Judgments

[1995] 2 F.C. 467

A-650-92

Her Majesty the Queen in Right of Canada (Appellant) (Defendant)

v.

Comeau Sea Foods Limited, a body corporate* (Respondent) (Plaintiff)

Indexed as: Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans) (C.A.)

Court of Appeal, Stone, Linden and Robertson JJ.A.—Halifax, November 29, 1994; Ottawa, February 27, 1995.

Administrative law — Appeal involving complex issue as administrative, tort law conflicting — Fisheries Minister authorizing offshore lobster fishing licences — Respondent incurring costs to convert scallop boats for lobster fishery — Inshore fishermen lobbied Minister to deny licences — Matter became major Federal, provincial political issue — Minister refused licences — Respondent sued Crown claiming damages for negligence — Trial Judge held Minister exhausted discretion when licences authorized — Held elements of negligence established — Crown’s argument Minister not liable (1) in case of policy decision, (2) under Crown Liability and Proceedings Act, s. 8 — Defence of statutory authority — Difference between issuing, authorizing licence — Policy, operational decisions distinguished — Prima facie duty of care owed — Review, exposition of case law since test for determining duty of care established by Anns v. Merton London Borough Council — In deciding duty of care, availability of administrative law remedies important — Respondent could have sought certiorari, mandamus — Duty of care negatived, Crown not liable in negligence.

Crown — Torts — Appeal and cross-appeal from F.C.T.D. decision awarding damages for Minister’s failure to issue authorized lobster fishery licences — Policy/operational distinction applied — Policy decisions not attracting liability in negligence — Prima facie duty of care owed to respondent — Negatived as adequate administrative law remedies available — Minister not breaching requisite standard of care — Not liable in negligence.

Fisheries — Minister authorized (Fisheries Act, s. 7) offshore lobster fishing licences — Before licences issued, respondent spending money to convert scallop dragger to lobster vessel — Inshore fishermen protesting — Minister refusing to issue offshore licences — Respondent suing Crown in negligence — Trial Judge holding revocation decision ultra vires, Crown liable — Whether policy or operational decision — Court prohibited from considering merits of Minister’s decision — Foreseeability of loss no fetter on ministerial discretion — No actionable negligence unless Minister improperly construed s. 7 by failing to take reasonable care to avoid ultra vires determination.

These were an appeal and cross-appeal from a Trial Division decision holding the Minister of Fisheries and Oceans liable for damages for failing to issue offshore lobster fishery licences which he had previously authorized under section 7 of the Fisheries Act. In December 1987, the Minister informed the respondent that he had authorized four experimental offshore lobster licences and specified its allowable catch for the current fishing year. Since that announcement, inshore lobster fishermen opposed to the new licences had actively lobbied the Minister to change his decision on the basis that more offshore licences would adversely affect the inshore fishery. Ultimately, the Minister gave in and withdrew the authorization, even though he knew that the respondent had already spent money converting a scallop dragger for the lobster fishery. The latter initiated an action for damages based on various grounds of liability, including negligence. The Trial Judge held that once the Minister authorized issuance of the licences, he had exhausted his discretion under section 7 so that the revocation decision was ultra vires and amounted to actionable negligence. The two main issues upon appeal were whether the Minister owed the respondent a duty of care and, if so, whether the requisite standard of care had been breached.

Held (Linden J.A. dissenting in part), the appeal should be allowed, the cross-appeal dismissed.

Per Stone J.A.: While the decision whether to authorize a licence pursuant to section 7 of the Fisheries Act was a “policy” decision, the Minister’s subsequent decision to go back on his commitment was neither a true policy decision nor an operational one. It was simply one that was not authorized by the statute. The appellant could not be made liable in negligence for a true policy decision unless it was not made bona fide or was irrational but, under certain circumstances, could be made liable in negligence for an “operational” decision. The policy/operational dichotomy has, by reason of its adoption by the Supreme Court of Canada, become enshrined in the law of Canada. The two-step test enunciated by the House of Lords in Anns v. Merton London Borough Council must be applied herein. First, it must be decided whether there is a sufficiently close relationship between the parties such that, in the reasonable contemplation of the defendant, carelessness might cause damage to the plaintiff. The Minister owed the respondent a prima facie duty of care at the relevant time. The second branch of the Anns test asks the question whether there are any considerations which ought to negative or limit the scope of the duty of care, the class of persons to whom it is owed or the damages to which a breach of it may give rise. The availability of relief by way of judicial review is a factor to be considered in deciding whether to impose a duty of care. Such relief would have been available to the respondent had it chosen to follow that course. At least from the time the Minister formally communicated his second decision by letter of May 31, 1988, the respondent was in a position to seek the relatively quick and sure remedy of certiorari. The remedy of mandamus requiring the licences to be issued was also available to the respondent in the spring of 1988. The availability of adequate administrative law remedies by way of judicial review was a consideration to be taken into account under the second branch of the Anns test in deciding whether the scope of prima facie duty of care should be negatived in the circumstances of this case. That duty was so negatived. The appellant should not be held liable in negligence as she owed no duty of care to the respondent.

Per Robertson J.A. (concurring in the result): The revocation decision was no less a policy decision than that to authorize the issuance of the licences in the first instance. Any judicial inquiry touching on the reasonableness or merits of the Minister’s decision to revoke the authorization is proscribed by Supreme Court of Canada decisions applying Anns and, in particular, the policy/operational distinction. As the decision in question fell within the policy category, no duty of care could have arisen between the parties as to whether the Minister was justified in revoking the authorization. Nor could foreseeability of the respondent’s loss be invoked as a valid fetter on ministerial discretion. The administrative tort of misfeasance in a public office is established once it is shown that the invalid decision is tainted by either malice or knowledge. There was no evidence, nor has it been suggested, that the Minister acted maliciously or with knowledge of the invalidity. Nor has there been a finding of bad faith on his part. The fact that the Minister lacked the authority to make the revocation decision did not make it any less a policy one. Misconstruction of the Act did not convert a policy decision into an operational one. It simply rendered it ultra vires. It is not permissible to consider whether the Minister should have revoked the authorization when evaluating an allegation of negligence. Provided that decision was made in good faith, it is not reviewable by the Court. The Minister owed the respondent a duty of care which was limited to the manner in which he went about deciding whether he had the requisite authority to revoke the authorization. He could not have been held negligent for exercising a policy discretion that he is authorized to exercise under an Act of Parliament, even in circumstances in which he is advised that a party has relied on previous representations of ministerial discretion. Foreseeability of loss (damages) cannot displace the obligation to establish a breach of the requisite standard of care. As the revocation decision has been found ultra vires, the defence of statutory authority was not available to the Minister. But to ground liability herein on the absence of statutory authority and the element of detrimental reliance would mean adopting a species of strict liability for public authorities and this has been rejected by the Supreme Court of Canada. This was not a case of actionable negligence.

Per Linden J.A. (dissenting in part): In purporting to withdraw from the respondent the authorization for licences, the Minister acted without statutory authority. Just because a minister or other government official is mistaken about the manner in which he exercises his discretion, civil liability does not necessarily follow. The Court should hold that a duty arises wherever some harm is reasonably foreseeable, unless good policy reasons exist for denying such a duty. Since the proximity in the relationship between the respondent and the Minister was obvious, a duty of care was owed by the latter. Not only was the Trial Judge correct in holding that a duty of care existed, there was sufficient basis for him to have found that negligent conduct was proven. All of the elements of a cause of action for negligence have been properly established, except for the policy/operational issue. The common law courts have been reluctant to treat the Crown like other private persons. Immunity from negligence should be granted sparingly to Crown agencies; only their true policy decisions, generally made at higher levels, involving social, political and economic factors and budgetary allotments for departments should be exempt from negligence law’s reach. If the conduct is not immunized as a true policy decision, ordinary negligence law principles remain applicable. Since the Crown must be free to govern, an immunity may be necessary, but it must be limited to those functions of government that can properly be considered to be “governing,” and not extended to the other tasks of government. Since the decision to cancel the authorization was not part of governing, it could not be protected by the policy immunity. The sole reason for the Minister’s volte-face appears to have been the political pressure exerted on him by those engaged in the inshore lobster fishery. Section 7 of the Fisheries Act does not give the Minister jurisdiction to withdraw, without reason, an authorization previously given. In purporting to do so, the Minister was acting ultra vires and that breach of statute was properly found to constitute actionable negligence.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

An Act for the regulation of Fishing and protection of Fisheries, S.C. 1867-68, c. 60.

Crown Liability and Proceedings Act, R.S.C., 1985, c. C-50 (as am. by S.C. 1990, c. 8, s. 21), ss. 3(a), 8.

Crown Proceedings Act, 1947, 10 & 11 Geo. 6, c. 44, s. 2(1)(a).

Federal Court Rules, C.R.C., c. 663, R. 456 (as am. by SOR/90-846, s. 15).

Fisheries Act, R.S.C., 1985, c. F-14, ss. 7, 9 (as am. by R.S.C., 1985 (1st Supp.), c. 31, s. 95).

CASES JUDICIALLY CONSIDERED

APPLIED:

Just v. British Columbia, [1989] 2 S.C.R. 1228; (1989), 64 D.L.R. (4th) 689; [1990] 1 W.W.R. 385; 41 B.C.L.R. (2d) 350; 41 Admin. L.R. 161; 1 C.C.L.T. (2d) 1; 18 M.V.R. (2d) 1; 103 N.R. 1; Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.).

DISTINGUISHED:

Rowling v. Takaro Properties Ltd., [1988] A.C. 473 (P.C.).

REVERSED:

Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), [1992] 3 F.C. 54 (1992), 11 C.C.L.T. (2d) 241 (T.D.).

CONSIDERED:

Brown v. British Columbia (Minister of Transportation and Highways), [1994] 1 S.C.R. 420; [1994] 4 W.W.R. 194; (1994), W.A.C. 1; 89 B.C.L.R. (2d) 1; 42 B.C.A.C. 1; 20 Admin. L.R. (2d) 1; 19 C.C.L.T. (2d) 233; Swinamer v. Nova Scotia (Attorney General), [1994] 1 S.C.R. 445; (1994), 129 N.S.R. (2d) 321; 112 D.L.R. (4th) 18; 362 A.P.R. 321; 20 Admin. L.R. (2d) 39; 19 C.C.L.T. (2d) 233; Kamloops (City of) v. Nielsen et al., [1984] 2 S.C.R. 2; (1984), 10 D.L.R. (4th) 641; [1984] 5 W.W.R. 1; 29 C.C.L.T. 97; Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021; (1992), 91 D.L.R. (4th) 289; 137 N.R. 241; Somerville Belkin Indust. Ltd. v. Man., [1988] 3 W.W.R. 523; (1988), 51 Man. R. (2d) 232; 38 B.L.R. 122 (C.A.); San Sebastian Pty. Ltd. v. Minister Administering Environmental Planning and Assessment Act 1979 (1986), 162 C.L.R. 340 (Aust. H.C.); R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; (1983), 153 D.L.R. (3d) 9; [1983] 3 W.W.R. 97; 23 CCLT 121; 45 N.R. 425; R. v. CAE Industries Ltd., [1986] 1 F.C. 129 (1985), 29 D.L.R. (4th) 347; [1985] 5 W.W.R. 481; 30 B.L.R. 236; 61 N.R. 19 (C.A.); Brewer Bros. v. Canada (Attorney General), [1992] 1 F.C. 25 (1991), 80 D.L.R. (4th) 321; 8 C.C.L.T. (2d) 45; 129 N.R. 3 (C.A.); Roncarelli v. Duplessis, [1959] S.C.R. 121; (1959), 16 D.L.R. (2d) 689; McGillivray v. Kimber et al. (1915), 52 S.C.R. 146; 26 D.L.R. 164.

REFERRED TO:

Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] S.C.J. No. 2 (QL); Stewart v. Pettie, [1995] S.C.J. No. 3 (QL); Petrocorp. v. Butcher, Aug. 14, 1990, N.Z., not reported; Ultramares v. Touche, 255 N.Y. 170 (App. Div. 1931); Yuen Kun Yeu v. Attorney-General of Hong Kong, [1988] A.C. 175 (P.C.); Peabody Donation Fund (Governors of) v. Sir Lindsay Parkinson & Co. Ltd., [1985] A.C. 210 (H.L.); Murphy v Brentwood DC, [1990] 2 All ER 908 (H.L.); Swanson v. Canada (Minister of Transport), [1992] 1 F.C. 408 (1991), 80 D.L.R. (4th) 741; 7 C.C.L.T. (2d) 186; 124 N.R. 218 (C.A.); LaPointe v. Canada (Minister of Fisheries & Oceans) (1992), 4 Admin. L.R. (2d) 298; 51 F.T.R. 161 (F.C.T.D.); Central Canada Potash Co. Ltd. et al. v. Government of Saskatchewan, [1979] 1 S.C.R. 42; (1978), 88 D.L.R. (3d) 609; [1978] 6 W.W.R. 400; 6 C.C.L.T. 265; 23 N.R. 481; Donoghue v. Stevenson, [1932] A.C. 562 (H.L.); Home Office v Dorset Yacht Co Ltd, [1970] 2 All ER 294 (H.L.); Batty v. Metropolitan Property Realisations Ltd., [1978] 2 W.L.R. 500 (C.A.); B.D.C. Ltd. v. Hofstrand Farms Ltd., [1986] 1 S.C.R. 228; (1986), 26 D.L.R. (4th) 1; [1986] 3 W.W.R. 216; 1 B.C.L.R. (2d) 324; 36 C.C.L.T. 87; 65 N.R. 261; Rothfield v. Manolakos, [1989] 2 S.C.R. 1259; (1989), 63 D.L.R. (4th) 449; [1990] 1 W.W.R. 408; 102 N.R. 249; Sutherland Shire Council v. Heyman (1985), 157 C.L.R. 424 (Aust. H.C.); Rivtow Marine Ltd. v. Washinton Iron Works et al., [1974] S.C.R. 1189; (1973), 40 D.L.R. (3d) 530; [1973] 6 W.W.R. 692; Stein et al. v. “Kathy K” et al. (The Ship), [1976] 2 S.C.R. 802; (1975), 62 D.L.R. (3d) 1; 6 N.R. 359; Galaske v. O’Donnell, [1994] 1 S.C.R. 670; (1994), 112 D.L.R. (4th) 109; [1994] 5 W.W.R. 1; 69 W.A.C. 37; 89 B.C.L.R. (2d) 273; 43 B.C.A.C. 37; 21 C.C.L.T. (2d) 1; 166 N.R. 5; Sterling Trusts Corpn. v. Postma et al., [1965] S.C.R. 324; (1964), 48 D.L.R. (2d) 423; Mentuck v. Canada, [1986] 3 F.C. 249 (1986), 3 F.T.R. 80 (T.D.); Grant v. Province of New Brunswick (1973), 6 N.B.R. (2d) 95; 35 D.L.R. (3d) 141 (C.A.); Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957; (1970), 22 D.L.R. (3d) 470; [1972] 3 W.W.R. 433; Sirros v Moore, [1974] 3 All ER 776 (C.A.); Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705; 23 Q.A.C. 1; (1989), 45 M.P.L.R. 1; 94 N.R. 1; Just v. R. in Right of B.C., [1985] 5 W.W.R. 570; (1985), 64 B.C.L.R. 349; 33 C.C.L.T. 49; 34 M.V.R. 124 (B.C.S.C.); Just v. B.C. (Govt.), [1987] 2 W.W.R. 231; (1986), 10 B.C.L.R. (2d) 223; 40 C.C.L.T. 160; 1 M.V.R. (2d) 357 (B.C.C.A.); Just v. British Columbia (1991), 60 B.C.L.R. (2d) 209 (S.C.); Dalehite v. United States, 346 U.S. 15 (1953); Riverscourt Farms Ltd. v. Niagara-on-the-Lake (Town) (1992), 9 C.C.L.T. (2d) 231; 8 M.P.L.R. (2d) 13 (Ont. Gen. Div.); Clark v. Canada, [1994] 3 F.C. 323 (1994), 3 C.C.E.L. (2d) 172; 20 C.C.L.T. (2d) 142; 94 CLLC 14,028; 76 F.T.R. 241 (T.D.); Kuczerpa v. Canada (1993), 14 C.R.R. (2d) 307; 152 N.R. 207 (F.C.A.); Williams v. State, 127 N.Y.2d 545 (Ct. App. 1955); Chhabra (O.P.) v. Canada, [1989] 2 C.T.C. 13; (1989), 89 DTC 5310 (F.C.T.D.); Francoeur et al. v. Canada (1994), 78 F.T.R. 109 (F.C.T.D.); Brasyer v. Maclean (1875), L.R. 6 P.C. 398 (P.C. N.S.W.); Janiak v. Ippolito, [1985] 1 S.C.R. 146; (1985), 16 D.L.R. (4th) 1; 31 C.C.L.T. 113; 57 N.R. 241; 9 O.A.C. 1; Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.); Tock v. St. John’s Metropolitan Area Board, [1989] 2 S.C.R. 1181; (1989), 82 Nfld. & P.E.I.R. 181; 64 D.L.R. (4th) 620; 257 A.P.R. 181; 1 C.C.L.T. (2d) 113; 47 M.P.L.R. 113; 104 N.R. 241; United Terminals Ltd. v. M.N.R., [1992] 3 F.C. 302(C.A.).

