Mid-Atlantic Minerals Inc. v. Canada, 2004 FCA 28

Date: 20040115

Docket: A-380-02

Citation: 2004 FCA 28

CORAM:        DESJARDINS J.A.

LÉTOURNEAU J.A.

NADON J.A.

BETWEEN:

                                                  MID-ATLANTIC MINERALS INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        HER MAJESTY THE QUEEN

                                                                                                                                                   Respondent

                              Heard at Montréal, Quebec, on January 12 and January 15, 2004.

                   Judgment delivered from the Bench at Montreal, Quebec, on January 15, 2004.

REASONS FOR JUDGMENT OF THE COURT BY:                                                     NADON J.A.

Date: 20040115

Docket: A-380-02

Citation: 2004 FCA 28

CORAM:        DESJARDINS J.A.

LÉTOURNEAU J.A.

NADON J.A.

BETWEEN:

                                                  MID-ATLANTIC MINERALS INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        HER MAJESTY THE QUEEN

                                                                                                                                                   Respondent

                                       REASONS FOR JUDGMENT OF THE COURT

                     (Delivered from the Bench at Montreal, Quebec, on January 15, 2004)

NADON J.A.

[1]                 At issue before us in this appeal is whether the fees fixed by the Minister of Fisheries and Oceans (the "Minister") for marine navigation services provided to ships by the Canadian Coast Guard under the Fee Schedule for Marine Navigation Services, 1997-1998 (the "Fee Schedule") adopted pursuant to s. 47 of the Oceans Act, R.S.C. 1996, c. 31 (the "Act") discriminate on the basis of a ship's nationality and if so, whether the discrimination is permissible under the enabling legislation.

[2]                 Before proceeding further, I will reproduce the relevant legislation :

[3]                 Subsection 6(1) of the Fee Schedule sets out the fees payable by non Canadian ships that load and unload cargo in Canadian waters. It provides that the basis for calculation of the fees payable by those ships is the amount of cargo loaded or unloaded, limited to a maximum of 50,000 tons, multiplied by a value which depends on the region in which the cargo is either loaded or unloaded, for example, $0.16 in the Laurentian and Central Regions.

[4]                 As to subsection 6(3), it provides that that the fees payable under subsection 6(1) will not exceed $0.05 per ton where aggregates are loaded or unloaded.

[5]                 Subsection 8(1), which deals with Canadian ships, provides for a different basis of calculation of the fees payable, which are arrived at by multiplying the gross registered tonnage (the "GRT") of the ship by $1.25. These fees are payable on a quarterly basis.

[6]                 Subsections 8(2) and 8(3) deal specifically with Canadian bulk carriers and container ships. Subsection 8(3) provides that the fees payable under subsection 8(1) shall not exceed $0.05 per ton when aggregates are carried.

[7]                 Finally, section 10 deals with ships temporarily operated in Canadian waters pursuant to a licence issued under the Coasting Trade Act, R.S.C. 1992, c. 31. In regard to these ships, fees are calculated by multipying the ship's GRT by the number of months during which the licence is in effect and by $0.42.

[8]                 A brief outline of the relevant facts will be helpful in understanding this appeal.

[9]                 The appellant, a Canadian company, operates ships in Canadian waters and more particularly in the St. Lawrence River. In February 1998, the appellant was granted a coasting trade licence pursuant to the Coasting Trade Act to operate the foreign vessel M.V. Bjorn in Canadian waters for the period of February 9 to March 9, 1998. At all material times, the M.V. Bjorn's GRT was 17,594 tons.

[10]            During the period in which the appellant operated the M.V. Bjorn in Canadian waters under its coasting trade licence, the respondent, through the Department of Fisheries and Oceans and the Canadian Coast Guard, provided marine navigation services in Canadian waters and in particular to the M.V. Bjorn.

[11]            On March 6, 1998, the respondent, relying on s. 10 of the Fee Schedule, invoiced the appellant in the sum of $8,420.68 ($7,389.48 plus $1,031.20 in taxes) for marine navigation services rendered to the M.V. Bjorn.

[12]            The appellant refused to pay these charges on the ground that the fees fixed under section 10 discriminated on the basis of the ship's nationality. Accordingly, the appellant, relying on subsection 8(3) of the Fee Schedule, paid to the respondent the sum of $1,368.62 which, in its view, represented the fees to which the respondent was entitled.

[13]            As a result, the respondent commenced legal proceedings against the appellant to recover the outstanding amount. The appellant filed a Statement of Defence and took the position that since the M.V. Bjorn was a foreign bulk carrier on which aggregates had been loaded, section 10 of the Fee Schedule was discriminatory in that it allowed the respondent to claim fees against foreign bulk carriers in excess of those that could be claimed against a Canadian bulk carrier on which the same commodity had been loaded. According to the appellant, the respondent was entitled to collect fees against the M.V. Bjorn, not under section 10, but rather under subsection 8(3). The appellant also took the position that section 47 of the Oceans Act did not authorize the Minister to fix fees that discriminated between foreign and Canadian ships.

[14]            The respondent's action proceeded by way of a simplified action before Prothonotary Richard Morneau who, on March 8, 2001, condemned the appellant to pay to the respondent the sum of $7,052.36 with interest and costs. In reaching his decision, the Prothonotary did not deal with the substantive issues concerning the Fee Schedule as he was of the view that the appellant could not, by way of a defence to an action, challenge its validity. In his view, this could only be done by way of a judicial review application of the Minister's decision fixing the fees pursuant to section 47 of the Act. Hence, the Prothonotary allowed the respondent's action in full.

[15]            The appellant appealed the Prothonotary's decision and on May 16, 2002, Rouleau J. dismissed the appeal on its merits. Firstly, he concluded, correctly in our view, that the appellant could, by way of a defence to the respondent's action, challenge the validity of the Fee Schedule. There is no appeal with respect to this conclusion.

[16]            Rouleau J. then turned his attention to the substantive issues before him. The first issue which he sought to resolve was whether the appellant had been "disadvantaged" because it had operated a foreign ship. He answered that question by a "no" because there was no evidence to support the appellant's contention that the fees payable by the M.V. Bjorn were those set out in subsection 8(3) of the Fee Schedule. Specifically, Rouleau J. concluded that the appellant's failure to prove that the M.V. Bjorn was a bulk carrier was fatal to its contention that subsection 8(3) was the section under which the fees for the respondent's marine navigation services ought to have been claimed.

[17]            In the absence of such proof, the learned judge had no difficulty concluding that had the M.V. Bjorn been a Canadian ship, it would have been invoiced for the same amount of fees as those for which it was invoiced under section 10 of the Fee Schedule, albeit by way of a different calculation. Rather than invoicing the appellant under section 10 of the Fee Schedule, the respondent would have invoiced the appellant under subsection 8(1).

[18]            Consequently, Rouleau J. concluded that the fees charged to the M.V. Bjorn were not discriminatory. Although that conclusion was sufficient to dispose of the appeal before him, Rouleau J. went on to decide whether the Minister was, in any event, authorized by the enabling legislation to fix fees which discriminate on the basis of a ship's nationality. He answered that question by a "yes".

[19]            As we are of the view that Rouleau J. made no error in concluding as he did on the evidentiary issue, we need not address the second substantive issue.

[20]            There can be no doubt in the present matter that the burden of proving that the marine navigation services rendered to the M.V. Bjorn ought to have been invoiced in accordance with subsection 8(3) of the Fee Schedule was that of the appellant. Specifically, in order to meet its burden, the appellant had to prove that the M.V. Bjorn was a bulk carrier and that aggregates had been loaded thereon during the February 9 to March 9, 1998 period.

[21]            The existence of that burden and the omission to adduce evidence on this issue was brought to the appellant's attention by the Prothonotary during the course of the hearing before him on March 6, 2001.

[22]            Notwithstanding this warning, the appellant made no attempt, prior to Rouleau J. having reserved his decision following the hearing before him on April 10, 2002, to adduce evidence in respect of the M.V. Bjorn and the nature of the cargo carried on that ship while in Canadian waters.

[23]            On April 15, 2002, the appellant applied to Rouleau J., pursuant to Rule 60 of the Federal Court Rules, 1998, for an order allowing it to adduce into evidence the coasting trade licence which, in its view, clearly showed that the M.V. Bjorn was a bulk carrier and that it had carried aggregates while in Canada. After consideration of all of the relevant circumstances, Rouleau J. denied the appellant's motion. That part of his decision is not under appeal.

[24]            Before us, the appellant takes the position that the coasting licence is part of the record and that it shows that the M.V. Bjorn was a bulk carrier that carried aggregates in Canadian waters during the during the February 9 to March, 9, 1998 period.

[25]            In support of its proposition, the appellant puts forward two submissions. Firstly, it says that the licence is part of the record, because it admitted in paragraph 1 of its Amended Statement of Claim the allegations made by the respondent in paragraph 5 of its Statement of Claim. These pleadings read as follows:

5.             Au mois de février 1998, un navire non canadien exploité par la défenderesse, le M.V. Bjorn, s'est vu délivrer un permis d'entrée temporaire, valide du 9 février 1998 au 9 mars 1998, en vertu de la Loi sur le Cabotage.

******************

IN RESPONSE TO HER MAJESTY'S DECLARATION THE DEFENDANT SAYS:

1.             It admits paragraphs 1 through 8 inclusively;

[26]            We cannot agree with this submission. At paragraph 5 of the Statement of Claim, the respondent simply alleged that the M.V. Bjorn was a foreign ship which entered Canada on a temporary basis pursuant to a licence issued under the Coastal Trade Act. That allegation, when admitted by the appellant in its defence, was sufficient to allow the respondent to make its claim for fees under section 10 of the Fee Schedule. However, since the respondent made no allegation concerning the type of ship the M.V. Bjorn was, nor did it make any allegation concerning the nature of the cargo carried on that ship, the appellant's admission cannot have had the effect sought by it.

[27]            In any event, it appears to us that the filing of the coasting licence, without further proof, would not have been sufficient to prove that the M.V. Bjorn had carried aggregates, which section 1 of the Fee Schedule defines as "... gravel, sand and whole or crushed stone, suitable for construction". There is no evidence that the cargo carried by the M.V. Bjorn met this definition.

[28]            The appellant's second submission is that the respondent, by not denying paragraph 10 of the Amended Statement of Defence, which reads as follows:

10.           However, Section 8(2) and (3) set forth a different calculation if the vessel is "a bulk carrier", as in this case, and carrying, as in this case, "aggregate",

is deemed to have admitted the truth of those facts.

[29]            That submission is simply untenable as it flies in the face of Rule 184(1) of the Federal Court Rules, 1998, which states in unequivocal terms that unless admitted, an allegation of fact in a pleading is deemed to have been denied.

[30]            We must therefore conclude that Rouleau J. made no error in concluding that there was no evidence that the M.V. Bjorn was a bulk carrier and that, as a result, the fees charged to the appellant were properly subjected to section 10 of the Fee Schedule.

[31]            Consequently, as the appellant has failed to establish that it was entitled to the benefit of the fee rebate or limit found in subsection 8(3) of the Fee Schedule, we need not address the issues of whether the Fee Schedule is discriminatory and, if so, whether the enabling legislation authorized the Minister to make distinctions on the basis of a ship's nationality.

[32]            For these reasons, the appeal will be dismissed with costs.

                                                                                                "M. Nadon"

                                                                                                              J.A.

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                   A-380-02

STYLE OF CAUSE: Mid-Atlantic Minerals Inc. v. H.M.Q.

PLACE OF HEARING:                                   Montreal, Quebec

DATE OF HEARING:                                     January 12 and January 15, 2004

REASONS FOR JUDGMENT                      (Létourneau J.A., Nadon J.A., Pelletier J.A.)

OF THE COURT:

DELIVERED FROM THE BENCH BY:     Nadon J.A.

APPEARANCES:

SOLICITORS OF RECORD: