SUPREME
COURT OF CANADA
Citation: Canada 3000 Inc., Re; Inter‑Canadian (1991)
Inc. (Trustee of), [2006] 1 S.C.R. 865, 2006 SCC 24
|
Date: 20060609
Dockets: 30214,
30729, 30730, 30731, 30732, 30738, 30740, 30742, 30743, 30745, 30749, 30750,
30751
|
Between:
NAV
Canada et al.
Appellants /
Respondents on cross‑appeals
and
International
Lease Finance Corporation et al.
Respondents /
Appellants on cross‑appeals
Between:
NAV Canada
Appellant
and
Wilmington Trust
Company et al.
Respondents
Between:
NAV Canada
Appellant
and
G.I.E. Avions de
transport régional et al.
Respondents
Between:
NAV Canada
Appellant
and
Inter‑Canadian
(1991) Inc. et al.
Respondents
and between:
Aéroports de
Montréal
Appellant
and
Wilmington Trust
Company et al.
Respondents
and between:
Greater Toronto
Airports Authority
Appellant
and
Ottawa Macdonald‑Cartier
International Airport Authority et al.
Respondents
and between:
Ottawa Macdonald‑Cartier
International Airport Authority
Appellant
and
Wilmington Trust
Company et al.
Respondents
Between:
NAV Canada
Appellant
and
Inter‑Canadian
(1991) Inc. et al.
Respondents
and between:
Aéroports de
Montréal
Appellant
and
Renaissance
Leasing Corporation et al.
Respondents
and between:
Greater Toronto
Airports Authority
Appellant
and
Ottawa Macdonald‑Cartier
International Airport Authority et al.
Respondents
and between:
Ottawa Macdonald‑Cartier
International Airport Authority
Appellant
and
Renaissance
Leasing Corporation et al.
Respondents
Between:
Aéroports de
Montréal
Appellant
and
Wilmington Trust
Company et al.
Respondents
Between:
Aéroports de
Montréal
Appellant
and
Newcourt Credit
Group (Alberta) Inc. et al.
Respondents
Between:
Aéroports de
Montréal
Appellant
and
Newcourt Credit
Group (Alberta) Inc. et al.
Respondents
and between:
St. John’s
International Airport Authority et al.
Appellants
and
Newcourt Credit
Group (Alberta) Inc. et al.
Respondents
and between:
Greater Toronto
Airports Authority
Appellant
and
Greater London
International Airport Authority et al.
Respondents
Between:
Greater Toronto
Airports Authority
Appellant
and
Renaissance
Leasing Corporation et al.
Respondents
Between:
Greater Toronto
Airports Authority
Appellant
and
Newcourt Credit
Group (Alberta) Inc. et al.
Respondents
Between:
Ottawa Macdonald‑Cartier
International Airport Authority
Appellant
and
Wilmington Trust
Company et al.
Respondents
Between:
St. John’s
International Airport Authority
Appellant
and
Newcourt Credit
Group (Alberta) Inc. et al.
Respondents
Between:
Charlottetown
Airport Authority Inc.
Appellant
and
CCG Trust
Corporation et al.
Respondents
Coram:
McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish and
Charron JJ.
Reasons for
Judgment:
(paras. 1 to 98)
|
Binnie J. (McLachlin C.J. and
Bastarache, LeBel, Deschamps, Fish and Charron JJ. concurring)
|
______________________________
Canada 3000 Inc. (Re); Inter‑Canadian (1991) Inc.
(Trustee of), [2006] 1 S.C.R. 865, 2006 SCC 24
NAV Canada, Greater Toronto Airports
Authority, Winnipeg Airports Authority Inc.,
Halifax International Airport Authority, Edmonton
Regional Airports Authority, Calgary Airport Authority,
Aéroports de Montréal, Ottawa Macdonald‑Cartier
International Airport Authority, Vancouver International
Airport Authority and St. John’s International
Airport Authority Appellants/Respondents
on cross‑appeals
v.
International Lease Finance Corporation, Hyr Här I Sverige
Kommanditbolag, IAI X, Inc., Triton Aviation International
LLC, Sierra Leasing Limited, ACG Acquisition XXV LLC,
ILFC International Lease Finance Canada Ltd., U.S. Airways
Inc., G.E. Capital Aviation Services Inc., as Agent and Manager
for Polaris Holding Company and AFT Trust‑Sub I, Pegasus
Aviation Inc., PALS I, Inc., Ansett Worldwide Aviation, U.S.A.,
MSA V, RRPF Engine Leasing Limited, Canadian Imperial Bank
of Commerce, Flight Logistics Inc., C.I.T. Leasing Corporation,
NBB‑Royal Lease Partnership One and GATX/CL Air Leasing
Cooperative Association Respondents/Appellants
on cross‑appeals
___________
NAV Canada Appellant
v.
Wilmington Trust Company and Wilmington Trust Corporation Respondents
____________
NAV Canada Appellant
v.
G.I.E. Avions de transport régional, ATR Marketing Inc.,
Heather Leasing Corporation, Renaissance Leasing Corporation,
Inter‑Canadian (1991) Inc. and Ernst & Young Inc., in its
capacity
as trustee for the bankruptcy of Inter‑Canadian (1991) Inc. Respondents
____________
NAV Canada Appellant
v.
Inter‑Canadian (1991) Inc., Wilmington Trust Company,
Wilmington Trust Corporation, Aéroports de Montréal, Greater
Toronto Airports Authority, Ottawa Macdonald‑Cartier
International Airport Authority and Ernst & Young Inc.,
in its capacity as trustee for the bankruptcy of Inter‑Canadian
(1991) Inc. Respondents
- and -
Aéroports de Montréal Appellant
v.
Wilmington Trust Company, Wilmington Trust Corporation,
NAV Canada, Greater Toronto Airports Authority, Ottawa
Macdonald‑Cartier International Airport Authority and Ernst
&
Young Inc., in its capacity as trustee for the bankruptcy of
Inter‑Canadian (1991) Inc. Respondents
- and -
Greater Toronto Airports Authority Appellant
v.
Ottawa Macdonald‑Cartier International Airport Authority,
Wilmington Trust Company, Wilmington Trust Corporation,
Aéroports de Montréal, NAV Canada, Ernst & Young Inc., in its
capacity as trustee for the bankruptcy of Inter‑Canadian
(1991)
Inc. and Inter‑Canadian (1991) Inc. Respondents
- and -
Ottawa Macdonald‑Cartier International Airport Authority Appellant
v.
Wilmington Trust Company, Wilmington Trust Corporation and
Ernst & Young Inc., in its capacity as trustee for the
bankruptcy
of Inter‑Canadian (1991) Inc. Respondents
_____________
NAV Canada Appellant
v.
Inter‑Canadian (1991) Inc., Renaissance Leasing Corporation,
Heather Leasing Corporation, G.I.E. Avions de transport
régional, ATR Marketing Inc., Ernst & Young Inc., in its
capacity
as trustee for the bankruptcy of Inter‑Canadian (1991) Inc.,
Aéroports de Montréal, Greater Toronto Airports Authority and
Ottawa Macdonald‑Cartier International Airport Authority Respondents
- and -
Aéroports de Montréal Appellant
v.
Renaissance Leasing Corporation, Heather Leasing Corporation,
G.I.E. Avions de transport régional, ATR Marketing Inc.,
Ernst & Young Inc., in its capacity as trustee for the
bankruptcy
of Inter‑Canadian (1991) Inc., NAV Canada, Greater Toronto
Airports Authority and Ottawa Macdonald‑Cartier International
Airport Authority Respondents
- and -
Greater Toronto Airports Authority Appellant
v.
Ottawa Macdonald‑Cartier International Airport Authority,
Renaissance Leasing Corporation, Heather Leasing Corporation,
G.I.E. Avions de transport régional, ATR Marketing Inc.,
Aéroports de Montréal, NAV Canada, Ernst & Young Inc., in its
capacity as trustee for the bankruptcy of Inter‑Canadian
(1991)
Inc. and Inter‑Canadian (1991) Inc. Respondents
- and -
Ottawa Macdonald‑Cartier International Airport Authority Appellant
v.
Renaissance Leasing Corporation, Heather Leasing Corporation,
G.I.E. Avions de transport régional, ATR Marketing Inc. and
Ernst & Young Inc., in its capacity as trustee for the
bankruptcy
of Inter‑Canadian (1991) Inc. Respondents
_____________
Aéroports de Montréal Appellant
v.
Wilmington Trust Company, Wilmington Trust Corporation and
Ernst & Young Inc., in its capacity as trustee for the
bankruptcy
of Inter‑Canadian (1991) Inc. Respondents
____________
Aéroports de Montréal Appellant
v.
Newcourt Credit Group (Alberta) Inc., Canada Life Assurance
Company, Ernst & Young Inc., in its capacity as trustee for the
bankruptcy of Inter‑Canadian (1991) Inc. and Renaissance
Leasing Corporation Respondents
_____________
Aéroports de Montréal Appellant
v.
Newcourt Credit Group (Alberta) Inc., Canada Life Assurance
Company, CCG Trust Corporation, Greater London
International Airport Authority, Greater Toronto Airports
Authority, Saint John Airport Inc., St. John’s International
Airport Authority, Charlottetown Airport Authority Inc.,
Renaissance Leasing Corporation, Heather Leasing Corporation
and Ernst & Young Inc., in its capacity as trustee for the
bankruptcy of Inter‑Canadian (1991) Inc. Respondents
- and -
St. John’s International Airport Authority and Charlottetown
Airport Authority Inc. Appellants
v.
Newcourt Credit Group (Alberta) Inc., Canada Life Assurance
Company, CCG Trust Corporation, Renaissance Leasing
Corporation, Heather Leasing Corporation, Canadian Regional
Airlines Ltd., Canadian Regional (1998) Ltd. and Ernst & Young
Inc., in its capacity as trustee for the bankruptcy of
Inter‑Canadian (1991) Inc. Respondents
- and -
Greater Toronto Airports Authority Appellant
v.
Greater London International Airport Authority, Saint John
Airport Inc., St. John’s International Airport Authority,
Charlottetown Airport Authority Inc., Newcourt Credit Group
(Alberta) Inc., Canada Life Assurance Company, CCG Trust
Corporation, Aéroports de Montréal, Renaissance Leasing
Corporation, Heather Leasing Corporation, Canadian Regional
Airlines Ltd., Canadian Regional (1998) Ltd. and Ernst & Young
Inc., in its capacity as trustee for the bankruptcy of
Inter‑Canadian (1991) Inc. Respondents
____________
Greater Toronto Airports Authority Appellant
v.
Renaissance Leasing Corporation, Inter‑Canadian (1991) Inc.
and Ernst & Young Inc., in its capacity as trustee for the
bankruptcy of Inter‑Canadian (1991) Inc. Respondents
____________
Greater Toronto Airports Authority Appellant
v.
Newcourt Credit Group (Alberta) Inc., Canada Life Assurance
Company, CCG Trust Corporation, Inter‑Canadian
(1991) Inc.,
Ernst & Young Inc., in its capacity as trustee for the
bankruptcy of
Inter‑Canadian (1991) Inc. and Renaissance Leasing Corporation Respondents
____________
Ottawa Macdonald‑Cartier International Airport Authority Appellant
v.
Wilmington Trust Company and Ernst & Young Inc., in its capacity
as trustee for the bankruptcy of Inter‑Canadian (1991) Inc. Respondents
___________
St. John’s International Airport Authority Appellant
v.
Newcourt Credit Group (Alberta) Inc., Canada Life Assurance
Company, CCG Trust Corporation, Ernst & Young Inc., in its
capacity as trustee for the bankruptcy of Inter‑Canadian
(1991)
Inc. and Renaissance Leasing Corporation Respondents
____________
Charlottetown Airport Authority Inc. Appellant
v.
