Canada v. Mid Atlantic Minerals Inc., 2002 FCT 569

Date: 20020516

Docket: T-1184-00

OTTAWA, Ontario, May 16, 2002

BEFORE: Rouleau J.

BETWEEN:

HER MAJESTY THE QUEEN

Plaintiff

AND:

MID-ATLANTIC MINERALS INC.

Defendant

ORDER

[1]        I allow the appeal as regards the prothonotary's decision on the right to challenge the legality of federal regulations other than by an application for judicial review and I dismiss it as to the decision on the merits. The defendant is accordingly required to pay the sum of $7,052.36 with interest at the rate prescribed in the Interest and Administration Charges Regulations as of April 2, 1998. Costs are awarded to the plaintiff.

Certified true translation

Suzanne M. Gauthier, C. Tr., LL.L.

Date: 20020516

Docket: T-1184-00

Neutral citation: 2002 FCT 569

BETWEEN:

HER MAJESTY THE QUEEN

Plaintiff

AND:

MID-ATLANTIC MINERALS INC.

Defendant

REASONS FOR ORDER

ROULEAU J.

[1]        This appeal by the defendant from an order made by the prothonotary Richard Morneau on March 8, 2001 deals with the validity of s. 10 of the Fee Schedule for . . . Marine Navigation Services ("the Fee Schedule"), adopted pursuant to ss. 47 et seq. of the Oceans Act, R.S.C. 1996, c. 31 ("the Act"). Specifically, the Court is required to decide whether the Minister of Fisheries and Oceans ("the Minister") was empowered to set the fees payable by users of marine navigation services by distinguishing between Canadian and foreign ships, and if he was, whether these fees were discriminatory.

[2]        The dispute arose following the defendant company's refusal to pay the fees in question, which led the Crown to claim payment of the fees in the Federal Court.^[1] The prothonotary allowed the simplified action brought by the plaintiff to recover navigation service fees payable by the defendant under the Fee Schedule, and ordered the defendant to pay her the sum of $7,052.36 with interest at the rate specified in the Interest and Administration Charges Regulations as of April 2, 1998. The defendant sought an order allowing the appeal at bar and reversing the prothonotary's order, as well as an order dismissing the plaintiff's action with interest and costs.

Legislative background

[3]        For a proper understanding of the substance of the questions raised by the parties, it is necessary to look at the legislative background to the case at bar.

[4]        The Canadian Coast Guard ("CCG") provides a number of marine navigation services in Canadian waters. In particular, those services involve the setting up in Canadian waters and in ports located in Canadian waters, for the use of boats navigating there, visual aids such as buoys, beacons, lighthouses, lights, radar assistance systems and auditory assistance systems such as foghorns, whistling buoys and so on. The marine navigation services supplied by the plaintiff also involve marine traffic services and distribution of information through the Marine Communication and Traffic Services Centres of the CCG.

[5]        Accordingly, in 1989 the federal government established a policy on recovering the costs entailed in supplying the services provided by it and by agencies under its control, including the CCG.

[6]        On June 1, 1996, the predecessor of the disputed Fee Schedule, the Marine Navigation Services Fees Regulations ("the Regulations") came into effect. These Regulations were enacted pursuant to s. 19(1)(a) of the Financial Administration Act, S.C. 1985, c. F-11. After the Regulations came into effect, the Minister continued consultations with the shipping industry so as to improve the cost recovery system. Those consultations have since continued and are still continuing. The system of charges contained in the Fee Schedule was accordingly established after extensive consultation with representatives of the shipping industry.

[7]        In 1997 the validity of the Regulations was challenged in this Court by the Canadian Shipowners Association, but the Court dismissed the challenge and its judgment was upheld by the Federal Court of Appeal in 1998. Those judgments are reported at The Canadian Shipowners Association et al. v. Her Majesty in Right of Canada et al. (1997), 137 F.T.R. 216 (F.C.T.D.); (1998), 233 N.R. 162 (F.C.A.).

[8]        On July 1, 1997, the Regulations were repealed and the Fee Schedule at issue in the case at bar came into effect.

Facts

[9]        The defendant Mid-Atlantic Minerals Ltd. is a Canadian company involved in marine transport, including shipping on the St. Lawrence River. For this purpose, as ships registered in Canada were not available, the defendant operated in Canadian waters a non-Canadian vessel with a gross tonnage of 17,594 tonnes, the M.V. Bjorn, in accordance with a temporary entry permit issued under the Coasting Trade Act, S.C. 1992, c. 31, valid for a month, from February 9 to March 9, 1998.

[10]      Pursuant to s. 10 of the Fee Schedule, the defendant received an invoice from the plaintiff dated March 3, 1998, claiming the sum of $8,420.68 within 30 days for navigation services rendered by the plaintiff to the defendant's ship while its permit was in effect.

[11]      To date, although duly notified on June 19, 2000, the defendant has only paid the sum of $1,368.62, the only amount which it considered it owed under the Fee Schedule, and is refusing to pay the unpaid balance of the bill of March 3, 1998, namely $7,052.36: hence the action at bar.

