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Court of Queens Bench of Alberta
Citation: Airco Aircraft Charters Ltd. v. Edmonton Regional Airports Authority, 2010
ABQB 397
Date: 20100611
Docket: 0903 16530
Registry: Edmonton
Between:
Airco Aircraft Charters Ltd.
Plaintiff- and -
Edmonton Regional Airports Authority
Defendant
_______________________________________________________
Memorandum of Decisionof the
Honourable Madam Justice J.E. Topolniski
_______________________________________________________
I. Introduction
[1] After learning that one of the Edmonton City Centre Airports (Airport) two runways
was to be decommissioned by the end of 2010 as the first step in a phased closure of the Airport,
Airco Aircraft Charters Ltd. (Airco) sued the Edmonton Regional Airports Authority
(ERAA) for declarations that ERAA is in breach of its statutory and contractual duties and forinjunctions requiring ERAA to continue to manage and operate the Airport and to govern itself
so as to advance economic and community development. Airco now seeks summary judgment
for that relief.
[2] Owned by the City of Edmonton, the Airport has been a part of Edmontons fabric since
1927, when it was designated Canada's first air harbour. Since that time, it has undergone name
changes (Blatchford Field, Edmonton Municipal Airport, City Centre Airport), air traffic changes
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(cargo, scheduled commercial passenger traffic, general aviation services), and changes in its
profitability (historically profitable, but only marginally profitable in recent years). Names, air
traffic, and profitability aside, the form and indeed the very existence of the Airport has been the
topic of public debate and uncertainty for at least 50 years.
1
[3] In a 1995 plebiscite (Plebiscite), voters approved use of the Airport for general aviation
services and consolidation of scheduled air traffic at the Edmonton International Airport (EIA).
This was the second plebiscite about the Airport in three years.
[4] In the spring of 1996, the City entered into a 56 year lease with ERAA pursuant to which
ERAA agreed to use the Airport as a public airport offering general aviation services for private
aircraft, small charter companies, and air ambulances (Head Lease). In turn, ERAA assumed
control and operation of the Airport, accepted assignments of existing leases from the City and
entered into new subleases with a variety of aviation and non-aviation related tenants. One of the
new tenants was Airco, whose sublease with ERAA was entered into on February 1, 1998(Sublease). The Sublease is for a term of 25 years with an option to renew for a further 25
years. The Sublease does not cover the Airport runways.
[5] In 2002, public hearings were held concerning potential closure of the Airport. Airco
representatives attended the hearings and voiced the companys objection to the closure.
[6] On June 20, 2009, ERAAs Board of Directors passed a resolution that for as long as the
Airport lands are used as an airport, ERAA is committed to managing the Airport as an airport in
accordance with the Head Lease to the expiry of the lease term and, in the even the Airport is
decommissioned as an airport, ERAA will cooperate in facilitating the relocation of aviation
tenants and will enter into the discussions necessary to put decommissioning into effect. Someweeks later, on July 8, 2009, Edmonton City Council passed a motion approving the phased
closure of the Airport (Motion).
[7] The Motion contemplated the immediate closure of one of the Airport's two runways,
Runway 16/34. The second runway, Runway 12/30, would be closed at an unspecified future
date. While the Motion did not specify a date for complete closure of the Airport, clearly it is the
Citys intention to close the Airport when the Airport lands are needed for redevelopment.
[8] Between July and late September 2009, ERAA communicated with its subtenants about
its intention to close Runway 16/34, advising that this was slated for 2010, the tenants would
have continued access to Runway 12/30, and a GPS/WAA (Wide Area Augmentation) systemwas being installed to further facilitate that.
[9] A closure strategy devised in January 2010 targets 2014 for completion of negotiations
and obtaining surrenders of subleases from all Airport tenants. It contemplates complete closure
of the Airport in 2015. A notice given on April 29, 2010 indicates that Runway 16/34 is to be
decommissioned the week of August 3, 2010 and that NAV CANADA approval of the
GPS/WAA system instruments for approaches for Runway 12/30 is expected before then.
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II. More About the Actors
[10] Airco is a locally owned and operated company that started as an aircraft sales, parts, andsalvage business. In 1989, it branched into providing commercial air services using single engine
land and float aircraft. By 1991, its business had evolved to using multi-engine aircraft and
providing charter and then scheduled air services.
[11] With a fleet of seven aircraft, Airco offers scheduled air services from the Airport to
Grande Prairie, Alberta as well as charter services from EIA for those customers whose
preference is that airport.
[12] Airco sees itself as catering to a niche market - customers seeking convenience and
proximity to Edmontons downtown and business area.
[13] ERAA was created by Order-in-Council 397/90, which was signed on July 26, 1990
following the submission of a petition of incorporation to the Lieutenant Governor in Council
(Petition) with proposed initial bylaws appended, as required by s. 4(5)(a) of theRegional
Airport Authorities Act, RSA 2000, c. R-9 (the Act). On the creation of ERAA, the Petition
became ERAAs articles of incorporation (s. 6(1)(a) of the Act). The Petition provides that:
a. The airports whose management and operation were intended to be
assumed were the EIA, Edmonton Municipal, Villeneuve, and Cooking
Lake (s. 3);
b. In the event ERAA did not assume the management and control of theEdmonton Municipal Airport by December 31, 1991, the three (3) director
appointments by the City of Edmonton having that as an initial term expiry
date were to terminate, in which case the Board would consist of ten
directors (s. 7); and
c. Those appointing directors were to ensure, as far as is reasonably
practicable, that ERAAs Board was representative of its region and
consist of persons who collectively had experience of and had shown
capacity in air transportation, industry, commerce, finance, administration,
law, engineering, the organization of workers and representation of
consumer interests (s. 8).
