Supreme Court of Canada
Manitoba Fisheries Ltd. v. The Queen, [1979] 1 S.C.R.
101
Date: 1978-10-03
Manitoba Fisheries
Limited Appellant;
and
Her Majesty The
Queen Respondent.
1978: June 22; 1978: October 3.
Present: Ritchie, Spence, Pigeon, Dickson,
Beetz, Estey and Pratte JJ.
ON APPEAL FROM THE FEDERAL COURT OF APPEAL
Compensation—Crown corporation given
exclusive right to carry on business of fish exporting—Implementation of
legislation having effect of putting fish exporting company out of
business—Goodwill taken—Company entitled to compensation—Freshwater Fish
Marketing Act, R.S.C. 1970, c. F-13.
The appellant company was incorporated in
1926 and was, from its earliest days until May 1969, engaged in the purchase of
fish from fishermen in the various lakes in Manitoba and the processing and sale of these fish to customers in the United States and in other Provinces in Canada. This company and others like it had
over the years built up individual clienteles in what had become a highly
competitive business.
By the Freshwater Fish Marketing Act, R.S.C.
1970, c. F-13, which came into force May 1, 1969, the respondent through its
agent, the Freshwater Fish Marketing Corporation, was granted a commercial
monopoly in the export of fish from Manitoba and other participating provinces. The Corporation was authorized
to license continued participation in the fish export industry by the appellant
and other firms and the respondent was authorized to exempt them from the
monopoly provisions of the Act. No such licence was issued nor was such
exemption made in favour of the appellant and the appellant accordingly ceased
carrying on its business on or about May 1, 1969.
Provision was made in the Act and by
agreement between Canada and
the participating provinces for payments to be made by the government of the
participating province, in this case, Manitoba, to the owners of redundant assets. The Government of Manitoba
refused to so compensate the appellant.
An action brought by the appellant for a
declaration that it was entitled to compensation for the loss suffered by
reason of the provisions of the Freshwater Fish Marketing Act was
dismissed at trial, and an appeal to the Federal Court of Appeal was also
dismissed. The company then appealed to this Court. The basic conten-
[Page 102]
tion of the appellant was that this
legislation had resulted in depriving it of its business and it was conceded
both in the judgments at trial and on appeal that the implementation of the
legislation had the effect of putting the appellant out of business. This loss
had been sustained without any compensation from the federal authority which
undoubtedly brought it about. The position taken by the respondent and
sustained in both Courts below was that while the effect of the legislation was
to extinguish the appellant’s goodwill, it was nevertheless not taken away by
the federal Crown or the Corporation.
Held: The
appeal should be allowed.
The legislation in question and the
Corporation created thereunder had the effect of depriving the appellant of its
goodwill as a going concern and consequently rendering its physical assets
virtually useless and the goodwill so taken away constituted property of the
appellant for the loss of which no compensation whatever had been paid. There
is nothing in the Act providing for the taking of such property by the
Government without compensation and as the Court found that there was such a
taking, it followed that it was unauthorized having regard to the recognized
rule 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, [1920] A.C. 508.
Ulster Transport Authority v. James Brown
& Sons, Ltd., [1953] N.I. 79, applied; France
Fenwick and Co. Ltd. v. The King, [1927] 1 K.B. 458; Government of
Malaysia v. Selangor Pilot Association, [1977] 2 W.L.R. 901, distinguished;
Trego v. Hunt, [1896] A.C. 7; B.C. Power Corp. Ltd. v.
Attorney-General of British Columbia (1962), 34 D.L.R. (2d) 25, referred
to.
APPEAL from a judgment of the Federal Court of Appeal,
dismissing an appeal from a judgment of Collier J. Appeal allowed.
K. Arenson, D.C.H. McCaffrey, Q.C., and
J. Lamont, for the appellant.
G.W. Ainslie, Q.C., and S. Lyman, for the
respondent.
The judgment of the Court was delivered by
RITCHIE J.—This is an appeal from a judgment of
the Federal Court of Appeal dismissing an
[Page 103]
appeal from a judgment rendered at trial by
Collier J., whereby he dismissed the action brought by the appellant for a
declaration that it was entitled to compensation for the loss suffered by
reason of the provisions of the Freshwater Fish Marketing Act, R.S.C.
1970, c. F‑13 (hereinafter referred to as “the Act”).
The appellant company was incorporated in 1926
and was, from its earliest days until May 1969, engaged in the purchase of fish
from fishermen in the various lakes in Manitoba and the processing and sale of
these fish to customers in the United States and in other Provinces in Canada.
The learned trial judge found that this company and others like it had over the
years built up individual clientele in what had become a highly competitive
business. The following facts are admitted by the respondent:
1. That prior to 1969 the Plaintiff owned
and operated a business in the fish exporting industry in Manitoba and that the
Plaintiffs business consisted entirely of some or all of the activities
described in Section 21(1) of the Freshwater Fish Marketing Act (hereinafter
called the “Act”).
2. That the Act inter alia created
the Freshwater Fish Marketing Corporation (hereinafter called the
“Corporation”) and gave to it the exclusive right to carry on the business of
fish exporting from Manitoba and elsewhere in Canada fish that are fished for
commercial purposes in a participating province as an agent of the Defendant
and that the Corporation commenced its business on May 1, 1969.
3. That the Act prohibited all firms in the
said industry from carrying on their business of fish exporting, fish that are
fished for commercial purposes in a participating province, unless a license
was issued by the Corporation or unless a firm was exempted from the
prohibition by the Governor in Council, and that no such license has been
issued nor has such an exemption been made in favour of the Plaintiff and that
the Plaintiff accordingly ceased carrying on its said business on or about May
1, 1969.
4. That the Act empowered the responsible
Minister, with the approval of the Governor in Council and on behalf of the
Government of Canada, to enter into an agreement with, inter alia, the
Government of Manitoba, providing for, inter alia, 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,
for compensation
[Page 104]
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 Part 3 thereof.
5. That in an agreement dated the 4th day
of June 1969, the Government of Canada and the Government of Manitoba agreed, inter
alia, as follows:
“5. The Province undertakes to make any
arrangements necessary with the owner of any plant or equipment in the Province
of Manitoba used in storing, processing or otherwise preparing fish for market,
for 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 the Act.”
and that the Government of Manitoba has
refused and continues to refuse to so compensate the Plaintiff and that the
Plaintiff is not a party to the said agreement. (The italics are my own.)
The defendant additionally admits as follows:
1. Until the creation of the Corporation by
the Act, persons wishing to purchase freshwater fish from Manitoba could
purchase such fish from the Plaintiff or other firms in the industry. After the
creation of the corporation such purchases could be made only from the Corporation
or its agents.
2. In servicing its customers immediately
after the first day of May 1969, the Corporation continued to process, package
and sell the fish in substantially the same manner as had been established and
followed by the Plaintiff and the other firms in the industry up to the first
day of May 1969.
3. The customers of all the firms in the
industry including the Plaintiffs, immediately prior to the creation of the
Corporation, and the Corporation’s customers immediately subsequent to the
creation of the Corporation, were in substance the same, and the sales to those
customers constituted all or nearly all of the Corporation’s sales in 1969.
The Freshwater Fish Marketing Corporation
(hereinafter called the “Corporation”) is an agent of Her Majesty in Right of
Canada and any property acquired by the Corporation becomes the property of the
federal Crown. Part III of the Act contains the following provisions outlining
the rights and authorities vested in the Corporation. By s. 23 the Corporation—
…has the exclusive right to market and
trade in fish in interprovincial and export trade and shall exercise that
[Page 105]
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.
Section 21(1) further provides:
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 or to any other province;
(c) in a participating
province, receive fish for coveyance 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.
The basic contention of the appellant is that
this legislation has resulted in depriving it of its business and indeed it is
conceded both in the judgments at trial and on appeal that the implementation
of the legislation had the effect of putting the appellant out of business.
