Date: 20050718
Docket: T-588-00
Citation: 2005 FC 995
Ottawa, Ontario, this 18th day of July, 2005
Present: The Honourable Justice James Russell
BETWEEN:
EARLY RECOVERED RESOURCES INC.
Plaintiff
and
HER MAJESTY IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA,
JIM DOYLE, MINISTER OF FORESTS
COAST FOREST PRODUCTS ASSOCIATION, and
INDEPENDENT TIMBER MARKETING ASSOCIATION
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
NATURE OF THE PROCEEDING
[1] This proceeding is about the constitutional competence to regulate the recovery of No Mark Visible (NMV) logs from the Fraser River in British Columbia. The source and ownership of the logs in this case cannot be determined.
[2] The Plaintiff has conceived and presented the matter as a test case that calls upon the Court to consider and rule upon the constitutional validity, applicability or effect of Part 9 of the Forest Act, R.S.B.C. 1996, c. 157 ("Forest Act"), and the associated Log Salvage Regulation for the Vancouver Log Salvage District, B.C. Reg. 220/81 as amended ("Log Salvage Regulation").
[3] In effect, the Plaintiff says that Part 9 of the Forest Act is unconstitutional because it is ultra vires the British Columbia legislature by virtue of the federal government's exclusive jurisdiction over navigation and shipping under s. 91(10) of the Constitution Act, (1982), and by virtue of s. 52 of the Constitution Act, (1982).
[4] In the alternative, the Plaintiff claims that if Part 9 of the Forest Act is not ultra vires the Province it is inoperative to the extent that it conflicts with the Canada Shipping Act, R.S.C. 1985, c. 5-9 ("Shipping Act"), and the International Convention on Salvage, 1989 ("Convention") that has been incorporated into Canadian domestic law through s. 449.1 of the Shipping Act and which came into force in Canada on July 14, 1996.
[5] Her Majesty in Right of British Columbia and Jim Doyle, Minister of Forests ("Province") say that Part 9 of the Forest Act is constitutionally valid because it deals with matters that come within the exclusive jurisdiction of the legislature of British Columbia. The Province takes the position that Part 9 of the Forest Act is, in pith and substance, legislation that falls within the purview of the following sections of the Constitution Act, (1982):
(a) 92(5) - the Management and Sale of Timber and Wood on Public Lands belonging to the Province;
(b) 92(10) - Local Works and Undertakings;
(c) 92(13) - Property and Civil Rights in the Province; and
(d) 92(16) - Generally all matters of a merely local or private nature in the Province.
[6] In the alternative, the Province says that, to the extent that the Shipping Act and the Convention purport to regulate the recovery, sale and distribution of the proceeds of sale of logs in British Columbia, they are not valid legislation in relation to navigation and shipping, and so must be ultra vires the Parliament of Canada.
[7] Coast Forest Products Association, formerly coast Forest and Lumber Association ("Coast"), and Independent Timber Marketing Association ("Timber Marketing") support the position of the Province. Coast is a provincial non-profit association whose members include all of the major, and many of the smaller, forest product and logging companies operating in coastal areas of British Columbia. Timber Marketing is also a provincial association whose membership is composed of some of the log brokers, and some of the smaller logging companies, operating in the coastal areas of British Columbia.
[8] Coast and Timber Marketing were added as parties to this dispute by order of Prothonotary Hargrave dated May 2, 2003.
[9] The appropriate notices of constitutional question have been served. Justice Canada has taken the position that the matter is "private and provincial" and the Attorney General of Canada has declined to intervene. Other federal officials and departments (Transport and Salvage and Wreck) also appear to regard the matters in this dispute as falling exclusively within provincial competence.
FACTUAL BACKGROUND
[10] In order to create a context and a factual base for the constitutional challenge, the Plaintiff carried out a typical log salvage operation and produced detailed notes and photographs of what transpired.
[11] Between January 13 and 19, 1999, Ms. Shirley Weishuhn, a co-owner and employee of the Plaintiff company, recovered 65 floating logs from the Fraser River in the Vancouver Log Salvage District.
[12] At all material times, Ms. Weishuhn was the holder of a valid log salvage permit that authorized her to salvage logs in the Vancouver Log Salvage District. The permit was issued pursuant to the Log Salvage Regulation enacted under the Forest Act.
[13] All of the 65 logs were recovered with the use of a marine vessel called the Starter II, which is licensed under number 13K73797.
[14] In recovering the logs, Ms. Weishuhn navigated the Starter II within a couple of metres of each log and, while remaining in the boat, gained hold of each log by hand or with the aid of an axe or pike pole.
[15] After steadying the log in the water, she used an axe to hammer a uniquely numbered dogline into each log. A "dogline" is a specialized item used in the salvage of logs. The "dog" is a metal spike which is driven into the log. Each dog was attached to a line with a loop on the end with which each log was secured to the towpost of the Starter II. This allowed each log to be towed behind the boat.
[16] Using a log salvage identification hammer, Ms. Weishuhn applied a mark to the log and then attached the log to the Starter II for towing.
[17] As the logs were recovered Ms. Weishuhn secured them by their individually numbered doglines at various points along the Fraser River.
[18] On January 20, 1999, Ms. Weishuhn towed all 65 logs to the foreshore of her property at 10487 River Road, Delta, British Columbia, with the Starter II.
[19] From the 65 logs, 17 were selected which bore no visible timber marks. Some of the remaining 48 logs bore identifiable timber marks. The 17 logs with no visible timber marks are the logs in question in this action.
[20] All 17 NMV logs had cut ends indicating that they were not natural woody debris.
[21] On February 1, 1999, the Plaintiff advised the Ministry of Forests that it was holding 17 NMV logs.
[22] On February 10, 1999, the Province responded with a letter.
[23] On February 10 and 11, 1999, Ms. Weishuhn, with the Starter II, towed the 17 NMV logs to the Fraser River Receiving Station of Gulf Log Salvage Co-Operative Association ("Gulf Log").
[24] Gulf Log accepted 14 of the 17 logs. Two of the logs were deadheads, and Ms. Weishuhn was directed by an employee of Gulf Log to deliver those 2 logs to West Coast Cellufibre which accepts deadheads. The third unaccepted log was alder. As alder logs are not accepted by Gulf Log at the Receiving Station, the small alder log was placed into a debris bag for disposal.
[25] The 14 accepted logs were scaled by a log scaler employed by Gulf Log. The 2 deadheads delivered to West Coast Cellufibre were scaled at that location.
[26] On August 16, 1999, the Plaintiff demanded again that the federal Minister of Forests compensate it for the 17 NMV logs pursuant to the terms of the Convention.
[27] On October 15, 1999, the Minister of Forests, through his agent, the Director of Revenue Branch Ministry of Forests, refused the Plaintiff's claim on the grounds that the Log Salvage Regulation was applicable and that the Convention had no application in the circumstances of the case.
[28] Sixteen of the 17 NMV logs were dealt with by Gulf Log. The 14 logs delivered to the Receiving Station were sold by Gulf Log. As regards the 2 deadhead logs delivered to West Coast Cellufibre, the invoice for their sale was issued by Gulf Log.
[29] The Ministry of Forests invoiced Gulf Log for stumpage fees and Gulf Log paid stumpage fees on the 16 logs to the Ministry of Forests for British Columbia.
[30] The other 48 logs were towed to Gulf Log by Mr. Earl Weishuhn, on behalf of the Plaintiff. Gulf Log paid compensation for those 48 logs under the provincial scheme, which compensation was accepted by the Plaintiff.
[31] The Plaintiff has calculated the value of the 17 NMV logs as $639.62, based upon the Schedule of Three-Month Average Domestic Log Selling Prices issued by the Province for stumpage purposes. That table is derived from the sale of green (non-salvaged) logs. The offer of compensation by Gulf Log to the Plaintiff (which the Plaintiff has refused) was based upon the calculation of the market value of salvaged logs. Gulf Log calculated the market value of the 16 NMV logs (other than the alder) as $271.90.
[32] The Plaintiff says that, in following the procedure described above, Ms. Weishuhn salvaged valuable property at risk of damage or loss. That property was lost in navigable waters in the course of its transportation and/or storage on the Fraser River. Ms. Weishuhn offered to return the property to the Province, whom the Plaintiff believed had the best claim to ownership of the logs in question, and, in so doing, she provided a benefit in the form of the return of valuable property, the elimination of a navigational hazard, and the elimination of an environmental risk to important and already compromised marshes of the Fraser River estuary.
POSITION OF THE PARTIES
[33] The Plaintiff says that the purpose of the log salvage operation that Ms. Weishuhn conducted was to resolve legal ambiguities surrounding a system for log recovery that have negatively affected Ms. Weishuhn's chosen profession and livelihood, the operation of her family business, and the close-knit community of marine log salvors on the Fraser River with whom she is actively engaged.
[34] In order to resolve such ambiguities and negative consequences of the present system for log recovery on the Fraser River, the Plaintiff has formulated its prayer for relief in various ways during the course of these proceedings. At the conclusion of the trial the order sought was as follows:
(a) A declaration that Part 9 of the Forest Act and the Log Salvage Regulation are unconstitutional and ultra vires the Province in that they regulate a matter that is at the core of federal jurisdiction (namely, navigation and shipping);
(b) Alternatively, a declaration that Part 9 of the Forest Act and the Log Salvage Regulation are inoperative and of no force and effect to the extent that they conflict with the Shipping Act and the Convention;
(c) A declaration that the Shipping Act and the Convention apply to marine log salvage; and
(d) A declaration that the Plaintiff is entitled to receive compensation for the 17 NMV logs it salvaged in accordance with Article 13(1) of the Convention as incorporated by Part V of the Shipping Act, including, but not limited to, compensation pursuant to Article 13(1)(b) of the Convention.
[35] The Province (supported by Coast and Timber Marketing) takes the position that Part 9 of the Forest Act and the associated Log Salvage Regulation are intra vires the provincial legislature as being in pith and substance matters in relation to timber resources, the rights of timber companies with respect to the harvesting of timber, the regulation of ownership and sale of Crown timber, the disposition of the proceeds of the sale of Crown timber, and the regulation of the recovery and salvage of timber that might otherwise be lost.
[36] While the Plaintiff says that the log salvage activities in question fall squarely within the federal regulatory power over navigation and shipping in accordance with s. 91(10) of the Constitution Act, 1982, the Province says that even if Part 9 of the Forest Act and the Log Salvage Regulation do have any impact on navigation and shipping, it is only to a limited extent and is merely incidental and ancillary to a valid provincial regulatory scheme.
[37] In fact, the Province (once again supported by the other Defendants) has raised its own constitutional issue for determination in this case:
In the alternative, to the extent that the Canada Shipping Act and the International Convention on Salvage, 1989 purport to regulate the recovery and sale of logs and distribution of the proceeds from the sale of recovered logs in British Columbia, whether these provisions are valid legislation in relation to navigation and shipping, and are ultra vires the Parliament of Canada.
[38] Because of the nature of this dispute, the Province has indicated it is not seeking costs.
[39] The appropriate notices of constitutional question have been served.