CCG Trust Corporation and Ernst & Young Inc., in its capacity
as trustee for the bankruptcy of Inter‑Canadian (1991) Inc. Respondents
Indexed as: Canada 3000 Inc. (Re); Inter‑Canadian (1991)
Inc. (Trustee of)
Neutral citation: 2006 SCC 24.
File Nos.: 30214, 30729, 30730, 30731, 30732, 30738, 30740,
30742, 30743, 30745, 30749, 30750, 30751.
2006: January 16, 17; 2006: June 9.
Present: McLachlin C.J. and Bastarache, Binnie,
LeBel, Deschamps, Fish and Charron JJ.
on appeal from the court of appeal for ontario
on appeal from the court of appeal for quebec
Transportation
law — Airports — Seizure and detention of
aircraft — Airlines operating fleets of aircraft under leasing
agreements with legal titleholders — Airlines, registered owners of
aircraft, incurring charges for civil air navigation and airport
services — Service providers applying to superior court judge for
authorization, pursuant to s. 9 of Airport Transfer (Miscellaneous
Matters) Act and s. 56 of Civil Air Navigation Services Commercialization
Act , to seize and detain aircraft operated by airlines for unpaid charges
incurred prior to airlines’ bankruptcies — Whether titleholders’
right to repossess leased aircraft should take priority over service providers’
seize and detain orders — Whether titleholders liable to service
providers for unpaid charges — Whether seize and detain orders can be
exercised against security posted by titleholders in substitution for
aircraft — Whether lessors of engines attached to detained aircraft
entitled to repossess engines — Airport Transfer (Miscellaneous
Matters) Act, S.C. 1992, c. 5, s. 9 — Civil Air
Navigation Services Commercialization Act, S.C. 1996, c. 20,
ss. 55 , 56 .
Legislation — Interpretation — Contextual
interpretation — Owner of aircraft — Whether word “owner”
in s. 55 of Civil Air Navigation Services Commercialization Act includes
legal titleholders of aircraft — Civil Air Navigation Services
Commercialization Act, S.C. 1996, c. 20, s. 55 .
An airline in the modern era may consist of little more
than a name, with its aircraft leased, its suppliers on week to week contracts
and even its reservation and yield management systems outsourced to one of the
global service providers such as Sabre or Galileo. Start‑ups are
relatively easy, balance sheets are often thin, and failure can be quick and
(to outsiders) unexpected. Yet privatized Canadian airports and NAV Canada
(the privatized civil air navigation service) are obliged by statute to provide
service even to financially troubled airline operators. When an operator
collapses leaving unpaid bills for airport charges and air navigation services,
the question becomes: who takes the financial loss, the people who ultimately
own the leased aircraft or the people who were obliged to (and did) provide the
airport and navigation services?
Before going bankrupt, the airline companies
Canada 3000 and Inter‑Canadian operated their fleets of aircraft
under leasing agreements with the respondent legal titleholders and were the
registered owners of the aircraft under the Aeronautics Act . These
airlines incurred approximately $33.75 million in charges for civil air
navigation and airport services provided by NAV Canada and the airport
authorities pursuant to the Airport Transfer (Miscellaneous Matters) Act
(“Airports Act”) and the Civil Air Navigation Services
Commercialization Act (“CANSCA ”).
The Collapse of Canada 3000
In November 2001, Canada 3000 applied for
protection under the Companies’ Creditors Arrangement Act (“CCAA ”).
NAV Canada and the airport authorities applied to a judge of the Ontario
Superior Court of Justice, under s. 56 of CANSCA and s. 9 of
the Airports Act, for authorization to seize and detain certain aircraft
operated by the airline. The judge released the aircraft on the posting of
security by the legal titleholders and later dismissed the seizure and
detention motions, holding that the provisions in question of CANSCA and
the Airports Act did not give the authorities priority over the rights
of the legal titleholders to repossess the aircraft. He also held that the
titleholders were not jointly and severally liable for the charges owed to NAV
Canada under s. 55 of CANSCA , since they were not “owners” within
the meaning of the Act. The majority of the Court of Appeal upheld the motions
judge’s decision.
The Collapse of Inter‑Canadian
In December 1999, the airport authorities and NAV
Canada obtained, pursuant to s. 56 of CANSCA and s. 9 of the Airports
Act, an order of the Quebec Superior Court to seize and detain a number of
aircraft operated by Inter‑Canadian. The airline was subsequently deemed
to have made an assignment in bankruptcy. Faced with the legal titleholders’
claims that they were entitled to repossess the aircraft, the trustee in
bankruptcy applied to the Superior Court for directions. The judge allowed a
motion to release the aircraft in exchange for security. He later held that
the legal titleholders were jointly and severally liable for the amounts
owing. The majority of the Court of Appeal overturned the motions judge’s
ruling, concluding that the lessors’ right to repossession took priority and
that the legal titleholders were entitled to the return of their aircraft free
and clear of the unpaid charges.
Held: The
appeals and cross-appeals should be allowed in part.
This case is from first to last an exercise in
statutory interpretation, and the issues of interpretation are closely tied to
context. Prior to CANSCA and the Airports Act, civil air
navigation and airport services were provided by the federal government. Under
the current legislative scheme, the privatized NAV Canada and airport
authorities operate as self‑funded corporations that provide services on
the basis of a cost‑based tariff fixed by government regulation. They
cannot withhold airport or navigation services even from an obviously failing
airline. At the time the measures in question here were enacted, airline
insolvencies and bankruptcies had become a fact of life throughout the airline
industry. The legislative scheme shows that Parliament fully appreciated that
in dealing with aircraft flown in and out of jurisdictions under complex
leasing arrangements, the only effective collection scheme would be to render
the aircraft themselves available for seizure, and thereafter to let those
interested in them resolve their dispute about where the money should come from
to pay the debts due to the service providers. [36‑39]
No Joint and Several Liability for Charges for Air Navigation
Services
The appeals are dismissed with respect to NAV Canada’s
claim that the legal titleholders are jointly and severally liable for
outstanding civil air navigation charges incurred by the registered owners and
operators of the failed airlines, since the legal titleholders are not “owners”
within the meaning of s. 55 of CANSCA . It is clear from the
statutory scheme and the legislative record that Parliament intended to create
a “user-pay” system for civil air navigation services, and that the only
“users” of those services within the contemplation of the Act are the
airlines. While in some contexts the meaning of “owner” could include legal
titleholders, a purposive interpretation of s. 55 excludes them. The definition
of “owner” in s. 55(2) lists only persons in possession or legal custody
and control of the aircraft. Section 55(1) should be similarly
construed. Interpreting the list in s. 55(2) as exhaustive of ownership
for the purposes of s. 55(1) is consistent with the rest of the statutory
scheme governing aeronautics, the legislative history, and conforms with common
sense. If NAV Canada’s interpretation of s. 55 were correct, it would
mean that a seizure and detention order issued in respect of Canada 3000’s
unpaid user charges could in theory attach not only to a legal titleholder’s
aircraft leased to Canada 3000, but also to any other aircraft to which
that lessor holds title, including aircraft leased to other airlines.
Moreover, to interpret “owner” as argued by NAV Canada would give preference to
the ambiguous English text of s. 55 over the relatively clear French
provision. A restrictive interpretation of “owner” is consistent with the
policy and practice throughout the federal aeronautics scheme where the term
“owner” is used to refer to the person in legal custody and control of the
aircraft, not the legal titleholder. In enacting CANSCA , Parliament
intended not to replace or override the existing regulatory framework but
rather to fit cohesively within it. [41‑61]
The Seizure and Detention Remedy
Although the legal titleholders are not directly
liable for the charges due to the service providers, NAV Canada and the airport
authorities were entitled to orders seizing and detaining the aircraft pursuant
to s. 56 of CANSCA and s. 9 of the Airports Act, and
are entitled now to have their claims (as assessed by the motions judges)
satisfied out of the security posted in substitution for the aircraft. Whereas
s. 55 of CANSCA identifies a group of persons who are made legally
liable for the amounts owing, the detention remedy set out in s. 9 of the Airports
Act and s. 56 of CANSCA has a different focus. This court‑granted
remedy entitles the authorities to possess the aircraft until the debt is paid
or security furnished. It does not confer any interest in the beneficial
ownership of the aircraft, and it cannot be circumvented by a leasing
arrangement made between an airline and an aircraft lessor. Since
ss. 9(1) and 56(1) do not distinguish between the unpaid charges
accumulated by specific aircraft operated by a defaulting owner or operator,
the amount in respect of which the seizure of each aircraft is made is the
entire amount owed by that registered owner or operator. There is no
limitation of debts on an aircraft by aircraft basis. [9‑10] [62‑75] [85-86]
Much of the potential unfairness complained of by the
legal titleholders in the operation of the detention remedy can adequately be
addressed by the motions judge. The right to seize and detain is not
automatic. It requires a prior court authorization which may be subject to
such terms as the court considers necessary. The court also has a discretion
to limit the duration of the remedy by requiring the applicable authority to
release a detained aircraft from detention prior to payment of the amount with
respect to which the seizure was made. In any event, an authority that obtains
an order is required to release a detained aircraft upon payment of the
outstanding charges, or upon the provision of acceptable security therefor.
Parliament has thus left the door open for the motions judge to work out an
arrangement that is fair and reasonable to all concerned provided that the
object and purpose of the remedy (to ensure the unpaid user fees are paid) is
fulfilled. [73] [92]
The legal titleholders are sophisticated corporate
players and are well versed in the industry in which they have chosen to
invest. Since they can select which airlines they are prepared to deal with
and negotiate appropriate security arrangements as part of their lease
transactions, they are in a better position to protect themselves against this
type of loss than are the airport authorities and NAV
Canada. [71-72]
The intervention of bankruptcy proceedings in both
Quebec and Ontario created procedural complications. In the case of
Inter-Canadian, the detention remedies were applied for well before the
assignment in bankruptcy. In the case of Canada 3000, the detention remedies
were applied for while the CCAA stay was in effect and Canada 3000
remained the registered owner of the aircraft in question. In neither case did
the aircraft become part of the bankrupt estate (because ultimate ownership was
in the legal titleholder). The aircraft were legitimate targets of the
detention remedies as they were still sitting on a Canadian airport tarmac and
were still “owned or operated” (within the meaning of the relevant statutes) by
the airlines at the relevant date. Given the authority to charge interest, the
interest continues to run to the first of the date of payment, the posting of
security or the bankruptcy. [77] [96]
In the proceedings involving Inter‑Canadian it
was not necessary for the Quebec Superior Court judge to resort to provincial
law or, more specifically, to the Civil Code of Québec. The Aeronautics
Act , the Airports Act, and CANSCA are federal statutes that
create a unified aeronautics regime. Parliament endeavoured to create a
comprehensive remedy that would be applicable across the country and would not
vary from one province to another. This uniformity is especially vital since
aircraft are highly mobile and move easily across jurisdictions. [78-79]
Two of the respondents leased to Canada 3000 the
engines attached to two of the aircraft which, when seized, were airworthy. For
the present purposes, the engines are part of the aircraft in respect of which
charges were incurred and that are the subject of the detention. The Aeronautics
Act does not envisage the dismantling of the aircraft (and thus of its
value as security) on the tarmac. [87-89]
Cases Cited
Applied: Bell
ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559,
2002 SCC 42; distinguished: Royal Bank of Canada
v. Sparrow Electric Corp., [1997] 1 S.C.R. 411; referred
to: Pan American World Airways Inc. v. The Queen,
[1981] 2 S.C.R. 565; Heydon’s Case (1584),
3 Co. Rep. 7a, 76 E.R. 637; Grand Trunk Railway Co.
of Canada v. Hepworth Silica Pressed Brick Co. (1915),
51 S.C.R. 81; Bristol‑Myers Squibb Co. v. Canada (Attorney
General), [2005] 1 S.C.R. 533, 2005 SCC 26; Dilworth
v. Commissioner of Stamps, [1899] A.C. 99; R. v. Loblaw
Groceteria Co. (Manitoba) Ltd., [1961] S.C.R. 138; Slaight
Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038; Schreiber
v. Canada (Attorney General), [2002] 3 S.C.R. 269,
2002 SCC 62; R. v. Dubois, [1935] S.C.R. 378; R.
v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867,
2001 SCC 56; Rizzo & Rizzo Shoes Ltd. (Re),
[1998] 1 S.C.R. 27; R. v. Morgentaler,
[1993] 3 S.C.R. 463; Aetna Financial Services Ltd. v.