AUTHORS CITED

Bailey, S.H. and M.J. Bowman. “The Policy/Operational Dichotomy—A Cuckoo in the Nest” (1986), 45 Camb. L.J. 43.

Cohen, David. “Regulating Regulators: The Legal Environment of the State” (1990), 40 U.T.L.J. 213.

Cohen, David. “Suing the State” (1990), 40 U.T.L.J. 630.

Craig, P. P. “Compensation in Public Law” (1980), 96 L.Q. Rev. 413.

Epstein, Richard A. et al. Cases and Materials on Torts, 4th ed., Toronto: Little, Brown and Company, 1984.

Evans, R. C. “Damages for Unlawful Administrative Action: The Remedy for Misfeasance in Public Office” (1982), 31 Int. & Comp. L.Q. 640.

Feldthusen, Bruce. Economic Negligence: The Recovery of Pure Economic Loss, 3rd ed., Scarborough: Carswell, Thomson Professional Publishing, 1994.

Fleming, John G. The Law of Torts, 8th ed. Sydney: Law Book Co. Ltd., 1992.

Galloway, Donald. “Liability of Government: Just or Just and Reasonable” (1990), 41 Admin. L.R. 133.

Hogg, Peter W. Liability of the Crown, Toronto: Carswell, 1989.

Hogg, Peter W. “Tock v. St. John’s Metropolitan Area Board” (1990), 69 Can. Bar Rev. 589.

Hogg, Peter W. “Government Liability: Assimilating Crown and Subject” (1994), 16 Adv. Q. 366.

Klar, Lewis N. “The Supreme Court of Canada: Extending the Tort Liability of Public Authorities” (1990), 28 Alta. L. Rev. 648.

Lewis, Clive B. Judicial Remedies in Public Law, London: Sweet & Maxwell, 1992.

McBride, Jeremy. “Damages as a Remedy for Unlawful Administrative Action”, [1979] C.L.J. 323.

Sopinka, Hon. J. “The Liability of Public Authorities: Drawing the Line” (1993), 1 Tort L Rev 123.

Woodall, M. Kevin. “Private Law Liability of Public Authorities for Negligent Inspection and Regulation” (1992), 37 McGill L.J. 83.

APPEAL and CROSS-APPEAL from a Trial Division decision ([1992] 3 F.C. 54 (1992), 11 C.C.L.T. (2d) 241) allowing an action for damages arising from the appellant’s failure to issue authorized offshore lobster fishery licences under section 7 of the Fisheries Act. Appeal allowed, cross-appeal dismissed.

COUNSEL:

David Sgayias, Q.C., for appellant (defendant).

Stewart McInnes, Q.C. and David S. MacDougall for respondent (plaintiff).

SOLICITORS:

Deputy Attorney General of Canada for appellant (defendant).

McInnes, Cooper & Robertson, Halifax, for respondent (plaintiff).

The following are the reasons for judgment rendered in English by

Stone J.A.: I have had the privilege of reading in draft the reasons for judgment of my colleague Mr. Justice Linden. The facts as found by the learned Trial Judge [[1992] 3 F.C. 54 are not in dispute. I respectfully agree with my colleague that the Trial Judge did not err in interpreting the provisions of section 7 of the Fisheries Act, R.S.C., 1985, c. F-14 and in particular the phrase “authorized to be issued.”[1] I agree that if the respondent is to succeed it should do so on the basis of negligence alone. I also agree that the cross-appeal should be dismissed for the reasons proposed by my colleague.

In paragraph 11 of its pleading, the respondent sought damages both for “incurred expenses” and for “loss of profits.” The learned Trial Judge found [at page 76] that this latter head of damages “was in relation to the claim for breach of contract,” which he had dismissed. Under paragraph 2 of the judgment, the appellant was adjudged to be liable “for reasonably foreseeable financial losses flowing from its reliance during the period of December 29, 1987 to April 29, 1988 on the defendant’s authorization” of the licences for the 1987-1988 fishing season. That aspect of the judgment was not attacked in the cross-appeal.

There is an aspect of this matter on which I desire to express my own views. It concerns the appellant’s argument that the appeal should succeed in any event because the Minister of Fisheries was not under a duty of care towards the respondent at the time the Minister decided not to issue the licences which he had earlier authorized. I wish particularly to address the appellant’s submission that this Court should be guided by some of the reasoning of the Privy Council in Rowling v. Takaro Properties Ltd., [1988] A.C. 473. As the Trial Judge makes no reference to that case in his reasons, I am assuming that it was not relied upon in argument at trial.

In the case at bar, while the decision of whether to authorize a licence pursuant to section 7 of the Fisheries Act was a “policy” decision, the Minister’s subsequent decision to go back on his commitment was simply not authorized by the statute. It is clear that the appellant could not be made liable in negligence for a true policy decision unless it was not made bona fide or was irrational but that, under certain circumstances, could be made liable in negligence for an “operational” decision.

As my colleague has pointed out, the policy/operational dichotomy has by reason of its adoption by the Supreme Court of Canada in Just v. British Columbia, [1989] 2 S.C.R. 1228, become enshrined in the law in Canada. In two recent decisions of the Supreme Court of Canada, the principles developed in Just, supra, were reaffirmed and applied: Brown v. British Columbia (Minister of Transportation and Highways), [1994] 1 S.C.R. 420; Swinamer v. Nova Scotia (Attorney General), [1994] 1 S.C.R. 445.

I agree with the Trial Judge and with my colleague that the Minister’s decision of December 29, 1987 was in the nature of a true policy decision. It is not, of course, this decision but the Minister’s subsequent decision of April 29, 1988 which was communicated to the respondent on May 31, 1988, that is the basis of the claim in negligence. It seems clear that this second decision cannot be classified as one of true policy if, as my colleague has shown and I agree, it was ultra vires section 7 of the Fisheries Act. Nor does it seem to me to have been “operational” in nature in the sense discussed in Just, supra and in subsequent decisions of the Supreme Court. I so conclude from the distinction between a true policy decision on the one hand and an operational decision on the other that is drawn in these cases. That distinction is explained with particular clarity by Cory J., for the majority, in Brown, supra, at page 441:

In distinguishing what is policy and what is operations, it may be helpful to review some of the relevant factors that should be considered in making that determination. These factors can be derived from the following decisions of this Court: Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705; Barratt v. District of North Vancouver, [1980] 2 S.C.R. 418; and Just, supra; and can be summarized as follows:

True policy decisions involve social, political and economic factors. In such decisions, the authority attempts to strike a balance between efficiency and thrift, in the context of planning and predetermining the boundaries of its undertakings and of their actual performance. True policy decision will usually be dictated by financial, economic, social and political factors or constraints.

The operational area is concerned with the practical implementation of the formulated policies, it mainly covers the performance or carrying out of a policy. Operational decisions will usually be made on the basis of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness.

I understand that the purpose of the policy/operational distinction is to allow for the courts to determine whether a decision is such as immunes a public authority from liability in negligence altogether or is one that may attract liability because of the manner in which it was implemented. The underlying assumption regardless of whether the decision is one of policy or is operational appears to be that the public authority made it in the exercise of statutory power. If the decision lies outside the statute, in my view, it could not be saved by being of a “policy” nature simply because there would be nothing to be saved. It seems to me, therefore, that the Minister’s second decision—not to issue the licences which he had authorized by his first decision— cannot be viewed as in any way concerned with the “practical implementation” or “the carrying out” of the earlier policy decision. In short, it is my view that this decision was neither a true policy decision nor an operational decision. It was simply one that was not authorized by the statute.

To so conclude, of course, does not end the matter for, as I have already indicated, it remains to be decided whether a duty of care was owed. My colleague refers to the two-step test enunciated by Lord Wilberforce in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), for determining duty of care. Lord Wilberforce expressed this test in the following words, at pages 751-752:

… the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter—in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise ….

This formulation was adopted in Kamloops (City of) v. Nielsen et al., [1984] 2 S.C.R. 2. Given that the Supreme Court has since reaffirmed the Anns formulation, in my view, it must be applied in this case. It did so in Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021 and in two very recent cases. In Winnipeg Condominium Corporation No. 36 v. Bird Construction Co. [[1995] S.C.J. No. 2 (QL)] (Case No. 23624, judgment rendered January 26, 1995), at pages 26-27, La Forest J. stated:

In the first place, this Court has not followed the House of Lords in repudiating the two-part test established by Lord Wilberforce in Anns. The approach proposed by Lord Wilberforce in Anns was adopted by this Court in City of Kamloops v. Nielsen, [1984] 2 S.C.R. 2, where Wilson J., at pp. 10-11, suggested the following slightly modified version of the Anns test:

(1)  is there a sufficiently close relationship between the parties … so that, in the reasonable contemplation of [one person], carelessness on its part might cause damage to [the other person]? If so,

(2)  are there any considerations which ought to negative or limit (a) the scope of the duty and (b) the class of persons to whom it is owed or (c) the damages to which a breach of it may give rise?

Subsequently, the Anns approach was employed by this Court in Rothfield v. Manolakos, [1989] 2 S.C.R. 1259, at pp. 1266, 1285 and, most recently, in Norsk, supra, where this Court chose not to follow the Law Lords in retreating from the approach in Anns and Kamloops.

The Anns formulation was again applied by the Supreme Court in Stewart v. Pettie [[1995] S.C.J. No. 3 (QL)] (Case No. 23739, judgment rendered January 26, 1995).

I turn then to the first branch of the Anns test. It seeks to discover whether there is a sufficiently close relationship between the parties such that in the reasonable contemplation of the defendant carelessness might cause damage to the plaintiff.[2] I respectfully agree with the Trial Judge that a prima facie duty of care was owed. As he put it, at pages 71-72:

First there was a duty of care owed by the Minister to the plaintiff. There was a proximity between the defendant and the plaintiff, flowing from the Minister’s representation to the plaintiff on December 29, 1987 that the licences would be issued to it. At least from that day onward it should have been obvious to the Minister that any further decisions he took in this matter would directly affect a determinate party, namely this plaintiff.

In my view the Trial Judge correctly concluded that the Minister owed the respondent a duty of care at the relevant time. This was a prima facie duty of care.

The second branch of the Anns test asks the question whether there are any considerations which ought to negative or limit the scope of the duty of care, the class of persons to whom it is owed or the damages to which a breach of it may give rise. It is, in my view, with respect to this branch of the Anns test that the reasoning in Takaro, supra, becomes relevant. That case represents one of several cases in which members of the Privy Council or the House of Lords began to cast doubt on the soundness of the Anns test for determining liability in negligence. Lord Keith indicates his misgivings with that test at page 501, where he refers to “the fear that a too literal application” of Anns “may be productive of a failure to have regard to, and to analyse and weigh, all the relevant considerations in considering whether it is appropriate that a duty of care should be imposed.” This same fear had been earlier expressed in Peabody Donation Fund (Governors of) v. Sir Lindsay Parkinson & Co. Ltd., [1985] A.C. 210 (H.L.) and in Yuen Kun Yeu, supra. These doubts matured into the decision of the House of Lords in Murphy v Brentwood DC, [1990] 2 All ER 908, to abandon the Anns test altogether. The Supreme Court of Canada declined to do the same when the opportunity first presented itself in Norsk, supra. As I have observed, that position was recently reaffirmed in Winnipeg Condominium, supra and in Stewart, supra.

I agree with my colleague that the views of Lord Keith on duty of care were not necessary to his decision which was to the effect that, assuming such a duty was owed, it was not breached. Lord Keith expressly so indicated at page 500 and again at page 503. Nonetheless, in my view his concerns must be examined to see whether any of them might have application in the case at bar. The appellant relied heavily upon Lord Keith’s reasoning in counsel’s submissions. If, indeed, that reasoning were adopted in whole or in part it would considerably strengthen the appellant’s defence.

I turn then to Takaro, supra. In his obiter, Lord Keith referred to six considerations as bearing importantly on the question of duty of care and, indeed, as militating against the imposition of liability. These appear at pages 501-503, where he stated:

Their Lordships wish to refer in particular to certain matters which they consider to be of importance. The first is that the only effect of a negligent decision, such as is here alleged to have been made, is delay. This is because the processes of judicial review are available to the aggrieved party; and, assuming that the alleged error of law is so serious that it can properly be described as negligent, the decision will assuredly be quashed by a process which, in New Zealand as in the United Kingdom, will normally be carried out with promptitude. The second is that, in the nature of things, it is likely to be very rare indeed that an error of law of this kind by a minister or other public authority can properly be categorised as negligent. As is well known, anybody, even a judge, can be capable of misconstruing a statute; and such misconstruction, when it occurs, can be severely criticised without attracting the epithet “negligent.” Obviously, this simple fact points rather to the extreme unlikelihood of a breach of duty being established in these cases, a point to which their Lordships will return; but it is nevertheless a relevant factor to be taken into account when considering whether liability in negligence should properly be imposed.

The third is the danger of overkill. It is to be hoped that, as a general rule, imposition of liability in negligence will lead to a higher standard of care in the performance of the relevant type of act; but sometimes not only may this not be so, but the imposition of liability may even lead to harmful consequences. In other words, the cure may be worse than the disease. There are reasons for believing that this may be so in cases where liability is imposed upon local authorities whose building inspectors have been negligent in relation to the inspection of foundations, as in Anns v. Merton London Borough Council [1978] A.C. 728 itself; because there is a danger that the building inspectors of some local authorities may react to that decision by simply increasing, unnecessarily, the requisite depth of foundations, thereby imposing a very substantial and unnecessary financial burden upon members of the community. A comparable danger may exist in cases such as the present, because, once it became known that liability in negligence may be imposed on the ground that a minister has misconstrued a statute and so acted ultra vires, the cautious civil servant may go to extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken, thereby leading to unnecessary delay in a considerable number of cases.