[14] Section1.02 of the bylaws (Bylaws) reads in part:
Except where stated in section 1.01 or where the context does not permit:
(a) words and expressions defined in the Act, Regulations and Articles
have the same meaning when used in this Bylaw;
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[15] Section 2.01 of the Bylaws mirrors the language of ss. 21 and 22 of the Act concerning
ERAAs purpose and mandate, as detailed below in the discussion of whether ERAA has
breached its statutory authority.
[16] Section 2.12 of the Bylaws describes actions requiring a special resolution. These include
the sale, lease or exchange of all or substantially all of the assets of the Authority (2.12(b)) and
entering into an agreement to manage and operate an airport not previously managed and
operated by ERAA (2.12(g)).
III. The Parties' Positions
[17] Airco views ERAAs actions as a derogation of grant of the Sublease, a breach of its
statutory mandate, and ultra vires the Act. It claims that the only appropriate remedy is
declaratory relief coupled with a permanent injunction requiring ERAA to fulfill its statutory
mandate by keeping Runway 16/34 and the Airport open. Airco contends that there are nogenuine issues to be tried and that summary judgment is not only appropriate but necessary to
avoid unnecessary damage and costly litigation.
[18] Conceding that its plan is to close the Airport completely someday and that closure is
likely to occur before the Sublease expires, ERAA submits that there are numerous genuine
issues for trial. Disputing the notion that its mandate precludes it closing airports under its
control, ERAA views a phased closure of the Airport as furthering its statutory mandate by
increasing the efficiency of the other airports for which it is responsible, benefiting the public in
the region, promoting and encouraging improved airline and transportation service, and
expanding the aviation industry. It argues that the doctrine ofultra vires does not apply to airport
authorities, including it. ERAA.
IV. The Issues
[19] There are three substantive issues:
1. Whether there is an anticipatory breach of the Sublease;
2. Whether ERAA has exceeded its statutory authority by failing to adhere to
its mandate or by acting ultra vires its power; and
3. Presuming that the answer to either of the questions is yes, whether apermanent injunction requiring ERAA to continue to operate the Airport,
including both of its runways, is the appropriate remedy.
V. Analysis
A. Rule 159
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[20] Rule 159 governs summary judgment applications. It reads in part as follows:
159(1) In any action in which a defence has been filed, the plaintiff may, on the
ground that there is no defence to a claim or part of a claim or that the onlygenuine issue is as to amount, apply to the court for judgment on an
affidavit made by him or some other person who can swear positively to
the facts, verifying the claim or part of the claim, and stating that in the
deponent's belief there is no genuine issue to be tried or that the only
genuine issue is as to amount.
. . .
(3) On hearing the motion, if the court is satisfied that there is no genuine
issue for trial with respect to any claim, the court may give summary
judgment against the plaintiff or a defendant.
[21] The Alberta Court of Appeal inDow Chemical Canada Inc. v. Shell Chemicals Canada
Ltd., 2010 ABCA 126 at para. 14 endorsed the test for summary judgment set out in Tottrup v.
Clearwater (Municipal District No. 99), 2006 ABCA 380 at paras. 9-10, 401 A.R. 88. There can
be no genuine issue of material fact requiring a trial (Guarantee Co. of North America v.
Gordon Capital Corp., [1999] 3 S.C.R. 423, 247 N.R. 97 at para. 27). If there are disputes about
material facts, summary judgment is not the place to resolve them as it is a trial judge's duty to
assess the quality and weight of the evidence (Poliquin v. Devon Canada Corp. , 2009 ABCA
216 at para. 13, 454 A.R. 61).
[22] A plaintiff who applies for summary judgment bears the evidentiary burden of proving allfacts necessary to establish its claim on a balance of probabilities (Pioneer Exploration Inc.
(Trustee of) v. Euro-Am Pacific Enterprises Ltd., 2003 ABCA 298, 339 A.R. 165, 27 Alta. L.R.
(4th) 62);Bank of Montreal v. Kalin (1992), 131 A.R. 397 (C.A.)). The evidentiary burden then
shifts to the defendant to prove that there is a genuine issue for trial, although the ultimate burden
remains with the plaintiff. It must be beyond doubt that no genuine issue for trial exists.
[23] If a defendant applies for summary judgment, it must be plain and obvious, clear or
beyond real doubt that the action should be summarily dismissed (Murphy Oil Company Ltd. v.
Predator Corporation Ltd., 2006 ABCA 69 at paras. 24-28, 384 A.R. 251; German v. Major
(1985), 39 Alta. L.R. (2d) 270 at 276 (C.A.);Zebroski v. Jehovah's Witnesses (1988), 87 A.R.
229 (C.A.)). To avoid summary dismissal of the action, there must be a real chance of success(Guarantee Co. of North America at para. 27;Murphy Oil Company Ltd. at paras. 26-28. If
there is a credibility issue or other conflicting evidence, summary judgment should not be granted
(Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 164 D.L.R. (4th) 257 at paras. 13-20
(C.A.)).