Feigelman, [1985] 1 S.C.R. 2; The Emilie Millon,
[1905] 2 K.B. 817; Channel Airways Ltd. v. Manchester Corp.,
[1974] 1 Lloyd’s Rep. 456; Peoples Department Stores
Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461,
2004 SCC 68; Firestone Tire & Rubber Co. of Canada v.
Industrial Acceptance Corp., [1971] S.C.R. 357; Bank of
America Canada v. Mutual Trust Co., [2002] 2 S.C.R. 601,
2002 SCC 43.
Statutes and Regulations Cited
Aeronautics
Act, R.S.C. 1985, c. A‑2,
ss. 3(1) “aeronautical product”, “registered owner”, 4.4(5), 4.5.
Airport Transfer (Miscellaneous
Matters) Act, S.C. 1992, c. 5,
ss. 9 , 10 .
Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, ss. 121 , 122 .
Canadian Aviation Regulations, SOR/96‑433, ss. 101.01(1)
“operator”, “owner”, 202.15 to 202.17.
Civil Air Navigation Services
Commercialization Act, S.C. 1996, c. 20,
ss. 2(1) “user”, (2), 7, 8, 9, Part III, 32 to 35, 36(3)(a)(i),
37(4), 44, 55, 56, 57(1).
Civil Code of Québec, S.Q. 1991, c. 64, arts. 1592, 1593.
Companies’ Creditors
Arrangement Act, R.S.C. 1985, c. C‑36,
s. 11.31 .
Interpretation Act, R.S.C. 1985, c. I‑21, ss. 8.1 , 8.2 , 12 .
Treaties and Other International Instruments
Air
Transport Agreement Between the Government of Canada and the Government of the
United States of America (1995), Annex I,
s. 1.
Convention on International
Civil Aviation, Can. T.S. 1944
No. 36, art. 19.
Authors Cited
Bunker, Donald H. Canadian
Aviation Finance Legislation. Montreal: Institute and Centre of
Air and Space Law, McGill University, 1989.
Canada. House of Commons. House
of Commons Debates, vol. IV, 1st Sess., 33rd Parl.,
June 20, 1985, pp. 6065‑66.
Canada. House of Commons. House
of Commons Debates, vol. 133, 2nd Sess., 35th Parl.,
March 25, 1996, pp. 1152‑54.
Canada. House of Commons. House
of Commons Debates, vol. 134, 2nd Sess., 35th Parl.,
May 15, 1996, pp. 2821, 2834, May 29, 1996,
p. 3144, June 4, 1996, pp. 3394, 3410.
Canada. Senate. Debates of
the Senate, vol. 135, 2nd Sess., 35th Parl.,
June 10, 1996, pp. 588‑89.
“Clause by Clause Analysis for the
Civil Air Navigation Services Commercialization Act ”, as presented to
the Senate Committee on Transport and Communications.
Driedger, Elmer A. Construction
of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Sullivan, Ruth. Sullivan
and Driedger on the Construction of Statutes, 4th ed.
Toronto: Butterworths, 2002.
Uniform Law Conference of Canada.
Drafting Conventions for the Uniform Law Conference of Canada,
s. 21(4) (online: http://www.ulcc.ca/en/us/index.cfm?sec=5).
APPEALS and CROSS‑APPEALS from a judgment of the
Ontario Court of Appeal (Abella and Cronk JJ.A. and Juriansz J. (ad
hoc)) (2004), 69 O.R. (3d) 1,
235 D.L.R. (4th) 618, 183 O.A.C. 201,
3 C.B.R. (5th) 207,
[2004] O.J. No. 141 (QL), affirming in part a decision of
Ground J. (2002), 33 C.B.R. (4th) 184,
5 P.P.S.A.C. (3d) 272,
[2002] O.J. No. 1775 (QL). Appeals and cross-appeals
allowed in part.
APPEALS from judgments of the Quebec Court of Appeal
(Nuss, Pelletier and Morissette JJ.A.), [2004] R.J.Q. 2966,
247 D.L.R. (4th) 503, [2004] Q.J. No. 11921 (QL),
[2004] Q.J. No. 11922 (QL),
[2004] Q.J. No. 11923 (QL), [2004]
Q.J. No. 11924 (QL), [2004] Q.J. No. 11925 (QL),
[2004] Q.J. No. 11926 (QL), [2004] Q.J. No. 11927 (QL),
[2004] Q.J. No. 11928 (QL), [2004]
Q.J. No. 11930 (QL), [2004] Q.J. No. 11932 (QL),
[2004] Q.J. No. 11933 (QL), [2004]
Q.J. No. 11961 (QL), reversing, in whole or in part, decisions
of Tremblay J., [2000] R.J.Q. 2935,
[2000] Q.J. No. 7330 (QL), [2000] Q.J. No. 4959 (QL),
[2000] Q.J. No. 4996 (QL),
[2000] Q.J. No. 5004 (QL), [2000] Q.J. No. 5005 (QL),
[2000] Q.J. No. 5007 (QL),
[2000] Q.J. No. 5009 (QL). Appeals allowed in part.
Clifton P. Prophet and Eric Wredenhagen, for NAV Canada (30214).
Lyndon A. J. Barnes and Jean‑Marc Leclerc, for Greater Toronto
Airports Authority (30214).
John T. Porter and Alan B. Merskey, for Winnipeg Airports
Authority Inc., Halifax International Airport Authority, Edmonton Regional
Airports Authority, Calgary Airport Authority, Aéroports de Montréal, Ottawa
Macdonald‑Cartier International Airport Authority, Vancouver
International Airport Authority and St. John’s International Airport Authority
(30214).
Richard A. Conway, David P. Chernos, Linda M. Plumpton
and Jana N. Stettner, for International Lease Finance Corporation,
Hyr Här I Sverige Kommanditbolag, IAI X, Inc., Triton Aviation International
LLC, Sierra Leasing Limited, ACG Acquisition XXV LLC, ILFC International Lease
Finance Canada Ltd. and U.S. Airways Inc. (30214).
Christopher W. Besant and Joseph J. Bellissimo, for G.E. Capital
Aviation Services Inc., as Agent and Manager for Polaris Holding Company and
AFT Trust‑Sub I, Pegasus Aviation Inc., and PALS I, Inc. (30214).
Barbara L. Grossman and Christopher D. Woodbury, for
Ansett Worldwide Aviation, U.S.A., and MSA V (30214).
Kenneth D. Kraft, for RRPF Engine Leasing Limited and Flight Logistics Inc. (30214).
Pamela L. J. Huff and Jill Lawrie, for C.I.T. Leasing Corporation and NBB‑Royal
Lease Partnership One (30214).
Written submissions only by Craig J. Hill
and Roger Jaipargas, for GATX/CL Air Leasing Cooperative
Association (30214).
Michel G. Ménard, for NAV Canada (30729, 30730, 30731, 30732).
Richard L. Desgagnés and Véronique E. Marquis, for Ottawa Macdonald‑Cartier
International Airport Authority, St‑John’s International Airport
Authority and Charlottetown Airport Authority Inc. (30731, 30732, 30742, 30749,
30750, 30751).
Gerald N. Apostolatos, for Aéroports de Montréal (30731, 30732, 30738, 30740, 30742).
Sandra Abitan, David Tardif‑Latourelle
and Allon Pollack, for Greater Toronto Airports Authority (30731,
30732, 30742, 30743, 30745).
Bertrand Giroux, Markus Koehnen,
Jeff Gollob, Jason Murphy, Jean‑Yves Fortin
and Geneviève Bergeron, for Wilmington Trust Company, Wilmington
Trust Corporation, Renaissance Leasing Corporation, Heather Leasing
Corporation, G.I.E. Avions de transport régional and ATR Marketing Inc. (30729,
30730, 30731, 30732, 30738, 30740, 30742, 30743, 30745, 30749, 30750).
Pierre Bourque and
Eugene Czolij, for Newcourt Credit Group (Alberta) Inc., Canada
Life Assurance Company and CCG Trust Corporation (30740, 30742, 30745, 30750,
30751).
No one appeared for Canadian Imperial Bank of
Commerce, Inter‑Canadian (1991) Inc., Ernst & Young Inc., in its capacity
as trustee for the bankruptcy of Inter‑Canadian (1991) Inc., Greater
London International Airport Authority, Saint John Airport Inc., Canadian
Regional Airlines Ltd. and Canadian Regional (1998) Ltd.
The judgment of the Court was delivered by
1
Binnie J. _ When an airline collapses leaving
unpaid bills for airport charges and air navigation services, the question
becomes who takes the financial loss (or, as it is sometimes said, “the
haircut”), the people who ultimately own the aircraft or the people who were
obliged to (and did) provide the airport and navigation services?
2
The question lands before the Court because of the collapse of
“Inter-Canadian (1991) Inc. Airline” in 1999 and, in 2001, of Canada 3000
Airlines Ltd. and Royal Aviation Inc. (collectively “Canada 3000”). The answer
depends on the statutory interpretation to be given to provisions of the Airport
Transfer (Miscellaneous Matters) Act, S.C. 1992, c. 5 (“Airports Act”),
and the Civil Air Navigation Services Commercialization Act, S.C. 1996,
c. 20 (“CANSCA ”). The important context for this interpretation is the
unusual nature of the modern airline business.
3
After decades of financial turbulence, an airline in the modern era may
consist of little more than a name, with its aircraft leased, its suppliers on
week to week contracts and even its reservation and yield management systems
outsourced to one of the global service providers such as Sabre or Galileo.
Start-ups are relatively easy, balance sheets are often thin, and failure can
be quick and (to outsiders) unexpected, as the history of Canada 3000
illustrates. When a financial collapse occurs (and these have been frequent in
Canada and elsewhere in the past decade), there is little meat on the corporate
bones for unsecured creditors. Doing business with such airline operators
carries significant financial risks, yet the appellant Canadian airports
operating under government supervision are obliged by statute to allow
financially troubled airlines to make use of their services (and sometimes the
airport will not know if an airline is in financial trouble or not). Airport
costs are largely recovered through landing fees. If these and other fees go
unpaid, the airport is out of pocket for the cost of the service it was obliged
by law to provide.
4
“NAV Canada”, the privatized successor to the former government-run
civil air navigation system, is also obliged to offer its services to any
aircraft flying through Canadian airspace on a cost-recovery basis. Its
business is even riskier than that of the airports because quite often these
aircraft do not even land in Canada, as in the case of transatlantic traffic
flying the great circle route to and from the eastern seaboard of the United
States: Pan American World Airways Inc. v. The Queen, [1981]
2 S.C.R. 565.
5
When Parliament adopted its policy of privatizing major airports and
navigation services in the early 1990s putting such services on a commercial
footing, potential investors were expected to insist on some assurance that
they would in fact be financially viable serving the chronically unstable
aviation business. Thus, Parliament decided to extend to the private operators
of airport and navigation services a statutory power to apply to a superior
court judge for an order to seize and detain aircraft until outstanding charges
are paid, similar to the power Parliament had earlier conferred on the Crown in
pre-privatization days under the Aeronautics Act, R.S.C. 1985, c. A-2,
s. 4.5 .
