Law Times

Law Times • July 8, 2013 Page 11 FOCUS Complex rules provide 'lots of opportunities' in aviation law BY MICHAEL McKIERNAN For Law Times D onald Gray feels a twinge of jealousy every time he sits down on board a brand-new passenger airliner. During a 30-year career, he has advised on the financing or refinancing of more than 700 aircraft, but part of him wishes his seat was a few rows further forward in the cockpit. The Toronto-based Blake Cassels & Graydon LLP partner was born with aviation in his blood. "My mom was a pilot involved in air racing, so I grew up on her lap flying aircraft," says Gray, who co-leads the firm's aviation and aerospace practice group. By the age of 16, Gray was flying himself and he has owned a string of small planes since then, including his current model, a Cessna 185 float plane that gets a run out "almost every weekend up north." "When I travel, I love to take the opportunity to fly whatever I can get my hands on locally. I've done a lot of simulator flying, too, at Boeing," says Gray. But on the advice of his doubtful mother, he avoided the temptation to turn a passionate hobby into a career and went to law school while still determined to stick with the field. "She urged me to work in the industry but not as a full-time pilot," says Gray. "There were no firms in Toronto that did anything close to full-time aviation work. A lot of people told me I must be nuts to even contemplate doing something that concentrated exclusively." Three decades later, Gray belongs to a relatively small band of Canadian lawyers whose practices consist almost exclusively of aviation work. They split broadly into three categories: insurance, financing, and regulatory work. "There are lots of opportunities now for people who love aviation," says Gray. "I feel very privileged to mix my passion with my profession. There's no question I would not be as successful as I have been if I wasn't able to work with stuff I love. I tell people now if you can find an area of business that really turns you on, go for it because there are always legal aspects. Don't let anyone tell you you can't." Bruce MacDougall, a leading figure on the insurance side of the business, gravitated towards the aviation industry in part because it fit neatly with his own background as an engineer before turning to law. He's a partner at Toronto's Paterson MacDougall LLP where he performs defence work for airlines, product manufacturers, and maintenance companies. The firm also cohosts the annual Canadian aviation conference. The insurance market's traditional home is in Britain, but MacDougall says much more is happening domestically these days. That's just one of the many changes he has witnessed in aviation during more than 40 years at the bar. "When I first started, a lot of people around the industry were self-made who started their own operations after they'd learned to fly before or after the Second World War. Life has changed a lot since then but it's just as interesting," he says. Luckily for MacDougall, the aviation insurance business remains relatively well insulated from the sector's notorious volatility. "We've had situations where we represent airlines and things are going along fine, then all of a sudden, bang, they're gone," he says. "But then someone else comes along to pick up the pieces, and we start all over again." In aircraft financing, Gray says insolvency considerations have long since overtaken tax issues as the critical component in deals. "You never used to hear about Canadian insolvency law, but now it's almost the first question financiers raise: What are the chances of me getting my assets back quickly if there's a default?" he says. His own experience in bankruptcy matters, largely acting for lessors and financiers, reads like a who's who of historic Canadian airlines: Odyssey International, Nationair, Can-Air Cargo, Vistajet, Canadian Airlines, Jetsgo, Zoom Airlines, and many others. Gray says Canada's recent ratification of the Cape Town Convention, an international treaty concerning aircraft equipment, Federal act challenged Continued from page 10 collection of the personal information of wine club members purchasing wine through its private ordering sales channel is necessary to the proper administration of the lawfully authorized activity," wrote Cavoukian. The LCBO appealed, but the wine club has hit back by claiming the federal act breaches s. 121 of the Constitution that governs the free movement of Canadian goods between provinces. A hearing is set for later this year at the Divisional Court. Mayeski is watching closely and is cheering on the wine club. "I think the more pressure on this archaic system, the better," she says. "People want to buy wine when they want and how much they want. It's stifling when they can't do that, not only for the industry but for consumers." LT certificates in order to buy five has transformed the ability of Cabrand-new Boeing 777 aircraft nadian airlines to access cheap fifor delivery over the next year. nancing on U.S. capital markets. The blended financing arrange"Cape Town was largely driven ment rate of 4.66 per cent is Air by insolvency," he says. Canada's lowest ever by a substanGray was involved when negotial margin, according to Gray. tiations began 17 years ago, and On the regulatory side of although Canada was an original things, Bill Clark of Toronto's Clark signatory to the treaty in 2001, it & Co. is a go-to lawyer for national didn't officially implement it until carriers seeking a route into the April of this year when enabling Canadian market. He notes that legislation finally came into force. since most major market carriers A key section of the treaty, are already doing business here, known as Alternative A, mirrors most of his recent clients "are very s. 1110 of the U.S. Bankruptcy much what Canadian authorities Code that allows for repossescall marginal markets." sion of aircraft equipment after He helps airlines navigate 60 days unless all defaults are 'A lot of people told me I must be nuts to through the maze of internacured regardless of the automatic even contemplate doing something that stay process. concentrated exclusively,' says Donald Gray. tional agreements and technical inspections that must be in place The additional security for creditors provided by s. 1110 has traditionally before they finally get their slots on the schedule. given U.S. carriers an advantage over internation- When Ethiopian Airlines launched its first direct al competitors because it opens up a route to the flights to Toronto last year, it marked the culminacountry's cheap capital markets for fundraising. tion of almost a decade of work for Clark. "It took me six or seven years just to get Canada Despite the fact that no hostile stay has continued to the table, and they are now operating in Toronto for more than 60 days during Canadian airline bankruptcies, the theoretical possibility has closed direct from Addis three times a week," he says. "Canada still has somewhat of a protectionist that route to operators here until now, says Gray. In fact, Gray says some credit agencies now view policy even though our present government loudCanadian law under the Cape Town framework as ly touts its Blue Sky policy. But there are no truly an enhanced version of s. 1110. The implementa- open-skies agreements between Canada and any tion came just in time for Air Canada to complete a other nation, whereas the Americans have a sigLT $700-million offering of enhanced equipment trust nificant number of them." TRUST you're putting your reputation on the line. It's all about trust well placed. LEONARD KUNKA | CRAIG BROWN | DARCY MERKUR Since 1936 Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. As a law firm specializing in civil litigation, we have a record of accomplishment second to none. With a group of 30 litigators and a support staff of over 100 people, we have the resources to achieve the best possible result for your client. Moreover, we are exceptionally fair when it comes to referral fees. We welcome the chance to speak or meet with you about any potential referral. We look forward to creating a solid relationship with you that will benefit the clients we serve. YOUR ADVANTAGE, in and out of the courtroom. TF: 1.888.223.0448 T: 416.868.3100 W: www.thomsonrogers.com www.lawtimesnews.com Untitled-11 1 13-07-03 3:42 PM

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