Collingwood Aviation Partners Ltd. v. Winterland Airfield Holdings Ltd. Winterland Airfield Holdings Ltd. v. Collingwood Aviation Partners Ltd.
[Indexed as: Collingwood Aviation Partners Ltd. v. Winterland Airfield Holdings Ltd.]
Ontario Reports
Ontario Superior Court of Justice
Morgan J.
April 26, 2021
155 O.R. (3d) 463 | 2021 ONSC 3023
Case Summary
Contracts — Interpretation — Air services company operating flight school on land adjacent to airport — Purchaser of airport erecting fence and restricting access contrary to existing operating agreement — Air services company entitled to declaration of full access by contract and by easement — Purchaser's safety concerns not borne out by evidence — Fencing imposed restrictions that were both inconvenient and hazardous — Air services company not obliged to pay user fees for right of access it already had — Purchaser not entitled to order requiring air services company to increase insurance coverage as there was no evidence existing coverage failed to meet contractual obligations.
Real property — Easements — Air services company operating flight school on land adjacent to airport — Purchaser of airport erecting fence and restricting access contrary to existing operating agreement — Air services company entitled to declaration of full access by contract and by easement — Historical evidence establishing severance of one parcel with creation of runway for benefit of both parties, creating implied easement — Purchaser's safety concerns not borne out by evidence — Fencing imposed restrictions that were both inconvenient and hazardous — Air services company not obliged to pay user fees for right of access it already had.
CAPL operated an air services company and flight school on land adjacent to an airport. When CAPL acquired the land, it sought to reduce to writing an arrangement that had been in place between the adjoining owners dating back nearly 50 years to when the airport was built. The result was an operating agreement signed in 2014 between CAPL and the Town of Collingwood. In 2019, the Town sold the airport to WAH and also assigned the operating agreement. CAPL's rights of unimpeded access to the airport lands were formally disclosed to WAH before the sale and expressly stated in the terms of the operating agreement. WAH unilaterally erected a wire fence around CAPL's property, leaving a 90-foot wide opening where there had once been a 240-foot boundary providing access. The fence restricted runway access and made maneuvering difficult for airplanes and flight school students. The fence blocked foot traffic between the properties, interfering with the flight school's ability to acquire fuel from the airport as required under the operating agreement. It also blocked CAPL's access to the drainage ditch running along the property line, thereby impeding snow removal. CAPL applied for a declaration that it had a common law easement and contractual rights giving it full access to the airfield lands. WAH applied for a declaration and order requiring CAPL to increase its insurance coverage for the risks posed by its operations.
Held, the application by CAPL should be allowed; the application by WAH should be dismissed. [page464]
CAPL was entitled to a declaration that it had the benefit of full access to the airport property along the 240-foot boundary. WAH submitted that "full access" provided for in the operating agreement imported some reasonable restrictions, and justified its fencing for the most part with safety concerns. Those concerns were not borne out by the evidence. The historic context of the properties demonstrated that WAH could not unilaterally impose its own interpretation of full access. The evidence established that before the airport was built the lands had been part of the same parcel. With the lands being severed and a runway created to be a shared facility for the mutual benefit of both owners, an easement was impliedly created for its access and use. The fencing and resulting restrictions by WAH were not just inconvenient, they seriously interfered with CAPL's use of the property and imposed unnecessary hazards for the operation of aircraft. Any fence erected by WAH to the north of the CAPL property had to be at least 30 feet north of the boundary line. CAPL had a right of access to the drainage infrastructure for the purpose of snow removal and for ensuring proper drainage on its property.
CAPL had no obligation to pay an access fee for the purpose of accessing the airport property. The operating agreement specifically provided that neither CAPL nor its tenants were exempt from user fees, but that clause had to be read in the context of the agreement as a whole. WAH could not charge for a right of access which CAPL already owned.
The application by WAH was dismissed as it had not established that CAPL's insurance coverage failed to meet the standard set for it in the operating agreement. With no expert reports or testimony, nothing else in the record could objectively establish whether the CAPL coverage was adequate or whether WAH was acting reasonably in demanding more.