THE ATTACK ON THE PROVINCIAL SCHEME
[40] At the heart of this dispute lies a constitutional attack by the Plaintiff on the Province's scheme for recovering and salvaging logs from the Vancouver Log Salvage District as that scheme is embodied in Part 9 of the Forest Act and the Log Salvage Regulation.
[41] The Forest Act and the Log Salvage Regulation are part of a comprehensive regime for managing forest resources in British Columbia. That regime also includes the Forest and Range Practices Act, S.B.C. 2002, c. 69, the Forest Practices Code of British Columbia, R.S.B.C. 1996, c. 159, the Scaling Regulation, B.C. Reg. 446/94, the Timber Marking and Transportation Regulation, B.C. Reg. 253/97, and the Forest Planning and Practices Regulation, B.C. Reg. 14/2004.
[42] The Plaintiff impugns the constitutional validity of Part 9 of the Forest Act and the Log Salvage Regulation in a somewhat oblique way. The Plaintiff has seized upon the concept of "marine salvage" to assert that the Province has sought to regulate a matter that is at the core of Canadian maritime law and the federal jurisdiction over navigation and shipping.
[43] It is true that the Plaintiff does refer to the conventional "pith and substance" approach to constitutional review set out by the Supreme Court of Canada in Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), 2002 SCC 31">2002 SCC 31, but the Plaintiff's analysis of the pith and substance of the impugned provisions is little more than an assertion that they "do intrude into the area of navigation and shipping as they seek to regulate the return or recovery of property lost in the course of its transport by water." As regards Part 9 of the Forest Act, the Plaintiff simply says that "these provisions apply to solely marine log salvage [emphasis is the Plaintiff's]" and that "anything that happens in the marine context is prima facie federal jurisdiction."
[44] The Plaintiff then addresses the assertions made by the Province that the impugned provisions regulate property rights and traffic in salvaged logs.
[45] As regards the regulation of property rights, the Plaintiff takes a somewhat literalist approach and argues that the impugned provisions "do not create a new basis for ownership of salvaged wood" and they "do not determine ownership in unmarked logs."
[46] As regards the traffic in logs, the Plaintiff argues that the impugned provisions do not provide regulation because they do not stipulate how the provincial licencee, Gulf Log, should sell the logs "other than to require those logs to be sold at the best price" and, although salvors are paid salvage fees, salvors "are not buying or selling the logs."
[47] Having concluded that the impugned provisions do intrude upon the federal navigation and shipping power because they "seek to regulate the return or recovery of property lost in the course of its transport by water," the Plaintiff then, in accordance with Kitkatla, addresses the issue of whether or not they are, nevertheless, part of a valid provincial legislative scheme.
[48] The Plaintiff's position is that, while the Forest Act in general does not intrude on federal jurisdiction, a "constitutionally invalid provision will not be saved by being put into an otherwise valid statute."
[49] The crux of the Plaintiff's argument as regards the scheme enacted by the Forest Act is that the provisions of Part 9 and the Log Salvage Regulation "are not sufficiently integrated with or essential to that scheme so as to make them valid legislation concerning property and civil rights to save them from such intrusion."
[50] This is because the "provisions are marine salvage provisions alone that apply only to logs salvaged from water below the high tide line - they do not apply to recovery of timber generally."
[51] Unlike the provisions in the Forest Act that deal with land salvage, the Plaintiff argues that "Marine log Salvage is not related to the harvest of trees. It is related to the recovery of timber lost in the course of their (sic) transport by water and associated storage." Hence, the Plaintiff says, "eliminating the Province's ability to regulate marine log salvage in no way affects its ability to regulate the harvest of timber," and the impugned provisions "are entirely severable from the rest of the legislative scheme set out in the Forest Act."
[52] To bolster its conclusions on pith and substance, the Plaintiff raises "the doctrine of inter jurisdictional immunity ... to preclude the Province from regulating marine log salvage at all." The Plaintiff's argument here is that the "general law of marine salvage falls within the core of federal jurisdiction over navigation and shipping. Further, the law of marine salvage is sufficiently well-developed that there is little room for effective provincial legislation affecting that field. As log salvage fits in the expanded definition of marine salvage it also (sic) at the core of Parliament's exclusive jurisdiction over shipping and navigation."
[53] The Plaintiff invokes ITO - International Terminal Operators Ltd. v. Miida Electronics Ltd., [1986] 1 S.C.R. 752 and Whitbread v. Walley, [1990] 3 S.C.R. 1273 for the proposition that "maritime jurisdiction is, for constitutional, historical and practical reasons, extremely broad." Ordon Estate v. Grail, [1998] 3 S.C.R. 437 is also enlisted to show that "each head of federal power possesses an essential core which the provinces are not permitted to regulate indirectly through otherwise valid laws of general application" and that the essential core of maritime law should be assessed with reference to "the national and international law dimension of maritime law and the corresponding requirement for uniformity in maritime law principles."
[54] The Plaintiff's conclusion is that "Ordon stands for the proposition that it is relatively rare that a provincial law of general application will apply to a matter otherwise governed by Canadian maritime law."
[55] With further regard to inter-jurisdictional immunity in the context of the federal marine jurisdiction, the Plaintiff cites the recent British Columbia Court of Appeal decision in R. v. Kupchanko, (30 January 2002), at Vancouver CA026665, [2002] B.C.J. No. 148 (Q.L.) (B.C.C.A.), and quotes the words of Esson CJA at para. 35 that "there is now a very limited scope for the application of any provincial law in the maritime context ... ."
[56] On the basis of these authorities, the Plaintiff urges the following conclusions on the Court concerning the case at bar:
(a) The core of exclusive federal maritime jurisdiction is unusually broad;
(b) Marine salvage is a vital or essential aspect of the federal maritime jurisdiction;
(c) The existence of a ratified international marine salvage convention creating uniform salvage rules demonstrates that marine salvage, including marine log salvage (which falls within the broad definition of property under the Convention), is within the unassailable core of federal maritime jurisdiction;
(d) Section 422.1 of the Shipping Act emphasizes the federal nature of salvage when it gives the federal Minister of Transport "the general superintendence of all matters relating to salvage" throughout Canada;
(e) Salvage is a legal cause of action known only to the admiralty courts;
(f) Marine log salvage, which necessarily occurs in navigable waters and involves navigating vessels to remove hazards to navigation cannot be characterized as anything but a maritime activity;
(g) The Forest Act and the Log Salvage Regulation intrude on vital aspects of the core federal maritime jurisdiction over marine salvage;
(h) Log booms are created for the express purpose of navigation and are vessels within the meaning of the Shipping Act and the Convention so that the logs in this case which, on a balance of probabilities, were the cargo of a vessel (i.e. a log boom), are salvage within the traditional definition of that term and are thus subject to the exclusive jurisdiction of Parliament.
[57] Looking at the Plaintiff's argument on the ultra vires of Part 9 of the Forest Act and the Log Salvage Regulation as a whole, it is clear that the inter-jurisdictional immunity doctrine is, in fact, the real basis of the Plaintiff's case. The pith and substance analysis offered is fairly superficial and amounts to little more than a general assertion that the impugned provisions intrude on the federal navigation and shipping power because "they seek to regulate the return or recovery of property lost in the course of transport by water" and "are not sufficiently integrated with or essential to the [Provincial scheme under the Forest Act] so as to make them valid legislation concerning property and civil rights to save them from such intrusion."
[58] The Plaintiff's central argument against the impugned provisions is, when boiled down to its essence as follows: log salvage is marine salvage; marine salvage is a core element of the federal maritime jurisdiction over navigation and shipping; the federal maritime jurisdiction is very broad; and there is no room constitutionally for a provincial scheme that deals with log salvage in navigable waters.
[59] The Plaintiff has been encouraged in this approach by the order of Mr. Justice Hugessen of February 15, 2002 which dismissed a motion by the Province for summary judgment in this case. In his reasons of February 20, 2002, that followed his dismissal order, Mr. Justice Hugessen made the following remarks concerning the merits of the case as it appeared to him at that time:
...
7. It is to be noted that the province has not in any way impugned the federal legislation so that a finding of the latter's applicability necessarily excludes the application of the provincial legislation. I think that concession by the province is entirely proper for recent case law has been very clear that the federal power in the area of maritime law and navigation and shipping is very broad indeed and I make reference to the well-known cases which were extensively cited in argument before me of ITO-International Terminal Operators Ltd. v. Miida electronics Inc., [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641, Whitbread v. Walley, [1990] 3 S.C.R. 1273, 77 D.L.R. (4th) 25, Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1, Ordon Estate v. Grail, [1998] 3 S.C.R. 437, 166 D.L.R. (4th) 193 and others.
8. It was urged upon me that the preparatory works to the 1989 Convention do not show that logs and log booms were within the contemplation of the drafters and reference is made to an article by Lord Justice Kerr in this regard: M. Kerr, "The International Convention on Salvage 1989 - How it Came to Be" (1990) 39 I.C.L.Q. 530. In my view, the omission of specific mention of logs and booms is of very little consequence. The words used by the drafters could not have been any broader and the fact that they did contemplate specifically in their preliminary works such things as buoys and fishing gear makes it plain to me that they did not intend any restriction and did not express any restriction. I simply cannot accept that there was any implied intention to exclude such things as logs and booms. It may be that the reasons that they were not discussed is because this country and perhaps the United States are really the only principal maritime nations in which an important part of commercial shipping takes place in the form of logs and booms. That may also be an explanation for the early view of the English Admiralty Court where, of course, the commerce in floating timber was never of the kind of importance that it has played for many years on both coasts of this country.
9. I conclude accordingly, that the claim as asserted is apparently within the jurisdiction of this Court as relating to salvage. That does not, of course, mean that the claim is well-founded or that it will succeed in due course. It does mean that it can go forward to trial and it also means that the provincial regulations whether they are viewed as invalid, inoperable or simply inapplicable do not play any role in the determination of the plaintiff's claim for damages. It also means, of course, that the motion must be dismissed. [emphasis added]
...
[60] So, Mr. Justice Hugessen took the position that the provincial scheme was not applicable to the facts of this case and that the matter should go forward as a salvage claim under federal jurisdiction.
[61] Notwithstanding the Plaintiff's assertions and its reliance upon the Order of Mr. Justice Hugessen, that Order was appealed, and although the Federal Court of Appeal dismissed the appeal by the Province and concurred with Mr. Justice Hugessen that the matter should proceed to trial, the Federal Court of Appeal also went a considerable distance in providing guidance on how this matter should be dealt with at trial. Pelletier J.A., writing for the Court, made the following findings and observations:
1. This is an appeal by Her Majesty the Queen in right of the Province of British Columbia (the Province) from the dismissal of her motion for summary judgment. The plaintiff (respondent in the appeal) has brought an action seeking a declaration of invalidity of Part IX [sections 122-126] of the Forest Act, R.S.B.C., 1996, c. 157, dealing with marine log salvage, and its associated regulation (Log Salvage Regulation for the Vancouver Log Salvage District, B.C. Reg. 220/81), on the ground that they are legislation in relation to salvage, a matter within exclusive federal jurisdiction. The Province sought to put an early end to the litigation by moving for summary judgment, asserting the constitutional validity of its legislation. However, its motion was dismissed for reasons which, while stopping short of a declaration of invalidity, left no doubt as to the Motion Judge's conclusion that the provincial legislation was ultra vires. That decision is reported at [2002] 4 F.C. 626 (T.D.).
