Supreme Court of Canada
The King v. Northumberland Ferries Ltd., [1945] S.C.R.
458
Date: 1945-05-15
His Majesty the
King (Respondent) Appellant;
and
Northumberland
Ferries Limited (Claimant) Respondent.
1945: February 26, 27, 28; 1945: March 1;
1945: May 15.
Present: Rinfret C.J. and Kerwin, Hudson,
Taschereau, Rand, Kellock and Estey JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Compensation—Appropriation of ships by the
Crown for naval services—Reference to Exchequer Court under s. 7 of War
Measures Act, R.S.C. 1927, c. 206, to determine compensation—Principles
applicable in determining compensation—"Value of the vessel" in s. 5 (1)
of The Compensation (Defence) Act, 1940 (c. 28).
Appeal—Jurisdiction—Award on reference to
Exchequer Court under s. 7 of War Measures Act—Whether appeal lies to Supreme
Court of Canada—Exchequer Court Act, R.S.C. 1927, c. 34, ss. 18, 19, 37,
82—Supreme Court Act, R.S.C. 1927, c. 35, ss. 35, 44—Contention that Exchequer
Court was curia designata—Effect of provision for choice of court, etc., in
making reference under s. 7 of War Measures Act.
Under s. 7 of the War Measures Act, R.S.C.
1927, c. 206, the Minister of Justice referred to the Exchequer Court
respondent's claim for compensation in respect of two ships, the Seaborn and
the Sankaty, appropriated and acquired for naval services by the Crown.
In the Exchequer Court ([1944] Ex. C.R. 123) Angers J. awarded $100,000 for the
Seaborn and $205,000 for the Sankaty. Against the amounts of such
awards the Crown appealed to this Court. Respondent moved to quash the appeal
for want of jurisdiction, mainly on the ground that the Exchequer Court was curia
designata and, no appeal being provided by the War Measures Act, there
was no right of appeal. Argument was heard both on the motion to quash and on
the merits of the appeal.
Under said s. 7, if the compensation is not
agreed upon, the claim shall be referred by the Minister of Justice "to
the Exchequer Court, or to a superior or county court of the province within
which the claim arises, or to a judge of any such court".
Under s. 5 (1) of The Compensation (Defence)
Act, 1940 (c. 28), the compensation shall be "a sum equal to the value
of the vessel * * * no account being taken of any appreciation due to the
war".
Held: (1) This
Court had jurisdiction to hear the appeal. (Cases discussed.)
Per the Chief
Justice: It is to be noted that, along with the authority or jurisdiction to
each of the courts enumerated in s. 7 of the War Measures Act or to a
judge thereof, there is not given special and independent powers. When once the
reference is made, the court or
[Page 459]
the judge is to deal with the matter in the
ordinary way and according to the powers vested in the court by the general Act
and the inherent powers already possessed. Parliament's intention was clearly
that the Exchequer Court, in a reference to it as in the present case, should
act as a court in accordance with the provisions of the Exchequer Court Act and
that all the provisions of that Act should apply to the reference. The
jurisdiction of the Exchequer Court, through the reference, was one "in
any manner vested in the Court" within s. 82 of the Exchequer Court
Act, and under said s. 82, read in connection with s. 44 of the Supreme
Court Act, there was a right of appeal to the Supreme Court of Canada.
Per Kerwin J.:
S. 82 (1) of the Exchequer Court Act, taken in conjunction with ss. 35
and 44 of the Supreme Court Act, conclusively gives a right of appeal in
this case. The words "in virtue of any jurisdiction now or hereafter, in
any manner, vested in the Court" in said s. 82(1) are broad enough to
include the present reference. S. 7 of the War Measures Act provides for
the very vesting required by said s. 82(1). The option given to the Minister in
making the reference under said s. 7 is not a ground for holding against a
right of appeal in the present case. If a reference were made to a provincial
superior or county court or a judge thereof, then whether any appeal would lie
from the ensuing judgment would depend upon the ordinary jurisdiction of such
court and the provisions made as to appeals from judgments thereof.
Per Hudson,
Taschereau and Kellock JJ.: The option given under s. 7 of the War Measures
Act as to the court or judge to whom the reference shall be made, is not a
ground for holding against a right of appeal in the present case (James Bay
Ry. Co. v. Armstrong, [1909] A.C. 624, at 630).
Per Hudson J.:
S. 44 of the Supreme Court Act, read with s. 82 of the Exchequer
Court Act, is ample to vest jurisdiction in this Court in this appeal. The
matters referred to the Exchequer Court fell well within those comprised in its
ordinary jurisdiction; and the procedure followed in that Court was in
accordance with the normal practice of a suit carried on therein.
Per Taschereau
J.: The trial Judge did not exercise any special jurisdiction with an
appropriate machinery for that particular purpose, but dealt with the matter as
a judge of the Court in the discharge of his ordinary judicial functions.
Per Rand J.: A
reference to the Exchequer Court under s. 7 of the War Measures Act is
not to be taken in any other sense than a reference by a departmental head (as
under s. 37 of the Exchequer Court Act) and the effect of the
reference is to place the claim within the ordinary procedure of the Court.
(Whether a similar reference allowed to a provincial county or superior court
carries with it the ordinary rights of appeal under provincial law, it is not
necessary to decide. The language "or to a judge of any such court"
in said s. 7 contemplates a judge exercising the original jurisdiction of his
court). The present proceeding was in the Exchequer Court as such, and
therefore an appeal lies under s. 82 of the Exchequer Court Act.
Per Kellock
J.: S. 7 of the War Measures Act vests jurisdiction in the Exchequer
Court within the meaning of s. 82 of the Exchequer Court
[Page 460]
Act, conditional
only upon the exercise by the Minister of the power of [reference given him by
the War Measures Act; and the combined effect of s. 82 of the Exchequer
Court Act and s. 44 of the Supreme Court Act is to authorize an
appeal to this Court.
(2) On the merits of the appeal: As to the Seaborn,
the compensation should be reduced to $92,764.93 (the amount tendered by
the Crown) (The Chief Justice and Kerwin and Taschereau JJ., dissenting, would
have affirmed the judgment at the trial, except as to the irate of interest
allowed). As to the Sankaty, the case should be sent back to the
Exchequer Court for re-assessment.
The meaning of "value of the
vessel" within s. 5(1) of The Compensation (Defence) Act,
1940, and the principles to be applied and factors to be considered in
determining that value, discussed, and cases referred to.
As to the Seaborn:
Per Hudson J.:
The award below failed to give due weight to the cost of the vessel to
respondent, which, though not necessarily evidence of value, was, under the
circumstances, practically the only evidence of value before the Court within
the prescription of s. 5 of The Compensation (Defence) Act,
1940. Also there were errors in amounts in items considered in reaching the
award. It is a case where this Court is justified in modifying the award and it
should be reduced as aforesaid.
Per Rand J.:
The purchase by respondent of the Sankaty, admittedly much more suitable
than the Seaborn for respondent's service, excludes any special value of
the Seaborn to respondent as of the time of acquisition. In all the
circumstances, the general market value must govern the determination of the
value of the Seaborn. But the trial Judge, in reaching his award,
included items irrelevant to market value; and also indicated a regard to
considerations of realized special adaptability, and no such element was
admissible. There was not in the evidence sufficient to bring the market value
to more than the sum tendered by the Crown, which, though relatively not much
less than that awarded below, was so generous as to prevent this Court from
exceeding it.
Per Kellock
J.: There was no evidence which enabled the trial judge, consistently with the
proper principles to be applied, to assess the value of the Seaborn at
any amount beyond that tendered by the Crown.
Estey J. agreed in the conclusion of Rand and
Kellock JJ.
Per the Chief
Justice (dissenting): There was evidence upon which the trial judge could make
the award he made; and, even though this Court might, in its own view, think
there was possibly a small error of valuation, this Court should not, under the
circumstances, interfere.
Per Kerwin J.
(dissenting): It does not appear that the trial judge failed to observe the
applicable principles and it cannot be said that the sum awarded was excessive
so as to justify alteration of it.
Per Taschereau
J. (dissenting): The trial judge did not misdirect himself on the principles to
be applied and took into account the proper elements in reaching his award,
which was not clearly excessive; and therefore this Court should not interfere
with his finding.
[Page 461]
As to the Sankaty: Per Curiam: The
trial judge erred in applying the principle of "replacement value" or
"reinstatement" in reaching his award, as that was a method not in
accordance with the direction in said s. 5 (1) of The Compensation (Defence)
Act, 1940, on which the award must be based; and, as the evidence was not
sufficient to enable this Court to ascertain the value on the proper basis, the
case must be returned to the Exchequer Court for that purpose.
APPEAL by the Crown from the judgment of
Angers J. in the Exchequer Court of Canada
on a reference to that Court by the Minister of Justice under the provisions of
s. 7 of the War Measures Act, R.S.C. 1927, c. 206, to determine the
compensation payable by the Crown to the respondent in respect of the
acquisition by the Crown of the title to two ships owned by the respondent and
known respectively as the Seaborn and the Sankaty. The said ships
were appropriated by the Crown for naval services. Angers J. determined the
compensation payable to be $100,000 for the Seaborn and $205,000 for the
Sankaty. The Crown appealed to this Court against the amounts of such
awards.
There was a motion by the respondent to quash
the appeal for want of jurisdiction, on the ground that the Exchequer Court was
curia designata, and, no appeal being provided by the War Measures
Act, that Court's determination was final and not appealable. Another
ground taken was that it was the intention of the parties, as shown by a
certain letter from the Minister of National Defence for Naval Services to the
respondent's solicitor, that the determination of the amount of the respondent's
claim was to be by the Exchequer Court as arbitrator and was to be final and
not appealable.
Argument was heard both on the motion to
quash and on the merits of the appeal.
By the judgment of this Court now reported,
the motion to quash was dismissed with costs; on the merits, the appeal was
allowed, with costs in this Court to the appellant; in respect of the Seaborn,
the judgment of the Exchequer Court was modified and the compensation
reduced to $92,764.93, the amount tendered and paid by the appellant (the Chief
Justice and Kerwin and Taschereau JJ., dissenting, would have affirmed the
judgment at the trial, except that interest should have been
[Page 462]
allowed at three instead of four per centum
per annum); in respect of the Sankaty, the case was to be sent back to
the Exchequer Court for the purpose of re-assessment; the costs of all
proceedings below to be as directed by the Judge presiding at the
re-assessment; such re-assessment to be made by the Exchequer Court in
accordance with the principles and directions laid down in the reasons for
judgment on the appeal in this Court.
J. G. Fogo K.C. and C. Stein for the
appellant.
W. F. Schroeder K.C. and G. J. Tweedy
K.C. for the respondent.
The Chief
Justice.—The judgment now submitted to this Court was
rendered by the Exchequer Court of Canada on a reference by the Honourable the
Minister of Justice under section 7 of the War Measures Act (R.S.C.
1927, c. 206). It had to do with a claim of the respondent, Northumberland
Ferries Limited, for compensation in respect of the ships Seaborn and Sankaty
appropriated by His Majesty the King, for naval services.
Northumberland Ferries Limited is a company
incorporated under the laws of the Province of Nova Scotia, and authorized to
do business in the Province of Prince Edward Island. It was organized for the
purpose of operating a proposed ferry service for the carriage of passengers,
freight and motor cars and trucks, between Woods Island, P.E.I., and Caribou,
N.S.
This ferry service was operated by the respondent
in the years 1941 and 1942.
The Seaborn had been purchased by the
respondent on or about July 14th, 1939. The purchase price was stated to be
$80,000, made up of $30,000 in cash, $25,000 in second mortgage bonds and the
remaining $25,000 by the issue of 500 shares of the company without par value,
at $50 per share.
The bonds and shares were subsequently
repurchased from the vendor by the group promoting the company for $25,000. It
was also subsequently disclosed in the prospectus of the company that Mr. W.
MacDonald, through whose agency the purchase was carried out, had made a
commission of $15,000 on the transaction.
[Page 463]
The Seaborn was a pleasure yacht built in
1925, of 495 tons gross tonnage. Delivery was taken at New London, Connecticut,
and certain expenses for fitting out and fuel oil were incurred in bringing the
vessel to Halifax, from which she was taken to the Halifax Shipyards Limited
with a view to alterations for conversion into a ferry boat.
Before, however, any alterations were commenced,
the Seaborn was first requisitioned for war purposes by the Director of
Marine Services on the authority of the Minister of National Defence for Naval
Services, and she was finally acquired by His Majesty the King, acting through
the same Minister, for war purposes. In the company's balance sheet as at
December, 1939, the cost of that ship was shown as $79,500 to which there are
added charges for maintenance ($6,505.14) and other expenses directly
applicable ($6,759.49), or a total of $92,764.63.
By Order in Council passed on March 20th, 1941,
authority was given to pay to the respondent the sum of $92,764.63, being the
valuation made by the Advisory Board, Atlantic Coast, as compensation for the Seaborn.
The payment of that amount was recommended by
the Minister and it was made without prejudice to any claims which the
respondent might submit to the Exchequer Court for additional compensation in
respect of the acquisition of the said vessel, and also without prejudice to
the right of the Government to set up any defence including the terms of The
Compensation (Defence) Act, 1940, against any such claims for
additional compensation.
On December 12th, 1939, the respondent purchased
the steamer Sankaty from Washington Trust Company, for a total of $4,500
American funds, or approximately $4,995 in Canadian money. The Sankaty was
built in 1911, had a gross tonnage of 677 tons and drew 187 feet in length.
An amount of $6,342.45 had to be expended at
Stamford to get the ship ready for the voyage to Halifax. The accounts of the
Halifax Shipyards Limited for work done on the vessel after arrival at Halifax,
amounted to $56,736.72. There were certain other expenditures charged to the
account of the vessel and the learned trial judge found the cost of it to the
respondent to have been then $71,226.14. In addition, it was estimated that a
further sum of $20,000 would have had to be spent to complete the repairs and
alterations.
