Greater Fredericton Airport Authority Inc. v. NAV Canada, 2008 NBCA 28

• Jurisdiction: New Brunswick
• Judge: Turnbull, Larlee and Robertson, JJ.A.
• Neutral Citation: 2008 NBCA 28
• Subject Matter: CONTRACTS,ARBITRATION
• Citation: 2008 NBCA 28,(2008), 329 N.B.R.(2d) 238 (CA),229 NBR (2d) 238,290 DLR (4th) 405,[2008] NBJ No 108 (QL),329 NBR(2d) 238,(2008), 329 NBR(2d) 238 (CA),329 N.B.R.(2d) 238,290 D.L.R. (4th) 405,[2008] N.B.J. No 108 (QL)
• Date: 25 September 2007
• Court: Court of Appeal (New Brunswick)

Airport Authority v. NAV Can. (2008), 329 N.B.R.(2d) 238 (CA);

    329 R.N.-B.(2e) 238; 844 A.P.R. 238

MLB headnote and full text

Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2008] N.B.R.(2d) TBEd. MR.042

Renvoi temp.: [2008] N.B.R.(2d) TBEd. MR.042

NAV Canada (respondent) (appellant) v. Greater Fredericton Airport Authority Inc. (applicant) (respondent)

(130/06/CA; 2008 NBCA 28)

Indexed As: Greater Fredericton Airport Authority Inc. v. NAV Canada

Répertorié: Greater Fredericton Airport Authority Inc. v. NAV Canada

New Brunswick Court of Appeal

Turnbull, Larlee and Robertson, JJ.A.

March 20, 2008.

Summary:

Résumé:

The Aviation and Services Facilities Agreement (ASFA) between the Greater Fredericton Airport Authority (GFAA) and NAV Canada (NAVCAN) granted NAVCAN sole authority to replace or relocate any Licensed Civil Air Navigation Asset on airport property. Under ASFA, NAVCAN paid for replacement and GFAA paid for relocation. GFAA asked NAVCAN to relocate an Instrument Landing System (ILS) from runway 15/33 to runway 09/27, which GFAA was expanding. Instead, NAVCAN acquired a new ILS for installation on runway 09/27. A dispute arose as to who should pay for the new Distance Measuring Equipment (DME) component of the ILS. NAVCAN informed GFAA that it was not going to make provision for the acquisition of the DME in its upcoming fiscal budget unless there was an agreement as to who would pay for it. "Under protest" GFAA agreed to fund the DME. GFAA and NAVCAN, by arbitration agreement, asked an arbitrator to rule as to who had to pay for the DME. The arbitrator ruled that NAVCAN was not entitled to compensation from GFAA under ASFA. However, the arbitrator ruled that the parties had made a new contract for the purchase and installation of the DME, and that under that new contract, GFAA had to pay for the DME. GFAA appealed pursuant to ss. 45 and 46 of the Arbitration Act (N.B.).

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported 305 N.B.R.(2d) 344; 791 A.P.R. 344, allowed the appeal and set aside the arbitrator's award. NAVCAN appealed.

The New Brunswick Court of Appeal dismissed the appeal. The court held that GFAA established economic duress and that the arbitrator erred in finding that the parties had made a new contract.

Arbitration - Topic 7959

Judicial review (incl. appeals) - Jurisdiction of arbitrator - General - Excess of jurisdiction - An arbitrator ruled that one party was liable for payment to the other not by virtue of the main contract between them but by virtue of a new contract that they had concluded - On appeal, an issue arose as to whether the arbitrator exceeded his jurisdiction by ruling in respect of a new contract - The New Brunswick Court of Appeal ruled that the arbitrator did not exceed his jurisdiction - See paragraphs 8 to 15.

Contracts - Topic 1585

Formation of contract - Consent - Duress defined - [See Contracts - Topic 1586 ].

