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T-5970-78
A. M. Smith & Company Limited (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Walsh J.—Halifax, May 16; Ottawa, May 23, 1980.
Crown — Compensation — Loss of goodwill following establishment of Canadian Saltfish Corporation — Whether plaintiff's claim for compensation time-barred by virtue of s. 2 of The Statute of Limitations of Nova Scotia — Whether claim based on "specialty" or "taking away of property" — The Statute of Limitations, R.S.N.S. 1967, c. 168, s. 2(1)(c), (e) — Saltfish Act, R.S.C. 1970 (1st Supp.), c. 37, Part III — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 38.
The plaintiff, who owned and operated a fish exporting business in Nova Scotia, claims compensation for the taking away of its goodwill on the basis set out in the Supreme Court decision Manitoba Fisheries Ltd. v. The Queen rendered on June 22, 1978. As a result of the establishment in 1970 of the Canadian Saltfish Corporation pursuant to the Saltfish Act, plaintiffs operations became redundant and by the end of 1971 plaintiff ceased to carry on its fish exporting business and lost the goodwill of that business. The question is whether plaintiffs claim for compensation is time-barred by virtue of section 2 of The Statute of Limitations of Nova Scotia. Plaintiff, who relies on paragraph 2(1)(c) of the statute which provides for a twenty-year limitation period, argues that its action is based on "a bond or other specialty" pursuant to said paragraph and hence, is based on "an obligation arising under a statute". Defendant contends that the claim comes under paragraph 2(1)(e) of the statute (which provides for a six-year limitation period) as an action for the taking away of property, hence is now time-barred. As its secondary argument, plaintiff, going into the history of The Statute of Limitations of Nova Scotia, submits that the words "actions for the taking away or conver sion of property" of paragraph 2(1)(e) were never intended to apply to a cause of action for the loss of goodwill resulting from a statutory interference with marketing arrangements.
Held, the action is time-barred. With respect to plaintiffs first argument, the Saltfish Act does not establish any obliga tion on the Crown to compensate. However, the finding by the Supreme Court in the Manitoba Fisheries Limited case that there is a right of action since the statute does not specifically take away the right to compensate, applies here. Plaintiffs right of action is not on a statute, hence not on a specialty, but merely flows from the statute. With respect to plaintiffs second argument, the fundamental rule of interpretation of statutes is that they should be given their literal interpretation based on the words used: there is no need to go into the historical background or make any attempt to determine what was the intention of the legislature when the statute was adopted. There is no difficulty in interpreting paragraph 2(1)(e) on its literal wording, nor is there anything harsh or absurd or contrary to
common sense in the result. While there was no physical taking away from plaintiff by defendant of property, the Supreme Court having found that goodwill is property, plaintiff is en titled to compensation from defendant for taking of same. The matter is thus clearly within the wording of paragraph 2(1)(e) with its six-year prescriptive period.
Manitoba Fisheries Ltd. v. The Queen [1979] 1 S.C.R. 101, applied. Cork and Bandon Railway Co. v. Goode (1853) 13 C.B. 826, referred to. Thomson v. Lord Clan- morris [1900] 1 Ch. 718, referred to. Dominion Distillery Products Co. Ltd. v. The King [1937] Ex.C.R. 145 affirmed by [1938] S.C.R. 458, considered.
ACTION. COUNSEL:
K. E. Eaton, Q.C. and D. Pink for plaintiff.
Eileen M. Thomas, Q.C. and H. Gordon for defendant.
SOLICITORS:
Kitz, Matheson, Green & MacIsaac, Halifax, for plaintiff.
Deputy Attorney General of Canada for defendant.
The following are the reasons for judgment rendered in English by
WALSH J.: This action was set down for hearing on a preliminary determination of a question of law pursuant to Rule 474(2) of the Rules of this Court. At the same time action No. T-118-79 Zwicker & Company, Limited v. The Queen [[1980] 2 F.C. 159] was set down for hearing on the same question of law, the issues in the two cases being identical. The question set down read as follows:
Is the claim of the Plaintiff time-barred by virtue of the provisions of Section 2 of the Statute of Limitations R.S.N.S. 1967, Chapter 168?
