Supreme Court of Canada
The Queen v. Walker, [1970] S.C.R. 649
Date: 1970-03-20
Her Majesty the Queen Appellant;
and
Wilfred Alan Walker Respondent.
Her Majesty the Queen Appellant;
and
M. E. Clark & Son Ltd. Respondent.
1969: October 27, 28; 1970: March 20.
Present: Cartwright C.J. and Fauteux, Abbott, Martland, Judson, Ritchie, Hall, Spence and Pigeon JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Crown—Leases of lands in National Park—Renewal clauses—Perpetuity—Arbitration—Minister’s discretion—The Dominion Forest Reserves and Parks Act, 1911 (Can.), c. 10, as amended, 1913 (Can.), c. 18—Regulations—Retrospective operation.
A lease of a lot situated in Jasper Park (now Jasper National Park) was made by the Crown in 1924 to the predecessor in title of the respondent W. A lease in similar terms was made in 1925 to the predecessor in title of the respondent C. Both leases were for a term of 42 years from the date of the lease, and each provided for an annual rent of $8 up to January 1, 1930, and for the next 10 years, and for every subsequent period of 10 years, or less, such yearly rental as might be fixed by the lessor, or, if not agreed to by the lessee, as might be determined by a judge of the Exchequer Court to be the full annual value of the tenement at the date of determination.
Each lease provided for the granting, under certain conditions, to each lessee a lease for a second term of 42 years, containing the like stipulations, terms and conditions as contained in the initial lease, save as to rent. Failing agreement as to the rent under the renewal lease, it was provided that it should be determined by three arbitrators. A further clause of the lease provided for further renewals for terms of 42 years subject to like stipulations, terms and conditions, subject to rentals to be determined in the manner provided in respect of the first renewal.
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When the original leases expired, the Crown, in each case, refused to issue a renewal lease in the terms of the agreement. The respondents filed a petition of right in the Exchequer Court seeking an order declaring their entitlement to renewal leases, in the terms provided in the initial leases. The respondents were successful at trial in obtaining the declaration which they sought, save only as to those provisions of the initial leases which related to the manner of determining the rental payable under renewals of the leases (i.e., by arbitration).
From this judgment the Crown appealed, and the respondents applied to vary the judgment at trial, in so far as it decided that a renewal lease could not be granted, in accordance with the terms of the initial lease, in regard to the provision as to the determination of the rental payable under the renewal lease.
Held (Abbott and Judson JJ. dissenting and Pigeon J. dissenting in part): The appeal should be dismissed and the application to vary allowed.
Per Cartwright C.J. and Fauteux, Martland, Ritchie, Hall and Spence JJ.: The leases were properly issued pursuant to regulations enacted in 1913, following the enactment of 1913 (Can.), c. 18, amending The Dominion Forest Reserves and Parks Act, 1911 (Can.), c. 10. As a consequence, no question arose as to the authority to provide for successive renewals.
Under the said regulations, the Minister was not required to fix the rentals payable on renewals of the lease, but it was in his discretion to approve the form of lease, and therefore he did not lack authority to make the rental provision which he did when he approved the form of the lease, so long as the requirements of the regulations were observed, as in fact they were.
The National Parks Act, originally 1930 (Can.), c. 33, now R.S.C. 1952, c. 189, and the regulations enacted thereto are not to be construed as applying retrospectively so as to take away rights already created. They lay down rules applicable from the date of enactment regarding the disposition of property in National Parks, but in the absence of clear and specific terms to that effect they should not be interpreted so as to divest the respondents of contractual rights and equitable interests already validly granted to them.
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The contention that by their very terms the leases were subject to any regulations subsequently enacted was not accepted. When the leases speak of “Regulations for the control and management of Dominion Parks” they are speaking of regulations enacted under para, (a) of subs. (3) of s. 18 of The Dominion Forest Reserves and Parks Act, i.e., those which govern the control and management of parks, and not regulations under para. (c), i.e., those which govern the leasing of lands within parks.
Per Abbott and Judson JJ., dissenting: The appeal should be allowed and the motion to vary dismissed.
The trial judge was correct in holding that the 1913 regulations related to “Forest Reserves” and in no way related to “National (Dominion) Parks”, and that the leases in the parks were governed by the regulations of the National Parks of Canada made in 1909 and re-established in 1911, pursuant to subs. (2) of s. 18 of The Dominion Forest Reserves and Parks Act, 1911 (Can.), c. 10. However, in applying the 1911 regulations, the trial judge erred in holding that the words “with a right of renewal” gave the Minister power to grant leases containing a covenant giving the right of renewal in perpetuity. Where a lessee appeals to a statute and regulations made thereunder as supporting a right to perpetual renewal, the statute and the regulations must give him that right expressed with the same clarity that is demanded in the case of a covenant for renewal contained in a lease.
The lessees in this case had no right of renewal in perpetuity and in any renewal lease the rent, as was required by both the 1911 and the 1913 regulations, must be fixed by the Minister.
Per Pigeon J., dissenting in part: The appeal and the cross-appeal should be dismissed.
Applying the usual rules of statutory interpretation, the provision in the 1911 regulations authorizing leases of land in the national parks “with the right of renewal” should not be construed restrictively so as to authorize only a single renewal for the maximum term of forty‑two years.
Furthermore, the authorized representatives of the Crown had construed the regulation as authorizing leases with the right of renewal in perpetuity and the executed lease so provided. In order to
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escape from the binding force of those leases, the Crown was required to show that the regulations did not authorize the right of renewal that was granted. This was not established by showing that renewal clauses in conveyances are presumed not to be in perpetuity.
The trial judge correctly held that the provision for fixing the rental by arbitration was not authorized. The regulations provided for leases at a rental to be fixed by the Minister. There could be no right of review. However, as held below, the provision for arbitration was severable.
APPEAL from and a MOTION by the respondents to vary a judgment of Gibson J. of the Exchequer Court of Canada. Appeal dismissed and motion to vary allowed, Abbott and Judson JJ. dissenting and Pigeon J. dissenting in part.
C.R.O. Munro, Q.C., and A.S. Ross, for the appellant.
G.H. Steer, Q.C., and G.A.C. Steer, Q.C., for the respondents.
The judgment of Cartwright C.J. and Fauteux, Martland, Ritchie, Hall and Spence JJ. was delivered by
MARTLAND J.—Under date of October 1, 1924, a lease was made by His Majesty, King George the Fifth, represented by the Minister of the Interior, as lessor, to one Julia E. Follett, as lessee, of a lot situated in Jasper Park (now Jasper National Park) in the Province of Alberta. It is agreed that the respondent Walker is entitled to enforce the right, title and interest of the lessee. A lease in similar terms was made by the said lessor to Joseph Thomas Norquay, under date of October 1, 1925, and it is agreed that the respondent M.E. Clark & Son Ltd. is entitled to enforce the right, title and interest of the lessee.
Each of the leases was executed, on behalf of the Crown, by the Deputy Minister of the Interior.
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Both leases were for a term of 42 years from the date of the lease, and each provided for an annual rent of Eight Dollars up to January 1, 1930, and for the next 10 years, and for every subsequent period of 10 years, or less, such yearly rental as might be fixed by the lessor, or, if not agreed to by the lessee, as might be determined by a Judge of the Exchequer Court to be the full annual value of the tenement at the date of determination.
Each lease provided that if, at the expiration of its term, the lessee desired to take a renewal lease of the demised premises, if the lessee had given six months’ notice in writing to the Minister, had paid the rents reserved, and had observed, performed, fulfilled and abided by the stipulations, terms and conditions of the lease, His Majesty, His successors or assigns would grant a lease for a second term of 42 years, containing the like stipulations, terms and conditions as contained in the initial lease, save as to rent. Failing agreement as to the rent under the renewal lease, it was provided that it should be determined by three arbitrators, one to be named by the Minister, one by the lessee, and the third to be chosen by the two so named. A further clause of the lease provided for further renewals for terms of 42 years subject to like stipulations, terms and conditions, subject to rentals to be determined in the manner provided in respect of the first renewal.
The respondents paid the rentals provided in their respective leases, and observed the stipulations, terms and conditions of such leases. They each gave notice of their desire to renew in accordance with the provisions of the leases. The Crown has, in each case, refused to issue a renewal lease, in the terms of the agreement.
The respondents filed a petition of right in the Exchequer Court seeking an order declaring their entitlement to renewal leases, in the terms provided in the initial leases.
The respondents were successful at trial in obtaining the declaration which they sought, save only as to those provisions of the initial leases which related to the manner of determining the rental payable under renewals of the leases (i.e.,
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by arbitration). The learned trial judge held that it was not within the power of the Minister of the Interior, under the relevant regulations, applicable when the leases were made, to include such a provision in the leases. In his opinion the rentals to be paid had to be fixed by the Minister.
From this judgment the Crown has appealed, and the respondents have applied to vary the judgment at trial, in so far as it decided, as mentioned in the preceding paragraph, that a renewal lease could not be granted, in accordance with the terms of the initial lease, in regard to the provision as to the determination of the rental payable under the renewal lease.
The appellant seeks to justify what, on its face, appears to be a refusal by the Crown to perform its contract, on two grounds:
(a) That the relevant regulations, in effect when the leases were made, did not give to the Minister the power to issue leases, renewable at the option of the lessee, for successive terms of 42 years, in perpetuity.
(b) That at the time the respondents sought renewal of their leases, the Minister was prohibited by the National Parks Act, 1930 (Can.), c. 33, and regulations made pursuant to it from issuing leases in the terms of the covenant for renewal.
Dealing with the first point, I wish to deal briefly with the legislative background of the applicable statute and the regulations which were in effect when the leases were executed.
In 1883, by chapter 17 of the Statutes of Canada of that year, an Act was passed to amend and consolidate the several Acts respecting public lands of the Dominion. It applied to public lands in Manitoba and the several Territories of the Dominion. This statute was the forerunner of The Dominion Lands Act, R.S.C. 1886, c. 54, and later R.S.C. 1906, c. 55. This Act was replaced in 1908 by 1908 (Can.), c. 20.
The Rocky Mountains Park Act was enacted in 1887, as 1887 (Can.), c. 32. It established, as a single park, the Rocky Mountains Park, later Banff Park.
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The Dominion Forest Reserves Act, 1906 (Can.), c. 14, provided that Dominion lands, within Manitoba, Saskatchewan, Alberta and British Columbia, as described in the Act, should be withdrawn from sale, settlement and occupation under The Dominion Lands Act and be set apart as Dominion Forest Reserves
in order to protect and improve the forests for the purpose of maintaining a permanent supply of timber, to maintain conditions favourable to a continuous water supply and to protect so far as the Parliament of Canada has jurisdiction, the animals, fish and birds within the respective boundaries of such reserves and otherwise to provide for the protection of the forests in the said provinces.
In 1907, pursuant to the authority of s. 194 of the Dominion Lands Act, R.S.C. 1906, c. 55, which empowered the Governor in Council to set aside lands in Alberta, or the Yukon Territory, on, adjacent to, or in the vicinity of the Rocky Mountains, as forest parks, Jasper Forest Park was set apart and established as a forest park, by P.C. 1323. The description of the lands included in this Park was amended in 1909 by P.C. 1068.
In 1911, The Dominion Forest Reserves and Parks Act, 1911 (Can.), c. 10, was enacted. Up to this point, the situation was that one park, the Rocky Mountains Park, had been withdrawn from Dominion Lands, and various forest reserves, including Jasper Forest Park, had been similarly withdrawn under the provisions of The Dominion Forest Reserves Act.
The 1911 Act withdrew the lands described in it as reserves from sale, settlement and occupancy under the Dominion Lands Act. It also provided, by s. 18, for the designation of reserves or areas within forest reserves as Dominion Parks. Section 18, as it appeared in the 1911 Act, was repealed in 1913 (c. 18, S.C. 1913) and replaced by a new s. 18 to which I will now refer. The relevant parts of this section are as follows:
18. The Governor in Council may, by proclamation, designate such reserves or areas within forest reserves or such other areas as he sees fit, the title
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to which is vested in the Crown in the right of Canada, to be and to be known as Dominion Parks, and they shall be maintained and made use of as public parks and pleasure grounds for the benefit, advantage and enjoyment of the people of Canada, and the provisions of this Act governing forest reserves, excepting section 4, shall also apply to the Dominion Parks.
