Docket: T-392-16
Citation:
2016 FC 1063
Ottawa, Ontario, September 20, 2016
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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MCKEIL MARINE
LIMITED
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Applicant
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and
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ATTORNEY
GENERAL OF CANADA
AND FOSS
MARITIME COMPANY
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Respondents
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JUDGMENT AND REASONS
[1]
The Chief, Marine Policy and Regulatory Affairs
Seaway and Domestic Shipping Policy of Transport Canada [Transport Canada] made
a decision on February 5, 2016, that the towage of two decommissioned vessels
from British Columbia via the Panama Canal to Nova Scotia, to be dismantled,
would not constitute engaging in the “coasting trade”
as defined in the Coasting Trade Act, SC 1992, c 31 and thus there was
no impediment to a foreign ship performing part of this journey without having
first obtained a licence under the Act.
[2]
At the hearing, McKeil Marine Limited [McKeil]
sought the following relief from the Court:
A.
A declaration that the towage of vessels between
British Columbia and Nova Scotia constitutes engaging in the “coasting trade” , as that term is used in the Coasting
Trade Act;
B.
A declaration that any ship engaged in the
towage of vessels from British Columbia bound for Nova Scotia, and which is a
foreign ship, is in violation of the Coasting Trade Act;
C.
An Order in the nature of mandamus requiring
Transport Canada to require that the towage of vessels from British Columbia to
Nova Scotia be a Canadian ship or otherwise have a license [sic]
pursuant to the Coasting Trade Act; [and]
D.
An Order in the nature of prohibition
prohibiting any vessel which is not a Canadian ship or otherwise licensed under
the Coasting Trade Act from engaging in the towage of vessels from
British Columbia to Nova Scotia.
Background
[3]
McKeil is a Canadian tug and barge/ship owning
company based in Ontario with operations through the Great Lakes, St. Lawrence
Seaway and the east coast of Canada. From time to time, the McKeil also
engages in partnerships with west coast vessel operators.
[4]
Two Canadian naval vessels, the HMCS PROTECTEUR
and the HMCS ALGONQUIN, were decommissioned and were to be dismantled. The
ships were based in Esquimalt, British Columbia and were to be scrapped at a
shipyard in Liverpool, Nova Scotia by R.J. MacIsaac Construction Ltd. [RJM].
RJM entered into a contract with Atlantic Towing [Atlantic] to tow the vessels
from Esquimalt, British Columbia to Liverpool, Nova Scotia.
[5]
The towage of these two vessels was to occur in
two stages. They would first be towed from Esquimalt, British Columbia to
Panama. Then they would be towed from Panama to Liverpool, Nova Scotia.
Atlantic engaged the Respondent, Foss Maritime Company [Foss] an American
shipping company, to provide a tugboat to tow each of the vessels from British
Columbia to Panama. The US flagged vessels used for the first portion of the
towage did not have a licence under the Act for this operation.
[6]
Whether this operation constituted engaging in
the “coasting trade” as that term is defined in
the Act is the critical issue. If the activity does not fall within the
definition of coasting trade, then a foreign ship does not require a licence to
carry out the activity. If the activity falls within the definition of
coasting trade, then the ship involved must be a Canadian duty-paid ship or a
licence must be obtained by making an application to the Canadian
Transportation Agency.
[7]
An application to the Canadian Transportation
Agency initiates a process in which the Agency determines whether there are
Canadian flagged ships which are “suitable and
available” to carry out the activity. It is only if there are no
Canadian flagged ships which are “suitable and
available” that a licence is issued to the foreign flagged ship to carry
out the activity.
[8]
On January 18, 2016, McKeil brought to the
attention of Transport Canada that the US flagged ships being used to tow the
decommissioned vessels did not have a licence and questioned whether there was
a violation of the Act.
[9]
On January 20, 2016, Atlantic received an email
from RJM which stated that Transport Canada had contacted it regarding the
towing of these two vessels from Esquimalt, British Columbia to Liverpool, Nova
Scotia via the Panama Canal. The email recites that Transport Canada pointed
out that under the Act “the tow of [these
decommissioned] vessels meets the definition of coasting trade under clause
2(1)(f) of the Act.” The email goes on to recite the options given to
it by Transport Canada:
She told us that to
meet the requirements of the act [sic] and have Foss do the tow we have
two options:
1) Have Foss/Atlantic apply for a
coasting trade licence with the Canadian Transportation Agency (she told me
this can take some time)
2) Have a Canadian tug tow the navy
vessels out of Esquimalt to 12 miles off the Canadian coast for transfer to
Foss, or to US waters for transfer all the way to Panama for transfer to
Atlantic.