[12]      This action was challenged by the defendant on the sole ground that the Fee Schedule on which the appellant's claim is based is invalid and unlawful. The Regulations make a distinction between Canadian and non-Canadian ships and as regards bulk carriers and container ships, they impose different rates and clearly favour Canadian ships. In the defendant's submission, the Minister does not have the power to make a fee schedule with ship categories based on nationality. That distinction is discriminatory, in conflict with the enabling legislation and hence unlawful.

[13]      In its defence the defendant admitted all the facts giving rise to application of s. 10 of the Fee Schedule cited. However, the defendant presented no evidence to support the allegations in its defence and consequently none of the facts alleged by the defendant in its defence were proven before the prothonotary.

[14]      At the hearing of the case on March 6, 2001, the prothonotary indicated to the parties that he was refusing to rule on the question of the validity of the Fee Schedule and would not hear arguments by the parties in that regard, as the defendant had failed to file an application for judicial review to challenge the legality of the Fee Schedule in question and could not seek a conclusion that it was illegal in defence to an action. Specifically, the prothonotary refused to consider the defendant's argument that there is no rule in the Federal Court Rules, 1998, allowing a defendant simply to raise the illegality of regulations in a defence and so avoid the statutory requirements of ss. 18 and 18.1 of the Federal Court Act.

[15]      Consequently, the prothonotary allowed the action brought by the plaintiff based on the admissions of the parties, as they stand in the record. The defendant is now appealing that decision.

Points at issue

[16]      The appeal at bar raises the following two questions:

(1) Did the prothonotary err in law in deciding that the defendant could not challenge the legality of the Fee Schedule in a defence to an action brought by the plaintiff, thereby justifying this Court's intervention?

(2) If so, is the Fee Schedule on which the plaintiff based her claim ultra vires the Minister?

Parties' arguments

[17]      On procedure, the defendant submitted that the prothonotary erred in law by denying it the right to a full and complete defence. He erred by raising of his own motion a point which was not part of the parties' allegations and was not included in the parties' pre-trial memorandums, nor in the discussions which took place at the pre-trial conference before Hugessen J. The defendant further submitted that the prothonotary erred in law in ruling that the only means of challenging the legality of federal regulations is an application for judicial review based on ss. 18 and 18.1 of the Federal Court Act. The prothonotary did not base his decision on any case law or authority and the defendant submitted that it had found none.

[18]      Additionally, the defendant argued that ss. 18 and 18.1 of the Federal Court Act, which deal with judicial review of federal tribunals by the Federal Court, have nothing to do with a party's right to allege in defence that federal regulations are void. Finally, the defendant submitted that the prothonotary erred in law by not allowing it to argue any point which might involve dismissal of an action, as specified in ss. 175 and 183(c)(i) of the Federal Court Rules, 1998.

[19]      On the merits of the action, the defendant stated that the enabling legislation, especially ss. 47 et seq. of the Act, allows the Minister to set the fees payable by users of marine navigation services. In the defendant's submission, those provisions are designed to allow federal authorities to recover the money spent in providing such services. They do not either expressly or by implication allow a distinction to be made between Canadian and foreign vessels, nor favourable treatment of the former at the expense of the latter by a more advantageous rate. The defendant submitted that the Supreme Court of Canada has several times held that such a distinction in regulations, in order to be valid, must be expressly authorized by the enabling legislation, and that is not the case here. Moreover, discrimination between Canadian and non-Canadian ships is not absolutely essential to enable the Minister to exercise his regulatory authority to set fees for marine navigation services.

[20]      Finally, the defendant submitted that the case at bar should be distinguished from the one involving the former Regulations, regulations found valid by this Court on the ground that the distinctions they were making were authorized by the delegating legislation, since the wording of the provisions of those Regulations was quite different and expressly envisaged the possibility of creating classes of ship for fee purposes. Consequently, the defendant asked the Court to dismiss the plaintiff's claim on the ground that it was based on an unlawful fee schedule.

[21]      For her part, the plaintiff claimed that the prothonotary's decision was quite correct, and in any case the defendant had not presented evidence that it was given any different or prejudicial treatment because of the origin of its ship. Additionally, she argued that the Fee Schedule was intra vires the Minister.

[22]      In Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425, the Federal Court of Appeal ruled on the standard of review of a prothonotary's discretionary decision. It stated its conclusion as follows, at para. 95 of the judgment:

Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo.

[23]      The decision in question is one which, in my opinion, is vitiated by an error of law and raises a question vital to the final issue of the case, so that the Court must exercise its own discretion de novo. As the foregoing analysis indicates, the Court cannot accept the conclusion arrived at by the prothonotary. It must therefore intervene.

