Date: 20021128
Docket: T-382-99
Neutral citation: 2002 FCT 1237
BETWEEN:
RADIL BROS. FISHING CO. LTD.
Plaintiff
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
as represented by the REGIONAL DIRECTOR-GENERAL
OF THE DEPARTMENT OF FISHERIES AND OCEANS
FOR THE PACIFIC REGION
Defendant
REASONS FOR ORDER
HARGRAVE P.
[1] By this motion the Crown seeks to strike out a Further Amended Statement of Claim of 31 October 2000 on the grounds that it contravenes the 19 October 2001 Order and Reasons of the Federal Court of Appeal. While the grounds for striking out, as set out in the motion, refer to a number of sub-heads under Rule 221, by agreement argument was limited to the scope of amendment allowed by the Court of Appeal's Order.
CONSIDERATION
[2] Key in this decision is what the Court of Appeal dealt with and decided in October 2001. I will begin with some background leading up to that decision.
[3] I heard the initial motion to strike out the Statement of Claim which was filed 5 March 1999 declining, by an Order of 16 June 1999, to strike it out. That decision was appealed to Mr Justice McKeown who, by Order of 17 November 2000, struck out the whole of the Statement of Claim.
[4] By Order of 19 October 2001 the Court of Appeal struck out the claim by the Plaintiff against two of the Defendants, British Columbia Packers Limited ("BC Packers") and Titan Fishing Ltd., but found some middle ground as to the claim against the Crown. In reading the 19 October 2001 Order, an Order which caused some confusion between counsel, one must keep in mind that the Court of Appeal is making an order in terms of an appeal of my Order of 16 June 1999:
| With respect to the declaratory relief sought in the Statement of Claim, the appeal from the Order of the Prothonotary is allowed and the Statement of Claim is struck out.
With respect to the claim in damages against the Crown, the appeal from the Order of the Prothonotary is dismissed and both the Statement of Claim and the Amended Statement of Claim are struck out with leave to amend within fourteen days of the date of judgement. Costs to plaintiff.
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In effect the Court of Appeal struck out the declaratory relief which I had allowed to stand. The Court of Appeal then upheld the 16 June 1999 Order to the extent of allowing the claim for damages to stand, with the proviso that both initial Statement of Claim of 5 March 1999 and Amended Statement of Claim of 25 June 1999 be struck with leave to re-amend, within 14 days: see also paragraph 39 of the Court of Appeal's Reasons. Here the amendment was to allow the Plaintiff to proceed with a statement of claim for negligent misrepresentation. A portion of the Reasons deals with negligent misrepresentation, including an operational decision by a Crown servant as to the effect of a fishing licence transfer. Here the Court of Appeal referred to the cause of action as involving "the duty of care owed to Radil by the Minister or his officers whatever the legality of the decision" (paragraph 36). It is instructive to set out a portion of the Reasons:
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37 It is premature, at this early stage of the proceedings, to conclude that Radil has no chance, with appropriate amendments, to demonstrate that the alleged negligent misrepresentation was part of an operational, as opposed to policy decision, that there was a prima facie duty of care and that the scope of the duty was not, in the circumstances, to be negatived or limited. Radil [page233] has a steep hill to climb, but it cannot, at this stage, be said that it cannot be done.
38 The Prothonotary committed no reviewable error when he allowed the action to go on with appropriate amendments. He erred, however, when he went on to allow the amendments on grounds of malfeasance or on grounds similar to those associated with judicial review proceedings. He should, instead, have invited Radil to make amendments that would plead in more explicit terms negligent misrepresentation by a servant of the Crown and would open the door to findings with respect to the five general requirements listed by the Supreme Court of Canada in Queen v. Cognos Inc., [1993] 1 S.C.R. 87, at page 110, i.e.:
The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms. The decisions of this Court cited above suggest five general requirements: (1) there must be a duty of care based on a "special relationship" between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentations; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. In the case at bar, the trial judge found that all elements were present and allowed the appellant's claim.
39 I would allow the appeal with respect to the claim in damages against the Crown and order that the statement of claim filed in Court file T-382-99 on March 5, 1999 and the amended statement of claim filed on June 25, 1999 be struck out, but with leave to file a re-amended statement of claim in accordance with these reasons and within 14 days of the date of the judgment in this appeal.
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The Further Amended Statement of Claim, as set out in paragraph 39 of the Reasons, is to be in accordance with the Court of Appeal's Reasons.
[5] In passing I will deal with whether there is any conflict between the terms of the Order, specifically as to amendment "with respect to the claim in damages ..." (underlining added) and the Reasons which, at first glance, seems a little more specific, allowing amendment "in accordance with these reasons". Here I note the use of a definite article in the Order and that it is "the" claim in damages, noting things already mentioned or under discussion, rather than the indefinite article "a" referring to any claim in damages. Thus, the damages claim allowed by way of amendment by the Court of Appeal is a damages claim by way of negligent misrepresentation, that being the thrust of paragraph 38 of the Court of Appeal's Reasons.
