DATE: 20040513

DOCKETS: C38228, C38229, C38241, C37427, C37425, C37426, C37429 and C37444

COURT OF APPEAL FOR ONTARIO

IN THE MATTER OF THE BANKRUPTCY OF CANADA 3000 INC., OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO

AND IN THE MATTER OF THE BANKRUPTCY OF CANADA 3000 AIRLINES LIMITED/LIGNES AÉRIENNES CANADA 3000 LIMITÉE, OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO

AND IN THE MATTER OF THE BANKRUPTCY OF ROYAL AVIATION INC., OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO

RE: GREATER TORONTO AIRPORTS AUTHORITY, WINNIPEG AIRPORTS AUTHORITY INC., HALIFAX INTERNATIONAL AIRPORT AUTHORITY, EDMONTON REGIONAL AIRPORTS AUTHORITY, THE CALGARY AIRPORT AUTHORITY, AÉROPORTS DE MONTRÉAL, OTTAWA MACDONALD-CARTIER INTERNATIONAL AIRPORT AUTHORITY, VANCOUVER INTERNATIONAL AIRPORT AUTHORITY, ST. JOHN’S INTERNATIONAL AIRPORT AUTHORITY, AND NAV CANADA (Appellants (Respondents and Respondents by Cross-Appeal) – and – 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., US AIRWAYS, INC., GE CAPITAL AVIATION SERVICES, INC. AS AGENT AND MANAGER FOR POLARIS HOLDING COMPANY AND AFT TRUST-SUB I, PEGASUS AVIATION, INC., PALS 1, INC., ANSETT WORLDWIDE AVIATION, U.S.A. AND MSA V (Respondents (Appellants and Appellants by Cross-Appeal) – and – RRPF ENGINE LEASING LIMITED, CANADIAN IMPERIAL BANK OF COMMERCE, AND FLIGHT LOGISTICS INC. (Respondents), C.I.T. LEASING CORPORATION, NBB-ROYAL LEASE PARTNERSHIP ONE, AND GATX/CL AIR LEASING COOPERATIVE ASSOCIATION (Respondents (Appellants by Cross-Appeal))

BEFORE: ABELLA, CRONK and JURIANSZ JJ.A.

COUNSEL: Lyndon A.J. Barnes and Donald D. Hanna, for the appellant (respondent and respondent by cross-appeal), Greater Toronto Airports Authority John T. Porter and Alan B. Merskey, for the appellants (respondents and respondents by cross-appeal), Winnipeg Airports Authority Inc. et al, listed in Schedule “A” hereto Clifton P. Prophet and Eric B. Wredenhagen, for the appellant (respondent and respondent by cross-appeal), NAV Canada Richard A. Conway and Linda M. Plumpton, for the respondents (appellants and appellants by cross-appeal), International Lease Finance Corporation et al, listed in Schedule “B” hereto David P. Chernos, for the respondent (appellant and appellant by cross-appeal), US Airways, Inc. Christopher W. Besant and Joseph J. Bellisimo, for the respondents (appellants and appellants by cross-appeal), GE Capital Aviation Services, Inc. as agent and manager for Polaris Holding Company and AFT Trust-Sub I, Pegasus Aviation, Inc., and PALS 1, Inc. Barbara L. Grossman, for the respondents (appellants and appellants by cross-appeal), Ansett Worldwide Aviation, U.S.A. and MSA V Pamela J. Huff and Jill M. Lawrie, for the respondents (appellants by cross-appeal), C.I.T. Leasing Corporation and NBB-Royal Lease Partnership One Craig J. Hill, for the respondent (appellant by cross-appeal), GATX/CL Air Leasing Cooperative Association Kenneth D. Kraft, for the respondent, RRPF Engine Leasing Limited V. Ross Morrison, for the respondent, Flight Logistics Inc. Steven J. Weisz, for Canadian Imperial Bank of Commerce

HEARD: June 24, 25 and 26, 2003

On appeal from the orders of Justice John D. Ground of the Superior Court of Justice dated December 3, 2001 and May 7, 2002.

COSTS ENDORSEMENT

BY THE COURT:

[1] Further to this court’s reasons for judgment in this matter issued on January 20, 2004, we have now received and reviewed the written submissions of the parties on the costs of these proceedings.

[2] The respondents were successful before this court on the two primary issues in these proceedings, which concerned the interpretation of the seizure and detention remedies regarding aircraft established under s. 9 of the Airport Transfer (Miscellaneous Matters) Act, S.C. 1992 c. 5 (the “Airports Act”) and s. 56 of the Civil Air Navigation Services Commercialization Act, S.C. 1996, c. 20 (the “CANSCA”) and the interpretation of the joint and several liability provision contained in s. 55 of the CANSCA. They were unsuccessful on some subsidiary issues arising on the main appeals. As well, a new hearing before the motions judge was ordered on the issue of reimbursement of the costs of detention of the applicable aircraft and the posting of security in accordance with the order of the motions judge dated December 3, 2001. Those respondents who cross-appealed were unsuccessful on their cross-appeals, which were dismissed in their entirety.