[24] In summary judgment applications where the outcome of the case depends on the
interpretation of a statute or document or some other issue of law arising from undisputed facts,
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the test is whether the issue of law can fairly be decided on the record before the court. It may be
necessary to have a full trial if the legal issue is unsettled, complex or fact dependent, in order to
provide a proper foundation for the decision (Tottrup at para. 11).
[25] The affidavit filed by the applicant in support of a summary judgment application must be
confined to a statement of facts within the knowledge of the deponent (Rule 305; Yellowbird v.
Samson Cree Nation No. 444, 2003 ABQB 535 at para. 16, 349 AR, 208). Stated otherwise, as
this is a final determination of the issues, there can be no hearsay evidence presented by the
applicant.
[26] In some situations, hearsay may satisfy the evidentiary burden on the responding party on
a summary judgment application, although the respondent is expected to explain why it cannot
adduce the evidence directly (Scandinavian Bank v. Shuman (1917), 37 D.L.R. 419 (Alta.
S.C.(C.A.); Condominium Plan 9320022 v. ACTA General Inc., 2004 ABQB 932 at paras.
19-20). Admission of the hearsay is predicated on the assumption that the source of the evidencewill be available for trial. As a result, statements made by unknown persons are not acceptable
(Murphy Oil Co. v. Predator Corp., 2006 ABCA 69, 384 A.R. 251).
B. Is There an Anticipatory Breach of the Sublease?
[27] A brief overview of the germane terms of the Head Lease, Sublease, and some of the
evidence concerning the making of those agreements may be helpful at this juncture.
1. The Head Lease
[28] The Head Lease contains the following terms, among others:
1. The term is 56 years (Articles 4.1 and 1.1.40), with an annual rent of $1.00
(Articles 5 and 1.1.33).
2. The demised premises include land, building structures, aprons, taxiways,
and two runways (Articles 11.16, 3.1 and Schedule A).
3. The demise is for the purpose of the operation of an airport (Article 3.1).
4. ERAA covenants ... to use the demised premises for the operation of a
VFR/IFR Precision Approach Public Airport, providing 24 hour a daylanding capability, offering general aviation services which shall include,
without limitation, private planes, small charters, and air ambulances
(Article 6.1) and ... to continuously, actively and diligently operate an
airport on the Demised Premises in the manner stated in Section 6.1 and in
accordance with all Applicable Laws, from and after the Commencement
Date and thereafter throughout the term( Article 6.2).
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2. The Sublease
[29] The Sublease preamble references the Head Lease and its duration. The Sublease
provides that:
1. The leased premises (6,313.32 metres) are detailed on a drawing which is
a schedule to the lease, and are shown as Hangar 1 located west of 109th
Street in Edmonton.
2. There are no conditions, agreements, warranties or representations relating
to the leased premises other than as stated in the Airco sublease (article
5.1).
3. There is no warrant, except as provided in Section 5.1., as to the quality,
condition or sufficiency of the leased premises for any use or purpose(Article 5.1(b) (i)).
4. Airco is to use, occupy, and conduct all business on the premises in
compliance with the policies, standards, guidelines and requirements
established by ERAA from time to time pertaining to the Airport, which
includes the Operations Policy and Passenger Access Policy for the
Airport (Article 8.2; Schedules A and B).
5. Airco is entitled to quiet enjoyment of the leased premises (Article 19.1).
[30] The Passenger Access Policy refers to the Plebiscite, the Head Lease and the scope of theAirports operations being limited to general air services. The Operations Policy sets landing fees
for aircraft and Airport user fees for each enplaning or deplaning passenger.
[31] Edward Schlemko, a director of Airco, deposed that in deciding to enter into the Sublease
the company took into consideration that ERAA was a party to the Head Lease and the scope of
operations at the Airport had been resolved. He also deposed that implied representations were
made about the Airport's continued operation, citing as examples a City Councillor saying words
to the effect of: [w]hat part of a 56-year lease dont you understand? in response to questioning
by him at a public hearing in 2000; ERAA's promoting hangar construction sometime prior to
2002; a press release issued by ERAA in 2004 confirming its commitment to ensuring the
Airport remained a viable airport in the long-term; and a query made by ERAA in its call forproposals in 2008 as to the long-range plans of carriers for proposed services at the Airport.
3. Breach of Quiet Enjoyment and Derogation from Grant
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[32] The right of quiet enjoyment under a lease means that a landlord cannot interfere with the
title to or physically interfere with use of the leased premises (581834 Alberta Ltd. v. Alberta
(Gaming & Liquor Commission), 2007 ABCA 332 at para. 9, 425 A.R. 248).
[33] Derogation from grant in the context of a lease means that a lessor who expressly or
impliedly agrees that the lessee can use the property for a particular purpose cannot actively
render it unfit or materially less fit for the particular purpose for which it was let (Edmonton
Regional Airports Authority (c.o.b. Edmonton Airports) v. North West Geomatics Ltd., 2002
ABQB 1041 at paras. 55-57, 329 A.R. 332; citingMolton Builders Ltd. v. City of Westminster
London Borough Council, [1975] 30 T & CR 183 at 186,187 and 817 (CA); Firth v. Board
Management Ltd. (1990), 73 D.L.R. (4th) 375 at 380; Clark's-Gamble of Canada Ltd. v. Grant
Park Plaza Ltd., [1967] S.C.R. 614 at para. 24-27).