2. The said parks shall, subject to the direction of the Minister of the Interior, be under the control and management of the Commissioner of Dominion Parks, or such person as is selected for that purpose by the Governor in Council.
3. The Governor in Council may make regulations—
(a) for the protection, care, management, control, maintenance and improvement of Dominion Parks, and their use and enjoyment as public parks and pleasure grounds;
(b) for the conduct of persons residing in or making use of any park;
(c) for the lease for any terms of years of such parcels of land in the parks as he deems advisable in the public interests, for public purposes, for the construction of buildings for ordinary habitation, for purposes of trade and industry and for the accommodation of persons resorting to the parks;
(d) for the maintenance and improvement of properties in the parks that have been sold or leased;
(e) prescribing the class and style of buildings and other structures to be erected in the Parks and the materials of which they must be built, and for classifying building and fire areas;
It will be noted that all the provisions of the Act governing forest reserves also applied to Dominion Parks, other that s. 4, which gave the control and management of reserves to the Director of Forestry, whereas s. 18(2) gave the control and management of Dominion Parks to the Commissioner of Dominion Parks.
Section 17(b) of the 1911 Act, as amended in 1913, empowered the Governor in Council to make regulations for:
the cutting and removal of timber, the working of mines, quarries and mineral deposits, the removal
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of sand, gravel, earth, stone or any other material, the pasturage of cattle, the use of hay lands, the establishment and use of reservoirs, water-power sites, power transmission lines, telegraph and telephone lines, and any other use not inconsistent with the purposes of this Act, and the granting of leases and permits therefor;
(The emphasis is my own.)
Jasper Park, and four other Dominion Parks, were established by P.C. 1338, in 1911, under the authority of the 1911 Act. The order in council designated the parks with the phrase “the following tracts located within forest reserves.” The lands which were leased to the respondents were within a Dominion Park and also within a forest reserve.
I now turn to consider the provisions of those regulations to which reference has been made in this case.
Two years prior to the establishment of Jasper Park as a Dominion Park, regulations were enacted, entitled “Regulations of the National Parks of Canada”, by P.C. No. 1340, in 1909. The order in council rescinded the regulations previously applicable to the Rocky Mountains Park.
Section 2 of the 1909 regulations appeared under a heading “Residence in the Parks”, and provided as follows:
2. The Minister of the Interior shall have power to cause such portions of the Parks as from time to time he may designate to be surveyed and laid out in building lots, for the construction thereon of buildings for ordinary habitation and purposes of trade and industry, and for the accommodation of persons resorting to the Parks, and may issue leases for such lots for any term not exceeding forty-two years, with the right of renewal, at rentals to be from time to time fixed by him; also to set apart such portions of the Parks as he may think proper for the sites of market-places, jails, courthouses, places of public worship, burying grounds, benevolent institutions, squares, and for other similar public purposes.
In 1913, following the amendment to the 1911 Act, there were enacted, by P.C. 2028, regula-
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tions entitled “Regulations for Dominion Forest Reserves.”
Section 1(d) stated that:
“Dominion Lands” means lands of the Dominion of Canada which are within or which comprise any Dominion Forest Reserve to which the provisions of “The Dominion Forest Reserves and Parks Act” apply.
Section 64 provided as follows:
64. The Minister is authorized to lease lands for the following purposes, and under the conditions hereinafter provided:
(a) …
(b) ….
(c) Summer resort lots.
Conditions governing the leasing of lands for above purposes:
(a) …
(b) …
(c) leases for building lots within duly established summer resorts, on such form as is approved by the Minister, may be granted for a period of forty-two years renewable in like periods at a rental to be fixed by the Minister. Such rental shall be subject to readjustment in the year 1920 and at the end of each period of ten years thereafter. Before a lease is issued in favour of any applicant he shall be required to execute an agreement by which he will undertake to erect and complete within one year to the satisfaction of the forest officer in charge of the reserve a building for residential purposes according to plans and specifications previously approved by the said forest officer, and on fulfilment of the terms of the agreement the lease shall be granted. No building shall be erected or used for other than residential purposes except by special authorization of the Minister.
(d) Leases shall not be transferable without the written consent of the Minister.
Julia E. Follett and Joseph Thomas Norquay, the respective predecessors in title of the respondents, each applied for a lease on forms prepared by the Department of the Interior. Each application contained the following paragraph:
In making this application I understand that the applicant has no authority to exercise any rights
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whatever under this application until an agreement has been issued also that before any building operations are commenced plans and specifications in duplicate must be filed with the Superintendent of the Park and a building permit secured.
In each case, prior to the granting of the lease, the applicant undertook to erect and did erect and complete a building, according to plans approved by the Superintendent of Jasper Park, which was a prerequisite to the granting of the lease.
Each of the leases, in the clause governing rental, contained a provision for a readjustment of rental for the ten-year period commencing on January 1, 1930, and for each ten-year period, or part thereof, during the balance of the term.
The leases were in a form prepared by the Crown and submitted to the lessees. It appears clearly to me that, in insisting on the building requirement, and in providing for rental readjustments, the Crown had in mind the requirements of s. 64 of the 1913 regulations.
Dealing with the issue as to whether it was the 1909 regulations or the 1913 regulations which governed, the learned trial judge said this:
The submission of the respondent on this question is that the said referred to 1913 Regulations passed pursuant to the 1913 amendment to The Dominion Forest Reserves and Parks Act were Regulations in respect to “Forest Reserves” only and were not Regulations which in any way related to “National (Dominion) Parks”; and further and instead that the Regulations with respect to “National (Dominion) Parks” which are relevant and were existing in 1923-1925 and were the authority under which both these subject leases were originally granted, were the said 1909 Regulations as re-established by the Governor in Council by Order in Council P.C. 1336 dated June 6, 1911, made under section 18(2) of The Dominion Forest Reserves and Parks Act, Statutes of Canada 1911, chapter 10.