Paragraphs (c) and (e) of subsection (1) of the said section 2 which give to the issue raised in the present actions read as follows:
2 (1) The actions in this Section mentioned shall be com menced within and not after the times respectively in such Section mentioned, that is to say:
(c) actions for rent upon an indenture of demise, actions upon a bond or other specialty, actions upon any judgment or
recognizance, within twenty years after the cause of any such action arose, or the recovery of such judgment;
(e) all actions grounded upon any lending, or contract, expressed or implied, without specialty, or upon any award 'where the submission is not by specialty, or for money levied by execution; all actions for direct injuries to real or personal property; actions for the taking away or conversion of prop erty, goods and chattels; actions for libel, malicious prosecu tion and arrest, seduction, criminal conversation; and actions for all other causes which would formerly have been brought in the form of action called trespass on the case, except as herein excepted, within six years after the cause of any such action arose;
The question was submitted on an agreement on issues and facts. Both plaintiffs are companies incorporated in the Province of Nova Scotia with head offices in that Province. The A. M. Smith & Company Limited action was instituted on Decem- ber 21, 1978 and that of Zwicker & Company, Limited on January 4, 1979, but nothing turns on this. In both actions the Deputy Attorney General of Canada on behalf of the defendants filed a statement of defence on February 28, 1979, plead ing section 2 of the said The Statute of Limita tions of Nova Scotia. The facts are set out in paragraphs (2) to (9) of the agreement on issues and facts and are identical in both cases save for the fact that in paragraph (7) the amount approved for payment to plaintiff A. M. Smith & Company Limited was $60,000 while in the case of Zwicker & Company, Limited it was $46,000. These paragraphs read as follows:
2. It is further agreed that those questions of law be determined on the following facts:
(1) The plaintiff is a company incorporated in the province of Nova Scotia with its head office at Lunenburg in that province.
(2) Until the year 1971 the Plaintiff owned and operated a fish exporting business, in the course of conducting which the Plaintiff bought salt cured fish in Newfoundland, stored, prepared and processed it in Nova Scotia, from where it was sold to purchasers located in other parts of Canada and to purchasers located outside of Canada.
(3) On the 25th day of March, 1970, the Salt-fish [sic] Act (hereafter called "the Act") established the Canadian Salt- fish [sic] Corporation (hereafter called "The Corporation") and declared that the Corporation is for all purposes of that Act an agent of the Defendant.
(4) Part III of the Act prohibited the Plaintiff from carrying on its business of buying and conveying cured fish from
Newfoundland and delivering it to Nova Scotia unless it was issued a licence by the Corporation, and no such licence has been issued to the Plaintiff.
(5) The Act empowered the Governor in Council to exempt the Plaintiff from the application of Part III of the Act but the Governor in Council did not so exempt the Plaintiff.
(6) The Act empowered the Minister responsible thereunder, with the approval of the Governor in Council and on behalf of the Government of Canada, to enter into an Agreement with the Government of Nova Scotia providing for the undertaking by the Province of arrangements for the pay ment to the owner of any plant or equipment used in storing, processing or otherwise preparing fish for market, of com pensation for any such plant or equipment that would or might be rendered redundant by reason of any operations authorized to be carried out by the Corporation under the said Part III, but the Province of Nova Scotia declined to enter into any such agreement.
(7) By letter dated the 7th day of September, 1971, the Minister of Fisheries advised the Plaintiff that the Govern ment of Canada had approved payment of the sum of $60,000 to the Plaintiff on an ex gratia basis for the loss of its operations resulting from the enactment of the Act, and that amount was subsequently received by the Plaintiff.
(8) By reason of the failure of the Corporation to grant any licence to the Plaintiff and the failure of the Governor in Council to exempt the Plaintiff from the application of Part III of the Act the Plaintiff, by the end of 1971, ceased to carry on its fish exporting business and lost the goodwill of that business.
(9) On October 3, 1978 the Supreme Court of Canada gave judgment in Manitoba Fisheries Limited v. The Queen (1978) 23 N.R. 159, 2 and a copy of the reasons for judg ment, delivered by the Honourable Mr. Justice Ritchie for the Court, is attached to this Agreement.
It is common ground that the Saltfish Act 3 which is the statute in issue in the present actions is not substantially different in its effects from the Freshwater Fish Marketing Act 4 which was in issue in the Manitoba Fisheries Limited case. The action of the plaintiff in the Manitoba Fisheries Limited case for a declaration that it was entitled to compensation for the loss suffered by reason of the said Act was dismissed at trial and also on appeal to the Federal Court of Appeal although it was conceded that the implementation of the legis lation had the effect of putting the appellant out of business without adequate compensation having been received from the federal authorities which
' In the case of Zwicker & Company, Limited v. The Queen, this figure was $46,000.
2 Supreme Court Report reference [1979] 1 S.C.R. 101 is used in these reasons.
3 R.S.C. 1970 (1st Supp.), c. 37.
4 R.S.C. 1970, c. F-13.
had brought it about. The lower courts held that while the effect of the legislation was to extinguish appellant's goodwill it had nevertheless not been taken away by the Federal Crown or the Corpora tion. It was held by the Supreme Court that the legislation in question and the Corporation created thereunder had the effect of depriving the appel lant of its goodwill as a going concern and conse quently rendering its physical assets virtually use less, and the goodwill so taken away constituted property for the loss of which no compensation whatsoever had been paid. Since there was nothing in the Act providing for the taking of such prop erty without compensation and since the Court found that there was such a taking it was conclud ed that this was unauthorized on the basis that "unless the words of the statute clearly so demand, a statute is not to be construed so as to take away the property of a subject without compensation" (per Lord Atkinson in Attorney-General v. De Keyser's Royal Hotel Ltd. [1920] A.C. 508).
In rendering the judgment of the Court Ritchie J. stated at page 110:
Once it is accepted that the loss of the goodwill of the appellant's business which was brought about by the Act and by the setting up of the Corporation was a loss of property and that the same goodwill was by statutory compulsion acquired by the federal authority, it seems to me to follow that the appellant was deprived of property which was acquired by the Crown.
Although in these actions plaintiffs claim com pensation on the same basis, the origin of their claims cannot be considered as commencing from the date of the Supreme Court judgment on June 22, 1978. All that such a judgment does is decide definitively how the law should be interpreted, and whether a claimant only realized for the first time upon the rendering of such a judgment that he had a right of action, or whether such a judgment merely confirmed what the claimant had believed to be his right all along, with which view the lower courts had disagreed, the right cannot be said to have been created by the said judgment. In the present cases a right to compensation for the taking away of plaintiffs' goodwill must be deemed to have always existed from the time such goodwill was taken following the adoption of the Saltfish Act and the failure to issue licences to plaintiffs to
continue their operations. It is from that date that the right of action originated and if proceedings were not commenced within the period fixed for bringing them by The Statute of Limitations they would have to be considered as time-barred, not withstanding the judgment of the Supreme Court of Canada in the Manitoba Fisheries Limited case. Since it is agreed that both plaintiffs ceased to carry on their fish exporting business and lost their goodwill by the end of 1971, both actions would be time-barred if the six-year limitation in section 2(1)(e) of The Statute of Limitations of Nova Scotia (supra) applies. On the other hand, if section 2(1)(c) on which plaintiffs rely applies then the limitation period is twenty years and the actions were brought in time. Plaintiffs also have a secondary argument that if neither paragraph applies, nor can the limitation be brought within any other section of the Act, then there is no prescriptive period for the actions as brought.
It is common ground that it is The Statute of Limitations of Nova Scotia which applies in both actions as a result of the provisions of section 38 of the Federal Court Act 5 .
In deciding the question of law raised the Court has had the advantage of extensive written submis sions by counsel for both parties as well as oral argument.
Plaintiffs' principal argument is that these actions are based upon "a bond or other specialty" pursuant to paragraph (c). Plaintiffs state that specialty is clearly defined as a contract under seal—such as a bond or mortgage: a "specialty debt" is an obligation secured by such a contract. A specialty is, also, an obligation arising under a statute (see Stroud's Judicial Dictionary, 4th Edi tion, Vol. 5, p. 2592). Clearly there was no con tract under seal here so plaintiffs are forced to rely on the argument that their claims are based on "an obligation arising under a statute". Quite aside from the fact that it could perhaps be argued that the wording of the statute in associating "special- ty" with "bond" indicates that it is specialties similar to bonds—that is to say contracts under
5 R.S.C. 1970 (2nd Supp.), c. 10.
seal—to which paragraph (c) is intended to refer, and not to obligations arising under a statute, defendant contends that for an obligation to arise under a statute there must be clear words in the statute creating the obligation. Plaintiffs refer to the case of The Cork and Bandon Railway Co. v. Goode 6 but as defendant points out it was made clear that an action to recover a debt in respect of a liability created by a statute is an action on a specialty but that the judgment distinguishes the situation where a statute enables an action to be brought, which, nevertheless is not an action on the statute and therefore not an action on a spe cialty. Reference was made by defendant to the case of Thomson v. Lord Clanmorris 7 in which at page 728 Vaughan Williams L.J. made a distinc tion between an action which is given by a statute and an action on the statute. In the first instance it would be an action on the case and the second would be an action on the statute or founded on the obligation therein established. Of particular interest is the case of Dominion Distillery Prod ucts Company Limited v. The Kings where it was argued that the claim for a refund of taxes paid on goods exported from the country, which refund was provided for in these circumstances in the statute that imposed the tax, was an action on the statute. After reviewing the cases however it was held that it was an action for monies had and received and not for a liability created by a statute. This action was affirmed on appeal in the Supreme Court of Canada 9 where it was determined that the action which arose as a result of the statute was an action for monies had and received and not an action on a specialty. Defendant's counsel con tended that in these cases the distinctions were argued because of similar prescriptive periods as exist in The Statute of Limitations of Nova Scotia.
6 (1853) 13 C.B. 826.
7 [ 1900] 1 Ch. 718.
8 [1937] Ex.C.R. 145.
9 [1938] S.C.R. 458.
The Saltfish Act did not establish any obliga tion on the Crown to compensate. Defendant con tends that the action is a common law action for compensation flowing from the effects of the stat ute and is not an action on the statute, and there fore not a specialty. Plaintiffs' counsel contends there was no common law right of action. The Supreme Court decision in the Manitoba Fisheries Limited case however has indicated that there is a right of action since the statute did not specifically take away the right to compensate. I conclude that plaintiffs' right of action is not on the statute, hence not on a specialty, but merely flows from it as the Supreme Court has found.
Defendant's contention is that the claim comes under paragraph (e) as an action for the taking away of property, hence is now time-barred.
Plaintiffs' secondary argument goes into the his tory of The Statute of Limitations of Nova Scotia, contending that the words "actions for the taking away or conversion of property" of paragraph (e) were never intended to apply to a cause of action for the loss of goodwill resulting from a statutory interference with marketing arrangements. It is contended that the first limitations statute in Nova Scotia (1738) 36 Geo. 3rd c. 24 provided a six- year period for "all actions of trespass, detinue, trover, and replevin for taking away of goods and cattle" which is based on a similar provision in the English Limitations Act of 1623. Similar wording appeared in the Nova Scotia Limitations of Actions Act in R.S.N.S. 1884, c. 112, but in The Statute of Limitations R.S.N.S. 1900, c. 167, references to "detinue, trover and replevin" were replaced by the present reference to "actions for the taking away or conversion of property". Plain tiffs' counsel argues that this change was made to reflect changes brought about by the Judicature Act in respect of the old forms of action, the intention being to encompass by the words "actions for the taking away ... of property" the subject matter of the old actions of detinue and replevin and to substitute the modern term "con- version" for the old action of trover. He then deals with the action for replevin which lay to recover damages for unlawfully taking away chattels, the first step being to obtain redelivery to plaintiff on
his giving security to prosecute his claim for dam ages. He points out that detinue was originally an action for breach of a contract to deliver a specific chattel which only lay against those affected with the duty of delivery and it was eventually extended to become an action against anyone who unlawful ly detained goods from their owner without regard to the means by which he obtained possession of them. Certainly the present claim would not come under any of these headings as defendant never physically took away or removed any property from plaintiffs' possession. In continuing this rea soning plaintiffs' counsel submits that section 2(1)(e) of The Statute of Limitations therefore cannot apply and, since section 2(1)(c) does not apply either, therefore the cause of action does not fall within any provision of section 2 and as there are no other provisions of the Nova Scotia Statute of Limitations which would be applicable the action is not time-barred.
I am unable to agree with this line of reasoning. The fundamental rule of interpretation of statutes is-that they should be given their literal interpreta tion based on the words used, and, unless there is some difficulty in interpreting them on this basis, this settles the matter and there is no need to go into the historical background or make any attempt to determine what was the intention of the legislature when the statute was adopted (see Maxwell on the Interpretation of Statutes, 12th Edition, pages 28 and following). At page 29 Maxwell states:
Where, by the use of clear and unequivocal language capable of only one meaning, anything is enacted by the legislature, it must be enforced however harsh or absurd or contrary to common sense the result may be.
I find no difficulty interpreting paragraph (e) on its literal wording, nor is there anything harsh or absurd or contrary to common sense in the result. While there was no physical taking away from plaintiffs by defendant of property the Supreme Court has found that goodwill is property and that they are entitled to compensation from defendant for the taking of same. As Ritchie J. stated in the passage cited (supra): "... the Appellant was
deprived of property which was acquired by the Crown". This appears to me to bring the matter clearly within the wording of section 2(1)(e) of The Statute of Limitations of Nova Scotia with its six-year prescriptive period. As Maxwell points out at page 31 dealing with the rule of literal construction:
One consequence of the rule of literal construction is that wide language should be given a wide construction, however restricted the scope of previous legislation dealing with the same matter may have been.
Finally I would quote again from Maxwell at page 29:
It was repeatedly decided at law that the statutes of limita tion which enacted that actions should not be brought after the lapse of certain periods of time from the accrual of the cause of action barred actions brought after the time so limited, even though the cause of action was not discovered, nor was practi cably discoverable, by the injured party at the date of accrual, and even though it was fraudulently concealed by the wrongdo er until the expiry of the statutory period. The hardship of such decisions was obvious, but the language was susceptible of no other interpretation.
I regretfully am forced to conclude therefore that the actions are time-barred and that the question of law set down for decision must be answered in the affirmative.
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