[34] When considering allegations of derogation from grant, the court should consider whether
the landlord has used or proposes to use any part of the balance of its land in a fashion whichwould result in any part of the lands leased to the plaintiff being rendered unfit for doing business
(Clark's-Gamble of Canada Ltd. at paras. 26 and 27).
[35] Edmonton Regional Airports Authority concerned an action by ERAA for arrears of rent
and a counterclaim alleging derogation of leasehold grant and conspiracy arising from the
transfer of scheduled passenger service to the EIA. Belzil J. found no express or implied
covenant by ERAA that scheduled passenger service would continue at the Airport (then called
the Edmonton Municipal Airport). He rejected the notion that the uncertain business climate
which arose after the City entered into the Head Lease amounted to a derogation from grant,
observing (at para. 85) that: ... issues pertaining to the Municipal Airport have at various times
over the years been hot political topics, and, indeed, the Municipal Airport was the subject of tworeferenda in 1992 and 1995 which came to opposite results. He also noted (at para. 90) that:
The historical record of the Municipal Airport from the time of its formation as
Blatchford Field in 1927 until the October 1995 civic referendum does not support
the proposition that at any time the Municipal Airport debate was resolved. In a
democracy, issues are never finalized and can always be reopened.
[36] While there is no evidence that ERAA has breached the Sublease yet, its clear intention is
to decommission Runway 16/34 during the week of August 3, 2010 and ultimately to close the
Airport completely.
[37] An aggrieved party claiming anticipatory breach of a contract involving lands can seek
declaratory relief and, in certain circumstances, specific performance (Kloepfer Wholesale
Hardware v. Roy, [1952] S.C.R. 465 at 477). The latter, which is tantamount to mandatory
injunctive relief, is not granted as a matter of course absent evidence that the property is unique
to the extent that its substitute would not readily be available (Asamera Oil Corp. v. Sea Oil &
General Corp., [1979] 1 S.C.R. 633;Semelhago v. Paramadevan, [1996] 2 S.C.R. 415, 136
D.L.R. (4th) 1 at 9-11).
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[38] A brief overview of the evidence relating to the Airport runways provides a backdrop for
analysis of the legal consequences of decommissioning Runway 16/34. Runway 16/34 is a north
(34) - south (16) runway while Runway 12/30 is a northwest (30) - southeast (12) runway.
[39] As a result of prevailing winds and concerns with noise abatement, Runway 30 is the
most commonly used runway at the Airport.
[40] Instrument approaches are not possible for either Runway 12 or Runway 30. The
GPS/WAA instrumentation intended to be installed this summer will permit landings on Runway
12 if there is 342 foot visibility. For Runway 30, the visibility must be 749 feet.
[41] Runway 34 is the preferred Runway in the event of dramatically deteriorated weather or
north winds, due to its precision approach and the Instrument Landing System (ILS) which
permit approaches with cloud ceilings of 200 feet. The approach to Runway 16 is not a precisionapproach. It allows approaches down to cloud ceilings of 409 feet.
[42] Airco contends that decommissioning Runway 16/34 will have a detrimental effect on the
safe and efficient use of the Airport and will have a negative impact on its business as a result of
the following:
(a) There will be reduced aircraft movements and attendant fee increases
caused by changes to the minimum visibility ceilings in dramatically
deteriorated weather conditions. In turn, aircraft movements will be further
driven down.
(b) Airco will lose business when prevailing winds or low visibility and cloud
ceiling render the Airport unusable.
(c) The Airport will be unusable during periods of inclement weather, for
snow removal, and during runway maintenance because it will have only
one functioning runway. Airco recognizes that many airports have only
one runway, but points out that they also have fewer aircraft movements
than at the Airport.
[43] Airco proffered no evidence of the historical use of Runway 16/34 to accommodate winds
or inclement weather. Instead, the Court is asked to speculate about how often Runway 16/34 isthe only runway that can be used and to infer that decommissioning will result in the leased
premises being rendered unfit or materially unfit for the purpose for which they were let.
Speculation does not equate to proof on a balance of probabilities that such is the case. Airco has
failed to establish that there is no genuine issue for trial as to whether the decommissioning of
Runway 16/34 will constitute a breach of its right of quiet enjoyment or will derogate from its
grant under the Sublease.
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[44] ERAA candidly admits that its closure of the Airport is expected to precede the Sublease
expiring, that its intention is to negotiate a surrender of the Sublease, and if it is unsuccessful in
that regard and Airco is then carrying on its present business, ERAA will be in breach of its
contractual obligations, both as to the covenant of quiet enjoyment and the implied covenant tooperate the Airport as a general services airport. The concession is logical since, as Belzil J.
commented in obiterinEdmonton Regional Airports Authority, the lessee cannot realistically
use the demised land for the permitted uses unless the Airport is open (at para. 65).
[45] While it is beyond dispute that a complete closure of the Airport would constitute a
breach of ERAAs contractual obligations, it is premature to say that a breach of contract is
inevitable. This too requires speculation that Airco will be in the same business and the Sublease
will be in effect when closure of the Airport occurs. The target date for complete closure of the
Airport according to the January 2001 closure strategy is 2015. However, the Motion specifies
that timing of complete closure will be determined when the Airport lands are required for
redevelopment. Even assuming the more certain of the two dates is correct, much can happen infive years, as evidenced by Aircos own metamorphosis since its inception. Also, as discussed
more fully below, Airco has failed to established that damages would be an inadequate remedy,
one of the requirements that must be met before injunctive relief will be granted.