In my view, the submission of the respondent on this question is the correct statement of the applicable law.
The 1909 regulations, to which reference is made in this passage, had been enacted before
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The Dominion Forest Reserves and Parks Act was passed. At the time of enactment there was only one Dominion Park, i.e., The Rocky Mountains Park, and it is not clear under what statutory authority they had been enacted. They were, however, re-established in 1911, as is pointed out by the learned trial judge, and, under them, the Minister of the Interior was given authority to issue leases of lands in Dominion Parks.
It is, however, clear that when the leases in issue here were granted they were issued, not under the 1911 regulations, but under the 1913 regulations. The requirement for the construction of an approved building as a prerequisite to the lease, the incorporation in the leases of the provision for readjustments of rental at the end of ten-year periods, and the provisions contained in the leases for renewals all relate to those regulations.
The 1913 regulations were enacted very shortly after the 1913 amendment to The Dominion Forest Reserves and Parks Act. The 1913 amendment to s. 18 made the provisions of the Act governing forest reserves applicable to Dominion Parks. Section 19 of The Dominion Forest Reserves and Parks Act provided as follows:
19. Every regulation made under this Act shall be published for four consecutive weeks in The Canada Gazette, and shall thereupon have the same force and effect as if herein enacted, and the said regulations shall be laid before Parliament during the first fifteen days of the then next session thereof. Provided that any regulation made by the Governor in Council under the provisions of this Act, with respect to the matters mentioned in paragraph (b) of section 17 and paragraph (c) of section 18 of this Act, shall remain in force until the day immediately succeeding the day of prorogation of the session of Parliament next after the date of such regulation, and no longer, unless during that session such regulation is approved by resolution of both Houses of Parliament.
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Chapter 44 of the Statutes of Canada, 1928, provided as follows:
1. Orders in Council or Regulations heretofore made by the Governor in Council under authority of The Railway Belt Water Act, chapter forty-seven of the statutes of 1912; The Dominion Forest Reserves and Parks Act, chapter ten of the statutes of 1911; The Dominion Lands Act, chapter twenty of the statutes of 1908; the Rocky Mountains Park Act, chapter sixty of the Revised Statutes of Canada, 1906, or the Yukon Act, chapter sixty-three of the Revised Statutes of Canada, 1906, are hereby declared to have the same force and effect as if they had been approved by both Houses of Parliament as required by said Acts respectively.
The effect of these provisions is that the 1913 regulations were given the same force and effect as if they had been enacted as a part of The Dominion Forest Reserves and Parks Act, and, accordingly, by virtue of s. 18(1) of that Act, their provisions, governing forest reserves, also applied to Dominion Parks.
In my opinion, the Minister had authority under the Act and under the 1913 regulations to issue the leases which he did. Section 64 of those regulations authorized the Minister to lease “lands.” The lands here referred to are obviously the “Dominion Lands” defined in s. 1(d) as meaning “lands of the Dominion of Canada which are within or which comprise any Dominion Forest Reserve to which the provisions of The Dominion Forest Reserves and Parks Act’ apply.” The lands defined in the two leases are within this definition.
The situation is, therefore, that the Crown has granted the two leases in question relying upon the 1913 regulations, which provide adequate authority. Having done that, is it now open to the Crown to contend that such leases should have been issued under the earlier 1909 regulations and that they are only valid to the extent that they comply with those regulations? In my opinion, the Crown, having purported to act under the authority of one set of regulations, cannot impugn the authority of its agent so to act unless it can be established that the regulations
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he relied upon do not give the requisite authority to act. The Crown is not entitled to impeach its own act because the agent could have acted, more properly, under another set of regulations, if he did not elect so to do.
In the present case the Minister had authority to issue leases of park lands under either of the two sets of regulations unless it can be established that one excludes the other. By their terms, neither set purports to exclude the other. It is argued that, by implication, the 1909 regulations excluded the leasing powers under the later 1913 regulations in respect of lands in Dominion Parks. This view was not taken by the Minister at the time he issued the leases, and I am not prepared to accept the contention in light of the fact that the enactment of the 1913 regulations occurred, subsequent in time, and very shortly after the amendment of the statute, which made them applicable to Dominion Parks, and without any provision to exclude their application to such parks. If there were any doubt on this point, I think the view expressed many ears ago by Lord Coke in St. Saviour’s Southwark (Churchwardens) case, respecting the construction of Crown grants, would properly be applicable in considering this submission:
If two constructions may be made of the King’s grant, then the rule is, when it may receive two constructions, and by force of one construction the grant may according to the rule of law be adjudged good, and by another it shall by law be adjudged bad; then for the King’s honour, and for the benefit of the subject, such construction shall be made that the King’s charter shall take effect, for it was not the King’s intent to make a void grant, and therewith agrees Sir J. Moleyn’s case in the sixth part of my reports.
In my opinion the leases were properly issued pursuant to the 1913 regulations and, consequently, no question arises as to the authority to provide for successive renewals.
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It is, however, contended that the clauses of the leases governing renewals are invalid because they provide that the rental payable on renewals, failing agreement between the parties, is to be determined by arbitration. It is urged that the Minister’s power under the regulations is to fix such rentals and that, having failed to do this, and there being therefore no provision as to the rental payable on renewals, the renewal clause cannot stand.
On this issue, the learned trial judge was of the view that the Minister did not have power to introduce the arbitration provision into the renewal clause, but held that this portion of the clause was severable, leaving the rest of the clauses unaffected. On this point he concluded as follows:
As to this, I am of opinion firstly, that the offending words are severable from each of the renewal clauses and can be disregarded, leaving the rest of the clauses unaffected; and secondly, that, on the true interpretation, these clauses do reserve to the designated Minister the power to fix the rent from time to time in the way it always was intended. It was intended that the designated Minister fix the rent payable pursuant to leases renewed under such covenants to renew by way of a general Regulation applicable to all leases of the same category as the subject leases in National Parks and not by a series of single Regulations applicable only to each individual lease of lands in National Parks, and therefore the subject leases do not lack this essential term of an agreement to renew the lease, namely, the rent to be paid.
