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 CanLII 377 (SCC), [1997] 1 S.C.R. 411; referred to: Pan American World Airways Inc. v. The Queen, 1981 CanLII 215 (SCC), [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), 1915 CanLII 584 (SCC), 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., 1960 CanLII 84 (SCC), [1961] S.C.R. 138; Slaight Communications Inc. v. Davidson, 1989 CanLII 92 (SCC), [1989] 1 S.C.R. 1038; Schreiber v. Canada (Attorney General), [2002] 3 S.C.R. 269, 2002 SCC 62; R. v. Dubois, 1935 CanLII 1 (SCC), [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 CanLII 837 (SCC), [1998] 1 S.C.R. 27; R. v. Morgentaler, 1993 CanLII 74 (SCC), [1993] 3 S.C.R. 463; Aetna Financial Services Ltd. v. Feigelman, 1985 CanLII 55 (SCC), [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., 1970 CanLII 140 (SCC), [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), 2004 CanLII 32169 (ON CA), 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), 2002 CanLII 49584 (ON SC), 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 CanLII 41230 (QC CA), [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 CanLII 18666 (QC CS), [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

1Binnie 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?

2The 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.

3After 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 CanLII 215 (SCC), [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), 2002 CanLII 49584 (ON SC), 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), 2004 CanLII 32169 (ON CA), 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 CanLII 18666 (QC CS), [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), 2004 CanLII 41230 (QC CA), 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), 1915 CanLII 584 (SCC), 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., 1960 CanLII 84 (SCC), [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 CanLII 92 (SCC), [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 CanLII 1 (SCC), [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 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 35; R. v. Morgentaler, 1993 CanLII 74 (SCC), [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 CanLII 55 (SCC), [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 CanLII 377 (SCC), [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, 1974 CanLII 1 (SCC), [1976] 1 S.C.R. 108, at p. 115, per Dickson J. (as he then was); R. v. Goulis (1981), 1981 CanLII 1642 (ON CA), 33 O.R. (2d) 55 (C.A.), at pp. 59‑60; R. v. Hasselwander, 1993 CanLII 90 (SCC), [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., 1970 CanLII 140 (SCC), [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. Disposition¹

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.

Footnotes

1. 1The amendments to para. 98, issued on August 16, 2006, are included in these reasons.