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A-27-77
Manitoba Fisheries Limited (Appellant) (Plain- tiff)
v.
The Queen (Respondent) (Defendant)
Court of Appeal, Heald and Uric J.J. and MacKay D.J.—Winnipeg, June 28; Toronto, July 25, 1977.
Crown Appeal from Trial Division's dismissal of application for entitlement to compensation Acquisition by Crown of goodwill under Freshwater Fish Marketing Act rendering business, plant, and equipment valueless Whether or not goodwill taken without compensation by statute, and compensation payable Whether or not Exchequer Court Act provided substantive basis for awarding compensation Whether or not deprivation of property contrary to Canadian Bill of Rights Freshwater Fish Marketing Act, R.S.C. 1970, c. F-13, ss. 2, 7, 21(1), 23(1) Exchequer Court Act, R.S.C. 1970, c. E-11, ss. 17, 18(1) Canadian Bill of Rights, S.C. 1960, c. 44 (R.S.C. 1970, Appendix 111).
This is an appeal from Trial Division's judgment dismissing appellant's application for declarations of entitlement to com pensation for property taken and for the fair market value of business as a going concern. It had been alleged that respond ent acquired business and goodwill under Freshwater Fish Marketing Act, and as no licences had been granted to private concerns under the Act, appellant lost business, goodwill and the value of its business assets. The Trial Judge found that goodwill had been taken by respondent without compensation and, therefore, the appellant argued that, in absence of clear statutory authority providing otherwise, compensation was pay able. Secondly, the appellant argued that the Exchequer Court Act provided a substantive as well as jurisdictional basis for awarding compensation for the taking of property: that the Act was still in force when the right of action arose. Lastly, the appellant argued that its deprivation of enjoyment of property without compensation was contrary to the Canadian Bill of Rights for it occurred without due process of law.
Held, the appeal is dismissed. The Corporation did not purchase, confiscate, or in any other way acquire possession, in fact or law, of any of the physical or intangible assets belonging to the appellant. The Trial Judge correctly found that the statute, considered as a whole, did not purport to take any property with or without compensation. To establish the respondent's liability to compensate the appellant and others for loss of their business, a clear legislative intention to take the goodwill—(assuming it is property)—without paying for it must be shown. None can be divined, expressly or impliedly, from the Act. Sections 17 and 18(1) of the Exchequer Court
Act do not provide the basis of a claim for compensation, but merely clothed that Court with jurisdiction in the prosecution of claims, of the kinds envisaged in the sections, against the federal Crown. They do not create substantive rights in the factual situation at bar. The Act did not deprive appellant of the enjoyment of any property, and although its implementa tion resulted in putting the appellant out of business, that result did not occur due to any deprivation of the enjoyment of property in the sense that those words are used in the Canadian Bill of Rights.
Attorney-General v. De Keyser's Royal Hotel Ltd. [1920] A.C. 508, applied; France Fenwick & Co. Ltd. v. The King [1927] 1 K.B. 458, applied; Belfast Corporation v. O.D. Cars Ltd. [1960] A.C. 490, applied.
APPEAL. COUNSEL:
K. M. Arenson, D. McCaffrey, Q. C., and J. Lamont for appellant (plaintiff).
L. P. Chambers and S. M. Lyman for respondent (defendant).
SOLICITORS:
Kaufman Arenson, Winnipeg, for appellant (plaintiff).
Deputy Attorney General of Canada for respondent (defendant).
The following are the reasons for judgment rendered in English by
URIE J.: This is' an appeal from a judgment of the Trial Division, [[1977] 2 F.C. 4571, wherein an action brought by the appellant for a declara tion that it was entitled to compensation for prop erty taken, was dismissed with costs. It was alleged that the appellant's business and goodwill were acquired by the respondent by virtue of the enact ment of the Freshwater Fish Marketing Act', which I will hereinafter refer to as the "Act". The appellant also sought a further declaration that the appellant was entitled to "the fair market value of the said business as a going concern as at the 1st day of May 1969...."
' R.S.C. 1970, c. F-13.
Briefly, the relevant facts are these.