6
It is worth emphasizing that no power to seize and detain as such is
conferred. A superior court judge is interposed between the aircraft sought to
be seized and the airports or NAV Canada. As discussed below, the role of the
judge is crucial to an understanding of the statutory detention remedy.
7
The respondents are primarily entities with the ultimate ownership of
the aircraft in respect of which the charges in issue were incurred (“the legal
titleholders”). Their position is that under the terms of their various leases
with the defaulting airlines, they did not operate the aircraft, nor did they
make use of the services for which charges were levied, nor did they derive
benefit therefrom. They say that they are investors, and that when the lessees
failed they were entitled to repossess their aircraft free of the charges which
the defaulting airlines — not the legal titleholders — incurred. They consider
it unjust that they were required in these cases to post security as a
condition of removing “their” aircraft from the airports in question. The
appellant airport authorities and NAV Canada, on the other hand, argue that the
failure of Canada 3000 and Inter-Canadian reflects the sort of air carrier
instability that Parliament rightly anticipated and in light of which it
created the statutory remedies in question. Parliament must be taken to
appreciate, they say, that an airline may be only a corporate shell but an
aircraft under detention is a good, solid and enduring hostage for payment.
8
I agree with the courts below that the respondent legal titleholders are
not subject to personal or corporate liability to pay the unpaid charges under
s. 55 of CANSCA . But that is not to say that the aircraft are
similarly unburdened.
9
In my view, the appellants are entitled to obtain judicially authorized
seize and detain orders (hereinafter sometimes collectively referred to as the
detention remedy) to be exercised against the security posted in substitution
for the aircraft. The matters should be remitted to the motions judges to work
out the details of the orders. Considered in the context in which the
detention remedy was intended by Parliament to operate, the detention remedy
cannot be circumvented as suggested by the respondents by the expedient of
leasing arrangements made between the airlines and the aircraft lessors. The
detention remedy is purely statutory and Parliament’s intention to create an
effective collection mechanism against the aircraft itself owned or
operated by the person liable to pay the amount or charge must be given full
effect.
10
On the other hand, the appellants’ remedy, if an order is granted, is
limited to possession. Simple possession under the statutes does not confer
any interest in the beneficial ownership of the aircraft. I do not think the
appellants’ further claim to the airborne equivalent of a maritime lien is well
founded, nor do they have any “implied” power to sell the aircraft once
detained. They get what the statute says they get — a right to apply for a
judicial order to seize and detain the aircraft until payment — no more, and no
less.
11
For the reasons that follow, I would allow the appeals and the
cross-appeals in part, and return the seizure and detention applications to the
respective motions judges to be dealt with in accordance with this judgment.
I. Facts
12
In 1992, the Airports Act privatized airports formerly owned and
operated by the federal government. In 1996, CANSCA implemented the
same objective in relation to Canada’s civil air navigation services. Thus NAV
Canada was incorporated as a non-profit corporation for the purpose of
developing, operating and maintaining the civil air navigation system; see House
of Commons Debates, vol. 133, 2nd Sess., 35th Parl., March 25, 1996, at p.
1153. CANSCA implemented the transfer of what was Transport Canada’s civil
air navigation services to NAV Canada and established the commercial and
economic regulatory arrangements for the continued operation of those services;
see House of Commons Debates, vol. 134, 2nd Sess., 35th Parl., May 15,
1996, at p. 2821.
A. Canada 3000
13
On November 8, 2001, Canada 3000 applied for protection under the Companies’
Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA ”). The
effect of an initial court order made on the same day stayed all proceedings by
creditors pending the filing of a plan of arrangement. Although the stay
contemplated the continuation of operations, some five hours later the
airlines’ management issued a press release declaring that the airlines had
ceased operations. The next day, November 9, a further order was issued
grounding the fleet and providing for the return of aircraft operated by the
airlines to Canada.
14
On November 9, 2001, NAV Canada applied to the Ontario Superior Court of
Justice under s. 56(1) of CANSCA for an authorization to seize and
detain certain aircraft operated by Canada 3000. The Greater Toronto Airport
Authority (“GTAA”) applied for relief against Canada 3000 but did not at that
time seek leave of the court to seize and detain any aircraft.
15
On November 10, 2001, the directors and officers of Canada 3000
resigned. The next day the Canada 3000 companies were put into bankruptcy. At
that time, the Canada 3000 companies owed approximately $7.4 million to NAV
Canada, $13 million to the GTAA, and $8.35 million to the other Canadian
airport authorities. On November 12, the GTAA moved to seize and detain
aircraft under s. 9 of the Airports Act and on November 23, the other
airport authorities applied for similar relief.
16
The detention remedy sought by the authorities was in relation to 38
aircraft operated by the Canada 3000 companies and collectively worth
approximately US $1.1 billion. Despite the existence of the legal
titleholders, all of the aircraft were registered in the name of Canada 3000 as
owner under the Aeronautics Act . Canada 3000 held leases with the
various respondents in respect of 36 aircraft. The lessors retained legal
title to the aircraft. At the time of the CCAA application, rental
payments under the leases were significantly in arrears.
17
The termination provisions varied somewhat from lease to lease. Under
some, the leases came to an end and the lessors became entitled to repossession
upon the granting of the CCAA order, under others by the cessation of
operations, and under the rest by the assignment in bankruptcy. The CCAA stay
operated, in effect, as an interim bar to repossession (see s. 11.31 CCAA ).
At the time the detention remedy was sought, the aircraft sought to be seized
were grounded at the Canadian airports listed in the style of cause of the
various proceedings.
18
On December 3, 2001, after the aircraft had been grounded for close to a
month, the motions judge approved the terms of their release on the posting of
security for 110 percent of the amounts alleged to be owed. The motions judge
then heard the seizure and detention motions through December and into January
2002, and dismissed them on May 7, 2002. The airport authorities and NAV
Canada appealed and on January 20, 2004, the Ontario Court of Appeal dismissed
their appeal.
B. Inter-Canadian
19
Inter-Canadian operated its fleet of aircraft under leasing agreements
with the legal titleholders but it too was the registered owner under the Aeronautics
Act . On November 27, 1999, Inter-Canadian ceased operations and laid off
90 percent of its employees. At that point, it had accumulated unpaid charges
totalling approximately $5 million owing to NAV Canada and to the airport
authorities.
20
Through early December 1999 the airport authorities and NAV Canada moved
to seize and detain a number of the aircraft. This was authorized by four
orders made by the Quebec Superior Court between December 8 and 17. Before the
seizure motions were launched, however, one of the respondents, Renaissance
Leasing Corporation, had purported to terminate its lease with Inter-Canadian.
The aircraft nevertheless remained on the tarmac at Dorval airport.
21
On January 5, 2000, Inter-Canadian filed a notice of intention to make a
proposal to its creditors pursuant to the Bankruptcy and Insolvency Act,
R.S.C. 1985, c. B‑3 . The airline’s creditors rejected its proposal
in March and the company was deemed retroactively to have made an assignment in
bankruptcy as of January 5. Faced with the legal titleholders’ claims that
they were entitled to repossession of the aircraft, the trustee in bankruptcy
applied to the Superior Court for directions.
22
On July 7, 2000, the Superior Court allowed a motion to release the
aircraft in exchange for security set at 150 percent of the claims of the
airport authorities and NAV Canada. On November 9, 2000, Tremblay J., having
heard the application on its merits, confirmed the validity of the detention
and also held the legal titleholders liable for the amounts owing. His ruling
was overturned by a majority decision of the Quebec Court of Appeal, which held
that the lessors’ right to repossession took priority and that the legal
titleholders were entitled to the return of their aircraft free and clear of
the unpaid charges.
II. Judicial History
A. Canada 3000
(1) Ontario Superior Court of Justice (Ground
J.)
23
The motions judge concluded that the legal titleholders were not jointly
and severally liable for the charges owed to NAV Canada under s. 55 of CANSCA .
They were not “owners” within the meaning of the Act because none of the
aircraft were registered in their name. Nor were any of the titleholders in
possession of the aircraft when the charges were incurred. In his view, “the
word ‘owner’ in [CANSCA ] should not be interpreted to include persons
who do not have custody or control of the aircraft, do not operate the
aircraft, and do not make use of the air navigation services in respect of
which the navigation charges are levied”: (2002), 33 C.B.R. (4th) 184, at
para. 52.
24
Further, the motions judge concluded that the seizure and detention
remedies found in CANSCA and the Airports Act did not create a
lien or security interest that ranked in priority to the ownership or perfected
security rights of third parties. He preferred the analogy of a Mareva
injunction:
I am not persuaded, however, that the legislation
granting such detention rights should be interpreted as creating rights against
third parties having ownership or perfected security interests in the aircraft
such that they, in effect, become liable for the debts of third parties and
must extinguish those debts before they can enforce their contractual rights to
repossess the aircraft or enter into possession of the aircraft to realize on
their security. [para. 43]
25
Accordingly, he dismissed the claims of NAV Canada and the airport
authorities.
(2) Ontario Court of Appeal
(a) Cronk J.A., for the Majority
26
Cronk J.A. agreed with the motions judge that the titleholders were not
jointly and severally liable under s. 55 of CANSCA . A restrictive
definition of “owner” excluding legal titleholders was consistent with the
user-pay model established by CANSCA , the broader regulatory system and
the relevant legislative history, all of which demonstrated Parliament’s intent
to limit liability to “persons having legal custody and control and persons
otherwise in possession of aircraft”: (2004), 69 O.R. (3d) 1, at para. 118.
27
Cronk J.A. also agreed that the seizure and detention provisions in CANSCA
and the Airports Act do not give the authorities priority over the
rights of the titleholders to repossess the aircraft:
I conclude that the remedies under the Detention
Provisions, if granted, do not create rights in the Aircraft that rank in
priority to the interests in the Aircraft of the Lessors, the legal
titleholders to the Aircraft, in the face of a claim for repossession and
recovery of the Aircraft by the Lessors. . . . The Detention Provisions are
intended to apply to aircraft of persons having legal custody and control or
who are otherwise in possession of the aircraft. [para. 190]
28
In the view of the majority, even if the aircraft had been properly
detained, the engines attached to the aircraft and leased to Canada 3000 by two
of the respondents could be removed by their respective owners. The appeal of
the various authorities was dismissed.
(b) Juriansz J. (ad hoc), Dissenting in Part
29
Juriansz J. (ad hoc, now J.A.) would have allowed the appeal in
respect of the detention remedies. In his view, these remedies focus on the
aircraft and not the persons liable to pay. As long as the aircraft is owned
or operated by a person liable to pay then it may be the subject of an
application to seize and detain it. The fact that other persons may have
property interests in the aircraft is of no consequence:
The remedy is “in addition to any other remedy available for the
collection” of the outstanding charges. The remedy is not confined to
collection of outstanding charges from persons liable for the charges. The
remedy is not directed to persons at all, but rather to “aircraft”, and permits
the Authorities, under court supervision, to seize, to detain and to refuse to
release the aircraft until somebody has satisfied the outstanding charges.
[para. 255]
Juriansz J.
also held that the detention provisions apply to the leased engines since they
were affixed to the aircraft that were subject to the detention remedy.