Section 18(3)(c) of The Dominion Forest Reserves and Parks Act, which authorizes the enactment of regulations for leasing, contains no stipulation as to the method of fixing rentals.
The learned trial judge was of the view that the 1909 regulations applied which provided for the issuing of leases “with the right of renewal, at rentals to be from time to time fixed” by the Minister.
The 1913 regulation authorizes leasing “on such form as is approved by the Minister,… for a period of forty-two years renewable in like
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periods at a rental to be fixed by the Minister.” The regulation itself stipulates that such rental shall be subject to readjustment in the year 1920 and at the end of each period of 10 years thereafter. This provision does not contemplate, as does the 1911 regulation, a periodic fixing of rent from time to time by the Minister, as renewals occur. It contemplates that the Minister shall fix the rental at the time the lease is made. It also provides that such rental shall be readjusted in the year 1920 and at the end of each ten-year period thereafter. This makes it clear that the Minister is only required to fix the initial rental. It is that rental which is to be readjusted periodically.
The leases in question here were on a form approved by the Minister. They were for a period of 42 years, renewable in like periods, and they were at a rental fixed by the Minister. In my opinion it was within the authority of the Minister to execute them. The Minister was not required to fix the rentals payable on renewals of the lease, but it was in his discretion to approve the form of lease, and therefore, in my opinion, he did not lack authority to make the provision which he did when he approved the form of the lease, so long as the requirements of the regulations were observed, as I think they were.
I turn now to the second point urged by the appellant, that is, that at the time the respondents sought renewals of their leases the Minister was prohibited by the National Parks Act, 1930 (Can.), c. 33, and regulations from issuing leases in the terms of the covenants for renewal.
The appellant states its proposition in this way, i.e., that a person in the position of the Minister, who contracts to renew a lease, in effect contracts to exercise his authority to issue a lease in the future and such a contract is always subject to the continuing existence of such authority. If such authority does not exist at the time the contract is to be performed the Minister is discharged from his obligation.
This submission overlooks the fact that the leases here in question were not made with the Minister, but were made with the Crown. The
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Minister prescribed the form of the lease, and the leases were executed on behalf of the Crown by the Deputy Minister of the Interior, but the Minister’s role was not that of principal. He was only an agent.
In view of this fact, the appellant’s submission in reality is that if the Crown enters an agreement, executed on its behalf by an agent, to do something in the future, the Crown ceases to be obligated to perform its covenant if, at the time of performance, the agent then lacks authority to do that which has been promised. In my opinion such a contention cannot be sustained. The Crown, just as much as individuals, is obligated to perform its contracts. Such obligation may be discharged by appropriate statutory provisions, but in the absence of clear statutory authority, it cannot evade that obligation. The obligation is not to be avoided merely because the power of the Minister to make new leases is less broad than it was when the original lease was made.
The case of Rayonier B.C. Limited v. City of New Westminster, relied on by the appellant is not comparable to the present case. In that case a municipality had leased land to a company with a first right of renewal, but “subject always to the lessor’s right to lease.” The lease exempted the company from payment of tax on land. During the term a new Municipal Act was enacted forbidding the granting by municipalities of tax exemptions.
At the expiration of the term the parties negotiated as to rent and agreed to a renewal, but the municipality subsequently declined to renew on the same terms as to tax exemption. It was held that, while the company had a right to renew, this was subject to the right of the municipality to lease, and the municipality could not grant a renewal lease containing the tax exemption.
The section of the Municipal Act which was applicable provided specifically that the Council
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of a municipality should not grant assistance to an industrial or commercial enterprise by granting exemption from taxation.
In the Rayonier case the lessor was subject to provincial legislation concerning its powers and it had been forbidden by statute to grant any exemption from taxation. In the present case there is no statutory prohibition which prevents the appellant from performing its obligation. The situation is only that, as to the granting of new leases, the powers of the Minister have been defined in terms less broad than before.
The appellant relies upon the provisions of s. 6 of the National Parks Act, originally 1930 (Can.), c. 33, now R.S.C. 1952, c. 189, which read:
Public lands within the Parks shall not be disposed of or located or settled upon, and no person shall use or occupy any part of such lands, except under the authority of this Act or the regulations.
Under the current regulations authority is given for the granting of leases for a term not exceeding 42 years, with an option to renew for a term not exceeding 21 years.
The appellant concedes that if the covenant to renew in the leases had given to the respondents an absolute right of renewal, the repeal of legislative authority would not affect that right. But the appellant contends that the covenant to renew did not confer an absolute right, but a right subject to the continuation of the Minister’s authority to grant a lease in the terms of the covenant for renewal.
I can find no such limitation in the covenant for renewal, which specifically provided that, if the lessee had complied with the terms of the lease, and had given the required notice of a desire to renew,
then His Majesty, His successors or assigns shall and will grant unto the lessee the said demised premises for a second term of forty-two years, by a lease containing the like stipulations, terms and conditions as are in these presents expressed and contained, except as to the rent to be paid by the lessee during such second term…
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The renewal clauses also contained the provision that:
…it being the true intent and meaning of these presents that at the end of the hereby granted term of forty-two years and also at the end of every renewal term of forty-two years, so to be granted as aforesaid, and upon the observance and fulfilment of, and compliance with the like requirements as are hereinbefore provided with respect to such first and second renewals, there shall be granted a further renewal term or lease of the said demised premises, containing the like stipulations, terms and conditions, and at a rent fixed and determined, as are hereinbefore respectively provided, and so on forever.
The National Parks Act and the regulations enacted pursuant thereto are not to be construed as applying retrospectively so as to take away rights already created. They lay down rules applicable from the date of enactment regarding the disposition of property in National Parks, but in the absence of clear and specific terms to that effect they should not be interpreted so as to divest the respondents of contractual rights and equitable interests already validly granted to them. For this proposition I adopt the language of Wright J. in Re Athlumney:
Perhaps no rule of construction is more firmly established than this—that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment.
The limitations imposed by the National Parks Act, and the regulations enacted under its authority, do not purport to take away and should not be construed so as to take away those rights which the respondents already had.