[46] There are triable issues concerning Airco's allegations of anticipatory breach of the
Sublease and the appropriate remedy should Airco ultimately prevail. Airco is not entitled to
summary judgment on this basis.
C. Has ERAA Breached its Statutory Authority?
[47] Airco asserts that ERAA is afoul the Act for having failed: (1) to take steps to keep oneof the airports under its mandate open; (2) to promote the aviation industry; and (3) to consider
the interests of the public in its region. The analysis as to whether ERAAs actions are ultra vires
necessarily begins with a review of the Act.
1. The legislation
[48] The Act describes ERAAs purposes and mandate as this:
21. The purposes of an authority are
(a) to manage and operate the airports for which it is responsible in a safe,secure and efficient manner, and
(b) to advance economic and community development by
means that include promoting and encouraging improved airline and
transportation service and an expanded aviation industry
for the general benefit of the public in its region.
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22(1) An authority shall so conduct its undertaking as to promote
its purposes.
(2) An authority shall not operate for profit and shall apply all its surpluses towardpromoting its purposes.
[49] ERAA has the capacity, rights, powers and privileges of a natural person, but is not
permitted to do anything that is prohibited by or is in contravention of its articles (ss. 8(1) and
(2)). However, any such impermissible actions, including the transfer or receipt of property by it,
are not invalidated by reason only that the action is contrary to the Act, ERAAs articles,
ERAAs Bylaws, or because it is inconsistent with its purposes (s. 8(3)).
[50] Some provisions of theAlberta Airport Authorities Regulation, A.R. 149/1990
(Regulation) are similar, if not identical, to those found in the Canada Business Corporations
Actand AlbertaBusiness Corporations Act. For example, the Regulation provides for theorganization and structure of airport authorities (Part1), the appointment of and duties of
directors (Part 2), the appointment of receivers and investigators (Parts 9 and 10), voluntary and
compulsory liquidation (Part 10), and remedies for aggrieved parties in the form of oppression
and derivative actions (Parts 12 and 13).
2. Statutory Interpretation
[51] At the heart of this aspect of Aircos claim are the words manage and operate found in
s. 21(a) of the Act.
[52] Aircos view is that a logical and literal interpretation of the word operate requires apositive action; something that gives effect to the action. It urges that absent express
authorization from the Lieutenant Governor in Council to do otherwise, ERAAs mandate is to
run rather than to close the Airport. It looks to the Passenger Access Policy and Operating Policy,
appended to the Sublease, as evidencing ERAAs mandate and its commitment to maintain the
operation of Runway 16/34 and the Airport as a whole.
[53] ERAA submits that the word operate in s. 21(a) must be read contextually, not only in
relation to the other words used in that provision, but also in terms of ERAAs entire mandate. It
points out that there is no prohibition in the Act against its intended action. It notes that s. 21 of
the Bylaws requires a special resolution before it can enter into an agreement to manage and
operate an airport not previously managed and operated by it. However, there is no mention madeof a special resolution being required before it can close an airport being operated by it. ERAA
argues that this implies it has authority to immediately close Runway 16/34 and, ultimately, the
Airport.
[54] As interpretation of the Act is a legal issue, the test for summary judgment is whether it
can fairly be decided on the record. If the issue is unsettled, complex or intertwined with the
facts, a full trial may be necessary.
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[55] The modern approach to statutory analysis is summarized as follows by Elmer A.
Driedger in his text The Construction of Statutes, 2d ed.(Toronto: Butterworths, 1983 ) at p. 87,
as cited in countless cases, includingBell ExpressVu Limited Partnership v. Rex, 2002 SCC 42at para. 26, [2002] 2 S.C.R. 559:
Today there is only one principle or approach, namely, 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.
[56] The object of the Act is to create, empower, and place limits on regional airport
authorities. The schemes of the Act and Regulation are similar to legislation governing the affairs
of privately constituted corporations.
[57] According to the online Compact Oxford English Dictionary, Oxford University Press, 3rd
ed. rev., the ordinary meanings of manage and operate are:2
Manage: verb
1 be in charge of; run. 2 supervise (staff). 3 administer and regulate
(resources). 4 succeed in doing or dealing with. 5 succeed despite
difficulties; cope. 6 be free to attend (an appointment).
Operate : verb
1 (of a machine, process, etc.) be in action; function. 2 control thefunctioning of (a machine or process). 3 (with reference to an
organization) manage or be managed. 4 (of an armed force) conduct
military activities. 5 be in effect. 6 perform a surgical operation
[58] The words manage and operate as they appear in s. 21(a) are modified by what follows:
...in a safe, secure and efficient manner (emphasis added). While ERAA is not to operate on a
for-profit basis, nevertheless it is directed to operate the airports under its control efficiently
and with a view to enhancing both the regions aviation industry and the public interest.
[59] In my view, when these words are read in the context of the object, scheme and entirety
of the Act,ERAA is empowered,through its directors, to reasonably exercise its judgment as towhat is efficient vis-a vis- all of its mandates. Its decision may be unpopular with some
stakeholders, but that does not affect the validity of the decision unless its directors exercised
their judgment irresponsibly.
[60] Here, I digress to state the obvious. Resolution of whether the directors exercised their
judgment responsibly is distinct from interpreting the Act. It involves a question of fact, and
given the evidence does not agree, that fact cannot be resolved without a trial.