Contracts - Topic 1586

Formation of contract - Consent - Duress - Defence of - When available - The Aviation and Services Facilities Agreement (ASFA) between Nav Canada (NAVCAN) and the Greater Fredericton Airport Authority (GFAA) provided that NAVCAN had sole authority to replace or relocate certain equipment on airport property - NAVCAN was to pay for replacement and GFAA was to pay for relocation - GFAA asked NAVCAN to relocate equipment from one runway to another - Instead, NAVCAN decided to replace one component of the equipment with a new one - NAVCAN informed GFAA that it was not going to make provision for the acquisition of the new component in its upcoming fiscal budget unless there was an agreement as to who would pay for it - GFAA agreed to pay, but "under protest" - An arbitrator was asked to determine who was to pay - The arbitrator ruled that GFAA was not liable to pay under ASFA but that the parties had made a new contract making GFAA liable - The New Brunswick Court of Appeal ruled instead that GFAA was not liable for payment - While a variation to an existing contract, unsupported by fresh consideration, could be enforceable if it was not procured under economic duress, in the present case GFAA established economic duress - NAVCAN exerted pressure to obtain what amounted to a modification of ASFA, and GFAA was left with no practical alternative but to capitulate to NAVCAN's demand - GFAA did not consent to the variation and the fact that GFAA's promise to pay was not supported by fresh consideration suggested that consent was lacking - The arbitrator erred in finding that there had been a separate contract - See paragraphs 8 to 68.

Contracts - Topic 2502

Variation or alteration - General - Consent - [See Contracts - Topic 1586 ].

Contracts - Topic 2504

Variation or alteration - General - Requirement of consideration - [See Contracts - Topic 1586 ].

Arbitrage - Cote 7959

Révision judiciaire (y compris appels) - Compétence de l'arbitre - Généralités - Excès de compétence - [Voir Arbitration - Topic 7959 ].

Contrats - Cote 1585

Formation du contrat - Consentement - Contrainte - Définition - [Voir Contracts - Topic 1585 ].

Contrats - Cote 1586

Formation du contrat - Consentement - Défense de contrainte - Conditions d'ouverture - [Voir Contracts - Topic 1586 ].

Contrats - Cote 2502

Modification ou changement - Généralités - Consentement - [Voir Contracts - Topic 2502 ].

Contrats - Cote 2504

Modification ou changement - Généralités - Contrepartie obligatoire - [Voir Contracts - Topic 2504 ].

Cases Noticed:

Stilk v. Myrick (1809), 2 Camp. 317; 170 E.R. 1168 (N.P.), refd to. [para. 19].

Gilbert Steel Ltd. v. University Construction Ltd. (1976), 12 O.R.(2d) 19 (C.A.), consd. [para. 20].

Modular Windows of Canada v. Command Construction, [1984] O.J. No. 1340 (Div. Ct.), affd. [1986] O.J. No. 437 (C.A.), consd. [para. 21].

Combe v. Combe, [1951] 1 All E.R. 767; [1951] 2 K.B. 215 (C.A.), refd to. [para. 22].

Raggow v. Scougall & Co. (1915), 31 T.L.R. 564, refd to. [para. 23].

Morris v. Baron and Co., [1918] A.C. 1 (U.K.H.L.), refd to. [para. 23].

Deluxe French Fries Ltd. v. McCardle (1976), 10 Nfld. & P.E.I.R. 414; 17 A.P.R. 414 (P.E.I.C.A.), refd to. [para. 23].

Techform Products Ltd. v. Wolda (2001), 150 O.A.C. 163; 56 O.R.(3d) 1 (C.A.), leave to appeal refused (2002), 295 N.R. 196; 171 O.A.C. 400 (S.C.C.), consd. [para. 24].

Maguire v. Northland Drug Co., [1935] S.C.R. 412, refd to. [para. 24].

Williams v. Roffey Bros. & Nicholls (Contractors) Ltd., [1990] 1 All E.R. 512; [1991] 1 Q.B. 1 (C.A.), consd. [para. 25].

Watkins v. Olafson et al., [1989] 2 S.C.R. 750; 100 N.R. 161; 61 Man.R.(2d) 81, refd to. [para. 31].

R. v. Salituro, [1991] 3 S.C.R. 654; 131 N.R. 161; 50 O.A.C. 125, refd to. [para. 31].

Knutson v. Bourkes Syndicate, [1941] S.C.R. 419, consd. [para. 36].