The appellant, since at least 1926 or 1927, marketed freshwater fish. The fish were purchased from independent fishermen at various points in Manitoba and were processed in various ways, at plants owned by the appellant. The processed product was sold principally to buyers in the United States. It was, apparently, a highly com petitive business. However, the learned Trial Judge found as a fact that the appellant, and other firms like it, had built up individual clienteles and com petitive positions in the industry. He further held [at page 461] that, on the evidence, "there was goodwill, in the legal and business sense, attaching to the plaintiff's operation" the value of which it was not necessary for him to fix since the parties agreed that any compensation payable in respect thereof would be the subject of agreement between them or, failing that, determined by a Judge of the Trial Division. Whether or not the learned Trial Judge erred in his determination as to the exist ence or non-existence of goodwill in the appellant's business need not, it seems to me, be explored in these reasons since, for the purpose thereof, I will assume that he was correct in making this finding.
The Freshwater Fish Marketing Act was appar ently enacted by Parliament at the request of the Provinces of Alberta, Saskatchewan, Manitoba and Ontario and the Northwest Territories. The appellant contended at trial and before this Court that the practical effect of the legislation and the manner in which it was administered was to put the appellant out of business and to take from it its goodwill vesting it in the Freshwater Fish Market ing Corporation, the Crown corporation estab lished pursuant to section 3(1) of the Act, without compensation. Since by section 14 the Corporation is, for all purposes of the Act, an agent of Her Majesty, the appellant's action was brought against her. It was also contended that the plant and equipment of the appellant were rendered valueless by the consequences of the legislation and again no compensation has been paid.
The appellant's counsel conceded in argument in this Court, and apparently at trial, that in order to found its claim for compensation it must establish
a statutory right. As 1 understood them, counsel for the appellant based their respective arguments on three grounds:
1) Having found that property of the appellant, namely goodwill, had been taken by the respond ent without payment of compensation, unless clear statutory authority could be found for taking in such a way, compensation for goodwill, in the broadest sense of that word, was payable to the appellant. Since the Act here under scrutiny does not provide authority for taking without payment of compensation, the appellant is entitled to be compensated for its property so taken.
2) The Exchequer Court Act provides a sub stantive, as well as jurisdictional, basis for the awarding of compensation for the taking of prop erty. In this instance, because the right thereto arose before the repeal of that Act when the Federal Court Act came into force, the statutory basis for payment of compensation can be found therein.
3) The appellant was deprived of the enjoyment of its property without compensation having been paid. Failure to pay compensation means that the Crown took "such action without "due process of law" and thus was contrary to section 1 of the Canadian Bill of Rights as that section is to be interpreted by the imperative provisions of section 2(e) 2 of that Act.
Before dealing with these arguments, the Act should be examined to the extent necessary to determine the validity of the appellant's conten tions.
As previously indicated, the Act established the Freshwater Fish Marketing Corporation as an agent of the federal Crown. The Corporation was established
for the purpose of marketing and trading in fish, fish products and fish by-products in and out of Canada....'
2 S.C. 1960, c. 44. See R.S.C. 1970, Appendix III.
3 Section 7.
and for that purpose was granted a number of powers.'
Part III of the Act is entitled, "Regulation of Interprovincial and Export Trade" and includes sections 20 to 32 inclusive.
Section 23 confers on the Corporation certain duties and powers and subsection (1) sufficiently describes them for the purposes of this judgment.
23. (1) Subject to section 21, the Corporation has the exclu sive right to market and trade in fish in interprovincial and export trade and shall exercise that right, either by itself or by its agents, with the object of
(a) marketing fish in an orderly manner;
(b) increasing returns to fishermen; and
(c) promoting international markets for, and increasing interprovincial and export trade in, fish.
The species of fish upon which the marketing rights are conferred are set forth in a Schedule to the Act to which schedule additions and deletions may be made from time to time. "Participating province" is defined in section 2 to mean
... a province or territory in respect of which there is in force an agreement entered into under section 25 with the govern ment of that province or territory;
Section 21(1) is a key section and reads as follows:
21. (1) Except in accordance with the terms and conditions set forth in any licence that may be issued by the Corporation in that behalf, no person other than the Corporation or an agent of the Corporation shall
(a) export fish from Canada;
(b) send, convey or carry fish from a participating province to another participating province or to any other province;
(c) in a participating province, receive fish for conveyance or carriage to a destination outside the province; or
(d) sell or buy, or agree to sell or buy fish situated in a participating province for delivery in another participating province or any other province, or outside Canada.
