Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on whether unpaid Airport Improvement Fees (AIFs) collected by Lynx Air for various Canadian airport authorities were held in trust.

• The Memorandum of Agreement (MOA) between Lynx and the authorities expressly disclaimed the creation of a trust relationship.

• The Court confirmed an agency relationship existed, but determined it did not equate to a fiduciary or trust obligation.

• Arguments for implied and constructive trusts were rejected due to lack of intent, absence of segregated funds, and no unjust enrichment.

• A separate agreement with Greater Toronto Airports Authority (GTAA), which included express trust terms, received different judicial treatment.

• The Alberta Court of Appeal upheld the lower court’s findings, reinforcing contractual freedom and denying the Airport Authorities' appeal.

Factual background and procedural history

Lynx Air Holdings Corporation (and its related entity) operated as a budget airline that, under a nationwide Memorandum of Agreement (MOA), collected Airport Improvement Fees (AIFs) from passengers on behalf of multiple Canadian airport authorities. These fees are mandated surcharges used to fund airport infrastructure. In February 2024, Lynx filed for protection under the Companies’ Creditors Arrangement Act (CCAA), and at the time, had failed to remit over $4 million in AIFs to the authorities.

The airport authorities—including Edmonton, Calgary, Vancouver, Halifax, and Winnipeg—applied for a court declaration that the unremitted AIFs were subject to an express, implied, or constructive trust. Their goal was to ensure priority payment from Lynx’s estate. However, the chambers justice denied the application, citing that no trust was created under the MOA, while a separate agreement with the Greater Toronto Airports Authority (GTAA), which contained explicit trust provisions, was upheld.

The authorities sought leave to appeal this decision, which was granted in 2024 ABCA 380. The appeal itself was later dismissed in 2025 ABCA 116.

Terms of the agreement and core legal interpretation

The MOA, a contract executed in 2022, specified in section 20.1 that the parties "expressly disclaim any intention to create a partnership, joint venture, trust relationship or joint enterprise." While it did allow that Lynx acted as an "agent" for the airport authorities in collecting and remitting AIFs, the courts held this was insufficient to create a trust.

The appellate court affirmed that a clear contractual disclaimer prevents recharacterization of the relationship. It highlighted that while an agency may exist, it does not imply a fiduciary or trust obligation absent express terms or circumstances justifying such a finding.

Arguments and findings on trust theories

The authorities advanced multiple legal theories:

• Express trust: Rejected due to the MOA’s clear language disclaiming such a relationship.

• Implied trust: Courts found no evidence that airline passengers intended to create a trust, nor that any of the trust certainties (intent, subject matter, object) were met.

• Constructive trust: Denied as there was no evidence of wrongful conduct, fiduciary breach, or unjust enrichment. The contractual terms provided a valid juristic reason for Lynx retaining the funds, even if temporarily.

The GTAA’s successful trust claim was based on a different contract with Lynx that explicitly created a trust, distinguishing it from the MOA’s language.

Outcome of the appeal

In its April 2025 decision, the Alberta Court of Appeal dismissed the appeal. It concluded the chambers justice had not committed any palpable or overriding errors in interpreting the MOA or assessing the trust claims. It emphasized that courts must respect the terms agreed upon by sophisticated commercial parties and cannot impose equitable remedies merely to achieve a fairer result.

The appellate judges also rejected arguments that the inconsistent treatment of AIFs between GTAA and other airport authorities created an injustice. The differing outcomes were due to materially different contractual language, not judicial error.

Conclusion

The case confirms that clear disclaimers in commercial contracts will be upheld and that equitable remedies like constructive or implied trusts will not override explicit contractual terms absent exceptional circumstances. The decision serves as a caution to contracting parties in regulated industries to carefully structure agreements if they seek proprietary remedies in insolvency scenarios.

No monetary award was specified in the decisions.