Cases referred to
Deforest Bros. Quarry Ltd. v. Tuck, [2020] O.J. No. 4736, 2020 ONSC 6439 (S.C.J.); DuVernet v. Eisener, 1951 CanLII 323 (NS CA), [1951] N.S.J. No. 18, [1951] 4 D.L.R. 406, 29 M.P.R. 231 (C.A.); Knock v. Knock (1897), 1897 CanLII 91 (SCC), 27 S.C.R. 664, [1897] S.C.J. No. 62; Riverside Professional Centre Inc. v. Ottawa Hospital, [2021] O.J. No. 1160, 2021 ONSC 1705 (S.C.J.); Salah v. Timothy's Coffees of the World Inc., [2010] O.J. No. 4336, 2010 ONCA 673, 268 O.A.C. 279, 74 B.L.R. (4th) 161; Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, 373 D.L.R. (4th) 393, [2014] 9 W.W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1
Statutes referred to
Aeronautics Act, R.S.C. 1985, c. A-2, s. 3(1) [as am.]
Authorities referred to
La Forest, Anne, Anger and Honsberger, Law of Real Property, 3rd ed. (Toronto: Carswell, 2012)
Transport Canada, Aerodromes Standards and Recommended Practices - TP312, 5th ed. (2015)
APPLICATIONS for a declaration of contractual and common law rights of access to land and for an order requiring increased insurance coverage.
Nancy Roberts and Alexis Beale, for Collingwood Aviation Partners Ltd. [page465]
David Levangie and Teodora Prpa, for Winterland Airfield Holdings Ltd.
E.M. MORGAN J.: —
[1] These two applications together comprise a dispute between two adjacent landowners. One of the landowners operates an air services company and flight school while the other operates an airport.
[2] Collingwood Aviation Partners Ltd. ("CAPL"), the air services company, seeks a declaration that it has a common law easement and contractual rights that give it full access to the airfield lands. Winterland Airfield Holdings Ltd. ("Winterland"), the airport operator, seeks to build a fence and to impose other measures (e.g., user fees, insurance coverage) that will define and contain CAPL's access to the airport property.
I. The Historic Relationship
[3] In 1968, the Town of Collingwood did not have an airport. The original owners of CAPL set up a company to build a runway on what were designated to be the airport lands, in consideration for which they received a plot of land abutting the new airport. They also agreed to provide air services, including the operation of a flight school, on the plot they were given abutting the airport property.
[4] Over the decades, the relationship between the two owners embodied this symbiotic existence. Three consecutive owners of what is now the CAPL property provided the requisite air services, operated the flight school, and enjoyed unimpeded access to the airport's land. In 2014, when CAPL became the owner of those lands, it wanted to reduce the existing arrangement to writing in order to add a layer of formality to its common law historic access rights. This document became the Operating Agreement of June 16, 2014, signed by the Town and CAPL (the "operating agreement").
[5] In 2019, the Town sold the airport to Winterland. As part of this change in the airport's ownership, the operating agreement was assigned to Winterland. As counsel for CAPL points out, CAPL's rights of unimpeded access to the airport lands were plain to see on visual inspection of the two properties. They were also formally disclosed to Winterland in the period leading up to its acquisition of the airport and, in fact, were expressly provided in the terms of the operating agreement that Winterland voluntarily assumed. It is not disputed that prior to Winterland's purchase of the airport, CAPL always had full access to the airport lands, unimpeded by any barriers or fencing. [page466]
[6] Currently, CAPL's principal tenant is Fly Genesis Inc. It operates a commercial flight school on the CAPL lands, in fulfillment of the longstanding obligation of CAPL and its predecessors in title to provide a flight school.
II. The New Restrictions
[7] On December 12, 2019, Winterland unilaterally erected a wire fence that ringfenced the CAPL Property. The fence left a 90-foot wide opening along the CAPL property's eastern boundary, reducing the previous 240-foot access route between the two properties that previously allowed for unobstructed access for airplanes taxiing from the CAPL property to the airport lands.
[8] The wire fence and restriction of runway access made maneuvering difficult for airplanes and flight school students using the CAPL facilities. CAPL removed it from the eastern boundary of its property a week later, following which it was replaced by Winterland with a concrete barrier along the airport's western and CAPL's eastern border. This was even more restrictive, but has now been removed pending the resolution of the present application.
[9] The fence that ringed CAPL's property on its northern border was also placed where no fence had ever been placed. CAPL's northern end is comprised of an asphalt apron used by airplanes to turn around. Previously, the airport had fenced off its property 30 feet to the north of the CAPL property line, leaving a grass or snow-covered empty space to allow for airplane maneuverability on the CAPL apron. The new fence erected by Winterland deprived airplanes on the CAPL grounds the ability to maneuver in the northern apron. Without the 30-foot buffer zone of empty land, the wingspan of the airplanes was too large to use CAPL's apron without being obstructed by the fence.
[10] Winterland's fence also blocked off foot traffic between the two properties. There was previously a set of gates and two wooden bridges providing footpath access so that pedestrians had unimpeded access between the properties. CAPL patrons and its tenants' employees used these paths to the airport's restaurant and other facilities by foot. The gates and bridges also facilitated flight instructors from CAPL's tenants to safely return to the flight school on the CAPL property after escorting their students to fuel pumps located on the airport lands. The new fence requires pedestrians to walk along the taxiway instead of through pedestrian gates and wooden walkways.
[11] As previously indicated, the operating agreement requires the flight school on CAPL's land to acquire airplane fuel from the airport. The arrangement requires access not only for the airplanes, but for the pedestrian traffic that accompanies this use. [page467]
[12] Finally, the fence erected by Winterland along CAPL's southern boundary blocks off CAPL's access to the drainage ditch that runs along that property line. This has impeded CAPL's access to the area for the purposes of snow removal. The blockage, in turn, has created a flooding problem on CAPL's land.
III. Access Rights
[13] In a staff report dated June 16, 2014, the Town of Collingwood stated: ". . . This land has always been an [integral] part of the airport and has had access to the airport and its runways since the late 1960s." This accorded with the then new owners of CAPL, who were interested in reducing to writing the arrangement between CAPL and the Town with respect to the airport lands since 1968. The Town was also of the view that a written formalization of the arrangement would be appropriate. The 2014 staff report provides:
The purpose of the agreement provides for mutual benefits to both parties in that it recognizes a historical pre-existing condition of access and use by the owner and occupants of these neighbouring lands and in turn the Town will gain some limited operating controls on the private property.
[14] Acting on this advice, in 2014 the Town council enacted By-Law 2014-054 authorizing execution of an operating agreement between itself and CAPL (the "operating agreement"). It provides that CAPL and the tenants of the CAPL land have a right of full access to the airport and airport facilities for the operating life of the airport. In consideration of this acknowledgment, CAPL agreed to purchase all of its airplane fuel from the airport, thereby assigning to the Town (and any successor to the Town) a considerable source of revenue. The operating agreement was registered on title to the CAPL and airport lands.
[15] In 2018, the Town assigned the operating agreement to Winterland as part of Winterland's purchase of the airport. It is obvious that Winterland was not pleased to have inherited the operating agreement, and proposed to CAPL that it be substantially re-written. Winterland's proposed draft contained a termination clause which would have authorized it to terminate the arrangement with CAPL with six months' notice. CAPL rejected this offer, and Winterland ultimately accepted the assignment of the operating agreement. As CAPL's counsel point out, Winterland's acceptance of the assignment from the Town was done with advice from Winterland's lawyers.
[16] Acknowledging and memorializing CAPL's right of access appears to have been the very reason for the operating agreement. The Town's 2014 staff report introduced its subject matter by stating that its purpose is "to outline a request for continued [page468] access to the Collingwood Regional Airport by an abutting landowner, to be recognized in the form of an operating agreement between the Property Owner, Collingwood Regional Airport Services Board and the Town of Collingwood".
(a) Contractual rights
[17] The operating agreement provides for, inter alia, unimpeded access by CAPL to the airport lands (subject to government regulation):
2.1
The Owner [CAPL] and its tenants/licensees shall have full access to the Collingwood Region Airport's runway systems and other facilities and services necessary for flight operation across the Airport Lands, on the internal roadways, and from the Township road adjoining the Airport Lands on a 24 hour per day/365 days per year basis, subject to applicable government regulations, as long as an airport continues to be operated on the Airport Lands . . .
[18] The question on which the parties join issue is the meaning of "full access". Counsel for Winterland is of the view that "full" imports with it some reasonable restrictions. They justify their fencing and other restrictions, for the most part, with reference to safety concerns, citing a photograph of a child sitting on a runway in order to suggest that this is what happens when the airport is not fenced off from its neighbour. Counsel for CAPL, on the other hand, is of the view that "full" means full. They contend that the fencing as erected by Winterland has itself created a hazardous situation, and that there is no evidence to suggest that it is necessary to curtail CAPL's access rights out of a concern for safety.