This loss has been sustained without any compensation from the federal
authority which undoubtedly brought it about. The position taken by the
respondent and sustained in both Courts below is that while the effect of the
legislation is to extinguish the appellant’s goodwill, it was nevertheless not
taken away by the federal Crown or the Corporation.
The reasons for judgment rendered in the Court
of Appeal by Mr. Justice Urie are now conveniently reported in [1978] 1
F.C. 485, and in the concluding portion of that judgment, at p. 496, he
has this to say about the effect of the legislation:
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 appellant, either tangible or intangible, unless it could be
said that the fishermen who supplied the
[Page 106]
appellant 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. If that loss included whatever
goodwill the appellant had, it was not taken by the Corporation.
I have great difficulty in following this
reasoning because it is clear from the record that a very substantial group of
customers had been doing business with the appellant over a period of many
years and they continued to do so until the legislation effectively deprived
them of their source of supply and left them in a position where they no longer
had a free choice as to where their business was to be placed and were indeed
compelled to do business only with the Corporation. It will be seen that the
learned trial judge and the Court of Appeal proceeded on the basis that prior
to May 1, 1969, when the Corporation came into existence, the appellant and companies
like it had substantial goodwill attaching to their businesses and that they
lost this goodwill as a result of the creation of the Corporation by the
federal government. In this regard, Mr. Justice Urie, in reviewing the
facts at the opening of his judgment had this to say, at p. 487 of the
Federal Court Report:
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 competitive business. However, the
learned Trial Judge found as a fact that the appellant, and other firms like
it, had built up individual clienteles and competitive 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 plaintiffs
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
[Page 107]
Trial Judge erred in his determination as
to the existence 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.
In my view the appellant’s suppliers and
customers who it had acquired and cultivated over the years constituted one of
its most valuable assets as of April 30, 1969, and on the following day that
asset was completely extinguished and the suppliers and customers were left
with no choice but to do business with the Freshwater Fish Marketing
Corporation which was created as of that date by the federal authority for the
express purpose of enjoying a monopoly of the market in which the appellant had
formerly prospered. The kind of goodwill lost to the appellant by reason of the
Act is, in my view, best described by Lord Macnaghten in Trego v. Hunt, at p. 24, where he said:
…it happens that the goodwill is the very
sap and life of the business without which the business would yield little or
no fruit. It is the whole advantage, whatever it may be, of the reputation and
connection of the firm, which may have been built up by years of honest work or
gained by lavish expenditure of money.
In the course of his reasons for judgment in the
Trial Division, Mr. Justice Collier, as reported in [1977] 2 F.C. at
p. 461, had this to say:
The evidence satisfies me there was
goodwill, in the legal and business sense, attaching to the plaintiffs
operation. The economic or pecuniary value, for purposes of damages or
compensation, may ultimately be small. The parties, in this case, stipulated
the amount of compensation would be agreed on by the parties or, failing
accord, determined by a judge of this Court. On that basis, the plaintiff did not
call any evidence to calculate or establish a dollar-and-cent value.
In so finding, Mr. Justice Collier relied
on the following passage from the reasons for judgment of Lord MacDermott
L.C.J. in Ulster Transport Authority v. James Brown & Sons, Ltd., at pp.
[Page 108]
109 to 110. The passage which was quoted in
[1977] 2 F.C. 460 and 461 reads as follows:
Goodwill, in my view, must be here looked
at in the commercial sense. That includes the approach of the practical
businessman and not merely the mathematical dollar-and-cent approach of the
chartered accountant. I rely on the following comments of Lord MacDermott
L.C.J. in Ulster Transport Authority v. James Brown and Sons Ltd.:
“Goodwill” is a word sometimes used to
indicate a ready formed connection of customers whose custom is of value
because it is likely to continue. But in its commercial sense the word may
connote much more than this. It is, as Lord Macnaghten observed in Inland
Revenue Commissioners v. Muller & Co.’s Margarine Ltd. [1901] A.C. 217,
224, “the attractive force which brings in custom,” and it may reside, not only
in trade connections, but in many other quarters, such as particular premises,
long experience in some specialised sphere, or the good repute associated with
a name or mark. It is something generated by effort that adds to the value of
the business. When the make-up of a well-established, profitable enterprise
providing a special service (such as the respondents’ furniture removing
service) is examined I think it well-nigh impossible to disentangle the
business that has been built up from its goodwill or to give the latter a
single or precise meaning. I therefore approach the question under
consideration on the basis that here the relevant loss is really a loss of
goodwill in the commercial sense and as described by Lord Macnaghten in Muller
& Co.’s case.
In my opinion, viewed in this light, goodwill,
although intangible in character is a part of the property of a business just
as much as the premises, machinery and equipment employed in the production of
the product whose quality engenders that goodwill.
That the judgment of the Court of Appeal
proceeded on the basis that goodwill is “property” is apparent from the
following passage to be found in the reasons for judgment of Mr. Justice
Urie, reported in [1978] 1 F.C. p. 490:
Assuming, however, that goodwill is
property, did the Corporation take that property from the appellant? If
that question is answered in the affirmative, then, as
[Page 109]
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.
It is thus apparent that the Courts below based
their conclusion on the premise that although the appellant had lost its
business and the legislation created a monopoly in that business in the
Corporation, the effect could not be regarded as a taking or acquiring of the
business by the Corporation. In this regard it is well to remember that the
respondent expressly admitted the fact that:
1. Until the creation of the Corporation by
the Act, persons wishing to purchase freshwater fish from Manitoba could
purchase such fish from the Plaintiff or other firms in the industry. After the
creation of the Corporation such purchases could be made only from the
Corporation or its agents.
There is no express language in the Act
providing for the payment of compensation by the federal Crown but the
appellant relies upon the long-established rule which is succinctly stated by
Lord Atkinson in Attorney-General v. De Keyser’s Royal Hotel Ltd., at p. 542 where he said:
The recognized rule for the construction of
statutes is 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.
The rule of construction is more amply stated in
Maxwell on Interpretation of Statutes, 11th ed., pp. 275 to 277 in
language which was approved by Wilson J.A. in the British Columbia Court of
Appeal in B.C. Power Corp. Ltd. v. Attorney-General of British Columbia et
al., at
p. 44, which is set out at length in the judgment of Mr. Justice
Collier at [1977] 2 F.C. p. 462, where reference is also made to the
approach adopted by Lord Radcliffe in Belfast Corporation v. O.D. Cars Ltd., at p. 523 (H.L.(N.L)). In considering
whether a particular piece of legislation contemplates taking without
compensation, Lord Radcliffe there said:
[Page 110]
On the one hand, there would be the general
principle, accepted by the legislature and scrupulously defended by the courts,
that the title to property or the enjoyment of its possession was not to be
compulsorily acquired from a subject unless full compensation was afforded in
its place. Acquisition of title or possession was “taking.” Aspects of this
principle are found in the rules bf statutory interpretation devised by the
courts, which required the presence of the most explicit words before an
acquisition could be held to be sanctioned by an Act of Parliament without full
compensation being provided, or imported an intention to give compensation and
machinery for assessing it into any Act of Parliament that did not positively
exclude it. This vigilance to see that the subject’s rights to property were
protected, so far as was consistent with the requirements of expropriation of
what was previously enjoyed in specie, was regarded as an important guarantee
of individual liberty. It would be a mistake to look on it as representing any
conflict between the legislature and the courts. The principle was, generally
speaking, common to both.
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.
In support of the contention that in creating a
monopoly for the Corporation Parliament had in fact not taken anything from the
appellant, some reliance is placed on a short paragraph from the reasons for
judgment of Lord MacDermott, L.C.J., in Ulster Transport Authority v. James
Brown and Sons Ltd., supra, where he said, at p. 111:
The next question is whether the effect of
the relevant prohibition is “to take” the property thus lost. This verb was the
subject of much argument, most of it referable to two submissions advanced on
behalf of the appellants as follows: (1) “to take” means to acquire or take
over and thus signifies a transfer or passing of property from one to another,
in contra-distinction to a taking away without acquisition, as by dissipation
or destruction; and (2) a mere prohibition is not a taking whatever else “to
take” may connote.
[Page 111]
This passage is merely a recital of the
arguments advanced on behalf of the Transport Authority. In the result Lord
MacDermott found that there had been a taking away when the Legislature, by
enacting Transport Act (Northern Ireland), 1948, repealed the statutory
exemption which had allowed the Brown Company and others like it to operate in
competition with the Government Board in respect of furniture moving and
replaced it by a provision which so seriously impaired the scope of the
business of such companies as to prompt Lord MacDermott to observe, at
p. 113:
I think, therefore, that the legislation
and the nature of its subject matter justify the answer that the intention was
to enable the appellants to capture the prohibited business, and to do so
without expense. I can find no other intention which offers a more likely explanation
of the provisions in question; and counsel for the appellants, when invited to
suggest some other view which would fit the circumstances as well or better
were unable to advance an alternative.
Later in the same judgment, Lord MacDermott
observed at p. 116:
We are not dealing here with a “mere”
prohibition or with a prohibition which is essentially regulatory in character.
We are dealing with what I have held to be, according to the intention of the
Legislature, a device for diverting a definite part of the business of
furniture removers and storers from the respondents and others to the
appellants. If that is right, the result must be the same whether
section 5(1) of the Act of 1920 sounds in pith and substance or in effect
or partly in one and partly in the other. Wherever else a prohibition directed
to other ends might lead, the relevant prohibition cannot but constitute a
taking if my views as to its effect and underlying intention are correct.
For these reasons, I am of the opinion that
there has been a taking of property within the meaning of section 5(1).
When read as a whole, there can be little doubt
that the Ulster Transport Authority case, supra, strongly
supports the appellant’s contention in the present case.
[Page 112]
The respondent, however, relies also on the case
of France Fenwick and Company Limited v. The King, which was examined and
distinguished in the Ulster Transport Authority case. This was a
judgment rendered by Wright J., (as he then was) sitting alone in the Court of
King’s Bench from which Mr. Justice Urie selects the following passage as
authority for the proposition that the rule that a statute is not to be
construed so as to take away property of a subject without compensation without
express statutory language to that effect is limited to the “actual, physical
assumption of possession or use of the property by the Crown”:
…but I shall assume that the Crown has no
right at common law to take a subject’s property for the 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.
The France Fenwick case was one where, in
the exercise of the authority conferred by regulations under the Emergency
Powers Act, 1920, a customs officer, during a coal strike, had refused
permission for the suppliant’s ship to discharge a cargo of coal as a result of
which the vessel was delayed in the Thames from April 2nd until April 22nd when
she was ordered to proceed to another port to discharge her cargo which had
been requisitioned by the Government. The claim was for detention of the vessel
from April 2nd when she arrived in the Thames until April 23rd when her cargo
was finally discharged and Mr. Justice Wright allowed the claim only for
the two days (April 22nd and 23rd) while she was being discharged, holding that
the cargo had not been requisitioned until then. In my opinion, the ratio
decidendi of this judgment is to be found in the following sentence at
p. 467:
[Page 113]
I cannot find it suggested, still less
decided, in any case, that a mere direction by the Government to a ship to go
to a place, or, a fortiori, a mere negative direction, such as not to
unload without permission, can constitute a requisition or a requirement that a
vessel should be placed at the Government’s disposal within such a Regulation
as the present.
With the greatest respect, it is in my view
difficult to equate the circumstances of that case in any way with those with
which we are here concerned. It is indeed difficult to find any analogy between
the effect of an order made under government regulation to delay the unloading
of a ship’s cargo and the creation by Parliament of a government corporation
for the express purpose of monopolizing the whole of the business of the
appellant and others like it.
It is apparent that the reasons for judgment of
Mr. Justice Urie in the Court of Appeal are based in great measure upon
his reliance upon the judgment of the Privy Council in Government of
Malaysia v. Selangor Pilot Association.
The headnote contained in the Law Reports is adopted by the Court of Appeal
as sufficiently recounting the facts of the case; this is reproduced at [1978]
1 F.C. 494 and reads as follows:
The Constitution of Malaysia provides by
article 13:
(1) No person shall be deprived of property
save in accordance with law. (2) No law shall provide for the compulsory
acquisition or use of property without adequate compensation.
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 licensed
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 au-
[Page 114]
thority and the Government of Malaysia for
declarations that they were entitled to compensation 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.
It will be seen that the case is concerned with
the plight of six licensed pilots providing pilotage services in the Port of
Swettenham who had formed themselves into a partnership, acquired some physical
assets and employed other pilots. The legislation complained of had the effect of
restricting the business of providing pilotage services in the Port to those
employed by the Port Authority. The Authority offered employment to all
licensed pilots, including the members of the association, purchased the
physical assets of the association and operated its own pilotage services. The
character of the restriction which the legislation placed on the members of the
respondent association is vividly described in the opinion of Viscount Dilhorne
addressing himself to the question of whether they had been deprived of
property. His observations are quoted in the reasons for judgment of
Mr. Justice Urie at [1978] 1 F.C. 494 and read as follows:
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 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
[Page 115]
property. All they lost was the right to
act as pilots unless employed by the authority and the right to employ others
on pilotage, neither right being property.
The difference between the deprivation placed on
the pilots by the legislation at issue in that case and the obliteration of the
appellant’s entire business is at once apparent.
In the Malaysian case the licences of the
pilots were not disturbed except to the extent that they were required to be
employed by the Port Authority which offered them employment. These conditions
are in sharp contrast with those described in the following paragraph of the
Admission of Facts filed by the respondent:
That the Act prohibited all firms in the
said industry from carrying on their business of fish exporting, fish that are
fished for commercial purposes in a participating province, unless a license
was issued by the Corporation or unless a firm was exempted from the
prohibition by the Governor in Council, and that no such license has been
issued nor has such an exemption been made in favour of the Plaintiff and that
the Plaintiff accordingly ceased carrying on its said business on or about May
1, 1969.
With all respect I am of opinion that the
factual differences existing between the Malaysian case and the present
one are so fundamental as to make the opinion of the Privy Council inapplicable
to the present circumstances.
It is not possible to part from this question
without considering the provision of s. 25(2)(c) of the Act which
reads as follows:
25. (2) With the approval of the Governor
in Council, the Minister may, on behalf of the Government of Canada, enter into
an agreement with the government of any province to which this
section applies, providing for
(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;…
[Page 116]
Under the authority of this section an
agreement was entered into between the Government of Canada and the Government
of Manitoba on June 4, 1969, whereby the Province undertook to make the
necessary arrangements with owners such as the appellant to provide
compensation for any plant or equipment made redundant by reason of the
operations of the Corporation. The relevant paragraph of this agreement is
recited in the Admission of Facts to which I referred at the outset and I have
only to add that the creation of the monopoly which destroyed the company’s
business necessarily rendered the greater part of its plant and equipment
redundant and that the Government of Manitoba has refused and continues to
refuse to compensate the appellant. In this connection, it is more than
interesting to read the letter written by the Federal Minister of Fisheries on
June 24, 1974, where he says, in part:
I share your disappointment at the
unwillingness of the Manitoba Government to provide additional compensation to
your firm and others who were put out of business as a result of the
establishment of the Freshwater Fish Marketing Corporation. I disagree with you
that we have broken our promise. I am sure you know that the Freshwater Fish
Marketing Act was passed at the request of the provincial governments, and
although the Act provided for compensation for assets no longer required in the
industry, the responsibility for making payments rests with the provinces. In a
spirit of partnership, the Government of Canada subsequently offered to
reimburse the provinces up to 50 per cent of payments made.
Although it was generally agreed that
compensation was with respect to assets, the Government is now prepared to
accept for purposes of compensation, that the assets could be valued on the
basis of ongoing business; such payments have already been made to the Alberta
Government.
The last-quoted paragraph of this letter gives
indication of the fact that the Minister considered that for purposes of
compensation the assets of the appellant could be valued on the basis of an ongoing
business. This is very close to an acknowledgement of the propriety of
awarding compensation for the loss of goodwill.
All these circumstances appear to have led
Mr. Justice Collier to the conclusion that the appellant
[Page 117]
had been unfairly treated. Towards the end of
his judgment, the following paragraph is to be found:
On the evidence before me the plaintiff and
his former competitors, to my mind, have been unfairly treated. They are
taxpayers and citizens of both Manitoba and Canada, entrapped in policy
differences between two levels of government. They have been economically
erased. Redress, I hold, cannot be had against the federal Crown. It seems
unlikely it can be had against the provincial Crown.
The same sentiments are echoed in the final
paragraph of the judgment of the Court of Appeal where Mr. Justice Urie
said:
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 obligation to so frame it that
unfairness does not result in the implementation thereof.
In so far as the respondent contends that the
appellant should look to the Government of Manitoba for compensation and that
there thus arises what Mr. Justice Collier refers to as an “entrapment in
policy differences between two levels of government”, I adopt as an accurate
analysis of the situation the following paragraph from the reasons for judgment
of Mr. Justice Smith rendered in disposing of an application to strike out
the statement of claim as disclosing no cause of action:
On this last point I agree with the
contention of the plaintiff that any claim they may have must be made against
the Defendant, not the Government of Manitoba. It was a statute of the
Parliament of Canada that took away their business and prohibited them from
engaging in the fish exporting business. This was necessarily so, since interprovincial
and international trade fall within the sole jurisdiction of the Parliament and
Government of Canada, and though it seems to be the case that the statute in
question, the Freshwater Fish Marketing Act, was enacted in response to
requests from several of the provinces, the statute is an Act of Parliament
alone. Nor does the agreement of June 4, 1969, between Canada and Manitoba
alter the situation. The plaintiffs are not parties to the agreement and were
given no legal rights under it.
[Page 118]
It will be seen that in my opinion the Freshwater
Fish Marketing Act and the Corporation created thereunder had the effect of
depriving the appellant of its goodwill as a going concern and consequently
rendering its physical assets virtually useless and that the goodwill so taken
away constitutes property of the appellant for the loss of which no
compensation whatever has been paid. There is nothing in the Act providing for
the taking of such property by the Government without compensation and as I
find that there was such a taking, it follows, in my view, that it was
unauthorized having regard to the recognized rule 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, supra.
For all these reasons I would allow this appeal,
set aside the judgment of the Court of Appeal and direct that judgment be
entered providing for a declaration that the appellant is entitled to
compensation in an amount equal to the fair market value of its business as a
going concern as at May 1, 1969, minus the residual value of its remaining
assets as of that date, together with a declaration that the said fair market
value is to be agreed to by the parties, and failing agreement within a
reasonable time, that either party may apply to a judge of the Federal Court to
have that value determined.
The appellant’s claim is for “compensation” and
in my view full compensation cannot be determined without taking into account
the loss to the appellant of the use of the assets of its business since 1969,
and I think it to be only fair and equitable that this loss should be reflected
in the amount of compensation awarded to the appellant hereunder. To this end
the judgment herein will include a further declaration that the appellant is
entitled to a sum equal to 5 per cent per annum of the fair market value agreed
or determined as aforesaid, from May 1, 1969, until the date hereof.
The appellant is entitled to its costs
throughout.
[Page 119]
Appeal allowed with costs.
Solicitors for the appellant: Kaufman,
Arenson, Winnipeg.
Solicitor for the respondent: Roger
Tassé, Ottawa.