issue of an airworthiness certificate, he did not consider it would be relevant to Helilogging’s exemption application. Further, he explained that a report of this nature, specific to a 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 dealt with by one person. For example, the application filed in relation to the [Metro Air Mk 5] was handled for CAA by my brother, Peter Gill. He approved the Special Experimental Category Airworthiness Certificate for this helicopter. The report provided by Mr Bernie Lewis dated 12 January 1999 was addressed to Peter for this reason. This report was requested together with a report from a maintenance engineer as part of the standard requirements for this Certificate related to this one helicopter. It was not intended that the reports provided would then be circulated more widely within our Unit or more widely. The reports were not intended or used where we were considering other aircraft or the type of aircraft more generally. The reports remained in the airworthiness certification file for the particular aircraft.This is illustrated by the fact that I was not aware of the report from Mr Lewis in relation to [the Metro Air Mk 5] during my work on the Helilogging applications in the period 2004 and 2005. This was not unusual. The report was not relevant to my work at the time. Mr Lewis’ report was provided for the limited purpose of processing the Special Experimental Category Certificate for [the Metro Air Mk 5]. The report was held in the file for this helicopter and was not available on any wider basis. It was not intended or treated as a general report on the suitability or quality of the Wessex more generally. Ms MacIntosh, chief legal counsel for the CAA at the relevant time, could not recall seeing the 1999 Lewis report. Her cross-examination on this topic was as follows:Q. And are you aware now, well I think you are aware, that Mr Lewis had prepared a report in 1999 on the same, on the [Mk 5] aircraft hadn’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 provided to 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  report appears in 2001 for the Coroner, appears in 2015 when discovery in this proceeding is given but doesn’t appear in 2005 when Mr Lewis is giving advice to the director? Can you account for that?A. No, I have no idea. Fourthly, we consider Helilogging has significantly overplayed the importance of Mr Lewis’ 1999 report. We share Mr Gill’s assessment that this report, which was prepared for a limited purpose, was not relevant to Helilogging’s exemption application. Helilogging’s contrary contention is premised on the 1999 report having been prepared by Mr Lewis in the knowledge that the Wessex Mk 5 helicopter would be used for heli-logging. We have already explained why we do not accept that contention.Ground 2 — recklessness in respect of the 2005 Lewis letter The sixth amended statement of claim alleges that the CAA acted recklessly and was indifferent as to whether the contents of the 2005 Lewis letter were true. We have set out the five pleaded particulars at  above. Only the first of these is relevant to this ground of appeal — failing to make any or any proper investigation into Mr Lewis’ qualifications to give an opinion on the safety of the Wessex Mk 2. Ground 2 of the notice of appeal reads:8. The Judge failed to adequately address the appellants’ submission at trial that Messrs Jones and Fogden were reckless in respect of the 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 of the Wessex. Mr Dale submits that “all of the ensuing problems could have been avoided if the Director or someone from the CAA had asked Mr Lewis [these] two simple questions”. This is presumably because Mr Lewis’ lack of relevant current knowledge and expertise would have been identified and he would not have been engaged by the CAA in consideration Helilogging’s exemption applications. Mr Dale says no CAA witness gave any explanation for not asking these questions and he says the Judge did not deal with this point in any detail in the High Court judgment. We have described the genesis of Mr Lewis’ involvement with Helilogging’s exemption application. He had been engaged to assist the CAA on the agricultural overload project. Knowing of Mr Lewis’ experience and technical background, including as a test pilot, Mr Fogden asked Mr Lewis whether he could assist in reviewing Mr Barclay’s report. Mr Lewis agreed to do so. Mr Fogden recalled that during this initial discussion Mr Lewis gave a “brief resum of his experience as a Wessex pilot and test pilot”. Notwithstanding that this discussion took place 14 years earlier in 2005, Mr Dale pressed Mr Fogden during the hearing to be more precise about the detail of the conversation:Q. So can you be more precise? Did he tell you when, for example, he last 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 world to 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’s report and the technical aspects of that, and Mr Lewis’ response to that was yes, he would have a look at it for me.Q. So are you saying in this initial discussion there was no reference by either 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 to ask? Is that your evidence?A. You’re asking about that particular meeting? No. Mr Dale then asked Mr Fogden whether he ever asked Mr Lewis when he last flew a Wessex. Mr Fogden said Mr Lewis told him during this meeting or shortly afterwards that he had also conducted type conversion training for two pilots on the Wessex. Mr Fogden could not recall whether this information was volunteered or provided 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 in the South Island when it was owned by Metro Air and he had trained some pilots on that. Whether that was one of my first questions at the first meeting to him or whether that came out shortly afterwards but I was aware that he had flown the Wessex earlier during training for 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 have volunteered that information or I may have asked him. I can’t be sure. Mr Lewis was also cross-examined on this topic:Q. In that first meeting did Mr Fogden ask you about the extent of your experience 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 then I flew the Wessex [Mk 2] with, oh, [Mk 52] with the Iraqis and with Bristow Helicopters with the