Applicable legislative and regulatory provisions

[24]      The Fee Schedule applies to all commercial shipping in Canadian waters, except vessels excluded from the definition of "ship" in s. 1 of the Schedule and vessels exempted under s. 2. Apart from those two provisions, which deal respectively with the definitions and scope of the Fee Schedule, the latter is divided into three parts, namely Part I, Fees in the Western Region, Part II, Fees in the Maritimes Region, Newfoundland and the Laurentian and Central Regions, and Part III, General. Parts I and II are both divided into two sections, the first dealing with non-Canadian ships and the second Canadian ships. Among other things, Part III lays down the fee payable for ships operated in accordance with a temporary entry permit issued under the Coasting Trade Act. The defendant was billed pursuant to Part III of the Fee Schedule. Before commencing the analysis, it is worth setting out the applicable provisions of the Act and Fee Schedule.

(1)        Oceans Act

Fees

47. (1)      The Minister may, subject to any regulations that the Treasury Board may make for the purposes of this section, fix the fees to be paid for a service or the use of a facility provided under this Act by the Minister, the Department or any board or agency of the Government of Canada for which the Minister has responsibility.

(2) Fees for a service or the use of a facility that are fixed under subsection (1) may not exceed the cost to Her Majesty in right of Canada of providing the service or the use of the facility.

(2)        Fee Schedule for . . . Marine Navigation Services

PART II

FEES IN THE MARITIMES REGION, NEWFOUNDLAND

REGION AND THE LAURENTIAN AND CENTRAL REGIONS

Non-Canadian Ships

6. (1) Subject to subsections (2) and (3) and sections 7 and 10, the fee payable, for marine navigation services, by a non-Canadian ship that is loading or unloading cargo at a Canadian port is the amount obtained by multiplying the weight in tonnes of the cargo that is loaded, to a maximum of 50,000 tonnes, or unloaded, to a maximum of 50,000 tonnes, by

(a) $0.16 in the Laurentian and Central regions . . .

. . . . .

(2) In calculating the fee prescribed by subsection (1), the weight of cargo that is loaded or unloaded shall not include the weight of transshipped cargo that has been carried by another ship for which a fee has been paid.

(3) The fee calculated in subsection (1) shall not exceed $0.05 per tonne for aggregates and $0.15 per tonne for gypsum.

. . . . .

Canadian Ships

8. (1) Subject to subsections (2) to (5), the quarterly fee payable, for marine navigation services, by a Canadian ship that is operating in Canadian waters in the Maritimes, Newfoundland or Laurentian and Central Regions is the amount obtained by multiplying the gross tonnage of that ship by $1.25.

(2) The fee payable for marine navigation services, by a Canadian ship that is a bulk carrier or container ship that is operating in Canadian waters in the Maritimes Region, Newfoundland Region or Central and Laurentian Region is the amount obtained by multiplying 1/100 of the distance travelled in kilometers, rounded to the next highest whole number, by the tonnes carried by $0.0076.

. . . . .

PART III

GENERAL

9. (1) Subject to subsection (2), the fee payable, for marine navigation services, by a non-Canadian ship that is operating in Canadian waters of the Newfoundland Region, Maritimes Region or the Laurentian and Central Region, that is not subject to any other fees fixed by this fee schedule, is the amount obtained by multiplying the gross tonnage of that ship by $0.42.

(2) The fee set out in subsection (1) shall be paid a maximum of once a calendar month.

10. The fee payable, for marine navigation services, by a non-Canadian ship or a non-duty paid Canadian ship that is operating in Canadian waters pursuant to a temporary entry permit issued under the Coasting Trade Act is the amount obtained by multiplying the gross tonnage of that ship by the number of months during which the permit is in effect and by $0.42.

(My emphasis)

Procedural question

[25]      The plaintiff submitted that s. 18(1) of the Federal Court Act provides that this Court has exclusive jurisdiction to grant declaratory relief against any federal board, commission or other tribunal, and s. 18(3) of the same Act provides that the remedies provided for in subsections (1)

and (2) may be obtained only on an application for judicial review. In the case at bar, in defence to the action, the defendant asked this Court to find that the Fee Schedule which is the basis of the plaintiff's claim is ultra vires and unlawful. In doing so, it asked this Court to grant declaratory relief against a federal board, commission or other tribunal, here the Minister. The plaintiff relied on this Court's judgment in Saskatchewan Wheat Pool v. Canada (Attorney General) (1993), 17 Admin. L.R. (2d) 236, to argue that the courts have held that a Minister or the Governor in Council exercising a regulatory power under federal legislation constitutes a federal board, commission or other tribunal, and hence that the only proper means of seeking to invalidate such regulations is to proceed by an application for judicial review. Accordingly, the plaintiff submitted that the prothonotary correctly decided that the defendant should have proceeded by judicial review in challenging the legality of the Fee Schedule, and on that ground alone the appeal should be dismissed.