[19] It is a first principle of contract law that any contract right must be interpreted and understood in its entirety and in the context of the surrounding circumstances in which it arose: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, at paras. 46-7. Counsel for CAPL submit that, given the background to the operating agreement, the only common-sense interpretation of the phrase "full access" is that it describes the access rights in place up to the date of the operating agreement. In other words, "full" means "preserving the status quo", and any restriction of the status quo except that imposed by government would have required explicit mention in the operating agreement.
[20] The status quo gave CAPL more than the access to the airport that one needs to fly an airplane, as Winterland suggests. Rather, in the words of the Town's 2014 staff report, the CAPL property "has always been an [integral] part of the airport and has had access to the airport and its runways since the late 1960s". The historic context of these properties certainly demonstrates that the [page469] interpretation of CAPL's "full access" cannot be imposed unilaterally by Winterland. In fact, Winterland sought to do that in its proposed revision to the operating agreement, but that revision was rejected. When it assumed the rights and liabilities of the Town, it assumed the obligation to honour CAPL's unrestricted (i.e., unfenced-in) access to the airport lands.
[21] Further, Winterland's argument about safety is not borne out by the evidence in the case. While it is intuitive that a child might wonder onto the runway if it is not fenced off or otherwise blocked from public access, the picture of the child on the runway appears to have been a one-time event over the course of the 53 years that these parties have been neighbours. Moreover, I am advised by counsel that the incident occurred in recent years, subsequent to the installation of fences by Winterland. In other words, the fencing is aimed more at impeding aircraft movement than it is at stopping all pedestrian flow between the properties.
[22] Furthermore, the safety factors seem to point in the opposite direction. CAPL's counsel point out that Transport Canada's publication Aerodromes Standards and Recommended Practices - TP312, 5th ed. (2015) ("TP312") addresses taxiing and maneuverability of aircraft. That publication requires a taxiway strip to have a width of no less than 170 feet, but Winterland's fencing reduces the span for maneuverability of aircraft on CAPL's lands well below that mark. Since CAPL's property fits the definition of "aerodrome" in s. 3(1) of the federal Aeronautics Act, R.S.C. 1985, c. A-2, as an area of land "equipped or set apart for use either in whole or in part for the arrival, departure, movement or servicing of aircraft", the requirements set out in TP312 apply. The fencing is not a resolution of any safety hazard; it is the hazard.
[23] With respect to safety, Winterland also contends that 240 feet of access along CAPL's eastern boundary is not required because that assumes that airplanes with a large wingspan are using the CAPL property and no rating has been done on the pavement in this area to determine if meets the requisite pavement strength to service planes with such a wingspan. It seems obvious, however, that in making this argument, Winterland is grasping at straws. In fact, it concedes that it has no actual information one way or another about the pavement strength on the CAPL property.
[24] Winterland cannot invoke unverified safety fears as a means of circumventing the historic use of the property, now enshrined in the operating agreement, that allowed airplanes to pass each other in accessing the airport from the CAPL grounds, and vice-versa. The operating agreement makes it clear that safety concerns are paramount, but the safety concerns that it refers to [page470] are those imposed by actual government regulation. Otherwise, restrictions on CAPL's access are contractually forbidden to be imposed by Winterland's unilateral preferences.
(b) Common law easement
[25] As indicated, the purpose and effect of the operating agreement was to formalize the runway access on CAPL's eastern boundary, the buffer access on its northern boundary, the footpath access through the gates and wooden bridges, and the drainage access along the southern boundary of CAPL's property. Counsel for CAPL also submit that one does not have to rely on the operating agreement as the source of those rights, as they pre-date the operating agreement by several decades. As CAPL sees it, in addition to rights arising by contract, all of the access rights contained in the operating agreement confirmed common law rights that existed prior to the operating agreement and that continue to exist independent of that contract.
[26] It is CAPL's position that the rights of access that Winterland has attempted to limit have long vested as an implied easement. These rights arise at common law by virtue of a history of usage, and have been described as follows:
When land owned by one person is divided and part of the land conveyed to another, even if there are no words in the instrument expressly creating an easement, a court will imply that the new owner was granted easements of necessity and any continuous and apparent easements which existed as quasi-easements during unity of ownership. Thus, the implied grant will render the retained lands servient and the newly acquired portion dominant.
In order for a quasi-easement which was exercised during unity of ownership to become an easement by implication of law, the right claimed must meet certain criteria:
(a) it must be necessary to the reasonable enjoyment of the part granted;
(b) it must have been used by the owner of the entirety for the benefit of the part granted up to and at the time of the grant; and
(c) it must have been apparent at the time the land for which the easement is claimed was acquired.
