The British Columbia Court of Appeal considered whether the province can enact legislation which creates a charge upon the Vancouver International Airport Authority’s leasehold interest in the federally owned airport lands. Specifically, the court considered whether the doctrine of interjurisdictional immunity renders invalid provisions of the provincial Builders Lien Act in relation to the federal crown lands housing Vancouver International Airport.
The federal crown owns the land on which the Vancouver Airport was built. The Vancouver International Airport Authority (the “Authority”) leased the lands with a mandate to operate the airport. The lease purports to contract out of the provincial Builders Lien Act (the “Act”), but s. 42 of the Act expressly prohibits such contracting out. The Authority entered into two contracts for improvements to the Airport: an expansion of the taxiways for aircrafts and an expansion of Pier C, a holding area for passengers waiting to board an aircraft. A number of suppliers registered liens against the property. The Authority requested that these liens be removed in accordance with the lease contract, but the Registrar of the Land Titles Office refused citing s. 42 of the Act.
The Authority sought judicial review of this decision. It requested an order directing the Registrar to remove all of the liens and a declaration that the impugned provisions were constitutionally inapplicable under the doctrine of interjurisdictional immunity. The chambers judge held that the impugned provisions of the Act must be “read down” to the extent they purport to apply to the leasehold interest of the Authority. The judge declared that all builders liens filed against the leasehold interest of the Authority are invalid and of no force and effect.
The provincial Attorney General appealed. The Court of Appeal upheld the lower court decision. However, it noted that the chambers judge erred by employing the incorrect “affects” test for the application of interjurisdictional immunity to the impugned provisions. The appellate court considered the correct test set out by the Supreme Court of Canada in the companion decisions of Canada Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3 [CWB], and British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86) [Lafarge]. The test requires the impugned provisions “impair” (not merely “affect”) the core competence of a matter that falls within the exclusive jurisdiction of the federal Parliament and/or a vital, essential or integral part of a federal undertaking.
The provincial AG disputed that the impugned provisions “impaired” the core competences. The court considered Greater Toronto Airports Authority v. Mississauga (City) (2000), 192 D.L.R. (4th) 443, 50 O.R. (3d) 641 (Ont. C.A.) which concerned the application of the provincial building code to new construction at Pearson Airport. This case was decided under the former “affects” test. The court held that the provincial code did not apply to the federal undertaking.
The court went on to consider whether the impugned provisions “impair” the exclusive jurisdiction of the federal government in aeronautics and the federal undertaking of the operation of an international airport. Despite the stricter test, the Court reached the same conclusion as the court in Mississauga. Here, the court held that the construction of taxiways and a holding area for travelers is clearly a “vital part” of the Authority’s development, management and maintenance of the Airport. A lien against the airport lands gives the chargor the ability to impede aircrafts from landing or taking off. Clearly, this is a vital and essential part of the airport’s operation and would impair the essential operations of the airport. The in rem nature of the lien creates the risk of impairment by limiting the ability of the Authority to obtain financing in order to meet its objectives. The sale of the Authority’s leasehold interest to enforce a registered lien would terminate its mandate to operate the Airport.
Note: counsel for the Authority made a general submission that provincial legislation cannot restrict the right of lessees of Federal Crown land or conflict with the terms of a lease from the Federal Crown, particularly where the activities of the lessee fall within the exclusive jurisdiction of the federal Parliament. The court did not comment on this submission because it was not raised before the trial judge. However, it is likely that this argument will be tested in the future.
February 25, 2011
Link to Decision
Julia Wilkes
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