2. The activity in issue is the recovery of logs left behind in coastal waters and rivers as a result of logging operations. The Province has enacted a scheme which provides for licensing of those who engage in log recovery, the establishment of a body to receive and dispose of the logs, and the distribution of the proceeds of the sale of the recovered logs to those who recovered them, and to those who claim an interest in them. The legislation describes all of this in terms of log salvage but on my reading of it, the legislative purpose could have been accomplished just as easily had the word recovery been used instead of the word salvage. All of which is to say that I attach no significance to the use of the word "salvage" in the legislation.
3. The respondent believes that the amounts paid to those who recover logs under the provincial scheme are too low and, by way of a declaration of invalidity of the provincial legislation, seeks to bring itself within the more generous scheme contemplated by the International Convention on Salvage, 1989 to which Canada is a signatory and which has been incorporated into theCanada Shipping Act, R.S.C., 1985 c. S-9 (the Shipping Act). If it is successful, responsibility for an activity which the Province has regulated for some considerable time will pass to the Government of Canada which evinces little interest in assuming this burden as it has not appeared in these proceedings to assert the jurisdiction which the plaintiffs seek to bestow upon it.
4. Section 449.1 of the Shipping Act declares the International Convention on Salvage, 1989 (the Convention) to have the force of law in Canada. The Convention [at Article 1] defines "salvage operation" as "any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever". Property is defined as "any property not permanently and intentionally attached to the shoreline and includes freight at risk". Salvage is not defined in the Shipping Act so that the definition in the Convention applies for purposes of this litigation.
5. The learned Motions Judge concluded that once it is found that the subject-matter of Part IX of the Forest Act and its associated regulation falls within the definition of salvage in the Convention , there is no room for the Province to assert jurisdiction in relation to that subject-matter. He concluded, on the strength of the wording of the Convention and its incorporation into domestic law, that "Parliament has clearly legislated so as to extend the scope of marine salvage to include 'property' such as logs and booms of logs within the scope of the law of salvage". He observed that when the drafters of the Convention made it applicable to "property of any kind", they did not intend any restriction on the nature of the property.
6. Salvage is not itself an enumerated head of power under section 91 of the Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) so that the fact that the subject-matter of the legislation falls within the definition of salvage is not conclusive of constitutional competence. Salvage is matter of federal jurisdiction because it comes within one of the enumerated heads, namely shipping. The definition of salvage in the Convention cannot alter the division of powers under the Constitution. Consequently, the question is not whether the provincial log recovery scheme falls within the expanded definition of salvage but whether that scheme has a sufficient connection to shipping such that the expanded definition of salvage would apply to it. In other words, log recovery is not an aspect of shipping (and subject to federal jurisdiction) simply because it falls within the definition of salvage. If the provincial scheme falls within federal jurisdiction, it is because it is necessarily ancillary to shipping and is therefore properly characterized as salvage. [emphasis added]
7. The question of the validity of the provincial legislation is to be decided by employing the pith and substance analysis as set out inKitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146, at paragraph 58:
1. Do the impugned provisions intrude into a federal head of power, and to what extent?
2. If the impugned provisions intrude into a federal head of power, are they nevertheless part of a valid provincial legislative scheme?
3. If the impugned provisions are part of a valid provincial legislative scheme, are they sufficiently integrated with the scheme?
8. The Province has set out its position with respect to the connection between log recovery and logging and forestry. However to dispose of this matter in the manner sought by the Province would require me to find that there is no sufficient connection between log recovery [page454] and shipping to justify federal jurisdiction. I do not have before me a record upon which I could make such a determination. Even though this is an application for summary judgment where the onus is on each party "to put their best foot forward" (see Feoso Oil Ltd. v. Sarla (The), [1995] 3 F.C. 68 (C.A)), a court ought not to rule upon the constitutional validity of legislation except upon an adequate factual record.
...
[62] In my view, the crucial words of Pelletier J.A. for the approach that the Plaintiff has taken on this matter occur in paragraph 6 of his judgment where he says:
Consequently, the question is not whether the provincial log recovery scheme falls within the expanded definition of salvage but whether that scheme has a sufficient connection to shipping such that the expanded definition of salvage would apply to it. In other words, log recovery is not an aspect of shipping (and subject to federal jurisdiction) simply because it falls within the definition of salvage. If the provincial scheme falls within federal jurisdiction, it is because it is necessarily ancillary to shipping and is therefore properly characterized as salvage.
[63] As I read the Plaintiff's argument attacking the constitutional validity of Part 9 of the Forest Act and the Log Salvage Regulation, the emphasis is very close to the approach that the Federal Court of Appeal said should not be taken on this issue, and is very much a reassertion of the approach of Mr. Justice Hugessen that the Federal Court of Appeal appears to reject in its judgment.
[64] In my view, the correct approach to reviewing the impugned provisions of the Provincial scheme has to be the one directed by the Federal Court of Appeal in paragraph 7 of its reasons quoted above. And although the Plaintiff certainly refers to this approach in its argument, in my opinion, it is somewhat superficial in its analysis on the pith and substance issue and seeks to make up for such shortcomings by trying to direct the Court's attention to the approach of Mr. Justice Hugessen through its introduction, elaboration and emphasis of the doctrine of inter-jurisdictional immunity.
[65] However, my understanding of the role of the doctrine of inter-jurisdictional immunity is that it does not come into play unless the impugned provisions in this case go to the core of a federal power. I am thinking here of the words of LeBel J. in Kitkatla, where the Supreme Court of Canada concluded that the impugned provisions of the Heritage Conservation Act R.S.B.C. 1996, c. 187 were, in pith and substance, law under property and civil rights and did not intrude into the federal jurisdiction over Indians:
Given this conclusion, it will not be useful to discuss the doctrine of inter-jurisdictional immunity. It would apply only if the provincial legislation went to the core of the federal power (see Ordon Estate v. Grail, [1998] 3 S.C.R. 437, at para. 81; Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, supra, at paras. 177-78, per Lamer C.J.
[66] In the case at bar, it is the Plaintiff's position that Part 9 of the Forest Act and the Log Salvage Regulation do go to the core of the federal power over navigation and shipping, and so bring into play the doctrine of inter-jurisdictional immunity. The Plaintiff's assertions in this regard, however, are based more upon an expanded view of the meaning of "salvage" and its relation to the federal maritime jurisdiction than upon a detailed pith and substance analysis of the impugned provisions of the provincial scheme.
[67] Before considering whether the doctrine of inter-jurisdictional immunity is brought into play by the facts of this case, the Court must first determine the pith and substance of the impugned provisions.
PITH AND SUBSTANCE
General Guidelines
[68] Although sections 91 and 92 of the Constitution Act, 1982 allocate "matters" of exclusive legislative authority between the federal and provincial governments, legislative endeavour isn't always neatly classifiable in accordance with the discrete topics of the constitution. Even without intentional poaching, the practicalities of governing a federal state such as Canada make it impossible for either level of government to operate within the strict nomenclature of constitutional categorization. Hence, the Courts have been compelled over time to develop a set of principles against which the constitutional validity of particular statutes and regulations can be tested.
[69] For purposes of the present case, I believe that the principles for testing the constitutional validity of Part 9 of the Forest Act and the Log Salvage Regulation are well-known, and there is no point in my pretending to invent yet another account of what those principles are. They have been reiterated in numerous cases, and I merely choose what I regard as being a particularly thorough and adept encapsulation of the relevant jurisprudence that I believe assists with the facts before me. Here is Mr. Justice Burnyeat of the Supreme Court of British Columbia in the recent case of Laboucane v. Brooks 2003 BCSC 1247, paras. 17-30 in which he was called upon to review the constitutional validity of s. 10(1) of the Worker's Compensation Act, R.S.B.C. 1996, c. 492:
17. Regarding the constitutionality of s. 10(1) of the Act, there is a presumption that legislation is constitutional so that the onus rests on a party challenging the validity of a law to prove that it is unconstitutional: [1978] 2 S.C.R. 662">Nova Scotia (Board of Censors) v. McNeil, [1978] 2 S.C.R. 662; and Reference re Firearms Act, [2000] 1 S.C.R. 783. Accordingly, the onus is on Mr. Laboucane to establish that s. 10(1) of the Act is constitutionally inapplicable in these circumstances.
18. I am satisfied that, when the constitutional applicability of an enactment is challenged, the first step in the constitutional analysis is to determine the "pith and substance" of that enactment. After determining the essential character or dominant feature of the provision, the second step is to determine whether the pith and substance of the enactment relates to one of the heads of power granted to the enacting legislature: Ward v. Canada (Attorney General), [2002] 1 S.C.R. 569; Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146; and R. v. Eurosport Auto Co. (2003), 225 D.L.R. (4th) 277 (B.C.C.A.).
19. In Ward, the Court dealt with whether a charge under the Federal Marine Mammal Regulations which prohibited the sale, trade or barter of whitecoat and blueblack seals came within the power of the federal government to legislate in relation to fisheries or the criminal law or whether the prohibition fell under the provincial power to legislate on matters involving property and civil rights. The Court adopted the pith and substance analysis in reviewing the legislation. The Chief Justice on behalf of the Court stated:
The pith and substance analysis asks two questions: first, what is the essential character of the law? Second, does that character relate to an enumerated head of power granted to the legislature in question by the Constitution Act, 1867? (at para. 16)
The Chief Justice then set out the appropriate approach to be taken in applying the pith and substance test:
The first task in the pith and substance analysis is to determine the pith and substance, or essential character of the law. What is the true meaning or dominant feature of the impugned legislation? This is resolved by looking at the purpose and the legal effect of the regulation or law .... The purpose refers to what the legislature wanted to accomplish. Purpose is relevant to determine whether, in this case, Parliament was regulating the fishery, or venturing into the provincial area of property and civil rights. The legal effect refers to how the law will affect rights and liabilities, and is also helpful in illuminating the core meaning of the law .... (at para. 17)
20. In Kitkatla, the Court dealt with the question of whether legislation under the Provincial Heritage Conservation Act fell within the provincial responsibility for property and civil rights or within the federal responsibility for Indians and lands reserved to Indians. It was argued that the Heritage Conservation Act, to the extent that it allowed for the alteration and destruction of native cultural objects, should be struck down. On behalf of the Court, LeBel, J. stated:
The beginning of any division of powers analysis is a characterization of the impugned law to determine the head of power within which it falls. This process is commonly known as "pith and substance" analysis .... By thus categorizing the impugned provision, one is able to determine whether the enacting legislature possesses the authority under the constitution to do what it did.
A pith and substance analysis looks at both (1) the purpose of the legislation as well as (2) its effect. First, to determine the purpose of the legislation, the Court may look at both intrinsic evidence, such as purpose clauses, or extrinsic evidence, such as Hansard or the minutes of parliamentary committees.
Second, in looking at the effect of the legislation, the Court may consider both its legal effect and its practical effect. In other words, the Court looks to see, first, what effect flows directly from the provisions of the statute itself; then, second, what "side" effects flow from the application of the statute which are not direct effects of the provisions of the statute itself .... (at pp. 170-1)
21. LeBel, J. also stated that the proper approach is to look first at the impugned provisions rather than the pith and substance of the entire Act containing the impugned provisions. In this regard, LeBel, J. cited with approval the dicta of Dickson, J., as he then was, in [1983] 2 S.C.R. 206">Attorney General of Canada v. Canadian National Transportation Ltd., [1983] 2 S.C.R. 206, at p. 270 (quoted by Dickson, C.J. in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, at p. 665):
The correct approach, where there is some doubt that the impugned provision has the same constitutional characterization as the Act in which it is found, is to start with the challenged section rather than with a demonstration of the validity of the statute as a whole. I do not think, however, this means that the section in question must be read in isolation. If the claim to constitutional validity is based on the contention that the impugned provision is part of a regulatory scheme it would seem necessary to read it in its context. If it can in fact be seen as part of such a scheme, attention will then shift to the constitutionality of the scheme as a whole.
22. It is critical to note that the Court in Kitkatla found that there was no intrusion on a federal head of power, that the impugned portions of the Heritage Conservation Act were, in pith and substance, law within the legislative competence of the Province under property and civil rights, and that LeBel, J. on behalf of the Court stated:
Given this conclusion, it will not be useful to discuss the doctrine of inter-jurisdictional immunity. It would apply only if the provincial legislation went to the core of the federal power (See Ordon Estate v. Grail, [1998] 3 S.C.R. 437, at para. 81; Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, supra, at paras. 177-78, per Lamer C.J.) (at p. 181)
23. LeBel, J. cited with approval the three-part test for determining the pith and substance of a provision as set out by Dickson, J. in General Motors of Canada, supra, at pp. 666-7:
The first step should be to consider whether and to what extent the impugned provision can be characterized as intruding into provincial powers. If it cannot be characterized as intruding at all, i.e., if in its pith and substance the provision is federal law, and if the act to which it is attached is constitutionally valid (or if the provision is severable or if it is attached to a severable and constitutionally valid part of the act) then the investigation need go no further.
If, on the other hand, the legislation is not in pith and substance within the constitutional powers of the enacting legislature, then the court must ask if the impugned provision is nonetheless a part of a valid legislative scheme. If it is, at the third stage the impugned provision should be upheld if it is sufficiently integrated into the valid legislative scheme.
24. Accordingly, two of the most recent pronouncements of the Supreme Court of Canada in this regard state the beginning of any division of powers analysis is the pith and substance analysis to determine the head of power within which the impugned law falls. That approach to analysis was also adopted in a recent judgment from our Court of Appeal.
25. In Eurosport, the Court dealt with the question of whether s. 42.1(2)(b) of the Insurance (Motor Vehicle) Act R.S.B.C., 1996 c. 231 which allowed a person to be charged with making a false statement or representation to I.C.B.C. in order to obtain payment for goods or services was enacted in furtherance of a valid provincial purpose or whether it was, in its pith and substance, criminal law. Braidwood, J.A. on behalf of the Court stated that:
The accepted approach to a division of powers analysis requires two steps:
1. An identification of the law's "matter" or "pith and substance"; and
2. An assignment of the "matter" of the law to a head of power under the Constitution Act, 1867 .... (at p. 284)
26. If the pith and substance of an enactment falls within a class of subjects assigned to the Legislature by s. 92 of the Constitution Act, 1867, the enactment will be valid notwithstanding that it may have incidental or ancillary effects in areas of federal jurisdiction: General Motors of Canada v. City National Leasing, [1989] 1 S.C.R. 641; Reference re Firearms Act, supra; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161; Westbank First Nation v. B.C. Hydro and Power Authority, [1999] 3 S.C.R. 134, and Eurosport, supra. In Eurosport, Braidwood, J.A. stated on behalf of the Court:
It is clear that where the "matter", "dominant characteristic" or "pith and substance" of an enactment, or part of an enactment, falls within a class of subjects allocated exclusively to the provincial legislatures by s. 92 of the Constitution, then any incidental effects the enactment may have on federal jurisdiction do not affect its validity.
[I]n a federal state it is inevitable that, in pursuing valid objectives, the legislation of each level of government will impact occasionally on the sphere of power of the other level of government; overlap of legislation is to be expected and accommodated in a federal state. [General Motors of Canada v. City National Leasing, [1989] 1 S.C.R. 641; [1989] S.C.J. No. 28 at para. 45.] [p. 669 S.C.R.]
It is possible for provincial legislation to impact on federal areas of exclusive jurisdiction if that impact is ancillary to an otherwise valid scheme:
The determination of which head of power a particular law falls under is not an exact science. In a federal system, each level of government can expect to have its jurisdiction affected by the other to a certain degree. As Dickson, C.J. stated in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, at p. 669, "overlap of legislation is to be expected and accommodated in a federal state". Laws mainly in relation to the jurisdiction of one level of government may overflow into, or have "incidental effects" upon, the jurisdiction of the other level of government. It is a matter of balance and of federalism: no one level of government is isolated from the other, nor can it usurp the functions of the other.
[Reference re: Firearms Act (Can.), [2000] 1 S.C.R. 783, [2000] S.C.J. No. 31, 144 C.C.C. (3d) 385, 185 D.L.R. (4th) 577, at para. 26]
27. In reviewing the incidental or ancillary effects that legislation may have in areas of federal jurisdiction, the Court in Kitkatla adopted and restated the three-part test originally enunciated by Dickson, C.J.C. in General Motors of Canada, supra:
(a) Do the impugned provisions intrude into a federal head of power if so, to what extent?
(b) If the impugned provisions intrude into a federal head of power, are they nevertheless part of a valid provincial legislative scheme?
(c) If the impugned provisions are part of a valid provincial legislative scheme, are they sufficiently integrated with the scheme? (at p. 173)
28. The plaintiff submits that the appropriate analysis is to assume the constitutional validity of s. 10(1) and then to commence with tests for inter-jurisdictional immunity as set out in Ordon Estate v. Grail, [1998] 3 S.C.R. 437. I am satisfied that this approach to analysis is contrary to numerous decisions of the Supreme Court of Canada as well as to the approach taken in Eurosport. I am satisfied that the analysis as set out in Ward, Kitkatla, and Eurosport is the appropriate approach. If the pith and substance of a provision does not intrude into a power of the other government, it is not necessary to consider the doctrine of inter-jurisdictional immunity.
29. Regarding Ordon Estate, it is important to note that the decisions in Ward, supra, and Kitkatla, supra, were decided after the decision of the Court in Ordon Estate and that LeBel, J. in Kitkatla makes it clear that the analysis of the pith and substance of a provision must be considered first. As well, it should be noted that: (a) the parties in Ordon Estate conceded that the subject matter at issue in the appeals was "maritime negligence law" falling within the exclusive federal jurisdiction (at p. 505); and (b) the question which was framed by the Court was: "whether and how the provisions of a provincial statute may function to determine legal issues which arise incidentally as part of a negligence claim otherwise entirely governed by federal maritime law." (at p. 452).
30. Accordingly, the first question which must be answered is what is the pith and substance of s. 10(1) of the Act. If the pith and substance of that section does not intrude into shipping and navigation power of the federal government, it will not be necessary to consider the doctrine of inter-jurisdictional immunity. If there is no intrusion, then the provincial legislation is constitutionally valid. If there is some intrusion into the federal head of power over shipping and navigation, the next question is whether the impugned provision is nevertheless part of a valid provincial legislative scheme with the impugned provision sufficiently integrated within the scheme.
[70] With this jurisprudence in mind, I now turn to the particular facts of this case.
The Impugned Provisions
[71] Part 9 of the Forest Act is composed of five sections that deal with the following matters:
a) Section 122 authorizes the Minister to establish an area as a log salvage district in British Columbia;
b) Section 123 provides for the granting of a receiving station licence to a holder who will accept delivery of salvaged logs within a log salvage district. The holder of a receiving station licence must:
(i) maintain facilities in the log salvage district for receiving, storing and sorting salvaged logs;
(ii) dispose of salvaged logs in a prescribed manner;
(iii) pay the Province the prescribed licence fees;
(iv) account for, hold, disburse and use revenues received from the sale of salvaged logs in the prescribed manner; and
(v) subject to the regulations, pay to holders of log salvage permits compensation in the prescribed amount for logs delivered to the receiving station or to a place specified by the holder;
c) Section 124 provides for the granting of log salvage permits to qualified log salvors;
d) Section 125 provides that the disposal and delivery of logs from a log salvage district must be in accordance with the regulations;
e) Section 126 provides for the limited closing of areas to log salvaging if notification is received that logs have been lost in an area of coastal waters. While an area is closed, only the log owner or the owner's agent can salvage the logs in the closed area.
[72] Part 9 is clearly a framework for dealing with that part of the Province's forestry resource that has become drift timber, and so needs to be salvaged or recovered so that its value can be realized. Part 9 is part of the Forest Act, a statute that deals generally with multiple aspects of the management and harvesting of timber in British Columbia. Part 9 is necessary to the general scheme because the distinct geography of British Columbia makes it inevitable that, between harvesting and sale, some logs will get lost and become drift timber. If the Province's economic stake in those logs is to be realized, there has to be some way to manage, recover and sell cut logs that are adrift in the Fraser River.
[73] In my view, Part 9 of the Forest Act has nothing to do with navigation or shipping. During the course of the trial, the Plaintiff suggested various ways to try and connect it with navigation and shipping, but any such connection is tenuous and does not, in my opinion, taint the clear purpose and effect of Part 9, or Part 9 read in the context of the Forest Act as a whole.
[74] It can be said, for instance, that navigation and shipping are connected to water, and Part 9 deals with the retrieval and sale of logs that have become adrift in water. But the fact that cut logs have somehow found their way into water does not mean that they have ceased to be part of the forestry resource, or that the Province should lose the right to continue managing that resource in the manner contemplated by Part 9. Just because the logs are recovered from navigable waters does not mean that the impugned provisions must be related to navigation and shipping.
[75] The Plaintiff also made much of the fact that logs adrift in navigable waters pose a hazard to shipping. There is no doubt that drifting logs and deadheads can be a hazard to shipping and that the removal of those logs from the water removes that hazard. But the purpose and effect of Part 9 of the Forest Act is not to deal with hazards to shipping. Part 9 deals with the retrieval or recovery of logs from the water so that their economic value can be realized. The evidence was clear at trial that neither the Plaintiff nor other salvors were in the business of recovering logs to prevent hazards to shipping. Their interest is economic. The fact that retrieving a log from the water and delivering it to a receiving station may also have the incidental effect of removing a hazard to shipping does not mean that the pith and substance of Part 9 of the Forest Act is related to navigation or shipping. The impugned provisions have not interfered with the federal interest in navigation and shipping and the federal ability to deal with drift logs under the Navigable Waters Protection Act, R.S.C. 1985 c.N-22. The evidence was clear at the trial that there is in place a federal framework for dealing with safety of shipping and navigation issues which is carried out through the Federal Harbour Board and other federal departments. Under the relevant federal provisions, logs that are a danger to navigation and shipping are removed. Those provisions do not deal with the property rights or the economic interests in logs or the forestry resource management aspects of drifting logs. The federal and provincial systems work side by side and the Court heard no evidence of any practical problems in this arrangement other than the economic concerns of the salvors and the debatable environment impact.