[3] The costs sought by the respondents in respect of the three main appeals are substantial. As set out in the respondents’ bills of cost, filed with this court, the claimed costs are as follows:

Costs Claimed

1. GE Capital Aviation Services Inc. and Pegasus Aviation, Inc. $177,846.52
2. Ansett Worldwide Aviation and USA MSA V 166,557.89
3. International Lease Finance Corporation et al 126,093.00
4. U.S. Airways Inc. 66,885.70
5. C.I.T. Leasing Corporation ($23,323.92) and NBB-Royal Lease Partnership One ($23,101.13) 46,425.05
6. GATX/CL Air Leasing Cooperative Association 44,094.75
7. Flight Logistics Inc. 3,317.00

TOTAL: $631,219.91

[4] The claimed costs include fees and Goods and Services Tax and, where applicable, disbursements and Goods and Services Tax. In all instances save one (GATX/CL Air Leasing Cooperative Association), the respondents’ bills of costs indicate that costs are claimed on a partial indemnity basis. For the purpose of our costs disposition, we have assumed that GATX/CL Air Leasing Cooperative Association’s costs claim is also calculated on the partial indemnity scale.

[5] The appellants and the respondent RRPF Engine Leasing Limited previously agreed that, as between them, no award of costs should be made in these proceedings. Accordingly, no costs submissions were filed with this court by that respondent.

[6] The appellant airport authorities and NAV Canada (collectively, the “Authorities”) filed joint costs submissions. They submit that no costs should be awarded in favour of the respondents. In the alternative, if costs are awarded to the respondents, the Authorities argue that the costs should be assessed by an assessment officer or the registrar in bankruptcy, subject to directions by this court concerning reductions for specific items.

[7] Since the introduction in January 2002 of the costs grid under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, this court has fixed costs where the record before it permits it to do so. In our view, it is neither necessary nor appropriate in this case to direct an assessment of costs by either an assessment officer or the registrar in bankruptcy.

[8] Several important factors militate against an award of costs to the respondents.

[9] First, these proceedings raised novel issues of statutory interpretation that engaged the public interest. A majority of this court stated in its reasons for judgment dated January 20, 2004:

This case raised important issues of interpretation concerning the CANSCA and the Airports Act not previously considered by an Ontario court and, at the time of the proceedings before the motions judge, addressed in only one previously reported decision of another Canadian court. In addition, the demise of the Canada 3000 Companies gave rise to issues of broad public interest, as well as matters relating to the commercial rights of the parties. I agree with the motions judge’s observation in his reasons concerning costs: “There is also…an element of public interest in having the seizure rights of the Authorities, which impact upon the travelling public and the travel industry in Canada, being judicially scrutinized.”

Justice Juriansz, dissenting on other grounds, did not disagree with these conclusions.

[10] It is our view that the novelty of this case and the public interest involved in the resolution of the issues raised by the parties are as relevant to the determination of the costs of these proceedings as they were to the question of the costs of the proceedings before the motions judge.

[11] Second, the respondents were not completely successful in these proceedings. As we have said, the cross-appeals were dismissed in their entirety. As well, this court rejected the respondents’ positions on several issues that had also been raised by them before the motions judge with an equal lack of success. Although we do not suggest that these issues were of central concern or prominence, in combination with the cross-appeals they received full attention in the various facta filed by the parties and, in some instances, occupied part of the time spent in oral argument before this court. There is no doubt that pursuit of these matters before this court extended the oral and written submissions of the parties, increased the volume of materials to be prepared by the parties and considered by this court, added to the number and complexity of the issues to be argued, and increased the legal costs of the litigants.

[12] Third, it cannot be said that the Authorities acted unreasonably in bringing their appeals. The respondents acknowledge that the main appeals raised intricate and complex legal issues and arguments. In that context, the importance of the interpretative issues raised, their considerable significance to the aviation industry and to the traveling public, and the impact on these proceedings of the lack of established jurisprudential authority concerning the key issues to be determined by this court cannot be over-emphasized.

[13] It is also relevant that the Authorities are not-for-profit corporations whose mandate is to provide required services to facilitate air travel within Canada. Although it is true that the issues raised were of commercial importance to the Authorities, as well as to the respondents, it is also true that the Authorities are public entities who raised issues of broad public import in their appeals.

[14] In some circumstances, although not all, the nature of the issues raised in complex litigation will warrant a departure from the usual rule that costs should follow the event. This is such a case.

[15] Taking all relevant factors into account, we conclude that a fair and reasonable disposition is to exercise our discretion to award no costs of the appeals or the cross-appeals. Accordingly, no costs are awarded in these proceedings.

Signed: “R.S. Abella J.A.” “E.A. Cronk J.A.” “R.G. Juriansz J.A.”

SCHEDULE “A”

Winnipeg Airports Authority Inc. Halifax International Airport Authority Edmonton Regional Airports Authority The Calgary Airport Authority Aéroports de Montréal Ottawa MacDonald-Cartier International Airport Authority Vancouver International Airport Authority St. John’s International Airport Authority

SCHEDULE “B”

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.