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(a) The doctrine of ultra vires has been abolished by statute for corporations
incorporated under business corporations legislation in most Canadian
jurisdictions, including Alberta (paras. 30-31);
(b) Nevertheless, limited aspects of the doctrine may be present for
corporations created by special act for public purposes (para.32);
(c) It is open to the legislature to provide for other remedies short of
invalidity for acts contrary to the statute... (para.32).
[69] The Court considered the legislative history of the remedial provisions of theMCA,
stating (at para. 45) that:
Like similar provisions in other corporations acts, s. 16(3) provides that no act
of a corporation is invalid only because the act is contrary to its articles or to TheCorporations Act. However, s. 16(3) ofThe Corporations Actmust be read
together with s. 3(1)(b) ofThe Corporations Act, and ss. 9(7) and 26(5) ofThe
Communities Economic Development Fund Act. In my view, s. 16(3) ofThe
Corporations Actis part of a legislative scheme to abolish the doctrine ofultra
vires. The remedial provisions in Part XIX ofThe Corporations Actare an
integral part of that scheme. The abolition of the doctrine ofultra vires goes
together with the creation of new statutory remedies. The fact that Part XIX is
expressly made inapplicable to the Fund by s. 3(1)(b) ofThe Corporations Actis
an indication of a legislative intention to retain the doctrine ofultra vires for the
Fund, with respect to loans that contravene the Act. [Emphasis added.]
[70] Communities Economic Development Fundis distinguishable from the present case on
several grounds. Like the Development Fund, ERAAs powers are defined by its constating
legislation. However, unlike the legislation governing the Development Fund, the Act contains
no prohibition against the acts complained of. Further, the Regulation provides a comprehensive
statutory remedy. Finally, the provisions of the Act and the Regulation concerning remedy,
capacity, and validity of acts are almost identical to those found in theMCA that were scrutinized
by the Supreme Court of Canada and, but for the prohibition, might have produced a different
result.
[71] Even if the doctrine ofultra vires does apply, I am not satisfied that Airco has established
on a balance of probabilities that ERAA has breached its duty to promote the aviation industryfor the general benefit of the public in the region. The Act requires that the Board of ERAA, as
a whole, be representative of the region. As evidenced by the history of the Airport, the Motion
and this dispute, the public in the region is comprised of stakeholders with divergent interests.
The following observation by the Supreme Court of Canada inBCE Inc. v. 1976
Debentureholders, 2008 SCC 69 at para. 83, [2008] 3 S.C.R. 560 about the duties of directors of
a public corporation resonates:
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Directors may find themselves in a situation where it is impossible to please all
stakeholders. The fact that alternative transactions were rejected by the directors
is irrelevant unless it can be shown that a particular alternative was definitely
available and clearly more beneficial to the company than the chosen transaction:Maple Leaf Foodsper Weiler J.A., at p. 192.
[72] Whether ERAA giving effect to the Motion equates to disregard of its duty to the public,
or whether the contrary is true, is a triable issue. The evidence on this application does not
support a finding that the directors of ERAA had a more beneficial alternative, and in the absence
of compelling evidence in that regard the Court should not be asked to substitute its opinion for
theirs.
[73] Aircos evidence to support its contention that ERAAs actions constitute a breach of its
duty to promote an expanded aviation industry consists of Mr. Schlemkos assertion that Airco
will experience a competitive disadvantage if forced to relocate to EIA. Tempting as it may be tospeculate about the financial consequence to Airco of relocating to other airports in the region
when the Airport is completely closed, Mr. Schlemkos assertion does not provide the degree of
proof required for summary judgment.
[74] Nor am I satisfied on the evidence presented in this application that ERAA is obliged to
continue to subsidize the Airport's operational costs from EIA generated revenues. That too is a
triable issue.
[75] In the result, Airco has failed to meet the threshold test for establishing that it is entitled
to summary judgment for a declaration that ERAA is in breach of its statutory mandate.
D. Should Airco Receive Injunctive Relief?
1. Mandatory Injunctions
[76] Airco seeks mandatory injunctions requiring ERAA to manage and operate the Airport in
a safe, secure and efficient manner and to govern itself in a fashion so as to promote and
encourage improved airline transportation services and an expanded aviation industry. It also
seeks a permanent injunction prohibiting the closure of the Airport, which I consider to be the
same as a mandatory injunction requiring that it keep the Airport open. It is stated in the
negative, but the result is exactly the same.
[77] Given my findings, I need not address whether an injunction is an appropriate remedy.
However, should the Court of Appeal disagree, I will undertake the analysis for the sake of
expediency.
[78] A mandatory injunction may be granted prior to any harm having been suffered.
According to the seminal case ofRedland Bricks, Ltd. v. Morris, [1970] A.C. 652 at 665 (H.L.),
it is a fact-driven, discretionary remedy that typically is available in the following situations:
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(a) When a person has not yet done harm to another, but is threatening or
intending to do something that will cause irreparable harm if carried to
completion. These cases are normally, although not exclusively, concernedwith negative injunctions.
(b) Where a person has been fully recompensed at law and in equity for the
damages suffered, but alleges that the earlier actions may lead to future
causes of action. An example of this is where a person has withdrawn
support from his neighbour's land.
[79] Redland Bricks sets out the following principles which apply to the granting of a
mandatory injunction (at pp.665-666):
1. A mandatory injunction can only be granted where the plaintiff shows avery strong probability on the facts that grave damages will accrue to him
in the future...