[76] The Plaintiff's central argument, however, is that Part 9 of the Forest Act deals with the salvage of logs from navigable waters, log salvage is marine salvage, and marine salvage is a matter for federal jurisdiction under navigation and shipping. But this is the argument that the Federal Court of Appeal, in dealing with the summary judgment issue warned against: "the fact that the subject-matter of the legislation falls within the definition of salvage is not conclusive of constitutional competence." As the Federal Court of Appeal pointed out, the question is whether the impugned provisions have "a sufficient connection to shipping ..." and "log recovery is not an aspect of shipping (and subject to federal jurisdiction) simply because it falls within the definition of salvage." In other words, the expanded definition of "salvage" contained in the Convention should not be used as a tail to wag the constitutional dog.
[77] There is a technical aspect to the definition of "property" and "cargo" for the purpose of salvage that I will address later when considering the impact of the Shipping Act and the Convention, but for the purpose of a pith and substance analysis of Part 9 of the Forest Act, even the fact that drift logs might be considered as "property" as that term is now defined by the Convention, does not mean that the purpose or effect of Part 9 of the Forest Act is to deal with shipping or navigation. The purpose and effect of Part 9 is, in my view, to deal with the recovery and sale of drifting logs as part of the Province's general scheme for managing its forestry resource and realizing upon its economic value. If those logs, at some stage in the process, can be said to fall within the expanded definition of "salvage," this does not change the essential purpose or effect of Part 9 of the Forest Act or the provincial scheme of which it is a part.
[78] The Log Salvage Regulation fleshes out the scheme authorized by Part 9 of the Forest Act. It deals with the following:
a) Section 3 deals with the qualifications for a licence as a log salvage permittee;
b) Section 4 deals with the qualifications for a log salvage permit;
c) Section 5 deals with delivery of, remuneration for, and rights of property in an identifiable log, which section 1 defines as being a salvaged log that bears a timber mark or a registered marine log brand, or that is salvaged in a boom, section, bundle or parcel that has at least one log that bears a timber mark or a registered marine log brand, or that bears an ownership tag;
d) Section 6 deals with how the "owner" of an identifiable log is to be determined;
e) Section 7 deals with who can dispose of and accept delivery of a salvaged log from a log salvage district;
f) Section 8 deals with the scaling of salvaged logs;
g) Section 9 deals with the duties of a licencee in maintaining a receiving station in Howe Sound and the recording and maintaining of records of logs delivered to a receiving station or an authorized mill;
h) Section 10 deals with the calculation of the payments to be made to permittees for merchantable logs;
i) Section 11 deals with how the proceeds of disposition of identifiable salvaged logs must be handled;
j) Section 12 deals with how permittees shall keep and produce their permits and provide proof of identity;
k) Section 13 deals with time restrictions on permittees for the delivery of merchantable logs to the receiving station or notification to the licencee concerning the salvaging of a log boom;
l) Section 14 deals with certain prohibitions concerning where logs can be salvaged;
m) Section 15 deals with restrictions on the numbers of salvage boats, tenders and land vehicles that a permittee can use when engaged in log salvage operations, as well as the way a permit number must be displayed and restrictions on the use of helpers;
n) Section 16 deals with the issuance and use of log salvage identification hammers;
o) Section 17 deals with scaling prior to removal of a salvaged log from the water or delivery by land;
p) Section 18 restricts the times for carrying on log salvage operations;
q) Section 19 deals with the seizure of logs by the regional manager, an authorized forest officer, or a peace officer in the event of certain contraventions of the regulations or the Forest Act;
r) Section 20 fixes the amount of licence and permit fees;
s) Section 21 creates an offence for anyone who contravenes the Log Salvage Regulation.
[79] Once again, whether viewed severally or together, these provisions are not, in my view, in pith and substance related to navigation and shipping. They deal with the licencing, identification, ownership, permit requirements, sale and delivery, and compensation issues for those parties involved in log recovery under Part 9 of the Forest Act. The only sections that appear to have any connection to boat operation are those restrictions found in sections 15 and 18 that limit the number of boats to be used, the use of helpers and hours of operation. In my view, these restrictions are ancillary safety features associated with the forest resources management purpose of the Forest Act and the Log Salvage Regulation and do not trench in any meaningful way on the federal navigation and shipping power.
[80] The Plaintiff says that Part 9 of the Forest Act and the Log Salvage Regulation do intrude on the federal navigation and shipping power for two reasons:
a) "They seek to regulate the return or recovery of property lost in the course of its transport by water"; and
b) On their face, and as indicated in the title of Part 9 of the Forest Act, "these provisions apply to solely marine log salvage" and "anything that happens in the marine context is prima facie federal jurisdiction."
[81] It is, of course, true that the impugned provisions do address certain aspects of log recovery that take place in navigable waters and are concerned with the return and recovery of property in the form of logs that are adrift in the Fraser River. But the impugned provisions are clearly intended to regulate the ways that log owners, licencees, salvor permittees and the Province should manage and participate in the economic realization of that portion of the forest resource that somehow ends up adrift in the Vancouver Log Salvage District. The purpose and effect of the provisions is not related to shipping or navigation, even when they are examined in isolation. But, in addition, Part 9 of the Forest Act and the Log Salvage Regulation are an integral part of a seamless provincial resource management scheme, and the fact that they deal with the recovery of property lost in the water, or that the logs in question might or might not fit within some expanded definition of "salvage" or "property," does not, in my view, change the essential character and effect of the statute and the regulations that establish and direct the management of that scheme. Any connection with navigation and shipping is tenuous and incidental at best. Under the provincial scheme, cut logs and other timber are salvaged or recovered on land, from the banks of the Fraser River, from various structures and facilities along the river, as well as from the navigable channel. The Plaintiff believes that Part 9 of the Forest Act and the Log Salvage Regulation can be isolated from the rest of the provincial scheme but, in my view, this is neither legally nor practically possible. The whole scheme deals with the recovery of cut logs and other timber from various locations so that the economic value of those logs can be realized. The impugned provisions are an integral part of the entire scheme. Their practical effect is to reduce waste and loss in the timber industry, to protect the provincial interest in Crown timber through the payment of stumpage, and to help protect the property rights of log owners.
[82] Even if it could be said that the impugned provisions in some way intrude on the federal navigation and shipping power (and in my view they do not), the provisions would still be part of a valid provincial legislative scheme and are sufficiently integrated with that scheme to render them intra vires the Province. Any impact on a federal matter is merely incidental. See 2003 SCC 55">Paul v. British Columbia (Forest Appeals Commission), 2003 SCC 55, at para. 14. The evidence at trial was clear that the Attorney General of Canada is of the same view. On two occasions (January 12, 2001 and February 22, 2005) the Federal Department of Justice has confirmed that it will not participate in this matter because it is a "private and provincial matter." This position is understandable to me, bearing in mind that the federal interest in navigation and shipping as it relates to drift logs is adequately addressed under the Navigable Waters Protection Act.
[83] This conclusion is borne out by evidence given by various witnesses at the trial. For instance, Ms. Weishuhn, on behalf of the Plaintiff, gave evidence that the Log Salvage Regulation did not impact upon the way she operated on the water when engaged in recovering logs.
[84] There was also evidence presented at trial to the effect that the recovery of logs from the Fraser River in accordance with the provincial scheme is an activity that is unique to the coastal region of British Columbia and that the matter is one of a merely local or private nature within the meaning of section 92(10) of the Constitution Act, 1867. Even Ms. Weishuhn, on behalf of the Plaintiff, said she was not aware of anywhere else in Canada where the activity of log recovery is carried out in the way it is done in British Columbia.
[85] So my conclusion is that Part 9 of the Forest Act and the Log Salvage Regulation are valid provincial legislation that is intra vires the Province, aspects of which can be allocated to property and civil rights (92(13)), management and sale of timber (92(5)), local works and undertakings (92(10)), or matters of a merely local or private nature in the province (92(16)).
[86] Some of the motives behind this litigation emerged at the trial and are perfectly understandable. There was evidence to suggest that log salvors on the Fraser River feel that the provincial system does not provide a sufficient economic incentive to encourage the recovery of logs that are adrift in the Vancouver Log Salvage District. This in turn has given rise to an environmental concern that marshes in the estuary are being adversely affected by logs (although the Plaintiff's evidence on the environmental issue was inconclusive and somewhat ambiguous). However, such matters of concern are for the Province to deal with and do not provide a basis to invalidate the constitutional legitimacy of Part 9 of the Forest Act or the Log Salvage Regulation.
[87] In my view, these conclusions effectively deal with the issues raised by the Plaintiff and with Plaintiff's prayer for relief. However, there remains the issue of the validity and applicability of the Shipping Act and the Convention. The Plaintiff has based much of its case on the expanded definitions of "property" and "salvage operation" in the Convention, and the Province has asked the Court to consider whether the Shipping Act and the Convention are ultra vires the Parliament of Canada in so far as they purport to regulate the recovery and sale of logs, and the distribution of the proceeds of sale, in British Columbia.
THE SHIPPING ACT AND THE CONVENTION
Remaining Issues
[88] Canada adopted the Convention in 1993. It is given the force of law in Canada by virtue of section 449.1 of the Shipping Act "from and after the day on which Canada deposits an instrument of ratification with the Secretary General of the International Maritime Organization."
[89] There is no dispute between the parties about the ability of Canada to enter into the Convention or to implement it as part of domestic law through the Shipping Act. The dispute lies in whether the Shipping Act and the Convention purport to deal with the log recovery activities carried out by the Plaintiff in this case and with the Province's interest in managing and realizing the economic value of its timber resource.
[90] The Province and other Defendants have taken the position that, apart from a superficial connection between log salvage and the salvage of cargo and ships pursuant to the Convention, the two activities are completely distinct and marine log salvage is not a matter related to navigation and shipping. They also assert that the activities of Ms. Weishuhn in recovering the 17 NMV logs in question in this case do not qualify as salvage under the Convention and do not give rise to a right for payment.
[91] When the Province made its application for summary judgment, Mr. Justice Hugessen firmly disagreed with the Province's position on the non-applicability of the Shipping Act and the Convention to the facts of this case. Mr. Justice Hugessen's reasons for disagreement are set out in paragraph 59 of these reasons.