[Page 464]
Before the commencement of these proceedings,
the appellant paid the company as compensation in respect of the acquisition of
the Sankaty, $83,900 under the same conditions as the payment made for
the Seaborn.
Subsequently, the respondent submitted a claim
for $475,000 for the two vessels, giving credit for the amounts already received
and claiming a balance of $298,335.35.
The claim was referred to the Exchequer Court by
the Minister of Justice, under section 7 of the War Measures Act, and
the reference came on for hearing before the Honourable Mr. Justice Angers at
Charlottetown, P.E.I., in June, 1942.
The learned trial judge in his judgment awarded
the respondent in respect of the Seaborn the sum of $100,000 and in
respect of the Sankaty the sum of $205,000, or a total of $305,000, from
which was to be subtracted the sum of $176,664.63 already paid to the
respondent.
He directed that the respondent should recover
the balance, $128,335.37, with interest at four per cent. from March 1, 1941,
to the date of the judgment with costs.
From the foregoing decision, the appellant now
appeals.
The respondent made a motion to quash the appeal
apparently based on two grounds: (1) that the Exchequer Court acted as a curia
designata in this case, under the authority of section 7 of the War
Measures Act, and that no right of appeal is given by that Act. (2) That
there was a binding agreement between the appellant and the respondent to treat
the decision of the Exchequer Court as final and conclusive.
The hearing on the motion, when it was
presented, was adjourned to be disposed of at the same time as the merits of
the appeal; and it was so heard. The points raised by the motion must first be
disposed of.
The reference in this case was in these terms:
Under the powers conferred by section 7 of
the War Measures Act, or otherwise existing in this behalf, I hereby refer to
the Exchequer Court of Canada for adjudication the annexed claim of
Northumberland Ferries Limited for compensation in respect of the ships Seaborn
("Charles A. Dunning") and Sankaty appropriated for naval
services by His Majesty The King.
Dated at Ottawa this 7th day of June, A.D.
1941.
(Signed) ERNEST LAPOINTE,
Minister of Justice.
[Page 465]
Section 7 under which the reference is made
reads as follows:
Whenever any property or the use thereof
has been appropriated by His Majesty under the provisions of this Act, or any
order in council, order or regulation made thereunder, and compensation is to
be made therefor and has not been agreed upon, the claim shall be referred by
the Minister of Justice to the Exchequer Court, or to a superior or county
court of the province within which the claim arises, or to a judge of any such
court.
Then The Compensation (Defence)
Act, 1940, section 5, relating to the compensation payable for the
acquisition of a vessel (on which the present claim is based) is as follows:—
5. (1) The compensation payable in respect
of the acquisition of any vessel or air-craft shall be a sum equal to the value
of the vessel or air-craft, no account being taken of any appreciation due to
the war, and shall, subject to the provisions of this Act, be paid to the
person who is then the registered owner of the vessel or air-craft; provided
that, for the purpose of assessing any compensation under this section, no
account shall be taken of any compensation under paragraph (a) or
paragraph (c) of subsection one of section four hereof which may have
become payable in respect of the requisition of that vessel or air-craft.
It was argued on behalf of the respondent that
the Exchequer Court or the Superior or County Court, or the Judge of any such
Court, acting under the provisions of section 7 above quoted, act as persona
designata and that therefore there exists no right of appeal from the
decision rendered by either of them.
In support of that contention, the respondent
referred to a number of decided cases which are later examined; but it relied
primarily on section 82 of the Exchequer Court Act and section 44 of the
Supreme Court Act.
Section 44 states that the Supreme Court of
Canada shall have jurisdiction as provided in any other Act confering
jurisdiction.
Section 82 of the Exchequer Court Act reads
as follows:—
Any party to any action, suit, cause,
matter or other judicial proceeding in which the actual amount in controversy
exceeds five hundred dollars, who is dissatisfied with any final judgment, or
with any judgment upon any demurrer or point of law raised by the pleadings,
given therein by the Exchequer Court, in virtue of any jurisdiction now or
hereafter, in any manner, vested in the Court and who is desirous of appealing
against such judgment, may, within thirty days from the day on which such
judgment has been given, or within such further time as a judge of such Court
allows, deposit with the Registrar of the Supreme Court the sum of fifty
dollars by way of security for costs.
[Page 466]
The respondent laid emphasis on the word
"vested" in the above section.
It contended that the jurisdiction exercised in
the premises by the Exchequer Court was not "vested in the Court"
under the provisions of the Exchequer Court Act; that it was conferred
upon the Court by force of section 7 of the War Measures Act and as a
consequence of the reference made by the Minister of Justice; that therefore
the present proceedings did not come within section 82 of the Act, and that
accordingly there was no right of appeal, since the Court did not decide the
matter in virtue of its ordinary jurisdiction but acted as curia designata.
I do not think the argument is well founded.
When all is said and considered, the question of
whether a court or judge indicated in a statute is intended as a persona
designata depends upon the construction to be given to the statute wherein
the said court or judge is indicated; and, in the present instance, there is a
strong presumption that Parliament meant the appointed court or judge to act in
its judicial capacity.
It is to be noticed that the statute giving the
authority or jurisdiction to each of the courts enumerated in section 7 or to a
judge thereof, does not purport to grant or to give special and independent
powers either to the court or to the judge to whom the reference is made. It
says that the Minister of Justice should refer the matter of compensation to
the court or to a judge thereof, without more.
When once the reference is made, the court or
the judge is to deal with the matter in the ordinary way and according to the
powers vested in it by the general Act and the inherent powers which it already
possesses. Indeed, if the court or judge chosen by the Minister of Justice were
not to resort to the powers vested in them by the general Act and in the
ordinary way, it would seem that the exercise of its jurisdiction would be
practically unworkable.
The intention of Parliament was clearly, in this
instance, that the Exchequer Court to which the reference has been made, should
act as a Court in accordance with the provisions of the Exchequer Court Act and
that all the provisions of that Act should apply to the reference thus made by
the Minister of Justice.
[Page 467]
Now, section 82 of the Exchequer Court Act read
in connection with section 44 of the Supreme Court Act, is to the effect
that any final judgment given by the Exchequer Court "in virtue of any
jurisdiction now or hereafter, in any manner, vested in the Court" is
appealable to the Supreme Court of Canada.
Even if, as contended by the respondent, the
jurisdiction herein exercised is not to be held "vested in the Court"
under sections 18 and following of the Exchequer Court Act, it is not to
be doubted that, upon any view of the matter, the jurisdiction here is given to
the Exchequer Court by force of section 7 of the War Measures Act, through
the reference made to that Court by the Minister of Justice. It is a
jurisdiction "in any manner vested in the Court" at least as a result
of the application of the War Measures Act and therefore
"vested" within the meaning of section 82.
The consequence is unavoidable that the latter
section applies to the reference and that a right of appeal is thereby given to
the Supreme Court of Canada.
A great number of judgments were referred to by
counsel of both parties in this case; but, as usual, very few of them have real
application to the question now under discussion, because these judgments dealt
with questions different from those which are raised in the motion to quash,
and statutes differently worded. In the cases referred to, the courts were
called upon to interpret statutes differing in language or in aim from the Acts
now before this Court. (See Lord Davey in Commissioners of Taxation v. Kirk).
Let us take, for example, Valin v. Langlois. In that case, Parliament
had conferred upon provincial judges in Dominion Controverted Elections cases
an exceptional jurisdiction with a special procedure and with all powers
material for exercising such jurisdiction and having nothing in common with the
provincial courts. It was held that these judges and courts were merely
utilized outside their respective jurisdiction to deal with this purely
Dominion matter.
[Page 468]
Again in Canadian Northern Ontario Railway
Company v. Smith
it was pointed out that the judge to whom the application was made under the
Dominion Railway Act was, it is true, a judge of the Superior Court of
the Province, but, for the purposes of that application, his jurisdiction was
"special and peculiar, distinct from, and independent of any power or
authority with which he is clothed as a judge of that court"; the Act
conferring jurisdiction upon him provides all necessary material for the full
and complete exercise of such jurisdiction in a very special manner, wholly
independent of, and distinct from, and at variance with, the jurisdiction and
procedure of the court to which he belongs.
Duff J. (as he then was), at page 480, expresses
the view that the jurisdiction created by section 196 of the Railway Act (c.
37, R.S.C., 1906) was not "a jurisdiction given to the Superior Court or
County Court as the case may be, but to the judge or judges of those
courts"; and he added, "in other words, when acting under that
section the judge does not exercise the powers of the court as such but the
special powers given by the Act".
Of all the other cases relied on by the
respondent, in his motion to quash, I find it necessary to refer only to the
following:
Warner Quinlan Asphalt Company v. The King.
This was a case initiated under section 7 of the War Measures Act. The
judgment of the Exchequer Court was affirmed and the decision of this Court was
rendered on the merits of the case.
Idington J. questioned whether any right of
appeal existed and he referred to Gosnell v. Minister of Mines and Wigle v. The
Corporation of the Township of Gosfield.
He declined, however, to dispose of the case on the question of jurisdiction
and he said that, after hearing a very elaborate argument on the merits of the
case, he had come to the conclusion, for the reasons assigned by the learned
trial judge with which he agreed, that his judgment was right and that the
appeal should be accordingly dismissed.
[Page 469]
Duff J. (as he then was), with whom Sir Louis
Davies, C.J., Mignault and Malouin JJ. concurred, after stating that the
question whether section 7 of the War Measures Act contemplated "a
determination by the court to which the claim is referred to be final and
non-appealable" was one "of some little difficulty", said that
he had come to a clear opinion upon the merits of the claim advanced by the
appellant and that therefore he did not propose to consider the question of
jurisdiction.
The question was therefore left undecided.
Consolidated Wafer Company Limited v. International Cone Company Limited. The judgment of the
Exchequer Court had ordered, under section 40 of the Patent Act, on
appeal from the Commissioner of Patents, the Consolidated Wafer Company Limited
to grant a licence to the International Cone Company to make and use a machine
covered by the Wafer Company's patent at a licence fee fixed by the judgment.
It was held that the Supreme Court of Canada had jurisdiction to hear the
appeal and the judgment was affirmed.
His Majesty the King v. MacKay.
The Crown, in April, 1918, pursuant to Order in Council passed under the War
Measures Act, 1914, requisitioned the respondent's ship. The Exchequer
Court of Canada fixed the compensation at $11,000 as being the ship's value at
time of requisition, with interest thereon from the date of the requisition to
the date of the judgment. The Crown appealed against the allowance of interest.
The case was heard on its merits in this Court and the appeal allowed without
any question being raised on the jurisdiction of this Court.
The Sun Life Assurance Company of Canada v. The Superintendent of Insurance. This was an appeal to the
Exchequer Court under the provisions of subsections 5 and 6 of section 68 of
the Insurance Act from a ruling of the Superintendent of Insurance. The
ruling was upheld by the Exchequer Court and then came the appeal to this
Court. The appeal was dismissed on its merits, Newcombe J. agreeing with the
conclusion of the judgment of Chief Justice Anglin with whom Cannon J. also
concurred, while Duff and Smith JJ. dissented.
[Page 470]
Chief Justice Anglin and Cannon J. were of the
opinion that the Supreme Court of Canada was without jurisdiction to entertain
the appeal, as no actual amount was in controversy and no tangible property
possessing a money value was at stake in the appeal, nor would the rights of
shareholders be legally affected by its determination. (Sections 82 and 83 of
the Exchequer Court Act). They thought that moreover, by giving
under subsection 5 of section 68 of the Insurance Act a right of appeal
to the Exchequer Court (in a summary manner) from the ruling of the
Superintendent of Insurance, the Parliament intended to make that Court curia
designata for the purpose of supervising acts of an official and the
summary jurisdiction to be thus exercised by the Court so designated should be
final and conclusive.
On the other hand, Duff and Smith JJ. held that
an appeal lay to this Court from the judgment of the Exchequer Court. In their
view, the right of appeal from that Court does not exist only when the judicial
proceeding involves a pecuniary demand; the construction of section 82 of the
Act should be determined by the decisions rendered by this Court under section
46 of the old Supreme Court Act; and it has been held that, when the
matter in controversy was, for example, the right to pass a by-law and so to
nullify a contract, there was jurisdiction if the right immediately involved
amounted to $2,000. Moreover, the proceeding in the Exchequer Court was a
"judicial proceeding" and the adjudication by that Court was a
"judgment within the meaning of sections 82 and 83 of the Exchequer
Court Act".
Thus, upon the question of jurisdiction, two of
the judges of this Court were of opinion that jurisdiction lay, while two other
judges held that it did not; and the case was disposed of on its merits, with
Newcombe J. concurring in dismissing the appeal.
The Sun Life case went to the Judicial
Committee of the Privy Council.
Before the Board, the question of the jurisdiction of the Supreme Court to
consider the judgment of the Exchequer Court was given up and the only question
argued before the Board was on the merits of the case: the ruling of the
Superintendent of Insurance amending
[Page 471]
the annual company's report under the provisions
of the Insurance Act; it did not afford any authority on the point we
are now discussing, except to the extent that their Lordships agreed with the
dissenting judges in the Courts below on the merits of the appeal and they
ordered the remittance of the case to the Exchequer Court so that it may direct
the Superintendent of Insurance to restore the figure of $4,000,000 in the
return by the Sun Life Assurance Company as the authorized capital of the
Company.
The only further case to which I care to refer,
is that of The James Bay Railway Company v. Armstrong. This was an appeal from a
decision of the Chief Justice of the Common Pleas Division of the High Court of
Justice for Ontario, increasing the award of arbitrators in proceedings for
expropriation of plaintiff's land by the James Bay Railway Company.
Under section 168 of 3 Edward VII, c. 58,
amending the Railway Act, 1903, if an award by arbitrators on
expropriation of land by a railway company exceeded $600, any dissatisfied
party could appeal therefrom to a Superior Court, which, in Ontario, meant the
Court of Appeal and the High Court of Justice. It was held that if, under that
section, an appeal from an award was taken to the High Court, there can be no
further appeal to the Supreme Court of Canada, which cannot even give special
leave.