The appellant, however, contends that by their very terms the leases were subject to any regulations subsequently enacted, and relies upon the fifth clause of the leases, which reads as follows:
FIFTH: That this lease and any renewal thereof, shall be subject to all Regulations for the control
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and management of Dominion Parks now in force, or which may hereafter be made from time to time in that behalf, by the Governor in Council.
This issue was dealt with by the learned trial judge in the following terms:
As to the fourth question, namely, whether the fifth covenant in each of the subject leases makes applicable all Regulations for the control and management of National Parks in force at the original dates of the subject leases, or which were made thereafter from time to time in that behalf by the Governor in Council, the suppliants submit that this provision refers to Regulations which may be made from time to time which are in the nature of police regulations, and not of the type, such as is the case here, empowering or not, the designated Minister to do what is in issue in this action. The respondent on the other hand submits that this provision makes all leases such as the subject leases subject to all Regulations for the control and management of the parks in force at the original date of the leases or which thereafter may be made from time to time by the Governor in Council without limitation as to type.
I am of the view that the suppliants’ submission is the true interpretation of the meaning of the fifth covenant in the subject leases.
I agree with this conclusion and find support for it in the wording of s. 18 of The Dominion Forest Reserves and Parks Act, which applied when the leases were executed. Subsection (3) of this section dealt with the power of the Governor in Council to make regulations, and para. (a) empowered the making of regulations:
for the protection, care, management, control, maintenance and improvement of Dominion Parks, and their use and enjoyment as public parks and pleasure grounds.
(The emphasis is my own.)
But the granting of leases was not effected under that paragraph. A separate paragraph governed the power to make regulations:
(c) for the lease for any terms of years of such parcels of land in the parks as he deems advisable in the public interests,…
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Parliament itself differentiated between regulations to govern the control and management of parks, and those which govern the leasing of lands within parks. When the leases speak of “Regulations for the control and management of Dominion Parks” they are speaking of regulations enacted under para. (a) and not regulations under para. (c).
For these reasons, I would dismiss the appeal, with costs, and would allow the respondents’ application to vary the judgment at trial.
The judgment of Abbott and Judson JJ. was delivered by
JUDSON J. (dissenting)—The common issue in these two appeals is whether two lessees of lands in Jasper National Park have a right of perpetual renewal. One lease was granted in 1924, the other, in 1925. Each was for a term of 42 years and each granted to the lessee the rights of renewal in perpetuity in the following unmistakable terms: that at the expiry of the first term of 42 years the Crown would grant a second term of 42 years, and then at the expiry of the second term of 42 years, if the lessee should be desirous of renewing, the Crown would grant a further renewal of 42 years, and so on forever. When the original leases expired, the Minister tendered renewal leases for a period of 42 years without any further right of renewal. These, the respondents refused to accept and by petition of right claimed a declaration that the renewal leases should give them the right of perpetual renewal. The Exchequer Court found in their favour and the Crown appeals from that judgment.
My opinion is that the leases were issued and could only be issued pursuant to the regulations of the National Parks of Canada made on June 21, 1909, by Order in Council P.C. 1340, and re-established by Order in Council P.C. 1336, dated June 6, 1911, pursuant to subs. (2) of s. 18 of The Dominion Forest Reserves and
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Parks Act, 1911 (Can.), c. 10. Section 2 of those regulations authorized the Minister to issue leases in the following terms:
2. The Minister of the Interior shall have power to cause such portions of the Parks as from time to time he may designate to be surveyed and laid out in building lots, for the construction thereon of buildings for ordinary habitation and purposes of trade and industry, and for the accommodation of persons resorting to the Parks, and may issue leases for such lots for any term not exceeding forty-two years, with the right of renewal, at rentals to be from time to time fixed by him; also to set apart such portions of the Parks as he may think proper for the sites of market-places, jails, court-houses, places of public worship, burying grounds, benevolent institutions, squares, and for other similar public purposes.
This section gives the Minister the power to issue a lease for a term not exceeding 42 years, “with the right of renewal”, at rentals that are to be from time to time fixed by him. “With the right of renewal” does not mean “with the right of renewal in perpetuity” and does not authorize the inclusion of such clause in the renewal lease.
Because of the submission of the lessees that their leases with the covenant for perpetual renewal came under the regulations of August 8, 1913, and not the regulations of June 6, 1911, it was necessary for the learned trial judge to make a complete examination of the legislation and regulations relating to national parks and forest reserves. This he did and I adopt his analysis and do not repeat it here. His summary is:
In 1923-1924 when the respective said subject leases of the suppliants were granted by the respondent, the Regulations in force firstly, respecting “National (Dominion) Parks” and, secondly, respecting “Forest Reserves” were as follows:
(i) Respecting “National (Dominion) Parks
The June 21, 1909 Regulations made by Order in Council P.C. 1340, as re‑established by Order in Council P.C. 1336 dated June 6, 1911, passed under the enabling authority of subsection (2) of section 18 of The Dominion Forest Reserves and Parks Act
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(ii) Respecting “Forest Reserves”
The Regulations made by Order in Council P.C. 2028 dated August 8, 1913, (rescinding the Regulations of January 13, 1908 and October 19 (October 12) 1910) as further amended by Order in Council P.C. 2349 dated September 24, 1913 (which rescinded section 75 of the Regulations relating to Forest Reserves established by Order in Council of August 8, 1913 and substituted a new section 75).
The significance of the August 8, 1913, regulations is that they authorize leases “for a period of 42 years renewable in like periods”. The 1913 regulations are obviously more favourable to the position taken by the lessees than the 1911 regulations. But the learned trial judge held, correctly in my opinion, that the 1913 regulations related to “Forest Reserves” and in no way related to “National (Dominion) Parks”, and that leases in the parks were governed by the 1911 regulations. The learned trial judge then applied the 1911 regulations and held that the words “with a right of renewal” gave the Minister power to grant leases containing a covenant giving the right of renewal in perpetuity. With this conclusion, as I have said, I do not agree.
The 1913 regulations required an undertaking to build, to be executed before the granting of the lease. But the fact that the Minister, as a prerequisite to the granting of these leases, exacted from the applicants an undertaking to build according to plans to be submitted, does not mean that his authority to act came from the 1913 regulations relating to forest reserves. One of the lots was on a lake and the other was within the townsite of Jasper. It was entirely reasonable and within his power to require those building agreements. There was no reason to grant these leases ahead of need and for speculative purposes.