2. Damages will not be a sufficient or adequate remedy if such damage does
happen...
3. Unlike the case where a negative injunction is granted to prevent the
continuance or recurrence of a wrongful act the question of the cost to the
defendant to do works to prevent or lessen the likelihood of a future
apprehended wrong must be an element to be taken into account:
a. Where the defendant has acted without regard to his neighbour's
rights, or has tried to steal a march on him or has tried to evade the
jurisdiction of the court or, to sum it up, has acted wantonly and
quite unreasonably in relation to his neighbour he may be ordered
to repair his wanton and unreasonable acts by doing positive work
to restore the status quo even if the expense to him is out of all
proportion to the advantage thereby accruing to the plaintiff...;
b. But where the defendant has acted reasonably, although in the
event wrongly, the cost of remedying by positive action his earlier
activities is most important for two reasons. First, because no legalwrong has yet occurred... Secondly, because if ultimately heavy
damage does occur the plaintiff is in no way prejudiced for he has
his action at law and all his consequential remedies in equity...
4. If in the exercise of its discretion the court decides that it is a proper case
to grant a mandatory injunction, then the court must be careful to see that
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the defendant knows exactly in fact what he has to do and this means not
as a matter of law but as a matter of fact...
[80] The second principle, the sufficiency of damages, is a mirror of the requirement ofirreparable harm for an interlocutory injunction. Similarly, the third principle is akin to weighing
the equities in a permanent injunction scenario and the balance of convenience in the context of
an interim injunction.
[81] Applying these principles, I find that Airco has failed to establish on a balance of
probabilities that an injunction is appropriate in all of the circumstances.
2. A Very Strong Probability of Grave Damage
[82] In Operation Dismantle Inc. v. Canada, [1985] 1 S.C.R. 441 at para. 36, Dickson, C.J.C.
observed that the unwillingness of courts to take remedial action where the occurrence of futureharm is not probable demonstrates the courts' reluctance to grant relief where it cannot be shown
that the impugned action will cause a violation of rights.
[83] Airco predicts that like other scheduled and charter services that have failed on relocating
to EIA, it too will falter, if not fail. Mr. Schlemko describes the concern as this:
We'd be going head to head with Air Canada, WestJet, and our niche is we're
close to downtown and passengers can walk on and walk off and get to Grande
Prairie in a timely manner. If we operated out of the International that would
change. It's kind of like trying to sell Coke in a Mac's store next to Wal-Mart.
[84] Evidence concerning the failure of two scheduled air service companies which relocated
to EIA after the Plebiscite is unhelpful as the Court is asked to speculate that the businesses
failed solely or at least materially because of their relocation. There may have been any number
of factors that caused their demise. It is pure speculation at this juncture to say that the closure of
Runway 16/34 or complete closure of the Airport will be fatal to Aircos continued survival.
Indeed, there is some evidence of other aviation businesses having succeeded after relocating to
the EIA.
[85] Airco's fear of what the future holds for it at the Airport or elsewhere is understandable.
That said, to obtain injunctive relief on a summary basis it must show there is a very serious
danger of grave harm. It has not done so. The occurrence complained of is only possible and thedegree of harm is speculative.
3. Insufficiency of Damages
[86] Airco contends that it is simply inappropriate to consider that a publicly created body
can breach its statute and simply pay damages for the privilege.
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[93] Even if Aircos evidence was stronger, the undisputed evidence of P. Sharpe, a certified
business valuator retained by ERAA, shows that any damages caused to Airco from the phased
closure of the Airport could be calculated with a reasonable degree of accuracy. The
quantification of damages for lost revenue, diminished marketability and loss of opportunity is an
issue regularly addressed by our courts.
[94] In the result, Airco has failed to establish that damages would be an insufficient remedy.
5. Weighing the Balance of Convenience
[95] As indicated inEvergreen Building Ltd. v. IBI Leaseholds Ltd., 2005 BCCA 583, 50
B.C.L.R. (4th) 250, the equities between the parties should be considered in determining whether
to grant permanent injunctive relief.
[96] In my view, the matters to be considered in the present case include the uniqueness of the
property, who is responsibility for altering the parties relationship, where the public interest lies,
and the burden of the injunction.
[97] The following considerations weigh in favour of Airco:
The land is unique to the extent that, but for the Airport, only EIA is a
suitable locale for Aircos present business;
Airco has done nothing wrong. ERAA is solely responsible for altering the
status quo of the parties relationship.
[98] These factors weigh in favour of ERAA:
While the property is unique, Airco can still use the remaining runway and
can relocate to the EIA on the ultimate closure of the Airport;
C Damages are quantifiable;
ERAA has expended significant sums on decommissioning of Runway
16/34 that would be thrown away.
[99] The public interest concern is a neutral factor given the considerable debate over thephased closure of the Airport. To some stakeholders, the very existence of the Airport is contrary
to the public interest; to others like Airco, it is a matter of private and public importance.
[100] In my view, Airco has failed to establish that the balance of convenience lies with it.
6. Certainty of Terms
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[101] The Supreme Court of Canada inDoucet-Boudreau v. Nova Scotia (Minister of
Education), 2003 SCC 62 at para. 97, [2003] 3 S.C.R. 3 addressed the need for specificity in
injunction orders, stating:
The drafting of applications asking for injunctive relief, or of orders granting suchremedies, can be a serious challenge for counsel and judges. The exercise of the
court power to grant injunctions may lead, from time to time, to situations of
non-compliance where it may be necessary to call upon the drastic exercise of
courts' powers to impose civil or criminal penalties, including imprisonment (R. J.