B. Inter-Canadian
(1) Quebec Superior Court (Tremblay J.)
30
The motions judge held the titleholders to be jointly and severally
liable for the unpaid charges due to NAV Canada under s. 55 of CANSCA . CANSCA
and the Airports Act provide for a right to retain the aircraft
operated by a party that has not paid its charges. The motions judge relied on
arts. 1592 and 1593 of the Civil Code of Québec, S.Q. 1991, c. 64,
and determined that the authorities’ right of retention of the aircraft took
priority over the lessors’ interests: [2000] R.J.Q. 2935.
31
Accordingly, by order dated November 9, 2000, the motions judge
confirmed the validity of the seizures, and declared the respondents liable to
pay the overdue charges.
(2) Quebec Court of Appeal
(a) Pelletier and Morissette JJ.A., for the
Majority
32
Pelletier and Morissette JJ.A. reversed the motions judge’s decision and
absolved the legal titleholders from liability for unpaid service charges to
NAV Canada under s. 55 of CANSCA . In their view, limiting the
definition of “owner” to the enumerated categories in s. 55(2) was the only
interpretation consistent with both the English and French versions of the
statute and the statutory context. They noted that NAV Canada’s
interaction is primarily with the user of the aircraft, not the legal titleholders.
They concluded, at (2004), 247 D.L.R. (4th) 503, para. 106, that
[translation] these
aircraft are in no way liable for the debts of Inter-Canadian for the simple
reason that they do not belong to this debtor.
33
Moreover, in their view, neither the airport authorities nor NAV Canada
had any right to an order to seize and detain the aircraft in priority to the
rights of the legal titleholders. They rejected the motions judge’s resort to
the Civil Code.
(b) Nuss J.A., Dissenting
34
Nuss J.A. concluded that the intention and purpose of the statutory
provisions would be defeated if the legal titleholders could obtain release of
the aircraft without payment of the charges. However, he limited the liability
of a legal titleholder to an obligation to pay the charges incurred in the
operation of aircraft of which it is the titleholder:
. . . the titleholder, to obtain release of its seized
aircraft must only pay all the charges, in the use of the airport, incurred
(and unpaid) by the operator in the operation of any aircraft owned by the same
titleholder. [Emphasis added; para. 145.]
III. Statutory Provisions
35
The statutory provisions are reproduced in the relevant paragraphs of
the reasons.
IV. Analysis
36
This case is from first to last an exercise in statutory interpretation,
and the issues of interpretation are, as always, closely tied to context. The
notion that a statute is to be interpreted in light of the problem it was
intended to address is as old at least as the 16th century; see Heydon’s
Case (1584), 3 Co. Rep. 7a, 76 E.R. 637. In a more modern and elaborate
formulation, it is said that “the words of an Act are to be read in their
entire context and in their grammatical and ordinary sense harmoniously with
the scheme of the Act, the object of the Act, and the intention of Parliament”
(E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87).
37
As this Court noted in 1915, part of the context is “the condition of
things existent at the time of the enactment”: Grand Trunk Railway Co. of
Canada v. Hepworth Silica Pressed Brick Co. (1915), 51 S.C.R. 81, at p.
88. At the time the measures in question here were enacted, airline
insolvencies and bankruptcies had become a fact of life throughout the airline
industry. Many of the planes flown in and out of and across Canada were leased
to, and flown by, airlines in, or close to, bankruptcy protection. Under the
interpretation offered by the respondents and the majority decisions of the
Courts of Appeal, the detention remedy would be opposable to everybody but the
titleholder, whose aircraft is often the only asset to survive the financial
wreckage. Parliament would be taken to have intended a remedy that is least
effective when it is most needed. It is more likely that Parliament fully
appreciated that in dealing with aircraft flown in and out of jurisdictions
under complex leasing arrangements, the only effective collection scheme is to
render the aircraft themselves available for seizure, and thereafter to let
those interested in them, including legal titleholders, registered owners,
sublessors and operators, resolve their dispute about where the money is to
come from to pay the debts due to the service providers. I should add that I
agree with Juriansz J. that the legal titleholders are not without benefit from
the services provided, although the benefit is indirect. Without the day to
day flight operations the legal titleholders would have no business. They
lease the aircraft intending them to be used in the very activities for which
the services are provided. By and large, the legal titleholders are
sophisticated corporations. They are knowledgeable about the ways of the
industry in which they have chosen to participate.
38
Part of the important context is the commercial reality of the
marketplace where a statute is intended to function. Here the privatized
appellants provide services on the basis of a cost-based tariff fixed by
regulation. Prior to CANSCA and the Airports Act, civil air
navigation and airport services were provided by the federal government.
Central to the statutory scheme is the fact that these service providers are
self-funded and intended to be financially viable and independent; see CANSCA,
ss. 7 and 8 ; House of Commons Debates, March 25, 1996, at pp. 1152-54.
The privatized service providers do not possess the financial resources of the
Crown. The statutory remedies are clearly intended to promote financial
viability within a risky business environment and to make privatization
attractive and practicable to potential investors.
39
Another important commercial fact is that not only are NAV Canada and
the airport authorities required to provide services according to a cost-based
tariff, but they cannot withhold services from even an obviously failing
airline. Pursuant to the lease agreement between Transport Canada and the
Airport Authorities, the airports cannot limit the access of aircraft to their
facilities except in cases of bad weather or emergency conditions; see Ottawa
Macdonald-Cartier International Airport Ground Lease, s. 8.10.02.
Similarly, NAV Canada is obligated under s. 9 of CANSCA to provide all
users with its civil air navigation services. This reflects the obligation
undertaken by Canada under international agreements; see, e.g., Air
Transport Agreement Between the Government of Canada and the Government of the
United States of America, February 24, 1995 (“USA-Canada Open-Skies
Agreement”), Annex I, s. 1.
40
With these preliminary comments on context (and in particular the
vitally important commercial context in which these statutes were designed to
operate), I turn to the two major questions raised by the appeals. Firstly are
the legal titleholders liable for the debt incurred by the registered
owners and operators of the failed airlines to the service providers?
Secondly, even if they are not so liable, are the aircraft to which they
hold title subject on the facts of this case to judicially issued seizure and
detention orders to answer for the unpaid user charges incurred by Canada 3000
and Inter-Canadian?
A. Are the Legal Titleholders Jointly and
Severally Liable to NAV Canada Under Section 55 of CANSCA for Outstanding Civil
Air Navigation Charges?
41
In my view, on a purposeful interpretation of s. 55, the answer is
no. I agree with Ground J. and with the unanimous view of both Courts of
Appeal that the legal titleholders are not personally liable for the unpaid
charges. Section 55 provides:
55. (1) [Joint and several liability] The
owner and operator of an aircraft are jointly and severally liable for the
payment of any charge for air navigation services imposed by the Corporation in
respect of the aircraft.
(2) [Meaning of “owner”] In subsection (1), “owner”,
in respect of an aircraft, includes
(a) the person in whose name the aircraft is registered;
(b) a person in possession of an aircraft as purchaser under
a conditional sale or hire-purchase agreement that reserves to the vendor the
title to the aircraft until payment of the purchase price or the performance of
certain conditions;
(c) a person in possession of the aircraft as chattel
mortgagor under a chattel mortgage; and
(d) a person in possession of the aircraft under a bona fide
lease or agreement of hire.
42
The appellants contend that the word “owner” in s. 55(1) should be
given its ordinary meaning to include the legal titleholders. Who, more than
they, should be considered an “owner”? The legal titleholders respond that it
would be absurd to make them jointly and severally liable for civil air
navigation charges related to air operations in which they did not participate,
any more than the owner of a rented car should be liable for charges incurred
by a renter in using a toll bridge. They point out that the practical effect
of NAV Canada’s argument would be mischievous. In this case, for example,
Canada 3000 leased a number of aircraft from International Lease Finance
Corporation (“ILFC”) based in California, one of the largest aircraft leasing
companies in the world. If NAV Canada’s interpretation of s. 55 is
correct, it would mean that a seizure and detention order issued in respect of
Canada 3000’s unpaid user charges could in theory attach not only to the ILFC
aircraft leased to Canada 3000, but also to any other aircraft to which ILFC
holds title, including aircraft leased to other airlines (e.g. Lufthansa,
British Airways or United Airlines). Thus the wreckage created by Canada
3000’s collapse could spread disruption widely and perhaps unjustifiably
trigger a further crisis in other airlines.
43
It seems clear from the statutes and the legislative record that
Parliament intended to create a “user-pay” scheme for civil air navigation
services, and that the only “users” of the civil air navigation services within
the contemplation of the Act are the airlines, not the legal titleholders.
(1) The Meaning of “Owner”
44
If s. 55(1) were read in isolation, the ordinary and grammatical
meaning of “owner” would include the legal titleholder. However, this Court
held, in Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559,
2002 SCC 42, that
one must consider the “entire context” of a provision before one
can determine if it is reasonably capable of multiple interpretations.
. . .
. . . It is necessary, in every case, for the court charged
with interpreting a provision to undertake the contextual and purposive
approach set out by Driedger, and thereafter to determine if “the words
are ambiguous . . .”. [Underlining added; paras. 29-30.]
45
Accordingly, to paraphrase the Court’s decision in Bristol-Myers
Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26,
it is necessary to suspend judgment on the precise scope of the word “owner” in
s. 55(1) and first to examine the “contextual” elements of the Driedger
approach.
(2) Statutory Context
of Section 55
46
Understandably, the appellants lay great emphasis on the fact that
s. 55(2) is introduced by the words
In subsection (1), “owner”, in respect of an aircraft, includes
. . . .
followed by a
list of four subsections. In the French text, on the other hand, the
introductory words are
Pour l’application du paragraphe (1), “propriétaire”, relativement à
un aéronef, s’entend . . . .
There was, as
might be expected, much argument over the words “includes” and “s’entend”
in s. 55(2). NAV Canada argues that “includes” expands the definition of
owner beyond the enumerated groups and that its ordinary meaning encompasses
titleholders. The legal titleholders respond that the sense of “s’entend”
in the French text is usually conveyed by the English word “means”, which
generally precedes a definition to be construed as exhaustive, and which would
therefore exclude them from personal liability.
47
The English word “includes” may also, depending on the context, precede
a list that exhausts the definition; see, e.g., Dilworth v. Commissioner of
Stamps, [1899] A.C. 99 (P.C.), at pp. 105-6; R. v. Loblaw Groceteria Co.
(Manitoba) Ltd., [1961] S.C.R. 138.
48
In this case, in my view there are three significant reasons for
adopting a restrictive interpretation of the word “includes” in s. 55(2),
and thereby excluding the legal titleholders from liability under
s. 55(1).
49
Firstly, it is significant that the French version signals a closed
list; see Uniform Law Conference of Canada, Drafting Conventions for the
Uniform Law Conference of Canada (online), s. 21(4). The shared meaning is
not conclusive when such an interpretation would be contrary to the purpose and
intent of the statute, but it is preferred; see Slaight Communications Inc.
v. Davidson, [1989] 1 S.C.R. 1038, at pp. 1070-72; Schreiber v. Canada
(Attorney General), [2002] 3 S.C.R. 269, 2002 SCC 62, at para. 56; and R.
Sullivan, Sullivan and Driedger on the Construction of Statutes
(4th ed. 2002), at pp. 79-90. Further, where one of the linguistic
versions is broader than the other, the common meaning favours the more
restricted or limited meaning; see Schreiber; R. v. Dubois,
[1935] S.C.R. 378. As the English version is ambiguous, indicating that the
list could be exhaustive or expansive depending on the context, the fact that
the relatively clear French version signals that “owner” is restricted to the
persons listed in s. 55(2) is a factor weighing against NAV Canada’s expansive
interpretation.
50
Secondly, I conclude (as did the Courts of Appeal) that interpreting the
list enumerated in s. 55(2) as exhaustive of ownership for the purposes of s.
55(1) is consistent with the regulatory scheme as a whole and its legislative
history, outlined below. In restricting “owner” to those in possession and
legal custody and control of the aircraft, s. 55(2) is brought into conformity
with the meaning that the word “owner” carries throughout the interlocking
statutes that regulate aeronautics. For example, under the Canadian
Aviation Regulations, SOR/96-433 (“CARs”), only a person who has
legal custody and control may be a registered owner. Sections 55(2)(b)
to (d) all explicitly state that the “owner” must be in possession of
the aircraft. Also of significance is s. 55(2)(d), which includes as
owner someone “in possession of the aircraft under a bona fide lease”. No
reference is made therein to the lessor. Parliament put its mind to aircraft
leasing agreements and decided that the person in possession of the aircraft is
the owner for the purposes of user charges.
51
Thirdly, exclusion of legal titleholders is consistent with Parliament’s
manifest intent to limit the scope of liability to “users” of NAV Canada’s
civil air navigation services. Section 32 of CANSCA authorizes NAV
Canada to impose charges only on a “user”, which s. 2(1) of the Act defines as
“an aircraft operator.” Part III of CANSCA lays out detailed mechanisms
through which NAV Canada may impose fees. All of its provisions contemplate
that it is the user who will be charged. Section 36(3) (a)(i) states
that notice of changes to existing charges and notice of new charges must be
sent to representative user organizations. Section 37(4) states that NAV Canada
must advise representative user organizations once a new charge has been
approved. Section 44 limits the right to appeal charges to “any user, group of
users or representative organization of users”.
52
In contrast, titleholders are not provided with notice of rates or
accounts of the charges that their aircraft accumulate. In this case, the
respondents in the Canada 3000 case were only notified of the $7.4 million
owing to NAV Canada the day before the airline filed for protection under the CCAA .
Thus Cronk J.A. observed that
the charges scheme of the CANSCA does not protect aircraft
lessors and secured creditors from the possible imposition by NAV Canada of
improper or arbitrary navigation charges precisely because it is not envisaged
that such persons will have any liability for such charges. [para. 101]
53
In summary, in my view, the statutory context supports the exclusion of
the legal titleholders from the definition of owner under s. 55 of CANSCA .
(3) The Broader Legislative Framework
54
As stated, aeronautics in Canada is governed by a complex web of
statutes, regulations and international conventions. CANSCA and the Airports
Act are part of this broader legislative framework. In R. v. Ulybel
Enterprises Ltd., [2001] 2 S.C.R. 867, 2001 SCC 56, the Court emphasized,
at para. 52, “the principle of interpretation that presumes a harmony,
coherence, and consistency between statutes dealing with the same subject
matter”. See also Bell ExpressVu, at para. 27.
55
The policy and practice throughout the federal regulatory scheme is to
use the term “owner” to refer to the person in legal custody and control of the
aircraft, not the legal titleholder. The CARs, for example, define
owner as “the person who has legal custody and control of the aircraft” (s.
101.01(1)). The Aeronautics Act refers only to “registered owners” and,
under s. 4.4(5) , only the operator or registered owner may face
liability for charges imposed under that Act. Section 3(1) defines a
registered owner as the person to whom a certificate of registration has been
issued and the CARs make clear that an aircraft may only be registered
by an owner who, again, must have legal custody and control of the aircraft;
see ss. 202.15 to 202.17. Section 2(2) of CANSCA itself states that
“[u]nless a contrary intention appears, words and expressions used in this Act
have the same meaning as in subsection 3(1) of the Aeronautics Act .” I
appreciate that arguments are available to counter these points but in my view
the legal titleholders have the better side of the debate.
56
Internationally, the Convention on International Civil Aviation,
December 7, 1944, Can. T.S. 1944 No. 36 (the “Chicago Convention”), does
not require legal title to correspond with registered ownership. Article 19
states that registration shall be in accordance with the laws of the contracting
State. It is common ground that, by virtue of ss. 202.15, 202.16 and
202.17 of the CARs, an aircraft may only be registered in the Canadian
Civil Aircraft Register by the “owner” of the aircraft as that term is defined
under s. 101.01(1) of the CARs, and that that person is the entity
having legal custody and control of the aircraft. Thus an airline operating
aircraft in Canada under a long-term lease is named on the Certificate of
Registration as “owner” of the aircraft, notwithstanding that title is actually
held by the lessor; see D. H. Bunker, Canadian Aviation Finance Legislation
(1989), at p. 764. We have been given no reason why the privatization
legislation should be held to depart so strikingly from Canadian regulatory
practice.
(4) Legislative History
57
Though of limited weight, Hansard evidence can assist in determining the
background and purpose of legislation; Rizzo & Rizzo Shoes Ltd. (Re),
[1998] 1 S.C.R. 27, at para. 35; R. v. Morgentaler, [1993] 3 S.C.R. 463,
at p. 484. In this case, it confirms Parliament’s apparent intent to exclude
legal titleholders from personal liability for air navigation charges. The
legislative history and the statute itself make it clear that Parliament did
not intend CANSCA to replace or override the existing regulatory
framework but rather to fit cohesively within it. In introducing CANSCA ,
the Minister of Transport stated that the Aeronautics Act , which
establishes the essential regulatory framework to maintain safety in the
aviation industry, “will always take precedence over the commercialization
legislation” (House of Commons Debates, March 25, 1996, at
p. 1154). In the Ontario Court of Appeal, Cronk J.A. highlighted a number
of other instances where government spokespersons emphasized to Members of
Parliament that CANSCA was to fit within the existing regulatory
framework which generally favours the narrow meaning of “owner”; see, e.g., House
of Commons Debates, May 15, 1996, at p. 2834; May 29, 1996, at p.
3144; June 4, 1996, at pp. 3394 and 3410; and Debates of the Senate,
vol. 135, 2nd Sess., 35th Parl., June 10, 1996, at pp. 588-89.
58
In 1985, during passage of the Aeronautics Act , a concern was
raised in Parliament that liability under s. 4.4(5) (that Act’s liability
provision) could extend to legal titleholders. In response, the Government
inserted the term “registered owner”. The Parliamentary Secretary to the
Minister of Transport specifically stated that the change was made to ensure
that liability did not extend to those who had a security or other financial
interest in the aircraft; House of Commons Debates, vol. IV, 1st Sess.,
33rd Parl., June 20, 1985, at pp. 6065-66.
59
In 1996, the Government considered Bill C-20 (which became CANSCA )
as it transferred the operation of the civil navigation system from Transport
Canada to NAV Canada. The Clause by Clause Analysis brief presented to
the Senate Committee explained that s. 55 is based on the wording of the
equivalent section of the Aeronautics Act which, as stated, restricts
“owner” to registered owner; see “Clause by Clause Analysis for the Civil
Air Navigation Services Commercialization Act ”, as presented to the Senate
Committee on Transport and Communications, at pp. 51-52. However, the textual
discrepancy noted above was not addressed.
(5) Conclusion on the Section 55 Issue
60
A purposive interpretation of s. 55 that takes into account the
foregoing considerations compels rejection of the position urged by NAV
Canada. Moreover, and importantly, the narrow interpretation of “owner” in
s. 55(1) conforms with common sense. It would be a severe disruption to
the functioning of the airline industry if, as a result of Canada 3000’s
failure to pay its charges, NAV Canada could seize and detain an aircraft
operated by, for example, Air Canada. There is no reason to think Parliament
intended to let the damage caused by a failed airline expand beyond that
airline’s fleet of aircraft.
61
Accordingly, applying Driedger’s contextual approach to s. 55(1) of
CANSCA , I agree with the Courts of Appeal that the titleholders of the
aircraft are not jointly and severally liable for the charges due to NAV
Canada. They are not “owners” within the meaning of that section.
B. The Detention
Remedy
62
If the legal titleholders are not directly liable for the charges due to
the service providers, they argue that it would be unfair and contradictory to
hold their aircraft hostage for the payment. Section 56 of CANSCA and
s. 9 of the Airports Act should be interpreted consistently with
s. 55(1) of CANSCA , the legal titleholders argue, and their right
to repossess the aircraft on termination of the lease should take priority over
the statutory remedy.
63
On the other hand, Nuss J.A., dissenting in the Quebec Court of Appeal,
put the contrary position:
If the titleholder could obtain release of the
seized aircraft without the payment of the outstanding charges or providing
security, the intention and purpose of the Detention Provisions enacted by
Parliament would be defeated. This is so because the debt is constituted of
charges incurred by the operator of the aircraft (who is often, as in this
case, the registered owner) and not by the titleholder. Thus, if the
contention of [the titleholders] were to prevail, the titleholder, who is
neither the operator nor the “owner” within the meaning of the statutes, could
always obtain release of the aircraft and the charges would not be paid. The
recourse provided by Parliament would, inevitably, be of no avail. [para. 126]
I believe that
Nuss J.A. is correct on this point.
64
The relevant provisions, which authorize applications to a superior
court judge of the province in which any aircraft owned or operated by the
person liable to pay the charge or amount is situated, are expressed in the two
statutes in similar terms.
65
Section 56 of CANSCA provides:
56. (1) [Seizure and detention of aircraft]
In addition to any other remedy available for the collection of an
unpaid and overdue charge imposed by the Corporation for air navigation
services, and whether or not a judgment for the collection of the charge has
been obtained, the Corporation may apply to the superior court of the
province in which any aircraft owned or operated by the person liable to pay
the charge is situated for an order, issued on such terms as the court considers
appropriate, authorizing the Corporation to seize and detain any such
aircraft until the charge is paid or a bond or other security for the
unpaid and overdue amount in a form satisfactory to the Corporation is
deposited with the Corporation.
(2) [Application may be ex parte] An
application for an order referred to in subsection (1) may be made ex parte
if the Corporation has reason to believe that the person liable to pay the
charge is about to leave Canada or take from Canada any aircraft owned or operated
by the person.
(3) [Release] The Corporation shall release
from detention an aircraft seized under this section if
(a) the amount in respect of which the
seizure was made is paid;
(b) a bond or other security in a form satisfactory to the
Corporation for the amount in respect of which the seizure was made is
deposited with the Corporation; or
(c) an order of a court directs the
Corporation to do so.
66
Section 9 of the Airports Act, under which the airport
authorities bring their seizure and detention applications, is to the same
effect.
9. (1) [Seizure and detention for fees and
charges] Where the amount of any landing fees, general terminal fees or other
charges related to the use of an airport, and interest thereon, set by a
designated airport authority in respect of an airport operated by the authority
has not been paid, the authority may, in addition to any other remedy
available for the collection of the amount and whether or not a judgment for
the collection of the amount has been obtained, on application to the
superior court of the province in which any aircraft owned or operated by
the person liable to pay the amount is situated, obtain an order of
the court, issued on such terms as the court considers necessary, authorizing
the authority to seize and detain aircraft.
(2) [Idem] Where the amount of any fees, charges
and interest referred to in subsection (1) has not been paid and the designated
airport authority has reason to believe that the person liable to pay the
amount is about to leave Canada or take from Canada any aircraft owned or
operated by the person, the authority may, in addition to any other remedy
available for the collection of the amount and whether or not a judgment for
the collection of the amount has been obtained, on ex parte
application to the superior court of the province in which any aircraft
owned or operated by the person is situated, obtain an order of the court,
issued on such terms as the court considers necessary, authorizing the
authority to seize and detain aircraft.