[26]      This Court's judgment in Saskatchewan Wheat Pool does not in my opinion provide a conclusive solution to the case at bar, as it must be clearly distinguished from the latter. In that case proceedings were brought by the plaintiff Saskatchewan Wheat Pool by judicial review against the Attorney General of Canada to have the Regulations enacted by the Governor in Council under the Canadian Wheat Board Act, R.S.C. 1985, c. C-24, ruled ultra vires. In the case at bar, the defendant only opposed the validity of the Fee Schedule in response to an action brought against it by the plaintiff to recover costs. I reproduce here the relevant passages from the judgment of Rothstein J. (as he then was) for the sake of convenience:

¶ ¶ 2 The proceedings were commenced by way of notice of motion for judicial review pursuant to section 18.1 of the Federal Court Act, R.S.C. 1985, c. F-7, as amended. In the course of setting this matter down for hearing, the question of whether these proceedings should be by way of application for judicial review under section 18.1 or by way of action and statement of claim was considered by the parties.

¶ ¶ 3 Counsel for the Saskatchewan Wheat Pool was of the view that the appropriate procedure might be that of an action commenced by way of statement of claim. Counsel for the respondent did not object to this approach, and an agreement was reached that the matter should proceed by way of action instead of by way of application for judicial review. A document dated August 30, 1993, entitled Agreement as to Procedure was filed to this effect.

¶ ¶ 4 As the matter presently stands, there is filed a motion seeking judicial review and a statement of claim commencing an action and a statement of defence in response. While there is no doubt that between the two procedures the matter is properly before the Court, (and I will grant the extension of time sought with respect to the filing of the application for judicial review) for the sake of clarity, I will briefly express my views as to the appropriate procedure in a case such as this.

                                                                                                            . . . . .

¶ ¶ 6 When the Governor in Council acts pursuant to a statute, it is a federal board. See for example, National Anti-Poverty Organization v. Canada (A.G.), [1989] 1 F.C. 208(T.D.), reversed without comment on this point, [1989] 3 F.C. 684 (F.C.A.).

                                                                                                            . . . . .

¶ ¶ 8 It would appear from these provisions [section 18] that in challenging a decision or order of the Governor in Council made pursuant to statutory authority, the correct and only procedure is to proceed by way of originating notice under section 18.1 of the Federal Court Act as was originally done here.

                                                                                                            . . . . .

¶ ¶ 12 Section 18 is a specific statutory provision which deals with prerogative writs and declarations in respect of decisions and orders of federal boards, commissions and other tribunals. As I read section 18, it clearly provides that proceedings brought against the Attorney General of Canada for declaratory relief in respect of a decision or order of a federal board, commission or other tribunal are to be brought by way of application for judicial review under section 18.1 and in no other way. The fact that the parties have agreed that the Federal Court shall decide a question of law does not derogate from section 18. If the question relates to a federal board, commission or other tribunal, judicial review is the proper procedure. Nor do I see any distinction in the definition of federal board, commission or other tribunal or in section 18 that would exclude from the ambit of section 18 the Governor in Council or any other federal board when acting in a legislative capacity.

¶ ¶ 13 No explanation has been provided that satisfies me that Parliament would have intended that legislative acts of federal boards, commissions or other tribunals should be challenged by way of action while decisions or orders of a judicial, quasi-judicial or administrative nature should be challenged by way of judicial review. Indeed, the amendments to the Federal Court Act brought into force on February 1, 1992, were introduced, at least in part, to clarify and simplify proceedings in the Federal Court. At this time, when the courts are tending to move away from technical distinctions, I do not think Parliament, in enacting the February 1, 1992 amendments to the Federal Court Act, would have intended that there be a subtle distinction between the way in which proceedings are brought to challenge legislative actions as opposed to actions of a judicial, quasi-judicial or administrative nature. No useful purpose would be served by such a distinction.

¶ ¶ 14 I am fully satisfied that the proceedings as originally framed under section 18.1 were properly brought. However, in order to avoid unproductive procedural objections at the appeal stage of these proceedings, I will allow the statement of claim and agreement as to procedure between counsel to subsist as filed.

(My emphasis)

[27]      Sections 18 and 18.1 of the Federal Court Act provide:

18. (1) Subject to section 28, the Trial Division has exclusive original jurisdiction

(a) to issue an injunction, writ of certiorari, writ of prohibition, writ of mandamus or writ of quo warranto, or grant declaratory relief, against any federal board, commission or other tribunal; and

(b) to hear and determine any application or other proceeding for relief in the nature of relief contemplated by paragraph (a), including any proceeding brought against the Attorney General of Canada, to obtain relief against a federal board, commission or other tribunal.

. . . . .

(3) The remedies provided for in subsections (1) and (2) may be obtained only on an application for judicial review made under section 18.1.

18.1 (3) On an application for judicial review, the Trial Division may

(a) order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing; or

(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.

(My emphasis)

[28]      It seems clear to me from reading these provisions that remedies brought against a federal board, commission or other tribunal for declaratory relief against a "decision, order, act or proceeding" of that tribunal must be brought by judicial review, not otherwise. Contrary to what the prothonotary concluded, these provisions do not set out any other statutory requirements which the defendant might have [TRANSLATION] "avoided" by filing a defence to an action brought by the plaintiff. Sections 18 and 18.1 of the Federal Court Act provide that any person intending to appeal against a "decision, order, act or proceeding" of a federal board, commission or other tribunal must proceed by judicial review. In the case at bar, there was nothing requiring the defendant to launch a preventive challenge (a kind of pre-emptive strike) to the plaintiff's "decision" to claim a sum of money from it for services provided, once the bill of March 3, 1998, had been sent to it, even though no specific action had yet been taken against it. Further, Rules 175, 178 and 183(c) state quite clearly that once an action is brought against a person the latter may, and even must, raise and argue in his or her defence any point of law which might defeat a claim.

[29]      The plaintiff did not seek to have the regulations ruled invalid until it was replying to an action which the plaintiff herself chose to bring against the defendant.

Point at issue

Was the defendant discriminated against because it was using a non-Canadian ship?

[30]      In order to argue that the Fee Schedule is unlawful because it imposes a different set of fees for Canadian as against non-Canadian ships, and clearly favours Canadian ships if they are bulk carriers or container ships, the defendant had first to establish that it had in fact been discriminated against in the operation of a non-Canadian bulk carrier or container ship. The defendant argued that it would have been charged a lower rate if it had been operating a Canadian ship, since in its view it would have been charged under s. 8(2) of the Fee Schedule applicable to Canadian container ships and bulk carriers, not under s. 10. That is why it claimed there had been discrimination. There is no evidence in the record to suggest that the defendant's ship would have been charged under s. 8(2) if it was a Canadian ship. Section 8(2) is an exceptional provision which only applies to container ships and bulk carriers, as defined in the Fee Schedule, and there is nothing in the evidence to indicate that in the case at bar the M.V. Bjorn qualified under either of those definitions, as the defendant entered no evidence to that effect.

[31]      At the hearing in this Court the plaintiff maintained that the defendant had entered no evidence in the record before the prothonotary showing that the M.V. Bjorn was a bulk carrier. A motion was then filed by the defendant pursuant to Rule 60 of the Federal Court Rules, 1998, to correct this deficiency in its evidence, when the appeal from the prothonotary's decision had already been under advisement for nearly a week. In view of the status of the case at bar at the advanced stage of the appeal from the prothonotary's decision, I would dismiss the defendant's motion for the reasons set out below.

[32]      The courts have clearly held that a judge hearing an appeal from a prothonotary's decision is bound by the record as it stood before the latter: James River Corp. of Virginia v. Hallmark Cards Inc. et al. (1997), 126 F.T.R. 1, at 9-10. According to the first branch of the test set out by the Federal Court of Appeal in Brunckost (Frank) Co. et al. v. Gainers Inc. et al., [1993] F.C.J. No. 874 (QL) (F.C.A.), a party may only be authorized to file evidence on appeal if it could not reasonably have known of the existence of the evidence at trial or if the evidence was not available at that time: Symbol Yachts Ltd. v. Pearson, [1996] 2 F.C. 391, at 398-400. In the case at bar, by its motion the defendant sought to enter in evidence the temporary entry permit issued pursuant to the Coasting Trade Act, which in its submission showed that its ship was a bulk carrier within the meaning of the Fee Schedule, and which indicated the quantity of goods transported by it between points A and B. That permit was issued to the defendant in 1998. Accordingly, it is clear that the permit and the information contained in it were known to the defendant at the time it could have filed its affidavits at trial under Rule 299, which provides for the filing of affidavits in the trial of a simplified action. On that ground alone, the motion should be dismissed.

[33]      Further, at the hearing at trial the prothonotary informed counsel for the defendant that some of the allegations contained in its defence had not been proven, as no affidavit was filed by the defendant for a simplified action. After the prothonotary had made this comment, counsel for the defendant never indicated his intention to enter the said permit or any other evidence in the record. The defendant also did not ask this Court prior to the hearing of the appeal for leave to file any new evidence, despite the fact that the plaintiff clearly mentioned in her reply record her argument based on the insufficiency of the defendant's evidence. Accordingly, it is now too late to do so and such a motion to file new evidence cannot be presented at this time, when the appeal has been taken under advisement.

[34]      In view of the absence of any evidence that the M.V. Bjorn was a bulk carrier, it has to be assumed that if the latter was a Canadian ship it would have been charged the rate applicable to ordinary Canadian ships, which is set out in s. 8(1) of the Fee Schedule. The rate charged ordinary Canadian ships (in other words, those which are not container ships or bulk carriers) under that provision is the same as that charged a non-Canadian ship operated under a coasting trade permit and covered by s. 10, although it is calculated differently. It thus appears that there is no evidence in the record to suggest that the defendant would have been subject to a lower rate if it had operated a Canadian ship. As the defendant has not in any way established that it was placed at a disadvantage because it operated a non-Canadian ship, it cannot base its challenge to the legality of the Fee Schedule on that premise.