Reference was made to Ottawa Electric Company
v. Brennan.
The case of Birely v. Toronto,
Hamilton and Buffalo Railway Company
was there referred to with approval, in which it was held "that no appeal
lay from the judgment of the High Court to the Court of Appeal in such a case,
both those courts being designated by the statute as special tribunals, to
either of which the appellant might resort".
In the Privy Council, the appeal was dismissed.
It was held that according to the true construction of section 168 of the
Canada Railway Act, 1903, the appeal
[Page 472]
given to a Superior Court from an award under
that Act, lies, in the province of Ontario, to either the Court of Appeal or
the High Court of Justice at the option of an appellant; but that in case of
appeal to the High Court, inasmuch as it is not the Court of last resort in the
province within the meaning of the Supreme and Exchequer Courts Act, (R.S.C.
1886 c. 135, section 26), there was no appeal therefrom to the Supreme Court of
Canada.
The ground upon which the judgment of the Privy
Council was based was, therefore, that there was no right of appeal from the
judgment of the High Court of Ontario because that Court is not, within the
meaning of section 36 of the Supreme Court Act, "the highest court
of final resort" established in the province of Ontario; and that an
appeal lies to the Supreme Court of Canada only from such highest court of last
resort. That is not a decision which can be of any help to the appellant in the
premises.
On this point, I am of opinion that the
respondent fails on his motion to quash.
So far as the letter of the Minister of National
Defence for Naval Services dated March 12th, 1941, is concerned, I do not think
it has the meaning ascribed to it by the respondent; and, moreover, the letter
was filed only in this Court in support of the motion to quash. It was not put
or invoked before the learned trial judge in the Exchequer Court and was not
referred to in any way while the case was before that Court. The letter itself
was by no means resorted to for the purpose of referring the matter to that
Court nor can it be interpreted as intending to make the Exchequer Court a mere
arbitrator between the parties.
By the very terms of the reference, the matter
was brought to the Exchequer Court under section 7 of the War Measures Act, through
the intervention of the Minister of Justice, and it was as a consequence of the
reference so made that jurisdiction in the matter was vested in the Exchequer
Court. I cannot accede to the contention of the respondent that this had the
effect that the determination of the amount of the respondent's claim
[Page 473]
by the Exchequer Court was to be final and
non-appealable, as that appeal is provided by the provisions of section 44 of
the Supreme Court Act.
The respondent's motion to quash for want of
jurisdiction ought, therefore, to be dismissed with costs.
I shall now take up the judgment on the merits
of the adjudication which it has made, and for the purpose of this discussion,
the award in respect of the Seaborn must be envisaged separately from
that with regard to the Sankaty.
Very little need be said about the Seaborn. She
was entered in the balance sheets of the respondent as representing a value of
$92,764.63, as we have already seen. That figure included $79,500 for the
"vessel at cost", $6,505.14 for maintenance and $6,759.49 for
"expenses directly applicable". By Order in Council, the Minister was
authorized to pay the sum of $196,377.55 for the acquisition and charter hire
of the two vessels stated. The sum was made up as follows:—
|
Advisory Board valuation of Seaborn. . . .
. . . . . . . .. . .
|
$92,764.63
|
|
Charter hire payable on Seaborn. . . . . .
. . . . . . . . . . .
|
8,200.00
|
|
Advisory Board valuation of Sankaty. . . .
. . . . . . . . . .
|
83,900.00
|
|
Charter hire payable on Sankaty . . . . . .
. . . . . . . . . . .
|
11,512.92
|
|
|
$196,377.55
|
Such was the sum paid to the company and detail
of the amount so paid.
Thus, disregarding the $8,200 for charter hire
of the Seaborn, the actual figure tendered and paid for the acquisition
of that vessel is therefore the last sum entered in the balance sheet of the
respondent as at December 31, 1939. Therefore the Government paid for the cost,
for the maintenance and for the expenses directly applicable as entered in the
books of the company.
Then if we look at the reasons for judgment of
the learned trial judge, we find the following:—
The proof shows that the cost of
overhauling her [the Seaborn] and bringing her from New London, Conn.,
to Halifax and the cost of her maintenance until she was requisitioned totalled
$16,651.94. It is also established that the structural changes, which were
effected on her but
[Page 174]
were not completed on account of her being
taken over by the [appellant, His Majesty the King], cost $2,181.73. These
various items [including $80,000 for the purchase price of the Seaborn]
form a total of $98,833.67.
And the learned judge concludes:—
After taking into consideration the various
elements hereinabove referred to, I have reached the conclusion that the value
of the Seaborn * * * to her owner, Northumberland Ferries Limited,
during the summer of 1939, before the declaration of war, was $100,000.
Under the circumstances, I do not feel that this
Court would be justified in interfering with the award made by the learned
judge in respect of the Seaborn. It need only be said that there was
undoubtedly evidence upon which the learned trial judge could make the award he
made. It would be asking too much from an Appellate Court to nullify the
judgment of the learned trial judge in expropriation matters, merely because in
its own view the Court might think that, on a total award of $100,000, there
might be a possible error of valuation amounting to $1,166.33.
Only in two respects could the correctness of
the award be disputed.
(1) On the ground that the learned trial judge
would appear to have taken the purchase price of the Seaborn to have
been $80,000, of which $30,000 was paid in cash, $25,000 by shares, and $25,000
by two mortgage bonds of the Company; and it was argued by the appellant that
the shares and the bonds should not be considered at their face value, because
they were subsequently acquired by other interested parties for the sum of
$25,000.
But the learned trial judge was perfectly
justified to decide that the subsequent sale of the shares and bonds was not
made at their true value. Several reasons may have prompted the vendor to
accept that sum as being in exchange for the shares and bonds. So far as the
respondent was concerned, he undoubtedly continued to be responsible for the
full amount of $25,000 represented by the second mortgage bonds and it cannot
be assumed that the shares were valueless, in the absence of any evidence to
that effect.
Moreover, the purchase price of a ship does not
necessarily represent the value of that ship. Such value may be either less or
more than the purchase price, according
[Page 475]
to the circumstances under which the purchase on
the one part and the sale on the other were made. I do not think that the
allowance made in the judgment for the value of the Seaborn was
successfully challenged by the appellant.
(2) So far as the inclusion of a certain amount
for the cost of the maintenance of the Seaborn until she was requisitioned
is concerned, I would have been of the opinion that it should not have been
included in the allowance that was made, but it is apparent that the appellant
accepted the item of maintenance as being properly claimed by the respondent
and, in fact, he has actually included it in the payment made by it as a
consequence of the Order in Council.
The validity of that payment is not questioned
by the appellant and it was no longer an issue when the reference was made to
the Exchequer Court.
I think, therefore, that the award of $100,000
for the Seaborn should stand.
But it is different so far as the award for the Sankaty
is concerned. The trial judge awarded $205,000, while the Advisory Board
valuation was only $83,900.
The learned trial judge, as a reason for his
valuation, said that the award in respect of the Sankaty should be made
on the replacement basis and he gave three alternatives of the way in which
such replacement value might be arrived at:—
One was for the cost of buying a new ship to
replace the Sankaty; another was for the purchase of the Fishers
Island for which her owner asked the price of $285,000, representing $316,550
in Canadian funds, from which should be deducted an appreciation of 33⅓%
representing the increased value due to the existence of the war, leaving a
balance of $210,900; and the third alternative was that the respondent might
have purchased another vessel of the type of the Prince Nova, which the
respondent had acquired after the Sankaty was requisitioned.
This would have meant, in the view of the
learned trial judge, an expenditure in round figures of $92,000, bringing the
price of the two vessels purchased to replace the Sankaty to an amount
of $184,000.
[Page 476]
With these two vessels, in the view of the
learned trial judge, the respondent would not have been in as advantageous a
position as with the Sankaty, seeing that the operation of two vessels
would have involved heavier overhead expenses.
And the learned trial judge added:—
After perusing the evidence carefully,
listening attentively to and later reading the exhaustive argument of counsel
and examining the various acts relied upon and studying the precedents invoked,
I have reached the conclusion that in order to put the claimant in as
favourable a position financially as it was in before the taking of the Sankaty
by the respondent and to enable it to obtain a suitable substitute for the
said vessel, of approximately the same size and carrying capacity, it must be
granted a compensation of $205,000.
The judgment appealed from quoted several
authorities in support of the proposition that, in a case such as the present
one, there was justification for applying the principle of the replacement
value in the premises.
But the authorities referred to in the judgment,
as well as all those to which the learned counsel for the respondent drew our
attention either in his factum or in the course of his argument before the
Court, have to do with the application of statutes worded differently from the
statutes which are applicable in the present case and therefore they cannot
support either the judgment or the argument put forward by the respondent on that
point.
Here, the statute and the only statute
applicable, is The Compensation (Defence) Act, 1940, assented
to on August 7th, 1940; and section 5 of that statute, relating to the
compensation payable for the acquisition of a vessel, is the one on which the
allowance is based and must be based.
That section says that:—
The compensation payable in respect of the
acquisition' of any vessel * * * shall be a sum equal to the value of the
vessel * * * no account being taken of any appreciation due to the war.
It is idle, therefore, to resort to any other
statute or to the judgments rendered on the interpretation of other statutes
for the purpose of ascertaining what, in the present case, the compensation
should be.
Section 5 is very clear: "the compensation
shall be a sum equal to the value of the vessel, no account being taken of any
appreciation due to the war".
[Page 477]
What the Court must do, therefore, to estimate
the compensation to be allowed, is merely to find out the value of the vessel
requisitioned, without taking into account any increased value resulting from
the existence of a state of war.
It seems clear that that is not what the learned
trial judge has done, in basing his award upon what it would have cost, either
to build a new ship or to purchase other ships in order to replace the Sankaty.
If I found in the evidence taken before the
Exchequer Court the elements enabling this Court to establish the value of the Sankaty
in accordance with the directions contained in section 5 of The
Compensation (Defence) Act, 1940, I would probably have
endeavoured to arrive at the right figure within the meaning of that statute
and to substitute it to the amount allowed in the judgment appealed from.
Unfortunately the necessary elements are not to
be found in the record now before us and there is no other course opened to
this Court but to return the case to the Exchequer Court with a direction that
there should thereby be proceeded to an estimation of the value of the Sankaty
at the time of its requisition, without taking into account any increased
value which she might have acquired as a result of the existence of a state of
war.
It follows that, in my view, an order should go
to the effect just mentioned and that the appeal should be allowed to that
extent, the appellant being entitled to two-thirds of the cost of this appeal,
as I consider that the appeal in respect of the Seaborn did not
represent more than one-third of the appeal costs.
So far, however, as the Seaborn is
concerned, the judgment should stand.
As to the costs at the trial, the respondent
should get one-half its costs against the appellant; the remaining one-half and
the costs of the new trial should be in the discretion of the Judge presiding
thereat. The respondent is, therefore, entitled to be paid by His Majesty the
King the sum of $7,235.37, with interest thereon at the rate of three per cent.
per annum in accordance with Order in Council 529 of January 22nd, 1943.
[Page 478]
Kerwin J.—This is an appeal by His Majesty the King from a judgment of the
Exchequer Court that the respondent was entitled to recover from the appellant
the sum of $128,335.37, being the balance of the compensation payable by reason
of the appropriation by the appellant of the title to two vessels owned by the
respondent, and interest at 4 per centum per annum from March 1st, 1941, the
date of appropriation.
The respondent was the owner of the motor vessel
Seaborn (afterwards known as the Charles A. Dunning) and
the S.S. Sankaty. Under the provisions of section 3 of the War
Measures Act, R.S.C. 1927, c. 206, the Crown, after the outbreak of the
present war, requisitioned the use of these vessels and subsequently, on March
1st, 1941, compulsorily acquired the ownership thereof. Certain amounts as
charter hire for the use of the vessels were paid and no question arises
thereon but the parties were unable to agree as to the amount to be paid for
the acquisition of title. A sum considered adequate by the appellant was paid
therefor in pursuance of an arrangement set forth in a letter of March 12th,
1941, from the Minister of National Defence for Naval Services and addressed to
the respondent's solicitor. That letter refers to the solicitor's suggestion
that the respondent was prepared to accept the amount paid as on account, leaving
the final determination of the amount payable to be settled by the Exchequer
Court and concludes:
In view of these considerations I am
preparing to recommend, and I am recommending, that a cheque be forwarded to
you for the amount of $196,377.55, leaving to the determination of the
Exchequer Court of Canada the question whether any further sum is due, and if
so, in what amount.
It was first argued that the Exchequer Court had
been named as arbitrator, from whose decision there was no appeal. The Minister's
letter, however, is only a reference to the power conferred upon the Minister
of Justice under section 7 of the War Measures Act and which power was
in fact exercised and in pursuance of which the proceedings were taken. This
section provides:
7. Whenever any property or the use thereof
has been appropriated by His Majesty under the provisions of this Act, or any
order in council, order or regulation made thereunder, and compensation is to
be made therefor and has not been agreed upon, the claim shall be referred by
[Page 479]
the Minister of Justice to the Exchequer
Court, or to a superior or county court of the province within which the claim
arises, or to a judge of any such court.
It was under this section that the Minister of
Justice on June 7th, 1941, referred to the Exchequer Court for adjudication the
claim of the respondent for compensation in respect of the two ships
appropriated for naval services by His Majesty the King.
The respondent takes the further point that the
Exchequer Court was curia designata and that no appeal lies from its
adjudication. This is based upon a number of decisions to the effect that where
a judge is persona designata, there can be no appeal. So far as this
Court is concerned, the first statement of such a principle appears in the
judgment of Sir William Ritchie in Valin v. Langlois. Leave to appeal from the
decision of this Court was refused by the Privy Council. The precise question did
not actually arise because a section of the Supreme Court Act provided for an
appeal to this Court, but the statement of the Chief Justice was afterwards
approved and adapted by Sir Charles Fitzpatrick in Canadian Northern Ontario
Railway Company v. Smith.