(3) [Release on payment] Subject to subsection
(4), except where otherwise directed by an order of a court, a designated
airport authority is not required to release from detention an aircraft seized
under subsection (1) or (2) unless the amount in respect of which the seizure
was made is paid.
(4) [Release on security] A designated airport
authority shall release from detention an aircraft seized under subsection (1)
or (2) if a bond, suretyship or other security in a form satisfactory to the
authority for the amount in respect of which the aircraft was seized is
deposited with the authority.
(5) [Same meaning] Words and expressions used in
this section and section 10 have the same meaning as in the Aeronautics Act .
67
According to these provisions, the airport authorities or NAV Canada
(upon obtaining a court order) may take possession of an aircraft and detain
it. The aircraft must be either “owned” or “operated” by a person who is
liable to pay. Either is a sufficient basis for an application.
68
The key difference between the joint and several liability provisions in
s. 55 of CANSCA and the detention remedy provided for in s. 56 of CANSCA
and s. 9 of the Airports Act is that the seizure and detention remedy
lies against the aircraft. Whereas s. 55 identifies a group of persons who
are made legally liable for the amounts owing, the detention remedy has a
different focus. It provides for a right to possess aircraft until the
debt is paid or security provided.
69
The legal titleholders argue that the claim of NAV Canada and the
airport authorities to detain the aircraft must yield to their right under
their respective leases to repossession. They liken the seizure and detention
remedies to a Mareva injunction, in which the assets are frozen
while various parties work out their respective entitlements; see Aetna
Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2. However, in my
view, there is no need to resort to analogies, especially loose analogies (e.g. Mareva
injunctions are interlocutory, whereas the detention remedy is available
whether or not a judgment for the collection of the charge or amount has been
obtained. Moreover, Mareva injunctions are directed at persons (Aetna
Financial Services, at pp. 25-26), whereas the seizure and
detention remedy targets the aircraft itself).
70
The CARs, adopted pursuant to the Aeronautics Act , provide
that an “operator” in respect of an aircraft “means the person that has
possession of the aircraft as owner, lessee or otherwise” (s. 101.01(1)). At
the dates of the applications for seizure and detention orders, Canada 3000 and
Inter-Canadian were still the registered owners of the aircraft. Accordingly,
if the Court is to read the words of the detention remedy in the context of the
realities of this industry previously discussed, it seems to me that those
remedies must be available against the aircraft of Canada 3000 (except any
aircraft already repossessed by the titleholder prior to the CCAA
application on November 8, 2001) and Inter-Canadian. (Once a titleholder
reclaims possession, it becomes an operator in possession within s. 55(1) of CANSCA .
However, as its possession post-dates the charges, no personal liability is
incurred on that account.)
71
It is difficult to endorse the indignation of the legal titleholders
with respect to detention of their aircraft until payment is made for debts due
to the service providers. They are sophisticated corporate players well versed
in the industry in which they have chosen to invest. The detention remedies do
not affect their ultimate title. Investors who have done their due diligence
will recognize that detention remedies have deep roots in the transport business.
In The Emilie Millon, [1905] 2 K.B. 817 (“Mersey Docks”), for
example, the English Court of Appeal examined a statute that stipulated that
the Mersey Docks and Harbour Board could cause a ship to be detained until all
harbour and tonnage payments had been made despite the fact that the ownership
of the ship did not correspond to the debtor who had incurred the charges. The
ruling in that case reflects the traditional scope of this type of remedy (at
p. 821):
The Mersey Docks and Harbour Board have a right by
statute to detain the vessel until the dock tonnage rates and harbour rates are
paid. That is an express statutory right, and the board have nothing to do with
any sale of the vessel to a purchaser. That is a matter which only concerns those
who are interested in the vessel. It does not concern the board. The board
are entitled to detain the vessel, whoever is the owner, until the rates are
paid. The order appealed against deprives them of that right, and without
their consent purports to give them an option to try and make some claim to a
lien upon or right against the fund in priority to other claimants. The board
have no such lien or right. If this vessel had been allowed to leave the dock,
the board would have been left to make a futile claim against the fund in
court. [Emphasis added.]
This type of
provision is not uncommon in the airline business, see, e.g., decisions
under a differently worded U.K. Act such as Channel Airways Ltd. v.
Manchester Corp., [1974] 1 Lloyd’s Rep. 456 (Q.B.), at p. 461, in which it
was held that the Manchester Corporation Act “mean[t] what it
sa[id]”, and that the city could detain aircraft in respect of which charges
had been incurred until those charges had been paid. The legal titleholders
face this problem on the other side of the Atlantic. It is a risk they manage
there. No reason was given as to why they cannot manage it here.
72
The legal titleholders are in a better position to protect themselves
against this type of loss than are the airport authorities and NAV Canada. The
legal titleholders can select which airlines they are prepared to deal with and
negotiate appropriate security arrangements as part of their lease transactions
with the airlines. In the case of the aircraft at issue in these appeals, many
if not all of the leases provided for substantial security deposits. For
example, the total amount posted by Canada 3000 to the ILFC as security
deposits for airport fees and charges was approximately $15,305,500. It is
unnecessary to catalogue all of the possible security arrangements, but these
deposits demonstrate a legal titleholder’s ability to negotiate protection at a
time when the airline is solvent to cover the amounts in overdue charges that
the airline may eventually be required to pay to the statutory service
providers.
73
I agree with Cronk J.A. (at para. 133) that the detention remedy under
the statutes is subject to several constraints: (i) the remedy is not
automatic and requires prior court authorization; (ii) the remedy is
discretionary and may be subject to such terms as the court considers
necessary; (iii) under s. 9(3) of the Airports Act and
s. 56(3) (c) of CANSCA , the court also has a discretion to
limit the duration of the remedy by requiring the applicable authority to
release a detained aircraft from detention prior to payment of the amount with
respect to which the seizure was made; (iv) in any event, an authority
that obtains an order under the detention provisions is required to release a detained
aircraft upon payment of the outstanding amount or charges in respect of which
the seizure was made or upon the provision of acceptable security therefor
(ss. 9(3) and 9(4) of the Airports Act and ss. 56(1) and 56(3)
of CANSCA ); and (v) an order is not available under the detention
provisions if the aircraft in respect of which the order is sought is exempt
from seizure and detention under provincial law (s. 10(1) of the Airports
Act and s. 57(1) of CANSCA ) or, in the case of the Airports
Act, under a regulation made by the Governor in Council (s. 10(2)).
74
On the other hand, the conclusion of Juriansz J., dissenting in part,
was correct that “the wording of the Detention Provisions makes apparent that
aircraft may be seized and detained without regard to the property interests of
persons who are neither the registered owners nor the operators of the aircraft
under the legislation. As long as the aircraft is owned or operated by a
person liable to pay the outstanding charges, it may be the subject of an application
to seize and detain it. The fact that there may be other persons, who are not
liable to pay the outstanding charges but have property interests in the
aircraft, is of no consequence” (para. 239).
75
I turn, then, to a number of additional arguments raised on both sides
which, in my view, with respect, unnecessarily complicate a straightforward
task of statutory interpretation.
(1) Whether or Not a Lien Existed
76
In the Ontario case, there was considerable debate about whether the
detention remedy created a lien. However, as the English Court of Appeal
commented in Mersey Docks, there was no need for the port authority “to
. . . make some claim to a lien” (p. 821). Nor is it necessary here. In
this case, as in Mersey Docks, the remedy is purely a creature of
statute. Whether or not a lien could be said to arise by operation of law is
perhaps of theoretical interest but it has no practical bearing on the result in
these appeals.
(2) Effect of the Bankruptcy Proceedings
77
The intervention of bankruptcy proceedings in both Quebec and Ontario
created procedural complications. For present purposes, it is sufficient to
note that the detention remedies in Quebec were applied for well before the
assignment in bankruptcy. In Ontario, the detention remedies were applied for
while the CCAA stay was in effect and Canada 3000 remained the
registered owner of the aircraft in question. In neither case did the aircraft
become part of the bankrupt estate (because ultimate ownership was in the legal
titleholder). The aircraft were nevertheless legitimate targets of the
detention remedies as they were still sitting on a Canadian airport tarmac and
were still “owned or operated” (within the meaning of the relevant statutes) by
the airlines at the relevant date.
(3) Resort to the Civil Code of Québec
78
In the Quebec Superior Court, Tremblay J. held that the seizure and
detention provisions create a right similar to that found in arts. 1592 and
1593 of the Civil Code of Québec. However, with respect, there is no
need to make reference to provincial law or, more specifically, to the Civil
Code, and to do so here is inappropriate. Section 56 of CANSCA and
s. 9 of the Airports Act specifically state that the remedy is to
be “in addition to any other remedy”, which includes remedies under provincial
law.
79
The Aeronautics Act , the Airports Act and CANSCA
are federal statutes that create a unified aeronautics regime. Parliament
endeavoured to create a comprehensive code applicable across the country and
not to vary from one province to another. This uniformity is especially vital
since aircraft are highly mobile and move easily across jurisdictions.
80
NAV Canada also relied on ss. 8.1 and 8.2 of the Interpretation Act,
R.S.C. 1985, c. I-21 , to urge that s. 56 of CANSCA provides for a civiliste
right of retention. However, neither section applies in this case. Section
8.1 states that
if in interpreting an enactment it is necessary to refer
to a province’s rules, principles or concepts forming part of the law of
property and civil rights, reference must be made to the rules, principles and
concepts in force in the province at the time the enactment is being applied.
If it were necessary
to resort to provincial law, then the provincial law to be used is that of the
province in which the provision is being applied: Peoples Department Stores
Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461, 2004 SCC 68. Here, for
reasons stated, resort to provincial law is not necessary.
81
Section 8.2 of the Interpretation Act states that
when an enactment contains both civil law and common law terminology,
or terminology that has a different meaning in the civil law and the common
law, the civil law terminology or meaning is to be adopted in the Province of
Quebec and the common law terminology or meaning is to be adopted in the other
provinces.
82
The issue here is not one of conflicting terminology. The language used
in relation to the detention remedy is perfectly apt to make Parliament’s
intention clear bilingually and bijuridically. In short, resort to the Civil
Code was neither necessary nor appropriate.
(4) Existence of a Power of Sale
83
The appellants argue that the existence of a seizure and detention
implies (in their favour) a power of sale. No such power is contained in CANSCA
or the Airports Act. Nor is it necessarily implied in the creation of a
power to seize and detain. The only claim that the authorities have under
federal aeronautics law is the claim to possession of the aircraft until their
user charges are paid.
(5) Presumption Against Interference With
Private Rights
84
The Ontario motions judge applied a narrow approach to the Detention
Remedy on the basis that it invades what would otherwise be the proprietary
rights of the legal titleholders. Reference was made to Royal Bank of
Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411, where it was held
that the legislation at issue in that case did not impose a charge in the
nature of a lien because of the absence of clear and unambiguous language.
However, only if a provision is ambiguous (in that after full consideration of
the context, multiple interpretations of the words arise that are equally
consistent with Parliamentary intent), is it permissible to resort to
interpretive presumptions such as “strict construction”. The applicable
principle is not “strict construction” but s. 12 of the Interpretation
Act , which provides that every enactment “is deemed remedial, and shall be
given such fair, large and liberal construction and interpretation as best
ensures the attainment of its objects”; see Bell ExpressVu, at para. 28:
Other principles of interpretation — such as the
strict construction of penal statutes and the “Charter values”
presumption — only receive application where there is ambiguity as to the
meaning of a provision. (On strict construction, see: Marcotte v. Deputy
Attorney General for Canada, [1976] 1 S.C.R. 108, at p. 115, per
Dickson J. (as he then was); R. v. Goulis (1981), 33 O.R. (2d) 55
(C.A.), at pp. 59‑60; R. v. Hasselwander, [1993] 2 S.C.R. 398, at
p. 413; R. v. Russell, [2001] 2 S.C.R. 804, 2001 SCC 53, at para. 46. .