One source of confusion is the legislative treatment of “Forest Reserves” and “National Parks”. These were dealt with by separate
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statutes until 1911. Again, I adopt the summary of the learned trial judge:
So, putting it another way, originally the “Forest Reserves” and “National Parks” were dealt with in separate statutes until 1911. The Parks were first dealt with by the Rocky Mountains Park Act, Statutes of Canada 1887, chapter 32 and the Forest Reserves were first dealt with by The Dominion Forest Reserves Act, Statutes of Canada 1906, chapter 14. Then in 1911, these two Acts were repealed and from that date until 1930, “Forest Reserves” and “National Parks” were dealt with by one Act, The Dominion Forest Reserves and Parks Act, Statutes of Canada 1911, chapter 10.
In 1930, by the Imperial Statute 21 Geo. V, chapter 26, the British North America Act 1930, the “Forest Reserves” (inter alia) owned by Canada situated in the Province of Alberta, were transferred to the Province of Alberta, but the Government of Canada for Canada retained ownership of the “National Parks”, the Indian lands, veterans’ lands and other lands and things, all of which is spelled out in that statute and the agreements forming part of it.
Although the 1911 statute dealt with both reserves and parks, regulations made pursuant to that statute dealt separately with parks and reserves and were authorized by separate sections. This was noted by the learned trial judge:
At all times, the Regulations dealing with “Forest Reserves” were different from the Regulations dealing with “National (Dominion) Parks.” A consideration of the history of the “National (Dominion) Parks” Regulations demonstrates that the Regulations relating to “Forest Reserves” never did apply to “National (Dominion) Parks.”
Section 17 of the 1911 Act authorized the making of regulations dealing with forest reserves. Subsection (b) of this section mentioned the granting of leases in connection with certain problems of management in the following terms:
(b) the cutting and removal of timber, the working of mines, quarries and mineral deposits, the removal of sand, gravel, earth, stone or any other material, the pasturage of cattle, the use of hay
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lands, the establishment and use of reservoirs, water-power sites, power transmission lines, telegraph and telephone lines, and the granting of leases and permits therefor.
It will be noted that the power to grant leases says nothing about the terms of these leases.
Section 18 of the 1911 Act authorized the making of regulations for Dominion Parks. Subsection (c) of s. 18(2) deals with leasing:
(c) the lease for any term of years of such parcels of land in the parks as he deems advisable in the public interest, for public purposes, for the construction of buildings for ordinary habitation and purposes of trade and industry, and for the accommodation of persons resorting to the parks;…
The 1913 Act, 3-4 Geo. V, c. 18, was an amending Act. It repealed s. 18 of the 1911 Act and enacted a new section 18. I will quote the new 18(1) and 18(3)(c):
18. The Governor in Council may, by proclamation, designate such reserves or areas within forest reserves or such other areas as he sees fit, the title to which is vested in the Crown in the right of Canada, to be and to be known as Dominion Parks, and they shall be maintained and made use of as public parks and pleasure grounds for the benefit, advantage and enjoyment of the people of Canada, and the provision of this Act governing forest reserves, excepting section 4, shall also apply to the Dominion Parks.
3. The Governor in Council may make regulations—
(c) for the lease for any terms of years of such parcels of land in the parks as he deems advisable in the public interests, for public purposes, for the construction of buildings for ordinary habitation, for purposes of trade and industry and for the accommodation of persons resorting to the parks.
The above sections are the statutory authority for the making of regulations relating, first, to forest reserves and, second, to parks. There
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always were, both before and after the 1913 Amending Act, separate regulations for the two entities, each of which had its own problems requiring separate treatment. There were separate regulations when the leases in question were granted.
The lessees argue that the last words of para. 1 of the new s. 18 enacted by the 1913 Amending Act, “the provisions of this Act governing forest reserves, excepting section 4, shall apply also to the Dominion Parks,” give the Minister power to grant leases of park lands under the forest reserve regulations rather than the park regulations. I do not agree with this argument. It is contrary to the co-existence of separate sections authorizing separate regulations for forest reserves in parks and the co-existence of the separate regulations themselves. When these leases of property in the park were granted, the only statutory authority was s. 18 relating to parks and the corresponding park regulations. The purpose of the controversial words in the new s. 18 is not to make s. 17 and the regulations thereunder applicable to both reserves and parks but simply to repeat the general principle that one Act deals with both reserves and parks, a principle which, as Gibson J. noted, marked a departure in the history of legislation dealing with these matters.
A large part of the argument before us was therefore devoted to this question: Are the 1911 park regulations applicable which authorized the lease for 42 years “with a right of renewal”, or are the 1913 forest reserve regulations applicable which authorized a period of 42 years “renewable in like periods”. I have stated above that Gibson J. held that the 1911 park regulations applied and that they were enough to support the right of renewal in perpetuity. The lessees appeal to the 1913 forest reserve regulations and rely on the words “renewable in like periods” as supporting their right to renewal in perpetuity. My opinion is that neither form of wording supports such a right.
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The law relating to covenants for perpetual renewal contained in a lease is not in doubt. A covenant for renewal in a lease only establishes a right to renewal in perpetuity when strict words indicate that to be the unequivocal intention of the parties. There is no doubt about this principle. (Re Jackson and Imperial Bank of Canada and Auld v. Scales, and 23 Hals., 3rd ed., p. 627.) If a lessee appeals to a statute and regulations made thereunder as supporting a right to perpetual renewal, is he entitled to a different standard? I think not. The statute and the regulations must give him that right expressed with the same clarity that is demanded in the case of a covenant for renewal contained in a lease.
Even if the covenants in question did grant a right of perpetual renewal, which they did not, they would nonetheless be ineffective, since in another respect they purport to do something not allowed by either the 1911 or the 1913 regulations. Section 2 of the 1911 regulations authorizes the Minister to issue leases “at rentals to be from time to time fixed by him.” Section 64(c) of the 1913 regulations uses the words “at a rental to be fixed by the Minister.” Both regulations clearly require the Minister and the Minister alone to fix rent under the lease.