Fourth, it is very difficult to identify any particular case in which it can properly be said that a minister is under a duty to seek legal advice. It cannot, their Lordships consider, reasonably be said that a minister is under a duty to seek legal advice in every case in which he is called upon to exercise a discretionary power conferred upon him by legislation; and their Lordships find it difficult to see how cases in which a duty to seek legal advice should be imposed should be segregated from those in which it should not. In any event, the officers of the relevant department will be involved; the matter will be processed and presented to the minister for decision in the usual way, and by this means his mind will be focused upon the relevant issue. Again, it is not to be forgotten that the minister, in exercising his statutory discretion, is acting essentially as a guardian of the public interest; in the present case, for example, he was acting under legislation enacted not for the benefit of applicants for consent to share issues but for the protection of the community as a whole. Furthermore he is, so far as their Lordships are aware, normally under no duty to exercise his discretion within any particular time; and if, through a mistaken construction of the statute, he acts ultra vires and delay thereby occurs before he makes an intra vires decision, he will have in any event to exercise his discretion anew and, if his discretion is then exercised in the plaintiff’s favour, the effect of the delay will only be to postpone the receipt by the plaintiff of a benefit which he had no absolute right to receive.

The broad application of this reasoning would probably result in there being no duty of care owed by a public authority except perhaps in a case where the authority acted in bad faith or irrationally.

In Anns, supra, Lord Wilberforce [at page 752] did not elaborate the “considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise.” Lord Keith’s concerns were, of course, not directed to these “considerations” which are to apply where a prima facie duty of care is owed. It is important to remember that Takaro, supra, unlike the present case, involved a claim that a public authority had acted negligently in the exercise of a statutory discretion. That is not the case here assuming, as I believe, that the Trial Judge correctly construed the provisions of section 7 of the Fisheries Act. While the Minister had a discretion to decide whether or not to authorize the issuance of the offshore licences, the statute granted him no discretion to refuse those licences once they were authorized. I acknowledge that the licences were subject to conditions to be attached by the Minister—a matter which I shall address momentarily. It cannot be fairly said that the Minister, like the minister in Takaro, supra, somehow erred in exercising a discretionary power conferred on him by the statute. In my view, at the time he decided not to issue the licences the Minister possessed no such discretion under the statute.

I turn then to Lord Keith’s concerns to see whether any of them should be taken into account under the second branch of the Anns test. It seems to me that Lord Keith’s first concern is a consideration that should be recognized in this case. He suggests that the availability of relief by way of judicial review is a factor to be considered in deciding whether to impose a duty of care. I find that this concern has relevance for the present case. As I shall attempt to demonstrate later, in the present case relief by way of judicial review would have been available to the respondent had it chosen to follow that course.

Lord Keith’s second concern was that [at page 502] “in the nature of things, it is likely to be very rare indeed that an error of law of this kind by a minister of other public authority can properly be categorised as negligent” because “anybody, even a judge, can be capable of misconstruing a statute.” In that case the Minister had been asked to exercise an undoubted statutory discretion in favour of the plaintiff and it was alleged that he strayed outside his mandate. Nothing in the record before us suggests that the Minister even addressed his mind to the construction of the statute, particularly section 7. At page 64 of his reasons, the Trial Judge found:

There is no evidence to explain the volte-face of the Minister between December 29, 1987 and April 29, 1988 other than the obvious: namely the pressure generated by the strenuous objections of the inshore fishermen (who are far more numerous than the offshore fishermen) to any new offshore lobster licenses. The Minister did not testify at this trial and his Department did not produce any evidence suggesting any other reason. Ample evidence was presented of the objections of the inshore fishermen.

The power to make the second decision seems to have been assumed. This is to be contrasted with the situation in Takaro, supra, where the alleged negligence of the Minister occurred in the course of exercising a statutory discretion.

Lord Keith’s third concern was the danger of overkill flowing from a decision to impose liability in negligence on a public authority. He was concerned [at page 502] that “the cautious civil servant may go to extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken, thereby leading to unnecessary delay in a considerable number of cases.” Accepting the force of this argument in the situation which obtained in Takaro, supra, it remains difficult to see how it should have decisive impact on the existence of a duty of care in the present case. We are not here concerned with a decision that was made in the exercise of a discretionary power but with the Minister’s attempt to reverse a decision so made. The circumstances are most unusual. Still I do not see this consideration as having the same weight it might possibly hold in some circumstances.

Lord Keith then expressed the view that it could not [at page 502] “reasonably be said that a minister is under a duty to seek legal advice in every case in which he is called upon to exercise a discretionary power conferred upon him by legislation.” It does appear, once again, that Lord Keith’s principal focus here was on the situation before him. I have already suggested that the present case is materially different. In the circumstances of this case, in my view, the Minister ought to have assured himself that the statute that empowered him to make the first decision empowered him to reverse it. This was not too much to expect.

I can well understand Lord Keith’s next concern, namely, that the [at page 502] Minister was there “acting essentially as a guardian of the public interest.” That much might well be said of the Minister’s December 29, 1987 decision because it was a policy decision which likely took account of such matters as the extent of the resource and the extent to which its exploitation should be permitted. Again, we are not here concerned with that particular decision. According to the findings at trial the second decision did not grow out of a true concern for protecting the community interest in the resource. This is evident from the Trial Judge’s findings at page 71:

The evidence presented on behalf of the defendant, while honest and straightforward, simply did not demonstrate any reasonable justification for first announcing a decision authorizing the issue of the lobster licences to the plaintiff and then the withdrawal of that authorization. The only apparent justification for a change in the decision to issue the licences was the strident opposition of the inshore fishermen. But the evidence indicated that even prior to the announcement authorizing the licences, such opposition was quite predictable if not perhaps its strength and volubility.

Lord Keith’s final concern [at page 503] was that the Minister was “normally under no duty to exercise his discretion within any particular time”; that if he acted ultra vires in doing so and delay resulted “the effect of the delay will only be to postpone the receipt by the plaintiff of the benefit which he had no absolute right to receive.” Upon the Trial Judge’s construction of the statute, which I have adopted, the Minister was not here engaged in the exercise of a statutory discretion in coming to his decision of April 29, 1988.

I wish now to elaborate my reasons for the view already expressed that in deciding duty of care it is important to see whether adequate administrative law remedies were available to the respondent. This was Lord Keith’s first concern in Takaro, supra. The same point is made as follows in C. Lewis, Judicial Remedies in Public Law (London: 1992), at page 379:

Decisions taken in the exercise of statutory power will be subject to judicial review, and sometimes a statutory right of appeal. Unlawful decisions can be nullified and the individual relieved of the consequences of such a decision. The existence of these remedies is regarded by the courts as an indicator that no additional remedy in negligence need be provided, particularly where the judicial review or appeal is adequate to rectify matters, and the only real damage suffered by the individual is the delay and possibly the expense involved in establishing that a decision is invalid. This seems in part an axiomatic decision on the part of the court, that there should be a division between public law remedies and private law remedies. Where an ultra vires decision can be set aside on appeal or review, there should not normally be any additional liability in damages, unless the individual can establish misfeasance. Simple negligence is insufficient. The fact that the decision may be set aside may also mean that the only damage suffered is the expense involved in challenging the decision.

As these views were expressed in the context of liability in negligence under principles which were to some extent developed in England in the post-Anns era, they must, of course, be read with that in mind. Nonetheless, I find the analysis compelling. At least from the time the Minister formally communicated his second decision by letter of May 31, 1988, the respondent was in a position to seek a relatively quick and sure remedy of certiorari by way of judicial review in the Trial Division of this Court. If, as I have concluded, the Minister had no authority to make this second decision, the Trial Division would surely have set that decision aside.

The removal of that obstacle would have cleared the way for the respondent to seek an order in the Trial Division by way of mandamus requiring the Minister to issue the licences. The licences were to be subject to certain “specific conditions” but it is apparent from the findings of the Trial Judge that these conditions presented no barrier to their issuance. According to the findings below, some at least of these conditions had been discussed and presented no difficulty. He made a finding at page 62, that “until at least March 8” the Department of Fisheries “would have issued [the licences] subject to settling any specific conditions.” At page 67 he found:

When the licences were ultimately refused, the refusal had nothing to do with a failure by the plaintiff to meet any specific conditions.

Later, at page 74, he found as a fact that:

The evidence further was to the effect that, as a result of subsequent discussions undertaken between fisheries officials and those authorized to receive the new licences, matters were proceeding without difficulty to the actual issue of the licences. No policy issues remained to be resolved. The objective facts indicate the assumption on both sides that the actual issue of the licence certificates was a matter of routine, not a matter of policy. Therefore there is no basis for denying the existence of a duty of care in the manner in which the licence authorizations were cancelled.

The conditions to be attached to the licences were not a matter for negotiations between the parties; they were for the Minister to impose and indeed he did impose conditions in addition to those which had been discussed between his officials and the respondent.[3] In this case, at least, the Minister did not refuse to issue the licences because of a condition to be imposed. What the evidence indicates is that the conditions to be attached merely caused delay in the issuance of the licences.[4] Accordingly, the remedy of the mandamus by way of a judicial review application in the Trial Division, requiring the licences to be issued, was available to the respondent in the spring of 1988.

Would these remedies have been adequate to rectify the matter from the respondent’s standpoint? The respondent had incurred expenses between December 29, 1987 and April 29, 1988, in converting boats for use in the offshore lobster fishery. The availability of these remedies would have allowed the respondent to put its boats to use in this fishery. I recognize that this fishery was seasonal and that if the respondent wished to pursue it after the end of the 1987-1988 season it would have needed renewed licences. I also acknowledge that the delay in securing relief by way of judicial review might have resulted in the respondent being able to spend very little or, perhaps, no time fishing before the end of that season. How soon the respondent might have obtained the relief and whether the licences would have been renewed are matters about which one can only speculate. I refrain from so doing. It may be fairly said that in incurring the cost of converting the boats the respondent gambled that the licences which were authorized on December 29, 1987 would be renewed at the end of the 1987-1988 fishing season, for their renewal lay within the Minister’s absolute discretion under subsection 7(1) of the Act.

I have concluded that the availability of adequate administrative law remedies by way of judicial review is a consideration to be taken into account under the second branch of the Anns test in deciding whether the scope of prima facie duty of care should be negatived in the circumstances of this case. In my view that duty is so negatived. Accordingly, in my view, as the appellant owed no duty of care to the respondent the appellant should not be held liable in negligence.

I would allow the appeal with costs in this Court and at trial and would dismiss the cross-appeal with costs.

* * *

The following are the reasons for judgment rendered in English by

Linden J.A. (dissenting in part): This appeal requires this Court to unravel a complex issue in which the worlds of administrative law and tort law collide.

Certain fishing licences are authorized by the Government, subject to specific conditions to be discussed. With the actual knowledge of the Government, expenditures are incurred in preparation by the intended licensees. Despite there being no problems in relation to the conditions, the Government changes its mind and does not issue the licences. Financial loss is thereby suffered. A civil action for damages is brought by a disappointed “licensee,” who is successful at trial. The Government appeals and the “licensee” cross-appeals to this Court.

FACTS

Comeau Sea Foods Limited (Comeau) is an integrated fishing company which operated up to 15 vessels off the coast of Nova Scotia. Since 1984, the company had been expressing to the Government its interest in obtaining offshore lobster fishing licences. The resolution of the Gulf of Maine boundary dispute between Canada and the United States in 1985 added some additional lobster fishery areas to Canadian waters. Comeau, consequently, renewed its efforts to obtain lobster licences through 1986 and 1987. In September, 1987, the Minister indicated to the Comeau family that their company would receive at least one offshore lobster licence.

On December 29, 1987, the Minister of Fisheries and Oceans sent Comeau a telex informing the company that he had authorized four licences and specifying its enterprise allocation (EA or the amount of allowable catch) for the current fishing year:

I am pleased to advise you that I have authorized the issuance of two offshore lobster licences to your company valid for NAFO divisions 4X/5Z and two experimental offshore lobster/red crab licences valid for NAFO division 4W. One of each of these licences will be fished as a unit and will be placed on two of your company vessels greater than 60 feet LOA.

Your company’s EA based on a 12 month fishing season (Oct. 15-Oct. 14) for lobster in division 4W will be 60T per vessel with no catch limit for red crab. Similarly your company’s EA for lobster in divisions 4X/5Z will be 30T per vessel.

These EAs will be prorated for the 1987/88 season as follows for each of your vessels:

Division 4W—48T

Divisions 4X/5Z—24T

Regional officials will be in contact with you shortly at which time specific conditions of licence will be discussed.

On January 11, 1988, regional officials invited Comeau and others to a “meeting of the offshore lobster licence holders” to be held at Hunt’s Point, Nova Scotia, on January 14, 1988. Present at the meeting were previous licence holders, as well as representatives of Comeau and others who had received licence authorizations from the Minister on December 29, 1987. The Department explained the new allocations and controls which would be imposed.

On January 27, 1988, those present at the meeting received a second telex from the Department, notifying them that they were to file fishing plans for each vessel for the balance of the current season. Comeau did so by letter dated January 29, 1988, naming the two vessels to be used: Lady Comeau and Lady Louise. The letter further stated:

These vessels are presently geared for the scallop fishery but work to convert these for the offshore lobster fishery is due to start very shortly. These vessels should be ready to go fishing in April.

From this point in time until March 8, 1988, licences could have been issued to Comeau at any time, but since the conditions had not yet been finalized, the licences would have been issued subject to the settlement of those conditions. On March 8, however, instructions were received from Ottawa that these licences were not to be issued without specific clearance from the Assistant Deputy Minister in Ottawa.

Ever since the announcement of the new licences on December 29, 1987, inshore lobster fishers, who were much more numerous than the offshore group, opposed the new licences and actively lobbied the Minister to change his decision. The Minister’s initial response, based on a report he had received, was that there was no scientific evidence to demonstrate that issuing new licences in area 4W would harm the inshore fishery. The pressure continued. Following a meeting with the inshore people on March 30, 1988, the Minister issued a press release stating that he would not “cancel” the new offshore lobster licences, but that he was prepared to impose conditions to meet the concerns of the inshore lobster fishery. Despite this assurance, the inshore fishers continued their opposition, the matter becoming a major political issue both in Nova Scotia and in Ottawa.

Eventually, the political pressure succeeded, causing the Minister to change his mind. In what the Trial Judge called a “volte-face,” on April 29, 1988, the Minister reneged and announced in a press release that “the four experimental offshore lobster licences in Nova Scotia would not be issued in the foreseeable future,” pending the results of a new study “of all the major issues facing the lobster industry in Scotia-Fundy Region.” This decision was confirmed by letter to Comeau dated May 31, 1988. Although the study was completed in 1990, at the time of the trial decision in the spring of 1992, Comeau had not yet received the licences, initially authorized in late 1987.

TRIAL DECISION

Mr. Justice Strayer, the Trial Judge, as he then was, in twenty-three pages of written reasons,[5] found the Government civilly liable to Comeau. He described the situation as an example of [at page 71] “erratic public administration which was productive of serious mischief to private entrepreneurs.”

His Lordship considered the scope of the Minister’s authority under the relevant provisions of the Fisheries Act, R.S.C., 1985, c. F-14, sections 7 and 9 [as am. by R.S.C., 1985 (1st Supp.), c. 31, s. 95], which read as follows:

7. (1) Subject to subsection (2), the Minister may, in his absolute discretion, wherever the exclusive right of fishing does not already exist by law, issue or authorize to be issued leases and licences for fisheries or fishing, wherever situated or carried on.

(2) Except as otherwise provided in the Act, leases or licences for any term exceeding nine years shall be issued only under the authority of the Governor in Council.

…

9. The Minister may suspend or cancel any lease or licence issued under the authority of this Act, if

(a) the Minister has ascertained that the operations under the lease or licence were not conducted in conformity with its provisions; and

(b) no proceedings under this Act have been commenced with respect to the operations under the lease or licence.

Counsel for the Government, at trial, argued that section 7 gives the Minister absolute discretion to decide whether a licence should be issued or authorized to be issued, including the right to change his mind at any time until the licence has actually been issued. After that point, it is conceded that the Minister must act in accord with section 9.

Mr. Justice Strayer disagreed, saying (at pages 66-67):

The language of section 7 is quite clear in stating that there is an absolute discretion either to issue or to authorize the issue of a licence. The meaning of this language seems plain. If the Minister issues the licence nothing remains to be done by anyone. If he authorizes the issue, as he did here, with certain conditions to be settled with the intended licensee, then it only remains for someone else (his officials) to work out those conditions with the licensee. The position of an authorized licence is perhaps more ambiguous than that of an issued licence (the latter being revocable only in accordance with section 9). But there is no continuing role for the Minister in respect of an authorized licence. His absolute discretion is either (1) to issue, or (2) to authorize the issue, of the licence.

Thus, the Trial Judge held that, having decided to authorize licences to be issued to Comeau, the Minister had exhausted his discretion. His decision later to refuse to issue those licences was, therefore, beyond his powers. The Trial Judge found support for this conclusion, in part, on the fact that everyone, from the Minister on down, acted as if the licences had already been granted. The Minister included the catch allocation for the current fishing season in the telex of December 29, 1987, informing Comeau that it would receive four licences. In subsequent meetings and correspondence involving Comeau and departmental officials, Comeau was addressed and treated as if it were already a “licence holder.” No one disputed that the licences could have been issued at any time prior to March 8, 1988, after which issuance they could only have been cancelled in accordance with section 9.

Having determined that the purported decision to refuse to issue the licences was ultra vires the Minister, the Trial Judge then considered the four legal bases advanced by Comeau for finding civil liability: (l) promissory estoppel; (2) irrevocable legal act; (3) breach of contract; and (4) negligent breach of statutory duty.

The Trial Judge rejected the first basis on procedural as well as substantive grounds. He denied the respondent’s application at trial to amend its statement of claim to plead promissory estoppel because of the lateness of the application. On the substantive question he also stated (at pages 68-69):

In coming to this conclusion I am influenced by the fact that I think such a pleading would in any event be futile. It would be an attempt to base a cause of action, a claim for damages, on a promissory estoppel and not merely the invocation of such a promise in order to estop the promisor from acting inconsistently with that promise. I believe this strains the concept of promissory estoppel and this is not a case suitable for its application.

The second basis for founding liability, that the Minister had performed an irrevocable legal act the purported revocation of which caused damages to the respondent, was also rejected. This argument was based partly on estoppel and partly on a suggestion that, once he had authorized licences to issue, the Minister was functus officio. The Trial Judge explained (at page 76):

I have rejected estoppel above, and I am not convinced the functus officio argument adds anything to my conclusion that it was ultra vires the Minister to revoke an authorization once given and refuse to issue where the refusal to issue had nothing to do with the conditions on which the licence was authorized to be issued.

Neither was the Trial Judge persuaded by the third ground—breach of contract. Comeau’s position was that a contract was created to the effect that Comeau would prepare for and carry out offshore lobster fishing in exchange for the Minister issuing the licences authorized on December 29, 1987. The Minister would benefit from the information gained through Comeau’s fishing in the experimental area 4W, which had not been previously fished. Comeau argued that, by commencing the conversion of its boats, it had begun to perform the contract and the Minister was, therefore, contractually bound to issue the licences.

The Trial Judge stated that the nature of the relations between those who issue licences and those who apply for them is generally governed by the provisions of the relevant statute and not by the law of contract. If contractual obligations were intended to flow from the application for, and grant of, a licence, there should be clear evidence to that effect, evidence which was not present here. The proposition that Comeau’s expenditure of funds to convert his boats constituted “acceptance” of the “offer” contained in the Minister’s December 29, 1987, telex was not persuasive, for there was no evidence that the Minister even knew prior to that time that Comeau would expend funds. In fact, Comeau had previously advised the Minister that it already possessed suitable boats for lobster fishing.

Mr. Justice Strayer concluded that the only possible basis for liability was the fourth contention— negligence. He decided that the elements of negligence—a duty of care, a breach of that duty, and a foreseeable loss as a consequence of the breach—had been established. His reasons, on this point, are as follows (at pages 71-72):

First there was a duty of care owed by the Minister to the plaintiff. There was a proximity between the defendant and the plaintiff, flowing from the Minister’s representation to the plaintiff on December 29, 1987 that the licences would be issued to it. At least from that day onward it should have been obvious to the Minister that any further decisions he took in this matter would directly affect a determinate party, namely this plaintiff. Second, there was a breach of the requisite standard of care. At least as of January 29, 1988 when the plaintiff advised the Department of Fisheries and Oceans that it was undertaking work to convert vessels for the offshore lobster fishery in order to use the licences, it was perfectly foreseeable that any departure from the line of conduct (i.e. the issue of the licences) previously announced by the Minister on December 29, 1987 would have a harmful effect on the plaintiff. Third, as I have indicated the evidence satisfies me that at least some foreseeable financial loss was suffered by the plaintiff as a result of the volte-face of the Minister on April 29, 1988.

The Government argued that, even though the elements of ordinary negligence may have been established, no liability should attach to the Minister or the Crown. Two grounds were urged in favour of this result: first, that no duty of care was owed by the Minister to Comeau because the Minister was making a policy decision, not an operational one; and second, that the Minister was exempt from liability because his actions in exercising his absolute discretion were authorized by statute and, therefore, the Minister was protected from tort liability by general legal principles and by the provisions of section 8 of the Crown Liability and Proceedings Act, R.S.C., 1985, c. C-50 [as am. by S.C. 1990, c. 8, s. 21].

On the Government’s first argument, dealing with the policy immunity, the Trial Judge’s reasons are as follows (at pages 73-75):

In respect of public authorities there is a good reason not to find a duty of care if the decision of the authority which caused harm was a “policy” decision. By this means courts respect the right and obligation of public bodies to make policy within the ambit of their authority and the courts do not presume to review such policy decisions for which the public authorities are politically responsible…. On the other hand, decisions taken in the “implementation” of those policy decisions are subject to a duty of care. In effect, once the necessary policy decision is taken, it should be implemented in a way which will not cause an unreasonable risk of harm to those foreseeably affected by it.

It should first be observed that this rationale proceeds, as I understand it, on the assumption that the alleged “policy” decision is authorized by statute. In the present case I have already decided that the decision complained of, the refusal to issue, was ultra vires the Minister.

But I have also concluded that the only relevant policy decision was taken by the Minister when he announced that he had authorized the issue of the licences to the plaintiff. This was no mere informal step but was one specifically provided for in subsection 7(1) of the Fisheries Act which gives him a discretion to “issue or authorize to be issued … licences”. The evidence suggests in this case that the decision was to authorize the issue rather than the actual issue because there were still some detailed conditions to be worked out…. No policy issues remained to be resolved. The objective facts indicate the assumption on both sides that the actual issue of the licence certificates was a matter of routine, not a matter of policy. Therefore there is no basis for denying the existence of a duty of care in the manner in which the licence authorizations were cancelled.

Second, even if one accepted the defendant’s argument that after authorizing the issue of the licences the Minister retained an absolute discretion to refuse to issue them, I am not satisfied that this would be an obstacle to a plea of simple negligence. The defence of statutory authority has never been absolute. If an agency was given a discretionary power it could not rely on statutory authority as a defence in actions in tort for harm committed in the exercise of that power unless it could show that the interference with private rights complained of was inevitable in the exercise of the power…. In the present case the defendant has not demonstrated that this manner of managing lobster fishery licences was the inevitable consequence of the exercise of discretion under section 7 of the Fisheries Act.

The other arguments of the Government were also rejected. The Trial Judge ruled that the defence of statutory authority is not absolute, but can only provide a defence to a claim in negligence if the harm complained of is the inevitable consequence of the exercise of the power granted in the statute. He concluded (at page 75):

Authorizing the issue of a licence within the licence year in which the announcement was made, and then refusing to issue the licence after an intended licensee has to the knowledge of the Minister undertaken expenditure on the basis of the authorization of his licence, has not been shown to my satisfaction to be a necessary means of exercising the Minister’s discretion under section 7.

With respect to the Government’s position on the statutory exemption, the Trial Judge correctly pointed out that section 8 of the Crown Liability and Proceedings Act has been held by the Federal Court of Appeal, in Swanson v. Canada (Minister of Transport),[6] to be relevant only to non-negligent conduct. As the Trial Judge had already concluded that the Minister’s actions in this case were negligent, he ruled that the statute did not apply.

In the result, the Trial Judge found the Government liable in negligence, but rejected the three other grounds of potential liability. The assessment of damages had been left for another day, following the determination of the liability issue, by order of Mr. Justice Martin, dated May 7, 1991.

ISSUES ON APPEAL

There are three main areas of contention in this appeal: (1) the meaning of section 7; (2) the negligence cause of action; and (3) exemption from liability: policy/operational. I shall consider each of them in turn.

1.         The Meaning of Section 7

The appellant contends that section 7 gives the Minister the absolute discretion whether or not to issue or authorize the issuance of licences, including the right to decide not to issue licences which had previously been authorized. The Trial Judge rejected this contention, ruling that the words were quite plain: the Minister’s discretion extended to doing one of two things and two things only—issuing a licence or authorizing a licence to be issued. The Trial Judge also decided that, in purporting to withdraw the authorization of licences to Comeau, the Minister was acting without statutory authority. In my view, the Trial Judge was correct in these conclusions.

Section 7 confers a power on the Minister to issue licences or to authorize the issue of licences. This power can be described as a positive power, the power to give or grant a privilege or right. Section 9 confers on the Minister the power to suspend or cancel existing licences. This power can be described as a negative power, the power to revoke, to remove, to take away rights and privileges previously granted. The power of the Minister under section 9 is not absolute as it is under section 7. The Minister may suspend or cancel the licence only if the licence-holder has violated the terms and conditions under which the licence is held. These limits on the Minister’s power recognize that the suspension or cancellation of a licence is likely to have adverse consequences for the licence-holder. In one case, for example, a minister who purported to cancel a fishing licence in order to make an example of a particular fisherman was held to be acting without jurisdiction. In LaPointe v. Canada (Minister of Fisheries & Oceans),[7]⁷ Mr. Justice Collier imposed civil liability, saying:

… an authority in which a discretion is vested …. cannot take any action which is not authorized by statute; its actions must be in keeping with the spirit of the legislation which gives it the power to act. When the authority does act it cannot do so in an arbitrary or capricious manner; the law requires that a decision-making authority act in good faith, having regard to all relevant considerations before it.

Counsel for the Government acknowledged in this case that, once the Minister has issued a licence under section 7, it can only be revoked in accordance with section 9. With respect to a ministerial decision to authorize a licence to be issued, however, the Government argued that, until a physical certificate of licence has been drawn up and handed to the licence-holder, the Minister may revoke or withdraw this authorization at will. But what is the real difference between issuing a licence and authorizing a licence to be issued? Clearly the Minister does not keep a supply of licence certificates in his desk, which he fills in and signs, thereby “issuing” a licence. Normally one would expect that his officials do this on the Minister’s instructions.

Why then does section 7 contain these two different types of authority and what do they mean? I am not persuaded by the explanation of counsel for the Government that the words “authorized to be issued” were intended to deal with situations where the responsibility to issue licences is shared with another minister or Crown agent. Those situations are rare indeed and would not warrant this special wording in the statute. To me, the obvious construction of section 7 is that it provides for two situations: first, if the conditions of licence are already known or settled, the Minister simply directs his officials to issue the licence. If, however, terms and conditions of licence remain to be settled, but the Minister has decided that someone should receive a licence, the Minister authorizes his officials to issue the licence as soon as the conditions have been finalized. Such an interpretation is consistent with administrative efficiency, since, as long as agreement can be reached on the conditions of licence, ministry officials do not need to go back to the Minister. If this interpretation is correct, the Minister cannot withdraw without cause an authorization for a licence, at least one which has been communicated to the applicant.

This was the interpretation adopted by the Trial Judge, which he found to be supported by the evidence. In my view, he was correct. Not only did the Minister inform Comeau that he had authorized four new licences, he also told them how much fish they were entitled to catch under those licences in the fishing year already in progress. The Minister, his officials, and Comeau all acted as if Comeau had already received the licences. Comeau was invited to meetings of licence-holders. Comeau received correspondence addressed to licence-holders. The physical issue of the certificates of licence was treated as mere paperwork, a mere formality, which would be completed in due course.[8] The Minister exceeded his authority in purporting to withdraw the authorization on the facts of this case.

It could be argued that the result might be different if the Minister had changed his mind about issuing the licence before he notified Comeau. Similarly, it might be said that if the Minister had merely made a general public statement that new licences would be issued, Comeau would have no assurance that he would receive one. Reliance would not be warranted. The Minister would be free to change his mind, for a general statement that something will be done is not the same as a specific commitment to an individual. In this case, an authorization of licences was made in writing and specifically communicated to the respondent.

This is not a situation similar to that in San Sebastian Pty. Ltd. v. Minister Administering Environmental Planning and Assessment Act 1979,[9] where developers invested in land on the basis of a municipal development plan which a city council committed itself to consider when reviewing future development applications. Had the municipality bound itself not merely to consider but to follow its development plan, a stronger argument for liability might have been available, if it failed to do so. However, the developers were, in effect, gambling (or, to put it in more business-like terms, taking a calculated risk) that the council would follow its development plan. In the context of this case, if Comeau proceeded with the conversion of its boats for the lobster fishery in anticipation of being granted a licence on the basis of a general statement about plans to issue further licences, it would have been gambling too. Until the company had been officially notified of the Minister’s decision to authorize a licence, there would be no basis for complaint if the gamble did not pay off.

2.         The Negligence Cause of Action

Having determined that the Minister acted ultra vires in purporting to withdraw the licence authorizations, we must now consider the matter of the consequences of that breach. We leave the world of administrative law and enter the world of tort law.

It is clear that, just because a minister or other government official is mistaken about the manner in which he exercises his discretion, civil liability does not necessarily follow.[10] In Rowling v. Takaro Properties Ltd.,[11] a government minister was required to give his consent to certain purchases by non-residents of land in New Zealand. In deciding whether to give that consent, it was argued that the Minister considered a factor he was not entitled to consider. The plaintiffs who had suffered financial loss as a consequence of the Minister’s refusal to consent to the purchase claimed that the Minister acted negligently in the exercise of his powers, knowingly exceeding his authority, and exercising that authority maliciously. The Trial Court ruled that the Minister honestly believed he was exercising his function properly. The Minister knew he could not rely on the impugned factor as the sole consideration in arriving at his decision, but believed he could consider it along with other factors. The Court of Appeal reversed, finding the Minister negligent on the basis that, if he knew that he could not rely solely on the impugned factor, he should have known that he could not consider it at all. In restoring the trial decision, the Privy Council ruled that the Court of Appeal had ignored the Trial Judge’s finding of fact that the Minister, even after receiving advice from a cabinet committee, believed he could take the factor into account.

But Takaro is not applicable here, because in Takaro, the Minister was making the decision he was authorized to make by the statute. His mistake was in the manner in which he arrived at the decision he made. In the present case, however, the Minister made a decision he was not authorized to make and, therefore, exceeded his statutory authority.

The Trial Judge concluded that the Minister’s decision to withdraw the licence authorization was both a breach of his statutory duty and actionable negligence. To summarize his reasons, quoted extensively above, the purported withdrawal was found to be negligent in the context of the communication of the licence authorization by the Minister to Comeau (complete with catch allocation), the actual and reasonable reliance by Comeau on the authorization which was demonstrated by expenditures on converting the fishing boats, the Minister’s actual knowledge of that reliance and the foreseeability of damage to Comeau as a result of reneging. I am of the view that he was correct.

Duty

Ever since Donoghue v. Stevenson[12] was decided, a duty of care has been owed by all to take reasonable care to avoid injuring one’s neighbour. Subject to the policy/operational problem, which will be discussed below, Lord Atkin’s memorable and poetic words guide us to this day:

The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be—persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

This statement of the neighbour principle has served as a “general road sign”[13] for later courts, but not as a binding rule. According to Lord Reid, the neighbour principle “ought to apply unless there is some justification or valid explanation for its exclusion.”[14] In other words, the Court should hold that a duty arises wherever some harm is reasonably foreseeable, unless good policy reasons exist for denying such a duty.

One attempt at explaining the situation is that of Lord Wilberforce in Anns v. Merton London Borough Council,[15] who wrote:

… the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity of neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter—in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise ….

This two-stage approach to the test of duty was adopted by the Supreme Court of Canada in Kamloops (City of) v. Nielsen et al.,[16] where Madam Justice Wilson particularized it to a degree:

(1)  is there a sufficiently close relationship between the parties … so that, in the reasonable contemplation of the [defendant], carelessness on its part might cause damage to that person? If so,

(2)  are there any considerations which ought to negative or limit (a) the scope of the duty and (b) the class of persons to whom it is owed or (c) the damages to which a breach of it may give rise?

This test was consistently followed in other Supreme Court of Canada cases.[17]

Following the retreat from Anns in the United Kingdom,[18] the Supreme Court of Canada, in Canadian National Railway Co. v. Norsk Pacific Steamship Co.,[19] unanimously and resoundingly refused to alter its course and reiterated its faith in Anns. The Anns case is, therefore, alive and well in Canada even though it has been buried in the land of its birth. This is encouraging because Anns was a helpful refinement of the neighbour principle espoused in Donoghue v. Stevenson, which is and should remain the bedrock principle of negligence law.

This being an economic loss case, however, an additional factor should be present before a duty of care can be said to be owed—that of proximity. Madam Justice McLachlin explained the concept in Canadian National Railway Co. v. Norsk Pacific Steamship Co.,[20] where she wrote:

The matter may be put thus: before the law will impose liability there must be a connection between the defendant’s conduct and plaintiff’s loss which makes it just for the defendant to indemnify the plaintiff. In contract, the contractual relationship provides this link. In trust, it is the fiduciary obligation which establishes the necessary connection. In tort, the equivalent notion is proximity. Proximity may consist of various forms of closeness—physical, circumstantial, causal or assumed—which serve to identify the categories of cases in which liability lies.

Viewed thus, the concept of proximity may be seen as an umbrella, covering a number of disparate circumstances in which the relationship between the parties is so close that it is just and reasonable to permit recovery in tort. The complexity and diversity of the circumstances in which tort liability may arise defy identification of a single criterion capable of serving as the universal hallmark of liability. The meaning of “proximity” is to be found rather in viewing the circumstances in which it has been found to exist and determining whether the case at issue is similar enough to justify a similar finding.

In summary, it is my view that the authorities suggest that pure economic loss is prima facie recoverable where, in addition to negligence and foreseeable loss, there is sufficient proximity between the negligent act and the loss. Proximity is the controlling concept which avoids the spectre of unlimited liability. Proximity may be established by a variety of factors, depending on the nature of the case. To date, sufficient proximity has been found in the case of negligent misstatements where there is an undertaking and correlative reliance (Hedley Byrne); where there is a duty to warn (Rivtow); and where a statute imposes a responsibility on a municipality toward the owners and occupiers of land (Kamloops). But the categories are not closed. As more cases are decided, we can expect further definition of what factors give rise to liability for pure economic loss in particular categories of cases. In determining whether liability should be extended to a new situation, courts will have regard to the factors traditionally relevant to proximity such as the relationship between the parties, physical propinquity, assumed or imposed obligations and close causal connection. And they will insist on sufficient special factors to avoid the imposition of indeterminate and unreasonable liability. The result will be a principled, yet flexible, approach to tort liability for pure economic loss. It will allow recovery where recovery is justified, while excluding indeterminate and inappropriate liability, and it will permit the coherent development of the law in accordance with the approach initiated in England by Hedley Byrne and followed in Canada in Rivtow, Kamloops and Hofstrand.

In this way, Her Ladyship indicated that proximity would parallel the civil law requirement of direct causation, positing a “close link” between the negligence and the loss, and excluding “[d]istant losses which arise from collateral relationships.”[21]

The proximity in the relationship between Comeau and the Minister in this case is obvious. Direct discussions took place between them. A written communication was sent by the Minister to Comeau announcing the authorization of licences and granting specific quotas, subject to conditions. Comeau wrote to the Department about its plans and the work to be done on the ships. The Department was fully aware of the alterations being done. Meetings were attended to discuss plans and the opposition to those plans. The purported withdrawal was made, not only in a public statement, it was directly communicated to Comeau in writing. There is clear proximity in this case—physical, circumstantial and causal. This is not one of those economic loss cases where the courts have to be concerned about “liability in an indeterminate amount for an indeterminate time to an indeterminate class” that so worried Mr. Justice Cardozo in Ultramares v. Touche.[22] In this case, there was a determinate number of “licensees,” given permission to fish for a particular quota in a specific area for a finite period of time. The cost of the alterations being undertaken to the ships in preparation would be easily calculable. There is, therefore, no reason to conclude that there is no duty owed by the Government to Comeau in these circumstances of proximity, save for the policy/operational issue to be discussed below.

Breach by Negligent Conduct

Not only was the Trial Judge correct in holding that a duty of care existed, there was sufficient basis for him to have found that negligent conduct was proven. The standard of the reasonable person was breached, according to the finding of the Trial Judge. Appeal courts are reluctant to interfere with findings of fact if there is evidence capable of supporting the decision and there is no palpable and overriding error.[23]

Mr. Justice Strayer recognized that mere evidence of a statutory violation by itself did not require him to find negligence. Ever since R. in right of Canada v. Saskatchewan Wheat Pool,[24] a statutory breach is considered to be evidence of negligence; a judge is entitled to accept the evidence or to reject it. The judge is not bound to rely on it, but he may do so, if he chooses to do so.

The way in which statutory breach should be considered in assessing negligence was described by Dickson, J.[25] (as he then was):

It must not be forgotten that the other elements of tortious responsibility equally apply to situations involving statutory breach, i.e. principles of causation and damages. To be relevant at all, the statutory breach must have caused the damage of which the plaintiff complains. Should this be so, the violation of the statute should be evidence of negligence on the part of the defendant. [Underlining is mine.]

Prior to Saskatchewan Wheat Pool, violation of a statute was prima facie evidence of negligence; that is, the judge had to accept it as negligence, unless there was evidence to the contrary.[26] There were also cases where violation of statute amounted to negligence per se.[27] Nowadays, however, such violation is only some evidence of negligence upon which the judge may or may not rely.

The Trial Judge determined, as a fact, that the Minister’s ultra vires withdrawal of the licence authorization in violation of the legislation, in the context of these circumstances, amounted to negligent conduct causing foreseeable loss to Comeau. Negligent conduct has been correctly found to exist in this case. I see no reason to disagree with him on the facts of this case. There was not only reasonable foresight of potential loss by Comeau, but actual knowledge of the type of expenditure being undertaken. The Government knew it would cost Comeau money if it reneged on the licence. There was reasonable reliance by Comeau on the Minister’s authorization of the licence. There was economic loss proximately resulting from the purported withdrawal.

All of the elements of a cause of action for negligence have, therefore, been properly established, except for the policy/operational issue.

Related Jurisprudence

There have been cases where, in similar situations to this, it has been held on the particular facts that there can be contractual liability.

In Somerville Belkin Indust. Ltd. v. Man.,[28] for example, the plaintiff agreed to purchase a plant if Government assistance were available to help operate it. A grant was approved by the Economic Development Committee of Cabinet and by the full Cabinet of Manitoba. This decision was communicated to the plaintiff by letter from the Minister’s office dated the day of a provincial election, but the Order in Council was not finalized. Although the Government then changed, the plaintiff was assured by departmental officials that the grant would still be forthcoming and the plaintiff continued to expend funds. The new Government reneged and refused to advance the grant and the plaintiff sued. The Court of Appeal, affirming the trial decision, ruled that the new Government was bound by the commitment. The Order in Council was held to be a mere formality, the absence of which could not negate an agreement intended by both parties to be binding.

The majority in Somerville Belkin adopted the reasons of Stone J.A. in R. v. CAE Industries Ltd.[29] CAE Industries took over an Air Canada maintenance facility on the understanding that the federal government would guarantee a minimum number of hours of work and use its best efforts to bring additional work to the plant. The basis for that understanding was a letter signed by three federal cabinet ministers to the President of the plaintiff company. The federal government took the view that the letter was a political understanding with no intention of creating contractual relations. Mr. Justice Stone disagreed, noting:[30]

It is clear from the evidence that the parties treated the document as a binding contract to the extent that it was partly performed. Moreover, as has been pointed out the onus of proof in a case of this kind “is on the party who asserts that no legal effect was intended, and the onus is a heavy one” …. [Citations omitted.]

The facts here cannot support a finding of contractual liability, but the situation does bear some resemblance to these cases. The evidence which was accepted by the Trial Judge showed clearly that both Comeau and the Department treated the issuing of the licences as a mere formality which would be fulfilled in due course, not unlike the situation in Somerville Belkin. All parties proceeded as if the licences had already been granted, the Minister by allocating a catch quota and Comeau by converting the boats. The common understanding of the parties was that Comeau would be fishing that season under these licences. There were no promises meant to be binding, however, and, hence, no contract. The governing principles covering the issuance of the licences in this case are those of public law and tort law, not contract law. It is, nevertheless, comforting to see consistent results in similar situations based on different theories of liability.[31]

3.         Exemption from Liability: Policy/Operational

Even though the governmental action is ultra vires and even though it has been found prima facie to give rise to a cause of action for negligence, civil liability does not necessarily follow. The no-man’s-land between administrative law and tort law must now be traversed. The Court must decide whether the principles of tort law should govern here, or whether the exigencies of administrative law should prevent it from operating in this case.

Even though federal legislation[32] has stated since 1947 that the “Crown is liable in tort for the damages for which, if it were a private person … , it would be liable in respect of a tort committed by a servant of the Crown,” the common law courts have been reluctant to treat the Crown like other private persons. Because of the courts’ respect for the separation of powers and because of their concern about their capacity to evaluate government decisions, an immunity from negligence liability has been developed for “policy” decisions. This is in addition to the well-recognized immunity from civil liability for legislative action and judicial and quasi-judicial decision making.[33]

The leading case on this issue is Just v. British Columbia,[34] where the Supreme Court of Canada, speaking through Mr. Justice Cory, simplified the law significantly. The appellant, Mr. Just, and his daughter were driving on a British Columbia highway on their way to a holiday at Whistler Ski Resort when their car was struck by a rock falling from a cliff above them. The daughter died as a result of the accident and Mr. Just was severely injured. The British Columbia Crown was sued in tort for negligent maintenance of the highway. The Trial Judge,[35] and the Court of Appeal,[36] both dismissed the action, holding that the system of highway inspection was one of planning and policy, out of which no negligence duty could arise.

On the appeal to the Supreme Court of Canada, the delicate task of determining whether there was a tort duty on the provincial government, in this instance, was undertaken by Mr. Justice Cory, who warned about the inadvisability of restoring government immunity and obliterating the recent advances in the law. He distinguished between the two types of government activity—“true policy decisions” and “implementation”:

The early governmental immunity from tortious liability became intolerable. This led to the enactment of legislation which in general imposed liability on the Crown for its acts as though it were a person. However, the Crown is not a person and must be free to govern and make true policy decisions without becoming subject to tort liability as a result of those decisions. On the other hand, complete Crown immunity should not be restored by having every government decision designated as one of “policy”.[37]

He explained further:

True policy decisions should be exempt from tortious claims so that governments are not restricted in making decisions based upon social, political or economic factors. However, the implementation of those decisions may well be subject to claims in tort.[38]

…

As a general rule, the traditional tort law duty of care will apply to a government agency in the same way that it will apply to an individual. In determining whether a duty of care exists the first question to be resolved is whether the parties are in a relationship of sufficient proximity to warrant the imposition of such a duty.[39]

Mr. Justice Cory also pointed out some of the hallmarks of a true policy decision, which would be immune from negligence liability:

The duty of care should apply to a public authority unless there is a valid basis for its exclusion. A true policy decision undertaken by a government agency constitutes such a valid basis for exclusion. What constitutes a policy decision may vary infinitely and may be made at different levels although usually at a high level.[40]

…

As a general rule, decisions concerning budgetary allotments for departments or government agencies will be classified as policy decisions.[41]

In other words, immunity from negligence should be granted sparingly to Crown agencies;[42] only their “true policy decisions,” generally made at higher levels, involving “social, political and economic factors” and “budgetary allotments for departments” should be exempt from negligence law’s reach.

If the conduct is not immunized as a “true policy decision,” ordinary negligence law principles remain applicable. Still needed, however, is a “traditional torts analysis … of [the] standard of care required of the government agency …. in light of all of the surrounding circumstances including, for example, budgetary restraints and the availability of qualified personnel and equipment.”[43] Thus, if a tort duty is imposed, the actual conduct must still be assessed to see whether it was unreasonable, using the usual indicators of negligence law, including the availability or lack of resources.

In the result, Mr. Justice Cory concluded that there was a tort duty owed, but that the case had to be sent back for a new trial to see whether the proper standard of care was met by the government employees. At the retrial, Mr. Justice Donald found negligence and assessed damages in excess of one million dollars, which decision was not appealed.[44]

Another way of looking at this issue of the policy immunity is to say that the Court recognized that a government must be entitled to govern free from the restraints of ordinary tort liability. In short, it cannot be a tort for a government to govern.[45] However, when a government is doing things for its people, other than governing, it should be subject to ordinary negligence principles. Since, in the words of Mr. Justice Cory “the Crown … must be free to govern,”[46] an immunity may be necessary, but it must be limited only to those functions of government that properly can be considered to be “governing,” and not extended to the other tasks of government. These other tasks of government may be called “implementation,” “operational functions,” “business powers,” “routine matters,” “providing services” or other descriptions. There is no need for a plaintiff to prove that the function involved is “implementation,” or “carrying out”; it is for the Court merely to decide, as a matter of law, that it is inappropriate for it to consider the matter because it is one of policy.

In other words, the immunity should cover only what Professor Hogg describes as “peculiarly governmental activity.”[47] Such activity is normally concerned with large issues, macro decisions, if you will, not routine items, that is, micro decisions.[48] For example, an unemployed person or a business that goes bankrupt cannot be allowed to sue the Crown for the cabinet’s negligent management of the economy.[49] Decisions of economic policy made at the highest levels cannot, and should not be reviewed by courts, since they are not institutionally suited for such a task; only the ballot box can control this type of conduct.

This does not mean, however, that whenever there is a discretionary element to a decision which requires some judgment by an official, the Government should escape scrutiny. All professional people exercise judgment and Courts hold them accountable for their decisions. The work of Government inspectors and regulators in most situations is not so different from that of other professionals that courts are incapable of assessing them against the yardstick of the reasonable person, Professor Feldthusen notwithstanding.[50] It must be recognized that most government decision making is done at more than one level. For example, the budgetary aspects are decided at a different level than the operational aspects. Thus, if one’s allegation of negligence is that insufficient funding was supplied by the Government to a particular safety inspection branch of government, one might well fail to convince the Court that this was not a policy decision.[51] However, if one’s argument is that the inspectors hired with that funding by the particular safety inspection branch did their checking carelessly, it is hard to see how this could be classified as a policy decision.[52]

The Just case was followed in Swanson v. Canada (Minister of Transport),[53] where an airplane owned by Wapiti Aviation crashed, killing six of the nine passengers. The pilot had been flying in contravention of safety regulations, something that was a common occurrence with Wapiti Aviation. Transport Canada knew of Wapiti’s past safety violations but took insufficient measures to make them correct their system. A report by one of Transport Canada’s own inspectors had warned his superiors about Wapiti’s “total disregard for regulations, rights of others and safety of passengers” and concluded that, if it continued, “we are virtually certain to be faced with a fatality.”[54] Following the fatal crash that was forecasted by the Transport Canada inspector, the families of some of the victims sued the Government of Canada, Wapiti having become insolvent. The Trial Judge [[1990] 2 F.C. 619(T.D.)] found that there was a duty owed to the families and that it had been breached. The Federal Court of Appeal affirmed. Following Just, the Court reasoned:

In this case, the Trial Judge correctly decided that the Crown’s response to the complaints and reports was an operational decision, not a policy matter …. He later concluded that it was “more than a matter of policy but one of operation” [page 634]. The official making the enforcement decisions was not a high elected official like a Minister or even a Deputy Minister, he was only a regional director. His work involved not policy, planning or governing, but only administering, operations or servicing. The decision had no “polycentric” aspects, nor was there evidence of any lack of resources to permit more rigorous enforcement of the regulations. There were available numerous specific guidelines upon which the Court could rely in evaluating the conduct of the decision-maker. This was not a budgetary, macro-exercise.

These people were essentially inspectors of airlines, aircraft and pilots, who did not make policy, but rather implemented it, although they certainly had to exercise some discretion and judgment during the course of their work, much like other professional people.

…

These officials were not involved in any decisions involving “social, political or economic factors”. Indeed it was another emanation of the Department of Transport altogether, the Canadian Transport Commission, a quasi-judicial body whose function it was to take into account such grounds, which granted the initial licence to Wapiti and other airlines, whereas this branch concerned itself with operating certificates that focused mainly on the matter of safety. These officials were not concerned with the health of the airline industry, with supplying service to remote areas or with employment for young pilots and, if such matters were considered by them in making their decisions, they probably should not have been. Nor was it their job to worry about airlines “going political”. Their task was to enforce the regulations and the ANO’s as far as safety was concerned to the best of their ability with the resources at their disposal. This function was clearly operational. Hence, a civil duty of care was owed to the plaintiffs to exercise reasonable care in the circumstances.[55]

Another case which relied on Just was Brewer Bros. v. Canada (Attorney General),[56] where several grain producers sued the Government of Canada because the Canadian Grain Commission had negligently allowed a “producer elevator” to operate without having posted adequate bond security, as required by the Canada Grain Act.[57] The plaintiffs, who delivered grain to the “producer elevator,” suffered financial losses when the elevator operator’s licence was cancelled and it was placed in receivership before paying the plaintiffs. The Trial Judge [(1990), 66 D.L.R. (4th) 71 (F.C.T.D.)] held the Government of Canada liable and the Federal Court of Appeal affirmed.

This being a case of economic loss, the analysis was more complex. Mr. Justice Stone explained, however, that the Act was “enacted with a view to protecting those grain producers … and cast upon the Commission an obligation to be satisfied as to the sufficiency of that security.”[58] The evidence, said Mr. Justice Stone, was that the “Commission’s role in duly administering the licensing and bonding provisions … was a cardinal component of the Canadian grain trade … I am satisfied that a relationship of proximity, such as gave rise to a private law duty of care, came into existence.”[59]

Mr. Justice Stone, relying on Just, explained further that there is “no basis for exempting the [Government] from the imposition of liability on the ground that the decisions made were ‘policy’ decisions.”[60] Nor was Justice Stone prepared to say that there was an exemption “from private law liability because its functions were quasi-judicial or analogous to police functions. While it is arguable that certain of the Commission’s powers might be so characterized, the acts and omissions of which the [plaintiffs] complain are not among them.”[61] His Lordship then went on to consider whether the expected standard of care had been met in implementing their policy and concluded that it had not.

Hence, Canadian courts, true to the teaching of Just, are demonstrating that they will hold most government activity subject to ordinary negligence principles. The scope of the policy immunity has clearly been contained within narrow limits by Just.[62]

In the event that a court decides that the conduct in question involves a “policy” decision and exempts the governmental agency from ordinary negligence principles, liability may still be imposed, but on another more complex and narrower basis. It is open to a claimant to prove that a policy decision was made in bad faith or that it was so irrational or unreasonable that it did not constitute a proper exercise of discretion. In such a case, liability might be found.[63] Further, if this hurdle cannot be overcome, and it seldom can be, the government agency can still be held liable if it fails to follow properly the policy it has adopted.

There have been two recent cases of the Supreme Court of Canada in which governments have been relieved of liability on the basis of the principles espoused in Just. In Brown v. British Columbia (Minister of Transportation and Highways),[64] [the plaintiff motorist skidded on an icy road on Vancouver Island. While the Court felt that there was a duty owed generally to maintain the road, in this case, the Government was exempt from ordinary negligence principles because its decision to adopt a summer schedule of reduced service was one of policy. This decision, said Mr. Justice Cory [at pages 441-442], involved the “classic policy considerations of financial resources, personnel and, as well, significant negotiations with government unions. It was truly a governmental decision involving social, political and economic factors.” Consequently, absent proof of irrationality or bad faith and absent proof of negligence in the operational aspect of the policy decision, no liability was imposed. Whereas the Court was unanimous in the result, Mr. Justice Sopinka, in concurring, indicated [at page 424] that he was not happy with the “‘(policy/operational)’ test as the touchstone of liability,” hinting that he would like the Court to reconsider its continued usefulness at some future time.

In Swinamer v. Nova Scotia (Attorney General),[65] the second case, the plaintiff was injured by a tree which fell on his truck on a highway maintained by the province. There had been a survey made of trees near the highway that might be a hazard and 200 dead trees—not including the one that hit the plaintiff —were marked. Money was requested to remove these trees over a three-year period. Whereas the Court recognized again the duty to maintain the highway, it concluded that the decision to inspect and identify dangerous trees was a preliminary step in the policy-making process. It was, according to Mr. Justice Cory [at page 465], a “classic example of a policy decision”, that is, one “setting priorities for the allocation of available funds.” “Policy decisions of government must be immune from the application of private law standards of tort liability,” he concluded [at pages 465-466]. Since there was no proof of irrationality or bad faith, nor of negligence in relation to the operational aspects of the policy decision, no liability could be found.

While these two cases may appear to some to be “backsliding,” I am of the view that they are true to the philosophy of Just. It must be noted that the main decisions in both cases were written by Mr. Justice Cory, who was the author of the reasons in Just; he certainly did not indicate that he was departing in any way from what he had written earlier, even though there seemed to be some hesitation on various aspects of his reasons by other members of the Court. The determinations that the governmental decisions in these two cases were policy ones are certainly understandable in the circumstances, even though it might not have been necessary to deal with the duty issue because, in my view, both cases could have been more simply disposed of on the basis that there was no negligence proven on the facts.

In this case, the Trial Judge concluded that the decision of the Minister to authorize the issuance of the licences to Comeau was a policy decision. But, once having done this, no policy issues remained to be resolved, only the routine items of setting the conditions and issuing the licence. These by their very nature cannot be considered to be policy matters. There were no budgetary aspects involved in the decision to renege, even though it was made at the ministerial level. It was not a macro decision that could be described as part of governing. It was a micro decision of little importance to the nation. It was not the kind of decision that it would be improper or difficult for courts to evaluate. The decision to cancel the authorization, therefore, cannot be protected by the policy immunity. The purported cancellation of an authorization, reneging on an earlier decision and done without jurisdiction, can hardly be considered to be a policy decision worthy of immunity from liability for negligence. The law should not grant the reward of an immunity in these circumstances, where there was full knowledge of the harmful financial consequences to someone who reasonably relied on a commitment, for this would be inconsistent with professionalism and responsibility in the public service.

In the present case, the sole reason for the Minister’s about-face appears to have been the political pressure exerted on him by those engaged in the inshore lobster fishery. There was no suggestion that Comeau would not comply with the conditions being worked out with the Department. It was conceded that Comeau would have received the licences on request prior to March 8, 1988. The Trial Judge noted that the Minister was well aware, prior to the December 29, 1987, telex, that there would be opposition from the inshore fishers, although he may not have anticipated its extent and volume.

The law of torts is not eclipsed by the needs of administrative law in this situation.

Takaro

Finally, I must comment on the obiter remarks of Lord Keith of Kinkel in Takaro, expressing opposition to governmental liability in tort. In my view, his comments are entirely irrelevant, since Parliament, both in England[66] and in Canada, has enacted that a government can be liable in tort as if it were a private person. Moreover, there is binding authority on this point in the Supreme Court of Canada that deals with this question. I feel I must do this, nevertheless, because counsel for the appellant urged us to adopt these views and because my colleagues have dealt with it.

Lord Keith opined that, if a decision is characterized as operational, it should not necessarily follow that a duty of care should be recognized. Lord Keith, in direct conflict with legislation enacted by Parliament, suggested that [at page 501] “there are certain considerations which militate against imposition of liability.” His Lordship continues:[67]

Their Lordships wish to refer in particular to certain matters which they consider to be of importance. The first is that the only effect of a negligent decision, such as is here alleged to be have been made, is delay. This is because the processes of judicial review are available to the aggrieved party; and, assuming that the alleged error of law is so serious that it can properly be described as negligent, the decision will assuredly be quashed by a process which, in New Zealand as in the United Kingdom, will normally be carried out with promptitude. The second is that, in the nature of things, it is likely to be very rare indeed that an error of law of this kind by a minister or other public authority can properly be categorised as negligent. As is well known, anybody, even a judge, can be capable of misconstruing a statute; and such misconstruction, when it occurs, can be severely criticised without attracting the epithet “negligent.” Obviously, this simple fact points rather to the extreme unlikelihood of a breach of duty being established in these cases ….

The third is the danger of overkill. It is to be hoped that, as a general rule, imposition of liability in negligence will lead to a higher standard of care in the performance of the relevant type of act; but sometimes not only may this not be so, but the imposition of liability may even lead to harmful consequences. In other words, the cure may be worse than the disease…. in cases such as the present, once it became known that liability in negligence may be imposed on the ground that a minister has misconstrued a statute and so acted ultra vires, the cautious civil servant may go to extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken, thereby leading to unnecessary delay in a considerable number of cases.

Lord Keith of Kinkel notes that it may be possible to address some of these points, but the difficulty in doing so led the Trial Judge and one of the appeal judges in Takaro to doubt whether any duty of care should exist. The reasons of Lord Keith go on:[68]

… it is being suggested that liability in negligence should be imposed in cases such as the present, when the effect of any such imposition of liability will on the one hand lead to recovery only in very rare cases and then only for the consequences of delay which should not be long; and may, on the other hand, lead to considerable delay occurring in a greater number of cases, for which there can be no redress. In all the circumstances, it must be a serious question for consideration whether it would be appropriate to impose liability in negligence in these cases, or whether it would not rather be in the public interest that citizens should be confined to their remedy, as at present, in those cases where the minister or public authority has acted in bad faith.

Their Lordships do not think it would be right for them to answer that question in the present case; indeed they must not be thought to be expressing any opinion on the point. This is partly because, as they have said, the matter was not fully exposed in argument. But in any event they are very conscious of the fact, already referred to, that, in the great majority of cases where it is alleged that there has been negligence in the construction of a statute, it is likely to prove that the error cannot be described as negligent.

In my view, aside from the fact that these remarks are entirely obiter, and inconsistent with Supreme Court of Canada jurisprudence, there are a number of problems with Lord Keith’s approach to the obligations of public authorities. First, he suggests that no duty of care should exist because a breach of that duty, that is, negligence, would rarely be found. With respect, I fail to see how the fact that few negligence claims might be successful can be used to justify eliminating a cause of action in tort. On the contrary, it could be suggested that, if cases of negligence are rare, the duty of care which is currently imposed on public authorities may be having the desired effect of encouraging a high standard of conduct.[69]

Second, Lord Keith suggests that administrative law remedies are available to quash errors of law promptly. That may be true in England, but delay in the courts is a serious problem in this country. No matter how quickly claimants may be heard, for some, even a short delay can be extremely serious. A missed day’s fishing is missed forever. Lord Keith does not mention the possibility that, even if an order to quash is obtained expeditiously, it might be appealed, adding further delay. Even if delay is not a problem, setting aside a decision may be no real remedy at all, because damages are not generally available in ordinary cases of administrative review. Thus, even if the application were successful, Comeau would still have to bear the cost of converting the boats. In the present case, any delay of more than a few weeks in having the decision set aside (let alone appealed) would damage Comeau’s ability to make any profit in the year. This is hardly a satisfactory result for persons acting in good faith in reliance on the actions of representatives of their government. It seems to me, however, that it would be proper to consider this factor in deciding whether Comeau took sufficient steps to mitigate its damages, but it cannot operate as a bar to relief as suggested by Mr. Justice Stone.

Lord Keith amazingly suggests that the threat of negligence claims against government might so terrify British civil servants that the decision-making processes of government will become paralyzed. He fears that government activity might be frozen by the chill of possible liability and that detailed legal advice will have to be sought on all manner of decisions which have been properly made with or without it for years. How different a jurisprudential tune is being sung these days in the United Kingdom as compared to that sung two decades earlier in Home Office v Dorset Yacht Co Ltd.[70] [Then, with great pride and fanfare, the House of Lords, through Lord Reid, proclaimed that British civil servants would not be deterred from doing their duty by the fear of potential tort liability. Unlike the situation in New York,[71] where there was an immunity to protect public servants from negligence liability, the British bureaucracy, he proudly boasted, did not need such an immunity for “Her Majesty’s servants are made of sterner stuff.”

I would not say that our public servants are any better than those in England, but I see no reason to disparage Canadian bureaucrats, as Lord Keith has their British counterparts. I cannot believe that the Canadian bureaucracy is as timid and faint-hearted as Lord Keith apparently believes public servants in England are nowadays. Surely, they, like other professionals, will be able to perform their duty, despite the possibility of tort liability in the rare instances that they can be proven to be negligent. I prefer to associate myself with the views of Madam Justice Wilson, who declared in Kamloops (City of) v. Nielsen et al.[72] that allowing civil liability of public authorities would not be “potentially ruinous,” but rather would be a “useful protection to the citizens whose ever-increasing reliance on public officials seems to be a feature of our age.” Her Ladyship felt that Canadian officials were “conscientious” by and large, and that any failure was the “exception rather than the rule.” This is a view that demonstrates confidence in the public service; it can withstand scrutiny in tort cases just like all others in our society.

In any event, it must be remembered that the Takaro case dealt with the question of what a minister was entitled to do in making a decision within his discretion, while the present case concerns a minister illegally reneging on a decision which was initially made in the proper exercise of his discretion.

CONCLUSION

To recapitulate, section 7 gives the Minister the absolute discretion to issue and to authorize the issue of licences. It does not give the Minister jurisdiction to withdraw, without reason, an authorization previously given. Consequently, in purporting to do so, the Minister was acting ultra vires. Even though the Minister acted outside his authority, this by itself does not constitute actionable negligence. However, in these circumstances, where the other party relied to its detriment on the Minister’s decision, and so relied to the knowledge of the Minister, the breach of statute was properly found to constitute actionable negligence. Finally, the Minister cannot claim the protection of the policy immunity in this case, as his decision was not a budgetary one, nor one involving governing; it was merely a routine matter and it was made without authority. While the original decision to authorize a licence to issue may have been a policy decision, which would not have been subject to challenge by tort law, the decision to withdraw the authorization, done without statutory jurisdiction, cannot attract the policy shield. Administrative law does not trump tort law in this case.

The appeal is, therefore, dismissed with costs.

As for the cross-appeal, I am of the view that the Trial Judge did not err in his treatment of the other three bases for liability advanced by the respondent. Consequently, the cross-appeal is also dismissed with costs.

* * *

The following are the reasons for judgment rendered in English by

Robertson J.A. (concurring in the result): I have reviewed the reasons of my colleague Linden J.A. and regret that I am unable to agree with his conclusion that this is a case of actionable negligence. The essential facts of this case underscore the tension underlying the application of private law principles within a public law forum.

Pursuant to section 7 of the Fisheries Act, R.S.C., 1985, c. F-14 (the Act), the then Minister of Fisheries (the Minister) exercised his “absolute” discretion to authorize the issuance of offshore lobster fishing licences to the respondent, Comeau Sea Foods Limited (Comeau). On the basis of that authorization and at a time when all essential conditions precedent to the issuance of the licences had been satisfied, but before the licences had actually been issued, Comeau began expending monies in converting a scallop dragger for use as a lobster vessel and so advised the Minister. At the same time, pressure was being placed on the Minister by inshore fishermen who believed that more offshore licences would adversely affect the inshore fishery. Ultimately, the Minister succumbed to their protests by withdrawing the authorization, refusing to issue any offshore licences and launching a federal study into the state of the lobster fishery. Sixteen months later, Comeau initiated an action for damages on the basis of wide-ranging grounds of liability, including “negligence.” It has never pursued the remedial options of judicial review and mandamus.

Relying on section 7 of the Act, the Minister argued at trial that he retained the authority to revoke the authorization at any time prior to the licences actually issuing. The Trial Judge did not accept this construction and held that once the Minister authorized the issuance of the licences he had exhausted his discretion under section 7 (now reported [1992] 3 F.C. 54(T.D.)). Hence, the revocation decision was deemed ultra vires the Minister. The Trial Judge went on to conclude that the revocation decision amounted to actionable negligence and that, even if the Act had expressly empowered the Minister to withdraw the authorization, the legal result would have been no different. The other grounds of liability were rejected and are pursued on the cross-appeal.

Linden J.A. has concluded that the Trial Judge’s decision must be affirmed. While I agree that the decision to withdraw the authorization was ultra vires the Minister, that he owed a limited duty of care to Comeau, and that the cross-appeal should be dismissed, I am also of the respectful view that the Minister did not breach the requisite standard of care and consequently this is not a case of actionable negligence. I shall try to state my position as succinctly as possible before offering a fuller analysis.

The two principal issues raised on this appeal are whether the Minister owed Comeau a duty of care and, if so, whether the requisite standard of care was breached in the circumstances. Whether or not a duty of care arises in this case is dependent on the application of the policy/operational distinction first enunciated in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), and now firmly entrenched in Canadian law. Based on that distinction, policy decisions cannot attract liability in negligence. Operational decisions do not enjoy that immunity. The Trial Judge characterized the revocation decision as operational as well as constituting the negligent act. In my view, however, the revocation decision is no less a policy decision than the decision to authorize the issuance of the licences in the first instance. This is not to suggest that the Minister owed Comeau no duty of care. The revocation decision involved two distinct lines of inquiry. First, the Minister had to decide whether the authorization should be revoked. Second, he had to decide whether, as a matter of law, he could do so. The first question is one of policy and therefore immune from allegations of negligence. The second is operational because it involves the manner in which the Minister ascertained whether he had the legal authority to revoke the earlier authorization. It is in this limited sense that a duty of care arises such that the Minister’s decision to revoke the authorization is subject to the principles of negligence law.

If negligence is to be established, it is because the Minister failed to exercise reasonable care as required of a reasonable “minister” acting in similar circumstances. The fact that an administrative decision is ultra vires, however, does not tell us it was made without reasonable care. Thus it remains to be explained how it is that the Minister breached the requisite standard of care. The Trial Judge’s formal finding of actionable negligence rests on two factors. First, the Minister failed to “demonstrate any reasonable justification for first announcing a decision authorizing the issue of the lobster licences to [Comeau] and then the withdrawal of that authorization” (at page 71). The Trial Judge characterized the Minister’s volte-face as “erratic public administration which was productive of serious mischief to private entrepreneurs” (at page 71). Second, the Minister breached the requisite standard of care by revoking the earlier authorization in circumstances where he ought to have reasonably foreseen that that decision would expose Comeau to financial loss (at page 72). In short, the Minister failed to act reasonably in the circumstances.

With great respect, I believe that analysis is flawed. It is my contention that any judicial inquiry touching on the reasonableness or merits of the Minister’s decision to revoke the authorization is proscribed by the Supreme Court’s jurisprudence regarding Anns and, in particular, the policy/operational distinction. As the decision in question falls within the policy category, I do not believe that any duty of care could have arisen between the Minister and Comeau as to whether the Minister was justified in revoking the authorization. I am also of the view that foreseeability of Comeau’s loss cannot be invoked as a valid fetter on ministerial discretion. Nor can foreseeability of loss by itself justify the conclusion that the revocation decision constituted negligent behaviour. As will be discussed more fully below, actionable negligence will arise only if it can be shown that the Minister improperly construed section 7 of the Act by failing to take reasonable care to avoid arriving at an ultra vires determination.

It is detrimental reliance, foreseeability of loss, coupled with excess of jurisdiction, which make a finding of liability so attractive in this case. The question I must address is whether these factors, when viewed collectively, warrant the epithet “negligence.” Undoubtedly, there are those who will feel that Comeau is entitled to compensation. In my view, the principles of contract law, promissory and equitable estoppel, negligent misrepresentation, negligence per se, and breach of a statutory duty do not support such a right when measured against the facts of this case. Negligence, of course, is not the only source of tortious liability for unlawful administrative action. The tort of misfeasance in a public office is well established in law and must be first considered. The relationship of this administrative tort to the case at bar will become apparent.

MISFEASANCE IN A PUBLIC OFFICE

In its earliest form, the tort of misfeasance in a public office was limited to cases where a public officer (a person exercising a statutory or prerogative power) abused a power actually possessed. Once it was shown that a decision was tainted with malice in the sense that there was an intent to inflict injury on the plaintiff then the invalid decision gave rise to a claim in damages. With time, the tort was extended to include cases in which decision-makers knew that they did not possess the power which they purported to exercise. Today, the administrative tort is established once it is shown that the invalid decision is tainted by either malice or knowledge: see Chhabra (O.P.) v. Canada, [1989] 2 C.T.C. 13 (F.C.T.D.), at pp. 18-19, per Cullen J.; and Francoeur et al. v. Canada (1994), 78 F.T.R. 109 (F.C.T.D.), at pp. 125-128; and see generally Peter W. Hogg, Liability of the Crown (Toronto: Carswell, 1989) at pages 111-113; J. McBride, “Damages as a Remedy for Unlawful Administrative Action”, [1979] C.L.J. 323; P. P. Craig, “Compensation in Public Law” (1980), 96 L.Q. Rev. 413; R. C. Evans, “Damages for Unlawful Administrative Action: The Remedy for Misfeasance in Public Office” (1982), 31 Int. & Comp. L.Q. 640.

A classic example of this administrative tort is Roncarelli v. Duplessis, [1959] S.C.R. 121, where liability depended on article 1053 of Quebec’s Civil Code although it is generally assumed that liability would be the same under the common law; see Rand J., at pages 139-142. In Roncarelli, the plaintiff’s liquor licence was cancelled by the Quebec Liquor Commission at the direction of the Premier in order to punish the plaintiff for providing bail to fellow Jehovah’s Witnesses charged with violating by-laws governing the distribution of their literature. As is well known, the plaintiff was successful before a divided Supreme Court. Yet, there can be no doubt that the act complained of amounted to a “gross abuse of legal power expressly intended to punish [the plaintiff] for an act wholly irrelevant.” Rand J., in delivering one of the judgments of the Court, characterized the wrongful act as malicious while proceeding to redefine that term to include: “acting for a reason and purpose knowingly foreign to the administration” (at page 141).

While it seems clear that malice or actual knowledge is required for the tort of misfeasance to be committed, that has not always been the law. The notion that a person who has suffered a loss because of an ultra vires decision is entitled to compensation even though no malice, knowledge of invalidity or negligence is present can be traced to the Supreme Court’s decision in McGillivray v. Kimber et al. (1915), 52 S.C.R. 146. According to that decision, liability was no longer fault based but rather regarded as a species of strict liability; see also Brasyer v. Maclean (1875), L.R. 6 P.C. 398 (P.C. N.S.W.).

In McGillivray, the plaintiff’s licence had been revoked by a simple resolution of the licensing authority when, under the governing by-law, it could only do so after a proper hearing. In separate dissenting reasons, two of the five members of the Supreme Court were not prepared to sustain the damage award rendered at trial in the absence of malice on the part of the licensing authority. In separate reasons, each of the three justices in the majority were prepared to impose liability on the licensing authority even though malice had not been established. The majority seemed to have accepted that the defendant honestly believed it had the authority to revoke the licence without a proper hearing (there was some evidence of improper motive). On the authority of McGillivray, it was accepted that a public official or tribunal could be held liable for an excess of jurisdiction even though the decision-maker wrongly assumed that it had the power to act; see McBride, supra, at page 330.

The understanding that a person who has suffered a loss because of an invalid administrative decision is entitled to compensation even though no fault can be established is to recognize a species of strict liability. Until the decision of the Supreme Court in Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957, it appears to have been accepted that in Canada an invalid decision made in good faith would be actionable: see Hogg, supra, at page 111, note 160; see also Evans, supra, at page 660; and Craig, supra, at pages 438-440, who advocate strict liability.

In Welbridge, the Supreme Court held that the enactment of an invalid by-law was not actionable in the absence of negligence or intentional wrongdoing. Writing for the Court, Laskin J. (as he then was) took the opportunity to comment on McGillivray with the effect of laying to rest the notion that the tort of misfeasance in a public office could rest on an ultra vires act alone. At page 967, Laskin J. abruptly concluded:

McGillivray v. Kimber ((1915), 52 S.C.R. 146), so far as it has a majority rationale, rests either on a complete want of jurisdiction or an intentional wrongdoing which might, in any event, be said to be reflected in the want of jurisdiction.

Though the explanation offered of the true rationale underlying McGillivray is perhaps tenuous, it does reflect the prevailing view that in the absence of fault a public authority will not be held liable simply because it exceeded its jurisdiction. Today, the administrative tort of misfeasance in a public office must be looked upon as an intentional tort, the relevance of which has been largely subsumed by the good faith/bad faith dichotomy.

On the facts of this case there is no evidence, nor has it been suggested, that the Minister acted maliciously or with knowledge of the invalidity. Nor has there been a finding of bad faith on the part of the Minister. The absence of that finding leads me to consider whether the Minister’s actions are sufficient to attract the epithet “negligence” or whether the imposition of liability in this case is more consonant with the notion of strict liability. The latter possibility is, of course, incompatible with the Supreme Court’s teachings. I turn first to the issue of whether a duty of care arises.

THE DUTY OF CARE

In my view, there was no duty of care owed by the Minister with respect to the policy decision regarding whether he should have revoked the authorization. However, a duty of care did arise in respect of the implementational decision as to whether the Minister could revoke the authorization. I base this prima facie duty on the notions of proximity and detrimental reliance. I cannot pursue this line of analysis, however, without first turning to the policy/operational distinction.

It is trite law that the policy/operational distinction lies at the core of the Supreme Court’s attempt to provide an analytical framework on which to immunize certain governmental activity from the reach of negligence principles. Even though a prima facie duty of care can be established within the common law framework (the first part of the two-stage analysis enunciated by Lord Wilberforce in Anns), it is only when the impugned decision is found to be operational in nature that a duty arises (the second stage of his analysis). Policy decisions are immune from negligence suits on the basis that the Crown “must be free to govern”; Just v. British Columbia, [1989] 2 S.C.R. 1228, at page 1239, per Cory J.

It is common ground that the Minister’s decision to authorize the issuance of licences to Comeau was a matter of pure policy. Section 7 of the Act expressly confers on the Minister an “absolute” discretion when it comes to authorizing the issuance of licences. The Supreme Court has stated on numerous occasions that decisions based upon social, political or economic factors will be characterized as true policy decisions. Had the Minister been correct in his interpretation of section 7, there can be no doubt that the revocation decision would have been classified as a policy decision.

Both the decision to authorize the issuance of fishing licences and the decision to withdraw that authorization were based on considerations which typically fall within the policy category. Both decisions were made at the ministerial level. Finally, the magnitude of the decision to withdraw the authorization was as equally significant, if not more so, than the decision to authorize the issuance of the licences in question. That being said, the fact that the Minister lacked the authority to make such a decision did not make it any less a policy one. The act of revoking a policy decision must be viewed as an act of “negation” not of “implementation” as found by the Trial Judge (see reasons of Trial Judge, at page 73). Furthermore, misconstruction of the Act did not convert a policy decision into an operational one. It simply rendered it ultra vires.

I recognize that the policy/operational distinction has been subjected to strident criticism, essentially on the ground that this touchstone of liability is fundamentally ambiguous. As Professor Hogg notes: “even operational decisions may have such a heavy policy element that they are also not amenable to judicial evaluation by reference to the negligence standard of reasonable care” (supra, at page 124, note 11). In Brown v. British Columbia (Minister of Transportation and Highways), [1994] 1 S.C.R. 420, Sopinka J. took the opportunity to draw attention to the plethora of academic literature criticizing the distinction as an ineffective and unreliable test for imposing a duty of care and to suggest that: “the Court may wish to reconsider at some future time the continued usefulness of this test as an exclusive touchstone of liability” (at page 425).