. .)
In my view,
there is no ambiguity in the statutory language creating the detention remedy
and thus resort to “strict construction” is not called for.
(6) Limitation of Debts on an Aircraft by
Aircraft Basis
85
The titleholders argue that it would be extremely unfair that one
titleholder’s aircraft, however recently leased, may ultimately be held hostage
for all of the unpaid user charges of the airline that flew it. They contend
that if (which they deny) the titleholders must pay charges in order to recover
an aircraft, they should only be required to pay the charges incurred by the
individual aircraft sought to be released, as opposed to the charges
outstanding in relation to the whole fleet of the defaulting airline.
86
However, the statute says that an aircraft operated by the person liable
to pay the amount can be seized and, absent further court order, need not be
released until the entire amount owed by that operator has been paid.
This point is made clearly by the release provisions in s. 9(3) of the Airports
Act and s. 56(3) of CANSCA . The authorities must only release the
aircraft if “the amount in respect of which the seizure was made is paid”.
Since s. 9(1) and s. 56(1) do not distinguish between the amounts accumulated
by specific aircraft operated by a defaulting owner or operator, it seems clear
that the amount in respect of which the seizure was made is the entire amount
owed by that registered owner or operator.
(7) Limitation of Seizure to Exclude Engines
87
Two of the respondents, RRPF Engine Leasing Ltd. and Flight Logistics
Inc. (the “engine lessors”), leased to Canada 3000 the engines attached to two
of the aircraft which, when seized, were airworthy. The engine lessors argue
that they should be entitled to repossess their engines because seizure of the
aircraft is not seizure of the engines. They cite Laskin J. (as he then was)
in Firestone Tire & Rubber Co. of Canada v. Industrial Acceptance Corp.,
[1971] S.C.R. 357, for the proposition that the doctrine of accession does not
apply to a removable and identifiable object such as the engines.
88
In my view, the engines are part of the aircraft for present purposes.
Engines and equipment such as onboard computers fall under the definition of
“aeronautical product” in the Aeronautics Act (s. 3(1) ). If the engines
could be removed, third-party lessors could cannibalize any “aircraft propeller
or aircraft appliance or part or the component parts of any of those things,
including any computer system and software”; see Aeronautics Act, s.
3(1) .
89
Firestone Tire is not of assistance here. In that case, a truck
was repossessed under a conditional sales contract. The vendor in possession
of the seized truck sought to retain the tires mounted on the truck as against
the claim of the unpaid conditional seller of the tires. Laskin J. was
concerned about the windfall one creditor might receive when repossessing the
property of another unpaid creditor for which he “has given no value” (p.
359). Here, no beneficial interest is implicated. The engines are attached to
the aircraft in respect of which charges were incurred and that are the subject
of the detention. The Act does not envisage the dismantling of the aircraft
(and thus of its value as a security) on the tarmac.
(8) Effect of Sub-Leases
90
The respondents Ansett Worldwide Aviation, U.S.A. and MSA V leased three
aircraft to Canada 3000, two of which, in turn, had been leased by those respondents
from other persons under head leases. These sub-lessors stand in no better
position than the legal titleholders, and the aircraft in which they have a
leasehold interest were subject to seizure.
C. The Important Role of the Motions Judge
91
The detention remedy does not create any rights unless, and until, a
court order is made authorizing the seizure and detention of an aircraft.
Instead, the provisions create potential remedies, available at the discretion
of the court and subject to such conditions as the court considers necessary,
as Cronk J.A. noted, at para. 134.
92
Much of the potential unfairness which the titleholders envisage in the
operation of the detention remedy can be addressed by the motions judge.
Section 56(3) (c) of CANSCA states that NAV Canada must
release the aircraft “if . . . an order of a court directs the
Corporation to do so”. Similarly, s. 9(3) of the Airports Act states
that an airport authority need not release the aircraft until the charges are
paid, “except where otherwise directed by an order of a court”. Parliament has
left the door open for the motions judge to work out an arrangement that is
fair and reasonable to all concerned, provided that the object and purpose of
the remedy (to ensure the unpaid user fees are paid) is fulfilled. It would be
open to a judge on a detention remedy hearing to determine an allocation
amongst the titleholders that reflected such factors as the number of seized
aircraft, the amount of charges in relation to a particular aircraft or the
short duration of an aircraft’s life spent in the doomed fleet. The judge need
not make each aircraft hostage for the full amount of the unpaid charges,
provided the result is that the authority is paid in full. In this way, what may
otherwise be portrayed as a draconian remedy can be reduced to a fair and
proportionate judicial response to the airline collapse.
D. Interest
93
The Airports Act explicitly authorizes the airport authorities to
charge interest on the overdue amounts. Section 9(1) defines the amount on
account of which the seizure was made as the “amount of any landing fees,
general terminal fees or other charges related to the use of an airport, and interest
thereon”. While CANSCA makes no explicit mention of interest, ss.
32 to 35 lay out a broad authority for NAV Canada to set and charge its fees.
A procedure has been established under s. 35(1)(a), whereby the
Minister of Transport approves the charges imposed by NAV Canada. The Minister
has approved a regulation imposing interest. Notice was provided to airline
operators (although not the legal titleholders) and no judicial review of this
regulation was sought.
94
The time value of money is universally accepted in ordinary commercial
practice; see Bank of America Canada v. Mutual Trust Co., [2002] 2
S.C.R. 601, 2002 SCC 43. There is no reason for this principle to be excluded
in the case of privatized aeronautics services, and it is not surprising that
NAV Canada has been permitted to incorporate interest on unpaid charges into
its charging scheme.
95
The question then turns to how long the interest can run. The airport
authorities and NAV Canada have possession of the aircraft until the charge or
amount in respect of which the seizure was made is paid. It seems to me that
this debt must be understood in real terms and must include the time value of
money.
96
Given the authority to charge interest, my view is that interest
continues to run to the first of the date of payment, the posting of security
or bankruptcy. If interest were to stop accruing before payment has been made,
then the airport authorities and NAV Canada would not recover the full amount
owed to them in real terms. Once the owner, operator or titleholder has
provided security, the interest stops accruing. The legal titleholder is then
incurring the cost of the security and losing the time value of money. It
should not have to pay twice. While a CCAA filing does not stop the
accrual of interest, the unpaid charges remain an unsecured claim provable
against the bankrupt airline. The claim does not accrue interest after the
bankruptcy: ss. 121 and 122 of the Bankruptcy and Insolvency Act .
97
A particular issue is raised in the Quebec appeals regarding proper
notice of the interest charges. This is an issue to be dealt with by the
motions judge when these matters are returned for further consideration and
disposition.
V. Disposition
98
For these reasons, I would allow the appeals and cross-appeals in part,
as follows:
1. I would dismiss the appeals of NAV Canada
seeking to hold the respondents liable in their personal/corporate capacity;
2. I would allow the appeals of NAV Canada and
the airport authorities of the dismissal of their seizure and detention
applications and remit those applications to the respective motions judges to
be dealt with in accordance with these reasons;
3. I would set aside the orders requiring NAV
Canada and the airport authorities to reimburse the respondents for the
aircraft detention costs;
4. I would allow the appeals of NAV Canada and
the GTAA of the ruling that the engine lessors are entitled to repossess the
leased engines;
5. Interest on overdue charges continues to run
to the first of the date of payment, the posting of security or bankruptcy.
In other
respects, the appeals and cross-appeals will be dismissed. Aéroports de
Montréal, St. John’s International Airport Authority Inc. and Charlottetown
Airport Authority Inc. are entitled to their costs in the Quebec appeals. All
other parties shall bear their own costs.
Appeals and cross-appeals allowed in part.
Solicitors for NAV Canada (30214): Gowling Lafleur
Henderson, Toronto.
Solicitors for Greater Toronto Airports Authority
(30214): Osler Hoskin & Harcourt, Toronto.
Solicitors for Winnipeg Airports Authority Inc., Halifax
International Airport Authority, Edmonton Regional Airports Authority, Calgary
Airport Authority, Aéroports de Montréal, Ottawa Macdonald‑Cartier
International Airport Authority, Vancouver International Airport Authority and
St. John’s International Airport Authority (30214): Ogilvy Renault,
Toronto.
Solicitors for International Lease Finance Corporation, Hyr Här I
Sverige Kommanditbolag, IAI X, Inc., Triton Aviation International LLC, Sierra
Leasing Limited, ACG Acquisition XXV LLC, ILFC International Lease Finance
Canada Ltd. and U.S. Airways Inc. (30214): Torys, Toronto.
Solicitors for G.E. Capital Aviation Services Inc., as Agent and
Manager for Polaris Holding Company and AFT Trust‑Sub I, Pegasus Aviation
Inc., and PALS I, Inc. (30214): Cassels Brock & Blackwell,
Toronto.
Solicitors for Ansett Worldwide Aviation, U.S.A., and MSA V
(30214): Fraser Milner Casgrain, Toronto.
Solicitors for RRPF Engine Leasing Limited
(30214): Heenan Blaikie, Toronto.
Solicitors for Flight Logistics Inc. (30214): Morrison
Brown Sosnovitch, Toronto.
Solicitors for C.I.T. Leasing Corporation and NBB‑Royal Lease
Partnership One (30214): Blake Cassels & Graydon, Toronto.
Solicitors for GATX/CL Air Leasing Cooperative Association
(30214): Borden Ladner Gervais, Toronto.
Solicitors for NAV Canada (30729, 30730, 30731,
30732): Lapointe Rosenstein, Montréal.
Solicitors for Ottawa Macdonald‑Cartier International Airport
Authority, St‑John’s International Airport Authority and Charlottetown
Airport Authority Inc. (30731, 30732, 30742, 30749, 30750, 30751): Ogilvy
Renault, Montréal.
Solicitors for Aéroports de Montréal (30731, 30732, 30738, 30740,
30742): Langlois Kronström Desjardins, Montréal.
Solicitors for Greater Toronto Airports Authority (30731, 30732,
30742, 30743, 30745): Osler Hoskin & Harcourt, Montréal.
Solicitors for Wilmington Trust Company, Wilmington Trust
Corporation, Renaissance Leasing Corporation, Heather Leasing Corporation,
G.I.E. Avions de transport régional and ATR Marketing Inc. (30729, 30730,
30731, 30732, 30738, 30740, 30742, 30743, 30745, 30749,
30750): Brouillette Charpentier Fortin, Montréal.
Solicitors for Newcourt Credit Group (Alberta) Inc., Canada Life
Assurance Company and CCG Trust Corporation (30740, 30742, 30745, 30750,
30751): Desjardins Ducharme Stein Monast, Montréal.
Solicitors for Canadian Imperial Bank of Commerce
(30214): Blake Cassels & Graydon, Toronto.
Solicitors for Inter‑Canadian (1991) Inc. and Ernst &
Young Inc., in its capacity as trustee for the bankruptcy of Inter‑Canadian
(1991) Inc. (30730, 30731, 30732, 30738, 30740, 30742, 30743, 30745, 30749,
30750, 30751): Kugler Kandestin, Montréal.
Solicitors for Greater London International Airport Authority and
Saint John Airport Inc. (30742): Ogilvy Renault, Montréal.
Solicitors for Canadian Regional Airlines Ltd. and Canadian Regional
(1998) Ltd. (30742): Fraser Milner Casgrain, Montréal.
The amendments to para. 98, issued on August 16, 2006, are included
in these reasons.