[6] The 19 October 2001 decision of the Federal Court of Appeal was followed by the Further Amended Statement of Claim filed 31 October 2001. At issue is whether the amendments fall within the terms of the Court of Appeal's Order.
[7] The Further Amended Statement of Claim contains some background information to place BC Packers, formerly a defendant, in the position of agent for the Plaintiff, the task of BC Packers being to see the fishing licence transaction through to a satisfactory conclusion. This background is set out in paragraphs 11 through 15, being new material, except for paragraph 12:
| 11. B.C. Packers was authorized by the Plaintiff to act as its agent to arrange for and effect the transfer of the 'A' licence to the "SEACREST".
12. In 1993, the 'A' licence owned by B.C. Packers was combined or married to licence 'T'0092 (the "AT licence"), which was issued and placed on the fishing vessel "PACIFIC EAGLE", a vessel owned at the time by Polar Star Enterprises Ltd. and with whom B.C. Packers had an arrange for the placement of the licence.
13. B.C. Packers were unable to transfer the 'A' licence to the Plaintiff because DFO would not approve the separation of the 'A' licence from licence 'T'0092.
14. In order to facilitate the transfer of the 'A' licence to the Plaintiff, B.C. Packers entered into an arrangement with the DFO whereby the 'A' licence would be transferred from B.C. Packers to the Plaintiff by swapping the combined 'AT' licence owned by B.C. Packers for the 'T' licence owned by the Plaintiff.
15. The arrangement between B.C. Packers and the DFO to swap the 'AT' licence from the "PACIFIC EAGLE" for the 'T' licence from the "SEACREST" was unknown to the Plaintiff and B.C. Packers acted in excess of its authority in arranging for the swap of the two licences.
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In these paragraphs the Plaintiff says that BC Packers may have acted in excess of its authority, however the Further Amended Statement of Claim goes on to set out that, unknown to the Plaintiff, the head of licencing in British Columbia, for the Department of Fisheries and Oceans (whom I shall also call "Fisheries"), made representations to BC Packers so that the transaction would fall within the parameters set by the Plaintiff, namely, that while licences might be exchanged, the catch history would remain with the vessels, thus entitling the vessels to fishing quotas based upon their previous catches.
[8] The substantive amendments to the Further Amended Statement of Claim, that is material which did not appear in the earlier Statements of Claim, occur in paragraphs 18 through 20, 24, 28 and 35. The basic allegation here is that the Plaintiff's agent relied on the representation from the Crown's servant, the head of licencing at Fisheries in Vancouver, that was untrue, that the substantial catch history of the "T" licence belonging to the Seacrest, the Plaintiff's vessel, would remain with that vessel: instead, the catch history went to the less productive Pacific Eagle, owned by the former defendant, Titan Fishing Ltd. These representations, apparently relied upon by the Plaintiff's agent, are said to have been untrue. This leads to a claim for various categories of damages. However, along the way to the prayer for relief, there are some paragraphs which the Defendant, quite properly, questions.
[9] To begin and not necessarily in the order in which they appear in the Further Amended Statement of Claim, but rather in the general order in which counsel for the Defendant proceeded with his argument, the Defendant says that paragraph 42, which alleges a fiduciary duty owed by Fisheries to the Plaintiff, to protect and safeguard the licence, ought to be struck out, as it was struck out by the trial judge and not dealt with by the Court of Appeal. However, this overlooks the fact that the Court of Appeal approached its task as an appeal from the Order of the Prothonotary, resulting in declaratory relief being struck out, but with a specific type of allegation as to negligence, being negligent misrepresentation, leading to damages, remaining. Moreover, the Court of Appeal referred, in its Reasons to a duty of care in the sense of Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964], A.C. 465 (H.L.): see paragraph 37 which is set out above. Paragraph 42 may thus remain.
[10] Paragraphs 40 and 41 allege negligence on the part of the Fisheries and a duty not to transfer a licence in a manner which did not comply with regulations and departmental policies, particularly in that the documentation required to transfer the licence was incomplete. The Defendant says that the negligence referred to in these two paragraphs does not relate to any misrepresentations. As I understand it, this is a fall-back position for the Plaintiff.
[11] While the Court of Appeal dealt specifically, in its Reasons, with the right of Radil Bros. to allege negligent misrepresentation, it did not specifically deal with the plea of negligence in the operation of transferring the licences. Here the plea of negligence in the transfer leads to a claim for damages. However, the Order and Reasons of the Court of Appeal are instructive, for while they allow the Plaintiff to proceed with respect to the claim for damages, they limited the damage claim to negligent misrepresentation by a Crown servant at Fisheries. Paragraphs 40 and 41 of the Further Amended Statement of Claim are struck out.
[12] Paragraphs 38 and 39 deal with the structure of licence record-keeping at Fisheries. With paragraphs 40 and 41 being struck out, paragraphs 38 and 39 are to some degree surplus, but they do also flow into paragraph 42 by providing background. They shall remain.
