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T-2695-75
Irving Refining Limited (Petitioner)
v.
National Harbours Board (Respondent)
Trial Division, Walsh J.—Montreal, January 12; Ottawa, January 29, 1976.
Practice—Parties—Agreement providing for application by lessee for determination of rental within 90 days—Whether proceedings should have been against Queen and by way of action—Federal Court Act, s. 17(2),(3) and Rules 319, 332(5)—National Harbours Board Act, R.S.C. 1970, c. N-8, s. 3(2),(3).
A lease provided that when notified of a rent increase lessee had 90 days to apply to the Federal Court for determination of appropriate rental. Notification was made April 22, 1975; the letter was allegedly received May 6, and these proceedings commenced August 1. While not arguing that petitioner is out of time, respondent claims (1) that proceedings should have been against the Queen, and (2) that proceedings should have been by way of action, instituted by a statement of claim, and not a motion under Rule 319. Success on either ground will put petitioner beyond the time limit, and petitioner argues for permission to make necessary amendments, if either is successful.
Held, petitioner's motion is granted. (1) The Court has jurisdiction under section 17(2) and (3) of the Federal Court Act. The contract is between Irving and the National Harbours Board, by its creating legislation, a body corporate and politic, agent of the Crown, with capacity to contract, sue and be sued in its own name. While respondent might have been designated as the Queen as represented by the National Harbours Board, there is no prejudice in directing proceedings directly against the Board. (2) The agreement provides for an "application" to the Court; the intention seems to be that the Court should determine the rental after hearing evidence and contentions. While a more detailed supporting affidavit would be necessary, Rule 319 provides for filing of affidavits by the opposing party, and that, with the Court's approval, a witness may be called. There is no reason why, with the Court's approval, the neces sary evidence could not be adduced without prejudice to either side on a simple motion. To dismiss the motion now would deprive petitioner of all recourse to have the matter determined on the merits, as both parties contemplated.
North Shipping and Transportation Limited v. Le Conseil des Ports nationaux [1969] 1 Ex.C.R. 12; Hunt v. The Queen [1967] 1 Ex.C.R. 101; Aladdin Industries Inc. v. Canadian Thermos Products Limited [1973] F.C. 942 and Re Coles and Ravenshear [1907] 1 K.B. 1, applied.
MOTION.
COUNSEL:
C. Blondeau for petitioner.
J. C. Ruelland for respondent.
SOLICITORS:
Langlois, Drouin & Laflamme, Quebec, for petitioner.
Deputy Attorney General of Canada for respondent.
The following are the reasons for judgment rendered in English by
WALSH J.: This is a motion by the petitioner contesting the increase in rental to take effect May 1st, 1975, demanded by respondent for an ease- ment for a pipeline which it rents from respondent in Saint John Harbour by virtue of a lease com mencing May 1st, 1965. By virtue of the provisions of the said lease rental was to be $200 per annum from May 1st, 1965, until April 30th, 1970, $279 per annum from May 1st, 1970 to April 30th, 1975, and for the period from May 1st, 1975 to April 30th, 1980, at such revised rates as may be fixed by the Board pursuant to subclause B of the interpretation clause. Subclause B of the interpre tation clause states that:
the Board may at any time up to 6 months after the commence ment of the period fix a different rental which shall be effective retroactively if necessary to the commencement of the period.
and goes on to say that should the rate be higher than that in force immediately prior to the period
it is hereby agreed between Her Majesty in right of Canada, as represented by the Board, on the one hand and the lessee on the other hand, that the lessee may apply to the Federal Court for determination by that Court of the appropriate rental for the particular period in question.
The said clause provides further:
In any event the rental rate fixed by the Board shall be conclusive and binding upon the lessee unless the lessee's application for determination of rental rate by the Federal Court be entered not later than 90 days after notification from the Board to the lessee of the rate so fixed by the Board.
There is no appeal from the decision as to the rate fixed by the Federal Court.
"Federal Court" is defined in another section of the lease as the "Trial Division of the Federal Court of Canada".
On April 22nd, 1975, the respondent advised the petitioner of an increase in rental for the period from May 1st, 1975 to April 30th, 1980 at the rate of 12¢ per foot based on the diameter of the pipeline, which represented an increase in rental from $279 per annum to $558 per annum, or double the amount previously charged. This letter was allegedly received by the petitioner on May 6th, 1975. The present proceedings by way of petition to have the Federal Court fix the rental rate were filed on August 1, 1975.
The respondent in opposing the application does not contend that the date of notification to peti tioner of the increase in rental be taken as April 22nd, 1975, the date the letter was dated rather than May 6, 1975, the date when it was allegedly received and hence that the present proceedings commenced on August 1st, 1975 were brought after the expiration of the 90 day period to appeal to the Federal Court, so that the rental rate fixed by the Board becomes conclusive, but limits its contestation to two grounds. First that it should have been directed against Her Majesty the Queen instead of the National Harbours Board and secondly that proceedings should have been brought by means of an action introduced by a statement of claim rather than by a simple motion made pursuant to the provisions of Rule 319 of the Federal Court Rules. If the respondent succeeds on either of these grounds, however, then the petitioner is clearly beyond the 90 day delay for institution of proceedings and for this reason the petitioner argues that if the proceedings are direct ed against the wrong respondent or if it is found that they should have been brought by means of an action rather than a motion then the Court should permit the necessary amendments to overcome this problem, since to dismiss the proceedings would leave the petitioner without recourse.
Dealing with the first ground of objection this Court has jurisdiction by virtue of section 17(3) of the Federal Court Act to hear and determine the matter of
(a) the amount to be paid where the Crown and any person have agreed in writing that the Crown or that person shall pay an amount to be determined by
(i) the Federal Court.
The easement agreement in question is not a con tract between the Crown and Irving Refining Ltd. but between the National Harbours Board and the said company. Section 3(2) of the National Har bours Board Act, R.S.C. 1970, c. N-8 states:
3. (2) The Board is a body corporate and politic and, for the purposes of this Act, is and shall be determined to be an agent of Her Majesty in right of Canada.
Subsection (3) states:
(3) The Board has the capacity to contract and to sue and be sued in the name of the Board.
The easement agreement itself provides as stated (supra) that, in fixing the amount of an increase
it is hereby agreed between Her Majesty in right of Canada, as represented by the Board, on the one hand and the lessee on the other hand, that the lessee may apply to the Federal Court for determination by that Court of the appropriate rental rate for the particular period in question.
If there were any doubt as to the jurisdiction of the Court it can also be found in section 17(2) which gives the Trial Division jurisdiction in all cases "in which the claim arises out of a contract entered into by or on behalf of the Crown".
While the respondent might perhaps have been designated as Her Majesty the Queen as represent ed by the National Harbours Board I can see no prejudice in directing the proceedings as in the present case directly against the National Har bours Board in view of the provisions of section 3(3) of the National Harbours Board Act (supra) nor do I find that the Court lacks jurisdiction to hear the proceedings so directed rather than against Her Majesty the Queen. (See North Ship ping and Transportation Limited v. Le Conseil des Ports nationaux [1969] 1 Ex.C.R. 12 at page 18 which refers to Hunt v. The Queen [1967] 1 Ex.C.R. 101 at page 102.)
A more serious objection is that the present proceedings should have been brought in the form of an action which would enable motions for par ticulars to be made, examinations for discovery held, and specifically define the issue for hearing on the merits so that the Court would have before it all the necessary evidence to enable the proper amount of rental to be determined. However, the easement agreement itself permits the lessee to
"apply to the Federal Court for determination by that Court of the appropriate rental rate" and later refers to the "lessee's application for determi nation of rental rate" having to be entered not later than 90 days after notification of the increase. The word "application" is not one having special legal significance and while it would not perhaps exclude proceeding by way of a statement of claim in the ordinary way, it is certainly more consistent in its common usage with a less formal application such as a petition or motion, and it appears that the intention was simply that the Federal Court should determine the appropriate rental after hearing the evidence and contentions of the parties respecting same. Rule 319 under which the motion was made provides that such a motion shall be "supported by an affidavit as to all the facts on which the motion is based that do not appear from the record". The simple affidavit supporting the present motion merely stating that all the facts alleged in same are true does not of course give any indication as to why the rental should not have been increased to $558 per annum or indicate what is an appropriate rental, and a more detailed affidavit or affidavits would certain ly have to be submitted before the Court would have any evidence before it on which a decision could be based. The Rule provides, however, that the opposite party may also file affidavits and that by leave of the Court a witness may be called to testify in open Court. Rule 332(5) permits cross- examination of the parties on an affidavit. This frequently takes place in industrial property injunctions, so that there is no real reason why, with the approval of the Court, the necessary evidence could not be adduced, without prejudice to either party, on a simple motion rather than by an action instituted in the usual way by a state ment of claim.
In the case of Aladdin Industries Inc. v. Canadian Thermos Products Limited' Mr. Justice Kerr, in taxing a bill of costs at a higher amount than that allowed by the Tariff without prior special direction having been given by him for this, referred to the judgment of Collins M.R., in Re Coles and Ravenshear 2 where the learned Master of Rolls stated:
[1973] F.C. 942 at page 945. 2 [1907] 1 K.B. 1 at page 4.
Although I agree that a Court cannot conduct its business without a code of procedure, I think that the relation of rules of practice to the work of justice is intended to be that of handmaid rather than mistress, and the Court ought not to be so far bound and tied by its rules, which are after all only intended as general rules of procedure, as to be compelled to do what will cause injustice in the particular case.
I fully agree with this quotation and I believe it is applicable in the present case. If the petitioner's motion were to be dismissed at this stage of the proceedings it would have lost all recourse to have the amount of the rental determined on the merits by this Court as was contemplated by both parties in the easement agreement. On the other hand, there is no prejudice to the respondent in having the matter so determined on the merits unless such prejudice arises merely from the fact that unless this matter can be determined on the present proceedings, petitioner will have lost its recourse.
Under the circumstances, therefore, petitioner's motion will be granted but as the proceedings may not have been brought in the most appropriate manner the motion will be granted without costs.
ORDER
Petitioner's motion is granted without costs. The petitioner will be permitted to file an appropriate affidavit or affidavits as to the facts which may support its contentions as to the appropriate rental. Respondent will have the right to examine the affiants on these affidavits and to submit an affidavit or affidavits in contestation thereof, with petitioner being permitted to examine the affiants on these affidavits. When the examinations have been completed either party may set the motion down for hearing and argument.
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