In June 2010, in Airco v Edmonton Regional Airports Authority, the Alberta Court of Queen's Bench declined to grant summary judgment in favour of Airco, after it commenced an action seeking to compel the Edmonton Regional Airports Authority to cease from proceeding with the gradual closure of the Edmonton City Centre Airport.
In December 2010 the Alberta Court of Appeal released its memorandum of judgment dismissing Airco's appeal of this decision.(1)
By way of background, Airco had a longstanding presence at the airport, having commenced as an aircraft sales, parts and salvage business. By 1991 it had evolved into providing air charter and later scheduled air services with a fleet of seven multi-engine aircraft.
In Spring 1996 the City of Edmonton entered into a head lease for space at the airport with the airport authority in which, among other things, the airport authority was authorised to enter into sub-leases with aviation tenants, one of which was Airco. The Airco sub-lease had a term of 15 years, with an option to renew for a further 25 years. Neither the head lease nor the Airco sub-lease explicitly contemplated the closure of the airport.
On June 20 2009 the airport authority's board of directors passed a resolution on the gradual closure of the airport. This resolution provided for the immediate closure of Runway 16/34 and the subsequent closure of the only other runway, 12/30, at a date to be determined. The city approved the plan three weeks later and in January 2010 a strategy was developed targeting the surrender of all sub-leases by 2014 and complete closure of the airport by 2015.
Airco commenced an action to prevent this plan from taking effect and, as reported above, unsuccessfully brought a summary judgment motion in that action in April 2010.
The appeal of that decision raised two issues: correctness of findings and availability of injunctive relief.
In the first place, the motions judge made several disputed findings in concluding that there were genuine issues for trial. He noted that it is unknown whether Airco's lease will still be in effect at the time of closure and likewise unknown whether the federal government will approve the closure. The motions judge also determined that a trial would be necessary to determine whether the airport authority had exceeded its statutory authority in deciding to close the airport.
On these points the court of appeal agreed with the motions judge that it would be speculative to conclude now that by the time the closure of the airport is set to proceed, the airport authority will be in breach of its obligations to Airco. The court commented approvingly on the motions judge's remark that "much can happen in five years", and that no breach of the sub-lease had yet occurred. Nor was it certain that any such breach would ever occur.
As to the question of whether the airport authority had the statutory authority to close the airport, Airco argued that the Regional Airports Authorities Act (Alberta) mandates that the airport authority "manage and operate the airports for which it is responsible". Airco argued that because the legislation did not explicitly authorise it to close an airport, the power to do so did not extend to the airport authority, but rather resided with the federal government or the lieutenant governor in council. Alternatively, Airco argued that the airport authority would violate the same legislation by closing the airport because its mandate was to "promote… [the] aviation industry for the general benefit of the public in its region".
On these points, the court of appeal accepted the reasoning of the motions judge by interpreting the words 'manage and operate' to include closing the airport. It also held that a trial would be required to determine whether a closure of the airport would, in fact, be detrimental to the general benefit of the public.
The second issue to be decided on the appeal was whether Airco had met the requirements for granting a mandatory injunction requiring the airport authority to abandon its plans. In order to succeed on this issue, Airco would have to show:
- a very strong possibility of grave damage should the injunction not be granted;
- the insufficiency of damages as a means to remedy this grave damage;
- a weighing of the balance of convenience in favour of an injunction; and
- the ability to frame any injunction in terms such that the airport authority was "capable of understanding exactly what it must do".
Once again, the appellate court upheld the motions judge's findings, holding that:
- it may be possible for Airco to transfer its operations to the Edmonton International Airport;
- the damages incurred by Airco for the closure of the Edmonton City Centre Airport could be calculated with a reasonable degree of certainty;
- the speculative and quantifiable losses that may be incurred by Airco did not outweigh the significant sums already spent by the airport authority on decommissioning Runway 16/34; and
- granting the injunction would result in the airport authority being unclear on what it had the power to do with the airport.
In the end, the court noted that granting an injunction is a discretionary act and, as a result, the motions judge is entitled to deference. Since no palpable or overriding error was found, Airco's appeal was dismissed.
For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800), fax (+1 416 982 3801) or email ([email protected]).
(1) Airco Aircraft Charters Ltd v Edmonton Regional Airports Authority, 2010 ABCA 364.