Sharpe,Injunctions and Specific Performance (2nd ed. (loose-leaf)), at p. 6-7).
[102] The court further commented inPro Swing Inc. v. ELTA Golf Inc., 2006 SCC 52 at
para. 24, [2006] 2 S.C.R. 612 on the need for certainty of terms in court orders:
Despite their flexibility and specificity, Canadian relief orders are fashioned
following general guidelines. The terms of the order must be clear and specific.
The party needs to know exactly what has to be done to comply with the order.
Also, the courts do not usually watch over or supervise performance. While the
specificity requirement is linked to the claimant's ability to follow up non-
performance with contempt of court proceedings, supervision by the courts often
means relitigation and the expenditure of judicial resources.
[103] InBritish Columbia (Director of Civil Forfeiture) v. Onn , 2009 BCCA 402, 97 B.C.L.R.
(4th) 222, the British Columbia Court of Appeal considered a proposed interim preservation
order relating to a house allegedly used in a drug grow-op. One of the terms of the draft order
provided: 7. That the registered owner of the Property, Im Onn (the "Registered
Owner"), shall continue to fulfill all the duties and obligations of an owner
of real property and in particular, shall...
[104] The Court found (at para. 22) that this general obligation was uncertain in scope and the
particularized obligations described in the sub-paragraphs that followed were insufficient to cure
the defect as they were not an exhaustive list of an owner's duties and obligations. Also, one of
the sub-paragraphs was too broad and vague to be enforceable.
[105] Two of the injunctions sought in the present case essentially parrot the language of s. 21
of the Act and would require ERAA to manage and operate the City Centre Airport in a safe,secure and efficient manner and to govern itself in a fashion so as to advance economic and
community development by means that include promoting and encouraging improved airline
transportation service and an expanded aviation industry. A third would prohibit ERAA from
closing the Airport in whole or in part until October 16, 2051.
[106] As demonstrated by the foregoing cases, the need for specificity in the terms of every
court order is apparent. However, that need is amplified in circumstances such as this where two
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of the injunctions sought mirror statutory mandates and compliance with those mandates is a
hotly contested issue. The ways in which an airport authority could operate and govern itself are
potentially unlimited. I agree with ERAA that if the mandatory injunctions were granted, it
would not know as a matter of fact exactly what it had to do to be in compliance with the order. I
have a similar concern with respect to Aircos request for an injunction prohibiting partialclosure of the Airport. Such a provision also would be open to interpretation.
[107] With the exception of the injunction prohibiting total closure of the Airport until October
16, 2051, Airco has failed to establish on a balance of probabilities that the terms of the
injunctions it seeks are certain.
VI. Conclusion
[108] Airco's application for summary judgment is dismissed. If the parties cannot agree on
costs they may speak to me within 30 days.
Heard on the 30 day of April, 2010. Further written submissions received on the 30 day ofth th
May, 2010.
Dated at the City of Edmonton, Alberta this 11 day of June, 2010.th
J.E. Topolniski
J.C.Q.B.A.
Appearances:
M.J. McCabe, Q.C.
Reynolds Mirth Richards & Farmer LLP
for the Plaintiff
Grant S. Dunlop
Stephanie A. Bowes
Ogilvie LLP
for the Defendant
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1.Edmonton Regional Airports Authority v. North West Geomatics Ltd., 2002 ABQB 1041, describes
the controversies as these (at para.3):
1927 - Opening of Blatchford Field
1952 - Two planes collide on runway. Safety issue discussed at City Council. City and Federal officials
discuss relocating airport.
1957 - Noise issue debated at City Council. Public meeting held regarding proposed move of Municipal
Airport.
1960 - Motion before City Council to close Municipal Airport once International Airport opens.
1963 - Federal Government builds and opens Edmonton International Airport 40 kilometres south ofMunicipal Airport.
1966 - One alderman campaigns in civic election based on platform of closing the Municipal Airport as
a priority.
1969 - City Council requests airport study.
1972 - Edmonton area Aviation Master Plan prepared.
1977 - Crash of Cessna aircraft at Municipal Airport gives rise to public calls for closure of the
Municipal Airport. A noise bylaw for the Municipal Airport is enacted by City Council.
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1980 - City Council studies options for the Municipal Airport including closing it.
1981 - Small aircraft attempting to land at Municipal Airport crashes into Royal Alexandra Hospital.
Updated Edmonton Area Aviation Master Plan prepared.
1984 - City Council enacts noise management policy.
1985 - City Council defines the role of the Municipal Airport. Federal Government announces itsintention to transfer airports to local authorities.
1986 - Municipal Airport noise rules are enacted.
1987 - One alderman requests a special meeting of City Council to discuss issues surrounding the
Municipal Airport.
1988 - City Council confirms the continuation of scheduled passenger service at the Municipal Airport.
Federal Government deregulates scheduled passenger service in Canada.
1990 - City Council conducts public hearings on the airports issue.
2. At http://www.askoxford.com/dictionaries/compact_oed/?view=uk
http://www.askoxford.com/dictionaries/compact_oed/?view=ukhttp://www.askoxford.com/dictionaries/compact_oed/?view=uk