[92] Mr. Justice Hugessen was of the view that "Parliament has clearly legislated so as to extend the concept of marine salvage to include 'property' such as logs and booms of logs within the scope of the law of salvage." Mr. Justice Hugessen did not, of course, conclude that the Plaintiff was entitled to any payment for the logs in accordance with the Convention: "I conclude accordingly, that the claim as asserted is apparently within the jurisdiction of this Court as relating to salvage. That does not, of course, mean that the claim is well-founded or that it will succeed in due course."
[93] The assertions of Mr. Justice Hugessen concerning the applicability of the Convention in this case were based upon his observation that the Province "has not in any way impugned the federal legislation so that a finding of the latter's applicability necessarily excludes the application of the provincial legislation."
[94] Underlying these conclusions was Mr. Justice Hugessen's view of the record before him that this was a case about maritime salvage within the terms of the Convention, so that the provincial legislation did not come into play and the Plaintiff need only establish entitlement to payment under the Convention.
[95] As pointed out in paragraph 61 of these reasons, the Federal Court of Appeal directed otherwise: "The definition of salvage in the Convention cannot alter the division of powers under the Constitution. Consequently, the question is not whether the provincial log recovery scheme falls within the expanded definition of salvage but whether that scheme has a sufficient connection to shipping such that the expanded definition of salvage would apply to it. In other words, log recovery is not an aspect of shipping (and subject to federal jurisdiction) simply because it falls within the definition of salvage." The Federal Court of Appeal appears to have assumed, or found implicitly, that the log recovery carried out in this case had nothing to do with "navigation," as opposed to "shipping," and that the connection to shipping had yet to be established.
[96] In my reasons so far, I have attempted to follow the directions of the Federal Court of Appeal and I have come to the conclusion that the provincial scheme embodied in Part 9 of the Forest Act and the Log Salvage Regulation is intra vires the Province and is thus applicable to the 17 NMV logs recovered by the Plaintiff in this case.
[97] This does not involve a finding that the 17 NMV logs recovered by the Plaintiff in this case do not fall with the expanded definition of "property" contained in the Convention. In my view, such a finding is not necessary to decide the principal issue in the case: namely, the constitutional validity of Part 9 of the Forest Act and the Log Salvage Regulation.
[98] However, whether or not the 17 NMV logs in this case fall within the Convention definition of "property," that can be the subject of a "salvage operation," does raise the issue of the relationship between the federal salvage provisions and the provincial scheme, and whether the federal provisions need to be read down in some way because they intrude upon the valid exercise of the provincial jurisdiction that I have found in this case. The Province has directly raised this issue with the Court. If the 17 NMV logs do not fall within the Convention definitions of "property" and "salvage operation," then it seems to me that there is no conflict on the facts of this case and that no reading down would be required. So, in order to determine whether any reading down is required, it is necessary to review the Convention definitions to some extent to see whether the logs at issue in this case could conceivably qualify as "property" under the Convention.
The Convention Definitions
[99] Article 1 of Chapter 1 of the Convention contains the following key definitions:
a) Salvage operation means any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever.
b) Vessel means any ship or craft, or any structure capable of navigation.
c) Property means any property not permanently and intentionally attached to the shoreline and includes freight at risk.
[100] One of the arguments made by the Plaintiff on the facts of this case is that logs escaping from booms in the Fraser River can be considered as the cargo of a vessel. If this were the case, of course, it could mean that the logs could be regarded as salvage in the traditional sense of that word.
[101] The Plaintiff submits that a log boom is a vessel because it is designed for transport and containment in water, and is capable of navigation.
[102] Whether or not a log boom can be considered a vessel for the purpose of the Convention does not, in my view, assist the Plaintiff in this case. Ms. Weishuhn was clearly unable to say where the 17 NMV logs in question had come from. They may have come from a boom, or from a vessel in the conventional sense, but they may have come from another source (e.g. a land source) that clearly would not qualify as a vessel under the Convention or otherwise.
[103] So there is no evidence before the Court to support the view that any of the 17 NMV logs came from a vessel, even if a log boom could be considered a vessel. That being the case, the issue is whether the logs can be considered as "property" under paragraph (c) of Article 1 of the Convention.
[104] In the reasons he gave to deny the Province's application for summary judgment, Mr. Justice Hugessen was clearly of the view that the logs did qualify as "property" under the extended Convention definition. As in the trial before me, the Province took issue with an extended definition of salvage property that would include the logs in question, and cited traditional English case law to support its position. Mr. Justice Hugessen dealt with the Province's arguments in the following way:
...
5. The defendant cited to me three eighteenth and nineteenth century decisions of the English courts: Nicholson v. Chapman (1793), 2 H. Bl. 254, at page 257; 126 E.R. 536, at page 537; Raft of Timber (1844), 2 W. Rob. 251; 166 E.R. 749 and Gas Float Whitton No. 2 (The), [1896] P. 42 (C.A.), affd sub nom. Wells v. Gas Float Whitton No. 2 (Owners of). The Gas Float Whitton No. 2, [1897] A.C. 337 (H.L.). Those cases held that rafts and booms could not be the subject of a claim for salvage which was limited in the view of the English Admiralty Court to ships and their cargos. In my view, and whether or not those decisions were ever part of the law of Canada, they have now been decisively displaced by the Convention and Parliament has clearly legislated so as to extend the concept of marine salvage to include "property" such as logs and booms of logs within the scope of the law of salvage. It is not suggested that that [page631] legislation is incompetent.
6. The plaintiff says, and there is evidence to support that contention, that the logs salvaged by it were in danger. That is enough, at this stage of the case, to allow the matter to proceed in this Court. It may, of course, be that the logs here in question would even have been the subject of a claim for salvage in the traditional sense. They were apparently found floating in the navigation channel of the river and had no identifying marks upon them. Thus they might have been part of the cargo of a log barge which would have, of course, brought them within the traditional view of salvage although I must concede that as a practical matter, it is more probable that they had either escaped from a boom or had entered the river free floating. It is not necessary for me to make any finding upon that question (although I note that it underlines the artificial nature of the traditional distinction between cargo and other salvaged property).
...
[105] Coast and Timber Marketing support the Province's contention that the recovery of logs has traditionally not been treated as salvage, and they point out that "From 1858 until 1993, it has never been argued in the UK or Canada that recovery of logs amounted to salvage as that term is used in maritime law."
[106] It was in 1993 that Canada adopted the Convention and its expanded definition of "property". Coast and Timber Marketing say, however, that if the "any property not permanently and intentionally attached to the shoreline" definition is applied literally, it would encompass such property as a car driven into a lake or river, or a watch that falls into a stream. This might not be an issue in a unitary state, but it is in a federal state where such an all-encompassing definition of property could conceivably take the Convention outside of legislative competence.
[107] Although Mr. Justice Hugessen rejected some of the caveats contained in Lord Justice Kerr's article on the Convention in favour of a broad approach to the definition of "property" that would include "logs and booms," as the full record of this case has shown, the difficulties do not end there, and the following cautions by Lord Justice Kerr, at page 549 of his article, remain relevant for that reason:
It should be recalled that article 1, concerning the definitions, formed part of a package and must be read together with other articles, particularly article 30 dealing with reservations ... Throughout the negotiations for the 1989 Convention, there were many amendments suggested, or made, concerning the definitions. Phrases were included in draft articles, then removed only to resurface in later discussions, depending on whether a wide or narrow definition of salvage was desired....
The resulting set of definitions and exclusions will doubtless be the source of much future discussion and litigation. There is no doubt that there are very real ambiguities in many of the provisions. Some of these are because of oversight, but most are the result of the inevitable compromises which characterize the negotiation of international conventions. Often, it is easier to reach an agreement by leaving a point deliberately vague; each delegation can then satisfy its government (and commercial and other interests) by indicating its own interpretation. In some cases, therefore, it may be a rather fruitless quest to look for a "true" interpretation of a particular provision. A judge or arbitrator must make the best interpretation possible on the text.
[108] Lord Justice Kerr's prophetic words that "The resulting set of definitions and exclusions will doubtless be the source of much future discussion and litigation," and that "There is no doubt that there are very real ambiguities in many of the provisions" lead, of course, directly to the case at bar.
[109] It is not the role of the Court in these proceedings to attempt to reach an exhaustive understanding of the scope of the Convention definition of "property." The Court is dealing specifically with 17 NMV logs whose source and ownership cannot be determined.
[110] The issue for the Court is whether the 17 NMV logs found adrift in the Fraser River by Ms. Weishuhn from no identifiable source, and with no means of identifying the owner, can be considered "property" for the purpose of the Convention.
[111] Understandably, there is no evidence before me that the status of NMV logs was ever considered by the framers of the Convention and/or the parties who have adopted it. Conditions must vary significantly from country to country. As Mr. Justice Hugessen points out, the "commerce in floating timber" has a particular importance for Canada. This is why he favoured a broad definition of "property" under the Convention.
[112] The traditional concept of salvage in UK and Canadian law is based upon the amount to be paid by the "owner" of a vessel or cargo for services rendered in recovering that vessel or cargo. This is why there is no conceptual difficulty in including logs and booms that come from a vessel within the traditional definition of salvage. But the problem in this case is whether it can include drifting logs from no identifiable source that have no identifiable owner.
[113] The Plaintiff is very aware of this problem and has argued strenuously that the Province has an ownership interest in the 17 NMV logs in question in this case that can be used to ground recovery in traditional salvage law and provide a source for a salvage award. The legal characterization is not entirely clear, but the legislation and the evidence in this case suggest that the Province has some kind of lien interest against NMV logs recovered in waters inside and adjacent to British Columbia until the charges set out in the regulations have been paid.
[114] The Convention itself is grounded in "ownership" but does not say what degree of ownership or interest will suffice. For instance, the duties owed by the salvor under Article 8 are owed "to the owner of the vessel or other property in danger," thus confirming the view that identifiable ownership is required, whether or not the property is cargo or other property. Section 2 of Article 8 establishes reciprocal duties towards the salvor on the part of "the owner and master of the vessel or the owner of the other property in danger." Article 13, which establishes criteria to be taken into account when fixing a reward, stipulates in paragraph 2 that "Payment of a reward fixed in accordance to paragraph 1 shall be made by all of the vessel and other property interests in proportion to their respective salved values," thus suggesting that salvage under the Convention definition is linked to identifiable property interests. Article 19 also says that the "other property" aspect of the Convention is property that still requires an identifiable owner:
Article 19
Prohibition of salvage operations
Services rendered notwithstanding the express and reasonable prohibition of the owner or master of the vessel or the owner of any other property in danger which is not and has not been on board the vessel shall not give rise to payment under this Convention.
[115] This suggests to me that salvage under the Convention can take place in relation to property "which is not and has not been on board the vessel," but that such property still requires the identification of an owner. But does the Province have a sufficient ownership interest? And, if the Province is fixed with an ownership interest sufficient for a salvage claim under the Convention, there would appear to be nothing to prevent the Province from issuing an express and reasonable prohibition in relation to drift logs in the Vancouver Log Salvage District. It may even be, of course, that the Forest Act and the Log Salvage Regulation are themselves an express and reasonable prohibition.
[116] When Mr. Justice Hugessen considered this matter, he took the view that there was no implied intention to exclude such things as logs and booms from the definition of property in the Convention. This would seem to accord with the view of the authors of Kennedy and Rose Law of Salvage, London: Sweet and Maxwell, 2002 at para. 164 that the definition of "property" under the Convention is intended to be inclusive and that "it is sufficient that a potential subject of salvage falls within the broad principle ..., and not necessary that it fits neatly into previously recognized classifications." When considering the reasons of Mr. Justice Hugessen, the Federal Court of Appeal did not take issue with his conclusion that the drafters of the Convention did not intend any restriction on the nature of the property. They merely pointed out that the constitutional question related to "shipping" and not an expanded concept of salvage that Parliament had enacted by adopting the Convention definition of "property" into Canadian domestic law. I see no reason, then, to conclude that the 17 NMV logs that are the subject matter of this dispute cannot constitute "property" for the purposes of the expanded Convention definition. There may well be problems with attributing "ownership" for purposes of payment but, conceptually at least, they fall within the Convention definition of "property."
Entitlement to Payment
[117] For reasons related to the ownership issue, it is unclear on the facts before me whether the Plaintiff could establish an entitlement to payment under the terms of the Convention for any of the 17 NMV logs in question.
[118] The Plaintiff's claim to entitlement is based upon Article 12 and Article 13 of Chapter III of the Convention which read as follows:
Article 12
Conditions for reward
1. Salvage operations which have had a useful result give right to a reward.
2. Except as otherwise provided, no payment is due under this Convention if the salvage operations have had no useful result.
3. This chapter shall apply, notwithstanding that the salved vessel and the vessel undertaking the salvage operations belong to the same owner.
Article 13
Criteria for fixing the reward
1. The reward shall be fixed with a view to encouraging salvage operations, taking into account the following criteria without regard to the order in which they are presented below:
(a) the salved value of the vessel and other property;
(b) the skill and efforts of the salvors in preventing or minimizing damage to the environment;
(c) the measure of success obtained by the salvor;
(d) the nature and degree of the danger;
(e) the skill and efforts of the salvors in salving the vessel, other property and life;
(f) the time used and expenses and losses incurred by the salvors;
(g) the risk of liability and other risks run by the salvors or their equipment;
(h) the promptness of the services rendered;
(i) the availability and use of vessels or other equipment intended for salvage operations;
(j) the state of readiness and efficiency of the salvor's equipment and the value thereof.
2. Payment of a reward fixed according to paragraph1 shall be made by all of the vessel and other property interests in proportion to their respective salved values. However, a State Party may in its national law provide that the payment of a reward has to be made by one of these interests, subject to a right of recourse of this interest against the other interests for their respective shares. Nothing in this article shall prevent any right of defence.
3. The rewards, exclusive of any interest and recoverable legal costs that may be payable thereon, shall not exceed the salved value of the vessel and other property.
[119] In seeking a declaration that it is entitled to receive compensation under Article 13(1) of the Convention, the Plaintiff sought to fix the Province with the ownership of the logs, and thus the responsibility for making that payment.
[120] The obligation to pay a reward under the Convention to a salvor is established under Article 13(2) which says that "Payment of a reward fixed according to paragraph 1 shall be made by all of the vessel and other property interests in proportion to their respective salved values."
[121] In the present case, there is no vessel so that, before a payment can be made, it is necessary to identify the "other property interests" in the logs in question. The evidence before the Court is inconclusive on the property interests involved in this case. There is a suggestion that ownership in the logs, for instance, is vested in one or more members of Coast and/or Timber Marketing, but the logs were recovered by Ms. Weishuhn individually and it is not possible to ascribe ownership or other property interests in any particular log to any particular member of Coast or Timber Marketing.
[122] To overcome this problem, the Plaintiff alleges that the Province has a sufficient property interest in the logs in question to make the Province responsible to pay a reward under Article 13(1) of the Convention. But Article 13(2) does suggest some kind of proportional payment commensurate with the separate ownership interests involved.
[123] A somewhat telling factor in this dispute is that, on behalf of the Plaintiff, Ms. Weishuhn recovered 65 floating logs in total from the Fraser River between January 13 and 19, 1999. From the 65 logs, 17 were selected which bore no visible timber marks. Some of the remaining 48 logs bore identifiable timber marks so that their owner could be traced. Yet all of those 48 logs were taken and delivered by the Plaintiff to Gulf Log, which runs the receiving station under the provincial system, and the Plaintiff accepted payment from Gulf Log under the provincial system. So why should there be a separate federal system for logs that are NMV?
[124] The Plaintiff says that it claims salvage from the Province for the 17 NMV logs "on the grounds that the Crown claims to own unmarked cut timber below the high tide line within the bounds of the Vancouver Log Salvage District ... ." The Plaintiff also says:
Shirley Weishuhn salvaged valuable property at risk of damage or loss. That property was lost in navigable waters in the course of its transport or storage on the river before or after transport. Ms. Weishuhn offered to return that property to the party with the best claim to ownership in those logs. [Emphasis added] In so doing she provided a benefit through the return of valuable property, the elimination of a navigation hazard and the elimination of a risk to the important and already compromised marshes of the Fraser River estuary.
[125] The Plaintiff invokes the case of Five Steel Barges (1890), 15 PD 142 (Prob. Ct.) in support of its position in the Province's ownership interest in the 17 logs, but I can find little that is helpful or analogous between that case (where the defendants appear to have had possession of the barges and a total equitable interest in them) and the present case where the Province's interest, under the Forest Act, R.S.B.C. 1996 c. 157 appears to be no more than a lien for the payment of stumpage fees:
130 (1) Money that is required to be paid to the government under the circumstances set out in subsection (1.1)
(a) is due and payable by the date specified for payment in a statement to, or notice served on, the person who is required to pay it,
(b) bears interest as prescribed, and in the case of an amount due under section 108, the interest runs from the date determined by the regional manager to be the date stumpage or royalty would have been due if the timber referred to in section 108 had been scaled correctly under Part 6,
(c) may be recovered in a court as a debt due to the government, and
(d) constitutes, in favour of the government,
(i) a lien on timber, lumber, veneer, plywood, pulp, newsprint, special forest products and wood residue owned by the person who owes the money, and
(ii) a lien on chattels or an interest in them, other than chattels referred to in subparagraph (i), owned by the person who owes the money.
(1.1) The circumstances referred to in subsection (1) are that money is required to be paid
(a) under this Act, the former Act, the Range Act, the NEWForest and Range Practices ActNEW, or a regulation made under any of them,
(b) under an agreement entered into under this Act, the former Act or the Range Act,
(c) under a permit issued under the NEWForest and Range Practices ActNEW or the regulations made under that Act, or
(d) for goods, services or both provided by the ministry.
(2) A lien under subsection (1)(d)(I) has priority over all other claims, and a lien under subsection (1)(d)(ii) has priority over all other claims other than claims secured by liens, charges and encumbrances registered against the chattels before the money is due and payable.
(3) A lien constituted under subsection (1) is not lost or impaired only because
(a) proceedings to recover the money are taken or not,
(b) partial payment of the money is tendered or accepted, or
(c) the lien is not registered.
(4) If default is made in the payment of all or part of the money due and payable, the minister may issue, and file with a court having jurisdiction, a certificate stating
(a) the amount that remains unpaid, including interest, and
(b) the name of the person who is required to pay it.
(5) A certificate filed under subsection (4) has the same effect as an order of the court for the recovery of a debt in the amount stated in the certificate against the person named in it, and all proceedings may be taken as if it were an order of the court.
[126] The Plaintiff has placed no conclusive authority before the Court to establish that such a lien interest was intended under the Convention to render the Province responsible for paying salvage in accordance with the Convention. And, of course, there is a conceptual problem with using that lien as a basis for "ownership" under the Convention because, from the Plaintiff's perspective, the lien will not arise, at least as regards payments under the Log Salvage Regulation, unless Part 9 of the Forest Act is valid provincial legislation. And this is why the Plaintiff has sought to fix the Province with an ownership interest that does not derive from the impugned statutory and regulatory provisions.
[127] Throughout its written representations, the Plaintiff makes various assertions to try and ascribe to the Province on ownership interest in unmarked logs:
a. 72. The regulations do not determine ownership in unmarked logs. This is done through the Crown's assertion of prima facie ownership of all unmarked cut timber. The authority for this assertion comes from the Crown's underlying title in standing timber, not from part 9 of the Forest Act or the Regulation.
b. 144. The Province, in its opening statement, claimed ownership of unmarked logs in the Fraser River.
c. Article 13(2) - the Province's property interest
179. The Plaintiff submits that what is required for the equitable rules of salvage to apply is that a benefit has been received for the return of property. The Plaintiff submits that the Province claims ownership of, has an interest in, and claims a benefit from "freely floating logs" in the Fraser River that are "unidentifiable."
180. In its opening statement the Crown concedes that it asserts ownership for all unmarked cut timber found in the water. Mr. Walders testified that property rights in uncut standing timber of Crown land vest in the Crown. Ownership passes from the Crown once stumpage is paid. The Crown asserts ownership on the grounds that it is unclear if stumpage has been paid in the case of unidentifiable salvaged wood. The Crown's assertion of ownership does not depend on the Provincial Marine Log Salvage Provisions.
181. While the Defendants CFPA and ITMA suggest that the Crown's interest is limited to .70 per cubic meter, the Plaintiff respectfully disagrees. As Mr. Walders explained the Crown could charge any amount of stumpage it wished on a log, but chooses to charge .70 per cubic meter as a matter of policy.
182. The Plaintiff submits that the Province's assertion of an ownership interest is sufficient to satisfy the ownership requirements of the Convention.
[128] The Province, on the other hand, submits that "there is insufficient evidence for the Court to conclude that the Defendant Province is the owner of the 17 NMV unmarked logs."
[129] In its Statement of Defence, at paragraph 5, the Province takes the position that ownership and property rights in respect of cut timber, such as the logs at issue in this case, is determined in accordance with the provisions of the Log Salvage Regulation.
[130] This position is difficult for the Court to accept. My reading of the Log Salvage Regulation - sections 5 and 6 in particular - suggests to me that the regulation only deals with rights of property and ownership in an "identifiable log" which is defined by the Log Salvage Regulation as a log that:
a) bears a timber mark or a registered marine log brand, or
b) does not bear a timber mark or a registered marine log brand but is salvaged in a boom, section, bundle or parcel that
(i) has at least one log that bears a timber mark or a registered marine log brand, or
(ii) bears an ownership tag.
[131] The logs in this case, in other words, are not "identifiable logs" within the meaning of the Log Salvage Regulation because the indicia of ownership are completely absent. As the Province says elsewhere in its argument, there is no clear evidence as to where these logs came from and "The logs are unidentifiable ... ."
[132] The Log Salvage Regulation, however, does provide a system for the recovery and sale of unidentifiable logs. The crucial provisions occur in section 11, which deals with the proceeds from disposition of both identifiable and unidentifiable logs.
[133] The proceeds of disposition are dealt with differently depending upon whether a log is identifiable or not:
11(1) The licensee shall hold money that it receives from a disposition of identifiable salvaged logs during an accounting period, after deduction of
(a) money paid or payable during the accounting period by the licensee to permittees in respect of the salvaged logs,
(b) costs incurred during the accounting period by the licensee for scaling and for Crown charges in respect of the salvaged logs, and [there is information missing here] in trust for the benefit of the former owners of the identifiable salvaged logs disposed of by the licensee during the accounting period.
(2) Within 120 days after an accounting period the licensee shall pay, from the money held in trust in respect of the accounting period to each former owner of identifiable salvaged logs disposed of by the licensee during the accounting period, an amount equal to the amount of money required to be held in trust by the licensee in respect of the accounting period, multiplied by the quotient that is obtained when
(a) the volume of identifiable salvaged logs of the former owner that was disposed of by the licensee during the accounting period is divided by
(b) the total volume of identifiable savaged logs disposed of by the licensee during the accounting period.
(3) The licensee shall hold in reserve money it receives during an accounting period from the disposition of unidentifiable salvaged logs after deduction of
(a) money paid or payable by the licensee to permittees in respect of the salvaged logs,
(b) costs incurred by the licensee for scaling and Crown charges in respect of the salvaged logs, and
(c) reasonable costs for overhead and other current operating expenses of the licensee in respect of the salvaged logs,
to be used
(d) to provide working capital for operation of its facilities, and capital for expansion of its facilities,
(e) to replace fixed assets, and
(f) under the general direction of the Deputy Minister of Forests, to finance or assist in financing programs for recovery and disposal of deadheads and unmerchantable timber, and for debris control,
but if any of the money so held by the licensee is surplus to those requirements, the licensee shall hold that surplus in trust, to be paid in the same manner and in the same proportions to the same persons as the money the licensee received during that accounting period in respect of the disposition of identifiable salvaged logs.
[134] What is telling, for me, about section 11(3) is that the surplus monies are not paid to the Province, but are held in trust for, and paid in the prescribed manner, to the owners of identifiable salvaged logs. This suggests at least some recognition in the Log Salvage Regulation of a residual interest in parties other than the Province. Section 11(3), through the creation of a trust of the proceeds for identifiable log owners, recognizes that any surplus equity in unidentifiable logs does not lie with the Province.
[135] I think the only conclusions that can be drawn on this issue are that the ownership interests in unidentifiable cut timber in the Fraser River are far from clear, and there is no clear authority before the Court that, under the terms of Convention, the Province has an ownership interest in the 17 NMV logs that would be sufficient to fix it with the responsibility of paying or compensating the Plaintiff under Article 13 of the Convention if the Convention was applicable in this case.
[136] In a letter of August 12, 1996 from Mr. Bill Howard, Director of Revenue Branch for the Ministry of Forests in British Columbia, in response to a letter from Mr. Ben Parfitt who had requested clarification of ownership of salvaged logs, Mr. Howard had the following to say:
I am writing in response to your recent letter which requested clarification on the ownership of salvaged logs.
In consideration of the legal advice I received, and my interpretation of the Log Salvage Regulation for the Vancouver Log Salvage District (VLSD), I advise as follows:
For floating logs inside or outside of the VLSD that are marked with a timber mark or a marine brand, in general the owner of the logs is presumed to be the holder of the registered marine log brand, or, if there is no brand, the holder of the timber mark on the logs. If a different person can prove ownership by, for example, showing that he/she purchased the logs, then they own the logs.
You should note that in the VLSD, an identifiable log can include a log that does not bear a timber mark or a registered marine log brand, if the log was salvaged from a boom, section, bundle or parcel that has at least one log that bears a timber mark, marine log brand or an ownership tag.
For unidentifiable floating, or beached logs on Crown land, inside the VLSD, the ownership of the logs is deemed to vest in the Crown. Log salvors have no ownership rights. The regulation provides a 30 day period during which the log salvors are in legal possession of the logs until they are delivered to a receiving station.
[137] This letter was put to Mr. Bruce Walders by Plaintiff's counsel during the course of the trial. Mr. Walders is the Inspector of Marine Log Salvage and Export for the Province. The following exchange occurred on the ownership issue:
Q. And this is a letter [referring to Tab 77, Exhibit 2(c)] in which, as I understand it, Bill Howard is responding to a question by Mr. Parfitt about the ownership of the logs, floating logs inside the Vancouver Log Salvage District. Is it your understanding that this is the current position of the Provincial Government, that the Crown is the ownership of free-floating logs in the Fraser River?
A. My understanding of the position is that for logs that have no mark visible and are unidentifiable as to ownership, since the Crown has an equity in that timber in the form of stumpage, they consider the timber to be owned by the Crown unless someone can prove a higher level of ownership, until such time as the timber has been scaled and any monies payable to the Crown have been made.
[138] In written submissions, the Province's position on this matter was stated as follows:
234. There is no doubt that the Crown has an equitable interest in cut logs where stumpage has not been paid. Tracking of logs and marking logs to ensure that stumpage is paid are essential elements of the regime under the Forestry Act to provide the revenue to the Crown for its timber resources.
235. The fact that the Crown claims that equitable interest when there is no mark visible on logs, does not determine the question as to whether or not the Crown is an owner for the purpose of the 1989 Convention.
[139] I think the Plaintiff is correct that, in the past, the Province has taken the position that, to quote Mr. Howard, "For unidentifiable floating, or beached logs on Crown land, inside the VLSD, the ownership of the logs is deemed to vest in the Crown." But his assertion is not necessarily authoritative and appears to have been made in a context where the Province wanted to make it clear that "Log Salvors have no ownership rights." Mr. Walters characterized the Province's right as "an equity in that timber in the form of stumpage," so that the Province considers "the timber to be owned by the Crown unless someone can prove a higher level of ownership ... ." This does not speak to the issue of whether the Province's interest in the 17 NMV logs in this case is sufficient to give rise to a right to receive compensation from the Crown under the terms of the Convention.
[140] Coast and Timber Marketing take the position that the Province "has a claim against unmarked, or NMV logs recovered in waters inside and adjacent to British Columbia, until the charges set under Regulation section 11 are paid:
Our clients possess and own almost all logs in storage in, and moved through, the Fraser River... . The effect of the Regulation is that although the ownership of any individual NMV log cannot be proven, the residual equity in that log belongs to (members of) CFPA and ITMA in accordance with section 11 of the Regulation.
[141] From the evidence presented to the Court on this issue, I come to the following conclusions:
(a) The Province has a lien interest in unidentifiable logs to ensure that stumpage has been paid, and exerts its lien interest until such time as the logs have been scaled and any monies payable to the Crown have been made;
(b) The Log Salvage Regulation appears to recognize some residual equity in NMV logs as belonging to parties other than the Province;
(c) It is unclear on the basis of the evidence and jurisprudence placed before the Court by the Plaintiffs whether the Province has a sufficient ownership interest in the 17 NMV logs to form the basis for a claim under Article 13 of the Convention.
[142] I am prepared to assume that the 17 NMV logs in question constitute valuable property at risk in navigable waters.
Reading Down
[143] The Province does not dispute the ability of Canada to enter into the Convention and to implement it into domestic law through the Shipping Act. However, to the extent that the Province alleges the Convention to be unconstitutional on the basis that it is beyond the legislative competence of Parliament, the burden of establishing such validity rests with the Province.
[144] The Province takes the position that, beyond a superficial connection between log salvage and salvage of cargo and ships pursuant to the Convention, the two fields are completely distinct and that marine log salvage in the Vancouver Log Salvage District is not a matter in relation to navigation and shipping.
[145] So the Province acknowledges that the Convention, as adopted into Canadian domestic law by the Shipping Act is, in pith and substance, related to navigation and shipping, in so far as general marine salvage is concerned. The issue is whether, if the Convention is interpreted as including marine log salvage in the Vancouver Log Salvage District, the provisions relating to log salvage infringe the unassailable core of the Province's legislative jurisdiction.
[146] It has to be borne in mind that the conclusions reached by the Court in this case are related to the specific facts that the logs in question are NMV logs and that the recovery operations in question are situated entirely within the Vancouver Log Salvage District. There is no evidence that the logs are traditional cargo, and ownership interests cannot be clearly identified. However, like Mr. Justice Hugessen, I see no reason why logs (even NMV logs) and booms do not fall within the expanded "property" definition of the Convention, even though entitlement to payment in accordance with the Convention is not clearly established in this case.
[147] The Province has asked that the Court read down the Convention and interpret it in such a way that it only applies to "marine salvage" as described in the evidence given by Captain Rose and not to the recovery of logs. For the reasons given, the Court cannot say that the Convention definition of "property" does not apply to logs, or even NMV logs. This suggests that, in order to remain consistent with the conclusion that Part 9 of the Forest Act and the Log Salvage Regulation are intra vires for the Province, the Court must conclude that to the extent that the Shipping Act and the Convention purport to regulate the recovery, sale and distribution of the proceeds of sale of recovered NMV logs adrift in the Vancouver Log Salvage District, they are not valid legislation in relation to navigation and shipping and are, thus, ultra vires, the Parliament of Canada because they infringe the unassailable or core of the Province's legislative jurisdiction under sections 92(5), 92(10), 92(13) and 92(16) of the Constitution Act( 1982).
CONCLUSIONS
[148] For the reasons set out above, I am of the view that the Plaintiff's prayer for declaratory relief should be refused on the basis that Part 9 of the Forest Act and the Log Salvage Regulation are intra vires the Province of British Columbia as being valid provincial legislation, aspects of which can be allocated to property and civil rights (92(13)), management and sale of timber ((92(5)), local works and undertakings (92(10)), and matters of a merely local or private nature within the province (92(16))
[149] The Court is also of the view that to the extent that the Shipping Act and the Convention purport to regulate the recovery, sale and distribution of the proceeds of sale of recovered NMV logs adrift in the Vancouver Log Salvage District, they are not valid legislation in relation to navigation and shipping and are ultra vires the Parliament of Canada.
[150] The Defendants (other than the Province) and the Plaintiff are at liberty to address the Court on the issue of costs in the event that they have not come to their own understanding on this matter.
[151] I would like to thank and complement all counsel involved for the way this matter was organized and presented at trial.
"James Russell"
JFC
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-588-00
STYLE OF CAUSE: Early Recovered Resources Inc v. Her Majesty the Queen in Right of the Province of British Columbia et al
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: February 24, 2005
REASONS FOR
Judgment and Judgment: RUSSELL, J.
DATED: July 18, 2005
APPEARANCES:
Ms. Margot Venton for Plaintiff
Mr. Devon Page
Ms. Nancy Brown for Defendant (HMTQ in Right
Ms. Nerys Poole of British Columbia)
Ms. Elizabeth Rowbotha
Mr. David McEwen for Defendant Coast Forest Products Association et al
SOLICITORS OF RECORD:
Sierra Legal Defence Fund for Plaintiff
Vancouver, British Columbia
Mr. Geoff Plant for Defendant (HMTQ in Right
Attorney General for British Columbia of British Columbia)
McEwen Schmitt and Company for Defendant Coast Forest
Vancouver, British Columbia Products Association et al
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