This statement is as follows:
Reading these special provisions in
connection with the Act of 1873, and what has been said of the Act generally, I
think it is not arriving at a forced or unnatural conclusion to say that that
Parliament intended to establish Dominion Tribunals exceptional in their
jurisdiction, perfect in their procedure, and with all materials for exercising
such jurisdiction, and having nothing in common with the Provincial Courts;
that these judges and courts were merely utilized outside their respective
jurisdictions for giving full effect to these statutory tribunals to deal with
this purely Dominion matter.
Next in order is Canadian Pacific Ry. Co. v.
The Little Seminary of Ste. Thérèse,
where two things were held. One was that the Judge in Chambers in Quebec,
before whom certain proceedings under the Dominion Railway Act originated,
was not a Superior Court, and the second, that such Judge was a persona
designata. All the judges agreed, but the ground for decision on the second
point is perhaps made clearer in the judgment of Mr. Justice Patterson where,
referring to various functions assigned to the Judge mentioned in the Act, he
states (pp. 618-619):
[Page 480]
They are functions which from their nature
and object must be intended to be exercised in a summary manner and not liable
to the delay incident to the appeals from court to court. From these
considerations, as well as from the language of the statute, it is plain that
the judge acts as persona designata and does not represent the court to
which he is attached.
—referring to Re Sheffield Waterworks.
The Ste. Thérèse case was distinguished
in City of Halifax v. Reeves.
There, under a section of the charter of the City of Halifax, any person
intending to erect a building upon or close to the line of the street was first
to cause such line to be located by the city engineer and obtain a certificate
of the location; and if a building were erected upon or close to the line
without such certificate having been obtained; the Supreme Court of Nova Scotia
or a Judge thereof might, on petition of the Recorder, cause it to be removed.
In North British Canadian Investment Company v. The Trustees of St.
John School District,
it was held that the confirmation of a tax sale transfer by a judge of the
Supreme Court of the Northwest Territories under a section of the Land Titles
Act, 1894, was a matter or proceeding originating in a Court of superior
jurisdiction and an appeal would lie to this Court from the final judgment of
the full Court affirming same. The majority of the Court were unable to
distinguish the case from that of City of Halifax v. Reeves (supra).
In St. Hilaire v. Lambert, there had been an
application for the cancellation of a liquor licence issued under the Alberta Liquor
Licence Act to a judge of the Supreme Court of Alberta in chambers, who
granted an originating summons ordering all parties concerned to attend before
him, and after hearing the parties who appeared, refused the application. The
full Court of Alberta reversed this order and cancelled the licence. The
majority of this Court were of the opinion that the case came within the
principle decided in the Ste. Thérèse case. In Canadian Northern
Ontario Ry. Co. v. Smith,
the Chief Justice, Sir Charles Fitzpatrick, with whom Idington J. agreed,
adapted the quotation from Sir William Ritchie's judgment
[Page 481]
referred to, and considered that the case came
clearly within the rule in the Ste. Thérèse and Lambert cases (supra).
Mr. Justice Duff stated the principle which, I think, is the proper one to
be applied in such cases in the following words:
The jurisdiction created by section 196 of
the Railway Act is not, I think, a jurisdiction given to the Superior
Court or County Court as the case may be, but to the judge or judges of those
courts. In other words, when acting under that section the judge does not
exercise the powers of the court as such, but the special powers given by the
Act.
The other three members of the Court disposed of
the matter on the ground that there was nothing in the record to show that the
amount in dispute was $2,000 or over, and that, therefore, the appeal failed.
In Calgary and Edmonton Railway Company v.
The Saskatchewan Land and Homestead Company, the majority of the Court
determined that a judge, when taxing costs under a section of the Railway
Act, acted as persona designata and that no appeal lies from his
decision. In Consolidated Wafer Company Limited v. International Cone
Company Limited,
it was held that this Court had jurisdiction to hear an appeal from the
Exchequer Court's judgment delivered on an appeal from the Commissioner of
Patents under section 40 of the Patent Act. In Sun Life Assurance
Company of Canada v. The Superintendent of Insurance, the majority of the Court
considered that no actual amount was in controversy in an appeal from the
Exchequer Court's decision on an appeal from a ruling of the Superintendent of
Insurance under the provisions of the Insurance Act; and that
furthermore, in giving a right of appeal to the Exchequer Court in what was
deemed to be a summary manner, Parliament intended to make that Court curia
designata and that no further appeal could be had. Two of the Judges were
of opinion that there was jurisdiction. When the case went to the Privy Council, the question of
jurisdiction was abandoned and, on the merits, the judgment of this Court was
reversed. I have only to add that
[Page 482]
in my view, the decision of this Court in James
Bay Railway Company v. Armstrong,
and of the Privy Council,
has no bearing upon the point under consideration.
The effect of these decisions and the many
others referred to is that in any particular case, the relevant statutory
enactments must be read to ascertain the nature of the jurisdiction conferred.
In the present case, subsection 1 of section 82 of the Exchequer Court Act, R.S.C.
1927, c. 34, is conclusive when taken in conjunction with sections 35 and 44 of
the Supreme Court Act. The latter provide:
[Section 35] The Supreme Court shall have,
hold and exercise an appellate, civil and criminal jurisdiction within and
throughout Canada. [Section 44] Notwithstanding anything in this Act contained
the court shall also have jurisdiction as provided in any other Act conferring
jurisdiction.
Subsection 1 of section 82 of the Exchequer
Court Act reads as follows:
Any party to any action, suit, cause, matter
or other judicial proceeding, in which the actual amount in controversy exceeds
five hundred dollars, who is dissatisfied with any final judgment, or with any
judgment upon any demurrer or point of law raised by the pleadings, given
therein by the Exchequer Court in virtue of any jurisdiction now or hereafter,
in any manner, vested in the Court and who is desirous of appealing against
such judgment, may, within thirty days from the day on which such judgment has
been given, or within such further time as a judge of such Court allows,
deposit with the Registrar of the Supreme Court the sum of fifty dollars by way
of security for costs.
The words "in virtue of any jurisdiction
now or hereafter in any manner vested in the Court" are sufficiently broad
to include the reference by the Minister of Justice under the War Measures
Act. It is suggested that only Parliament has the power to vest
jurisdiction in the Exchequer Court, but by section 7 of the War Measures
Act, Parliament has provided for the very vesting required by subsection 1
of section 82 of the Exchequer Court Act. It was further contended that
it could not be presumed that Parliament intended to permit the Minister of
Justice to refer one dispute to a Court from which there would be an appeal to
this Court, and another to a Superior or County Court of the Province within
which the claim arose, with the possible result that there would be no appeal
[Page 483]
at all. There might very well be cases, however,
where only small amounts were involved and where the Minister would consider it
proper to refer the claims to one of the Last mentioned courts "or to a
judge of any such court."
The point now taken was advanced on behalf of
the Crown in Warner Quintan Asphalt Co. v. The King. None of the judges dealt
with the point except Mr. Justice Idington who, while disposing of the appeal
on its merits (as did the others), was inclined in favour of the argument on
the ground that if the reference had been made to any of the judges of the
courts referred to, except the Exchequer Court, it could not be contended that
an appeal would lie by either party from his disposition of the claim. With
respect, I am of a contrary opinion. If a reference were made to a provincial,
superior or county court or a judge thereof, whether any appeal would lie from
the ensuing judgment would depend upon the ordinary jurisdiction of such court
and the provisions made as to appeals from judgments thereof. While it is true
that section 9 of the War Measures Act gives a court power to make
rules, none have been made by the Exchequer Court and, so far as known, by any
other court. Even if they had, it would be almost impossible for any court or
judge to proceed with a reference unless the aid of all the relevant statutory
provisions dealing with such court could be invoked. This being a case or
matter in which the Exchequer Court has given a final judgment in virtue of the
jurisdiction vested in it by section 7 of the War Measures Act and the
Minister's reference, an appeal lies to this Court. The motion to quash is
dismissed with costs.
We are now in a position to discuss the merits
of the appeal. The provisions of The Compensation (Defence)
Act, 1940, are to be observed in fixing the compensation for the
"acquisition" of the two vessels, which term in relation to any
vessel or aircraft means (s. 2 (a)) the appropriation by or on behalf of
His Majesty of the title to or property in the vessel or aircraft. It was
recognized that by reason of the actual and threatened destruction of vessels
by the enemy in the present war the available tonnage would be considerably
lessened, and it was deemed
[Page 484]
only proper that the owner of any vessel
acquired by the Crown in the stress of war should not have the advantage of the
resulting higher prices of ships. Therefore, by subs. 1 of s. 5 it is provided
that the "compensation" payable in respect of the acquisition shall
be a sum "equal to the value of the vessel or aircraft, no account being
taken of any appreciation due to the war."
The term "value of a ship" occurs in
the British Merchant Shipping Act, 1854, c-.104, s. 504, this being one
of the earliest Merchant Shipping Acts in which permission was granted the
owner of a ship to limit his liability to the value of the ship. Counsel for
the appellant argued that decisions under that section were relevant to the
ascertainment of "value" in the Compensation (Defence)
Act, and also the authorities as to the amount recoverable arising out of
the total loss of a ship due to collision, and in the matter of the
ascertainment of the value of a ship for the purposes of determining the loss
in a case of marine insurance. The provision in the Merchant Shipping Act was
enacted for an entirely different purpose and the other decisions referred to
proceed upon a principle that is not applicable to subs. 1 of s. 5 of the Compensation
(Defence) Act.
Were it not for that Act, the subject of an
enquiry such as this Would be the "compensation" to be made under
section 7 of the War Measures Act; and, that enactment being in pari
materia with the Dominion Expropriation Act, the expression
"compensation" should, so far as possible, be given the same meaning
in the two enactments. In some respects but not all, "value" as used
in subs. 1 of s. 5 of the Compensation (Defence) Act means
the same as "compensation" in the Dominion Expropriation Act. Thus
an owner of a ship acquired by the Crown is entitled to be paid the value of
the vessel to him, not to the Crown. In Lake Erie & Northern R. Co. v.
Brantford Golf and Country Club,
a case of compulsory taking of land under the Railway Act, Duff J., at
p. 228, states what, with appropriate changes, is applicable here:—
The phrase "the value of the land to
them" has most frequently been made use of to emphasize the fact that it
is not the value of the land arising in consequence of the requirements of the
undertaking for which it is taken that is to determine the scale of
compensation.
[Page 485]
It is needless to emphasize perhaps that
the phrase does not imply that compensation, is to be given for
"value" resting on motives and consideration that cannot be measured
by any economic standard.
That it is not necessarily the market value
appears from a further quotation from the same judgment which immediately
follows:
It does not follow, of course, that the
owner whose land is compulsorily taken is entitled only to compensation
measured by the scale of the selling price of the land in the open market. He
is entitled to that in any event, but in his hands the land may be capable of being
used for the purpose of some profitable business which he is carrying on or
desires to carry on upon it and in such circumstances it may well be that the
selling price of the land in the open market would be no adequate compensation
to him for the loss of the opportunity to carry on that business there. In such
a case Lord Moulton in Pastoral Finance Ass. v. The Minister has given what he describes
a practical formula, which is that the owner is entitled to that which a
prudent person in his position would be willing to give for the land sooner
than fail to obtain it.
The shipowner is also entitled to be paid the
present value of the vessel (as of a date immediately prior to the outbreak of
war), including the future advantages of the ship but only insofar as they help
to give it that present value. Cedars Rapids Manufacturing and Power Co. v.
Lacoste,
and The King v. Elgin Realty Co. Ltd. in which latter case the
following extract from the judgment of the President of the Exchequer Court was
quoted with approval as an accurate statement of the law:—
I do not mean to say that the defendant, by
reason of the special adaptability of its property for particular purposes on
account of its size, shape and location, is thereby entitled to, a hypothetical
or speculative value which has no real existence, and therefore any remote
future value must be adequately discounted.
The learned trial judge awarded as the value of
the Seaborn the sum of $100,000, of which $92,764.63 had already been
paid. In arriving at this amount, he stated that the respondent did not base
its claim, and he did not rest his judgment, on the doctrine of reinstatement,
so that we need not presently consider it. It should be explained that in 1938
an agreement was made between the Minister of Trade and Commerce and Farquhar
Steamships Limited whereby the latter agreed that on May 1st, 1939, they would
place the motor-ship Djursland or a suitable substitute vessel to be
built subject to the
[Page 486]
approval of the Minister, on a route between
Wood Island, Prince Edward Island, and Caribou, Nova Scotia, for the carriage
of passengers, freight, motor cars and motor trucks from May 1st to November
30th in each year for a period of five years. The service to be given and the
fares to be charged were particularized. In return a subsidy of $28,000 per
year was to be paid. The Djursland disappeared from the picture and the
Farquhar Company's rights were transferred to the respondent which, to fulfill
its accompanying obligations, purchased the Seaborn.
The Seaborn was originally an ocean-going
pleasure yacht, built in 1925 in Scotland and lengthened in the United States,
at a total cost of about $400,000. While if had not been used for some years
prior to its purchase by the respondent, it had not been dismantled but, on the
contrary, always had a skeleton crew on board to look after it. As a yacht it
was in first class shape but when the respondent purchased it in July, 1939,
expensive yachts were a drug on the market. The price paid by the respondent
was $80,000 payable $30,000 in cash, $25,000 in second mortgage bonds, and the
remaining $25,000 by the issue of five hundred shares of the respondent company
without par value at $50 per share. The bonds and shares were subsequently
repurchased from the vendor by the group promoting the company for $25,000.
While it has been argued by the appellant that the net purchase price was
really $55,000, the respondent contends that so far as the company is concerned
it was $80,000. I am inclined to think that the true explanation appears in the
following question and answer in the cross-examination of Robert E. Mutch, the
President of the respondent company, at page 81 of the record:
Q. And the purpose of issuing the second
mortgage bonds was to enable this to be done, to repurchase for $25,000
securities to the value of $50,000, and put them back in the hands of people
putting up $25,000?