For an easement to be apparent, its previous use must have been indicated by some visible, audible or other apparent evidence on either the quasi-dominant or the quasi-servient tenement which could be seen, heard or smelled by a reasonable inspection.
Anger and Honsberger, Law of Real Property, 3rd ed. (Toronto: Carswell, 2012), §17.20.20(d).
[27] Evidence in the record before me demonstrates that the airport lands and CAPL lands were once part of the same parcel, and that in 1968 the CAPL lands were severed and sold by the [page471] Town of Collingwood to the predecessor in title to CAPL. The purchase price was $3,500 plus the construction of a runway by CAPL. The agreement of purchase and sale is silent on the access rights claimed by CAPL. However, it is CAPL's position that the terms of the 1968 agreement and the conduct of the parties following conclusion of that agreement demonstrate that the parties held a common intention that the CAPL property have the benefit of the rights of access.
[28] These rights were apparent at the time the agreement was concluded, since part of the consideration demanded by the Town and agreed to by CAPL's predecessors was that CAPL would create a runway that would be a shared facility accessed by both property owners. Where an agreement to sever land includes the creation of a road for the mutual benefit of both owners, the agreement impliedly creates an easement for the road's access and use: Riverside Professional Centre Inc. v. Ottawa Hospital, [2021] O.J. No. 1160, 2021 ONSC 1705 (S.C.J.).
[29] The 1968 purchase agreement reflects its parties' common intention that the now-CAPL property provide "Air Services" to the airport. It would be impossible for any such Air Service to be provided without the runway access from the CAPL property to the airport. Likewise, the purchase agreement required CAPL to operate a flight school from its property. That operation requires a broad runway access on CAPL's eastern boundary, as well as a buffer zone access on CAPL's northern side and footpath access for pilots and students.
[30] As for drainage access on the south boundary of the CAPL lands, there is nothing in the 1968 agreement itself that addresses that. However, the evidence in the record shows that the drainage swales next to the southern property line were constructed very shortly after the 1968 agreement was concluded and the two properties were severed from each other. The drainage infrastructure created five decades ago has been in constant use and continuously accessed by the owners of the CAPL lands ever since.
[31] It is Winterland's position that for a common law easement to arise, it cannot be merely a convenience but must be a necessity for the dominant tenement. Winterland's counsel argue that none of the rights of access are, strictly speaking, a necessity, and that they can all be worked around by CAPL with some changes and effort. It is CAPL's position that the access rights are indeed necessary for its operations. CAPL's counsel argue that Winterland misconstrues the use of the term "necessary" for a common intention easement, and is confusing it with the meaning of that term in the context of an easement of necessity. The former meaning is considerably broader than the latter. [page472]
[32] Specifically, for a common intention easement, "the Applicants need not demonstrate that without the grant they cannot access their property": Deforest Bros. Quarry Ltd. v. Tuck, [2020] O.J. No. 4736, 2020 ONSC 6439 (S.C.J.), at para. 50. Rather, the easement must be "necessary for the reasonable and convenient use of the land conveyed": DuVernet v. Eisener, 1951 CanLII 323 (NS CA), [1951] N.S.J. No. 18 (C.A.), at para. 21. The Supreme Court of Canada determined more than a century ago that for the common intention to be enforced at common law, the claimed easement must be "necessary for the convenient use and enjoyment of the land": Knock v. Knock (1897), 1897 CanLII 91 (SCC), 27 S.C.R. 664, [1897] S.C.J. No. 62.
[33] In CAPL's case, being ringfenced and losing its historic access to the airport lands would be substantially more harmful to it than a mere inconvenience. It would potentially create hazardous conditions for the operation of its aircraft, and would certainly impact on the viability of the flight school and other air services carried on by CAPL and its tenants. When Winterland's fence and concrete barrier reduced CAPL's eastern access from 240 feet to a 90-foot gap, the flight school had to adopt a policy whereby only instructors could navigate through the barrier under wet and slippery road conditions. On especially slippery days, tractors were used to pull aircraft through the eastern fence. CAPL states that operating in this manner was unsustainable and unreasonable.
[34] In fact, the Transport Canada safety recommendations are in line with CAPL's view. The large aircraft operating from the CAPL lands require a taxi strip of at least 170 feet. Typically, the taxi strip should befree of obstacles. CAPL's affiant deposes that virtually all other airports follow a simple rule: any obstacle is bad.
[35] A similar analysis can be made with respect to the restriction of the northern buffer area. Use of the apron at the north end of CAPL's property is part of the historic usage enjoyed by CAPL and the airport owners alike. Both property owners benefit from the air services and flight training provided on the CAPL property, and so both have accommodated the maneuverability needs of aircraft using the CAPL lands. The same is true with pedestrian access through the historically demarcated routes. The system of gates and bridges has historically been in place for the benefit of both properties, and is another badge of the symbiotic relationship between them.
[36] Cutting off the northern buffer zone and the pedestrian access points has the effect of narrowing maneuverability on CAPL property, isolating that property, and undermining the access that has been the hallmark of CAPL's relationship with the airport. The imposition of physical restrictions by Winterland has [page473] not just made operations on CAPL's property less convenient or less profitable; it has gone a significant distance toward undermining the very intentions that were at the core of CAPL's historic function vis-à-vis the airport.
[37] Finally, Winterland's actions in cutting off CAPL's access to the drainage infrastructure on the southern side of its property strikes me as little more than an effort to pressure CAPL to negotiate a new arrangement. I have seen no justification, or even any assertion of a need, for fencing in the drainage area to the south of CAPL's property, or for blocking CAPL's ability to clear snow from the area and prevent spring flooding. Ordinarily, of course, a property owner is free to fence in its land and treat its neighbour as a stranger. But Winterland and CAPL are not ordinary owners; they are neighbours with a history of shared uses coming from an original common intention to service each other's needs.
[38] In short, as property owners Winterland and CAPL are not strangers. They are owners who have inherited an arrangement that arose by mutual intent and has developed and continued over the decades as an ongoing manifestation of that common intention. It is not for one of them to suddenly alter those vested arrangements by cutting off the other's access to necessary infrastructure such as drainage ditches and snow removal areas.
[39] The evidence before me demonstrates that Winterland's fencing of CAPL's property and the restrictions in access to the airport property are not just inconvenient, they are a serious interference with CAPL's use of its property and, in addition, impose unnecessary hazards for the operation of aircraft by CAPL and its tenants -- the very use which has been at the heart of the relationship between the two neighbours for over 50 years.
IV. Access Fees
[40] Article 2.3 of the operating agreement addresses the issue of user fees as follows:
2.3 This Agreement does not preclude the Owner [CAPL] or tenants of the [CAPL] Property to be exempt from any applicable user fee as determined by the Town from time to time.
[41] It is Winterland's position that this provision entitles it to charge CAPL fees at its own discretion, just as it is at liberty to charge user fees to any other user of the airport facilities. In July 2019, it delivered a new fee schedule to CAPL, which imposed relatively modest fees on aircraft access, aircraft landing, and aircraft movement. Counsel for Winterland submits that this [page474] managerial decision is well within the rights of an airport owner, and is in keeping with normal operating procedures for airports.
[42] CAPL takes issue with the new fee schedule. Its counsel state that the issue at present is not with the quantum of fees, which concede are not designed to represent an onerous expense, but rather with Winterland's entitlement to levy them at all. It is CAPL's position that the user fees clause is meant to include CAPL in the fee schedule imposed on other users of the airport facilities, but that it does not apply to the uses in which CAPL engages as of right. That is, that the clause is not a carve-out from CAPL's rights of full access, but rather is a clarification that those rights do not exempt CAPL from fees imposed on other types of airport uses.
[43] Winterland's position, while understandable when the user fees clause is taken in isolation, is a decontextualized interpretation of a single clause within the overall operating agreement. As previously indicated, however, it is important in interpreting any specific contractual clause to recall that "the court construes the contract as a whole, in a manner that gives meaning to all of its terms, and avoids an interpretation that would render one or more of its terms ineffective": Salah v. Timothy's Coffees of the World Inc., [2010] O.J. No. 4336, 2010 ONCA 673, at para. 16.
[44] CAPL's counsel contend that art. 2.3 of the operating agreement cannot be read in a way that permits Winterland to impose a charge on what CAPL otherwise has as of right. Rather, it can only be seen as confirming that CAPL will not be exempt from user fees levied on users of the Airport generally, with the exception, of course, of those fees that touch on access to the airport lands, which are specifically given to CAPL as of right. The very concept of a user fee carries with it the fact that the payer is otherwise not entitled to use the facility for which the fee is being charged. By definition, a user fee is not applicable to a party already entitled to the specific form of use.
[45] Just as the purchaser of land does not have to pay an ongoing user fee to the previous owner in order to use its newly acquired land, CAPL, as the owner of an easement and contractual right of access over the airport lands, does not have to pay a user fee to enjoy its right of access to those lands. Counsel for CAPL is correct that the modest size of the current user fee schedule is not the issue here; Winterland cannot charge for a right of access which CAPL already owns. Insofar as Winterland purports to charge user fees to CAPL for matters covered within the scope of CAPL's right of full access to the airport lands, those user fees are unenforceable as against CAPL. [page475]
V. Insurance
[46] Article 13.1 of the operating agreement provides that CAPL "shall, at its own expense, procure and maintain in force adequate insurance for the CAPL Property and its uses that is acceptable to Winterland, acting reasonably, naming Winterland as additional insured". It is Winterland's view that CAPL's insurance coverage is inadequate for the risks posed by its operations. In its application, Winterland seeks a declaration and order requiring increased coverage by CAPL.
[47] CAPL has provided Winterland with a Certificate of Insurance demonstrating its coverage for the property, and, at Winterland's insistence, has increased its Airport Premises and Operations coverage from $1 million to $5 million. Winterland is not satisfied by this level of coverage by CAPL, and submits that CAPL's insurance certificate is inadequate and not in compliance with art. 13.1 of the operating agreement.
[48] In support of its position, Winterland's affiant has included an e-mail from the airport's insurer that addresses the insurance obligations of tenants of the airport. This evaluation of insurance needs does not, of course, apply to CAPL, as it is not a tenant of the airport but rather is a neighbouring owner providing air services to the airport. For its part, CAPL has advised Winterland that its broker has indicated that increased coverage is not necessary for its land and operations.
[49] Neither party has submitted expert evidence on the question of CAPL's insurance needs. Each side's position on the issue could potentially be described as being self-serving. Without expert reports and testimony, there is nothing else in the record which can objectively establish whether CAPL has "adequate insurance" and whether Winterland is "acting reasonably" in demanding more.
[50] Since the insurance claim arises as part of Winterland's application, it retains the burden of proof that CAPL is acting contrary to its obligation under the operating agreement. As indicated, there is some evidence that each side has informed the other that it is either under-insured or adequately insured, but there is nothing for the court to go on in coming to this determination since there is no expert evidence on either side relating to the CAPL's insurance needs. Accordingly, Winterland has not established on the balance of probabilities that CAPL's insurance coverage fails to meet the standard set for it in art. 13.1 of the operating agreement.
VI. Disposition
[51] CAPL is entitled to the following relief: [page476]
(a) a declaration that the CAPL property has the benefit of full access to the airport property along the 240-foot boundary between the CAPL property and the airport property, being the eastern boundary to the CAPL property;
(b) a declaration that under the operating agreement and as a common law easement, the CAPL property has a right, subject to applicable government regulation, to unimpeded access to the airport property along the 240-foot eastern boundary of the CAPL property;
(c) a declaration that CAPL has no obligation to pay an access fee for the purpose of accessing the airport property;
(d) an order that any fence erected by Winterland to the north of the CAPL property is to be at least 30 feet north of the boundary line between the two properties;
(e) a declaration that CAPL has a right of access to the drainage infrastructure along its southern property line for the purposes of snow removal and for ensuring proper drainage on its property.
[52] Winterland's application is dismissed.
[53] With respect to costs, both sides agree in their factums that they are governed by art. 12.2 of the operating agreement. Article 12.2 provides:
12.2 The Town covenants with the Owner to indemnify the Owner against all actions, suits, claims, damages, costs and liability arising out of:
(a) breach, violation or non-performance of any Town covenant, condition and agreement in this Agreement, and from all costs, counsel fees, expenses and liabilities incurred as a result of any such claim or any action or proceeding brought thereon.
[54] The parties may make written submissions as to quantum of costs. I would ask that counsel for CAPL provide me with submissions of no more than two pages within two weeks of today, and that counsel for Winterland provide me with submissions of no more than two pages within two weeks thereafter.
[55] The cost submissions may be sent to my assistant by email. There is no need to provide me with copies of authorities cited in the cost submissions, provided that all authorities are accessible online and the submissions contain proper citations or links to those authorities.
Application for access rights allowed; application for
increased coverage dismissed.
End of Document