The exclusive jurisdiction of the Canadian Parliament over aeronautics was settled in 1951. Since then, various provincial pieces of legislation have been enacted which, if allowed to stand, would have circumscribed that jurisdiction significantly.
With few exceptions, Parliament has prevailed. Most recently, at the end of August 2011, the Supreme Court of Canada refused leave to appeal a decision of the British Columbia Court of Appeal, which in turn declined to apply a provincial act that would have permitted the creation of a lien affecting the leasehold interest of the Vancouver International Airport Authority.
Canada is a federation and the authority to legislate is divided between the federal Parliament and the legislatures of the provinces and territories. The Constitution assigns legislative subject matters to either the federal or the provincial level; for example, defence, navigation and shipping and banking are all within the federal legislative powers, while education, property and civil rights and the administration of justice are provincial matters. The Constitution was originally enacted in 1867 and has never been amended to deal with aeronautics specifically. Therefore, there was some early dispute as to how aeronautics should be regulated, and the present rule was established in 1951. At that time it was determined that a residual power of Parliament – to enact laws for the "peace, order and good government of Canada" – included aeronautics in the federal sphere.
However, this was far from the end of the matter. The interpretation of this scheme for the division of powers has generated some complicated legislation with political implications. Most recently, 'cooperative federalism' has emerged as the dominant view and the Canadian courts generally attempt to accommodate "the ordinary operation of statutes enacted by both levels of government". Nevertheless, provincial legislation has not fared well when its operation can be seen to have a serious effect on the aeronautical legislative power or on an integral part of a federal undertaking of an aeronautical nature. This is the case even where no federal statute comes into direct conflict with the provincial enactment.
The land on which Vancouver International Airport is built is federal crown land which has been leased to the Vancouver International Airport Authority. This is a common arrangement in Canada. In Vancouver International Airport Authority v British Columbia(1) the question which arose was whether provincial legislation which made provision for a builders' lien could have any application to the leasehold interest of the authority. In attempting to justify its legislation, the province readily agreed that the liens which it purported to create could never authorise the sale of federal land, but argued that the leasehold interest of the authority should be subject to the legislation, which would allow the registration of a charge against the leasehold interest.
The underlying dispute arose as the authority entered into contracts for airport improvements. The nature of these contracts was of some significance: one was for the expansion of taxiways, and the other for expansion of passenger concourses. In the course of the construction several companies that supplied materials and labour registered builders' liens. When the authority learned of this, it asked the registrar to refuse to accept further builders' liens and the registrar refused. The authority sought a remedy in court and was successful at every level. As the Supreme Court has refused leave to appeal the decision of the appeal court, the dispute is at an end. No liens may be registered or enforced in respect of work done under these contracts.
The constitutional doctrine invoked to support this result is that of interjurisdictional immunity, which has had an eventful history. It started modestly, expanded significantly by the late 1980s and, within the last five years, has been restricted significantly. The doctrine applies when a province enacts legislation which affects a core federal legislative competency or an essential part of a federal undertaking. Much of the recent debate has been over the nature of the effect, which will trigger the operation of the doctrine. It is clear that it is not enough to point to an effect, however minor. On the other hand, it is not necessary to wait until the provincial legislation has 'sterilised' the federal competency.
The favoured word in recent jurisprudence is 'impairs'. Thus, for the doctrine to apply, the court must identify a core legislative competency or an essential part of a federal undertaking which would be impaired or seriously affected if a provincial enactment were allowed to stand.
The operation of a major international airport clearly falls within the federal power over aeronautics and is likewise a federal undertaking. The lease, as would be expected, is very restrictive in what it permits the authority to do and this was significant. The authority covenants that it will use the airport lands for purposes compatible with the operation of an international airport. It further agrees to keep the premises free of encumbrances. This was significant because there is precedent to allow the creation of encumbrances of leasehold interests on federal lands. However, in the main case which was cited by the province in support of its position, the lessor of the lands was engaged in operations which were within the province's regulatory authority. In the case at hand, the authority was engaged in the operation of an international airport; and that has been repeatedly affirmed to be an area of core federal competence.
The outcome of the case would then depend on whether allowing liens to be filed against the leasehold interest would affect a core or vital aspect of this federal undertaking and, if so, whether the effect would be sufficiently severe to justify rendering the provincial enactment ineffective.
The following factors were particularly important in the court's view:
- the subject of the contracts was the expansion of essential parts of the airport: taxiways and passenger concourses;
- the mandate of the authority was to operate an international airport and any impairment of its ability to construct essential infrastructure would have a severe impact on that mandate; and
- allowing the filing of liens could affect the authority's ability to obtain financing, and thus impair its ability to fulfil its mandate.
For these reasons, the provincial legislation was found to be ineffective and the exclusive nature of Parliament's jurisdiction over all aeronautical matters was once again affirmed.
For further information on this topic please contact Gerard A Chouest or 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] or [email protected]).
(1) Attorney General of British Columbia v.Vancouver International Airport Authority, 2011 CanLII 52133.