Early Recovered Resources Inc. v. Gulf Log Salvage Co Operative Assn., 2003 FCT 549

Date: 20030502

Docket: T-588-00

Neutral citation: 2003 FCT 549

BETWEEN:

                                           EARLY RECOVERED RESOURCES INC.

                                                                                                                                                         Plaintiff

and

                             GULF LOG SALVAGE CO-OPERATIVE ASSOCIATION,

HER MAJESTY IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA,

                                              JIM DOYLE, MINISTER OF FORESTS,

COAST FOREST AND LUMBER ASSOCIATION

and INDEPENDENT TIMBER MARKETING ASSOCIATION

                                                                                                                                               Defendants

                                                            REASONS FOR ORDER

HARGRAVE P.

[1]                  This motion is an application for addition of two entities, composed of owners of logs, to be added either as defendants or as interveners. Those taking positions agree that addition as interveners would be proper, subject to conditions, however the Plaintiff objects to the addition of Coast Forest and Lumber Association and Independent Timber Marketing Association whom I shall also call the "Associations" as defendants. It is proper, given the nature of this action, that the Associations be named as Defendants.

ANALYSIS

[2]                  Shorn of the trappings of declaratory relief, this action is one for salvage of 17 unmarked logs, picked up by the Plaintiff. However, one would never suspect such, from the style of cause, which names neither an owner, in personam, nor the subject matter of the salvage, in rem. Either an owner or the subject matter of the salvage, or both, ought to be named in the style of cause in any salvage proceeding. For example, a usual style of cause in a salvage action such as the present would refer at least to one defendant as "The Owner of 17 Unmarked Logs", with the owner actually named if known, thus constituting an in personam claim for salvage. An in rem proceeding might refer to "17 Unmarked Logs and All Those Interested in the Logs". To extend this to an in personam and in rem proceeding, the style of cause could refer to "_ as Owners of 17 Unmarked Logs and the 17 Unmarked Logs". This approach to the style of cause gives an owner notice and a chance to take part in the action in order to protect his or her position and possessions.

[3]                  Mr. James Aspinall, in arguing The Elton [1891] P. 265 pointed out that "the defendant cargo owners may fairly be deemed 'proper' parties ... as it is manifestly convenient that all parties interested should be before the Court when the salvage action is tried." (page 267). Of course, this observation has two aspects, for the presence of owners, on the one hand, gives them a chance to protect their position and, on the other hand, gives the court the opportunity to test the facts and conditions surrounding the salvage.

[4]                  In The Elton the question was whether owners of cargo from a salvaged ship, who were out of the jurisdiction, might be served. Sir Frances Jeune, as he was then, observed that it would be "impossible to doubt that notice of this writ should be permitted to be given to the owners of the cargo.". He asked, rhetorically, "[i]f they were within the jurisdiction, would they not be proper parties to the action?" (page 269). He discussed Massey v. Heynes (1888) 21 Q.B.D. 330 as authority for involving cargo owners in a salvage action and then observed that "by the practice of the Admiralty Court they could always have been made parties" (page 269 of The Elton). He went on to say that "I see no reason why such parties, if consisting of separate individuals, or sets of individuals, should not have been brought before the Court together by monition." (loc. cit. page 270). He was thus prepared to summons owners of ship and cargo as proper parties to a salvage action. He rejected the contention of Mr. Phillimore, who later went on to the Court of Appeal, that at least foreign owners of cargo ought not be dragged into a salvage case, by pointing out the importance of determining an entire question of salvage by bringing in the interested parties. Thus there is not only sound law but also sensible purpose in having before the Court the owners of the salved object not only so that the owners may protect their position, but also so that the court may have before it full evidence and a record upon which to make a determination in a salvage case.