A. The reason for it was this, that when we
bought the boat our first mortgage bonds were not ready for issue and Miss
Morrison, or whoever was the American party to the deal, agreed to give the
boat and accept this as protecting her until such time as funds were available
and in the meantime the Maritime Trust Company were preparing the trust deed
and the advertising of 'the sale of the bond issue to the public. I do not know
that the Maritime Trust Company was selling the bond issue but I rather think
it was some St. John firm that was selling it.
[Page 487]
Whatever the original cost, certain repairs were
made and expenses incurred. The company carried the ship on its books at
varying amounts but a letter dated May 10th, 1940, from it to the Director of
Shipbuilding of the Department of Munitions and Supply stating "the actual
cash laid out at the time of purchase of the boat was $55,000" would
indicate that the answer above quoted meant that the original cost was the
amount stated in the letter.
In view of the conclusion at which I have
arrived, the question of the discrepancy between that amount and $80,000 need
not be further pursued. Negotiations took place as to the sum to be paid for
the acquisition of the ship and at that time (March 29th, 1940) the respondent
was willing to accept $65,000, while the department offered $50,000. On
September 17th, 1940, an Order in Council was passed authorizing the payment of
what is called "an agreed sum" of $58,000 and a bill of sale, dated
October 11th, 1940, was executed by the respondent in which the consideration
is stated to be $70,705. For some unexplained reason, this transaction was
never completed. Unless the cost of the vessel to the respondent was intended
to be taken by the appellant as $80,000, it is difficult to ascertain the basis
upon which the amount finally offered and paid, $92,764.63, was arrived at. As
a matter of fact, this amount appears under the heading "Fixed
Assets" in the respondent's balance sheet, dated December 31st, 1939, made
up as follows:—
|
Vessel (Charles
A. Dunning) at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
|
$79,500 00
|
|
Maintenance—Charles
A. Dunning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
6,505 14
|
|
Expenses directly
applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
|
6,759 49
|
|
|
192,764 63
|
In the balance sheet as of December 31st, 1940,
appears the following:
|
S.S. Charles A.
Dunning cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
|
$75,500 00
|
|
Maintenance . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
|
9,514 18
|
|
Expenses . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
|
7,531 19
|
|
|
$92,545 37
|
Why the "cost" in these statements
appears as $79,500 and $75,500 is not satisfactorily explained but, in any
event, these are mere bookkeeping entries.
[Page 488]
The trial judge quite rightly considered that,
while cost should be borne in mind, it was not conclusive and that the sums,
which in March and October, 1940, the respondent was apparently willing to
accept, were the result of the unfortunate financial position in which it found
itself. I also agree that the suggestion made throughout the trial that the Seaborn
was or would be unstable as a ferry is not borne out by the evidence. Two
witnesses for the respondent placed the value prior to the war at $175,000 as
being what a willing purchaser would pay to a willing vendor. Two witnesses for
the Crown placed such value at $60,000. The trial judge fixed it at $100,000.
In the Elgin Realty case it was said that in cases
under the Expropriation Act, if a judge of first instance has acted upon
proper principles, has not misdirected himself on any matter of law, and that
if the amount arrived at is supported by the evidence, this Court ought not to
disturb this finding. Later, in Canadian National Ry. Co. v. Harricana
Gold Mine Inc.,
it was stated that if these rules have not been infringed the Court will not
interfere in such a case on a mere question of quantum, unless it is satisfied
that the amount allowed was clearly excessive or just as clearly too small.
The mere fact that in a dispute as to the
compensation to be paid for a ship, admittedly worth a very substantial sum,
the amount awarded is approximately $7,200 over the amount tendered and paid
would not be sufficient in itself to warrant this Court refusing to interfere.
There was no real cross-examination of the witnesses as to how their estimates
of $175,000 and $60,000 were arrived at but, in my view, that is no reason for
interfering with the trial judge's finding based upon such evidence as the
parties chose to place before him. From a careful reading of the reasons for
judgment I am unable to find that the trial judge failed to observe the
applicable principles and I cannot say that the sum of $100,000 is excessive so
as to justify any alteration of it and I would, therefore, dismiss the appeal
of the Crown so far as the Seaborn is concerned.
[Page 489]
The Sankaty was built in 1911 and was
purchased by the respondent on December 12th, 1939, from a United States Trust
Company for approximately $4,995 in Canadian funds. While it was suggested at
the trial that this was a forced sale, there is nothing in the evidence to
substantiate the suggestion. An amount of $6,342.45 was expended at the point
of purchase to get the ship ready for the voyage to Halifax, including wages,
fuel and emergency repairs. Accounts for work done at Halifax amounted in all
to $56,736.73 (or $56,876.73), certain other expenditures were charged to the
vessel, and the trial judge fixed the total cost to the respondent at
$71,226.14. It was estimated by John Paterson of Halifax Shipyards, Limited, a
witness for the respondent, that a further sum of $20,000 would have been
required to complete the repairs and alterations necessary to make the ship
available for the ferry service between Wood Island and Caribou. The Sankaty
was purchased after the use of the Seaborn had been appropriated by
the Crown and in order that the respondent might fulfil its obligations under
the agreement of 1938 with the Minister of Trade and Commerce.
The Crown appropriated the use of the Sankaty
and ultimately, on March 1st, 1941, acquired the title thereto.
Subsequently the respondent endeavoured to find a ship to replace the Sankaty
and mention is made in the evidence of the Fishers Island, the Red
Star, and Erie Isle, the latter of which was purchased by the
respondent and renamed the Prince Nova. The trial judge examined at
length the evidence as to the sums asked for the two first named vessels and as
to the cost to the respondent of the Prince Nova. When dealing with the Seaborn
he had not considered the replacement value, but that was the basis of his
final allowance to the respondent as the value of the Sankaty of the sum
of $205,000.
This is not the correct principle to apply.
Value to the owner without any appreciation due to the war, which is the proper
test, is far different from replacement value. As a matter of fact, on August
19th, 1941 (after the requisition of the two vessels) a new agreement was entered
into between the respondent and the Minister of Trade and Commerce cancelling
the previous agreement with
[Page 490]
Farquhar Steamships, Limited, and providing that
the contract should remain in force until November 30th, 1950. The same subsidy
of $28,000 per year was promised. In this agreement, the Prince Nova is
named as the motor-ship then in use and it was provided that the required
service would be continued with that vessel, or a suitable substitute. Whatever
might be said about the Prince Nova, it was apparently satisfactory to
the Minister for the ferry service:
Under the Expropriation Act, damage to
the owner is relevant and even there it is only in exceptional circumstances
that it has been awarded: Cripps on Compensation, 8th Edition, pp. 180 and 181.
But over and above that, the proviso in subs. 1 of s. 5 of the Compensation (Defence)
Act prevents its application. How can the value of a ship be reinstated
when the court is prohibited from giving any effect to appreciation due to the
war? To do as the trial judge did—take a figure as representing what the cost
of a similar ship would be in wartime and then deduct a percentage for such
appreciation, is too uncertain. As Middle-ton J.A. put it in Re Lennox and
Toronto Board of Education:
"There are too many contingencies; too many factors to be considered, all
of which rest on opinion, or, in other words, mere guessing."
The respondent rested its claim for the value of
the Sankaty on the basis of replacement and the appellant on market
value—instead of on the principles outlined above. It is with regret that I see
no escape from the necessity of sending the case back for the reassessment of
the value of the Sankaty. The appellant should have two-thirds of its
costs of the appeal, against which may be set off one half the costs of the
respondent of the trial. The remaining half and the costs of the new assessment
should be in the discretion of the judge presiding thereat. The judgment a
quo should be varied accordingly, and so far as the Seaborn is concerned
the result is that, upon the respondent giving to the appellant a good and
valid title thereto free from all charges and encumbrances whatsoever, it is
entitled to be paid by His Majesty the King the sum of $7,235.37. The
respondent
[Page 491]
is entitled to interest thereon but it is agreed
that under Order in Council 529 of January 22nd, 1943, the rate should be three
instead of four per centum per annum.
Hudson J.—On the 1st of March, 1941, His Majesty acquired for war purposes
two ships designated respectively Sankaty and Seaborn. Both of
these ships were the property of the respondents and they, as owners, claimed
as compensation a larger amount than the Crown was willing to pay. The Minister
of Justice thereupon referred such claim to the Exchequer Court for
adjudication under the authority of section 7 of the War Measures Act.
This appeal is brought by the Crown from an
adjudication by the Exchequer Court, that the respondents were entitled to an
amount in excess of what the Crown had already paid. It is now objected by the
respondents that this Court has no jurisdiction to entertain the appeal, on the
ground that the Exchequer Court acted as a curia designata under section
7 of the War Measures Act and that there was no right of appeal provided
for in such Act.
By the Exchequer Court Act, R.S.C. 1927,
c. 34, it is provided:
18. The Exchequer Court shall have
exclusive original jurisdiction in all cases in which demand is made or relief
sought in respect of any matter which might, in England, be subject of a suit
or action against the Crown, and for greater certainty, but not so as to
restrict the generality of the foregoing terms, it shall have exclusive
original jurisdiction in all cases in which the land, goods or money of the
subject are in the possession of the Crown, or in which the claim arises out of
a contract entered into by or on behalf of the Crown.
19. The Exchequer Court shall also have
exclusive original jurisdiction to hear and determine the following matters:—
(a) Every claim against the Crown
for property taken for any public purpose;
* * *
(d) Every claim against the
Crown arising under any law of Canada or any regulation made by the Governor in
Council;
* * *
(g) The amount to be paid
whenever the Crown and any person have agreed in writing that the Crown or such
person shall pay an amount of money to be determined by the Exchequer Court,
[Page 492]
or any question of law or fact as to which
the Crown and any person have agreed in writing that any such question of law
or fact shall be determined by the Exchequer Court.
From this it appears plainly that the matters
here referred to the Court fell well within those comprised in its ordinary
jurisdiction.
The adjudication which must be made under
section 7 certainly calls for the exercise of judicial functions and
necessarily involves the application of rules of law to facts adduced in
evidence legally received. There is nothing in the section to indicate that it
was intended to grant the court named by the Minister of Justice any arbitrary
or discretionary powers.
The procedure followed in this instance was in
accordance with the normal practice of a suit carried on in that court. There
was a statement of claim, a statement of defence, discovery, examination and
cross-examination of witnesses, and then a judgment was rendered in the form
ordinarily used in disposing of cases in the Exchequer Court, including an
award of costs as against the Crown.
In the case of Mayor, etc., of Montreal v.
Brown et al.,
the Judicial Committee, in dealing with a somewhat similar objection, strongly
stressed the procedure adopted by the Superior Court in Quebec as evidence that
the proceeding was a judicial proceeding with a final judgment and, as such,
subject to appeal under Article 1115 of the Code of Civil Procedure.
It was further contended in argument that the
fact that under section 7 the Minister of Justice is given an option of
referring the matter to any one of a number of courts, is evidence that the
court named by the Minister was not a court to exercise its ordinary
jurisdiction, but one of special designation. This argument is adequately
answered by a statement of Lord Macnaghten in the case of James Bay Railway
Co. v. Armstrong:
The Supreme Court in the present case
appear to think that this view is right [the view that there was no right of
appeal from the High Court to the Court of Appeal in the case of railway
awards.] It is, however, objected that, if the appellant has the option of
going either to the High Court or the Court of Appeal, and if the Supreme Court
is right in holding that no appeal lies from the High Court to the Supreme
[Page 493]
Court, an appellant has the power of
shutting out any further appeal at his own will and pleasure. No doubt that
privilege, whether it be a benefit to the litigants or a calamity, is somewhat
anomalous, but it does not seem to their Lordships that the anomaly is so great
or so startling as to make it necessary or permissible to confine the
expression "superior Court" to the Court of Appeal.
Section 82 of the Exchequer Court Act provides:
Any party to any action, suit, cause,
matter or other judicial proceeding, in which the actual amount in controversy
exceeds five hundred dollars, who is dissatisfied with any final judgment, or
with any judgment upon any demurrer or point of law raised by the pleadings,
given therein by the Exchequer Court, in virtue of any jurisdiction now or
hereafter, in any manner, vested in the Court and who is desirous of appealing
against such judgment, may, within thirty days from the day on which such
judgment has been given, or within such further time as a judge of such Court
allows, deposit with the Registrar of the Supreme Court the sum of fifty
dollars by way of security for costs.
By the Supreme Court Act, R.S.C. 1927, c.
35, section 35, this Court is given a general appellate jurisdiction within and
throughout Canada, and by section 44 it is expressly given jurisdiction as
provided in any other Act conferring jurisdiction. In my opinion, section 44
read with section 82 of the Exchequer Court Act is in this instance
ample to vest in this Court jurisdiction to hear and determine this appeal.
It was also objected that the reference was made
as the result of an agreement between the parties and that, therefore, it
should be regarded as in the nature of an arbitration. No such agreement was
put in evidence at the trial and, even if it had been, I think the matter would
clearly fall in the provisions for an appeal to this Court contained in section
82 of the Exchequer Court Act.
The amount to which the respondents are entitled
for the two ships in question is prescribed by The Compensation (Defence)
Act, 1940, chapter 28 of the Statutes of Canada, 1940. Section 5 of that
Act is the section here relevant and is as follows:
5. (1) The compensation payable in respect
of the acquisition of any vessel or aircraft shall be a sum equal to the value
of the vessel or aircraft, no account being taken of any appreciation due to
the war * * *
The "value of the vessel" referred to
in the section is not further defined but the generally accepted rule of law is
that when property is taken for public purposes the owner is entitled to a fair
pecuniary equivalent.
[Page 494]
In ascertaining the amount, the well established
rules in the case of expropriation of land provide a guide. It is the value to
the owner, not to the Crown. It is the commercial value, including the present
value, if any, of its future potentialities. Where it is possible to establish
a market value, that would be most important (see Cedars Rapids v. Lacoste; Pastoral Finance v.
The Minister).
It must be kept in mind, however, that these rules apply here subject to the
restriction imposed by section 5 of the Compensation (Defence)
Act.
