VANCOUVER - A survivor who watched his wife and daughter die as they fell to Earth in a flaming hot air balloon has filed a negligence lawsuit that names the balloon's owner-pilot, several companies and the federal government.

Meanwhile, the pilot, Stephen Pennock, has launched a separate suit against anyone connected with making or maintaining the balloon.

August Knackstedt managed to jump clear as the burning balloon rose into the air.

But his wife Shannon, 49, and daughter Jemma, 21, were killed as the basket, engulfed in flames, soared skyward, then plunged into a trailer park, igniting several homes and cars.

Knackstedt is suing Pennock, his company SRP Adventure Tours Ltd., maintenance engineer Doug Scott and several firms connected with making the balloon.

He's also named Transport Canada, which is responsible for regulating the ballooning industry and which came under fire by the Transportation Safety Board for lax oversight in the wake of two serious balloon crashes in August 2007.

In a statement of claim, Knackstedt said he suffered severe physical injuries, including burns and fractures, jumping out of the rising balloon, and severe psychological harm from witnessing the "tragic and gruesome death" of his wife and daughter.

The suit questioned Pennock's competence as a pilot, the balloon's fitness to fly safely and several deficiencies, including lack of an emergency deflation system, operating while exceeding its maximum allowable weight and problems with the propane system feeding the balloon's burners.

The suit alleged Transport Canada -- the sole regulator of hot air balloons, pilots and commercial operations -- failed passengers by inadequately enforcing its regulations when it came to Pennock and his company.

Passengers relied on the department's certification procedures to assure themselves the balloon ride would be safe, the suit claims.

In his statement of claim, Pennock said the August 2007 accident was caused by negligent design, manufacture, repair and/or distribution of the balloon's propane burner system.

Pennock's suit, filed in B.C. Supreme Court this week, named a half-dozen U.S. firms involved in making or maintaining the balloon's components, as well as up to five other unnamed firms that made or supplied parts of the burner system.

Pennock said he suffered burns, scarring orthopedic injuries, post-traumatic stress and depression. The accident wrecked his profitable balloon business, he claimed.

The companies were negligent in failing to warn of the hazards associated with the balloon's burner system and failing to provide safe maintenance instructions, the suit alleged.

And the burner system and replacement parts were substandard and not fit for their intended purpose, Pennock claimed.

Several homeowners whose units were gutted by the burning wreckage are also suing Pennock and his company.

No statements of defence have been filed in the suits and neither Pennock, whose claims have not yet been tested in court, nor his lawyer could be reached for comment.

The safety board report issued last year found fault with unauthorized modifications that added a fourth gas cylinder whose line failed, sparking the fatal fire.

The safety board criticized Pennock for giving a perfunctory safety briefing that did not include an explanation on how to exit the basket in an emergency.

The safety board report does not name Pennock, but Pennock identified himself in his lawsuit as the pilot of the balloon and the owner of the company.

The passengers' preflight safety briefing "consisted of reassurances that balloon flight was very safe but did not specifically explain how they were to exit the balloon basket in the event of an emergency."

The fire began as Pennock was conducting a test burn just before he and a dozen passengers were to lift off.

A line connecting the added gas cylinder that Pennock had installed without the manufacturer's or Transport Canada's approval broke. The escaping gas was ignited either by the test burn or the burners' pilot light, the safety board said.

Pennock ordered passengers to evacuate and escaped himself, but the report said he did not activate the emergency system that quickly would have let hot air out of the balloon, keeping the basket grounded.

Instead, the basket rose about 10 metres into the air on its ground tether attached to the balloon's trailer. Passengers jumped, many of them suffering injuries when they hit the trailer.

The tether burned through before Shannon and Jemma Knackstedt could escape. They rode the balloon's burning wreckage down as it crashed into the trailer park.

Pennock could not be reached for comment.

When the safety board report was issued last September, his spokesman said the pilot has struggled with what happened.

John Kageorge noted that Pennock did everything he could to help the safety board in its investigation.

"There's a sense that the system has failed," Kageorge said last year. "People have died, lives have changed and this operation has been inspected regularly and passed by Transport Canada."