Wessex [Mk 60].Q. So that’s what you would describe as 40 year old experience?A. Yes. Mr Dale also drew our attention to the following exchange (61 pages later in the transcript):Q. You see, you were asked to give independent expert evidence for the CAA, weren’t you, correct?A. Yes.Q. Well did anybody ask you the kind of questions that I’ve asked you about your experience and expertise? [The earlier questioning covered Mr Lewis’ lack of familiarity with modifications that had been made to the Wessex helicopters since the 1960s such as to the computers 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 about your experience and expertise?A. I don’t think so, no. Mr Lewis’ 2005 letter can be criticised for its reference to some negative features of the Wessex aircraft with which he was familiar but without researching whether these features had been modified subsequently. However, that is not the issue here. This ground of appeal is directed to whether the CAA was reckless in engaging Mr Lewis in the first place. Mr Lewis told Mr Fogden about his experience with the Wessex helicopters during 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 flight conversion training with Metro Air on the Wessex Mk 5 in December 1998. At the time Mr Lewis provided his 2005 letter, the only Wessex in the same series 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 and flight trials on that aircraft in 1998. Because these types of Wessex aircraft had primarily been operated overseas by the military and by Bristow in the North Sea, it may well be that Mr Lewis had greater flight experience with these helicopters than anyone else in New Zealand at the time. The criticism that his experience related to the 1960s needs to be considered in the context of the age of these aircraft which were manufactured between 1958 and 1970. We note that Mr O’Malley’s Mk 5 was manufactured in 1964 and Helilogging’s Mk 2 helicopters in 1965. Mr Barclay also considered that Mr Lewis had relevant expertise in this context and listed him in a June 2005 presentation to the director and Mr Fogden as being an adviser supporting Helilogging’s application. It may be recalled that in his email to Messrs Takarangi, Ford and others on 19 May 2005, Mr Barclay emphasised Mr 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 and was involved in the early Wessex development work, including time with [Rolls Royce] on the Gnome engine development! He was also allowed to do some freelance flying with Bristow’s in the Wessex.His medical has lapsed, but he is still passionate about the Wessex. He still does the odd bit of expert advice, which may be why CAA had sent him a copy of my latest report. He described it as superb, which if he told them that, may mean they don’t contact him again... However it does mean we now have a solid benchmark for the report. We can well understand why Mr Fogden considered Mr Lewis would be able to provide an independent expert opinion on whether this type of aircraft would be suitable for heli-logging. We are not at all persuaded the CAA was reckless in engaging him. The second limb of this appeal ground is that the CAA was reckless “in respect of the engagement of Mr Lewis” in failing to ask what his concerns were about the safety of the Wessex. This limb does not marry with any allegation in the statement of claim. In any event, Mr Lewis plainly understood he was being asked to advise on the suitability of the aircraft for heli-logging and to report any concerns.Ground 3 — the vibration flight In its sixth amended statement of claim, Helilogging alleged that the CAA dishonestly withheld concerns expressed by Mr Lewis about the safety of the Wessex Mk 2, in particular because of vibration issues that occurred in a flight in 1999, with the result that Helilogging and its experts were denied the opportunity of addressing those concerns. Helilogging also claimed that Mr Lewis failed to disclose to the CAA his alleged concerns about vibration issues, either in his 2005 letter or in his other communications with them. In other words, Helilogging’s claim is that Mr Lewis told the CAA about the vibration flight but did not mention it in his letter. Further, for whatever reason, the CAA did not refer to this as a reason for declining the exemption application despite its obvious relevance to the safety issue. This is a curious and counterintuitive claim, which the Judge described as “somewhat complicated” and “convoluted”. Before addressing this claim and the evidence relevant to it, we first need to describe the so-called “vibration flight” and explain how and when it emerged as a feature in this case. After these proceedings were filed in 2014, the CAA applied for summary judgment, contending that the claims were time barred. For completeness, we note that Associate Judge Osborne granted the application and entered summary judgment for the CAA on 13 October 2015. This Court subsequently overturned this judgment finding that the factual contest could only be resolved at trial, particularly in view of fresh evidence adduced on appeal by Helilogging, including the evidence of Mr Potts. The Supreme Court declined to give leave for a further appeal. Mr Lewis provided two affidavits in support of the summary judgment application. His 1999 report was attached to the second of these affidavits. In the first affidavit, dated 21 October 2014, Mr Lewis answered a criticism in Helilogging’s statement 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 conversion training 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 since been labelled the “vibration flight”. This flight took place on 25 February 1999 and was 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 wanted to 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 of the excessive vibration which was caused by this load. The vibration was very severe, more than I have ever felt in an aircraft before or since. In his subsequent brief of evidence for the present proceedings, dated 9 August 2018, Mr Lewis said he was not sure if they were indeed carrying logs and said it may have been a small timber hut. He added that the load was being carried using a 200 foot strop:In preparing this affidavit I have considered this further. I have a strong recollection of us lifting a small timber tramping or hunting hut somewhere in the Marlborough Sounds and carrying it for what I think was around five minutes before dropping it off somewhere else in the Marlborough Sounds. I do not know why we were carrying out this job.I cannot now be completely sure that we did lift any logs on a long line during this trip and it may be that we only lifted the hut on a long line. However, Mr Lewis maintained he clearly recalled the excessive vibration experienced while carrying this external load:I do still have a clear recollection of the excessive vibration as a result of carrying this external load and reiterate that this vibration was very severe and more than I have ever felt in an aircraft. It only occurred when it was lifting the external load. Mr Dale cross-examined Mr Lewis extensively on whether he told Mr Fogden or the director about this vibration flight and why no mention was made of it in his 2005 letter:Q. And so did you also tell [Mr Fogden] about the vibration flight that you 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. Mr Dale suggested that the vibration flight would have been an obvious thing to raise with Mr Fogden. Mr Lewis responded to this proposition, which was repeatedly put, “I don’t really know”, “I can’t really remember”, “I really can’t remember, I’m sorry”. Mr Lewis was pressed further:Q. And the issue was the safety of the Wessex. So are you telling His Honour that in all of those meetings, not once did it occur to you to mention to them that you had been in a flight that you describe as frightening?A. I don’t think I did.Q. And you don’t think that it’s a little odd that you wouldn’t mention something as important as that?A. I – it’s very hard to say. I could well have done, I could well have done, but I’m not sure. Mr Lewis was also questioned whether he mentioned the vibration flight to the 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 about the 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 you didn’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’t mention the vibration flight, did you?A. No, I didn’t. I don’t know why either. Mr Dale then suggested that Mr Lewis was lying about the vibration flight and it was simply a fabrication. He suggested this explained why Mr Lewis did not mention this incident to Mr Barclay:Q. Well I suggest to you one reason is it’s not true? You didn’t have a vibration flight and you didn’t have those concerns?A. Oh yes I did, I can assure you. Despite these questions and answers, Mr Dale submits that Mr Lewis made a “critical admission ... where he expressly acknowledged that he thought he had told Mr Fogden about the vibration flight in a conversation with Mr Fogden after the [June 2005] PowerPoint presentation”. This is a reference to the presentation given by Mr Barclay to the director and Mr Fogden at the CAA’s offices on 13 June 2005 in which it was claimed that Mr Lewis was supporting Helilogging’s application. Mr Fogden spoke to Mr Lewis after this presentation because he was surprised to discover that Mr Lewis was advising Helilogging. The following exchange in Mr Lewis’ cross examination about this telephone discussion is relied on as 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. However, Mr Fogden was quite clear that he was not told about the vibration flight and he maintained that position in cross-examination:Q. So according to your testimony Mr [Fogden] when you and the director ask [Mr Lewis] about his concerns [he] does not tell you about the flight, the vibration flight here and he does not tell you that he’s prepared a report on the Wessex [Mk 5] in 1999. Is that your evidence?A. That’s correct, he didn’t. As can be seen, Helilogging advanced two alternative theories in cross 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 untruthful fabrication. The Judge rejected that allegation:First, [Helilogging] contend[s] that this flight may never have occurred and that 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 in Mr O’Malley’s Wessex helicopter, and that it concerned him at the time, but that he made no formal report about the incident. This finding, which is well-justified on the evidence, is not challenged on appeal. The claim that the CAA was vicariously liable for any dishonesty by Mr Lewis has fallen away. Hence, the focus in this ground of appeal is on the alternative theory that Mr Lewis told Mr Fogden about the vibration flight, but this safety concern was not referred to in the decision or otherwise conveyed to Helilogging. The Judge found it was unlikely Mr Lewis raised the vibration issue in oral discussions with Mr Fogden or the director. The Judge noted that it was not referred to in Mr Lewis’ written advice and he found that it played no role in the director’s final decision. 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 about the vibration flight. This is unsurprising. Mr Lewis was being asked to recall unrecorded conversations that took place more than 14 years earlier. Despite Mr Lewis’ so-called critical admission — that he “would imagine” he had told Mr Fogden about the vibration flight — we agree with the Judge it is unlikely Mr Lewis did mention the vibration flight to Mr Fogden or the director. That is the most likely explanation for why this issue was not referred to in Mr Lewis’ 2005 letter and neither Mr Fogden nor the director had any recollection of it being mentioned.Ground 4 — safety as the primary ground for refusal This ground of appeal is that the Judge erred in concluding that safety was not the principal ground on which the director based his decision. The relevant paragraph of the judgment, set out below, appears at the end of a section rejecting Helilogging’s claim that Mr Lewis’ advice was dishonest and Mr Fogden and the director both dishonestly adopted the letter knowing it was flawed. Having rejected these claims, the Judge added: Finally it is relevant that [the director’s] decision did not turn on Mr Lewis’ advice. Mr Dale described it as pivotal, and the “decisive knockout blow”. But it was only one of eight factors listed in [the director’s] 19 August file note [attached to the final decision]. Mr Fogden put greater weight on it in his advice to [the director], but it is plain from the other materials, including the preliminary decision, that the application would have been declined irrespective of Mr Lewis’ opinion. Mr Dale says this misses the point. He submits the director’s reliance on the 2005 letter is a question of fact and he rhetorically asks, “why obtain it and refer to it in detail if it was not needed?”. We readily accept that the director relied on Mr Lewis’ advice. This is not controversial and is plain on the face of the decision. However, the point the Judge was making was that the advice was not pivotal, as Helilogging contended, because it is clear from the contemporaneous record that the application would have been declined for other reasons, irrespective of Mr Lewis’ advice. That appears to us to be quite plainly correct. Mr Dale then postulates two counterfactuals. The first is that if the director had declined Helilogging’s exemption applications without Mr Lewis’ 2005 letter, Helilogging might have successfully pursued judicial review. Another counterfactual is 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 causation theses to support the loss of chance claim and are premised on assumed prior findings of dishonesty or misfeasance in connection with Mr Lewis’ 2005 letter. Having rejected Helilogging’s appeal against the Judge’s findings that there was no such 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 and immediately apparent to Mr Barclay. He drew the alleged errors to Mr Ford’s attention at the meeting on 23 August 2005 and Mr Castle advised on 22 December 2005 that there were good grounds to challenge the director’s decision by way of judicial review. 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 decline the exemption application without Mr Lewis’ 2005 letter. Mr Dale acknowledges that this point was not expressly put to Mr Fogden at the hearing, but he says the inference is 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 This ground of appeal is that the Judge erred in failing to place any or any sufficient weight on the effect of the dishonest statements about the safety of the Wessex Mk 2 on the availability of funding for Helilogging to pursue judicial review. It is said that the Judge erred in his determination of whether:(a) The dishonest conduct caused Helilogging not to pursue an application for judicial review.(b) But for the CAA’s conduct, an application for judicial review would have been pursued and whether there was a chance the application would have succeeded.(c) Damages should be calculated on the basis of a loss of a chance. This ground is also directed to questions of causation and loss predicated on “dishonest statements about the safety of the Wessex Mk 2”. Having rejected Helilogging’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 This is a general appeal ground asserting that the Judge’s findings that the CAA was not liable for misfeasance or in deceit were contrary to the weight of the evidence. We have already addressed the specific points raised on appeal as to the alleged deceit and recklessness in respect of Mr Lewis’ letter and explained why we agree with the Judge’s factual findings rejecting those allegations. Mr Dale focused his submissions under this ground of appeal on the director’s 9 November 2004 memorandum. As noted, Helilogging pleaded that the CAA dishonestly represented in November 2004 that it was still considering Helilogging’s applications on their merits when it was not. In particular the CAA was said to have dishonestly withheld that the director had already determined, by 9 or 15 November 2004 at the latest, that the 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 Judge observed that the document was not signed and some of the addressees (all CAA personnel) did not recall receiving it. The Judge found that after consulting with Ms MacIntosh and Mr Gill, the director decided not to circulate the memorandum in this form. Further, Ms MacIntosh and Mr Gill both made detailed comments on the draft. It is unlikely they would have done so if this was a memorandum recording a decision already made. The Judge’s conclusion was also supported by a contemporaneous document prepared by Ms MacIntosh which described Mr Gill’s comments on the memorandum as “comments on draft memo”. Helilogging’s claim that a final decision was made on 9 November 2004 was therefore inconsistent with the director’s subsequent memorandum dated 19 November 2004 sent to Messrs Lanham and Allen setting out the further information he required and the seven-stage process he intended to follow. The Judge continued: Neither was anything hidden. The original draft was intended to be sent to a number of persons, but after consulting with Ms MacIntosh and Mr Gill, [the director] decided not to send it in this form, or to send it to all these people. In his 19 November memorandum to Mr Lanham, [the director] recorded that before he could grant the application he had to be satisfied that the risk to safety would not be significantly increased. He then recorded that Mr Remacha’s memorandum covered “a number of safety concerns” which he listed, to which he added the lack of oversight of GKN, lifing of and traceability of components and parts, and that he was “not confident the company is able to comply with the manufacturers restrictions”. He also identified the more general concerns about the use of ex-military helicopters, including that the accident record was “atrocious”, before saying he was “not prepared to consider exercising the exemption power” until properly advised. This memorandum was provided to the plaintiffs on 30 November. That did not hide views adverse to the plaintiffs, but rather set them out in a clear way. I also conclude that [the director] was of the view that it would be necessary to give the plaintiffs an opportunity to make submissions on any proposed decision to decline the applications. He advised Mr Ford of this on 16 November before he finalised the process in the memorandum of 19 November. Those two steps — obtaining further information, and the 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. Mr Dale submits that the last three paragraphs of the director’s 9 November 2004 memorandum demonstrate a final determination had been made. These paragraphs read:Both these are exemptions to the Safety Rules and I am not prepared to accept the responsibility nor do I feel it would be wise.Mr Ford has undertaken a significant amount of work to show these aircraft are safe. However, I am not prepared to allow this precedent of ex military aircraft to continue being added to the New Zealand register for Hire and Reward operations.It is my recommendation that no additional “Ex Military” helicopters be added to the New Zealand register unless for only private use on the “Special Experimental” category and not available for logging operations. Also a prohibition of logging operations should be placed on all existing “Restricted” category UH1 aircraft. 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 considerable pressure to make a decision on Helilogging’s exemption applications. However, he resisted that pressure and identified in consultation with Ms MacIntosh and Mr Gill the further information needed to enable him to make a final decision. It is clear that the director had formed an adverse view of Helilogging’s applications by 9 November 2004, 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 was done after 19 November 2004 — the entire seven-stage process which was set in place by the director prior to the commencement of the judicial review proceedings — was nothing more than a pointless charade. Like the Judge, we reject that proposition.Ground 7 — pleadings The Judge started by setting out the essence of Helilogging’s case. Helilogging accepts the accuracy of this summary. The Judge then commented that the key features of Helilogging’s allegations as described were not set out in that way in the pleadings or in opening: The key features of the plaintiff’s allegations that I have just summarised were not set out in this way in the plaintiff’s pleadings, or in the opening. After exchanges with Mr Dale QC during his opening, and in a ruling dated 26 September 2019, I not only dealt with applications to amend the pleadings and to allow the plaintiffs to call supplementary witnesses, but I sought to record the essence of the plaintiffs’ case as I understood it at that stage, and Mr Dale subsequently confirmed I had accurately captured the position. That summary is similar to the summary I have just provided. I did that so that there was greater clarity in relation to the claims that were being advanced. I note at that stage the plaintiffs had accepted that a reasonable director could have decided to decline the application. This ground of appeal responds to this comment:The Judge erred in concluding at  that the appellants departed from their pleaded case. The issues to which the Judge referred arose only out of exchanges with the Judge in respect of motive, which was not required to be either pleaded or proved. As Mr Dale says in his submissions, nothing turns on this. In any event, leave was granted to amend the pleadings. The sixth amended statement of claim is dated 26 September 2019 and was filed at the end of the first week of the trial. No pleading point was taken by the CAA. There is no complaint that the Judge failed to address the substance of Helilogging’s case.Ground 8 — counsel’s concession This is a related ground, corresponding to the last sentence of  of the High Court judgment quoted above. Helilogging contends the Judge “erred in placing any reliance upon the concession that a reasonable director could have decided to decline the application, which was in any event withdrawn in the course of argument”. The Judge understood that the concession was subsequently withdrawn: 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 accepted that a decision to decline was open to a reasonable Director. In closing, however, Mr Dale withdrew that concession and contended that a reasonable Director would have been compelled to grant the exemption application. He argued that this was a consequence of the evidence that had emerged at trial. The Judge then set out his reasons for finding that it was open to a reasonable director to decline (or alternatively grant) the applications. The Judge placed no reliance on the withdrawn concession. We note that Mr Dale did not address any written submissions to this ground of appeal. We are satisfied the Judge did not err as contended under this ground.Ground 9 — alteration to Mr Lewis’ 23 July 2005 letter As we have seen, two changes were made to Mr Lewis’ letter following its receipt 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. As the Judge said, this change was made transparently and without any dishonest concealment. Mr Lewis confirmed his wish to make that amendment in a letter he wrote to the director on 2 August 2005. The second, more subtle change — from “Mk 52” to “Mk 2” — appears in the first line of the second main paragraph on the first page of Mr Lewis’ letter and can be seen in the version of the letter Mr Ford received, copied below. That there has been an alteration is reasonably obvious to a careful reader. Further, if one looks closely, it is apparent the numeral struck through was a “5”: Mr Wellik put a line through the “5” on his version of Mr Lewis’ letter and made other notes
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while discussing it with an unidentified technical adviser. However, he said he would not have made the alteration to the original letter and none of the other witnesses accepted doing so. Mr Lewis did not recall requesting or authorising the alteration, although he regarded it as inconsequential because he always understood the Mk 2 was the same as the Mk 52. The Judge agreed the alteration should not have been made but he rejected the contention this was a dishonest attempt to mislead anyone: There is no dispute that it was inappropriate for it to be made. I do not accept, however, there was a dishonest attempt to mislead anybody by the alteration. The evidence established that the Wessex aircraft at the time was used by different military services with a different number assigned, but the 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 was used 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 used for the Wessex used in Iraq was not well known. I conclude that the person who made this change was simply seeking to avoid any confusion arising from the use of the number 52 rather than 2 or 5. The plaintiffs sought to argue that this alteration disguised the fact that Mr Lewis was referring to the obsolete aircraft used in the 1960s rather than the Mark 2 aircraft as it existed at the time of the application in 2004/05. I do not accept this. It is clear from the letter that Mr Lewis was referring to the aircraft that he flew with the Iraq Airforce in Baghdad, and in the context of this letter and Britain’s historic association with Iraq, it was clearly referring to events of some time ago. Deleting the 5 did not suggest that this experience was recent. The number assigned to the aircraft had no association with the age of Mr Lewis’ experience. So I conclude it was an inappropriate change to the letter without any fraudulent intent, and with no significance in terms of the information conveyed to the reader. Ground 9 of the appeal is a complaint that the Judge erred in finding that the change to the letter was to avoid confusion. This is said to be because there was no satisfactory evidence to support that finding; the alteration made a fundamental difference to its meaning, in particular that it was directed to a “current version” of the Wessex rather than a 1960s version; and there was no evidence of any attempt to obtain Mr Lewis’ approval for this alteration. Mr Dale did not develop any argument in his submissions relating to this appeal ground other than to say that this was an unexplained difficulty for the CAA. It is plain from Mr Lewis’ letter that he was referring to his experience with the twin engine versions of the Wessex — with the Iraqi Air Force in Baghdad and with Bristow in the North Sea. Although the helicopter Mr Lewis flew with the Iraqi Air Force was labelled a Mk 52, it was the same as the Mk 2. This change to the letter was inconsequential. It would be obvious to anyone reading the letter that Mr Lewis was referring to his historical experience. Mr Barclay understood that. Following his meeting with Messrs Gordon, Ford, Takarangi, Biel and others on 23 August 2005 to discuss the director’s decision and the attached reports including Mr Lewis’ letter, Mr Barclay wrote to Mr Lewis the following day noting technical errors “reflecting the changes that have taken place in the helicopter/engine since your ‘era’”. The fact Mr 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 Irene King was called as a witness by Helilogging. She was the chair of the Air Transport Division of the AIA in 2002 and was appointed chief executive in April 2005. Qwilton Biel was the chairman of the helicopter division at that time and he and his father were both active in the heli logging industry. Ms King stated that in 2004/2005 the AIA was in favour of the use of ex-military helicopters provided all safety and statutory requirements were met. She said she was aware of Helilogging’s exemption application because Mr Ford had complained to the AIA about difficulties obtaining a decision from the CAA. In cross-examination, Ms King said she frequently liaised with Mr Biel about this. Ms King had known the director, Mr Jones, since about 1986 when she joined Air New Zealand. At that time, Mr Jones was the general manager of Mount Cook Airlines (owned by Air New Zealand). Ms King recalled discussing Helilogging’s application with him in 2005. She could not recall the date but believed it was somewhere around June or July 2005 because she recollected looking out the window of Mr Jones’ Wellington office and commenting on the inclement weather conditions. In her prepared brief of evidence, Ms King described her exchange with Mr Jones as follows:22. The reason for the discussion was because of industry concerns about the way [Helilogging’s] application appeared to be treated. I pointed out to Mr Jones that the process “did not feel right”. Because of those concerns I said “some people within your own organisation were saying the applications were good to go yet you are saying the opposite. What is the situation here?”. Mr Jones’ reaction to my question was quite remarkable, and such that I have the clearest recollection 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 and I had never seen him react in such a fashion before. I remember thinking at the time that Mr Jones must have been under some kind of pressure from somebody, although I should add that not once did I ever consider he might have been bribed. I knew Mr Jones was independently wealthy, had always displayed integrity in my dealings with him and had been very transparent when we had dealt with other very demanding situations such as the issues around the standard for medical fitness of Pilots in New Zealand.24. Nevertheless his reaction made me think that there was something very unusual about the way [Helilogging’s] application was being handled.25. Mr Jones said in response to my question that there was no way that those aircraft were ever going to fly in New Zealand so I should stop wasting his time. Those may not be the exact words but it was to that effect.26. I pointed out that all of the documents would be discoverable and we would be able to challenge the internal decision making process, starting with the Official Information Act . Mr Jones responded “you will never get anywhere. You will never see it. It will be subject to commercial confidentiality or privileged”. I said to Mr Jones that is not right, and we went on to have a discussion about getting access to the documents. Ms King clarified in cross-examination that the discussion about commercially confidential or privileged documents related to internal documents on the meaning of “hire or reward” operations in r 91.105 of the Rules. The Judge found that this conversation occurred after the preliminary decision was released in May 2005. While having reservations about the accuracy of Ms King’s recollection, the Judge accepted she recalled Mr Jones’ demeanour at this meeting. The Judge also accepted her evidence that Mr Jones commented in forthright terms to the effect the application was not going to be granted. However, the Judge said this did not mean Mr Jones would not have been prepared to reconsider his strongly expressed views if compelling new information was provided in response to his preliminary decision: I am less certain about the accuracy of Ms King’s recollection. Whilst Ms King remembers the nature of Mr Jones’ behaviour, she could not recall his actual words. It is some time ago. She was unsure of the timing of the conversation, but indicated the period of June–August 2005 because it was inclement weather outside. Wellingtonians will recognise that that does not greatly limit the timeframe. Moreover a re-remembering of the event focussing on the emotional impact of the occasion may have distorted some of the detail. I nevertheless accept that a comment was made in forthright terms to the effect that the plaintiffs’ application was not going to be granted. I conclude that this conversation occurred after the preliminary decision was released in May 2005. Mr Jones’ intention to decline the application was accordingly already disclosed. I accept that Mr Jones answered emotionally when queried by Ms King. This is likely to have reflected the severe pressure that 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 Ministerial pressure. Now Mr Jones’ personal friend, Ms King, acting on behalf of the AIA was questioning his approach, and he reacted. That provides the context to the kind of strong comment I find that he made. As I have already concluded there is no misconduct in Mr Jones having views, even very strong views, in the decision-making process. He was obliged to act professionally, and with an open mind, when making a statutory decision. But I am not prepared to conclude that a comment of this kind evidences dishonesty, or a lack of integrity. It does not mean that Mr Jones would not have reconsidered his strongly expressed views if the plaintiffs had come back with compelling responses to the preliminary decision.(Footnote omitted.) Helilogging says the Judge erred (at  quoted above) in expressing doubts about the accuracy of Ms King’s recollection. Helilogging claims this was not supported by the evidence. However, it is plain from reading the entirety of her evidence that Ms King could not recall many of the details of the meeting. She made no contemporaneous report of the meeting. Given the discussion took place 14 years before Ms King prepared her brief of evidence, it is not surprising she was unsure about some of the details. 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-examination that the discussion was in the context of hire and reward:Q. In any event, you are aware, according to your evidence, that Mr Jones clearly isn’t engaged in a genuine process because he’s decided not only that he will never agree to the exemption but he will hide relevant documents. 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 inspect in respect of the decision-making process and he said “You’ll never see 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’s the way the conversations used to go with [Mr] Jones. We would cover a wide range of issues. Counsel agree it is likely that this discussion occurred on or about 10 August 2005, after Mr Fogden’s final report and shortly before the director’s final decision on Helilogging’s application was released on 19 August 2005. This is because on 12 August 2005 Ms King sent an email to Mr Barclay copied to Mr Biel stating “I had a brief discussion about this with JJ a couple of nights ago. I have been trying to encourage a more transparent process for developing legal opinions”. The other emails sent in this period make no reference to any concerns by the AIA about the process being followed in respect of Helilogging’s application. We do not consider there is anything in this ground of appeal.Ground 11 — whether the decision was reasonably open to the director In its notice of appeal, Helilogging complains that the Judge erred in focusing on whether a reasonable director could grant or decline the exemption applications. This is said to be because Helilogging was materially misled in the approval process by the withholding of material information. If this information had been disclosed, this would have resulted in an application for judicial review with good prospects for success and the possibility the director would have been removed from the decision making process. Helilogging submits that the Judge’s finding that the exemption application could have been granted is of assistance because, if this Court concludes that the causes of action are made out, then Helilogging has a claim for lost chance of achieving a successful outcome. This ground is solely concerned with issues of causation and loss. Because we have rejected Helilogging’s appeal against the Judge’s liability findings, we need not consider it further. In view of our rejection of the grounds of Helilogging’s appeal, we do not need to address the issues raised by the CAA in its notice to support the judgment on other grounds.Summary We are satisfied the Judge was correct to dismiss the deceit claim. The evidence came nowhere near establishing any dishonesty on the part of the director, Mr Fogden or Mr Lewis. On the contrary, we consider the evidence as a whole shows that these three men acted conscientiously throughout and in accordance with what they genuinely believed were their professional obligations. The manifest safety issues arising out of the use of ex-military helicopters for heli logging purposes were well-known because of the poor accident record and high fatality rate. The safety concerns were widely publicised within the industry, including by the CAA, and had to be addressed with care in considering any exemption application such as that pursued by Helilogging. Helilogging may have felt encouraged that the professional approach it adopted would ultimately lead to some form of exemption from the Rules being granted to permit the use of its Wessex Mk 2 helicopters for heli logging purposes. However, despite expressly seeking an assurance that an exemption would be granted on completion of the process, no such assurance was given by the director or anyone else at the CAA. Helilogging and its advisers ought to have appreciated it was not proper or reasonable to expect such an assurance. The application for exemption from the type acceptance requirement to enable an airworthiness certificate to be issued in the restricted category always faced major difficulties. The director advised Mr Ford in his letter dated 7 May 2003 that the aircraft was only eligible for a special category airworthiness certificate. Mr Lanham was strongly opposed, for good reasons, to the grant of an exemption from the type acceptance requirement for a restricted category airworthiness certificate. Mr Fogden shared this view. Although Mr Gill suggested that such an exemption could be granted, he considered the CAA should never have embarked on the process of allowing a non-certificated aircraft to be used for commercial operations. Given that none of his technical advisers favoured granting this exemption, it would have been a bold decision for the director to grant it. This is particularly so in view of the difficulties inherent in the CAA taking on the role of NAA for Westland Wessex helicopters (first signalled by Mr Remacha in his May 2002 report), the lack of clarity surrounding the basis of GKN’s involvement and ongoing support, the uncertainty concerning the support available from Rolls Royce, and the absence of information showing traceability of the spares. Even Mr Barclay, in his final report prior to the decision being made, acknowledged that he had not provided “all of the information necessary to issue an aviation document”. Mr Ford himself did not seek to “reactivate” this exemption application at the time he engaged with the new director, Mr Douglas, in July 2007. In all the circumstances, it is difficult to see how the director could properly have granted an exemption from the type acceptance requirement. The alternative application for an exemption from the hire or reward restriction on aircraft issued with special experimental airworthiness certificates faced many of the same difficulties. Mr Gill was strongly opposed to it, saying “I find it difficult to see on what grounds an exemption could be given” and suggesting it “would be de facto rule making”. While Mr Lanham considered such an exemption could be granted, he recommended this be done on a “kick for touch” basis and reviewed once the rules revision had been completed. Like Mr Gill, Mr Fogden was strongly opposed to this exemption being granted. The same unresolved safety issues summarised above meant that granting such an exemption would be seriously problematic. The director had no jurisdiction to grant an exemption unless satisfied one or more of the statutory criteria in s 37(2) had been made out. In view of the technical advice he received, it is not easy to see how the director would have been able to justify granting this exemption. In any event, we consider the misfeasance claim was misdirected. As noted, the appropriate defendant is the public officer appointed to discharge the relevant public 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 CAA could be held vicariously liable for any misfeasance on the part of the director given he was required to act independently in making his decision. Finally, all but two of the matters relied on to found the deceit claim and postpone the commencement of the limitation period were either discovered or were reasonably discoverable more than six years prior to the commencement of the proceedings. The exceptions were the 1999 Lewis report and the so-called vibration flight. Neither of these was known to the director and they had no bearing on his decision. The nine year delay in issuing the proceedings would therefore have been fatal to the claim in any event. The appeal must accordingly be dismissed.Result The appeal is dismissed. The appellants are to pay costs to the respondent for a complex appeal on a band B basis and usual disbursements. We certify for second counsel.-------------------------------------------------------------------- Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand  NZHC 1641. At . Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand  NZHC 3305 [High Court judgment]. At . At . At . At . At . At . At . At . At . Convention on International Civil Aviation 15 UNTS 295 (opened for signature 7 December 1944, entered into force 4 April 1947) [the Chicago Convention]. Civil Aviation Act 1990, s 28(1)(a) [the Rules]. Civil Aviation Rules, r 91.1(a). Rule 91.101(a). Rule 21.173. Rule 1.1. Rule 91.105(a). Rule 21.191. ICAO denotes International Civil Aviation Organisation, a United Nations agency funded by 193 national governments to support their diplomacy and cooperation in air transport as signatory states to the Chicago Convention. Although it was conceded at the hearing of the appeal that the CAA could not be vicariously liable for any dishonesty on the part of Mr Lewis, dishonesty and recklessness in connection with his engagement and 2005 letter remain key features of Helilogging’s case. OEM denotes original equipment manufacturer. This airworthiness certificate was issued following the director’s letter to Mr O’Malley dated 27 May 2002, referred to at  above. This was an error. The aircraft that crashed in February 2001 was a Westland Wessex Mk 5. This is a reference to Annex 8 of the Chicago Convention. Mil-8 is a reference to a type of military helicopter originally designed in the Soviet Union and currently produced in Russia. Helilogging Ltd v Civil Aviation Authority of New Zealand HC Wellington CIV-2004-485-2558, 1 December 2004 at . Helilogging Ltd v Civil Aviation Authority of New Zealand HC Wellington CIV-2004-485-2558, 16 December 2004. At . At . At . At . Mr Barclay was one of the key participants who had died by the time of the High Court trial in 2019. The “Part 21 Project” is a reference to the review of pt 21 of the Rules that the CAA was undertaking at the time. UH-1 refers to the Bell Iroquois helicopter. This first limb was abandoned at the hearing of this appeal on the basis that these memoranda were legally privileged and therefore did not need to be disclosed. High Court judgment, above n 3, at  and . Currie v Clayton  NZCA 511,  2 NZLR 195 at . High Court judgment, above n 3, at ; citing Amaltal Corp Ltd v Maruha Corp  NZCA 112;  NZLR 608 (CA) at . At . At . See Mr Barclay’s email to Messrs Takarangi, Ford and others sent on 19 May 2005 and quoted at  above. High Court judgment, above n 3, at  and . Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand  NZHC 2503. Heli-Logging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand  NZCA 196. Civil Aviation Authority of New Zealand v Helilogging Ltd (in rec and liq)  NZSC 132. High Court judgment, above n 3, at . At . At . At –. At –. At –. At . Mr Biel later became Ms King’s partner. The Judge observed at  that this is not a reliable indicator of the timeframe because inclement weather conditions in Wellington are not confined to winter months. At .