[13] The Defendant takes issue with paragraph 35 of the Statement of Claim, which alleges a wrongful swapping of licences, or alternatively that by virtue of the negligent misrepresentation by Fisheries there is a trust on the part of Fisheries of the fishing quota for the use and benefit of the Plaintiff. The issue here is whether the concept of a trust goes beyond what was envisioned by the Court of Appeal in allowing a claim for negligent misrepresentation.
[14] The Defendant says that the reference to holding a fishing quota in trust for the use and benefit of the Plaintiff, in paragraph 35 of the Further Amended Statement of Claim, ought to be struck out for it has no relationship to negligent misrepresentation.
[15] While causes of action based upon negligent misrepresentation are, by Hedley Byrne (supra), based upon the relationship of trust or reliance between the parties, the concept of a breach of trust is not part of a Hedley Byrne relationship requirement. The Supreme Court of Canada expanded upon Hedley Byrne in The Queen v. Cognos Inc., [1993] 1 S.C.R. 87, in the course of which Mr Justice Iacobucci, at page 110, set out a general statement as to the elements required for a successful Hedley Byrne claim, a passage included in the above quotation from the Court of Appeal's Reasons in the present action. The relevant requirement is that there be "a duty of care based on a 'special relationship' between the representor and the representee; ...". I agree that the alleged breach of trust does not go to that special relationship. While the allegation of a trust of paragraph 35 of the Further Amended Statement of Claim is not an element needed for Hedley Byrne claim, it is said by the Plaintiff to be a result of the negligent misrepresentation of the Fisheries and as such it would sound in damages. This clearly stretches the Order of the Court of Appeal too far. Moreover, negligent misrepresentation and improper swapping licences are dealt with elsewhere in the Further Amended Statement of Claim. Paragraph 35 is struck out.
[16] I do not look upon paragraphs 26, 33 and 34, with which the Defendant takes issue, as being either conclusions or necessary background. Rather they relate to the negligent record-keeping operations of the Fisheries. The plea is not related to a Hedley Byrne claim, but rather is a fall-back position for the Plaintiff, to negligence simpliciter. Here counsel for the Plaintiff refers me to Cooper v. Hobart (2002), 206 D.L.R. (4th) 193 (S.C.C.). In Cooper the Supreme Court considered the duty care owed by a statutory regulator to certain members of the public. While the Supreme Court referred to Hedley Byrne, it did so merely as an example of recognized proximity, which gave rise to a duty. Relevant to the Plaintiff's position is the discussion of liability for operational decisions, as opposed to policy decisions (pages 205 and 206), as this was a liability given the Plaintiff by the Court of Appeal in paragraph 37 of its decision. However, paragraphs 26, 33 and 34 deal with, as I say, negligent record-keeping, not negligent misrepresentation. Paragraphs 26, 33 and 34 are struck out.
[17] Finally, paragraphs 30, 31 and 32, are perhaps surplus passages on one view, but on another view explain the importance of the case, in terms of a valuable quota allocation being tied to the catch history of a vessel. Even looking upon these paragraphs as surplus, a court will not strike out such statements, so long as no prejudice flows from them: Belanger Inc. v. Keglonada Investments Ltd.(1986), 1 F.T.R. 238 (T.D.) at 241, Pater International Auto motive Franchising Inc., [1990] 1 F.C. 237 (T.D.) at 243 and Copperhead Brewing Co. v. John Labatt Ltd. (1995), 61 C.P.R. (3d) 317 (F.C.T.D.) at 322.
CONCLUSION
[18] As I pointed out initially, the result of this motion depended upon the scope of amendment allowed by the Court of Appeal in its 19 October 2001 Order and Reasons. Because the Court of Appeal's Order and Reasons are fairly concise, I have taken a restrictive view of the allowable amendments. However, leaving aside the full effect of the Court of Appeal's Order, because there may be viable causes of action which do not fall within the permitted amendment at this time, I have not dismissed any portions of the claim as sought by the Defendant, but have merely struck out offending material.
[19] I thank counsel for substantial material and efforts.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
28 November 2002
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-382-99
STYLE OF CAUSE: Radil Bros. Fishing Co. Ltd. v. Her Majesty the Queen in Right of Canada, as represented by the Regional Director-General of the Department of Fisheries and Oceans for the Pacific Region
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: 14 January 2002
REASONS FOR ORDER: Hargrave P.
DATED: 28 November 2002
APPEARANCES:
J Raymond Pollard FOR PLAINTIFF
Paul F Partridge FOR DEFENDANT
R S Whitaker
SOLICITORS OF RECORD:
Richard Buell Sutton FOR PLAINTIFFS
Barristers & Solicitors
Vancouver, British Columbia
Morris Rosenberg FOR DEFENDANT
Deputy Attorney General of Canada
Department of Justice
Vancouver, British Columbia
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