[10]
Atlantic made efforts to contact Transport
Canada regarding its message and also began to make arrangements to involve
Seaspan ULC, a Canadian company, in the towing operation from Esquimalt,
British Columbia.
[11]
By email dated January 29, 2016, and contrary to
its initial position, Transport Canada informed RJM that the operation did not
seem to meet the definition of “coasting trade”
in subsection (2)(1)(f) of the Act:
With respect to the towing activity, this is
considered a marine activity of a commercial nature in Canadian waters as
defined in definition 2(1)(f): the engaging, by ship, in any marine activity
of a commercial nature in Canadian waters. However, certain elements of
the service that will be undertaking [sic] in your specific case impact
how to best interpret the application of the Coasting Trade Act. The
main considerations include: the activity is not limited to a local area (not
localized); the main portion of the activity is international nature; and, the
policy intent of the Act as it relates to commercial marine activities in
Canadian waters (localized activity).
Given these considerations, a United States
registered vessel as described would not seem to meet the definition of
coasting trade found in 2(1)(f).
Please note that this is not meant to be a
legal opinion as it is not Transport Canada’s role to provide legal opinions on
the application of Acts but to provide information on the potential application
of legislation in specific cases. It remains the responsibility of each
proponent to ensure that they are compliant with all applicable laws and
regulations while operating in Canada.
[12]
Following the receipt of this email, Atlantic
proceeded as it had planned. On or about February 12, 2016, Atlantic entered
into a contract with Foss to tow the decommissioned HMCS PROTECTEUR from
Esquimalt, British Columbia to Panama. On or about April 1, 2016, Atlantic
entered into a second contract with Foss to tow the decommissioned HMCS
ALGONQUIN from Esquimalt, British Columbia to Panama.
[13]
On February 5, 2016, Transport Canada responded
to McKeil’s concerns about a potential violation of the Act providing reasons
similar to those it had given to RJM above.
[14]
A Foss tugboat towed the HMCS PROTECTEUR from
Esquimalt, British Columbia on or about February 24, 2016 to Cristobal, Panama,
arriving on or about March 23, 2016. An Atlantic tugboat towed the vessel from
Cristobal, Panama on or about March 24, 2016, to Liverpool, Nova Scotia,
arriving on April 22, 2016.
[15]
A Foss tugboat towed the HMCS ALGONGUIN from
Esquimalt, British Columbia on May 9, 2016, to Cristobal, Panama, arriving on
June 8, 2016. An Atlantic tugboat towed the vessel from Cristobal, Panama on
or about June 8, 2016, to Liverpool, Nova Scotia, arriving on June 27, 2016.
[16]
This application was heard on July 13, 2016, in
Toronto. By that date, the towage of the decommissioned vessels had been
completed.
Issues
[17]
McKeil raises an interesting issue as to the
proper interpretation of the Act in the towage situation described above.
Firstly, it submits that the towage was “the carriage
of goods by ship … from one place in Canada or above the continental shelf
of Canada to any other place in Canada or above the continental shelf of
Canada, either directly or by way of a place outside Canada” and thus
was coasting trade as defined in subsection 2(1)(a) of the Act [emphasis
added]. Foss and apparently Transport Canada are of the view that the towing
of a ship cannot be properly characterized as the “carriage
of goods” by ship.
[18]
Unlike subsection 2(1)(a), subsection 2(1)(f)
does not expressly provide that the commercial marine activity referenced
therein may be by way of a place outside Canada. Rather, it provides that
coasting trade is “the engaging, by ship, in any other
marine activity of a commercial nature in Canadian waters.” McKeil
submits that the towage here, via the Panama Canal, was one tow beginning and
ending in Canadian waters and thus was coasting trade within the meaning of
this subsection. Foss and apparently Transport Canada are of the view that it
was two towing operations neither of which was entirely within Canadian waters
and thus not a “marine activity of a commercial nature
in Canadian waters.”
[19]
However, before the merits of the application
are engaged, the Court must deal with two issues raised by Foss: Standing and
mootness.
[20]
Foss submits that McKeil lacks standing to bring
this application because it is not directly affected by the decision as
required under section 18.1 of the Federal Courts Act, RSC 1985, c F-7.
It further submits that McKeil should not be granted public interest standing
to challenge the decision.
[21]
Foss submits that even if McKeil has standing to
challenge the decision of Transport Canada, the issue before the Court is moot
because the towage of the two ships has been completed and the Court ought not
to exercise its discretion to hear the matter.
Analysis
Standing
[22]
McKeil submits it has standing in this
application because it is directly affected by the decision in two ways.
First, it says that it has lost the opportunity to object to an application for
a licence under the Act being issued to a foreign vessel and to offering its
equipment to perform the marine activity as provided for in the Act. Second,
it submits that it is directly affected by the negative precedential effect
that the decision has on it and other members of the Canadian shipping industry
in that the decision allows tows to be split into smaller international voyages
without violating the Act. In this respect on cross-examination (Questions 146
and 147) McKeil frankly acknowledged that it was principally concerned with the
impact of the decision in this case to its operations in the Great Lakes:
We’re very concerned with the ruling because
we do a lot of towages here on the Great Lakes. One side of the Great Lakes is
American and one side of the Great Lakes is Canadian.
There are many American tug operators and
during my conversation with Ms. Laflamme [of Transport Canada] we broached the
idea of what would happen in the event that there was a dead ship coming from
Thunder Bay that had to go to Montreal which would be the same situation we’re
in now, just a shorter transit and we were very concerned with this ruling it
would open the door for an American tug operator to pick that tug up or that
ship up in Thunder Bay, tow it to Detroit, clear it into Detroit and then
another either Canadian or a second American company to pick up the tug, sorry
the ship, in Detroit and take it to Montreal and bypass the whole process
because essentially that’s what’s going on. Foss picked up an American --- a
Canadian vessel in a Canadian port, towed it to a foreign port where it was
going to be picked up by a Canadian operator to take it to a Canadian port but
the transport of that ship is from one Canadian port to another Canadian port.
[23]
An applicant is “directly
affected” if the matter at issue directly affects that applicant’s legal
rights, imposes legal obligations on it, or prejudicially affects it in some
manner: Forest Ethics Advocacy Association v National Energy Board, 2014
FCA 245, 246 ACWS (3d) 191.
[24]
McKeil provided no evidence demonstrating any
direct advantage to it if its application succeeds or any direct disadvantage
if it fails. Its interest in the matter at issue is, at best, an indirect one,
namely its concern that the decision may have precedential effect on its
business in the Great Lakes. The only entities that were directly affected by
the decision were Atlantic, Seaspan, and Foss.
[25]
While McKeil submits that it has lost the
opportunity to object to a licence being granted under the Act and its ability
to offer its equipment to perform the marine activity; the record establishes
that it would have never had the opportunity to do so even if Transport Canada
found that the Act applied to this tow. Foss provides emails in which
arrangements are being made with Seaspan, a Canadian company, to participate in
the towing operation when it appeared that it was Transport Canada’s position
that Foss required a licence. Because Seaspan is a Canadian company, the
process McKeil describes would not have been triggered. No notification
process would be initiated and McKeil could not have offered its equipment.
[26]
I find that McKeil’s fear that the decision is
directly affecting them by the negative precedential effect on it and other
members of the Canadian shipping industry due to its precedential effect to be
speculative. No evidence has been led to suggest their economic interests will
be directly affected in the future – whether negatively if the decision stands
or positively if the decision is quashed.
[27]
For these reasons, McKeil does not have direct
standing. I turn now to its submission that it ought to be granted public
interest standing.
[28]
In Downtown Eastside Sex Workers
United Against Violence Society v Canada (Attorney General), 2012 SCC 45 at
para 2, [2012] 2 S.C.R. 524 [Downtown Eastside], the Supreme Court of
Canada advised that the following were to be considered when determining
whether to grant public interest standing: “whether the
case raises a serious justiciable issue, whether the party bringing the action
has a real stake or a genuine interest in its outcome and whether, having
regard to a number of factors, the proposed suit is a reasonable and effective
means to bring the case to court.” It was also recognized that the “courts exercise this discretion to grant or refuse standing
in a ‘liberal and generous manner’.”
[29]
The issue of the interpretation of the meaning
of coasting trade in the Act as it applies to the facts in this case is far
from frivolous, and was not brought by a “busybody”
litigant. In my view, there is a serious justiciable issue in this case.
[30]
Foss submits that McKeil has not demonstrated a
continuing interest in the subject of this application. The subject of the
application is clearly within the business of McKeil. While it may be the case
that they have not previously actively demonstrated their interest, they
demonstrate this interest as a participant in the Canadian shipping industry.
I am prepared on this basis to find that McKeil has a “real
stake or a genuine interest in its outcome.”
[31]
In Downtown Eastside at paragraph 51, the
Supreme Court of Canada identified a number of factors a court may find useful
when assessing whether the proposed suit is a reasonable and effective way to
bring the issue before the courts. In my view, the most relevant of these to
the facts at hand is “whether there are realistic
alternative means which would favour a more efficient and effective use of
judicial resources and would present a context more suitable for adversarial
determination.”
[32]
Foss submits that there will be cases in the
future where the issue can be more effectively raised between parties that are
more directly opposed. It provides the following example: McKeil in
competition with an American company for a project between two points in Canada
through American waters in the Great Lakes with the American company being
chosen to do the work.
[33]
McKeil cites Sierra Club of Canada v Canada
(Minister of Finance), [1999] 2 FC 211, 157 FTR 123 and Alberta v Canada
(Wheat Board), 1998 2 FC 156, 2 Admin LR (3d) 187 for the importance of
granting public interest status to prevent the immunization of legislation or
public acts from any challenge. It argues that that there is no other way to
challenge the decision of Transport Canada or seek to enforce the terms of the
Act by its intended beneficiaries. If Transport Canada rules that the activity
is not engaging in the coasting trade, then the foreign ship does not require a
licence and there is no engagement of the process that would lead a Canadian
operator such as McKeil to have a direct interest. It submits that other
interested beneficiaries have no recourse, do not make submissions to Transport
Canada, and cannot appeal the decision of Transport Canada. Focusing on the
third consideration for granting public interest standing, the McKeil submits
there is no one who could reasonably be expected to litigate the issues other
than it.
[34]
Given the considerations in granting public
interest standing and primarily relying on the consideration that the present
case is not one closely reflecting McKeil’s real concern, I do not think this
is the appropriate case to grant it public interest standing. In this respect,
I agree with Foss that it is a better use of judicial resources to address
McKeil’s real concern which rests in Great Lakes towing if there is a future
situation where that issue can be more effectively raised between parties that
are more directly opposed.
[35]
This finding will not, however, bar McKeil from
being granted public interest standing in the future (when a more appropriate
case arises) since the first two considerations in granting public interest
standing are met in my opinion and it will always be the case that McKeil arguably
lacks direct standing.
Mootness
[36]
Even if I had granted McKeil standing in this
application, I am of the view that the matter is moot and I would not exercise
my discretion, on the facts here, to hear the matter.
[37]
A matter has become moot if the tangible and
concrete dispute has disappeared and the issues have become academic. McKeil
submits that there is still a live controversy as the Act provides for an
offence where a ship contravenes subsection 3(1) and for detention of ships
where an enforcement officer believes on reasonable ground that an offence
under the Act has been committed by or in respect of a ship. I do not accept
this submission.
[38]
The evidence shows that there is no longer a
live controversy as the Foss vessels have completed the tugging operations and
the decommissioned ships have arrived in Liverpool, Nova Scotia. A
determination that the Act applies and requires Foss to obtain a licence would
not serve a purpose since the Foss vessels have already completed the tugging
operations.
[39]
The Federal Court of Appeal in Amgen Canada
Inc v Apotex Inc, 2016 FCA 196 at para 16, 269 ACWS (3d) 154, recently
summarized the matters a court ought to consider when determining,
notwithstanding the mootness finding, to exercise its discretion and hear the
matter:
To guide that discretion, the Supreme Court
in Borowski [v Canada ,[1989] 1 S.C.R. 342, 57 DLR (4th) 231 [Borowski]]
offered three considerations:
1. The absence of adversarial
parties. If there are no longer parties on opposing sides that are keen to
advocate their positions, the Court will be less willing to hear the matter.
2. Lack of practicality; wasteful
use of resources. If a proceeding will not have any practical effect upon
the rights of the parties, it has lost its primary purpose. The parties and
the Court should no longer devote scarce resources to it. Here, the concern is
judicial economy. However, in exceptionally rare cases, the need to settle
uncertain jurisprudence can assume such great practical importance that a court
may nevertheless exercise its discretion to hear a moot appeal: M. v. H.,
[1999] 2 S.C.R. 3, 171 D.L.R. (4th) 577 at paragraphs 43-44.
3. The court exceeding its proper
role. In some cases, pronouncing law in a moot appeal in the absence of a
real dispute is tantamount to making law in the abstract, a task reserved for
the legislative branch of government not the judicial branch.
[40]
Regarding the first consideration, the Supreme
Court of Canada in Borowski stated that collateral consequences of the
outcome may provide the necessary adversarial context. One of the examples
cited in Borowski is Vic Restaurant Inc v City of Montreal,
[1959] S.C.R. 58, 17 DLR (2d) 81. The restaurant, for which a renewal of a liquor
licence had been sought, had been sold leaving the issue moot. There were
however prosecutions outstanding against it for violation of the municipal
by-law which was the subject of the legal challenge. The determination of the
validity of the by-law was a collateral consequence which provided the appellant
with a necessary interest. In the present case, there are no collateral
consequences as a result of hearing the application. There may be impacts on
McKeil or other marine businesses in the future; however these impacts are more
remote than what was envisioned by the Supreme Court of Canada in Borowski.
[41]
The second consideration is conservation of
judicial resources. Factors to consider are whether the court’s decision will
have some practical effect on the rights of the parties, whether the case is likely
to recur, whether the case is likely to be evasive of review (due to timing
resulting in a moot issue), and whether there is an issue of public importance
of which a resolution is in the public interest.
[42]
A case with these particular facts is unlikely
to reoccur, however this does not mean that a case questioning whether an
operation is engaged in “coasting trade” will
not reoccur – that is more likely. McKeil submits that due to the nature and
timing of the issue, and the lack of notice given by the Canadian
Transportation Agency (since the process is not triggered when coasting trade
is not determined to be engaged), the dispute is evasive of review. Foss
submits that there is no evidence presented that there would be insufficient
time to challenge the tow.
[43]
I accept that a marine towing business would not
come to know directly of a foreign towing operation because there would be no
notice issued if it was not seen to be coasting trade. Nonetheless, it appears
that knowledge may well be obtained in another manner. Here McKeil submitted
its query to Transport Canada after hearing “rumors [sic]
that a US tug company will be towing either one or both of the above vessels
[HMCS PROTECTEUR and ALGONQUIN] for a potion [sic] of the tow from Esquimalt,
BC to Nova Scotia.” While not entirely certain, it appears that this
factor may weigh in favour of hearing the application.
[44]
In the future, if McKeil were to hear of rumours
of a US flagged vessel operating in the Great Lakes without a licence and
raised similar concerns to Transport Canada, a judicial review of Transport
Canada decision could be brought on an urgent basis or an application could be
made to the court for an interim injunction.
[45]
I am of the view that the third consideration,
the proper role of the court, weighs strongly against a ruling on the merits of
this application.
[46]
McKeil submits that the real issue is the proper
interpretation of the meaning of “coasting trade”
in the Act and that this is very much the proper role of this Court. I agree
that statutory interpretation is a proper court function, but there can be no
proper interpretation of the Act in the abstract that would apply to every
conceivable scenario that might involve commercial towage. The real interest
of McKeil, as it acknowledged, is the interpretation of the Act in Great Lake
towing involving a stop-over in an American city. Those facts are so far
removed from the facts here that it is my view that any decision here on the
merits would be of little or of questionable value to McKeil and other Great
Lake marine businesses.
[47]
For these reasons, I decline to hear this
application on its merits.
Costs
[48]
Foss advised the Court that its fees and
disbursements were $10,686.36 pursuant to Column III of the Tariff. It is
entitled to be awarded its costs in that amount.
[49]
In the usual case, those costs would be paid by
McKeil; however, I am ordering that the costs are to be paid to Foss by the
Attorney General of Canada, the other respondent in this Application. I make
that award for the following reasons.
[50]
Canada is a named Respondent. Canada filed a
Notice of Appearance on March 11, 2016. Canada did nothing further to defend
or support its decision that was under attack. Canada, improperly in my view,
left it to its co-respondent Foss, to support Canada’s decision. By the time
this application came on for hearing Foss had no real interest in the
application, its contract having been completed. Nonetheless Foss did fully
participate and its submissions to the Court were most helpful.
[51]
At the hearing, counsel for McKeil informed the
Court that he had requested Canada to produce material relevant to this
application pursuant to Rule 317 of the Federal Courts Rules. Canada
never responded.
[52]
The casual approach taken by Canada to the Court
process cannot go without condemnation and sanction. The decision under review
was its decision and it was surely the party who ought to have had the greatest
interest in the outcome. Yet it chose to do nothing. It is for this reason
that Foss’s costs are to be paid to it by Canada.
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