College News

Featured Article- June 2008   Nav Canada v. Greater Fredericton Airport Authority Inc., 2008 NBCA 28   © 2008 T. Arthur Barry, Q.C. Stewart McKelvey

The decision of the New Brunswick Court of Appeal in Nav Canada released on March 20, 2008 settled a $223,000 dispute between Nav Canada and GFAA over who should pay for some new navigation equipment installed in the course of a runway extension project (subject of course to potential appeal to the Supreme Court of Canada.)  Nav Canada ended up with the bill.  The resolution of the dispute by the Court of Appeal has provided a potentially significant “incremental” change in the common law, one which is of note for construction lawyers.

In a nutshell, it has long been held that the performance of a pre-existing obligation would not qualify as fresh or valid consideration to vary an existing contract: Stilk v. Myrik (1809), 2 Camp. 317, 170 E.R. 1168.  The rule in Stilk required that fresh consideration be a condition precedent to the enforceability of any contract variation.  In reasons which thoroughly analyze the common law history of the doctrine requiring fresh consideration, Robertson, J.A. held: 

[7]        … I conclude that the arbitrator erred in finding that the variation was supported by fresh consideration. As a matter of law, however, I am prepared to recognize and adopt an “incremental” change in the traditional rules by holding that a variation unsupported by consideration remains enforceable provided it was not procured under economic duress.

Nav Canada and GFAA were parties to an Aviation Services Facilities Agreement ("ASF Agreement") which included terms governing responsibility for certain capital expenditures.  As part of the $6,000,000 runway extension project, GFAA requested that Nav Canada relocate an instrument landing system to the runway being extended. ...