Is the Fee Schedule valid even if it provides for rates by categories of ship based on nationality?

[35]      Even assuming that the defendant suffered different treatment because of the fact that it was operating a non-Canadian ship, I consider that the Minister had the power to issue a fee schedule providing for rates in accordance with categories of ship based on nationality.

[36]      The plaintiff admitted that the Fee Schedule distinguishes between Canadian and foreign ships in imposing the fees payable by users of marine navigation services. Accordingly, the question is simply whether the Act authorizes such discriminatory treatment.

[37]      In order to determine the validity of s. 10 of the Fee Schedule, the Court must look at the Act and must determine whether it authorizes the Governor in Council to set fees payable by users of marine navigation services which distinguish between Canadian and foreign ships. It was established by documents entered in evidence (affidavit by Tim Meisner) that Parliament's purpose in adopting ss. 47 et seq. of the Act was to recover from the recipients of marine navigation services provided by the federal government and agencies under its control a part of the costs incurred in supplying those services. The objective sought by the Governor in Council in adopting the provisions of the Fee Schedule is not challenged in the case at bar. Rather, the Court must determine whether it is consistent with that contemplated by Parliament in the enabling legislation.^[2]

[38]      Section 47 of the Act gives the Minister a broad discretion to set fees for various services provided by federal departments or agencies under his jurisdiction, including marine navigation services supplied by the CCG. Apart from common law limitations, such as bad faith or the exercise of a discretion for an improper purpose, which do not apply here, the only limits on the Minister's power are the following. First, under s. 47(1) of the Act, the fees must be paid for a service provided by the Minister. In the case at bar, in view of s. 41 of the Act, this condition was met. Second, under s. 47(2) of the Act, the fees recovered may not exceed the cost of the services rendered. Finally, under s. 50 of the Act the Department before setting fees has a duty to consult affected persons. It appeared from the evidence that these two conditions were also met.

[39]      The enabling provision does not set any other limits on the Minister's authority, and in my opinion it permits the creation of classes of user based on a ship's nationality. As the Minister is empowered to fix "the fees to be paid for a service", he may fix various fees, using different criteria, for various classes of ships covered by the Fee Schedule, and may even refrain from fixing fees for certain classes of ship. The Minister is not required to fix one fee applicable to all classes of ship for the same service.^[3] The English version of the wording of s. 47 confirms this interpretation. The words "may fix the fees to be paid for a service" show that several fees may be set for the same service without any limitation.

[40]      Counsel for the defendant urged the Court to rule that s. 47 does not authorize the Minister to set fees payable by users of marine navigation services by distinguishing between classes of ship, since the wording of the section differs from that of s. 19 of the 1996 Regulations. The latter expressly authorized the Minister "by regulation [to] prescribe the fees or changes to be paid . . . by the users or classes of users of the service or facility", which is not true with the new provision.

[41]      It is clear from reading s. 47 of the Act that the latter does not expressly authorize the Governor in Council to enact regulations imposing a rate by class of ship based on nationality. However, administration of the Act by implication requires, for good reasons, that the Fee Schedule be able to distinguish between certain classes of ship. In view of the purpose of Parliament and the circumstances surrounding commercial marine navigation I think it is possible to give a special status, for example, to bulk carriers and container ships, and in my opinion, also to consider non-Canadian ships in a separate class for purposes of imposition of fees (affidavit by Tim Meisner, at paras. 7, 21 and 41-45). The comments by the Federal Court Trial Division in The Canadian Shipowners Association, supra, are very relevant on this point.

¶ ¶ 3 ... For Canadian ships, the fee is payable annually. Non-Canadian ships pay the fee on a periodic basis when entering or navigating Canadian waters in the Western Region and on loading or unloading cargo in other regions. The mode of imposition of the fees vary according to ships' flag, type of vessels or the condition under which the vessel entered into Canada. It also varies by Western, Central and Atlantic region.

                                      . . . . .

¶ ¶ 10 The Marine Navigation Services Fees Regulations prescribes fees for one class of users, namely, commercial shipping. The fact that the Regulations prescribe different fee structures and modes of imposition of those fees to reflect different operations within the commercial shipping industry, does not create new classes of users nor does it constitute discrimination as alleged by the applicants. The fee structure for the West Coast, after extensive consultation between the shipping industry and the Canadian Coast Guard, is based on vessels' Gross Registered Tonnage, which is applicable to both Domestic and Foreign ships. The fees for Canadian Flag Vessels are structured on an annual basis because the Canadian Coast Guard does not have access to domestic activity on a trip by trip basis. The data for domestic activity is available on an annual basis for the purpose of developing and structuring a fee.

¶ ¶ 11 In the Atlantic and Central Regions, the fee for foreign vessels are based on cargo tonnage, reflecting the feedback received from the marine industry that indicated a preference for cargo based fees. The fees for Canadian Flag vessels are structured on an annual basis because the Coast Guard does not have access to domestic activity such as movements and cargo loaded/unloaded on a trip by trip bases. The data for domestic activity is available on an annual basis for the purpose of developing and structuring a fee. The fee for Other Foreign flags non-cargo is a rate per vessel Gross Registered Tonnage since they do not load or unload cargo. The fee for foreign Flag Cruise ships is a flat fee per visit to a Canadian port because they do not load or unload cargo and as well, it reflects the preference of the Cruise industry. The Coasting trade vessels are foreign vessels (cargo and non-cargo) that must obtain a licence to operate in the domestic industry. The fee is based on the length of the licence.

¶ ¶ 12 Furthermore, impliedly contained within legislation's discretionary power to create classes of uses, is the Governor in Council's power to include or exclude certain types of ships from payment of fees . . .

                                      . . . . .

¶ ¶ 13 I am satisfied therefore that the evidence does not support any allegation of discrimination concerning the fee structure and mode of imposition contained in the Regulations. In all cases, it is clear that the Regulations were made for valid reasons and in good faith.

                                                                                                            . . . . .

¶ ¶ 16 In summary therefore, section 19 of the Financial Administration Act explicitly authorizes the imposition of fees or charges for the services provided by Her Majesty on users or classes of users. The class of users towards which the Marine Navigation Services Fees Regulations are aimed is the commercial shipping industry operating in Canadian waters. The rationale for the different fee structure prescribed by the Regulations is based on the reality behind the operation of ships in Canada by the commercial shipping industry and were designed after extensive consultation between the Canadian Coast Guard and the industry.

[42]      Accordingly, I do not share the view of counsel for the defendant that only express legislation could authorize the establishment by regulation of classes or subclasses of ship based on nationality for fee-setting purposes.

[43]      Moreover, the rule that a general power to set fees or dues for services provided by federal departments or agencies allows the government to set fees by class of user is well established in earlier decisions.

[44]       In Aerlinte Eirann Teoranta v. Canada, [1987] 3 F.C. 383, a decision by this Court appealed to the Court of Appeal in 1990 ((1990), 68 D.L.R. (4th) 220), several airlines were challenging the Air Services Fees Regulations, which provided for higher landing fees for certain classes of flight. Higher fees were charged on transoceanic flights than on international flights, which in their turn were the subject of higher fees than domestic flights. These fees were determined in accordance with the weight of aircraft, and the evidence showed that the cost of building and maintaining runways and reception areas for passengers was higher in the case of transoceanic flights. The plaintiff companies, which provided transoceanic flights, challenged the said Regulations on the ground inter alia that the latter discriminated against them. The Regulations were enacted pursuant to s. 5 of the Aeronautics Act, R.S.C. 1985, c. A-2, a provision similar to s. 47 of the Act, and providing that:

5. The Governor in Council may make regulations, or subject to and in accordance with such terms and conditions as may be specified by the Governor in Council, authorize the Minister to make regulations prescribing charges for the use of

(a)            any facility or service provided by the Minister or on his behalf for or in respect of any aircraft; and

(b)            any facility or service not coming within paragraph (a) provided by or on behalf of the Minister at any airport.

[45]      On the scope of this provision, Muldoon J. wrote the following at pp. 391-392 of the trial judgment:

The discretion conferred upon the Governor in Council and, in turn, upon the Minister of Transport, is broad, profound and virtually unfettered. The discretion to prescribe charges for the use of any facility or service provided by the Minister or on his behalf, at any airport, or for or in respect of any aircraft accords power to charge or not for any facility or service, or not, or for some and not others.

[46]      As regards discrimination as such, the judge said that in his opinion the case law dealing with discrimination applicable in municipal law did not apply to regulations adopted by the Governor in Council or a Minister of the Crown, and concluded that neither discrimination nor reasonableness is a ground for quashing regulations enacted by the executive (at p. 399-403 of the judgment). In his view, the power to make regulations prescribing charges for the use of facilities and services without further fetter is the power to establish categories of users. I cannot subscribe to counsel for the defendant's argument that the ratio of that case cannot be applied in the case at bar, since the Aeronautics Act provided a power of taxation and not a power to recover costs for services rendered. In my opinion, the method of levying charges (taxes/costs) has no bearing on the question of whether the Fee Schedule in the case at bar is valid.

[47]      In [1967] S.C.R. 60">Compagnie de publication La Presse v. Attorney General of Canada, [1967] S.C.R. 60, relied on by Muldoon J. in Aerlinte, the Supreme Court of Canada came to a similar conclusion regarding regulations dealing with the licence fees payable for broadcasting. In that case, s. 3 of the Radio Act, R.S.C. 1952, c. 233, provided that:

3. The Governor in Council may

(a)            prescribe the tariff of fees to be paid for licences and for examination for certificates of proficiency held and issued under this Act . . .

[48]      Under that provision the Governor in Council enacted regulations setting higher licence fees for companies which had gross revenue exceeding $200,000. La Presse, which fell into this class, challenged the regulations on the ground that they discriminated against it. Abbott J., for the majority, dismissed the argument as follows at p. 75 of the judgment:

As to the alleged discriminatory character of the regulation, I am not satisfied that it is in fact discriminatory. In any event s.3 of the Act puts no limitation upon the powers of the Governor in Council to prescribe licence fees. That such fees may in fact be discriminatory, in my opinion, affords no legal ground of attack upon the validity of the Order.

[49]      Accordingly, we see that the discriminatory nature of regulations enacted by the executive, and setting user fees for services rendered, under general legislative authority has little or no effect on validity. In Aerlinte, the Federal Court of Appeal per Heald J.A., at p. 228 of its judgment, unanimously upheld the comments made by Muldoon J. as follows:

On the basis of this factual situation, the submission with respect to discrimination cannot be sustained. However, having said this, I must add that even if the record established discrimination, the result would not be any different. I agree with the trial judge that "... neither discrimination nor even unreasonableness is a ground for quashing regulations enacted by the executive ... I also agree with him that "The power to make regulations prescribing charges for use of facilities and services without further fetter, is the power to establish categories of users"".

[50]      In accordance with these precedents, I feel that the Minister had the power under s. 47 of the Act to provide a different rate for marine navigation services rendered depending on whether they were for Canadian or non-Canadian ships. The Fee Schedule at issue in the case at bar is accordingly intra vires the Minister, as the latter has the power to create classes of user based on the nationality of ships in setting fees for his services.

[51]      If one accepted the defendant's position, the Minister would be placed in a situation in which not only would he have to charge all ships receiving his services, he would also have to charge them at the same rate. There would therefore only be one fee applicable to all ships regardless of category, activity and the region in which they operated. In my opinion, such a position not only is contrary to the wording of s. 47 of the Act, which is quite broad so as to allow the creation of classes based on ships' nationality in setting fees, but also contrary to what Parliament intended. The latter would not have conferred powers to set fees if its intention was to set a single fee for all, since it would only have had to indicate that fee in the Act directly. Accordingly, in order to give any meaning to the power conferred on the Minister under s. 47 of the Act, it must be construed as authorizing him to create different classes of user, including a class based on ship nationality (Canadian and non-Canadian) when setting fees for services rendered.

[52]      In closing, I should like to comment briefly on this Court's judgment in Canada v. St. Lawrence Cruise Lines Inc., [1997] 3 F.C. 899. In that case the Federal Court of Appeal found to be invalid and ultra vires the provisions of Regulations which imposed special fees, calculated in terms of the number of passengers, only on cruise ships used "in a voyage during which the passengers are on board for at least one overnight period" on the ground that they were discriminatory. Exceptionally, Parliament had taken care to add to the wording of the Public Harbours and Port Facilities Act, R.S.C. 1985, c. P-29, a requirement that "equitable treatment" be "provide[d]", which in the Court of Appeal's opinion showed "that it intended to give users of Canadian harbours broader rights than those that stem from the implied requirement of non-discrimination which courts generally read into enactments". No similar or analogous provision is contained in the Oceans Act or in the Aeronautics Act. That case must therefore be clearly distinguished from the case at bar and cannot in any way assist the defendant.

[53]      Since I have, for the reasons set out above, come to the conclusion that the Fee Schedule was not discriminatory in administrative law by distinguishing between Canadian and foreign ships for purposes of setting fees for marine navigation services, I do not have to decide whether the rules applicable to discrimination within the meaning of municipal law are the same for regulations issued by the executive.

Disposition

[54]      For these reasons, I allow the appeal with respect to the prothonotary's decision on the right to challenge the legality of federal regulations other than by an application for judicial review, and dismiss it as to the decision on the merits. The defendant is accordingly required to pay the sum of $7,052.36, with interest prescribed in the Interest and Administration Charges Regulations, as of April 2, 1998. Costs are awarded to the plaintiff.

OTTAWA, Ontario

May 16, 2002

Certified true translation

Suzanne M. Gauthier, C. Tr., LL.L.

                                                    FEDERAL COURT OF CANADA

                                                                 TRIAL DIVISION

                                                          SOLICITORS OF RECORD

FILE:                                                                               T-1184-00

STYLE OF CAUSE:                                                     Her Majesty the Queen and Mid-Atlantic Minerals Inc.

PLACE OF HEARING:                                                Montréal, Quebec

DATE OF HEARING:                                                  April 10, 2002

REASONS FOR ORDER AND ORDER BY:         Rouleau J.

DATED OF REASONS:                                               May 16, 2002

APPEARANCES:

Bernard Letarte                                                                 FOR THE PLAINTIFF

André Braen                                                                       FOR THE DEFENDANT

SOLICITORS OF RECORD:

Morris Rosenberg                                                              FOR THE PLAINTIFF

Deputy Attorney General of Canada

Marler & Associés                                                            FOR THE DEFENDANT

Montréal, Quebec