[5]                  An absence of full evidence and a complete record was a shortcoming referred to by the Court of Appeal in this action on hearing an appeal of a failed summary judgment application. Here I would note that well before the summary judgment application the action was discontinued, as against the Defendant, Gulf Log Salvage Co-operative Association which, at best, had some form of bailment of the logs, although no real interest in them, but the Association might well have been able to put matters into a practical context. Thus neither Mr. Justice Hugessen, who initially dealt with the summary judgment application, nor the Court of Appeal, had before them any evidence other than that presented by the Plaintiff with the claim to salvage and the province of British Columbia, with log salvage legislation to uphold. This absence of evidence occurred notwithstanding that on a summary judgment application it is for each party to put their best foot forward: Feoso Oil Ltd. v. The Sarla, [1995] 3 F.C. 68 at 82 (F.C.A.). Here I have no reason to believe that either the Plaintiff or the Provincial Crown failed in this obligation. Yet the record before the Court was found, by the Court of Appeal, to be deficient. Thus, I do not see how this claim for salvage might be properly decided by the Court without the participation of the owners of the salved property, the owners being available and willing, rather than of a mind to abandon their property. Here counsel for the Associations makes a telling point: under the "International Convention on Salvage, 1989", which is Schedule V to the Canada Shipping Act, only an owner of salved property can be required to pay a salvage award: see Articles 13 and 14.

[6]                  In this instance the owners of the salved property would clearly come within Rule 104(1)(b) which provides that the Court may "order that a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined be added as a party, ...". To round out the law on this point, even though it is in a sense repeating what was said in The Elton, I will refer to Stevens v. Canada (Commissioner, Commission of Inquiry), [1998] 4 F.C. 125 (F.C.A.) and to Havana House Cigar & Tobacco Merchants Ltd. v. Jane Doe (1998), 80 C.P.R. (3d) 443 (F.C.T.D.). In the Stevens case the Court of Appeal noted, at page 137, there adopting a passage from Amon v. Raphael Tuck & Sons Ltd. [1956] 1 Q.B. 357 at 380 that:

The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action, and the question to be settled therefore must be a question in the action which cannot be effectually and completely settled unless he is a party.

Stevens was a judicial review proceeding which had been converted to an action. At issue was the propriety of the Commissioner of the Commission of Inquiry, which enquiry had brought the whole matter about, as a party. Clearly the Commissioner was, at best, not more than a necessary witness who would be subpoenaed if needed. Here I would note that Coast Forest and Lumber Association and Independent Timber Marketing Association fall into the category of parties required to effectually and completely settle the salvage claim. They are certainly not mere necessary witnesses.

[7]                  In Havana House Mr. Justice Rothstein, as he then was, applied the pocketbook test in determining whether an entity ought to be joined as a defendant. Where the rights and pocketbook of an entity would be directly affected it therefore has a direct interest to protect and ought to be added as a party. Mr. Justice Rothstein said he would not speculate as to why the plaintiffs had not chosen initially to sue the new defendant, but raised the possibility of a fear of exposure to damages, or the desire to exclude someone with the resources to defend, for the matter clearly required the joining of a given defendant, the rule then in effect being similar to the present Rule 104. He observed that the plaintiff had not offered any satisfactory explanation for not adding that entity as a defendant.

[8]                  In applying the pocketbook and directly affected test, I would note that the interest of the provincial Crown would at one time have been as to stumpage and royalties, a matter of $7.70. However the provincial Crown does not claim any beneficial ownership in the logs and indeed everything points to the certainty that stumpage and royalties were paid long before the Plaintiff picked up the logs.

[9]                  Someone who has a right to be a party, as a necessary party, ought not have to rely upon someone else to vicariously defend his or her interests: see Havana House (supra) at page 445 where Mr. Justice Rothstein adopts a passage from Canadian Red Cross Society v. Simpsons Ltd. (1983), 70 C.P.R. (2d) 19 (F.C.T.D.) at 22 and then repeats that very concept.

[10]            The Plaintiff, which would like to limit the participation of Coast Forest and Lumber Association and Independent Timber Marketing Association, submits that they ought to be merely interveners with limited rights, as only the Crown has asserted ownership of the logs. This overstates the Crown's case. The provincial Crown does acknowledge, in pre-trial conference material, that it may claim as an owner of logs where stumpage and royalties have not been paid, but the provincial Crown does not claim ownership in its defence. This is a pragmatic approach, for stumpage and royalties are always collected by the Crown at the earliest possible opportunity, after scaling at camp: such payment would certainly not be delayed for weeks or months until the logs reached the Fraser River estuary, went astray and were picked up by the Plaintiff.

[11]            The Plaintiff may not wish to have Coast Forest and Lumber Association and Independent Timber Marketing Association as defendants. Here the Plaintiff submits that the general rule is that it is for a plaintiff to choose the defendant. This is of course so unless either it would be impossible for the Court to effectually and completely adjudicate upon and settle the present salvage issue, or that there are either special or exceptional circumstances to depart from the general rule: see Ferguson v. Arctic Transportation Ltd., [1996] 1 F.C. 771 (F.C.T.D.) at 780 - 781. In Ferguson, while it might have been convenient that the Panama Canal Commission be a party, it was not necessary in order to determine the issues in the Plaintiff's case. In contrast, early in these Reasons, I pointed to the essential need to have the owner of salved property before the Court, assuming the owner has not abandoned the property. The need to have an owner of salved property before the Court, in order to effectually and completely determine the salvage aspect of the proceeding, is a special circumstance which overrides the concept that a plaintiff may generally choose the defendants. Indeed, it ought to come as no surprise to the Plaintiff that there is finally an owner of slaved property against whom to test the case for salvage.

[12]            Of more substance is whether a cause of action exists between the Plaintiff and the two Associations. There is no doubt that the owners of salved property are essential participants in a salvage claim, in order to ensure that the claim may be effectually and completely decided. However, the Plaintiff submits that the Associations, Coast Forest and Lumber Association and Independent Timber Marketing Association, whose membership together consists of all of the major coastal logging companies and many of the smaller coastal logging companies and brokers, who are most likely the owners of almost all of the logs in question, are not entities which could be defendants with any claim against the Plaintiff. This overlooks the in rem claims of the members of the Associations to the logs, an ownership claim with no contradictory evidence, and the overall interest of the Associations and their members to have orderly and proper recovery of logs that has escaped their owners.           

[13]            The Plaintiff illustrates its point, as to standing to become a defendant, by referring to a line of cases in which Indian Bands or other representatives of aboriginal individuals were rejected as parties seeking to uphold the interest of their members.

[14]            In Minister of Fisheries and Oceans v. Shubenacadia Indian Band, 2002 FCA 509, an unreported 17 December 2002 decision, of the Federal Court of Appeal rejected the participation of the Union of Nova Scotia Indians and the Confederacy of Mainland Mi'kmaq for there was no claim, no relief sought and no allegation against them. The action was one which did not need the participation of the two Indian associations.

[15]            In Benoit v. Canada (2001), 272 N.R. 169, a case also referred to by counsel for the Plaintiff, the Court of Appeal, as an aside and referring to a comment made by the trial judge, observed at page 171 that there was no cause of action between the plaintiff and the representative taxpayer's group. The Court of Appeal then went on to allow the appeal from the motions judge, who had denied the applicant status both as defendant and as intervener, on the basis that there was no cause of action as between the plaintiff and the representative taxpayer's group. The Court of Appeal looked upon the applicant as an appropriate intervenor.

[16]            Relying on these cases counsel for the Plaintiff makes the point that "neither the Prospective Participants [i.e. Coast Forest and Lumber Association and Independent Timber Marketing Association] nor their members have claimed to own or assumed duty of ownership for the specific 17 logs at issue in this action. They have not sought to retrieve the property at issue in this Proceeding from the Plaintiff, nor offered the Plaintiff any remuneration for salvage of this property.". However, the Plaintiff does go on to acknowledge that the roles of the Crown, on the one hand and the Associations, on the other hand, are different. This may certainly be a viewpoint. However, it overlooks the fact that what Coast Forest and Lumber Association and Independent Timber Marketing Association are trying to do is to defend ownership interests both in rem in the logs and in the existing log recovery system. The view of the Plaintiff, that the Associations should be seeking to retrieve the logs is specious, because it is for the Court to determine if the Plaintiff has a right of salvage and, if there is an entitlement to an award, the amount of the award. It is not for the Associations to ignore and to bypass the present valid legislation governing recovery of and statutory payment for those logs.

[17]            Also flowing from the Plaintiff's argument is that the Associations are not in themselves log owners. By analogy, if I understand the Plaintiff's cases and argument correctly, the individual Indians in the cases on which the Plaintiff relies each had his or her own treaty right, just as coastal forest companies had rights in timber that they have logged, paying royalties to the Crown, or otherwise bought and paid for. Thus, this line of reasoning continues, each of the many score of coastal forest and logging companies ought to be parties to this litigation, not merely the two Associations. Where this analogy breaks down is that in the treaty right and similar cases, referred to by the Plaintiff, there was no difficulty in pointing to individuals who held the rights in question and could easily become parties. Here, the logs being unmarked but, as I pointed out, owned by some unidentified entity, other than the Crown, those owners are doing the best that they can, short of adding a multitude of defendants to the proceeding, to protect an in rem claim in the logs and their interest in maintaining an efficient, reliable and workable statutory log recovery system.

[18]            There is a contrary argument, to the line of aboriginal law cases relied upon by the Plaintiff, to be effect that the Associations may not be parties. Counsel for the Associations submits that it is well-established that Indian bands possess the capacity to represent their members and as such may be defendants: see for example Martin v. Canada (Attorney General), an unreported 28 October 2002 decision, 2002 FCT 1117 at paragraph 15, there referring to The Queen v. Simon, [985] 2 S.C.R. 387 (S.C.C.). In Martin 13 Indian bands were added as necessary defendants able to represent their members.

[19]            To summarize, the cases put forth by the Plaintiff, involving aboriginal litigation, may be distinguished. The individuals in those cases held treaty rights and thus their umbrella societies were not necessarily parties within the Federal Court Rules. In the present context, any one of a number of forest companies may be an owner of one or more of the logs and thus the reasoning underlying the Plaintiff's cases cannot apply. Here the log owners are, from a practical perspective, doing all that they can to protect their positions in this salvage action and included is the ability of the Associations to fill the factual vacuum, already commented upon by the Court of Appeal in the summary proceedings. Thus the need to have additional defendants to effectually and completely determine this action. The style of cause shall now be that set out above.

[20]            At the conclusion of the hearing counsel for the Plaintiff noted that the Plaintiff and the organization assisting the Plaintiff have limited resources. Counsel had earlier proposed that the Associations not be entitled to any costs, but that the Plaintiff have the right to seek costs from the Associations. Apparently the Plaintiff and the provincial Crown have worked out some arrangement whereby they look upon the matter as a test case and neither will claim costs from the other. To allow the Plaintiff to claim costs from the Associations, yet to prevent the Associations, if successful, from claiming costs from the Plaintiff, would be inequitable. Thus neither the Plaintiff, on the one hand, nor the Associations, on the other hand, shall have the right to claim costs one against the other.

(Sgd.) "John A. Hargrave"

                                                                                              Prothonotary

Vancouver, British Columbia

2 May 2003

                         FEDERAL COURT OF CANADA

                                          TRIAL DIVISION

   NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                            T-588-00

STYLE OF CAUSE:                                                    Early Recovered Resources Inc. v. Gulf Log Salvage Co-operative Association et al.

PLACE OF HEARING:                                               Vancouver, British Columbia

DATE OF HEARING:                                                  8 April 2003

REASONS FOR ORDER:                                       Hargrave P.

DATED:                    2 May 2003

APPEARANCES:

SOLICITORS OF RECORD: