A-787-86
Her Majesty the Queen in Right of Canada
Appellant (Defendant)
v.
Regional Municipality of Peel Respondent (Plain-
tiff)
INDEXED AS: PEEL (REGIONAL MUNICIPALITY) V. CANADA
Court of Appeal, Mahoney, MacGuigan and Des-
jardins JJ.—Toronto, November 14; Ottawa,
December 19, 1988.
Constitutional law — Fundamental constitutional principles
— Payments made by municipality in compliance with court
orders under s. 20(2) Juvenile Delinquents Act — S. 20(2)
invalid — Trial Judge finding constitutional principle to effect
executive under no obligation to make expenditure in absence
of appropriation but principle to be applied in context of
federal system and, in light of principle of redress for unjust
enrichment, unfair plaintiff bear costs — Trial Judge ignoring
requirement defendant have legal liability to pay before grant
ing redress for unjust enrichment — Constitutional principle
that no federal liability to pay costs of administration of
federal laws — Federal Government's obligation re: delin
quents of political nature only.
Restitution — Payments made by municipality in compli
ance with court orders under s. 20(2) Juvenile Delinquents Act
S. 20(2) ultra vires Parliament — Trial Judge finding
payments recoverable as principles of federal system of gov
ernment and of redress for unjust enrichment combined to
entitle municipality to reimbursement — Trial decision disre
garding requirement defendant be legally liable to make pay
ments before granting redress for unjust enrichment — Court
cannot extend principles of restitution as between public
authorities so as to render Crown liable for ultra vires law.
This was an appeal against a decision of the Trial Division
holding that the respondent was entitled to full recovery of
monies paid for the maintenance of juvenile delinquents in
compliance with orders made by the Provincial Court of
Ontario under subsection 20(2) of the Juvenile Delinquents
Act. The Supreme Court of Canada found the provision to be
ultra vires to the extent that it purported to impose obligations
on municipalities. The Trial Judge found that the payments
had been made in compliance with an invalid law and that, as
between the two parties involved, it would be unjust for the
plaintiff to bear those costs.
Held (Mahoney J. dissenting): the appeal should be allowed.
Per MacGuigan J.: The Trial Judge's decision ignores the
requirement that the appellant has a legal liability to make the
payments before granting redress for unjust enrichment. In a
federal context, constitutional principles do not establish a
federal liability to pay for the administration of its laws.
Furthermore, the federal government cannot be said to have
received a direct financial benefit from the municipality's ex
penditures. Although the federal government was the initiating
cause of the expenditures, its obligation in this matter was only
political in nature.
Per Desjardins J. (concurring): The Court's traditional
power to nullify ultra vires legislation did not permit extending
the principles of restitution as between public authorities so as
to render liable the Crown for legislation which a legislature
lacked authority to adopt.
Per Mahoney J. (dissenting): The British constitutional prin
ciple that the Crown is not required to pay for the administra
tion of its laws in the absence of an appropriation, while
appropriate in a unitary state, must be adapted to the demands
of the Canadian federal constitution. The fundamental issue is
the effective enforcement of the constitution. It is not erroneous
to require the federal government to bear the costs of maintain
ing juvenile delinquents regardless of whether that government
had any legal liability for such expenses.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Colonial Laws Validity Act, 1865 (U.K.), 28-29 Vict., c.
63.
Constitution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.) s. 52(1).
Juvenile Delinquents Act, R.S.C. 1970, c. J-3, s.
20(1),(2).
Statute of Westminster, 1931, 22 Geo. V., c. 4 (U.K.)
[R.S.C. 1970, Appendix II, No. 26], s. 7(1).
The Proceedings against the Crown Act, R.S.S. 1965, c.
87, s. 5(7).
Young Offenders Act, S.C. 1980-81-82-83, c. 110.
CASES JUDICIALLY CONSIDERED
APPLIED:
Kiriri Cotton Co. Ltd. v. Dewani, [ 1960] A.C. 192;
[1960] I All E.R. 177 (C.A.); Eadie v. The Township of
Brantford, [1967] S.C.R. 573; 63 D.L.R. (2d) 561.
REVERSED:
Peel (Regional Municipality) v. Canada, [1987] 3 F.C.
103 (T.D.).
DISTINGUISHED:
B.C. Power Corporation v. B.C. Electric Company,
[1962] S.C.R. 642; Amax Potash Ltd. et al. v. Govern
ment of Saskatchewan, [1977] 2 S.C.R. 576; Jacobs
(George Porky) Enterprises Ltd. v. City of Regina,
[1964] S.C.R. 326; 44 D.L.R. (2d) 179; Air Can. v. B.C.
(Govt.), [1986] 5 W.W.R. 385 (B.C.C.A.).
CONSIDERED:
Reference re liability of province of Nova Scotia for
expenses incurred in calling out troops in aid of the civil
power in Cape Breton, [1930] S.C.R. 554; [1930] 4
D.L.R. 82; Peel (Regional Municipality) v. Ontario
(1988), 64 O.R. (2d) 298 (H.C.); Moses v. Macferlan
(1760), 97 E.R. 676; 2 Burr. 1005 (K.B.); Fibrosa
Spolka Akcyjna v. Fairbairn, Lawson, Combe Barbour,
Ld., [1943] A.C. 32 (H.L.); Hydro Electric Commission
of Nepean v. Ontario Hydro, [1982] 1 S.C.R. 347; 132
D.L.R. (3d) 193.
REFERRED TO:
Regional Municipality of Peel v. MacKenzie et al.,
[1982] 2 S.C.R. 9; 139 D.L.R. (3d) 14; Re Peel (Region-
al Municipality of) et al. and Viking Houses (1977), 16
O.R. (2d) 632; 36 C.C.C. (2d) 137 (Ont. H.C.); aff'd
(1977), 16 O.R. (2d) 765; 36 C.C.C. (2d) 337 (Ont.
C.A.); aff'd, sub nom, Attorney General for Ontario et
al. v. Regional Municipality of Peel, [1979] 2 S.C.R.
1134; 104 D.L.R. (3d) l; Re Regional Municipality of
Peel and Viking Houses (July 10, 1978) (Ont. H.C.),
unreported; aff'd (1980), 113 D.L.R. (3d) 350 (Ont.
C.A.); Brook's Wharf and Bull Wharf, Ld. v. Goodman
Brothers, [1937] I K.B. 534; [1936] 3 All E.R. 696
(C.A.); Deglman v. Constantineau, [1954] S.C.R. 725;
[1954] 3 D.L.R. 785; Reading v. Attorney-General,
[1951] A.C. 507 (H.L.); Pettitt v. Pettitt, [1970] A.C.
777 (H.L.); Carleton, County of v. City of Ottawa,
[1965] S.C.R. 663; 52 D.L.R. (2d) 220; More (James) &
Sons Ltd. v. University of Ottawa (1974), 49 D.L.R. (3d)
666 (Ont. H.C.); Pettkus v. Becker, [1980] 2 S.C.R. 834;
117 D.L.R. (3d) 257; Sorochan v. Sorochan, [l986] 2
S.C.R. 38; 2 R.F.L. (3d) 225; Adoption Act, of Ontario,
Reference re authority to perform functions vested by,
[1938] S.C.R. 398; Re Family Relations Act, [1982] 1
S.C.R. 62; Turigan et al. v. Alberta (1988), 90 A.R. 118
(C.A.); Attorney General of British Columbia v. Smith,
[1967] S.C.R. 702; R. v. Big M Drug Mart Ltd. et al.,
[1985] I S.C.R. 295.
AUTHORS CITED
McCamus, John D. "Restitutionary Recovery of Moneys
Paid to a Public Authority under a Mistake of Law:
/gnorantia Juris in the Supreme Court of Canada"
(1983), 17 U.B.C. L. Rev. 233.
Collins, Ronald D. "Restitution from Government Offi
cials" (1984), 29 McGill L.J. 407.
Gautreau, Q.C., J. R. Maurice "Developments in the
Law of Restitution" (1985), 5 Advocates' Q. 419.
Fridman, G.H.L. and McLeod, James G., Restitution,
Toronto. Carswell_ 1987 .
Hogg, Peter W., Constitutional Law of Canada, Toronto:
Carswell, 1977.
Chevrette, François and Marx, Herbert, Droit constitu-
tionnel: notes et jurisprudence, Montréal: Presses de
l'Université de Montréal, 1982.
COUNSEL:
Paul J. Evraire for appellant (defendant).
J. E. Sexton, Q.C. and B. G. Morgan for
respondent (plaintiff).
•
SOLICITORS:
Deputy Attorney General of Canada for
appellant (defendant).
Osler, Hoskin & Harcourt, Toronto, for
respondent (plaintiff).
The following are the reasons for judgment
rendered in English by
MAHONEY J. (dissenting): This is an appeal
from a judgment of the Trial Division, [1987] 3
F.C. 103, which held the respondent municipality
entitled to recover from Canada $1,166,814.22,
and costs. That is the net amount it had paid to
third parties in compliance with court orders made
on authority of subsection 20(2) of the Juvenile
Delinquents Act, R.S.C. 1970, c. J-3. Subsection
20(2) was held to be ultra vires to the extent it
purported to impose obligations on municipalities.
Regional Municipality of Peel v. MacKenzie et
al., [1982] 2 S.C.R. 9; 139 D.L.R. (3d) 14.
I have had the advantage of reading in draft the
reasons for judgment of my colleagues herein and
find myself in respectful disagreement. In my
view, it was open to the learned Trial. Judge to
conclude [at page 121] that "as between the [mu-
nicipality] and [Canada], it would be unjust that
the [municipality] ultimately bear those costs
rather than [Canada]" and, having so concluded,
to render the judgment he did.
I am content to adopt the reasons for judgment
below. The constitutional principle developed in
Great Britain, a unitary state, is that, absent Par
liamentary appropriation, there is no legal obliga
tion on the Crown to pay for the administration of
laws enacted by Parliament. I agree with the
learned Trial Judge that principle must be adapted
in Canada to the demands of our federal constitu
tion. As he said, at page 121:
If the Crown in right of Canada can invoke an immunity from
action for payment of costs unlawfully imposed by the legisla
tive branch of the federal government on the plaintiff, on the
grounds that the legislative branch has provided no appropria
tion or authorization for the defendant to make such payments,
then the federal order of government will have achieved what
the constitution says it cannot achieve: namely, the imposition
of a financial burden on the plaintiff municipality for the
maintenance of juvenile delinquents under the Juvenile Delin
quents Act.
In my respectful opinion, the fundamental issue in
this case is the effective enforcement of the Consti
tution of Canada—"the supreme law of Canada".
I do not see that as susceptible of ex gratia
resolution. Principles of restitution founded on
unjust enrichment may have at most analogous
application. I see no error in requiring that
Canada bear the cost regardless of whether
Canada would have had any legal liability to pay
the obligation had Parliament not, unconstitution-
ally, imposed it on the municipality in a fashion it
could not avoid.
Ontario is not amenable to this court's jurisdic
tion. The learned Trial Judge was not called upon
to consider whether it, rather than Canada, was
liable to the municipality. The parallel claims
against Canada and Ontario can be considered
together only by the Supreme Court of Canada.
Other courts considering the claims should, in my
view, give full credit to the assurance that double
compensation is not being sought.
I would dismiss the appeal with costs. Further
stay of execution of its judgment should be sought
in the Trial Division.
The following are the reasons for judgment
rendered in English by
MACGUIGAN J.: This is an appeal from Strayer
J. in the Trial Division reported as Peel (Regional
Municipality) v. Canada, [1987] 3 F.C. 103, in an
action for recovery of money paid out by the
respondent for the maintenance of juvenile delin
quents in compliance with orders made by the
Provincial Court of Ontario based on subsection
20(2) of the Juvenile Delinquents Act, R.S.C.
1970, c. J-3 (the Act)) The action arises as a
result of the decision of the Supreme Court of
Canada in Regional Municipality of Peel v.
MacKenzie et al., [1982] 2 S.C.R. 9; 139 D.L.R.
(3d) 14 that that subsection is ultra vires
Parliament. 2
Subsection 20(1) of the Act authorized a Court
to impose any of nine dispositions on a child found
to be a juvenile delinquent, and subsection (2),
which had been in the Act since 1908, provided as
follows:
(2) In every such case it is within the power of the court to
make an order upon the parent or parents of the child, or upon
the municipality to which the child belongs, to contribute to the
child's support such sum as the court may determine, and
where such order is made upon the municipality, the municipal
ity may from time to time recover from the parent or parents
any sum or sums paid by it pursuant to such order.
After citing Reference re liability of province of
Nova Scotia for expenses incurred in calling out
troops in aid of the civil power in Cape Breton,
[1930] S.C.R. 554; [1930] 4 D.L.R. 82, in which
1 The Juvenile Delinquents Act has now been replaced by the
Young Offenders Act, S.C. 1980-81-82-83, c. 110.
2 The municipality had to go to the Supreme Court twice to
get this constitutional interpretation: Re Peel (Regional Mu
nicipality of) et al. and Viking Houses (1977), 16 O.R. (2d)
632; 36 C.C.C. (2d) 137 (Ont. H.C.); affd (1977), 16 O.R.
(2d) 765; 36 C.C.C. (2d) 337 (Ont. C.A.); aff'd [1979] 2
S.C.R. 1134; 104 D.L.R. (3d) 1; sub nom. Attorney General
for Ontario and Viking Houses v. Regional Municipality of
Peel (1979), 104 D.L.R. (3d) 1 (S.C.C.); Re Regional Munici
pality of Peel and Viking Houses (July 10, 1978) (Ont. H.C.),
unreported, aff d (1980), 113 D.L.R. (3d) 350 (Ont. C.A.), and
finally as above (S.C.C.).
the Supreme Court had held that Parliament could
not impose upon a province the duty to pay
expenses incurred in connection with a requisition
calling out the active militia in aid of the civil
power, Martland J. for a unanimous Court wrote
(at pages 22 S.C.R.; 24-25 D.L.R.):
If the Parliament of Canada cannot impose on a province a
duty to pay expenses, without its consent, it is my view that
likewise it cannot, without the interposition of the province,
impose such a duty upon municipal institutions in the province,
created by the province pursuant to s. 92(8) of that Act [the
Constitution Act, 1867].
In my opinion the Parliament of Canada did not have the
authority to enact s. 20(2), in so far as it is made applicable to
municipalities. This is not legislation in relation to criminal law
or criminal procedure, and it was not truly necessary for the
effective exercise of Parliament's legislative authority in these
fields. The provisions of s. 20(2), in so far as they relate to
municipalities, constitute legislation which affects the civil
rights of municipalities, which are, themselves, the creation of
and subject to the legislative control of the provincial legisla
tures. Section 92(8) of the Constitution Act, 1867 gave to the
provinces the exclusive right to make laws in relation to
"Municipal Institutions in the Province". The establishment of
municipal institutions is effected by the provinces pursuant to
this power. The effect of s. 20(2) is to alter the role of
municipal institutions, not necessarily limited to financial mat
ters but also with respect to their duty toward persons found
within their boundaries. This is an indirect amendment to
provincial legislation respecting municipalities. It could not be
justified in the absence of a direct link with federal legislative
power under s. 91(27). There is no direct link between the
municipality "to which the child belongs" and the issue of the
child's criminality. The obligation sought to be imposed on the
municipality arises only after the criminal proceedings have
been completed and sentence has been imposed.
The respondent was incorporated as a regional
municipality in 1973 and commenced functioning
on January 1, 1974. It seeks recovery of
$1,166,814.22 3 paid to group homes, institutions
and individuals pursuant to subsection 20(2)
orders between January 1, 1974, and approximate
ly July 22, 1982, the date of the Supreme Court
judgment of unconstitutionality.
3 This was the net amount of expense after the deduction of
subsidies from the Province of Ontario.
The Trial Judge found as a fact that the
respondent made these payments under compul
sion, since failure to pay as ordered by the Court
would have exposed it to contempt proceedings.
After considering the principles both of the Con
stitution and restitution, Strayer J. concluded
(supra, at page 121):
It is at this point where the principles of the federal system of
government and the principle of redress of unjust enrichment
join together in requiring that the defendant reimburse the
plaintiff for the costs incurred by the plaintiff through compli
ance with the invalid law. It might well have been impossible
for anyone to have sued the defendant directly to force the
payment of such monies in the first place. But where the
plaintiff has paid them in compliance with a federal law that
has turned out to be invalid, and in furtherance of the objec
tives of that law duly adopted by Parliament, as between the
plaintiff and the defendant it would be unjust that the plaintiff
ultimately bear those costs rather than the defendant.
The respondent has also succeeded at trial in an
action for the recovery of the same $1,166,814.22
against the Province of Ontario: Peel (Regional
Municipality) v. Ontario (1988), 64 O.R. (2d) 298
(H.C.). Montgomery J. there commented (at page
299) on the duplication of actions:
Due to jurisdictional restrictions the action against the Fed
eral Government had to proceed in Federal Court. It is unfortu
nate that under present legislation, it is necessary to go through
two separate trial levels and two separate appellate levels before
the question of the equities as between the two senior levels of
government can be considered.
I have had the benefit of reading the Federal Court decision,
at trial, of Mr. Justice Strayer, released November 27, 1986 ...
Judgment there was in favour of the Municipality. That judg
ment has been stayed pending the disposition of an appeal to
the Federal Court of Appeal. No amount has been paid to the
Municipality under that judgment. Counsel for the Municipali
ty has undertaken that it will only seek to collect once.
He went on to conclude (at page 304) that
judgment should issue against the Province:
To establish a right of recoupment, the plaintiff Municipality
must:
(I) show that it was compelled by law to make the payment;
(2) not make the payment foolishly when there is no reason to
do so;
(3) have discharged a liability of the defendant, and
(4) satisfy the court that as between the parties the defendant
Province was primarily liable.
Here, the payments were not foolishly made. They were
made under protest in response to court orders. These payments
discharged a responsibility of the Province. Since s. 20(2) of the
Juvenile Delinquents Act was ultra vires the Federal Govern
ment, responsibility lay upon the Province to pay.
The Municipality has satisfied me that as between the parties
the Province is primarily liable. Further, in my view, the
equities all lie with the Municipality. Under numerous Ontario
statutes payment concerning the welfare of children is, in large
measure, made by the Province.
We were informed that this decision is under
appeal to the Ontario Court of Appeal. Only if
both cases reach the Supreme Court of Canada
will they be fully reconciled.
The parties are agreed that the applicable law is
"the principle of restitution against what would
otherwise be an unjust enrichment". 4 They are as
well agreed even on the elements of the law, which
might be said to be as follows.
The principle of restitution appears to have been
first stated by Lord Mansfield in several decisions
from 1760 to 1780. For instance, in Moses v.
Macferlan (1760), 97 E.R. 676, at page 680; 2
Burr. 1005 (K.B.), at page 1012, he referred it as
"[t]his kind of equitable action, to recover back
money, which ought not in justice to be kept ... .
It lies only for money which, ex aequo et bono, the
defendant ought to refund". It was refined in
recent times by Lord Wright M.R. in Brook's
Wharf and Bull Wharf Ld. v. Goodman Brothers,
[1937] 1 K.B. 534; [1936] 3 All E.R. 696 (C.A.)
and in Fibrosa Spolka Akcyjna v. Fairbairn,
Lawson, Combe Barbour, Ld., [1943] A.C. 32
(H.L.). In the latter case Lord Wright stated at
page 61:
It is clear that any civilized system of law is bound to provide
remedies for cases of what has been called unjust enrichment or
4 The phrase is that of Rand J. in Deglman v. Constantineau,
[1954] S.C.R. 725, at p. 728; [1954] 3 D.L.R. 785, at p. 788.
unjust benefit, that is to prevent a man from retaining the
money of or some benefit derived from another which it is
against conscience that he should keep. Such remedies in
English law are generically different from remedies in contract
or in tort, and are now recognized to fall within a third
category of the common law which has been called quasi-con
tract or restitution .... Payment under a mistake of fact is only
one head of this category of the law. Another class is where, as
in this case, there is prepayment on account of money to be
paid as consideration for the performance of a contract which
in the event becomes abortive and is not performed, so that the
money never becomes due.
And, again, in commenting on Lord Mansfield's
views in Moses v. Macferlan, supra, he said, at
page 62:
The obligation is a creation of the law, just as much as an
obligation in tort. The obligation belongs to a third class,
distinct from either contract or tort, though it resembles con
tract rather than tort. This statement of Lord Mansfield has
been the basis of the modern law of quasi-contract ....
Despite these broad statements, it appears that
the principle may be limited in English law largely
to cases where a person who has paid money sues
for its return: Reading v. Attorney-General,
[1951] A.C. 507 (H.L.), at pages 513-514, Lord
Porter; Pettitt v. Pettitt, [ 1970] A.C. 777 (H.L.)
at page 795, Lord Reid.
In Canada the principle of restitution has been
much applied in that sense: Carleton, County of v.
City of Ottawa, [ 1965] S.C.R. 663; 52 D.L.R.
(2d) 220; More (James) & Sons Ltd. v. University
of Ottawa (1974), 49 D.L.R. (3d) 666 (Ont.
H.C.), Morden J.; Deglman v. Constantineau,
supra, (for services rendered). It has also been
applied in a broader context in its unjust enrich
ment form: Pettkus v. Becker, [ 1980] 2 S.C.R.
834; 117 D.L.R. (3d) 257; Sorochan v. Sorochan,
[1986] 2 S.C.R. 38; 2 R.F.L. (3d) 225.
However, although moneys paid under a mis
take of fact are recoverable under the law of
restitution, the general rule that moneys paid
under a mistake of law cannot be recovered contin
ues to exist in Canada, despite its legislated aboli
tion in many common law jurisdictions, despite the
strong dissent of Dickson J. [as he then was]
(Laskin C.J.C. concurring) in Hydro Electric
Commission of Nepean v. Ontario Hydro, [1982]
1 S.C.R. 347; 132 D.L.R. (3d) 193, and despite
the animadversions of academic critics. 5 The
reason is stated as follows by Estey. J. in the
Nepean case for the majority (at pages 412
S.C.R.; 243 D.L.R.):
These authorities, both old and current, relating to the
situation where mistake of law alone is present, are founded, in
my respectful view, on good sense and practicality. Certainty in
commerce and in public transactions such as we have here is an
essential element of the well-being of the community. The
narrower rule applicable to mistake of law as compared to that
applicable to mistake of fact springs from the need for this
security and the consequential freedom from disruptive undoing
of past concluded transactions. Mistake of fact is, of course,
limited to the parties and has no in rein consequences; hence
the more generous view. In any event, nothing has been brought
to light in the review of the law by the parties on this appeal to
indicate any basis for the merging of the principles applicable
to the categories of mistake, and indeed the wisdom embodied
in the authorities augurs for the maintenance of this ancient
distinction.
Nevertheless, that limitation on the principle of
restitution or unjust enrichment does not affect the
present case because of the recognized exceptions
to the limitation. In Kiriri Cotton Co. Ltd. v.
Dewani, [ 1960] A.C. 192, at page 204; [ 1960] 1
All E.R. 177 (C.A.), at page 181, Lord Denning
said:
Nor is it correct to say that money paid under a mistake of law
can never be recovered back. The true proposition is that
money paid under a mistake of law, by itself and without more,
cannot be recovered back .... If there is something more in
addition to a mistake of law—if there is something in the
defendant's conduct which shows that, of the two of them, he is
the one primarily responsible for the mistake—then it may be
recovered back. Thus, if as between the two of them the duty of
observing the law is placed on the shoulders of the one rather
than the other—it being imposed on him specially for the
protection of the other then they are not in pari delicto and the
money can be recovered back .... Likewise, if the responsibili
ty for the mistake lies more on the one than the other—because
he has misled the other when he ought to know better—then
again they are not in parti delicto and the money can be
recovered back.
5 John D. McCamus, "Restitutionary Recovery of Moneys
Paid to a Public Authority under a Mistake of Law: Ignorantia
Janis in the Supreme Court of Canada" (1983), 17 U.B.C. L.
Rev. 233; Ronald D. Collins, "Restitution from Government
Officials" (1984), 29 McGill L.J. 407; J. R. Maurice Gautreau,
Q.C., "Developments in the Law of Restitution" (1985) 5
Advocates' Q. 419.
Accordingly, a primary exception to the limitation
exists, as established by Eadie v. The Township of
Brantford, [1967] S.C.R. 573; 63 D.L.R. (2d) 561
and recognized as such by Estey J. in the Nepean
case, where the moneys in question have been paid
under compulsion, even practical as well as actual
legal compulsion. In the case at bar the appellant
admitted in argument before us that, given the
Provincial Court orders, the moneys were paid
under compulsion.
Both parties in their memoranda of fact and law
cite Fridman and McLeod, Restitution (Toronto:
The Carswell Company Limited, 1982) at pages
347 and 348, for the four conditions that a plain
tiff must satisfy in order to have a right of recoup-
ment for moneys expended (which are in substance
the four conditions relied on by Montgomery J.,
supra, in the suit against the Provincial Crown):
(I) that he has been compelled by law to make the payment or
was capable of being so compelled at the time of payment;
(2) that he did not officiously expose himself to the liability to
make the payment;
(3) that the payment discharged a liability of the defendant to
the extent of the recoupment and;
(4) that as between the plaintiff and the defendant, the
defendant was ultimately or primarily liable.
The appellant conceded in argument that the first
two conditions had been met, and suggested that
the third and fourth conditions should be con
sidered together. I would agree, in the sense that
any greater responsibility of the appellant as be
tween the parties could be relevant only to extent
that the appellant had the legal liability for the
payments made by the respondent. In other words,
the third condition is the crux of the problem.
This was recognized by the learned Trial Judge,
who first turned to and I believe correctly stated
the constitutional principles applicable, supra, at
pages 117 to 119:
A critical question is whether the defendant, the executive
government of Canada, can be said to have received a benefit,
either generally or through the discharge of its legal responsi
bility, by the payment by the Regional Municipality of Peel of
the cost of maintenance of juvenile delinquents pursuant to an
invalid federal law. In the narrow sense, I am not able to find
that the executive government of Canada automatically has an
enforceable legal obligation to pay the costs of administration
of every Act of Parliament, even of valid Acts. No authority
has been submitted for such a proposition and both experience
and principle suggest the contrary.
It is obvious for example that Parliament often imposes
obligations on individuals and corporations which entail the
expenditure by them of their own money in the course of
compliance with the law. Little or no obligation is placed on the
executive branch in such cases, except perhaps for purposes of
monitoring compliance. It is also obvious that the provinces
collectively spend hundreds of millions of dollars in the enforce
ment and administration of the federal Criminal Code [R.S.C.
1970, c. C-34] or the Juvenile Delinquents Act and its succes
sor. Arguably, those provincial expenditures may be regarded
as voluntary although it appears to me from the decision of the
Supreme Court of Canada in Regional Municipality of Peel v.
MacKenzie et al [[1982] 2 S.C.R. 9], that a federal enactment
properly characterized as "criminal law" could impose expendi
ture obligations on a province or its instrumentalities. At page
22 it was said that the purported imposition on municipalities
of the obligation under subsection 20(2) of the Juvenile Delin
quents Act
... could not be justified in the absence of a direct link with
federal legislative power under s. 91(27) [Emphasis added].
This implies that if there were a "direct link" with federal
legislative power then such obligations could be imposed on
municipalities and it would not be the federal executive that
would be obliged to make such expenditures.
On the basis of general constitutional principles, it is also
difficult to contend that there is automatically a financial
obligation on the federal executive to pay for the administration
of federal laws. That executive is responsible to Parliament for
its expenditure of money, and if it has not been authorized by
Parliament to make a certain expenditure it has no right or
enforceable legal obligation to do so. Nor is the Crown liable
vicariously for the actions of the legislative branch; Parliament
is in no sense the agent or servant of the Crown. Further, the
doctrine of parliamentary supremacy implies that courts cannot
require Parliament to vote appropriations. If Parliament has
not provided for payment out of the federal Consolidated
Revenue Fund of the costs of implementation of legislation, and
has not validly imposed a duty on others to bear those costs, a
court could not issue a mandatory injunction or a mandamus to
require Parliament to vote an appropriation for the proper
administration of its law. Any such obligation is of a political,
not a juridical, nature. These are fundamental principles of the
English Constitution which emerged in the 17th century and
were confirmed by the Bill of Rights, 1688, Will. & Mary,
Sess. 2; c. 2. (U.K.). We have inherited them through the
language of the preamble to the Constitution Act, 1867 [30 &
31 Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am.
by Canada Act 1982, 1982, c. Il (U.K.), Schedule to the
Constitution Act, 1982, Item I )] which states that we are to
have a constitution "similar in Principle to that of the United
Kingdom".
However, the Trial Judge felt that the foregoing
constitutional principles, which left Parliament
with "a political, not a juridical" obligation to pay
for the proper administration of its laws, applied
only to a unitary state, and that in a federal state,
the result must be different, supra, at pages 119 to
121:
These fundamental constitutional principles developed in a
unitary state must, however, be applied in the context of a
federal system and in the light of the principle of redress for
unjust enrichment. Even if there is not a right of action against
the federal executive for the cost of enforcing federal laws, or
against the provincial executive for the costs of enforcing
provincial laws, there is unquestionably a generally perceived
political responsibility on the part of each order of government
in a federal system to administer effectively the laws adopted
by its legislative branch. In the field of criminal law, the federal
obligation is underlined by the confirmation in Attorney Gener
al of Canada v. Canadian National Transportation, Ltd. et al.,
[1983] 2 S.C.R. 206, followed in R. v. Wetmore, et al., [1983]
2 S.C.R. 284, that Parliament's jurisdiction under head 91(27)
of the Constitution Act 1867 includes the power to provide for
the enforcement of criminal law. The case of Peel v. MacKen-
zie, supra demonstrates, however, that in so providing for the
enforcement or administration of criminal law Parliament
cannot, in the circumstances involved here, pass on the finan
cial obligations of administration to a province or the instru
mentality of a province if that province or instrumentality does
not voluntarily undertake such obligations. Yet, if there were
not redress for the plaintiff in this case, Parliament would have
effectively done so through its invalid legislation (subsection
20(2) of the Juvenile Delinquents Act) which has since 1908
obliged municipalities to pay such costs, and through its reli
ance on the constitutional principle that there is no right or
obligation in the federal executive to pay money where such has
not been appropriated by Parliament. In this connection, it is
instructive to consider the case of B.C. Power Corporation,
Limited v. B.C. Electric Company, [1962] S.C.R. 642. There
the validity of legislation expropriating the common shares of
the British Columbia Electric Company Limited was being
attacked as to its constitutionality. The Crown in right of the
province objected to the appointment of a receiver of the
company pending the outcome of the litigation, on the grounds
that such an order would affect the property or interest of the
Crown in the company as provided for in the impugned legisla
tion. The Supreme Court confirmed that such a receiver could
be appointed pendente lite and that Crown immunity from suit
as it then generally existed in British Columbia could not be
invoked to prevent such an order. At 644 and 45 Kerwin C.J.
on behalf of the Court stated:
In a federal system, where legislative authority is divided, as
are also the prerogatives of the Crown, as between the
Dominion and the Provinces, it is my view that it is not open
to the Crown, either in right of Canada or of a Province, to
claim a Crown immunity based upon an interest in certain
property, where its very interest in that property depends
completely and solely on the validity of the legislation which
it has itself passed, if there is a reasonable doubt as to
whether such legislation is constitutionally valid. To permit it
to do so would be to enable it, by the assertion of rights
claimed under legislation which is beyond its powers, to
achieve the same results as if the legislation were valid. In a
federal system it appears to me that, in such circumstances,
the Court has the same jurisdiction to preserve assets whose
title is dependent on the validity of the legislation as it has to
determine the validity of the legislation itself.
This statement was quoted with approval in Amax Potash
Limited et al v. Government of Saskatchewan supra at page
591. Dickson J. remarked there that while the B.C. Electric
case involved somewhat different issues, the Amax case
... would seem to be governed by the very considerations
which led to the decision in the earlier case. In each case, the
concern is with the preservation of the Constitution which is
paramount. [Emphasis Added]
Similarly, in the present case, if the Crown in right of
Canada can invoke an immunity from action for payment of
costs unlawfully imposed by the legislative branch of the feder
al government on the plaintiff, on the grounds that the legisla
tive branch has provided no appropriation or authorization for
the defendant to make such payments, then the federal order of
government will have achieved what the Constitution says it
cannot achieve: namely, the imposition of a financial burden on
the plaintiff municipality for the maintenance of juvenile delin
quents under the Juvenile Delinquents Act.
Strayer J. did not go so far as to hold that the
federal government is liable as a matter of princi
ple to pay the costs of the administration of its
laws. He stated, supra, at page 121:
... It might well have been impossible for anyone to have sued
the defendant directly to force the payment of such monies in
the first place.
And, more directly, at page 122:
... I am not prepared to adopt the view that the federal
executive is automatically and legally obliged to pay all the
costs of the administration of federal laws.... Instead, liability
to reimburse the plaintiff arises out of the requirements of
justice as between the two parties.
It is, ultimately, a redress for unjust enrichment,
supra, at page 121:
... But where the plaintiff has paid [the moneys] in compliance
with a federal law that has turned out to be invalid, and in
furtherance of the objectives of that law duly adopted by
Parliament, as between the plaintiff and the defendant, it would
be unjust that the plaintiff ultimately bear those costs rather
than the defendant. [His emphasis].
With great respect, this seems to me to be
tantamount to reducing the fourth condition for
unjust enrichment to which party, as between the
two, should more fairly bear the cost, and at the
same time ignoring the third condition, as to
whether the defendant/appellant had any legal
liability at all. One obvious result of such an
analysis is that the plaintiff/respondent may well
become legally entitled to recovery against both
senior governments. As the appellant pointed out
in oral argument, the respondent's statement of
claims against both governments made identical
claims that the payments discharged "a liability or
responsibility of the defendant" (Appeal Book,
vol. 1 at page 3 and vol. 5 at page 741.)
In fact, I believe that the analysis of the Trial
Judge leads to the conclusion that, even in a
federal context, the constitutional principles estab
lish no federal liability to pay the costs of the
administration of federal laws, and still less so
where the constitutional authority to make the law
in question was lacking. As Montgomery J. stated
in the respondent's action against the Province,
supra, at page 304:
These payments discharged a responsibility of the Province.
Since s. 20(2) of the Juvenile Delinquents Act was ultra vires
the Federal Government, responsibility lay upon the Province
to pay.
The respondent itself relied in its statement of
claim against the Province on 29 provincial stat
utes under which, it alleged the Province "had a
liability or responsibility to pay for the courses of
action set out in section 20(1)" (Appeal Book, vol.
5 at page 741 and at pages 747 to 748). 6 The
negotiations leading up to (Appeal Book, vol. 1 at
6 Provincial authority to confer powers on provincial courts in
matters concerning juveniles has been recognized in Adoption
Act, of Ontario, Reference re authority to perform functions
vested by, [1938] S.C.R. 398 and Re Family Relations Act,
[1982] 1 S.C.R. 62.
pages 108 to 133) a federal cost-sharing agree
ment with Ontario on care and after-care services
to juveniles in the care of correctional authorities
and the Agreement itself of April 29, 1975
(Appeal Book, vol. 3 at pages 336 to 361) indicate
a keen awareness by the government of Ontario of
its constitutional jurisdiction and at most the as
sumption of a political responsibility by the federal
Government.
In my view the respondent's case is not helped
by the B.C. Power Corporation v. B.C. Electric
Company, [1962] S.C.R. 642 and Amax Potash
Ltd. et al. v. Government of Saskatchewan, [ 1977]
2 S.C.R. 576 cases, cited by the Trial Judge. The
former held only that the Crown cannot defeat a
court receivership order to preserve the assets of
an undertaking pending resolution of the constitu
tionality of a statute merely by invoking Crown
immunity in property to which its interest attached
only be reason of the impeached statute.
The substantive issue in the Amax case was the
constitutionality of a Saskatchewan tax on persons
engaged in mining potash. In another statute (sub-
section 5(7) of The Proceedings against the Crown
Act [R.S.S. 1965, c. 87]) the Province attempted
to bar the recovery of moneys paid to the govern
ment in the event that tax legislation was held to
be ultra vires. In interlocutory proceedings con
cerning this statutory bar, Dickson J. for the Court
wrote, (at pages 590 and 592):
Section 5(7) of The Proceedings against the Crown Act, in
my opinion, has much broader implications than mere Crown
immunity. In the present context, it directly concerns the right
to tax. It affects, therefore, the division of powers under The
British North America Act, 1867. It also brings into question
the right of a Province, or the federal Parliament for that
matter, to act in violation of the Canadian Constitution. Since
it is manifest that if either the federal Parliament or a provin
cial legislature can tax beyond the limit of its powers, and by
prior or ex post facto legislation give itself immunity from such
illegal act, it could readily place itself in the same position as if
the act had been done within proper constitutional limits. To
allow moneys collected under compulsion, pursuant to an ultra
vires statute, to be retained would be tantamount to allowing
the provincial Legislature to do indirectly what it could not dc
directly, and by covert means to impose illegal burdens.
The principle governing this appeal can be shortly and simply
expressed in these terms: if a statute is found to be ultra vires
the legislature which enacted it, legislation which would have
the effect of attaching legal consequences to acts done pursuant
to that invalid law must equally be ultra vires because it relates
to the same subject-matter as that which was involved in the
prior legislation. If a state cannot take by unconstitutional
means it cannot retain by unconstitutional means.
I can find no useful analogy between those
decisions and the case at bar. In both the B.C.
Power and Amax cases the governments were
attempting to pull themselves up by their own
bootstraps, as it were, so as to avoid even the
consideration of liability. If there were any analo
gy at all with the case at bar it would be, not with
the interlocutory actions there decided, but with
the substantive actions which followed. Dickson J.
may have been expressing an opinion on an ulti
mate aspect of the substantive issue when he said
above:
To allow moneys collected under compulsion, pursuant to an
ultra vires statute, to be retained would be tantamount to
allowing the provincial legislature to do indirectly what it could
not do directly, and by covert means to impose illegal burdens.
To the same effect are Jacobs (George Porky)
Enterprises Ltd. v. City of Regina, [1964] S.C.R.
326; 44 D.L.R. (2d) 179, the Eadie case, supra;
Air Can. v. B.C. (Govt.), [1986] 5 W.W.R. 385
(B.C.C.A.) (though it was not followed in Turigan
et al. v. Alberta (1988), 90 A.R. 118 (C.A.).
However, in my view the respondent's case is not
helped by cases involving the receipt rather than
the expenditure of money. In the former a govern
ment has received a clear money benefit to which
it had no legal right, and it appears equitable and
just that it should be compelled to disgorge such
ill-gotten gains. In the latter the government may
have received a hard-to-quantify benefit from the
expenditure of funds it occasioned. This is not to
say that the benefit to the public from the effective
implementation of the legislation should not, per
haps, in some situations be attributed to a govern-
ment. But, if so, the cases of direct financial
benefits to governments will not found that right.'
What is decisive, I believe, in the present case is
that the government of Canada had no legal obli
gation of any kind to pay for the maintenance of
juvenile delinquents. The obligation it had as a
result of its legislation, though serious, was of a
political nature, and led to its cost-sharing agree
ment with the province of Ontario—as the word
"cost-sharing" implies, not an assumption of 100
percent responsibility—and the Province in turn
paid some of the costs of the municipality. In a
relationship involving three parties, one cannot
impose liability on one of only two on the theory
that of those two it has the lesser equity. This is
not to say that the Province is necessarily liable to
the respondent. That issue is for another court to
decide. But it is to assert that, however much the
federal Government was the initiating cause of the
respondent's expenditures, it cannot be said to
have had legal liability for those expenditures. Its
responsibility is political, for which the resolution,
if any, is of an ex gratia nature.
The appeal must therefore be allowed, the judg
ment at trial set aside, and the respondent's action
dismissed with costs here and below.
* * *
The following are the reasons for judgment
rendered in English by
DESJARDINS J.: The Parliament of Canada had
in its statutes, since 1908, a provision, namely
subsection 20(1) of the Juvenile Delinquents Act, 8
R.S.C. 1970, c. J-3 which gave a court of law, once
it had adjudged that a child was a juvenile delin-
7 Collins, supra, argues that a special standard applies to
public officials who illegally demand money from citizens.
e Now replaced by the Young Offenders Act, S.C. 1980-81-
82-83, c. 110.
quent, discretion to take a number of courses of
actions including placing the child with various
group homes or other similar institutions. By
virtue of subsection 20(2) of the Act, the Court
was empowered to order that the cost of such
placements be borne by the municipality in which
the child belonged. For many years, that provision
was thought to be valid under the decision of
Attorney General of British Columbia v. Smith,
[1967] S.C.R. 702.
In 1977, the Regional Municipality of Peel chal
lenged three of the said orders by which the Mu
nicipality had been ordered to pay Viking Houses
for the support of juveniles placed in those institu
tions. The grounds relied on were: (1) that subsec
tion 20(2) of the Act was not within the legislative
competence of the Parliament of Canada, and (2)
that none of the provisions of subsection 20(1) of
the Act authorized a placement to Viking Houses.
The courts ruled in favor of the Municipality on
the second ground. The constitutional question was
therefore not addressed to, (Re Peel (Regional
Municipality of) et al. and Viking Houses (1977),
16 O.R. (2d) 632; 36 C.C.C. (2d) 137 (Ont.
H.C.); aff d (1977), 16 O.R. (2d) 765; 36 C.C.C.
(2d) 337 (Ont. C.A.); affd sub nom. Attorney
General for Ontario et al. v. Regional Municipali
ty of Peel, [1979] 2 S.C.R. 1134; 104 D.L.R. (3d)
1).
As a result, the juvenile delinquent mentioned in
the order pronounced by the Supreme Court of
Ontario, was brought back before the Family Divi
sion of the Provincial Court and this time subsec
tion 20(1) was complied with. The Municipality
then appealed on constitutional grounds and was
successful (Re Regional Municipality of Peel and
Viking Houses (unreported, July 10, 1978) (Ont.
H.C.); afrd (1980), 113 D.L.R. (3d) 350 (Ont.
C.A.); aff d sub nom. Regional Municipality of
Peel v. MacKenzie et al., [ 1982] 2 S.C.R. 9; 139
D.L.R. (3d) 14).
This constitutional error on the part of Parlia
ment has cost the Municipality of Peel a loss of
$1,166,814.22 over the years. Can it recover the
amount from the Crown in right of Canada in an
action for recovery of money?
Three distinct steps are to be found in the
conclusions of the Trial Judge. Firstly, he dealt
with the principles of restitution and their exten
sion by Canadian courts so as to apply to a public
authority for money expended for the maintenance
of a member of the public. Secondly, he analyzed
the constitutional principles between Parliament
and the Crown as they developed in the United
Kingdom on the basis that the Canadian Constitu
tion is "similar in Principle to that of the United
Kingdom". He felt that "[t]hese fundamental con
stitutional principles developed in a unitary state
must, however, be applied in the context of a
federal system and in the light of the principle of
redress for unjust enrichment". He said that in
Canada "there is unquestionably a general per
ceived political responsibility on the part of each
order of government in the federal system to
administer effectively the laws adopted by its legis
lative branch". He considered that "if the Crown
in right of Canada can invoke an immunity from
action for payment of costs unlawfully imposed by
the legislative branch of the federal -government on
the plaintiff, on the grounds that the legislative
branch has provided no appropriation or authori
zation for the defendant to make such payments,
then the federal order of government will have
achieved what the Constitution says it cannot
achieve: namely, the imposition of a financial
burden on the plaintiff municipality for the main
tenance of juvenile delinquents under the Juvenile
Delinquents Act". Thirdly, he combined the con
stitutional principles with those of restitution and
concluded that "as between the plaintiff and the
defendant it would be unjust that the plaintiff
ultimately bear those costs rather than the
defendant."
Although his reasons for judgment constitute a
remarkable piece of legal thinking, I have, with
respect, difficulty with the combination of the two
principles.
I understand the B.C. Power Corporation v.
B.C. Electric Company, [1962] S.C.R. 642 at
pages 644-645 and Amax Potash Ltd. et al. v.
Government of Saskatchewan, [1977] 2 S.C.R.
576 at page 591 as saying no further than if the
law of a legislature is unconstitutional, the Crown
of that legislature cannot hide itself under the
cover of an immunity so as to escape the effect of
the ultra vires of that legislation. At page 592 in
the Amax Potash Limited case, Dickson J. said for
the Court:
... If a state cannot take by unconstitutional means it cannot
retain by unconstitutional means.
The sanction to the supremacy of the Constitu
tion is the power, traditionally exercised by courts
of law, to nullify ultra vires legislation adopted by
a legislature. This power can be traced as far back
as the Colonial Laws Validity 1865 (U.K.), 28-29
Vict., c. 63. 9 This traditional power does not not
go further and has never gone so far as to permit
the courts to extend the principles of restitution as
between public authorities so as to render liable
the Crown of a legislature for a law which is
beyond the authority of that legislature to adopt.
This "generally perceived political responsability
on the part of each order of government in a
federal system to administer effectively the laws
adopted by its legislative branch" which I accept
as a proposition cannot, in my view, be sanctioned
by a court of law.
I have had the advantage of reading in draft the
reasons for judgment of both Mahoney J. and
MacGuigan J.
I agree in the result with the reasons given by
MacGuigan J.
9 Peter W. Hogg, Constitutional Law of Canada, Toronto:
Carswell, 1977, at p. 14; François Chevrette et Herbert Marx,
Droit constitutionnel: notes et jurisprudence (Montréal: Pres
ses de l'Université de Montréal, 1982), at p. 166. See also The
Statute of Westminster, 1931, 22 Geo. V, c. 4 (U.K.) [R.S.C.
1970, Appendix I1, No. 26] s. 7(1) which has been repealed
and replaced by s. 52(1) of the Constitution Act, 1982,
Schedule B, Canada Act /982, 1982, c. 11 (U.K.); R. v. Big M
Drug Mart Ltd. et al., [1985] 1 S.C.R. 295 at p. 312.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.