Section 25 authorizes the Minister designated to act for purposes of the Act to enter into agree ments with Alberta, Saskatchewan, Manitoba, Ontario and the Northwest Territories. Subsection (2) authorizes these agreements to provide, inter alia, for:
4 Section 7(a) to (i).
25. (2)...
(c) the undertaking by the province of arrangements for the payment, to the owner of any plant or equipment used in storing, processing or otherwise preparing fish for market, of compensation for any such plant or equipment that will or may be rendered redundant by reason of any operations authorized to be carried out by the Corporation under this Part; ...
The evidence discloses that such an agreement was entered into with the Province of Manitoba in June 1969 but no compensation was paid to the appellant for any of its plant or equipment since none actually was taken by the Crown nor has compensation been paid for any plant or equip ment made redundant by reason of the operations of the Corporation. Neither was the appellant granted a licence by the Corporation nor was it exempted from the operation of Part III of the Act so that, effectively, the appellant was put out of business.
The evidence also discloses, in the words of the learned Trial Judge [at page 465], that the "Cor- poration, from the outset, because there was no other source of supply, obtained the trade of the United States customers of the plaintiff and its Manitoba competitors."
With the statutory scheme in mind, the three contentions of the appellant to which I earlier referred may now be examined.
Dealing with the first contention it appears to be founded on a false premise, namely, that the learned Trial Judge found that the goodwill of the appellant had been taken by the respondent. I do not read his judgment as having so found although he did hold that there was goodwill attaching to the appellant's business operations. Assuming, however, that goodwill is property, did the Corpo ration take that property from the appellant? If that question is answered in the affirmative, then, as appears from the jurisprudence, there must be found a clear legislative intent to do so without compensation.
The Trial Judge found, on consideration of the whole statute, that it did not purport to take any property in any of the participating provinces from anyone, with or without compensation. It is a conclusion with which I must agree. The object of the legislation in establishing the Corporation was as set out in section 23(1) and may be generally described as being for the orderly marketing of
fish and fish products with the consequential ben efits said to flow from such a scheme accruing to the fishermen. While the Corporation has been endowed with exclusive rights, provision has been made for the licensing of others to participate in the export and interprovincial marketing of fish and fish products.
In order to establish the liability of the respond ent to compensate the appellant and others for the loss of their business, it would have to be shown that in the legislation there was a clear intention to take the goodwill of the appellant, assuming that it is property, without paying for it. In my view, no such intention can be divined either expressly or impliedly from the Act here under consideration.
There can be no question that a statute is not to be construed as taking away the property of a subject without compensation. 5 Clear and unmis takable words showing that it was the intention of Parliament that it is not to be paid, must be found in the legislation. That principle has linked with it the further requirement that the taking must be one which involves the actual, physical assumption of possession or use of the property by the Crown.
As was stated in the France Fenwick case 6 by Wright J.:
... but I shall assume that the Crown has no right at common law to take a subject's property for reasons of State without paying compensation. I think, however, that the rule can only apply (if it does apply) to a case where property is actually taken possession of, or used by, the Government, or where, by the order of a competent authority, it is placed at the disposal of the Government. A mere negative prohibition, though it involves interference with an owner's enjoyment of property, does not, I think, merely because it is obeyed, carry with it at common law any right to compensation. A subject cannot at common law claim compensation merely because he obeys a lawful order of the State.
Lord Radcliffe noted the distinction too in his judgment in Belfast Corporation v. O.D. Cars Ltd.' at pages 524-525.
5 Attorney-General v. De Keyser's Royal Hotel Ltd. [ 1920] A.C. 508 at p. 541.
6 France Fenwick & Co. Ltd. v. The King [1927] 1 K.B. 458 at p. 467.
7 Belfast Corporation v. O.D. Cars Ltd. [ 1960] A.C. 490.
I am of the opinion that it is clear from the stated objects and purposes of the Freshwater Fish Marketing Act, from the whole scheme of the Act and from a plain reading of the statute as a whole that it neither directly nor indirectly discloses an intention to take from anyone any kind of prop erty, including in that term proprietary rights as well as physical assets. The Corporation did not purchase, confiscate or in any other way acquire possession, in fact or in law, of any of the physical or intangible assets belonging to the appellant. There was no "taking", "taking away" or "taking over" of any such assets in any realistic interpreta tion of those words. 8 That being so the question of whether or not the statute provides clear directions that no compensation is to be paid for property taken does not arise.
That view is not affected by the presence of section 25(2)(c) in the Act since section 25 as a whole merely empowers the Minister to enter into agreements with participating provinces containing certain provisions among which may be an under taking by any such province to compensate an owner for plant and equipment which will or may become redundant by reason of the operations of the Corporation. Paragraph (c) is not the source of any rights to an owner and, as the learned Trial Judge observed [at page 469]:
There is ... no intention, inference, or suggestion the federal Crown should be the direct source of such compensation.
The appellant's next contention was that sec tions 17 9 and 18(1) 10 of the Exchequer Court Act, R.S.C. 1970, c. E-11, provide the basis of a claim for compensation.
8 See Belfast Corporation v. O.D. Cars Ltd., supra, at p. 517.
9 17. The [Exchequer] Court has exclusive original jurisdic tion in all cases in which the land, goods or money of the subject are in the possession of the Crown, or in which the claim arises out of a contract entered into by or on behalf of the Crown.
10 18. (1) The [Exchequer] Court also has exclusive original jurisdiction to hear and determine the following matters:
(a) every claim against the Crown for property taken for any public purpose;
In my view, those sections merely clothed the Exchequer Court with jurisdiction in the prosecu tion of claims, of the kind envisaged in the sec tions, against the federal Crown. Whether or not they created substantive rights in other situations, upon which I express no opinion, they certainly did not do so in the factual situation of the case at bar.
There was not any taking of any of the appel lant's property, as has already been shown, wheth er for public purpose or otherwise. Neither did any land, goods or money of the appellant come into the possession of the Crown, no matter how broad ly those words are interpreted. Thus, in my opin ion, the Exchequer Court Act does not provide any foundation for the appellant's action.
The third ground upon which the appellant relied was the Canadian Bill of Rights and in particular sections 1(a) and 2(e) thereof. Those sections read as follows:
1. It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely,
(a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;
2. Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to
(e) deprive a person of the right to a fair hearing in accord ance with the principles of fundamental justice for the deter mination of his rights and obligations;
The learned Trial Judge rejected this argument on the ground that the legislation, properly con strued, does not purport to deprive the appellant or anyone else of the enjoyment of his property. The Canadian Bill of Rights, therefore, did not have to be involved in this instance. With this conclusion I agree.
Considerable support for so viewing the legisla tion is derived from a very recent decision of the
Privy Council in Government of Malaysia v. Selangor Pilot Association." The headnote of the report sufficiently sets forth the facts of the case.
The Constitution of Malaysia provides by article 13:
(1) No person shall be deprived of property save in accord ance with law. (2) No law shall provide for the compulsory acquisition or use of property without adequate compensa tion.
In 1969 six licensed pilots formed a partnership (the "association") to provide pilotage services in Port Swettenham. The association had physical assets and employed other li censed pilots. Its income was the pilotage dues earned by the pilots. In 1972, under powers conferred by section 29A of the Port Authorities Act 1963, the port authority declared Port Swettenham a pilotage district thereby making it an offence by virtue of section 35A of the Act for pilots other than those employed by the port authority to provide pilotage services in the port. The port authority offered employment to all licensed pilots, purchased the physical assets of the association and began to operate a pilot service. The association brought an action against the port authority and the Government of Malaysia for declarations that they were entitled to compensa tion for the loss of the goodwill of the business and that section 35A of the Port Authorities Act was unconstitutional and of no effect. The action was dismissed. On appeal the Federal Court granted a declaration that the association was entitled to compensation for loss of goodwill.
On a further appeal to the Privy Council the judgment of the Federal Court was reversed.
It is noteworthy, I think that article 13(1) of the Constitution of Malaysia and section 1(a) of the Canadian Bill of Rights each use the word "deprived" in connection with "property". The former, of course, uses the phrase "deprived of property", while the latter speaks of being "deprived" of "the enjoyment of property". I do not think that anything turns on that difference in language.
Viscount Dilhorne, writing for the majority of the Privy Council, at pages 905-906 of the report has this to say about the interpretation to be given to the word "deprived" in the context in which it was used in the Constitution.
The first question for consideration is whether this restriction on the exercise of a pilot's rights given by the grant of a licence amounted to a deprivation of property. An ordinary driving licence in the United Kingdom entitles its holder to drive many
" [1977] 2 W.L.R. 901.
classes of vehicles, including heavy locomotives. If Parliament in its wisdom thought it advisable that in future drivers of heavy locomotives should have a special test and that unless the holders of driving licences had passed that test, they should not drive heavy locomotives, could it be said that all holders of driving licences were in consequence deprived of property? Does disqualification from holding a driving licence involve deprivation of property? In the opinion of their Lordships, the answer to these questions is in the negative. In their view the restriction placed on the activities of individual licensed pilots did not deprive them of property and if this be the case, it is hard to see that it can be said to have deprived the licensed pilots who were partners in the association of property. All they lost was the right to act as pilots unless employed by the au thority and the right to employ others on pilotage, neither right being property. The result was that the association could no longer carry on its business and employ licensed pilots but unless it was deprived of property otherwise than in accordance with law or its property was compulsorily acquired or used by the port authority, there was no breach of article 13.
Again, at pages 907 - 908 he said:
Deprivation may take many forms. A person may be deprived of his property by another acquiring it or using it but those are not the only ways by which he can be deprived. As a matter of drafting, it would be wrong to use the word "deprived" in article 13(1) if it meant and only meant acquisition or use when those words are used in article 13(2). Great care is usually taken in the drafting of constitutions. Their Lordships agree that a person may be deprived of his property by a mere negative or restrictive provision but it does not follow that such a provision which leads to deprivation also leads to compulsory acquisition or use. If in the present case the association was in consequence of the amending Act deprived of property, there was no breach of article 13(1) for that deprivation was in accordance with a law which it was within the competence of the legislature to pass.
It may be that the association by its enjoyment over a consider able period of time of a monopoly in the provision of pilotage services had acquired a goodwill, the value of which would be reflected on a sale by it of its business and of which it was deprived by the amending Act. But if it were so, it does not follow that the goodwill was acquired by the port au thority from the association and in the opinion of the majority of their Lordships it was not. [The emphasis is mine.]
I am of the opinion that what was said by Viscount Dilhorne is equally applicable to the interpretation of section 1(a) of the Canadian Bill of Rights and thus lends strong support to the conclusion of the learned Trial Judge, with which I agree, that the Act here in question did not deprive
the appellant of the enjoyment of any property. Unfortunately, implementation of the legislation had the effect of putting the appellant out of business but that result did not occur due to any deprivation of property of the appellant by the respondent. As earlier stated, the Crown did not acquire, possess or use any property of the appel lant, either tangible or intangible, unless it could be said that the fishermen who supplied the appel lant with their fish or the customers to whom the appellant sold its fish and fish products had become their property. Obviously that could not be so because either the fishermen or the customers could, if they so desired, do business with anyone they wished. They were not the exclusive property of the appellant or anyone else, as the admittedly highly competitive nature of the business indicates. What the appellant lost was not property but was its right to carry on the business in which it had been engaged, without a licence. 1f that loss included whatever goodwill the appellant had, it was not taken by the Corporation.
Having said that, clearly there was no depriva tion of the enjoyment of property, in the sense that those words are used in the Canadian Bill of Rights. That being so, no failure of "due process" was involved. Even if section 2 "may have grafted on what was formerly regarded as 'due process' of law requirements of a higher standard than for merly prevailed for the protection of the human rights and fundamental freedoms of the individual recognized and declared by section 1(a)", 12 such higher standard could not apply in this case because there was no underlying deprivation of property necessitating the application of such higher standard, even assuming that such a new standard was created by paragraph (e) of section 2. I am, therefore of the view that there has been no breach of the Canadian Bill of Rights in this case.
For all of the above reasons, the appeal must be dismissed with costs. In view of this conclusion, it is unnecessary to deal with the appellant's submis sions with respect to the question of interest, if
12 Armstrong v. The State of Wisconsin and The United States of America [1973] F.C. 437 per Thurlow J. at p. 439.
any, which might have been payable on any com pensation which the respondent might have been required to pay if she had been found liable.
I do not wish to leave this case without saying that I fully recognize that the result may appear harsh but, as was pointed out by the learned Trial Judge, our responsibility is to interpret the law as we see it and we must leave to others the obliga tion to so frame it that unfairness does not result in the implementation thereof.
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HEALD J.: I concur.
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MACKAY D.J.: I agree.
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