Edmonton Flying Club v. Edmonton (City), 2013 ABQB 421

Court of Queen ’ s Bench of Alberta Citation: Edmonton Flying Club v. Edmonton (City), 2013 ABQB 421 20130725 Date: Docket: 1203 17058, 1303 04567, 1303 04525 Registry: Edmonton Between: Action No. 1203 17058 Edmonton Flying Club and 1222663 Alberta Ltd. Applicants - and - The City of Edmonton Respondents And between: Action No. 1303 04525 Hamilton Aviation Ltd. and Air Spray

(1967) Ltd. Applicants - and - City of Edmonton Respondents And between: Action No.1203- 18110 Airco Aircraft Charters Ltd. Applicants - and - City of Edmonton Respondents _____________________________________________________

Reasons for Judgment of the Honourable Mr. Justice S.D. Hillier _____________________________________________________ Introduction [ 1 ] The Applicants are holders and operators under long term aviation leases of lands at the Edmonton City Centre Airport (ECCA). They seek judicial review of Bylaw 16033: A Bylaw to adopt the City Centre ARP (ARP Bylaw) and a subsequent expropriation resolution (Expropriation Resolution) of Edmonton City Council, both of which relate to plans for closure of the ECCA and redevelopment of the lands it currently occupies. [ 2 ] The Applicants seek to have the ARP Bylaw and Expropriation Resolution declared invalid and quashed because: (

i) the City erred in adopting the area redevelopment plan (ARP) by bylaw because the ARP does not comply with legislative requirements; (ii) the City acted in bad faith adopting the Bylaw; (iii) the Bylaw was passed for an improper purpose; (iv) the Bylaw is manifestly unfair and unjust; (

v) the Resolution is similarly flawed; and (vi) the City has no jurisdiction to close the ECCA as this is an area exclusively within federal jurisdiction. [ 3 ] While the City interprets this as a challenge to its authority to control a large and central land redevelopment, the focus of most of the submissions has been on the substantive and procedural considerations upon which the City relies to support both the Bylaw and the Resolution. Record [ 4 ] The Applicants apply for judicial review.

However, various atypical matters arose in advance of the hearing, most notably as affect the nature and scope of the Record filed with the Court. A number of documents were included by agreement to provide a fuller context. Further materials derived from related litigation where the parties were relieved of the implied undertaking of confidentiality. Still more documents were the subject of rulings on admissibility tied largely to the onus imposed on the applicants in support of their allegations of bad faith. [ 5 ] Obviously, the parties take divergent positions as to

interpretation of the applicable legislation. Similarly, they urge different

interpretations of the chronology of events as relate to the intent or purpose behind various steps taken over a course of many years. It remains the task of this Court to weigh these

interpretations without distortions of hindsight; in other words, the Court must determine the effect of what has factually occurred leading up to the Bylaw and Resolution under review. [ 6 ] In summarizing this chronology, the Court remains cognizant of the challenge to fairly characterize the most relevant steps and reports in neutral language in advance of dealing with the positions of the parties. The following outline of the background derives from the materials and counsel ’ s submissions.

Background [ 7 ] The ECCA has been in continuous operation since 1927. The Record discloses that the ECCA played a remarkable role for aviators from the early days of bush pilots, through major world conflicts, search and rescue and medical response, along with commercial and passenger services as the City continued to grow. [ 8 ] On October 16, 1995, a public referendum approved moving scheduled air passenger service from the ECCA to the Edmonton International Airport, which changed the role of the ECCA to a general aviation facility.

Effective April 1, 1996 the City entered into a 56 year lease of the ECCA with the Edmonton Regional Airport Authority (ERAA). [ 9 ] All three Applicants have long term leasehold interests which they seek to protect. ERAA had entered into a 35 year lease with Hamilton Aviation Ltd. in 1989, from which Air Spray

(1967) Ltd. became a sub-tenant. ERAA also entered into: (

a) a 25 year sublease with Airco in 1998, with an option to renew for a further 25 years; (

b) a 30 year sublease with the Edmonton Flying Club (EFC) in 1998 which was assigned to 1222663 Alberta Ltd. in 2006. [ 10 ] On January 30, 2008, the City Manager presented a report to City Council on the growing development constraints in the City core. [ 11 ] Council passed a motion asking City Administration to prepare a report for Council by June 18, 2008 detailing challenges and possibilities. [ 12 ] On June 18, 2008, a report from the City ’ s Corporate Services Department dated May 15, 2008 was presented to Council including information to the effect that if the City wished to change or end the use of ECCA as a general aviation airport, the City would have to negotiate cooperative surrenders of the head lease and subleases.

As at May 2008, the period of time required to negotiate co-operative surrenders was uncertain (Record Tab 1, p. 2). [ 13 ] City Council received further reports from August 2008 (Record, Tab 8) and over the following year regarding surrender of the head lease to the City, and the City conducted public hearings and consultations on this issue. The reports indicate arrangements were being made to accommodate users at other facilities.

During these consultations, Council was made aware that several aviation subtenants had expressed in public hearing their desire to remain at ECCA given its advantages for their businesses and to better serve their customers. [ 14 ] As early as February 2009, Administration reported to Council that the Citizen's Advisory Group expressed concerns about tight timelines and availability of information (Record, Tab 14, Attachment 1, p. 3).

A second non statutory public hearing was held in June 2009 and Council's Executive Committee heard that month from various speakers including representatives of the Applicants in favour of keeping the airport open (Record, Tabs 32-34). [ 15 ] On July 8, 2009, the City passed a motion to carry out a phased closure of ECCA. ECCA has two runways. The first phase contemplated negotiating with ERAA regarding closing of a runway and surrender of adjacent parcels to the City.

The second phase contemplated full and final closure of ECCA, including setting a date for closure followed by remediation. [ 16 ] The City continued to work out a phased reduction of airport services without a definite closure date. In a report dated October 29, 2009 (Record, Tab 38), the potential costs to the City for acquisition of leases were summarized. At that time, a staged approach to acquiring various tenancy rights and toward the development of the lands was deemed the best approach.

[ 17 ] On November 10, 2009, Council received a private report on the variables affecting negotiations to acquire leases from aviation sub-tenants. [ 18 ] The report dated January 26, 2010 reflected the understanding that the City would be primarily responsible for costs incurred through lease terminations, and that the timing for acquiring various leasehold interests was dependent upon the staging of the planning, zoning, subdivision, servicing, marketing and absorption (Record, Tab 40). [ 19 ] On March 10, 2010, a set of detailed planning principles for the redevelopment of the ECCA was accepted by City Council. [ 20 ] On July 7, 2010, a budget was approved by City Council for the acquisition of various leasehold interests at the ECCA. [ 21 ] The City negotiated with ERAA regarding closing of a runway and surrender of adjacent parcels to the City.

On July 23, 2010, ERAA transferred its interests in one runway to the City. The City negotiated with SPAR Aerospace to purchase its leasehold interest (Record, Tabs 49, 62). On August 3, 2010, the City requested that ERAA close one runway and aviation tenants were notified. [ 22 ] The City worked with Alberta Health Services and Alberta Health and Wellness on the phased transition of Air Ambulance/Medevac operations to the Edmonton International Airport (Record, Tab 50). [ 23 ] The City continued to negotiate with leaseholders at ECCA.

The Record discloses discussions with EFC as to site availability at Villeneuve Airport and that Administration intended to submit an offer to EFC to acquire EFC ’ s leasehold interest during the month of September 2010. The Record reflects negotiations during 2010, 2011 and 2012 with EFC, STARS, Canadian Helicopters, Shell, and others (see, for example, Record, Tabs 52, 53, 75, 77, 82). [ 24 ] On June 22, 2011, the City selected Perkins & Will to prepare a “ Master Plan ” by the end of 2012 for the ECCA site and its redevelopment (Record, Tab 69).

The City initially considered that a full statutory plan for redevelopment of the ECCA under an area structure plan would take from June 2011 to the end of 2012 (approximately 15 to 18 months). [ 25 ] Airco had previously filed a Statement of Claim on October 21, 2009, seeking, among other things, a permanent injunction to prevent ERAA from doing anything with the head lease which would diminish Airco ’ s rights under the sublease. On July 8, 2011, EFC and 1222663 Alberta Ltd. commenced a separate action against the City and ERAA, seeking relief including a permanent injunction to prevent closure of ECCA.

On July 20, 2011, Airco amended its Statement of Claim to add the City as a defendant and seeking to prevent the City from taking further steps to close the ECCA. [ 26 ] As at October 2011, the City had acquired five leasehold interests, with a sixth one pending, and had identified seven remaining primary leases that had to be acquired. Thereafter, quarterly updates were presented privately to Council with cost estimates for airport closures as at 2024, 2019 and 2014. [ 27 ] High level meetings continued with the Provincial Government, NAIT, Epcor and other stakeholders.

Alberta Treasury Board expressed serious concerns regarding their ability to meet the proposed closure date (Supplementary Record, Tab 3).

Public workshops were held from October 11 to 13, 2011 for participants from around the City to offer input, advice and opinions on the redevelopment opportunity. [ 28 ] During this period of time, a petition was prepared to support keeping the airport open (it was ultimately unsuccessful), a municipal election was held, and the City acquired the STARS sublease. [ 29 ] The City had considered setting a closure date for the ECCA of December 31, 2012 but did not pursue that strategy in favour of the ARP process in about November 2011 (Supplementary Documents, Tab 12, pp. 174-175).

[ 30 ] On November 14, 2011, the City Centre Redevelopment Steering Committee adopted minutes reflecting that the Statutory Plan to be prepared by the consultant would be an ARP rather than a Neighbourhood Area Structure Plan. [ 31 ] On December 14, 2011, a report to Council referred to achieving the Master Plan process by November 2012. A revised plan and responses to questions received through public sessions were to be presented at public sessions being held in February 2012. The “ first shovel in the ground ” for the infrastructure was projected for the summer/fall of 2013 or spring 2014.

The revised plan was to be a high level ARP. [ 32 ] On January 5, 2012, Council accepted a recommendation from the City ’ s Sustainable Development department to adopt the City Centre ARP.

The department stated at p. 3 of its report: To describe the development concept and built form in more detail in order to create a world leading sustainable community that demonstrates the very best in architecture, design and planning, an addendum to the proposed ARP will proceed to Council for consideration in the fall of 2012. [ 33 ] On February 27, 2012, a public hearing was held to discuss the City ’ s plan to commence redevelopment of the airport lands starting no later than 2014.

The City gave first and second readings to the ARP Bylaw with representations from at least one of the Applicants during the public hearing. [ 34 ] On May 16, 2012, the ARP Bylaw was passed. [ 35 ] The ARP indicated that airport related uses would continue on a portion of the site until phased closure of the airport was complete and the lands were required. In a report given to Council and dated August 28, 2012, timelines for the staging of the development at the airport were presented.

The report stated that in order to proceed with timely development including phased construction beginning in 2014, it was necessary to obtain exclusive possession of the lands. [ 36 ] On September 6, 2012, the City Centre Redevelopment Steering Committee continued to expect Perkins & Will to provide a draft ARP to the City on September 14, 2012.

As at the date of the judicial review hearing, no further plan has been passed by Council. [ 37 ] On September 14, 2012, Veit J. ordered that EFC could sever the injunction issue from the damages claim: Edmonton Flying Club v Edmonton Regional Airports Authority , 2012 ABQB 563 , 543 AR 28 .

That order was set aside by the Court of Appeal on March 8, 2013: 2013 ABCA 91 , 544 AR 6 . [ 38 ] On September 5, 2012 letters were mailed to property interest holders informing them that Administration was seeking approval to commence expropriation and advising of their ability to request to speak to Executive Committee (Record, Tab 91). [ 39 ] On September 19, 2012, the Executive Committee of Council passed a resolution to commence an expropriation process that would result in expropriation of lands including the unresolved aviation subleases and Council approved the resolution on October 3, 2012. [ 40 ] On November 15, 2012, the Province appointed an Inquiry Officer for the expropriation but that Inquiry Officer was recused by the Court on December 13, 2012 based on a reasonable apprehension of bias. [ 41 ] The November 28, 2012 Report indicated that a date for full and final closure of the airport would be determined by City Council with input from NavCanada and ERAA at a point when the lands were required to support the ARP and the City ’ s needs (Record, Tab 94).

[ 42 ] On December 3, 2012, EFC, 1222663, Hamilton and Air Spray applied for judicial review. Airco applied two weeks later. [ 43 ] On December 18, 2012, a second Inquiry Officer was appointed.

On January 21, 2013, he concluded that he had a conflict of interest requiring his recusal and that he did not have jurisdiction. [ 44 ] As a result of these recusals, the City was required to formally abandon the October expropriation resolution because the Minister could no longer comply with the statutory time limits for the appointment of an Inquiry Officer. [ 45 ] On February 20, 2013, the City passed a resolution abandoning the expropriation process, and then passed a new resolution to commence the same process (the Expropriation Resolution). [ 46 ] The Notice of Intention to Expropriate sent to each Applicant stated that the Resolution was to implement the approved ARP Bylaw by commencement of construction, but the City ’ s covering letter stated: Although City administration is moving forward with the expropriation, we intend to discuss with all interest holders the option of a negotiated acquisition of their interest. [ 47 ] Air Ambulance/Medevac operations finally moved to International Airport effective March 15, 2013.

Legislation 1) Governance [ 48 ] Prior to addressing the parties ’ submissions, it is helpful next to lay out the legislative framework surrounding the ARP, the ARP Bylaw, the Expropriation Resolution and the expropriation proceedings. [ 49 ]

Section 3 of the MGA sets out the purposes of a municipality.

Section 7 of the MGA sets out various municipal purposes with respect to which council may pass bylaws. [ 50 ] According to s. 634 of the MGA , council may designate an area of the municipality as a redevelopment area for various purposes and may adopt, by bylaw, an ARP.

Section 635(

a) provides that an ARP must describe certain things: (

i) the objectives of the plan and how they are proposed to be achieved ; (ii) the proposed land uses for the redevelopment ; (iii) the reasons for any redevelopment levy ; and (iv) any proposals for the acquisition of land for any purposes council considers necessary. [ 51 ] Section 636(1) provides that a municipality must provide a means for any person who may be affected by an ARP to make suggestions and representations. Section 692(1)(

d) mandates that council hold a public hearing before giving second reading to a proposed bylaw to adopt an ARP.

[ 52 ]

Section 638 provides that all statutory plans (defined as including an ARP) adopted by a municipality must be consistent with each other. [ 53 ] The ARP Bylaw adopted on May 16, 2012 designates the lands described therein as a redevelopment area pursuant to s. 634(1) of the MGA . It adopts the ARP for the defined area.

The Bylaw itself does not mention expropriation. 2) Expropriation [ 54 ] Section 14(2) of the MGA provides that Council may acquire an interest in land to, among other things, carry out an ARP, and that it may acquire the estate or interest in the land by expropriation under the Expropriation Act , RSA 2000, c E-13. [ 55 ] Therefore, s. 14(2) links Council's intention to acquire land in order to carry out an ARP to the procedures engaged under the Expropriation Act . The MGA and the Expropriation Act together authorize the municipality to expropriate for the purpose of pursuing an ARP. [ 56 ]

Section 3 of the Expropriation Act provides that when an authorizing Act (in this case the MGA ) permits or authorizes an expropriation of land, the expropriating authority may acquire any estate required by the expropriating authority in the land. [ 57 ] The Act further provides in part: 6(1) No person may in any proceedings under this Act dispute the right of an expropriating authority to have recourse to expropriation.

(2) In any proceedings under this Act, the owner may question whether the taking of the land, or the estate or interest in it, is fair, sound and reasonably necessary in the achievement of the objectives of the expropriating authority. ... 8(1) The expropriating authority shall file a notice of intention to expropriate in the land titles office. ...

(5) A notice of intention shall contain ... (

b) the description of the land, (

c) the nature of the interest intended to be expropriated, (

d) an indication of the work or purpose for which the interest is required... [ 58 ] The requirements to give notice of the land, the nature of the interests to be expropriated, and the work or purpose for which it is required are not expressly linked to the definition of an ARP in s. 635 of the MGA , nor do these criteria mirror the s. 635 criteria. The expropriation notice need not set out the City ’ s objectives as outlined in the ARP and how they are proposed to be achieved, nor the proposed land uses per se . It must, however, contain “ an indication of the work or purpose for which the interest is required ” .

3) Objections [ 59 ] The Expropriation Act sets out the procedures by which an individual directly affected by the proposed expropriation is alerted to and may object to the expropriation, excluding the ability to dispute the right of an expropriating authority to have recourse to expropriation. [ 60 ] In contrast, ss. 634, 635 and 692 of the MGA contemplate a political process which would invite and encourage fulsome discussion between the City and the affected communities, interested public and other stakeholders regarding many aspects of a proposed area redevelopment. [ 61 ] Section 536(1)(

a) of the MGA provides that a person may apply to the Court of Queen ’ s Bench for a declaration that a bylaw or resolution is invalid. However, s. 539 provides that no bylaw or resolution may be challenged on the ground that it is unreasonable. [ 62 ]

Section 537 provides that a person who wishes to have a bylaw or resolution declared invalid on the basis that either the proceedings prior to the passing of the bylaw or resolution, or the manner of passing the bylaw or resolution do not comply with the MGA or any other enactment, must make an application within 60 days after the bylaw or resolution is passed. [ 63 ] Rule 3.15(2) of the Alberta Rules of Court provides that an originating application for judicial review to set aside a decision or act of a person or body must be filed and served within 6 months after the date of the decision or act.

Preliminary Issues 1) Failure to raise issues [ 64 ] The City argues that the points now raised by the Applicants were never raised at any time after approval of the ARP Bylaw despite the continued open consultation process, and the Court has discretion to deny judicial review in such circumstances, citing Information and Privacy Commissioner v Alberta Teachers' Association , 2011 SCC 61 , [2011] 3 SCR 654 at paras 22 and 25 ( ATA ) . [ 65 ] The Applicants argue that the ARP Bylaw and Expropriation Resolution are ultra vires and any failure by the Applicants to raise issues cannot create jurisdiction which the MGA does not itself bestow. [ 66 ] A full review of the Record does not disclose any reference to the deficiencies now alleged.

However, the Applicants take the position that they were deprived of essential information, or reasonably anticipated further information, in the process culminating in the expropriation proceedings.

In my view, whether or not all of the issues raised by the Applicants are jurisdictional, to deny them a decision in these circumstances would be contrary to the interests of justice. 2) Limitations [ 67 ] The City also argues that some of the issues raised are statute barred by s. 537 of the MGA because an application was not made with respect to the proceedings relating to the ARP within 60 days after the bylaw was passed. [ 68 ] In Okotoks (Town) v Foothills (Municipal District No 31) , 2013 ABCA 222 , [2013] AJ No 629 the Court of Appeal confirmed that an application for declaration of invalidity of a bylaw or resolution which is not caught by the 60 day limitation in s. 537 is nevertheless subject to the six month limitation in Rule 3.15(2).

[ 69 ] The application by the City ’ s Sustainable Development department to adopt the ARP was accepted on January 5, 2012. Sustainable Development indicated that an addendum to the ARP would be available for consideration in the fall of 2012. The ARP Bylaw was passed on May 16, 2012. The report given to Council and dated August 28, 2012 indicated that in order to proceed with timely development including phased construction beginning in 2014, it was necessary to obtain exclusive possession of the lands.

On September 6, 2012, the City Centre Redevelopment Steering Committee still expected Perkins & Will to provide a draft ARP to the City on September 14, 2012. On September 19, 2012, the Executive Committee of Council passed a resolution to commence an expropriation process that would result in expropriation of the sub-lease. The resolution was approved on October 3, 2012. [ 70 ] On December 3, 2012, EFC, 1222663, Hamilton Aviation Ltd. and Air Spray

(1967) Ltd. applied for judicial review. On December 18, 2012, Airco applied for judicial review. [ 71 ] The Applicants argue that it was really not until the fall of 2012 that it became apparent that the first stage ARP would be relied upon as a basis for the expropriation proceedings. They rely on the full history leading up to expropriation to attack the Expropriation Resolution. It is at least arguable that until October 3, 2012, the Applicants may not have realized that no addendum to the ARP would be forthcoming before expropriation proceedings would be triggered.

The first of the judicial reviews raising these matters was filed two months later. The current Expropriation Resolution was passed in February 2013. [ 72 ] Whether the 60 day or six month limitation is applied, judicial review of the Resolution is not barred by limitations. Review of the Resolution and its predecessor involves consideration of the ARP and ARP Bylaw upon which the City purports to rely for the expropriation proceedings, pursuant to s. 14(2) of the MGA.

In my view, consideration of the ARP and ARP Bylaw in order to determine the validity of the Expropriation Resolution does not render the Applicants ’ attack of the Resolution statute barred. Issues [ 73 ] The parties have characterized the issues in varied ways. T he fundamental issues raised by the Applicants can be set out as follows: 1) Is the Expropriation Resolution invalid?

a) Does the ARP fail to fulfill the statutory requirements under the MGA ?

b) If not, did City Council improperly adopt by bylaw the ARP?

c) If so, does this render the Expropriation Resolution invalid? 2) Did City Council adopt the ARP Bylaw and pass the Expropriation Resolution in bad faith?

a) Did City Council intend an improper purpose?

b) Did City Council intend to interfere with or avoid contractual obligations?

c) Did City Council intend to interfere with pending litigation?

d) Are City Council ’ s actions manifestly unfair and unjust? 3) Does the City lack jurisdiction under the Constitution to close the ECCA? Standard of Review

1) Positions of the Parties [74] The Applicants submit that all of the alleged errors constitute errors in law or jurisdiction, or constitute acts which exceed theCity’s jurisdiction. As such, they urge that review must be conducted on a standard of correctness. The Applicants cite UrbanDevelopment Institute v Rocky View (Municipal District No 44), 2002 ABQB 651, 321 AR 253 at paras 21-25 as authority for theproposition that if a municipality makes a jurisdictional error in passing a bylaw, the bylaw is void ab initio.

They cite extensiveauthority for the proposition that the correctness standard applies to the issues of bad faith and improper purpose. [75] The City submits that review of City Council’s jurisdiction to pass an ARP would be determined on the standard ofcorrectness. However, the City notes that true questions of jurisdiction are exceptional as stated in ATA.

Whether any particular ARPthat has been adopted complies with statutory requirements involves an analysis of facts and law, attracting a standard of review ofreasonableness: Okotoks (Town) v Foothills (Municipal District No 31), 2012 ABQB 53, 532 AR 237, Henderson v Saskatoon (City),2008 SKQB 135, 318 Sask R 9. [76] The City further argues that if statutory compliance in this case raises a true question of jurisdiction, s. 635 must beinterpreted in a broad and purposive manner: United Taxi Drivers’ Fellowship v Calgary (City), 2004 SCC 19, [2004] 1 SCR 485.Regardless of how the issue is characterized, the Supreme Court intends that significant deference will be given to municipal councils:Catalyst Paper Corp v North Cowichan (District), 2012 SCC 2, [2012] 1 SCR 5. [77] The City argues that adoption of a statutory plan, which requires a public hearing, is similar to a land use bylaw because citycouncil in those cases is acting partly as a quasi-judicial body: Broda v Edmonton (City) (1989), (AB KB), 102 AR255, [1989] AJ No 952 (QB), Calgary (City) v Valdun Developments Ltd, 1997 ABCA 134, 200 AR 19.

It argues that in passing theExpropriation Resolution, Council was acting more as a legislative body. The City submits that City Council should be treated as adecision making body interpreting its own legislation: Northland Material Handling Inc v Parkland (County), 2012 ABQB 407, 100MPLR (4th) 277.

Moreover, the City argues that s. 539 of the MGA suggests a standard of patent unreasonableness should be applied toreview of bylaws and resolutions which are intra vires decisions or acts: Nor-Chris Holdings Inc v Sturgeon (County), 2013 ABQB184, [2013] AJ No 297 at paras 63-73, Nanaimo (City) v Rascal Trucking Ltd, 2000 SCC 13, [2000] 1 SCR 342 at para 53, Kadar vEdmonton Municipal Council, 2010 ABCA 260, [2010] AJ No 1013. [78] The City concedes that allegations of bad faith and improper purpose are reviewed on a standard of correctness, but onlywhere evidence supports that the act was intentionally or recklessly illegal or clearly irrelevant: Northland.

It submits that since there isno such evidence here and Council is acting within its legislative authority, the standard of review is patent unreasonableness: Nor-Chris. 2) Validity of the Expropriation Resolution and ARP Bylaw [79] It is well established that a property owner whose rights are being expropriated is entitled to insist upon strict compliance withthe enabling legislation: Costello v City of Calgary, (SCC), [1983] 1 SCR 14, [1983] SCJ No 4, Toronto Area TransitOperating Authority v Dell Holdings Ltd, (SCC), [1997] 1 SCR 32 at 44-45, 142 DLR (4th) 206.

Expropriationstatutes are remedial and must be given a broad and liberal

interpretation consistent with their purpose; this results, for example, in thepresumption that compensation will be paid whenever land is expropriated. [80] The fact that councillors are accountable at the ballot box does not insulate them when it comes to jurisdictional questions: Nanaimo at para 33. [81] However, in United Taxi Drivers' Fellowship of Southern Alberta v Calgary (City), 2004 SCC 19, [2004] 1 SCR 485 at para6 the Court, speaking specifically of the MGA, explained that the evolution of the municipality has produced a shift in the properapproach to interpreting statutes that empower municipalities. A broad and purposive approach to the

interpretation of municipallegislation reflects the true nature of modern municipalities which require greater flexibility in fulfilling their statutory purposes and isconsistent with the Court's approach to statutory

interpretation generally.

[ 82 ] Although it is not necessary to proceed in this manner in all expropriation cases, in this particular case City Council chose to rely on the ARP as a basis for expropriation.

The question arises as to whether the strict compliance rule and standard of correctness extends beyond the proceedings under the Expropriation Act to encompass the material steps under the MGA which led up to the expropriation. [ 83 ] The interplay between the need for strict compliance in relation to expropriation and correctness on jurisdictional issues, and the broad and purposive approach to statutes empowering municipalities was discussed i n Fouillard v Ellice (Rural Municipality) , 2007 MBCA 108 , 220 Man R (2d) 113 , leave denied [2007] SCCA No 555 and Dales Properties Ltd v Surrey (City) , 2010 BCSC 1196 , 323 DLR (4th) 438 .

In those cases, the applicants argued that the municipalities had failed to describe a lawful purpose forming the basis for the expropriation. The Courts accepted that where a municipality is exercising its statutory rights to expropriate property, a property owner whose rights are being expropriated has the right to insist upon strict compliance with the enabling legislation. However, the Courts also held that expropriation statutes are remedial and are to given a broad and liberal

interpretation in construing the purposes for which the municipalities may expropriate. [ 84 ] In Goodtrack v Waverley (Regional Municipality, No 44) , 2012 SKQB 413 , 46 Admin LR (5th) 336 , the Court considered the applicability of the Supreme Court ’ s decision in Catalyst in reviewing the exercise of a municipality ’ s statutory expropriation powers. Again, the applicant argued that the expropriation bylaw did not indicate that the expropriation was undertaken for a purpose authorized by the appropriate municipal Act.

Schwann J. determined that the correctness standard continued to apply with respect to whether the municipality had the statutory authority to enact the impugned bylaw. [ 85 ] All of the parties agree that correctness applies to the issue of whether City Council has the jurisdiction to adopt an ARP by bylaw. There is no question that City Council is authorized in principle under s. 634 to adopt an ARP by bylaw. The language of s. 634 is discretionary and undeniably broad: council “ may designate ” a redevelopment area for a variety of purposes, including “ facilitating any other development in the area ” .

It “ may adopt, by bylaw ” an ARP. [ 86 ] The question before this Court is whether City Council could, as a basis for the Expropriation Resolution, rely on the Bylaw adopting this specific ARP, particularly in light of the mandatory wording in s. 635. [ 87 ] Arguably, the principle that municipalities must strictly comply with expropriation statutes does not extend to all events and decisions leading up to the triggering of the expropriation procedures under the Expropriation Act .

However, in the present case, the steps taken by Council under the MGA are fairly linked through s. 14(2) of the MGA and s. 3 of the Expropriation Act to the expropriation process under the Expropriation Act , which was purportedly triggered for the purpose of carrying out the ARP. [ 88 ] Despite the application of the correctness standard, the case law noted above does support a generous

interpretation of the MGA when reviewing Council ’ s identification of the purpose for expropriation. If indeed the ARP is part of the expropriation framework in this case, then s. 635 is analogous to those provisions in expropriation statutes requiring an indication of the purpose. A purposive

interpretation of the relevant provisions is bolstered by the nature of ARPs which contain largely aspirational language. Political, social, economic and other factors must be considered in the designation and description of an area for redevelopment. The ARP forms the basis for subsequent public hearings under s. 692, during which it would reasonably be contemplated that any shortcomings in the ARP will be explored by any concerned members of the public and considered by Council . The s. 635 criteria themselves potentially overlap to a considerable degree. All of these factors militate toward a purposive

interpretation of the s. 635 requirements in determining whether the Expropriation Resolution was properly supported. 3) Bad faith [ 89 ] The standard of review with respect to bad faith is correctness. Municipalities must act for bona fide purposes.

Courts review the legality of a municipal act on the correctness standard: Nanaimo at para 29, London (City) v RSJ Holdings Inc , 2007 SCC 29 , [2007] 2 SCR 588 at para 37 , Associated Cab Limousine Ltd v Calgary (City) , 2009 ABCA 181 , 457 AR 124 . [ 90 ] However, the correctness standard must be applied having regard to the municipal context and nature of the decision in question. The expropriation resolution at issue here does not exist in a vacuum but derives from a complex and changing dynamic. The Court must be mindful of this dynamic in reviewing the exercise of municipal powers.

In Catalyst , McLachlin C.J. discussed the nuances

unique to review of municipalities’ actions: 28 Another set of limitations on municipalities passing bylaws flows from the need for reasonable processes. In determining whether aparticular bylaw falls within the scope of the legislative scheme, factors such as failure to adhere to required processes and impropermotives are relevant. Municipal councils must adhere to appropriate processes and cannot act for improper purposes. As Gonthier J.stated for the Court in Immeubles Port Louis Ltée v.

Lafontaine (Village), (SCC), [1991] 1 S.C.R. 326, "[a] municipalact committed for unreasonable or reprehensible purposes, or purposes not covered by legislation, is void" (p. 349). 29 It is important to remember that requirements of process, like the range of reasonable outcomes, vary with the context and nature ofthe decision-making process at issue. Formal reasons may be required for decisions that involve quasi-judicial adjudication by amunicipality. But that does not apply to the process of passing municipal bylaws.

To demand that councillors who have just emergedfrom a heated debate on the merits of a bylaw get together to produce a coherent set of reasons is to misconceive the nature of thedemocratic process that prevails in the Council Chamber. The reasons for a municipal bylaw are traditionally deduced from the debate,deliberations and the statements of policy that give rise to the bylaw. 30 Nor, contrary to Catalyst's contention, is the municipality required to formally explain the basis of a bylaw. As discussed above,municipal councils have extensive latitude in what factors they may consider in passing a bylaw.

They may consider objective factorsdirectly relating to consumption of services.

But they may also consider broader social, economic and political factors that are relevant tothe electorate. [91] Bylaws and resolutions are presumed to have been enacted in good faith, unless the contrary has been proven by thoseattacking them: London Lane Industrial Park Ltd v Richmond (City), 2005 BCCA 452, 258 DLR (4th) 698, Grosvenor v East LutherGrand Valley (Township) (2007), 2007 ONCA 55 , 84 OR (3d) 346, 219 OAC 381 (CA), Northland at para 63. [92] The standard to be met in establishing bad faith is high and necessitates evidence to demonstrate the municipality acted otherthan in the public interest: Municipal Parking Corp v Toronto (City) (2009), (ON SC), 314 DLR (4th) 642, [2009]OJ No 5017 (SCJ). [93] Therefore, while the appropriate standard of review on questions of law is correctness, courts on municipal challenges requirea “clear demonstration” before concluding that a municipality has acted without jurisdiction: Nanaimo at para 36, citing Shell CanadaProducts Ltd v Vancouver (City), (SCC), [1994] 1 SCR 231 at 244, [1994] SCJ No 15.

The Applicants acknowledgedthat the burden of proof is a heavy one when it comes to establishing bad faith. 4) Jurisdiction over aviation [94] As in Québec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 SCR 536, theessential argument on this point is that the City’s actions are ultra vires to the extent that they impair the federal government’s exerciseof its core competence under the federal aeronautics power. This is a question of law to which the standard of correctness applies.

Analysis [95] Although argued separately, the Applicants rely on fundamentally the same points to support this challenge and I will treattheir submissions collectively. 1) Is the Expropriation Resolution invalid?

a) Does the ARP fail to fulfill the statutory requirements under the MGA?

i) Section 635 [ 96 ] The February 20, 2013 Expropriation Resolution commenced the expropriation process to acquire the interests described in Attachment 2 of the Corporate Services report 2013COL004. That Resolution triggered the Expropriation Act requirements which are intended to ensure certain disclosure by the expropriating authority and an opportunity for those affected to object to the planned expropriation. There is no allegation that the procedural formalities required by the MGA for a resolution were not observed in this case.

Aside from the bad faith allegations, the Applicants ’ arguments to challenge the expropriation concern the validity of the ARP Bylaw itself which supported the Expropriation Resolution. [ 97 ] The Applicants argue that the ARP Bylaw is improper as it does not meet the mandatory requirements of s. 635(

a) of the MGA , including: how the objectives of the plan are proposed to be achieved, the proposed land uses, and proposals for land acquisitions. I will consider each of these in turn. [ 98 ] Generically, however, the Court must interpret the scope and intent of s. 635 having regard to the full circumstances. Some ARPs will derive as new ideas without prior public consideration. Others will arise out of considerable study and public consultation. Certainly the statutory language is mandatory as to certain requirements but these do not lend themselves to formulaic application. [ 99 ]

Section 635(a)(

i) requires that an ARP describe how stated objectives are to be achieved. That wording does not dictate any specific manner of description, nor degree of detail. The Applicants concede that the language of the ARP makes various references to objectives. The Applicants argue, however, that no steps, procedures or strategies are set out in this ARP, including responsibilities, timing, or cost estimates. [ 100 ] Whether s. 635(a)(

i) is interpreted literally or purposively, the level of detail that the Applicants demand is beyond the scope of what the

section requires. In the context of seeking conformance with various Plans to which the City is already committed from previous meetings, this ARP identifies six Core Principles (Section 4.1, pp. 8-9), virtually all of which include reference to various objectives. Not all use the same term “ objective ” and some remain general on how the ARP will meet or adhere to them. On the protection of the Environment and Resources, the ARP refers to the use of sustainable solutions for renewable energy, reduction of carbon dioxide emissions, management of water, wastewater and solid waste.

Similarly for the core principle to Strengthen Communities it is expressed that (p. 14): The Northwest LRT is essential to achieving Council ’ s Vision and Seven Master Plan Principles for the City Centre ARP. As a result, the objectives of the ARP establish that residential densities and employment opportunities will be provided in proximity to future LRT stations to support ridership levels.

The Redevelopment Concept (Section 7.0) also establishes objectives for each district to ensure access, through active modes of transportation to public transit. [ 101 ] No further details are required for such a planning document to meet the minimum statutory requirements. Concerns about municipal servicing, timing and cost may be legitimate points of inquiry, but they are not statutory requirements of an ARP under s. 635. [ 102 ] The Applicants point to the wording of the ARP itself as acknowledging deficiencies because of the reference to a second stage ARP.

I do not follow the logic that a promise of more somehow concedes a failure to meet statutory requirements. Further, the wording used is equivocal at best (p. 34): The second stage of the process will provide the detailed policies necessary to achieve Council ’ s Vision and Seven master Plan Principles for the redevelopment of the plan area. The following is required to complete this two-stage plan making process: ... 3. Prepare and provide the second stage Plan for the City Centre Redevelopment to Council for consideration in November 2012.

The second stage Plan will be more detailed and include a description of the redevelopment concept; a servicing plan, development policies and may also include zoning provisions, design guidelines, a description of how improvements in municipal infrastructure will be facilitated; and a detailed development phasing of the Plan area. [ 103 ] These topics will be useful to Council on a go forward monitoring basis, but they do not undermine in any way the original description of how objectives are proposed to be achieved, nor the legitimacy of the ARP Bylaw. [ 104 ] The next requirement under s. 635(a)(ii) is that the ARP must describe the proposed land uses for the redevelopment.

The Applicants complain that simply naming four districts without explaining the particular use and location does not satisfy this requirement. They argue that absence of land use detail prevents the public and Council from understanding the intended land use designations and location within the redevelopment area. [ 105 ] The Record does not support this assertion. The proposed land uses are described and set out in map form to clarify locations.

This seven page portion of the ARP outlines: • a Town Centre District with specified residential density, commercial, entertainment and cultural destinations • a Technology and Research District with an LRT corridor, dense housing, accommodations for NAIT, and open spaces between LRT Nodes

• a Park District with public promenades to link a series of outdoor rooms and smaller, more formal parks of gardens and recreational space, and • an Agrihood District with medium and high density townhouse and high rise residences, urban agriculture, recreation and productive landscaping opportunities. [5] The Applicants submitted sample ARPs, admissible pursuant to s. 28 of the Alberta Evidence Act , RSA 2000, c A-18, to provide contrast on the level of detail regarding land use and implementation.

With respect, these do not constitute a clear and consistent practice as might assist in showing how the City has interpreted and fulfilled the statutory requirements in the past. In fact, the samples - including those provided by the City in response - demonstrate that ARPs are variable and regularly subject to amendment, which in no way undermines their original validity. Apart from any distinctions based on project dates, scope or complexity, these documents support variant styles and planning strategies. The ARP Bylaw complies with this statutory requirement. [6] There is no requirement under this

section to prescribe the planning requirements according to s. 640 at this stage. The public can see the proposed uses in each district and provide feedback without further details. That is as much as s. 635(2)(a)(ii) contemplates as an ARP requirement. From the Applicants ’ perspective, they would be under no misapprehension that the proposed redevelopment would ultimately preclude continued operation of the ECCA. [7] As to s. 635(2)(a)(iv), the Applicants argue that the ARP is fundamentally silent on the matter of proposals for acquisition for municipal and other listed purposes.

The City argues that it owns all the land so this subsection is inapplicable. I reject that argument as a narrow and improper

interpretation of the intent of the section. Leasehold interests in the redevelopment area including those of the Applicants are clearly covered. [8] In all events, the City relies on the wording of

Part 3.2 of the ARP: Private leasehold interests exist on the subject lands including those for aviation uses. To ultimately fulfill the redevelopment of the subject lands, it is the City ’ s intention to acquire those aviation leaseholds for municipal use. Other non-aviation leaseholds will be acquired as necessary. [9] The Applicants respond that the statement is inadequate because it makes no reference to timing and says nothing about process including the prospect of expropriation.

They argue that such deficiency defeats the ability of the public to understand what specific land or interests are being affected and in what way. [10] The MGA specifically provides that an ARP may support the City ’ s power to expropriate, but that may not be required in all cases. Exercise of that power is neither certain, nor appropriate if the parties can make other arrangements.

Having regard to the process of expropriation under the Expropriation Act , specific procedures and forums are mandated to examine need, timing, and other matters affecting fairness. [11] The ARP is not deficient as regards proposals for acquisitions within the Plan area. Timing, methodology and costing may vary with each interest holder.

In order to undermine the ARP, there must be substantive non-compliance, not simply some ambiguity as to related but ancillary matters such as timing and process by which interests will be reconciled. [12] Nor is it required that the ARP list or define aviation use since a planning document does not require legislative precision. The ARP does use general language in

Section 2.1: “ There are leaseholds throughout the Plan area that the City may need to acquire in the future for municipal use, schools, parks and recreation facilities ” . The only reasonable

interpretation is that this refers to non-aviation leaseholds that may later be affected as detailed placement of these facilities are determined. As for aviation leaseholders, the Record clearly discloses that the Applicants were not left to wonder whether and how the ARP would affect their interests. ii) Inconsistency with other Plans [13] Still within the scope of objections tied to the MGA , the Applicants allege that the ARP is inconsistent with a Municipal Development Plan, Bylaw 15100: The Way We Grow .

Since that Plan applies to the ECCA, any inconsistency would violate s. 638 of the MGA which requires that all statutory plans adopted by a municipality be consistent. [14] This position is also unsustained on review and

interpretation of the ARP which does identify municipal land needs.

Part 4.3 specifically cites and addresses the following direction from that MDP approved in May 2010: 3.2.1.5 Develop the Edmonton City Centre Airport lands over time to create a complete and sustainable residential and business community that is transit oriented, through the provision of mixed use, medium to higher density residential, business and institutional uses. [15] The ARP similarly refers to six other major City plans and strategies, highlighting the consistency contemplated by s. 638. iii) Evolution of the ARP [16] The Applicants also argue that the ARP meets the requirements for an area structure plan, but not an area redevelopment plan.

The concern that this ARP may have been prepared initially as an area structure plan does not itself undermine its legitimacy. Topics contemplated by s. 633 for an ASP are certainly covered, but not to the detriment of what an ARP must describe as I have already reviewed. The lands in question are a composite of property developed for aviation and other commercial purposes, as well as unserviced property. Municipal planning does not invoke separate silos for development projects. Barring substantive inconsistency, there is nothing

to preclude information from one type of plan being included as part of another type. This plan meets the requirements of an ARP. [17] Apart from specific legislative requirements, the Applicants argue that the failure to provide Stage 2 details undermines the statutory authority of the City to adopt by bylaw and rely upon the ARP to support its right to expropriate. This position must be rejected for essentially the reasons earlier expressed. [18] The ARP is sufficient even in the face of language which expressly contemplates a second “ stage ” or addendum.

Further, information on a servicing plan, development policies and perhaps zoning provisions, design guidelines, or more detailed development phasing are obviously important to the success of the ARP, but they are not prerequisites to its validity under s. 635.

Further information was reported to Council moving forward, but that does not mean that an ARP must include all such information as a precondition to Council adopting the ARP Bylaw. [19] In my view, neither any lack of detail nor the additional information subsequently provided renders the ARP non-compliant with s. 635 so as to undermine the ARP Bylaw and the subsequent Expropriation Resolution. [20] I conclude that the ARP in question substantively meets the minimum mandatory statutory requirements set out in s. 635, in particular how the objectives of the plan are proposed to be achieved, the proposed land uses and proposals for land acquisition.

It follows that Council did not err on these grounds in adopting it by bylaw, nor in passing the Expropriation Resolution. 2) Did City Council adopt the ARP Bylaw and pass the Resolution in bad faith? [21] The Applicants allege that the City passed the ARP Bylaw and the Expropriation Resolution in bad faith, in a concerted effort to bypass the procedures it put into place, breach its contracts, terminate numerous property interests (including the subleases), and frustrate the Applicants ’ pending litigation, all in order to accelerate the closure of the ECCA. [22] They argue that Council ’ s decision to suddenly disregard both its own long term plan and the shortcomings expressly stated in the ARP cannot have been undertaken for any good faith purpose.

Rather, Council acted for an improper or collateral purpose, unreasonably and arbitrarily, without fairness, openness, impartiality or due diligence. In their view, the rush without justification indicates a pre-determined judgment by Council that expropriation was necessary and appropriate. The speed and absence of proper planning are consistent with a conclusion that the true purpose of the bylaw was to undermine the Applicants ’ legal proceedings. [23] The Applicants ’ argument in respect of bad faith pervades their challenge to the manner in which the City purports to deal with their interests.

Recognizing both the extent of overlap and that the argument must be examined in its totality, I have divided the submissions into discernible categories.

a) Improper purpose [24] The Applicants complain that the City chose to adopt an ARP that would enable it to expropriate their leasehold interests. That may not be an altogether unfair characterization. The question, however, is whether that choice manifests bad faith. [25] The City ’ s mandate or purpose as contemplated by s. 3 of the MGA includes good governance, providing services, facilities, etc. for the municipality and developing and maintaining safe and viable communities.

Steps taken in the exercise of the power of expropriation must be consistent with these municipal purposes. [26] The Applicants point to two critical issues which they say support a singular and tainted motive revealing bad faith, and rendering Council ’ s acts inconsistent with a valid municipal purpose: 1) the ARP Bylaw was prepared in considerable haste inconsistent with all prior indicators as to time lines, and 2) the City had not yet closed the airport when it passed the ARP Bylaw, and still has not set a closure date. [27] The Record certainly points to instances from and after 2009 where the City indicated that it would acquire aviation leasehold interests through negotiation.

In fact, during the period from 2009 to the end of 2011, the City was able to secure cooperative surrender of a number of aviation leases, but not those of the Applicants. Accepting the Applicants ’ submission that their intent was not to hold the City hostage, the question does arise as to what strategies are available to a municipality in such circumstances. [28] Does the decision to approve an ARP Bylaw which could serve as a basis for expropriation demonstrate bad faith? I have already determined that the legislative criteria for the ARP were met.

The timing was tight for initial preparation (less than three months) but more than two years of background work had been accomplished by that time. Public hearings were held before the ARP Bylaw was approved. [29] Further details were provided to Council, not in a Stage 2 ARP format, but as and when information was assembled, including reports in July, August, and November 2012 setting out further steps and timing with maps, photos and diagrams.

Of particular note from the August 29, 2012 Private Report to Council (R89) is the indication that Stage 1 cannot occur until the identified land interests are acquired: Acquisition of all property interests must be commenced shortly in order to gain possession of all required property interests by approximately end of summer of 2013, which is necessary to allow for phased construction to begin in 2014. In order to proceed with acquiring possession of the lands, it is necessary for Council to approve an associated budget for all acquisitions.

On July 7, 2010, an initial $24 million to fund the purchase of those leasehold interests that expire after 2024 was approved by City

Council. At that time, plans and staging for airport development had not been determined, and it provided a starting point for acquiringleasehold interests. With concept plans and staging now determined, the timeline for acquiring leasehold interests is moved to 2012(from 2024) and an additional _____ is needed for acquisitions. As noted, the acceleration of acquisitions facilitates the extension ofLRT, the use of existing infrastructure and allows for multiple development nodes (commercial, mixed -use, and residential), whichspeeds up development of the project including cash flow and future tax revenues.

Specifically, the funding covers the increased number of property interests being acquired (leases before 2024), as well as costsassociated with expropriation. [30] These time lines are consistent with the public report prepared for Council in December 2011 which mentioned that therewould be a revised plan, being a high level ARP, and timelines for the creation of the ARP would be compressed as Perkins & Will hadalready met with members of City administration to address certain issues.

The report contemplated the master plan process, whichincluded the ARP, being completed by fall/winter 2012. [31] The work on municipal planning issues on a tighter

schedule after the ARP Bylaw was in place does not support an inferenceof bad faith. That work reinforced a continued commitment to the purpose of area redevelopment as reflected in the ARP itself, even inthe face of continued litigation and potential expropriation. [32] Despite the Applicants’ subjective

interpretation, the evidence does not support the conclusion that the shorter time line wasaimed at dealing with the aviation leases.

As expressed by the Project Director Phil Sande (Supplementary Documents, Tab 12 at 171-172): We proceeded with the preparation of the Area Redevelopment Plan as I said a few minutes ago significantly because of wanting tomake sure we were on the right track with City Council and also being aware that an Area Redevelopment Plan would provide us withthe required authority through the Expropriation Act should we desire to ultimately go through an expropriation of these propertieswhich hadn’t been decided at that point in time. [33] The representations that aviation tenants would be allowed to continue until actual closure is somewhat less clear.

TheApplicants are adamant that only one purpose can be inferred from the failure to honour the commitment to allow the aviation leases tocontinue until a closure date is set - the City simply wants them out. [34] The City states that far from an illegal purpose, its only purpose in terminating the aviation leases is for municipalredevelopment.

But even a secondary purpose of a bylaw or resolution does not amount to bad faith: Koslowski v West Vancouver(District) (1981), (BC SC), 122 DLR (3d) 440, [1981] BCJ 2139 at para 55 (SC); see also Cambridge Leaseholds Ltdand City of Toronto (No. 2), (ON SC), [1973] 3 OR 395 at para 8, 37 DLR (3d) 60 (HCJ). [35] The Record does not fully explain why the City has not yet formally closed the airport. The major purpose in not awaiting adeclaration of airport closure appears to relate to planning needs as reflected in transitory uses at p. 10 of the ARP.

Such use will continueuntil all aviation leases are acquired either by expropriation or negotiated surrenders. [36] As I interpret the intent, it continues to serve the business interests of all parties not to shut down operations prematurely andsome degree of flexibility is being offered. In that regard the City’s correspondence enclosing the Notice of Intended Expropriation isrelevant: We confirm that the City of Edmonton, as the expropriating authority is moving forward with the current expropriation.

Although Cityadministration is moving forward with the expropriation, we intend to discuss with all interest holders the option of a negotiatedacquisition of their interest. Please feel free to contact the writer and we can arrange a mutually convenient time to talk. [37] Moving toward expropriation while continuing to attempt to negotiate is not indicative of bad faith.

Nor is the statement of anobvious fact - in this case, that unsuccessful negotiations will at some point lead to expropriation: Re Magee and City of Calgary, (AB KB), [1979] AJ No 916, 103 DLR (3d) 686 (QB). [38] Nothing in the Record supports the Applicants’ utter speculation that the City may wish to lease to other air service operatorsin total conflict with the planning and monies invested to date in redevelopment.

Similarly, nothing speaks against the prospect that ashort term licence would be possible to the mutual benefit of the City and affected aviation subtenants after expropriation until actualclosure. [39] Further, the Court cannot be invited to speculate what arrangements are in place with other levels of government regardingclosure of the aviation facility.

The November 28, 2012 report to Council (Record, Tab 94) notes that: “A date for full and final closureof the airport will be determined by the City Council with input from NAV Canada and Edmonton Regional Airports Authority at apoint which the lands are required to support the Area Redevelopment Plan and the needs of the City”. [40] Separate from the legal argument related to jurisdiction over aeronautics, the lack of certainty regarding timing for formalclosure of the remaining runway is not evidence of bad faith. [41] From the Record, I conclude that the only purpose of the ARP Bylaw was to allow the City to pursue redevelopment plansfor the airport lands.

This required, in part, acquisition of the aviation leases, whether through negotiation or expropriation. The ARPwas one, but not the only source of authority, upon which the City was entitled to exercise authority to expropriate. No bad faith can beinferred from the City’s choice to proceed in this manner.

b) Interference with or avoidance of contractual obligations [42] The Applicants submit that the City approved the ARP in order to allow it to breach its contracts, contrary to its goodgovernance obligations under the MGA, citing Alexander v Huntsvill (Village), [1894] OJ No 236 at para 39 (HCJ), Macartney vHaldimand (County), [1905] OJ No 222 at para 33 (HCJ), Canadian Pacific RW Co v City of Toronto, [1902] OJ No. 392 at paras 9and 14, I M Rogers, The Law of Municipal Corporations, 2d ed (Toronto: Carswell, 1971-), vol 2 at 1063. [43] Notably, in this case the surrender of the head lease to the City occurred after public hearings and consultations regarding theredevelopment of the airport lands.

The City had passed a motion to carry out a phased closure of ECCA. A budget had been approvedby City Council for the acquisition of various leasehold interests at the ECCA. ERAA transferred its interests in one runway to the City.The City acquired some leaseholds and continued to negotiate with remaining ECCA lessees. As at March 2012, a few weeks afterpublic hearings and introduction of the proposed ARP Bylaw, Council was advised that the City had acquired five aviation leases,negotiations were ongoing with four others, and three additional aviation tenants were not responding to the City's overtures.

In sum, theRecord discloses more than two years of City efforts to negotiate surrender of aviation leases to facilitate redevelopment of these lands. [44] Whenever a municipality uses its power of expropriation, it is superimposed on property rights, whether those rights derivefrom title or contract. Compensation is fixed under the Expropriation Act. [45] In this case, the City has acquired some and continues to pursue the remaining aviation leases in the process of movingtoward redevelopment.

This was no secret. [46] Without being drawn into the whole topic of specific performance in the litigation under case management of Veit J., nothinghas been referred to in the subleases which divests the City of its power to expropriate simply because it is the residual land owner.

Theanalysis comes back to the purpose for which that power is being invoked. [47] In Misty Mountain Charters Ltd v Revelstoke (City), 2010 BCSC 1246, 75 MPLR (4th) 221, Powers J. held: 57 I agree with the petitioners that if the sole purpose of the resolution was to breach the contract that the City had entered into withthe petitioners and the B.C. Transit Authority, then it would be in bad faith. However, I do not agree that the bylaw is bad simplybecause it may have the effect of breaching the contract the City had with the petitioners ...

They would be subject to a claim fordamages, the same as any other person who breached a contract. However, that would not render their resolution ... invalid. [48] It is not as simple a matter as asserting breach of contract either in relation to the ARP Bylaw or the ExpropriationResolution. As expressed in the Supreme Court of Canada in Landreville v Boucherville (Town), (SCC), [1978] 2 SCR801 at 813, 22 NR 407, proof of bad faith is required to vitiate otherwise valid municipal actions.

In that case, the Court found bad faithwhere, from the very beginning, the town was trying to appropriate a quarry without paying for it, ultimately attempting to expropriate itfor $1.00. [49] In this case, both statutory powers were fairly exercised by the City in a transparent process and in anticipation of appropriatecompensation. The Expropriation Resolution was undertaken in the face of failed negotiations but with a continued offer to engage infurther negotiations.

Expropriation in these circumstances is not inconsistent with good governance, and certainly does not amount to badfaith. [50] Having considered the entire Record and supplementary materials, I find no support for the allegation of bad faith on thisground.

c) Interference with pending litigation [51] From the Record it is clear that the Applicants not only resisted attempts to negotiate, they commenced actions specifically toenforce entitlement to the full term of their leases by permanent injunction.

They allege on judicial review that the ARP Bylaw and theExpropriation Resolution are tainted attempts to counteract these causes of action. [52] In particular, the Applicants argue that the speed with which the process was undertaken and the absence of proper planningand reports are consistent with an intent to undermine the legal proceedings, citing Chernipeski v Lacombe (Town) (1996), (AB KB), 192 AR 389, [1996] AJ No 1026 at paras 25 and 39 (QB), aff’d 1998 ABCA 344, 228 AR 111 (CA), and Chippewas of Saugeen First Nation v Keppel (Township) (1994), (ON SC), 117 DLR (4th) 419, [1994] OJ No 1933 at para 30(Gen Div). [53] In Chernipeski, the town passed a land use bylaw in order to facilitate a town-owned land sale.

No reports were obtained forthe review of city council members and no planning considerations were discussed. The trial judge and the Court of Appeal held that theplanning power must be exercised solely for planning purposes. [54] In Chippewas, a court ordered a trial to resolve a land ownership claim by the Chippewas First Nation. A month later, thetownship passed bylaws to issue quit claims to owners of land in relation to which ownership was disputed.

The bylaws were quashed. [55] As a matter of timing, the drafting of the ARP Bylaw occurred over two years after Airco filed its action but only six monthsor so after the other Applicants filed their actions specifically naming the City. The first iteration of an Expropriation Resolution wasmore than a year after these actions naming the City, and contemplated a hearing process which has only just recently been completeddue to no fault of the parties.

[56] I am invited to infer that the City ’ s steps toward expropriation were a response to Veit J. ’ s severance decision issued in September 2012. If the purpose of the ARP was to invoke the power to expropriate, then its potential exercise must have been known and available from at least the date of approval in May 2012. Mr. Sande certainly identified resort to expropriation as one of the options that would be open under an ARP as considered in December 2011. [57] Expropriation is authorized under the MGA . The functional availability of expropriation crystalized with passage of the ARP Bylaw in May 2012 and was recommended specifically to Council in its meeting August 30, 2012. On the

interpretation of the evidence most favourable to the Applicants, Council may well have been encouraged to protect its options against the risk of a severance decision; but it could not have known of a decision before it was actually issued on September 14, 2012. [58] The Court of Appeal ’ s reversal of the severance decision was made in full knowledge of pending expropriation ( 2013 ABCA 91 , 544 AR 6 ): 38 One of the justifications for severing the trial was the assertion by the respondent that, as a not-for-profit organization, it was impossible to measure its losses in damages ...whatever the merits of this argument, it was undermined by the subsequently announced intention to expropriate.

The Land Compensation Board only has jurisdiction to make monetary awards; it has no ability to grant injunctions. The Expropriation Act , RSA 2000, c. E-13, s. 46 contemplates expropriation of interests of not-for-profit organizations. Whatever the difficulties, obstacles, or shortcomings of calculating the respondent's damages, it appears inevitable that that will be the result. There is also a prospect that the expropriation proceedings will overtake any trial over the entitlement to an injunction to close the airport, especially since the sublease may provide that it terminates on expropriation.

While the respondent argues that the present expropriation proceedings are flawed, the prospect of an eventual expropriation cannot be ignored. [59] The law does not impose a taint on the motives of a party based on an assessment of risks and consequences in litigation. The litigation in this case would have generally underscored for the City that continued negotiations were unlikely to bear fruit. [60] Further, the City is accountable to support the actual need to expropriate in the course of an Inquiry, which is not the subject of this judicial review.

I am satisfied that the ARP Bylaw and the Expropriation Resolution were passed for legitimate municipal purposes, being to pursue the redevelopment described in the ARP. Although the City ’ s actions may affect the course of the Applicants ’ litigation, I find that they are not targeted at such an outcome, nor is that sufficient to support an allegation of bad faith in this case.

d) Manifestly unfair and unjust [61] Returning to the sum of the arguments in support of bad faith, there is evidence that the City initially took the position that it could not act unilaterally and had to work co-operatively to negotiate surrenders and deal with issues such as compensation. [62] As noted in the chronology above, the City embarked on a process of consensual, negotiated surrender of all affected subleases. As at May 2008, the period of time required to negotiate co-operative surrenders was uncertain.

Council continued to receive status reports on negotiations from August 2008, including arrangements to accommodate users at other facilities. Council was made aware that several aviation subtenants wished to remain at ECCA. [63] As early as February 2009, Council was alerted to concerns on the part of the Citizen's Advisory Group about tight timelines and availability of information.

A second non statutory public hearing was held in June 2009 and Council's Executive Committee heard that month from speakers, including representatives of the Applicants, in favour of keeping the airport open. [64] The City continued to work out a phased reduction of airport services without a definite closure date.

In October 29, 2009, a report summarized the potential costs to the City for lease acquisitions, and a staged approach toward lease acquisition and development of the lands was considered to be the best approach. [65] The report dated January 26, 2010 reflected the understanding that the City would be primarily responsible for costs for lease terminations, and that the timing for acquisitions depended on a variety of factors.

It is clear that the City would have recognized that allowing aviation tenants to operate as long as possible would minimize the cost to the City of acquiring the leasehold interests. [66] On July 23, 2010, as a result of the City ’ s negotiations with ERAA, it transferred one runway to the City. The City negotiated with SPAR Aerospace to purchase its leasehold interest.

On August 3, 2010, the City requested that ERAA close one runway and aviation tenants were notified. [67] In June 2011, the City selected Perkins & Will to prepare the redevelopment plan. [68] The City had considered setting a closure date for the ECCA of December 31, 2012 but did not pursue that strategy in favour of the ARP process in about November 2011. By September 19, 2012, City Council began to consider the necessity to expropriate the remaining property interest holders ’ rights.

The November 28, 2012 Report indicated that a date for full and final closure of the airport would be determined by City Council with input from NavCanada and ERAA at a point when the lands were required to support the ARP and the City ’ s needs. [69] The Record reflects negotiations during 2010, 2011 and 2012 with EFC, STARS, Canadian Helicopters, Shell, and others.

The City worked with Alberta Health Services and Alberta Health and Wellness on the phased transition of Air Ambulance/Medevac operations, which finally moved to International Airport effective March 15, 2013. [70] Overall, the Record reveals that this vast and complex project has engaged the City in efforts to negotiate with numerous stakeholders as part of a controversial redevelopment plan.

[71] There is no evidence in the Record of animosity toward, or targeting of, the Applicants, and nothing to support the argumentthat the steps taken were arbitrary, unfair or unjust, nor that the ARP was part of a subterfuge. [72] The Applicants have raised concerns from their perspective. From my review, those concerns do not establish bad faith. TheCity has acted in accordance with its constituent legislation and for no improper purpose. 3) The City lacks jurisdiction to close the ECCA [73] The Applicant EFC submits that the City exceeded its jurisdiction by passing the Expropriation Resolution.

Once finallyapproved, expropriation of all aviation leases will have the effect of closing the ECCA for airport purposes. EFC argues that neither amunicipality nor a province has jurisdiction to regulate or forbid airport location - only the federal government can do so.

Expropriationresulting in cessation of airport operations regulates airport activity indirectly: Laferrière v Quebec (AG), 2008 QCCA 427, 48 MPLR(4th) 26 at paras 39-52; R v Varga (1979), (ON CA), 27 OR (2d) 274, [1979] OJ No 4494 at para 8 (CA). [74] In Québec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 SCR 536, on appeal fromLaferrière, the majority of the Supreme Court held that the location of aerodromes lies at the core of the federal aeronautics power.

Thedoctrine of interjurisdictional immunity was applicable in that case to protect the immunized core of federal power from any provincialimpairment. However, the Court concluded that it was possible to comply with both the provincial and federal legislation at issue in thatcase by demolishing the aerodrome in question, and the evidence did not establish a federal purpose regarding the location of aerodromesthat was frustrated by the provincial legislation.

Therefore, the doctrine of federal paramountcy could not be invoked. [75] The issue raised by EFC must be considered in context and with the benefit of relevant evidence and argument. The AttorneyGeneral of Canada is not party to this litigation. Further, there was no discussion regarding any frustration of the federal power in thehearings and meetings of City Council and there is no evidence before this Court to suggest that the federal purpose is, or is not,frustrated by the Bylaw or Resolution in question. [76] The Record indicates ongoing communications with NavCanada and the ERAA.

Edmonton Airports invested $20 million atthe International Airport in land servicing to accommodate ECCA tenants in custom facilities to be constructed by private developers,and invested $3 million at Villeneuve Airport to accelerate options for transitioning ECCA tenants to that facility. These initiativesinvolved detailed negotiation and decisions between Edmonton Airports, NavCanada, ECCA tenants, and private developers (Record,Tab 51).

As noted earlier, formal closure is intended to be in consultation with NavCanada (Record, Tabs 87, 94). [77] Given the information before the Court for judicial review, it would be entirely speculative to conclude that the City hasexceeded its jurisdiction in this respect by adopting the ARP Bylaw and passing the Expropriation Resolution. Decision [78] In the result and for the reasons expressed, the applications for judicial review are dismissed. [79] The parties may speak to the matter of costs within 60 days of the date of this decision, if required. Heard on the 28th day of June, 2013.

Dated at the City of Edmonton, Alberta this 23rd day of July, 2013. S.D. Hillier J.C.Q.B.A. Appearances: Jack N. Agrios, Q.C. for the Applicants, Edmonton Flying Club, 1222663 Alberta Ltd., Hamilton Aviation Ltd., and Air Spray

(1967) Ltd.

Sheila McNaughtan, Q.C. and Sean Ward for the Applicant, Airco Aircraft Charters Ltd. Cameron Ashmore and Bradley Savoury for the Respondent, City of Edmonton