With regard to the Sankaty, I agree with
my Lord the Chief Justice that the learned trial judge was in error in
accepting the replacement value as a proper test of compensation under the Compensation
(Defence) Act and the circumstances here. For that reason, I
would have the case sent back to the Exchequer Court for the purpose of
reassessment.
The Seaborn was acquired by the
respondent company in July, 1939, at a cost of $55,000, which sum included
profits made by a promoter and its largest shareholder. Subsequently, they
expended for refitting and maintenance less than $25,000.
On September 2nd, 1939, the vessel was
requisitioned by the Crown, and thereafter, except for a period of less than
three months, has been in the possession of the Crown and charter hire paid at
an agreed rate until ownership was finally acquired by the Crown.
Early in 1940 negotiations were entered into
between the owner and the Crown as to the price to be paid for acquisition. On
March 29th the respondent company made a firm offer to accept $65,000. This was
followed by a counter offer by the Crown of $50,000. Then, in September, 1940,
a sum of $58,000 was agreed upon and an Order in Council was passed approving
of the payment of this sum. However, such agreement was never carried out.
Eventually, in March, 1941, the Crown paid the respondents $92,764.63, without
prejudice to any claim which the respondents might submit to the Exchequer
Court.
It appears from the Order in Council that it was
made on the recommendation of an Advisory Board, but the report of such Board
is not in evidence.
[Page 495]
The amount so paid corresponds very closely with
the value of the Seaborn appearing on the balance sheet of the
respondents. The only evidence given at the trial of a value higher than the
sum paid is that of two experts who expressed an opinion that the Seaborn was
worth $175,000 but gave no adequate reasons or facts to support such opinion;
that they were not accepted by the learned trial judge is shown by the fact
that his award was made for a round sum of $100,000.
With respect, I am of the opinion that this
award failed to give due weight to the cost of the vessel to the respondents.
It was acquired only a few months before the war, it was found to be unsuitable
for the purpose for which it was purchased, at any rate without expensive or
dubious alterations. It went into the possession of the Crown in the course of
a few weeks. It is true that the price paid by the owner is not necessarily
evidence of its value but, under the circumstances here, it seems to me that
apart from the offers and counter offers of the parties it is the only real
evidence of value which we have. All else is speculative and more or less
influenced by war conditions, and excluded under section 5 of the Compensation
(Defence) Act.
As pointed out by my brother Kellock, the
learned judge has made errors of fact in several particulars, including items
which were duplications. I think the case falls well within the exceptions to
the general rules applicable to appeals from awards in cases of this kind, as set
forth by this Court in a number of cases: Vézina v. The Queen, followed in The King v.
Elgin Realty Company,
and Canadian National Railway Co. v. Harricana. I would, therefore, modify
the judgment of the Exchequer Court by fixing the compensation for the Seaborn
at the sum already paid by the Crown: $92,764.63.
I would dismiss the motion to quash with costs,
allow the appeal to this Court with costs to the appellant.
In respect of the Sankaty, the costs of
all proceedings below should be as directed by the judge presiding at the
reassessment.
[Page 496]
Taschereau J.—A preliminary objection to the jurisdiction of this Court was
raised by the respondent. It has been submitted that the Exchequer Court of
Canada, which determined the amount payable by the Crown for the acquisition of
two vessels, the Seaborn and the Sankaty, was curia designata,
and that its decision was final and not appealable.
It was under the provisions of section 3 of the War
Measures Act, R.S.C. (1927), chap. 206, that the Crown requisitioned these
two ships, and, under section 7 of the same Act, the matter of compensation was
referred to the Exchequer Court.
The Supreme Court of Canada, in virtue of
section 35 of its Act, holds an appellate, civil and criminal jurisdiction,
within and throughout Canada. And section 44 of the same Act says that it
"shall also have jurisdiction as provided in any other Act conferring
jurisdiction."
The Exchequer Court Act, subsection 1 of
section 82, reads as follows:—
Any party to any action, suit, cause,
matter or other judicial proceeding, in which the actual amount in controversy
exceeds five hundred dollars, who is dissatisfied with any final judgment, or
with any judgment upon any demurrer or point of law raised by the pleadings,
given therein by the Exchequer Court, in virtue of any jurisdiction now ox
hereafter, in any manner, vested in the Court and who is desirous of
appealing against such judgment, may, within thirty days from the day on which
such judgment has been given, or within such further time as a judge of such
Court allows, deposit with the Registrar of the Supreme Court the sum of fifty
dollars by way of security for costs.
The Exchequer Court was undoubtedly vested with
the necessary jurisdiction to hear this matter, in virtue of the reference made
by the Minister of Justice, who was acting under the War Measures Act. The
trial Judge did not exercise any special jurisdiction with an appropriate
machinery for that particular purpose, but dealt with the matter as a judge of
the court in the discharge of his ordinary judicial functions.
In support of his motion to quash, the
respondent contended that there could be no appeal to this Court, because the
Minister of Justice is at liberty to refer such a matter indifferently to the
Exchequer Court or to a superior or county court of the province within which
the claim arises, or to a judge of any such court. It is submitted that
[Page 497]
no appeal to this Court would lie if the matter
had been referred to a county court judge, and it cannot be assumed that there
could be an appeal in one case and none in the other. The answer to this
objection may be found in the reasons of my brother Kerwin, who says that there
might very well be cases where only small amounts are involved and where the
Minister would consider it proper to refer the claims to a different court, or
to a judge of any such court.
I may add also that, in my judgment, the matter
has been settled by the Privy Council itself in James Bay Railway Co. v.
Armstrong,
where it was held that, according to the true construction of section 168 of
the Canada Railway Act (1903), the appeal given thereby to a superior
court from an award under that Act, lies in the Province of Ontario to either
the Court of Appeal or the High Court of Justice therein at the option of the
appellant; but that in case of appeal to the High Court, inasmuch as it is not
the court of last resort in the province within the meaning of the Supreme
and Exchequer Courts Act, R.S.C. 1886, chap. 135, section 26, there is no
appeal therefrom to the Supreme Court of Canada.
At page 630, Lord MacNaghten says:—
It is, however, objected that, if the
appellant has the option of going either to the High Court or the Court of
Appeal, and if the Supreme Court is right in holding that no appeal lies from
the High Court to the Supreme Court, an appellant has the power of shutting out
any further appeal at his own will and pleasure. No doubt that privilege,
whether it be a benefit to the litigants or a calamity, is somewhat anomalous,
but it does not seem to their Lordships that the anomaly is so great or so
startling as to make it necessary or permissible to confine the expression
"superior Court" to the Court of Appeal.
The principles enunciated in that case are
applicable here, and I 'believe that the option given to the Minister of
Justice, to choose the court to which he may refer the matter, has not the
effect of making that court a curia designata.
I have reached the conclusion that this Court is
competent to hear this appeal, and that this preliminary objection should be
dismissed with costs.
The learned trial judge in his judgment,
rendered in November, 1943, awarded the respondent in respect of the Seaborn
a sum of $100,000, and in respect of the Sankaty
[Page 498]
a sum of $205,000, a total of $305,000, from
which must be deducted a sum of $176,664.63 paid to respondent. He directed
that the respondent should recover the balance of $128,335.37, with interest at
4% from March 1st, 1941, to the date of the judgment, with costs.
The compensation for the acquisition of these
two ships must be determined by The Compensation (Defence)
Act, 1940. Subsection 1 of section 5 says that "the compensation * * *
shall be a sum equal to the value of the vessel *' * *, no account being
taken of any appreciation due to the war".
I do not think that this Court ought to
interfere with the finding of the trial Judge so far as the Seaborn is
concerned. In its statement of claim, the respondent valued this ship at
$175,000, and His Majesty the King offered $92,764.63. The learned trial Judge
reached the conclusion that the value of this ship before the war in 1939 was
$100,000. In order to reach this conclusion, he took into account various
elements revealed by the evidence, as the purchase price, the cost of
overhauling and bringing the ship to Halifax, the cost of maintenance and of
structural changes.
He did not ignore the fact that the purchase
price was low, but he added, and with this statement I fully agree, that the
cost, although it may be an element of estimation in some cases, is seldom
decisive, and particularly in the present case, where the owner, old and unable
to use this ship, which was a pleasure yacht, had no other alternative but to
put her for sale at whatever price could be obtained.
Although I entertain serious doubts that the
cost of maintenance before the requisitioning should have been taken as an
element in determining the value of the ship, I think it was properly
considered by the learned trial Judge, owing to the fact that His Majesty the
King agreed in his offer to pay this amount.
It has been the constant jurisprudence of this
Court not to interfere with the finding of the Court below, in cases such as
the present one, when the trial Judge has acted upon proper principles, has not
misdirected himself on a
[Page 499]
matter of law, unless it is satisfied that the
amount allowed is clearly excessive. (The King v. Elgin Realty Co.
Ltd.;
Canadian National Ry. Co. v. Harricana).
I agree with the view that the learned trial
Judge has not misdirected himself in the principles to be applied, and that he
has taken into account the proper elements in assessing the ship Seaborn which
he valued at $100,000. I do not think that this Court would be justified to
interfere with the finding that he has made.
As to the Sankaty, the principle of
replacement value has been applied, and the trial Judge has reached the
conclusion that, in order to put the claimant in as favourable a position
financially as it was before the taking of this ship by the appellant, and to
enable it to obtain a suitable substitute for the said vessel of approximately
the same size and carrying capacity, it must be granted a compensation of
$205,000.
Is this the true principle applicable? The
Compensation (Defence) Act, 1940, chap. 28, sec. 5, para. 1,
provides that:—
The compensation payable in respect of the
acquisition of any vessel or aircraft shall be a sum equal to the value of
the vessel or aircraft, no account being taken of any appreciation due to the
war.
The words used in the drafting of this section
make it impossible, I think, to apply the principles of the reinstatement or
replacement value. It is the real value to the owner of the ship
requisitioned that must be determined, and the award cannot be based on what it
would have cost to acquire another ship to replace the Sankaty. If this
principle were to be adopted in the present case, and if the award were to be
based on the value of substituted property, then, the respondent might obtain a
larger amount than Parliament has decided he should get.
I agree that the case should be sent back to the
Exchequer Court so that the value of the Sankaty be determined as above
indicated. I adopt the proposition of my brother Kerwin as to the disposition
of the costs.
Rand J.—This appeal concerns the matter of compensation for two vessels,
called the Seaborn and the Sankaty, acquired by the Dominion
Government under the War
[Page 500]
Measures Act. Two
questions are raised: jurisdiction to hear the appeal, and the basis of compensation
to be applied.
The point of jurisdiction arises from the
language of section 7 of the War Measures Act:
Whenever any property or the use thereof
has been appropriated by His Majesty under the provisions of this Act, or any
order in council, order or regulation made thereunder, and compensation is to
be made therefor and has not been agreed upon, the claim shall be referred by
the Minister of Justice to the Exchequer Court, or to a superior or county
court of the province within which the claim arises, or to a judge of any such
court.
The contention is that each court and each judge
of each court is constituted a curia or persona designata and, as
no appeal is expressly provided, none lies. As Middle-ton J. A. in Hynes v.
Swartz
observes, it was not until the middle of the 19th century that these terms, curia
designata and persona designata, came into use in relation to courts
or judges; they arose in the course of interpreting statutes granting powers
for public undertakings in which provision was made for the summary
determination of questions of compensation. They connote a judge or court in
which limited powers have been vested in relation to subject-matter which in
general is either justiciable or administrative. The question that arises in
each case is whether the subject-matter has been placed within the ordinary
jurisdiction of the court or judge, or whether a new and disparate tribunal has
been set up for a special and limited purpose.
The subject-matter of compensation for property
taken by the Crown is well known to the Exchequer Court; and references to the
court to determine compensation, made by heads of government departments, a
long-established procedure. Originally such questions were referred to what
were known as official arbitrators, but their jurisdiction was transferred to
the court upon its establishment. By section 19 (h) of the Exchequer
Court Act (c. 34, R.S.C. 1927), the head of any department may refer the
question of determining the value "of any real or personal, movable or immovable,
property, or of any interest therein,
[Page 501]
sold, leased or otherwise disposed of by the
Crown, or which the Crown proposes to sell, lease or otherwise dispose
of." By section 37,
Any claim against the Crown may be
prosecuted by petition of right, or may be referred to the Court by the head of
the department in connection with the administration of which the claim arises.
2. If any such claim is so referred no fiat
shall be given on any petition of right in respect thereof.
Now, section 7 of the War Measures Act does
not expressly give any right to compensation for property taken. Its language
is, "and compensation is to be made therefor." Neither does the Compensation
(Defence) Act, c. 28, Statutes of 1940. By section 19 of the Exchequer
Court Act, that court shall
have exclusive original jurisdiction to
hear and determine the following matters:
(a) Every claim against the
Crown for property taken for any public purpose;
* * *
(c) Every claim against the Crown
arising out of any death or injury to the person or to property resulting from
the negligence of any officer or servant of the Crown while acting within the
scope of his duties or employment.
The latter paragraph has long since been held
not only to give jurisdiction but to create the right against the Crown.
Applying that principle, I have no doubt that when, by the authority of the War
Measures Act, property is acquired by the Crown a right to compensation
arises under paragraph (a).
The mandatory effect, then, of section 7 is to
deprive a subject of his right to bring a petition of right in the Exchequer
Court and to give to the Minister of Justice a choice of courts; but that a
reference to that Court by the Minister is to be taken in any other sense than
one by a departmental head, or that it should be deemed to deprive the subject
of statutory rights to which otherwise he would be entitled, are propositions
with which I am quite unable to agree. The effect of the reference in each case
is to place the claim within the ordinary procedure of the court. Whether a
similar reference which, for obvious reasons of quantum and convenience, is
allowed to the county or superior courts of a province, carries with it the
ordinary rights of appeal under provincial law, it is not
[Page 502]
necessary to decide. The language, "or to a
judge of any such court," does not permit a reference to a particular
judge. It contemplates a judge exercising the original jurisdiction of his
court. The provision of section 9, which empowers the court to make rules of procedure
for such a reference, is obviously necessary because of the unusual mode by
which the matter is introduced to the court. The Crown in such case has no
claim against the owner; the claim is against the Crown; and procedure is
required to enable the claim to be placed in form to be adjudicated according
to the ordinary course of the court. In the present case, for instance, the
claimant has properly been made the plaintiff and the issue is on the claim
which it is asserting against the Crown.
As the proceeding, then, is in the Exchequer
Court as such, an appeal lies under section 82 of the Act governing the Court,
and the preliminary objection fails.
The facts relating to the Seaborn have
been stated and I shall not repeat them. To make that vessel suitable for the
proposed service, alterations estimated to cost around $55,000 would have been
required. Space for twenty-four automobiles and possibly three or four trucks
was planned but there was serious doubt that the vessel so altered would be
safe for operation at the maximum draught of 10½ feet. The only evidence on
this point is that of a naval architect of the department, who had reported
adversely on the vessel. There is nothing before the court to warrant the view
that the company was settled upon proceeding with the alterations at the time
of the requisition in December, 1939. To explain the delay in commencing the
work, some suggestion was made of intimations from the department that the
vessel would again be required, but that evidence is too vague and general to
be regarded. On the other hand, it is clear that the company had been
negotiating for the Sankaty before that time. In any event, the purchase
of the Sankaty, admittedly a much more suitable vessel for the service,
excludes any special value to the respondent as of the time of acquisition.
The general market value, then, must govern;
but, as I read it, the judgment below does not confine the allowance to that.
After dealing with the estimates of value made by
[Page 503]
the witnesses and the items making up the total
accounting charge of the respondent against the Seaborn, the trial judge
states his conclusion in these words:
After taking into consideration the various
elements hereinabove referred to, I have reached the conclusion that the value
of the Seaborn, rechristened the Charles A. Dunning, to her owner, Northumberland
Ferries Limited, during the summer of 1939, before the declaration of war, was
$100,000.
Besides the inclusion of items that are
irrelevant to market value, the reference to the value "to the
owner," otherwise unexceptionable, in the particular context indicates
that considerations of realized special adaptability were in his mind:
but no such element was admissible. I do not find in the evidence sufficient to
bring the market value to more than the sum offered: and although the
difference between that and the amount allowed is relatively small, what was
tendered was, I think, so generous as to prevent us from exceeding it.
About a week after the requisitioning of the Seaborn,
in December, 1939, the respondent acquired the somewhat larger vessel, the Sankaty.
It was purchased apparently at a judicial sale for about $5,000 and was
brought to Halifax for rehabilitation. It had been built in 1910 and needed
extensive reconditioning before being fit for the service intended. For that
service there were two governing features: the shallow draught already
mentioned, and the desirability of a maximum capacity for automobiles and
trucks. The necessary alterations and equipment were proceeded with and toward
the end of June, 1940, the work was almost completed. The cost was in the vicinity
of $56,000 and the total outlay up to that time was not more than $65,000. In
that month the vessel was in turn requisitioned. This continued until March,
1941, when with the Seaborn she was acquired. The compensation was fixed
at $205,000, and against this allowance the appeal is brought.
Evidence was given by a yacht broker of another
vessel said to be the equivalent of the Sankaty, and purchasable at a
"rock bottom sum" of $285,000 in American funds, at an American port.
Other evidence related to the cost of building a suitable vessel in the Halifax
shipyards. Estimates had been made for the predecessor of the respondent of
$200,000 for the hull and a minimum of $115,000 for
[Page 504]
the machinery, heating, lighting and other
equipment: from this, deductions were made for depreciation and for increased
value of materials and labour due to the war. But the principle applied was
that of reinstatement, and whether that rule is applicable becomes the decisive
question in the appeal.
The Compensation (Defence)
Act, 1940 (c. 28), section 5 (1), provides that:
The compensation payable in respect of the
acquisition of any vessel or aircraft shall be a sum equal to the value of the
vessel or aircraft, no account being taken of any appreciation due to the war *
* *
The court is to determine, then, "the value
of the vessel." Mr. Schroeder, in his thorough argument, urged two
contentions which, as I understood him, he treated as two aspects of the same
principle: the value to the owner, and the reinstatement cost. That the value
is to be the value to the owner is, I think, incontestable, but what is that
value? With special adaptability realized in the ownership from which it is
expropriated, that value is the amount which a prudent man in the position of
the owner would be willing to give for the property sooner than fail to obtain
it: Pastoral Finance Assn. Ltd. v. The Minister: without realized special
adaptability, it is market value—theoretical, if need be—which is the present
value of all possible utility reached in a competitive field.
But reinstatement is something quite different:
it is placing the owner from whom property is taken in a substantially equivalent
condition by means of substituted property. The cost of furnishing that
substitute might exceed by far the value which the owner would be willing to
pay as the value of the property to him.
It is applied to determine the compensation to
an owner arising from damages resulting from the exercise of statutory powers.
Under both the Lands Clauses Consolidation Act (1845) and the Railways
Clauses Consolidation Act (1845), in the interpretation of which principles
of compensation were laid down which have been accepted in this country as
governing under the Expropriation Act and the Railway Act (City
of Toronto v. Brown Co.) ,
it has been treated as a proper measure in certain cases: but that it was
damage which was being ascertained, and
[Page 505]
not merely value of property, was never
questioned. The principle evolved as a measure of compensation where none had
been laid down by the statute.
But under the enactment with which we are
dealing, it is not a matter of damages generally; compensation, it is true, but
the precise measure is prescribed: value to the owner. The replacement cost of
the same vessel with a deduction for physical depreciation or obsolescence
cannot be said to have no relevancy to market value; but it is simply one of
the aggregate of elements that determines price. Estimates of market value
should be made by those who, through experience or acquaintance with similar or
analogous transactions, are capable of judgments cognate with those of prudent
purchasers and susceptible of analysis and exposition; but this, though at
times difficult, is scarcely satisfied by a melange of notions crowned with a
guess. And, as laid down in Pastoral Finance Assn. Ltd. v. the
Minister, supra, the special value to the owner is not a capitalized value
of estimated savings or increased profits; it is an addition to the ordinary
market price which a prudent purchaser, contemplating all of the risks and
circumstances in which his investment and prospective use are to be placed,
would, if necessary, be willing to pay.
As sufficient evidence was not presented to
enable us to ascertain the value on the basis indicated, the appeal should be
allowed and the case remitted to the Exchequer Court for the necessary finding.
When that has been made, the total judgment will have regard to the reduction
in the amount allowed for the Seaborn from $100,000 to $92,764.63. The
appellant should have his costs of the appeal; the costs of all proceedings
below will be as directed by the judge presiding at the reassessment.
Kellock J.—This is an appeal by the Crown from the judgment of the Exchequer
Court of Canada, Angers J., pronounced November 24th, 1943, on a reference by
the Minister of Justice dated June 7th, 1941, under the provisions of section 7
of the War Measures Act, to determine the compensation payable to the
respondent in respect of the acquisition by the Crown of the title to two ships
owned by the respondent, known respectively as the Seaborn
[Page 506]
and Sankaty. By the judgment in appeal,
the compensation in respect of the first named ship was fixed at $100,000 and
of the second ship, $205,000.
By the provisions of the War Measures Act, R.S.C.
chapter 206, section 7, whenever any property or the use thereof has been
appropriated by His Majesty under the provisions of the Act or of any Order in
Council, order or regulation made thereunder and compensation is to be made
therefor and is not agreed upon, the claim is to be referred by the Minister of
Justice "to the Exchequer Court, or to a superior or county court of the
province within which the claim arises, or to a judge of any such court".
Section 9 provides:
Every court mentioned in the two sections
last proceeding may make rules governing the procedure upon any reference made
to, or proceedings taken before, such court or a judge thereof under the said
section.
The Compensation (Defence)
Act, 1940, 4 Geo. VI, chapter 28, provides for the compensation payable in
respect of the requisition or acquisition of a vessel by His Majesty.
"Requisition" is defined by section 2 (f) as the appropriation
of the use of a ship or requiring it to be placed at the disposal of His
Majesty, and "acquisition" by section 2 (a) as appropriation
by or on behalf of His Majesty of the title to the vessel. By section 5,
subsection (1), the compensation payable in respect of the acquisition of any
vessel "shall be a sum equal to the value of the vessel * * * no account
being taken of any appreciation due to the war".
On the 7th of June, 1941, the Minister of
Justice, acting under the provisions of section 7 of the War Measures Act, referred
to the "Exchequer. Court of Canada" for adjudication, the claim made
by the respondent in respect of the acquisition of the two ships, and the
judgment now in appeal was pronounced upon that reference. It is objected by
the respondent that no appeal lies to this Court on the ground that the
Exchequer Court was curia designata.
It may be pointed out that, were it not for the
provisions of section 7 of the War Measures Act, it would seem that the
respondent would have been entitled to proceed by
[Page 507]
way of petition of right in the Exchequer Court,
and that that Court would have had jurisdiction under the provisions of section
19 (a) and (d), or that the claim might have been referred to the
Exchequer Court by the head of the department of Government concerned, under
section 37, in either of which cases an appeal would have lain to this Court
under section 82 of the Exchequer Court Act and section 44 of the Supreme
Court Act. Is, then, section 7 of the War Measures Act intended to
produce a different result where a claim is referred to the Exchequer Court
under that section?
In support of the contention of the respondent,
many authorities were referred to, including the reasons of Idington J. in Warner
Quinlan Asphalt Company v. The King.
The other members of the Court in that case did not express any opinion on the
point. The question is always one of intention to be gathered from the
provisions of the legislation in question, and, in my opinion, the objection is
not well taken in the present case. It is argued that because the Minister of
Justice has an option as to the court or judge to whom the reference shall be
made, no appeal can be intended, as there can be no uniform procedure by way of
appeal from these various tribunals.
In James Bay Railway Co. v. Armstrong, an appeal from an award of
arbitrators under the provisions of the Dominion Railway Act was taken
to the High Court in Ontario, the legislation providing for an appeal to a
"superior court" which was defined as including the High Court and
the Court of Appeal. It was held, following Ottawa Electric Co. v. Brennan, that no appeal lay to this
Court. On a further appeal to the Privy Council, the judgment was affirmed,
although the Judicial Committee entertained an appeal direct from the High
Court pursuant to special leave which had been obtained. In giving the judgment
of the Board, Lord Macnaghten, after referring to the relevant legislation,
said at page 630:
It seems to follow that a party desirous of
appealing from an award under the Canada Railway Act has in Ontario the option
of going either to the High Court or to the Court of Appeal. This has uniformly
been so held in Ontario, and it has also been held from the first that no
[Page 508]
appeal lies from the High Court to the
Court of Appeal in Ontario in the case of railway awards: see Birely v. Toronto,
Hamilton and Buffalo Railway Co..
The Supreme Court in the present case
appear to think that this view is right. It is, however, objected that, if the
appellant has the option of going either to the High Court or the Court of
Appeal, and if the Supreme Court is right in holding that no appeal lies from
the High Court to the Supreme Court, an appellant has the power of shutting out
any further appeal at his own will and pleasure. No doubt that
privilege, whether it be a benefit to the litigants or a calamity, is somewhat
anomalous, but it does not seem to their Lordships that the anomaly is so great
or so startling as to make it necessary or permissible to confine the
expression "superior court" to the Court of Appeal.
The basis for that part of Lord Macnaghten's
judgment, which I have quoted, would appear to be that under the Dominion Railway
Act, which provided for an appeal from the award, either to the High Court
or to the Court of Appeal, at the option of the appellant, there was no
provision for a further appeal from either Court, and that it was within the
power of an appellant, by taking an appeal to the High Court, to shut off any
further appeal, which he could not do if his appeal were taken to the Court of
Appeal, as other Dominion legislation, namely the Supreme and Exchequer
Courts Act, R.S.C. 1886, chapter 135, provided for an appeal from the Court
of Appeal. At page 631, Lord Macnaghten said:
* * * except
in certain specified cases within which the present case does not come, an
appeal to the Supreme Court lies only from the Court of Appeal.
This was the view expressed by Osier, J.A., in Birely
v. Toronto, Hamilton and Buffalo Railway Co., and this would appear to
be the view prevailing after the decision in the James Bay case (supra),
as in Ruddy v. Toronto Eastern Railway Co. an appeal from an award
under the Dominion Railway Act was taken to the Appellate Division of
the Supreme Court of Ontario and an appeal from the judgment of that Court was
entertained without objection by this Court. Similarly, in Standard Fuel Co.
v. Toronto Terminals Railway Co.,
an appeal from an award was taken to the Court of Appeal in Ontario and a
further appeal was had directly to the Privy Council.
In Sun Life Assur. Co. v. Superintendent
of Insurance,
the majority of the Court, in considering section 82
[Page 509]
of the Exchequer Court Act, considered it
legitimate to refer to the definition of "judicial proceeding" in
section 2 (e) of the Supreme Court Act as indicating "the
class of matters which Parliament thought should be excluded from the appellate
jurisdiction of" this Court, and they held that the Exchequer Court was curia
designata. On appeal to the Privy Council
the objection to the jurisdiction was given up and the appeal was heard and
disposed of.
I do not think that there is any question but
that the proceeding in the Exchequer Court in the case at bar was a judicial
proceeding within the definition applied in the above case to section 82 of the
Exchequer Court Act, nor that the judgment of Angers J. is a
"judgment" within the meaning of that section. Accordingly, I think
that the combined effect of that section and section 44 of the Supreme Court
Act is to authorize an appeal to this Court. Section 7 of the War
Measures Act, in my opinion, vests jurisdiction in the Exchequer Court
within the meaning of section 82, conditional only upon the exercise by the
Minister of the power of reference given him by the War Measures Act.
Turning to the merits, the first question for
determination is as to the meaning of the phrase "the value of the
vessel" as used in section 5 of The Compensation (Defence)
Act, 1940. It is to be observed that the same language appears in clause (d)
of subsection. (1) of section 4, and that, although by subsection (6) of
that section the expression "total loss" is to have the same meaning
as it has for the purposes of the law relating to insurance, the Statute does
not define the phrase "the value of the vessel".