Kiewit (Peter) Son's Co. of Canada Ltd. v. Eakins Construction Ltd., [1960] S.C.R. 361, consd. [para. 36].

Astley v. Reynolds (1731), 93 E.R. 939, refd to. [para. 37].

Occidental Worldwide Investment Corp. v. Skibs A/S Avanti, [1976] 1 Lloyd's Rep. 293 (Eng. Q.B.), refd to. [para. 37].

Pao On v. Lau Yiu Long, [1979] 3 All E.R. 65; [1980] A.C. 614 (P.C.), consd. [para. 38].

Universe Tankships Inc. of Monrovia v. International Transport Workers' Federation, [1982] 2 All E.R. 67; [1983] 1 A.C. 366 (U.K.H.L.), consd. [para. 40].

Barton v. Armstrong, [1975] 2 All E.R. 465; [1976] A.C. 104 (P.C.), refd to. [para. 41].

Dimskal Shipping Co. S.A. v. International Transport Workers' Federation; Ship Evia Luck, Re, [1991] 4 All E.R. 871; [1992] 2 A.C. 152 (U.K.H.L.), refd to. [para. 43].

Stott v. Merit Investment Corp. (1988), 25 O.A.C. 174; 63 O.R.(2d) 545 (C.A.), refd to. [para. 44].

Gordon (In Trust) v. Roebuck et al. (1992), 57 O.A.C. 64; 9 O.R.(3d) 1 (C.A.), refd to. [para. 44].

Hillspring Farms Ltd. v. Walton (Leland) & Sons Ltd. (2007), 312 N.B.R.(2d) 109; 806 A.P.R. 109; 2007 NBCA 7, refd to. [para. 46].

Vantage Navigation Corp. v. Suhail and Saud Bahwan Building Materials plc; Ship Alev, Re, [1989] 1 Lloyd's Rep. 138, refd to. [para. 47].

Atlas Express Ltd. v. Kafco (Importers and Distributors) Ltd., [1989] 1 All E.R. 641, refd to. [para. 48].

Permaform Plastics Ltd. et al. v. London & Midland General Insurance Co. et al. (1996), 110 Man.R.(2d) 260; 118 W.A.C. 260 (C.A.), refd to. [para. 60].

Authors and Works Noticed:

Boyle, Christine, and Percy, David R., Contracts: Cases and Commentaries (7th Ed. 2004), generally [para. 27].

British Columbia, Law Reform Commission, Report on Performance Under Protest, Report No. 81 (1985), generally [para. 36].

Corbin, Arthur Linton, Contracts (Rev. Ed. 1993), vol. 2, p. 7:21 [para. 57].

Halson, R., Opportunism, Economic Duress and Contractual Modifications (1991), 107 L.Q. Rev. 649, generally [para. 27].

Halson, R., The Modification of Contractual Obligations (1991), 44 Current Legal Problems 111, generally [para. 27].

McCamus, John D., The Law of Contracts (2005), pp. 249 [para. 26]; 381, 382 [para. 28].

Ogilvie, M.H., Economic Duress in Contract: Departure, Detour or Dead-End? (2000), 34 Can. Bus. L.J. 194, generally [para. 35]; pp. 204 [para. 59]; 219, 220, 224 [para. 45].

Ogilvie, M.H., Forbearance and Economic Duress: Three Strikes and You're Still Out at the Ontario Court of Appeal (2004), 29 Queen's L.J. 809, generally [para. 24]; para. 26 [para. 50].

Ontario, Law Reform Commission, Report on Amendment of the Law of Contract (1987), p. 14 [para. 23].

Waddams, Stephen M., The Law of Contracts (5th Ed. 2005), p. 83 [para. 29].

Counsel:

Avocats:

Eric LeDrew and Crystal A. Gamble, for the appellant;

Hugh J. Cameron, for the respondent.

This appeal was heard on September 25, 2007, by Turnbull, Larlee and Robertson, JJ.A., of the New Brunswick Court of Appeal. The following decision of the Court of Appeal was delivered in both official languages on March 20, 2008, by Robertson, J.A.