If the policy/operational distinction is not to be the touchstone of liability then what is its replacement? Though criticisms abound, it is the search for a practical and acceptable substitute that has continued to elude commentators. The shortcomings of Anns are well known, it’s just that the solutions are as flawed as the distinction itself; see Hogg’s incisive analysis to this effect (supra, at pages 117-118). One solution that has attracted a following requires that the duty issue involve a detrimental reliance analysis which, at first blush, seems ideally suited to the case at bar: see Sutherland Shire Council v. Heyman (1985), 157 C.L.R. 424 (Aust. H.C.); M. K. Woodall, “Private Law Liability of Public Authorities for Negligent Inspection and Regulation” (1992), 37 McGill L.J. 83; and Murphy v. Brentwood DC, [1990] 2 All ER 908 (H.L.). Others such as Justice Brennan of the High Court of Australia question whether the reliance solution is itself flawed. Writing in the Paisley Lectures, “Liability in Negligence of Public Authorities: The Divergent Views”, he posits the following objection (at page 114):

It is one thing for the courts to award damages when a plaintiff has been induced to rely on a public authority’s continued and careful exercise of a statutory power; it is another thing to award damages to a plaintiff when the public authority’s responsibility consists in its failure to exercise its powers to protect the plaintiff in circumstances where the failure may be likely to cause damage.

The difficulty in applying the policy/operational distinction in cases far removed from the factual context present in Anns was recognized by the Judicial Committee of the Privy Council in Rowling v. Takaro Properties Ltd., [1988] A.C. 473. There, the plaintiff claimed that the New Zealand Minister of Finance had been negligent in construing his statutory authority when he refused to grant his consent to a foreign investment proposal. As to the policy/operational dichotomy, their Lordships were “inclined” to the prevailing view in the literature that the distinction does not provide a touchstone of liability. They recognized that the Minister’s decision to refuse the consent was capable of being described as policy rather than operational in nature. On the other hand, it was felt that the task of construing a statute lent itself toward the latter type of characterization.

Ultimately, all that was decided in Takaro was that no negligence on the part of the Minister had been shown. However, the Privy Council did take the opportunity to reformulate the Anns’ principles. Even in cases where the decision under review is classified as operational and a prima facie duty of care can be established, it was suggested that a duty of care would not automatically arise (at page 501). A final determination would be dependent on various pragmatic considerations with a view to eliminating non justiciable cases. It is within this framework that my colleague Stone J.A. has reasoned that Comeau was not owed a duty of care. The adequacy and availability of the remedial option of mandamus is said to be a sufficient justification for negativing the prima facie duty.

I cannot deny that the Takaro reformulation of the Anns’ principles is extremely attractive and may well become part of the Canadian solution; see Hon. J. Sopinka, “The Liability of Public Authorities: Drawing the Line” (1993), 1 Tort L Rev 123. However, I am reluctant to pursue that line of analysis in the circumstances of this case. Once the parties agreed to sever the issue of liability from that of damages, it was inevitable that the Trial Judge would be deprived of the opportunity to deal with questions touching on the relevancy and adequacy of existing administrative law remedies. Why is it that Comeau never sought an order of mandamus? Does the adequacy of this remedy go to the issue of mitigation (see Janiak v. Ippolito, [1985] 1 S.C.R. 146) as opposed to the existence of a duty of care? Such questions were never pursued. This analytical approach is complicated further by the fact that the Trial Judge went on to limit liability to damages flowing from reasonable detrimental reliance—a remedy more compatible with the plea of promissory or equitable estoppel. A claim for loss of profits is as reasonably foreseeable in tort as it is in contract; e.g., Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.). But, as neither party has appealed this aspect of the decision, I feel compelled to focus on the Trial Judge’s finding that this is a case of actionable negligence.

In my view, it is unnecessary to abandon the policy/operational distinction as presently applied by the Supreme Court: see Kamloops (City of) v. Nielsen et al., [1984] 2 S.C.R. 2; Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705; Just v. British Columbia, supra; Rothfield v. Manolakos, [1989] 2 S.C.R. 1259; Tock v. St. John’s Metropolitan Area Board, [1989] 2 S.C.R. 1181; Brown v. British Columbia, supra; Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021; Swinamer v. Nova Scotia (Attorney General), [1994] 1 S.C.R. 445; Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., [1995] S.C.J. No. 2 (QL); and Stewart v. Pettie, [1995] S.C.J. No. 3 (QL).

As noted earlier, the revocation decision required the Minister to address two questions and arrive at two distinct conclusions. The first question or decision was whether the Minister should revoke the initial authorization. The second question or decision was whether he could, as a matter of law, do so.

The first question is essentially a policy question. The Minister had to decide whether it was in the public interest to revoke the authorization. In so deciding there is no doubt that the Minister would have reasonably foreseen that his revocation decision would cause Comeau to suffer a financial loss. The Trial Judge focussed on the failure of the Minister to offer a reasonable justification for reversing his original stance. The Trial Judge found, as a matter of fact, that the Minister knew at the time of the authorization that there would be vocal opposition from the inshore fishermen. The Minister also had before him studies indicating that the granting of offshore licences would not harm the inshore fishery. Bowing to foreseen political pressure, the Minister’s volte-face was characterized by the Trial Judge in the following manner (at pages 71 and 75 respectively):

It is clear that what was done on behalf of the defendant in this case was erratic public administration which was productive of serious mischief to private entrepreneurs…. The evidence presented on behalf of the [Minister] … simply did not demonstrate any reasonable justification for first announcing a decision authorizing the issue of the lobster licences to [Comeau] and then the withdrawal of that authorization….

The question remains, however, as to whether this kind of decision-making amounts to actionable negligence. I have concluded that, in the circumstances, it does.

…

Authorizing the issue of a licence within the licence year in which the announcement was made, and then refusing to issue the licence after an intended licensee has to the knowledge of the Minister undertaken expenditure on the basis of the authorization of his licence, has not been shown to my satisfaction to be a necessary means of exercising the Minister’s discretion under section 7.

I fail to see the basis on which it can be said that the Minister was under a legal obligation to allow the financial interests of Comeau to take precedence over what the Minister felt was in the public interest. Nor am I prepared to question the political wisdom, or lack thereof, underlying the revocation decision. Consequently, I am of the respectful view that it is not permissible to consider whether the Minister should have revoked the authorization when evaluating an allegation of negligence. Provided that decision was made in good faith, it is not reviewable by this Court. Whether or not the Minister had the authority to make that decision is another matter.

It could be argued that, for the purposes of establishing liability in negligence, it is permissible to examine the reasonableness of the Minister’s decision without raising the spectre that an unreasonable exercise of a discretionary power renders an administrative decision ultra vires. In my opinion, it is unwise to elevate the “reasonableness” of an administrative decision to the status of a relevant criterion in the assessment of a negligence claim and then weigh that factor against any reliance losses thrust on a plaintiff. The application of negligence principles is difficult enough without injecting another criterion of “reasonableness.”

From the foregoing, it follows that the only decision for which the policy/operational distinction can have any application is the decision pertaining to the Minister’s statutory authority to revoke the authorization. This case is analogous to those where a building permit is negligently issued by a municipality because of a failure to take reasonable care in ensuring that a development project complies with existing by-laws. While the municipality retains the legal right to revoke the permit, the owner may pursue damages in negligence for any resulting loss. In “wrongful issuance” cases, the impugned decision under review is operational in nature and the same may be said of cases involving “wrongful revocation.”

In summary, I am of the opinion that the Minister owed Comeau a duty of care. However, the duty of care was limited to the manner in which the Minister went about deciding whether he had the requisite authority to revoke the authorization. It remains to be decided whether, in so deciding, the Minister breached the requisite standard of care.

NEGLIGENCE

In his reasons, Stone J.A. notes at page 483: “Nothing in the record before us suggests that the Minister even addressed his mind to the construction of the statute, particularly section 7.” And at page 484 he concludes that: “the Minister ought to have assured himself that the statute that empowered him to make the first decision empowered him to reverse it. This was not too much to expect.” To the extent that these comments may be viewed as supporting a finding that the Minister negligently misconstrued the Act, I must respectfully disagree.

This is not a case in which it has been alleged that the Minister failed to exercise due care in ascertaining the scope of his authority under section 7 of the Act. Nor did the Trial Judge base his finding of actionable negligence on that ground. On reviewing the pleadings and the transcripts of the trial, it is apparent that this line of argument was never pursued. Indeed, the only reference to negligence in Comeau’s pleadings is to a “breach of the defendant’s statutory duty thereunder, constituting the tort of negligence” (Appeal Book, at page 10). Whether or not the Minister sought and obtained legal advice and, if not, whether he was under a duty to do so were factual and legal issues never pursued by Comeau. It would, in my opinion, be mischievous to assert that the Minister is under a legal duty to obtain legal advice. That would give rise to the mistaken belief that he was under an obligation to disclose the contents of any legal opinions that he might have received. I wish to make it clear that the onus was not on the Minister to demonstrate that he acted reasonably in formulating his opinion as to his jurisdiction under section 7 of the Act. It is true that the Minister was not called as a witness by the Crown. But that did not deprive Comeau of the opportunity to seek testimony from the Minister relevant to these issues (see Federal Court Rules [C.R.C., c. 663], Rule 456 [as am. by SOR/90-846, s. 15]; and United Terminals Ltd. v. M.N.R., [1992] 3 F.C. 302(C.A.), leave to appeal to S.C.C. refused (1993), 147 N.R. 320 (S.C.C.)).

I am not suggesting that the Minister may avoid liability simply by raising the defence of “error of judgment.” On the other hand, I agree with Lord Keith in Takaro that it may well be a rare case where the plaintiff will be able to establish negligent misconstruction. The complexity of many modern statutes and their susceptibility to differing interpretations is a self-evident fact. One can construe a statutory provision carefully and get it wrong or construe it negligently and get it right. Admittedly, it could happen that an administrative decision is made contrary to an express and unambiguous provision of a statute in which case it would not be unreasonable to presume that the decision maker had acted either negligently or in bad faith (with knowledge of excess of jurisdiction); see Craig, supra, at pages 423-426. Alternatively, had the Minister persisted with a frivolous argument as to his jurisdiction under section 7, I would have been prepared to consider resting liability on either of these grounds. But that is not the case before us.

Since this is not a case in which it has been alleged or found that the Minister failed to exercise due care in ascertaining the scope of his authority, it is proper to review more fully the basis on which the learned Trial Judge concluded that the Minister’s decision to withdraw the authorization constituted actionable negligence. In other words, what was the standard of care required of the Minister and how was that standard breached in the circumstances of this case? At page 72, the Trial Judge concluded:

Second, there was a breach of the requisite standard of care. At least as of January 29, 1988 when the plaintiff advised the Department of Fisheries and Oceans that it was undertaking work to convert vessels for the offshore lobster fishery in order to use the licences, it was perfectly foreseeable that any departure from the line of conduct (i.e. the issue of the licences) previously announced by the Minister on December 29, 1987 would have a harmful effect on the plaintiff.

Strictly speaking, the standard outlined is not dependent on the reasonableness of the revocation decision earlier discussed. The standard can be reduced to the proposition that no reasonable person (Minister) would have revoked the authorization because it was foreseeable that Comeau would suffer a loss. With respect, I do not believe that that analysis accords with negligence principles. If that is to be accepted as an accurate statement of the law then it makes no difference whether the Minister actually had the authority to revoke the authorization. In other words, the Minister could not have availed himself of the defence of statutory authority. Indeed, at pages 70-71 and 74 respectively, the Trial Judge so concluded:

Indeed, I am also of the view that even if the revocation of authorization were permitted by statute, it would in these circumstances still constitute the tort of negligence. However, the plaintiff has not so pleaded, its amended statement of claim alleging only that the refusal to issue

… was ultra vires Fisheries Act and a breach of the defendant’s statutory duty thereunder, constituting the tort of negligence… .

…

Second, even if one accepted the defendant’s argument that after authorizing the issue of the licences the Minister retained an absolute discretion to refuse to issue them, I am not satisfied that this would be an obstacle to a plea of simple negligence. The defence of statutory authority has never been absolute. If an agency was given a discretionary power it could not rely on statutory authority as a defence in actions in tort for harm committed in the exercise of that power unless it could show that the interference with private rights complained of was inevitable in the exercise of the power.

While I do not believe that the Minister can be held to a standard of conduct which is different from that imposed on ordinary individuals in the tort context, there are significant differences between ministers of the Crown and ordinary citizens that justify some differences with respect to defences to negligence. The defence of statutory authority is obviously one of those differences. That defence states, generally, that a public body may not be responsible in negligence if it has acted pursuant to a statutory duty or authority, if it can show that the interference of private rights was the inevitable exercise of that power: see Tock v. St. John’s Metropolitan Area Board, supra; and Peter W. Hogg Case Comments, “Tock v. St. John’s Metropolitan Area Board” (1990), 69 Can. Bar Rev. 589.

I agree that a public authority cannot exercise a statutory discretion absolutely, unless of a policy nature. In this case, the powers of the Minister regarding the issuance of licences are pure policy decisions relating to the management of Canadian fisheries, and it would have been open to the Minister to revoke an authorization within that discretion, had the Act so authorized. Therefore, I cannot agree with the Trial Judge’s view that, even if revocation of licences were permitted by statute, such revocation in the circumstances of this case would still constitute negligence. In my view, the Minister could not have been held negligent for exercising a policy discretion that he is authorized to exercise under an Act of Parliament, even in circumstances in which the Minister is advised that a party has relied on previous representations of ministerial discretion. In such cases, any detrimental reliance incurred by a plaintiff would be with full knowledge that the initial authorization could be withdrawn. Such detrimental reliance could not be considered “reasonable.”

It may be felt that the comments of the Trial Judge on the matter of statutory authority are obiter and, therefore, to be ignored. What cannot be ignored is the fact that the negligence of the Minister still rests on his decision to revoke the authorization in circumstances where Comeau’s loss was foreseeable. Foreseeability of loss (damages), however, cannot displace the obligation to establish a breach of the requisite standard of care. It is true that, as the revocation decision has been found ultra vires, the defence of statutory authority is not available to the Minister. But to ground liability in this case on the absence of statutory authority and the element of detrimental reliance is to adopt a species of strict liability for public authorities. Such a basis of liability was rejected in Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, supra. In effect, the standard of care being proposed is one of statutory correctness.

As trite as it may seem, I think it important to bear in mind that the issuance of licences is the life blood of many administrative bureaucracies. It is also foreseeable that once issued, reasonable reliance will be placed on the right to possess such documents and that if wrongfully revoked a licensee will be exposed to economic loss. It is also a common facet of the administrative world that licences will be revoked in circumstances where judicial hindsight deems the revocation decision to have been ultra vires. Excess of jurisdiction is as much a problem today as it has been over the last three centuries since the administrative tort of misfeasance in a public office was first conceived. The practical workability of administrative law cannot be entirely displaced by a robust theory of negligence law which allows foreseeability of loss (detrimental reliance/damages) to overtake the need to establish that there has been a breach of the requisite standard of care. In my respectful view, this is one of those economic loss cases where the courts have to be concerned about “liability in an indeterminate amount for an indeterminate time to an indeterminate class”, per Cardozo J., Ultramares v. Touche, 255 N.Y. 170 (App. Div. 1931), at page 179. Obviously, the precedential significance of this case extends far beyond the limits of the offshore lobster fishery.

In my opinion, this is not a case of actionable negligence.

CONCLUSION

I would allow the appeal, set aside the decision of the Trial Division and dismiss the action with costs here and below. I would dispose of the cross-appeal as proposed by my colleague Linden J.A.

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