The learned trial judge took the view that the
principles applicable are those which have been applied in fixing compensation
under section 23 of the Expropriation Act, R.S.C. 1927, chapter 64.
Whatever may be the position under the Expropriation Act, it is
erroneous, in my opinion, to apply the principles applicable under that Act, to
a case arising under The Compensation (Defence) Act, 1940, the
provisions of which are not the same but narrower in scope.
[Page 510]
The comprehensive nature of the language used in
the Expropriation Act is referred to by Maclean J., in Federal
District Commission v. Dagenais,
where he says that the
"compensation money" does not
appear to be limited by the statute to the "value" of the lands
taken, in fact, I think, the word "value" is not once mentioned in
the Act. The "compensation money", it seems to me, is to be the
equivalent of the loss which the owner has suffered for any land "taken",
and is not to be ascertained only by considering the "value" of the
land.
In Cedars Rapids Manufacturing and Power
Company v. Lacoste,
Lord Dunedin, in delivering the judgment of the Privy Council, at page 576,
approved of the judgments of Vaughan Williams and Fletcher Moulton L.JJ., in
the case of In Re Lucas and Chesterfield Gas and Water Board, in which judgments the
principles applicable in determining the value to the owner of land
compulsorily taken are laid down. Where the value of the thing taken, whether
it be land or other property, is being determined without regard to the
question of damages suffered by the owner, over and above the value of the
thing taken, as in the case at bar, the matter is governed, in my opinion, by
those principles. The owner is entitled to the "value to him" of the
property taken, as it existed at the date of the taking. There must be taken
into consideration all advantages, present or future, which it possesses for
other possible purchasers as well as for the owner himself, but there is to be excluded
from consideration any special value to the person exercising the power of
compulsory taking where that value exists only for him in connection with the
scheme for which the property is taken. I am not intending to do anything more
than to epitomize what is found in the authorities to which I have referred, as
I understand them. Lord Moulton, in delivering the judgment of the Judicial
Committee in Pastoral Finance Association v. The Minister, summed up the matter in
this way:
Probably the most practical form in which
the matter can be put is that they [the owners] were entitled to that which a
prudent man in their position would have been willing to give for the land
sooner than fail to obtain it.
[Page 511]
The Statute there in question was the Statute of
New South Wales (No. 26 of 1900, section 117) which provided as the basis for
assessment "the value" of the land being acquired. The section also
dealt with damage caused by severance, but that question did not arise in the
case before the Board. Reference may also be made to Lake Erie and Northern
Ry. Co. v. Schooley.
With respect then to the Seaborn, this
ship was acquired by the respondent on the 14th of July, 1939, and it was
requisitioned by the Crown on the 4th of September following. The Crown retained
possession for a period not disclosed by the evidence, when the ship was then
returned to its owners, with the intimation that it would be sooner or later
again required. Subsequently, on the 2nd of December, 1939, the ship was
requisitioned and its possession was retained until the acquisition of the
title by the Crown on the 1st of March, 1941. The ship was built as a private
yacht and at the time of its purchase by the respondent, had been out of
commission for a few years, although it had been well taken care of. On its
purchase, the respondent had done some refitting for the purpose of converting
it for use as a ferry boat, the respondent at that time being the owner of a
franchise expiring November 30th, 1943, for the operation of a ferry between
Wood Island, Prince Edward Island, and Caribou, Nova Scotia. Although the
franchise agreement called for the operation of this ferry from the 1st of May,
1939, the respondent had not operated the ferry and did not do so until
sometime in 1941.
The respondent paid $30,000 in cash for the ship
and in addition had issued $25,000 par value second mortgage bonds and 500
shares of its capital stock of no par value at $50 per share, there being in
addition to these shares only three other outstanding shares issued for
qualifying purposes. According to the evidence of the president of the
respondent company "Miss Morrison, or whoever was the American party to
the deal, agreed to give the boat" and accept the bonds and the shares
"as protecting her until such time as funds were available". Later,
the bonds and shares were acquired by an interested group for $25,000. The
prospectus of the company filed with the Registrar of
[Page 512]
Joint Stock Companies for the Province of Nova
Scotia on May 1st, 1940, states that the Seaborn was purchased from Miss
Morrison, who acted as agent for Mr. W. N. MacDonald of Sydney, Nova Scotia.
The same document also states that "Mr. W. N. MacDonald, who negotiated
the transaction [which refers to another ship, the Sankaty] has declared
that he realized a gross profit of $15,000 in the purchase of the Charles A.
Dunning [the Seaborn], out of which he paid his own
expenses". Mr. MacDonald appears as the largest single shareholder and
largest holder of second mortgage bonds of the company.
The American owner of the ship then sold it for
$40,000 American funds. There is no difficulty on this evidence in concluding
that the shares and second mortgage bonds issued in connection with the
purchase of the ship did not, at that time, exceed $25,000 in value. It was
stated by the president of the respondent company in evidence that each of the
directors received a first mortgage bond of the company for their first year's
services. The company was incorporated on the 10th of January, 1939. He went on
to say that this bond, at the time, was not saleable and "perhaps not
worth anything." A fortiori, neither the second mortgage bonds nor
the shares could have differed much in value. The only asset of the company in
September, 1939, was the Seaborn and the ferry franchise. This latter
item does not appear in the balance sheet of the company of December 31st,
1939, and was of uncertain value, as the service had not been commenced. The
subsidy payable by the Crown under the franchise amounted to $28,000, but under
the provisions of the deed of trust securing the first mortgage bonds of
$110,000, the subsidy was to be applied in paying the interest on outstanding
bonds and the principal of maturing bonds.
The Seaborn underwent some refitting at
New London for the purpose of making the ship fit for the voyage to Halifax and
the expenditure under this head was $2,397.02. Fuel for the trip cost an
additional $500. Apart from work done at Halifax for the purpose of
reconverting the ship from a yacht to a ferry, the cost of which was $2,303.09,
the expense applicable to this ship including maintenance to the end of 1939
was $13,264.63, against which must be set $500 realized on the sale of one of
the ship's launches.
[Page 513]
The total of these items, $79,567.72 plus
exchange on $55,000, represents the full expenditure in connection with the
ship, up until the time of its second requisition by the Crown in December,
1939.
The learned trial judge finds that the cost of
the ship was $98,833.67, although at another place in his judgment, he states
the amount as $93,264.63. In arriving at the higher figure, he takes the price
of the ship as $80,000 and the cost of overhauling, bringing her to Halifax and
maintenance until she was requisitioned at $16,651.94, to which he adds the
cost of reconversion, $2,181.73. This last item is a duplication, as it is
already included in the amount of $16,651.94. Exhibit "G", a letter
written by the respondent company to the Director of Shipbuilding dated the
10th of May, 1940, shows that the $16,651.94 is made up as follows:
$13,264.63—representing "maintenance and other expenses directly
applicable to the boat, including cost of bringing it to Halifax";
$2,303.09—"most of which is represented by the bill presented by the
Halifax Shipyards Limited for overhauling after arrival at Halifax";
$1,084.22—"expenses of the company for the period January 1st, 1940 to May
2nd, 1940 … a large part of which represents interest on borrowed money
required to help finance the company".
Not only, therefore, must the item of $2,181.73
be deducted from the figure used by the learned trial judge, but also the item
of $1,084.22, as this represents expenses after the 1st of January, 1940, when
the ship was under requisition to the Government and earning hire. There must
also be deducted $500 for the sale of the launch, as well as the difference
between the purchase price of the ship in American funds and the $80,000 figure
accepted in full by the trial judge.
Evidence was given casting doubt upon the
suitability of the ship for reconversion as a ferry, owing to the fact that
when converted to carry cars and trucks, its stability would be affected. The
learned trial judge, in his reasons for judgment, refers to the "possible
lack of stability of the Seaborn if converted into a ferry boat"
and says "from the evidence adduced I am inclined to think that the Seaborn
was not the right kind of vessel to use for the
[Page 514]
carrying of trucks and automobiles, at least to
carry the quantity which she was expected to carry". According to the
president of the respondent company, when the company on the 12th of December,
1939, acquired the Sankaty, the respondent was agreeable to making a
sale of the Seaborn.
The respondent called two experts, Jagle and
Strang, each of whom placed a value of $175,000 on the ship as of September,
1939. Jagle gave no explanation as to the basis of his figure which he called
an "appraised" value. This often means reconstruction cost less
depreciation. It may have other meanings and the witness did not explain his
meaning. There is nothing to indicate that the phrase was used to express the
opinion of the witness as to the value of the vessel on the' basis of the
principles already referred to. In my opinion, such evidence is valueless. Strang
said that in arriving at his figure, he did not calculate the amount by any
method known to appraisers of vessels. He said his figure was based on the sale
of two similar vessels, though of slightly different size, but he paid no
attention to the fact that the ship was a yacht. He did not have in mind in any
way the value of the ship for the purposes of a ferry, but he valued it
"just as a vessel, without reference to any particular trade." He
described his value as an "actual value" and said that he did not
know the current prices in 1939, particularly in the case of yachts. It is
evident, therefore, that the two similar vessels, to which he had already
referred in his evidence, were not yachts. He went on to say that in 1939 the
"market value" would be higher than the "actual value"
because the owner of a vessel has to make a profit and the profit would have to
be added to what he called the "actual value". This profit he
described as 10 per cent, but he went on to say that if one knew the
"market value" in 1939, the "actual value" could not be
arrived at by deducting this profit. He also said that the "actual
value" might be higher or lower than the "theoretical" sum which
he called "market value". It is impossible, in my judgment,
intelligently to place any value upon this evidence.
The Crown paid to the respondent in respect of
the acquisition of the title to the Seaborn, the sum of $92,764.63,
being the amount of the valuation made in
[Page 515]
respect of this ship by an Advisory Board. It
does not appear what evidence the Board had before it when this amount was
arrived at, although it appears that this amount is the book value of the ship
as it appears in the books of the respondent company. As already pointed out,
the learned trial judge erred in his determination of the principle to be
applied in assessing value under the provisions of section 5 of the Compensation
(Defence) Act. Applying the principles to which I have
referred, I am of opinion that there is no evidence which enabled the learned
trial judge consistently with those principles to assess the value of the Seaborn
at any amount beyond the amount paid by the Crown. It is not necessary to
consider whether, consistently with those principles, the value should be
determined at any lesser amount, as there is no complaint by the Crown except
with respect to the excesses over and above the amount paid.
With regard to the Sankaty, this ship was
purchased by the respondent on the 12th of December, 1939. At that time, she
was an old boat, having been built in 1911. The purchase price was
approximately $5,000. The ship being unseaworthy, it was necessary largely to
rebuild her and some $6,300 was expended in rendering her capable of proceeding
to Halifax. In Halifax, an additional sum of approximately $54,000 was spent
upon her in the shipyards there, and approximately $2,500 in materials was
supplied to employees of the respondent, who were also working upon her. The
total expenditures up to the time the ship was requisitioned by the Crown on
the 17th of June, 1940, according to the evidence, was approximately $67,800,
there being still some $20,000 required to complete the work. Ultimately, the
title to the Sankaty was acquired by the Crown on the 1st of March,
1941. According to the evidence of the secretary of the respondent company, it
was as a result of both of these ships having been requisitioned that the
respondent company decided to purchase another ship then known as the Erie
Isle but whose name was changed on purchase to the Prince Nova. The
cost of Prince Nova, which was a smaller ship than the Sankaty, was
$92,000.
[Page 516]
In connection with the Sankaty, the
learned trial judge, basing himself on the view that the principle applicable
in cases arising under the Expropriation Act was equally applicable
under the Compensation (Defence) Act, held that the
doctrine of reinstatement applied and fixed the amount at $205,000.
Reinstatement is not limited to the value of the property taken, but involves
the substitution of other property and a consideration of its value or cost. It
is applicable in cases where the principle restitutio in integrum governs,
but it is quite inapplicable to cases such as the case at bar, for that
principle is excluded by the terms of the governing Statute which confines the
tribunal assessing compensation to a consideration of the value of particular
property, without regard to other property which may be necessary to place the
person whose property is taken in the same position in which he was immediately
prior to the exercise of the compulsory powers. It may well be doubted whether
the principle of reinstatement could in any event have any application to the
case at bar, depending as it does for its application, in any given case, upon
the existence of circumstances under which the obtaining of substitute property
was made necessary by the forcible taking and the course followed in obtaining
that property was reasonable: A & B Taxis, Limited v. Secretary
of State for Air.
It has not been shown in evidence that the purchase of the Prince Nova was
rendered necessary by the acquisition of the title to the Sankaty. The
exact date of the purchase of the Prince Nova is not established,
although it appears to have been sometime in the early part of 1941. The Sankaty
was then, and had been since June 17th of the previous year, under
requisition and it is expressly stated by the witness McKay, the secretary of
the respondent company, that it was as a result of the requisitioning of
the Sankaty and the Seaborn that the decision to purchase the Prince
Nova was made. It is not necessary to decide this point, however, as in my
opinion, for the reasons mentioned, the doctrine of reinstatement has no
application. I do not find it possible on the evidence to arrive at the proper
value of the Sankaty, as, in my opinion, the evidence was not directed
in accordance with the pertinent principles.
[Page 517]
The appeal should, therefore, be allowed and the
case remitted to the Exchequer Court to determine the value of the Sankaty in
accordance with the principles referred to, but the compensation allowed in
respect of the Seaborn should be reduced to $92,764.63. The appellant
should have the costs of the appeal. The costs of the former trial should be in
the discretion of the Judge presiding at the new trial, who will have regard to
the fact that the appellant has succeeded throughout with respect to the Seaborn.
Estey J.—I agree in the conclusion of my
brothers Rand and Kellock.
Motion to quash dismissed with costs.
Appeal allowed
with costs.
Solicitors for the appellant: Burchell,
Smith, Parker & Fogo.
Solicitor for the respondent: George J.
Tweedy.
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