In the first of the two covenants for renewal clauses in each of the subject leases, there appear the following words:
…except as to the rent to be paid by the lessee during such second term, and that the amount of such rent, in case His Majesty, His successors or assigns, and the lessee shall fail to agree thereupon, shall be fixed and determined by the award and arbitrament of three arbitrators…
The second covenant for renewal clause, dealing with renewal after the expiration of the second term, contains the words:
…the amount of rent to be payable under such second renewal lease to be fixed and determined in the manner above provided and set forth
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The covenants purport to allow the rent to be fixed by arbitration in certain circumstances. But neither the 1911 nor the 1913 regulations permit such arbitration. The words in the covenant dealing with the fixing of rent by arbitration are therefore ineffective.
However, I would not invalidate, for this reason alone, whatever right of renewal the lessees may have. It is sufficient to say in these reasons that they have no right of renewal in perpetuity and that in any renewal lease the rent must be fixed by the Minister. The judgment of the Exchequer Court, although it gives the right of perpetual renewal does say that the rent must be fixed by the Minister. The lessees moved to vary the judgment to this extent.
I would allow the appeal with costs, dismiss the motion to vary with costs and reverse the judgment of the Exchequer Court so as to provide that the lessees are not entitled to any of the relief sought in their Petition of Right. The Crown is entitled to costs in the Exchequer Court.
PIGEON J. (dissenting in part)—In these two cases I agree entirely with the conclusions of the trial judge. Having had the advantage of reading the reasons of my brothers Martland and Judson, I wish to indicate briefly why I am unable to agree with either of them.
In my view, the provision in the regulations authorizing leases of land in the national parks “with the right of renewal” should not be construed restrictively so as to authorize only a single renewal for the maximum term of forty-two years. The usual rules of statutory interpretation should be applied. In itself, the phrase applies to any right of renewal known to the law, and this includes the right of renewal in perpetuity. Under a well-known rule of construction, where there is no distinction in the text, none should be introduced except for a special reason. No such reason is apparent.
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Furthermore, the authorized representatives of the Crown have construed the regulation as authorizing leases with the right of renewal in perpetuity and the executed lease so provides. In order to escape from the binding force of those leases, the Crown must show that the regulations do not authorize the right of renewal that was granted. This is not established by showing that renewal clauses in conveyances are presumed not to be in perpetuity.
Concerning the cases referred to by my brother Judson, I must say with respect that Re Jackson and Imperial Bank of Canada appears wrongly decided. It is in direct contradiction of Hare v. Burges, in which it was held that:
Although, prima facie, a lessor shall not be taken to have intended to enter into a covenant for perpetual renewal, yet if there be in the lease expressions indicative of such an intention, the Court will give effect thereto.
Lease for lives, with a covenant on the death of either of the cestuis que vie to execute a renewed lease at the same rent and subject to the same covenants “including this present covenant:”—Held, a covenant for perpetual renewal, and lessee entitled to have inserted in the renewed lease a covenant for renewal totidem verbis with that contained in the original lease, but with the name of the new cestui que vie substituted for that of the deceased.
Respecting Auld v. Scales, it must be noted that this question was considered only by Estey J. and it was clearly obiter. Also, he concluded his remarks thereon by saying (at pp. 555, 556):
The same observations distinguish the case of Northchurch Estates Ltd. v. Daniels ([1946] 2 All E.R. 524), where the lease was for a period of one year certain with an option in the tenant to
renew the tenancy from year to year on identical terms and conditions as hereinafter stated,
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notice of such intention to renew the tenancy to be given in writing on or before December 25 in each year.
Evershed J. held this to create the right of a perpetual renewal. At p. 526 he stated:
The language used includes the phrase “the option to renew the tenancy from year to year”, and it says further that notice of that intention is to be given on or before Dec. 25 “in each year”. Those words seem to me to be very strong indications indeed that what was in the minds of the parties was that, so long as the tenant exercised his option within the time stated, he could go on from year to year ad infinitum renewing his tenancy.
I cannot agree with my brother Martland that the applicable regulations are those concerning forest reserves because, in my view, the definition of “lands” clearly reveals the intention of having this apply only to lands in forest reserves. At the time the regulations were made, as well as at the time the leases were executed, the lands with which we are concerned were not in a forest reserve but in a national park. The fact that some actions were taken in accordance with the provisions of the forest reserves regulations cannot make these applicable because they could be amended only by the authority empowered to make them, that is the Governor General in council.
For a similar reason I cannot agree that the provision for fixing the rental by arbitration was validly stipulated. The regulations provided for leases at a rental to be fixed by the Minister. They had the same legal effect as a statute so providing. Administrative discretion was thereby conferred on the Minister that was not subject to review by any other authority (Calgary Power Ltd. et al. v. Copithorne). A right of review could not be created by a Minister executing a lease. This would have the effect of impeding the exercise by future incumbents of the discretion that was to be theirs exclusively: delegatus non potest delegare.
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I am therefore of the opinion that the trial judge correctly held that the arbitration clause was not authorized. It would have meant that the rental, instead of being in the discretion of the Minister at the time when it would have to be fixed anew, instead of being established on any basis that the Minister would see fit, would, on the contrary, have to be established at a reasonable level in the opinion of arbitrators. This is entirely different from a discretionary level.
However, it appears to me that the trial judge correctly held that the provision for arbitration is severable. It is in the nature of the right of review of the Minister’s decision. The renewal clause can be given full effect without it, the lessee having to take the renewal at the rental fixed by the Minister if he desires to exercise his right. In other words, his only option is to renew on the terms agreed with the Minister, and this is fully in accordance with the regulations and effective by itself.
For the above reasons I would dismiss the appeal with costs and the cross-appeal without costs.
Appeal dismissed and motion to vary the judgment of the Exchequer Court allowed, with costs, ABBOTT and JUDSON JJ. dissenting and PIGEON J. dissenting in part.
Solicitor for the appellant: D.S. Maxwell, Ottawa.
Solicitors for the respondents: Milner & Steer, Edmonton.
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